More Paper Shenanigans in the COMEX Silver Market Yesterday

28 January 2017 — Saturday


The gold price was stair-stepped quietly lower during the Far East trading session in the Far East on their Friday, which was Chinese New Years Eve, with the low tick coming minutes before the London open.  It chopped mostly sideways from there, with a slight positive bias until a minute or so before 1 p.m. in London, which was about twenty minutes before the COMEX open.  It began to rally at that point, but the price was kept on a very tight leash — and it continued to crawl higher right into the close of trading at 5:00 p.m. EST.  Very unusual trading action for a Friday, as gold closed almost on its high tick of the day…such as it was.

The low and highs were reported by the CME Group as $1,179.70 and $1,191.00 in the February contract.

Gold finished the Friday session in New York at $1,191.30 spot, up $3.00 from Thursday.  Gross volume was monstrous at 380,629 contracts, but net volume was very quiet at just under 73,000 contracts.  The rest was roll-over/switch volume out of February.

Gold only moved in a $12 price range yesterday, so the 5-minute tick chart isn’t worth posting.

It was mostly the same in silver in Far East trading.  The low tick over there came a minute or so after 3 p.m. China Standard Time — and the price crawled higher into the noon silver fix in London from there.  It was sold off a bit from there, culminating in a short, but vicious spike down about forty-five minutes later.  That was the low tick of the day, which was a penny or two below silver’s 50-day moving average.  The price chopped erratically higher from there, but really began to sail once the London p.m. gold fix was done for the day.  Then the moment that London closed, the price went vertical which had all the hallmarks of a “no ask” market.  The buyer either vanished moments later, or the price got capped by a short buyer/long seller of last resort — and it was sold back to the $17 spot mark by 12:15 p.m. in New York.  It crawled higher from there until minutes after the COMEX close — and then traded flat for the rest of the day.

Ted Butler carefully pointed out that unlike gold, silver was not allowed to rally after the COMEX close — and I know he’s got lots more to say about this in his weekly review later today.

The low and high ticks in this precious metal were reported as $16.635 and $17.26 in the March contract.

Silver closed in New York yesterday at $17.12 spot, up 38 cents.  Not surprisingly, net volume was very decent at just under 58,000 contracts.

And here’s the 5-minute silver tick chart courtesy of Brad Robertson.  It’s obvious at a glance that all the volume that mattered began at the 6:30 a.m. Denver time COMEX open, with most if it centered around the big spike in price after London closed.  Within fifteen minutes of the 11:30 a.m. Denver time COMEX close, the volume was back to mostly fumes and vapours.

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.

Platinum followed silver and gold pricing very closing.  It was also turned lower at the noon London silver fix — and the low tick[s] of the day were set about two hours later in COMEX trading.  After that, the price rallied slowly but steadily higher right in the 5 p.m. EST close, finishing the Friday session virtually on its high tick at $984 spot — and up 8 bucks from Thursday.  Its low tick was $963 spot in morning trading in New York, so it had quite a hole to dig itself out of to actually close higher on the day.

Palladium inched lower throughout all of Far East trading, but was sold down a bit more about an hour before Zurich opened — and the spike low tick of $710 spot came around 9:45 a.m. in Europe.  After that it rallied unsteadily higher until 11:30 a.m. in New York — and then chopped quietly sideways into the close from there.  Palladium finished the day at $740 spot — and up $18 dollars from Thursday.

The dollar index closed very late on Thursday afternoon in New York at 100.53 — and began to chop higher almost from the moment that trading began at 6:00 p.m. EST a few minutes later.  The 100.82 high tick was printed about fifteen minutes before the London open.  It moved unsteadily lower from there before taking a bit of a dive starting at 8 a.m. in New York.  The 100.32 low tick came minutes after 9 a.m. EST.  It rallied back to the 100.70 level by minutes before 1 p.m. — and then faded a bit into the close.  The index finished the Friday session at 100.58 — up 5 whole basis points on the day.  Nothing to see here.

Of course the activity, or lack thereof, in the currency markets on Friday in no way, shape, or form can explain away what happened in the futures market in silver yesterday, as that was strictly a paper affair involving ‘da boyz’.  Once again they provided no currency fig leaf to hide behind as they went about their work on the COMEX.

And here’s the 6-month U.S. dollar index, which you can read into whatever you wish.

The gold shares opened unchanged, but quickly rallied to their respective high ticks, which came around 11:15 a.m. EST.  They gave back over half their gains by 12:20 p.m. — and then crawled quietly higher into the close, as they followed the gold price rally like a shadow for the rest of the day.  The HUI finished the Friday session up 1.13 percent.

The silver equities also opened unchanged — and after a brief dip into negative territory, rallied to their highs by 2:25 p.m. EST — and didn’t do much after that.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 1.83 percent, which wasn’t much of a gain, all things considered.  Click to enlarge if necessary.

And here are two 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 both of them.

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

I shan’t bother posting the year-to-date chart, as it’s the same as the month-to-date for obvious reasons.

The CME Daily Delivery Report showed that 47 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  The two short/issuers worth noting were JPMorgan with 35 contracts out of its client account — and Macquarie Futures with 10 out of its house account.  The only long/stopper worth mentioning was Canada’s Scotiabank once again with 45 contracts for its own account.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Friday trading session showed that gold open interest in January was unchanged at 47 contracts — and of course those were all issued for delivery on Tuesday as per the above paragraph, so gold is now done for the month.  Silver o.i. in January declined by 33 contracts, leaving 1 contract still around.  Thursday’s Daily Delivery Report showed that 34 contracts were actually posted for delivery on Monday, so something went astray with one contract.  This should be rectified in some manner by the close of trading on Monday.

Gold open interest for February dropped by 56,495 contracts, leaving 29,184 still around — but most of that will vanish by the middle of next week — and First Day Notice numbers for gold will be posted on the CME’s website on Monday evening — and I’ll have them for you in Tuesday’s column.  Silver o.i. in February increased by 15 contracts — and is sitting at 241 contracts still open.

There were no reported changes in GLD yesterday, but an authorized participant did add 758,165 troy ounces of silver to SLV.  This deposit follows hard on the heels of that 2.37 million troy ounce conversion of SLV shares for physical silver that occurred on Thursday.  Without doubt, JP Morgan owns it all now.

There was a smallish sales report from the U.S. Mint yesterday.  They sold 6,000 troy ounces of gold eagles — and 1,500 one-ounce 24K gold buffaloes — but no silver eagles.

Month-to-date the mint has sold 110,500 troy ounces of gold eagles — 30,500 one-ounce 24K gold buffaloes — and 4,897,500 silver eagles.  There are still two more business days left in January — and I’ll be far more interested in what their silver eagles sales are, than how much more gold they sell.  I’m sure that’s Ted’s opinion as well.

There was very little gold movement over at the COMEX-approved gold depositories on the U.S. east coast on Thursday…but what there was, was all in kilobar form.  All of the ‘in’ activity was 1,864.700 troy ounces/58 kilobars [U.K./U.S. kilobar weight] received at Manfra, Tordella & Brookes, Inc. — and there were 8 kilobars [U.K./U.S. kilobar weight] shipped out of that depository as well.  There was also 1 kilobar shipped out of Brink’s Inc. — and that one was the Chinese SGE kilobar weight.  The link to this tiny amount of activity, in troy ounces, is here.

Of course the big activity, as always, was in silver…as the turn-over for the fourth week in a row has been off the charts once again — and I just know that Ted will have lots to say about it in his commentary later today.  There was only 3,005 troy ounces received — and all of that went into Delaware.  But the ‘out’ activity totalled 1,813,829 troy ounces.  Of that that amount there was 1,318,072 troy ounces shipped out of HSBC USA, plus another 470,580 troy ounces out of Delaware.  The remainder came out of Brink’s, Inc.  The link to all this action is here.

With those big withdrawals yesterday, that now puts JPMorgan’s silver stash at a bit over 50 percent of the entire silver inventory of all eight COMEX depositories.

It was another fairly quiet day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They received exactly 1,000 kilobars — and shipped out 44 of them.  All of this activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.

The cut-off for yesterday’s Commitment of Traders Report was at the close of COMEX trading on Tuesday — and this is what I had to say in my Wednesday missive…”Just eye-balling the above charts for gold and silver, I’d say we’ll see mostly unchanged in both reports just from scanning the dojis.  But for the last several weeks, what was in the COT Reports was radically different than what appeared in the price action on these charts.  So I shall sit on the fence again this week.

The actual numbers were close to that, but the changes that did occur showed smallish increases in the  Commercial net short positions for both silver and gold.

In silver, the Commercial net short position increased by only 1,348 contracts, or 6.74 million troy ounces of paper silver.  They arrived at this number by purchasing 2,167 long contracts, plus they added 3,515 short contracts courtesy of the Managed Money traders.  The difference between those two numbers is the change for the reporting week.

Ted feels that there’s still a Managed Money trader with a big enough short position to be in the Big 4/Big 8 category — and that certainly distorts all the numbers in them.  The stand-out number in this week’s report was the fact that the Big 4 increased their net short position by around 2,200 contracts — and Ted hands all of that increase to JP Morgan — and pegs their short position at around 20,000 COMEX contracts, up from 18,000 the week before.

Under the hood in the Disaggregated COT Report, the Managed Money traders account for all of the weekly change, plus a whole lot more.  They went long to the tune of 4,512 contracts, plus they added 187 short contracts.  The net change is the difference between those two numbers, which is 4,325 contracts, more than three times the change in the Commercial net short position.

The Commercial net short position now stands at 415.4 million troy ounces of paper silver, which works out to 171 days of world silver production.

Here’s nine years worth of COT data for silver — and the changes in yesterday’s report are not material, at least on the surface.  Click to enlarge.

In gold, the commercial net short position increased by a smallish 3,263 contracts, or 326,300 troy ounces of paper gold.  They arrived at this number by purchasing 7,601 long contracts, plus they picked up 10,864 short contracts, the bulk of which came courtesy of the Managed Money traders.  The difference between those two numbers is the change for the reporting week.

Ted figures that there are still one or more Managed Money traders in the Big 8 category, so breaking down the internal numbers of the Big 4, Big 8 — and the raptors doesn’t explain very much.

The commercial net short position is now up to 12.64 million troy ounces of paper gold, which certainly isn’t a big change from last week’s report.

Under the hood in the Disaggregated COT Report, the Managed Money traders only accounted for 1,119 contracts of the change in the Commercial net short position.  To arrive at that number, they sold 6,407 long contracts, plus they added 7,526 short contracts, which the commercial traders were only too happy to provide.  The rest of the weekly changes came courtesy of the Other Reportables — and the Nonreportable/small trader categories.

Here’s the 9-year COT chart for gold and, like in silver, the changes this week are not material.  Click to enlarge.

But as I said in Friday’s column, it was a given that this COT Report was already yesterday’s news considering the price action since the Tuesday cut-off, particularly in silver — and especially after Friday’s silver shenanigans on the COMEX.

Ted was of the opinion that everything about this week’s price declines in the precious metals, plus yesterday’s price action in COMEX trading, was engineered to the nth degree by JPMorgan et al.  I’m not about to argue with that assessment — and I look forward to what he has to say about all this in his column later today.

Of course there are two more trading days left until the cut-off for next Friday’s COT Report, but also in the month of January as well — and much can happen between now and then.

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 135 days of world silver production—and the ‘5 through 8’ traders are short an additional 47 days of world silver production—for a total of 182 days, which is 6 months of world silver production, or about 442.2 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 415.4 million troy ounces.  So the Big 8…as usual…hold a short position larger than the Commercial net position to the tune of 442.2 – 415.4 = 26.8  million troy ounces…give or take.

In my conversation with Ted yesterday, he pegs JPMorgan’s short position at around 20,000 contracts, or 100 million ounces, which is up from the 18,000 contracts/90 million ounces it was a week ago.  A hundred million ounces works out to around 41 days of world silver production that JPMorgan is short.  That’s compared to the 182 days that the Big 8 are short in total.

The approximate short position in silver held by Scotiabank works out to around 53 days of world silver production.  For the tenth week in a row, Scotiabank is the King of the silver shorts in the COMEX futures market.

The two largest silver shorts on Planet Earth—JPMorgan and Canada’s Scotiabank—are short about 94 days of world silver production between the two of them—and that 94 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 21 days of world silver production apiece.  The four traders in the ‘5 through 8’ category are short a hair under 12 days of world silver production apiece.

And to put it another way, the short positions of Scotiabank and JPMorgan combined, represents a bit more than 50 percent of the short position held by all the Big 8 traders combined.  How’s that for a concentrated short position?

The Big 8 are short 49.9 percent of the entire open interest in silver in the COMEX futures market — and that number would be around 55 percent once the market-neutral spread trades are subtracted out.  In gold it’s 36.1 percent of the total open interest that the Big 8 are short.

In gold, the Big 4 are short 42 days of world gold production, it was 41 days last week — and the ‘5 through 8’ are short another 20 days of world production, which is unchanged from the prior week, for a total of 62 days of world gold production held short by the Big 8.  Based on these numbers, the Big 4 in gold hold about 67 percent/two thirds of the total short position held by the Big 8.  How’s that for a concentrated short position within a concentrated short position?  At least it’s not as bad as silver in that regard.

The “concentrated short positions within a concentrated short position” in silver, platinum and palladium held by the Big 4 are about 74, 73 and 70 percent respectively of the short positions held by the Big 8.  These percentages are unchanged from last week’s COT Report.

Here’s a chart that Nick Laird whipped up for me — and was one that I used in my presentation at the Vancouver Resource Conference last weekend.  For obvious reasons, it’s based on the COT Report from Friday, January 20 — but the differences between that one, and the current one, aren’t material.  It shows the “Approximate Short Positions of the Big 8 Traders in COMEX Silver“.  Click to enlarge.

From last week’s COT Report — and Nick Laird’s data — it’s a known fact that the smallest of the Big 8 traders are the ‘5 through 8’ — and their total number of days of world silver production held short totalled 48 — and the Big 4 largest traders held 136 days of world silver production short between them.

There were three ‘knowns’ in the Big 4 category which helped with the numbers.  The first was Ted’s approximation of JPMorgan’s short position — which was 35 days.  We also knew that Scotiabank’s short position was larger than JPMorgan’s.  The third and really helpful data point was the fact that Ted detected the presence of a Managed Money trader with a short position so large that it had crept into the Big 4 category.  In order to do that, it has to be a bigger position that the 4th largest trader in the ‘5 through 8’ category.

The two most important things to remember about this chart are that my selections for the small ‘5 through 8’ category on the left-hand side of the chart are purely arbitrary.  But two things are important here…the total of all four traders has to add up to 48 daysand it’s a given the short positions held by these four small traders aren’t all the same.

And, to a certain extent, the short positions of the Big 4 traders are mostly arbitrary as well, but the data points that we already knew, thanks to Ted, made the job easier.  Of course, the four largest traders had to add to up 136 days of world silver production.

Like I said, this chart is an approximation of the positions of the 8 largest traders on the short side in COMEX silver.  The exact short positions for each of these 8 traders is not know for sure, of course.  But I’ll absolutely guarantee you that if those numbers were available to be plotted on a chart similar to this one, the two charts would have more or less the exact same shape.  There’s no getting around that.

Ted was more than curious as to which firm it would be that holds down the #3 spot on this chart.  The one thing that he did know about this entity is that they were not a bank…U.S. or foreign.  I guessed that it was a brokerage house — and the first one that came to mind was Morgan Stanley.  The reason I picked them was because this silver price management scheme has so far turned out to be a 100{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} North American affair — and that’s why I suspect the #3 short position to be U.S.-based as well — and they fit the bill.  However, I do reserve the right to be wrong about that.

I’ve tried to cut the stories down to the bare minimum, but still have a fair number — and I hope you have time to read them in what’s left of your weekend.

But before I start in on them, I must correct an error in my commentary on a story headlined “Rep. Gabbard calls on U.S. govt to stop ‘supporting terrorists’ after meeting Syria civilians and Assad“.  I made the assumption that ‘Rep.’ in the headline stood for ‘Republican’…when it actually was the abbreviation for ‘Representative’.  This is the sort of thing that happens when a Canadian attempts to ‘improve’ on a U.S. news story.  I had two readers point this out to me yesterday, so I’m sure a lot more of my U.S. subscribers noticed it as well.  My apologies to all.


Q4 GDP Misses Big as Exports Tumble: U.S. Economy Grows a Paltry 1.6{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} In 2016

It appears that Deutsche Bank’s warning that the global economy is about to roll over was spot on, because moments ago the Bureau of Economic Analysis reported that GDP in Q4 rose only 1.9{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}, barely above the lowest forecast of 1.7{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}, and below both the consensus estimate of 2.2{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} and the whisper estimate of 2.5{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}-2.6{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}. The reason for the big miss, and nearly 50{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} drop from the 3.5{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} print in Q3: a collapse in contribution to GDP from trade (net exports and imports) which subtracted a whopping 1.7{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} from the headline number. So much for that bumper soybean bumper boost to the US economy. The silver lining: Business investment picked up to 0.67{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} of the final print, potentially a harbinger for faster capital spending in 2017.

Net exports subtracted 1.7{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} points from Q1 GDP, the most since the second quarter of 2010, as the trade deficit widened following a jump in soybean shipments that helped add to growth in the third quarter. The chart below shows just how big the trade slowdown was in the last quarter.

The adverse impact from trade is shown in the contribution chart below: the -1.7{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} reduction from the bottom-line annualized number was the largest since 2010.

Inventory expansion added 1 percentage point to GDP growth, as stockpiles were rebuilt at a $48.7 billion annualized pace following a $7.1 billion rate.

Personal Consumption Expenditures, while not distressing, slowed down again, and contributed just 1.7{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} of the final number, the lowest since Q1. In addition to household spending, the economy got help from business spending on equipment, which rose 3.1{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} for the first gain in five quarters. Inventory accumulation added the most to growth since early 2015, housing made the strongest contribution in a year and government spending picked up.

This 6-chart Zero Hedge article showed up on their Internet site at 8:43 a.m. on Friday morning EST — and I thank Richard Saler for today’s first story.  Another link to it is here.

Luxury home sales continued to slump in the fourth quarter

Uncertainty around the election spooked wealthy home buyers in the fourth quarter, continuing 2016’s slowdown in luxury real estate, according to several new reports

Sales in the Hamptons, Aspen and Los Angeles fell by double-digit percentages in the fourth quarter, as the supply of unsold homes grew and prices came under pressure, according to market reports Douglas Elliman and Miller Samuel Real Estate Appraisers & Consultants.

Separate research from Redfin found that luxury properties nationwide under-performed the broader housing market for the eighth consecutive quarter. The supply of homes priced at $1 million or more rose 1 percent in the fourth quarter, while the number of $5 million-plus homes was up 15 percent.

The Trump rally in the stock market did little to move prices in luxury real estate,” Redfin’s chief economist Nela Richardson said. “Cities with booming luxury markets attracted traditional high-income buyers seeking a place to live, work and grow their families. Prices in cities with more transient luxury buyers, looking for investments or a place to park their wealth, had more tepid growth to close out 2016.”

This CNBC news item [complete with a 34 second video clip] showed up on their Internet site at 12:30 p.m. EST on Thursday afternoon — and it’s something I found embedded in yesterday’s edition of the King Report.  Another link to it is here.

Is It Time to Escape to Your Personal Alamo? — Doug Casey et al

Doug Casey, Jeff Thomas, and Nick Giambruno recently discussed a topic they all think about often—pulling the trigger and leaving your home country to sit out an economic or political crisis.

This is an issue that came up in my interview with gold/‘s Peter Spina in our interview at the Vancouver Resource Conference on Monday.

This longish, but very worthwhile discussion was posted on the Internet site yesterday, but brace yourself for the inevitable infomercial at the end.  Another link to it is here.

Fake news is about to get even scarier than you ever dreamed — Vanity Fair

Less than a month after Donald Trump was improbably elected the 45th president of the United States, a strange story began to make its way across social media. In the quaint days before Russia’s dissemination of fake-news stories in the interest of facilitating Trump’s victory became front-page news, a 28-year-old named Edgar Maddison Welch began reading about a pizzeria in Washington, D.C., that housed young children as sex slaves in a devilish operation masterminded by the recently vanquished Democratic candidate for president, Hillary Clinton. So Welch decided to drive the six or so hours up from his home in Salisbury, North Carolina, to Comet Ping Pong in northwest D.C., where he opened fire with an AR-15.

The Comet Ping Pong story, and the even more disturbing news of the Kremlin’s role in our election, merely underscore fake news’s rapid ascent from an amorphous notion to perhaps the most significant digital epidemic facing the media, government, and, at the risk of sounding mildly hysterical, democracy itself. One Pakistani military offender, confused by a fake-news story, raised the prospect of a nuclear war with Israel. (Recall that Michael Flynn Jr., the son of Trump’s national security adviser, shared the Comet Ping Pong story on Twitter.)

Meanwhile, our current president spent virtually his entire campaign inventing or proliferating fabricated stories such as his suggestion that Ted Cruz’s father was involved in the plot to assassinate John F. Kennedy (he wasn’t) and his pronouncement that violent crime was at an all-time high in the U.S. (crimes rates, while rising slightly in the last year, are near a 20-year low). While all of these stories were obviously fabricated in various ways, they did share one technological commonality: they were almost entirely text-based. And that is about to change.

This amazing article was posted on the Internet site on Thursday — and it’s downright scary!  It’s certainly a must read in my opinion — and I thank Roy Stephens for pointing it out.  Another link to it is here.

French Finance Minister: “May Is Not In a Position to Negotiate With Trump

With Theresa May – preparing to enact Article 50 officially starting the Brexit process from the E.U. – set to meet Trump tomorrow as the new U.S. president’s first meeting with an international leader to lay the groundwork for a U.S.-U.K. trade deal, the outcome will provide the first test for how world leaders can deal with Donald Trump, who has put the world on edge with his recent push for isolationism and trade protectionism, culminating most recently with his tweet that Mexico’s president needn’t bother visiting if Mexico will not pay for the wall along the Mexican-U.S. border.

As we rediscover our confidence together –- as you renew your nation just as we renew ours –- we have the opportunity, indeed the responsibility, to renew the special relationship for this new age,” the U.K. prime minister will tell Republican lawmakers gathered in Philadelphia on Thursday, according to excerpts from her prepared remarks. “We have the opportunity to lead, together, again.

As Bloomberg notes, the good news for May, who’s due to meet Trump at the White House on Friday, is that he’s eager to cement relations and nail down a U.K. trade deal too — for his own reasons. He’d like to further drive a wedge into a fractured Europe and strengthen at least one trade relationship as he exits the Trans-Pacific Partnership and prepares to renegotiate NAFTA.

A close relationship between the U.S. and U.K. would prove that neither nation is turning inward — Trump after an election victory fueled by his “America First” campaign, and May as she takes Britain out of the European Union after last year’s Brexit referendum.

So May is opting to brush aside the worldwide protests that followed Trump’s inauguration and worked hard to secure Trump’s first meeting in office with a foreign leader.

This Zero Hedge article appeared on their website at 9:53 a.m. on Thursday morning EST — and it’s the second news item that I lifted from yesterday’s edition of the King Report.  Another link to it is here.

Lifting of Sanctions Could Be Costly To Russia — Paul Craig Roberts

Tweets on social media say Trump is about to lift the sanctions placed on Russia by the Obama regime. Being a showman, Trump would want to make this announcement himself, not have it made for him by someone outside his administration. Nevertheless, the social media tweets are a good guess.

Reports are that Trump and Putin will speak tomorrow. The conversation cannot avoid the issue of sanctions.

Trump during his first week has moved rapidly with his agenda. He is unlikely to delay lifting the sanctions. Moreover, there is no cost to Trump of lifting them. The sanctions have no support in the US and Western business communities. The only constituency for the sanctions were the neoconservatives who are not included in the Trump administration. Victoria Nuland, Susan Rice, Samantha Power are gone along with much of the State Department. So there is nothing in Trump’s way.

President Putin is correct that the sanctions helped Russia by pushing Russia to be more economically independent and by pushing Russia toward developing economic relationships with Asia. Lifting the sanctions could actually hurt Russia by integrating Russia into the West.  The Russian government should take note that the only sovereign country in the West is the United States.  All the rest are U.S. vassals. Could Russia escape the same fate?  Anyone integrated into the West is subject to Washington’s pressure.

The problem with the sanctions is that they are an insult to Russia. The sanctions are based on lies that the Obama regime told. The real purpose of the sanctions was not economic. The purpose was to embarrass Russia as an outlaw state and to isolate the outlaw. Trump cannot normalize relations with Russia if he lets this insult stand.

This commentary by Paul put in an appearance on his Internet site yesterday sometime — and it’s certainly a must read for any serious student of the New Great Game.  I thank Brad Robertson for sending it — and another link to it is here.

Kremlin-Baiting Trump…and What is the Risk? — John Batchelor Interviews Stephen F. Cohen

Says Batchelor the news is swamped this week by events on numerous fronts concerning efforts by both war parties in Washington and Moscow, Europe and in NATO to maintain the present New Cold War (NCW) at its present status of disarray against détente. And here Cohen maintains a common theme with all the “Kremlin baiting” of Putin and anti-Trump (pro Russian accusations) that various prominent people in Washington, including those who back the war party, are saying very vocally that the “New World Order” is falling apart. Richard Haass, Council on Foreign Relations, for example stated that all is in decline and even George Soros are echoing similar sentiments. Cohen maintains that this Kremlin baiting is a major threat to United States national security; how does Trump negotiate with Putin if all the gives by this administration are going to be treated as a proof of treason with his opposition in his own country? So far all his advisors, including Michael Flynn, seem baffled as to how to work in this environment.

But there are some signs that not all are Kremlin bashing as Batchelor brings up the case of Devin Nunes, Chairman, Permanent Select Committee on Intelligence who is demanding proof from the various Intelligence Agencies to show proof of Russian involvement in the DNC scandal and to help Trump during his election campaign. Given that the investigation will be bi-partisan, there may be no light at the end of that tunnel, but on the other hand, if no real evidence is presented showing any Russian influence, there may be an opportunity for all parties to withdraw gracefully. This writer thinks the latter is unlikely. And Cohen makes a huge point that some American business interests did well in Russia, but Trump failed in his gambit to erect hotels. That should count in his favour in the investigation. Similarly, Trump’s National Security Advisor, Michael Flynn, has also come under fire as being too cozy with Putin and the Kremlin. Cohen considers the real need here is a full Congressional investigation into the whole American Intelligence Community and its activities domestically and internationally. There is a pressing matter of credibility of these institutions as a source of analysis for any president.

Détente is welcome in Russia by Putin and probably with most Russians, however, there is a cadre, the Russian War Party, that makes a position that the US has always broken its agreements with Russia, and the Trump administration will be no different. With the huge daily anti-Trump rhetoric from the U.S. MSM so vocal against Russia, it is easy to see how this attitude is supported. Also I think, for the first time Cohen mentions the possible existence of an all powerful group behind the visible Washington government called the “Deep State”. Russians, however, have no problem believing in this “shadow government” body. In the months and years ahead Trump will have a fifth column against him in opposition and it remains to be seen if he can surmount the obstacles that they are sure to erect against him.

This 39-minute audio interview appeared on the Internet site on Tuesday and, for the usual reasons, had to wait for today’s column.  Although the link to this interview came from Ken Hurt, the above executive summary comes to us courtesy of Larry Galearis as usual — and I thank him profusely on your behalf.  Another link to this interview is here.

Greece Is In Trouble Again: Bonds, Stocks Plunge as Bailout Talks Collapse; IMF Sees “Explosive” Debt

It may – or may not – shock readers to learn that Greece is once again on the verge of collapse.

10-year bond yields shot up and stocks tumbled on Friday, a day after euro zone finance ministers acknowledged the country’s fiscal progress but once again failed to break an impasse with the IMF over the country’s future bailout targets. Early on Friday morning, the greatest Greek nemesis alive, and surely in the afterlife, German Finance Minister Wolfgang Schaeuble said that Greece’s creditors won’t unlock further financial aid to the country unless the government meets its reform promises, which he said it hasn’t done yet.

Two years after its third bailout, Athens and the Troika, or is that Quadriga, i.e., its European and IMF creditors, are still at odds over the fiscal goals Greece can achieve after 2018, when its third rescue programme ends. According to Reuters, the talks have dragged on for months, hindering the conclusion of a bailout review that would help Athens qualify for inclusion in the ECB’s much despised bond-monetization programme and return to bond markets as early as this year.

And, yes, the ongoing disagreements have rekindled fears of a new crisis in Greece, which never really emerged from any of the previous ones, which was forced to sign up to another bailout in July 2015 in order to stay in the euro zone.

Worse, hinting that there may not be a 4th bailout simply because the Greek people will snap by then, the Greek parliament’s budgetary office warned on Friday that “the fiscal cost of the delays may prove bigger than the benefit of a deal“.

I had a story in my column a day or so ago about this, but here’s the Zero Hedge spin on it.  It’s on the longish side, but certainly worth reading if you have the interest.  It’s the second offering of the day from Richard Saler — and another link to it is here.

In double whammy for Turkey, Fitch cuts to junk after S&P slashes outlook

Ratings agency Fitch downgraded Turkey’s sovereign debt to “junk” on Friday, snuffing out its last remaining investment grade and underscoring deepening concern about politics and monetary policy in what was once a star emerging market.

The ratings cut, although widely expected by the market, came hours after rival agency Standard & Poor’s surprised investors by lowering its outlook for Turkey to “negative” from “stable”.

Both agencies sounded concern about political insecurity after a failed coup last year, as well as pressure on the central bank. More than 100,000 people have been sacked or suspended in the civil service and the private sector since the July 15 abortive putsch. Thousands more have been arrested.

Political and security developments have undermined economic performance and institutional independence,” Fitch said in its statement. It lowered its rating to BB+ from BBB-, the latter being its lowest investment-grade rating.

Last year, S&P cut Turkey’s rating further into junk territory. Moody’s later followed suit and cut its own rating to junk, citing worries about the rule of law after the failed coup, and a slowing economy.

What’s the big deal here?  The debt of all countries on Planet Earth, except for Russia, is junk, because none of it will ever be repaid.  This Reuters news item, filed from Istanbul, showed up on their Internet site at 5:00 p.m. EST on Friday afternoon — and it’s something I found on Doug Noland’s website when I was looking for his latest Credit Bubble Bulletin.  Another link to it is here.

Global trade update — Alasdair Macleod

The easy pattern of prolonged trade negotiations has been rudely interrupted by President Trump. Even before he had become President his anticipated presence in the White House changed global attitudes and expectations. In Europe, E.U. officials are wrong-footed, while British trade officials cannot believe their luck.

E.U. officials were prepared to punish the U.K. knowing they could prevaricate forever, because the E.U. should never, in its view, be challenged by a member state. The U.K. has been a disruptive member, and other members must be discouraged from following Britain’s exit at a time when there are increasing signs of rebellion by Europe’s deplorables. Britain, having shocked its own establishment by voting for Brexit, faced the prospect of protracted negotiations with the E.U. that could, in the words of one British official who has since resigned, take a decade or more.

President Trump has dramatically changed the balance of power in Britain’s trade negotiations with the E.U. It is probably no accident that the British approach was finally declared after Trump won the presidential election, and his attitude to trade with Britain was more friendly than Obama’s. The British negotiating strategy is remarkably sensible from a government that hasn’t until now believed in free markets, at least to the extent that it is prepared to back genuine free trade as a policy. Effectively, the E.U. has been told by Mrs. May that Britain will propose, and they can take it or leave it, because Britain’s focus is now to trade relatively freely with the rest of the world. And if they don’t agree, Britain will cut corporation taxes to compensate British-based businesses from E.U. intransigence.

This commentary by Alasdair appeared on the Internet site on Thursday sometime — and I thank Peter Holland for bringing it to my attention — and now to yours.  Another link to it is here.

Silver, Gold and Commodities in 2017 — Alasdair Macleod

China launched the One Belt One Road (OBOR) project 5+ years ago and made their first rail delivery in February 2016. China has been stock piling commodities, especially base metals, like copper and steel, for the past 2+ years in order to produce all the finished goods necessary to construct the largest infrastructure the world has ever seen. In 2016 we witnessed close to a doubling of the market price for iron ore and Alasdair sees this trend continuing into 2017.

I sat down with Alasdair Macleod, Head of Research at, to discuss the current state of commodities, gold, silver and the mining sector. According to Mr. Macleod, China has run into a bit of problem with their stock piling efforts. The iron ore has now been ruined and will need to be replaced. This will create even more stress on the mining industry due to the fact mines have been in decline for the past several years since their capital inflows have slowed. We have seen a resurgence of interest in the mining sector for the past year and this will help to relieve some of the stress, however, it is a question of how long will it take to create the needed relief.

President Trump campaigned, and won the Presidency, on a platform of returning jobs to America. He has vowed to unleash an infrastructure project that will rival China’s OBOR project. Where will the raw materials come from? How quickly will they get to market to produce the finished goods necessary to rebuild America’s infrastructure along with China’s already in progress infrastructure project? This does not take into account India and China’s internal solar projects that promise to power somewhere around 600 million homes between the two countries. The required volume of silver alone has forced China to purchase raw silver ore directly from the mines and refine it themselves. How can this continue?

This 42:26 minute audio interview with host Rory Hall over at the Daily Coin was posted on the Internet site on Monday — and for length reasons had to wait for my Saturday column.  I thank Larry Galearis for sharing it with us.  Another link to it is here. [Note:  I understand from this report that China’s current iron ore stockpiles are now “ruined”.  I wasn’t aware this was possible.  If someone has an explanation as to why this is so, I’d love to hear from you. – Ed]

Doug Noland:  A Dubious Monetary Backdrop

At least for this week, I’ll leave it to others to pontificate on the economic merits of Trump policy making. Dow 20,000 is testament to the market’s ongoing fixation with tax reduction and reform, deregulation and imminent fiscal stimulus. There were enough disquieting developments this week to dent confidence, though break-out bullish exuberance proved resilient. Unwavering faith in the course of central banking surely underpins the markets, confidence that I expect to be challenged in 2017.

My focus – one that the world now largely neglects – is on unsound global finance. It’s such an extraordinary backdrop – in all things monetary, in politics, geopolitics and the markets. Yet it is anything but a new experience for speculative markets to disregard latent financial fragilities. And we’ve witnessed in past episodes the capricious nature of market psychology. There’s something to glean from each one.

I think back to the summer of 1998. Markets were surging to record highs, led by monster advances in bank and financial stocks. The mantra was “the West will never allow Russia to collapse” – certainly not after the devastating Asia Tiger debacle. The simultaneous autumn implosions of Russia and LTCM not only punctured the financial Bubble, they almost brought down the global financial system.

Bolstered by “The Committee to Save the World” and all the Fed’s Y2K histrionics, powerful Bubble reflation saw NASDAQ almost double in 1999. Fear somehow just vanished as greed took full control. The U.S. was the indisputable leader of the free-world; there was an unassailable New Paradigm of technology-induced prosperity; America was the vanguard of technological revolution; and the dollar was unconditional king. With the clairvoyant Maestro leading U.S. and global central bankers, the New Millennium was destined to be the golden age of prosperity. Naysayers were tarred and feathered, yet that didn’t change the harsh reality that finance was fundamentally unsound.

Doug’s Credit Bubble Bulletin was posted on his website sometime before midnight Denver time last night — and it’s always a must read for me.  Another link to it is here.

Matthew McConaughey takes on Bre-X, but the real story behind ‘Gold’ is crazier than fiction

It’s often been said that the story of Calgary’s Bre-X Minerals had all the makings of a Hollywood script: gold, love, betrayal and an enduring mystery.

Two decades after the stock-market darling was declared a colossal hoax, the mining firm’s amazing tale is finally getting the celluloid treatment — though loosely based on true events.

In Tinseltown’s take, called Gold, the producers swap in Reno, Nev., for Calgary, and Matthew McConaughey for stocky executive David Walsh.

But whatever embellishments the scriptwriters added, they needn’t have bothered.

The true story behind Bre-X — a $3-billion swindle that ruined countless lives ­— remains an epic tale of deceit, greed and ruin.

A lot of people ended up losing a lot of money — their life savings, in many cases,” says Jaana Woiceshyn, assistant professor in strategy and global management at the University of Calgary’s Haskayne School of Business. “It was a spectacular fraud and a warning example for investors and anyone contemplating trying to become rich that way. In Canada, it remains probably the biggest business-related fraud we’ve seen.

This very long exposé showed up on the Calgary Herald‘s website on Thursday — and was updated late on Friday morning Mountain Standard Time [MST].  Roy Stephens sent it to me yesterday evening — and it’s definitely worth reading, as I remember the scam all too well.  Another link to it is here.



You can easily judge the character of a man by how he treats those who can do nothing for him.” — Malcolm S. Forbes

Today’s pop ‘blast from the past’ was pretty easy.  I’ve posted this group’s works before.  They’re an extraordinary group of Moscow musicians…’Leonid and Friends’…that cover tunes from the American rock group Chicago.  The first two covers I posted were “Wishing You Were Here” and “Make Me Smile“…back in November sometime, I believe.  Both which were first rate.  But they outdid themselves with their cover of “25 or 6 to 4” which they posted on in December.  If you can tell the difference between them and the original version, you’re better than I am.  One of the guitar player, Sergey Kashirin, is simply amazing — and that takes nothing away from the rest of the group, as they’re all gifted musicians in their own right.  He really cooks on this number.  It’s a must watch for sure — and full screen is a must as well.  Enjoy — and I just know you will.  The link is here.

Today’s classical ‘blast from the past’ is one that I was listening to while I was bottling wine on Thursday.  It’s Bach’s Brandenburg Concerto #1 in F major, BWV 1046.  This performance is courtesy of the Freiburg Baroque Orchestra — and was recorded in the Hall of Mirrors, Palace of Cöthen, 23-26 March 2000.  The link is here.

The gold price didn’t quite make it down to its 50-day moving averages yesterday — and silver pierced its by 2 whole cents — and not for very long, either.  Then we had the paper hangers in the COMEX futures market put on a show in silver — and the timing of the price action around the London p.m. gold fix — and the London close an hour later, was beyond exquisite.  Ted said it looked like a perfectly planned and executed event — and I just know he’ll have more to say about it later today, as he’s the real authority on all this.

Here are the 6-month charts for all four precious metals, plus copper, so you can see the where the various moving averages lay vs. their current prices.  It still remains to be see if JPMorgan et al are going to take one last swing for the fences and punch silver and gold prices a meaningful amount below their respective 50-day moving averages.  But after yesterday’s price action in silver, I would be amazed if that is still in the cards.

Forty-six years after the world was “temporarily” yanked off the last vestiges of a gold standard by Richard M. Nixon, the economic, financial and monetary carnage before us is terrifying to behold.  The mountains of consumer, corporate and national debt in all countries [except Russia] that will never be repaid, staggers the imagination.  After writing about this for the last ten years or so, I’m starting to run out of adjectives and superlatives to describe the current situation, which proceeds from bad to worse with each passing week.

As for which yet unseen financial event finally brings down this house of economic and financial horrors, is still not known.  However, the process may have already started, but has yet to manifest itself in a form that we recognize.  But come down it will…because it must.

The commentary by Doug Casey et al in the Critical Reads section headlined “Is It Time to Escape to Your Personal Alamo?” is very much apropos at this time in history — and I urge you to put some thought into it.  Their comments easily fall into that Benjamin Franklin quote from way back when that states…”An ounce of prevention is worth a pound of cure.

That’s sage advice for any day and age…but particularly for this day and age.

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


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