The Precious Metals Get Sold Lower…and the Shares Get Hammered Again

28 February 2017 — Tuesday


The gold price didn’t do a whole lot of anything during Far East trading on their Monday.  But once London opened, it was sold down a few bucks.  Then the price didn’t do much until the dollar index fell of a cliff at exactly 8:30 a.m. in New York.  The gold price began to head higher at that point, but ran into “all the usual suspects” moments after the London close as the price went vertical, touching its 200-day moving average in the process.  Then a dollar rally of some size was engineered — and that started at exactly 12:00 o’clock noon EST.  ‘Da boyz’ used that opportunity to sell gold down hard — and they didn’t stop until the low tick of the day was set around 4 p.m. EST in the thinly-traded after-hours market.  It rallied a dollar and change into the 5 p.m. close.

The high and low tick were reported by the CME Group as $1,264.90 and $1,251.50 in the April contract.

Gold was closed in New York on Monday at $1,252.10 spot, down $4.80 from Friday’s close.  Net volume was very heavy at just under 199,000 contracts.

Brad Robertson had to leave the office early yesterday — and the 5-minute tick charts he sent didn’t show a large chunk of the engineered price decline in either precious metal, so I passed on posting them.

Like gold, the silver price didn’t do much in either Far East or London trading but, also like gold, began to rally once the dollar index headed south.  The vertical price spike at 11:15 a.m. EST got capped immediately — and once the engineered rally in the dollar index began at noon, the engineered price decline in silver commenced as well.  JPMorgan et al set the low tick in this precious metal the same time as they did for gold.

The high and low tick in silver were recorded as $18.475 and $18.205 in the March contract.  Net volume was pretty decent at 46,000 contracts as March went off the board.  Roll-over/switch volume out of March was pretty decent as well, but not as much as it was on Friday.

After trading flat through most of Far East and Zurich trading, the platinum price began to head higher at the noon silver fix in London, which was 1 p.m. in Zurich.  That ended at the afternoon p.m. gold fix — and although it jumped up in price at 11:15 a.m. EST, just like silver, its price was brutally capped at that point — and once the dollar index got ramped, down went the platinum price as well.  It finished the Monday session at $1,026 spot, down a buck on the day.  At its high, it was up 15 dollars.

Palladium spent most of the Far East session on Monday trading lower by a few dollars, but was back to unchanged by the Zurich open.  It rallied a few bucks in the early going, but was back to unchanged by thirty minutes before the COMEX open.  Then away it went to the upside — and you know the rest — although once the COMEX closed for the day, the downward price pressure backed off by quite a bit.  Palladium closed yesterday at $780 spot — and up 10 dollars on the day, but was up $17 at its high.

The dollar index closed very late on Friday afternoon in New York at 101.14 — and didn’t do much when trading began around 4 p.m. EST on Sunday afternoon.  After an hour or so, it rallied up to around the 101.27 mark — and gave it all back shortly after that.  It chopped quietly lower from there until precisely 8:30 a.m. EST — and then headed south with a vengeance.  Except for a brief blip upwards and back above the 101.00 mark briefly at the London p.m. gold fix, it was all down hill until the usual ‘gentle hands’ appeared around 11:45 a.m.  The 100.69 low tick was set at that juncture — and the ramp job began at precisely noon in New York.  That ended at the 101.18 mark just a few minutes before the COMEX close — and it didn’t do a lot after that.  The dollar index finished the Monday session at 101.15 — and up 1 whole basis points from its close on Friday.

There should be no doubt in anyone’s mind that the powers-that-be hit the ‘ramp the dollar index/smash precious metals’ button at 12 o’clock noon EST yesterday — and that was helped along by someone at the Fed commenting that an interest rate increase at the March Fed meeting had become more likely.

Here’s the 3-day dollar index chart so you can put Sunday and Monday’s activity in some perspective.

And here’s the 6-month U.S. dollar index chart — and it’s just as managed as the Dow and precious metal prices.

The gold stocks opened down a hair, but quickly rallied into positive territory.  They were up about 3 percent at their highs, but they began to head lower when ‘da boyz’ showed up a few minutes before noon in New York.  From there the stocks got slaughtered out of all proportion to the decline in the gold price.  Not only did they give up all their gains, but they got closed down another 5.06 percent on the top of that.  It was a bloodbath.

It was an identical scenario for the silver equities.  They were up about 2.5 percent at their pre-noon EST high ticks — and by the time the markets closed in New York at 4:00 p.m. EST yesterday afternoon, Nick Laird’s Intraday Silver Sentiment/Silver 7 Index got slammed to the tune of 5.47 percent.  Click to enlarge if necessary.

Several readers e-mailed me over the weekend — and yesterday — asking about the share price action vs. the prices of the metal themselves.  I’ve been talking about it in my column since last Wednesday — and here’s what I said in my Thursday column…”I must admit that I’m rather underwhelmed by the soft price action in the precious metal shares so far this week — and a quick glance at the gold and silver charts posted above indicates that a topping pattern may be in progress.  I wouldn’t be at all surprised if we saw an engineered price correction from here…courtesy of JPMorgan et al…particularly in silver — and that’s despite the fact that the set-up in the COMEX futures market in gold is very bullish.

And this is what I said in my Friday column…

As I said in yesterday’s column — and I’ll be even more emphatic about it today — and that’s that the precious metal share price action has been terrible all week.  And why that extended into Thursday is beyond me.  I do not like what it may portend.

And in my Saturday column under the Silver Sentiment/Silver 7 chart, I had this to say…

As you know, dear reader, I’ve been going on about the rotten share price action since my column on Wednesday, so today’s rant will make it four day in a row.  I have no idea why the share price action is so rotten, as it makes absolutely no sense at all.  It’s possible that ‘the powers-that-be are dicking with them, but I don’t want to go too far down that particular rabbit hole.

And also in The Wrap

To add more intrigue to the above, one only has to look at the absolutely miserable performance of the precious metal equities over the last couple of weeks.  To say that it has been abysmal is being kind — and a few of the explanations I’ve heard on the Internet over the last couple of days just don’t cut it with me.  As I said in my comments on the HUI and Silver 7 Index in the first part of today’s column, I have no rational explanation for their behavior…and the only alternative explanation that I can come up with involves a red pill and rabbit hole, so I shan’t go there.

I’ll have a bit more on this in The Wrap.

The CME Daily Delivery Report showed that 1 gold and 349 silver contracts were posted for delivery on First Day Notice for March.  Scotiabank picked up the lone gold contract.  In silver, the only two short/issuers were AMD out of its client account with 182 contracts — and Canada’s Scotiabank out of its own in-house [proprietary] trading account with 167.  There were fifteen long/stoppers in total.  JPMorgan picked up 182 contracts…131 for its own account, plus another 51 for clients.  Macquarie Futures was back again, picking up 64 contracts for its own account.  ABN Amro rounded out the top three with 34 contracts for its client account.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Monday trading session showed that with deliveries for February now complete, gold open interest in March dropped by 186 contracts, leaving 639 left open, minus the 1 contract mentioned in the previous paragraph.  Silver o.i. in March fell by a chunky 10,060 contracts, leaving 7,300 still around, minus the 349 contracts mentioned in the previous paragraph.  I would suspect that it will drop a bit more in today’s report, but even if it does, this is still a fairly large number of contracts to have left.  It could be an interesting delivery month, but I’ll wait until tomorrow before passing further judgement.

Silver analyst Ted Butler had this to say about silver open interest for March in his weekly review on Saturday…”the remaining open interest in the March contract seems a bit elevated to me. The good news is that we won’t have to wait long to see if there might be a bit of pushing and shoving in this delivery process. One of these days we are likely to see pronounced physical tightness during a COMEX silver delivery month, although it’s been a mug’s game up until now to predict exactly when – which is why I’ve always steered far away from such predictions. Still, I can’t help noticing that even among those who invariably declare an impending delivery default for whatever the current approaching delivery month may be for years on end, I have heard no such predictions for this March. Just sayin’.

There were no reported changes in either GLD or SLV yesterday.

The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on insider their gold and silver ETFs for the week ending on Friday, February 24 — and this is what they had to report.  The amount of gold in their gold ETF declined by 26,623 troy ounces…but their silver ETF added 99,957 troy ounces.

There was a sales report from the U.S. Mint on Monday.  They sold 1,500 troy ounces of gold eagles — 500 one-ounce 24K gold buffaloes — and 325,000 silver eagles.

There was almost no activity in gold over at the COMEX-approved gold depositories on the U.S. east coast on Friday.  Nothing was reported received — and only 201 troy ounces were shipped out of Canada’s Scotiabank.  I won’t bother linking this amount.

It was another big day in silver however, as 1,838,578 troy ounces were received — and 647,644 troy ounces were shipped out.  Two container loads/1,238,770 troy ounces were received at Canada’s Scotiabank — and one container load/599,808 troy ounces was received at CNT.  There was a container load/619,885 troy ounces shipped out of CNT as well — and much tinier amounts from Brink’s, Inc. and Scotiabank.  A link to this action is here.

Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday, they reported receiving 650 of them, plus they shipped out 452.  All of this activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.

Here are two charts that Nick passed around on Friday — and because I was already full-up with charts for Saturday’s column already, they had to wait until today.  They show the updated weekly charts for all known gold and silver depositories on Planet Earth as of the close of business on Friday.  In gold, that increase was 574,000 troy ounces for the week — and in silver there was 1,155,000 troy ounces added.  Click to enlarge.

I have a fair number of stories today — and I’ll happily leave the final edit up to you.


Core Durable Goods Orders Tumble Most Since June, Shipments Slump

While the headline durable goods orders print beat expectation (rising 1.8{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} MoM in Jan) – thanks to a considerable downward revision in December – the core orders and shipments disappointed markedly and declined in all cases.  Core durable Goods Orders fell most since June and Shipments fell most since July as it appears ‘hard’ data drastically disappoints relative to ‘soft’ data expectations.

Core Durable Goods Orders declined: (-0.2{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} MoM vs. +0.5{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} Exp)

As once again the headline beat was all airplanes – military and civilian

  •     Defense aircraft and parts +59.9{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}
  •     Non-defense aircraft and parts +69.9{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}

And Core Capital Goods Shipments tumbled… (-0.6{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} vs. +0.2{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} exp)

This story appeared on the Zero Hedge website at 8:41 a.m. EST Monday morning — and it’s the first of two stories in a row from Brad Robertson.  Another link to it is here.

Pending Home Sales Tumble to Lowest In a Year (And It’s About to Get Worse)

Against expectations of a 0.6{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} rise, pending home sales in January plunged 2.8{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} MoM – the biggest drop since May.

The West – the most expensive region – saw the biggest decline, down 10.3{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} MoM with The Midwest also tumbling 5.2{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} MoM.

As mortgage rates have soared since the election (and mortgage applications tumbled), affordability has become a major issue according to NAR with pending home sales at the lowest in a year.

Lawrence Yun, NAR chief economist, says home shoppers in January faced numerous obstacles in their quest to buy a home.

This 3-chart Zero Hedge article was posted on their Internet site at 10:08 a.m. on Monday morning EST — and it comes to us courtesy of Brad Robertson.  Another link to it is here.

February forecasts see flat U.S. sales despite heavy discounts

U.S. new-vehicle sales this month are expected to be about the same as a year ago or down slightly, according to three forecasts issued this week, but it’s taking record incentives to keep up that pace.

Incentive spending in the first 12 days of the month reached a new February high of $3,748 per vehicle, J.D. Power said. That’s an 8.5 percent increase from February 2016. Average transaction prices also are rising, but incentives now account for more than 10 percent of transaction prices for the first time in any February since the auto market hit bottom in February 2009 during the 2008-09 Great Recession. Automakers will release February sales results on Wednesday, March 1.

While retail sales remain strong, the heavier discounts pose “a fundamental threat to the long-term health of the industry,” said Deirdre Borrego, senior vice president of automotive data and analytics at J.D. Power.

J.D. Power and LMC Automotive said they project new-vehicle sales to rise 0.6 percent after a slow start to the month, for a seasonally adjusted, annualized selling rate of 17.7 million. Edmunds estimates that sales will fall 1 percent, resulting in a SAAR of 17.6 million, and Kelley Blue Book is calling for a 3.3 percent decline and a SAAR of 17.1 million.

The SAAR was 17.57 million last month and 17.69 million in February 2016.

This story was posted on the Internet site last Friday — and it’s something I found in yesterday’s edition of the King Report.  Another link to it is here.

When selling starts in markets, it’ll trigger an “avalanche“, Marc Faber says

The man often hailed as the original ‘Dr. Doom’ is warning investors that the U.S. stock market is vulnerable to a seismic sell-off—one that could start any time in a very unassuming way.

Marc Faber, the editor of “The Gloom, Boom & Doom Report,” predicted the rally’s disruption won’t be caused by any single catalyst. His argument: Stocks are very overbought and sentiment is way too bullish for the so-called Trump rally to continue.

Very simply, the market starts to go down. As it goes down, it will start triggering selling, and then it will be like an avalanche,” said Faber recently on “Futures Now.” “I would underweight U.S. stocks.”

Faber, a supporter of President Donald Trump, isn’t blaming the new administration for his bearish forecast.

One man alone, he cannot make ‘America great again.’ That you have to realize,” he said. “Trump, unlike Mr. Reagan, is facing huge, huge headwinds — including a debt to GDP that is gigantic, as it is in other countries.”

There are three video clips that run concurrently, I believe — and total six minutes.  It appears that these three interviews were conducted last Friday, but weren’t posted on the CNBC‘s website until 5:03 p.m. on Sunday afternoon EST.  The first person through the door with these was Swedish reader Patrik Ekdahl — and another link to them is here.

Giant Fiscal Bloodbath Coming Soon — David Stockman

Former Reagan Administration White House Budget Director David Stockman says financial pain is a mathematical certainty. Stockman explains, “I think we are likely to have more of a fiscal bloodbath rather than fiscal stimulus.  Unfortunately for Donald Trump, not only did the public vote the establishment out, they left on his doorstep the inheritance of 30 years of debt build-up and a fiscal policy that’s been really reckless in the extreme.  People would like to think he’s the second coming of Ronald Reagan and we are going to have morning in America.  Unfortunately, I don’t think it looks that promising because Trump is inheriting a mess that pales into insignificance what we had to deal with in January of 1981 when I joined the Reagan White House as Budget Director.

So, can the Trump bump in the stock market keep going? Stockman, who wrote a book titled “Trumped” predicting a Trump victory in 2016, says, “I don’t think there is a snowball’s chance in the hot place that’s going to happen. This is delusional.  This is the greatest suckers’ rally of all time.  It is based on pure hopium and not any analysis at all as what it will take to push through a big tax cut.  Donald Trump is in a trap.  Today the debt is $20 trillion.  It’s 106{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} of GDP. . . .Trump is inheriting a built-in deficit of $10 trillion over the next decade under current policies that are built in.  Yet, he wants more defense spending, not less.  He wants drastic sweeping tax cuts for corporations and individuals.  He wants to spend more money on border security and law enforcement.  He’s going to do more for the veterans.  He wants this big trillion dollar infrastructure program.  You put all that together and it’s madness.  It doesn’t even begin to add up, and it won’t happen when you are struggling with the $10 trillion of debt that’s coming down the pike and the $20 trillion that’s already on the books.

Then, Stockman drops this bomb and says, “I think what people are missing is this date, March 15th 2017.  That’s the day that this debt ceiling holiday that Obama and Boehner put together right before the last election in October of 2015.  That holiday expires.  The debt ceiling will freeze in at $20 trillion.  It will then be law.  It will be a hard stop.  The Treasury will have roughly $200 billion in cash.  We are burning cash at a $75 billion a month rate.  By summer, they will be out of cash.”

This 26:31 minute video interview with David was posted on the Internet site on Sunday afternoon — and I thank Judy Sturgis for pointing it out.  Another link to it is here.  The Zero Hedge spin on this is headlined Stockman: “After March 15 Everything Will Grind To A Halt” — and has had 625,960 hits as of 9:11 p.m. EST last night.

U.K. government-backed Royal Bank of Scotland reports almost £7 billion loss for 2016

The Royal Bank of Scotland has posted a £6.96bn loss for 2016, a sharp rise from the £2.7bn recorded in the previous year.

The bank which is 72 per cent owned by the Government has been hit by £6.7bn in conduct and legal costs including a £3.1bn provision for mis-selling mortgage-backed securities in the US. It also spent £2bn on restructuring its operations.

RBS has lost more £50bn since it received a £45bn bailout from taxpayers at the height of the financial crisis.

Chief executive Ross McEwan said: “The bottom-line loss we have reported today is, of course, disappointing but, given the scale of the legacy issues we worked through in 2016, it should not come as a surprise.

These costs are a stark reminder of what happens to a bank when things go wrong and you lose focus on the customer, as this bank did before the financial crisis.

This news item put in an appearance on the Internet site last Friday — and Patrik Ekdahl sent it our way on Sunday.  Another link to it is here.

French farmers hope Marine Le Pen will free them from E.U. ‘straitjacket’

Bertrand Hourdel proudly pats one of his plump pigs, but the Brittany farmer is painfully aware that when he sells them, his profits, if any, will be slim.

He blames the European Union’s “straitjacket” of regulations and inaction by politicians from establishment parties for French farming’s deepest crisis since the Second World War.

Brittany’s verdant pastures and ancient stone farmhouses are a picture of bucolic bliss, but anger and desperation in France’s leading agricultural region, and other rural areas, are shifting the political winds in favour of Marine Le Pen’s anti-E.U. Front National.

France remains the biggest beneficiary of E.U. farm aid, but more than a third of French farmers earned less than €4,200 (£3,560) last year, squeezed by falling food prices and cheaper imports from other member states.

It is true that France is now a net contributor to the E.U. Mr Hourdel, who also grows crops on his 300-acre farm in Pordic, collects €40,000 a year in subsidies, but says his expenses are much higher. He would prefer to see E.U. aid replaced by a national system of quotas and subsidies, as Ms Le Pen proposes.

300 acres is mostly a hobby farm here in North America.  Economies of scale are killing the European [and British] farmer.  There is no happy way out of this for the farmer, the consumer, or France et al.  This article showed up on the Internet site on Saturday evening at 6:00 p.m. BST, which was 1:00 p.m. in New York…EST plus 5 hours.  It’s the second story of the day that I ‘borrowed’ from yesterday’s edition of the King Report — and another link to it is here.

The European Debt Bomb Fuse Is Lit! Target2 Imbalances Hit Crisis Levels

Vast liabilities are being switched quietly from private banks and investment funds onto the shoulders of taxpayers across southern Europe. It is a variant of the tragic episode in Greece, but this time on a far larger scale, and with systemic global implications.

There has been no democratic decision by any parliament to take on these fiscal debts, rapidly approaching €1 trillion. They are the unintended side-effect of quantitative easing by the European Central Bank, which has degenerated into a conduit for capital flight from the Club Med bloc to Germany, Luxembourg, and The Netherlands.

This ‘socialization of risk’ is happening by stealth, a mechanical effect of the ECB’s Target2 payments system. If a political upset in France or Italy triggers an existential euro crisis over coming months, citizens from both the eurozone’s debtor and creditor countries will discover to their horror what has been done to them.

As always, the debt markets are the barometer of stress. Yields on two-year German debt fell to an all-time low of minus 0.92pc on Wednesday, a sign that something very strange is happening. “Alarm bells are starting to ring again. Our flow data is picking up serious capital flight into German safe-haven assets. It feels like the build-up to the eurozone crisis in 2011,” said Simon Derrick from BNY Mellon.

This longish, but must read [in my opinion] commentary by Mish Shedlock was posted on the Zero Hedge website at 3:15 p.m. EST on Sunday afternoon.  It’s based on an Ambrose Evans-Pritchard article that came out last Thursday, but most of it was behind The Telegraph‘s subscription wall.  The quote above is the first four paragraphs from that AE-P commentary — and another link to the entire ZH article is here.  I thank Richard Saler for pointing it out.

Poland, Hungary Join Together to Challenge E.U. Bureaucracy

In 2015, Poland and Hungary joined together to stop an EU ministerial agreement that would have forced all EU countries to honor same-sex “marriages” wherever they were contracted in the European Union.

Europe is facing a prolonged period of political upheaval, with elections also slated for 2017 in Germany, France, the Netherlands and Italy – all countries where economic anxiety, opposition to the EU and a surge in migration have fed growing support for populist parties.

The EU is also deeply divided over the sanctions imposed against Russia. Many countries oppose the «trade war» and the discontent is growing. Imposed three years ago, the restrictive measures have failed to achieve any results. The policy has little impact on Moscow. President Vladimir Putin has said many times that Russia’s economy can rebound stronger from Western sanctions. It has been estimated that the cost to European farmers of the sanctions against Moscow is equal to €5.5 billion a year.

According to the Austrian Institute of Economic Research (WIFO), the macroeconomic effects of the trade loss, amounting to €34 billion in value added in the short run and €92 billion in the longer. Keeping farmers in business, on a drip of multi-million euro rescue packages is not a sustainable solution.

This Zero Hedge article, via the Internet site, was posted on the ZH website at 4:00 a.m. EST on Monday morning — and it’s another offering from Brad Robertson.  Another link to it is here.

Interesting week for Vladimir Putin and Donald Trump — The Saker

I don’t follow the western corporate media so I don’t really know how much coverage this development has received in the West, but in Russia and the Ukraine the big news is the decision by Russia to begin recognizing official Novorussian documents such as passports, driver licenses, school and college diplomas, etc. The Russians were pretty specific in the way the made the announcement. They said that it was a temporary measure dictated by humanitarian considerations. They have a point. Until now, the residents of the Donetsk and Lugansk People’s Republics had to travel to the Nazi-occupied Ukraine to try to get their documents. Which, considering how the Ukronazis consider anybody from the Donbass was not only futile, but sometimes dangerous. This decision makes perfect sense practically. But, of course, it has a far-reaching symbolic dimension too. The timing is also crucial: by recognizing the documents issued by the DNR and LNR authorities, the Russians have de facto “semi-recognized” the authorities which issued them and that is just a fairly short step away from recognizing these republics.

Right now, the Kremlin is vehemently denying any such thoughts. But all the Kremlin-affiliated commentators are rather blunt about what this really means. According to them, the message for the junta in Kiev is simple: if you attack Novorussia or if you officially ditch the Minks agreements we will immediately recognize these two republics. And, once that happens, it’s over the the Ukronazis, these republics will be gone just like South Ossetia or Abkhazia. Of course, nobody will officially recognize the independence of these republics, but neither will anybody do anything meaningful about it. And, let’s be honest, the Russian authorities couldn’t care less about what western politicians or their corporate media have to say: they already heard it all and it’s not like they could be demonized much further.

The next logical move would be to move the Russian border control from the Russian border to the line of contact. Or not. If the Russians don’t do it, this might be a sign that they support the official position of the Republics which is that they want to liberate the totality of the Doentsk and Lugansk regions. By the way, the Russian Border Guards are elite and highly militarized forces whose presence on the line of contact would in no way prevent a Novorussian (counter-)attack against the Ukronazi forces. So the decision about where to deploy them would have a primarily political dimension and no real military consequences.

This commentary by The Saker was posted on his website on Sunday — and is certainly worth reading if you have the interest.  I thank Larry Galearis for sending it our way — and another link to it is here.

The Body Count Grows: Covert War Is Being Waged Against Russia

In October 2014, the Washington Post openly speculated that Russia was responsible for spreading Ebola.

So in the spirit of speculation, and especially considering that no less than four top Russian diplomats have dropped dead in the last two months, we would like to share a rough chronology of all the “tragic accidents” and straight-up assassinations that have happened to — or been blamed on — Russia.

We did not attempt to list all the things that Russia has been blamed for over the last two years — ranging from Brexit to killer squids. This is strictly a body count.

This news item showed up on the Internet site on Sunday — and  I thank ‘aurora’ for sending it our way.  Another link to it is here.

Jim Rickards — The Biggest Financial Story in the World Today: The Dollar Shortage

The biggest financial story in the world today is not Fed policy or emerging-market debt. The biggest story is the global dollar shortage.

The reason the dollar shortage is the main event is that it affects all of the others. If dollars are in short supply, China can’t control its currency, emerging markets can’t roll over their debts and the Fed cannot pursue its plans to tighten monetary conditions without making the situation worse.

The global dollar shortage is the 800-pound gorilla in the boardroom of the international monetary elites.

Many observers are surprised to hear there’s a dollar shortage. After all, didn’t the Fed print almost $4 trillion to bail out the system after 2008? Yes, but while the Fed was printing $4 trillion, the world was creating $100 trillion in new debt.

When those debt holders want their money back, $4 trillion is not enough to finance $100 trillion, unless new debt replaces the old. We may be getting close to the end of the new debt cycle. That’s what causes a global liquidity crisis.

This commentary by Jim, which he’s spoken of on several occasions in the past, showed up on the Internet site last Thursday — and I thank Harold Jacobsen for bringing it to our attention.  Another link to it is here.

Workers in Japan encouraged to leave work at 3pm every last Friday of the month

Japan’s government is urging employees to leave the office early every last Friday of the month, hoping to crackdown on a culture of workaholics while providing a shot in the arm for the economy.

The Premium Friday campaign, which launched this week, is calling on workers to leave the office at 3pm once a month, and spend time with family, dine out or go shopping, according to Japan Times.

It is hoped that the initiative will encourage people to spend more money on food, in shops and on travel. All Nippon Airways, the country’s largest airline, is offering special discounts from Friday in a bid to entice people to take trips.

The campaign is part of a general push by the government to limit excessive working hours following the suicide of an employee at ad agency Dentsu that was reportedly ruled to be a “death by overwork”, and cast a harsh spotlight on Japan’s deeply entrenched problem of overtime and burnout. The president of Dentsu stepped down in the wake of the tragic incident and the company has since announced new measures such as switching off the office lights between 10pm and 5am.

This sad, but not surprising news story appeared on the Internet site on Saturday — and I thank Patrik Ekdahl for pointing it out.  Another link to it is here.

Royal Canadian Mint struggles to make money, documents show

The Royal Canadian Mint just isn’t making the money it used to.

Revenue is down sharply, jobs have been chopped, morale is in the tank, and formerly successful lines of business are being shut down — even as the mint spends millions of dollars on new executive offices.

Once a cash cow, the mint — which actually lost money in 2015 — is struggling financially.

Latest figures for the third-quarter of 2016 show that revenues were down by $208 million, or about 27 percent, and profits were down by $6.5 million, or 61 percent.

The weak financials mean the mint’s 1,200 employees likely won’t get their general annual bonus, which is based on meeting corporate profit targets. In April 2016 each worker took home an average of $8,204 in bonuses.

This news item was posted on the Internet site at 5:00 a.m. EST on Saturday morning — and was updated about three hours later.  I found it in a GATA dispatch on the weekend — and another link to it is here.

Central banks may have been evil with gold, but not stupid — Chris Powell

Warburton wrote that central banks easily could use big financial houses as intermediaries to control the commodity markets with derivatives and thereby prevent monetary inflation from showing up in consumer prices. For an effective hedge against inflation, Warburton wrote, investors would have to find commodities free of futures markets and thus free of the price-suppressive influence of the derivatives trading inspired and underwritten by central banks.

As it turned out, by the year 2000 gold leasing by central banks and the gold carry trade it supported had gone a little too far.

Financial houses had borrowed central bank gold at negligible interest rates, sold it for cash, and invested the cash in government bonds, collecting a handsome spread while helping Western governments support their currencies and bonds. This trade was risk-free trade as long as the financial houses had assurance that central banks would always inject more gold into the market as necessary. But the dishoarding of gold by central banks through the gold carry trade eventually drove the monetary metal’s price so far below the cost of production that production declined, shortages developed, and the market started to reverse upward.

At that point central banks could not recover their leased gold from the financial houses without worsening the shortage, exploding the gold price, and ruining the financial houses. So the central banks began selling gold — or, rather, every few weeks they announced that they were selling gold.

But actually the central banks were only arranging cash settlement of their gold leases and not requiring the gold’s return. This rescued the financial houses the central banks had used as cover for their interventions in the gold market.

Why is this a better explanation of the central bank gold sales that von Greyerz mocks as simple stupidity?

This very worthwhile commentary by Chris showed up on the Internet site on Saturday morning EST — and another link to it is here.

U.S. Mint flunks Koos Jansen’s gold audit document request, refunds his fee

Gold researcher Koos Jansen reports tonight that the U.S. Mint has provided him with some documents in response to his freedom-of-information request for documents related to audits of the U.S. gold reserve but the documents provided are incomplete, redacted, and hundreds of pages short of the number of pages he was told were involved for which he was charged, and so the Mint has refunded his payment.

As the money for his payment was raised by crowdfunding from his readers, Jansen is refunding their contributions.

This is more proof that something dishonest has been going on with the U.S. gold reserve.

This hugely long ‘news’ item looks more like the script for 3-part TV mini-series.  You’ll need to set aside a very decent chunk of your day to absorb everything that’s in this Koos Jansen commentary from Sunday.  I passed on it.  I found it in another GATA dispatch — and a link to that is here.

Bets on Gold Miner ETFs Show There’s Greed in the Fear Trade

Even in the fear trade, there’s a whole lot of greed.

While February is the shortest month of the year, inflows into the VanEck Vectors Junior Gold Miners exchange-traded fund (GDXJ) have already set a record at almost $926 million.

That’s about 60 percent more than its much larger, more conservative peer — VanExck Vectors Gold Miners ETF (GDX) — had attracted this month through Feb. 24. Junior miners are seen as riskier because of their smaller, and in some cases, uncertain asset bases. The Junior Miners ETF has about $5.7 billion in assets, compared with $11.9 billion in the older Gold Miners ETF.

Gold-based products are more of an inverse fear trade,” said Todd Rosenbluth, director of ETF research at CFRA in New York. “Miners are a beneficiary of that, but the money tends to focus more on GDX.”

Gold mining companies have rallied along with other precious metal as real interest rates, which jumped after the U.S. election, have been retreating. Strategists at UBS Group AG have predicted that rising market-based measures of inflation expectations will push real rates lower and propel gold toward $1,300 per ounce.

This gold-related Bloomberg news item put in an appearance on their website at 1:07 p.m. Denver time on Monday afternoon — and it represents the fourth and final offering of the day from Swedish reader Patrik Ekdhal — and I thank him on your behalf.  Another link to it is here.

Online channels in China shine with gold-backed financial products

Sellers of gold-backed financial products are expanding their online sales channels and attracting more investors to the precious metal as a hedging tool and asset safe haven, analysts have said.

More than 20 internet-based service providers have launched gold-backed financial management products so far, including Tencent Holdings Ltd, which started enabling users to give digital red packets of physical-gold-backed assets that can be transacted in real time.

Zeng Yan, an analyst with Guibao Precious Metal Investment Co, said: “The rising price of gold and its nature as a hedging tool are the major reasons financial service providers are launching these products. They believe market fluctuation and investor sentiment are affected by uncertainties in the global economy. Going online is an effective way for gold to touch more investors, particularly young ones.”

Also, in China, the consumption of gold and physical gold investment are closely related and investors would like to buy gold when prices rise as they believe a rising price is a signal that the precious metal is maintaining value.

These sound like Ponzi schemes in the making to me, but I’ll let you be judge and jury on this.  The gold eye candy in the embedded photo is worth the trip.  I thank Ellen Hoyt for sending it along in the wee hours of Monday morning Denver time — and another link to it is here.

Australia’s 2016 Gold Output Highest This Century — Lawrie Williams

According to Melbourne based consultancy, Surbiton Associates, which specialises in analysis of the Australian gold sector, the country’s 2016 new mined gold output came out at 298 tonnes, the highest annual production total since 1999.  This would seem to confirm Australia’s position as the world’s second largest gold producer after China (ca 455 tonnes according to latest USGS figures) and still ahead of Russia in third place which the USGS estimates produced 250 tonnes.  In fairness we should point out that the USGS estimate for Australian gold output for 2016 is a rather lower 270 tonnes, but we would take the Surbiton Associates figure as being locally analysed, and more up to date and thus the more accurate.  However this means that the USGS estimates for other countries may be equally under- or over- stated and we await more definitive figures as the year progresses.

One of the key factors in the rise in Australian gold output has been the strength of the gold price in Australian dollars – currently close to Aus$1,640 according to “This has encouraged the redevelopment of previously mined areas and the refurbishment of mothballed plants, thereby pushing Australian gold output higher.” Reports Surbiton Director, Dr Sandra Close

It was a good year for Australia’s gold miners,” she says. “We are getting very close to the 300 tonne a year mark but we still have a way to go to break the all-time annual record of 314 tonnes set in 1997.” Dr Close went on to say that from its all-time high some twenty years ago, Australian gold production had fallen to 220 tonnes by 2008 but since then has been trending upwards.

This very worthwhile gold-related news story from Lawrie was posted on the Sharps Pixley website on Monday — and another link to it is here.



It certainly appeared to be another in-your-face engineered price decline in all four precious metals, as they all took off higher at exactly 8:30 a.m. in New York, as the dollar index headed south in tandem.  Whether or not it was the lousy durable goods numbers that triggered it, is irrelevant.  But once gold’s 200-day moving average was touched, it was obvious that willing short buyers and long sellers were there in droves in all four — and then topped off by the magical appearance of a just-in-time dollar index rally courtesy of the usual ‘gentle hands’.  The algos got spun — and that, as I like to say, was that.

Here are the 6-month charts for all four precious metals, plus copper.  And since the cut-off for these charts is the COMEX close, the Monday dojis don’t reflect their respective closing prices at all.  A good deal of the downside price action came after that time, including the low ticks of the day.  That price activity won’t show up until Tuesday’s doji is posted on the Internet site later this afternoon EST.  Click to enlarge helps a bit with the first four charts.

And as I type this paragraph, the London open is less that ten minutes away — and I see that gold traded a dollar or so higher in the Far East on their Tuesday, but is inching lower at the moment — and is only up 60 cents an ounce.  Silver was up a nickel by around 11 a.m. China Standard Time — but it tacked on a couple of more pennies in the last few minutes — and is up 7 cents.  Platinum and palladium are both higher by 3 dollars each.

Net HFT gold volume is sitting at 28,000 contracts, which isn’t a lot — and that number in silver is right at the 6,500 contract mark, with virtually all of that volume in the new front month, which is May.

The dollar index made it up to the 101.23 mark shortly after trading began at 6:00 p.m. EST in New York yesterday evening — and it began to trend lower from there.  But once it hit the 101.00 mark around 2:45 p.m. CST, the usual ‘gentle hands’ showed up — and the dollar index is now down only 5 basis points as London opens.  At its low earlier, it was down 15 basis points.

Once again the precious metal shares got slammed out of all relation to the actual decreases in the precious metal prices themselves — and I’m at a real loss to explain this.  I heard nothing on the Internet about it that makes sense to me.  I did go over the situation at some length in the paragraphs under my discussion of the Silver Sentiment/Silver 7 Index…but since I wrote that about six hours ago, I don’t have a thing to add to what I’ve already said.

Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report — and after yesterday’s price performance in both silver and gold, I’ll wait until my Wednesday column before I stick my neck out regarding what Friday’s numbers might look like.  And whatever number I come up with will certainly be for entertainment purposes only, like it’s been for the last quite a number of weeks.

And as I post today’s column on the website at 4:05 a.m. EST, I note that the price pressure continue in all four precious metals the moment that London and Zurich began to trade about an hour ago.  Gold is down a dime currently — and silver is only up 2 cent.  Platinum is now back to unchanged — and palladium is only up a dollar.

Net HFT gold volume is just about 37,000 contracts — and that number in silver is around 8,500 contracts.

The dollar index has chopped back to about unchanged — and is down 1 lonely basis point at the moment.

I’d be lying if I said I had any clue as to what might happen going forward, or what’s going on right now for that matter.  It certainly appears to me that the powers-that-be are not only active in managing the precious metal prices, but their shares as well.  I have no other explanation, rational or otherwise, that explains this current dichotomy that began back on February 9.

Nor does anyone else, for that matter.  All we can do is watch and wait.

See you tomorrow.


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