Silver Closes Above Its 50-Day Moving Average

13 October 2018 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price began to edge quietly lower once trading began in New York at 6:00 p.m. EDT on Thursday evening in New York.  That lasted until shortly before 10 a.m. China Standard Time on their Friday morning — and after that it traded sideways for the rest of the Friday session everywhere on Planet Earth.  Both tiny rallies during the COMEX trading session were turned aside — and the price didn’t do much from the London close onwards.

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

Gold finished the Friday session in New York at $1,217.50 spot, down $6.10 from Thursday’s close.  Net volume was pretty heavy at just over 282,500 contracts — and there was about another 9,900 contracts worth of roll-over/switch volume in this precious metal.

The price activity in silver was somewhat more ‘volatile’…but only just.  It also trended lower in Far East trading until around 9:30 a.m. in London — and the rally that commenced at that juncture got capped and turned lower around 8:35 a.m. in New York.  Like for gold, it was sold lower into the 11 a.m. EDT London close — and didn’t do much of anything after that.

The low and high ticks in this precious metal were reported by the CME Group as $14.54 and $14.735 in the December contract.

Silver was closed at $14.58 spot, up 2 cents on the day — and above its 50-day moving average by four cents.  Net volume was fairly decent at a hair over 64,500 contracts — and roll-over/switch volume was only 1,261 contracts on top of that.

The platinum price chopped quietly sideways until minutes before the COMEX open in New York — and from that point, it was sold unevenly lower into the 1:30 p.m. COMEX close.  It edged a few dollars higher in the thinly-traded after-hours market — and finished the Friday session at $836 spot, down 3 bucks on the day.

Platinum was sold quietly lower until shortly before 10:30 CST in Far East trading on their Friday morning, but managed to make into the Zurich open up a dollar or so.  It jumped up to its high tick of the day…$1,084 spot…shortly after that, but that’s as high as it was allowed to get — and by 1:30 p.m. CEST, it was headed lower.  That engineered sell-off lasted until noon in New York — and it traded flat into the COMEX close from there.  Like platinum, it rallied a few dollars in after-hours trading, but all that was taken away by the time trading ended at 5:00 p.m. EDT.  Palladium was closed at $1,063 spot, down 12 dollars on the day — and 21 bucks off its high tick.

The dollar index closed very late on Thursday afternoon at 95.04 — and proceeded to chop quietly sideways once trading began at 6:00 p.m. EDT a few minutes later.  The 94.95 low tick of the day was set about 8:20 a.m. in London on their Friday morning — and the subsequent ‘rally’ lasted until the afternoon gold fix.  Its high tick at that point was 95.37 — and it chopped quietly lower from that point until precisely noon in New York.  It edged quietly but unsteadily higher into the close from there — and finished the Friday session at 95.26…up 22 basis points on the day.

It was yet another trading session where what was happening in the currency market did not match up with what was happening in the precious metals, which is just more proof that precious metal prices are set in the COMEX futures market — and are NOT based on what’s happening with the currencies.  In a free market, there would be an obvious currency/precious metal price link…but we don’t have free markets in anything anymore.

And here’s the 1-year U.S. dollar index chart — and the delta between its close — and the close on the intraday dollar index chart above, was 35 basis points on Friday.

The gold stocks began to head lower the moment that the equity markets open in New York at 9:30 a.m. EDT on Friday morning — and their respective low ticks were set just minutes after the 11 a.m. EDT London close.  They rallied sharply but unsteadily higher from there — and were actually in positive territory for a bit a few minutes before 3 p.m.  But the day traders showed up — and the shares were sold a bit lower into the close from there.  Considering the closing price for gold, its underlying equities did remarkably well, all things considered — and the HUI closed down only 0.64 percent.

With some minor deviations, the price action in the silver equities was very similar, except their forays into positive territory were much more robust…which should be expected I suppose, considering the fact that silver finished up a few pennies on the day.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 0.36 percent.  Not a lot, to be sure, but far better than the alternative.  Click to enlarge if necessary.

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

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 what a difference a week makes…but most of these gains came on Thursday.  The reason that silver and their associated equities are underperforming is because JPMorgan has it on its 50-day moving average leash.  Click to enlarge.

Of course the month-to-date looks better as well.  And you can tell, it doesn’t look much different that the weekly chart.  That’s how carefully JPMorgan has managed the precious metal market…until this past Thursday, that is.  Click to enlarge.

The year-to-date chart continues to be a sea of red, but much improved over what it looked like last week.  As is always the case, the silver equities continue to ‘outperform’ their golden brethren, however that’s not saying much with this chart.  Click to enlarge.

This unfolding bull market in precious metals is just getting started — and it remains to be seen how far it will go — and how fast it will get there.  It’s JPMorgan’s world — and they’ll do whatever they want, or until they’re told to step aside.


The CME Daily Delivery Report showed that 60 gold and 20 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  In gold, the sole short/issuer was International F.C. Stone out of its client account.  The largest long/stopper was JPMorgan with 42 contracts for its client account.  In distant second and third spots were Advantage and Morgan Stanley, with 8 and 7 contracts respectively…Advantage for its client account — and MS for its own in-house/proprietary trading account.  In silver, JPMorgan issued all 20 contracts — and then stopped all 20 for its client account as well.  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 October fell by 63 contracts, leaving 1,258 still open, minus the 60 contracts mentioned just above.  Thursday’s Daily Delivery Report showed that only 2 gold contracts were actually posted for delivery on Monday, so that means that 63-2-61 more gold contracts vanished from the October delivery month.  Silver o.i. in October jumped up 37 contracts, leaving 42 still open, minus the 20 mentioned in the previous paragraph.  Thursday’s Daily Delivery Report showed that only 3 silver contracts were actually posted for delivery on Monday, so that means that 3+37=40 more silver contracts just got added to October.


There was another big addition to GLD on Friday, as an authorized participant took in 181,498 troy ounces.  There were no reported changes in SLV.

In the last three business days there has been 465,349 troy ounces…14.47 metric tonnes of gold added to GLD.

There was no sales from the U.S. Mint on Friday.

Month-to-date the mint has sold 12,000 troy ounces of gold eagles — 2,500 one-ounce 24K gold buffaloes — and 930,000 silver eagles.

There was a bit of movement in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.  Nothing was reported received, but 37,808.400 troy ounces/1,176 kilobars [U.K./U.S. kilobar weight] were shipped out of JPMorgan.  The link to this activity is here.

As is almost always the case, it was much busier in silver, as 612,792 troy ounces were received — and 1,002,322 troy ounces were shipped out the door for parts unknown.  One truck load…597,805 troy ounces…disappeared into JPMorgan’s vault — and the remaining 14,986 troy ounces was dropped off at Delaware.  That amount was a transfer out of Brink’s, Inc.  The rest of the ‘out’ activity was 889,079 troy ounces from CNT, plus 98,256 troy ounces from Delaware.  The link to this action is here.

It was a fairly quiet day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They reported receiving 200 of them — and shipped out 117.  This activity was at Brink’s, Inc. — and the link to that is here.

House of Habsburg, Ferdinand I, 1835-1848, Ducat 1838

Origin: Austria     Mint: Kremnica     Material: Gold    Full Weight: 3.49 grams     Value: €939.00


The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, was sort of what Ted was expecting in silver…but a big positive surprise in gold.

In silver, the Commercial traders improved their long position by 4,567 contracts, or 22.8 million troy ounces of paper silver.

They arrived at that number by increasing their long position by 1,431 contracts, plus they reduced their short position by 3,136 contracts — and it’s the sum of these two numbers that represents the change for the reporting week.

The position changes of the Big 4 and Big ‘5 through 8’ traders are still immaterial because of the contamination of that data by the large number of Managed Money traders that now inhabit this group.

Under the hood in the Disaggregated COT Report, it was all Managed Money traders, plus a bit more, as the value-motivated Managed Money traders sold off another 5,087 contracts of their long position…but the brain-dead variety only increased their short position by 107 contracts — and it’s the sum of those two numbers…5,194 contracts…that represents their change for the reporting week.  The difference between that number — and the Commercial net short position…5,194 minus 4,567 equals 627 contracts…was made up by the traders in the other two categories, as both increased their net long positions by tiny amounts.  Here’s the snip from the Disaggregated COT Report so you can see these weekly changes for yourself.  Click to enlarge.

We’re back to a Commercial net long position in silver once again…3,555 contracts worth, or 17.8 million troy ounces of paper silver.  But in the grand scheme of things, numbers like these are not much more than rounding errors compared to what we’ve seen in the past.  Ted pegs JPMorgan position in the COMEX futures market in silver as neutral at worst — and maybe a thousand contracts or so on the long side of the ledger at best.

Here’s the 3-year COT chart for silver — and there’s not a lot to see.  The Commercial category has gone from a tiny net short position in last week’s report, to a tiny net long position this week — and that’s all because of that big engineered price decline that we had on Monday.  This decent improvement in the Commercial net short position did not come by accident.  Click to enlarge.

Of course — and as I pointed out in my Friday column, this COT Report basically gives us a reference to judge how much the market structure has deteriorated since the Tuesday cut-off.  As you are already aware, silver has not been allowed to penetrate its 50-day moving average by any material amount over the last few days…but there certainly has been some deterioration in the Commercial net short position, regardless of that fact.  There are still two more trading days left in the reporting week, so I’ll leave any speculation until after the COMEX close on Tuesday.


In gold, the commercial net long position rose by a surprising 16,991 contracts, or 1.7 million troy ounces of paper gold.

They arrived at that number by increasing their long position by 4,938 contracts, plus they reduced their short position by 12,053 contracts — and it’s the sum of those two numbers that represents their change for the reporting week.

Like in silver, the position changes of the Big 4 and Big ‘5 through 8’ traders are still immaterial because of the contamination of that data by the large number of Managed Money traders that now inhabit this group.

But under the hood in the Disaggregated COT Report was an even bigger surprise.  Not only was it all Managed Money activity that accounted for the weekly change, they did so in spades!  The value-investing/non-technical fund Managed Money longs sold 18,453 long contracts — and the brain-dead/moving average-following variety added another 11,398 contracts to their short position.  It’s the sum of those two numbers…29,851 contracts…that represents the change for the reporting week.  Ted could hardly believe his eyes.

The difference between that number — and the commercial net short position…29,851 minus 16,991 equals 12,860 contracts.  That amount, plus another 638 contracts courtesy of the ‘Nonreportable’/small trader category, was all gobbled up by the traders in the ‘Other Reportables’ category.  Here’s the clip from the Disaggregated COT Report for gold that shows this.  Click to enlarge.

The commercial net long position in gold is now up to a whopping 25,866 contracts, or 2.59 million troy ounces of paper gold.  That’s another new record long number — and a number that should stand for a good long while.

Here is the 6-month COT chart for gold — and it’s impressive.  Click to enlarge.

Of course this is all “yesterday’s news” but, like in silver, gives a good reference/starting point for the price action that has occurred since.  Without doubt, there has been massive deterioration in the commercial net long position in gold…probably all of this past week’s improvement, plus more.  But, like for silver, I’ll wait until after next Tuesday’s cut-off before speculating further.

In platinum and palladium, the Managed Money traders either added to their long position, or decreased their short positions by a thousand contracts or so in both.  Please remember that these are very tiny and mostly illiquid markets — and it doesn’t take much activity to have a major impact on their respective prices.   And in copper, it was the opposite, as the Managed Money traders decreased their net long position by about 7,700 contracts.

Despite the big run-up in the gold price on Thursday, I suspect that the set-up in the COMEX futures market in gold, is still very much in the wildly bullish camp.  That’s even more the case in silver, as JPMorgan stopped its price at its 50-day moving average on Thursday, although they allowed silver to close above it by a few pennies on Friday, so the vast majority of the short position that existed last week is still in place.  But most or all of this past week’s ‘improvement’ in COT structure may have already gone out the window after the Thursday rally.  Ted is quite correct when he says it’s far too soon to tell whether this is the start of the ‘Big One’ or not.


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 COMEXClick to enlarge.

But, like the COT Report itself, the chart above is basically irrelevant at this point as well — and for the same reason.  Except for Scotiabank — and one or two U.S. banks…not including JPMorgan…the positions of the Big 4 and Big 8 traders are mostly made up of the brain-dead/moving average-following Managed Money traders now.

For the current reporting week, the Big 4 traders are short 100 days of world silver production, up one day from the 99 days they were short in last week’s report — and the ‘5 through 8’ large traders are short an additional 52 days of world silver production, down a chunky 14 days from last week’s report—for a total of 152 days held short, which is five months of world silver production, or about 354.8 million troy ounces of paper silver held short by the Big 8.  [In last week’s COT Report the Big 8 were short 166 days of world silver production.]

The Big 8 commercial traders are short 35.6 percent of the entire open interest in silver in the COMEX futures market, which is down a bit from the 38.5 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 31.7 percent of the total COMEX open interest that the Big 8 are short, down a bit from the 33.0 percent they were short in last week’s report — and just over 35 percent once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 37 days of world gold production, which is up 1 day from what they were short last week — and the ‘5 through 8’ are short another 14 days of world production, which is down 3 days from what they were short the prior week, for a total of 51 days of world gold production held short by the Big 8 — which is down 2 days from what they were short in last week’s report.  Based on these numbers, the Big 4 in gold hold about 73 percent of the total short position held by the Big 8…which is up a big 5 percentage points from last week’s COT Report.

And, once again, don’t forget that a lot of the traders in the Big 4 and Big 8 categories in both gold and silver are Managed Money traders now — and not the commercial variety.

The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 66, 68 and 70 percent respectively of the short positions held by the Big 8.  Silver is up 6 percentage points from the previous week’s COT Report, platinum is up four percentage points from a week ago.  Palladium is down 3 percentage points from last week’s COT Report.

It was another quiet day as far as stories are concerned, although I have several that I’ve been saving for today’s column for length and/or content reasons.


CRITICAL READS

Why Trump Has the Most to Lose From Falling Stocks — Bill Bonner

We begin with America’s president, Donald J. Trump.

POTUS says the Fed is to blame for falling stock prices. It’s “gone loco,” he claims. It’s “out of control,” he charges.

He’s right. But the Fed went loco a long time ago. When he was a candidate for the White House, Trump saw it clearly.

The Fed had “created a false economy” with lower interest rates, he charged. Trump – always the fighter – said they did this in order to make Obama look good. He said it had created a “big, fat, ugly bubble.”

He’s right about almost everything. Except the Fed didn’t create the bubble to make Obama look good. The Fed lowered rates to make itself look good – as the savior of the economy.

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


Doug Noland: Rude Awakening Coming

“Risk Off” has become a global phenomenon — de-risking/deleveraging within a backdrop of central banks hoping to move beyond years of repeated market liquidity backstop operations. Moreover, it is a backdrop of highly divisive politics and troubling geopolitics. It is a worrying backdrop of escalating populism, nationalism and protectionism – that will matter now that markets are faltering.

I tell my wife that “it’s over” just to hear her laugh. “How many times have you said that?,” she’ll say. With a chuckle, I respond, “This time I mean it.” We shared a little laugh together, but this time I wasn’t kidding. I do vividly recall thinking “it’s over” in the summer of 2012, not anticipating that the German’s would tolerate Draghi’s “whatever it takes” unlimited “money” printing operations. And I similarly recall thinking “it’s over” with China’s Bubble at the precipice in early-2016. I guess I should have anticipated China’s “national team,” along with a ratcheting up of QE from the BOJ and ECB and an abrupt postponement of Fed “normalization” (after one tiny baby step).

I think “It’s over” because all these market bailouts ensured things turned really crazy – and I believe this time around it’s going to take central bankers longer to respond. I sense little appetite for another round of concerted global “money” printing operations. The focus is on domestic issues rather than some global agenda.

And market structure has become acutely vulnerable. Trillions in perceived safe and liquid ETFs. Trillions in a hedge fund industry struggling with performance and susceptible to huge outflows. Hundreds of Trillions of derivatives susceptible to market dislocation and illiquidity. Too much derivative market “insurance” that risks fomenting an avalanche of self-feeding sell orders. And let’s not forget the maladjusted U.S. economic structure that will function surprisingly poorly in a backdrop of tighter financial conditions and sinking securities markets.

In particular, it was an ominous week for the two great intertwined Bubbles, illustrated by the Shanghai Composite’s and S&P500’s respective 7.6% and 4.1% declines. I could go on and on, but I find it all sad and frustrating.

Doug’s weekly Credit Bubble Bulletin is definitely worth reading this week.  It was posted on his Internet site around 2 a.m. EDT this morning — and another link to it is here.


John Mearsheimer and Stephen Cohen Take on the Delusional Neocon-Neoliberal Establishment in a Vital Debate

In New York City on September 20, 2018, the Intelligence Squared hosted a debate of critical importance in helping one understand much of what we are currently seeing on the global scene.

The debate developed along three main questions. The first was on the role of NATO (“NATO is no longer fit for purpose”), the second was about Russia (“The Russian threat is overblown”), and the third was on Iran (“It’s time to take a hard line on Iran”).

To discuss these important issues, five very special guests were invited, namely: Derek Chollet, Executive Vice President of the German Marshall Fund of the United States and former U.S. Assistant Secretary of Defense; Stephen F. Cohen, Professor Emeritus of Russian Studies and History, New York University; Reuel Marc Gerecht, Senior Fellow at the Foundation for Defense of Democracies and a former CIA Analyst; John J. Mearsheimer, American Political Scientist & Professor at the University of Chicago; and Kori Schake, Deputy Director-General at the International Institute for Strategic Studies.

Looking at the panel, one immediately notices how Cohen and Mearsheimer were invited to bring a realist point of view to the discussion, as opposed to the other three who have an interventionist view of American foreign policy, viewing the United States as the indispensable nation. Cohen and Mearsheimer have worked for years, if not decades, to explain to American and international audiences how Washington’s hegemonic policies have accelerated the end of the US unipolar moment as well as spawned chaos around the world.

Cohen, and especially Mearsheimer, are pure realists. Without going into the merits of the differences between offensive realism, defensive realism and offshore balancers, they both have a coherent vision of why American actions have provoked the results we have seen around the world since the fall of the Berlin Wall.

This youtube.com video really begins with the introduction of the topics to be discussed, how the ‘debate’ will be carried out — and the introduction of the speakers.  That starts at the 5:30 minute mark.  But things really don’t get rolling until the speaking order is selected around the 13:45 minute mark.  From start to finish, the whole thing lasts 1 hour and 37 minutes.  Roy Stephens sent this to me on Wednesday — and for obvious reasons, it had to wait for my Saturday column.  I haven’t listed to it yet, but I will over the weekend.  Another link to it is here.


Patrick Buchanan Blasts bin Salman: “The Saudi Prince Has Become Toxic

Was Washington Post columnist Jamal Khashoggi murdered inside the Saudi consulate in Istanbul, and then his body cut up with a bone saw and flown to Riyadh in Gulfstream jets owned by Crown Prince Mohammed bin Salman?

So contend the Turks, who have video from the consulate, photos of 15 Saudi agents who flew into Istanbul that day, Oct. 2, and the identity numbers of the planes.

Supporting the thesis of either a murder in the consulate or a “rendition,” a kidnapping gone horribly bad, is a Post story that U.S. intel intercepted Saudi planning, ordered by the prince, to lure Khashoggi from his suburban D.C. home back to Saudi Arabia. And for what beneficent purpose?

If these charges are not refuted by Riyadh, there will likely be, and should be, as John Bolton said in another context, “hell to pay.”

And the collateral diplomatic damage looks to be massive.

Well, dear reader, it certainly appears that Saudi Arabia got caught with their proverbial pants down — and with Mohammed bin Salman being a very key U.S. ‘ally’ in the Middle East…it will be interesting to see how this apparent atrocity plays out.  This very scathing commentary from Pat, which actually headlined “With Friends Like These…“, put in an appearance on his Internet site at 2:18 a.m. EDT on Friday morning — and I thank Philip Manuel for sending it along.  Another link to it is here.


The new Silk route on rails — Nat South [for The Saker]

This is the second part in a series that looks behind the scenes, at particular aspects of trade, shipping and transport involving Russia. This analysis was partially written back in spring 2018, before taking academia seriously for a while.

Historically — and to this day the U.S. depends on the Mahan theory of sea route control and control of significant maritime choke-points for power projection. Hence, the U.S. hegemon relies heavily on its heavy outstretched military muscle, especially the use of any of the 11 carrier groups as part of this infrastructure. This is connected to traditional maritime trading routes.

We are seeing an ascendancy of Chinese military projection in the last decade, within increasing Chinese naval presence in those areas traditionally dominated by the U.S. Navy. The New Silk road as embodied by the Great Belt & Road Project will also inevitably change military dominance, (as China is building its third aircraft carrier and launched its 29th Type 054A frigate in January).

Without repeating the articles by Pepe Escobar on bigger geopolitical and economic picture on the New Silks Roads, I will concentrate on some the ‘cogs’ that will underpin the Belt and Road Initiative (BRI). The BRI started with a large-scale international economic forum was held in Beijing in May 2017. More than 100 countries, many heads of states attended, including President Putin. The forum kicked off a whole series of projects world-wide, with long lasting and far-reaching socio-economic impacts.

Similarly, the newly created Yuan petrodollar could create a seismic shift by eventually pushing out the U.S. dollar monopoly and eventually lead to the demise of the status quo of the U.S. dollar as a global reserve currency. The U.S. dollar is the weak link in Washington’s U.S. uni-polar vision of the world, as well as focus of military power. De-dollarization has been underway for a while in order to create an alternative economic order.

This longish, but worthwhile commentary was posted on thesaker.is Internet site back on October 6 — and I thank  Larry Galearis for pointing it out.  It’s another article that I though should wait for today’s column — and another link to it is here.


Vietnam Mass Protests Land Lease: Exposes Hanoi’s China Dilemma

The huge nationwide protests that rocked Vietnam last week have highlighted Hanoi’s headaches in dealing with China, both as a hostile power in the South China Sea and as a key trading partner and economic investor.

The history of Vietnam-China relations is steeped in a thousand years of Chinese colonization, conflict, and rebellion. The last Chinese invasion was a two-month border war in 1979.

The recent protests centered on the Special Zone Act, a law that would create “special economic zones” (SEZs) with the goal of sparking investment and economic reform. However, the prospect of dodgy deals that allegedly would have handed land over to Chinese investors provoked a flood of angry demonstrations less than two weeks ago, with protesters holding placards that read “No Special Zone — No leasing land to China — Even for one day!” and “Down with those who sell our country.” The chants started in Ho Chi Minh City and Hanoi but soon spread to towns in six provinces, including Danang, Nha Trang, Binh Thuan, and Tai Ninh.

Pham Chi Dung an ex-military officer, now chairman of the Independent Journalists of Vietnam, told The Diplomat, “The Special Zone Act is termed by the Vietnamese people as the law to sell the country. Many people are outraged. These [SEZ] concessions are only for poor and backward countries.”

No doubt Dung had in mind two poorer neighbor countries, Laos and Cambodia, which already been lured into accepting Chinese investor deals with 99-year leases on the land.

This longish, but very interesting article showed up on thediplomat.com Internet site back in June of this year…but I thought it worth posting anyway.  I thank Australian reader Garry Robinson for sending it our way — and though it best to wait to post it in Saturday’s column.  Another link to it is here.


China, the World’s Largest Car Market Faces Historic Drop

China’s car market has been one of the most reliable engines of global growth for decades. Now that all might be coming to an end.

Purchases of passenger vehicles by dealerships plunged for a third straight month, an industry group said Friday. With trade ties with the U.S. worsening by the day and car sales barely up for the year already, the industry is now facing the prospect of its first contraction since at least the 1990s.

A slowdown in China — where automakers poured in billions of dollars in the past 20 years to bulk up factories — leaves the industry struggling to find growth anywhere on the planet. A trade war with the U.S. has already prompted luxury-car makers BMW AG and Daimler AG to warn about lower profits while Chinese consumers staying away from showrooms forced Jaguar Land Rover to shut a factory temporarily.

The economic standoff between the U.S. and China escalated last month when President Donald Trump slapped a 10 percent duty on $200 billion of Chinese imports, and said the levy will jump to 25 percent in 2019. China said it would retaliate with levies on $60 billion worth of U.S. goods. As retailers pass on the duties to consumers and Chinese markets sell off, the tit-for-tat spat has raised concerns shoppers would rein in spending.

Passenger-car purchases by dealerships declined 12 percent to 2.06 million units in September, the China Association of Automobile Manufacturers said. That leaves the market up just 0.6 percent for the first nine months of the year, and the association said fourth-quarter comparisons from 2017 are challenging.

This Bloomberg story was embedded in a Zero Hedge article yesterday evening.  It was posted on the Bloomberg website at 12:33 a.m. Denver time on Friday morning — and another link to it is here.


Experts Say Furor Over Banksy Painting’s Surprise ‘Shredding’ Has ‘Multiplied’ Its Value

As has become depressingly commonplace in contemporary society, street artist Banksy’s latest provocative anti-consumerist gesture has been exposed as just another marketing stunt. As the Financial Times reports, auction house Sotheby’s has completed the sale of Banksy’s “Girl with Balloon” painting – a sale that caused a stir in the art world when it self-destructed immediately after the auction-house gavel came down via a shredding mechanism hidden in the frame. Banksy’s handling services organization, Pest Control, has blessed the half-shredded painting as a new work, entitled “Love is in the Bin“, and the painting’s original winning bidder, an anonymous female European collector, has pressed ahead with the purchase, though she now has the option of re-selling it on the secondary market for an even larger premium.

The half-shredded painting is to go on public display at Sotheby’s London salerooms on Saturday and Sunday. Shocked art patrons looked on in horror a week ago when the painting, originally entitled “Girl With Balloon” self-destructed. But as many readers probably anticipated, the surprise shredding concept, which was incorporated in secret, was “integral” to the piece. Already, bidders had driven the price of the piece upwards from the expected £200,000 to £300,000 to £1.04 million. Now, experts say it could be worth many times that.

Well, dear reader, I’m only posting this story to show you how stark raving mad the world has become.  Words fail me when I see stories like this Zero Hedge piece that showed up on their Internet site at 3:55 p.m. EDT on Friday afternoon.  Another link to it is here.


Chile’s environmental court orders Barrick to close Pascua-Lama gold mine

Chile’s environmental court on Friday ordered Canada’s Barrick Gold Corp to definitively close the Chilean side of its stalled Pascua-Lama mining project, a final procedural step that draws a line under a long-running saga.

The court, sitting in the northern Chilean city of Antofagasta, approved by two votes to one the closure of the polemical project that straddles the Andes Mountains between Chile and Argentina.

The gold and silver operation was put on hold in 2013 due to environmental issues, political opposition, labor unrest and development costs that ballooned to $8.5 billion.

Barrick was told to close the mine by Chile’s environmental regulator in January this year and fined $11.5 million. Friday’s court ruling rubber-stamps that order.

Barrick, the world’s largest gold miner, did not immediately respond to a request for comment.

The five short paragraphs above are all there is to this brief Reuters story that was filed from Santiago yesterday.  It appeared on their Internet site at 3:24 p.m. EDT — and was updated about three hours later.  I found it embedded in a GATA dispatch last night — and another link to the hard copy is here.


The PHOTOS and the FUNNIES

Back to the Big Island’…Hawai’i…one last time.  The eruption at fissure 8 on the East Rift Zone of Kilauea volcano  has been over for a few months already.  But here are some ‘before and after’ aerial photos that I thought worth sharing.  Note all the vegetation that was killed by the sulfur dioxide gas downwind of the fissure 8 vent in the first two shots.  The ‘click to enlarge‘ feature certainly helps.  There photos come courtesy of the U.S. Geological Survey — and here are the first two…

This last photo shows Kapoho Crater in the upper left portion of the image. Lava filled much of the crater, including the small nested crater that contained Green Lake. The Kapoho Beach Lots subdivision is in the right side of the image, north of Kapoho Bay, and was completely covered by the fissure 8 lava flow. Vacationland Hawai‘i, in the lower right corner of the image, was also completely covered, along with the adjacent tide pools. Kapoho Farm Lots, near the center of the image, is also beneath the flow.  Click to enlarge.


The WRAP

Today’s pop ‘blast from the past’ is one I’ve featured only once before in the last ten years or so.  It, along with only a small handful of others, is one of my favourite songs of all time.  It was very controversial when it was released in 1968, but still managed to finish in the top 100 tunes from that year.  I’m in the mood for it today — and the link is here.

Today’s classical ‘blast from the past’ dates from sometime before 1721.  It’s Bach’s Brandenburg Concerto No. 2 in F major, BWV 1047.  This iteration was recorded at the Hall of Mirrors, Palace of Cöthen, in March of 2000.  It’s a good a recording as you’re ever likely to come across.  The link to it is here.


It was another what I call a ‘care and maintenance’ sort of day — and as I pointed out further up, the machinations of the dollar index had no impact on what was happening with precious metal prices.  And as I also pointed out, this shows once again that it’s only what happens in the futures market that determines their respective price.  That’s not what would be happening in a free market environment in both the currencies and the precious metals, of course…but “there are no markets anymore…only interventions.”

Here are the 6-month charts for all four precious metals, plus the 1-year charts for copper and WTIC…and silver’s close above its 50-day moving average should be noted.  Other than that, there’s not a lot to see.  The ‘click to enlarge‘ helps with all six charts today.

The world’s equity markets began to come apart at the seams [once again] this week…led by the U.S. — and it remains to be seen if they can, or will be, resurrected in the days ahead.  I, along with others, have called what confronts the nations of the world today…a Frankenstein economy — and that description can be easily applies to the entire financial and monetary system on which it is based.

In his Friday commentary, Bill Bonner had this to say…”The U.S. won’t go gently into a correction. Instead, in a panic, the Fed will abandon its normalization policy… and go into “Full Japanese Central Bank Retard” mode.  That is, it will begin buying everything in sight – U.S. Treasury debt (which will explode to $2 trillion a year)… stocks… corporate bonds… baseball cards… you name it.”

And last weekend, Charles Hugh Smith said the following in an essay of his last weekend..

We all know the Status Quo’s response to the global financial meltdown of 2008 has been a travesty of a mockery of a sham.

Smoke and mirrors, flimsy facades of “recovery,” fake “reforms,” serial bubble-blowing and politically expedient can-kicking, all based on borrowing and printing trillions of dollars, yen, euros and yuan, quatloos, etc.

So when will the travesty of a mockery of a sham finally come to an end?

If left to their own devices, the entire Ponzi scheme of world finance and economics would implode of its own volition.  But that hasn’t been allowed to happened as of yet.  But this week’s semi-meltdown was certainly a precursor of what probably lies ahead if a market-clearing event is allowed to occur.  Doug Noland’s commentary in the Critical Reads section confirms that.

On the political scene in Washington, the Kavanaugh confirmation is done…but the name-calling continues.  Syria is quiet, for the moment…as is the Ukraine.  The U.S. deep state has now got the long knives out for China in a big way.  The problem with this scenario is that whatever damage is caused to China in all this, will end up hurting the U.S. economy and consumer just as much.  Of course, the horror of horrors in the international arena at the moment is the Jamal Khashoggi story…murdered inside the Saudi consulate in Istanbul…and the body parts flown back to Saudi Arabia in a jet owned by Crown Prince Mohammed bin Salman.  You couldn’t make this stuff up.

Although the precious metals made a move this week…particularly gold, it certainly looks it’s still very much a managed market at the moment.  If and when Ted’s ‘Big One’ really gets wound up, the precious metal charts won’t look like anything that we’ve seen so far this week.  There are no daily limits in how high gold and silver can rise [or fall] in price during any given trading session — and once this ‘Big One’ gets underway, I expect this no limit scenario to be put to the test in very short order.

And with the COMEX futures market on a hair trigger in both precious metals, particularly silver, we’re still waiting for whatever ‘event’ that will be allowed to set it off.

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

Ed