So, Are We Done to the Downside Yet?

30 March 2019 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price didn’t do much of anything once trading began at 6:00 p.m. EDT on Thursday evening in New York.  It was tapped a bit lower [to a new intraday low price for this engineered price decline] shortly after the 2:15 p.m. afternoon gold fix in Shanghai — and from there it began to head higher at an ever-accelerating rate.  The price was capped minutes before the equity markets opened in New York on Friday morning, just as it was about to break above $1,300 spot — and once the afternoon gold fix was done at 10 a.m. EDT, it was sold quietly and unevenly lower until 4 p.m. in the thinly-traded after-hours market.  It then traded flat into the 5:00 p.m. EDT close from there.

The low and high ticks were recorded as $1,288.40 and $1,301.50 in the June contract.

Gold was closed in New York on Friday at $1,292.00 spot, up $2.30 from Thursday.  Net volume was pretty heavy at about 264,500 contracts — and there was a hair under 7,500 contracts worth of roll-over/switch volume in that precious metal.

The silver rose a few pennies — and then fell a few pennies during Far East trading on their Friday.  The low tick in silver came at the same time as gold’s…shortly before 3 p.m. CST.  From there, silver was led on the same price path as gold for the remainder of the Friday trading session.

The low and high ticks in this precious metal was recorded by the CME Group as $14.95 and $15.18 in the May contract.

Silver was closed yesterday at $15.09 spot, up 11 cents on the day.  Net volume was pretty healthy at 65,500 contracts — and there was a hair over 8,000 contracts worth of roll-over switch volume on top of that.

Platinum was up 7 bucks by shortly before 2 p.m. China Standard Time on their Friday afternoon, but once the afternoon gold fix in Shanghai was done…down went the price — and its low of the day came at the same moment as both silver and gold.  It began to rally steadily higher from that juncture — and was stopped dead in its tracks a few minutes after the equity markets opened in New York on their Friday morning.  It was sold down until a few minutes before 1 p.m. EDT — and really didn’t do much of anything after that.  Platinum was closed at $847 spot, up 9 dollars on the day — and 8 bucks off its high tick.

Palladium was up about 24 dollars by shortly before 3 p.m. CST, but suffered the same fate as the other three precious metals, as its low of the day came minutes after 3 p.m. over there.  It rallied until 10 a.m. in Zurich — and then traded sideways in a fairly tight range for the rest of the Friday session — and finished the day at $1,364 spot, up 38 bucks from Thursday’s close.

The dollar index closed very late on Thursday afternoon in New York at 97.02 — and opened exactly at the unchanged mark once trading began at 7:45 p.m. EDT on Thursday evening, which was 7:45 a.m. CST on their Friday morning.  It then went on a bit of a roller coaster ride starting at 12:55 p.m. China Standard Time — and ended shortly before 1:10 p.m. EDT in New York on their Friday afternoon.  The high and low ticks during that time period were 97.34 at 10 a.m. in London — and 97.01 at precisely 8:30 a.m. EDT in New York.  From 1:10 p.m. EDT onwards, the index didn’t do much of anything.  The dollar index finished the day at 97.28…up 8 basis points from Thursday’s close.

Once again what was going on with the dollar index had nothing to do with precious metal prices, as it was another COMEX paper affair again yesterday.

Here’s the DXY chart courtesy of BloombergClick to enlarge.

Here’s the 6-month U.S. dollar index chart — and the delta between its close…96.85…and the close on the DXY chart above, was 43 basis points on Friday.  Click to enlarge.

The gold stocks jumped up a bit over a percent at the open in New York yesterday morning — and their respective highs came at, or shortly before, the afternoon gold fix in London.  They fell and rose a bit from there until around 12:20 p.m. EDT — and from that point were quietly sold lower until the markets closed at 4:00 p.m.  The HUI finished down 0.18 percent.

The silver equities barely made it above unchanged once trading began in New York on Friday morning.  They then had a down/up move that ended shortly after 11:30 a.m. EDT — and from there they traded unevenly lower for the rest of the day, closing right on their respective low ticks.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 1.37 percent.  Click to enlarge if necessary.

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 it’s a sea of red.  All of that came courtesy of the engineered price decline in the four precious metals that began earlier in the week…with the real damage coming on Thursday.  Click to enlarge.

Here is the month-to-date chart — and it’s a mixed bag.  However, silver — and it’s associated equities really got it in the neck.  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 year, the silver equities are still outperforming their golden brethren.  Click to enlarge.

Last week in this space I said the following…”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.”  Unfortunately, that turned out to be rather prophetic.  And whether the ‘bottom’ is in for this move down, remains to be seen.


The CME Daily Delivery Report for Day 2 of the April delivery month showed that 823 gold and 413 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

In gold, there were eight short/issuers in total, but the only one that really mattered was JPMorgan once again, issuing 700 contracts out of its client account.  In very distant second spot was ABN Amro with 53 contracts out of its client account as well.  There were eight long/stoppers — and the two that mattered were Citigroup and Morgan Stanley…stopping 544 and 204 contracts for their respective in-house/proprietary trading accounts.

In silver, there were four short/issuers in total — and the only two that mattered here were ABN Amro and International F.C. Stone, as they issued 205 and 200 contracts out of their respective client accounts.  The head-and-shoulders largest long stopper of the seven in total was JPMorgan, picking up 359 contracts for its client account.

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 April declined by 1,071 contracts, leaving 2,809 still around, minus the 823 contracts mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 957 gold contracts were actually posted for delivery on Monday, so that means that 1,071-957=114 gold contracts vanished from the April delivery month.  Silver o.i. in April fell by 134 contracts, leaving 572 still open, minus the 413 contracts mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 141 silver contracts were actually posted for delivery on Monday, so that means that 141-134=7 more silver contracts just got added to April.

I suspect that Ted will have something to say about “all of the above” in his weekly commentary to his paying subscribers this afternoon…especially regarding the goings-on in the Daily Delivery Report.


There were no reported changes in GLD on Friday, but over at SLV, an authorized participant…most likely JPMorgan…took out 656,238 troy ounce of silver.

There was another tiny sales report from the U.S. Mint on Friday.  They sold 1,000 troy ounces of gold eagles — and 500 one-ounce platinum eagles.

For the month of March, the mint sold 11,500 troy ounces of gold eagles –5,500 one-ounce 24K gold buffaloes — 4,000 one-ounces platinum eagles — and only 850,000 silver eagles.  Pretty pathetic.  There is no retail bullion demand worthy of the name.

And, with the first quarter now ended, I’m still waiting for the Royal Canadian Mint to publish their Q4 and 2018 financial statements.

There was very little movement in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.  Nothing was reported received — and only 197 troy ounces was shipped out — and that occurred at HSBC USA.  There was also 1,089 troy ounces transferred from the Eligible category and into Registered.  I won’t bother linking these piddling amounts.

In silver, nothing was reported received, either — and only 2,961 troy ounces was shipped out — and that happened at HSBC USA and Delaware.  But there was another big transfer of silver from the Registered category — and back into Eligible…2,637,098 troy ounces in total.  Of that amount, there was 1,551,840 troy ounces transferred at CNT — and the remaining 1,085,257 troy ounces was transferred at Brink’s, Inc.  As Ted Butler pointed out on the phone on Thursday, this silver probably belongs to JPMorgan from March deliveries — and they’re keeping this silver in these depositories because their own silver vault may be full.  They changed categories, because the storage charges are cheaper when silver is in the Eligible category vs. Registered.  The link to all this activity is here.

There wasn’t much happening over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They reported receiving 73 of them — and shipped out 73 kilobars as well.  This activity was at Brink’s, Inc. of course — and I won’t bother linking this amount, either.


The Sion Treasure (also known as Kumluca treasure) is a group of liturgical objects and church furnishings from the 6th century A.D. found in Kumluca, Turkey in 1963. It consists of 53 to 58 objects. Some of the objects have become part of the Dumbarton Oaks Museum Collection in Washington D.C., as well as the Antalya Museum (Turkey). The treasure was discovered by local residents. Parts were sold to the antiques dealer Georges Zacos. Other parts were donated the Dumbarton Oaks Museum. During this time Turkish archaeologists carried out excavations in the area and found other silver objects that are currently part of the collection of the Antalya Museum. The Sion treasure also contains a total of three pairs of book covers.  The click to enlarge feature only helps with some of these photos.


The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, March 26, showed increases in the commercial net short positions in both silver and gold.  Both were bigger numbers that I was expecting…especially in gold.

And because of  the big engineered price decline in all four precious metals since the Tuesday cut-off, these numbers are very much yesterday’s news, so I’m only going to hit the highlights in both.

In silver, the Commercial net short position rose by 4,794 contracts, or 24.0 million troy ounces of paper silver.

They arrived at that number by selling 1,190 long contracts — and they also added 3,604 short contracts.  It’s the sum of those two numbers that represents the change for the reporting week.

The Commercial net short position is now up to 242.5 million troy ounces of paper silver.  Ted figures that JPMorgan may have added as many as 2,000 contracts to their short position in silver during the reporting week, bringing their short position up to around the 10,000 contract mark as of the Tuesday cut-off.  He also said that JPM has most likely eliminated their entire short position in silver since then.

Under the hood in the Disaggregated COT Report, the Managed Money traders only made up 2,590 contracts of the change in the Commercial net short position — and the traders in the ‘Nonreportable’/small trader categories made up for almost all of the rest, as the traders in the ‘Other Reportables’ category hardly did anything at all during the reporting week.

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

If one could view a COT Report for silver as of Friday’s cut-off, it would certainly be a far different beast than the one above.  Ted said that not only did the Managed Money traders sell a boat-load of long positions, but because silver was closed below its 200-day moving average on Thursday, they probably piled onto the short side in a big way as well.


In gold, the commercial net short position blew out by a very chunky 35,775 contracts, or 3.58 million troy ounces of paper gold.  Ted was not overly happy to see this — and neither was I.

They arrived at this number by selling 25,503 long contracts — and they also added 10,272 short contracts — and it’s the sum of those two numbers that represents their change for the reporting week.

Ted was of the opinion that JPMorgan didn’t do much, if anything in gold during the reporting week.

Under the hood in the Disaggregated COT Report it was, like in silver, only partly Managed Money that made up the change in the commercial net short position in gold.  They added 11,464 long contracts — and covered 16,048 short contracts — and it’s the sum of those two numbers…27,512 contracts, that represents their change for the reporting week.

The difference between that number — and the commercial net short position…35,755 minus 27,512 equals 8,243 contracts, was made up as it always is, by the traders in the ‘Other Reportables’ an ‘Nonreportable’/small traders category.

The commercial net short position in gold is now back up to 15.14 million troy ounces.

Here’s the 3-year COT chart for gold — and its rather healthy increase should be noted as well.  Click to enlarge.

JPMorgan et al blasted gold back below its 50-day moving average since the Tuesday cut-off, so it’s a reasonable assumption to make that all of last week’s increase in the commercial position has been reversed — and then some, since the Tuesday cut-off.

As is usually the case, 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 another 241 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 27,585 contracts, virtually unchanged from the previous week.  In platinum, the Managed Money traders increased their net long position by a very hefty 9,120 contracts — and are now net long the market by about 10,100 contracts.  Total open interest in this precious metal is 72,073 contracts, down about 2,700 contracts from last week’s report.  In copper, the Managed Money traders reduced their net long position by a further 25,818 COMEX contracts — and are now net short the COMEX futures market in copper by around 8,600 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 this past 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 122 days of world silver production, which is down 2 days from last week’s report — and the ‘5 through 8’ large traders are short an additional 61 days of world silver production, up 2 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 prior week’s COT Report, the Big 8 were also short 183 days of world silver production.]

In the COT Report above, the Commercial net short position in silver was reported as 242.5 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 242.5 equals 184.6 million troy ounces.

The reason for the difference in those numbers…as it always is…is that Ted’s raptors, the 34-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 10,000 contracts, up 2,000 contracts from last week’s report, or 50 million troy ounces of paper silver held short.  That translates into about 21 days of world silver production.  That number represents about 11 percent of the short position held by the Big 8 traders — and around 17 percent of the short position held by the Big 4 traders.

The Big 4 traders are short 122 days of world silver production — and once you subtract out the 21 days that JPM is short, that leaves 101 days split up between the other three large traders…a bit under 34 days that each is short.  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 61 days of world silver production in total, which is a bit over 15 days of world silver production each.  The smallest of the traders in this category holds something less than 15 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.  But according to Ted, JPMorgan most likely reduced its short position to zero since the Tuesday cut-off for the current COT Report, so these numbers…like the numbers in the above COT Report…are basically yesterday’s news/meaningless.  I’ll know more once next week’s COT and monthly Bank Participation Report are posted next Friday.

The Big 8 commercial traders are short 44.3 percent of the entire open interest in silver in the COMEX futures market, down a bit from the 45.2 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.  In gold, it’s now 36.9 percent of the total COMEX open interest that the Big 8 are short, up a very decent amount from the 32.7 percent they were short in last week’s report — and something over 40 percent once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 45 days of world gold production, up 5 days from the 40 days they were short in last week’s COT Report.  The ‘5 through 8’ are short another 20 days of world production, up 2 days from from the 18 days of world production they were short last week…for a total of 65 days of world gold production held short by the Big 8…up 7 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…unchanged from last week’s COT Report.

The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 67, 69 and 77 percent respectively of the short positions held by the Big 8.  Silver is down 1 percentage point from a week ago, platinum is unchanged from last week — and palladium is down 2 percentage points.

It was another very quiet news day and, once again, I don’t have a lot for you.


CRITICAL READS

Kudlow Calls For “Immediate” 50bps Rate-Cut, Signals Imminent Recession

Just weeks ago, President Trump’s top economic advisor Larry Kudlow was bloviating about the strength and sustainability of the U.S. economy as the cleanest dirty shirt in the world.

Something appears to have scared him as today, echoing Trump’s latest Fed pick Stephen Moore, Kudlow is calling for The Fed to “immediately” cut rates by 50bps.

Axios reports that Kudlow “would love to see” such a downward move, adding that the central bank shouldn’t have ever set overnight interest rates past 2%.

The market itself is pricing in almost 40bps of rate-cuts in 2019 while The Fed remains stuck at no rate-change in 2019.

The problem for Kudlow in calling for this immediate rate-cut is this – the last three recessions all saw a Fed rate-cut three months before they started.

However, it seems Kudlow has lost his mojo as the dollar is higher and stocks showed zero reaction to his comments.

So what is Kudlow worried about? This?  Click to enlarge.

This brief 3-chart news item showed up on the Zero Hedge website at 2:08 p.m. EDT on Friday afternoon — and another link to it is here.


The True Size of the U.S National Debt, Including Unfunded Liabilities, is 222 Trillion Dollars

The United States is on a path to financial ruin, and everyone can see what is happening, but nobody can seem to come up with a way to stop it.  According to the U.S. Treasury, the federal government is currently $22 trillion in debt, and that represents the single largest debt in the history of the planet.  Over the past decade, we have been adding to that debt at a rate of about $1.1 trillion a year, and we will add more than a trillion dollars to that total once again this year.  But when you add in our unfunded liabilities, our long-term financial outlook as a nation looks downright apocalyptic.  According to Boston University economics professor Laurence Kotlikoff, the U.S. is currently facing $200 trillion in unfunded liabilities, and when you add that number to our $22 trillion debt, you get a grand total of $222 trillion.

Of course we are never going to pay back all of this debt.

The truth is that we are just going to keep accumulating more debt until the system completely and utterly collapses.

And even though the federal government is the biggest offender, there are also others to blame for the mess that we find ourselves in.  State and local governments are more than $3 trillion in debt, corporate debt has more than doubled since the last financial crisis, and U.S. consumers are more than $13 trillion in debt.

When you add it all together, the total amount of debt in our society is well above 300 percent of GDP, and it keeps rising with each passing year.

This rather unsurprising commentary by Michael Snyder put in an appearance on the Zero Hedge website at 4:45 p.m. on Friday afternoon EDT — and another link to it is here.


Doug Noland: Everything Rally

Especially as the quarter was coming to an end, the divergent messages being delivered by the safe havens and risk markets somewhat began to weigh on market sentiment. Increasingly, collapsing sovereign yields were raising concerns. U.S. bank stocks were hammered 8.2% in three sessions only two weeks before quarter-end, reducing Q1 gains to 9.1%. Portending a global economy in some serious trouble?

I view the yield backdrop as confirmation of underlying fragilities in global finance – in the acute vulnerability of global Bubbles – stocks, bonds, EM, China Credit, European banks, derivatives, the ETF complex, and global speculative finance more generally. While risk market participants fixate on capturing unbridled short-terms speculative returns, the safe havens see the inevitability of market dislocation, bursting Bubbles and ever more central bank monetary stimulus.

And it wasn’t as if global fragilities receded completely during Q1. The Turkish lira sank almost 6.0% in two late-quarter sessions (March 21/22), with dislocation seeing overnight swap rates spike to 1,000%. Ten-year Turkish government bond yields surged about 300 bps in a week to 18.5%. Turkey CDS jumped 150 bps to 480 bps, heading back towards last summer’s panic highs (560bps). With rapidly dissipating international reserves and huge dollar debt obligations, Turkey is extremely vulnerable. Municipal elections Sunday.

A surge in EM flows gave Turkey’s (and others’) Bubble(s) a new lease on life. But as Turkey sinks so swiftly back into crisis mode, worries begin to seep into some quarters of the marketplace that fragilities and contagion risk may be Lying in Wait just beneath the surface of booming markets. The sovereign rally gathered further momentum, while the risk markets saw lower yields and eager central bankers as ensuring favorable conditions. Yet the more egregious the Everything Rally’s speculative run, the more problematic the inevitable reversal. It should be an interesting second quarter and rest of the year.

Doug’s weekly commentary appeared on his website in the very wee hours of Saturday morning EDT — and another link to it is here.


Stay Out of Western Hemisphere! Bolton Warns Russia Over Troops in Venezuela

The White House has dramatically stepped up its rhetoric threatening action against Russia’s military presence in Venezuela after the Kremlin deployed a troop contingency to Caracas last Saturday.

Trump’s national security adviser John Bolton took tensions to a new level, on Friday issuing a new Monroe doctrine of sorts, telling Moscow any attempt to establish or expand military operations in the western hemisphere constitutes a “provocative” and “direct threat” to international peace and security in the region.

We strongly caution actors external to the Western Hemisphere against deploying military assets to Venezuela, or elsewhere in the Hemisphere, with the intent of establishing or expanding military operations,” Bolton said in a statement.

We will consider such provocative actions as a direct threat to international peace and security in the region,” he added. This follows the president’s own warning on Wednesday that “all options” are on the table regarding potential expanding Russian presence in Venezuela.

Two Russian aircraft carrying about 100 servicemen and 35 tons of cargo arrived in Caracas last Saturday, led by Russian General Vasily Tonkoshkurov, identified as chief of the Main Staff of the Ground Forces and First Deputy Commander-in-Chief of the Land Forces of Russia.

Kremlin officials responded by explaining that it deployed military specialists merely to service preexisting arms contracts with Venezuela, and that Russia is not interfering in the Latin American country’s internal affairs.

Maduro will only use this military support to further repress the people of Venezuela; perpetuate the economic crisis that has destroyed Venezuela’s economy; and endanger regional stability,” Bolton said.

All of this also comes as the Maduro government stripped U.S.-backed opposition leader Juan Guaido of his position in the National Assembly, further barring him from holding public office for 15 years.

This Zero Hedge story appeared on their website at 6:25 p.m. on Friday evening EDT — and another link to it is here.


The Empire Files…Venezuela: An interview Alfred de Zayas…U.N. Human Rights Commission

This 39-minute video interview totally debunks the U.S. and main stream media’s story about the so-called humanitarian ‘crisis’ in Venezuela.  This interview is from three weeks ago, but it’s just as relevant now as it was back then.  I thank Michael Riedel for sending it our way — and it’s certainly worth watching if you want to see the U.S.’s ongoing attempt at regime change from the inside.


Can Japan Join the Multipolar Revolution – or Will U.S. Imperialism Bring It to Heel?

Relations between Japan and Russia have long been the subject of discussion within international-relations circles. The meetings between Prime Minister Abe and President Putin have been going on for years, yet the situation regarding the peace treaty between the two countries, never signed since the conclusion of the Second World War, is difficult to resolve. While the discussions appear to be about the status of the Kuril islands, they are in reality more profound, covering the role that Japan and Russia play in Asia, especially with regard to the other two regional superpowers, namely China and the United States.

Vladimir Putin and Shinzo Abe have met 25 times over five years, an average of five meetings a year, one every two-and-a-half months. Such an active relationship not only demonstrates the closeness between the two leaders but also their difficulty in trying to reach an agreement to solve the longstanding territorial dispute surrounding the Kuril Islands.

Understandably, Moscow does not intend in any way to renounce its sovereignty over the islands, especially given the geostrategic significance of the port city of Vladivostok. This important Russian city hosts Russia’s Pacific Fleet; and when one looks at the map, it is easy to understand the importance of the Kuril Islands. If these islands were militarized against the Russian Federation, then they could effectively block the Russian fleet’s access to the Pacific. Moscow faces the same problem with the Black Sea Fleet, where it needs to navigate through the Turkish Straits to reach the Mediterranean; the same is the case with the Baltic Fleet, located in St Petersburg and Kaliningrad, with Russian naval vessels having to navigate between Finland and Estonia, if coming from St Petersburg, and then through the Danish straits, between Sweden and Denmark, to reach the Atlantic Ocean.

For military and strategic reasons, unfettered access to the oceans is an absolute necessity for a major power like the Russian Federation; hence the importance of the Northern Fleet’s position in Severomorsk, and of the naval base in Tartus, Syria, which effectively allows Moscow to have access to the Atlantic and the Mediterranean Seas without having to worry about Turkey or the Nordic countries vis-à-vis St Petersburg and Kaliningrad.

This interesting commentary was posted on the strategic-culture.org Internet site on Monday —  and for content reasons, I’ve been saving it for Saturday’s column.  Another link to it is here.


Russia Is Dumping U.S. Dollars to Hoard Gold

Vladimir Putin’s quest to break Russia’s reliance on the U.S. dollar has set off a literal gold rush.

Within the span of a decade, the country quadrupled its bullion reserves, and 2018 marked the most ambitious year yet. And the pace is keeping up so far this year. Data from the central bank show that holdings rose by 1 million ounces in February, the most since November.

The data shows that Russia is making rapid progress in its effort to diversify away from American assets. Analysts, who have coined the term de-dollarization, speculate about the global economic impacts if more countries adopt a similar philosophy and what it could mean for the dollar’s desirability compared with other assets, such as gold or the Chinese yuan.

French President Emmanuel Macron said in an interview with CNN in November that European corporations and entities are too dependent on the U.S. currency, calling it “an issue of sovereignty.” Last year, Poland and Hungary surprised analysts by making the first substantial gold purchases by a European Union nation in more than a decade.

For Russia, experts are starting to question whether it can afford to keep up its intense pace of buying. Some say the country will import more gold to guard against geopolitical shocks and the threat of tougher U.S. sanctions as relations between the two powers continue to deteriorate. Gold buying last year exceeded mine supply for the first time. Still, others argue that Russia’s bullion demand is set to slow.

Nothing really new here, as you already know about this.  This gold-related news item showed up on the bloomberg.com Internet site at 5:00 p.m. Pacific Daylight Time on Thursday afternoon — and was updated about thirteen hours later.  I found it in a GATA dispatch that Chris Powell filed from Hong Kong early on their Saturday morning — and another link to it is here.


Rout Hammers Palladium After Slew of Bubble Warnings

Palladium posted the biggest weekly decline in more than three years as investors’ focus turned to demand amid concerns over slowing global growth.

The metal used in auto catalysts to curb emissions sank for the three days through Thursday before paring losses, putting it on course for an 11 percent weekly drop. The metal hit an all-time high on March 21 after a massive rally that spurred predictions a reversal was inevitable, with hedge funds cutting bullish bets.

Palladium futures for June delivery rose 2.5 percent to settle at $1,341.80 an ounce at 1:04 p.m. in New York, after dropping 7.9 percent Thursday and 6.2 percent the day before. The commodity slid 11 percent in March.

With the palladium market expected to be in deficit for an eighth year, manufacturers of gasoline vehicles have scrambled to get hold of supplies to meet stricter standards for pollution control.
Still, analysts surveyed by Bloomberg last week saw the metal ending the year in the $1,300s an ounce, partly as shortages are priced in and car sales in key markets slow. As prices scaled new highs in the first quarter, Saxo Bank A/S, Commerzbank AG and UBS Group AG were among banks warning of the potential for substantial pullbacks.

Like the engineered price declined in gold and silver that began earlier in the week, this waterfall price decline in palladium was strictly a COMEX paper affair in a very thinly-traded market at the best of times.  That will be more than evident in next Friday’s COT Report.  This Bloomberg article put in an appearance on their website at 7:46 p.m. PDT on Thursday evening — and it’s a story I found on the Sharps Pixley website.  Another link to it is here.


The PHOTOS and the FUNNIES

These three photos were taken at Harrison Lake/Hot Springs in mid-February of this year.  It was a beautiful sunny day — and despite the fact that that it was winter, there were scads of people out walking around and/or packing the local eating places.  This tourist spot is about a thirty minute drive west of Hope, B.C. on B.C. Highway 7.  This is certainly a place we’ll revisit when spring/summer gets here.  Click to enlarge.


The WRAP

Today’s pop ‘blast from the past’ dates was from 1964.  I was in Grade 10…sixteen years young…when this was hit — and what a hit it was!  The link is here.

Today’s classical ‘blast from the past’ is one I’ve posted only once before — and it’s time for a revisit.  I resist posting it, because I heard it so often in my youth, that I’m sick of it.  It’s Tchaikovsky’s Piano Concerto No. 1 in B minor, Op. 23.  It was composed between November 1874 and February 1875. It was revised in the summer of 1879 — and again in December 1888. The first version received heavy criticism from Nikolai Rubinstein, Tchaikovsky’s desired pianist. Rubinstein later repudiated his previous accusations and became a fervent champion of the work. It is one of the most popular of Tchaikovsky’s compositions and among the best known of all piano concertos.

Here’s the gifted [and luscious] Anna Federova doing the honours with the Nordwestdeutsche Philharmonie at The Royal Concertgebouw in Amsterdam on 14 October 2018.  [I feature her in last week’s classical ‘blast from the past’ when when she performed Rachmaninoff’s second piano concerto.]  It’s another audio/video tour de force — and the link is here.


Despite the rally attempts of all four precious metals yesterday, ‘da boyz’ put up a ‘STOP’ sign at around 9:10 a.m. EDT in COMEX trading in New York on Friday, as the rallies in all four were stopped dead in their tracks at, or near that time.  They were then turned lower once the afternoon gold fix in London was put to bed. ‘Da boyz’ are still around — and their iron grip is undiminished.

Here are the 6-month charts in all four precious metals, plus copper and WTIC.  Copper continues to crawl higher despite the carnage in the precious metals — and the price of WTIC was also unaffected.  This was purely a paper affair restricted to the precious metals in the COMEX futures market.  Click to enlarge.

So, are we done to the downside?  I don’t know for sure, as gold’s 200-day moving average remains unbroken.  However, as Ted pointed out on the phone yesterday, if they were really serious, their engineered price decline that began this week would have been far more brutal — and they wouldn’t have allowed the recovery rallies that we saw on Friday, if that was indeed their plan.


So, with April off the board in COMEX gold futures, Q1/2019 all done — and the new Basel III Accord for gold as a Tier 1 asset now in place…where to from here, you ask?

The short answer is…I don’t know — and that’s the long answer as well.

Whatever the world’s central banks have in store for us is still a carefully guarded secret.  But something is definitely afoot, as the current monetary, financial and economic situation that the world is in today continues to spin totally out of control — and the unpayable debt burdens continue to rise exponentially.

Economies everywhere are slowing sinking into recession, if not already there.  Only the b.s. government statistics — and the ongoing interventions in financial and equity markets of all types in the U.S., Japan and China, are preventing the whole sordid mess from imploding.

The canaries in the coal mine, the precious metals…gold in particular…are being kept quiet by the brutal and 24/7 interventions of the Big 8 traders, which are mostly U.S. banks and brokerage houses.

I haven’t quoted Peter Warburton’s three most famous paragraphs in a while, but I will today.  What he said back in April 2001 is even more relevant [and obvious] than it was way back then.

His essay was headlined “The debasement of world currency: It’s inflation but not as we know it”  — and here they are…under the sub-heading “Central banks are engaged in a desperate battle on two fronts“…

What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the U.S. dollar, but of all fiat currencies. Equally, they seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets. 

It is important to recognize that the central banks have found the battle on the second front much easier to fight than the first. Last November I estimated the size of the gross stock of global debt instruments at $90 trillion for mid-2000. How much capital would it take to control the combined gold, oil, and commodity markets? Probably, no more than $200 billion, using derivatives. Moreover, it is not necessary for the central banks to fight the battle themselves, although central bank gold sales and gold leasing have certainly contributed to the cause. Most of the world’s large investment banks have over-traded their capital [bases] so flagrantly that if the central banks were to lose the fight on the first front, then the stock of the investment banks would be worthless. Because their fate is intertwined with that of the central banks, investment banks are willing participants in the battle against rising gold, oil, and commodity prices.

Central banks, and particularly the U.S. Federal Reserve, are deploying their heavy artillery in the battle against a systemic collapse. This has been their primary concern for at least seven years. Their immediate objectives are to prevent the private sector bond market from closing its doors to new or refinancing borrowers and to forestall a technical break in the Dow Jones Industrials. Keeping the bond markets open is absolutely vital at a time when corporate profitability is on the ropes. Keeping the equity index on an even keel is essential to protect the wealth of the household sector and to maintain the expectation of future gains. For as long as these objectives can be achieved, the value of the U.S. dollar can also be stabilized in relation to other currencies, despite the extraordinary imbalances in external trade.”

That’s the battle that the U.S. banking system and brokerage houses have been fighting ever since they rescued the markets in the crash of ’87…and the battle has actually been going on far longer than that.  It all began to unravel when Nixon took the world off the gold standard back in 1971 — and we’ve been on a purely fiat currency regime since.

As I’ve said before on several occasions, the world’s monetary system is long past its ‘best before’ use date — and that’s why I think it’s a certainty that this Basel III agreement, with gold now classified as a Tier 1 asset, will come into play at some point.  The only uncertainty is what that date might be.

But as I said in last Saturday’s missive…

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.”

That scenario, or one similar to it, is certainly in our futures — and as I just stated a few paragraphs ago, who knows when that will be allowed to happen.  It’s a certainty that this disaster scenario will develop in only one of two ways, a black swan event totally out of left field that no one sees coming, or it will occur by design.  I’m expecting the latter, as the powers-that-be  would want to be in as total control of events as possible when it does come down.

So we wait some more.

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

Ed