Russia Adds 1.2 Million Ounces of Gold to Its Reserves in September

20 October 2018 — Saturday


The gold price wasn’t allowed to do much yesterday, either up or down.  There was a bit of a sell-off at the London open — and the rally at the COMEX open ran into all the usual suspects — and it appeared to be just another ‘care and maintenance’ session as far as I could tell.

The low and high ticks aren’t worth mentioning.

Gold finished the Friday session in New York at $1,226.50 spot, up $1.20 from Thursday’s close.  Net volume was very quiet at just under 186,000 contracts — and there was only 3,200 contracts worth of roll-over/switch volume on top of that.

Silver’s rally attempts before the London open were turned aside as well — and the low tick, like for gold, came minutes after trading began in London.  It began to chop higher once the noon silver fix was in — and its rally after that was stopped cold at the COMEX open — and then turned lower once the afternoon gold fix was done for the day.  That sell-off lasted until about 11:25 a.m. in New York — and it traded very flat for the remainder of the day.

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

Silver was closed yesterday at $14.60 an ounce, up 6 cents on the day.  Net volume was nothing special at exactly 54,000 contracts — and there was 2,254 contracts worth of roll-over/switch volume in that precious  metal.

The platinum price rallied in stair-step fashion in Far East trading on their Friday — and was up 6 bucks by the Zurich open.  It dipped a bit there, but recovered right away — and then traded flat until 2 p.m. CEST/8 a.m. EDT.  Its sharp rally met the same fate as the ones in gold and silver at that time.  It traded flat until the afternoon gold fix in London — and then was sold a bit lower until 12:30 p.m. in New York.  It didn’t do much after that.  Platinum was closed at $830 spot, up 5 dollars on the day.

It was the same price action in Far East trading for palladium as it was for platinum, except it was up 12 dollars by the Zurich open.  It was five bucks lower by 2 p.m. CEST/8 a.m. EDT — and from that juncture it began to quietly rally.  That was capped and turned lower right at the 10 a.m. EDT afternoon gold fix in London.  From there — and also like for platinum…its price was guided lower until around 12:30 p.m. in New York — and it didn’t do much of anything after that.  Palladium was closed in new York yesterday at $1,073 spot, up 9 dollars on the day — and at least 9 bucks off its high tick.

The dollar index closed very late on Thursday afternoon in New York at 95.97 — and when trading opened at 6:00 p.m. EDT a few minutes later, traded ruler flat until 1:30 p.m. China Standard Time on their Friday morning.  It got a little wobbly at that point — and then jumped to its 96.09 high tick of the day about twenty minutes after the London open.  It was all unsteadily down hill from there.  It looked like the usual ‘gentle hands’ showed up at the 95.54 low tick around 12:50 p.m. in New York — and from that juncture, it ‘rallied’ a bit until minutes before 4 p.m…but most of that gain vanished by the close.  The dollar index finished the Friday session at 95.67…down 30 basis points from Thursday’s close.

And here’s the 6-month U.S. dollar index chart — and the delta between its close — and the close on the intraday chart above, was 23 basis points yesterday.

The gold stocks shot to their highs of the day within ten minutes of the open of the equity markets in New York yesterday morning — and from there, chopped quietly lower until a few minutes after 2 p.m. EDT.  They wandered unevenly higher from there — and back into positive territory…closing up 0.03 percent.  Call it unchanged once again.

The silver equities chopped higher until around 11:20 a.m. EDT…and then followed an almost identical path as their golden brethren.  Their respective low ticks were set a few minutes after 3 p.m. — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 0.01 percent…unchanged as well.  Click to enlarge if necessary.

And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart.  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 there were tiny gains in everything except platinum during the reporting week.  Click to enlarge.

Of course the month-to-date looks better as well.  And although it appears that the gold stocks are outperforming the silver equities, they are not when you look at how well the underlying metals themselves are doing.  Click to enlarge.

The year-to-date chart continues to be [mostly] a sea of red, but improved over what it looked like last week — and particularly the week before.  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.

As I said in this space last week…this unfolding bull market in the 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 55 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  Advantage issued all 55 contracts out of its client account — and of the four long/stoppers in total, the two largest were JPMorgan with 40 — and Advantage with 10 contracts.  All were 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 October dropped by 649 contracts, leaving just 116 open, minus the 55 contracts mentioned just above.  Thursday’s Daily Delivery Report showed that 649 gold contacts were actually posted for delivery on Monday, so the change in open interest and the deliveries match once again…which is surprising on such a large number.  Silver o.i. in October remained unchanged at 1 contract still around — and there were no deliveries scheduled for Monday.  I wonder who that lone hold-out may be?

After three consecutive deposits in GLD, there was a withdrawal yesterday, as an authorized participant removed 94,609 troy ounces.  There were no reported changes in SLV.

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

Month-to-date the mint has sold 15,000 troy ounces of gold eagles — 5,000 one-ounce 24K gold buffaloes — and 1,130,000 silver eagles.

There was no physical gold movement over at the COMEX-approved depositories on the U.S. east coast on Thursday.  But there was a transfer of 64,237 troy ounces from the Eligible category and into Registered at HSBC USA…which is certainly delivery related.  There was also a transfer of 13,848 troy ounces from Registered and back into Eligible at JPMorgan.  I won’t bother linking this.

But it was another monster movement day in silver on Thursday, as 2,715,928 troy ounces were reported received — and another 1,811,147 troy ounces were shipped out.  In the ‘in’ category, there were two truck loads…1,232,968 troy ounces dropped off at Brink’s, Inc.  There was 879,030 troy ounces left outside the door at CNT — and the remaining truck load…603,930 troy ounces…found a home over at JPMorgan.  All of the ‘out’ activity…three truck loads…1,811,147 troy ounces…departed CNT.  The link to all that action is here.

Ted mentioned that almost 14 million troy ounces of silver had been moved in — and out of the COMEX-approved depositories during the last five business days.  That is a record by many millions of ounces — and I just know that he’ll have lots to say about it in his weekly review later today.

And that truck load that went into JPMorgan on Thursday puts them back at their old high of 145.5 million troy ounces of silver that they have stashed on the COMEX.  I expect that number to be surpassed by a goodly amount by the time they take delivery of all the silver they stopped in September.

There was also very decent activity in gold over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They reported receiving 3,200 of them — and shipped out another 5,564.  All of this activity was at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.

Since the 20th of the month fell on a weekend this month…today…the good folks over at The Central Bank of the Russian Federation updated their Internet site with September’s data on Friday, which is their normal procedure when that date falls on a weekend.  They reported that they added 1.2 million troy ounces of gold to their reserves that month, bringing their total declared gold reserves up to the 65.5 million troy ounce/2,037 metric tonne mark.

For the last three months in a row, Russia’s central bank has added, on average, one million troy ounces of gold to their reserves every month.  I would suspect that they’re putting the money from selling U.S. treasuries over the same period, to very good use.  This is far, far in excess of what Russia mines every month — and you have to wonder where they’re getting it from. I would suspect that they haven’t been selling any of their mine production in the open market for quite some time now — and have that hidden off their balance sheet and, like China, are only showing it when it suits them.  But the message from Russia to the West is very clear, for those who wish to hear it.

Here’s Nick’s most excellent chart, updated with the September data. Click to enlarge.

The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, October 16 were, as Ted Butler said on the phone yesterday…”disappointing, but not surprising“…as we’re now back to a commercial net short position in both silver and gold.

In silver, the Commercial traders reduced their long position by 543 contracts — and they also increased their short position by 7,836 contracts as well — and the total weekly change is the sum of those two numbers…8,379 contracts, or 41.9 million troy ounces.

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 still inhabit this group.

Under the hood in the Disaggregated COT Report, almost all the changes were attributable to what the Managed Money traders did during the reporting week. They increased their long position by a smallish 205 contracts — and they reduced their short position by 7,660 contracts. It’s the sum of those two numbers…7,865 contracts…the represents their change for the reporting week.

The difference between that number — and the Commercial net short position…8,379 minus 7,865 equals 514 contracts…was made up, as it always is, by the traders in the other two categories…the ‘Other Reportables’ and the ‘Nonreportable’/small traders. Here’s the snip from the Disaggregated COT Report that shows those changes. Click to enlarge.

The Commercial net short position in silver now stands at 4,824 contracts, or 24.1 million troy ounces of paper silver. Ted pegs JPMorgan’s short position at around 3,000 contracts. Ted’s also of the opinion that there’s another U.S. bank on the short side in silver as well — and that’s Citigroup. They may have also increased their short position during the reporting week. They’ve been short for quite a while…many months, if not longer, but their short position in silver has mostly been immaterial compared to JPMorgan’s — and it’s still immaterial, relatively speaking.

Here’s the 3-year COT chart for silver — and the changes are obvious. Click to enlarge.

Just because we’re back to a Commercial net short position in silver, all is not lost. Three months ago, a short position this small would have been unimaginable — and reason for riotous celebrations, so you have to keep things in perspective here, dear reader. And as I mentioned in Friday’s column, silver’s quick trip back below its 50-day moving average on Thursday, certainly improved the situation a bit from the numbers reported in this week’s COT Report.

In gold, the commercial traders sold 8,166 long contracts, plus they increased their short position by a very chunky 49,696 contracts — and it’s the sum of those two numbers…57,862 contracts, or 5.79 million troy ounces of paper gold, that represents their change for the reporting week.

Like for silver — and despite this week’s increase in short position, 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 still inhabit this group.

Under the hood in the Disaggregated COT Report, it was all Managed Money traders that were involved in this week’s activity. They increased their long position by 13,155 contracts — and they also added 46,957 short contracts — and it’s the sum of those two numbers…60,112 contracts…that represented their change for the reporting week.

As always, the difference between that number and what the commercial traders did…60,112 minus 57,862 equals 2,250 contracts…was made up by the traders in the other two categories. Here’s the snip from the Disaggregated COT Report for gold that shows that. Click to enlarge.

The commercial net short position in gold now stands at 31,996 COMEX contracts, or 3.20 million troy ounces of paper gold. As for silver, many months ago a number this low would have been considered unattainable, so don’t let this deterioration get to you.

Here’s the 3-year COT chart for gold — and as you can tell, compared to where we’ve been in the past, you have to put this week’s figure in some sort of context. Click to enlarge.

The bullish set up in both gold and silver still exists, but it’s not as wildly bullish as it was before…particularly in gold. And as Ted pointed out on the phone yesterday as well, the possibility exists that JPMorgan may engineer a price decline in both silver and gold to slam these Managed Money traders back on the short side after their trading actions last Thursday ran the gold price up $35 or so. But then again, maybe they won’t — and I know that Ted will have something to say about all this in his weekly commentary later today.

In the other precious metals, there was no change in palladium, as the Managed Money traders didn’t make any material changes. In platinum, they reduced their short position by a net 2,900 contracts or so — and in copper, they reduced their short position, plus went long to the tune of 5,800 contracts in total.

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. Click 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…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, unchanged from what they were short in last week’s report — and the ‘5 through 8’ large traders are short an additional 53 days of world silver production, up 1 day from last week’s report—for a total of 153 days held short, which is five months of world silver production, or about 357.1 million troy ounces of paper silver held short by the Big 8. [In last week’s COT Report the Big 8 were short 152 days of world silver production.]

The Big 8 commercial traders are short 35.8 percent of the entire open interest in silver in the COMEX futures market, which is virtually unchanged from the 35.6 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 34.9 percent of the total COMEX open interest that the Big 8 are short, up a bit from the 31.7 percent they were short in last week’s report — and about 40 percent once the market-neutral spread trades are subtracted out.

I doubt very much if the short positions of the two U.S. banks…JPMorgan — and now Citigroup…are large enough in silver that they would even be included in the Big ‘5 through 8’ large trader categories.

In gold, the Big 4 are short 41 days of world gold production, which is up 4 days from what they were short last week — and the ‘5 through 8’ are short another 17 days of world production, which is up 3 days from what they were short the prior week, for a total of 58 days of world gold production held short by the Big 8 — which is up 7 days from what they were short in last week’s report. Based on these numbers, the Big 4 in gold hold about 71 percent of the total short position held by the Big 8…which is down 2 percentage points from last week’s COT Report.

And, once again, don’t forget that like in silver…a lot of the traders in the Big 4 and Big 8 categories in are Managed Money traders as well — 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 65, 70 and 73 percent respectively of the short positions held by the Big 8. Silver is down 1 percentage point from the previous week’s COT Report, platinum is up another 2 percentage points from a week ago. Palladium is up 3 percentage points from last week’s COT Report.

It was another fairly quiet day as far as stories are concerned, but I do have another Cohen/Batchelor interview today.


Existing Home Sales Drop For 7th Straight Month as Homebuilders Stocks Collapse

With U.S. homebuilder stocks having their worst year since 2007, hope is high that September will show the long-awaited rebound in home sales (despite a soaring mortgage rate).

After ‘stabilizing’ unchanged in August, existing home sales were expected to drop 0.9% MoM in September, but instead August’s data was revised notably lower and September plunged… down 3.4% MoM – the biggest drop since Feb 2016.

Sales fell across all price ranges (not just the low-end as we have seen recently).

Median home price rose 4.2% from last year to $258,100

And you can’t blame supply as it rose notably – 4.4 months supply in Sept. vs. 4.3 in Aug.

Probably nothing. Just keep hiking rates.

This 5-chart Zero Hedge article was posted on their website at 10:07 a.m. EDT on Friday morning — and I thank Brad Robertson for this one.  Another link to it is here.

David Stockman: Why Greenspanian Central Banking is the Mortal Enemy of Capitalist Prosperity

We can thank bubblevision and the Maestro himself for a splendid reminder yesterday that Greenspanian central banking is the greatest menace to capitalist prosperity ever invented. This was made abundantly clear by his pronouncement on CNBC regarding the current labor market:

Tightest labor market I’ve ever seen.” – Greenspan on @CNBC

As an empirical matter, of course, that’s rank nonsense—and is among the stupidest quips the Maestro has ever uttered. That’s because the law of supply and demand dictates that if the labor market is actually the tightest since Greenspan began his career in the 1950s, wage rates should also be rising at the highest rate ever.

In fact, at 2.8% year-year-over-year for September 2018, nominal wage growth (red line) is the lowest it’s been since the late 1960s; and in real terms, the story is even worse.

To wit, between 1955 and 2000, real compensation per hour grew at a 1.75% annual rate—-and that’s the average across seven business cycle, including recession years.

By contrast, we are now at the top of the second longest business expansion in history, and real compensation (purple line) was up just 0.7% over the past 12 months. And that’s virtually the weakest late cycle growth rate on record.

This long commentary by David was posted in the clear on the Zero Hedge website at 7:45 p.m. on Friday evening EDT — and another link to it is here. 

Our Speech From Bermuda — Bill Bonner

I need to apologize for not sticking more closely to the script. I promised to tell you about Calvin Coolidge and his Treasury secretary, Andrew Mellon.

But when you sit down to compose a speech… you never know exactly where it will lead you. You want to react to what has been said so far. And I found Coolidge and Mellon to be rather less important, at least to my point, than I expected.

The short version of the story is that Coolidge cut taxes, still ran a surplus, and paid off a quarter of the national debt.

When the Crash of ’29 came, Coolidge was already out of office, but his Treasury secretary, Mellon, had been picked up by Herbert Hoover, and he brought the spirit of the Coolidge administration with him.

So when the stock market crash came in 1929, Mellon knew what to do: Let it burn itself out. He knew that a limit had been reached – and that the crisis was getting rid of bad debts and bad investments… so that the economy could get back to work on a more solid foundation.

In the 1920 Depression, the feds stayed out of it and the economy quickly recovered. But in 1929, instead of letting the markets correct mistakes, the feds intervened. The result was a long, drawn-out period that we know as the Great Depression.

And today, the feds are intervening more than ever.

This long, but very worthwhile commentary from Bill, put in an appearance on the Internet site very early on Friday morning EDT — and another link to it is here.

Doug Noland: Moscovici and the National Team

The Chinese Bubble is again at the precipice. The last comparable episode, back in late-2015/early-2016, came in different global backdrop. China implemented additional stimulus measures, while the ECB and BOJ boosted QE and the Fed postponed “normalization”. For the most part, rates were near zero globally and bond yields were declining. Pricing pressures were still leaning disinflationary. Global risk markets were neither as inflated nor as fragile as now.

That crisis episode saw the PBOC employ $100s of billions of reserves to stabilize the Chinese currency, in a global backdrop approaching $2.0 TN of annualized central bank liquidity injections. Back then, China was facing a relatively stronger economy and a booming apartment Bubble inclined for “Terminal Phase” excess.

The Chinese have considerably less flexibility today. The burst EM Bubble poses major financial and economic risks for a much more fragile Chinese system. At about $3.0 TN, China’s international reserves are down a (mere) trillion from 2014 highs. And pushing more Credit, investment and speculation into Chinese housing at this “Terminal Phase” is a perilous proposition.

For too long China needed to rein in Credit growth. They made an attempt. Not surprisingly, the results have been unsatisfying. The risk of Bubble implosion has now incited yet another round of stimulus measures. But Bubble risk is indomitable, risk that expands parabolically during the “Terminal Phase.” I believe there are a number of important factors – domestic and international, economic and financial – working against Beijing’s current stabilization efforts. Chinese officials might be at the cusp of finally losing control. The Trump administration provides a most convenient scapegoat.

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

Caravan Puts Trump Legacy on the Line — Patrick Buchanan

Our mainstream media remain consumed with the grisly killing of Washington Post columnist Jamal Khashoggi in the Saudi consulate in Istanbul, and how President Donald Trump will deal with Crown Prince Mohammed bin Salman.

Understandably so, for this is the most riveting murder story since O.J. Simpson and has strategic implications across the Middle East.

Yet far more critical to the future of our civilization is the ongoing invasion of the West from the Third World.

Consider the impact of the decision by Chancellor Angela Merkel in 2015 to throw open Germany’s doors to 1 million refugees from Syria’s civil war.

Last weekend, in a crushing blow to Merkel, the Christian Social Union, the Bavarian sister party of her CDU, won its smallest share of the vote in half a century, 37 percent. Her coalition party, the SPD, saw its share of the Bavarian vote fall to a historic low of less than 10 percent.

This very interesting and worthwhile commentary from Pat, appeared on his Internet site on Thursday sometime — and I thank Larry Galearis for pointing it out.  Another link to it is here.

‘Breakthrough’ and ‘message to U.S.’: France & Germany to join Russia & Turkey in Syria summit

France and Germany will meet Russia and Turkey this October for a four-way summit on Syria, a potentially groundbreaking gathering that could finally see key EU states working together with local players to end the war.

Unlike many of the previous rounds of talks in Astana or Geneva, this meeting, scheduled for October 27 in Istanbul, will gather the countries’ leaders. Turkish President Recep Tayyip Erdogan will host Russian President Vladimir Putin, German Chancellor Angela Merkel and French President Emmanuel Macron.

The meeting will focus on “the situation on the ground, the Idlib agreement and the political process,” according to Erdogan’s spokesman Ibrahim Kalin. It will aim to “harmonize joint efforts for finding a lasting solution” to the devastating seven-year conflict in Syria.

Russia welcomed the participation of Western powers. President Putin is against “isolationism” and is looking for “dialogues with all countries and all leaders,” his spokesman Dmitry Peskov has said.

With German and French participation at the highest level, the meeting has all the makings for a pivotal milestone on the way to a solution for Syria, experts have told RT.

This story was posted on the Internet site at 5:06 p.m. Moscow time on their Friday afternoon, which was 10:06 a.m. in Washington — EDT plus 7 hours.  I thank Swedish reader Patrik Ekdahl for finding it for us — and another link to it is here. 

Tales of the New Cold War: Spy vs Spy vs History — John Batchelor interviews Stephen F. Cohen

Part 1: The news that captured John Batchelor’s attention on Tuesday was the tragic crash south of Kiev involving an American and Ukrainian pilot flying a Su 27 fighter trainer. The crash occurred during a war game exercise with Ukrainian military and Western military forces, and Cohen  is certain that the Russians are furious. But this podcast explores the history of covert operations, and compares the Soviet period Cold War and the New Cold War – what are the differences, if any? Some famous names come up like KGB colonel, Oleg Gordievsky, spy for the West, is mentioned along with his American counterpart, Aldrich Ames who spied for Russia. Both of these operatives are quietly hated by the offended nation. But here Cohen finds it interesting that spy agencies, at least in the US, are much less covert and much more politically active than in Russia. The glaring example is Russiagate and the role the CIA and ostensibly others played in initiating this domestic political turmoil. The Skripal affaire in the U.K. is another example. But Batchelor adds that things have not really changed much from the 1980s, as the KGB was active in its efforts to deny Thatcher her win as Prime Minister of the U.K.

But Cohen also raises the point that, for example, the Skripal affaire could have been a rogue act by the FSB, or even a freelance operation by FSB operatives. These para legal operations also go on in Russia. There are operations to disrupt foreign policies of adversary countries, and even those of their own country. He gives an example involving Khrushchev being hindered by the KGB during his reign in the Soviet Union. Something similar also occurred to Eisenhower during the U2 shoot down incident – initiated by the CIA to stop détente efforts by that president. All of these events leave elements of doubt about who was in charge – including the recent execution by the Saudis of Jamal Khashoggi.

John Batchelor also adds his own example when then Premier Andropov of the Soviet Union launched Operation Ryan to look for signs the US was initiating a nuclear first strike, and the act of even attempting to find these signs (appropriate or not) increased the war risk. And Cohen adds to this that all these acts are murky and highly speculative as parties are aware of the propaganda value and spin is always possible.

Part 2: In this second podcast John Batchelor muses about the problems of analyzing information supplied by intelligence agencies because the goals are often cloudy. The motivation may be budget concerns, patriotic concerns, disinformation, but one cannot be sure of what goals are the real ones. But Cohen again makes the point that the intelligence agencies were clearly operating a political agenda against Trump in the Russiagate scandal. Cohen allows that intelligence agencies operate political agendas against adversary countries, but he also adds that in the US there is now an internal political operation against the president.  His political foes are attempting to isolate him, and hence, given the hugely aggressive provocative nature of these recent war games in Ukraine, he asks whether Trump even knows about this? The Soviets had their own methods of control of their leaders and Cohen makes the point that their last General Secretaries were literally dying men. Cohen concludes that because of Trump being held in a weakened position, rogue operations by the CIA are ongoing.

Even more fascinating Batchelor delivers the fact that the KGB launched a coup against Gorbachev, and he concludes that the intelligence agencies of most countries strengthen against leadership if it is found wanting. Cohen then describes how Washington in the mid 1970s supported the famous bi-partisan Church Investigations of CIA operations because of their rogue activities that were very similar to what is going on today. The reforms implemented did not work, nor do they seem possible today. But are the goals, that are apparently to impose sanctions, accomplishing anything? Cohen says, “no” in the macro sense; the Russian economy has a a large trade surplus, a resulting surplus of foreign exchange – and as a result some of Putin’s political problems concerning pensions now have a solution.  This is a huge positive reality for Russia. It also says that the CIA supported policy of sanctions against Russia are “temper tantrums” and simply do not work.


This is a fascinating podcast and a highly speculative one. The very important point for me was a statement that intelligence agencies become more proactive, more rogue, when the leadership is weak. This begs a discussion of how much the CIA et al are running a Washington government which has increasingly become oligarchical, autocratic and criminal.  The topic cries out for discussion of how much was American domestic intelligence agencies and foreign ones responsible for 9/11? Without doubt there was a lot of involvement. The twin towers attack was a complex operation that changed the world, and led to the ruination of seven or eight M.E. countries – and that process is ongoing. The resulting Afghan War was also instrumental in solidifying a new source of product for the CIA heroin business with an added possibility for new gas/oil pipeline construction in that beleaguered country. (The latter hope is probably forlorn .)  Elsewhere in the M.E. it gave life to Israeli hegemonic ambitions and the risk for a wider world war with Russia in Syria. It also hastened the process of a United States going bankrupt with this new invigorated push for empire. That any of this atrocious war mongering policy is of any benefit for the American people is hugely doubtful, and it is clear that American Intelligence Agencies – captured by the Deep State – are now more powerful sources of evil in the world.

This 2-part audio interview was posted on the Internet site on Tuesday — and I thought it best to wait for Saturday’s column when you would have more time for it over the weekend.  As always, I thank Larry Galearis for his always excellent executive summary and personal comments.  Each part runs for about 20 minutes.  The link to Part 1 is in the headline — and here — and the link to Part 2 is here.

Moody’s Cuts Italy’s Debt Rating to One Notch Above Junk

Five months after putting Italy on downgrade watch, Moody’s has seen enough and cut Italy’s debt rating to Baa3 – one notch above junk status.

Moody’s Investors Service has today downgraded the Government of Italy’s local and foreign-currency issuer ratings to Baa3 from Baa2. The outlook on the rating has been changed to stable, meaning that any downgrade to junk – the worst case scenario – has been taken off the table for the time being.

Moody’s also downgraded to Baa3 from Baa2 the local and foreign-currency senior unsecured bond ratings. The foreign-currency senior unsecured shelf and MTN ratings were downgraded to (P)Baa3 from (P)Baa2. Italy’s local-currency commercial paper rating and foreign-currency other short-term rating were downgraded to P-3/(P)P-3 from P-2/(P)P-2. The rating outlook is stable.

The key drivers for today’s downgrade of Italy’s ratings to Baa3 are as follows:

Italy’s debt, along with the debt of all other western countries, is already junk…regardless of whether the credit agencies call it that or not.  This news story showed up on the Zero Hedge website at 4:45 p.m. EDT on Friday afternoon — and another link to it is here.

Saudi Arabia Says Jamal Khashoggi Was Killed in Consulate Fight

Saudi Arabia said Saturday that Jamal Khashoggi, the dissident Saudi journalist who disappeared more than two weeks ago, died after an argument and fistfight with unidentified men inside the Saudi Consulate in Istanbul.

Eighteen Saudi men have been arrested and are being investigated in the case, Saudi state-run media reported without identifying any of them.

State media also reported that Maj. Gen. Ahmed al-Assiri, the deputy director of Saudi intelligence, and other high-ranking intelligence officials had been dismissed. They did not say whether the men’s firing had a connection to the Khashoggi case or whether they were being investigated for playing a role in it.

Saudi Arabia has offered various, changing explanations for Mr. Khashoggi’s disappearance — initially claiming that he had left the consulate alive.

But international outrage mounted as Turkish officials leaked lurid details from their own investigation suggesting that he was murdered inside the consulate and dismembered by a team of 15 Saudi agents who flew in specifically to kill him.

The case has battered the international reputation of the kingdom and its 33-year-old crown prince, Mohammed bin Salman, who has sought to sell himself to the world as a young reformer shaking off his country’s conservative past. But suspicions that such a complicated foreign operation could not have been launched without at least his tacit approval have driven away many of his staunchest foreign supporters.

Nobody is buying this bulls hit story, either.  This longish, but very interesting news item was posted on The New York Times website on Friday sometime — and I thank Roy Stephens for passing it along.  Another link to it is here.  The Zero Hedge spin on this is headlined “Saudis Admit Khashoggi Killed At Consulate “In Fist-Fight”, King Salman Fires 5 Top Officials” — and I thank Brad Robertson for that one.

What sanctions on Russia and China really mean — The Saker

A crucial Pentagon report on the U.S. defense industrial base and “supply chain resiliency” bluntly accuses China of “military expansion” and “a strategy of economic aggression,” mostly because Beijing is the only source for “a number of chemical products used in munitions and missiles.”

Russia is mentioned only once, but in a crucial paragraph: as a – what else – “threat,” alongside China, for the US defense industry.

The Pentagon, in this report, may not be advocating total war against both Russia and China – as it was interpreted in some quarters. What it does is configure the trade war against China as even more incandescent, while laying bare the true motivations behind the sanctioning of Russia.

The U.S. Department of Commerce has imposed restrictions on 12 Russian corporations that are deemed to be “acting contrary to the national security or foreign policy interests of the U.S.” In practice, this means that American corporations cannot export dual-use products to any of the sanctioned Russian companies.

There are very clear reasons behind these sanctions – and they are not related to national security. It’s all about “free market” competition.

This interesting and worthwhile commentary by the Saker put in an appearance on his website on Thursday sometime — and it’s another offering from Larry Galearis.  Another link to it is here. 

Gold Alert: Central Bank Increases Reserves By 1,000% — Mike Maloney

Join Mike Maloney as he analyzes the recent stunning news from the Hungarian Central Bank – an absolutely massive shift in their gold reserves.

Of course Mike is only about four days late with this news, as it became public very early this week.  This commentary on it, plus a few other things, appear in this 5:40 minute video clip that was posted on his website very early on Friday morning.  I thank Harold Jacobsen for passing it along.


Today’s ‘critter’ is the American black bear…a medium-sized bear native to North America. It is the continent’s smallest and most widely distributed bear species, with a large population estimated to be twice that of all other bear species combined. Along with the brown bear, it is one of only two of the eight modern bear species not considered globally threatened with extinction.  Click to enlarge.



Today’s pop ‘blast from the past’ is one I’ve posted before, but it’s been many many years. They were an American rock band, formed in Niles, Michigan in 1964. This tune was No. 12 on Billboard’s Top 100 hits of 1969 — and one of their biggest hits.  The link to it is here.

Today’s classical ‘blast from the past’ is also one that I haven’t featured for so many years, I’ve forgotten how many.  It’s Sergi Rachmaninoff’s ‘Rhapsody on the a Theme of Paganini’…Op. 43.   It is written for solo piano and symphony orchestra, closely resembling a piano concerto, albeit in a single movement.  He composed it at his villa in Switzerland in the summer of 1934.

The piece is a set of 24 variations on the twenty-fourth and last of Niccolò Paganini’s Caprices for solo violin. With some very notable exceptions, the work is written in the key of A minor.  Here’s the incredibly gifted…and incredibly luscious…Anna Fedorova, doing the honours.  The link is here.

Friday was just another ‘care and maintenance’ sort of day — and with volumes in both silver and gold very light, JPMorgan — and whoever else, had an easy time of it.

Here are the 6-month charts for all of the Big 6 commodities — and there’s not a lot to see on any of them.  The ‘click to enlarge‘ feature only helps with the four precious metal charts.

I think it’s safe to say that we’re now past the point of no return as far as the equity and bond markets are concerned.  The Federal Reserve and the other central banks of the world can only do so much from now on — and whatever actions they take, will only delay the inevitable.

Along with Russia, the U.S. is now bound and determines to bring China to its knees…economically, financially — and politically, if possible. Of course the end result of that will be the fall of the U.S. as well.  Looking back at the lasts few paragraphs from the article by the Saker in the Critical Reads section, he has this to say…

A glaring giveaway that these overlapping sanctions on Russia and China are all about the good old Brzezinski fear of Eurasia being dominated by the emergence of “peer competitors” was recently offered by Wess Mitchell, the U.S. State Department Assistant Secretary at the Bureau of European and Eurasian Affairs – the same post previously held by Victoria “F*ck the EU” Nuland.

This is the original Mitchell testimony to the Senate Foreign Relations Committee. And this is the redacted, sanitized State Department version.

A crucial phrase in the middle of the second paragraph simply disappeared: “It continues to be among the foremost national security interests of the United States to prevent the domination of the Eurasian landmass by hostile powers.”

That’s all the geopolitics Beijing and Moscow need to know. Not that they didn’t know it already.

How successful they will be in bringing China crashing to earth remains to be seen.  But I would suspect with their over-leveraged economy as far as the eye can see, it will be a much easier task than they found with Mother Russia…the most financially solvent nation on Planet Earth.  However, as I just pointed out before the above quote, the U.S. economy and financial system will  also be a casualty of this process.  The rest of the West will follow in short order, with Italy leading the way.

Complicating matters at the moment, is the grotesque murder of Jamal Khashoggi, as it puts the U.S. deep state in a very tough spot.  All the rhetoric fired at Russia and China recently, has been overshadowed by this event in Turkey and the Middle East.  They can hardly risk going soft on Saudi Arabia for this heinous crime, without looking like morons to the rest of the world.  The U.S. deep state has gone full rogue everywhere on Planet Earth already — and giving their 33-year-old crown prince, Mohammed bin Salman, any sort of Mulligan on this would not go down well in any national capital in the world.  When the U.S. chose someone like this as their ‘friend and ally’…the possible blow-back potential went off the charts.  Now this chicken has come home to roost — and in spades.  We certainly haven’t heard the last of this, or the fallout that will spring from it, or that already has.

Through all of this, the prices of the precious metals have remained in JPMorgan’s iron grip — and for how much longer, nobody knows.  But it’s a certainty that if they weren’t interfering in this market 24/7…precious metal prices would have blown sky high long ago.

It’s also a certainty that Putin knows all this as well.  As I’ve already pointed out, Russia’s central bank has purchased 3 million ounces of gold for its own reserves in the last three months alone.  And although Hungary may be a tiny country, the fact that it picked this moment in time to increase its gold reserves by a not inconsequential amount — and hold it inside their own country, means that they know this as well.  One wonders how many other central banks of the world are in the process of doing the same thing?

And not necessarily unrelated, is this manic in/out activity in silver that Ted Butler has been going on about for the last ten years or so.  It reached an absolute fever pitch during the last week, when around 14 million troy ounces was either moved in or out of the six major COMEX depositories on the U.S. east coast. What the hell is that all about?

At some point — and I don’t know when that will come, the precious metals will become Ground Zero in the fight between the U.S., Russia, China and Europe.  With old post World War 2 alliances being tested to their extremes by the U.S., it will certainly be every country and its central bank for itself — and at the end of it, that old Golden adage will surface once again, that “he who has the gold, makes the rules“.

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