Gold and Silver Price Rallies Capped At the London close

27 October 2018 — Saturday


The gold price chopped sideways once trading began at 6:00 p.m. EDT in New York on Thursday evening — and it stayed that way right up until the London open.  It rallied from there, but got capped and turned lower at, or just before, the morning gold fix in London.  It was sold quietly lower until shortly after the COMEX open — and then ticked higher until ten minutes before the London close…10:50 a.m. in New York.  It blasted higher from there, but ran into the usual short seller[s] of last resort right at the 11:00 a.m. EDT London close — and it was quietly sold down until around 12:50 p.m. EDT.  It crawled quietly higher from that juncture until about 3:20 p.m. in the thinly-traded after-hours market — and by the 5:00 p.m. close, even those tiny gains had been taken back.

The low and high ticks in this precious metal were reported by the CME Group as $1,232.50 and $1,246.00 in the December contract — and were barely worth looking up.

Gold was closed in New York on Friday at $1,232.80 spot, up $1.20 on the day.  Net volume was pretty heavy at a bit over 296,500 contracts — and there was only 9,370 contracts worth of roll-over/switch volume on top of that.

The silver price chopped unsteadily lower until around 12:30 p.m. China Standard Time on their Friday afternoon — and began to chop equally quietly and unsteadily into the London open. From there it rallied and was subsequently capped at the same time as gold…at, or shortly after, the morning gold fix in London.  It was sold down to its low tick of the day around 8:45 a.m. in New York — and after that its price path was very similar to gold’s.  The high tick in silver was also capped at the 11 a.m. EDT London close.

The low and high ticks were recorded as $14.595 and $14.795 in the December contract.

Silver was closed yesterday at $14.655 spot, up only 4.5 cents on the day.  Net volume was heavy at just under 80,500 contracts — and there was 3,558 contracts worth of roll-over/switch volume in this precious metal.

For all intents and purposes, the platinum price followed gold and silver prices closely, with the only real difference being that their high ticks of the day in both Zurich and in New York came much later than the highs in both silver and gold.  But its general price pattern was the same.  Platinum was closed in New York on Friday at $831 spot, up 6 dollars on the day.

Palladium didn’t do much of anything during Far East trading on their Friday — and the real action didn’t get started until after the Zurich open.  It was sold down a bunch of dollars during the first two hours of the Zurich trading session, but began to head higher…with obvious interference…shortly after the COMEX open.  That rally did not go unopposed, but it traded generally higher until 2 p.m. in the thinly-traded after-hours market — and then traded flat into the 5:00 p.m. close from there.  Palladium finished the Friday session in New York at $1,098 spot, up 5 bucks from Thursday.

The dollar index closed very late on Thursday afternoon in New York at 96.61 — and didn’t do much of anything in Far East trading on their Friday.  That all changed at 8:15 a.m. in London, as the index began to chop higher from that point.  The 96.86 high tick came around 12:35 p.m. BST — and it was all down hill from there until 12:25 p.m. in New York.  It rallied a bunch of basis points at that juncture until 1 p.m. EDT — and then sank quietly lower to its 96.29 low tick of the day, which came at 4 p.m.  It was obviously ‘saved’ at that time — and it jumped a bit higher into the close from there.  The dollar index finished the day at 96.41…down 20 basis points from Thursday.

And here’s the 6-month U.S. dollar index — and the delta between its close…96.13…and the close on the intraday chart above, was 28 basis points.

The gold stocks rallied until minutes after 11 a.m. in New York trading — and were up 4 percent at that point.  But at precisely noon EDT, they headed sharply lower until 1 p.m. — and then inched lower into the 4:00 p.m. close of trading from there.  The HUI closed up only 0.82 percent.

The silver equities chopped around unchanged until about 10:20 a.m. EDT — and after that, their price paths were almost the same as the gold shares.  At their high ticks…noon in New York trading…they were up 3 percent.  But that didn’t last, of course — and by the time trading ended, Nick Laird’s Intraday Silver Sentiment/Silver 7 Index finished up only 0.24 percent.  Click to enlarge if necessary.

And here’s Nick’s 1-year Silver 7/Silver Sentiment Index chart.  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 there were tiny gains in the precious metals, except for  platinum during the reporting week.  But the equities of both types got crushed — and that was mostly due to the fact that there was most likely big institutional selling last week, particularly on Thursday, when most of this week’s losses occurred.  It’s ugly.  Click to enlarge.

Of course the month-to-date looks better, but the silver equities are now down on the month — and the gold equities have outperformed.  I don’t expect that situation to last, because the silver price has not been allowed to rally as much as gold — and it certainly shows up in their associated stock prices.  Click to enlarge.

The year-to-date chart continues to be [mostly] a sea of red — and it’s clear from this chart that the silver equities are ‘outpeforming’ 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.  However, this past week was certainly a set-back for their respective equities.  But it’s still 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 14 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  In gold, ADM issued 10 contracts — and Advantage the other 4…all from their respective client accounts.  The sole long/stopper was the CME Group — and they immediately reissued them as 140 of the 10 oz. gold mini contracts.  ADM stopped 138 of them — and International F.C. Stone picked up the other 2.  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 10 contracts, leaving just 14 left — and those are out for delivery on Tuesday, as per the Daily Delivery Report above.  Thursday’s Daily Delivery Report showed that 10 gold contracts were posted for delivery on Monday…so October deliveries in gold are done as of the close of business on Tuesday.  Silver o.i. in October remained unchanged at 2 contracts open.  Thursday’s Daily Delivery Report showed that zero silver contracts were posted for delivery on Monday.  One has to wonder as to who the hold-outs are as short/issuers on those last two silver contracts.  But whoever they are, they only have three more business days left before they have to show their faces.

And, for the second day in a row, there were no reported changes in either GLD or SLV.

The folks over at the Internet site updated their short position data for both SLV and GLDas of the close of trading on Monday, October 15 — and they reported decent-sized increases in the short position in both precious metals.  In silver, the short position rose from 6,577,000 shares/troy ounces, up to 8,321,800 troy ounces…an increase of 26.5 percent.  In GLD, the short position rose from 1,273,730 troy ounces, up to 1,529,190 troy ounces…an increase of 20.1 percent.

There was no sales report from the U.S. Mint once again.

Month-to-date the mint has sold 19,000 troy ounces of gold eagles — 5,000 one-ounce 24K gold buffaloes — and 1,330,000 silver eagles.  These numbers haven’t changed much since a week ago.

There was no in/out activity in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.

There was certainly more activity in silver, as one truck load…607,324 was received…and that all went into JPMorgan — and 1,189,892 troy ounces were shipped out.  In the ‘out’ category, one very large truck load…661,604 troy ounces…departed CNT — and a smallish truck load…524,340 troy ounces…departed Malca-Amit USA.  The remaining 3,947 troy ounces was shipped out of Delaware.  The link to all this activity is here.

Ted pointed out on the phone yesterday that JPMorgan has now taken delivery of 9 million troy ounces of the approximately 10.6 million troy ounces that they stopped in September for its own account, so they have about three more truck loads to take delivery of before they’re done.

And this latest silver deposit into JPMorgan’s vault puts them at a new record high of course…148.5 million troy ounces…and here’s the chart from Nick showing their inventory level compared to the other Big 5 silver depositories.  Click to enlarge.

There was a decent amount of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They reported receiving exactly 1,000 of them, but shipped out 6,075.  All this action was at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.

The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday did, as Ted and I expected, not make for happy reading…particularly in silver.

In silver, the commercial net short position increased by a chunky 8,438 contracts, or 42.2 million troy ounces of paper silver.  I would suspect that most of this increase came on Tuesday, the cut-off date for Friday’s COT Report, when silver spiked higher.

They arrived at that number by reducing their long position by 1,043 contracts — and they also increased their short position by a chunky 7,395 contracts — and it’s the sum of those two numbers that represents the change for the reporting week.

Despite the increases in the Commercial net short position in silver recently, 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 — and then some, that made up for the changes during the reporting week.  They added 4,819 long contracts, plus they covered 7,555 short contracts…all at huge loses.  It’s the sum of those two numbers…12,374 contracts…that made up their change for the reporting week.  The difference between that number — and the Commercial net short position…12,374 minus 8,438 equals 3,936 contracts…was made up by the traders in the other two categories…the ‘Other Reportables’ — and the ‘Nonreportable’/small traders.  They all sold long positions — and added to their short positions as well.  Here’s the snip from the Disaggregated COT Report so you can see these changes for yourself.  Click to enlarge.

The Commercial net short position is now up to 13,262 COMEX contracts, or 66.3 million troy ounces.  This is still a very low number on a historical basis but, like you, I’m certainly not happy about the trend.

Ted puts JPMorgan’s short position at 10,000 contracts — and maybe a bit more, as he said that his 3,000 contract estimate in last week’s COT Report may have been on the low side.  He also said that he was perplexed why JPMorgan would show up as short seller of first resort, as they’ve never entered the silver market on the short side at such a low price before — and in size — and he was wondering what was going on under the hood that no one could see.  I’m sure he’ll have plenty to say on this subject in his weekly review this afternoon.

Ted’s other comment was about how badly these CTAs [Commodity Trading Advisors] were getting killed…not only in silver, but other commodities as well…losing billions recently.  These Managed Money traders are still net short in silver, so they have billion or tens of billions more unrealized loses still to come on top of what they’ve already booked.  I’m sure he’ll have something to say about that later today as well.

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

The set-up in silver for a price rally continues to be very bullish, but the fact that JPMorgan is now actively shorting silver at such a low price level, gives one pause — and Ted speculated on what it might mean in our discussion yesterday — and I know that he’ll “sleep on it” before putting anything in writing.

In gold, the commercial net short position increased by a further 14,524 contracts, or 1.45 million troy ounces of paper gold.  This number was well within Ted’s ‘horse shoes, hand grenades and atomic bombs’ estimate.

They arrived at that number by selling 2,729 long contracts, plus they added another 11,795 contracts to their short position — and it’s the sum of those two numbers that represents their change for the reporting week.

And, as in silver, despite the increases in the Commercial net short position in gold recently, 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 mostly Managed Money traders that were responsible for the weekly change, as they added 4,035 long contracts, plus they reduced their short position by 7,231 contracts — and it’s the sum of those two numbers…11,266 contracts…that represents their change for the reporting week.  The difference between that number — and the change in the commercial net short position…14,524 minus 11,266 equals 3,258 contracts…and, as always, this difference was made up by the traders in the other two categories, as they both reduced their short positions on a net basis during the reporting week.  Here’s the snip from the Disaggregated COT Report showing this week’s changes.  Click to enlarge.

The commercial net short position in gold is now up to 46,520 COMEX contracts, or 4.65 million troy ounces of gold.  Like for silver, this is…on an historical basis…a very low number.  But also like for silver, I’m not amused by the trend.

Here’s the 3-year COT chart for silver, updated with Friday’s data.  Click to enlarge.

My comments on the gold COT Report is the same as it was for silver…still an historically low commercial net short position — and it’s way too soon to assume anything.

In palladium, the Managed Money traders continue to add to their long positions — and cover short positions.  This precious metal would be a lot higher in price if its big rallies didn’t get continually capped on any serious breakout or price spike.  It has been obvious for several days now that sellers unknown are trying to turn the palladium price lower.  There was a slight reduction in the net long position of the Managed Money traders in platinum, but it wasn’t a material amount.  In copper, the Managed Money traders reduced their long position by around 3,000 contracts during the reporting week, which was not a material amount, either.

It’s still painfully obvious that ‘da boyz’…principally JPMorgan — and maybe Citigroup to a certain extent…are still keeping gold and silver prices on a very short leash — and it’s still way, way too soon to read anything into the last four weeks worth of COT reports, as despite all the deterioration we’ve seen, the set-up for a major move higher is very much in place…if JPMorgan wishes it, or is told to stand aside.  So all is not lost by any stretch of the imagination.

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 110 days of world silver production, up 10 days from what they were short in last week’s report — and the ‘5 through 8’ large traders are short an additional 50 days of world silver production, down 3 days from last week’s report—for a total of 160 days held short, which is five months and change of world silver production, or about 373.4 million troy ounces of paper silver held short by the Big 8. [In last week’s COT Report the Big 8 were short 153 days of world silver production.]

The Big 8 commercial traders are short 37.5 percent of the entire open interest in silver in the COMEX futures market, which is up from the 35.8 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 over 40 percent. In gold, it’s 36.2 percent of the total COMEX open interest that the Big 8 are short, up a bit from the 34.9 percent they were short in last week’s report — and something around 40 percent once the market-neutral spread trades are subtracted out.

I would now suspect that JPMorgan’s short position in silver would put in back in the Big ‘5 through 8’ large trader category.

In gold, the Big 4 are short 41 days of world gold production, which is unchanged from what they were short last week — and the ‘5 through 8’ are short another 19 days of world production, which is up 2 days from what they were short the prior week, for a total of 60 days of world gold production held short by the Big 8 — which is up 2 days from what they were short in last week’s report. Based on these numbers, the Big 4 in gold hold about 68 percent of the total short position held by the Big 8…which is down 3 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 69, 69 and 76 percent respectively of the short positions held by the Big 8. Silver is up 4 percentage points from the previous week’s COT Report, platinum is up another 1 percentage point from a week ago. Palladium is up 3 percentage points from last week’s COT Report.

I don’t have all that much in the way of stories for you today, but I do have another Cohen/Batchelor interview for those who follow him.


Global Bloodbath: World Stocks Puke Over $8 Trillion as U.S. Markets Collapse

Aaaaaand, it’s gone!

Global capital markets are down five weeks in a row, losing just under $9 trillion – the biggest, fastest drop since Lehman… (around $8.2 trillion from global equity markets)

It’s been ugly:

Dow down 9% from record high (down 4 of last 5 weeks)
S&P down 10.1% from record high (down 4 of last 5 weeks)
Nasdaq down 13% from record high (down 4 weeks in a row)
Dow Transports down 15.2% from record high (down 6 weeks in a row)
Small Caps down 15.8% from record high (down 6 weeks in a row)
With all the major U.S. equity indices languishing below their 200DMA…

This chart-filled story from Zero Hedge put in an appearance on their Internet site at 4:04 p.m. on Friday afternoon EDT — and I thank Brad Robertson for sharing it with us.  Another link to it is here.

Doug Noland: “Whatever They Want” Coming Home to Roost

It’s ridiculous to bestow a small group of global central bankers the power to do Whatever They Want in the name of delivering on some arbitrary index level of consumer price inflation. To create $14 TN of “money” and unleash it upon global securities markets is undoubtedly history’s most reckless monetary mismanagement.

Inevitable Blowback has commenced. “The dog ate my homework.” “The inflation mandate made us do it.” With a full year remaining in his term, Draghi won’t be sharing Bernanke’s good fortune. This whole historic monetary experiment will be unraveling while he’s still on watch. But, then again, the Trump administration already has its scapegoat. Perhaps the whole world will blame Chairman Powell – or the man that appointed him.

Following a terrifying trajectory, things somehow turn more disturbing by the week. Political travesty has degenerated into a surreal quagmire. And to see this degree of division and hostility at this cycle’s boom phase should have us all thinking carefully about what the future holds. As a nation, we are alarmingly unprepared. And it’s back to this same issue that’s troubled me for a number of years now.

Bubbles are always mechanisms of wealth redistribution and destruction. Akin to central banking, they can inflict immeasurable harm and somehow deflect culpability. As we’ve already witnessed as a society, they wreak subtle – and, later, more overt – havoc. And the current astounding Bubble has been on such an unprecedented global scale. Harsh geopolitical fallout is unavoidable. For me, it’s been scary for a while. It’s just more palpable now. We’ll see if the midterms can provide an impetus for a market rally. If not, this has all the appearances of something that could turn sour quickly.

This must read commentary by Doug was posted on his Internet site in the very wee hours of Saturday morning EDT — and another link to it is here.

How a Chinese Billionaire Was Erased — Bill Bonner

 As expected, the Dow bounced back yesterday.

The index was up 400 points. But this morning opened with another down draft.

Maybe the bubble and the pin have found each other. Maybe they haven’t. TBD…

Also as expected, the president of the United States is setting the Fed up to be the fall guy for when the crash does come.

The “King of Debt” has more to fear from a big sell-off than anyone. His personal fortune was built on low interest rates. As real estate prices in New York doubled in real terms over the last 20 years, developers like Trump used cheap, borrowed money to leverage that gain.

The Donald’s political career was also built on EZ money.

If the feds had not used fake money and fake interest rates to rip off the common man, the masses wouldn’t have lost faith in their elite Democrat and Republican leaders.

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

British ‘Cartel’ Traders Acquitted of Rigging Currency Market

Three British traders were acquitted of using an online chatroom to fix prices in the $5.1 trillion-a-day foreign exchange market, a blow to global efforts to police the industry.

A federal jury in New York rejected the U.S. claim that Richard Usher, Rohan Ramchandani and Chris Ashton, a group known as “The Cartel,” rigged the market from 2007 to 2013 by coordinating trades and manipulating prices on the spot exchange rate for euros and U.S. dollars.

The three men wept in relief and hugged supporters after the verdict was handed down Friday. Jurors deliberated for about half a day before rejecting the prosecution’s case against them.

This is a signal to all foreign exchange traders that they can go back to business as usual,” Mayra Rodriguez Valladares, a former foreign-exchange analyst for the New York Fed, said of the acquittal. “Not holding traders who manipulate rates accountable devalues the integrity of the foreign exchange market.”

This Bloomberg story, filed from London, was posted on their Internet site at 10:24 a.m. BST on Friday morning…5:24 a.m. EDT — and was updated about three hours later.  I found it embedded in a GATA dispatch — and another link to it is here.

Tales of the New Cold War: Nuke Arms Race with Russia? — John Batchelor interviews Stephen F. Cohen

Part 1:  The news continues to be grave with John Batchelor’s introduction as he lists National Security Advisor, John Bolton’s statements on Monday about not extending the START, (Arms Control Reduction Treaty) and also includes Trump’s declaration about ending the INF treaty (Intermediate Range Nuclear Forces Treaty). He then describes the danger this represents during a nuclear attack, as intermediate range missiles may only give 6 minutes warning for European targets and Russian ones. The format for this show uses a new book by Stephen F. Cohen, War with Russia?From Putin to Ukraine, from Trump to Russiagate that represents Stephen Cohen’s edited versions of five years of podcasts from the John Batchelor Show about the New Cold War. And the theme of the book is about five years of failure in relations between Russia and the West. The targeted audience is the general reader, not the historian, and Cohen ends his commentary about the book by hinting that the book is a discussion of these times, a discussion that never happened in the public arena and should have.

Batchelor then reminisces about the early stages of the Ukraine Civil War, the “annexation” of Crimea, and the resulting sanctions from the West, Minsk1 and Minsk2, the increasing ferocity against the breakaway provinces, and how the New Cold War was only accepted as new in the West when Russia entered Syria. When the US entered that fray, this added, states Cohen, an “international affair” to that proxy war that started the rest of the world thinking in terms of Cold Wars. NATO involvement followed, stated Batchelor, as the propaganda (fear) was exploited about Russia and its “misdeeds” in Ukraine, and this international or global element continues to expand with the recent military exercises with Russia and China. Cohen also adds to the theme with the mention of US support for the Ukrainian Maidan and the cozy relationship with NATO elements with the Nazi elements in that country.

Part 2: Batchelor returns to current events in this half of the podcasts with the topic of the loss of the INF Treaty and what is behind it. Cohen describes it as “one of the truly historical highlights of the Reagan/Gorbachev grand détente”, and part of President Reagan’s legacy now to be ended by Trump. These shorter ranged missiles are very dangerous because of their short flight times and their low detection profiles. This aspect can lead to false alarms. Nevertheless Cohen describes the INF abolition of these missiles as both historical and precedence setting, and showed that “abolitionism” of these weapons was possible. Trump has ended this hope. His reason, China was not a signatory to the treaty and hence the US would leave the agreement (and Russia was allegedly breaking it as well. .L) But Cohen states that the US has broken the treaty several times and lists the loss of the ABM Treaty as a factor in that anti-ballistic missiles can also be used as offensive systems. These too are now on Russia’s borders. The retirement of these treaties and thus the end of abolitionism in Batchelor’s opinion is inevitable, a kind of “Murphy’s Law” is in operation, and the end of START means a new beginning is now necessary. Cohen maintains that very much more danger exists today as the result. “The START treaty is due to be extended by 2021,” says Batchelor , and now START is in jeopardy.

Cohen then lists who benefits politically (and financially) from the endings of these treaties: the Military Industrial Complexes of both countries, and politicians like John McCain, John Bolton and the Clinton gang. In Moscow the war party also gains as Washington steadily provides proof that the US is not capable of negotiating in good faith, and Trump seems to be blind to this according to Cohen. However, there is US domestic resistance present in Washington. There are also American senators and others who also do not want to see these treaties abandoned. And as for the intermediate ranged missiles themselves, there is some doubt that Europe and other US allies would welcome their presence at all.


The problem that Washington has with negotiating treaties, in my humble opinion, can be found, in the lack of worldly outlook of civilians elected to office. Politicians are usually geopolitical amateurs (Cohen describes them as “American centric”) and know comparatively little of the outside world. The worldliness,  are found with the professionals of CIA analysts and similar people working in the Pentagon, however, civilian politicians also determine policy and negotiate with foreign countries to the detriment of results. During the Vietnam War, for example, the American soldier would refer to his time to rotate back to the US as “returning to the world” and more than a few ended up with more confusion around their activities than understandings. It is not a matter of xenophobia, but rather a cultural disinterest in other countries that still leaves room for, or even allows hegemonic policies. However, one can really praise the profound enlightenment of a President Reagan who found himself trying to do away with nuclear weapons, but whose other activities also included naivety with the invasion of Grenada and Panama, supporting a civil war in Nicaragua, and mining Soviet ships in a Nicaraguan harbour. Trump has similar lack of vision in his relationships with competitor countries although his negotiating style, or the incompetence of his advisers may be to blame. In regards to doing away with the INF treaty, Trump may be artificially creating a negotiating position as a ploy, or new bargaining chip to use in a new summit with Putin. However, the threat of withdrawing from this treaty flies in the face of his stated position to “get along with Russia”, and we have seen him do something similar with his opening discussions with the North Koreans.

This 2-part audio interview, with each part running about twenty minutes, was posted on the Internet site on Tuesday sometime — and I thought it best to leave if for my Saturday column.  As always, I thank Larry Galearis for the above executive summary, plus his own insight in the last paragraph.  The link to Part 1 is in the headline — and here.  The link to Part 2 is here.

Who profits from the end of the mid-range nuclear treaty? — Pepe Escobar

U.S. president Ronald Reagan and Mikhail Gorbachev, secretary-general of the USSR, signed the Intermediate-Range Nuclear Forces Treaty (INF) in 1987.

The Arms Control Association was extremely pleased. “The treaty marked the first time the superpowers had agreed to reduce their nuclear arsenals, eliminate an entire category of nuclear weapons, and utilize extensive on-site inspections for verification.”

Three decades later, the Trump administration wants to unilaterally pull out of the INF Treaty.

Earlier this week President Trump sent his national security adviser John Bolton to officially break the news to Russian President Vladimir Putin in Moscow.

As they were discussing extremely serious issues such as implications of a dissolving INF Treaty, the perpetuation of anti-Russia sanctions, the risk of not extending a new START Treaty and the deployment, in Putin’s words, of “some elements of the missile shield in outer space”, the Russian President got into, well, arrows and olives:

As I recall, there is a bald eagle pictured on the U.S. coat of arms: it holds 13 arrows in one talon and an olive branch in the other as a symbol of peaceful policy: a branch with 13 olives. My question: has your eagle already eaten all the olives leaving only the arrows?

Bolton’s response: “I didn’t bring any olives.”

This worthwhile commentary from Pepe was posted on his website on Friday sometime — and I thank Larry Galearis for pointing it out.  Another link to it is here.

China-Japan sign three-year FX swap deal to strengthen financial stability, business activity

Japan and China on Friday signed a currency swap arrangement of up to $30 billion – the largest such bilateral deal concluded by Tokyo – to strengthen financial stability and spur business activity in both countries, the Bank of Japan said.

The arrangement, which takes effect on Friday and lasts until Oct. 25, 2021, will allow the exchange of local currencies between the two central banks for up to 200 billion yuan or 3.4 trillion yen ($30 billion), the BOJ said.

Earlier in the day, China and Japan signed a broad range of agreements on strengthening bilateral ties, pledging to step up cooperation in areas from finance and trade to innovation and securities listings.

The agreements were signed during Japanese Prime Minister Shinzo Abe’s visit to Beijing for the first formal Sino-Japanese summit in seven years, as Asia’s two biggest economies looked to further build relations and trust against a backdrop of trade friction with the United States.

This Reuters news story, filed from Tokyo, appeared on their website at 10:23 p.m. on Thursday night EDT — and I found it on the Internet site.  Another link to it is here. 

Platinum’s discount to palladium sparking thoughts of substitution — Johnson Matthey

Platinum’s drop below palladium prices for the first time in 16 years is leading some automakers to consider reintroducing platinum to the mix of metals used in gasoline autocatalysts, Johnson Matthey’s general manager for market research Peter Duncan told the Reuters Global Gold Forum on Thursday.

Following are edited excerpts from the conversation:

Q: To what extent are automakers and autocatalyst manufacturers in the position to switch between catalyst loading composition based on palladium-platinum price parity?

A: I would say that it is very early days for platinum substitution back into gasoline catalysts. The problem is that it is very expensive and time-consuming to change catalyst designs, so original equipment manufacturers (OEMs) need to be very sure that by the time they have done it was still worth doing. So, they will want to see the price of palladium above that of platinum for some time.

However, some OEMs are now looking at dual “homologation” i.e. testing two catalyst systems, one with platinum, one without. I see this happening more over time if the palladium price remains above the platinum price.

Q: How far do you see the move away from diesel cars in Europe cutting diesel autocatalyst demand?

This interesting Q&A session appeared in a Reuters story back on October 12 — and it was picked up by Kitco on that date — and I thank Australian reader Garry Robinson for sending it our way.  Another link to it is here.

Gold to replace U.S. Treasuries as the ‘ultimate risk-off asset’ – strategist

A report by financial services organization INTL FCStone has measured gold’s ability to act as a hedge against stock market volatility, which “varies from decade to decade.”

According to the report, if the U.S. Federal Reserve continues to steadily raise interest rates, gold will replace US Treasuries as a safe-haven asset.“If, as I expect, rates will go higher for longer, much higher for much longer, gold will replace Treasuries as the ultimate risk-off asset, and investors should own it as an insurance against equity market risk,” said INTL FCStone global macro strategist Vincent Deluard. He noted that the precious metal tended to rally during “big down weeks for the stock market between 1985 and 1995, when the memories of the great inflation were still fresh.”

This gold-related story was posted on the Internet site at 2:44 p.m. Moscow time on their Thursday afternoon, which was 9:44 a.m. in New York — EDT plus 7 hours.  I thank Swedish reader Patrik Ekdahl for bringing it to our attention — and another link to it is here.


Today’s ‘critter’ is the chevrotain…or mouse deer.  Chevrotain is a French word that means “little goat”.   When I was looking up photos of the deer mouse for Friday’s column, this animal kept popping up, as the other name for the chevrotain, is mouse deer.  The extant species are found in forests in South and Southeast Asia, with a single species in the rainforests of Central and West Africa.  Chevrotains are the smallest hoofed mammals in the world. The Asian species weigh between 0.7 and 8.0 kg (1.5 and 17.6 lb), while the African chevrotain is considerably larger at 7–16 kg (15–35 lb).  Click to enlarge.


Today’s pop ‘blast from the past’ is one that I’ve feature before, but it’s been a number of years, so it’s worth a revist.  It was written and performed by American country pop artist “Buck Wheat” Stevenson back in 1973…46 years ago, but who’s counting.  It was later covered by Brooks and Dunn…but the original is still the best.  The only issue I have with this tune is that it’s way too short.  The link is here.

Today’s classical ‘blast from the past’ is the Concerto for Two Violins in D minor, BWV 1043, also known as the Double Violin Concerto…one of the most famous works by Johann Sebastian Bach — and considered among the best examples of the work of the late Baroque period.  Bach may have written the concerto between 1717 and 1723 when he was the Kapellmeister at the court of Anhalt-Köthen, although the jury is still out on that.

Here’s Yehudi Menuhin and David Oistrakh as soloists.  I’m listening to it on my laptop, so I can’t vouch for the audio quality.  This video recording is from the 1958, so it’s in black and white as well, but the performance is superb — and doesn’t get any better than this.  The link to it is here.

It was yet another day where JPMorgan et al were not going to allow precious metal prices, particularly gold and silver, to break higher, despite what the currency and stock markets were doing on Friday.  There were certainly there with all the COMEX paper necessary to cap, then sell silver and gold lower on their respective price spikes going into the 11:00 a.m. EDT London close.

But will they continue to do that as time goes along, you ask?  The answer is…I don’t know — and the answer is not knowable by anyone.  But I’m sure Jamie Dimon knows.  Despite the deterioration in the COMEX futures market over the last few weeks, the set-up is still hugely bullish in both precious metals on an historical basis, so it’s still too soon to speculate on anything at the moment.  Some readers are now complaining that the blue pills are no longer working for them — and my answer to them was just to double the dosage and lay down until any feelings of anxiety go away.

Here are the 6-month charts for the Big 6 commodities once again and, for the second day in a row, there’s not a lot to see.  The ‘click to enlarge‘ feature only helps with the four precious metal charts.

Well, dear reader, the bull market in equities — and most likely in bonds — is done for.  All the King’s men aren’t going to able to put this market back together again.  The die is cast — and it just remains to be seen over how long a time period it takes for this unfolding bear market for the ages to breath its last.  I turned 70 earlier this month — and only if I’m very lucky, will I live long enough to see the bottom of this now unstoppable economic, financial and monetary train wreck.

I’ve been reading a lot of Jim Grant’s daily commentaries…courtesy of a subscriber who shall remain nameless, but who I thank profusely…and he is now counting the days, as the internal structure of the equity markets is now beyond repair — and he’s waiting quietly for the end to arrive.

Unless the powers-that-be, which certainly includes all the world’s central banks — and their respective Plunge Protection Teams, are prepared to print unlimited money to buy up everything in sight, the implosion will be unstoppable.

But somewhere during this process the world will rediscover precious metals in a big way, as JPMorgan et al won’t be able to stop it at some point.  They’re big, but they’re not as big as the whole market  — and the possibility exists that Russia will give this gold and silver bull market a helping hand as well.  Both they and China have long been aware of how commodity prices in general — and the precious metal prices in particular, are being managed by the New York bullion banks…along with their co-conspirators at the CME Group and the CFTC.  It is, as has been pointed out before, a grand conspiracy to keep the developing/commodity producing nations in their place…a sort of Imperialism by COMEX paper — and at some point it will end.  But it will not die a natural death, as someone will have to kill it.  I’m just waiting for the event/circumstance that precipitates it.

As I said earlier, the last four weeks or so have proved to be trying times from a precious metal price — and precious metal equity perspective.  But that time is equivalent to just one chapter in a novel that is now unfolding in real time before our eyes.  There’s still lots more novel to go.  This price management scheme, which began back in 1973 when B.W. Stevenson penned today’s pop ‘blast from the past’ will not end quietly.  But until it does, we have to relearn the meaning of patience until our time in the sun arrives — and it will.

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