The ‘Big 7’ COMEX Silver Shorts: Dead Men Walking? — Ted Butler

23 March 2017 — Thursday


There was no gold price activity worthy of the name during most of the Far East trading on their Wednesday.  There was a bit of a rally in the last two hours in Shanghai leading up to the London open, but that was mostly dollar index related — and the gold price was back to unchanged by the COMEX open.  It began to chop quietly higher from there, but it was obvious from the chart pattern that each and every rally attempt, no matter how puny, was being guided lower — and the high tick of the day came around 2 p.m. EDT in the thinly-traded after-hours market.  The price was sold down about 4 bucks from there by 3:30 p.m. — and didn’t do much after that.

The low and high ticks certainly aren’t worth my effort to look up.

Gold finished the Wednesday session in New York at $1,248.20 spot, up $4.00 on the day.  Despite the quiet price action, or because of it, volume was still pretty heavy at just over 175,000 contracts.  Roll-over/switch volume out of April was very decent.

Silver’s tiny rally in the first hour of trading when New York opened on Tuesday evening, was summarily dealt with –and the Far East low came around noon China Standard Time.  It chopped higher into the London open — and by 10:30 a.m. GMT, which was the morning gold fix in London, silver was at its low tick of the day.  It didn’t do much from there until about twenty minutes before the COMEX open — and was forced to follow gold’s price path more or less tick for tick until it was turned lower for the final time at 2 p.m. in New York.

As for gold, the high and low ticks aren’t worth looking up, either.

Silver was closed unchanged on the day at $17.51 spot — and just looking at the Kitco chart below, you can tell just how carefully the silver price was being managed on Wednesday.  Net volume was a tiny bit elevated at just under 42,000 contracts.

Platinum followed silver’s price path pretty closely, at least up until shortly before 9 a.m. in New York.  It was turned sharply lower from there, with the $958 low coming around 11:30 a.m. EDT.  It rallied a few dollars from there, before chopping sideways for the rest of the Wednesday session.  Platinum was closed at  $961 spot, down 7 dollars from Tuesday.

Palladium traded a few dollar lower in Far East plus morning trading in Zurich on Wednesday.  It began to rally with some conviction starting shortly after 11 a.m. CET [Central European Time] in Zurich — and the high tick came shortly after 11 a.m. in New York.  It was sold down about five bucks from there going into the COMEX close — and didn’t do much after that.  Palladium finished the Wednesday session at $787 spot, up 3 bucks on the day.

The dollar index closed very late on Tuesday afternoon in New York at 99.77 — and then traded sideways in a very wide range for the next twenty-four hours.  The 99.93 high tick of the day was printed around 9:30 a.m. GMT in London — and the 99.55 low came shortly before 11 a.m. in New York.  It chopped quietly higher from there into the close, as it finished the Wednesday session at 99.72 — down 5 basis points on the day.

Here’s the 6-month U.S. dollar index chart…

The gold stocks didn’t do much yesterday.  Their respective highs came shortly after 10 a.m. in New York — and were negative territory less than an hour later.  They came up for air on the odd occasion during the rest of the trading session, but despite the fact that the underlying metal was in positive territory during  the entire COMEX trading day, they couldn’t squeeze a positive close.  The HUI closed down 0.12 percent.

The silver equities opened around unchanged — and blasted to their respective highs shortly after 10 a.m. EDT as well.  An hour later they too were back in the red, although they didn’t stay there long.  By around 12:30 they were back in positive territory — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 0.48 percent.  Click to enlarge if necessary.

The CME Daily Delivery Report showed that zero gold and 88 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.  International F.C. Stone issued 86 contracts as the largest short/issuer by far and, not surprisingly, it was the JP Morgan show again as long/stoppers.  They picked up 71 contracts for their own account, plus another 15 contracts for their ‘client’ account.  And not that it matters, but Morgan Stanley picked up the other 2 contracts for its client account.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Wednesday trading session showed that gold open interest in March remained unchanged at 21 contracts still open.  Tuesday’s Daily Delivery Report showed that zero gold contracts were actually posted for delivery today, so those numbers work out OK.  March o.i. in silver dropped by 7 contracts, leaving 423 still open, minus the 88 contracts mentioned in the previous paragraph.  Tuesday’s Daily Delivery Report showed that precisely 7 silver contracts were posted for delivery today, so those changes in open interest work out as well.

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

There was a smallish sales report from the U.S. Mint yesterday.  They sold 3,000 troy ounces of gold eagles — 500 one-ounce 24K gold buffaloes — and 30,000 silver eagles.

It was another zero in/zero out day for gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday.

It was almost a bust in silver as well.  Nothing was reported received — and only 3,929 troy ounces were reported shipped out…all from Brink’s, Inc.  I shan’t bother linking this activity.

But the gold kilobar activity at Brink’s, Inc. in Hong Kong on their Tuesday more than made up for it, as they’ve been on a tear over there for that last couple of weeks.  They reported receiving 7,446 of them — and 3,232 were shipped out.  The link to that action, in troy ounces, is here.

Here are three charts that Nick Laird passed around long after I’d posted my Wednesday column on my website, so here they are now.  They show Swiss gold import and exports data updated with the February numbers.  They imported 139 tonnes — and shipped out 89 tonnes, for a net change of 50 tonnes.  Click to enlarge.

These next two charts show Switzerland’s February’s gold imports and exports divided up by country of origin — and destination — and there are no surprises in these statistics.  Click to enlarge with both charts.

I have an average number of stories for you today, including a very long Jim Rickards audio interview at the end.


Retail Nightmare Just Won’t End: Sears Crashes on “Going Concern” Warning, Payless to File Bankruptcy in Days

Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern,” Eddie Lampert’s company said although always eager to put a positive twist on the worst of news, the company added that its comeback plan may help alleviate the concerns, “satisfying our estimated liquidity needs 12 months from the issuance of the financial statements.” Of course, the question is what happens when vendors start demanding cash on delivery as concerns about SHLD’s liquidity concerns continue to grow.

The disclosure comes after more optimistic signs from the company, which has been working on a turnaround under Chief Executive Officer Eddie Lampert. As Bloomberg notes, Sears posted a narrower loss than predicted in the fourth quarter, and it has pledged to lower its debt burden and cut annual expenses by at least $1 billion.

In a separate report, Payless Inc., yet another struggling discount shoe chain, was preparing to file for bankruptcy as soon as next week, according to people familiar with the matter Bloomberg noted, and added that the company is initially planning to close 400 to 500 stores as it reorganizes operations. Payless had originally looked to shutter as many as 1,000 locations, and the number may still be in flux, according to one of the people.

Payless’s bankruptcy would add to a tumultuous year in retail, with several bankruptcies and hundreds of store closings — even at companies that aren’t distressed. The industry is racing to try to adapt to more online purchasing and a shift away from mall shopping.

    Payless was bought by private equity firms Golden Gate Capital and Blum Capital Partners in 2012 as part of the breakup of publicly traded Collective Brands Inc. The company, founded in 1956 in Topeka, Kansas, employs almost 22,000 people, according to its website. It has more than 4,000 stores in 30 countries.

This news item was posted on the Zero Hedge website at 11:22 a.m. EDT on Wednesday morning — and it comes to us courtesy of Brad Robertson.  Another link to it is here.

30-Year Treasury Yield Tumbles Below 3.00{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} – Lowest Since February

The Long Bond has erased all its losses for March as 30Y yields drop back below 3.00{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} for the first time since Feb 28th.

Given the massively over-extended length of shorts, there seems plenty of room for yields to fall further…

So much for the rate-hike…

This tiny 1-chart Zero Hedge offering showed up on their website at 11:14 a.m. EDT on Wednesday morning — and it’s the second offering of the day from Brad Robertson.  The chart is certainly worth a quick look — and another link to it is here.

5 Charts That Scream “This Is It”

Before yesterday, the S&P 500 and DJIA hadn’t seen a 1{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} drop since October 2016. For some perspective, Hillary Clinton was the presidential front runner the last time markets fell 1{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}. This was the longest such streak for both indices in over 20 years.

In February, the DJIA recorded its longest “winning streak” since 1987. It closed 2,000 points above its 200-day moving average for the first time ever.

Also in February, the combined market cap of the S&P 500 topped $20 trillion for the first time. Its market cap has increased by over $2 trillion since the election—staggering.

Like we discussed last month, with a proliferation of “record” highs in 2017, where are market valuations at today? The five charts below paint the whole picture best.

This chart-filled, but very worthwhile commentary showed up on the Zero Hedge website at 8:15 p.m. EDT yesterday evening — and another link to it is here.

Doug Casey Has “Never Seen Anything Like This

Doug Casey and I recently chatted about Trump and what his presidency means for the stock market. We also hit on the War on Cash, bitcoin, and a big third-world problem that’s headed straight for the US.

I think you’ll find our conversation timely and enjoyable.

This very worthwhile Q&A between Doug and International Man senior editor Nick Giambruno — and I thank Brad Robertson for sending it our way.

From Nuisance to Threat: The High Cost of Truth — Paul Craig Roberts

I am convinced that the U.S., and probably the entire Western world, that is, the American Empire, has entered an era in which respect for truth does not exist in public and private institutions. We have been watching this develop for some time. Think, for example, back to August 3, 2002, a recent time in terms of our present predicament, but a time prior to political consciousness of anyone younger today than 33 years old. In the summer of 2002, the world was being prepared by propaganda for a U.S. invasion of Iraq. On August 3 of that year, the prestigious British publication, The Economist, summed up the consensus of ruling opinion in two sentences: “The honest choices now are to give up and give in, or to remove Mr. Hussein before he gets his [nuclear] bomb. Painful as it is, our vote is for war.

As Lewis Lapham, myself and others asked at the time, what bomb?

The only evidence of a bomb was fabricated and known to be fabricated. The U.N. weapons inspectors concluded that the infamous Weapons of Mass Destruction were a creation of U.S. propaganda. President George W. Bush eventually acknowledged that Iraq had no such weapons. U.S. Secretary of State Colin Powell said that the lies he was deceived by the Bush regime into telling the U.N. about Saddam Hussein’s WMD are a stain on his career.

Despite the 2003 U.S. invasion known to have been based entirely on lies, U.S. troops were not pulled out of Iraq until 2011, and whether or not they were pulled out, they are back in Iraq now. None of these facts has had any impact on the good opinion that Washington and the media have of themselves.

Unchastened, Washington and its presstitutes lied about Libya and destroyed that prosperous country. They lied about “Assad’s use of chemical weapons against his own people,” and would have destroyed Syria also had it not been for the Russians.

This longish commentary, which is a must read in my opinion, put in an appearance on the Internet site a week ago — and my thanks go out to ‘aurora’ for bringing it to our attention.  Another link to it is here.

LIBOR mastermind Tom Hayes deserves a lot of company in prison

For anyone burning to see financial wrongdoers put behind bars, Tom Hayes might seem like an ideal white-collar villain. As a superstar derivatives trader at a series of investment banks in London and Tokyo, Hayes masterminded a conspiracy to manipulate a benchmark interest rate that underlies hundreds of trillions of dollars’ worth of loans. British prosecutors — armed with gigabytes of evidence showing Hayes caught in the act, plus his own taped confessions — put him on trial in 2015; he’s now serving an 11-year sentence. It was an epic downfall, and David Enrich, an editor at The Wall Street Journal, recounts it well in The Spider Network: The Wild Story of a Math Genius, a Gang of Backstabbing Bankers, and One of the Greatest Scams in Financial History (HarperCollins, $29.99). One thing readers won’t get out of this exhaustively reported tale, however, is schadenfreude.

In Enrich’s telling, Hayes is more of a pitiable figure than a master fiend. He certainly never looked the part of a smooth operator: Carelessly dressed and shabbily groomed, Hayes had difficulty interacting with people, preferring the cold logic of spreadsheets. He didn’t party or jet-set like a typical overpaid banker, opting for juice or hot chocolate on the occasions he was forced to socialize outside of work. More substantially, Hayes wasn’t a top executive, and when he acted to rig the interest rate in question — the London interbank offered rate, aka Libor — he often did so with the knowledge of his bosses. The reason Hayes is in jail and his superiors aren’t seems to have more to do with his personality, and maybe his mild case of autism, than the severity of his crimes.

Don’t get me wrong — as Enrich makes clear, those crimes were pretty severe. Libor is a set of numbers, published every business day, that reflects what London banks charge each other to borrow money. A handy barometer of risk, it’s baked into a vast range of financial instruments, including complicated derivatives contracts as well as more mundane mortgages, car loans, and credit cards. Hayes colluded to nudge Libor higher or lower to benefit his trading positions; when he did, he made ordinary people’s interest payments go up and deprived municipalities and businesses of income. What sticks in the mind after reading The Spider Network is not that Hayes doesn’t belong in jail, but that he deserves a lot of company. …

Wow!  Here’s an absolute must read for you.  It’s a book review, but it lays bare the LIBOR scam from one end to the other.  It’s actually headlined “David Enrich’s The Spider Network makes him seem borderline sympathetic“.  The one you see above is courtesy of Chris Powell — and is just as applicable.  This incredible news item appeared on the Bloomberg website at 10:01 p.m. MDT on Tuesday evening — and I found it in a GATA dispatch.  Another link to it is here.

FTSE CEOs ‘earn 386 times more than workers on national living wage’

The average FTSE chief executive earns 386 times more than a worker on the national living wage, according to an analysis published by the Equality Trust as it steps up its campaign for new government rules to expose pay gaps.

The charity used annual reports from 2015 for all the companies in the FTSE 100 to calculate that their CEOs pocket an average of £5.3m each year, compared with £13,662 for someone on the national living wage of £7.20 an hour.

The trust issues its findings amid growing worries over a squeeze on living standards from sluggish pay growth and rising inflation. The pressures on households stem partly from Brexit worries knocking the pound lower and raising the price of imports to the U.K. Those factors underscore the challenge for Theresa May to take the U.K. out of the E.U. while vowing to cut inequality and create an economy that “works for everyone”.

Chiming with research by other groups that suggests the squeeze will accentuate inequality, the trust found more than two-thirds (67{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}) of FTSE 100 CEOs were paid more than 100 times the average U.K. salary.

This news item showed up on Internet site at 6:30 a.m. GMT on their Wednesday morning, which was 2:30 a.m. in New York — EDT plus 4 hours.  I thank Swedish reader Patrik Ekdahl for sharing it with us — and another link to it is here.

Eurozone chief, Jeroen Dijsselbloem tells Spain, Portugal, Italy and Greece to stop wasting money on “drinks and women

Jeroen Dijsselbloem, the head of the eurozone’s finance ministers, is facing calls to resign after refusing to apologise for saying crisis-hit European countries had wasted their money on “drinks and women”.

The Dutch policy chief – whose Labour party suffered a punishing defeat in national elections last week – was dubbed “insulting” and “vulgar” by MEPs for remarks made in an interview with German newspaper Frankfurter Allgemeine Zeitung.

At a European parliamentary hearing in Brussels on Tuesday, Mr Dijsselbloem said he would “not apologise” after coming under pressure to distance himself from remarks perceived as an attack on the bloc’s southern countries such as Spain, Portugal, Italy and Greece.

Greece, Ireland and Portugal were bailed out by the E.U. and International Monetary Fund in 2010, while Spain’s banking system was rescued with creditor funds in 2012.

Spanish MEP Gabriel Mato said the comments were “absolutely unacceptable” and an “insult” to member states, claiming Mr Dijsselbloem had lost his “neutrality” as Eurogroup chief.

I would suspect his comments are pretty close to the mark, but the howls of indignation and moral outrage were inevitable.  This commentary from Internet site on yesterday morning sometime, is mostly ‘borrowed’ from a Financial Times news item.  I thank Roy Stephens for sharing it with us — and another link to it is here.

UBS charges customers to deposit euros

Swiss bank UBS will start charging customers who deposit more than a million euros, as negative interest rates hit banks’ profits.

The annual 0.6{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} charge will take affect from May.

UBS already imposes charges for large accounts held in Swiss francs by companies and some wealthy clients.

Banks’ profits have been hit by the European Central Bank’s policy of stimulating growth through negative interest rates and increased liquidity.

The ECB penalises banks that store euros with it in an effort to make them lend rather than hoard their cash.

This news item appeared on the Internet site late on their Wednesday afternoon, which was early in the afternoon in New York.  It’s the second contribution of the day from Patrik Ekdahl — and another link to it is here.

Saudi Arabia Downgraded By Fitch to A+ on Soaring Fiscal Deficit, Deteriorating Balance Sheet

With Saudi Arabia scrambling to respond to surging U.S. shale production in what many analysts warn is a lose-lose decision, as either Saudi Arabia will lose market share under the current status quo, or government revenue will tumble should the Vienna 2016 production cut deal be cancelled, moments ago Fitch poured some fuel on the fire, when it downgraded the Saudi Kingdom from AA- to A+, as a result of the country’s soaring deficit, declining reserves, and a deteriorating balance sheet.

Fitch Ratings-Hong Kong-22 March 2017: Fitch Ratings has downgraded Saudi Arabia’s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to ‘A+’ from ‘AA-‘. The Outlooks are Stable. The issue ratings on Saudi Arabia’s senior unsecured foreign-currency bonds have also been downgraded to ‘A+’ from ‘AA-‘. The Country Ceiling has been downgraded to ‘AA’ from ‘AA+’ and the Short-Term Foreign and Local Currency IDRs have been affirmed at ‘F1+’.

The downgrade of Saudi Arabia’s Long-Term IDRs reflects the continued deterioration of public and external balance sheets, the significantly wider than expected fiscal deficit in 2016 and continued doubts about the extent to which the government’s ambitious reform programme can be implemented.

This long Zero Hedge article showed up on their Internet site at 9:28 a.m. on Wednesday morning EDT — and I thank Richard Saler for finding it for us.  Another link to it is here.

PBOC Injects Hundreds of Billions Into Chinese Banks After Sudden Defaults in Interbank Payments

As is customary virtually every time the Chinese central bank commences some form of tightening, overnight the PBOC injected “hundreds of billions of yuan into the financial system after some smaller lenders failed to repay borrowings in the interbank market“, according to people familiar with the matter.

According to a brief note by Bloomberg, Tuesday’s injections followed missed interbank payments on Monday, anonymous sources said; the matter is not made public over concerns of bank deposit flight risk. The institutions that missed payments included rural commercial banks. One of Bloomberg‘s trader sources said a borrower failed to repay an overnight repo of less than 50 million yuan ($7.3 million). China’s smaller lenders have been squeezed by a rise in money market rates this week, with the benchmark seven-day repurchase rate jumping to the highest level since April 2015 on Tuesday. As we described last Wednesday, the PBOC for the second time in a month engaged in tightening by hiking the rate on reverse repos as well as various liquidity conduit operations such as the MLS.

The PBOC wants to warn the smaller lenders not to play the leverage game excessively,” said Xia Le, chief economist at BBVA in Hong Kong. “It’s a tug of war between the central bank and the financial institutions.”

And while some smaller banks were on the verge of failure, overnight virtually everyone felt the surge in the 7-day repo fixing to the highest since 2014, driven by China’s liquidity squeeze amid policy tightening and continued high leverage.

This long financial news story appeared on the Zero Hedge website at 9:52 p.m. on Tuesday evening EDT — and it’s the second offering of the day from Richard Saler.  Another link to it is here.

David Rockefeller: Good Riddance — Jeff Berwick

I would never celebrate the death of any person.

But, the closest I have ever gotten was when I heard that, finally, David Rockefeller, had shed his mortal coil and left this plane of existence.

Rockefeller was a “new world order” globalist.

In his memoir he stated, “Some even believe we [the Rockefeller family] are part of a secret cabal working against the best interests of the United States, characterizing my family and me as ‘internationalists’ and of conspiring with others around the world to build a more integrated global political and economic structure — one world, if you will. If that is the charge, I stand guilty, and I am proud of it.

After all, David’s father John Davison Rockefeller Jr. was married to the daughter of Senator Nelson Aldrich who was intimately involved in the founding of the Federal Reserve Bank which infamously took place on Jekyll Island in Georgia. The Federal Reserve act, in 1913, was effectively a stealth takeover of the U.S. government that still lasts to this day.

It is no surprise that nearly every action taken and organization supported by Rockefeller was a part of, or in some way connected to, his family’s financial interests or their end goal of a one world, fasco-communist style government.

I’m not often found on the same page as Jeff, but this is one of those rare occasions where are thoughts meet.  Jeff’s commentary only scratches the surface of the criminal mind that was David Rockefeller — and this commentary of his from late Tuesday evening is definitely worth reading.  Another link to it is here.  Here’s another very worthwhile commentary posted on the Internet site headlined “The True Legacy of David Rockefeller“.  Both of these article come courtesy of Brad Robertson.

Peak Gold: The Biggest Gold Story Not Being Reported — Byron King

Gold has performed exceedingly well since last Wednesday’s much-anticipated rate hike. It shot up about $25 Wednesday alone. Today it’s up another three bucks, to $1,233.

The most common argument for gold is fairly well-known. Trump’s massive new spending proposals will goose inflation, meaning a higher gold price.

But while most investors focus on the potential for increasing demand, few consider if supplies will be able to meet that demand. And if supplies can’t keep up with demand, that should lead to much higher gold prices.

After three years of drifting lower, gold prices began to recover last year. Still, despite last year’s gold price move, the world’s top 10 gold mining companies were focused more on cost cutting. The result was a decline in gold production from mines run by majors.

And Ivan Glasenberg, CEO of mining giant Glencore, says that “there are no new big mines being built in the world today.” That’s because the industry downturn between 2012 and 2015 — the Mining Zombie Apocalypse, as I like to call it — caused miners to slash exploration budgets, in essence storing up trouble for the future.

Either Byron doesn’t read too much in the way of gold-related articles on the Internet, or he’s playing loosey goosey with the truth, as there have been many articles about peak gold by many different authors over the last several years…most of which have graced this column.  King seems to think that he’s discovered this issue all by himself.  He would be wrong about that.  Of course it’s entirely possible that the folks at The Daily Reckoning came up with this headline, as excessive hyperbole/false news seems to be all the rage these days.  There’s not much in here that isn’t a rehash of what’s already been posted in various other commentaries on this subject.  But it’s a slow news day, so I’ve decided to include it.  I found it on the Internet site yesterday — and you won’t be missing much if you pass on it.  Another link to it is here.  I note that King’s commentary was also picked up by the Sharps Pixley website. Their version came courtesy of the Internet site under the headline “Glasenberg: Any Global Event could send Gold Prices Soaring, Add Falling Supply to the Woes

Struggling with dore imports into India, MMTC Pamp banks on domestic gold scrap

Facing much difficulty in import of dore, the term for unrefined gold, India’s only refinery with LBMA (London Bullion Market Association) accreditation, MMTC Pamp, has diverted its focus on domestic jewellery scrap collection, to meet its raw material needs.

A joint venture between government-owned MMTC and Switzerland-based Pamp SA, the world’s leading bullion refiner, it has set up 10 scrap collection centres across major cities. These have testing machines and other equipment needed for checking purity of gold content in used jewellery.

Facing much difficulty in import of dore, the term for unrefined gold, India’s only refinery with LBMA (London Bullion Market Association) accreditation, MMTC Pamp, has diverted its focus on domestic jewellery scrap collection, to meet its raw material needs.

A joint venture between government-owned MMTC and Switzerland-based Pamp SA, the world’s leading bullion refiner, it has set up 10 scrap collection centres across major cities. These have testing machines and other equipment needed for checking purity of gold content in used jewellery.

MMTC Pamp is currently operating at half its installed capacity, given constraints in raw material supply.

This gold-related news item, filed from Mumbai, appeared on the Internet site at 1:34 a.m. IST on their Thursday morning — and was picked up by the Sharps Pixley website.  Another link to it is here.

The Gold Chronicles: March 2017 Interview with Jim Rickards and Alex Stanczyk

Topics Include:

*Commentary on FOMC and Rate Hike
*How VAT may enable a revenue neutral solution to allow Trumps fiscal and tax cuts plan
*One of the dangers to VAT is that it is prone to a creeping rise in the tax rate
*Scenarios for consumer reactions to VAT perceived as price inflation
*How increasingly fragile markets combined with highly leveraged financial services institutions are leading to amplified risk levels for the entire financial system
*Market fragility from Jim’s view is a function of system scale – if you double the size of the system the risk increases exponentially
*The system has not deleveraged since 2008, but has increased leverage and concentrated in an even fewer number of banks
*The derivatives market is approaching one quadrillion dollars in size, approximately ten times the size of global GDP

This hugely long audio interview with Jim runs for 1 hour and 49 minutes.  It was posted on the Internet site on Monday — and I thank Harold Jacobsen for bringing it to my attention — and now to yours.  Another link to it is here.  If you don’t have time for it today, I’ll try and remember to post it in my Saturday column.



“We know that the 7 big COMEX silver shorts are mostly foreign banks, speculating their butts off on the short side of silver and are not, repeat not, legitimately hedging in any way, just taking the other side of a speculative derivatives bet. Because there is no legitimate basis for why a Bank of Nova Scotia, for instance, would maintain a massive short position in COMEX silver, then, by definition, the basis for being short must be illegitimate. There is no way anyone could construct a legitimate economic motive behind the 7 big shorts’ massive and concentrated short position in COMEX silver; otherwise I would have heard it long ago. And not for a moment am I exempting JP Morgan in the legitimacy department, just in the 7 dead men’s fate.”

“I can’t tell you if the crooks at JP Morgan might not still continue to aid the 7 soon to be dead men by adding shorts for a while longer, but I don’t see JP Morgan bailing them out completely by donating the bank’s acquired physical silver of six years at low prices. My firm sense about JP Morgan and how they behave typically is that they would sooner rip your lungs out than look at you, if there was a decent buck in it for them. Even if JP Morgan temporarily prolongs the silver manipulation, as they are certainly capable of doing that, will only offer a brief stay of execution for the 7 walking dead.

“What I can tell you is that when the time is up for the walking dead, it will be a time like no other in the history of silver. Prices can and will continue to muddle along as long as the 7 big shorts and JP Morgan continue to cap price rallies, but the moment the capping ends – either at the hands of JPM or the walking dead – the silver price landscape will be changed forever. None of us – myself included – will be able to fully comprehend the upcoming shock to the upside. This has little to do with price per se, just the mechanics of the market; but it will be seen most vividly in price. When the big shorts start to buy back their shorts to the upside, the world of silver will have changed.” — Silver analyst Ted Butler: 22 March 2017

The Wednesday trading session in all four precious metals was sort of “another day off the calendar” as Ted Butler is wont to say from time to time.  But with a new high close in gold yesterday, it’s a certainty that the Managed Money Traders continued to pile in on the long side, plus cover short positions in the process.  That would certainly explain the elevated volume levels in gold yesterday.  And although silver closed above its 50-day moving average for the second day in a row, its price was kept on a very short leash.

Here are the 6-month charts for all four precious metals, plus copper…and there have been no significant changes since Tuesday.  The click to enlarge feature helps a bit with the first four charts.

And as I type this paragraph, the London open is an hour away — and I note that the gold price crawled lower until shortly before 11 a.m. China Standard Time on their Thursday morning.  At that point it was down 3 bucks and change.  Since then, along with a gently sinking dollar index, it has been inching higher, but is still down $1.10 an ounce at the moment.  The silver price has been trading pretty flat, but in the last couple of hours has been trading in the plus column by 2 cents the ounce.  The price pattern for platinum and palladium has been about the same as silver, with the former up a dollar — and the latter up 3.

Net HFT gold volume is around 29,500 contracts, with no roll-over/switch volume worth mentioning — and that number in silver is just over 4,400 contracts, which is very quiet.

The dollar index began to creep higher as soon as trading began at 6:00 p.m. EDT last evening in New York.  Its current 99.83 high came around 9:40 a.m. in Shanghai — and has been heading lower ever since — and is down 8 basis points as of 7:00 a.m. GMT in London.

The current ‘rallies’ in both gold and silver have been anything but impressive, despite the fact that both precious metals are now back above their respective 50-day moving average.  The share price action in both has certainly been stinking up the joint — and as I pointed out earlier this week, these rallies…such as they are…appear to be topping out, or are being made to appear to be topping out.  And that’s also despite the fact that dollar index has been heading noticeably lower as well.

But, as Ted Butler has already pointed out, there are enough mice in the trap that ‘da boyz’ could flush out most of these newly-minted Managed Money long contract holders on an engineered price decline.  But it remains to be seen how successful they are in their attempt, considering the fact that the core non-technical fund Managed Money longs, plus the longs in the other two trading categories of the Disaggregated COT Report, have been increasing steadily over time…regardless of the price action.

As I keep saying, Ted’s “Has the Worm Turned” hypothesis is still very much alive and well — and tomorrow’s Commitment of Traders Report should tell us a lot.

And as I post today’s effort on the website at 4:03 a.m. EDT, I see that not much has happened in the hour leading up to the London open.  Gold is down $1.80 at the moment, silver is back to unchanged — and platinum and palladium are still up the same 1 dollar  and 3 bucks they were an hour ago.  Nothing should be read into the current price action.

Net HFT gold volume is approaching 33,000 contracts, which isn’t a big change from an hour ago, however roll-over/switch volume has become more noticeable.  Silver’s net HFT volume now sits at 5,300 contracts, up about 900 contracts from an hour ago.  It’s very quiet at the moment in both precious metals.

The quiet sell-off in the dollar index during the Far East trading session bottomed out around the 99.63 mark shortly after 2:30 p.m. CST — and is inching higher a the moment — and is now back to unchanged on the day.

I doubt very much if this period of quiet will last for much longer.

That’s all I have for today — and nothing will surprise me when I check the charts later this morning.

See you here tomorrow.


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