‘Da Boyz’ at Battle Stations Once Again

04 November 2017 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price wandered around a dollar or two above unchanged until it began to weaken starting just before 2 p.m. China Standard Time on their Friday afternoon — and by the London open, was down a few dimes.  It was down about two bucks when the job numbers hit the tape — and blasted higher, only to run into ‘da boyz’ who were obviously laying in wait.  It was capped immediately — and then faded a bit from that point.  Then at 10:35 a.m. EDT the price got engineered lower — and the low tick of the day came right at the 4:00 p.m. BST/11:00 a.m. EDT London close.  It crawled quietly higher until around 3:15 p.m. in after-hours trading — and didn’t do much of anything after that.

Once again, the high and low ticks aren’t worth looking up.

Gold was closed on Friday in New York at $1,269.40 spot, down $6.10 on the day.  Net volume was over the moon once again at 347,000 contracts.

Here’s the 5-minute tick chart for gold, courtesy of Brad Robertson, for which I thank him.  The largest volume spikes of the day occurred on the price-capping operation when the jobs report came out — and then again when JPMorgan et al pulled the plug on the price around 8:35 Denver time on the chart below.  Volumes didn’t drop off to anything resembling background levels until shortly after 13:00 MDT/3 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.

The silver price was forced to follow a very similar path as gold’s, with the only real difference being that once the price slam to the downside was done by 10:40 a.m. in New York, the price barely moved after that.

The CME Group recorded the high and low ticks in this precious metal as $17.195 and $16.77 in the December contract.

Silver finished the Friday session at $16.80 spot, down 29 cents from its close on Thursday.  Net volume, not surprisingly, was very heavy at just under 92,500 contracts.

Here’s the 5-minute tick chart for silver, courtesy of Brad as well — and my comments on it are the same as they are for gold, expect that volume was back to mostly background levels shortly after the 11:30 a.m. Denver time COMEX close.

Like for gold, 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 this chart as well.

The platinum price pattern was a sort-of mini-version of what happened with the gold price on Friday — and when ‘da boyz’ were done with it, platinum closed at $919 spot, down 4 dollars on the day.

Palladium was up 6 dollars by 1 p.m. CST on their Friday afternoon, but the selling pressure commenced at that point — and it was sold down to its Zurich low around noon CEST.  It proceeded to rally a bit once the COMEX opened at 8:20 a.m. EDT, but by noon it was down at its low tick of the day.  Then shortly before 1 p.m. in New York it began to rally anew, with most of those gains coming by the COMEX close.  From there it ticked higher for the rest of after-hours trading session.  Palladium finished the day at $993 spot…up 3 bucks from its close on Thursday.

The dollar index closed very late on Thursday afternoon in New York at 94.72 — and crawled unevenly lower until precisely 2:00 a.m. China Standard Time on their Friday afternoon.  It then rallied weakly until around 10:15 a.m. BST, before heading a bit lower into the jobs report.  Minutes before the job numbers were reported, the dollar index fell off the proverbial cliff, hitting its 94.41 low tick the moment that the jobs numbers were released — and the dollar index was ramped higher at that juncture.  It was up to the 95.00 mark by minutes after 11 a.m. EDT — and then began to fade a bit starting a few minutes after the 1:30 p.m. EDT COMEX close.  The dollar index finished the Friday session in New York at 94.92 — and up only 20 basis points from Thursday.

It’s fairly obvious that the dollar index wanted to tank — and the precious metal wanted to blast higher on the job numbers, but the powers-that-be were there to make sure that there was no negative reaction in anything paper.

And here’s the 3-year U.S. dollar index — and you can read into it whatever you wish.

The gold shares opened about unchanged — and then slid into negative territory by a bit, but then really cratered once ‘da boyz’ pulled the plug on the gold price at 10:35 a.m. EDT.  Their respective lows came at gold’s low — and the dollar index high…which was a minute or so after 11 a.m. in New York.  They chopped quietly but steadily higher for the rest of the trading session — and the HUI closed down another 0.79 percent.

The silver equities opened about unchanged as well, but began to head south immediately.  Their respective lows came a minute or two before the gold stocks bottomed out — and like the silver price itself after that, the silver equities traded flat for the rest of the Friday session.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index got hit for another 1.98 percent.  Click to enlarge if necessary.

And here, as always, is the 1-year Silver Sentiment/Silver 7 Index.  Click to enlarge.

Here are the usual three charts from Nick that show what’s been happening for the week, month-to-date — 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.  ‘Click to enlarge‘ for all three.

Here’s the 1-week chart — and it ain’t great.

And the month-to-date chart, just three days worth, is just as sad.

And here’s the year-to-date chart — and virtually all of the gains in the gold shares we had early in the year have vanished courtesy of ‘da boyz’ — and the silver equities are actually down on the year now.  They’re underperforming the underlying metals by a significant amount.

The share price action, along with the precious metals themselves are still in the iron grip of JPMorgan et al — and that won’t change until they’re through doing what they’re doing, or they get over run.  It’s certainly obvious that the CFTC won’t do anything…new enforcement director or not — and it’s a given that the silent co-conspirators in this price management scheme, the mining companies themselves, won’t do anything either.


The CME Daily Delivery Report showed that 27 gold and 10 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  In gold, the three short/issuers were ADM, Advantage — and Morgan Stanley, with 14, 9 and 4 contracts out of their respective client accounts.  Of the four long/stoppers, the three largest were Goldman Sachs, Scotiabank and International F.C. Stone…with 10, 9 and 5 contracts respectively.  The 9 contracts for Scotiabank were for their in-house/proprietary trading account.  In silver, the two short/issuers were Morgan Stanley with 8 — and Advantage with 2 contacts.  The largest of the three long/stoppers was ADM picking up 8 contracts.  All of these silver contracts, both issued and stopped, were from or for their respective client accounts.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Friday trading session showed that gold open interest in November fell by only 1 contract, leaving 140 still open, minus the 27 mentioned just above.  Thursday’s Daily Delivery Report showed that 63 gold contracts were actually posted for delivery on Monday, so that means that 63-1=62 more gold contract just got added to November.  Silver o.i. in November declined by 8 contracts, leaving just 13 left, minus the 10 mentioned in the previous paragraph.  Thursday’s Daily Delivery Report showed that 18 silver contracts were actually posted for delivery on Monday, so that means that another 18-8=10 silver contracts just got added to the November delivery month.


There was a withdrawal from GLD yesterday…9,497 troy ounces.  If that represents a fee payment of some type, it’s a pretty chunky one!  There were no reported changes in SLV.

There was no sales report from the U.S. Mint yesterday.

Month-to-date, which is only three days old, the mint has sold 1,000 troy ounces of gold eagles — and that’s it.

There was very little activity in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.  Only 9,066.300 troy ounces/282 kilobars [U.K./U.S. kilobar weight] were reported received — and nothing was shipped out.  I won’t bother linking this amount.

It was pretty quiet in silver as well.  There was 352,681 troy ounces received at Canada’s Scotiabank — and that was all.  Nothing was shipped out.  The link to that activity is here.

It wasn’t overly busy over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They reported receiving 1,500 of them, plus they shipped out another 181.  All of this activity was at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.


The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, showed a fairly decent improvement in silver, but no change at all in gold.

In silver, the Commercial net short position declined by 5,477 contracts, or 27.4 million troy ounces of paper silver.

They arrived at that number by adding 2,323 long positions, plus they covered 3,154 short contracts — and the sum of those two numbers is the change for the reporting week.

Ted said that the Big 4 [read JPMorgan] only managed to cover about 400 contracts of their short position — and the ‘5 through 8’ large traders decreased their short position by around 500 contracts.  It was Ted’s raptors, the far-more-nimble 34-odd small commercial traders other than the Big 8, that really cleaned up, as they added approximately 4,600 contracts to their long position.

Under the hood in the Disaggregated COT Report, it was all Managed Money traders, plus a bit more…as they reduced their long position by 1,808 contracts, plus they added a very chunky 4,797 contracts to their short position.  The sum of those two numbers…6,605 contracts…was their change for the reporting week.  The difference between that number and the Commercial net short position…1,128 contracts…was made up by the traders in the ‘Other Reportables’ and ‘Nonreportable’/small trader categories.

The Commercial net short position in silver now sits at 71,028 contracts — and that translates into 355.1 million troy ounces of paper silver held short.  The Big 8 traders are short 494.1 million troy ounces of paper silver, or 203 days of world silver production.   The reason for the difference between those two numbers is that Ted’s raptors are long that amount.  Ted pegs JPMorgan’s short position at 36,000 contracts/180 million troy ounces, down 500 contracts from last week’s COT Report, as he assigned all the decrease in this week’s drop in the short position of the Big 4 to them.

Ted says that last weeks’ activity in silver, appeared to be another one of his patented “scams within a scam” trades, as the raptors slammed the Managed Money traders onto the short side using the salami slicing technique during the reporting week, then blew them out on the big price run-up [that they themselves engineered] on Wednesday, the day after the cut-off, ringing the cash register for fun and big profits once again.  Ted will have that profit number, to the nearest $10 million or so, in his weekly review later this afternoon.

Here’s the 3-years COT chart for silver — and although there is a bit of an improvement, it’s still a very bearish chart.  Click to enlarge.

In gold, there was no change at all…a 5 contract net decrease in the commercial net short position, which is as close to unchanged as I’ve ever seen.

They arrived at that position by adding 2,903 long contracts, plus they covered 2,898 short contracts — and the difference between those two number…5 contracts…was the change for the reporting week.

Ted said that the Big 4 actually added about 700 contracts to their short position, but the ‘5 through 8’ large traders decreased their short position by 900 contracts.  Ted’s raptors, the 47-odd small commercial traders other than the Big 8, reduced their collective long position by approximately 200 contracts.  Not much to see here.

Under the hood in the Disaggregated COT Report, there was quite a bit more to see, as the Managed Money traders sold 10,049 long contracts, plus they reduced their short position by an additional 7,646 contracts — and the difference between those two numbers…2,403 contract…was the change for the reporting week.  Since the commercial net short position declined by only 5 contracts, the other 2,398 contracts were scarfed up by the traders in the ‘Other Reportables’ category.  The traders in the ‘Other Reportables’ category also helped themselves to everything that the Nonreportable/small traders were selling as well.  For all intents an purposes the traders in the ‘Other Reportables’ category ate the lunch of the Big 8 traders, as they barely covered anything — and even forced the Big 4 to go short during the reporting week.

The commercial net short position in gold stands at 21.06 million troy ounces of paper gold.

Here’s the 3-year COT chart gold — and there’s not a lot to see, except for the fact that the report is, like it is for silver, very bearish.  Click to enlarge.

Even though there was an improvement in silver, it was not all that material — and the Big 8 traders continue to be stymied in their attempts to cover their massive short positions in both precious metals, as the raptors and other non-commercial traders are beating them to their food supply…the traders in the Managed Money category.


Here’s Nick Laird’s “Days to Cover” chart…which I consider to be the most important chart of all in my Saturday column…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 142 days of world silver production—and the ‘5 through 8’ large traders are short an additional 61 days of world silver production—for a total of 203 days, which is almost seven months of world silver production, or about 494.1 million troy ounces of paper silver held short by the Big 8.  [In the COT Report last week, the Big 8 were short 203 days of world silver production as well.]

In the COT Report above, the Commercial net short position in silver was reported as 355.1 million troy ounces.  The short position of the Big 8 traders is 494.1 million troy ounces.  The short position of the Big 8 traders is larger than the total Commercial net short position by a chunky 494.1 minus 355.1 = 139.0 million troy ounces.  The reason for the difference in those numbers, as I’ve already pointed out in the COT Report above, is that Ted’s raptors, the approximately 34-odd small commercial traders other than the Big 8…are long that amount.

As I also stated in the above COT Report, Ted pegs JPMorgan’s short position at about 36,000 contracts, or around 180 million troy ounces, which is down about 2.5 million troy ounces from what they were short in last week’s COT Report.  180 million ounces works out to around 74 days of world silver production that JPMorgan is short.  That’s compared to the 203 days that the Big 8 are short in total.  JPM is short about 36 percent of the entire short position held by the Big 8 traders.

I estimate the short position in silver held by Scotiabank/ScotiaMocatta at approximately 31 days of world silver production minimum, a number that hasn’t changed much in the last while — and that’s most likely because they’re not doing much in the COMEX futures market anymore as they continue to try and sell that ‘pig-in-a-poke’.  So JPMorgan is by far the No. 1 silver short on Planet Earth — and likely to remain that way indefinitely, unless they can engineer the mother of all price declines.

The two largest silver shorts on Planet Earth—JP Morgan and Canada’s Scotiabank—are short about 105 days of world silver production between the two of them—and that 105 days represents 73 percent of the length of the red bar in silver in the above chart…almost three quarters of it.  The other two traders in the Big 4 category are short, on average, about 18.5 days of world silver production apiece, which is unchanged from last week.  The four traders in the ‘5 through 8’ category are short, on average…15.25 days of world silver production each, which is down a hair from last week’s COT Report.

This is just more proof of the fact, if any was needed, that it’s only what JPMorgan does in the COMEX silver market that matters, as it’s only their position that every changes by any material amount.

The silver short positions of Scotiabank and JPMorgan combined, represents about 52 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 49.7 percent of the entire open interest in silver in the COMEX futures market — and that number would be around 55 percent once the market-neutral spread trades are subtracted out.  In gold, it’s 47.3 percent of the total COMEX open interest that the Big 8 are short — and something under 55 percent once the market-neutral spread trades are subtracted out.

For more than two months now, the Big 8 have been short a larger percentage of the total open interest in silver, than they have in gold.

In gold, the Big 4 are short 65 days of world gold production, which is unchanged from what they were short last week — and the ‘5 through 8’ are short another 25 days of world production, which is also unchanged from what they were short the prior week, for a total of 90 days of world gold production held short by the Big 8 — which is, of course, also unchanged from what they were short in last week’s report.  Based on these numbers, the Big 4 in gold hold about 72 percent of the total short position held by the Big 8…which is unchanged from last week’s COT Report as well.

The “concentrated short positions within a concentrated short position” in silver, platinum and palladium held by the Big 4 are about 70, 66 and 74 percent respectively of the short positions held by the Big 8.  These three numbers are exactly unchanged compared to last week’s COT Report — and the COT Report from the prior week as well.

And as I said in last week’s ‘Days to Cover’ discussion…

Every week for the last several months I’ve included the paragraph below in my discussion on the ‘Days to Cover’ report…

Why JPMorgan has taken it upon itself to be the short seller of last resort in silver [and probably in the other three precious metals as well] for the last number of months, is still the unresolved mystery that Ted has been thinking about for quite a while now.

Well, it appears that the mystery has been solved.  With the now-public knowledge that Scotiabank has been trying to unload its ScotiaMocatta division on the sly for the last year or so, it’s obvious that they’re no longer involved [or as involved] in day-to-day market making/price rigging in the COMEX futures market — and JPMorgan has had to take up the slack.

What buyer in their right mind would touch this ‘pig-in-a-poke’ once they saw the massive short positions that they held in silver — and probably in gold, in the COMEX futures market?

I have an average number of stories for you today, including a repeat from earlier this week…but there is no Cohen/Batchelor interview.


CRITICAL READS

Where the October Jobs Were: Record Waiters and Bartenders

Following last month’s sharply upward revised jobs report, whose initial negative print of -33,000 was since revised to a positive 18K, there was a sharp jump in October jobs, which while failing to meet consensus estimate of a +310K print, was still a solid +261K. But which jobs contributed the most? The answer, not surprising, is that the single biggest contributor was the same job category which was devastated in the previous month.

Readers will recall that last month we pointed out that workers in “food service and drinking places” aka waiters and bartenders, suffered their biggest drop on record, plunging by a whopping 111K. Well, one month later it’s payback time, and according to the BLS, 88,500 waiters and bartenders found jobs in October, as the “plow horse” sector of the so-called recovery found its spark. As shown in the chart below the monthly increase in waiters and bartenders was a record.

Putting this number in context, the record increase in “food service and drinking places” jobs was a whopping third (34%) of all the 261K jobs added in October.

There was another amusing observation. As we said last month, “we find it delightfully ironic that in the one month in which waiters/bartenders lost the most jobs on record is when average wages (allegedly) soared” and added that “the September drop will be revised and move higher next month. After all, many people fleeing Florida and Houston had to stay in hotels and motels, for example.  And certainly eat out more.

One month later of course, the other implication is that with tens of thousands of minimum wage jobs coming back, average hourly earnings would tumble, and – lo and behold – that is precisely what happened, with the worst monthly wage print since June 2015, as AHE actually declined by 1 cent in October.

This news item was posted on the Zero Hedge website at 10:33 a.m. EDT on Friday morning — and I thank Brad Robertson for sending it along.  Another link to it is here.


They’re Ba-ack!” – Citi Says Synthetic CDOs May Reach $100 Billion in 2017, 5x Increase in 2 Years

35-year-old Jia Chen of Citibank probably has no idea where that title quote above came from.  That’s because she was roughly 4 years old when Poltergeist II hit theaters back in 1986…

…that said, Citibank, as we noted a few weeks back, has every confidence that Jia is the perfect person to put in charge of once again making the bank into a powerhouse player in the Synthetic CDO market…perhaps because she was barely out of college when the same product nearly tanked the global financial system less than 10 years ago.

Be that as it may, Jia seems to be succeeding admirably in her mission to once again massively over-lever the global financial system as Citibank reports that Synthetic CDO new issues are expected to exceed $100 billion this year, up 5x in just two years. From Bloomberg….

The comeback in complex credit derivatives blamed for exacerbating the global financial crisis is picking up pace.

While investors suffered billions of dollars in losses on similar bets a decade ago, the leverage offered by synthetic CDOs is luring back buyers in an era of low yields and dwindling volatility.

It would seem as if the low spread-low volatility environment, similar to back in 2006-2007 (when investors couldn’t get enough of levered synthetic tranches) has revived some interest in portfolio credit risk,” Citigroup analysts led by Aritra Banerjee wrote. “Investors may not have necessarily wanted to add leverage, but, simply put, they have had to, given the lack of alternatives.”

Great shades of ‘The Big Short‘!!!  This Zero Hedge article, based on a Bloomberg story, showed up on the ZH website at 1:15 p.m. EDT yesterday afternoon — and it’s also courtesy of Brad Robertson.  Another link to it is here.


Doug Noland: End of an Era

Perhaps Jerome Powell is even the type of individual driven to cultivate a sound analytical framework and philosophy – determined to learn, understand and adapt. That would be such a refreshing change from the Era of ideologues.

As someone with significant market experience, he surely recognizes the risks associated with financial excess. He must appreciate the dangers associated with Bubbles and pandering to speculative markets.

A lot will remain unknown until Powell is tested. How quickly does he come to the markets’ defense? Does he quietly abandon Bernanke’s – “the Fed will push back against a tightening of financial conditions” – over-the-top market inducement?

While he has not dissented on an FOMC vote, from his diverse real world experience does he believe the Fed has been too reluctant in returning to traditional monetary management? Will he be a proponent of QE or instead view it with a healthier skepticism than the ideologues? I have no illusions that the Fed is about to eliminate QE from its toolkit. My view holds that, come the next serious de-risking/de-leveraging episode, central bankers will see few alternatives than creating more “money.”

Yet the key issue is how quickly in a crisis does the Powell Fed come to the markets’ rescue? As a pragmatic non-ideologue, he may appreciate the risks of coming too soon. And I have a crazy thought: maybe he even believes in the value of market discipline. By design or, more likely, by default – it’s the right time to move away from academic economists.

Doug’s Credit Bubble Bulletin was posted on his Internet site in the very wee hours of Saturday morning EDT — and it’s certainly worth reading.  Another link to it is here.


How America Spreads Global Chaos

As the recent PBS documentary on the American War in Vietnam acknowledged, few American officials ever believed that the United States could win the war, neither those advising Johnson as he committed hundreds of thousands of U.S. troops, nor those advising Nixon as he escalated a brutal aerial bombardment that had already killed millions of people.

As conversations tape-recorded in the White House reveal, and as other writers have documented, the reasons for wading into the Big Muddy, as Pete Seeger satirized it, and then pushing on regardless, all came down to “credibility”: the domestic political credibility of the politicians involved and America’s international credibility as a military power.

Once the CIA went to work in Vietnam to undermine the 1954 Geneva Accords and the planned reunification of North and South through a free and fair election in 1956, the die was cast. The CIA’s support for the repressive Diem regime and its successors ensured an ever-escalating war, as the South rose in rebellion, supported by the North. No U.S. president could extricate the U.S. from Vietnam without exposing the limits of what U.S. military force could achieve, betraying widely held national myths and the powerful interests that sustained and profited from them.

The critical “lesson of Vietnam” was summed up by Richard Barnet in his 1972 book Roots of War.  “At the very moment that the number one nation has perfected the science of killing,” Barnet wrote, “It has become an impractical means of political domination.

This longish, but absolute must read commentary put in an appearance on the consortiumnews.com Internet site on Monday.  I posted it in my Wednesday or Thursday column because of a slow news day, but said it would be in my Saturday column as well if you didn’t have time for it just then — and here it is.  Once again I thank Larry Galearis for pointing it out — and another link to it is here.


Money for Nothing: Inside the U.S. Federal Reserve

Narrated by Liev Schreiber, Money For Nothing takes viewers inside the Fed and reveals the far-reaching impact of its policies.

Current and former Fed officials debate the critics and each other about the decisions that helped lead the global financial system to the brink of collapse in 2008.

This absolute must watch 1 hour and 44 minute documentary on the Federal Reserve is worth very minute of your time.  I watched it ‘cover-to-cover’ yesterday.  It was produced in 2014 to mark the 100th anniversary of the Federal Reserve system — and they really get hung out to dry.  Jim Grant — along with others — is at the top of his game during his many appearances in this documentary.

Neil West brought it to my attention on Thursday evening — and it obviously had to wait for my Saturday column — and I thank him for pointing it out.  Once again, it’s a must watch.  Another link to it is here.


The Swiss National Bank Now Owns a Record $88 Billion in U.S. Stocks

In the third quarter of 2017, one in which the global economy was supposedly undergoing an unprecedented “coordinated growth spurt”, and in which central banks were preparing to unveil their Q.E. tapering intentions, in the case of the ECB, or raising rates outright, at the Fed, what was really taking place was another central bank buying spree meant to boost confidence that things are now back to normal, using “money” freshly printed out of thin air, and spent to prop up risk assets around the world by recklessly buying stocks with no regard for price or cost.

Nowhere was this more obvious than in the latest, just released 13F from the massive hedge fund known as the “Swiss National Bank.” What it showed is that, just like in the prior quarter, and the quarter before that, and on, and on, the Swiss central bank had gone on another aggressive buying spree and following its record purchases in the first quarter, the central bank boosted its total holdings of U.S. stocks to an all time high $87.8 billion, up 4.2% or $3.5 billion from the $84.3 billion at the end of the second first quarter.

As reported earlier this week, as of September 30, the Swiss central bank had accumulated foreign exchange worth 760 billion francs (roughly the same in USD) due to its relentless open market interventions to depress the Swiss franc, and has “invested” those funds created out of thin air in both stocks and bonds. At the end of the second quarter, it held 20% in equities, of which the bulk was in U.S. stocks.

While we are far beyond the point of debating central bank intervention in equity markets (we do want to remind readers that until several years ago, it was considered “fake news” to even mention it, and those who accused central bankers of manipulating stock markets were said to be paranoid tinfoil basement dwellers), we want to point out that unlike the BOJ, which at least keeps its capital markets distortion local, the SNB, which likewise creates money out of thin air (then sells it for dollars in an attempt to keep the Swiss franc depressed) is actively causing substantial price distortions in the U.S.

While we doubt this will be investigated with stocks are at all time highs, we look forward to the Congressional hearings after the crash when the scapegoating and finger pointing begins as it always does, and everyone is “stunned” to learn that central banks were responsible for blowing the biggest asset bubble the world has ever seen by directly buying stocks.

This worthwhile story is another Zero Hedge offering…this one courtesy of Richard Saler.  It appeared on their Internet site at 4:38 p.m. EDT on Friday afternoon — and another link to it is here.


Do you think his assessment is accurate? — The Saker

Do you think his assessment is accurate?” was the subject line of an e-mail I got from a good friend recently.  The e-mail referred to the article by Paul Craig Roberts “One Day Tomorrow Won’t Arrive” which claimed that “the U.S. military is now second class compared to the Russian military“.  The article then went on to list a number of Russian weapons systems which were clearly superior to their U.S. counterparts (when those even existed).  My reply was short “Basically yes. The USA definitely has the quantitative advantage, but in terms of quality and training, Russia is way ahead. It all depends on specific scenarios, but yes, PCR is basically spot on“.

This e-mail exchange took place after an interesting meeting I had with a very well informed American friend who, in total contrast to PCR, insisted that the USA had total military supremacy over any other country and that the only thing keeping the USA from using this overwhelming military might was that U.S. leaders did not believe in the “brutal, unconstrained, use of force”.  So what is going on here?  Why do otherwise very well informed people have such totally contradictory views?

First, a disclaimer.  To speak with any authority on this topic I would have to have access to a lot of classified data both on the U.S. armed forces and on the Russian ones.  Alas, I don’t.  So what follows is entirely based on open/public sources, conversations with some personal contacts mixed in with some, shall we say, educated guesswork.  Still, I am confident that what follows is factually correct and logically analyzed.

To sum up the current state of affairs I would say that the fact that the U.S. armed forces are in a grave state of decay is not as amazing by itself as is the fact that this almost impossible to hide fact is almost universally ignored.

This amazing commentary/opinion piece showed up on thesaker.is Internet site on Thursday — and the first person to drop it in my in-box was reader M.A.  It’s definitely worth reading if you have the interest — and another link to it is here.


4 key developments from President Vladimir Putin’s visit to Iran — Adam Garrie

Russian President Vladimir Putin has been in the Iranian capital, Tehran for meetings with Iran’s Supreme Leader Ayatollah Ali Khamenei and President Hassan Rouhani.

The meetings which have been largely described as successful, coincided with the beginning of work on Iran’s second nuclear power station, which will be constructed by Russian engineers and master builders.

Russia’s continued and growing economic relations with Iran, including in the field of nuclear energy, is a sign that Russia has no intention whatsoever to follow the U.S. lead in attempting to isolate Iran. Furthermore, as a party to the JCPOA (aka Iran nuclear deal), Russia like China, France, Britain, Germany and the E.U. as a whole, is perfectly satisfied that Iran is in full compliance with the letter and spirit of the JCPOA.

Russia, which will also assist Iran in building a gas pipeline to India, is positioning itself to fill any economic voids in Iran’s commercial and energy needs, created by a potential (some would say likely) withdrawal from the JCPOA.

With China working to promote the Petroyuan as a means of exchange in the global energy markets, Iran as an OPEC member, is well placed to step away from the U.S. Dollar in cooperation with countries like China, Russia and Venezuela who are already making strides in ditching the Petrodollar.

As Russia and Iran both find themselves on the receiving end of U.S. sanctions, it makes increasing pragmatic sense for both countries to find ways to avoid the restrictions on transactions that are based on the U.S. financial system.

This very interesting and worthwhile news item from Adam was posted on theduran.com Internet site at 7:16 p.m. EDT on Thursday evening — and I thank Roy Stephens for sharing it with us.  Another link to it is here.


Site chosen for Texas Bullion Depository

An Austin-area city will be home to the Texas Bullion Depository with construction expected to begin early next year.

Texas Comptroller Glenn Hegar on Friday announced the site will be in Leander (lee-AND’-ehr), about 20 miles (32 kilometers) north of Austin. The exact location hasn’t been revealed for security reasons.

Hegar in June announced Lone Star Tangible Assets of Austin was selected to build and operate the depository.

The 2015 Legislature approved a plan to start keeping the state’s gold holdings within its own borders, instead of in an underground vault at a New York City bank.

Officials haven’t said how much Texas gold will be stored at the new facility.

This brief AP story, filed from Austin, appeared on the usnews.com Internet site at 10:02 a.m. EDT on Friday morning — and the above five paragraphs are all there is to it.  I found it embedded in a GATA dispatch — and another link to the hard copy is here.


Wedding bells set to ring in fresh gold demand in India

Demand for physical gold was lacklustre in top consumers India and China this week, while the lure of the metal remained stable in Singapore, but India’s peak wedding season is expected to usher in renewed interest for bullion in coming weeks.

Gold is considered an essential part of weddings in India, second-biggest consumer of the metal in the world after China, and it is a popular gift on such occasions.

The wedding season has started. In the next few weeks, there are many wedding dates, which will boost demand,” said Kumar Jain, a Mumbai-based jeweller.

Dealers in India were charging a premium of up to $3 an ounce this week over official domestic prices, unchanged from last week. The domestic price includes a 10 percent import tax.

Gold imports by (jewellery) export houses have fallen sharply in the last few weeks. That’s why the market is in premium, despite moderate demand,” said a dealer with a private bank in Mumbai.

This gold-related news story, co-filed from Mumbai and Bengaluru at 4:47 a.m. IST on their Friday morning, is something I found on the Sharps Pixley website yesterday evening — and another link to it is here.


Hong Kong gold trade linked to Shenzhen; Dubai, Singapore, Myanmar next?

Nine hundred kilos of gold, worth 300 billion yuan (US$38.45 billion) swapped hands on Friday evening in the first cross-border trading under the newly launched “Gold Connect,” which links the gold markets of Hong Kong and Shenzhen.

The first trades were made after a ceremony hosted by Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor and Haywood Cheung Tak-hay, president of the Chinese Gold and Silver Exchange Society.

Under the scheme, mainland investors can trade yuan-denominated 1-kilogram gold bars in Hong Kong through one of the city’s 70 exchange members in Qianhai, the special economic zone in Shenzhen designed to facilitate the development of financial services that complement Hong Kong.

Investors can opt for settlement in cash or physical gold delivery.

The Shenzhen-Hong Kong Gold Connect is the city’s second such trading scheme after a linkup between Hong Kong and the Shanghai market in 2015. The new link has 70 Hong Kong companies taking part, compared with 30 in the Shanghai-Hong Kong Gold Connect.

This gold-related news item put in an appearance on the South China Morning Post at 8:56 p.m. CST on their Friday afternoon — and it was updated about two and a half hours later.  I found this on the gata.org Internet site — and another link to it is here.


The PHOTOS and the FUNNIES

These next three shots were of ducks and geese landing.  Unfortunately, my camera was set up on single shot — and not at the 6-frames-a-second continuous shooting mode.  In single shot I press the shutter button at what I think is the perfect moment — and get what I get.  But at 6 frames a second — and in landing sequences such as these, I can pick and choose from at least a dozen shots of each — and get the most spectacular shot of the bunch…the ‘pick of the litter’ if you like.  These three photos below are the best I could do with just one shot.  The ‘click to enlarge‘ feature is a real big help here.


The WRAP

Today’s pop ‘blast from the past’ is by a very famous Swedish pop group that I’m sure subscriber Patrik Ekdahl knows well.  This tune was a big for them back in November 1976 when it first released.  Feel free to sing along if you wish.  The link is here.

Today’s classical ‘blast from the past’ is Chopin’s Piano Concerto No. 2 in F minor, Op. 21 which he composed way back in 1829.  Last Saturday I featured his No. 1 piano concerto, but his No. 2 is my favourite — and certainly the most popular of the two compositions.  It was the second of his piano concertos to be published (after the Piano Concerto No. 1) — and so was designated as “No. 2”, even though it was written first.  Here’s Canada’s own Charles Richard-Hamelin doing the honours at the 17th International Fryderyk Chopin piano competition in Warsaw back in October of 2015.  The link is here — and it’s a feast for the senses.  Enjoy.


I must admit that I was more than taken aback by the ferocity of JPMorgan et al on the job numbers, as they were right there with all the necessary ‘liquidity’ to kill the rallies in silver and gold in less than a minute.  They certainly weren’t taking prisoners then, or on the engineered price decline that followed the London p.m. gold fix.

There were no new lows set in any of the precious metals yesterday, but after silver broke above its 50 and 200-day moving averages by a penny or so between the release of the job numbers — and the afternoon gold fix in London, ‘da boyz’ wasted no time in taking silver lower — and it remains to be seen how the precious metals market open in New York on Sunday evening.

But the situation in the COMEX futures market in both silver and gold is still unresolved.  The Big 4 covered very little of their short position once again during this reporting week — and they actually had to increase their short position in gold.  They keep getting beaten to the punch by the small commercial traders, Ted’s raptors, plus the traders in the ‘Other Reportables’ category…as they continue to gobble up the Big 8’s food supply that the Managed Money traders are providing.

If commercial traders continue with their engineered price decline, there’s certainly no guarantee that much of the benefits of it will accrue to the Big 8…and the short positions of the Big 4 traders remains alarmingly high.  I know that Ted will have more to say about this in his weekly review later today.

Then there’s Scotiabank’s problem child, ScotiaMocatta.  Not only have they been unable to unload this pig on anyone, it also appears that they are no longer active as a trader in either gold or silver, as any increase or decrease in the commercial net short position every week is awarded to JPMorgan…and Ted is correct in doing so.

Next Friday we get the latest Bank Participation Report — and that will allow Ted to recalibrate JPMorgan’s short position — and I’ll be very surprised if there’s much change from what it is now…plus or minus any changes that occur during the current reporting week, which still has two days left to run before the Tuesday cut-off.

As Ted has pointed out on the phone several times over the last week or so, this engineered price decline is taking far longer than it should — and it’s open to debate if the Big 8 are just toying with the precious metal market, or have come to the collective realization that these other traders, as I mentioned just above, are gobbling up the Managed Money food supply, as they are now totally clued in to their game — and JPMorgan et al are now more or less stuck holding the bag.

Here are the 6-month charts for all four precious metals, plus copper — and the attacks on gold and silver are the stand-outs.  The ‘click to enlarge‘ feature helps with the first four charts.

I spent a fair amount of time on youtube.com yesterday evening watching video clips from the movie ‘The Big Short‘ — and came to the realization that the entire world’s financial and economic system — and not just the U.S. subprime mortgage market featured in the film — has now become the reincarnation of that movie.

It certainly appears that no effort is being spared in keeping everything paper afloat — and the value of anything of tangible value, smothered.

Once again I feel obligated to repost what British economist Peter Warburton had to say 16 years ago in his classic commentary “The Debasement of World Currency: It is inflation, but not as we know it

Under the sub-heading:  Central banks are engaged in a desperate battle on two fronts …Warburton had this to say:

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 U.S. dollar can also be stabilized in relation to other currencies, despite the extraordinary imbalances in external trade.

The Fed ‘saved the world’ in the financial crisis back in 2007/09…but they — and the rest of the world’s central banks will be spectators in the next [and probably final] unwinding, as a world that was ‘too big to fail’ ten years ago has become, by many orders of magnitude…’too big to bail’.

A dramatic spike in the U.S. dollar price of gold — and silver — would set off a chain reaction that would be impossible to contain — and the collapse of all things paper would commence in earnest.

And this is the reason why commodity prices, particularly the precious metals, have been managed — and have been since the futures market in them was first rolled out in January of 1973.  The fight is ongoing to this day, but becoming more desperate all the time.

It’s just a matter of ‘when’…not ‘if’ this all blows sky high.  That day is coming, but the powers-that-be in this world will most likely fight it down to the very last COMEX futures contract, but certainly not to the very last bar.

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

Ed