Ted Butler: Expecting the Unprecedented

13 May 2017 — Saturday


The gold price didn’t do much for the first three hours of trading after the market opened at 6:00 p.m. EDT on Thursday evening in New York.  Then it rallied a couple of dollars into the morning gold fix in Shanghai, which was around 10:15 CST.  From there it traded flat for fours, before taking another bit of jump at the afternoon gold fix over there.  Gold rallied weakly until 11 a.m. in London — and then got sold off quietly until the the CPI/retail sales numbers were released at 8:30 a.m. in New York.  The price rallied sharply from there, but was capped and turned lower at precisely 9:00 a.m. EDT thirty minutes later.  It was sold down until 12:45 p.m. EDT — and crawled a dollar or so higher into the 5 p.m. close.

The low and high ticks aren’t worth looking up.

Gold finished the Friday session in New York at $1,227.70 spot, up $2.90 on the day.  Net volume was fairly decent once again at just over 159,000 contracts.

The silver price traded flat until 10 a.m. China Standard Time on their Friday morning — and then rallied about 7 cents into the morning gold fix in Shanghai.  It jumped up again at the p.m fix as well, before being rolled over into the 8:30 a.m. EDT CPI report out of Washington.  After that, it was forced to trade in similar fashion as the gold price, complete with a bit of rally in the thinly-trade after-hours market.

The low and high ticks in this precious metal aren’t worth looking up, either.

Silver closed in New York yesterday at $16.44 spot, up 14 cents from Thursday.  Net volume was pretty beefy at just over 53,000 contracts.

The price pattern in platinum on Friday was a very erratic version of what happened with silver and gold, complete with the after-hours rally as well.  Platinum finished the day at $919 spot, up 3 dollars.

Palladium was up 4 bucks by 10 a.m. in Shanghai — and then traded unsteadily sideways for the rest of the Friday session, closing in New York yesterday at $805 spot, up 4 dollar from Thursday’s close.

The dollar index closed very late on Thursday afternoon in New York at 99.65 — and began to head lower about three hours later, which was shortly before 9 a.m. China Standard Time on their Friday morning.  By minutes after 10 a.m. it was down to the 99.55 mark — and began to inch steadily higher from there — and was back to unchanged by the time the CPI numbers hit the tape at 8:30 a.m. in New York.  Then down it went, with most of the damage done by 9:00 a.m. — and it chopped quietly but steadily lower from there into the close, finishing the Friday session at 99.18…down 47 basis points on the day.

You would think that the precious metals, particularly gold and silver, would have performed better with a dollar index dive of that magnitude, but it should be obvious to all and sundry that when JP Morgan et al are lying in wait, it matters not what the currencies are doing.  I think I’ve made myself clear on that on too many occasions already.

And here’s the 6-month U.S. dollar index for you amusement.

The gold stocks gapped up about 2 percent at the open in New York yesterday morning — and that was their respective high ticks of the day, as it was all down hill from there until minutes before 1 p.m.  The stocks wandered generally higher from that point — and the HUI managed to close up 1.18 percent.

For the third day in a row, the silver equities fared far better, as Nick Laird’s Silver Sentiment/Silver 7 Index closed higher by 2.60 percent.  Here’s the 6-month Silver Sentiment/Silver 7 Index chart showing the move.  Click to enlarge.

Here are the three charts from Nick that show what’s been happening for the week, month — and year-to-date.  The first one shows the changes in gold, silver, platinum and palladium for the past trading week, in both percent and dollar and cents terms, as of their Friday closes in New York — along with the changes in the HUI, plus the changes in the Silver Sentiment/Silver 7 index, which is still available in this form.  The Click to Enlarge feature really helps on all three.

And here’s the month-to-date chart…

…and the year-to-date…

These charts look infinitely better this week than they have for the prior two weeks.  Let’s hope that the worst is behind us.

For whatever reason, the CME’s Daily Delivery Report was missing in action last night.  I’ll check over the weekend if it shows up — and if it does, I’ll update this paragraph.

The CME Preliminary Report for the Friday trading session showed that gold open interest in May fell by 1 contract, leaving 41 still around.  Thursday’s Daily Delivery Report showed that 8 gold contracts were actually posted for delivery on Monday, so that means that 8-1=7 more gold contracts were added to the May delivery month.  Silver o.i. in May declined by 109 contracts, leaving 95 still around.  Thursday’s Daily Delivery Report showed that 131 silver contracts were actually posted for delivery on Monday, so that means that another 131-109=22 silver contracts were added to the May delivery month.

Once again there were no reported changes in GLD…but to my astonishment, there was yet another big silver deposit into SLV, as an authorized participant, with the initials JPM, added another 2,365,890 troy ounces.

Since this engineered price decline began back on April 17, a net 12,774,676 troy ounces of silver has been added to SLV…of which 10.7 million of that amount was deposited since May 1.

Without doubt — and along with the off-the-charts dramatic data in Friday’s COT Report — Ted will have lots to say about “all of the above” in his weekly commentary to his paying subscribers this afternoon.

There was another sales report from the U.S. Mint yesterday.  They sold 2,000 troy ounces of gold eagles — 500 one-ounce 24K gold buffaloes — and another 75,000 silver eagles.

Month-to-date the mint has sold 6,000 troy ounces of gold eagles — 2,500 one-ounce 24K gold buffaloes — and 1,055,000 silver eagles.  And as lousy as those numbers are, they are already equal to, or more than, all that was sold by the U.S. Mint in April.

It was another fairly quiet day in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.  Nothing was reported received once again — and 25,720 troy ounces were shipped out.  Of that amount, there was 9,645.300 troy ounces/300 kilobars [U.K./U.S. kilobar weight] shipped out of HSBC USA — and the remaining 16,075.000 troy ounces/500 kilobars [U.K./U.S. kilobar weight] came out of Canada’s Scotiabank.  A link to that activity is here.

It wasn’t overly busy in silver, as 599,272 troy ounces were received — and 175,478 troy ounces were shipped out.  All of the metal received was deposited at CNT.  In the ‘out’ category, there was 100,282 troy ounces shipped out of Brink’s, Inc. — and the remaining 75,478 troy ounces came from Scotiabank.  There was also a transfer off 133,266 troy ounces from the Eligible to Registered category over at CNT.  The link to this activity is here.

But it was certainly a big day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday, as 6,995 kilobars were received — and another 9,940 were shipped out the door for parts unknown.  All of this action was at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.

As I said in yesterday’s column about the upcoming Commitment of Traders Report…”I must admit that I’m looking forward to seeing what’s in it like a kid waiting to open the big present on Christmas Day.“…and I wasn’t disappointed, as I could hardly believe the numbers I was seeing.

In silver, the Commercial net short position dropped a stunning 17,305 contracts, or 86.5 million troy ounces of paper silver.  They arrived at that number by purchasing 4,669 long contracts — and covering a whopping 12,636 short contracts…all courtesy of the Managed Money traders.

The Commercial net short position in silver is now down to ‘only’ 346.3 million troy ounces.

Ted said that the Big 4 traders covered 5,700 short contracts during the reporting week — and he attributes all of that to JP Morgan — and sets their COMEX short position in silver at the 18,000 contract mark, or 90 million troy ounces, which is pretty low.  The big ‘5 through 8’ traders only covered about 1,600 contracts of their short position — and Ted said that the most likely reason why that was the case, was because a Managed Money trader [or two] now had a big enough short position to fall into that category…nudging out a foreign bank or two in the process.  And finally, Ted’s raptors, the 28 smaller commercial traders not in the Big 8 category, increased their long position by 10,000 contracts.

And as impressive as the number were in the Legacy COT Report, in the Disaggregated COT Report, they were even more incredible.  The Managed Money traders not only sold 10,240 long contracts, but they also added an eye-watering 11,035 contracts to their short position…for a total weekly swing of 21,275 contracts.  Ted could hardly believe what he was seeing…nor could I.  But not only did the Commercial traders gorge themselves courtesy of the Managed Money traders, but the traders in the other two reporting groups…the ‘Other Reportables’ and the ‘Nonreportable’/small trader category both went net long during the reporting week:  the ‘Other Reportables’ by 3,563 contracts — and the ‘Nonreportable’/small trader category by 407 contracts.

The most important Managed Money long position that remained was a hair under 68,000 contracts, but it’s a lead-pipe cinch that every one of these longs is of the non-technical fund variety — and won’t be selling on lower prices.  Au contraire, they will most likely add to this long position on any further engineered price decline by ‘da boyz’…if that, in fact, happens.  This 68,000 contract long position is the sole reason why the Commercial net short position in silver is as big as it is, as they hold the short side of those trades.

Here’s the 3-year COT chart for silver, so you can see the dramatic decline over the last three weeks in far more detail than is available on the 9-year chart that I normally post.  Click to enlarge.

In gold, the numbers were just about spot on as to what Ted said they would be…around 40,000 contracts.  The Commercial net short position in gold actually fell by 39,564 contracts, or 3.96 million troy ounces of paper gold.  They arrived at that number by purchasing 5,906 long contracts, plus they reduced their short position by 33,658 contracts and, like in silver, it all came courtesy of the Managed Money traders.

The commercial net short position in gold is now down to 16.44 million troy ounces.

Ted said that the Big 4 traders covered a monstrous 17,200 short contracts, the ‘5 through 8’ large traders covered about 13,500 short positions — and Ted’s raptors, the 45 smaller Commercial traders other than the Big 8, added around 8,900 contracts to their long position.

Under the hood in the Disaggregated COT Report it was, as in silver, strictly a Managed Money affair, plus more.  During the reporting week they reduced their long position by 43,912 contracts, plus they added 3,737 contracts to their short position.  And it was not only the Commercial traders feasting on what the Managed Money traders were selling, the traders in the ‘Other Reportables’ category managed to grab 8,021 contracts on the long side as well.  They added 3,995 long contracts, plus they covered 4,026 short contracts.  The ‘Nonreportable’/small trader category added a net 64 contracts to their long position during the reporting week.

Here’s the 3-year COT chart for gold as well — and although it shows a big improvement, it’s not back to anywhere near its past lows of the last year or so.  Whether that is yet to come, is unknown.  But if it did, it would require a further engineered price decline in gold to get the contract count back to those levels.  Can they, or will they, are the questions with no answers at the moment.  Click to enlarge.

After the huge [and surprise] increase in platinum’s short position by the Managed Money traders in last Friday’s report, it was the first thing I checked when I scrolled down through the table of numbers in the Disaggregated COT Report yesterday afternoon.  The Managed Money traders added to their net short position in platinum by another 6,401 contracts during the current reporting week.  In just two weeks, the Managed Money traders have gone from a big net long position in platinum, to a big net short position.  Ted also mentioned that there were big clean-outs in the COMEX futures market in both copper and crude oil as well.  Along with the four precious metals, copper and crude oil make up the other two critical components of what I call the Big 6Control the prices of them — and the rest of the commodities complex falls into line.

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 131 days of world silver production—and the ‘5 through 8’ traders are short an additional 51 days of world silver production—for a total of 182 days, which is about six months of world silver production, or about 442.2 million troy ounces of paper silver held short by the Big 8.  [In last week’s report the Big 8 were short 197 days of world silver production.]

In the COT Report above, the Commercial net short position in silver is 346.3 million troy ounces.  So, we’re back to the situation in silver where the short position of the Big 8 traders is larger than the total Commercial net short position by 442.2-346.3= 95.9 million troy ounces.

As I also stated in the above COT Report, Ted pegs JP Morgan’s short position at around 18,000 contracts, or 80 million ounces, which is down from the 24,000 contracts they were net short in the previous week’s report.  80 million ounces works out to around 33 days of world silver production that JP Morgan is short.  That’s compared to the 182 days that the Big 8 are short in total.  JPM is now only short about 18 percent of the entire short position held by the Big 8 traders — and that’s a big drop from the prior week.

The approximate short position in silver held by Scotiabank works out to around 53 days of world silver production.  So, after this week’s bloodbath, Scotiabank is back to being the number one silver short in the COMEX futures market.

The two largest silver shorts on Planet Earth—JP Morgan and Canada’s Scotiabank—are short about 86 days of world silver production between the two of them—and that 86 days represents 66 percent of the length of the red bar in silver in the above chart…two thirds of it. [Last week they were short three quarters of it, so there been a big drop here as well]  The other two traders in the Big 4 category are short, on average, about 22 days of world silver production apiece — and those numbers hardly ever change.  The four traders in the ‘5 through 8’ category are short, on average, just under 13 days of world silver production each.

The short positions of Scotiabank and JP Morgan combined, represents about 47 percent of the short position held by all the Big 8 traders.  How’s that for a concentrated short position within a concentrated short position?

The Big 8 are short 45.2 percent of the entire open interest in silver in the COMEX futures market — and that number would be a bit over 50 percent once the market-neutral spread trades are subtracted out.  In gold, it’s 40.8 percent of the total open interest that the Big 8 are short.

In gold, the Big 4 are short 45 days of world gold production, which is down from the 51 days that they were short last week — and the ‘5 through 8’ are short another 18 days of world production, which is down from 23 days from the prior week, for a total of 63 days of world gold production held short by the Big 8.  Based on these numbers, the Big 4 in gold hold about 71 percent of the total short position held by the Big 8.

The “concentrated short positions within a concentrated short position” in silver, platinum and palladium held by the Big 4 are about 72, 67 and 63 percent respectively of the short positions held by the Big 8.  The numbers are mostly down a percent or so in all three from the last reporting week.

Before hitting the Critical Reads section, here’s a chart that Nick Laird passed around early yesterday evening Denver time.  It shows the withdrawals from the Shanghai Gold Exchange updated with April’s data.  During that month, there was 171.2 metric tonnes removed.  Click to enlarge.

I have an average number of stories for you today…including, of course, the small handful that always have to wait for Saturday’s column for length and/or content reasons.


David Stockman Warns “A Hurricane is Bearing Down on the Casino

Yesterday I said the Donald was absolutely right in canning the insufferable James Comey, but that he has also has stepped on a terminal political land-mine. And he did.

That’s because the entire Russian meddling and collusion narrative is a ridiculous, evidence-free attempt to re-litigate the last election. And now that the powers that be have all the justification they need. And what is already an irrational witch-hunt will be quickly turned into a scorched-earth assault on a sitting president.

I have no idea how this will play out, but as a youthful witness to history back in 1973-1974 I observed Tricky Dick’s demise in daily slow motion. But the most memorable part of the saga was how incredibly invincible Nixon seemed in early 1973.

Nixon started his second term, in fact, with a massive electoral landslide, strong public opinion polls and a completely functioning government and cabinet.

Even more importantly, he was still basking in the afterglow of his smashing 1972 foreign policy successes in negotiating détente and the anti-ballistic missile (ABM) treaty with Brezhnev and then the historic opening to China on his Beijing trip.

So I’ll take the unders from anyone who gives the Donald even the 19 months that Nixon survived.

This commentary by David from The Daily Reckoning website was posted there on Thursday — and I thank Brad Robertson for the first of several offerings in today’s column.  Another link to it is here.

Core CPI Slumps To 19-Month Lows – Below Fed Mandate

For the first time since October 2015, core consumer prices rose at a pace slower than The Fed’s mandate. The 1.9{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} YoY rise is the weakest print since Sept 2015.

The last time this pattern played out – in 2012 – The Fed unleashed Operation Twist and subsequently QE3 to stall the disinflationary dive…

This time they are hiking rates??

Perhaps even more concerning is that Core inflation ex-shelter is at its lowest since Feb 2015… and near record lows…

This tiny 2-chart Zero Hedge article showed up on their Internet site at 8:39 a.m. EDT on Friday morning — and it’s the second contribution in a row from Brad Robertson.  Another link to it is here.

Retail Sales Miss Across the Board; Grow at Slowest Pace of 2017

Earlier today, when looking at BofA’s internal credit and debit card data, we warned to expect a miss in retail sales:

And, sure enough, the actual spending data once again did not disappoint when moments ago the Census reported April retail sales which, well, did disappoint across the board:

  • Retail Sales up 0.4{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}, missing expectations of +0.6{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e},  up from an upward revised 0.1{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}
  • Retail sales up 4.5{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} Y/Y, down from 5.2{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} in April
  • Retail sales less autos rose 0.3{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} in April, est. 0.5{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}, unchanged from last month’s revised 0.3{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}
  • Retail sales ex-auto dealers, building materials and gasoline stations rose 0.2{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} in April
  • Retail sales ‘control group’ rose 0.2{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} m/m in April

While increases were posted across most sectors, they were uninspiring with the exception of online sales. aka “nonstore retailers” which rose 1.4{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} in April, and are up a whopping 11.9{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} Y/Y.

And now, bring on the downward revisions to Q2 GDP.

This news item on the Zero Hedge website was posted there at 8:46 a.m. on Friday morning EDT — and it’s the third in a row from Brad Robertson.  Another link to it is here.

Are You Ready to Die? — Paul Craig Roberts

Fifty years ago, the streets of Leningrad taught me one thing: If a fight is inevitable, you must strike first.” — Vladimir Putin

In George Orwell’s 1949 dystopian novel, 1984, information that no longer is consistent with Big Brother’s explanations is chucked down the Memory Hole. In the real American dystopia in which we currently live, the information is never reported at all.

On April 26—16 days ago—Lt. Gen. Viktor Poznihir, Deputy Chief of the Main Operations Directorate of the Russian Armed Forces, stated at the Moscow International Security Conference that the Operations Command of the Russian General Staff has concluded that Washington is preparing a nuclear first strike on Russia.

The Times-Gazett in Ashland, Ohio, was the only U.S. print media that a Google search could turn up that reported this most alarming of all announcements. A Google search turned up no reports on U.S. TV, and none on Canadian, Australian, European, or any other media except RT and Internet sites.

I have been unable to find any report that any U.S. Senator or Representative or any European, Canadian, or Australian politician has raised a voice of concern.

This must read commentary by Paul was posted on his Internet site on Thursday — and I thank Tolling Jennings for sending it our way.  Another link to  it is here.

Jim Rickards Double Header

There are at least two Rickards audio interview at this link — and there may actually be six in total if you look closely.  They range in length from about 38 to 44 minutes.  I haven’t had a chance to listen to any of them, as Ken Hurt sent them to me over the lunch hour on Friday afternoon MDT.

They were posted on theinvestorspodcast.com Internet site on various occasions — and I’ll leave it to you to pick through them if you have the interest.

A Ukraine on the Verge of Disaster Benefits No One

In the past three months, the lines of contact between Ukraine and the forces in Donbass have seen an escalation of considerable tension. Both the republics of Lugansk and Donetsk have suffered violent attacks at the hands of Kiev’s military forces. Of course all these violations are in stark contrast to what was established in the Minsk II agreements, in particular as regards the use of certain weapons systems.

In addition to the military issues between Donbass and Ukraine, Kiev faces important internal struggle between oligarchs regarding economic issues. Symptomatic of this were the clashes in Avdeevka, then the attempts to capture the water filtration plant in Donetsk, and finally the blockade of coal transit from Donbass to Ukraine. All these have further deepened divisions between the components of the Ukrainian state’s power. The consequences of these events have led to greater instability in the country and decisive moves by the nationalist fringe alongside the Ukrainian SBU and other components of the military, who are the authors of the blockade of the railway lines between the Donbass and the rest of Ukraine. Intensifying the divisions within the country, the meeting between Tymoshenko and Trump has further increased tensions, with Prime Minister Volodymyr Groysman defining Timoshenko as the source of all problems, both economic as well are regarding corruption. Ukraine is politically divided, exacerbated by disputes between Poroshenko and Timoshenko, and these divisions are being exploited by foreign actors like Israel and Turkey, propping up the nationalist and banderist fringe within the National Guard battalion.

External pressure is clearly exerted indirectly on the Poroshenko administration in order to force it to keep the extreme factions of the nationalist battalions under control. For his part, Trump, by meeting with Tymoshenko, has sent a clear signal that in the case of excessive chaos in Kiev, the succession of power has already been decided. In the same way, the IMF exerts pressure on Kiev, slowing down the funding necessary for Ukraine to survive.

The danger that Western planners see is at the same time simple and delicate. On the one hand, there is a need to avoid a failure of the Ukrainian state, and nearly $18 billion of IMF aid serves that purpose. On the other hand, the withholding of IMF funding is applied whenever there is a need to get something done by the government in Kiev. An example can be easily seen with the escalation in Avdeevka that indirectly led the IMF to reduce the overall aid package, with the justification being that corruption remains high in the country. The goal was actually to avoid a complete breakdown of the Minsk II agreements and put a halt to the Ukrainian operation on Avdeevka. Even in the meeting between Tymoshenko and Trump, the strong signal sent to Poroshenko was clear: stop the nationalists and their provocations or there will be consequences.

This longish opinion piece appeared on the strategic-culture.org Internet site back on April 19 — and I thank Larry Galearis for sharing it with us.  He sent it my way last Sunday, but for obvious reasons I had to save it for my weekend column.  I’ve read it — and think it’s worth your time if you have the interest.  Another link to it is here.

Politicians from Russia and Donbass meet in Donetsk to discuss further integration

An historic meeting has taken place in Donetsk, wherein leaders of the Donetsk People’s Republic and representatives of the Russian State Duma and Federation Council have meet to discuss further steps to help integrate the Donbass republics with the institutions of the Russian Federation.

The meeting took place between Donetsk head Alexander Zakharchenko, deputy chairmen of  the Donetsk People’s Republic Ministers’ Council Alexander Drobot, Russian State Duma deputy Andrey Kozenko for the United Russia party,Russian Federation Council member Sergey Tsekov as well as other politicians and journalists.

Russia all ready accepts legal documents including passports and professional qualification issued in The Donetsk and Lugansk People’s Republics and to that end, citizens of the Donbass republics can now open bank accounts in Russia as well as live and work in Russia so long as they hold a passport from Donetsk or Lugansk.

Historical considerations and present realities would dictate that the ultimate goal is full integration of the Donbass republics into the Russian Federation.

It is indeed possible for the two republics to live as independent peaceful states, but the more practical economic and cultural reality is for Donetsk and Lugansk to become members of the Russian Federation.

This news item showed up on theduran.com Internet site very early on Friday morning EDT — and I thank Roy Stephens for sharing it with us.  Another link to it is here.

Moscow Victory Parade 1945-2017 and Russian identity in the New Cold War:  John Batchelor interviews Stephen F. Cohen

The big news of the last two days has been the dismissal of FBI Director, James Comey. But as we know his next job will be testifying in various investigative sub committees, with the added theme possibly that the White House may want to ask him some pointed questions about his lack of professionalism around his Hilary Clinton criminal investigation, and perhaps even about lapses of duty around the so-called DNC “hack”. The froth from the Clinton side has also deepened keeping the hysteria jacked.  Nevertheless, the political circus has gained another act in the ring, and there is detectable a note of excited anticipation in John Batchelor’s introduction. Also on the news menu, Batchelor lists, is more troops on their way to Afghanistan (the Taliban is winning), and the Russian Victory Parade. Both Batchelor and Cohen use the Russian Victory Day event as a framework for this week’s discussion to illustrate the estrangement of US/Russian relations and Washington’s effort to manufacture reality with propaganda. Victory Day is extraordinarily important to Russians.  The statistics quoted by Cohen for war losses for Russia in WW2, and the societal repercussions on later generations of Russians are outlined in detail by Cohen, and we should note that much of the American public’s understanding of its own history is not honoured to the same degree, (or to have been corrupted to actually hide the true realities from their citizens).  He mentions how the American version, its own V.E. day celebrating the end of WW2, is no longer even celebrated. Instead the changing of historical fact is now but a political toy in Washington. Russians, states Cohen, do not understand what is going on, and have thought this rabid anti-Russian hysteria was all just temporary.  This is what they do not understand. The facts of the present are also being altered and “history” mythologized. There is a political investment at play and an extraordinary destructive one.

What is going on for Batchelor is an anti-Trump onslaught that “can tear apart this country”.  But Cohen notes that the Russian grasp of their war history gives a focus on  NATO expansion and its build up on its borders gives an importance for the Kremlin and the Russian citizen not understood by Washington.  And Cohen again brings up his concept of “Intellgate” – and its connection with the failed Clinton campaign – now grown to, as Cohen states it, “a malignancy in our lives”. Both Batchelor and Cohen believe this is now a major difficulty for détente with Russia, but Cohen still gives Trump points for perseverance in his efforts for détente in spite of these hurdles and his own blunders in foreign affaires. Tillerson, also to his credit, is still officially and publically stating a need to work with Russia. But the question remains for the pundits and Putin: “Can Trump deliver?” The important test case for Putin is cooperation in Syria, and Cohen describes how important in no uncertain terms. Can Washington surmount its blind spots over ISIS and its dangers to follow through with a changed policy in Syria? This writer wonders if the Deep State will allow it.

And anything at all can be a Kremlin plot. This includes the firing of Director, Comey! With this new storm front ahead, working with Lavrov and Putin in settling Syria is going to have a new head wind. And, as Cohen states, the ISIS problem is pervasive all through the M.E. and North Africa. Syria is only a beginning. The Cohen position on this is that solving the world terrorism problem is a matter of steadfast leadership. Does Trump have it? Cohen wonders if the allegation campaign against Trump can be defeated, and if it can, it will be combated with facts. Cohen is correct, of course, and it is also clear from recent polls held that the American citizen would also welcome some changes in policies in Washington. The problem for Trump is the same as what Washington does elsewhere in the world; the capacity for delivering the facts when the MSM is a censorship organization will likely mitigate against a clear debate. If a proper debate could be had in the present MSM, Americans would be much relieved that in that small way their media might become more non-partisan. But the MSM seems to care little about facts or what the citizen thinks of this turmoil, or even its credibility. The media seems to function only as a megaphone of hate against a president and the unexplained agenda of the invisible Deep State.

This week’s interview runs for the usual 40 minutes — and was posted on the audioboom.com Internet site on Tuesday but, as is usually the case, it had to wait for a spot in my Saturday column.  I thank Ken Hurt for the link and, as always, the biggest of all THANK YOUs is reserved for Larry Galearis — and his most excellent executive summary.  It’s a must read, especially if you don’t have the time to listen to the entire interview.  Another link to that interview is here.

Nepal signs up to China’s new Silver Road plan

Nepal on Friday signed up to China’s new Silk Road drive, a massive infrastructure project spanning some 65 countries at the centre of the Asian giant’s push to expand its global influence.

The long-discussed deal between impoverished Nepal and its much bigger neighbour comes just days before China hosts a summit for 28 leaders near Beijing, showcasing the ambitious plan.

The One Bel, One Road Initiative [OBOR[ spearheaded by President Xi Jinping would see 60 percent of the global population and around a third of global GDP linked through a network of Chinese-bankrolled ports, railways, roads and industrial parks.

The deal will see China plough money into Nepal for a series of projects including bossing its road network, power grid and a new railway connecting the capital Kathmandu with Lhasa in Tibet.

This AFP news item, filed from Kathmandu, appeared on The Economic Times of India website at 11:38 a.m. IST on their Friday afternoon — and I thank Kathmandu reader Nitin Agrawal for sharing it with us.  Another link to it is here.

China Stocks Are Tumbling Again. Unlike 2015, World Doesn’t Care

Global investors are still shaking off a rout that’s erased more than $560 billion from the value of Chinese equities, making them the world’s worst performers since mid-April.

Below are four charts showing just how deep the pain has spread in China’s mainland. Outside of the nation’s borders, investors are indifferent to the weakness in the second-largest equity market after the U.S. The MSCI All-Country World Index is near a record and the VIX Index, the so-called fear gauge for U.S. stocks, is close to its lowest level since 1993.

The ChiNext small-cap gauge, seen as a barometer for Chinese stock-market sentiment, has taken quite the hit this year, down 9.7 percent and close to its lowest level since February 2015. The selloff erased all that was left of a rebound from a low later that year, after a bubble in China’s markets burst.

A technical indicator suggests the Shanghai Composite Index has fallen too far, too fast. The gauge’s relative strength index dipped further below the 30 level that signals to some traders an asset is oversold, and is close to levels not seen since 2013. Chart watchers are still waiting for that rebound.

This Bloomberg article was posted on their Internet site at 3:00 p.m. Denver time on Thursday afternoon — and updated about four hours later.  It comes to us courtesy of Brad Robertson — and another link to it is here.

Ransomware virus plagues 100,000 computers across 99 countries

A ransomware virus is spreading aggressively around the globe, with over 100,000 computers in 99 countries having been targeted, according to the latest data. The virus infects computer files and then demands bitcoins to unblock them.

An increase in activity of the malware was noticed starting from 8am CET (07:00 GMT) Friday, security software company Avast reported, adding that it “quickly escalated into a massive spreading.”

In a matter of hours, over 75,000 attacks have been detected worldwide, the company said. Meanwhile, the MalwareTech tracker detected over 100,000 infected systems over the past 24 hours.

Dozens of countries around the globe have been affected, with the number of victims still growing, according to the Russian multinational cybersecurity and anti-virus provider, the Kaspersky Lab.

This news story was posted on the rt.com Internet site at 5:46 p.m. Moscow time on their Friday afternoon, which was 10:46 a.m. in New York — EDT plus 7 hours.  I thank Swedish reader Patrik Ekdahl for sharing it with us — and another link to it is here.  There was a Zero Hedge story about this headlined ““Worst-Ever Recorded” Ransomware Attack Strikes Over 57,000 Users Worldwide, Using NSA-Leaked Tools” — and I thank Brad Robertson for that one.  There was also a story about this on The Intercept as well headlined “Leaked NSA Malware Is Helping Hijack Computers Around the World” — and that comes courtesy of Roy Stephens.

Obama blocked this controversial Alaskan gold mine, but Trump just gave it new life

The Environmental Protection Agency has reached a legal settlement with a Canadian company hoping to build a massive gold, copper, and molybdenum mine in Alaska’s Bristol Bay watershed, clearing the way for the firm to apply for federal permits.

The settlement reached late Thursday between the EPA and the Pebble Limited Partnership, a subsidiary of Northern Dynasty Minerals Ltd., could revive a controversial project that was effectively scuttled under the Obama administration. And it underscores how President Trump’s commitment to support mining extends far beyond coal, to gold, copper and other minerals.

While the move does not grant immediate approval to the Pebble Mine project, which will have to undergo a federal environmental review and also clear state hurdles before any construction takes place, it reverses the agency’s 2014 determination that a large-scale mine in the area be barred because it would imperil the region’s valuable sockeye salmon fishery.

In a statement, EPA Administrator Scott Pruitt said that the agreement will not guarantee or prejudge a particular outcome, but will provide Pebble a fair process for their permit application and help steer EPA away from costly and time-consuming litigation.

This very long article showed up on The Washington Post website at 7:37 a.m. EDT on Friday morning — and I found it embedded in a GATA dispatch.  Another link to it is here.

We are seeing no selling of physical gold or silver” — Egon von Greyerz

What the central banks didn’t sell, they lent or leased to the market. They did this to earn a return on their gold. Most of the lending took place through LBMA (London Bullion Market Association) banks in London and some in New York. So a central bank would lend part of its gold to the market and the gold would stay within the London or New York pool. But that changed in the 2000s. The big buyers of gold are now China and India. Neither of these countries is interested in keeping their gold in London or New York. Instead they want physical delivery. The normal pattern is for the 400 oz bars to be sent from primarily London to the Swiss refiners to be broken down into 1 kg bars. The kilo bars are then exported from Switzerland to the buyers in China and India plus other major buyers like Russia. This is why the UK appears as a major exporter of gold.

The consequences of these transactions are very serious for Western central banks. Their gold which was leased to the market doesn’t exist anymore. It has been broken down into new 1 kilo bars and gone to Silk Road buyers. Western central banks will of course never get their physical gold back. All they have is an IOU from a bullion bank. And since the gold has left the West, the bullion bank will never be able to deliver physical gold against their paper commitment.

Since there have never been any audits, nobody knows how much unencumbered physical gold is still left in Western central banks. It is very unlikely to be even 50{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} of the 30,000 tonnes that they officially hold. The people and nations that understand that this Ponzi scheme is going on are not panicking. Because they know that the ones who hold the physical gold also have the power. But it is not only a question of power but also confidence that physical gold will protect the people who understand the significance of holding it.

This gold-related commentary by Egon put in an appearance on the goldswitzerland.com Internet site on Friday — and I thank Judy Sturgis for pointing it out.  Another link to it is here.

Golden Gamble: Gold mining in the Philippines, a dirty business

The use of child labour in the Philippine’s Paracale, or ‘Goldtown’, is widespread.  Extracting gold involves diving into mud-filled shafts and using toxic mercury.  Poverty and lack of alternative jobs force people into this highly dangerous work.  Many die young due to work accidents or breathing problems, others develop chronic illness

The Philippines’ town of Paracale was dubbed “Goldtown” for its rich deposits of the precious metal. Despite government attempts to regulate mining, illegal pits are still commonplace. They lack even the most basic health and safety and workers are exposed to toxic mercury fumes. Dirty water causes skin diseases and they live with the constant threat of being buried alive. Workers continue to take these risks day after day, because there is no other source of income. Many of the gold miners are children whose families can’t afford to send them to school.

Some gold is panned on the surface, but a lot has to be extracted from underground. To do that, prospectors dive into narrow, mud-filled shafts, using snorkelling masks and long tubes too breathe. If the mine collapses, they have no chance of escape. They have a saying here, ‘while you’re down the mine, you have one foot in the grave’. Several miners have already died that way, others from respiratory diseases caused by inhaling mercury fumes. The toxic metal is used in gold extraction with no safety precautions, so it poisons the air, the ground and the water, causing long-term harm to the whole community.

Another danger to the inhabitants of Paracale comes from disused mines, abandoned and left open, waiting for unsuspecting victims to fall in. The business takes its toll on workers, their families and the community. They have been known to demonstrate, demanding safer working conditions, better pay and other job opportunities, but change is slow. Meanwhile, extreme poverty among people who produce one of the world’s most precious metals leaves them no option but to continue with this pitiless occupation.

Wow!  This 25:40 minute rtd.com video is a must watch for sure.  It appeared on their Internet site on 05 May — and I thank Patrik Ekdahl for sending it our way on Thursday.  But for obvious reasons, had to wait for today’s column — and another link to it is here.

China Gold Demand Holding Up Well: May even be better still — Lawrie Williams

The latest published figures for Shanghai Gold Exchange (SGE) gold withdrawals for this year show that gold demand, as represented by the gold withdrawal figures, is holding up well, but the official cumulative figure for year to date withdrawals suggests that this demand could be even stronger! There is something of an anomaly in the officially reported cumulative figure which is somewhat in advance of the calculated figure from the month by month figures as shown in our table.  There appear to have been no adjustments made to prior months’ figures, so it will be extremely interesting to see how these cumulative figures progress in future months.

Either way, 2017 figures remain higher than at the same time last year, but lower than the record gold withdrawal figures of 2015.  We hope to get an answer on the anomalous cumulative figures in the SGE’s latest Data Highlights table, from which the withdrawal figures are taken, but we’re not holding our breath!  However given anecdotal comment coming in there has to be a good chance that the cumulative figure, as quoted in the SGE’s own table is correct (See footnote to our table).

There is some dissension among analysts as to whether or not SGE gold witdrawal figures are a true representation of Chinese gold absorbtion or not, but we have shown in the past that the cumulative total of known Chinese gold imports, plus China’s own gold production, plus an estimate for scrap supply come out much closer to SGE withdrawal figures than other estimates of Chinese gold consumption.

This commentary by Lawrie was posted on the Sharps Pixley website on Friday sometime — and another link to it is here.

Ted Butler: Expecting the Unexpected

I am convinced that silver will soon explode in price in a manner of unprecedented proportions, both in terms of previous silver rallies and relative to all other commodities. By unprecedented, I mean that the price of silver will move suddenly and shockingly higher in a manner never witnessed previously, including the great price run ups in 1980 and 2011. The highest prior price level of $50 will quickly be exceeded.

By “soon”, I mean that the move can commence at any time, but more likely before many weeks or months have gone by. I know that the price of silver has been declining on a daily basis nonstop for three weeks now, itself an unprecedented move, but I also know the reason for the decline and how the sharply improved COMEX market structure has always guaranteed a rally in a reasonable period of time. The only question is whether on the next silver price rally will JPMorgan add aggressively to its COMEX short positions. I’m suggesting JPMorgan is not likely to add to short positions on the next rally.

At the heart of the unprecedented move higher in the price of silver is the manner in which it will occur. It will be a price move like no other. It will be the greatest short covering rally in history. That’s guaranteed because the COMEX silver short position is the largest and most concentrated short position in history. There is no buying force in the financial markets more powerful than panicky buying by those forced to cover short positions. The largest short position ever holds the potential for the greatest short covering rally ever. For more than 30 years, COMEX silver futures have had the largest short position of any commodity in terms of real world production and inventories. Yet while silver prices have had some notable rallies over the decades, none have included a genuine short covering panic. In fact, the uniquely large and concentrated nature of the COMEX silver short position (meaning it is held by just a few traders) is the mechanism by which silver has been manipulated in price all these years.

This absolute must read commentary by Ted put in an appearance on the silverseek.com Internet site at 11:48 a.m. Denver time on Friday morning — and another link to it is here.


When I saw that the ‘critter-of-the-day’ was called the great potoo, I though someone was having me on…but that wasn’t the case.  It’s related to nighthawks and the common poorwill.  Similar to the owl, this species is also nocturnal. However they prey on eating insects and occasionally bats, which they capture in sallies from high perches.  Possibly its most well known characteristic is its unique moaning growl that the Great Potoo vocalizes throughout the night, creating an unsettling atmosphere in the Neotropics with its nocturnal sounds. They range from southern Mexico through northeastern Guatemala and through most of Central America down through South America as far as Bolivia and southeastern Brazil.  Click to enlarge.


The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin. Bankers own the Earth. Take it away from them, but leave them the power to create money, and with a flick of a pen, they will create enough money to buy it back again.”

Take this great power away from them and all great fortunes, like mine, will disappear, for then this would be a better and happier world to live in, but, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.” — Sir Josiah Stamp, President of the Rothschild Bank of England (1880-1941)

Today’s pop ‘blast from the past’ dates from 1965 — and when this groups showed up in the rock ‘n roll era, everything changed, as they were the ‘bad boys’ of the British Invasion that turned up in North America in early-to-mid 1960s.  What a commotion they caused at the time!  I remember it all too well, I’m afraid — and nothing has been the same since.  The link is here.

Today’s classical ‘blast from the past’ is one of the warhorses of the classical repertoire.  I’ve posted it before, but it’s been many years.  It was Nikolai Rimsky-Korsakov’s No. 1 hit way back in 1888.  It’s his symphonic suite Scheherazade, Op. 35. The incomparable Valery Gergiev conducts the Vienna Symphony Orchestra.  This particular recording has been viewed almost 7 million times.  The link is here — and full-screen viewing is a must.

It was sort of a ‘nothing’ day on Friday, at least that’s the way it turned out.  But it was obvious from the price action, especially on the CPI and retail sales numbers at 8:30 a.m. in New York, that ‘da boyz’ were ever vigilant.  If they hadn’t been around, the precious metal prices would have certainly run away to the upside.

Here are the 6-month charts for all four precious metals, plus copper, once again — and as you can tell, we’re off the current lows in both silver and gold by a bit, but that doesn’t mean that the powers-that-be are done yet.  The click to enlarge feature helps a bit with the first four charts.

I must admit that I’m still somewhat in shock after looking at yesterday’s Commitment of Traders Report.  Although silver’s net short position in the COMEX futures market is still sky high — and I doubt very much that it means anything at this juncture.  The Managed Money traders look just about as cleaned out on the long side, plus maximum short, as they’re going to get — and the traders in the other two categories…the ‘Other Reportables’ and the ‘Nonreportable’/small trader category. have been increasing their long positions at the expense of the Managed Money trader as well.  So there’s little blood to get out of the silver stone.

Gold is still a question mark — and if there is room to the downside, it’s not going to be a lot.  Of course ‘da boyz’ will have to determine whether or not the attempt to cover more of their short positions in this precious metal is worth their while, because as Ted pointed out in last Saturday’s weekly review, it gets to the point where they’re picking up nickels in front of a steamroller.  That’s why he also says that the bottom will only be known for sure when it’s visible in the rear-view mirror.  I’d like to say we can see it now, but I’m still choked with caution.

However, the precious metal equities are certainly treating the situation like the bottom is in — and we can only hope/pray that that is the case.

As I pointed out in my closing comments on the COT Report further up, as long as the powers-that-be can control the prices of the Big 6 commodities…the four precious metals, plus copper and crude oil…commodity inflation can be easily kept in check — and that’s what they’ve been doing ever since the futures market came into existence way back in the early 1970s.

But that may be coming to an end.  As Ted mentioned on the phone yesterday, we’ve seen major clean outs in the speculative long positions in all these six commodities, with the exception of palladium — and it’s such a tiny market it really doesn’t matter.  We are, as Ted said, sitting on a silver launch pad — and it’s an absolute certainty that if/when silver is allowed to rally without interference, it will take the Big 6…plus the rest of the commodity complex…along for the ride.  At that point, we’ll have all the price inflation that the central banks of the world could ever hope for, as their attempts by every other method have failed miserably.

The gold card…or in this case, the silver card…just might be the ticket they want to punch at this point in history.

However, this way is also fraught with its own perils, because as the prices of commodities rise, the paper world that the central banks have been steadily building up on money-out-of-thin-air since the crash of 1987, will come tumbling down.  You have to wonder if that’s the price they’re prepared to pay at this juncture.

At this point I’ll dredge up [for the umpteenth time] Peter Warbuton’s three famous paragraphs from his April 2001 essay…”The debasement of world currency…it’s inflation, but not as we know it” — and this is what he had to say:

Central banks are engaged in a desperate battle on two fronts

What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, they seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets.

It is important to recognize that the central banks have found the battle on the second front much easier to fight than the first. Last November I estimated the size of the gross stock of global debt instruments at $90 trillion for mid-2000. How much capital would it take to control the combined gold, oil, and commodity markets? Probably, no more than $200 billion, using derivatives. Moreover, it is not necessary for the central banks to fight the battle themselves, although central bank gold sales and gold leasing have certainly contributed to the cause. Most of the world’s large investment banks have over-traded their capital [bases] so flagrantly that if the central banks were to lose the fight on the first front, then the stock of the investment banks would be worthless. Because their fate is intertwined with that of the central banks, investment banks are willing participants in the battle against rising gold, oil, and commodity prices.

Central banks, and particularly the U.S. Federal Reserve, are deploying their heavy artillery in the battle against a systemic collapse. This has been their primary concern for at least seven years. Their immediate objectives are to prevent the private sector bond market from closing its doors to new or refinancing borrowers and to forestall a technical break in the Dow Jones Industrials. Keeping the bond markets open is absolutely vital at a time when corporate profitability is on the ropes. Keeping the equity index on an even keel is essential to protect the wealth of the household sector and to maintain the expectation of future gains. For as long as these objectives can be achieved, the value of the US dollar can also be stabilized in relation to other currencies, despite the extraordinary imbalances in external trade.

Are we about to see the end of all this, is the question that’s been running through my mind lately — and if it is…and it’s a pretty big if…what will be going on in the world as this commodity price explosion runs its course?  As I’ve said, also countless times, it will not happen in news vacuum, but in an Armageddon-Lite situation of some sort…whether it be centered in the U.S…or an a global scale.

Who knows for sure…but I’m just thinking out loud here in Edmonton at 3:15 a.m. EDT on Saturday morning.

And, as Ted Butler said in the headline to today’s column “Expect the Unprecedented“.

See you on Tuesday.


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