A Big Surprise: Another Incredible COT Report

20 May 2017 — Saturday


The gold price chopped quietly, but steadily higher all through Far East and most of London trading on their respective Friday’s.  The rally was capped and then sold a bit lower starting just before the equity market opened in New York, but shortly after the London p.m. gold fix was done, it went back to chopping quietly but steadily higher for the remainder of the Friday session in New York.

With gold trading in less than a ten dollar price range yesterday, the low and high ticks aren’t worth looking up.

Gold finished the day at $1,255.60 spot, up $8.80 from Thursday’s close.  Net volume was pretty heavy once again at 184,000 contracts.

The silver price jumped up about ten cents by shortly after 9 a.m. CST on their Friday morning — and then slowly inched lower until around 1:40 p.m. in Shanghai.  Then it began to chop quietly higher in price as well, meeting the same fate as gold just minutes before the equity markets opened in in New York on Friday morning.  Silver continued lower until precisely 1:00 p.m. EDT — and then rallied into the close from there, but closed off its high tick by a bit.

The low and highs in silver were recorded by the CME Group as $16.565 and $16.875 in the July contract.

Silver finished the Friday session in New York at $16.83 spot, up 27.5 cents on the day.  Net volume was pretty heavy once again at just under 70,000 contracts.

And here’s the 5-minute silver tick chart courtesy of Brad Robertson.  There was spotty volume in morning trading in the Far East, but it picked up to stay once the rally began around 1:40 p.m. in Shanghai, which is 23:40 p.m. Denver time on the chart below.  Volume really didn’t fall of to what I would call background levels until 14:00 MDT, which was 4:00 p.m. EDT.

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

For the most part, the platinum price followed an almost identical flight path as silver on Friday, except for the fact that it traded almost ruler flat from 6:00 p.m. EDT in New York on Thursday evening, right up until 1:40 a.m. in Shanghai when the rally commenced.  But unlike silver, its rally that started at 1 p.m. EDT on Friday afternoon wasn’t allowed to get far.  Platinum was closed in New York yesterday at $938 spot, up 7 bucks from Thursday.

Palladium traded flat until 2 p.m. China Standard Time on their Friday afternoon as well — and an hour later at the Zurich open, it was up 4 dollars the ounce.  It gave back 3 dollars of that gain by 1 p.m. in New York — and was then sold lower into the thinly-traded after-hours market — and was closed at a new low for this move down.   Palladium finished the Friday session at $756 spot, down 4 bucks on the day.

The dollar index closed very late on Thursday afternoon in New York at 97.90 — and fell 10 basis points in the first twenty minutes of trading once it began at 6:00 p.m. EDT in New York on Thursday evening.  It traded flat from that point until 2:00 p.m. CST on their Friday afternoon…then down it went.  The index chopped lower all through London trading — and the 97.08 low tick was set minutes before 2 p.m. EDT in New York.  It chopped sideways into the close from there, finishing the Friday session at 97.11 — and down 79 basis points from its close on Thursday.

If the ‘gentle hands’ were around yesterday, they weren’t obvious.

And here’s the 6-month U.S. dollar index…and you can read into it whatever you wish.

The gold stocks gapped up a percent and change at the open — and then chopped sideways in a fairly wide range for the entire Friday trading session.  The HUI closed up 1.15 percent.

And much to my amazement, Nick Laird was able to reconstruct the Intraday Silver Sentiment/Silver 7 chart using other data sources.  I don’t know how long this situation will last this time, but I’ll use it as long as I can.  The silver equities chopped higher until around 11 a.m. in New York — and then weakened from there.  The silver rally that began at 1 p.m. EDT — and ran right through into the close of the equity markets at 4 p.m…didn’t help the silver equities much, as they only closed higher by 0.83 percent.  Click to enlarge if necessary.

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 and the Silver 7 Index. The Click to Enlarge feature really helps on all three.

And here’s the month-to-date chart…

…and the year-to-date…

Like you, dear reader, I’m totally underwhelmed by the performance of the precious metal equities since the rally began about a week ago.

The CME Daily Delivery Report showed that zero gold and 26 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  In silver, the only short/issuer worth noting was JP Morgan with 25 contracts out of its client account.  ADM stopped 14…Morgan Stanley 6…and Macquarie Futures 5 contracts.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Friday trading sessions showed that gold open interest in May fell by 11 contracts, leaving 23 still open. Thursday’s Daily Delivery Report showed that in actual fact 11 gold contracts were issued for delivery on Monday, so the numbers work out exactly for a change — as no contracts were cancelled or added.  Silver o.i. in May fell by 7 contracts, leaving 103 still open, minus the 26 mentioned in the previous paragraph.  Thursday’s Daily Delivery Report showed that 33 silver contracts were actually posted for delivery within the COMEX-approved depositories on Monday, so that means that another 33-7=26  silver contracts were added to the May delivery month.

The May delivery month in silver shows that 4,573  COMEX contracts have been issued and stopped so far.  And, with no exceptions, there have been new contracts added to the delivery month every day.

There were no reported changes in GLD yesterday — and as of 7:22 p.m. EDT yesterday evening, there were no reported changes in SLV, either.

There was a tiny sales report from the U.S. Mint.  They sold 500 troy ounces of gold eagles — and 500 one-ounce 24K gold buffaloes — and that was it.

Month-to-date the mint has sold 9,000 troy ounces of gold eagles — 4,500 one-ounce 24K gold buffaloes — and 1,560,000 silver eagles.

As I pointed out earlier this week, mint sales for May are already miles ahead of what they were in April for the entire month.  But that’s not really saying a lot.

The Royal Canadian Mint came out with its 2016 Annual Report about ten days ago — and I posted all the pertinent gold and silver maple leaf sales data from that report at the time.  I also wondered out loud how long it was going to take them to release their Q1/2017 financial statements, as they were long overdue as well.  When I checked their website late yesterday afternoon…there they were — and this is what they had to say about gold and silver maple leaf sales for Q1/2017 on Page 8 of their First Quarter Financial Statements

Bullion revenues for the 13 weeks ended April 1, 2017 decreased 19{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} to $421.2 million from revised revenue of $521.4 million in the same period in 2016. Sales of gold coins, mostly Gold Maple Leaf (GML) coins, declined 2{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} to 208,300…(2016 – 210,600) ounces. Sales of silver coins, mostly Silver Maple Leaf (SML) coins, declined 56{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} to 4.7 million (2016 – 10.6 million) ounces. The recent decline in revenues is attributed to lower demand for bullion products in the 13 weeks ended April 1, 2017 compared to the same period in 2016.

In plain English the Q1 “lower demand” was because JP Morgan was no longer a buyer.

They also had this tidbit buried in the last three pages of the report.  I snipped it out — and the ‘click to enlarge‘ feature works wonders here.

For the second day in a row it was all zeros in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.

It was somewhat busier in silver, as 567,884 troy ounces were received, but only 9,162 troy ounces were shipped out.  There was 539,838 troy ounces received at Brink’s, Inc. — and the remaining 28,045 troy ounces were deposited at Delaware.  All of the ‘out’ activity was from Delaware as well.  The link to all this is here.

Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday, they reported receiving 3,000 of them — and shipped out 3,212.  All of this activity was at Brink’s, Inc. as usual — and the link to that activity, in troy ounces, is here.

Since the 20th of May falls on a Saturday this month, the good folks over at The Central Bank of the Russian Federation updated their website with April’s data — and this is what they had to report.  They added 200,000 troy ounces of gold to their reserves in April, bringing their total gold reserves up to the 54.2 million troy ounce mark, which translates into 1,685.8 metric tonnes of the stuff.  Here’s Nick Laird’s most excellent chart with the April data added.  Click to enlarge.

Well, I’m certainly glad that I didn’t bet any money on my guesses for what was going to be in yesterday’s Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday.  I was thunderstruck when I saw them — and I know Ted was pretty amazed as well. Based on the price action during the reporting week, I was expecting small increases in the Commercial net short positions in both silver and gold — and the actual numbers were about as far away my estimates as they could possibly be.

In silver, the Commercial net short position fell by an astonishing 11,932 contracts.  They arrived at this number by adding 7,212 long contracts, plus they covered an additional 4,720 short contract — and all of these contracts came courtesy of the Managed Money traders.  The Commercial net short position in silver is now down to 57,337 contracts, or 286.7 million troy ounces.

Ted said that the Big 4 traders decreased their short position by about 3,300 contracts — and he attributes all of that to JP Morgan, which bring their short position down to about the 15,000 contract mark.  The ‘5 through 8’ traders actually added 3,400 contracts to their short position during the reporting week — and Ted’s comment that “now at least two managed money shorts are in that category” is the reason why. [This last sentence was changed at 1:00 p.m. EDT on Sunday, as Ted sent me the wrong numbers initially. – Ed] Ted’s raptors, the remaining 30-odd traders in the commercial category other than the Big 8, increased their long position by around 12,000 contracts.  They are now net long 31,500 COMEX contracts…a huge number.

Under the hood in the Disaggregated COT Report, it was all Managed Money traders — and then some, as they added 16,158 short contracts, plus they increased their long position by 904 contracts as well.  The difference between those two numbers…15,254 contracts…was the change for the reporting week.  The Nonreportable/small trader category were also sellers this week, as they increased their short position by a net 1,281 contracts.   Along with the Commercial traders, it was the traders in the ‘Other Reportables’ category that were gorging themselves on what the Managed Money/Small traders were selling during the reporting week, as they went long 4,256 contracts, plus they decreased their short position by 347 contracts as well, for a weekly changed of 4,603 contracts in total.  I don’t ever remember the ‘Other Reportables’ category being this net long before — or the Managed Money traders being this short.

And not to be forgotten in all this is the remaining Managed Money long position, which Ted has been following religiously for about the last three years.  These remaining long positions are held by ‘strong hands’/non-technical fund Managed Money traders — and will not be sold on lower prices.  And if there are lower prices in the not-too-distant future, it’s a safe bet that they will add to this core long position.

Here’s the 3-year COT chart for silver once again — and you can see the massive improvements in the last four weeks.  And the only reason that the remaining net short position in silver is this high, is entirely due to the record long positions now held by the non-technical Managed Money traders — and the record long positions held by the traders in the ‘Other Reportables’ category.  I’ll stick my neck out and say that if these record long positions didn’t exist, neither would the Commercial net short position.  That’s why Ted is so wildly bullish — and I can hardly wait to see what he’s got to say in his weekly review, now that this COT Report is on the table.  Click to enlarge.

In gold, the numbers were no less incredible, as the commercial net short position in that precious metal dropped by 21,563 contracts, or 2.16 million troy ounces.  They arrived at this number by adding 8,759 long contracts, plus they reduced their short position by 12,804 contracts.  Like in silver, all these contracts came courtesy of the Managed Money traders.

Ted said that the Big 4 traders reduced their short position by around 12,000 contracts — and the ‘5 through 8’ traders covered about 5,600 short contracts as well.  Ted’s raptors, the smaller commercial traders other than the Big 8, added approximately 4,000 long contracts, which brings their net long position up to 16,300 contracts.  Like in silver…it was “all for one, and one for all“…just like the memo said.

The commercial net short position in gold is now down to 14.29 million troy ounces.

Under the hood in the Disaggregated COT Report it was, like in silver, all Managed Money traders, plus much, much more.  During the reporting week they reduced their long position by 19,325 contracts, plus they added 10,769 contracts to their short position, for a weekly change of 30,094 contracts.  Not only did the Commercial traders feast on this 30,094 contract banquet, both the ‘Other Reportables’ and ‘Nonreportable’/small trader categories feasted as well…the ‘Other Reportables’ to the tune of 6,812 contracts net long — and the ‘Nonreportable’/small traders went net long 1,719 contracts.

Here’s the 3-year COT chart for gold — and it’s very bullish.  Click to enlarge.

Of course, a lot has happened since the close of COMEX trading on Tuesday, the cut-off for the above COT Report — and in the past, if ‘da boyz’ have something big planned for the precious metals, they use the trick of waiting until the day after the cut-off to start the major dirty work.  That gives them a full ten days before what they’re up to manifests itself in next Friday’s report.

And with the gold price trading amongst their respective 50 and 200-day moving averages during the last three trading days — and the silver price miles below any moving average that matter, I’m at a total loss as to what next week’s report may, or may not, say.  I’ll leave that it Ted’s expert hands, especially after what this last COT report showed.

As I said in Friday’s column about Friday’s report: “the numbers will put a stake in the ground at the point where the big changes on Wednesday and Thursday began — and it will make an excellent reference point for next Friday’s COT Report.

And that comment, dear reader, has proven to be an understatement.

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 124 days of world silver production—and the ‘5 through 8’ traders are short an additional 58 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 182 days of world silver production…unchanged on the week.]

In the COT Report above, the Commercial net short position in silver is 286.7 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 a whopping 442.2-286.7= 155.5 million troy ounces.

As I also stated in the above COT Report, Ted pegs JP Morgan’s short position at around 15,000 contracts, or 75 million ounces, which is down from the 18,000 contracts they were net short in the previous week’s report.  75 million ounces works out to around 31 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 17 percent of the entire short position held by the Big 8 traders — and that’s another 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 Scotiabank is the number one silver short in the COMEX futures market — and has been for several weeks in a row now.

The two largest silver shorts on Planet Earth—JP Morgan and Canada’s Scotiabank—are short about 84 days of world silver production between the two of them—and that 84 days represents about 68 percent of the length of the red bar in silver in the above chart…a bit over two thirds of it.  The other two traders in the Big 4 category are short, on average, about 20 days of world silver production apiece — and those numbers hardly ever change by much, but they’re down from 22 days apiece in last week’s COT Report.  The four traders in the ‘5 through 8’ category are short, on average, about 14.5 days of world silver production each, which is up a noticeable amount from the previous report.  I would expect that this increase is because of the fact that Ted said that two of the Managed Money traders now have large enough short positions to be included in this category — and in the process bumped out the two smallest traders in the ‘5 through 8’ category.

The short positions of Scotiabank and JP Morgan combined, represents about 46 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 41.2 percent of the entire open interest in silver in the COMEX futures market — and that number would be a bit over 45 percent once the market-neutral spread trades are subtracted out.  In gold, it’s 36.6 percent of the total COMEX open interest that the Big 8 are short.

In gold, the Big 4 are short 41 days of world gold production, which is down from the 45 days that they were short last week — and the ‘5 through 8’ are short another 16 days of world production, which is down from 18 days from the prior week, for a total of 57 days of world gold production held short by the Big 8.  Based on these numbers, the Big 4 in gold hold about 72 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 68, 65 and 64 percent respectively of the short positions held by the Big 8.  Silver is lower by about 4 percentage points from the last reporting week, platinum is lower by 2 percentage points — and palladium rose 1 percentage point.

I have an average number of stories for you today, including a couple that I’ve been saving for my Saturday column for the usual length and content reasons.  I should point out that there’s no Doug Noland commentary, or John Batchelor/Stephen F. Cohen interview for you this week.  Hopefully they will both have something for us next week.


The Fed Will Blink — Bill Bonner

There was a time when central banking was an honest profession.

Central bankers provided financing for the government. They backed the banking system, too, by holding savings as reserves, which they lent to solvent member banks in emergencies.

They were tight-lipped, tight-laced, and tightwads. Their role was to say “no” more often than “yes.”

When the king wanted money to fight in a war… or build a bridge… the banker would give the terse reply: “Sire, we don’t have any.”

Real money was backed by gold. And credit had to be backed by real money, which meant it had to be saved. Savings were limited, as was money.

Savings backed 100{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} of U.S. credit needs until about 1973… two years after President Nixon first announced that the dollar would no longer be backed by gold.

Then, almost unnoticed, a new financial system took over… with new central bankers in control of it.

This commentary by Bill is one I found on the internationalman.com Internet site yesterday — and another link to it is here.

A Trillion Dollar Down Day

After reaching a record market cap of $74.1 trillion this week, global equities saw almost $1 trillion evaporate in a single day…

As Bloomberg notes, concern over Donald Trump’s administration and a political crisis in Brazil pushed the MSCI All-Country World Index down 1.5 percent in the past two days, the most since September.

The last time that happened, it took about three months for shares to recover the value lost.

This this tiny 2-chart Zero Hedge news item was posted on their website at 3:55 p.m. EDT yesterday afternoon — and it’s the first of two in a row from Brad Robertson.  Another link to it is here.

Warnings From the Market’s Mount Vesuvius

When Mount Vesuvius Blew

Everything was just the way it was supposed to be in Pompeii on August 24, 79 A.D.  The gods had bestowed wealth and abundance upon the inhabitants of this Roman trading town.  Things were near perfect.

The lucky residents of Pompeii lived in large homes with elegant courtyard gardens and all the modern conveniences.  Rooms were heated by hot air flowing through cavity walls and spaces under the floors.  Running water was provided to the city from a great reservoir and conveyed through underground pipelines to houses and public buildings.

Fresh fish from the Bay of Naples were readily available in the Macellum (great food market) and countless cauponae (small restaurants).  Entertainment was on hand at the large amphitheatre.  Life was agreeable, affable, and idyllic for all – and it was only getting better.  Everyone just knew it.  They could feel it.  They believed it.

By 79 A.D. Pompeii had experienced nearly uninterrupted advancement from its founding almost 700 years earlier.  That this would ever change was unthinkable.  On the morning of August 24th, who but a doomsayer would suggest there wouldn’t be another 700 years of progress?

Yet, just then, when things couldn’t have seemed more certain, Mount Vesuvius blew.  Nineteen hours later, where there had been life and a thriving civilization, there was silence for the next 1,669 years.

This very interesting commentary was embedded in a Zero Hedge article posted on their Internet site at 3:40 p.m. on Friday afternoon EDT — and I thank Brad Robertson for sharing it with us.  Another link to it is here.

The Deep State: Hiding in Plain Sight — Bill Moyers interviews Mike Lofgren

Mike Lofgren, a congressional staff member for 28 years, joins Bill Moyers to talk about what he calls Washington’s “Deep State,” in which elected and unelected figures collude to protect and serve powerful vested interests.

It is how we had deregulation, financialization of the economy, the Wall Street bust, the erosion or our civil liberties and perpetual war,” Lofgren tells Moyers.

This must watch 26:26 minute PBS video interview was posted on the youtube.com Internet site on April 15, 2014 — and I thank Roy Stephens for bringing it to our attention.  In an interesting aside, Bill Moyers himself is a member of the Council on Foreign Relations.  How ‘Deep State’ can you get?  This is one of those items that had to wait for my Saturday column — and another link to it is here.

Unprecedented Corruption Among Brazil’s Top Politicians Revealed In Unsealed JBS Plea Bargain

Recall that behind the latest political scandal to grip Brazil, in which president Michel Temer was accused of paying hush money to the jailed former House speaker, Eduardo Cunha (who was responsible for the impeachment of Temer’s predecessor Dilma Rouseff) to keep him from dragging Temer down as well, and which yesterday led to historic losses for the the Bovespa, was a plea bargain by the top executives of Brazil’s meatpacking giant JBS, Joseley Batista and his brother Wesley, which among other things, included an alleged recording of a phone conversation in which Batista told Temer he was paying Cunha to remain silent, to which the president was recorded saying, “You need to keep that up, okay?”

Moments ago, Brazil’s O Globo newspaper reported that the latest episode in Brazil’s epic political corruption saga has been unveiled, and two things emerged. First, president Temer is under now officially under investigation for corruption and obstruction of justice.

Second, and more important, the contents of the JBS plea bargain testimony were disclosed, courtesy of Reuters, and they reveal corruption so pervasive that virtually every single current and past top politician has been implicated.

This very interesting news item appeared on the Zero Hedge website at 1:00 p.m. on Friday afternoon EDT — and this one comes courtesy of Richard Saler.  Another link to it is here.

The Assault on Trump — Paul Craig Roberts

We are witnessing an assault by the national security state and its liberal media on a President of the United States that is unprecedented.

Wild and unsupported accusations of treasonous or illegal Russian connections have been the mainstay of the news since Trump’s campaign for president. These accusations have reached the point that there is an impeachment movement driven by the national security state and its liberal media and endorsed by Democrats, the American leftwing which has turned against the working class as “Trump deplorables,” and luminaries such as Harvard Law Professor Larry Tribe. The Washington Post, which was not present at the meeting of President Trump with Russian Foreign Minister Lavrov, purports to know that Trump gave Lavrov U.S. national security information.

The Russian government has offered the presstitute media a transcript of the meeting, but, of course, the pressitutes are not interested.

The latest story is that Trump tried to bribe FBI Director Comey, before he fired him, not to investigate Trump as part of the “Russian investigation.” Clearly there is no intelligence left in the American media. The President doesn’t need to bribe someone he can fire.

What we are witnessing is the determination of the national security state to keep their prized “Russian Threat” in its assigned role as the Number One Threat to the US. The liberal media, owned by the CIA since the 1950s is in accord with this goal.

This very worthwhile commentary by Paul was posted on his website on Thursday sometime.  I lifted it from a Zero Hedge piece that Roy Stephens sent me last night — and another link to it is here.

Ecuador seeks safe passage of Assange from London embassy to Ecuador

A source close to the Foreign Ministry of Ecuador has said  that the Ecuadorian Government has been urging Britain to arrange for the safe passage of Julian Assange from Ecuador’s London embassy to Ecuador.

The statement reads,

Given that the European arrest warrant no longer holds, Ecuador will now be intensifying its diplomatic efforts with the U.K. so that Julian Assange can gain safe passage in order to enjoy his asylum in Ecuador”.

This comes as British police threaten to arrest Assange for breach of bail conditions, relating to the now dropped Swedish investigation from 2012.

The United Nations has called Assange’s internment at the Embassy “arbitrary” and said that it infringed on his human rights under international law.

This news item was posted on theduran.com Internet site around 7:30 a.m. on Friday morning EDT — and I thank Roy Stephens for sending it along.  Another link to it is here.  Another — and very related UPI news item, also courtesy of Roy, is headlined “Sweden drops Julian Assange rape investigation

Deutsche Bank Woes Deepen in Monte Paschi Fraud Case

Deutsche Bank AG, on trial in Milan for allegedly helping Banca Monte dei Paschi di Siena SpA conceal losses, must face accusations that it was running an international criminal organization at the time.

Prosecutors used internal Deutsche Bank documents and emails to persuade a three-judge panel to consider whether there were additional, aggravating circumstances to the charges the German lender already faces related to derivatives transactions. The material included a London trader’s “well done!” message to a banker who is now on trial, evidence seen by Bloomberg shows.

Allowing prosecutors to argue that the alleged market manipulation crimes were committed by an organization operating in several countries could lead to higher penalties if they win a conviction. Giuseppe Iannaccone, a lawyer for Deutsche Bank and some of the defendants, sought to block the move at Tuesday’s hearing, saying there wasn’t a clear connection between the original charge of market manipulation and the alleged aggravating circumstances.

The trial for Deutsche Bank managers becomes more problematic after the judge’s decision,” said Giampiero Biancolella, an attorney specializing in financial crime who isn’t involved in the case. “If proven, the aggravating circumstance may increase the eventual jail sentence for the market manipulation to a maximum of nine years.

The German bank and Nomura Holdings Inc. went on trial in Milan in December, accused of colluding with Monte Paschi to cover up losses that almost toppled the Italian lender before its current battle for survival. Thirteen former managers of Deutsche Bank, Nomura and Monte Paschi were charged for alleged false accounting and market manipulation.

This very worthwhile Bloomberg news item appeared on their Internet site  on Tuesday — and was updated on Wednesday.  I found it in yesterday’s edition of the King Report — and another link to it is here.

ECB Tapering May Trigger “Disorderly Restructuring” of Italian Debt, Return to National Currency

Here’s the staggering scale of the Italian government’s dependence on the ECB’s bond purchases, according to a new report by Astellon Capital: Since 2008, 88{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} of government debt net issuance has been acquired by the ECB and Italian Banks. At current government debt net issuance rates and announced QE levels, the ECB will have been responsible for financing 100{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} of Italy’s deficits from 2014 to 2019.

But now there’s a snag.

Last month, the size of the balance sheet of the ECB surpassed that of any other central bank: At €4.17 trillion, the ECB’s assets have soared to 38.8{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} of Eurozone GDP. The ECB has already reduced the rate of purchases to €60 billion a month. And it plans to further withdraw from the super-expansionary monetary policy. To do this, according to Der Spiegel, it wants to spread more optimistic messages about the economic situation and gradually reduce borrowing.

Frantically sowing the seeds of optimism on Wednesday was Bruegel’s Francesco Papadia, formerly director general for market operations at the ECB. “On the economic front, things are moving in the right direction,” he told Bloomberg. The ECB will begin sending clear messages in the Fall that it will soon begin tapering QE, Papadia forecast. By the halfway point of 2018 the ECB would have completed tapering and it would then use the second half of the year to move away from negative interest rates.

So far, most current ECB members have shown scant enthusiasm for withdrawing the punch bowl. The reason most frequently cited for not tapering more just yet is their lingering concern about the long-term sustainability of the Eurozone’s recent economic turnaround.

The ECB’s binge-buying of sovereign and corporate bonds has spawned a mass culture of financial dependence across Europe, while merely serving to paper over the cracks that began forming — or at least became visible — in some Eurozone economies during the sovereign debt crisis. In many places the cracks are even bigger than they were back then. This is the elephant in the ECB’s room, and by now it’s too big to ignore.

This very worthwhile article showed up on the wolfstreet.com Internet site on Thursday sometime — and it’s the second contribution of the day from Richard Saler.  Another link to it is here.

Confirmed: America attacks Syrian Arab Army and its allies–a crime and blunder

The United States Air Force has struck a contingent of the Syrian Arab Army and allied fighters near At Tanf in southern Syria. The U.S. has a military outpost in At Tanf which is close to both the Iraqi and Jordanian border.

This is the second time that the U.S. has bombed elements of the Syrian Arab Army since Donald Trump became President.

According to Syria, the casualties of the attack are as follows:

  •     A convoy of five T-62 tanks were hit by the U.S. Coalition
  •     Two tanks were destroyed
  •     A Shilka was damaged
  •     Six military personnel were killed and another three were wounded
  •     Convoy consisted of soldiers from the Syrian Arab Army (SAA), National Defence Forces (NDF), Hezbollah, and    Imam Al-‘Ali Battalions

Previously under the Obama administration, the U.S. Air Force killed 62 Syrian Arab Army soldiers near Deir ez-Zor airport in a horrific war crime.

This story was posted on theduran.com Internet site on Thursday sometime — and I thank Roy Stephens for his third offering in today’s column — and another link to it is here.  In a directly related story from theduran.com website early on Friday morning is this news item headlined “Russia condemns America’s attack on Syrian and allied forces

Mattis: North Korea Military Solution Would Be “Tragic on an Unbelievable Scale

With the media narrative once again focused squarely on Trump and the “Russian connection”, something which will unlikely change over the next week absent “fireworks” elsewhere, the story of potential military intervention in South Korea has understandably dropped from the front pages. Although with a second US aircraft carrier now en route to the Korean Peninsula, and with Trump desperate for another “big bang” distraction, is it shortsighted to underestimate the potential of another geopolitical hot spot emerging in the next few days.

While the answer is unknown, on Friday afternoon Defense Secretary Jim Mattis reminded the American public just how high tht potential stakes are when he said that any military solution to the North Korea crisis would be “tragic on an unbelievable scale” and that Washington was working internationally to find a diplomatic solution.

Quoted by Reuters, Mattis told a Pentagon news conference that “we are going to continue to work the issue,” and added that “if this goes to a military solution, it’s going to be tragic on an unbelievable scale. So our effort is to work with the U.N., work with China, work with Japan, work with South Korea to try to find a way out of this situation.”

Pundits took the remarks as one of the clearest indicators yet that President Trump’s administration will seek to exhaust alternatives before turning to military action to force Pyongyang’s hand, although it would not explain U.S. willingness to potentially provoke the Kim regime with a second aircraft carrier in close proximity to Pyongyang. The U.S. which has 28,500 troops in South Korea to guard against the North Korean threat, has called on China to do more to rein in its neighbor. Mattis appeared to defend China’s most recent efforts, even as he acknowledged Pyongyang’s march forward.

This news story put in an appearance on the Zero Hedge website very early on Friday evening EDT — and another link to it is here.

The Amazing Dinosaur Found (Accidentally) by Miners in Canada

On the afternoon of March 21, 2011, a heavy-equipment operator named Shawn Funk was carving his way through the earth, unaware that he would soon meet a dragon.

That Monday had started like any other at the Millennium Mine, a vast pit some 17 miles north of Fort McMurray, Alberta, operated by energy company Suncor. Hour after hour Funk’s towering excavator gobbled its way down to sands laced with bitumen—the transmogrified remains of marine plants and creatures that lived and died more than 110 million years ago. It was the only ancient life he regularly saw. In 12 years of digging he had stumbled across fossilized wood and the occasional petrified tree stump, but never the remains of an animal—and certainly no dinosaurs.

But around 1:30, Funk’s bucket clipped something much harder than the surrounding rock. Oddly colored lumps tumbled out of the till, sliding down onto the bank below. Within minutes Funk and his supervisor, Mike Gratton, began puzzling over the walnut brown rocks. Were they strips of fossilized wood, or were they ribs? And then they turned over one of the lumps and revealed a bizarre pattern: row after row of sandy brown disks, each ringed in gunmetal gray stone.

After word of the discovery raced up the ladder at Suncor, the company quickly notified the Royal Tyrrell Museum. Henderson and Darren Tanke, one of the museum’s veteran technicians, scrambled aboard a Suncor jet and flew to Fort McMurray. Suncor excavators and museum staff chipped away at the rock in 12-hour shifts, shrouded in dust and diesel fumes.

Paleobiologist Jakob Vinther, an expert on animal coloration from the U.K.’s University of Bristol, has studied some of the world’s best fossils for signs of the pigment melanin. But after four days of working on this one—delicately scraping off samples smaller than flecks of grated Parmesan—even he is astounded. The dinosaur is so well preserved that it “might have been walking around a couple of weeks ago,” Vinther says. “I’ve never seen anything like this.”

This amazing absolute must read story, contains some of the most incredible dinosaur photos ever taken, because they are as the creature was…skin, armour, scales…everything.  Like the scientist said in the preceding paragraph…”it’s so well preserved, it could have been walking around a couple of weeks ago“.  This article appeared in the June issue of National Geographic — and I thank ‘aurora’ for digging it up for us earlier in the week.  Another link to this must read photo essay is here.

From Yukon to Patagonia, gold explorers stir after sleep

The number of holes drilled at gold deposits has been rising steadily for more than a year, according to S&P Global Market Intelligence. And while early-stage exploration budgets haven’t kept pace with spending at existing mines, prospecting hot spots are starting to pop up in traditional destinations Canada, Australia, and Latin America.
In some parts of Argentina, exploration has jumped about 50 percent, mainly for lithium but also for gold in provinces such as Santa Cruz, according to state-controlled energy company YPF SA. Chile’s government also sees a pickup this year with prospectors focusing on both copper and gold. Colombia is also attracting more attention.

In some parts of Argentina, exploration has jumped about 50 percent, mainly for lithium but also for gold in provinces such as Santa Cruz, according to state-controlled energy company YPF SA. Chile’s government also sees a pickup this year with prospectors focusing on both copper and gold. Colombia is also attracting more attention.

Drilling successes are adding to the interest. Aurion Resources Ltd. shares have more than tripled since Feb. 1 when it announced a discovery in northern Finland, while SolGold Plc has risen 12-fold in the past year as it drilled out a copper and gold find in Ecuador. This week’s $431 million deal between Eldorado Gold Corp. and Integra Gold Corp. is the latest acquisition driven by a need to secure new ounces.

We need more exploration in the industry; it’s been such a long downturn,” Mark Ferguson, head of mining studies at S&P Global Market Intelligence, said in a phone interview from Halifax, Nova Scotia. “A lot of producers are going to start facing medium-term shortfalls in their pipeline if they’re not replacing the reserves that they’re actively mining.”

Well, dear reader, the miners would be far more enthusiastic about exploration if they were receiving a free-market price for their efforts, which they aren’t…as you know all too well.  This Bloomberg story appeared on their Internet site at 5:00 p.m. Denver time on Thursday afternoon — and was updated about fifteen hours later.  I found it in a GATA dispatch — and another link to it is here.

Gold market rigging sneaks into Bloomberg profile of mining entrepreneur Giustra

Frank Giustra likes to see big where others think small.

The Canadian mining maverick’s latest target is a subterranean patch of red earth in southwestern Mexico. In January his new undertaking, Leagold Mining Corp., bought the Los Filos mine from Goldcorp Inc. for $350 million. It wasn’t the open pits churning out 200,000-plus ounces of the precious metal that caught this attention — it was the untapped deposit stretching for roughly 600 meters below.

We just looked at it and thought: This is a jewel,” Giustra, 59, said in an interview at his downtown Vancouver office, where a George Rodrigue blue dog painting hangs at the entrance. The plan is to use Los Filos to build “a major gold producer over the next two, three, four years,” he says. “Unless the world changes dramatically, I think we’ll pull it off.”

Giustra has a track record of finding the sparkle in the dirt. He’s used what he calls a grow-by-acquisition model to help build Endeavour Mining Corp. as well as a predecessor to Goldcorp, which is now one of the largest gold producers and Leagold’s biggest shareholder. In his spare time, he founded Lions Gate Entertainment Corp., which became one of the world’s biggest independent studios.

This Bloomberg essay, which is actually headlined “Billion-Dollar Gold Dream Lures Mining Maverick Out of Hiatus” showed up on their website at 5:00 p.m. MDT on Wednesday — and subsequently updated about seventeen hours later.  Chris Powell gave it the headline that you see above, because Giustra mentions it in the article — and I found it on the gata.org Internet site.  It’s certainly worth reading — and another link to it is here.

Royal Mint bullion coin sales surge on wave of political turmoil

In a warehouse a dozen miles to the northwest of Cardiff, the Royal Mint is running its machines through the night to keep up with demand for one of the big beneficiaries of the last year’s political turmoil – gold and silver bullion.

The 1,100-year-old Mint, based here since the 1960s, is producing 50 percent more gold bullion coins and bars than it was this time last year, director of bullion Chris Howard says, while its sales in January rose by a third.

With growth prospects for its core minting business limited by the advent of the cashless society, the Mint has focused heavily on growing its bullion arm in the last few years.

Its contribution to the overall business’s bottom line has gone from negligible levels in 2012 to more than a quarter in the last year.

We used to send these out by the box,” head of bullion sales Nick Bowkett says, indicating stacks of silver coins packed for transit in the Mint’s bullion striking room. “Now we ship them out by the pallet.

This Reuters story, filed from Llantrisant in Wales, was posted on their website way back on February 2 — and I found it on the goldcore.com Internet site yesterday.  Another link to it is here.


Today’s ‘critter’ is the very endangered whooping crane.  When I was in my early teens back in the early 1960s, there were only about 50 of these birds left.  As of February 2015, there 603 of these magnificent creatures around, of which, 161 were in captivity.  Needless to say, I’ve never seen one.  The ‘click to enlarge‘ feature makes a big difference with these photos.


Today’s pop ‘blast from the past’ was a “Motown-like” tune which came from 1964 — and I don’t remember it at all.  The link is here.  But later in the same year, The Ramsey Lewis Trio recorded an instrumental version — and their jazzy take on it is the one I remember.  Along with Dave Brubeck’s “Take Five“…this was one of the few jazz-style instrumental pieces that made at as a pop standard back in the 1960s.  I hadn’t heard it in decades, until tonight.  The link is here.  Enjoy.

Today’s classical ‘blast from the past’ is J.S. Bach’s famous organ piece, the Toccata and Fugue in D minor, BWV 565.  The actual date of composition is open to question, but it was early in the 18th century — and here’s the piece played on a instrument of about the same vintage.  The organist, Carl Richter, has an assistant pulling stops for him, which was absolutely necessary on an organ like this one with four manuals/keyboards.  I’ve seen organs where two stop-pullers were required.  Mozart didn’t call it the “king of instruments” for no reason.  I’ve posted this youtube.com recording before, but it’s been many years. The link is here.

I must admit that the COT Report from yesterday is still top-of-mind for me as I’ve been labouring away on today’s column.  The numbers were truly impressive — and just add to the wildly bullish structure in the COMEX futures market that silver analyst Ted Butler has been going on about for the last week or so when he came out with his essay “Expecting the Unexpected“.

In his Wednesday missive, he had this to say about what was going on…“As an analyst observing the repetitive cycle of COMEX positioning for more than three decades, it is fitting that I would become more cautious on price as the technical funds load up on the long side and more bullish when they abandon the long side and load up on the short side. I know many have expressed surprise that I have recently come out with the opinion that the big move in silver is close at hand, but my basic analysis demands it. If one is to be bullish after the technical funds have sold, should not he or she be most bullish after the technical funds have sold the most in history?  I don’t own or run the COMEX, or any other whorehouse; I’m just the piano player, observing what’s going on.

But after this unprecedented clean-out in silver, one has to wonder what has been going on in that precious metal since the Tuesday cut-off.  We’ve had three massive volume days in a row, but neither of the key moving averages that tempt the Managed Money traders, have come even remotely close to being broken to the upside, as you can see in the 6-month silver chart below.  I’m asking myself the question as to what kind of gaming can be going on under the hood — and who are the buyers and the sellers of all these hundreds of thousands of contracts traded over the last three business days.

Of course we won’t know for sure until next Friday, if we get that far without this whole thing blowing sky high before then.  One safe bet in all this is that JP Morgan is up to their neck in it.

Here are the 6-month charts for all four precious metals, plus copper.  Once again there was a reasonable amount of price/volume activity in the after-hours market, so Friday’s dojis don’t accurately reflect their respective day-end closing prices…but they’re close enough this time.  The ‘click to enlarge’ feature helps a bit with the first four charts.

I was more than surprised to see that President Trump’s first overseas foray was to that bastion of personal freedom, Saudi Arabia.  That seems like a strange place for any newly-minted U.S. president to visit.  Normally it would be a major economic or political power…usually a Western ally…but not this time — and I must admit that I’m wonder why that is.  I have my suspicions, but I’ll keep them to myself for the moment.

As for the world economy and their associated equity markets — I’m on the same page as Dave Stockman et al…as it’s ripe to implode at any time.  But the powers-that-be have been kicking this Frankenstein behemoth down the road since they ‘saved’ the system back in the crash of 2007/09 — but I doubt very much that they’ll be able to pull it off a second time…notwithstanding all Jim Rickards’ talk about the IMF’s SDRs.

I’m also wondering if this sudden commotion in the precious metals over the last month or so have been in preparation for some sort of ‘event’ like that, as all things paper crash and burn — and all things physical take center stage.

As I, along with others…including Jim Rickards, have stated over the years; if the world’s central banks are looking for inflation, setting a light under commodity prices, with the precious metals leading the way, would be a sure-fire way to make it happen.

If that’s the case, then it certainly explains why JP Morgan is going ‘pedal to the metal’ to reduce its short position in silver [and gold] to the lowest amounts possible.

All that “We, the people” can do is sit back and watch what develops — and hope we survive it all.

That’s all I have for today — and the week — and I’ll see you here on Tuesday.