Huge Withdrawal From GLD — Monster Deposit in SLV

22 October 2016 — Saturday


Gold traded within a 6 dollar price range all day on Friday — and on very low volume was well, so not much should be read into yesterday’s price action.  Of course the ‘rally’ that did develop shortly after London open got capped and sold off starting just minutes before the equity markets opened in New York.  The New York low came at precisely 12:00 o’clock noon EDT — and then ‘rallied’ into the 1:30 p.m. COMEX close.  It didn’t do much after that.

Even though there wasn’t much happening, it should be obvious that JPMorgan et al were still there riding shotgun over the precious metal market, as none of the price moves in New York trading were accidental.

For about the tenth day in a row, the low and high ticks certainly aren’t worth looking up.  That’s how carefully the price is being managed right now.

Gold finished the Friday session at $1,265.70 spot, up 50 cents on the day.  Net volume was very quiet at just over 84,000 contracts — and roll-over volume out of December was pretty impressive.  The gold price continues to hug its 200-day moving average.161022gold

Here’s the New York Spot Gold [Bid] chart so you can see what the low tick at “precisely 12 o’clock noon EDT” looks like.161022nygold

The silver price pattern on Friday was basically a mini version of the gold chart, so I shan’t spend any time discussing it, except that all the price inflection points were the same as gold’s, but it did manage to rally a hair once the COMEX session was over.

Needless to say, the low and high ticks aren’t worth looking up for this precious metal, either.

Silver was closed up half a cent, closing at $17.50 spot.  Net volume was also pretty quiet at a bit over 31,000 contracts.161022silver

Platinum was also sold lower to the tune of a few dollars in Far East and early Zurich trading, with the low tick set shortly after the COMEX open.  It rallied sharply from there, but the price was capped before it could get into positive territory — and after the afternoon gold fix was in, the price didn’t do much.  Platinum was closed at $931 spot, down 2 bucks on the day.161022platinum

By shortly before 2 p.m. Zurich time, palladium was down 9 dollars — and then, like platinum, got sold down to its low tick shortly before 9 a.m. in New York.  It then rallied until the Zurich close, which as 11:00 a.m. EDT — and ‘da boyz’ knocked it down a bit more as the Friday session wound down.  Palladium finished the day at $622 spot, down 8 bucks from Thursday’s close.161022palladium

The dollar index closed very late on Thursday afternoon in New York at 98.33 — and began to chop higher as soon as trading began at 6 p.m. that evening.  It topped out at the 98.81 mark a few minutes after the COMEX close — and headed lower from there.  The dollar index finished the Friday session at 98.66 — up 33 basis points on the day.  Here’s the 3-year U.S. dollar chart so you can get a longer term view of what’s happening.161022intraday-gif

The gold stocks opened unchanged, but headed lower into the afternoon gold ‘fix’ in London.  They rallied almost back to unchanged by shortly after 11 a.m. EDT, but rolled over once again, with their collective low ticks coming around 12:20 p.m. in New York.  From there they chopped quietly higher — and the HUI closed down only 0.40 percent.161022hui

The silver equities traded in a mostly similar fashion, with the only significant difference being that starting shortly before the 1:30 p.m. COMEX close, they began to chop sideways for the rest of the Friday session.  Nick Laird’s Intraday Silver Sentiment/Silver 7 index closed down 0.72 percent.  Click to enlarge if necessary.161022silver-7

And here are the usual 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.161022weekly

And the chart below shows the month-to-date changes as of Friday’s close.161022month-to-date

And below are the year-to-date changes as of the close of trading yesterday.161022year-to-date

The CME Daily Delivery Report showed that zero gold and 48 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  The sole short/issuer was International F.C. Stone out of its client account — and the only long/stopper worth mentioning was ADM with 37 contracts for its client account as well.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Friday trading session showed that October open interest in gold dropped by 395 contracts, leaving 298 still open.  Thursday’s Daily Delivery Report showed that 618 gold contracts were actually posted for delivery on Monday, so that means that another 618-395=223 gold contracts were added to the October delivery month.  October silver o.i. declined by 7 contracts, leaving 89 left, minus the 48 mentioned in the previous paragraph.  Thursday’s Daily Delivery Report showed that 7 silver contracts were posted for delivery on Monday, so the decline in open interest matches the deliveries for a change — as no contracts were added or subtracted.

After a long string of deposits in GLD, there was a huge withdrawal yesterday, as one or more authorized participants took out a whopping 534,055 troy ounces.  I was fearing a big withdrawal from SLV as well when I checked their website — and was astonished to see that an a.p. had actually added an eye-watering 3,226,594 troy ounces.

Without doubt Ted will have something to say about this in his weekly review later today.

There was a tiny sales report from the U.S. Mint yesterday.  They only reported selling 1,000 one-ounce 24K gold buffaloes — and that was it.

Month-to-date the numbers are far more impressive, as the mint has sold 87,500 troy ounces of gold eagles — 22,000 one-ounce 24K gold buffaloes — and 3,245,000 silver eagles.  There are still 6 business days left in October, so without doubt the month-end numbers will be impressive.

And also without doubt, JPMorgan is back with a vengeance this month as well.

There was a decent amount of gold received over at the COMEX-approved depositories on Thursday.  All of the ‘in’ activity — 66,456.117 troy ounces/2,067 kilobars [SGE kilobar weight of 32.151 troy ounces] — was at Brink’s, Inc. — and 1 kilobar — 32.150 troy ounces [U.K./U.S. weight],  was shipped out of Manfra, Tordella & Brookes, Inc.  The link to that activity is here.

There was one shipping container full of silver delivered over at Canada’s Scotiabank — and that totalled 600,995 troy ounces.  Nothing was shipped out.  The link to that activity is here.

The activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday was pretty decent once again.  They reported receiving 400 of them, but shipped out 2,669.  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 yesterday’s Commitment of Traders Report were a pleasant surprise for a change, as it showed improvements in the Commercial net short positions in both gold and silver, but particularly in gold.

In silver, the Commercial net short position declined by 2,724 contracts, or 13.6 million troy ounces of paper silver.  They arrived at that figure by purchasing 1,597 long contracts — and they decreased their short position by 1,127 contracts.  The sum of those two numbers is the total change for the week.

Ted was unhappy to see that the Big 4 commercial traders actually increased their short position by around 1,000 contracts during the reporting week — and the ‘5 through 8’ traders added about 100 contracts to their short position as well.  It was Ted’s raptors, the commercial traders other than the Big 8, that were benefiting this week, as they added around 3,800 contracts to their already considerable long position.

Ted attributed the entire reporting week increase of 1,000 contracts to JPMorgan — and he pegs their short position at 24,000 COMEX contracts, which is obviously up a thousand from last week’s report.  The Commercial net short position in silver now sits at 374.6 million troy ounces, which is still an ugly number.

Under the hood in the Disaggregated COT Report it was all a Managed Money affair, plus more, as they sold 3,469 long contracts, plus they increased their short position by 1,011 contracts as well, for a total weekly change of 4,480 contracts, which is the sum of those two numbers.  The difference between that number and the Commercial net short position was divided up more or less equally between the traders in the ‘Other Reportables’ and ‘Nonreportable’/small trader category.

Here’s the 9-year COT Report chart for silver — and we’re still miles away from anything that remotely looks like wildly bullish.  Click to enlarge.161022cot-silver

In gold, the commercial net short position improved by a very decent 18,528 contracts, or 1.85 million troy ounces of paper gold.  They accomplished this by adding 3,079 long contracts, plus they covered 15,449 short contracts and, like in silver, the total of those two numbers is the change for the reporting week.

Ted said that the Big 4 only decreased their short position by 6,400 contracts — and I know he was hoping for more than that.  So was I.  The ‘5 through 8’ traders decreased their short position as well — and by around 3,900 contracts.  Ted’s raptors, the commercial traders other than the Big 8, reduced their short positions by about 8,200 contracts.

The Commercial net short position in paper gold is now down to ‘only’ 20.27 million troy ounces.

Under the hood in the Disaggregated COT Report, it was all Managed Money traders once again — and almost to the contract.  They sold 13,025 long contracts, plus they added 4,814 contracts to their respective short positions — with the commercial traders standing there happily taking the other side of those trades.  The total of those two numbers — 17,839 contracts, is the change for the reporting week — and within 700 contracts of the change in the Commercial net short position.

Here’s 9 years worth of COT Reports for gold — and although we’ve come a long way, we’ve still got a long way to go to get back to bullish territory once again.  Click to enlarge.161022cot-gold

One positive thing that Ted Butler did mention in our conversation yesterday was the fact that we are now back at the late May/early June COT commercial net short position lows in both gold and silver — and at that point rallies in both began that added $150 per ounce to the price of the former — and about $4 to the price of the latter.

Will that happen again this time?  Beats me, but it is an interesting data point as we wait for the final resolution to all this.

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.  These are the same Big 4 and ‘5 through 8’ traders discussed in the COT Report.  Click to enlarge.161022days-to-cover

For the third week in a row we’ve moved further away from the ‘obscene’ and ‘grotesque’ situations that has existed in the COT Reports.  I’ve downgraded the situation to ‘just awful’!  For the current reporting week, the Big 4 are short 137 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 195 days, which is 6 and a half months of world silver production, or about 474 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 375.6 million troy ounces.  So the Big 8 hold a short position larger than the Commercial net position to the tune of just under 100 million troy ounces.  How concentrated — and ridiculous is that?

And if that isn’t bad enough, the Big 8 are short 50.1 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 now down to 39.8 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 85 days of world silver production between the two of them—and that 85 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 24,000 contracts, JPMorgan is short around 49 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 54 days of world gold production, down from 56 last week — and the ‘5 through 8’ another 17 days of world production [down from 18 days last week], for a total of 71 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?

The “concentrated short positions within a concentrated short position” in silver, platinum and palladium held by the Big 4 are 70, 68 and 74 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” haven’t changed at all for silver and platinum — and have actually increased from 70 to 74 percent for palladium.

Here’s a chart that Nick Laird passed around early yesterday evening Denver time.  It showed the withdrawals from the Shanghai Gold Exchange for the month of September — and it came to 170.9 tonnes.  Click to enlarge.161022sge

Here are three more charts that arrived in my in-box about two hours after the SGE chart above.  The first shows the monthly gold imports and exports for Switzerland updated with the September data.161022swiss-september  Click to enlarge.

These last two charts shows the countries that Switzerland received gold from — and shipped gold out to during September.  The ‘click to enlarge‘ feature is very useful on all three charts.161022swiss-imports


I don’t have all that many stories for you today — and they include some that I’ve been saving for today’s column for the usual reasons.


U.S. mall investors set to lose billions as retail gloom deepens

The dramatic shift to online shopping that has crushed U.S. department stores in recent years now threatens the investors who a decade ago funded the vast expanse of brick and mortar emporiums that many Americans no longer visit.

Weak September core retail sales, which strip out auto and gasoline sales, provide a window into the pain the holders of mall debt face in coming months as retailers with a physical presence keep discounting to stave off lagging sales.

Some $128 billion of commercial real estate loans – more than one-quarter of which went to finance malls a decade ago – are due to refinance between now and the end of 2017, according to Morningstar Credit Ratings.

Wells Fargo estimates that about $38 billion of these loans were taken out by retailers, bundled into commercial mortgage-backed securities (CMBS) and sold to institutional investors.

Morgan Stanley, Deutsche Bank and other underwriters now reckon about half of all CMBS maturing in 2017 could struggle to get financing on current terms. Commercial mortgage debt often only pays off the interest and the principal must be refinanced.

No surprises here.  Didn’t anybody learn anything from 2007/8?  This Reuters article, filed from New York, appeared on their website at 6:18 a.m. on Friday morning EDT — and it’s the first offering of the day from Richard Saler.  Another link to it is here.

David Rosenberg Calls For a Multi-Trillion, “Helicopter Money” Stimulus Package

With the inherent weakness in U.S. GDP and the rising probability of a recession (two weeks ago Bank of America modeled that the next recession would likely start roughly one year from now), Gluskin Sheff’s David Rosenberg thinks that with monetary options exhausted it will take a fiscal boost in the trillions of dollars to kick-start the economy. These issues were discussed in an extended interview with Real Vision TV, where the chief economist and strategist at Gluskin Sheff proposed some radical policies to engineer the growth needed in nominal income.

His ideas, some of which can be seen here in a clip of the interview, include helicopter money attached to a $2 trillion perpetual bond, massive infrastructure spending and measures to tackle the $1 trillion student debt load that has seriously hamstrung the economy.

“There are some people saying a recession is here right now,” Rosenberg says, “I don’t think that we meet those conditions yet. But people say, well, look. Twelve months in a row of negative year on year industrial production, that’s never happened outside recession, check. We’ve had now going into six quarters of profit contraction, year over year. That’s only happened in the context of a recession, check. I mean, all that is true, but so much of this has been related to the oil shock that we had.

Rosenberg’s problem with monetary policy, now in its 7th year of unorthodox experimentation, is that it has become a weak antidote to structural problems in the economy (even if it is still quite potent at boosting financial assets). Fiscal policy on the other hand, if constructed right, could be the answer due to its very powerful multiplier impact. “I can’t say that I know for sure, but it’s the old Einstein adage about the definition of insanity,” Rosenberg said. “And we’re finding that we’re really– if we’re not hitting the wall on monetary policy, we’re certainly seeing classic economics 101 of the law of diminishing returns.”

In terms of infrastructure spending, he said that one lesson from recent history and the Great Recession is that you’ve got to have the credibility to convince people that this is going to be permanent and not temporary, in terms of the impact on the economy. “So it can’t be transitory. It’s got to be very big. With interest rates as low as they are, there’s certainly the capacity. I mean, you’ve got a lot of governments around the world issuing 50 or 100-year bonds. So this is a once in a lifetime opportunity to borrow money.”

As Richard Saler correctly pointed out in his covering e-mail…”What is the Present Value of a $2.0 trillion 100 year or perpetual bond. Certainly, nothing close to $2.0 trillion.  Comforting that our currency is backed by the Fed.”  Amen to that, dear reader!  This commentary, with a short video clip embedded, was posted on the Zero Hedge website at 10:40 p.m. on Thursday evening EDT — and another link to it is here.

Trump and Clinton share Delaware tax ‘loophole’ address with 285,000 firms

There aren’t many things upon which Hillary Clinton and Donald Trump agree, especially as they court very different Delaware voters ahead of a primary on Tuesday. But the candidates for president share an affinity for the same nondescript 2-storey office building in Wilmington. A building that has become famous for helping tens of thousands of companies avoid hundreds of millions of dollars in tax through the so-called “Delaware loophole”.

The receptionist at 1209 North Orange Street isn’t surprised that a journalist has turned up unannounced on a sunny weekday afternoon.

You know I can’t speak to you,” she says. A yellow post-it note on her computer screen reads “MEDIA: Chuck Miller” with the phone number of the company’s director of corporate communications. Miller can’t answer many questions either, except to say that the company does not advise clients on their tax affairs.

The Guardian is not the first media organisation to turn up at the offices of Corporation Trust Centre, and it’s unlikely to be the last.

This story from The Guardian is from six months ago, but I thought it worth posting under the circumstances.  It appeared on their Internet site back on April 25 — and I thank reader ‘h c’ for pointing it out.  Another link to this article is here.

Politicians Should Not Be Allowed to Run For Public Office — Dennis Miller

What is it about elected office that causes smart people, many with good intentions, to turn into absolute morons? Their decision-making logic is totally focused on reelection instead of doing what is right. Many times their illogical decisions harm the people they are supposed to protect.

Each week I go through a large reading pile looking for ideas to write about. I scrawled “DUMB” across today’s selection.

I recently lambasted Wells Fargo about its corruption. They were fined $185 million for opening fake accounts. The executive who headed the crime unit quickly retired with a $125 million bonus. Their CEO, John Stumpf resigned. Wells Fargo is receiving well-deserved public backlash.

Predictably, opportunistic politicians jump on the bandwagon with some questionable decisions.

Recently USA Today reported “Illinois suspends business with Wells Fargo”.

Illinois Treasurer Michael Frerichs said Monday his office is suspending its annual $30 billion in investment activity with Wells Fargo for at least one year. The office oversees more than $1 trillion in transactions annually, Frerichs says, and Wells Fargo stands to lose “millions of dollars” in investment fees from the action.”

Frerichs’ term expires in 2018.

This commentary by Dennis appeared on his website on Thursday sometime — and another link to it is here.

Rigged Elections Are An American Tradition — Paul Craig Roberts

Do Americans have a memory? I sometimes wonder.

It is an obvious fact that the oligarchic One Percent have anointed Hillary, despite her myriad problems to be President of the US. There are reports that her staff are already moving into their White House offices. This much confidence before the vote does suggest that the skids have been greased.

The current cause célèbre against Trump is his conditional statement that he might not accept the election results if they appear to have been rigged. The presstitutes immediately jumped on him for “discrediting American democracy” and for “breaking American tradition of accepting the people’s will.

What nonsense! Stolen elections are the American tradition. Elections are stolen at every level—state, local, and federal. Chicago Mayor Richard J. Daley’s theft of the Chicago and, thereby, Illinois vote for John F. Kennedy is legendary. The Republican US Supreme Court’s theft of the 2000 presidential election from Al Gore by preventing the Florida vote recount is another legendary example. The discrepancies between exit polls and the vote count of the secretly programmed electronic voting machines that have no paper trails are also legendary.

So what’s the big deal about Trump’s suspicion of election rigging?

This commentary by Paul was posted on his Internet site yesterday — and I thank ‘aurora’ for his first of three contribution of the day.  It’s certainly worth reading — and another link to it is here.

Doug Casey on Why You Shouldn’t Take This Election Seriously

At least on first glance, you’d think things couldn’t get much worse in Canada in general, and Alberta in particular. Commodity prices are all down—some near historic lows in real terms—and Canada is all about commodities.

Then, last year, Canadians elected Justin Trudeau as Prime Minister, who can be counted on to promote absolutely every politically correct Big Government notion that crosses his mind and make the wrong decision at every opportunity. “Bold new programs” are always fun at the beginning. And since the Canadian government is in better shape than that of the U.S., it will be fun squandering whatever is in the piggy bank.

But whatever happens in Canada is a sideshow compared to the main event in the U.S. As you know, I’ve been on record for a year saying that Trump will win. I still think so, despite the fact that every pundit in existence rails against him daily, spewing visceral hate. They call him a racist, which is actually a lie. Racism has become such a hot “no-go” topic that no one even dares discuss what it is—forget about its pros and cons. It will be the subject of a future essay. They call Trump a sexist, which is another lie. I’ll cover sexism in the same article. That will also provide an opportunity to discuss immigration (perhaps more accurately called migration) policy today.

The average middle-class, middle-aged American doesn’t give a damn about racism or sexism, however, because they basically only exist in the imaginations of the Politically Correct. But it doesn’t really matter any more what the average white male American thinks; he’s become the laughing stock of the rest of the world. He’s gone from being the King of the World to a bumbling, overweight, uneducated, bigoted, near-bankrupt parody of himself. What we once thought of as the “average guy” in the 40s, 50s, 60s, 70s, and even the 80s is on his way out. The PCs and the migrants have pretty well transformed the U.S. — and Trump is the desperate “last hurrah” of the old order.

This short commentary by Doug showed up on the Internet site yesterday — and it’s worth reading as well.  Another link to it is here.

Did a Secret Central Banking Cabal Just Turn AGAINST the U.S.?

Quietly — and with little if any attention — foreign Central Banks have begun DUMPING U.S. Debt.

Bear in mind, these SAME Central Banks are currently buying their OWN debt (national and corporate) AT A PACE of nearly $200 BILLION per month!!!

That’s correct, Central Banks are now actively DUMPING U.S. debt and buying their own.

Gold has picked up that something MAJOR is afoot. It’s exploding higher against EVERY major currency.

Below is Gold’s chart prices in $USD, the Japanese Yen, and the Euro. Gold has BROKEN OUT big time in $USD and Euros. It’s about to do the same in Yen.

I posted a story similar to this earlier this week or late last week about foreign central banks dumping U.S. debt by the bucket full, but here’s another one on the same issue.  It’s somewhat ‘sensationalist’ in style, but worth reading anyhow — but beware the informerical at the end.  It put in an appearance on the Zero Hedge website at 11:13 a.m. on Friday afternoon EDT — and I thank ‘aurora’ for passing it around.  Another link to it is here.

Loonie Plunges to Lowest Since March as Canadian Retail Sales Disappoint

The Canadian dollar tumbled to the lowest since March after retail sales unexpectedly dropped in August while inflation accelerated last month at a slower-than-forecast pace.

The loonie is on pace for the biggest weekly decline since May as the data add to concern about Canada’s economy. The slump began Wednesday when Bank of Canada Governor Stephen Poloz said that officials “actively” discussed the possibility of adding more stimulus into the economy.’

So now we know why the BOC considered easing,” said Greg Anderson, global head of foreign-exchange strategy in New York at Bank of Montreal. “Economic growth in the third quarter doesn’t look as good as expected, inflation is below target and it’s unclear where an acceleration would come from.”

The loonie fell 0.8 percent to C$1.3332 per U.S. dollar as of 10:06 a.m. in Toronto, reaching the weakest level since March 16. The Canadian dollar is down 1.5 percent this week, the worst performance among Group-of-10 currencies.

This Bloomberg story appeared on their Internet site at 7:15 a.m. Denver time on Friday morning — and was updated about an hour later.  I thank Roy Stephens for sharing it with us — and another link to it is here.

Tales of the New Cold War: Biden Threatens to Cyber Attack Putin — John Batchelor interviews Stephen F. Cohen

There are a number of conflicting events discussed this week, from Vice President Joe Biden threatening a cyber attack against Russia, a small ceasefire truce effort from Russia in Syria, and significant news from the Ukrainian Civil War. The implied threat from Biden’s public cyber attack statement was taken very seriously in Moscow as a “declaration of war”. Cohen says this is a very serious escalation of tensions and speculates about the motives. And yet there is hardly any discussion about how serious this is in the U.S. media or any statements from the White House. But given the pending meeting between Russia’s Foreign Minister Lavrov and Sec. State, Kerry meeting in Switzerland the target may have been diplomatic. But Cohen asks (I paraphrase): “Why the silence from Obama, and who is actually making decisions in the White House?”

The discussion then moves to Syria where the White House is threatening to charge Putin and others in the Kremlin with war crimes over the Russian bombing of ISIS in Syria. Cohen maintains that this just makes the Kremlin “dig in its heels about Syria”. But these statements go along with Biden’s cyber attack statement, and are seen as extreme – even as top experts agree that proving the source of hacking is impossible. And Cohen goes on to explain “weasel language” in diplomacy. So the situation becomes pretense as a real cause of war.

Batchelor then turns his focus to the disruptive affects of the Syrian conflict on surrounding states including European and hence they turn to this new truce, this “humanitarian pause”. The result was a meeting last Wednesday with Germany’s Merkel, France’s Holland, and Putin. Cohen expected little outcome from this – as the European component have little political clout left.  And Cohen discusses the hypocrisy of Washington and its falsification of events in Syria in supporting the ISIS fighters in order to get regime change. But in spite of this the Russians are prepared to allow a humanitarian corridor, under U.N. observation for civilians and ISIS fighters to leave – even with their weapons. But given the U.S. broke that ceasefire by attacking Assad’s forces the last time, this may be a Russian test to see what Washington does with it – and this writer also thinks that the truce may be a counter to all the propaganda levied against Russia for being complicit in war crimes. Batchelor also brings up some European leaders’ efforts to increase sanctions over Syria. But this is what vassal states do, and it would seem that domestic political considerations for E.U. leaders take second place to the agenda of the Empire of Chaos. This fact is also very worrisome given how opposed many of those citizens are to what their leaders are doing.

The final discussion concerns Ukraine. Could Ukrainian President Poroshenko be in danger of assassination? And the answer is perhaps, but only if he tries to implement the Minsk2 Agreement. Not surprisingly, Kiev has increased its military assaults against the breakaway provinces. But the “Normandy Four” is still meeting in Berlin – Putin has relented and will talk with his European “partners”. The significance of this week’s podcast discussion can be summed up by the indisputable fact that all of Washington’s complaints and actual situational conflicts with Russia are based on unsupported facts and propaganda. It is all artificial, supported by the MSM, and most worrisome, done successfully for its propaganda goals. The question for most of us who pay attention is really whether or not Washington wants a war with Russia? If so, it is probable that few Americans (and Canadians) will see it coming, or understand anything about it.  And that is another way to say that the United States is no longer a democracy. As usual there is much more to hear in the podcast.

This 40-minute audio interview was posted on the Internet site on Tuesday and, as always, had to wait for my Saturday missive.  I thank Ken Hurt for the link, but as always my greatest THANK YOU goes out to reader Larry Galearis for all the effort he put into the above executive summary, which is a must read if you don’t have time to listen to the interview.  Another link to it is here.

President of Russia answered questions from Russian journalists following the BRICS Summit in Goa

Question: Much is being said in the Western media about BRICS going through a rough patch. Since Brazil got a new president, the country has been allegedly thinking whether it needs BRICS. There is little secret about the tension that exists between India and China. In fact, the US has been increasingly proactive regarding India.

You have said on a number of occasions that you view BRICS as an important and viable association. How serious do you think are the challenges, if any, that BRICS face? Will BRICS succeed in overcoming them and what are the development prospects for BRICS in general?

President of Russia Vladimir Putin: Some of our partners are always trying to dig up issues and challenges, no matter what we do. But as we say in Russia, why worry about a speck in your friend’s eye when you have a log in your own.

There are always issues, anywhere and in relations between any countries. Does this mean that countries whose representatives talk about BRICS this way do not have any issues with their closest strategic partners and allies? As a matter of fact, they have plenty of issues.

If there were no problems, they would have signed and ratified the Transatlantic Trade and Investment Partnership (TTIP) a long time ago, and would have resolved many other issues. However, the issues they face are still there, and they are real. So there is nothing special about having problems. This is how things work across the world.

This longish, but very informative Q&A session was posted on Internet site on Monday — and for obvious reasons had to wait for today’s column.  I thank ‘aurora’ for his third contribution to today’s column — and another link to this Q&A session is here.

Russian Naval Fleet Filmed Off British Coast, Followed “Every Inch of the Way

Two days ago we reported that a Russian aircraft carrier flotilla was spotted in international waters off the Norwegian coast on its way to Syria where it is expected to arrive in just under two weeks. NATO was not amused, and a diplomat quoted by Reuters said that Russia is “deploying all of the Northern fleet and much of the Baltic fleet in the largest surface deployment since the end of the Cold War,” and added that “this is not a friendly port call. In two weeks, we will see a crescendo of air attacks on Aleppo as part of Russia’s strategy to declare victory there.

Two days later, and the Russian flotilla, the biggest “since the end of the Cold War” is already off the coast of Britain, where Royal Navy vessels were closely monitoring the fleet as it passed through the English Channel at around 9am on Friday.

Just like two days prior, the Russian fleet was not shy about being photographed and the Admiral Kuznetsov carrier, and Peter the Great, a Kirov class battle cruiser, were among the ships filmed off Ramsgate, Kent, in footage posted online. According to The Telegraph The Russian vessels were being shadowed by the Royal Navy as they headed towards the eastern Mediterranean via the Dover Strait.

This Zero Hedge piece is their spin on a story that appeared in the The Telegraph yesterday.  The ZH article showed up on their Internet site at 2:57 p.m. EDT on Friday afternoon — and another link to it is here.

Stocks Give Up Week’s Gains at Open Following China Currency Carnage

It’s been happening for a couple of weeks but finally the ripples from China’s currency collapse are washing ashore in global risk markets…

A big tumble in Yuan on Thursday night…is hitting U.S. stocks…

Four nights this week have seen weakness in futures during the China session…

This tiny 2-chart Zero Hedge piece was posted on their website at 9:39 a.m. on Friday morning EDT — and it’s another contribution from Richard Saler.  The charts are worth a quick look — and another link to this news item is here.

China’s Capital Outflows are Soaring Again: Goldman Finds September FX Flows Surged to $78 Billion

If one looks at China’s reserve data released by the PBOC, one would be left with the impression that China’s capital outflows – the bogeyman that sent global risk assets tumbling in late 2015 and early 2016 –  have moderated notably in 2016 after the surge during the summer of 2015 and in early 2016. However, as we explained previously, the PBOC has a habit of hiding what is truly happening below the surface, using legitimate mechanisms such as forward contracts, as well as some less legitimate ones. So to get an accurate perspective of what is happening with China’s fund flows, one has to look at a monthly data set provided by SAFE, which presents the capital flow data in a way that can’t be “fudged.”

As a reminder, according to PBOC official data, China’s currency reserves fell by $18.79 billion in September to $3.17 trillion. The drop was larger than the $11 billion fall estimated and followed a drop of $15.89 billion in August and was the largest monthly decline since May. However, in what will surely be a troubling sign to Yuan bulls, not to mention all those who believe another burst of Chinese capital outflows can destabilize the market (as China is forced to dump US denominated reserves), Goldman has found that the real outflow in September was vastly greater: more than 4 times the official number, and the highest since January, an indication that the capital outflows are once again picking up substantial pace.

“Cumulatively since the beginning of the year, the gap between our measure of underlying FX outflows and what is suggested by data on PBOC’s FX reserves or position for FX purchase is significant. Year-to-date through September, FX outflow according to our measure totaled roughly US$500bn, while implied FX sales suggested by reserve data and position for FX purchase were approximately US$200bn and US$300bn, respectively. Exhibit 1 shows our FX flow gauge.”

Considering that as a result of the suddenly resurgent dollar, which overnight hit a 7 month high, and in turn led to the biggest drop in the Yuan since August, and the weakest print in the CNH since 2010, we are confident the outflows will only accelerate in October, and the complacency surrounding the biggest threat to China’s economy will be promptly crushed, potentially resulting in another “late 2015” episode in which the only thing that mattered to global stocks was the daily Yuan fixing and the monthly reserve flow report.

Currency wars in spades.  This is another piece from Zero Hedge courtesy of Richard Saler.  It was posted on their website 8 minutes after the ZH piece that preceded this one.  Another link to it is here.

Doug Noland: The Latest on China’s Mortgage Finance Bubble

It’s my view that the world is at the critical late-stage of a historic multi-decade Credit Bubble. China has become integral to the global Bubble – the marginal source of Credit and global finance. And in the face of a faltering Bubble Economy and increasingly vulnerable Chinese financial system, China’s mortgage finance Bubble has evolved into the predominant source of stimulus. Record Chinese Credit growth is the biggest global financial and economic story of 2016.

There’s a fundamental problem with speculative melt-ups and Credit Bubble “Terminal Phases:” They are invariably unsustainable. A torrent of Credit-driven liquidity inflates prices to unsustainable levels. Mortgage finance Bubbles are especially dangerous. They tend to be powerfully self-reinforcing, with Credit expanding exponentially during the precarious “Terminal Phase.” Fear and panic, as we’ve witnessed, can rather quickly see massive Credit expansion transformed into collapse.

It’s now been years of Chinese officials tinkering with an increasingly impervious Credit Bubble. They remain too timid, and I’d be surprised if current measures to slow housing markets have a dramatic impact. More likely, Chinese Credit continues to grow rapidly over the coming months. The much higher interest rates needed to slow rampant mortgage Credit excess are viewed as completely incompatible with a struggling general economy. Instead, it appears China will tolerate booming mortgage Credit as it systematically devalues its currency.

Doug’s weekly Credit Bubble Bulletin didn’t show up on his website until the wee hours of Saturday morning — and it’s certainly worth reading.  Another link to it is here.

American Global Power is Being Challenged by Russia and China—What Does the Future Hold?

In the strangest election year in recent American history—one in which the Libertarian Party’s Gary Johnson couldn’t even conjure up the name of a foreign leader he “admired” while Donald Trump remained intent on building his “fat, beautiful wall” and “taking” Iraq oil—the world may be out of focus for many Americans right now. So a little introduction to the planet we actually inhabit is in order. Welcome to a multipolar world. One fact stands out: Earth is no longer the property of the globe’s “sole superpower.”

If you want proof, you can start by checking out Moscow’s recent role in reshaping the civil war in Syria and frustrating Washington’s agenda to overthrow President Bashar al-Assad. And that’s just one of a number of developments that highlight America’s diminishing power globally in both the military and the diplomatic arenas. On a peaceable note, consider the way China has successfully launched the Asian Infrastructure Investment Bank as a rival to the World Bank, not to speak of its implementation of a plan to link numerous countries in Asia and Europe to China in a vast multinational transportation and pipeline network it grandly calls the One Belt and One Road system, or the New Silk Road project. In such developments, one can see ways in which the previously overwhelming economic power of the U.S. is gradually being challenged and curtailed internationally.

The Moscow-Washington agreement of September 10th on Syria, reached after 10 months of hard bargaining and now in shambles after another broken truce, had one crucial if little noted aspect. For the first time since the Soviet Union imploded, Russia managed to put itself on the same diplomatic footing as the U.S. As Russia’s Foreign Minister Sergey Lavrov commented, “This is not the end of the road… just the beginning of our new relations” with Washington. Even though those relations are now in a state of suspension and exacerbation, it’s indisputable that the Kremlin’s limited military intervention in Syria was tailored to achieve a multiplier effect, yielding returns both in that war-ravaged, devastated land and in international diplomacy.

In August 2015, by all accounts, President Assad was on the ropes and the morale of his dwindling army at rock bottom. Even the backing of Iran and the Lebanese militant group Hezbollah had proven insufficient to reverse his faltering hold on power.

This longish commentary was originally posted on the Tom Dispatch website, but was picked up by the folks over at the Internet site last Saturday.  Roy Stephens sent it to me last Saturday — and for obvious reasons it had to wait for today’s missive.  Another link to this essay is here.

Swiss gold exports down 9{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} on month to 149 metric tonnes in September

Gold exports from Switzerland totaled 149 metric tonnes in September, down 9 percent from 163 metric tonnes in August, Swiss federal customs data showed Tuesday.

The figure is 5 percent higher than 141 metric tonnes reported a year earlier but is the weakest monthly outflow since March.

Switzerland is the world’s largest refiner and exporter of gold and total exports from the country now stand at 1,349 metric tonnes for the year to date, up 4 percent from 1,302 metric tonnes in the same period of 2015.

This gold-related news item put in an appearance on the Internet site at 8:45 a.m. BST on their Friday morning, which was 3:45 a.m. in New York — EDT plus 5 hours.  I found it in a GATA release yesterday — and another link to it is here.

Gold Is Near The 2011 Highs — Egon von Greyerz

There are a lot of people who are concerned about the performance of gold and the fact that the price after four years of correction is still so far from the high. The mistake that most people make is to measure gold in U.S. dollars. We are seeing currently very temporary dollar strength. But the US$ is a weak currency in a mismanaged economy. Just look at the dollar in Swiss Francs. Since 1970 the dollar has lost 77{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} against the Swissy. That can hardly be called dollar strength.

If we measure the dollar in real money which is gold of course, the not so mighty dollar has lost 80{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} in this century.

So to talk about a strong dollar is totally ridiculous. The dollar is in a long-term downtrend which will continue for many years until it reaches zero. The temporary dollar strength gives the appearance that gold is currently weak. But we must remember that gold should be measured in your home currency and not only in dollars. It is pure laziness that makes non-Americans quote gold in dollars. International media don’t make it easier since they always show the dollar price.

The U.S. population is less than 5{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} of world population and most of the remaining 6.7 billion people are not linked to the dollar. If we instead use GDP as a measure, the U.S. represents around 25{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} of global GDP but that still leaves three quarters of global GDP which is not dollar based. My point is that gold in dollars is only relevant to a minority of the world and the rest of us should measure gold in our home currency.

This commentary by Egon appeared on the Internet site yesterday sometime — and it’s worth reading.  Another link to it is here.

Swiss gold exports to China hit highest since January

Swiss gold exports to China hit their highest since January last month, Swiss customs data showed on Thursday, though a sharp drop in shipments to Hong Kong meant exports to Hong Kong and China combined were sharply lower year on year.

The United Kingdom remained the biggest recipient of Swiss gold exports for a seventh straight month, receiving 52.162 tonnes of bullion.

Switzerland exported 35.5 tonnes of gold to China in September, the data showed, 64 percent higher year-on-year and up from 19.884 tonnes the month before. But shipments to Hong Kong dropped to 11.537 tonnes from 59.76 tonnes a year earlier.

Exports to India rose to 27.592 tonnes from 22.971 tonnes.

Switzerland remained a net importer of gold, with a drop in exports more than counterbalancing lower imports.

This short Reuters piece, filed from London, was posted on the Internet site on Thursday — and it’s something I found on the Sharps Pixley website late last night.  Another link to it is here.

The PHOTOS and the FUNNIES161022photo-7



There are some pop songs that are so iconic that no one should ever attempt to cover them.  At least that’s my opinion.  For me a partial list would include: Hotel California, Bohemian Rhapsody, MacArthur’s Park, Carry on Wayward Son — and Stairway to Heaven just to name a few.  Of course I was proven spectacularly wrong when Ann and Nancy Wilson of Heart covered Stairway as a tribute to  Led Zeppelin a few years ago.

Another song that could be easily added to that list is Chicago’s “Wishing You Were Here” — a number that features three of the Beach Boys singing harmony as back-up vocalists.  How could any group possibly cover that?  Then I ran across a Moscow singing group on last Saturday called Leonid Vorobyev and Friends that had done just that — and was expecting the worst when I hit the ‘play’ button.  How could Russian-speaking musicians even come close to nailing this piece, I thought.

Well, I was proven spectacularly wrong once again!

I was particularly impressed with vocalist Vasily Akimov who sang the bridge between the first and last parts of the tune.  He looks like a construction worker that someone dug out of a dumpster.  It was amazing to hear Chicago‘s Peter Cetera’s voice coming out of his mouth.  I note that they also conscripted drop-dead gorgeous Moscow singing sensation Ksenona for the back-up vocals.

The audio is superb — and the video recording quality is the best I’ve ever seen.  It just doesn’t get any better than this.  I was dazzled.  The link is here.  Enjoy!  And they also covered Chicago’s “Make Me Smile” as well — and the link to that is hereFull screen viewing is a must.

Today’s classical ‘blast from the past’ comes from Finland — and it’s the violin concerto in D minor Op. 47 by Jean Sibelius.  It took more than 50 years from its composition in 1904 for it to be considered one of the giants of the classical repertoire, as few could play it because of the extraordinary technical demands made of the soloist.  Now its performed regularly in concert halls all around the world.  It took me more than ten years from the first time I heard it, before I learned to appreciate this work for what it was.

Here’s the incomparable violin prodigy Sarah Chang to do the honours — and the link to the video is here.

The precious metal price action was similar to what has been happening all week, the appearance of nothing going on, but nothing could be further from the truth, as the powers-that-be are micromanaging precious metal prices to perfection.

Gold continues to crawl along its 200-day moving average — and silver just above its.  Both platinum and palladium set new intraday and low closing prices for their respective moves down once again — and I’m ever fearful of that happening to gold and silver as well.  We aren’t out of the woods yet, although as Ted mentioned in the COT comments further up that a very decent counter-trend rally is certainly possible at this juncture.

But with the dollar index screaming to the upside, a big move in the precious metals will have to wait until the index rolls over, because JPMorgan et al aren’t going to let precious metal prices out of the box, even though it’s obvious that they’re attempting to rally, despite [or because of] what the currencies are doing.

Since this is my Saturday column, I’m including the 6-month charts for all the Big 6+1 commodities — and you can read into them whatever you wish.  The copper chart is noteworthy in the fact that the Commercial traders have been ringing the cash register on the Managed Money traders in that metal for the last couple of weeks.161022-6-month-gold


The world is such a mess right now, it’s almost pointless to get into a discussion about it, as there’s already so much commentary on the Internet that me adding to the din won’t matter.

But everywhere you look from a political, economic, financial, monetary — and, horror of horrors, military standpoint, we’re on the brink of something.  I don’t even want to discuss the 3-ring circus that U.S. presidential election has become — but the ‘deep state’ wants Hillary — so by hook or by crook, that’s probably what we’ll get — which is most unfortunate, not only for the U.S., but for the rest of the world as well.

And this is just the flock of black swans that we can see.  Lurking on the balance sheets of countless banks — with Deutsche Bank and most Italian banks being the poster children for this — are debts in the trillions and derivatives in the tens of trillions that will never be collected, or there is no market for.  The world’s banks, central or otherwise, are all insolvent.

As I’ve been saying for more than a decade, when we do get a repricing of the precious metals, it will occur under the cover of some ugly world event, or events, as the ‘powers that be’ will want to point the finger somewhere.  But make no mistake about it, all this gold and silver that’s been flying around the world these last few years is in preparation for this — and it’s only a matter of when, not if, this happens.

And as I and others have also said, we should be careful what we wish for, as the world that emerges on the other side of these events will bear no resemblance to the one that we’re living in at the moment.

I’ve done all I can to prepare for this for the last 15+ years — and I hope you have as well.

All we can do now is sit back and wait out whatever is coming — and hope we survive it — because there’s not a damn thing we can do about it.

I’m done for the day — and the week — and I’ll see you on Tuesday.


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