Yet Another Quiet Volume Day in Both Silver and Gold

23 March 2019 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price really didn’t do much of anything on Friday.  Its Far East low came shortly after 1 p.m. China Standard Time on their Friday afternoon — and it edged unevenly higher from there until 10 a.m. in London — and from that juncture it chopped quietly sideways until trading ended at 5:00 p.m. EDT in New York.

The low and high ticks, such as they were, certainly aren’t worth looking up.

Gold finished the Friday session at $1,313.40 spot, up $4.40 on the day.  Net volume was very much on the lighter side at 181,000 contracts, but roll-over/switch volume was very heavy at a bit over 91,000 contracts, as we head into First Notice Day for April deliveries late next week.

The silver price crawled quietly sideways until the 2:15 p.m. CST afternoon gold fix in Shanghai — and then rallied a few pennies until 9 a.m. GMT in London.  It was all quietly down hill from there until the 11:00 a.m. EDT London close — and it crept a few pennies higher from that juncture until minutes after 4 p.m. in the thinly-traded after-hours market.  It traded ruler flat into the 5:00 p.m. close from there.

The high and low ticks in this precious metal are barely worth looking up.  The CME Group reported them as $15.55 and $15.365 in the May contract.

Silver was closed in New York yesterday at $15.405 spot, down 4 cents from Thursday.  Net volume was pretty quiet as well, at 51,300 contracts — and there was 2,690 contracts worth of roll-over/switch volume in that precious metal.

The platinum had a big down/up move in early morning trading in the Far East, followed by a rally that started about 1:30 p.m. CST.  Its high of the day came a few minutes after the Zurich open — and it was engineered quietly lower from there, with the low tick coming right at the 1:30 p.m. EDT COMEX close in New York.  It was bounced off that low multiple times in the ultra thinly-traded after-hours market — and finished the day at $845 spot, down 15 bucks from Thursday’s close.

It was mostly the same for palladium as it was for platinum in Far East trading on their Friday, although the down/up move wasn’t that extreme in morning trading over there.  But the ‘long knives’ were out starting about forty-five minutes before the Zurich open — and the saw-toothed engineered price decline by ‘da boyz’ showed that they were very serious from that point onwards. They had platinum down 53 dollars at its 12:15 p.m. EDT low in New York, but it recovered a bit from there — and was closed down ‘only’ 44 bucks.

The dollar index closed very late on Thursday afternoon in New York at 96.50 — and opened down 18 basis points once trading began about 7:45 p.m. EDT on Thursday evening, which was 7:45 a.m. China Standard Time on their Friday morning.  It crept a bit higher until around 8:35 a.m. CST — and then began to edge very quietly lower until 8:12 a.m. in London.  The ramp job got underway at that juncture — and the 96.81 high tick of the day was set at 9:24 a.m. GMT.  From that point it was very quietly and very unevenly down hill until trading ended at 5:28 p.m. in New York.  The dollar index finished the Friday session at 96.65…up 15 basis points from Thursday’s close.

Here’s the DXY chart from BloombergClick 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…96.15…and the close on the DXY chart above, was 50 basis points on Friday. Click to enlarge.

The gold shares opened unchanged — and then rallied to their respective highs of the day by around 10:10 a.m. EDT in New York trading.  They were sold down to their respective lows by precisely 11:00 a.m. EDT, which coincided with the London close.  Then, around 1 p.m., then began to chop quietly higher — and back into positive territory by a bit, as the HUI closed up 0.67 percent.

In most respects the silver equities traded in a similar price pattern as their golden brethren until minutes before 1 p.m. in New York trading…just as they were about to break back into positive territory.  They were sold lower starting at that time — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 0.61 percent on the day.  Click to enlarge.

And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart, updated with Friday’s doji.  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 as you can see, the only red on this chart, is palladium, which is only down because it got hammered into the dirt on Friday.  Everything else is up a bit, but not by consequential amounts.  Click to enlarge.

Here is the month-to-date chart.  Platinum, palladium and the HUI are up — and everything else is in the red by a bit — and there’s not a lot to see here, either.  Click to enlarge.

The year-to-date chart — and with the exception of silver,  everything shows green across the board.  But despite the fact that the underlying metal is down on the month by a hair, the silver equities are still outperforming their golden brethren by a bit.  Click to enlarge.

In the short term, meaning between now and the end of next week, I’m not sure what will happen.  The March silver deliveries are coming to an end — and First Day Notice for April deliveries in gold is coming up — and there could be any amount of precious metal price shenanigans between now and that time.  In the longer term, like for the rest of this year, I expect all precious metals to be considerably higher than they are now.  And as I said in this space last week…there’s still that DoJ thingy hanging over JPMorgan.  But almost five months have now passed since the public announcement — and Jamie and his merry band of price riggers are still walking free — and still doing their shtick in the COMEX futures market.


The CME Daily Delivery Report showed that zero gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  There were only deliveries scheduled in copper and palladium.  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 March remained unchanged at 15 contracts.  Thursday’s Daily Delivery Report showed that zero gold contracts were posted for delivery on Monday, so those number match OK.  Silver o.i. in March declined by 1 contract, leaving 44 still around.  Thursday’s Daily Delivery Report showed that  1 silver contract was actually posted for delivery on Monday, so the change in open interest and the delivery amount matches in silver as well.

So far this month there have been 384 gold contracts issued/reissued and stopped — and that number in silver is 5,380 contracts.


There was a deposit in GLD yesterday, as an authorized participant added 94,450 troy ounces.  But it was the opposite over at SLV, as an a.p…most likely JPMorgan…took out 1,359,488 troy ounces.

There was another tiny sales report from the U.S. Mint on Friday.  They sold 500 one-ounce 24K gold buffaloes — and that was all.

Month-to-date the mint has sold 10,000 troy ounces of gold eagles — 5,500 one-ounce 24K gold buffaloes — 3,000 one-ounce platinum eagles — and 850,000 silver eagles.

And I’m still waiting for the Q4/2018 annual report from the Royal Canadian Mint — as Q1/2019 is rapidly drawing to a close.

There was a tiny bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.  There was 1,500 troy ounce received at HSBC USA — and 225.05 troy ounces/7 kilobars [U.K./U.S. kilobar weight] was shipped out of Canada’s Scotiabank.  I won’t bother linking these amounts.

There was some activity in silver.  Nothing was reported received — and 761,903 troy ounces was shipped out.  In the ‘out’ category, there was one truckload…600,820 troy ounces…shipped out of Brink’s, Inc.  There was also 110,366 troy ounces — and 50,716 troy ounces, that departed the International Depository Services of Delaware and CNT respectively.  There was also a paper transfer of 214,996 troy ounces that was moved from the Eligible category — and into Registered.  That occurred over at CNT as well.  A link to that is here.

It was fairly busy over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They only received 167 of them, but shipped out 4,017.  All this activity was at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.


Priam’s Treasure is a cache of gold and other artifacts discovered by classical archaeologist Heinrich Schliemann at Hissarlik in modern Turkey. The majority of the artifacts are currently in the Pushkin Museum in Moscow.

Schliemann claimed the site to be that of Homeric Troy, and assigned the artifacts to the Homeric king Priam. This assignment is now thought to be a result of Schliemann’s zeal to find sites and objects mentioned in the Homeric epics which take place in northwestern Turkey. At the time the stratigraphy at Troy had not been solidified, which was done subsequently by the archaeologist Carl Blegen. The layer in which Priam’s Treasure was alleged to have been found was assigned to Troy II, whereas Priam would have been king of Troy VI or VII, occupied hundreds of years later.

Apparently, Schliemann smuggled Priam’s Treasure out of Anatolia. The officials were informed when his wife, Sophia, wore the jewels for the public. The Ottoman official assigned to watch the excavation, Amin Effendi, received a prison sentence. The Ottoman government revoked Schliemann’s permission to dig and sued him for its share of the gold. Schliemann went on to Mycenae. There, however, the Greek Archaeological Society sent an agent to monitor him.

Later Schliemann traded some treasure to the government of the Ottoman Empire in exchange for permission to dig at Troy again. It is located in the Istanbul Archaeology Museum. The rest was acquired in 1881 by the Royal Museums of Berlin, in whose hands it remained until 1945, when it disappeared from a protective bunker beneath the Berlin Zoo.

In fact, after the capture of the bunker by the Red Army Professor Wilhelm Unverzagt turned the treasure over to the Soviet commander and thus saved it from plunder and division. The commander promised to guarantee the safety of the art treasures. The artifacts were taken away to Moscow. During the Cold War, the Soviet government denied any knowledge of the fate of Priam’s Treasure. However, in September 1993 the treasure turned up at the Pushkin Museum.  Click to enlarge for both.

The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, was a mixed bag.  The Commercial net short position in silver declined by a bit, but the commercial net short position in gold increased by a small amount as well.

In silver, the Commercial net short position declined by a rather smallish 2,561 COMEX contracts, or 12.8 million troy ounces of paper silver.

The arrived at that number by increasing their long position by 961 contracts — and they also covered 1,600 short 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 didn’t do a whole heck of a lot…adding 814 long contract, plus 585 short contracts.  It’s the difference between those two numbers…229 contracts…that represents their change for the reporting week, which is basically no change.

The difference between that number — and the Commercial net short position…2,561 minus 229 equals 2,332 COMEX contracts — and as always, it was the traders in the other two categories that made up that difference.  But each of those categories went about it in entirely different fashion, as the ‘Other Reportables’ reduced their net long position by a very hefty 4,001 contracts, while the ‘Nonreportable’/small trader category increased their net long position by 1,211 contracts.

Here’s the snip from the Disaggregated COT Report so you can see these changes for yourself.  Click to enlarge.

Ted said the Big 4 traders actually increased their net short position in silver during the reporting week, which doesn’t jibe at all with the fact that the big traders in the Producer/Merchant category…where JPMorgan and the other big banks hang out…reduced their net short position by about 2,600 contracts.  [The Swap Dealers were market neutral] Ted said that the reason for that was two-fold…a Managed Money trader moved from the Big ‘5 through 8’ category — and into the Big 4.  The second reason was that the number of Managed Money traders on the short side took a big drop…from 36 to 30…during the reporting week.  Most of the positions of those 6 traders wound up with the Managed Money trader that suddenly ended up in the Big 4 category because of that.  These facts are confirmed if you read what I have to say in the ‘Days to Cover’ commentary that follows my COT commentary.

And because of the reduction in the Producer/Merchant category, Ted figures that JPMorgan covered a couple of thousand short contracts during the reporting week — and he pegs them at 8,000 COMEX silver contracts held short.

The Commercial net short position in silver is down to 218.5 million troy ounces, which is not a material change from last week.  All of the changes that mattered occurred out of sight in the Disaggregated COT Report.

Here’s the 3-year COT chart for silver courtesy of Nick Laird — and as you can see, this week’s change is barely noticeable.  Click to enlarge.

The Commercial net short position in silver still isn’t anywhere near what I would call bullish — and on its face, it’s rather bearish.  It remains to be seen if JPMorgan et al can or will do anything about that situation.


In gold, the commercial net short position increased by 7,185 contracts, or 718,500 troy ounces of paper gold.

They arrived at that number by reducing their long position by 5,325 contracts — and they also added 1,860 short 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 it was all Managed Money traders, plus a lot more, as they increased their long position by 616 contracts — and they reduced their short position by a very chunky 12,452 contracts.  It’s the sum of those two numbers…13,068 contracts…that represents their change for the reporting week.

The difference between that number — and the commercial net short position…13,068 minus 7,185 equals 5,883 COMEX contracts was made up by the traders in the ‘Other Reportables’ and ‘Nonreportable’/small traders, as both categories reduced their net long positions by decent amounts…the former by 3,491 contracts — and the latter by 2,392 contracts.

And here’s the snip from the Disaggregated COT Report for gold that shows those changes so you can see them for yourself.  Click to enlarge.

Ted mentioned that despite the increase in the commercial net short position in gold, the Big 4 traders actually reduced their short position by around 5,100 contracts which, like in silver, doesn’t jibe with what was going on in the Producer/Merchant  and Swap Dealer categories…as both groups increased their net short positions during the reporting week.  Ted was of the [surprising] opinion that there was a Managed Money trader in the Big 4 category with a hefty long position — and that they disappeared during this last reporting week.  And if you don’t understand all this, I wouldn’t worry about it.

I look forward to what Ted has to say about this in his weekly commentary this afternoon, once he has time to “sleep on it“…as it’s 5:13 p.m. EDT on Friday afternoon as I type this paragraph.

The commercial net short position in gold is now back up to 11.57 million troy ounces of paper gold.

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

Although this week’s changes in the headline numbers of the commercial net short positions in both gold and silver in the Legacy COT Report didn’t change by much, you can certainly tell that there’s a heck of a lot going on out of sight “under the hood” in the Disaggregated COT Report.

As per usual, there was very little volume in the very thinly-traded palladium market during the reporting week.  The Managed Money traders reduced their net long position by 345 contracts — and the amounts traded by the commercial traders, along with the traders in the other two categories, was even less.  Total open interest in palladium is 27,084 contracts, virtually unchanged from the previous week.  In platinum, the Managed Money traders increased their net long position by only 744 contracts — and are net long the market by about 1,000 contracts.  Total open interest in this precious metal is 75,915 contracts, down about 1,500 contracts from last week’s report.  In copper, the Managed Money traders reduced their net long position by a further 8,287 COMEX contracts — and are net long the COMEX futures market in copper by a hair over 8,000 contracts.


Here’s Nick Laird’s “Days to Cover” chart updated with yesterday’s COT data for positions held at the close of COMEX trading last 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.

For the current reporting week, the Big 4 traders are short 124 days of world silver production, which is up 5 days from last week’s report — and the ‘5 through 8’ large traders are short an additional 59 days of world silver production, down 7 days from last week’s report — for a total of 183 days that the Big 8 are short, which is a hair over 6 months of world silver production, or about 427.1 million troy ounces of paper silver held short by the Big 8.  [In the COT Report last week, the Big 8 were short 185 days of world silver production.]

In the COT Report above, the Commercial net short position in silver was reported as 218.5 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 427.1 million troy ounces.  The short position of the Big 8 traders is larger than the total Commercial net short position by a chunky 427.1 minus 218.5 equals 208.6 million troy ounces.
The reason for the difference in those numbers…as it always is…is that Ted’s raptors, the 35-odd small commercial traders other than the Big 8, are net long that amount.

As stated earlier, Ted estimates JPMorgan’s short position at around 8,000 contracts, down 2,000 contracts from last week’s report, or 40 million troy ounces of paper silver held short.  That translates into about 17 days of world silver production.  That number represents about 9 percent of the short position of the Big 8 traders — and around 29 percent of the short position held by the Big 4 traders.

The Big 4 traders are short 124 days of world silver production — and once you subtract out the 17 days that JPM is short, that leaves 107 days split up between the other three large traders…a bit under 36 days that each is short.  And as I pointed out in the COT Report, JPMorgan is no longer the Big short in silver — and these numbers prove that once again.

The four traders in the ‘5 through 8’ category are short 59 days of world silver production in total, which is around 14.75 days of world silver production each.  The smallest of the traders in this category holds something less than 14.75 days — and the largest, something more than that amount.

Based on these numbers, I would suspect that JPMorgan is not only the smallest of the Big 4 traders, but any further reduction in their short position will drop them into the Big ‘5 through 8’ large trader category.

The Big 8 commercial traders are short 45.2 percent of the entire open interest in silver in the COMEX futures market, down a hair from the 45.4 percent they were short in last week’s report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be very close to the 50 percent mark, if not a tad more.  In gold, it’s now 32.7 percent of the total COMEX open interest that the Big 8 are short, down a bit from the 33.4 percent they were short in last week’s report — and something under 40 percent once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 40 days of world gold production, down 1 day from the 41 days they were short in last week’s COT Report.  The ‘5 through 8’ are short another 18 days of world production, down 2 days from from the 20 days of world production they were short last week…for a total of 58 days of world gold production held short by the Big 8…down 3 days from last week’s COT Report.  Based on these numbers, the Big 4 in gold hold about 69 percent of the total short position held by the Big 8.

The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 68, 69 and 79 percent respectively of the short positions held by the Big 8.  Silver is up 4 percentage points from a week ago, platinum is unchanged from last week — and palladium is down 1 percentage point.

I have a very decent number of stories for you today.


CRITICAL READS

Yield Curve Inverts For the First Time Since 2007: Recession Countdown Begins

Don’t believe us? Here is Larry Kudlow last summer explaining that everyone freaking out about the 2s/10s spread is silly, they focus on the 3-month to 10-year spread that has preceded every recession in the last 50 years (with few if any false positives))

As we noted below, on six occasions over the past 50 years when the three-month yield exceeded that of the 10-year, economic recession invariably followed, commencing an average of 311 days after the initial signal.

And here is Bloomberg showing how the yield curve inverted in 1989, in 2000 and in 2006, with recessions prompting starting in 1990, 2001 and 2008. This time won’t be different.  Click to enlarge.

This chart-filled news item put in an appearance on the Zero Hedge website at 5:11 p.m. EDT on Friday afternoon at 5:11 p.m. EDT — and another link to it is here.


U.S. Budget Deficit Hits a Record $234 Billion as Interest on Debt Soars

Another month, another frightening jump in the U.S. budget deficit. And this time it was a record.

According to the latest Treasury data, the U.S. budget [deficit] in February – traditionally the worst month of the year due to tax refunds – was a whopping $234 billion, missing the $227 billion deficit expected, and well worse than the $214 billion deficit recorded last February. And even though there may have been one-time tax refund and government shutdown factors at play, the February deficit was also the biggest budget deficit on record.  Click to enlarge.

For March, receipts rose 7.5% y/y to $167.3BN while outlays rose 8.2% to $401.2BN in Feb. As a result, the budget deficit for the first five months of the fiscal year, widened to $544 billion, a whopping 39% higher than the $391 billion reported for the same period last year, largely the result of the revenue hit from Trump’s tax cuts and the increase in government spending. The deficit was the result of a modest drop in fiscal YTD receipts to $1.278 trillion, while spending jumped 9% to $1.823 trillion.

The jump in the deficit was despite the bump in customs duties, which almost doubled to about $29.5 billion this fiscal year from $15.3 billion a year ago, reflecting the Trump administration’s tariffs on Chinese imports.

On a trailing 12 month basis, the deficit rose again, hitting $932 billion, the highest since February 2013, when it was just above $1 trillion.

This news story was posted on the Zero Hedge website at 2:33 p.m. on Friday afternoon EDT — and I thank Brad Robertson for sharing it with us.  Another link to it is here.


U.S. Manufacturing PMI Plunges to 21-Month Lows, Services Slump

Following February’s very mixed picture (Services soared, Manufacturing tumbled), PMIs were expected to revert modestly in March (especially following this morning’s collapse in German PMI).

However, just like Germany, U.S. Services and Manufacturing PMIs dropped notably more than expected:

  • U.S. Manufacturing PMI prints 52.0, down from 53.0 (and expectations of 53.5) – 21-month low
  • U.S. Services PMI prints 54.8, down from 56.0 (and expectations of 55.5)

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

U.S. businesses reported a softer end to the first quarter, with output growth easing to the second lowest recorded over the last year.

A gap has opened up between the manufacturing and service sectors, however, with goods-producers and exporters struggling amid a deteriorating external environment and concerns regarding the impact of trade wars. The survey is consistent with the official measure of manufacturing production falling at an increased rate in March and hence acting as a drag on the economy in the first quarter.”

This economic story appeared on the Zero Hedge website at 9:53 a.m. on Friday morning EST — and it’s another contribution from Brad Robertson.  Another link to it is here.


At Least in the Country, They Survive… — Bill Bonner

This week, we’ve been exploring the age-old question: Who pays unpayable debt?

The borrower?  The lender?  Someone else?

To make a long story short, when it comes to government debt, the borrower never pays; the feds have no money. The lenders – big banks, investment funds, well-heeled insiders – don’t want to pay.

Generally, they collude with the feds to make sure the real cost is put on innocent third parties – taxpayers and consumers.

That was the meaning of the Fed’s announcement on Wednesday. There will be no rate hikes this year.

Still, it was shocking that Powell & Co. would cave in so fast. At least, Greenspan, Bernanke, and Yellen had enough sense of shame to wait for a crisis.

But here we are… at the tail end of a business expansion… with stocks near an all-time high and unemployment near an all-time low – and yet, the Fed’s key lending rate is barely above zero.

Where’s the emergency? The Fed didn’t want to find out.

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


Doug Noland: Doing Harm with Über-Dovish

An unusual era of monetary policy stability/predictability formally ended Wednesday. Balance sheet “normalization” is being brought to an early conclusion. Markets now assume the next rate move is lower. And with the Fed apparently turning its focus to persistently undershooting consumer price inflation, it is reasonable to assume it’s only a matter of time until the Fed resorts once again to QE. But when and at what quantity?

Especially with three years of rate “normalization” ending with Fed funds at only 2.25% to 2.50%, markets well-recognize there’s meager stimulus potential available in rate policy. Will the Fed even bother with rate cuts – or be compelled to move directly to QE? Suddenly, the future of monetary policy appears awfully murky.

Come the next serious stimulus push, it will be the Fed’s balance sheet called upon to do the heavy lifting. And, for those pondering a likely catalyst, I’d say look no further than a global market accident – omen December. As such, it now matters greatly that QE has evolved from an extreme policy response necessary to counter the “worst crisis since the Great Depression” – to a prominent tool in the Fed’s (and global central banking) toolkit readily available to counter risks of economic weakness and stock market instability.

Throw in the concept of late-cycle “Terminal Excess” – appreciating that policymakers, from Beijing to Tokyo to Frankfurt, London, Canberra, Toronto, Washington and beyond, are prolonging a most precarious cycle – and one can build a solid case for big trouble and big QE brewing. With this in mind, it’s not difficult to get quite concerned for the stability of global bond markets, along with securities, derivatives and asset markets more generally. And with markets unsettled, it probably didn’t help to have the largest ever monthly federal deficit ($234bn), with the y-t-d deficit after five months ($544bn) running 40% ahead of fiscal 2018 – or that President Trump announced the nomination of Stephen Moore to the Federal Reserve.

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


U.S. sanctions Venezuelan development bank in response to arrest of Guaido’s ‘terrorist’ aide

The U.S. Treasury has imposed sanctions on Venezuela’s Economic and Social Development Bank and on four other institutions affiliated with it, calling in its statement for the release of Juan Guaido’s Chief of Staff Roberto Marrero.

While the move came as official U.S. retaliation for Caracas’ targeting the associates of the wannabe president, U.S. Treasury Secretary Steven Mnuchin painted the Bank – known under its Spanish acronym BANDES – as the most vile organization and definitely worth sanctioning.

BANDES is a Venezuelan federal public company, associated with the Ministry of Finance, which was formed back in 2001. The bank focuses on financing projects, contributing towards development of the country – infrastructure, mass transportation, housing, industry and so on. One of the most notable projects involving BANDES was the launch in 2011 of the Chery Venezuela car factory in cooperation with China.

The willingness of Maduro’s inner-circle to exploit Venezuela’s institutions knows no bounds. Regime insiders have transformed BANDES and its subsidiaries into vehicles to move funds abroad in an attempt to prop up Maduro,” Mnuchin said in a statement.

This new story appeared on the rt.com Internet site on Friday evening at 6:37 p.m. Moscow time, which was 11:37 a.m. in Washington — EDT plus 7 hours.  I thank George Whyte for sending it our way — and another link to it is here.


U.K. Cabinet Ministers Are War-Gaming the Fall of Theresa May

U.K. Prime Minister Theresa May is confronting what could be the end of her premiership as the near impossible task of delivering a Brexit deal cracks her fragile government apart.

In the past two weeks, May has lost the trust of her Cabinet ministers, infuriated members of Parliament on all sides, and been told to her face a growing number of Conservatives want her to quit, according to at least 12 people familiar with the matter who declined to named.

Government ministers are now privately war-gaming the end of May’s rule as speculation grows that the Brexit crisis could force her out in the days ahead, officials said. May’s office declined to comment.

One senior Conservative figure said the situation is grave and appealed to May’s husband to urge his wife to resign so she can escape the miserable situation she’s in.

May’s crisis stems from her failure to get the divorce agreement she’s struck with the European Union ratified in Parliament, forcing her to make a humiliating request to EU leaders for more time to try again.

This Bloomberg article, showed up on their website at 11:58 a.m. Pacific Daylight Time on Friday morning — and it comes to us courtesy of Swedish reader Patrik Ekdahl.  Another link to it is here.


German Manufacturing Craters, Sending Bund Yields Negative

Two weeks ago, traders were puzzled by the ECB’s especially dovish stance (just days before the Fed followed suit). They got their answer today with the release of the latest German and French manufacturing PMIs, both of which cratered deeper into contraction territory.

Confirming that Germany – and Europe – is currently in a deep manufacturing recession, Markit’s Manufacturing PMI crashed to 44.7 from 47.6, the lowest since 2012 and far below economists’ expectation of a modest rebound to 48. That’s the third consecutive reading below 50, which indicates contraction (and recession). The new orders and employment components also declined.  Click to enlarge.

Germany’s composite index, which includes services, slipped to 51.5, the lowest in 69 months. The services index came in at 54.9 after posting 55.3 in February.

The downturn in Germany’s manufacturing sector has become more entrenched,” said Phil Smith, Principal Economist at IHS Markit. “Uncertainty towards Brexit and US-China trade relations, a slowdown in the car industry and generally softer global demand all continue to weigh heavily on the performance of the manufacturing sector, which is now registering the steepest rate of contraction since 2012.”

This story from the Zero Hedge website appeared there at 6:51 a.m. EDT on Friday morning — and it’s the final contribution of the day from Brad Robertson.  Another link to it is here. Swedish reader Patrik Ekdahl had a Bloomberg story about this headlined “Manufacturing Slump Deals Another Blow to Europe’s Economic Outlook


Crimea: The Geopolitical Jewel Russia Continues to Polish

With all that is happening in the world Crimea has taken a bit of a backseat recently. Yes, the U.S., E.U. and Canada just added more sanctions on Russia via the odious Magnitsky legislation but this is inconsequential.

There’s been a flurry of good news coming out of Crimea and the Black Sea recently that bears discussion. Let’s start with the most important. President Vladimir Putin was in Crimea earlier this week to celebrate the fifth anniversary of the peninsula’s reunification with Russia. There he also officially inaugurated two major upgrades to Crimea’s power grid.

Located in Simferopol and Sevastopol, two new power plants will produce 940 megawatts and secure Crimea’s energy needs for now and into the future.

Power has been Crimea’s Achilles’ heel since breaking off from Ukraine in 2014. It received almost 90% of its power from the mainland. In November 2015, the trunk lines into Crimea were sabotaged by Ukrainian nationalist radicals, encouraged by President Petro Poroshenko plunging it into darkness as winter took hold.

Does this sound familiar? A place that defies U.S. edicts geopolitically is first hit with a full trade embargo, sanctions and threatened militarily by proxies before having its electricity shut off?

*Cough* Venezuela *Cough*

This very interesting and worthwhile commentary by Tom Luongo was posted on the strategic-culture.org Internet site on Wednesday — and I thank Roy Stephens for pointing it out.  Another link to it is here.


Tales of the New Cold War 1 & 2: The Kremlin sees America as an existential threat — John Batchelor interviews Stephen F. Cohen

Part 1:  John Batchelor opens this discussion with a new premise that the New Cold War did not begin with the Ukraine Crisis, or the Georgia/Russian War, or Putin’s ascendancy, but with the ending of the old Soviet Union and the attempt by the West to take advantage of the collapse. This happened, he continues, due to the chaos of disintegration where “bits” of the old empire, like Georgia, thrown into the chaos of criminality, became targets of Western interests (especially the CIA) where politicians such as the now infamous Mikheil Saakashvili was placed as president. His role was to sell the people the idea that Western (U.S.) democratic reforms were coming. But the real purpose was for the CIA to destabilize the whole region and the new Russian Federation. These CIA machinations in Georgia had a long history and were even the reality before Saakashvili. Professor Cohen expands on this theme and suggests the CIA operation was the largest in the whole region – with a particular focus on oil resources in neighbouring Azerbaijan. But he also agrees that the new cold war probably began during this period, specifically when President Clinton authorized the bombing of Serbia. Throughout the Yeltsin years he presented U.S. motives to Russians as benign. Cohen then  verifies the U.S. relationship with Yeltsin as exploitative. Cohen also describes how the last cold war echoes this new one in various dogmatic ways but varies in that this time the views are more extreme and more illogical.

Part 2:  In this segment John Batchelor makes the argument that Georgia of the 1990s under Saakashvili was supported by the CIA and closely resembles what the present day Ukraine has become – and for the very same reasons. It was just plain subversion and the means to reduce Russia for the benefit of Washington, and Russians and Georgians know these details.  Cohen agrees and states that the link was the Washington effort to bring Georgia and Ukraine into NATO. This process is on going still and for Georgia it meant a proxy war with Georgia and Russia and a civil war in Ukraine. This was ill advised, and this has also now led to increasing war like threats from NATO against Russia. He cites recent statements from the Atlantic Council, a military think tank organization that advocates sending U.S. naval units to Ukrainian ports in the Black Sea and Sea of Azov. Cohen concludes that all these types of  anti Russian efforts are actually from government policy decisions and cites the new Senatorial legislative act: the Defending American Security from Russian Aggression Act (2019) as the latest example. This act, concludes Cohen, is “virtually a declaration of war against Russia”. The Russians, in reaction –their Security Council – now states that the U.S. is a serious and direct military threat to Russia.

John Batchelor responds and asks about the impact of this Senate legislation, whether it is a definitive statement of intent to destroy Russia? Cohen says that the situation is “dire” because unlike the last cold war there is no opposition or acceptance of even partial blame for this one. It is all Russia’s doing. And Cohen says he can find no government opposition to the dogma except Rand Paul and Tulsi Gabbard. These people are viciously attacked by the system now, but personal attacks were not the case in the last cold war.

***********************************************************

The difference between rhetoric and astute statements from American politicians may be lacking. Cohen describes the “Defending American Security etc” legislation in describing Russia as an “outlaw” and a threat to all things American may simply be hyperbole. To Russians it is a very serious statement and Russia, as Cohen states, is now even more motivated to prepare for war. But the question remains for me: do these American politicians really know the impact of these utterances as diplomatic positions or are they simply self serving rhetoric? In other words are such statements simply more oblivious statements by the oblivious? So Russia prepares for war and the U.S. senators who made these statements congratulate themselves for looking so good to their peers and to the press.

I also have a small disagreement with the professor about the aims of NATO encroachment on Russian borders. He states that the goals were to expand NATO into the debris field of old Soviet States. This is true, but only during the period that NATO and Washington were searching for a new enemy (during the Yeltsin years). In the first cold war Washington was concerned with containment of the Soviet Union by NATO. Those goals are now still present today. Recall that early in Putin’s reign he attempted to bring Russia into NATO. This was rejected by the West which indicated the real relationship between the USA and Russia.  Again I subscribe to let Mackinder’s Heartland theory to show us what lies behind these events in Georgia and Ukraine. They only serve American hegemony ambitions. We are now beginning to see how the American abandonment of the INF treaty by Washington shows how little Washington and NATO consider E.U. security as the war risks rise, and how E.U. war concerns over NATO gradually overwhelms the propaganda of Washington’s rhetoric.

This 2-part audio interview was posted on the audioboom.com Internet site on Tuesday and, as always, I thank Larry Galearis for his excellent executive summary.  For obvious reasons, I save it for my Saturday column. The link to Part 1 is in the headline — and here.   The link to Part 2 is here.


U.S. Cold Warriors escalate toward actual war with Russia — Stephen F. Cohen

Heedless of the consequences, or perhaps welcoming them, America’s Cold Warriors and their media platforms have recently escalated their rhetoric against Russia, especially in March.
Anyone who has lived through or studied the preceding forty-year Cold War will recognize the ominous echoes of its most dangerous periods, when actual war was on the horizon or a policy option. Here are only a few random but representative examples:

— In a March 8 Washington Post opinion article, two American professors, neither with any apparent substantive knowledge of Russia or Cold War history, warned that the Kremlin is trying “to undermine our trust in the institutions that sustain a strong nation and a strong democracy. The media, science, academia and the electoral process are all regular targets.” Decades ago, J. Edgar Hoover, the policeman of that Cold War, said the same, indeed made it an operational doctrine.

— Nor is the purported threat to America only. According to (retired) General David Petraeus and sitting Senator Sheldon Whitehouse, also in the Post on the following day, the “world is once again polarized between two competing visions for how to organize society.” For Putin’s Kremlin, “the existence of the United States’ rule-of-law world is intrinsically threatening.” This is an “intensifying worldwide struggle.” So much for those who dismissed post–Soviet Russia as merely a “regional” power, including former President Barack Obama, and for the myopic notion that a new Cold War was not possible.

But the preceding Cold War was driven by an intense ideological conflict between Soviet Communism and Western capitalism. Where is the ideological threat today, considering that post–Soviet Russia is also a capitalist country?

This long but worthwhile commentary by Stephen was posted on the rt.com Internet site at 12:38 p.m. Moscow time on their Thursday afternoon, which was 5:38 a.m. in Washington — EDT plus 7 hours.  I thank George Whyte for pointing it out — and another link to it is here.


Reaching for political heights? Trump’s statement on Golan sparks international uproar

U.S. President Donald Trump’s idea to recognize Israel’s sovereignty over the Golan Heights has sent shock waves throughout the world as nations in the Middle East and beyond slammed it as contrary to international law.

Trump has once again rocked the world with yet another demonstratively pro-Israeli stunt as he said it was time for the U.S. to officially recognize Israel’s sovereignty over the disputed Golan Heights. While Tel Aviv rejoiced at the news, the international community was definitely not amused as nations around the world, including America’s close allies, rushed to condemn the idea.

Trump’s suggestion has infuriated the Muslim world. Syria, which is recognized as the rightful owner of the Golan Heights under international law, condemned what it called an “irresponsible” statement, which shows Washington’s blatant bias towards the Israeli occupation and its “contempt” for international law.

Iran said that Trump’s “rash” decisions once again only demonstrate that U.S. policies pose a danger to the entire world as they push the already “volatile” Middle East towards “successive crises.” The Arab League denounced Trump’s statement as well by saying it was “completely beyond international law.”

U.S. NATO ally, Turkey, which has some tensions with Washington over its arms imports, also joined the chorus of critics as its president, Recep Tayyip Erdogan, said that the legitimization of the occupation of the Golan Heights cannot be allowed.

This news story was posted on the rt.com Internet site at 7:26 p.m. Moscow time on their Friday evening, which was 12:26 p.m. in Washington — EDT plus 7 hours.  I thank George Whyte for sending it our way — and another link to it is here.


Pompeo: God May Have Sent Trump to Save Israel From Iran

Is an apocalyptic war on Iran by the U.S. and Israel coming, driven by American Evangelical “rapture” theology of end times prophecy? Pompeo’s latest suggestion that God “raised Trump for such a time as this” doesn’t bode well for the region, or at least for those who hope to avoid a WWIII scenario. Apparently, Pompeo truly believes that Trump was sent by God to save Israel, and that the Golan is to be the first U.S. bestowed “gift” bringing the world closer to “end times” fulfillment.

While on his multi-country tour of the Middle East on Thursday, the U.S. secretary of state responded to a question from the Christian Broadcast Network’s Chris Mitchell during a press conference in Jerusalem, who asked, “could it be that President Trump right now has been sort of raised for such a time as this, just like Queen Esther, to help save the Jewish people from the Iranian menace?

Pompeo responded, “As a Christian, I certainly believe that’s possible” in agreement with the bizarre question. Crucially, this came the same day Trump tweeted his intention for the U.S. to formally recognize full Israeli sovereignty over the Golan Heights. This after Syria previously warned Israel its continued unlawful occupation of the long disputed territory would lead to war.

Pompeo added that he’s “confident that the Lord is at work here” in viewing firsthand the “remarkable history of the faith in this place and the work that our administration’s done to make sure that this democracy in the Middle East, that this Jewish state, remains.”

All of this makes the following a serious question: is the White House’s Middle East policy being driven by some kind of Evangelical apocalyptic desire to usher in biblical prophecy?

Wow! This Zero Hedge offering showed up on their Internet site at 8:25 p.m. EST on Friday evening — and another link to it is here.  On Wednesday, George Whyte sent me the following story from the salon.com Internet site headlined “Mike Pompeo criticized for allowing only “faith-based media” on State Department call“…which I declined to post at the time, but thought I should include it here to put the above scenario in some sort of perspective.


Russia Buys 1 Million Ounces of Gold In February –- Become Your Own Central Bank

Russia continues to add to its gold reserves and added another 1,000,000 ounces in February or 31.1 metric tonnes. Most analysts believe this buying will continue and may intensify in the coming months. Since 2007, we have clearly said that this would happen as currency wars deepen.

The latest large increase in Russia’s gold reserves has again gone largely unnoticed by most analysts except James Rickards – see tweet below.

Yesterday was the 20th of the month and you know what that means. New gold data from the Central Bank of Russia! They bought 31.1 tons in February, bringing total to 2,149 tons. Washington is finally noticing; part of the reason I was there Wednesday. This is the new Great Game.”

I had to laugh when I read the above tweet from Jim, because I was the one that e-mailed him that information in very wee hours of Thursday morning.  His reply to me in part read “Thanks Ed. Great twitter material!”  This brief commentary, along with an embedded chart and a 49-minute minute video interview with Mark, was posted on the goldcore.com Internet site on Friday sometime — and another link to it is here.


All that glitters, a walk through Dubai’s iconic Gold Souq

As you walk through the labyrynthine alleys, at the junction of two lanes – Sikkat Al Khail Road and Old Baladiya Road – is where you will find a haven for gold lovers.

Glittering jewellery, aromatic spices, the sound of the azaan or call for prayer and a buzz that is inimitably ‘Old Dubai’ — walk into Dubai’s Gold Souq and you might just feel like you’ve gone back in time.

Located in Deira’s Al Ras district, the Dubai Gold Souq is a traditional marketplace in a metropolitan city that has retained its Arabian feel through its architecture, items on sale, small shops and old-city charm. This traditional market is a hub for shoppers from across the world.

One striking feature of the souq is how it is filled with traders who have spent their entire lives in the market.

Walk into a tiny shop, tucked in between the bigger, branded shops, and you will be surprised to hear how many stories an old man sitting behind the counter can tell.

One such trader is Pakistani expatriate Mohammad Ashiq. He spoke about the time he met with Shaikh Rashid Bin Saeed Al Maktoum, 45-years ago.

He put a hand my shoulder and said: ‘Son, work hard and work honestly. Dubai is going to go very far ahead and so will you.’”

Everything is going really well. Even today, if you make sure you work hard and work honestly, you will have a great business,” he added.

This long picture/video clip-filled article put in an appearance on the gulfnews.com Internet site on Wednesday — and for length reasons, I’ve been saving it for Saturday’s column.  I found it on Sharps Pixley.  Another link to it is here.


The PHOTOS and the FUNNIES

Continuing on from Coalmont, I stopped to take these two photos as we approached Tulameen.  The first shot shows the general topography, which is called the “inter-mountain country” locally.  They are mountains, I suppose…made out of rock, etc…but are mere ‘hills’ compared to the nearby Northern Cascades, or the Rockies further east.  The Tulameen River, the Kettle Valley Railway right-of-way — and the highway to Tulameen are the left-to-right features in this shot.  Click to enlarge.

This second photo was taken about five minutes out of Tulameen — and I parked my vehicle on the road, as there was no traffic — and no shoulders worthy of the name.  My daughter is standing on the KVR right-of-way, with the Tulameen River on the far left.  This portion of the KVR right-of-way is now part of the Trans Canada Trail system.  Click to enlarge.


The WRAP

The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.” —  Ernest Hemingway


Today’s pop ‘blast from the past’ is one I feature about a year ago — and it’s time for a revisit.  It’s a cover of a Chicago tune by Moscow based rock group ‘Leonid and Friends‘.  The audio and video quality are second to none — and this cover is virtually indistinguishable from the original.  It’s had over 1.2 million views for a very good reason.  The link is here.  Enjoy.

While were visiting Mother Russia, I couldn’t help but pick today’s classical ‘blast from the past’ from there as well.  I know I’ve feature it before several times…too many times perhaps…but without doubt, this composition by Sergi Rachmaninoff is the most beloved of all the classical works from that country.  It’s his Piano Concerto No. 2 in C minor, Opus 18 — and this performance by Anna Fedorova is as good as it gets.  The Nordwestdeutsche Philharmonie accompanies the work, which was performed on 01 September 2013 at the Concertgebouw in Amsterdam.  Martin Panteleev conducts.  The link is here — and I promise I won’t feature it again for a very long time.


It was a very light volume trading day in both gold and silver on Friday.  The tiny rallies that began in both in early afternoon trading in the Far East, were halted in their tracks when the dollar index got ramped higher starting around 8:12 a.m. GMT in London on their Friday morning.  From that point, the gold price traded flat — and silver was sold quietly lower until the 11 a.m. EDT/3 p.m. GMT London close.  Then both crawled quietly and unevenly higher until trading ended at 5:00 p.m. EDT in New York.

But the sell-offs in the other two precious metals, particularly palladium, were pretty vicious — and it certainly looked like the powers-that-be are out to break the back of the ongoing rally in that precious metal.

The March delivery month for silver is drawing to a close — and the big April delivery month in gold is coming up hard, so roll-over/switch volume out of April and into future months is going to continue to be heavy right up until First Day Notice, which should be next Friday, March 29.  All the large traders that are standing for delivery next month, will have to roll or sell their April contracts before the close of COMEX trading next Thursday — and the rest will have to be out by the close of trading on the following day.  It’s also possible that First Day Notice may be on Thursday — and if that’s the case, then the aforesaid mentioned dates will come a day earlier than I just stated.

Here are the 6-month charts in the Big 6 commodities.  Besides palladium, both copper and WTIC got smacked pretty good yesterday as well.  Click to enlarge.

Well, it’s now official, as the world’s central banks have dropped all pretense…now joined by the Federal Reserve on Wednesday…and have only one policy objective.  That’s to prevent the implosion of the biggest financial and economic bubble the world has ever known, that they themselves created.

It’s a certainty that they’ve know this for years now, but would never publicly admit it.  They have emasculated themselves — and have no more aces to play, except for more QE and/or negative interest rates.  Even that would not be enough — and would most likely make matters far worse.

Allowing the free market to reign at this point would precipitate the biggest stock market crash in the history of Planet Earth, along with a concurrent melt-down of the world’s financial system.  Paper money of any kind would lose their purchasing power at blinding speed — and in extremis would drive precious metal prices to the moon and the stars as the only safe haven left.

The central banks, the powers-that-be, the deep state…call them what you will, will fight this outcome with all they have, but it won’t be enough.  The above outcome is inevitable in one form or another — and the only thing unknown is the speed of this unstoppable cataclysm…and whether or not it will be by circumstance, or design.

This Basel III thingy that starts next weekend is of interest — and as others besides myself have pointed out in the last few weeks, gold will become a Tier 1 asset, meaning it will be considered as good as cash or [gasp!] U.S. treasuries.  There’s no question in my mind that both gold and SDRs [Special Drawing Rights] are going to come to the fore at some point.  But how soon the IMF, the worlds central banks and governments, will be able to act on this once this new agreement comes into effect, remains an unknown.  However, that day is most certainly coming.  When that happens, the U.S. dollar will no longer be the world’s reserve currency, it will be the SDR — and the greenback will become just another regional currency…such as the Mexican peso, or the Russian ruble.

Jim Rickards wrote an excellent commentary about Special Drawing Rights back in September of 2017.  He was early in his prediction of course, but with Basel III coming into effect as the Monday trading day begins on April 1, 2019…all bets will be off, as the IMF table will be completely set for such an event.  The link to this must read article is here.

And in order for this new financial system to come into effect, it’s my opinion that a crisis will have to be precipitated — and none would be finer than an engineered melt-down of the “dead man walking” monetary, financial and economic system that currently exists today.  Once that was well underway, the IMF would come riding to the rescue.  Virtually overnight, probably on a weekend…with a few days worth of a world-wide bank ‘holiday’ thrown in for good measure, perhaps…the old world’s financial system would be swept away — and the new one would commence.

Then the world’s ‘reserve currency’ would be printed by an organization not accountable to anyone or any country — and that, in and of itself, is a scary thought.  But that outcome will be the only one acceptable to the banking elite of the world.

I think there’s very good reason why Russia and China, along with a handful of others have been accumulating gold within their own countries all these years.  And as for the gold held for other countries either at the Bank of England or the Federal Reserve Bank of New York…possession will turn out to be nine-tenths of the law, as they will be forced to “donate” their gold held there to this New World Financial Order coming down the pipe, as their chances of getting it back will evaporate.

And as Mark Byrne over at the goldcore.com Internet site stated in his commentary in the Critical Reads section above, you have to become your own Central Bank.  Because it’s also my opinion that once this new financial system is unleashed on the world, gold will sport a much, much higher value than it does now — and it will be priced out of reach to all except those with the deepest of pockets.  At that point, silver will become the new gold.

And as I said a few paragraphs ago, the countdown for “all of the above” begins on Monday.

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

Ed