09 February 2019 — Saturday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price crawled quietly lower starting shortly after trading began at 6:00 p.m. EST in New York on Thursday evening — and the low of the day was set shortly after 3 p.m. China Standard Time on their Friday afternoon. It began to edge higher from there, with the high tick of the day…such as it was…coming at 1 p.m. in New York. It was sold a dollar and change lower by the 1:30 p.m. EST COMEX close — and didn’t do much after that.
Once again, the low and high ticks aren’t worth looking up.
Gold was closed on Friday in New York at $1,314.00 spot, up $4.20 on the day. Net volume was fumes and vapours once again at a bit over 125,000 contracts — and there was around 11,200 contracts worth of roll-over/switch volume on top of that.
The silver price followed the same general price pattern in Far East trading on their Friday — and the low tick in this precious metal came very shortly before the London open. A rather robust rally began at that point — and the price was capped and turned lower about twenty minutes after the COMEX open in New York. It was sold back to the unchanged mark by the London close — and about an hour after that it began to head higher until a few minutes after 1 p.m. EST. It didn’t do much after that.
The low and high ticks were reported by the CME Group as $15.65 and $15.86 in the March contract.
Silver was closed on Friday in New York at $15.805 spot, up 9 cents on the day. Net volume was exceedingly quiet at about 42,200 contracts — and there was around 15,700 contracts worth of roll-over/switch volume in this precious metal.
The platinum price began to creep lower starting around 10 a.m. China Standard Time on their Friday morning — and it was down five bucks by the Zurich open. About two hours after that, it began to edged quietly and unsteadily higher — and that lasted until 1 p.m. in New York. It traded flat into the 5:00 p.m. EST close from there. Platinum closed up 2 dollars on the day at $798 spot.
The palladium price chopped quietly sideways until Zurich opened — and then had a huge spike higher…which has now been erased from the Kitco chart below. From that juncture it chopped very unevenly sideways until Zurich closed — and then crept higher until around 3 p.m. in the thinly-traded after-hours market. It didn’t do much after that. Palladium finished the Friday session in New York at $1,386 spot, up 21 bucks on the day…but certainly would have closed well above $1,400 spot, if allowed. Kitco recorded the spot high tick at $1,412.
The dollar index closed very late on Thursday afternoon in New York at 96.51 — and gapped up 10 basis points the moment that trading began at 7:45 p.m. EST on Thursday evening, which was 8:45 a.m. in Shanghai on their Friday morning. From there, it didn’t do much of anything until a minute or so before the London open. It began to head quietly higher from that juncture, with the 96.69 high tick of the Friday session coming at 9:45 a.m. GMT. It began to fade from that point — and it fell down to its 96.45 low around 8:38 a.m. in New York. I suspect that the usual ‘gentle hands’ appeared once again — and it ‘rallied’ unsteadily higher until ten minutes after the COMEX close. It then drifted sideways until trading ended at 5:25 p.m. EST. The dollar index finished the Friday session in New York at 96.64…up 13 basis points from its close on Thursday.
Here’s the DXY chart from Bloomberg once again. Click to enlarge.
And here’s the 6-month U.S. dollar index chart courtesy of the folks over at stockcharts.com — and the delta between its close…96.42…and the close on the DXY chart above, was 22 basis points on Friday. Click to enlarge.
The gold stocks began to rally the moment that the equity markets opened in New York at 9:30 a.m. EST on Friday morning. They chopped unevenly higher until exactly 3:00 p.m. — and sold off a bit staring about twenty-five minutes later. The HUI finished up 1.47 percent.
It was much the same for the silver equities, except the Friday rally ended a few minutes before 3 p.m. in New York trading — and they also sold off a bit into the close from there. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 1.37 percent. Click to enlarge if necessary.
Here’s a longer-term Silver Sentiment/Silver 7 Index chart from Nick. It shows you how far we’ve progressed on the current 4-month long rally — and just how far we have to go to get back to the old highs in mid-2016. 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 as you can see from the chart below, the only price activity was in platinum and palladium. Silver and gold — and their respective equities, did nothing during the week that was. Click to enlarge.
Here is the month-to-date chart — and since this chart has only one extra day added to it…Friday, February 1…it doesn’t look much different than the weekly chart. Click to enlarge.
The year-to-date chart still shows green across the board — and it should also be noted that the silver equities continue to outperform their golden brethren, especially when you compare them to the gains of their respective underlying precious metals. Click to enlarge.
With only five weeks gone out of the year, it’s hard to tell how the year will turn out. The precious metal market feels a lot different now, but that’s just the way it appears at the moment. However, i am optimistic. The DoJ is still lurking about over at JPMorgan — and in case you’ve forgotten, the DoJ sentencing date of that former JPMorgan precious metals trader has now been pushed back to June 2019.
The CME Daily Delivery Report showed that 55 gold and 7 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.
In gold, the two largest short/issuers were Advantage and ABN Amro with 22 and 20 contracts out of their respective client accounts. The largest of the five long/stoppers was JPMorgan, picking up 20 contracts for its own account, plus 5 for its client account. Tied for second spot were Advantage, with 12 contracts for its client account — and Citigroup, with 12 contracts for its in-house/proprietary trading account.
In silver, the sole short/issuer was ADM. There were six long/stoppers in total. ADM picked up 2 contracts — and all the rest picked up 1 contract each.
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 February fell by 200 contracts, leaving 689 still open, minus the 55 contracts mentioned a few paragraphs ago. Thursday’s Daily Delivery Report showed that 191 gold contracts were posted for delivery on Monday, so that means that 200-191=9 more gold contracts disappeared from the February delivery month. Silver o.i. in February declined by 6 contracts, leaving 8 still open, minus the 7 contracts mentioned a few paragraphs ago. Thursday’s Daily Delivery Report showed that 8 silver contracts were actually posted for delivery on Monday, so that means that 8-6=2 more silver contracts were added to February.
So far this month there have been 9,136 gold contracts issued and stopped — and that number in silver is 535.
There were withdrawals from both GLD and SLV on Thursday. An authorized participant removed 37,798 troy ounces of gold from GLD — and that makes six consecutive days that gold has been withdrawn from GLD. An a.p. took 656,684 troy ounces of silver out of SLV.
There was a tiny sales report from the U.S. Mint yesterday. They sold 1,000 troy ounces of gold eagles — 1,000 one-ounce 24K gold buffaloes — 400 one-ounce platinum eagles…but no silver eagles.
Month-to-date the mint has sold 5,500 troy ounces of gold eagles — 3,000 one-ounce 24K gold buffaloes — 1,400 one-ounce platinum eagles — and 285,000 silver eagles.
The only physical movement in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday was 514.400 troy ounces/16 kilobars [U.K./U.S. kilobar weight] that were shipped out of Canada’s Scotiabank. I won’t bother linking this.
It was another fairly quiet day in silver, as only 472,505 troy ounces were received — and 483,490 troy ounces was shipped out. All of the ‘in’ activity was at JPMorgan — and all of the ‘out’ activity was at CNT. The link to that is here.
Because of the Lunar/Chinese New Year — and for the third day in a row, there was no activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.
The Commitment of Traders Report, for positions held at the close of trading on Tuesday, January 8, showed a pretty big increase in the short position in silver…which is something I wasn’t expecting at all. But in gold, it was precisely the opposite. I was expecting a modest increase in the commercial net short position, but instead it declined by a huge amount.
In silver, the Commercial net short position increased by a hefty 10,937 contracts, or 54.7 million troy ounces of paper silver.
They arrived at that number by adding 4,370 long contracts, but they also added 15,307 short contracts — and it’s the difference between those two numbers that represents their change for the reporting week.
Under the hood in the Disaggregated COT Report, it was all Managed Money traders, plus a bit more, as they added 7,063 long contracts — and they reduced their short position by 5,602 contracts. So the change for the reporting week was the sum of those two numbers…12,665 contracts.
The difference between that number — and the changed in the Commercial net short position…12,665 minus 10,937 equals 1,728 contracts…was made up as it always is, by the traders in the ‘Other Reportables’ and ‘Nonreportable’/small trader categories. Here’s the snip from the Disaggregated Report so you can see who did what. Click to enlarge.
Ted estimates JPMorgan’s short position somewhere between 18-20,000 contracts.
The Commercial net short position in silver is now up to 68,791 contracts, or 344.0 million troy ounces of paper silver…which is a very big number.
Here’s the 3-year COT chart for silver, but keep in mind that the data is four weeks old. Click to enlarge.
From a COMEX futures market perspective, this puts silver firmly in bearish territory.
In gold, there was a big positive surprise, as the commercial traders actually reduced their short position by an eye-opening 23,427 contracts, or 2.34 million troy ounces of paper gold. Both Ted and I were expecting a small to modest increase during that reporting week.
They arrived at that number by increasing their long position by 7,320 contracts — and they also reduced their short position by 16,107 contracts — and it’s the sum of those two numbers that represents their change for the reporting week.
Under the hood in the Disaggregated COT Report, the Managed Money traders made up most, but not all of the change in the commercial net short position. They reduced their long position by 8,515 contracts — and they also added 9,198 short contracts. It’s the sum of those two numbers…17,713 contracts…that represents their change for the reporting week.
The difference between that number — and the commercial net short position…23,427 minus 17,713 equals 5,714 contracts…was made up by the traders in the other two categories, with most of the change coming in the ‘Other Reportables’ category. Here’s the snip from the Disaggregated COT Report in gold, so you can see these changes for yourself. Click to enlarge.
What this indicates according to Ted, is that the Managed Money traders actually made some money during this particular reporting week…all at the expense of the commercial traders.
The commercial net short position in gold is down to 12.12 million troy ounces, which easily puts it into the neutral-to-bullish category on an historical basis.
Here’s the 3-year COT chart from Nick Laird, updated with this data — and don’t forget that this data, like for silver, is four weeks old. Click to enlarge.
As I said earlier this week when the first COT Report appeared, I won’t be updating platinum, palladium or copper numbers until we’re all caught up…which looks like it will happen with the COT Report on March 1.
And for the same reason, I won’t be including my usual weekly discussion on the ‘Days to Cover Short Positions’ in silver, either.
Well, dear reader…in summing up, my predictions for this COT Report were far off the mark, as it was materially worse in silver than I thought it would be — and diametrically opposite to what I was expecting in gold. And for that reason, I shan’t be making any more predictions as to what may or may in all the upcoming COT Reports until they’re current. The next one will be posted on the CFTC’s website on Tuesday.
The January Bank Participation Report [BPR] data is extracted directly from the above Commitment of Traders Report. It shows the number of futures contracts, both long and short, that are held by all the U.S. and non-U.S. banks as of Tuesday’s cut-off in all COMEX-traded products. For this one day a month we get to see what the world’s banks are up to in the precious metals —and they’re usually up to quite a bit. The January BPR covers all of December.
In gold, 5 U.S. banks were net short 71,520 COMEX contracts in the January BPR. In December’s Bank Participation Report [BPR]…which covers November…these same 5 U.S. banks were net short 62,191 contracts, so there was a fairly big increase…9,329 contracts…since a month ago. But that number would have been far larger, if it hadn’t been for that surprise increase in the commercial trader’s long position reported in the above COT Report. That decreased this reported short position by around 23,000 contracts…as virtually all the large commercial traders are U.S. banks.
Also in gold, 28 non-U.S. banks are net short 48,209 COMEX gold contracts, which is less than two thousand contracts per bank. In the December BPR, 28 non-U.S. banks were net short only 26,074 COMEX contracts, so the month-over-month increase has almost doubled…22,135 contracts worth. However, I suspect that there’s at least one large non-U.S. bank in this group. Scotiabank still holds a fairly hefty short position in gold, but their trading activity in the precious metals has come to a screeching halt, so I suspect that another foreign bank has picked up the slack. I’m suspecting France’s central bank.
As of this Bank Participation Report, 33 banks [both U.S. and foreign] are now net short 26.3 percent of the entire open interest in gold in the COMEX futures market, which is up from the 22.1 percent they were short in the December BPR.
Here’s Nick’s chart of the Bank Participation Report for gold going back to 2000. Charts #4 and #5 are the key ones here. Note the blow-out in the short positions of the non-U.S. banks [the blue bars in chart #4] when Scotiabank’s COMEX short position was outed by the CFTC in October of 2012. Click to enlarge.
In silver, 5 U.S. banks are net short 43,606 COMEX silver contracts in January’s BPR. According to Ted, JPMorgan holds around 18-20,000 contracts of that amount. I suspect that Citigroup holds a very decent short position now as well. In December’s BPR, the net short position of these U.S. banks was 24,883 contracts, so the short position of the U.S. banks is up a whopping 18,723 contracts from November.
Also in silver, 21 non-U.S. banks are net short 26,771 COMEX contracts…which is up big from the 15,626 contracts that these same non-U.S. banks were short in the December BPR. I would suspect that Canada’s Scotiabank still holds a goodly chunk of the short position of the non-U.S. banks. But it certainly looks like a new player may have emerged on the short side, although that’s only speculation on my part. But even taking that into account, I believe that a number of the remaining 19 or 20 non-U.S. banks are actually net long the COMEX futures market in silver. But even if they aren’t, the remaining short positions divided up between these other 19 or 20 non-U.S. banks are immaterial — and have always been so.
As of January’s Bank Participation Report, 26 banks [both U.S. and foreign] are net short 37.8 percent of the entire open interest in the COMEX futures market in silver—which is up a monstrous amount from the 22.5 percent that they were net short in the December BPR — with much, much more than the lion’s share of that held by JPMorgan, Citigroup, Scotiabank..and perhaps one other.
Here’s the BPR chart for silver. Note in Chart #4 the blow-out in the non-U.S. bank short position [blue bars] in October of 2012 when Scotiabank was brought in from the cold. Also note August 2008 when JPMorgan took over the silver short position of Bear Stearns—the red bars. It’s very noticeable in Chart #4—and really stands out like the proverbial sore thumb it is in chart #5. Click to enlarge.
In platinum, 5 U.S. banks are net short 12,495 COMEX contracts in the January Bank Participation Report. In the December BPR, these same banks were net short 11,039 COMEX contracts…so it’s a smallish increase month-over-month. [At the ‘low’ back in July of 2018, these same five U.S. banks were actually net long the platinum market by 2,573 contracts.] That’s quite a change in five months.
Also in platinum, 18 non-U.S. banks are net short 6,864 COMEX contracts, which is up from the 5,752 contracts they were net short in the December BPR. But compared to the short positions of the 5 U.S. banks, the short positions of the non-U.S. banks are mostly immaterial. [Note: Back at the July 2018 low, these same non-U.S. banks were net short only 1,192 COMEX contracts.]
And as of January’s Bank Participation Report, 23 banks [both U.S. and foreign] are net short 22.3 percent of platinum’s total open interest in the COMEX futures market, which is up a hair from the 21.8 percent they were net short in December’s BPR.
Here’s the Bank Participation Report chart for platinum. Click to enlarge.
In palladium, 4 U.S. banks were net short 6,139 COMEX contracts in the January BPR, which is down a bit from the 7,031 contracts they held net short in the December BPR.
Also in palladium, 13 non-U.S. banks are net short 2,272 COMEX contracts—which is up a bit from the 1,857 COMEX contracts that these same non-U.S. banks were short in the December BPR.
When you divide up the short positions of these non-U.S. banks more or less equally, they’re immaterial, just like they are in platinum…especially when you compare them to the positions held by the 4 U.S. banks.
As of this Bank Participation Report, 17 banks [U.S. and foreign] are net short 29.4 percent of the entire COMEX open interest in palladium. In December’s BPR, the world’s banks were net short 33.8 percent of total open interest, so there’s been a bit of a decrease in the concentrated short position of the banks in this precious metal.
Here’s the palladium BPR chart. You should note that the U.S. banks were almost nowhere to be seen in the COMEX futures market in this metal until the middle of 2007—and they became the predominant and controlling factor by the end of Q1 of 2013. Click to enlarge.
I don’t wish to read too much into this current Bank Participation Report, as the data in it is a month out of date. But I’m certainly not happy about the monstrous increase in the short position held by the world’s bank in COMEX silver…which is the second biggest short position they’ve every held — and I have records going back to mid-2014. The largest short position in silver these banks have held was back in April of 2017, when they were short 75,009 COMEX contracts, compared to the 70,377 COMEX contracts they’re short in this January’s BPR.
With a bearish COMEX set-up like this, there’s no reason why JPMorgan et al couldn’t hammer the silver price into the dirt if they choose to do so…but so far they haven’t — and I don’t know why. Maybe the DoJ snooping around the halls over at JPMorgan has something to do with it. But whatever the reason, there has to be some sort of resolution. Either it’s the ‘same old, same old’…or they get overrun.
The Grouville Hoard is a hoard of an estimated 70,000 late Iron Age and Roman coins reported in June 2012. They were discovered by metal detectorists Reg Mead and Richard Miles in a field at an undisclosed location in the parish of Grouville on the east side of Jersey in the Channel Islands. It is the largest hoard ever found in Jersey, and the first major archaeological find made by metal detectorists on the island.
The hoard is thought to have belonged to a Curiosolitae tribe fleeing Julius Caesar’s armies around 50 to 60 B.C.
Mead and Miles started metal detecting in the area where the hoard was reported in the early 1980s after they heard about a farmer who some years earlier had discovered a number of silver coins in an earthenware pot while pulling out a tree from a hedgerow. However, as they did not know the exact location of the find, and as the current owner of the farm would only allow them to metal detect once a year for 10–15 hours after the crops had been harvested, it took about 30 years before they eventually managed to locate the hoard.
Conservation and examination of the hoard is ongoing, and as the individual items have yet to be removed from the clay mass in which they are embedded, the exact contents of the hoard are unknown. In addition to an estimated 70,000 Celtic and Roman silver coins, the hoard is believed to include some items of jewellery, including two gold necklaces and a silver brooch.
Philip de Jersey, an expert on Celtic coins, has suggested that the coins could be valued at between £100 and £200 each, in which case the entire hoard may be worth between £7m and £14m. Click to enlarge.
I have a reasonable number of stories for you today, including a couple that I’ve been saving for Saturday’s column.
Whenever you see the “we should do this” or “we should do that” in the public media, it is always followed by something that is idiotic or immoral.
Yesterday was no exception.
“It’s high time we abolish billionaires” says a serious front-page story in The New York Times. The “rich” are becoming the new villains… the “them” that will rally mobs… and voters… to action:
“… it is an illustration of the political precariousness of billionaires that the idea has since become something like mainline thought on the progressive left…”
And so begins another era; the beginning always comes at the end.
And now, the end of the week, we’re ready for it… the next phase of our economic history.
This commentary from Bill showed up on the bonnerandpartners.com Internet site very early on Friday morning EST — and another link to it is here.
The Fed shed $32 billion in assets in January, according to the Fed’s balance sheet for the week ended February 6, released this afternoon. This reduced the assets on its balance sheet to $4,026 billion, the lowest since January 2014. Since the beginning of this “balance sheet normalization,” the Fed has now shed $434 billion.
So the January roll-off continued to proceed on “autopilot,” as outlined in the Fed’s 2017 plan. It’s happening at a glacial pace, with a reduction of $17 billion in Treasury securities and $15 billion in MBS, for a total of $32 billion. And yet, after ignoring the QE unwind for a year, the clamoring on Wall Street and at the White House to stop this cruel and unusual punishment became deafening late last year when stocks cratered.
Over the next few months, the Fed will likely announce some tantalizing tidbits about how it might tweak the balance-sheet reduction. One of those tidbits will likely relate to how it will shed MBS faster and replace those additional reductions of MBS with short-term Treasury bills. The effects of this may not be what the markets had hoped for in their wildest dreams. And the Fed will likely dole out more clues about how much further it wants to cut its balance sheet. But all this will take months, and until those tweaks are nailed down and announced, the balance sheet normalization will proceed on autopilot at its by now customary glacial pace.
This somewhat thick commentary from Wolf put in an appearance on the wolfstreet.com Internet site on Thursday sometime — and I thank Richard Saler for passing it along. Another link to it is here.
For a month now, markets have celebrated the view that Chairman Powell (and global central bankers more generally) will not be attempting to “normalize” monetary policy. No Fed-induced tightening of financial conditions, along with no fretting the new Chairman’s commitment to the “Fed put.” Lost in all of this is recognition that a decade of experimental monetary stimulus has failed. Global finance is much more fragile today than prior to the 2008 crisis – the global economy more imbalanced and vulnerable.
Never has it been so easy to speculate – equities and corporate Credit alike. Never has corporate Credit availability – and financial conditions more generally – been governed by the interplay between the ETF complex, derivatives strategies and a distressed global leveraged speculating community. The Powell U-Turn unleashed another round of speculative excess. Right in the face of faltering global growth, I would argue this bout of speculation is especially precarious. And when the current “risk on” gives way to reality, maladjusted Market Structure will ensure liquidity issues on a scale beyond December.
“This is deflation, the amazing lurch toward recession despite QE…,” read the opening sentence of a friendly e-mail I received last week. Yet I remember all the talk of deflation after the 1987 stock market crash. It became even louder in 1990 – then again in ‘97/’98. Deflation was the big worry with the bursting of the “tech” Bubble and then with corporate debt problems in 2002. Global central bankers have been fighting deflation now for a decade since “the worst crisis since the Great Depression.”
For a long time now, I’ve argued that Bubbles are the overarching risk. The “scourge of deflation” was not the ghastly plight to vanquish with interminable “whatever it takes.” Rather, deflation is a fateful consequence of bursting Bubbles – Bubbles inflated in the process of central bankers fighting so-called “deflationary forces.” Now, after thirty years of unending global Credit growth, activist central banking and egregious financial speculation, Bubble risk has never been so great. “The amazing lurch toward recession” and financial dislocation specifically because of a failed experiment in QE and inflationist monetary management.
Doug’s weekly commentary put in an appearance on this Internet site in the very wee hours of Saturday morning and, in my opinion, it’s always worth reading. Another link to it is here.
The end of America’s unchallenged global economic dominance has arrived sooner than expected, thanks to the very same Neocons who gave the world the Iraq, Syria and the dirty wars in Latin America. Just as the Vietnam War drove the United States off gold by 1971, its sponsorship and funding of violent regime change wars against Venezuela and Syria – and threatening other countries with sanctions if they do not join this crusade – is driving European and other nations to create their alternative financial institutions.
This break has been building for quite some time, and was bound to occur. But who would have thought that Donald Trump would become the catalytic agent? No left-wing party, no socialist, anarchist or foreign nationalist leader anywhere in the world could have achieved what he is doing to break up the American Empire. The Deep State is reacting with shock at how this right-wing real estate grifter has been able to drive other countries to defend themselves by dismantling the U.S.-centered world order. To rub it in, he is using Bush and Reagan-era Neocon arsonists, John Bolton and now Elliott Abrams, to fan the flames in Venezuela. It is almost like a black political comedy. The world of international diplomacy is being turned inside-out. A world where there is no longer even a pretense that we might adhere to international norms, let alone laws or treaties.
The Neocons who Trump has appointed are accomplishing what seemed unthinkable not long ago: Driving China and Russia together – the great nightmare of Henry Kissinger and Zbigniew Brzezinski. They also are driving Germany and other European countries into the Eurasian orbit, the “Heartland” nightmare of Halford Mackinder a century ago.
The root cause is clear: After the crescendo of pretenses and deceptions over Iraq, Libya and Syria, along with our absolution of the lawless regime of Saudi Arabia, foreign political leaders are coming to recognize what world-wide public opinion polls reported even before the Iraq/Iran-Contra boys turned their attention to the world’s largest oil reserves in Venezuela: The United States is now the greatest threat to peace on the planet.
This longish, but very worthwhile commentary from Michael, showed up on the unz.com Internet site back on February 1. Roy Stephens sent it to me on Monday, but I though it best to wait until Saturday’s missive…so here it is. Another link to it is here — and it’s definitely worth reading.
“Unexpectedly,” German industrial production fell 3.9% in December 2018 compared to December 2017, after having fallen by a revised 4.0% in November, according to German statistics agency Destatis Thursday morning. These two drops were steepest year-over-year drops since 2009.
Even during the European Debt Crisis in 2011 and 2012 – it hit Germany’s industry hard as many European countries weaved in and out of a recession, with some countries sinking into a depression — German industrial production never fell as fast on a year-over-year basis as in November and December:
The declines on a year-over-year basis were broad: Without construction, industrial production fell 3.9% year-over-year in December, after having fallen 4.5% in November. And just manufacturing production, which includes mining and quarrying, fell 4.0% year-over-year in December, after having fallen 4.6% in November.
On a longer-term scale, the industrial production index peaked in May 2018 and has since fallen 4.6%. It is now back where it had first been in February 2017.
This article appeared on the wolfstreet.com Internet site on Thursday — and I thank Richard Saler for this news item as well. Another link to it is here.
Update: Following reports that France would effectively kill the controversial Nord Stream 2 pipeline, E.U. officials including German Chancellor Angela Merkel affirmed on Friday that an agreement has been reached which will allow construction of the pipeline to move forward – handing a major victory to Germany and Russia (and a stunning defeat for President Trump).
At a meeting in Brussels on Friday, E.U. diplomats advanced a draft gas-market law, initially proposed in late 2017, while greatly cutting back a provision that would have effectively blocked the pipeline.
The deal will allow negotiations with the European Parliament on a final version of the legislation to begin. Both sides are aiming for an official agreement as soon as next week, and no later than the end of May.
This story was posted on the Zero Hedge website at 8:19 a.m. on Friday morning EST — and it comes to us courtesy of Brad Robertson. Another link to it is here.
Another step toward the reestablishment of sound Constitutional money was taken on Wednesday in Kansas with the introduction of a bill (H.B. 2093) by the House Committee on Taxation exempting gold, silver, and other precious metals from sales taxes. It joins an increasing number of states exercising their sovereignty in such matters, ultimately exposing the fraud of Federal Reserve Notes (FRNs) posing as money.
As Mike Maharrey wrote in the Tenth Amendment Center blog: “By removing the sales tax on the exchange of gold and silver, Kansas would treat specie [gold and silver coins] as money instead of a commodity. This represents [another] small step toward reestablishing gold and silver as legal tender and [more importantly] breaking down the Fed’s monopoly on money.”
He added that the bill, if it becomes law, would allow citizens, if they choose, to pay bills and make other exchanges in gold and silver instead of paper or digital money issued by the Federal Reserve. More importantly, it invites contracts to demand payment in specie, thus largely eliminating the loss of value of paper money owing to inflation — increasing the money supply — by the Fed. Said Maharrey: “This would mark an important step toward currency competition. If sound money gains a foothold in the marketplace against Federal Reserve Notes, people will be able to choose the time-tested stability of gold and silver over the central bank’s [the Fed’s] rapidly-depreciating paper currency.”
This item appeared on thenewamerican.com Internet site on Thursday sometime — and I found it on the Sharps Pixley website. Another link to it is here.
A group of traders from across the U.S. who allege that J. P. Morgan Chase manipulated precious metals markets for years are one step closer to bringing a class action suit against the nation’s largest bank.
Earlier this month, a federal judge said five separate lawsuits making similar allegations against the bank could be combined, potentially including thousands of people who traded in the precious metals market from Jan. 2009 through December 2015.
Litigation in a separate civil case has been put on hold until at least May at the behest of the Justice Department, which is investigating a “related criminal case” that involves alleged market manipulation by precious metals traders at J. P. Morgan.
J. P. Morgan declined to comment on this story.
This news item was posted on the cnbc.com Internet site at 4:17 p.m. EST on Thursday afternoon — and it turned up in a GATA dispatch yesterday evening. Another link to it is here.
Two months after Venezuelan President Nicolas Maduro visited his counterpart Recep Tayyip Erdogan in Ankara, a mysterious company called Sardes sprang into existence.
The firm started business with a bang in January of 2018, when it imported about $41 million worth of gold from Venezuela, the first such transaction between the two countries in records that go back 50 years. The next month its volume more than doubled, with Sardes transporting almost $100 million worth to Turkey.
By November, when President Donald Trump signed an executive order authorizing sanctions on Venezuelan gold — after sending an envoy to warn Turkey off the trade, Sardes had shuttled $900 million of the precious metal out of the country. Not bad for a company with just $1 million in capital, according to regulatory filings in Istanbul.
It’s not the first time that Turkey has positioned itself as a work-around for countries facing U.S. sanctions, potentially undermining Washington’s efforts to isolate governments it considers hostile or corrupt. Ankara has often tested the boundaries of U.S. tolerance, and the alliance between the key NATO members is now essentially broken, according to two senior U.S. officials.
This interesting Bloomberg news item showed up on their Internet site at 2:10 a.m. Pacific Standard Time on Friday morning — and I found it in a GATA dispatch. Another link to it is here.
Russia’s Finance Ministry told the Izvestia newspaper it is considering complete abolition of value added tax (VAT) on gold purchases. This would give Russian savers an option of investing in gold, rather than foreign currencies.
The ministry said earlier the measure could also help returning capital worth tens of billions of rubles to the country.
Gold bar buyers in Russia are currently obliged to pay 20 percent VAT. However, when selling ingots, the tax is not returned. As a result, demand for gold investment in the country sits at just under 3 tons per year. Experts say that if the tax is dropped, demand could skyrocket to 50–100 tons.
The abolition of VAT will create an investment gold market in Russia, Sberbank Vice President Andrey Shemetov told the newspaper. According to him, as a financial instrument, gold is protected from inflation, and at a time of geopolitical risks, the metal could be an excellent substitute for traditional investments in U.S. dollars.
Resetting the VAT on gold bullion could support the idea of de-dollarization of the Russian economy, said Aleksey Panferov, deputy chairman of the board of Sovcombank. The inclusion of impersonal metal accounts in the deposit insurance system could become another important step in that direction, he added.
This is the second story/straw in the wind about this possible turn of events in the last few months — and it sounds like they’re really serious about it now. And as I said when the first article about these appeared in November or December…”the sooner the better“. This gold-related news story appeared on the rt.com Internet site at 11:34 a.m. Moscow time on their Friday afternoon — which was 3:34 a.m. in Washington — EST plus 8 hours. It was updated about two and a half hours later. I thank Larry Galearis for pointing it out — and another link to this worthwhile news item is here.
In this episode of the Keiser Report from Mexico, Max and Stacy discuss central banks on a gold buying spree and what that suggests is in our global monetary and trade policy future. The volume of gold buying has not been seen since 1967 when the world was, in fact, on a gold standard. Does this indicate we are, indeed, back on a quasi-gold standard if USD trade surplus is being converted into hard money, regardless of formal agreements to that effect?
This 13-minute video commentary starts right at the beginning of this edition of the Keiser Report — and I thank Swedish reader Patrik Ekdahl for bringing it to our attention.
At 14,000 feet, in the remote jungles of New Guinea, is the largest gold and copper deposit in the world. Getting to that deposit and building a profitable mine was one of the biggest engineering challenges ever.
I stumbled over this youtube.com video of the discovery of Freeport’s Grasberg mine earlier this week — and found it very interesting. It runs for a bit over 52 minutes — and worth your while if you have the interest. For obvious length reasons, I saved it for Saturday’s column.
The PHOTOS and the FUNNIES
Here are two more photos from the “Ocean Art” series that I thank Mike Easton for sending our way.
The first photo taken by: Wu Yung Sen — and is captioned “Pacific Red Sockeye salmon swimming up the Adams River in Canada“. I’ve “been there — and done that” myself. Click to enlarge.
This second photo is by Christina Barringer — and is captioned “A young crocodile charging towards a pair of divers in Banco Chinchorro, Mexico“. Click to enlarge.
Today’s pop ‘blast from the past’ is one I heard playing in the background of a TV commercial I saw yesterday evening — and since I hadn’t featured it before, I though it time. It was released on December 21, 1964 — and it was this group’s first No. 1 hit — and what a hit it was. The link is here.
The Canadian rock bank Chilliwack had a tune with the same name back in 1981 that was a pretty big hit as well, but it’s a horse of an entirely different colour — and the link to that is here.
Today’s classical ‘blast from the past’ is one that I had all picked out a week ago — and I’ve been saving it for today’s column. It is a transcription from piano to guitar and was composed by Isaac Manuel Francisco Albéniz y Pascual…29 May 1860 – 18 May 1909. He was a Spanish virtuoso pianist, composer, and conductor — and one of the foremost composers of the Post-Romantic era who also had a significant influence on his contemporaries and younger composers. He is best known for his piano works based on Spanish folk music idioms.
Transcriptions of many of his pieces, such as Asturias (Leyenda), Granada, Sevilla, Cadiz, Córdoba, Cataluña, and the Tango in D, are important pieces for classical guitar, though he never composed for that instrument.
Here’s Crotian-born Ana Vidović performing the Asturias (Leyenda) work by Albéniz. She’s an incredibly gifted musician — and not hard on the eyes, either. It lasts about 7 minutes — and it’s worth your time. Another link to it is here.
And if you’ve never seen how a world-class concert hall-style acoustic guitar is crafted, click here. I watched the whole thing earlier this week — and was totally blown away.
It was another extremely quiet volume day in both gold and silver — and that applies to the entire week as well. But despite that low volume, it was obvious that someone was there to keep the precious metals from getting too frisky to the upside — and that’s particularly true of palladium and silver.
I’m certainly not a happy camper with the blow-out in the commercial net short position in silver — and it remains to be seen how it resolves itself over time. Will it be the “same old, same old” as we’ve experience over the years/decades, or will it be “different this time?” I don’t know, nor does anyone, but as I said further up in my column, the precious metal market just ‘feels different’ than it has before.
So all we can do is wait it out and see what happens.
Here are the 6-month charts for all four precious metal, plus copper and WTIC. There’s not really much to see once again, but I do note that copper was closed back below its 200-day moving average yesterday. Click to enlarge for all six.
With darkening economic shadows already hovering over China, also sliding into the economic shade were both Italy and Germany…with France and the U.K. not far behind — and the Japanese Nikkei closed down on the week as well. How long, one has to wonder, will the U.S. be immune to this recessionary/depressionary black hole that is now sucking in one nation after another.
The Dow was quietly heading for the nether reaches of the earth up until shortly before noon in New York on Friday morning. But at that juncture, another ‘miracle’ rally appeared…most likely sponsored by your local PPT…and a ferocious short covering rally in the last few minutes of trading did the rest.
With an ever uglier trade war with China ongoing — and the U.S. deep state making even more ugly threats towards Venezuela, you just have to wonder how much longer the U.S. equity markets — and the U.S. dollar can be propped up.
As Doug Noland stated in his commentary in the Critical Reads section…”For a month now, markets have celebrated the view that Chairman Powell (and global central bankers more generally) will not be attempting to “normalize” monetary policy. No Fed-induced tightening of financial conditions, along with no fretting the new Chairman’s commitment to the “Fed put.” Lost in all of this is recognition that a decade of experimental monetary stimulus has failed. Global finance is much more fragile today than prior to the 2008 crisis – the global economy more imbalanced and vulnerable.”
He would be right about that.
According to the World Gold Council, global central banks bought more bullion last year than at any time since 1971, when the U.S. ended the gold standard. Governments added 651.5 tonnes of gold to their coffers in 2018 — and it also said that Russia, China and Turkey are leading the gold-buying spree.
The other straw in the wind was this second story in as many months about Russia reducing the VAT [Value Added Tax] on gold bullion sales to zero. Not only do I expect that to happen in the not-too-distant future, but I also expect that the Russian people will embrace that concept with great enthusiasm, as they know all about currency devaluation, especially regarding their own…the ruble.
The other thing that I noticed with February deliveries in gold on the COMEX, was that very little of the gold being delivered by the short/issuer to the long/stopper was brought into their inventories before the delivery month began. All that’s happening is that gold is already on deposit at the COMEX-approved depositories is changing ownership. And not only is no gold being shipped in during this delivery month, but none is being shipped out, either.
It certainly appears that the physical gold, in large amounts, is just not available. As Nick Laird’s charts show, the amount of gold imported by the five Silk Road countries on a yearly basis, now handily exceeds world mine supply.
But in the retail market, sales are moribund. As Ross Norman of Sharps Pixley fame pointed out in his commentary of 06 February 2019…”We believe that sentiment towards gold amongst retail investors is currently the lowest for about 20 years — and we are in a position to know, as our group is one of the largest sellers of coins and bars in Europe.”
And as precious metal prices continue to creep higher, there’s no question that retail demand will rise from its recent slumbers. It won’t take much to once again empty retailers and the mints that supply them, of what little physical supply they have…then good luck getting more in a reasonable time, if at all.
It’s happened before — and it will happen again. This year is stacking up to be that year.
I’m done for the day — and the week — and I’ll see you here on Tuesday.