More Deposits in GLD and SLV

15 October 2016 — Saturday


Almost from the open of trading in New York on Thursday evening, the gold price began to chop quietly lower.  The bids got pulled and the algos spun around 8 a.m. EDT — and the low tick of the day was set at 8:30 a.m. in New York, which was ten minutes after the COMEX open.  It rallied from there, with the New York high coming right at the London p.m. gold fix.  From there it continued to chop broadly lower for the rest of the Friday session.

The high and low ticks were recorded by the CME Group as $1,260.70 and $1,246.90 in the December contract.

Gold was closed at $1,250.50 spot, down $7.30 from Thursday’s close.  Net volume was pretty decent at just over 149,000 contracts.  And except for the spike low tick, gold traded in a very tight price range yesterday, so I shan’t bother with the 5-minute gold tick chart, even though Brad sent it to me.161015gold

Silver sold off until shortly after 11 a.m. China Standard Time on their Friday morning — and began to rally a bit around 1:30 p.m. over there.  It’s high tick in London came at the 10:30 a.m. BST morning gold fix — and it sold off quietly until 1 p.m. in London/8 a.m. in New York — and at that juncture, ‘da boyz’ gave it the once over as well.  Like gold, it then rallied to its New York high tick at the London p.m. gold fix — and it followed the same price path as gold after that as well.

The low and high ticks in this precious metal were reported as $17.60 and $17.315 in the December contract

Silver finished the Friday session in New York at $17.38 spot, down 8.5 cents on the day.  Net volume was quite heavy at just under 48,000 contracts and, for the same reason as gold, I won’t bother posting the 5-minute tick chart for silver.161015silver

Platinum was a mini version of the gold and silver charts, complete with the 8:30 a.m. EDT low tick — and doesn’t require any further embellishment from me.  This precious metal closed down a dollar at $933 spot.161015platinum

Palladium traded a dollar or two lower for most of the Far East and Zurich trading sessions on Friday and, like the other three precious metals, got its bell rung starting just before 8 a.m. in New York, which was 2 p.m. in Zurich.  Also like the other three, it rallied until the London p.m. gold fix, which is 10 a.m. EDT on the chart below — and it got sold off into the Zurich close.  Once that event was over, palladium began to rally immediately.  The price appeared to have been capped about fifteen minutes after the COMEX close — and it sold off a small handful of dollars after that.  Palladium finished the Friday session at $645 spot, up 7 bucks from Thursday.161015palladium

The dollar index closed very late on Thursday afternoon in New York at 97.55 — and began to head higher almost the moment that trading began in New York on Thursday evening.  It made it up to the 97.95 mark by around 8:45 a.m. BST in London.  It then chopped sideways until a rally began at the London p.m. gold fix, which was 10 a.m. in New York.  It rallied until noon, before falling back to ‘retest’ its afternoon gold fix low.  At that point it seemed that ‘gentle hands’ appeared — and ramped the index up to its 98.12 high at 4 p.m. yesterday afternoon.  It dipped a bit from there, finishing the day at 98.08 — and up 53 basis points from its Thursday close, gaining back all of Thursday’s loses, plus a bit more.161015intraday-gif

Here’s the 3-year U.S. dollar index chart — and you can read into it whatever you wish.161015-3-year-usd

The gold stocks gapped down a bit at the open, rallied to their respective highs at gold’s New York high, which was at the London p.m. gold fix.  They were sold back down into negative territory almost immediately — and continued lower until noon EDT.  From there the flopped and chopped into the close — finishing the Friday session almost on their low ticks of the day.  The HUI closed down 2.29 percent.161015hui

As you can tell at a glance, the silver equities followed an identical price path — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 1.75 percent.  Click to enlarge if necessary.161015silver-7

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.161015weekly

And the chart below shows the month-to-date changes as of Friday’s close.161015month-to-date

And below are the year-to-date changes as of the close of trading yesterday.161015year-to-date

The CME Daily Delivery Report showed that 530 gold and 1 silver contract were posted for delivery within the COMEX-approved depositories on Tuesday.  In gold, the only short/issuer was Macquarie Futures out of its own account.  There were eight long/stoppers in total — and the only one that mattered was JPMorgan as they stopped 482 contracts for their client account, plus 1 for their own account.  The ‘also ran’ of the bunch was Goldman Sachs with 20 stopped/received for its client account.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Friday trading session showed that gold open interest in October rose another big bunch, as 292 more contracts were added, leaving 661 still around. And since Thursday’s Daily Delivery Report showed that zero gold contracts were posted for delivery on Monday, it’s obvious that a net 292 gold contracts were added.  In silver, October o.i. rose again as well, as 26 more contracts were added.  Thursday’s Daily Delivery Report showed that 2 silver contracts were posted for delivery on Monday, so that means that another 2+26=28 silver contracts were added to the October delivery month.

It was another day of surprises in GLD and SLV, as both saw metal deposited.  An authorized participant added a very chunky 123,986 troy ounces of gold to GLD — and in SLV an a.p. added 1,138,906 troy ounces of silver.

This is amazing to see, as only the deepest of pockets and strongest of hands would be plowing this kind of bread into the precious metals as they ‘buy the dips’.  They may know something that we don’t.  This sort of buying activity bears watching, as something appears to be up.  But as to what, and when — who knows?  Ted says it could be ‘da boyz’ — principally JPMorgan.

There was another sales report from the U.S. Mint yesterday.  They sold 6,000 troy ounces of gold eagles — 1,000 one-ounce 24K gold buffaloes — and 150,000 silver eagles.

Month-to-date the mint has sold 65,500 troy ounces of gold eagles — 12,000 one-ounce 24K gold buffaloes — and 2,100,000 silver eagles.  The October sales month is officially half over at noon on Monday, so I’ll wait until next Tuesday’s column before commenting further on mint sales, but will point out that for the whole month of September, only 1,675,000 silver eagles were sold — and in August it was 1,280,000.

I’ll be very interested in what silver analyst Ted Butler has to say about “all of the above” in his weekly review due out this afternoon.

There was no ‘in’ movement in gold over at the COMEX-approved depositories on Thursday, but 43,400 troy ounces were shipped out — all of it from Brink’s, Inc.  A link to that activity is here.

It was pretty busy in silver once again, as 420,389 troy ounces were received — and 821,470 troy ounces were shipped out the door for parts unknown.  The ‘in’ activity was at Delaware — and of the ‘out’ activity 642,594 troy ounces were shipped out of HSBC USA, with the rest coming out of Brink’s, Inc.  The link to that action is here.

It was pretty busy over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday, as 1,237 were received — and 5,107 kilobars were shipped out.  All of the action was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.

The numbers in Friday’s Commitment of Traders Report were almost right on Ted’s estimations of what they would be — and you can read what he had to say in The Wrap section of Friday’s column if you so wish.

In silver, the Commercial net short position declined by 13,261 contracts, or 66.3 million troy ounces of paper silver.  They accomplished this by purchasing 3,289 long contracts, plus they covered 9,972 short contracts — and the sum of those two numbers is the change for the reporting week.

Ted said that the Big 4 covered a huge 5,300 short contracts — and the ‘5 through 8’ traders reduced their short position by about 2,000 contracts.  The raptors, the commercial traders other than the Big 8, added around 6,000 contracts to their already impressive long position.  Ted now pegs JPMorgan’s short position at 23,000 contracts, a drop of 5,000 contracts from last week — and almost all of the decline in the ‘Big 4’ in this week’s COT Report.

The Commercial net short position in silver now sits at 388.2 million troy ounces, which is still in nosebleed territory when compared to the December 2015 lows, but a vast improvement from the 500+ million troy ounce short position that existed a bit over two weeks ago.

Under the hood in the Disaggregated COT Report, the changes in the Managed Money were even more impressive, as they dumped longs and went short to the tune of 18,961 contracts, which was quite a bit more than the 13,261 contract change in the Commercial net short position.  The difference between those two numbers had to be divided up between the other two categories of traders in the Disaggregated Report — the ‘Other Reportables’ and the ‘Nonreportable’/small trader category.  Just looking at these numbers is all the proof you need that the price tango between the Commercial traders and the Managed Money traders is what sets the silver price.

Here’s the 3-year COT chart for silver, so you can see things in somewhat more detail, as the 9-year chart I usually post is kind of crowded.161015cot-silver  Click to enlarge.

In gold, the Commercial net short position declined/improved by 50,043 contracts, or 5.00 million troy ounces.  They arrived at this number by purchasing 498 long contracts, but they also covered an eye-watering 49,545 short contracts, courtesy of the Managed Money traders who were pitching long contracts with abandon.  The sum of those two numbers is the change for the reporting week.

Ted says that the Big 4 covered a whopping 30,900 short contracts, the ‘5 through 8’ large traders reduced their short position by about 5,600 contracts — and Ted’s raptors reduced their short position by around 13,500 contracts.

The Commercial net short position in gold is now down to 22.12 million troy ounces — and, like silver, still miles from its December 2015 low.

Under the hood in the Disaggregated Report, the Managed Money traders accounted for all the changes in the Commercial net short position, plus a bit more.  They dumped 41,732 long contracts, which were eagerly purchased by the Commercial traders, plus they added 9,591 contracts to their short positions, which the Commercials were happy to take the long side of.  The total of those two numbers, which is 51,323 contracts, was the change for the reporting week.

The difference between the Commercial net short position — 50,043 contract — and the Managed Money traders — 51,323 contract — is only 1,280 contracts.  That tiny difference was made up by the thousands of traders in the other two categories of the Disaggregated Report.

This shows, once again — and in spades — that as far as price is concerned, it is entirely controlled by the tango between JPMorgan et al on one side — and the Managed Money traders on the other.  Nothing else matters!  And why other so-called precious metal analysts can’t see this, is beyond both Ted and myself.  Any price analysis of all the commodities infected by Ted’s “silver disease” that doesn’t discuss this fact, is not worth reading — and should be avoided like the plague.

Here’s the COT chart for gold — and I’m posting the 3-year chart for the same reason as I posted the 3-year chart in silver above.  Click to enlarge.161015cot-gold

Ted was very happy to see these big declines in not only the total Commercial net short positions in both gold and silver in this week’s COT Report, but also in the big declines in the Big 4 category.  As he’s stated over the years, it’s what the big boys do that matter — and when you see them start covering their short positions aggressively like they’ve been doing during the last two weeks [JPMorgan’s short position in silver down 10,000 contracts in that period] it’s another sign that they end could be nigh.  We’ll see.

I’ll have more comments about this week’s COT Report in The Wrap.

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.161015days-to-cover

For the second week in a row — and for the first time in more than six months — we’ve moved further away from the ‘obscene’ and ‘grotesque’s situations that has existed in the COT Reports.  Now they’re just plain scary!  For the current reporting week, the Big 4 are short 135 days [4.5 months] of world silver production—and the ‘5 through 8’ traders are short an additional 58 days of world silver production—for a total of 193 days, which is 6 months and change of world silver production, or 469 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 388.2 million troy ounces.  So the Big 8 hold a short position larger than the Commercial net position—and by a whopping 81 million troy ounces.

And if that isn’t bad enough, the Big 8 are short 50.0 percent of the entire open interest in silver in the COMEX futures market.  And if you subtract out the market-neutral spread trades, it’s a reasonable assumption the Big 8 are short just under 55 percent of the total open interest in silver.  In gold it’s 41.6 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 83 days of world silver production between the two of them—and that 83 days represents around 62 percent 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 26 days of world silver production apiece.

And based on Ted’s estimate of JPMorgan’s short position of 23,000 contracts, JPMorgan is short around 47 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 56 days of world gold production, down from 67 last week — and the ‘5 through 8’ another 18 days of world production [down from 20 days last week], for a total of 74 days.  Based on these numbers, the Big 4 in gold hold about 76 percent of the total short position held by the Big 8 — and that’s off the record high, but only by a hair.  How’s that for a concentrated short position within a concentrated short position?

And here’s another set of data points for you to consider.  The “concentrated short positions within a concentrated short position” in silver, platinum and palladium held by the Big 4 are 70, 68 and 70 percent respectively of the short positions held by the Big 8.  And despite the improvements in the Commercial net short positions in all four precious metals during the reporting week just past, these “concentrated short positions within a concentrated short position” have barely changed.

I have a decent number of stories for you today, including a few that I’ve been saving for my Saturday column for length and/or content reasons.  I hope you have the time in what’s left of your weekend to read/watch/listen to the ones that interest you the most.


Ron Paul Interviews Jim Grant

What have the central bankers and the governments they serve done to our money? Legendary forecaster and publisher of Grant’s Interest Rate Observer, Jim Grant, joins us to discuss the bankers’ war on the rest of us.

This 20:32 minute video interview was posted on the Internet site  on Thursday.  It’s a Skype interview — and the audio from Jim leaves a lot to be desired in spots.  But if you value Jim’s opinion, it’s worth wading through.  I thank Jim Gullo for sending it to us.

Flash Crash trader Navinder Sarao loses U.S. extradition appeal

The London trader accused of spoofing the U.S. financial markets will be extradited to stand trial in the States after losing his final appeal.

Navinder Sarao, a 37-year-old from Hounslow, has been fighting the U.S. authorities’ bid to extradite him since he was arrested at his home in April 2015.

He has been charged with 22 offences that come with a maximum sentence of 380 years in total. His trading strategies, run from his bedroom in his parents’ home, generated $40m (£32m) in profits, prosecutors allege.

The U.S. has accused him of placing bogus bids into the Chicago Mercantile Exchange’s market for S&P futures contracts over a four-year period, making offers that he never intended to be filled in order to manipulate the price in the market.

The charges cover the day of the Flash Crash in 2010, when the S&P derivatives market destabilised, triggering a brief $1 trillion plunge in the stock markets, before prices abruptly recovered. The precise cause of the crash has been disputed.

This news item appeared on the Internet site at 1:51 p.m. BST on their Friday afternoon, which was 8:51 a.m. in New York — EDT plus 5 hours.  Roy Stephens, who sent us this story, had this to say in his covering e-mail…”As the Mark Knopfler song goes, “shoot the monkey, but let the organ grinder go”.”  Precisely, dear reader!  Another link to this story is here.

HP Plans Up to 4,000 Job Cuts Over Three Years

HP Inc. plans to cut 3,000 to 4,000 jobs over the next three years to help bring costs in line with slumping demand in the market for personal computers and printers.

The company will eliminate positions across the board, Chief Executive Officer Dion Weisler said on Thursday. The comments came as HP held its analyst meeting in New York. The reductions could include about 1,000 jobs being outsourced if the number of positions edges close to 4,000, Chief Financial Officer Cathie Lesjak said.

Weisler is searching for additional ways to drive profitability after his PC company gained independence last year from Hewlett Packard Enterprise, which sells corporate tech gear. Earlier this year, Weisler said HP would need to accelerate a plan announced in 2015 to eliminate about 3,000 positions over three years. Instead, those reductions are to be completed this fiscal year. HP has about 50,000 employees now.

As technology improves and as we become a faster, nimbler company, you are always looking to become more and more efficient,” Weisler said in an interview. “Efficiency wins the day. And when I think about the markets that we’re in, what’s important is that we remember to stay focused on the reinvention, the innovation that we’re driving.

This Bloomberg story was posted on their website at 4:27 p.m. EDT on Thursday afternoon — and was updated about an hour later.  I thank Brad Robertson for sending it our way — and he in turn picked up from Zero Hedge.  Another link to this article is here.

Leaked E-mails Reveals Clinton Campaign Plotted Supreme Court Threat Over Obamacare

Remember back in 2012 when the Supreme Court narrowly upheld the Obamacare mandate with a 5-4 decision but only after Judge Roberts, a Bush appointee, seemingly parted with his conservative counterparts on the bench to effectively, single-handedly preserve perhaps the most destructive piece of legislation in American history (if not, we wrote about it here)?  Many people were shocked by Judge Roberts’ decision and subsequently alleged that it was driven more by politics than his interpretation of the Constitution.

Turns out those people were proven right today as a new Podesta e-mail confirms that the Obama administration applied political pressure on Roberts to sway his decision:  it was pretty critical that the President threw the gauntlet down last time on the Court…that was vital to scaring Roberts off.

While it’s fairly disturbing that the Clinton team would flippantly admit such things, what’s even worse is that they plotted to use Obama’s same strategy of applying political pressure on the Supreme Court in 2015 to overturn “King vs. Burwell” which also threatened Obamacare’s future.

The email below from Neera Tanden, clearly shows Clinton staffers colluding with the President of the Center for American Progress on a scheme to apply political pressure on the Supreme Court to overturn the challenge.

Of course, the Supreme Court ultimately ruled in favor of the Obama administration with Justice Roberts writing the majority opinion.  Meanwhile, the late Justice Scalia wrote the dissenting opinion in which he said the following:

Words no longer have meaning if an Exchange that is not established by a State is “established by the State. It is hard to come up with a clearer way to limit tax credits to state Exchanges than to use the words “established by the State.” And it is hard to come up with a reason to include the words “by the State” other than the purpose of limiting credits to state Exchanges.

In hindsight, aren’t we all so lucky that Justice Roberts sold his soul to uphold such an amazing piece of legislation?  For his efforts, we’ve all received the benefits of worse healthcare coverage for twice the price.

This amazing Zero Hedge piece contains the e-mail evidence of the political pressure applied — and by whom.  It was posted on their Internet site at 5:30 a.m. on Friday morning EDT — and I thank ‘aurora’ for passing it around.  Another link to this ZH story is here.

Podesta E-mailed About an Assassination Three Days Before Supreme Court Justice Scalia’s Suspicious Death

True Pundit personnel, who have served in varying intelligence capacities and agencies for the United States, were floored this morning when combing the Wikileaks database of John Podesta emails.

Podesta, Hillary Clinton’s campaign chairman, in a Feb. 9, 2016 email makes reference to an assassination. Using the term “wet work,” Podesta sent a cryptic e-mail to Democratic strategist and heavyweight consultant Steve Elmendorf. The term wet work is an intelligence slang term with Russian roots. Defined it means to assassinate a public figure, diplomat or someone of political note.

Elmendorf replied to Podesta’s mysterious reference:

I am all in Sounds like it will be a bad nite , we all need to buckle up and double down.”

We do not want to go down the conspiracy rabbit hole here based on one or two comments. However, Podesta’s e-mail was sent on a Tuesday.  By Friday, Associate Justice of the Supreme Court Antonin Scalia was found dead at a remote Texas resort. To say Scalia’s death was suspicious is putting it mildly.

Wow!  This must read news item put in an appearance on the Internet site on Thursday — and I thank I thank John Jeffcoat for bringing it to my attention — and now to yours.  Another link to this must read article is here.

Doug Casey on the Self-Identified Elite

Mark Twain said, “If you don’t read the papers you’re uninformed. If you do read them, you’re misinformed.”

That’s why I want to draw your attention to a recent article called “The Isolationist Temptation,” in The Wall Street Journal, written by Richard Haass, the president of the Council on Foreign Relations.

The piece wasn’t worth reading—except that it offers some real insight into what the “elite” are thinking. The CFR is one of about a dozen groups, like Bilderberg, Bohemian Grove, and Davos, where the self-identified elite gather.

These groups don’t have political power, per se. But their members are members of governments, large corporations, universities, the military, and the media. They all went to the same schools, belong to the same clubs, socialize together and, most important, share the same worldview. What might that be? They believe in the State—not the market—as the best way to organize the world.

Believe it or not (I still don’t…) I was recently invited to one of these conclaves. Probably by mistake. I don’t expect to be a fox in the hen house, but more like a skeleton at a feast. I’ll tell you all about it next month…

This commentary by Doug easily falls into the absolute must read category — and it was posted on the Internet site yesterday.  Another link to it is here.

Carney: Bank of England Will Tolerate Higher Inflation for the Sake of Growth

Mr. Carney told an audience in Nottingham that the current environment of low inflation was “going to change” with the drop in the value of the pound likely to push up prices across the economy.

He said food prices were likely to be affected first, signalling that the situation was “going to get difficult” for those on the lowest incomes as the United Kingdom moves “from no inflation to some inflation.”

Speaking later in Birmingham, Mr. Carney defended the bank’s independence, insisting that policymakers would not “take instruction” from politicians on how to do their jobs.

The objectives are what are set by the politicians, the policies are done by technocrats,” he said. “We are not going to take instruction on our policies from the political side.

This news item showed up on the The Telegraph‘s website yesterday sometime — and it’s posted in the clear in this GATA release.  Chris Powell has headlined it “Bank of England warns U.K.’s elected officials that it runs the country” — and that pretty much sums it up if you read the bolded paragraph above this one.  Another link to this article is here.

The pound sterling: How not to manage a currency — Alasdair Macleod

Make no mistake, sterling’s collapse is a very serious development, and has serious consequences for sterling interest rates.

While it is becoming apparent that interest rates are going to have to rise possibly for all currencies on a one-year view, sterling’s problems are the consequence of bad judgement, and perhaps intellectual arrogance on the part of the Bank of England’s Monetary Policy Committee. The MPC in turn is not and cannot be independent from the influence of Mark Carney, the Bank’s Governor, who made the expensive error of intervening in the Remain campaign.

Many commentators are saying that sterling was over-valued, and the fall will stimulate exports. But value is wholly subjective, and not formulaic, as the ivory-tower economists would have us believe. The idea of stimulating exports through lower currency rates overlooks the depressing effect of the transfer of wealth it triggers from ninety per cent plus of the population, in favour of foreigners and owners of export businesses. That is the point about stagflation.

Do not forget the bank’s stated objective, its mission statement, which is on the front page of its website. It is “Promoting the good of the people by maintaining monetary and financial stability”. Monetary stability is further defined by the Bank elsewhere as “stable prices and confidence in the currency”.

This longish commentary by Alasdair put in an appearance on the Internet site on Thursday — and for length reasons had to wait for today’s column.  I found it embedded in a GATA release — and another link to it is here.  I must admit that I haven’t had the time to read it yet.

I think the world has reached a dangerous point,” says Gorbachev — John Batchelor interviews Stephen F. Cohen

Although the podcast headlines were outlined at the beginning, as usual by Batchelor, Cohen uncharacteristically usurped the programming with his concerns that the NCW (New Cold War) has become much worse. He returns to an earlier theme where he states that war mongering against Russia is now the uniform expression without dissent in Washington politics and in the MSM of the USA, and the break down of all cooperative ventures between the two countries, all past agreements, understandings, cultural exchanges, educational exchanges and, (probably most important) the negotiations over nuclear weapons are now defunct. The new subject for Cohen is how bad things have gotten in the USA and Russia since the last week. He then lists how the accusations against Russian actions in Syria and vilification of  Putin has reached new heights, and that most of the Putin’s efforts have been in reaction to American hostilities. Cohen considers Americans attitudes both stupid and that the administration and media are living in the past, in the 1990’s under Yeltsin – but “ Putin is no Yeltsin”. Cohen maintains that it is up to the party that is to blame for this NCW to stop and examine just what is wrong with its policy or we will have a tragedy. And so far we see no sign of this happening.

In part two Cohen discusses signs in Moscow and Washington that there are preparations for war. And of course last week’s tumultuous fall out over the “mistaken” U.S. forces bombing Assad and the new Russian threats for a no-fly zone were new dangerous declines. This was followed by Kerry’s hypocritical accusation about charging Russia with war crimes for doing what both countries were supposed to do under their cooperative action against ISIS in Aleppo. I will point out that none of this hypocrisy was discussed in the Canadian press, or CBC – nor was the U.S. threat of dropping diplomatic relations with Russia, nor the Russian threat to declare what amounts to a no-fly zone if there were more American “bombing mistakes”. The very active censorship is perniciously present in Canada too, with very similar escalations in ugly rhetoric. The slippery slope to war just got steeper.

The war drums are uniform” Batchelor quips in part three and they are present in the USA and Russia. Cohen then compares how the probability of war is THE most important topic for Russians whereas in the USA (Canada, and to some extent Europe) this “existential question of our time” is hardly discussed in the public realm. Russians now know that war may be coming. The Western public does not seem to have a clue – at least Washington and the MSM does not seem to want the discussion to happen. On a personal note I talked to several Canadians yesterday about the increased war risks (as listed in paragraph two) and found that younger, seemingly sophisticated Millenials asked had heard nothing about it, and one thought censorship was “about the media not wanting to scare the public”. One couple of my generation, who were news watchers, had also heard nothing and were very alarmed with the possibility of war with Russia. None of the younger set was at all alarmed about censorship in our media nor was there any alarm about anything else mentioned to them.

This 40-minute audio interview with Stephen F. Cohen was posted on the Internet site on Tuesday and, as always, the big THANK YOU goes to Larry Galearis for providing the link, plus the above executive summary.  Another link to this interview is here.  It’s a must listen for any serious student of the New Great Game.

The Eurasian Century is Now Unstoppable — F. William Engdahl

I recently returned from a fascinating two week speaking tour in China. The occasion was the international premier of my newest book, One Belt, One Road–China and the New Eurasian Century.

In the course of my visit I was invited by China’s Northwest University in Xi’an to give a lecture and seminar on the present global political and economic situation in the context of China’s New Economic Silk Road as the One Belt, One Road project is often called.

What I’ve seen in my many visits to China, and have studied about the entirety of this enormously impressive international infrastructure project convinces me that a Eurasian Century at this point is unstoppable.

The idiotic wars of the Washington war-hawks and their military industry–in Syria, in Ukraine, Libya, Iraq and now the South China Sea provocations against China–are not going to stop what is now clearly the most impressive and economically altering project in more than a century.

The term “American Century” was triumphantly proclaimed in a famous editorial in Life magazine in 1941 in the early phase of World War II, before the United States had even entered the war, to describe the system publisher Henry Luce saw dominating the postwar world after the fall of the rival British Empire.

The American Century has lasted a mere seven decades if we date from the end of the war. Its record has been one of dismal failure on balance. The industrial base of the United States, the predominant leading industrial nation and leading scientific innovator, today is a hollowed, rotted shell with once-booming cities like Detroit or Philadelphia or Los Angeles now burned-out ghettos of unemployed and homeless.

This long commentary by Engdahl appeared on the Internet site on Monday — and is definitely worth reading, especially if you’re a serious student of the New Great Game. This commentary was in my Thursday column — and I mentioned at the time it would be in my Saturday missive as well — and here it is.  I thank U.K. reader Tariq Khan for bringing it to our attention.  Another link to this long essay is here.

Doug Noland: The Perils of a Resurgent China Credit Boom

Global markets were troubled early in the year by fears of a faltering China Bubble – a stock market collapse, destabilizing outflows and a fledgling crisis of confidence. Market recovery owed much to the visibly heavy hand of Beijing frantically plugging holes and spurring a Credit resurgence. Those efforts ensured ongoing China economic expansion that, when coupled with $2.0 TN of QE, supported a short squeeze turned major rally throughout EM and commodities markets. Surging commodities and EM took pressure off troubled sectors, bolstering U.S. and developed market rallies generally. Highly leveraged speculators, commodity producers, companies, countries and continents were granted new leases on life.

The downside of ongoing massive QE and negative rates has of late become a market concern, and with concern comes heightened vulnerability. This ensures keen focus on the other major source of 2016 market support: The Resurgent China Boom. Here as well, the downside of egregious inflationism has become increasingly conspicuous. China’s Credit Bubble is completely out of control – and it’s become deeply systemic. We’re numb to how dangerous circumstances have become.

The banking system continues to balloon uncontrollably, as does so-called “shadow banking.” Reported bank assets have reached $30 TN, having more than tripled since 2008. According to Moody’s, shadow banking has expanded from from 40{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} to 78{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} of GDP – in just the past two years. Contemporary Chinese finance is nothing if not incredibly convoluted.

As the banking system self-destructs, the problematic local government debt situation only worsens. Corporate Credit continues to expand rapidly, in the face on an increasingly hostile pricing and earnings backdrop. Corporate debt has ballooned to $18 TN, or to almost 170{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} of GDP (from Reuters).

Doug’s weekly Credit Bubble Bulletin appeared on his website very early on Saturday morning EDT — and is always a must read for me.  Another link to it is here.

Perth Mint ‘tests out’ Indian gold import excise abuse

The Perth Mint sent an estimated $1 billion worth of gold to India for refining without the apparent consent of its Australian customers, with the West Australian government-owned refiner being dragged into a court case examining the alleged abuse of an Indian excise rebate scheme.

The Weekend Australian can reveal that the Mint arranged for semi-refined gold — or dore — from its mining customers to be sold to a third party for export into India to “test out” an Indian excise scheme. This is despite the mint having earlier complained to the Indian and Australian governments about the “unfairness” of the excise discount.

India in 2013 introduced a scheme that saw the excise charged on gold dore cut by 2 percentage points compared to the excise charged on the refined pure gold produced by the Perth Mint and other international refiners.

The excise discount drove a surge in gold refining activity in India — the world’s second-biggest market for gold — boosting the prospects of the mint’s refining rivals there and prompting several Australian gold miners to consider exporting their dore directly to India.

I’m not sure what to make of this story, as the above four paragraphs are all there is that’s posted in the clear.  The rest of it is behind a subscription wall ‘down under’ at Internet site.  It was posted there on Saturday local time — and I found the above over at the website.

PhD thesis stirs up a $1 billion gold-price trial for global banks

An Australian academic’s discovery of global gold price collusion has sparked a looming U.S. trial in which four of the world’s major banks are being sued for up to $1 billion over claims they rigged the price of the precious metal at the expense of investors over a decade.

Perth-based Andrew Caminschi can be revealed as the academic who unwittingly exposed a scandal during a painstaking study of tens of millions of gold transactions that took him 18 months.

It was needle in the haystack-type stuff,” Associate Professor Caminschi said yesterday of the anomalies he discovered in the data. “But once we found it, it was pretty damning.”

In a key development, a U.S. judge ruled last week that the four banks — Barclays, Bank of Nova Scotia, HSBC and Societe Generale — had a case to answer and that a lawsuit filed by investors would proceed to trial.

Germany’s Deutsche Bank was also accused of manipulation but settled its case in April and has agreed to help the plaintiffs in their claims against the remaining defendants.

This is another gold-related news item from Internet site…this one from Thursday.  It’s posted in the clear in its entirety at the Internet site — and it’s certainly worth reading, especially when combined with the commentary on this same issue by Ross Norman of Sharps Pixley that follows below.  Another link to it is here.

London Fixings: The Case is Laid Bare — Ross Norman

The Australian newspaper reports today on the damning case against the London gold fix following work by one of their leading academics. The research by the PHD mathematician shows quite conclusively that there is a build up of trading activity before and after the London fixings according to his heat map – proving conclusively that price manipulation was evident – Brilliant … nearly.

Actually what the research has discovered is a well known concept which is called clustering – people do it all the time – think of activity around a train station – think of church-goers – think of food markets… even animals do it (for protection) and all quite legitimate. So, no sir, you have not discovered anything other than one of the oldest and best known concepts known to man and beast – and that is the benefits of getting together… and you don’t need a PHD to know that.

Markets in particular do it because during periods in and around an event such as the benchmark you get high levels of liquidity – and high levels of liquidity means you get best price execution for your trade.

Going back to the fix, the argument seems to have overlooked a few other salient points. Clients trading through the fix invariably do not declare their interest before the event – even if they did, they have the option to change or cancel their order if the price is unattractive. I might add that the fixings are primarily a venue for market professionals and not widows and orphans. These are seasoned miners, fellow bankers, central bankers and other professionals who are participating who, like the fixing members, have a high level of market knowledge. It is distinctly not a platform for the retail client. In short, what about the potential for fixers themselves getting stitched up by their clients…

It is no surprise that U.S. courts have seized upon the academic report, prompting a flurry of law suits to be filed in what is clearly looking like a pre-ordained desire for a guilty verdict in search of evidence to support it…

The above five paragraphs are all there is to this opinion piece by Ross that appeared on the Sharps Pixley website on Friday sometime.  It’s certainly a must read as well.

India gold discounts drop to nine-month low on pick up in festive demand

Demand for gold in India, the world’s second-largest consumer, picked up as the festive season began and discounts narrowed, while demand across rest of the Asia continued to improve.

Gold traded within a narrow range throughout the week, after falling nearly 5 percent in the previous week.

Gold discounts in India narrowed to the smallest level in nearly nine months as prices fell during a key Hindu festival Dussehra boosted retail demand.

Dealers were offering gold at $2 an ounce discounts to official domestic prices this week, the narrowest since the week ending on January 23. Last week discounts were $4.

During Dussehra demand was very good. Jewellery shops were crowded after a long time,” said Fatechand Ranka, a jeweller based at Pune in western state of Maharashtra. India celebrated the Dussehra festival on Tuesday.  “At the end of the month we have Diwali festival. If prices remain at the current range, then certainly demand will remain robust even during Diwali.

This gold-related news story, co-filed from Mumbai and Bengaluru, appeared on the Internet site at 1:35 p.m. IST on their Friday afternoon.  I found this on the Sharps Pixley website as well — and another link to it is here.


Today’s photo is of a turtle of some sort on the back of a capybara.161015photo-3



The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.Ernest Hemingway

I received a really interesting e-mail from reader Peter Handley on Wednesday — and this is what he had to say about the link he sent me: “In consideration of your “blast from the past” in your Saturday column, I thought you might appreciate this.  I have tried it — and it worked for me.

When you click on the link — and enter the day, month and year you were born, it plays the #1 hit on that day.  It worked for me, but I was shocked when I heard what the tune was.  Am I that old???  The link is here — and have fun!

Today’s pop ‘blast from the past’ follows a somewhat different route.  The British rock group — and the song — require no introduction whatsoever, but this video shows bass guitarist extraordinaire Constantine Isslamow doing the bass cover to the tune.  If you ever had aspirations of playing guitar in a rock band, this is definitely worth listening to — and watching.  The link is here.  There’s lot more stuff of his in the right sidebar — and if you click on his name in this paragraph, it will take you to his playlist — and it’s huge.  Enjoy!

Today classical ‘blast from the past’ is one I’ve posted before, but it’s been so long, I can’t remember when.  It’s Mozart’s Requiem Mass in D minor, K626 — and the words written about this composition are never ending — and culminated in the 1984 Milos Forman-directed movie “Amadeus” — and if you haven’t seen it, you owe it to you to do so.

This video was recorded in Barcelona in December of 1991 — and John Eliot Gardiner conducts the Monteverdi Choir and the English Baroque Soloists, but nary a word about the orchestra.  It’s wonderful, but I prefer the recording I have.  If you’ve got 50 minutes, it’s certainly worth it — and the link is here.

It was another day where not a lot happened on the surface.  The spike lows in gold and silver didn’t hit new lows for this move down, but certainly did create some volume, so there might have been more Managed Money traders running for the hills…dumping longs and going short…while JPMorgan et al happily took other side of both trades.  Platinum and palladium set new intraday lows on their 8:30 a.m. EDT spike lows, but they did not close at new lows on Friday — and that’s the first time in a while for both precious metals.

Since this is my Saturday column, here are the 6-month charts for the Big 6+1 commodities — and you’ll see that ‘da boyz’ were active in copper for the second day running as well, as it was closed a new low.161015-6-month-gold


So, are we done to the downside?  If you compare the COMEX futures positions of the Commercial and Managed Money traders now to what they were back in late December 2105, the answer is a resounding ‘no’.  All you have to do is look at the COT charts in my discussion on the COT Report to see that.

But, having said that, there’s certainly nothing standing in the way of a very decent counter-trend rally even if the absolute bottom isn’t in.  Of course that will only occur if ‘da boyz’ allow it.

But, as Ted pointed out on the phone yesterday, the Big 4 traders [read JPMorgan] have been covering their short positions in silver and gold at a phenomenal rate during the last two weeks on those engineered price declines — and JPMorgan could hang the rest of the commercial shorts out to dry, if they feel that they’ve covered their short positions enough.

In the last two weeks alone, JPMorgan has reduced its short position in silver from 33,000 to 23,000 contracts, plus what they’ve covered since the Tuesday cut-off for next week’s report.  Combine that with the fact that Ted says that JPMorgan is sitting on a physical silver stash of 500 million plus ounces, they could easily cover the remainder of their short position using part of their physical holdings — and still have about 400 million ounces left.

And in gold, the Big 4 have reduced their short position by a bit over 56,000 contracts in the last two weeks, which is also a huge number — and it’s a pretty good bet that most of that was JPMorgan as well.  But I would guess that they still have a very large short position outstanding in that precious metal.  As for how much physical gold JPMorgan has, it’s really hard to tell.  Their COMEX inventory position at the close of Thursday was around 1.37 million troy ounces.

So where we go from here — whether a counter-trend rally to the upside to relieve the current oversold conditions, or ‘da boyz’ break both metals down hard below their respective 200-day moving averages — is hard to tell at the moment.  But if the latter happens, then as Ted said in his column last Saturday…”look out below“.

I doubt very much that we’ll have to wait much longer for an answer to that.

As far as the rest of what’s happening out there, everything is such a mess from a political, economic, financial and monetary perspective, it’s hard to imagine that a further engineered price decline would last long, if/when it were to occur.

The fact that gold and silver deposits are still continuing in GLD and SLV — along with the fact that there have been no withdrawals worth mentioning from either one in the last two weeks means, as I said earlier, that the strongest of hands and the deepest of pockets are buying these dips with abandon.  And it’s entirely possible, as Ted also mentioned, that these big buyers are none other than the Big 4 traders, led by JPMorgan, buying up all the physical gold and silver they can.

That may also apply to the big jump in U.S. Mint sales this month, as John Q. Public certainly isn’t doing the buying.

It’s a near certainty that the current situation that exists in the precious metals will come to a head before this year is out.  But of the most concern to me will be the other events that might be unfolding at the time that happens — and if you aren’t alarmed by the current state of the world, you should be.  Certainly since the Cuban missile crisis back in the early 1960s, which I remember all too well, these are Planet Earth’s darkest hours.

And on that happy note, I’m done for the day — and the week — and I’ll see you here on Tuesday.


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