Ted Butler: The Biggest Scandal

01 October 2016 — Saturday


The last trading day of the week, month and quarter was a rather tumultuous affair in the precious metal and currency markets yesterday.

The gold price rallied in fits and start during the Far East trading session on their Friday — and that continued into early trading in London.  The high tick over there came at, or just after, the London morning gold fix — and the price turned lower starting around 12:30 p.m. BST — and by 8:30 a.m. in New York, an hour later, it was only up a couple of bucks from Thursday’s close.  It rallied sharply at that point, but by shortly after 9 a.m. EDT the price was capped — and at that juncture ‘da boyz’, their spoofing and their algorithms put on a show, with the low tick of the day [and a new low for this move down] set a minute or so after the 1:30 p.m. COMEX close.  It chopped mostly higher from there into the 5 p.m. close of after-hours trading.

The high and low ticks were reported as $1,331.50 and $1,316.00 in the December contract.

Gold was closed in New York yesterday at $1,315.90 spot, down an even 4 dollars from Thursday.  Net volume was very high at a hair over 190,000 contracts.161001gold

And here’s the 5-minute gold tick chart courtesy of Brad Robertson.  There was a bit of volume in late Far East/early London trading, but the real volume started on the engineered price decline that began shortly after the noon silver fix in London, which is 05:00 Denver time on the chart below.  Needless to say, the heaviest volume occurred during the COMEX trading session in New York, particularly during the big price moves…both up and down — and really didn’t fall off to what I call ‘background levels’ until very late on Friday afternoon.

The vertical gray line is 10:00 p.m. Denver time, midnight in New York — and noon China Standard Time [CST] the following day in Shanghai—and don’t forget to add two hours for EDT.  The ‘click to enlarge‘ is a must here.161001-5-minute-gold

The silver price didn’t do a thing until 9 a.m. in London — and then it rallied a decent amount until exactly 8:30 a.m. in New York, just like gold.  After that, the price pattern was very similar to what occurred in gold, except the price spike was far more pronounced — and back above its 50-day moving average.  But by the COMEX close, JPMorgan et al had the price back to where it was when the initial rally began at 9 a.m. in London.  The silver price rallied a handful of pennies from there, but that was it.

The low and high ticks in this precious metal were recorded by the CME Group as $19.12 and $19.77 spot, which was an intraday move of 65 cents, or over 3 percent.

Silver was closed on Friday at $19.145 spot, up 5.5 cents on the day.  Net volume was very heavy at just over 66,000 contracts.161001silver

Like on the 5-minute tick gold chart above, the vertical gray line is 10:00 p.m. Denver time, midnight in New York — and noon China Standard Time [CST] the following day in Shanghai—and don’t forget to add two hours for EDT.  The ‘click to enlarge‘ is a must here as well.161001-5-minute-silver

Platinum didn’t do a lot in Far East trading — and what gains there were, were mostly gone by shortly before 10 a.m. Zurich time on their Friday morning.  After that, platinum followed the same pattern as gold, although the price spikes in early COMEX trading weren’t anywhere near as pronounced.  And, like silver, almost all of Friday’s earlier gains vanished by the COMEX close.  It was sold a bit lower in the thinly-traded after-hours market, finishing the Friday session at $1,025 spot, up one whole dollar.  At its high tick yesterday, it was up $17 the ounce.161001platinum

Palladium was up 4 bucks or so by the time its 8:30 a.m. EDT rally began — and those gains, plus its New York gains, were all gone by the COMEX close as well.  It rallied a few dollars after that, however — and finished higher by 7 dollars an ounce.  Palladium was up 11 bucks at its high tick.161001palladium

The dollar index closed very late on Thursday afternoon in New York at 95.47 — and chopped unsteadily sideways until it took off the to the upside around 2:25 p.m. China Standard Time on their Friday afternoon.  It topped out at precisely 8:00 a.m. in New York.  The high tick at that point was 95.96.  Then down it went.  The 95.34 low tick came shortly before noon EDT.  It rallied about 20 basis points during the next hour, but then crawled lower for the remainder of the day.  The dollar index closed in New York on Friday afternoon at 95.44 — down 3 whole basis points from Thursday.

Although the precious metals initially reacted as they should have on the dollar swoon, the gains were all taken away by the powers-that-be — and then some in gold.161001intraday-gif

And here’s the 3-year U.S. dollar index — and one wonders what it would show if all the world’s currencies were allowed to trade freely.  I don’t know for sure myself, but it wouldn’t look like this.161001-3-year-usd

The gold stocks gapped up about 2 percent at the open, but once it became obvious that JPMorgan et al weren’t taking any prisoners during the COMEX trading session in New York, they were in the red shortly after the London p.m. gold fix was in.  They drifted lower from there — and traded pretty flat after the 1:30 p.m. EDT COMEX close.  The HUI finished the Friday session down 1.15 percent.161001hui

Not surprisingly, the silver stocks opened up a bit more that 2 percent, but followed their golden brethren like a shadow after that.  The low tick of the day came shortly after 2 p.m. EDT — and they rallied a hair from there.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 1.22 percent.  Click to enlarge if necessary.161001silver-7

I thought I’d post the long-term Silver 7 chart so you can see how things are progressing once you stand back and look at the overall.161001lt-silver-7  Click to enlarge.

And here are three charts from Nick that tell all.  The first one shows the changes in gold, silver, platinum and palladium for the past week, in both percent and dollar and cents terms, as of Friday’s closes in New York — along with the changes in the HUI and Silver Sentiment/Silver 7 Index.  The Click to Enlarge feature really helps on all three charts.161001weekly

And the chart below shows the month-to-date changes as of Friday’s close.161001month-to-date

And below are the year-to-date changes as of the close of trading yesterday.161001year-to-date

The CME Daily Delivery Report showed that 3,005 gold, plus 11 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  In gold, there were ten short/issuers — and the three largest were S.G. Americas with 1,760 contracts out of their client account, plus Canada’s Scotiabank and HSBC USA with 630 and 532 contracts out of their respective in-house trading accounts.  There were 14 long/stoppers involved.  The largest was Goldman Sachs once again with 689 for its client account, plus 668 for its own account.  Next came Macquarie Futures with 1,313 for their own in-house trading account.  JPMorgan was an ‘also ran’ once again, picking up 225 contracts for its own account.  In silver, Scotiabank issued all 11 contracts — and Macquarie Futures picked up 10 of those for its own account.  The link to yesterday’s Issuers and Stoppers Report is here — and is worth a look if you have the interest.

The CME Preliminary Report for the Friday trading session showed that gold open interest in October dropped by a chunky 2,944 contracts, leaving 4,449 left, minus the 3,005 mentioned in the previous paragraph.  Thursday’s Daily Delivery Report showed that 2,470 gold contracts were actually posted for delivery on Monday, so that means that a very large 2,944-2,470= 474 short/issuers in gold were let off the delivery hook by the firms holding the long side of their contracts.  October silver o.i. fell by 235 contracts, leaving 202 still left, minus the 11 contracts mentioned above.  Thursday’s Daily Delivery Report showed that 301 silver contracts were posted for delivery on Monday, so that means that another 301-235=66 silver contracts were added to the October delivery month yesterday.

After two days of no activity, there was another withdrawal from GLD on Friday.  This time an authorized participant took out 38,156 troy ounces.  And as of 6:33 p.m. EDT yesterday evening, there were no reported changes in SLV.  But when I checked back at 1:40 a.m. EDT this morning, I noted that there was small withdrawal from SLV, as 595,560 troy ounces were removed — and that’s a bit on the chunky side to be a fee payment of some kind, but the final word on that will certainly be Ted’s.

There was another sales report from the U.S. Mint to end the month and the quarter.  They sold 7,500 troy ounces of gold eagles — 2,500 one-ounce 24K gold buffaloes — but no silver eagles.

For the month of September, the mint sold 94,000 troy ounces of gold eagles — 17,500 one-ounce 24K gold buffaloes — and 1,675,000 silver eagles.  Gold coin sales were very decent, but without JPMorgan there to buy every silver eagle the mint could produce, over and above what John Q. Public was buying, silver eagles sales remain in the dumpster.  The sales numbers in silver eagles over the last few months probably reflects true consumer demand over that last five years.  I’m sure Ted will have something to say about this in his weekly commentary this afternoon.

There was some gold movement over at the COMEX-approved depositories on Thursday.  There was 33,391 troy ounces received at Canada’s Scotiabank — and the only ‘out’ movement was 3 kilobars from the Manfra, Tordella & Brookes, Inc. depository.  The link to that activity is here.

Once again there was a very decent amount of in/out action in silver, as 594,448 troy ounces were received — and 420,010 troy ounces were shipped out the door for parts unknown.  All of the ‘in’ activity was at Brink’s, Inc. — and 359,976 troy ounces of the ‘out’ activity was at CNT.  The rest came of of Scotiabank.  The link to that action is here.

Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday, they reported receiving 1,494 of them, plus they shipped out 2,108.  All of the action was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.

The deterioration in this week’s Commitment of Traders Report puts us back at, or very close to, a record high Commercial net short position in both gold and silver — and it was far worse in gold, particularly in the Managed Money category, but first things first.

In silver, the Commercial net short position increased by 3,873 contracts, or 19.4 million troy ounces of paper silver.  They arrived at that number by purchasing 2,252 long contracts, but they also added 6,125 short contracts as well.  The net of those two numbers is the change/increase for the reporting week.  The Commercial net short position is now back above 500 million troy ounces, at 504.1 million troy ounces of paper silver.

Ted said that the Big 4 commercial traders, which includes JPMorgan and Scotiabank of course, increased their short positions by about 1,000 contracts.  The ‘5 through 8’ large traders reduced their short position by around 400 contracts — and the balance was covered by Ted’s ‘raptors’ — the commercial traders other than the Big 8 — as they sold 3,300 contracts of their long position in silver.

Ted puts JPMorgan’s short position at 33,000 contracts, up 1,000 contracts from last week’s COT Report.

Under the hood in the Disaggregated COT Report it was far worse, as the Managed Money traders increased their long position by 3,745 contracts — and they also reduced their short position by 1,826 contracts, for a net change of 5,571 contracts, which is about 1,700 contracts more than the Commercial net short position.  Of course it was the traders in the other two categories of Disaggregated report that made up the difference — the ‘Other Reportable’ category — and the Nonreportable/small trader category.

Here’s the 9-year chart for the silver COT Report — and it’s butt-ass ugly.  We’re not back at record highs, but at these extremes, it really doesn’t matter if we are or not.161001cot-silver

In gold, the numbers were even more horrific.  The Commercial net short position in that precious metal increased by 23,979 contracts, or 2.40 million troy ounces of paper gold.  They arrived at that number by purchasing 2,842 long contracts, plus they added 26,821 short contracts that came to them courtesy of the Managed Money traders who went long in droves.  The difference between those two numbers equals the change in the Commercial net short position for the week, which is now up to 31.46 million troy ounces.

It was another “all for one, and one for all” with the Commercial traders during the reporting week.  Ted said that the Big 4 traders increased their short position by about 12,800 contracts, the ‘5 through 8’ traders added a further 1,700 contracts to their short positions — and Ted’s raptors, the Commercial traders other than the Big 8, increased their short position by around 9,500 contracts.

And as bad as the numbers were in the Legacy COT report above, under the hood in the Disaggregated COT Report, it was as ugly as sin.  The Managed Money traders increased their long positions by an eye-watering 36,032 contracts, plus they reduced their short positions by 5,998 contracts — and the sum of those two numbers…42,030 contracts…was the change for the reporting week.  Wow!  The difference between the Managed Money number and the commercial net short position was around 18,000 contracts — and that’s what the other two groups of trader in the Disaggregated COT Report went short during the reporting week, because the numbers always have to net out to zero.

Here’s the 9-year COT chart for gold– and although we’re not back at a record high commercial net short position yet, we’re certainly within spitting distance of it.161001cot-gold

One can only imagine how high gold and silver prices would have risen if they had been allowed to trade freely during the reporting week.

Here’s Nick Laird’s “Days to Cover” chart updated with yesterday’s COT data for positions held at the close of COMEX trading on Tuesday.  It shows the days of world production that it would take to cover the short positions of the Big 4 — and Big ‘5 through 8’ traders in each physically traded commodity on the COMEX.  Click to enlarge.161001days-to-cover

As I say in every Saturday column without fail—the short positions of the Big 4 and 8 traders in silver continues to redefine the meaning of the words ‘obscene’ and ‘grotesque’.  For the current reporting week, the Big 4 are short 154 days [5 months] of world silver production—and the ‘5 through 8’ traders are short an additional 66 days of world silver production—for a total of 220 days, which is just over 7 months of world silver production, or 534.6 million troy ounces of paper silver held short by the Big 8.

And it should be pointed out here that in the COT Report above, the Commercial net short position in silver is 504.1 million troy ounces.  So the Big 8 hold a short position larger than the net position—and by about 30.5 million troy ounces.

And if that isn’t bad enough, the Big 8 are short 53.0 percent of the entire open interest in silver on the COMEX futures market — which is only off last week’s record high by a hair.  How insane is that?  And if you subtract out the market-neutral spread trades, it’s a reasonable assumption the Big 8 are short more than 55 percent of the total open interest in silver.  In gold it’s up to 48.1 percent of the total open interest that the Big 8 are short.

And as an aside, the two largest silver shorts on Planet Earth—JPMorgan and Canada’s Scotiabank—are short about 104 days of world silver production between the two of them—and that 104 days represents around 68 percent [two thirds] of the length of the red bar in silver in the above chart.  The other two traders in the Big 4 category are short, on average, about 25 days of world silver production apiece.

And based on Ted’s estimate of JPMorgan’s short position of 33,000 contracts, JPMorgan is short around 68 days of world silver production all by itself.  Because of that, the approximate short position in silver held by Scotiabank works out to around 36 days of world silver production.

In gold, the Big 4 are now short 76 days of world gold production — and the ‘5 through 8’ another 24 days of world production, for a total of 100 days. That number makes the math easy, as the Big 4 in gold hold 76 percent of the total short position held by the Big 8 — and that must be a record.  How’s that for a concentrated short position within a concentrated short position???

And just as an aside the “concentrated short positions within a concentrated short position” in silver, platinum and palladium… are 70, 70 and 66 percent respectively of the short positions held by the Big 8.

And the CME Group, the CFTC and the mining industry just sit their like dorks and do nothing.

I don’t have all that many stories for you today — and I hope you have enough time in what’s left of your weekend to read the ones that interest you.


A Furious Rick Santelli Rages at Janet’s Jawboning: “Please, Don’t Help Anymore


CNBC‘s Rick Santelli turned it up to ’11’ today as The Fed’s Janet Yellen joined the world’s central planners in suggesting intervention directly in the stock markets would ‘help’ the average Joe.

Santelli exclaims “don’t help anymore!!” How has any of their ‘help’ helped in the last 7 years?

“Central banks buying in the [stock] market… you really think that’s a good idea?” Raging about picking winners, buying Deutsche Bank, and keeping stocks “steady” around elections, the veteran pit trader exploded, “is that the world we really want to live in?”

The Fed’s buying stocks “will completely and utterly and in every possible way destroy and value in the marketplace…”

3 minutes of brutal reality slapped into the face of a ridiculous rumor-driven day…

This CNBC video clip showed up on the Zero Hedge website at 9:45 p.m. on Friday evening — and it’s certainly worth your while.  I found it all by myself — and another link to it is here.

Illinois Suspends “Billions of Dollars” of Investment Activity With Wells Fargo

Just when you thought you could relax into the weekend knowing that the U.S. (and world) banking system was ‘fixed’ again thanks to a rumor from French press, Wells Fargo take another hit. Following California’s decision to sever all banking ties with the bank, Illinois State Treasurer Michael Frerichs has confirmed his state’s plans to suspend billions of dollars of investment activity with Wells Fargo.

As Bloomberg reports,

  • News conference will be held on Monday at 10:00 a.m. at the James R. Thompson Center in Chicago to share details about the moratorium
  • Treasurer’s office comments in a statement

We estimate the score now to be Wells Fargo 0 – 4 Elizabeth Warren (claw backs, soldier car repo fines, California sanctions, and now Illinois, suspending banking)

This tiny Zero Hedge piece showed up on their website at 4:53 p.m. on Friday afternoon EDT — and another link to it is here.

David Stockman on “Wall Street Week”: Get Out of Harms’ Way Now—–The Casino is Heading For a Crash

Fox Business Former Reagan Budget Director David Stockman on the Federal Reserve and what is needed to boost the U.S. economy.

This 6:31 minute video clip appeared on David’s website yesterday sometime — and it comes courtesy of Roy Stephens.

David Stockman Interview: 30 Years of Misrule by the Wall Street/ Washington Elites

This 22:04 minute audio interview conducted by Jay Taylor is definitely worth your time if you have it.

Roy Stephens sent it to me on Thursday, the same day it appeared on David’s website.  But for length reasons, I thought I’d save it for my Saturday column.

Iceland’s Pirates head for power on wave of public anger

A party that hangs a skull-and-crossbones flag at its HQ, and promises to clean up corruption, grant asylum to Edward Snowden and accept the bitcoin virtual currency, could be on course to form the next Icelandic government.

The Pirate Party has found a formula that has eluded many anti-establishment groups across Europe. It has tempered polarising policies like looser copyright enforcement rules and drug decriminalisation with pledges of economic stability that have won confidence among voters.

This has allowed it to ride a wave of public anger at perceived corruption among the political elite – the biggest election issue in a country where a 2008 banking collapse hit thousands of savers and government figures have been mired in an offshore tax furore following the Panama Papers leaks.

If the Pirates emerge as the biggest party in an Oct. 29 parliamentary election – as opinion polls suggest – they will deliver another defeat to Europe’s mainstream politicians.

This longish Reuters news item, filed from Reykjavik, showed up on their Internet site at 4:39 p.m. BST on Thursday afternoon London time — and I thank Patrik Ekdahl for pointing it out.  For content reasons, it had to wait for today’s column — and another link to it is here.

U.K. farm subsidies: Payment to billionaire prince sparks anger

Taxpayers are paying more than £400,000 a year to subsidise a farm where a billionaire Saudi prince breeds racehorses.

The Newmarket farm of Khalid Abdullah al Saud – owner of the legendary horse Frankel – is among the top 100 recipients of E.U. farm grants in the U.K.

Farm subsidies swallow a huge chunk of the E.U.’s budget. They were started after World War Two to stimulate production, but led to food mountains that had to be dumped.

A compromised reform process – the so-called “greening” of the Common Agricultural Policy – resulted in farmers mostly being paid depending on how much land they own.

The U.K.’s top beneficiaries include estates owned partly or wholly by the Queen (£557,706.52); Lord Iveagh (£915,709.97); the Duke of Westminster (£427,433.96), the Duke of Northumberland (£475,030.70 ) the Mormons (£785,058.94) – and many wealthy business people.

I thought I knew all about farm subsidies in the U.K. and E.U., but I must admit that even I was taken aback by this article.  I received it in time for Friday’s column, but thought best to wait for today because of the subject material.  Patrik Ekdahl sent us this story as well — and his comment “Subsidies, a personally pet peeve…” hardly begins to do justice to the situation described in this story.  It was posted on the bbc.com Internet site on Thursday sometime — and another link to it is here.

Stocks Climb as Treasuries Fall on Deutsche Bank’s Speculation

Risk appetite returned to global markets on speculation Deutsche Bank AG will pay less than half of a penalty sought by the U.S., sparking a rally in stocks and sending Treasuries tumbling.

Equities extended their longest monthly advance since June 2014 and the Dow Jones Industrial Average climbed more than 160 points as a financial companies surged. The euro erased losses, while Treasuries fell with gold amid lower demand for haven assets. Oil posted its first September increase since 2010 as OPEC agreed to an output cut earlier this week.

Relief swept over global markets as Agence France-Presse reported that Deutsche Bank is near a $5.4 billion deal with the U.S. Department of Justice to settle a probe related to bad mortgages. Traders have kept a close watch on the lender as it struggles with tougher capital standards and soaring legal bills. While its shares have lost about 50 percent in value this year, systemic concerns have a way to go to reach levels sparked by the collapse of Lehman Brothers Holdings Inc. in 2008 after steps to shore up the financial system.

There’s a little bit of recognition of the reality that Deutsche Bank is not Lehman,” said John Stoltzfus, chief market strategist at Oppenheimer & Co. in New York. “The banks, as result of all the regulatory changes since the world crisis, are in better shape to withstand this.

The key word in the headline is “speculation” — because that’s what it is at the moment.  This Bloomberg story was originally datelined at 5:09 p.m. MDT on Thursday afternoon.  At that time it was headlined “Most Asian Index futures drop amid bank rout, oil, copper swing“.  It received a complete rewrite at 2:41 p.m. MDT on Friday afternoon — and sports the headline you see now.  I found this story on Doug Noland’s website — and another link to it is here.

Doug Noland: A Take on Deutsche Bank

Learning from the crisis, Deutsche Bank’s balance sheet is these days heavy on liquid assets. There are as well various emergency liquidity facilities available from the ECB and Bundesbank. Deutsche Bank is better prepared, policymakers are better prepared and the world is better prepared. From the bullish perspective, it’s almost unthinkable that global policymakers would sit back and watch the collapse of the “world’s most systemically risky bank.”

The sanguine bullish view is supported by Deutsche Bank (senior debt) Credit default swaps. Despite Friday’s morning’s 20 bps surge, CDS closed at 240 bps, still below trading highs from February. While elevated, these are not levels indicative of a looming Lehman-style collapse. Moreover, there’s the U.S. equities VIX index. Closing the week at 13.29, a level suggesting nothing but blue skies ahead. Moreover, the S&P ended Q3 only about 1{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} below record highs.

The bears, well, they’re convinced the bulls are nuts. More important than whimsical CDS pricing, the naysayers point to an incipient exodus of Deutsche Bank clients. Global markets were shaken Thursday by a Bloomberg article discussing how some key hedge funds were abandoning ship. Not yet faded from memory, Lehman Brothers proved a prime brokerage and counter-party exposure nightmare. Those who panicked first panicked best.

It’s perfectly rational for hedge funds in particular to shift assets, collateral and derivative business away from the slow-motion train wreck, Deutsche Bank. The bears see an approaching point of no return: a crisis of confidence and “run” on Deutsche that will necessitate a bailout and restructuring.

Doug’s Credit Bubble Bulletin was posted on his website around 2 a.m. EDT this morning — and it easily falls into the must read category.  Another link to it is here.

Armageddon at Aleppo: John Batchelor Interviews Stephen F. Cohen

The repercussions of the failed Syrian ceasefire may be driving the newest offensive by Russian and Syrian forces to take Aleppo. The government side seems to have given up on ceasefire along with its faith in the motives of Washington, the E.U. and U.N. The result has been an unprecedented attack on the city by air and ground forces resulting in many civilian casualties. Cohen is quite blunt in stating that this is a serious setback for the NCW (New Cold War)  and that Russian and American relations have taken a very bad hit; that Americans cannot be trusted is now officially Russia’s policy (as stated at the U.N.), and that the factions war between moderates and the war party in Washington is now in the open. This has removed most of the diplomatic options. Cohen goes on to state that Putin now only sees the military solution for ending the war as the best troops of ISIS are in Aleppo and therefore an escalation is the logical thing to do to destroy terrorists there before they can escape. There is one aspect, however, that was not discussed that was also revealed in the bombing of Syrian Army forces to end the ceasefire and Putin may be worried that Washington may decide to actively begin attacking Assad forces.  Also note, (and with apologies to Marshall McLuhan) that given the MSM in the U.S. and elsewhere is controlled for the most part by the war party in Washington one might assume that the war party faction is actually in control of Washington.

Finally the pundits bring up the little discussed role of invading Turkey in the war. Batchelor makes the point that the U.S is agreeing to discontinue support of the Kurds (even as they were effective fighters against ISIS), Cohen agrees and adds that it is also Putin’s failure to have trusted either Erdohan or Obama in Syria. And finally (!) Batchelor brings up the speculation that Turkey and Syrian forces might tangle – a personal worry of mine as Turkey would represent Washington one step removed AND NATO. Cohen does not discount this but he reminds that Russia’s first goal in Syria is to destroy ISIS. However, this is not a goal shared by Washington at all – and a fact that is surely known in the Kremlin.

Batchelor then goes on to suggest that on all fronts of the NCW the failure of the coalition in Syria has grave repercussions, and that an escalation is underway. Cohen responds with a discussion about how Ukraine and Syria are very similar. The solution in both seems to be whether Washington agrees to any solution, and the war party is always ready to undo any gains toward common sense and the political/diplomatic solution.  In Ukraine’s case Washington is aided in maintaining that war by the instability in the Kiev and Poroshenko’s fear of a Right Sector coup in Kiev. In Syria it is out and out mutiny and sabotage by the Defense Department, and in the end all pundits are left guessing about what outcomes on both fronts President Obama prefers.

The last segment is about the U.S. presidential debates, and I will leave that to listeners to pursue alone. However, there is a commentary about the American show 60 Minutes and its topic of a nuclear war that should be heard. As usual all these discussions are but a paraphrase of the broader analysis heard in the podcast and listeners are exposed to far more insights when they tune in at the provided link.

This 40-minute audio interview is certainly a must listen for anyone, even if you’re not a serious student of the New Great Game, as it wouldn’t take much for things to spiral totally out of control in Syria — and elsewhere.  It was posted on the audioboom.com Internet site on Tuesday but, for obvious reasons, had to wait for today’s column.  I offer profuse thanks to Larry Galearis for the link, plus his always incredible executive summary that you see above.  Another link to this interview is here.

Russia’s Sergei Lavrov: BBC interview in full

In an exclusive interview with the BBC, Russian Foreign Minister Sergei Lavrov says his country believes the United States may be tacitly supporting jihadist rebels in Syria.

He said the U.S. had broken a promise to help separate the the powerful Jabhat Fateh al-Sham (formerly known as al-Nusra Front) and other extremist groups from more moderate rebels.

He was speaking to Stephen Sackur on BBC World News TV on the first anniversary of the beginning of the Russian air campaign in Syria.

This 23:15 minute video interview was posted on the bbc.com Internet site yesterday sometime — and I must admit that I haven’t had time to listen to it yet, so I can’t comment on it.  I thank reader M.A. for bringing it to our attention — and another link to it is here.

The war against Syria: both sides go to “plan B”

In view of the total failure the U.S. policy to regime-change Syria and overthrow Assad, the time has now come for the United States to make a fundamental choice: to negotiate or double down. Apparently, Kerry and others initially tried to negotiate, but the Pentagon decided otherwise, treacherously broke the terms of the agreement and (illegally) bombed the Syrian forces. At which point, Kerry, Power and the rest of them felt like they had no choice but to “join” the Pentagon and double down. Now the U.S. “warns” Russia that if the Aleppo offensive continues, the U.S. will not resume negotiations. This is a rather bizarre threat considering that the U.S. is clearly unable to stick to any agreement and that the Russians have already concluded that the USA is “not-agreement-capable”. The Russia reaction was predictable: Lavrov’s admitted that he could not even take his American colleagues seriously.

Okay, so both sides are fed-up with each other. What comes next?

The U.S. will send more weapons to Daesh, including MANPADs, TOWs and Javelins. The effect of that will be marginal. Russian fixed-wing aircraft fly at over 5’000m where they are out of reach from MANPADs. They are currently the main provider of firepower support for the Syrians. Russian combat helicopters, while probably not immune to MANPADs, are still very resistant to such attacks due to three factors, survivability, weapons range and tactics: Mi-28s and Ka-52 have missiles with a maximum range of 10km and the way they are typically engaged is in a kind of ‘rotation’ where one helicopters flies to acquire the target, fires, immediately turns back and is replaced by the next one. In this matter they all protect each other while presenting a very difficult target to hit. Russian transport helicopters would, however, be at a much higher risk of being shot down by a US MANPAD. So, yes, if the US floods the Syrian theater with MANPADS, Syrian aircraft and Russian transport helicopters will be put at risk, but that will not be enough to significantly affect Russian or Syrian operations.

This longish commentary by The Saker appeared on his Internet site yesterday — and as of this writing has had 10,000 views already.  I thank Larry Galearis for his second contribution of the day — and another link to it is here.

Here’s the Smoking Gun That China Has a Huge Housing Bubble

Speculative buyers have eschewed Chinese stocks in favor of property, prompting even the chief economist at the central bank of the world’s second largest economy to declare that housing was in a “bubble.”

But when strategists at UBS AG recently compiled a list of bubblicious housing markets, there weren’t any selections from mainland China due to the lack of reliable data on the subject, underscoring the continued difficulty in declaring Chinese real estate to be in overheated territory.

But Deutsche Bank AG Chief China Economist Zhiwei Zhang thinks he’s pinpointed “a clear sign of a bubble” in the market — one that will end in a major correction in two years’ time.

After analyzing how much developers were willing to spend to win land auctions in 10 major Chinese cities in which values are already up 23 percent year-over-year, the economist found that the business case for these bids evaporates unless property prices continue to increase.

This Bloomberg article appeared on their Internet site at 7:22 a.m. Denver time on Thursday morning — and it’s another contribution from Patrik Ekdahl — and another link to it is here.

Clean Disruption – Why Energy and Transportation will be Obsolete by 2030 – Oslo, March 2016

Tony Seba’s Clean Disruption Keynote presentation at the Swedbank Nordic Energy Summit in Oslo, Norway, March 17th, 2016.

The keynote, based on the book ‘Clean Disruption of Energy and Transportation’ assert that four technology categories will disrupt energy and transportation by:

1- Batteries / Energy Storage
2- Electric Vehicles
3- Self-Driving Vehicles
4- Solar Energy

This very interesting and worthwhile video presentation was posted on the youtube.com Internet site back on April 2, 2016 — and Ted Butler featured it in his mid-week review ten days ago.  It runs for 53:53 minutes, but do yourself a favour, blow the froth off a cold one and watch it.  The further the presentation goes, the more incredible it gets.  The connection to silver is unspoken, but it’s in your face when he’s talking about solar power. Another link to it is here.

Ted Butler: The biggest scandal

My objection to managed money futures traders (and their commercial counterparties) dictating prices to the world’s actual commodity producers and consumers is that it completely upends the functioning of the law of supply and demand, which happens to be the cornerstone of any free market system. Prices are supposed to rise as real demand presses against real supply and vice versa to the downside, providing accurate price signals for increasing or decreasing real production and consumption. If prices are set by futures market speculators based upon chart or technical considerations that will send false signals to the world’s producers and consumers. The real law of supply and demand has been replaced by a paper market version divorced from factors in the real world.

At heart, I’m a commodities guy with a futures market background and I am most interested in silver, not sugar. But the same circumstances that exist and led me to discover the silver price manipulation have spread to other commodities on which futures trading occurs. I’ve singled out sugar futures trading because the facts are so similar. I’m not complaining about the price level of sugar (or silver for that matter), I’m complaining about how prices are set. Just like the tail shouldn’t wag the dog, futures market speculators shouldn’t dictate prices to real world producers and consumers. It should be the other way around.

Most at fault here are the regulators and the exchanges. Just like upper management at Wells Fargo, the commodity regulators and exchanges are supposed to be the adults making sure everything is on the up and up. But just as Wells Fargo management failed miserably, the CFTC and the CME Group have failed miserably in regulating silver, gold, copper and crude oil. To the failure list we can now add ICE and sugar trading. It took years and outside influence (local newspaper stories) to crack open the Wells Fargo scandal, but when it was opened, it was hard to believe it could have continued for as long as it did. This commodity pricing scandal has been going on for far longer than the indiscretions at Wells Fargo, but may be close to being cracked open.

This absolute must read commentary by Ted was posted in the clear on the silverseek.com Internet site at 9:41 a.m. Denver time on Friday morning — and another link to it is here.

Secret Alpine Gold Vaults Are the New Swiss Bank Accounts

Deep in the Swiss Alps, next to an old airstrip suitable for landing Gulfstream and Falcon jets, is a vast bunker that holds what may be one of the world’s largest stashes of gold. The entrance, protected by a guard in a bulletproof vest, is a small metal door set into a granite mountain face at the end of a narrow country lane. Behind two farther doors sits a 3.5-ton metal portal that opens only after a code is entered and an iris scan and a facial-recognition screen are performed. A maze of tunnels once used by Swiss armed forces lies within.

The owner of this gold vault wants to remain anonymous for fear of compromising security, and he worries that even disclosing the name of his company might lead thieves his way. He’s quick to dismiss questions about how carefully he vets clients but says many who come to him looking for a safe haven for their assets don’t pass his sniff test. “For every client we take, we turn one or two away,” he says. “We don’t want problems.”

Demand for gold storage has risen since the 2008 financial crisis. Many of the wealthy see owning gold as a hedge against the insecurity of banks and a reasonable investment at a time when markets are volatile and bank accounts and low-risk bonds pay almost no yield. It may also be a way to avoid the increasing scrutiny of tax authorities. In high-profile cases, U.S., French, and German prosecutors have gone after citizens of those countries with undeclared Swiss bank accounts.

Swiss storage operations such as these don’t have the same obligation that Swiss banks do to report suspicious transactions to federal regulators. Americans aren’t required under the U.S. Foreign Account Tax Compliance Act to declare gold stored outside financial institutions.

This very interesting Bloomberg article put in an appearance on their website at 1:00 a.m. MDT on Friday morning — and it’s the final contribution of the day from Patrik Ekdahl — and I thank him on your behalf.  Another link to this story is here.

India’s gold demand likely to fall to 750-800 tonnes in 2016 on high price

India’s gold demand is likely to fall to around 750-800 tonnes in 2016, as against 860 tonnes last year, mainly due to sharp rise in prices and jewellers’ strike following new regulations, World Gold Council has said.

In the first half of this year, gold demand fell to 248 tonnes. We think that demand will be better in the second half on the back of good monsoon,” WGC India MD Somasundaram PR told PTI on the sidelines of an Assocham event.

In August, WGC had reported that the country’s gold demand fell by 30 per cent to 247.4 tonnes during the first six months of 2016 from 351.5 tonnes in the year-ago period.Asked about the reasons for fall in demand, Somasundaram said: “Prices have risen sharply this year. Jewellers strike because of imposition of excise duty and pan card complexities are some other factors for the likely decline in demand“.

This gold-related news item appeared on the firstpost.com Internet site at 6:35 p.m. IST on their Thursday evening — and I plucked this story off the Sharp Pixley website late last night Denver time.  Another link to it is here.


The roses are still in bloom around here, but like all plant life at this latitude, are waiting for the first frost of the season, which is really late this year.  I spotted these two flies resting on a rose petal in the cool morning air — and despite my close approach, they never moved.  The ‘click/double click to enlarge‘ feature helps with both shots. 161001-2016-09-29-2



Today’s pop ‘blast from the past’ comes from a U.S. rock band that was by no means a one-hit wonder.  But, having said that, their most wildly popular tune, which was picked off their 1976 album Leftoverture, has sort of eclipsed everything that came before, or after.  I have to include it as of the Top 10 rock numbers of all time.  I’ve posted it before, but it’s been a while.  The link is here.

Today’s classical ‘blast from the past’ dates from around 1761-65.  It’s Haydn’s Cello Concerto No. 1 in C Major.  The work was presumed lost until 1961, when musicologist Oldřich Pulkert discovered a copy of the score at the Prague National Museum. Though some doubts have been raised about the authenticity of the work, most experts believe that Haydn did compose this concerto.

Like Mozart’s Requiem, who composed it no longer matters, as audiences the world over love both works anyway.  Here’s the incomparable Mstislav Rostropovich, considered by many as the greatest cellist that the 20th century ever produced, doing the honours with The Academy.  The link is here.

It was a pretty wild trading day during the COMEX session on Friday — and it should have been obvious to anyone with two synapse to rub together that JPMorgan et al were there with the hammer to drive the rallies in all four precious metals into the dirt.

This was particularly the case with silver, as it rallied well above its 50-day moving average before getting driven back to unchanged.  To a lesser extent, the same thing happened in gold, but the 50-day moving average was not involved.

All the price action yesterday certainly included the Managed Money traders on the long side — and the commercial traders on the other.  Once their respective prices ran up, or were allowed to run up, ‘da boyz’ and their HFT buddies rang the cash register for fun, profit and price management purposes once they’d spun their algos.  It was, as Ted Butler said, the powers-that-be running their ‘scam within a scam‘ on a very short-term basis — “day trading the 50-day moving averages” as he so aptly put it.

I’m sure he’ll have further comment on this, plus some dollar amounts to attach to these paper moves yesterday when his weekly review comes out later this afternoon.

Since this is my Saturday column, I’m including the 6-month charts for the Big 6+1 commodities that JPMorgan et al have an interest in.  That also includes the grains — and sugar — but I can’t post the charts for everything.161001-6-month-gold


Besides the fact that world is in a hell of mess on all fronts — economically, politically and financially, there isn’t much new to report.  The rumours that Deutsche Bank has settled with the U.S. Department of Justice is beside the point, as the bank is basically done for anyway, as the bank run on it has started already — and will only get worse as time passes.  It’s too big to fail — and too big to bail.  All we can do is stand back and watch what happens going forward.  If you didn’t read Doug Noland’s take on it in the Critical Reads section, now is a good time to make amends.

But it’s the situation in Syria that poses the gravest danger at the moment — and if the sociopaths and psychopaths at The Pentagon get their way, the consequences are unimaginable.

The inclusion of the yuan in the basket of currencies that determines the value of the IMF’s Special Drawing Rights — the world new currency — passed into the history books without a murmur yesterday — and with the IMF’s meeting in Washington next Friday, it only remains to be see how soon they start running the electronic SDR printing presses — and in what amounts.

My opinion, for what that’s worth, is that the process will begin soon — and in prodigious quantities as well.  We’ll see.

But, for the moment — and with Friday’s price action in the precious metals being a case in point, it doesn’t appear that JPMorgan et al are about to remove their iron grip from their respective prices.  However, with the amount of gold and silver being delivered on the COMEX this year — and earlier, it’s obvious [at least to me] that much higher prices are in our future.  But as to when, I’m as clueless as anyone else.

But still hanging over the precious metals are these grotesque and obscene short positions — and until that is resolved with a down-side engineered price declines of Biblical proportions in all four, or until some out-of-left-field black swan event blows their respective prices sky high and ‘da boyz’ get over run…things will remain, generally, as they are right now.

I know that’s no consolation, but that’s all I can see for the moment.

And on that cherry note, I’m done for the day — and the week.

Enjoy what’s left of your weekend — and I’ll see you here on Tuesday.