JP Morgan et al End the Year On a Sour Note

31 December 2016 — Saturday


On the 50-basis point plunge in the U.S. dollar index shortly after 6:00 p.m. EST on Thursday evening, gold barely reacted…or wasn’t allowed to react.  That goes for the other three precious metals as well.  And the moment that the dollar index began to show signs of recovery shortly after 9 a.m. China Standard Time on their Friday morning, the powers-that-be began to work the price lower — and it was up less than a dollar at the London open.  It was down a couple of bucks by 8:30 a.m. in New York — and rallied a bit into the London p.m. gold fix.  At that point ‘da boyz’ showed up again — and by the COMEX close, gold was down about 8 bucks.  From there it chopped mostly sideways for the remainder of the day.

The high and low ticks are barely worth looking up, but were reported as $1,164.30 and $1,150.30 in the February contract.

Gold was closed in New York yesterday at $1,150.90 spot, down $6.80 from Thursday’s close — and back below its 20-day moving average by a hair.  Net volume was a bit over 130,000 contracts.  Roll-over volume out of February was very decent yesterday.

Here’s the 5-minute gold tick chart courtesy of Brad Robertson as usual — and I shan’t offer any comment on it, except to note that the only volume that really mattered…as usual…was during the COMEX trading session, which is between 6:20 and 11:30 a.m. Denver time on the chart below.

The vertical gray line is 10:00 p.m. Denver time, midnight in New York — and 1:00 p.m. China Standard Time [CST] the following afternoon in Shanghai—and don’t forget to add two hours for EST.  The ‘click to enlarge‘ feature is a must.

It was more or less the same chart pattern for silver, with the high tick coming the moment that the dollar index began to rally off its low around 9:20 a.m. CST on their Friday morning.  After getting sold lower by a nickel or so, it chopped sideways until the morning gold fix in London was put to bed – and it drifted lower until minutes after 8:30 a.m. EST.  But once the p.m. gold fix was done, JPMorgan et al went to work, setting silver’s low tick minutes after 1 p.m. in New York trading — and back below $16 spot.  It spiked up a bit from there, but once the COMEX closed, it traded virtually ruler flat for the rest of the Friday session.

The high and low ticks in silver were reported by the CME Group as $16.345 and $15.88 in the March contract.

Silver was closed on Friday at $15.88 spot, down 24.5 cents on the day.  Net volume was a bit higher than average at just over 42,500 contracts.

Here’s the 5-minute tick chart for silver — and it’s more than obvious with this precious metal that all the volume that mattered occurred while New York was at work.  Once the COMEX closed, volume evaporated.

Like the 5-minute gold chart, the vertical gray line is 10:00 p.m. Denver time, midnight in New York — and 1:00 p.m. China Standard Time [CST] the following afternoon in Shanghai—and don’t forget to add two hours for EST.  The ‘click to enlarge‘ feature is a must here as well.

Platinum also rallied until 9:20 a.m. in Shanghai, until the dollar index was turned — and ‘da boyz’ showed up.  It was still up 6 dollars at the COMEX open, but was sold lower as the Friday session in New York progressed — but it did close in positive territory, up 2 bucks from Thursday at $901 spot.

Palladium was mostly unaffected by the currency shenanigans going on — and was up a few dollars by the COMEX open.  It spiked higher around 8:30 a.m., but was capped almost immediately — and chopped sideways to lower for the rest of the day.  Palladium finished the Friday session at $678 spot, up 6 dollars.

As I mentioned at the top of the column, the dollar index opened unchanged at 102.61 at the 6:00 p.m. open in New York on Thursday evening — and five minutes later it cratered by 50 basis points in minutes, if not seconds.  By shortly after 9 a.m. CST, it began to ‘recover’ — and made it back within a few basis points of unchanged a minute or so before the London open, but began to head sharply lower from there.  It appeared that the usual ‘gentle hands’ saved it at the 102.00 mark minutes before 10 a.m. GMT, but the ensuing rally began to head lower starting at exactly 8:00 a.m. in New York.  The 101.91 low tick was set around 10:45 a.m. EST.  It rallied weakly from there, closing the Friday session at 102.40 — and down 21 basis points on the day.

As you can easily see, what happened in the precious metals yesterday had nothing whatsoever to do with what was happening in the currency markets.  ‘Da boyz’ had no fig leaf to hide behind as the did the dirty on Friday, but they obviously didn’t care who was watching while they did it.

Here’s the 3-day U.S. dollar index chart, so you can see the drop in the dollar index on Thursday evening in New York — and put that move in some context.  It was obvious that it would have crashed yesterday if allowed to trade freely, which it wasn’t.

There are no markets anymore, only interventions.”

And here’s the 6-month U.S. dollar index chart — and you can read into it whatever you wish.  But as yesterday’s activity indicates, this chart is all ‘make believe’ as well.

The gold stock opened up a bit — and rallied to their highs at the London p.m. gold ‘fix’.  They began to head lower immediately as JPMorgan et al began to lean on the gold price.  Most of the damage to the shares was done by 11:45 a.m…but they continued to chop quietly lower for the rest of the day — and the HUI was closed on its low tick, down 3.77 percent.

The silver equities followed an identical price path — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by 4.74 percent, taking all of Thursday’s gains with it.  Click to enlarge if necessary.

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.

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

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

The CME Daily Delivery Report showed that only 2 gold and 1 silver contract were posted for delivery within the COMEX-approved depositories on Wednesday.

The CME Preliminary Report for the Friday trading session showed that gold open interest in January dropped by 136 contracts, leaving 1,007 still open, minus the 2 mentioned above.  Thursday’s Daily Delivery Report showed that 133 gold contracts were actually posted for delivery on Tuesday, so that means that 136-133=3 short/issuers were let off the delivery hook by the long/stoppers holding the other side of those contracts.  Silver o.i. in January fell by 291 contracts, minus the 1 contract mentioned in the previous paragraph.  Thursday’s Daily Delivery Report showed that only 195 silver contracts were posted for delivery on Tuesday, so that means that 291-195=96 short/issuers in silver were let off the January delivery hook as well.

There was another withdrawal/conversion of shares in GLD yesterday, as an authorized participant took out 38,118 troy ounces.  And as of 6:53 p.m. EST yesterday evening, there were no reported changes in SLV.

The only gold movement at the COMEX-approved depositories on the U.S. east coast on Thursday was 52,243.750/1,625 kilobars [U.K./U.S. kilobar weight] that were deposited in that new warehouse…International Depository Services of Delaware.  They’ve gone for zero ounces to 201,929 troy ounces of gold in just the last week or so — and I’m certainly curious as to what that’s about.  A link to this activity is here.

It was another quiet day in silver, as nothing was reported received — and only one good delivery bar weighing 1,023 troy ounces was shipped out of CNT.  There was also 1,450,951 troy ounces transferred from the Registered category — and into Eligible.  The lunatic fringe is all atwitter about this development but, as Ted Butler has been saying ever since this trend developed several years back, it means nothing.  The link to this ‘activity’ is here.

It was much quieter over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  Only 1,221 were received — and 690 were shipped out the door for parts unknown.  All this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.

The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, December 27th was a big surprise in both metals in some respects.  I was expecting a slight deterioration in the Commercial net short position in gold — and it was anything but.  I was expecting an improvement in silver, however the headline number was a crushing disappointment.  But checking under the hood in the Disaggregated COT Report showed something entirely different — and Ted’s comments were even more enlightening.

In silver, the Commercial net short position was virtually unchanged.  It increased by a piddling 59 contracts…which is not even a rounding error.  They arrived at that number by selling 123 long contracts — and they covered 64 short contracts.  The difference between those two numbers was the change for the reporting week.

But the internal movement by the eight largest traders on the short side, the Big 8, was in sharp contract to the 59 contract headline number.  Ted said that the Big 4 actually increased their short position by about 1,500 contracts during the reporting week, while the ‘5 through 8’ large traders covered around 500 short contracts.  Ted’s raptors, the commercial traders other than the Big 8, added around 900 contract to their long position.  The reason that the Big 4 increased their short position was simple.  Ted pointed out that during the last couple of weeks it’s now obvious that a Managed Money trader, who may have been elevated to the ‘5 through 8’ largest trader category in last week’s report, added enough short contracts during this reporting week to elevate him into the Big 4 category.

It’s entirely possible that the usual Big 4 commercial traders…read JPMorgan…actually covered short positions during this reporting week, but that fact was completely obscured by the inclusion of this Managed Money trader that piled in on the short side at the same time.

Speaking of JPMorgan, Ted pegs their short position at unchanged from a week ago…18,000 contracts.  In fact, it may be considerably less than that now — and I await his weekly commentary later today with some anticipation.  By the way — and while I think about it — the commercial net short position in silver is now down to ‘only’ 370.0 million troy ounces of paper silver.

But it was under the hood in the Disaggregated COT Report — and in the Managed Money category as usual — where it all became crystal clear.  During the reporting week they not only sold 1,032 long contracts, they also added 2,828 short contracts, for a total weekly swing of 3,860 contracts.  The traders in the ‘Other Reportable’ and Nonreportable/small trader category made up the difference by adding to their long positions, plus covering short contracts.

This dramatic change by the Managed Money traders during the reporting week probably had something to do with the fact that silver was closed at a new low for this move down this week — and it was the short selling by these same traders that probably caused it.

But the huge 3,860 contract swing by the Managed Money trader[s] is proof positive that the commercial traders in the Big 4 category/JPMorgan certainly covered a decent number of short positions during the reporting week.

So we’ve gone from a bullish to an even more bullish set-up in silver.  But as Ted also carefully pointed out…why, after waiting for six weeks, did these traders finally start adding to their short positions during the last two weeks — and at these super-low prices?  Is there more shorting to go?  Questions with no answers at the moment.

Here’s the 9-year COT Report for silver — and don’t forget that all the improvements that might have been, are masked by the Managed Money trader now in place in the Big 4 category — and that doesn’t show up on this chart.  Click to enlarge.

In gold, the Commercial net short position declined by a fairly chunky 13,055 contracts, or 1.31 million troy ounces of paper gold.

They arrived at that number by adding 2,015 long contracts, plus they covered 11,040 short contracts.  The sum of those two numbers is the change for the reporting week.

The surprise here was the short position of the Big 4 traders in gold was unchanged — and the ‘5 through 8’ large traders only covered about 2,500 short contracts. [The reason for that is the same as in silver…there are one or more Managed Money traders with short positions so large now, that they are part of the Big 8, which are spots where the commercial traders normally hang out.]  Ted’s raptors, the commercial traders other than the Big 8…added around 10,600 contracts to their already huge long position.

Under the hood in the Disaggregated COT Report, the Managed Money traders only made up 10,439 contracts of the 13,055 contract change in the commercial net short position.  They sold 6,993 long contracts, plus they added another 3,446 contracts on the short side — and the total of those is the 10,439 contracts just mentioned.  The difference, about 3,100 contracts, came entirely from the ‘Other Reportables’ category.

The commercial net short position in gold is now down to 12.10 million troy ounces.

Here’s the 9-year COT chart for gold — and its now at its lowest level since either late January or early February.  The click to enlarge feature works wonders here as well.

And as bullish as these charts indicate — and as low as the Commercial net short positions are, they are even lower than they appear.  As Ted Butler pointed out a few weeks back, the Managed Money traders are only visiting in the Big 8 category…which is normally commercial trader territory…and at some point they will vanish as fast they appeared once they start to cover.  So the short positions of the Big 8 commercial traders in both silver and gold are, in reality, far less than what the headline numbers say they are, as they will be reduced by the number of contracts held short by the Managed Money traders that currently inhabit their space — and that, dear reader, is a lot of contracts in both metals at the moment.

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 above.  Click to enlarge.

For the current reporting week, the Big 4 are short 128 days of world silver production—and the ‘5 through 8’ traders are short an additional 48 days of world silver production—for a total of 176 days, which is just about 6 months of world silver production, or about 427.6 million troy ounces of paper silver held short by the Big 8.

In the COT Report above, the Commercial net short position in silver is 370.0 million troy ounces.  So the Big 8…as usual…hold a short position larger than the Commercial net position to the tune of 427.6 – 370.0 = 57.6  million troy ounces…give or take.

And not to be forgotten is the fact that Ted pegs JPMorgan’s short position around 18,000 contracts/90 million ounces — which works out to around 37 days of world silver production that JPMorgan is short.  That’s compared to the 176 days that the Big 8 are short in total.

And as bad as those number are, the Big 8 are short 52.4 percent of the entire open interest in silver in the COMEX futures market — and that number would be well over 55 percent once the market-neutral spread trades are subtracted out.  In gold it’s up to 40.3 percent of the total open interest that the Big 8 are short.

The two largest silver shorts on Planet Earth—JPMorgan and Canada’s Scotiabank—are short about 90 days of world silver production between the two of them—and that 90 days represents around 70 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 19 days of world silver production apiece.  The four large traders in the ‘5 through 8’ category are short, on average, about 12 days of silver production apiece.

And to put it another way, the short positions of Scotiabank and JPMorgan combined, represents around 50 percent of the short position held by the Big 8 traders.

As I stated just above, based on Ted’s estimate of JPMorgan’s short position of 18,000 contracts, JPMorgan is short around 37 days of world silver production all by itself.  Because of that, the approximate short position in silver held by Scotiabank works out to around 53 days of world silver production.  For the sixth week in a row, Scotiabank is the King of the silver shorts in the COMEX futures market.

In gold, the Big 4 are short 40 days of world gold production, unchanged from last week — and the ‘5 through 8’ are short another 18 days of world production, a decline from 19 days last week, for a total of 58 days of world gold production held short by the Big 8.  Based on these numbers, the Big 4 in gold hold about 69 percent of the total short position held by the Big 8.  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 about 72, 69 and 65 percent respectively of the short positions held by the Big 8.

And the fact that there are now Managed Money traders temporarily ensconced in the Big 4 and Big 8 categories, changes nothing with respect to this chart, as we’re not talking about the Commercial net short position here.

Since this is my Saturday column — and the last column for 2016 — I have a goodly number of stories for you, as I’m housecleaning my in-box.  I hope you have time over this long weekend, to read/listen to the ones that interest you.


World’s largest hedge fund to replace managers with artificial intelligence

The world’s largest hedge fund is building a piece of software to automate the day-to-day management of the firm, including hiring, firing and other strategic decision-making.

Bridgewater Associates has a team of software engineers working on the project at the request of billionaire founder Ray Dalio, who wants to ensure the company can run according to his vision even when he’s not there, The Wall Street Journal reported.

The role of many remaining humans at the firm wouldn’t be to make individual choices but to design the criteria by which the system makes decisions, intervening when something isn’t working,” wrote the Journal, which spoke to five former and current employees.

The firm, which manages $160bn, created the team of programmers specializing in analytics and artificial intelligence, dubbed the Systematized Intelligence Lab, in early 2015. The unit is headed up by David Ferrucci, who previously led IBM’s development of Watson, the supercomputer that beat humans at Jeopardy! in 2011.

This article was posted on Internet site back on December 22 — and Judy Sturgis sent it our way on Wednesday.  Another link to it is here.

U.S. and China on Collision Course — Jim Rickards

China’s capital and currency markets are on a collision course with the U.S., and by extension, the entire world. Economists are fond of saying if something can’t go on forever, it won’t. That truism applies to China.

The idea of economic stress in China sounds strange to most ears. China has come from the chaos of the Cultural Revolution to the world’s largest economy measured on a purchasing power parity basis in just 35 years. Even using nominal GDP, my preferred metric, it is the world’s second largest economy.

China’s economy grew over 12{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} per year in 2006-2008, and again in 2010. Even at the depths of the global financial crisis in 2009, annual Chinese growth was still over 6{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}. Chinese growth ran between 8{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} and 6.7{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} from 2011 to 2016. These growth rates are extraordinary compared to the 0{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} to 2{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} annual growth achieved by the major developed economies since 2007.

But, beneath that glossy surface all is not well. Much of China’s growth was completely artificial. It would not be counted if China were subject to more rigorous accounting standards.

China’s growth consisted of about 45{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} investment. That compares with about 30{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} investment in developed economies. Investment is fine if the investments have positive expected returns and are not financed with excessive debt. But, China fails both of those tests.

This very worthwhile commentary by Jim appeared on the Internet site back on December 22 — and I thank Kathmandu reader Nitin Agrawal for sending it along.  Another link to it is here.

Doug Noland: 2016 Year in Review

Wild markets for the most part didn’t help the struggling leveraged speculation community. A December 28th Bloomberg headline: “The Golden Era of Hedge Funds Draws to a Close With Clients in Revolt.” While most funds again underperformed expectations, the industry got through 2016 without major redemptions. This they owe to central bankers and Chinese officials. And another Bloomberg headline, this one from December 30th: “Actively Managed Funds Take a Beating.” Throughout 2016, and especially after the election, “money” literally flooded into equity index and other passively managed ETFs. Central bankers ensured that managers attentive to risk and risk management had another crummy year.

I expect future historians will see 2016 chiefly through the geopolitical perspective. How can market happenings compete against Brexit, the Trump phenomenon and Renzi’s failed political reform referendum (to name only the most obvious)? But clearly unstable markets, unsettled societies and simmering geopolitical turmoil are more than coincidental. At their roots, all can be traced to a prolonged period of unchecked finance, central bank activism and the general effects of inflationism.

Consequences were on increasing display throughout 2016. There was the rising tide of anti-establishment populism that seemingly became a global phenomenon. There was the deep discontent that led to Brexit and President-elect Trump. This was part of general instability and uncertainty that afflicted financial markets – in the process ensuring “whatever it takes” went to even crazier extremes. And, almost ironically, this is the type of mercurial social and monetary backdrop conducive to powerful markets reversals and attendant bouts of hope and optimism.

Doug’s weekly Credit Bubble Bulletin is always a must read for me, especially this year-end review.  It was posted on his website in the wee hours of this morning MST — and another link to it is here.

Drifting into fascism — Alasdair Macleod

Most people regard governments and their central banks as forces for the good. Financial crises and suchlike are therefore blamed on capitalism, and people believe our leaders do their best to pick up the pieces from market failures, because they are elected to promote the public good.

The reality is very different, with governments acting not in the interests of their electors, but in the interest of the preservation of the administration. And the size of the administration is proportional to its degree of control over the people, so it and its burden on ordinary people just grows and grows with ever-increasing intervention and micro-management.

The logical endpoint in the reach of government is either state ownership of all private property, which is communism, or state control over what people do with their property, which is fascism. With communism discredited, the world is moving inexorably towards the latter. Every business is regulated in some way or other, and economic freedom is being progressively restricted with ever-tightening regulations.

From a government’s standpoint, lack of control over private activities equates with risk to the state and its objectives. The more that people are directed in their actions, the more certain the state’s security becomes. We see this in attempts to remove cash-money from circulation, because the use of cash cannot be controlled. It can be used for activities beyond government’s knowledge, it can be used to evade paying taxes, and it can be used to undermine a bank’s solvency. Many people who are financially aware probably thought this was a trend only to be seen in the advanced nations, but it is equally true in emerging economies, as the recent experience in India has dramatically shown.

This commentary by Alasdair was posted on the Internet site on Thursday sometime — and I found it in a GATA release yesterday.  Another link to it is here.

U.S. Major General Albert Stubblebine on 9/11

U.S. Major General Albert Stubblebine appeared in the 2006 documentary: “One Nation Under Siege” and was interviewed by journalist Kate Johnston in his home in Chile.

The ‘official’ government version of what happened on 9/11 has been so shot full of holes over the years, that nobody with more than a room-temperature I.Q. believes it any more.

This 15-minute video interview is definitely worth watching, as this guy is no nut-ball.  I thank Roy Stephens for sending it our way.  For obvious reasons, it had to wait for my Saturday column.

What is Henry Kissinger Up To? — Paul Craig Roberts

Reagan did not believe the CIA’s claim that the Soviet Union could prevail in an arms race. He formed a secret committee and gave the committee the power to investigate the CIA’s claim that the U.S. would lose an arms race with the Soviet Union. The committee concluded that the CIA was protecting its prerogatives. I know this because I was a member of the committee.

American capitalism and the social safety net would function much better without the drain on the budget of the military/security complex. It is more correct to say that the military/security complex wants a major threat, not an actual arms race. Stateless Muslim terrorists are not a sufficient threat for such a massive U.S. military, and the trouble with an actual arms race as opposed to a threat is that the U.S. armaments corporations would have to produce weapons that work instead of cost overruns that boost profits.

The latest U.S. missile ship has twice broken down and had to be towed into port. The F-35 has cost endless money, has a variety of problems and is already outclassed. The Russian missiles are hypersonic. The Russian tanks are superior. The explosive power of the Russian Satan II ICBM is terrifying. The morale of the Russian forces is high. They have not been exhausted from 15 years of fighting without much success pointless wars against women and children.

Washington, given the corrupt nature of the U.S. military/security complex, can arms race all it wants without being a danger to Russia or China, much less to the strategic alliance between the two powers.

The neoconservatives are discredited, but they are still a powerful influence on U.S. foreign policy. Until Trump relegates them to the ideological backwaters, Russia and China had best hold on to their strategic alliance. Anyone attempting to break this alliance is a threat to both Russia and China, and to America and to life on earth.

This commentary by Paul falls into the absolute must read category, even if you’re not a serious student of the New Great Game.  My thanks go out to ‘aurora’ for passing it around in the wee hours of Friday morning — and another link to it is here.

Not the Russians’: John McAfee talks hacking allegations, cyber-security with Larry King

McAfee is no stranger to cybersecurity. As the developer of the first commercial antivirus program, he has been a major player in the industry for the past 50 years. He is also the CEO of MGT Capital Investments, and an outspoken former presidential candidate for the Libertarian Party.

Based on all of his experience, McAfee does not believe that Russians were behind the hacks on the Democratic National Committee (DNC), John Podesta’s emails, and the Hillary Clinton presidential campaign. As he told RT, “if it looks like the Russians did it, then I can guarantee you it was not the Russians.

The Joint Analysis Report from the FBI contains an appendix that lists hundreds of IP addresses that were supposedly “used by Russian civilian and military intelligence services.” While some of those IP addresses are from Russia, the majority are from all over the world, which means that the hackers constantly faked their location.

McAfee argues that the report is a “fallacy,” explaining that hackers can fake their location, their language, and any markers that could lead back to them. Any hacker who had the skills to hack into the DNC would also be able to hide their tracks, he said

“If I was the Chinese and I wanted to make it look like the Russians did it, I would use Russian language within the code, I would use Russian techniques of breaking into the organization,” McAfee said, adding that, in the end, “there simply is no way to assign a source for any attack.”

This very interesting — and certainly not surprising news item was posted on the Internet site at 6:31 a.m. Moscow time on their Friday morning, which was 10:31 p.m. on Thursday evening in Washington — EDT plus 8 hours.  I thank Jim Gullo for sharing it with us — and another link to it is here.  The Zero Hedge spin on this is headlined “John McAfee: ‘I Can Guarantee You, It Was Not the Russians” — and this item is courtesy of David Caron.

Vladimir Putin won’t expel U.S. diplomats over hacking sanctions

Russian President Vladimir Putin on Friday said Moscow will not approve expelling 35 U.S. diplomats in response to sanctions by the Obama administration for alleged election hacking.

We will not create problems for American diplomats. We will not send anyone away. We will not prohibit their families and children to use their usual vacation spots in the New Year’s holidays,” Putin said, according to Russian state media.

Putin said that though Russia reserved the right to respond to the new U.S. sanctions, he would rather attempt to rebuild relations with the United States after Donald Trump is inaugurated January 20.

Further steps towards the restoration of Russian-American relations will be built on the basis of the policies carried out by the administration of President Trump,” Putin said in a statement issued by the Kremlin.

Trump later Friday called Putin “very smart” for withholding reciprocal sanctions.

This UPI story, filed from Moscow, is datelined 4:17 p.m. on Friday afternoon, but it was obviously filed much earlier, as I received it from Roy Stephens at 11:28 a.m. EST on Friday morning.  Another link to it is here.  The Zero Hedge spin on all this is headlined “Putin Stunner: “We Will Not Expel Anyone; We Refuse To Sink To ‘Kitchen’ Diplomacy”” — and I thank California reader Ray Wiberg for pointing it out.

2016: the year of Russia’s triumph — The Saker

Just like European maps place Europe in the center of the planet, so do most western commentators look at the past year from a U.S./Europe-centered perspective.  Which is fair enough.  Furthermore, the Anglo/Zionist Empire has just suffered two major disasters, the Brexit and the election of Trump, so there is truly much interesting to focus on.  Still, what I want to do today is to look at the year which is ending from a Russian perspective.  The following were the major challenges Russia faced in 2016:

  1. The Nazi regime in Kiev
  2. The civil war in the Donbass
  3. Ukrainian attempts to blockade Crimea
  4. The rabid hostility of the US Administration
  5. NATO’s policy of military confrontation in Europe
  6. The united European front against Russia
  7. Western sanctions, the subsequent drop in investments and credit and the low oil prices
  8. The growing dissatisfaction of the Russian people with the economic polices of the government
  9. The struggle against the “liberal” 5th column inside Russia
  10. The international aggression against Syria
  11. The demonization of Russia in general and of Vladimir Putin in particular
  12. TerChina connects east & west with longest bullet train linerorist attacks against Russia

Let’s take these one by one now and score them:

This long, but very worthwhile commentary showed up on Internet site on Wednesday — and for obvious length and content reasons, had to wait for today’s column.  It’s another contribution from Roy Stephens — and another link to it is here.  It’s definitely worth reading if you have the interest.

ECB’s Monte Paschi Capital Bar Would Trip Up 10 Other E.U. Banks

Deutsche Bank AG, UniCredit SpA and eight other European Union banks would fall short of the European Central Bank’s capital demands on Banca Monte dei Paschi di Siena SpA based on stress-test results, highlighting potential objections to the plan.

The ECB told Monte Paschi it needed enough capital to push its common equity Tier 1 ratio to 8 percent of risk-weighted assets in the adverse scenario of the stress test, the Bank of Italy said in a statement late on Dec. 29. That’s well above the legal minimum of 4.5 percent. This year’s health check had no pass mark, but in 2014 lenders were held to a CET1 ratio of 5.5 percent.

Monte Paschi was the worst performer in the stress test’s adverse scenario with a CET1 ratio of minus 2.4 percent, followed by Allied Irish Banks Plc with 4.3 percent. The Italian government is planning a bailout of Monte Paschi. Under European Union law, state aid can be given to solvent banks to cover a stress-test shortfall, but the absence of a hurdle means the size of the gap could be disputed when Italy seeks approval for the rescue from the European Commission.

There’s a lot more to be explained,” said John Raymond, senior European bank analyst at CreditSights. “They just say, ‘Oh, this is needed to get to 8 percent,’ as if we all knew the number was 8 percent, when in fact that’s a completely new number.

This Bloomberg news item appeared on their Internet site at 6:03 a.m. MST on Friday morning — and I thank Swedish reader Patrik Ekdahl for finding it for us.  Another link to it is here.

Currency revocation seems unlikely to generate windfall for Indian government

Indians rushed to exchange the last of their expired currency notes ahead of a deadline on Friday, amid initial signs that the country’s controversial demonetisation policy will fail to generate the windfall expected by the government.

New Delhi has claimed its decision, announced last month, to scrap 86 per cent of India’s currency and replace it with a smaller quantity of new banknotes, would eliminate illicitly earned or unaccounted for income that has been beyond the reach of tax authorities.

But figures show that as Indians queued to deposit the last of their old Rs500 and Rs1,000 notes, almost all of the old currency had been returned. Economists said this suggested the move had not eliminated as much illicit cash as expected, and would derail the government’s hope of a windfall gain from the scheme.

By Friday — the end of that 50-day period — some sense of calm had returned to the banking system, albeit in the middle of holiday season and with most ATMs still shut for lack of new notes.

But as economists processed the initial results of the policy, many warned that the early signals show that it has significantly slowed growth.

This longish story appeared on the Financial Times website on Friday — and it’s posted in the clear in its entirety over at the Internet site.  Another link to it is here.

China connects east and west with longest bullet train line

One of the world’s longest high-speed railways has started operating in China, linking the country’s prosperous eastern coast to the less-developed southwest, the state Xinhua news agency has reported.

The 2,264-kilometer Shanghai-Kunming rail line runs across the five provinces of Zhejiang, Jiangxi, Hunan, Guizhou and Yunnan. It cuts the travel time from Shanghai to the capital of Southwest China’s Yunnan province Kunming from 34 to 11 hours.

According to train driver Wang Jinda, the trains can travel at speeds up to 330 kilometers per hour.

In 2012, China started operating another high-speed link, the 2,298-km Beijing-Guangzhou line which stretches north to south.

The country has more than 20,000 km of high-speed rail lines and expects to more than double that to 45,000 km by 2030.

I mentioned in yesterday’s column that I would be posting this interesting story about China’s new high-speed train line.  It’s a reasonably short news item, but there are several fascinating video clips embedded as well.  They’re worth your time if you decide to read this article.  I thank Roy Stephens for passing it along on Wednesday — and another link to it is here.

New Zealand: In the Wake of the Quake

At two minutes past midnight on November 14, part of the ‘Humps’ fault zone ruptured 15 kilometres below Culverden on the South Island.  Over the following hundred seconds, the earth unzipped.

The quake ruptured the Conway and Leader faults, jumped to the Hundalee fault, flew along the Uwerau and Fidget faults, up the Jordan Thrust and down the Papatea Fault, set of the Kekerengu, and ran out to sea along the Needles fault under the light of the full moon.  New Zealand’s geography changed in a matter of minutes.

Along a 120-kilometre stretch of the Kaikoura coast, 80 kilometres was lifted clear out of the water, permanently altering the shoreline and leaving sea creatures gasping and exposed.  Landslides damned rivers and destroyed roads and railways.  Kaikoura was cut off, homes collapsed, and two people died.

Many people didn’t sleep that night: quake-zone residents fled shaking houses and stumbled up the nearest hill as tsunami warning were issued; civil defence and emergency services readied the response; and scientist stirred, electrified, wondering what would be revealed at first light.

This very long but amazing picture-filled essay appeared in the January/February issue of New Zealand Geographic. I found it on Wednesday — and I’m happy to post it in today’s column.  It’s definitely a must read if you have the interest.  And even if you don’t read it, you should at least look at the pictures.  Another link to it is here.

Iran received $10 billion in cash and gold as sanctions relief: Obama admin. denies direct role — Wall Street Journal

The Obama administration reportedly signed legal waivers that allowed sanctions relief to the tune of $10 billion in cash and gold to be sent to Iran as part of the Iran deal. But the White House denies that they had any direct role in the payments.

According to The Wall Street Journal, the cash and gold were moved through third-party countries in the Middle East and Europe after Asian nations unfroze Iranian oil revenues and wired the funds to various banks, including in Oman, Switzerland and Turkey. U.S. lawmakers and Middle East allies worry, due to the highly liquid nature of cash, the payments could be used to fund terror regimes.

The money was converted to currency and bars of gold, U.S. officials said. The White House put a single restriction on the transactions: They could not include U.S. dollars.

From the WSJ:

To enable the flow of the $700 million monthly payments, the White House signed a series of legal waivers authorizing countries to unfreeze Iranian oil revenues, the officials said. Without the waivers, those countries in many cases would have been in violation of U.S. secondary sanctions.

This Wall Street Journal story is mostly posted in the clear in this item that appeared on Internet site on Friday sometime.  I thank Brad Robertson for bringing it to our attention — and another link to it is here.

GATA plans important disclosure Saturday

On Saturday GATA expects to make an important disclosure about central bank gold reserves and the gold market.

When this GATA dispatch showed up in my in-box yesterday, my e-mail to Chris Powell read as follows…”What’s this all about?”  As a GATA board member, I thought I should know about this before it hit the street.  His reply was “Stay tuned. I don’t want to betray it by phone or e-mail yet.

So we wait.

It may be up on that Internet site by the time you receive this, so click here.  If it’s not, try later.

Jim Cook Interviews Ted Butler: December 21, 2016

Cook: People that have been holding silver for several years are beginning to lose patience. What do you say to them?
Butler: The facts surrounding silver have never been more bullish.

Cook: Such as?
Butler: Over the last few years, enormous changes have recast and transformed the silver market.

Cook: Can we have an example?
Butler: In only a few years, JPMorgan has accumulated the largest hoard of silver in the history of the world.

Cook: How does that compare with the Hunt Brothers in 1980?
Butler: They have five to six times as much as did the Hunts, maybe more.

Cook: With all their buying, why doesn’t the price go up?
Butler: They are world champion manipulators. They maintain a large paper short position on the futures market that enables them to keep the price where they want it. It allows them to buy physical silver cheap which they’ve done masterfully.

This interview was released publicly elsewhere on the Internet without Ted’s knowledge or permission — and because of that, Jim Cook decided it should be officially posted in the public domain, so here it is.  It put in an appearance on the Internet site on Friday — and it certainly falls into the absolute must read category.  Another link to it is here.



Today’s pop ‘blast from the past’ is one that I had running through my head today — and I just couldn’t get rid of it, so here it is now.  I was 19 years young and living in Ottawa when this song was a hit back in 1967.  This video is in black and white, as are most videos from that era, but that takes nothing away from tune — and I hope you enjoy it.  The link is here.

Today’s classical ‘blast from the past’ is one I’ve posted before, but it’s been a year or two, so it’s time for a revisit.  It’s the Brandenburg Concerto No. 3 in G major, BWV 1048 — and everyone has heard it in some iteration numerous times in their lives.  Here’s the Freiburg Baroque Orchestra doing the honours — and this recording is about as good as it gets — and the link is here.

I certainly wasn’t happy to see gold and silver closed down on the last trading day of the year.  But then again, I guess I shouldn’t have been surprised, either.  JPMorgan et al closed gold back below its 20-day moving average yesterday, after allowing it to close above it on Thursday.  So most of the long contracts placed as gold broke above it, were blown out of the water yesterday.  The sell-off in silver was even more egregious — but all the deterioration in the commercial net short position in silver since the Tuesday cut-off for next week’s COT report, vanished by the time ‘da boyz’ were done with it at the COMEX close on Friday.

A lot of the decent gains in the precious metal equities on Thursday, vanished yesterday as well.

And as you can tell, JPMorgan et al weren’t too concerned about platinum and palladium, as they allowed both to close up on the day.  They could have just as easily sold them down for a loss as well, but chose not to do so for whatever reason.

Here are the 6-month charts for all four precious metals, so you can see the damage done in gold and silver for yourself.

We’re starting off 2017 just about where we started in 2016 — and that’s with lousy sentiment and a wildly bullish set-up in the COMEX futures market in the only two precious metals that matter.

As Jim Cook asked in his first question to Ted in the above interview…”People that have been holding silver for several years are beginning to lose patience. What do you say to them?”  Ted’s answer was…”The facts surrounding silver have never been more bullish.

He would be right about that.

Of course with the new shorting in both gold and silver by the Managed Money traders during this reporting week, the question that now resurfaces is whether or not we’re actually at the price bottom or not.  If the powers-that-be were this successful at getting the Managed Money traders to pile in on the short side in both gold and silver, but particularly silver, they may attempt to push their advantage in the days and weeks ahead.

As Ted Butler points out at time like this, we’ll only know for sure when we see the low ticks for this move down in the rear-view mirror.  I get tired of hearing that — and I’m sure you are as well, even though he’s right.  It looked hopeful for most of this past week, but ‘da boyz’ dashed that after yesterday’s engineered price declines.

So we wait some more.

Will the next rally be the “big one” that Ted has been talking about for the last year or so?  I don’t know for sure, but nothing has changed from where I sit, as I’m still “all in”.  And even though my stock portfolio did well last year, I once again made the mistake of riding the silver price up and down — and giving back most of the delicious gains of earlier in the year.  If this next rally is not the “big one”…I’ll certainly be taking some money off the table, as I’ve reached the age where I’m not going to give back all those gains one more time.  I’ve done that enough over the last 15 years — and have learned my lesson the hard way.

Here, once again, is the list of stocks that I own as of the close of trading yesterday.  It has changed very little in the last ten years — and the only addition I made during that time was First Mining Finance Corp, Keith Neumeyer’s company, earlier this year.  I’m not a trader at all — and I’ve added to my positions in most of these stocks over the last year or so.  Besides these equities, I also own three precious metal mutual funds:  BMG Bullion Fund Class A…RBC Global Precious Metals Fund…and Sprott Gold and Precious Minerals Fund.

When I say that I’m “all in” with precious metals…I’m not kidding.

I probably won’t have a column on Tuesday, as Monday will be a holiday just about everywhere in the Western world.  I must admit that I’m keeping one eye on China for an imminent yuan devaluation, although I can’t imagine them pulling it off while the markets are closed on Monday.  But you just never know.

As I put the finishing touches on today’s missive, I’ll use this opportunity to wish you a happy and prosperous New Year — and my wish for you is my own wish — and that is that the next rally is the really “Big One”.

I’m done for the day, week, month — and the year — and I’ll see you here next week.


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