Another Incredible COT Report

18 August 2018 — Saturday


The gold price trended quietly — and very unsteadily higher through most of the Friday trading session.  The high during the COMEX trading session came at 11:30 a.m. in New York — and it drifted lower until around 1:45 p.m. in after-hours trading.  It began to chop higher from there — and the high tick of the day came at 4:15 p.m. EDT — and the price didn’t do much after that.

The low and high ticks were reported by the CME Group as $1,174.20 and $1,187.60 in the October contract — and $1,178.50 and $1,192.00 in the October contract — and $1,178.50 and $1,192.00 in December.

Gold finished the Friday trading session at $1,184.60 spot, up $10.90 from Thursday’s close.  Net volume in October and December combined was pretty decent at a bit over 259,000 contracts — and roll-over/switch volume was a paltry 1,873 contracts.

The silver price didn’t do much of anything on Friday during regular trading hours.  There was a bit of a rally during the first hour and change in London, but that was summarily dealt with.  Then, like for gold and the other two precious metals, the price began to head higher as the dollar index cratered starting around 2 p.m. in after-hours trading in New York.  That lasted until 3 p.m. EDT — and it traded quietly sideways into the 5:00 p.m. close from there.

The low and high ticks in this precious metal were recorded as $14.575 and $14.80 in the September contract.

Silver closed in New York at $14.765 spot, up 14.5 cents on the day.  Net volume was pretty decent at around 61,400 contracts — and roll-over/switch volume was another 13,900 contracts on top of that.

The platinum price behaved in a similar manner to silver…chopping unsteadily sideways during most of the Friday trading session everywhere on Planet Earth on Friday.  And like the other three precious metals, rallied between 2 and 3 p.m. in after hours trading when the dollar index did a face plant.  Platinum finished the Friday session in new York at $787 spot, up 9 dollars from Thursday’s close.

It was almost the same for palladium, at least up until shortly before 9 a.m. in New York.  At that juncture it began to head higher — and made it back above the $900 spot mark in the process.  All the gains that mattered were in by 3:45 p.m. in the thinly-traded after-hours market — and the price traded sideways for the remainder of the Friday session.  Palladium closed at $904 spot, up 22 bucks on the day.

The dollar index closed very late on Thursday afternoon in New York at 96.60 — and after a rally of a handful of basis points in the first two hours of trading on Thursday evening, began to head very unsteadily lower starting around 8 a.m. China Standard Time on their Friday morning.  That lasted until 2 p.m. EDT — and it then took a 20 basis point header that lasted an hour — and the 96.09 low tick was set a minute or so before 3 p.m. EDT.  It traded quietly sideways into the close from there.  The dollar index finished the day at 96.13…down 47 basis points from Thursday’s close.

And here’s the 6-month U.S. dollar index chart — and it’s far too soon to say whether this is the beginning of the end of the current dollar index ‘rally’ or not.

The gold stocks rallied sharply the moment that trading began at 9:30 a.m. EDT in New York on Friday morning — and their high ticks were set a few minutes before 11 a.m.  They hung in there until minutes after 11:30 a.m. in New York trading — and began to head lower from there, as the gold price was quietly sold off.  That lasted until around 1:50 p.m.  — and they chopped higher in fits and starts from that point into the 4:00 p.m. close of trading.  The HUI finished up 2.44 percent.

Most of the gains that mattered in the silver equities were posted by a minute or so before 10 a.m. in New York.  From that juncture they chopped very unsteadily sideways until the silver price, like gold, was quietly rolled over starting about 11:30 a.m.  By 2:50 p.m. EDT, they were back at unchanged.  From there, they followed their golden brethren higher — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 2.14 percent.  Click to enlarge if necessary.

And here’s the 1-year Silver Sentiment/Silver 7 Index.  Click to enlarge as well.

Here are the usual 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.

Here’s the weekly chart — and despite the rally in the equities yesterday, it’s still ugly.  Click to enlarge.

The month-to-date chart chart doesn’t look much different than than than the weekly chart above — and there’s no way to sugar-coat how butt-ass ugly this chart is as well.  Click to enlarge.

The year-to-date graph is a big sea of red, too.  When major price lows are set, either by market forces, or by JPMorgan et al, this is what you get — and this one is as ugly as it can possibly be.  Click to enlarge as well.

Despite the ugliness, or because of it, I was a buyer of precious metal shares this past week….First Majestic Silver — and Fortuna Silver Inc.

And with another incredible COT Report yesterday, the above seas of red is what major price bottoms are made of — and they’re ugly, with this last swing for the fences by JPMorgan being the worst I’ve very seen in the eighteen years I’ve been watching the precious metal market.  With the current configuration in the COMEX futures market, it’s doubtful that JPMorgan will appear as shorts sellers of either first and/or last resort once the next serious moving average-breaking rally is allowed to begin.

I doubt very much that these charts will look this way for long.  And please don’t forget that it’s always darkest just before dawn.

The CME Daily Delivery Report showed that 27 gold and 13 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  In gold, the three short/issuers were ADM, Advantage — and International F.C. Stone, with 12, 11 and 4 contracts out of their respective client accounts.  There were four long/stoppers in total — and the three that mattered were JPMorgan, Advantage — and Morgan Stanley, with 15, 6 and 5 contracts for their respective clients as well.  In silver, the three short/issuers were ABN Amro, Advantage — and ADM, with 9, 3 and 1 contracts — and the two long/stoppers were Goldman with 8 — and ADM with 5.  All contracts, both issued and stopped, involved 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 August declined by 26 contracts, leaving 246 still open, minus the 27 mentioned just above.  Thursday’s Daily Delivery Report showed that 17 gold contracts were actually posted for delivery today, so that means that 26-17=9 gold contracts disappeared from the August delivery month.  Silver o.i. in August dropped by 92 contracts, leaving 45 still around, minus the 13 mentioned in the previous paragraph.  Thursday’s Daily Delivery Report showed that 96 silver contracts were actually posted for delivery on Monday, so that means that 96-92=4 more silver contracts were added to August.

There was another withdrawal from GLD yesterday, as an authorized participant took out 37,869 troy ounces.  There were no reported changes in SLV.

There was a very decent sales report from the U.S. Mint on Friday…relatively speaking, that is.  They sold 3,500 troy ounces of gold eagles — 7,000 one-ounce 24K gold buffaloes — and 425,000 silver eagles.  I’m still of the opinion that sales of this size are not the result of buying by John Q. Public.

Month-to-date the mint has sold 12,000 troy ounces of gold eagles — 18,000 one-ounce 24K gold buffaloes — and 955,000 silver eagles.

There was a bit of activity in gold over at the COMEX-approved gold depositories on the U.S. east coast on Thursday.  Nothing was reported received — and 19,636 troy ounces were shipped out.  This activity was at Canada’s Scotiabank — and the link to that, in troy ounces, is here.

It was busier in silver, as 595,605 troy ounces was received — and 380,958 troy ounces was shipped out.  All of the ‘in’ activity was at Scotiabank, as was 280,892 troy ounces of the ‘out’ activity.  There was 80,011 troy ounces shipped out of CNT — and the remaining 20,054 troy ounces departed the International Depository Services of Delaware.  The link to all that is here.

Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday, there was nothing reported received, but 2,500 were shipped out.  This activity was at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.

Switzerland, Basel, 1452-1478, Goldgulden [undated]

Mint: Imperial Mint Basel     Material: Gold     Full weight: 3.28 grams

The Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday showed huge improvements in the commercial net short positions in both gold and silver again this week.

In silver, the Commercial net short position declined by a further 9,742 contracts, or 48.7 million troy ounces of paper silver.

They arrived at that number by increasing their long position by 5,167 contracts — and they also reduced their short position by another 4,575 contracts.  It’s the sum of those two numbers that represent the change for the reporting week.

I wasn’t able to talk to Ted about these numbers yesterday, but I would certainly assume that JPMorgan was covering short positions aggressively during the reporting week, particularly on the big engineered price decline on Monday.

Under the hood in the Disaggregated COT Report, I know that Ted was certainly relieved that the non-technical/non-blinking Managed Money traders didn’t do much during the reporting week, reducing their long position by only 930 contracts.  Once again it was the brain-dead moving-average following Managed Money traders that plowed even deeper onto the short side to the tune of 7,383 contracts — and it’s the sum of those two numbers…8,313 contracts…that represents their change for the reporting week.

And please don’t forget, dear reader that these two sets of Managed Money traders operate with diametrically opposite trading strategies, as no brain-dead Managed Money trader would hold even one long position at these price levels.  They’re all on the short side.

The difference between what that Commercial traders bought — and what the Managed Money traders sold during the reporting week, works out to 9,742 minus 8,313 equals 1,429 contracts.  This amount, of course, was made up by traders in the ‘Other Reportables’ and ‘Nonreportable’/small trader categories, but each category went their own ways.  The ‘Other Reportables’ increased their long position by about 1,100 contracts, but the small traders went short to the tune of around 2,600 contracts.  Here’s a snip from the Disaggregated COT Report so you can see these changes for yourself.  Click to enlarge.

The Commercial net short position in silver is now down to 12,376 contracts, or 61.9 million troy ounces of paper silver.  I would assume that virtually half of JPMorgan’s short position disappeared during the reporting week — and maybe a bit more than that.

Here is the 3-year COT chart for silver — and this week’s change should be duly noted.  Click to enlarge.

Of course the internal structure of the COMEX futures market in silver has improved even further since Tuesday’s cut-off.  But that improvement won’t be known until next Friday — and there are still two more trading days left in the reporting week.  Anything could happen before they’re over — and just might.

In gold, the commercial net short position dropped by another 18,259 contracts, or 1.83 million troy ounces of paper gold.

They arrived at that number by increasing their long position by 9,992 contracts, plus they reduced their short position by a further 8,267 contracts — and it’s the sum of those two numbers that represents the change for the reporting week.

I would suspect that JPMorgan is now long the COMEX futures market in gold.

Under the hood in the Disaggregated Report, like in silver, it was almost all Managed Money traders on the other side.  And also like in silver, Ted was more than relieved to see that the non-technical Managed Money traders only liquidated 1,046 long contracts, while the brain-dead moving-average-following Managed Money traders piled even more onto the short side…to the tune of 16,162 contracts worth.  It’s the sum of those two numbers…17,208 contracts…that represents their change for the reporting week.   The difference between that number and the commercial net short position…18,259 minus 17,208 equals 1,059 contracts…was made up by the traders in the other two categories.  You can see the snip of this activity in the table of numbers below.  Click to enlarge.

The short position of the brain-dead Managed Money traders now sits at 188,127 contracts.  I can remember from a few short months ago when the entire commercial net short position was around that size.

As of the Tuesday cut-off, the commercial net short position in gold is now down to only 7,350 contracts, or 735,000 troy ounces of gold.  This is no short position at all.

Here’s the 3-year COT chart for gold — and this week’s improvement should be carefully noted.  Click to enlarge.

Of course, as in silver, there has been further improvement in gold since Tuesday after the big engineered price declines that occurred in New York on Wednesday.

In the other two precious metals, the net long position in palladium is now down to its smallest on record, a piddling 624 contracts worth — and the short position in platinum also hit a new record high.  The weekly change in copper was immaterial.

But as I pointed out in yesterday’s column, today’s COT Report is ‘yesterday’s news’ in some ways, as none of the dramatic trading and volume activity of both Wednesday and Thursday is in it.  Of course what happened on those days are mostly a known quantity in certain respects, as it’s not a stretch to assume that there have been big, if not dramatic changes since the Tuesday cut-off.  It also indicates the Ted’s double cross of the other commercial traders by JPMorgan, most likely in all four precious metals now, is as complete as it will ever get.

We are, without a shadow a doubt, sitting at the most wildly bullish COMEX futures market set up in the precious metals in history, made more bullish by the fact that the the short seller of last resort…JPMorgan…has left the building — and most likely won’t be back.  I’m really looking forward to what Ted has to say about all this in his weekly review later today, as he’s the real authority on all this.

And while on that subject, it would be remiss of me not to point out the fact that everything that is known about the paper and physical markets in the precious metals in New York came through Ted first.  That includes virtually all of what I write about in my column every day.  In my 18 years I can’t think of one thing that I’ve learned from someone else, as Ted has been the source of all knowledge on this.  I mention his name a lot — and post the odd quote, but you’re getting only a small fraction of what he writes about — and it’s always time-delayed.  If you want the real deal straight from source the moment it’s written, then subscribing to Ted’s service would be a very wise investment — and the link to his website is here.

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 traders are short 126 days of world silver production—and the ‘5 through 8’ large traders are short an additional 63 days of world silver production—for a total of 189 days, which is a bit over 6 months of world silver production, or about 441.1 million troy ounces of paper silver held short by the Big 8.  [In the COT Report last week, the Big 8 were short 200 days of world silver production.]

In the COT Report above, the Commercial net short position in silver was reported as 61.9 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 441.1 million troy ounces.  The short position of the Big 8 traders is larger than the total Commercial net short position by a chunky 441.1 minus 61.9 equals 379.2 million troy ounces.  The reason for the difference in those numbers…as it always is…is that Ted’s raptors, the 37-odd small commercial traders other than the Big 8, are long that amount.  You couldn’t make this stuff up.

Since I don’t have JPMorgan’s short position in silver, I can’t calculate the approximate positions of the other three traders in the Big 4 category.  All I can say with certainty is that, on average, the Big 4 traders are short 32 days of world silver production each.  At this juncture, what JPMorgan is short has become almost immaterial.

The four traders in the ‘5 through 8’ category are short 63 days of world silver production in total….down 5 days from last week’s COT Report.  They’re short, on average, a bit under 16 days of world silver production each, which is down 1.25 days from what each was short in last week’s COT Report.

The smallest of the traders in this category holds something less than 16 days — and the largest, something more than that amount…but neither number by a lot.

I would suspect that JPMorgan is no longer the largest short holder in silver in the COMEX futures market, if it has a short position of any consequence left at all, that is.  I’m sure that Ted will have something to say about this in his weekly review later today.

The Big 8 commercial traders are short 36.7 percent of the entire open interest in silver in the COMEX futures market, which is down a bit from the 39.7 percent that they were short in last week’s COT Report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be something around 40 percent.  In gold, it’s now 32.7 percent of the total COMEX open interest that the Big 8 are short, down a bit from the 33.8 percent they were short in last week’s report — and a bit over 35 percent once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 34 days of world gold production, which is unchanged from what they were short last week — and the ‘5 through 8’ are short another 20 days of world production, which is unchanged from what they were short the prior week, for a total of 54 days of world gold production held short by the Big 8 — which also unchanged from what they were short in last week’s report.  Based on these numbers, the Big 4 in gold hold about 63 percent of the total short position held by the Big 8…which is, of course, also unchanged from last week’s COT Report.  Like in silver, there’s at least two, if not more, Managed Money traders in the Big 8 category — and that certainly skews the numbers to the high side by a number of days of world gold production.

The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 67, 61 and 67 percent respectively of the short positions held by the Big 8.  Silver is up one day from the previous week’s COT Report, platinum is unchanged from a week ago — and palladium is down 2 days from last week’s COT Report.

Ted’s double cross trap was pretty much set for the other commercial traders in both gold and silver in last week’s COT Report, so it’s certainly ‘locked and loaded’ now.  That would also apply to platinum and palladium was well.  And if we could get a peek at the numbers since the Tuesday cut-off, I suspect [as I said further up] that JPMorgan’s short position in silver is only a tiny fraction of what it was before Tuesday’s cut-off.  The Big 8 commercial traders…sans JPMorgan…along with the brain-dead Managed Money traders, are all teed up and about to be driven down the fairway.

All we’re waiting for is the CME CEO Terry Duffy’s “event“.

It’s another day where I only have a tiny handful of stories for you — and that includes the repost of the Cohen/Batchelor interview that appeared in Friday’s column.


Why America Hasn’t Had a Raise in Forty Years — Bill Bonnner

The financial press reports that two things emboldened investors yesterday and may have turned the train around – Walmart’s latest results and the upcoming trade talks with China.

Hmmm. We stop. We listen. We put our ear to the rail… trying to hear what’s coming down the track.

Walmart’s sales were up 4.5% year-over-year. But where did these sales come from?

People might spend more if they had more to spend. But despite the statistical noise on the subject, real wages – for the people who shop at Walmart – have gone nowhere.

Or to be more precise, the real average wage has risen – are you sitting down? – by a grand total of 13 cents an hour annually, since the beginning of this century.

This commentary by Bill showed up on the Internet site very early on Friday morning EDT — and another link to it is here.

Maduro orders 96 percent devaluation in hyperinflation-stricken Venezuela

Venezuela’s president Nicolas Maduro announced on Friday a single exchange rate pegged to his socialist government’s petro cryptocurrency, effectively devaluing by 96 percent in a move economists said would fan hyperinflation in the chaotic country.

In one of the biggest economic overhauls of Maduro’s five-year government, the former bus driver and union leader also said he would hike the minimum wage by over 3,000 percent, boost the corporate tax rate, and increase highly-subsidized gas prices in coming weeks.

I want the country to recover and I have the formula. Trust me,” Maduro said in a nighttime speech broadcast on state television.

But economists expressed doubts that Venezuela’s cash-strapped government, which faces U.S. sanctions and has defaulted on its bondholders, would succeed.

This Reuters story was posted on their Internet site at 6:04 p.m. EDT on Friday evening — and I found it on the Internet site.  Another link to it is here.

S&P Downgrades Turkey to B+, Forecasts “Recession” and “Hard Landing

Update: And to round out the triumvirate, Moody’s just joined S&P and Fitch in the Turkey downgrade party…

Moody’s downgraded Turkey’s long-term foreign debt rating to Ba3 from Ba2. Additionally, Moody’s shifted the outlook to negative from watch negative.

The key driver for today’s downgrade is the continuing weakening of Turkey’s public institutions and the related reduction in the predictability of Turkish policy making.

That weakening is exemplified by heightened concerns over the independence of the central bank, and by the lack of a clear and credible plan to address the underlying causes of the recent financial distress, notwithstanding recent statements by the government.

The tighter financial conditions and weaker exchange rate, associated with high and rising external financing risks, are likely to fuel inflation further and undermine growth, and the risk of a balance of payments crisis continues to rise.

*  *  *
Just hours after Fitch fired off the latest rating agency warning shot against Turkey, warning that the actions Erdogan has undertaken so far are “insufficient to restore policy credibility“, traders were keenly looking at the scheduled update of S&P’s BB- rating of Turkey, which with an “outlook negative” would most likely be a downgrade.

Sure enough, moments ago Standard and Poors announced that it had cut Turkey by one notch, from BB to B+, citing its expectation “that the extreme volatility of the Turkish lira and the resulting projected sharp balance of payments  adjustment will undermine Turkey’s economy.

This news item is from the Zero Hedge website — and it was posted there on Friday afternoon at 4:30 p.m. EDT — and another link to it is here.

Turkey’s Collapse Could Send “Millions” of Refugees Flooding Into Europe

As Turkey braces for a fresh round of U.S. sanctions amid a plummeting lira and what Turkish President Recep Tayyip Erdoğan says is “economic warfare” with Washington over the detention of U.S. pastor Andrew Brunson, millions of refugees – primarily from Northern Africa and neighboring Syria, would likely flood into Europe as the Turkish economy collapses according to Newsweek.

Over 3.5 million refugees now live in Turkey after having escaped the brutal conflict that has continued for over seven years in neighboring Syria. At the same time, there are at least half a million refugees from other parts of the Middle East and Northern Africa also living in the transcontinental country.

Many of these migrants settled in the country because of a deal Ankara struck with the European Union in 2016.Newsweek

Even though they haven’t integrated into Turkish society, they have benefited from a welcoming government. Erdoğan says he’s spent $20 billion of unbudgeted funds on these people. It’s quite clear these are unbudgeted expenditures he’s been willing to spend. But if you add another million on top of that, who knows,” Bulent Alizira, director of the Turkey program at the Washington, D.C.–based Center for Strategic and International Studies, told Newsweek.

Clearly if Turkey’s economic crisis continues, if the government has to seriously reign in public funding, funding for refugee programs would have to be on the chopping block,” Ross Wilson, an expert on Turkey at the Atlantic Council in Washington D.C., told Newsweek.

This story put in an appearance on the Zero Hedge website at 12:21 p.m. EDT on Friday morning — and it comes to us courtesy of Brad Robertson.  Another link to it is here.

Tales of the New Cold War: One Hundred Years of Sanctioning Russia — John Batchelor interviews Stephen F. Cohen

Part 1:  It is very difficult not to be despondent about the latest round of sanctions to be levied against Russia by the United States over the (now debunked) Skripal plus one poisoning events in the U.K. John Batchelor lists the demands made (and like those levied against Iran), go well beyond provocative – as they are meant to do. They include restrictions on goods Washington considers of national security importance and are extended to gas turbine engines, electronics (calibration equipment) and to come into affect August 22nd. This also includes an ultimatum that unless “Russia provides assurances within 90 days that it will not use WMD anywhere and makes its chemical weapons arsenal available for U.S. inspections, it will have very severe additional sanctions levied against it – including severe financial sanctions.”

Cohen, the historian, agrees that this is serious. His response is to place this event in a historical context, and his title comes from a quote from Prime Minister, Medvedev that the West has really sanctioned Russia basically since the inception of the Soviet Union – for100 years. He then discusses the role of sanctions in Russian history over this period. Cohen’s perspective on sanctions in general is that they mean Washington has no policy, and that “sanctions are like temper tantrums”.  This history includes refusal to recognize the Soviet State from year one, restricting trade of military items (except during WW2), the Jackson Vanick amendment (1974-5), followed by the Maginstski Act under Obama and the recent ones from the Ukrainian Crisis. This brings us to the present proposed sanctions and Cohen notes that if implemented they may curtail credit for Russian banks – and that is inclusive of opposing multilateral banks outside of the U.S. as well – and will really hurt the Russian economy. Cohen maintains that all these sanctions, including the latest from the U.S. Senate, will fail. And Russia could retaliate with real damage to the U.S. by dumping the rest of their U.S. T-Bills, by shutting down U.S. banks operating in Russia, by refusing dollars in any trade transactions, by ignoring U.S. sanctions on North Korea and Iran, and also to cease supplying titanium to the U.S. for its aircraft industry.

Part 2: Batchelor begins the discussion by stating that these latest sanctions in curtailing Russian financial activity are a determined attack to destroy the Russian economy. And Cohen decries the lack of statesmanship and intelligence of most of the senate members in pursuing this obvious Russiagate policy. He also sees no understanding by most senators of potential negative consequences for the US. Russian retaliation could really hurt some very major U.S. corporations – and Russia could cease selling their rocket engines to the U.S. that would literally shut down NASA and the American ability to launch satellites (including military ones to be used against Russia).

Batchelor at this point calls the new sanctions “fantastic nonsense” that would blow back very badly and affect millions of people in Eurasia.  Having just returned from the Caspian Sea area where the littoral countries have just made major agreements and commitments to integrate more fully economically, Batchelor is very worried about the impact on all these countries should Russia come under the attack as these latest sanctions promise to do. He asks why they are sanctioning Russia again? Cohen simply states that they are adding to the sanctions for the same events of the past plus one more, the Skripal event. He also adds that none of these reasons are legitimate in any way. Why do we have this latest round of sanctions? Cohen maintains it is all about Donald Trump winning the presidency and his latest transgression of the Helsinki Summit.


The one single commonality of themes for the sanctions and hostility against Russia is probably a little more complex than Cohen maintains. While Russiagate was about an excuse for an “illegitimate” Trump winning the election, we should look a little deeper into the constancy of bellicosity and the history of U.S. sanctions against other countries as well. Batchelor, at one point, hints about MacKinder’s Island theory to explain Russian history with the West. We should therefore also note the policy of Manifest Destiny held by Washington from America’s early history, the moral depravity of the military-industrial complex’s “war is a racket” policy, the very fact that empires need to expand at the expense of any other national interests, that International Law cannot be observed by any empire, and the role of Israeli Zionism as a partnership in crime with Washington in the M.E.

The role of Trump in the empire is that of a loose cannon, and a foil for the “normal” business of Washington summed up by all of the above. Russiagate was a shallow, ill thought out excuse for the Hillary election failure that was likely just seized upon as a convenient opportunistic place to start a seditious campaign against a legal president. This was the initiation of an endless supply of stupid decisions to build an increasingly self-destructive trend in American politics. The commonality of themes is maintained, but the empire is failing for the prosperity of the United States, and catastrophically for many of the unaligned nations that do not see the monetary/economic storm front approaching.

This interview was posted in my Friday column as well, but as I said at the time, I would be posting it in my Saturday missive in case you didn’t have time for it yesterday — and here it is.  These two very worthwhile audio interviews, each of which runs for about 20 minutes, were posted on the Internet site on Tuesday and, as always, a big hat-tip to Larry Galearis for his wonderful executive summary and commentary that appears above.  The link to Part 1 is in the headline — and here.  The link to Part 2 is here.

Sanctions, Sanctions, Sanctions: the Final Demise of the Dollar Hegemony? — Peter Koenig

Sanctions left and sanctions right. Financial mostly, taxes, tariffs, visas, travel bans – confiscation of foreign assets, import and export prohibitions and limitations; and also punishing those who do not respect sanctions dished out by Trump, alias the U.S. of A, against friends of their enemies. The absurdity seems endless and escalating – exponentially, as if there was a deadline to collapse the world. Looks like a last-ditch effort to bring down international trade in favor of — what? – Make America Great Again? – Prepare for U.S. mid-term elections? – Rally the people behind an illusion? – Or what?

All looks arbitrary and destructive. All is of course totally illegal by any international law or, forget law, which is not respected anyway by the empire and its vassals, but not even by human moral standards. Sanctions are destructive. They are interfering in other countries sovereignty. They are made to punish countries, nations, that refuse to bend to a world dictatorship.

Looks like everybody accepts this new economic warfare as the new normal. Nobody objects. And the United Nations, the body created to maintain Peace, to protect our globe from other wars, to uphold human rights – this very body is silent – out of fear? Out of fear that it might be ‘sanctioned’ into oblivion by the dying empire? – Why cannot the vast majority of countries – often it is a ratio of 191 to 2 (Israel and the U.S.) – reign-in the criminals?

This longish, but worthwhile commentary by Peter appeared on Internet site on Friday sometime — and I thank Tom Djian for bringing it to our attention.  Another link to it is here.

Doug Noland: Instability

Beijing faces a huge dilemma. The faltering EM Bubble poses significant risk to the unbalanced Chinese economy. Moreover, global de-risking/deleveraging dynamics exacerbate risk to Chinese finance and the renminbi. The policymaker impulse is to orchestrate another round of fiscal and monetary stimulus. Meanwhile, China’s historic mortgage finance and apartment Bubbles maintain powerful momentum. Stimulus measures at this stage of the cycle pose extreme risk. For one, it would surely push non-productive Credit growth to perilous extremes. Second, the combination of additional system liquidity and escalating systemic instability would exacerbate already significant risk of a disorderly Chinese currency devaluation.

That things look “terrible” in China, in contrast to obvious greatness in the U.S., is to provide the Trump administration a decisive trade negotiation advantage. And I can see the perceived benefit of scheduling low-level trade discussions ahead of a big trade meeting with the Chinese after the midterms. A temporary “truce” would be viewed as bolstering U.S. equities and supporting “great again” campaigning into November. I’m not, however, convinced this gambit will reverse the bursting of the EM Bubble. And I don’t believe pushing serious negotiations out to November will in anyway resolve China’s deteriorating financial and economic positions.

All in all, it was another ominous week for highly unstable global financial markets. Bubbles bursting, Bubbles faltering and Bubbles inflating. Global financial and economic prospects are dimming rapidly. I would be less apprehensive if U.S. equities (and Chinese apartment prices!) were adjusting to new realities. But it’s not as if Bubble resilience is without precedent.

The S&P500 peaked on July 20, 1998, just weeks prior to near global financial meltdown. Back on August 25, 1987, the S&P hit a record high about six weeks before the “Black Monday” market crash. And looking back to fateful 1929, the DJIA traded to a record high on September 1st, with the Great Crash erupting the following month. Those that have studied the late-twenties should recognize ominous parallels. How on earth were they so completely blindsided?

Doug’s weekly Credit Bubble Bulletin was posted on his Internet site in the very wee hours of Saturday morning EDT — and it’s always a must read for me.  Another link to it is here.

I didn’t see any precious metal stories on Friday that I thought worth posting.


Today’s critter is the Galápagos tortoise.  They are the largest living species of tortoise. Modern Galápagos tortoises can weigh up to 417 kg (919 lb).  They are native to seven of the Galápagos Islands, a volcanic archipelago about 1,000 km (620 mi) west of the Ecuadorian mainland.  Shell size and shape vary between populations — and they have lifespans in the wild of over 100 years.  Click to enlarge.


I have two pop ‘blasts from the past’ today.  The first one is in memory of Aretha Franklin, the Queen of Soul, who passed away this week.  I was never a big fan of her music, but certainly recognized how great she — and her voice were.  This tune is from 1967…which was the first time her name came to mind.  The link is here.  The second pop ‘blast from the past’ is in celebration of a movie that turned 40 years young this week…and the link to the title track is here.  Where has all that time gone?

Today’s classical ‘blast from the past’ is Ludwig van Beethoven’s Piano Concerto No. 5 in E-flat major, Op. 73The Emperor.  Its premiere took place on 13 January 1811 at the Palace of Prince Joseph Lobkowitz in Vienna, with Archduke Rudolf as the soloist.  This performance, from November 2014, is courtesy of the legendary Maurizio Pollini — and it’s conducted by his son, Daniele Pollini.  The link is here.

I’m not sure if anything should be read into Friday’s price action, although it should be noted that the volumes in both gold and silver were higher than I expected to see.  The rallies in all four precious metals between 2 and 3 p.m. EDT after the COMEX close, certainly had something to do with the fact that the dollar index fell out of bed during that one hour time period.

The COMEX futures market is now set up in a bullish configuration that, quite frankly, a few months back I never thought possible.  And as Ted has been going on about for several months now, JPMorgan has used that time to not only exit its huge short position in gold, but also reduce its 20,000 contract short position in silver by a drastic amount.  Just how much won’t be known until next Friday’s COT Report — and that’s only if we make it through the next two trading days without incident.

Here are the 6-month charts for all four precious metals, plus copper and WTIC — and there’s not really much to see in Friday’s dojis.  Everything is set up for Ted’s rally of the century, if that’s what the powers-that-be have in mind.  And as I’ve said before on numerous occasions, all we’re waiting for is the ‘event’ that will be allowed to set it off.  The ‘click to enlarge‘ feature only helps with the first four charts.

The deep state has been shoving hard — and at an ever-increasing rate recently, particularly in Venezuela, Iran, China and especially Russia.  The impossible ultimatum that they’ve delivered to Russia was crafted in such a way that Putin will have no option except to reject it, which any sovereign head of state would do if faced with a similar situation.  This all comes to a head early next week, Tuesday I believe — and I’ll be watching to see how Putin responds to this.

In most respects, this ultimatum to Russia has many similarities to the “Hull note“…which was the final proposal delivered to the Empire of Japan by the United States before the attack on Pearl Harbor — and the Japanese declaration of war.

In yesterday’s column I posted a Zero Hedge article headlined “Pompeo Forms “Iran Action Group” to Coordinate All Iran Strategy, Reports Directly to White House“.  The deep state’s actions against Turkey are starting to take on a similar flavour — and it remains to be seen how quickly the situation over there deteriorates from bad to worse.

There was news yesterday, or the day before, about some sort of trade talks between China and the U.S. coming up in November — and the U.S. equity market rejoiced.  But based on the deep state’s increasingly bellicose attitude to China and trade right now, I can’t see any good coming from it — and lots can happen to derail this meeting before it ever takes place.

As Peter Koenig stated in his commentary in the Critical Reads section further up…”All this is, of course, totally illegal by any international law or…forget law, which is not respected anyway by the empire and its vassals, but not even by human moral standards. Sanctions are destructive. They are interfering in other countries sovereignty. They are made to punish countries, nations, that refuse to bend to a world dictatorship.”

Somehow I get the impression that these events above, especially the ultimatum to Russia, is directly connected to the mad rush by JPMorgan to exit stage left from the precious metal complex in the COMEX futures market.  That has certainly been on display over the last several months.  Ted has been monitoring their progress in every week’s COT Report, culminating in what appeared to be the final washout to the downside this week — and ending with a hammering to the downside during the New York trading session on Wednesday.

I’m certainly looking forward to these moon-shot rallies, but my enthusiasm is somewhat tempered by the circumstances under which they will happen — and what sort of world we will face after that fact, if events do unfold that way.

So, we wait some more.

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