How Blatant Can you Get…Yet Again

15 June 2019 — Saturday


The gold price began to wander quietly higher once trading commenced in New York at 6:00 p.m. EDT on Thursday evening — and that lasted until around 11 a.m. China Standard Time on their Friday morning.  It didn’t do much after that until a few minutes before 2 p.m. CST — and then it began to head higher.  The market appeared to go ‘no ask’ at the 2:15 p.m. afternoon gold fix in Shanghai, but the short sellers appeared in an instant, as volume exploded — and the gold price was capped and turned lower a few minutes after the 8 a.m. BST open in London.  It drifted a bit lower until ‘da boyz’ showed up at the COMEX open in New York.  Their handiwork came to an end a few minutes after 2 p.m. in the thinly-traded after-hours market — and it crept a bit higher into the 5:00 p.m. EDT close, but was not allowed to finish the Friday session showing a gain on the day.

The CME Group recorded the high and low ticks as $1,362.20 and $1,341.40 in the August contract.

Gold was closed in New York on Friday at $1,341.10 spot, down 80 cents on the day.  Net volume was ginormous once again at just under 342,500 contracts — and there was 17,500 contracts worth of roll-over/switch volume on top of that.

JPMorgan et al guided silver on the exact same price path as gold so, for the third day in a row, there’s no need for a play-by-play in this precious metal.  However, it should be noted that silver blasted above its 200-day moving average during the Friday session — and was closed back below it — and right on its 50-day moving average…to the penny.

The high and low ticks in silver were reported as $15.12 and $14.775 spot in the July contract.

Silver was closed on Friday at $14.84 spot, down 4.5 cents on the day — and safely back below $15 spot.  Net volume was very heavy at a hair over 98,000 contracts — and there was a hair under 18,000 contracts worth of roll-over/switch volume out of July and into futures months.

The platinum price traded a few dollars either side of unchanged in Far East trading on their Friday — and was up 2 bucks by the Zurich open.  Its high price tick of the day came shortly before 11 a.m. CEST — and it was all down hill from there until about thirty minutes before the Zurich close.  It rallied 5 dollars from there, but was turned lower once again at 1 p.m. in New York — and it revisited its low tick at the COMEX close.  It didn’t do much of anything after that.  Platinum was closed on Friday at $802 spot, down 8 dollars on the day.

The palladium price traded flat in most of Far East trading, but was up 3 dollars by the Zurich open.  Like platinum, it rallied from there, but was obviously capped and turned lower shortly before 11 a.m. CEST. From that juncture it was sold back to a few dollars below unchanged by 9 a.m. in New York — and at that point it began to rally anew.  It then spiked higher at 1 p.m. in New York, but the short sellers were there in a flash — and it did next to nothing in the very thinly-traded after-hours market.  Palladium finished the day at $1,448 spot, up an even 20 bucks from Thursday’s close.  And, like the other three precious metals, would have closed significantly higher if it had been allowed to trade freely.

The dollar index closed very late on Thursday afternoon in New York at 97.01 — and opened unchanged once trading began at 7:45 p.m. EDT in Thursday evening, which was 7:45 a.m. China Standard Time on their Friday morning.  It rose and fell a handful of basis points between then and 9:14 a.m. BST in London, with the 96.94 low coming at that time — and at that juncture, ‘da boyz’ hit the ‘ramp the dollar index/engineer gold and silver prices lower’ button.  All the gains that mattered were in by 1 p.m. in New York — and the index chopped sideways from there into the 5:30 p.m. EDT close.  The dollar index finished the Friday session at 97.57…up 56 basis points from Thursday.

A more blatant and in-your-face market manipulation in both the dollar index and the precious metals, could hardly be imagined.  It is was so obvious that “both Stevie Wonder and Ray Charles could see it“…as Ted mentioned on the phone yesterday.

Here is the DXY chart, courtesy of Bloomberg as usual.  Click to enlarge.

And here’s the 5-year U.S. dollar index chart, courtesy of the good folks over at the Internet site.  The delta between its close…97.07…and the close on the DXY chart above, was 50 basis points on Friday.  Click to enlarge as well.

The gold stocks opened up a bit under two percent in morning trading in New York, but that was as high as they were allowed to get — and they sagged a bit until minutes after 1 p.m. when ‘da boyz’ really laid into the gold price for the second time during COMEX trading.  The sell-off, which certainly looked suspicious, lasted until 2:30 p.m. EDT — and they managed to crawl back to about the unchanged mark by the 4:00 p.m. close.  The HUI finished down by a negligible 0.05 percent.

Nick now has his Silver Sentiment/Silver 7 chart up and running again, thankfully.  It shows that the Silver 7 Index was up 5.24 percent on a net basis since it went off line three trading days ago. However, I can compute Friday’s action — and that shows that the Silver Sentiment/Silver 7 Index closed lower by 1.15 percent, but was up 2.50 percent intraday at its high tick.  This chart will be back to normal on Monday.  Click to enlarge.

And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart — and it basically shows what it should — and updated with each day’s doji, as Nick gets his data for this chart from another source, which is something I forget entirely about until went to put this paragraph together.  Click to enlarge as well.

Here are the usual three charts from Nick that show what’s been happening for the week, month — 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 was another good week, even though gold finished unchanged —  and silver actually closed down a hair.  It’s green across the board, although we would have had much more impressive gains if ‘da boyz’ hadn’t been out and about in force on both Monday and Friday.  Click to enlarge.

The month-to-date chart is far more impressive looking — and it should be noted that the equities vastly outperformed the underlying precious metals…the silver equities in particular.  Click to enlarge.

Here’s the year-to-date chart — and it’s much improved.  But the fact that JPMorgan continues to hold a near death grip on silver is obvious in this chart — and that’s certainly reflected in the state of the Silver 7 Index.  Platinum is still barely above unchanged, but that’s because ‘da boyz’ have been engineering its price lower over the last month.  Palladium continues its climb off its recent lows.  Click to enlarge.

Despite the huffing and puffing by JPMorgan et al, the precious metal complex is certainly in play now — and the four-letter gold word is far more frequent in the main stream financial press now.  It will go ever stronger as the year progresses.

The CME Daily Delivery Report showed that 119 gold and 40 silver contracts are posted for delivery within the COMEX-approved depositories on Tuesday.

In gold, the three short/issuers were Advantage, ADM and International F.C. Stone, with 73, 28 and 18 contracts out of their respective client accounts.  There were four long/stoppers in total, but the only two that mattered were JPMorgan and Advantage, with 93 and 24 contracts for their respective client accounts as well.

In silver, ADM was the sole short/issuer — and Goldman Sachs stopped 34, with JPMorgan picking up the other 6.  All contracts, both issued and stopped, involved their respective client accounts.

The link to yesterday’s Issuers and Stoppers Report is here.

So far this month there have been 1,813 gold contracts issued/reissued and stopped — and that number in silver is 350.

The CME Preliminary Report for the Friday trading session showed that gold open interest in June continues to rise, as another 286 gold contracts were added yesterday, leaving 590 still open, minus the 119 contracts mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 106 gold contracts were actually posted for delivery on Monday, so that means that another 106+286=392 gold contracts were just added to the June delivery month.  That’s a lot!  Silver o.i. in June also rose — and by a very chunky 240 contracts, leaving 241 still around, minus the 40 mentioned a few short paragraphs ago.  Thursday’s Daily Delivery Report showed that zero silver contracts were actually posted for delivery today, so that means the obvious…that 240 more silver contracts were added to June.

Someone obviously wants physical metal in a hurry.  What’s the rush, I wonder?  Let’s see who the issuers and stoppers turn out to be.  The Daily Delivery Report above should give us some clue.

There was an addition to GLD on Friday, as an authorized participant deposited 141,637 troy ounces — and there were no reported changes in SLV.

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

Month-to-date the mint has sold 4,000 troy ounces of gold eagles — 3,000 one-ounce 24K gold buffaloes — and 550,000 silver eagles.  Pretty pathetic.

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

It was certainly busier in silver, as 1,208,796 troy ounces…two truckloads…were reported received — and all of that ended up at JPMorgan, so their silver vault is obviously not completely full just yet.  There was 2,168 troy ounces shipped out — and that activity was at Delaware.  The link to this is here.

There was very little activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  Nothing was reported received — and only 51 were shipped out.  All of that activity was at Brink’s, Inc…which I won’t bother linking.

Here’s a chart that Nick slid into my in-box late on Friday afternoon PDT — and I thought it should go in today’s column, rather than waiting until Tuesday’s missive.  It shows the amount of gold withdrawn from the Shanghai gold exchange in May…123.1 tonnes, which wasn’t a lot — and it’s a given that Lawrie Williams will have something to say about this over the weekend — and I’ll post his comments next week.  Click to enlarge.

The Ribchester Helmet is a Roman bronze ceremonial helmet dating to between the late 1st and early 2nd centuries A.D., which is now on display at the British Museum. It was found in Ribchester, Lancashire, England in 1796, as part of the Ribchester Hoard. The model of a sphinx that was believed to attach to the helmet was lost.

The helmet was impractical for protecting a soldier in battle. The helmet was intended for displays of elite horsemanship known as hippika gymnasia or cavalry sports.

The helmet was part of the Ribchester Hoard, which was discovered in the summer of 1796 by the son of Joseph Walton, a clogmaker. The boy found the items buried in a hollow, about three metres below the surface, on some waste land by the side of a road leading to Ribchester church, and near a river bed. The hoard was thought to have been stored in a wooden box and consisted of the corroded remains of a number of items but the largest was this helmet. In addition to the helmet, the hoard included a number of paterae, pieces of a vase, a bust of Minerva, fragments of two basins, several plates, and some other items that the antiquarian collector Charles Townley thought had religious uses. The finds were thought to have survived so well because they were covered in sand.

The helmet and other items were bought from Walton by Townley, who lived nearby at Towneley Hall. Townley was a well-known collector of Roman sculpture and antiquities, who had himself and his collection recorded in an oil painting by Johann Zoffany. Townley reported the details of the find in a detailed letter to the secretary of the Society of Antiquaries, intended for publication in the Society’s Proceedings: it was his only publication. The helmet, together with the rest of Townley’s collection, was sold to the British Museum in 1814 by his cousin, Peregrine Edward Towneley, who had inherited the collection on Townley’s death in 1805.  Click to enlarge.

The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday was somewhat worse than Ted expected/hoped for in silver — and pretty much spot on in gold, which wasn’t happy news, either.

In silver, the Commercial net short position increased by 12,902 contracts, or 64.5 million troy ounces of paper silver.

They arrived at that number by increasing their long position by 3,438 contracts, but the also added 16,340 short contracts — and it’s the difference between those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report, it was virtually all Managed Money traders, as they increased their long position by 8,560 contracts — and they also reduced their short position by 2,916 contracts…all for a loss.  It’s the sum of those two numbers…11,476 contracts…that represents their change for the reporting week.

The difference between that number — and the Commercial net short position…12,902 minus 11,476 equals 1,426 contracts.  That difference, as it always is, was made up by the traders in the other two categories, with most of it occurring in the ‘Nonreportable’/small trader category, as the ‘Other Reportables’ didn’t do much.

The Commercial net short position in silver is now back up to 126.0 million troy ounces.

Ted wasn’t able ascertain what JPMorgan did during the reporting week.  Are they still net long the market, or did they sell their entire long position during that time?  I’m sure he’ll ‘sleep on it’ — and have something to say about it in his weekly review later today.

Here’s the 3-year COT chart from Nick — and the deterioration should be noted.  Click to enlarge.

Without doubt there has been a further increase in the Commercial net short position in silver since the Tuesday cut-off, but with two more trading days left in the reporting week, it would be foolish to speculate on what next Friday’s COT Report will show.

In gold, the commercial net short position blew out by another 29,451 contracts, or 2.95 million troy ounces of paper gold.

They arrived at that number by adding 5,202 long contracts — and they also increased their short position by 34,653 contracts.  It’s the difference between those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report, it was all Managed Money traders plus a bit more, as they increased their long position by 9,977 contracts — and also covered 23,001 short contracts…all for big losses.  It’s the sum of those two numbers…32,978 contracts…that represents their change for the reporting week.

The difference between that number — and the commercial net short position…32,978 minus 29,451 equals 3,527 contracts.

As always is the case, that difference was made up by the traders in the other two categories, but both went about it differently, as the ‘Other Reportables decreased their net long position by 4,855 contracts — and the ‘Nonreportable’/small traders increased their net long position by 1,328 contracts.  The difference between those two numbers…4,855 minus 1,328 equals 3,527 contracts…which it must be.

The commercial net short position is now up to 20.20 million troy ounces of paper gold.  Ted calls this “market neutral” on an historical basis, which is certainly correct.  But that doesn’t make me feel any better.

Here is the 3-year COT chart for gold — and the increase in the commercial net short position should be noted as well.  Click to enlarge.

Like in silver, the commercial net short position has certainly increased since the Tuesday cut-off, if one could see that report as of the close of COMEX trading on Friday.  But, as I mentioned in my discussion on silver, there are still two days left in the current reporting week.

In the other metals, the Manged Money traders in palladium increased their net long position in this precious metal by a further 519 contracts.  The Managed Money traders are net long the palladium market by 10,051 contracts…over fifty percent of the total open interest.  Total open interest in palladium is 19,001 COMEX contracts, up 277 contracts from the previous week.  As you you already know, it’s a very tiny market.  In platinum, the Managed Money traders decreased their net short position by 2,788 contracts during the reporting week.  The Managed Money traders are net short the platinum market by a very hefty 15,699 COMEX contracts.  In copper, the Managed Money traders increased their net short position in that metal by a further 6,536 contracts during the reporting week — and are now net short the COMEX futures market by a whopping 52,305 contracts.  That translates into a short position of 1.31 billion pounds of the stuff.

Once again — and as always, it is Managed Money buying and commercial selling that account for virtually 100 percent of the price changes in gold and silver — and here’s a chart from Nick that shows that tight correlation in gold…close to 95 percent.  Normally I’d post the same chart for silver, but alas, Nick doesn’t have one.  Click to enlarge.

Any so-called precious metal ‘analyst’ that doesn’t mention that fact prominently, can be safely ignored.  Remember, there are no barriers to writing on the Internet, as virtually all commentary is free, so you have to be on your guard as to its veracity.  The only other alternative as to why it’s not mentioned, is contained in this quote…

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 98 days of world silver production, which is down 1 day from last week’s report — and the ‘5 through 8’ large traders are short an additional 70 days of world silver production, which is up 9 days from last week’s report — for a total of 168 days that the Big 8 are short, which is a bit over five and a half months of world silver production, or about 392.1 million troy ounces of paper silver held short by the Big 8.  [In the prior week’s COT Report, the Big 8 were short 160 days of world silver production.]

In the COT Report above, the Commercial net short position in silver was reported as 126.0 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 392.1 million troy ounces.  The short position of the Big 8 traders is larger than the total Commercial net short position by a chunky 392.1 minus 126.0 equals 266.1 million troy ounces.

The reason for the difference in those numbers…as it always is…is that Ted’s raptors, the 38-odd small commercial traders other than the Big 8, are net long that amount.

As I mentioned in my COT commentary in silver above, Ted is unsure if JPMorgan continues to hold a long position in the COMEX futures market in silver or not.

The Big 4 traders now in that category are short, on average, about…98 divided by 4 equals…24.5 days of world silver production each — and at least one of them still comes from the ranks of the Managed Money category.  The four traders in the ‘5 through 8’ category are short 70 days of world silver production in total, which is 17.5 days of world silver production each.

The Big 8 commercial traders are short 34.7 percent of the entire open interest in silver in the COMEX futures market, which is basically unchanged from the 34.6 percent they were short in last week’s report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be around the 40 percent mark.  In gold, it’s now 41.7 percent of the total COMEX open interest that the Big 8 are short, up a decent amount from the 38.2 percent they were short in last week’s report — and something over 45 percent once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 48 days of world gold production, up 9 days  from what they were short in last week’s COT Report.  The ‘5 through 8’ are short another 24 days of world production, down 1 day from what they were short last week…for a total of 72 days of world gold production held short by the Big 8…up 8 days from last week’s report.  Based on these numbers, the Big 4 in gold hold about 67 percent of the total short position held by the Big 8…up 6 percentage points 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 58, 66 and 84 percent respectively of the short positions held by the Big 8.  Silver is down 4 percentage points from a week ago, platinum is up 2 percentage points from last week — and palladium is unchanged from a week ago…and still at its record high.

If you look at the above ‘Days to Cover‘ chart above, you can see these percentages for yourself between the red and the green bars for each precious metal.  The grotesque short position of the Big 4 traders, relative to the positions of the Big 8 traders in palladium, should be noted.  It has been at this extreme level for many weeks now.

I have an average number of stories for you today.


A Morgan Stanley economic indicator just suffered a record collapse

A reading of the economy from Morgan Stanley is signaling “June gloom.”

Morgan Stanley’s Business Conditions Index, which captures turning points in the economy, fell by 32 points in June, to a level of 13 from a level of 45 in May. This drop is the largest one-month decline on record and the lowest level since December 2008 during the financial crisis, according to the firm.

The decline shows a sharp deterioration in sentiment this month that was broad-based across sectors,′ economist Ellen Zentner said in a note to clients. “Fundamental indicators point to a broad softening of activity, but analysts did not widely attribute the weakening to trade policy.”
Fears of a possible economic slowdown were raised last week after a much worse than expected jobs report. The economy added just 75,000 jobs in May, according to the Labor Department last Friday. A report Thursday showed a spike in jobless claims last week. Manufacturing activity last month grew at the slowest pace in two years.

This not-very-surprising story was posted on the Internet site at 2:01 p.m. EDT on Thursday afternoon — and I thank Swedish reader Patrick Ekdahl for pointing it out.  Another link to it is here.

The Extinction of the Fiscal Conservative — Bill Bonner

The Dow rose yesterday. Gold rose, too. Dow investors are betting on clear skies and smooth sailing. Gold investors are betting on icebergs.

Who’s right?

We don’t know. Perhaps both are betting on rate cuts. Like a gust of wind, more fake money, lent at fake rates, may push them both along… in the short run.

In the long run, our money is on the icebergs.

And it begins with politics. Ultimately, the feds control the money we use. And over a long, painful history, they learned – and we all learned – that no human being can be trusted to create fake money at will.

John Law was the world’s first modern central banker to make counterfeiting a matter of public policy. His fake money system collapsed in 1720.

This… and many other 18th-century paper money disasters… persuaded governments to rely on metal for their money.

This very worthwhile commentary from Bill appeared on the Internet site early on Friday morning EDT — and it’s definitely worth reading.  Another link to it is here.

The “Deficits Don’t Matter” Folly — David Stockman

Well, that was timely. The U.S. Treasury just posted a record $207 billion deficit for May and record monthly spending of $440 billion. That brought the rolling 12 month deficit to just shy of the trillion dollar mark at $986 billion.

The timely part is two-fold.

First, it just so happens that May marked month #119 of the current expansion, making it tied for the duration record with the 1990s cycle. But even JM Keynes himself would be rolling in his grave in light of the chart below.  Click to enlarge.

To wit, even by the lights of hardcore Keynesians of yore, fiscal deficits were supposed to be falling sharply at the end of a business cycle or even moving into surplus as they did in 1999-2000, not erupting toward 5% of GDP as has now happened.

The second timely note, of sorts, is that The Wall Street Journal was Johnny on the Spot this AM with a front page story entitled, “How Washington Learned to Love Debt and Deficits“.

The story’s quote from the current Dem Chairman of the House Budget Committee, John Yarmouth, says it all. There simply has never been such bipartisan complacency about the nation’s public finances in all of modern history—-including during the biggest borrow and spend days of FDR, LBJ and every president since Gerald Ford:

Rep. John Yarmuth (D., Ky.), House Budget Committee chairman, says he rarely hears from constituents concerned about rising deficits and debt. Many voters’ attitudes, he says: “There haven’t been any cataclysmic consequences, so why worry about it?

This long chart-filled commentary from David was posted in the clear on the Zero Hedge website at 9:45 p.m. on Friday evening EDT — and another link to it is here.

Doug Noland: Q1 2019 Z.1 “Flow of Funds”

Systems have become acutely unstable. Market-based Credit so dominates system Credit that “risk on”/“risk off” speculative dynamics now exert an acutely destabilizing impact on financial conditions, Credit expansion, securities prices, Household Net Worth and economic performance. In this highly speculative market environment, “risk on” ensures loose financial conditions, Credit and speculative excess and vigorous market inflation, while exacerbating economic maladjustment.

When “risk on” invariably succumbs to “risk off,” financial conditions abruptly tighten, debt issuance tanks, system Credit growth drops sharply, markets turn illiquid, Bubbles falter, equities prices sink, Household Net Worth deflates, and the Bubble Economy commences a downward spiral. Worse yet, these dynamics are a global phenomenon.

Is the Fed really about to further feed “risk on”, stoking Bubble excess in the process? I’ll assume the Powell Fed would rather sit this one out. They are, of course, ready to respond in the event of “risk off.” But at this speculative blow-off Bubble phase, things tend to unwind really quickly. Global bonds appreciate the acute fragility and are priced for rate cuts and aggressive QE deployment.

The global yield collapse is not so much in response to economic weakness and trade war risks. The global financial system is an accident in the making. China is an accident in the making. Markets are demanding: “Give us rate cuts and prepare for aggressive QE – or we’ll give you central bankers the type of vicious market accident you are not prepared to contend with!” The Fed is faced with the Hobson’s Choice of either stoking the Bubble or waiting for incipient “risk off” – and hoping it possesses the firepower to hold things together. Markets bet confidently the Fed lacks the fortitude to wait.

Doug’s weekly commentary put in an appearance on his Internet site in the wee hours of Saturday morning — and another link to this very worthwhile but heavy slogging narrative is linked here.

For those who don’t understand inflation — Alasdair Macleod

This brief summary of current thinking in financial markets ignores the fact that a catastrophic tariff-cum-credit-cycle mixture is baking in the economic cake. Crashing government bond yields, reflecting a flight to relative safety, are only the start of it. If the 1929-32 comparison is valid, today we have the additional problems of excessive government debt coupled with consumer debt, and hundreds of trillions of over-the-counter derivatives adding to systemic risk. The banking system all but collapsed in the 1930s, as banks desperately dumped collateral assets into falling markets. This time, the debt is not confined to industry; a debt contraction will hit consumers directly and threaten domino defaults in OTC derivatives as well.

Obviously, this cannot be permitted to happen. Whatever it takes to prevent a debt-deflation spiral developing is de facto official policy. The only solution central bankers have is to flood the economy with a tsunami of interest-free money, which will be in addition to the monetary expansion which has continued since the Lehman crisis.

As our tariff and credit cycle mixture bakes in the economic cake, infinite monetary inflation will be the response. At some point, financial markets will wake up to the consequences. It could be sudden and relatively soon. The chart below, of the euro-dollar exchange rate warns us that the two most important fiat currencies are about to experience a sudden change in their relationship, likely to have far-reaching consequences.

This longish commentary from Alasdair was posted on the Internet site on Thursday sometime — and I found it on the website yesterday.  Another link to it is here.

Trump’s Trade Threats Are Really Cold War 2.0 — Michael Hudson

President Trump has threatened China’s President Xi that if they don’t meet and talk at the upcoming G20 meetings in Japan, June 29-30, the United States will not soften its tariff war and economic sanctions against Chinese exports and technology.

Some meeting between Chinese and U.S. leaders will indeed take place, but it cannot be anything like a real negotiation. Such meetings normally are planned in advance, by specialized officials working together to prepare an agreement to be announced by their heads of state. No such preparation has taken place, or can take place. Mr. Trump doesn’t delegate authority.

He opens negotiations with a threat. That costs nothing, and you never know (or at least, he never knows) whether he can get a freebee. His threat is that the U.S. can hurt its adversary unless that country agrees to abide by America’s wish-list. But in this case the list is so unrealistic that the media are embarrassed to talk about it. The U.S. is making impossible demands for economic surrender that no country could accept. What appears on the surface to be only a trade war is really a full-fledged Cold War 2.0.

This rather brief, but very worthwhile commentary from Michael put in an appearance on the Internet site on Thursday — and it comes to us courtesy of Larry Galearis.  Another link to it is here.

Find A Need And Fill It — Dennis Miller

Northwestern University sits on the shores of Lake Michigan. It’s a beautiful campus, particularly when the leaves are turning golden. I left work and drove to night school to begin the fall semester.

I thought to myself, ‘I want to be an accountant, why is a marketing course required?’ Marketing 101, here I come.

Professor Howard was an executive in a major advertising agency and taught in the evening division. I quickly learned the value of professors serving the business world, versus pure academics.

In big letters on the blackboard – “Find A Need And Fill It!” – the subject of the first night’s lecture.

I looked out the open window and felt the cool evening breeze when he walked in.

He explained this premise is a basic marketing truth. He shared exciting, personal stories. I was mesmerized – for the entire semester.

My life changed forever. For almost four decades I served as a marketing consultant to 40 of the top 500 U.S. corporations – applying Professor Howard’s basic truth to my clients.

This interesting commentary from Dennis showed up on his website on Thursday sometime — and another link to it is here.

Turkey Sinks Deeper Into Junk After Moody’s Downgrades to B1, Warns of Government Default Risk

When it rains, it pours for Turkey, which already saw its currency slump earlier in the day when its foreign minister, Murat Cavuosglu, said that Ankara is ready to retaliate to any U.S. sanctions imposed upon the NATO member state by the U.S. over Turkey’s purchase of a Russian S-400 missile system. And then, with markets set to close for the day and today’s pounding of the Turkish lira put in the history book, Warren Buffett’s favorite rating agency, Moody’s, delivered what tomorrow will surely be called an act of aggression and prompt Erdogan to expel any Moody’s employees from Turkey and confiscate any office they may have in the country, namely a downgrade of Turkey deeper into junk territory, cutting its credit rating by one notch from Ba3 to B1, outlook negative.

As Moody’s explained “today’s downgrade reflects the view that the risk of a balance of payments crisis continues to rise, and with it the risk of a government default.” Pretty self-explanatory.

The news spiked the lira – which continues to be inexplicably bid after every incremental piece of bad news by “unknown” traders – as much as 300 pips lower, before the loss was cut in half, and the USD/TRY closed the day at 5.8951. Of course, now that not only is Turkey’s sale of sovereign debt going to be that much more expensive, but once Trump does in fact hike tariffs on Turkey, there will be the usual bevy of “traders” angrily asking how they failed to sell the lira at the current extremely generous levels when they could.

Turkey is indeed once again facing intermittent currency crises after a period of relative calm that lasted from late September 2018 through February 2019. In consequence, both gross and net reserves have fallen since February, with the decline in net reserves being particularly pronounced. Gross and net reserve levels have been structurally weak for many years, but this decline contributes to a significant increase in external vulnerability for the country. In 2019, Moody’s expects that short-term external debt repayments, currently maturing long-term external debt, and total non-resident deposits will total more than 2.6 times the level of FX reserves. Moreover, funding costs have risen rapidly, with yields up by around 400 basis points since February.

This long commentary put in an appearance on the Zero Hedge website at 5:18 p.m. EDT on Friday afternoon — and I thank Brad Robertson for sending it our way.  Another link to it is here.

U.S. Officials Say Tanker Crew “Detained” – While Russia Thanks Iran For “Rescuing” Its Nationals

Just after his trip to Tehran where he met with Iran’s president Rouhani as well as Supreme Leader Ayatollah Ali Khamenei, during which a Japanese owned tanker was attacked in the nearby Gulf of Oman on Thursday along with another international vessel, Japan’s Prime Minister Shinzo Abe condemned the suspected attack in official statements.

Speaking to reporters Friday he said: “Japan adamantly condemns the act that threatened a Japanese ship, no matter who attacked,” and further urged “all related countries” to avoid any “accidental confrontation” or an escalation of tensions.

The Trump ally also spoke to the U.S. president by phone on Friday, reportedly briefing him on his visit to Iran, Abe confirmed in his remarks, though without detailing what he conveyed to the White House. Trump had previously said during a Fox & Friends telephone interview that “it’s probably got essentially Iran written all over it.”

A number of media pundits and even mainstream news networks like CNN raised an unusual level of skepticism regarding the attacks being hastily penned on Iran by Washington as well as the U.K.

Meanwhile, the Russian Foreign Ministry issued its own statements amid broader calls in Europe for “constraint” in assigning premature blame. Russia accused the U.S. of “stoking tensions,” according to the AP, based on Washington’s “Iranophobic” stance which seeks to “artificially” fuel tensions, according to the ministry statement.

Russia’s statement further condemned the attack incident but called for a “thorough and unbiased international probe.”

So essentially, the Russian Foreign Ministry is thanking Iran for “rescuing” its nationals from the boat while US officials are simultaneously claiming crew members have been detained.

Could this unfolding drama in the Persian Gulf get any weirder at this point? Indeed there’s likely much more bizarre and brazen claims to come.

This news item/commentary showed up on the Zero Hedge Internet site at 6:05 p.m. on Friday evening EDT — and it’s another offering from Brad Robertson.  Another link to it is here.

Could John Bolton soon be sacked? Will it avert Iran war? Former CIA agent Kiriakou positive on both

Hawkish National Security Advisor John Bolton has steered the Trump administration towards multiple conflicts. However, CIA whistleblower John Kiriakou tells RT he’s learned that Bolton’s days in the White House may be numbered. [emphasis mine – Ed]

Since joining the Trump administration in April of last year, Bolton has taken the hardest line possible on every geopolitical flare-up. From advocating “humanitarian intervention” in Venezuela, to briefing journalists about a plan to deploy 100,000 troops to the Middle East, to rumors of him “sabotaging” Trump’s summit with North Korea’s Kim Jong-un last year, Bolton has trumpeted escalation and confrontation as a panacea to all of America’s foreign policy ills.

Now, former CIA agent Kiriakou writes, Bolton is falling out of President Trump’s favor. In the happy-hour bars of Washington DC, Kiriakou’s contacts within the Trump administration tell him a reckoning is coming, and Bolton’s head is next on the chopping block.

Bolton’s departure is “definitely not a done deal,” Kiriakou stressed, when contacted by RT. But in conversations with “mid-level” national security officials, he has learned that Bolton’s firing is being talked about. Concerned for his legacy, Trump is apparently willing to fire Bolton rather than get dragged into a reputation-tarnishing war, just over a year out from the 2020 election.

We’ll see if there’s any truth to this straw in the wind in the fullness of time, dear reader.  This article appeared on the Internet site at 9:13 p.m. Moscow time on their Friday evening, which was 2:13 p.m. in Washington on their Friday afternoon — EDT plus 7 hours.  I thank George Whyte for bringing it to our attention — and another link to it is here.

Hong Kong tycoons start moving assets offshore as fears rise over new extradition law

Some Hong Kong tycoons have started moving personal wealth offshore as concern deepens over a local government plan to allow extraditions of suspects to face trial in China for the first time, according to financial advisers, bankers and lawyers familiar with such transactions.

One tycoon, who considers himself potentially politically exposed, has started shifting more than $100 million from a local Citibank account to a Citibank account in Singapore, according to an adviser involved in the transactions.

It’s started. We’re hearing others are doing it, too, but no-one is going to go on parade that they are leaving,” the adviser said. “The fear is that the bar is coming right down on Beijing’s ability to get your assets in Hong Kong. Singapore is the favored destination.”

The head of the private banking operations of an international bank in Hong Kong, who declined to be named, said clients have been moving money out of Hong Kong to Singapore.

These aren’t mainland Chinese clients who might be politically exposed, but wealthy Hong Kong clients,” the banker said. “The situation in Hong Kong is out of control. They can’t believe that Carrie Lam or Beijing leaders are so stupid that they don’t realize the economic damage from this.”

This Reuters story, filed from Hong Kong, appeared on their website at 4:30 a.m. EDT on Friday morning — and was updated a few hours later.  I thank Richard Saler for sharing it with us — and another link to it is here.

Bond king Jeffrey Gundlach bets on gold — and rings alarm bell on potential U.S. recession

Trade tensions are also one reason DoubleLine Capital Chief Executive Officer Jeffrey Gundlach now sees a bigger chance of a recession hitting U.S. shores in the not-too-distant future.

Providing our call of the day, Gundlach predicted a 40% to 50% chance of a U.S. recession within the next six months and a 65% chance of that happening in the next 12 months, in a webcast to clients late Thursday, according to a roundup of his comments from Reuters and other media outlets. He said signs of a slowdown on the global economic front are also a worry.

No doubt, the calls for the Federal Reserve to head off a downturn are growing louder by the day. Gundlach is not expecting an interest-rate cut when the Fed meets next week. Instead, he notes the bond market is tipping two or three cuts by the end of the year.

As for where Gundlach is putting his money, he said he is “certainly long gold,” given expectations the dollar, which stands to take a hit if the Fed lowers interest rates, will close the year weaker.

This story put in an appearance on the Internet site at 9:31 a.m. EDT on Friday morning — and the first person through the door with it was Fred Ehrman.  Another link to it is here.


A week after our 1-day trip to Lillooet, we were off to Salmon Arm…via Kamloops and Chase.  The day started off very decently, weather-wise, but once we got past Chase, it really started to cloud over — and the photo opportunities were few and far between.  It was a scenic drive, but there was nothing worth taking a picture of, if that makes any sense.  The first photo I took was the only one I thought worth taking on the 2.5 hour drive from Merritt.  No sage brush or cactus here, even though the geography and geology hasn’t changed much, as there’s a complete climate change once you get east of Chase.  There’s much more precipitation there in both summer and winter.  I was shocked by what we saw there, as the lake level is down huge.  Everything that’s grass-covered in photos 2 & 3 used to be under water ten years ago — and the extent of the permanent grass cover [plus the promenade and the rocky man-made shore line in photo 3] indicates that it’s been growing there for many moons.  Click to enlarge.


Today’s pop ‘blast from the past’ comes courtesy of Ted’s comments about Stevie Wonder — and yesterday’s price action in silver and gold.  This was his first big hit back in 1967 that I remember from my hippie days on Yonge Street in Toronto — and it’s still my favourite tune of his by far.  The link it is here.  There’s also an extended and expanded version of this song, complete with a killer bass line — and that’s linked here.

Today’s classical ‘blast from the past’ is from a composer I’ve never featured before — and I can’t think of why I haven’t.  It’s Franz Liszt.  He was a Hungarian composer, virtuoso pianist, conductor, music teacher, arranger and organist of the Romantic era. He was also a writer, a philanthropist, a Hungarian nationalist and a Franciscan tertiary.

Liszt gained renown in Europe during the early nineteenth century for his prodigious virtuosic skill as a pianist. He was a friend, musical promoter and benefactor to many composers of his time, including Frédéric Chopin, Richard Wagner, Hector Berlioz, Robert Schumann, Camille Saint-Saëns, Edvard Grieg, Ole Bull, Joachim Raff, Mikhail Glinka, and Alexander Borodin.

Here’s his wildly popular and equally well-known “Liebesträume” No. 3 for solo piano that was published in 1850.  Evgeny Kissin does the honours — and the link is here.  It doesn’t get any better than this.

‘Da boyz’ had their hands full yesterday…capping the rallies in gold and silver at the London open, as they ramped the dollar index higher at the same time.  The equity markets in New York didn’t co-operate, either.  They managed to get the Dow into positive territory in afternoon trading, but in the last thirty minutes there was a wave of selling — and it closed down on the day — and up only 20 points on the week.

And despite the obvious engineering by the JPMorgan et al this week, the precious metals — and their associate equities, outperformed everything else.  The tide is beginning to turn — and in the end they’re fighting a losing battle — and they know it, as the stars are all aligned for a big rally in the precious metals based on everything that’s going on in the world today.

Here are the 6-month charts for the four precious metals, plus copper and WTIC.  The high ticks in the dojis for gold, silver and platinum shows just how high ‘da boyz’ had to reach in the paper market to put out the fires yesterday.  Palladium, although quietly managed, continue to hoe its own row — and copper came close to closing a new low for this move down.  The Managed Money traders certainly hold a new record short position in this vital industrial commodity, so it’s only a matter of time before the commercial traders start a rip-your-face-off rally.  Click to enlarge.

The economic news continues to go from bad to worse — and all the market pundits of significant net worth are warning of recession dead ahead…taking their lead from the goings-on in the bond market.  They’re all long gold in one form or another…or about to be.  And Bill Bonner’s  ‘Crash Alert’ flag is snapping in the ever-strengthening wind.

Interest rates in the U.S. are definitely heading lower — and whether or not that decline begins with the FOMC meeting next week, remains to be seen.  If not then, then certainly the next one.  The U.S. dollar will be one of the major casualties — and the rush to precious metals will grow in proportion, if not exponentially.  What’s been going on over the last six months has been but the very thin edge of the wedge.

The PPT knows that all too well — and at some point in the future —  and the not-too-distant future I might add, they either be over run, or give in to the inevitable.

As economist John Kenneth Galbraith said…”All successful revolutions are the kicking in of a rotten door” — and that’s precisely what we’re faced with at this moment in history.  The gargantuan and ever-growing incestuous and inbred economic, financial and monetary system that has existed since 1971 when the U.S. defaulted on its international promise to ‘Pay the Bearer on Demand’…will end in a similar manner.

What will be the financial or economic match that does the proverbial kicking — and will it be by chance…or by design?  Who knows…but that end, by whatever means, is just about within sight.  If I had to pick one thing that might be the start of it, would be the Federal Reserve seen to be heading for a zero Fed’s fund rate.  And it’s a lead-pipe cinch that we won’t have to wait till zero before the whole system comes unglued — and we’re already seeing signs of it now.

What comes after that, you ask?  Who knows…but Jim Rickards thinks it will be economic “chaos” as there is no ‘Plan B’ anywhere in sight.  And if Special Drawing Rights courtesy of the IMF and the BIS are the cure, then they’re keeping it a closely-guarded secret.

But one thing that you can be certain of, is that the rush will be out of paper — and into anything tangible.  That has started, although it has been a case of ‘two steps forward — and one back’ for about the last year.  The word ‘gold’ is in the air everywhere you turn now — and it’s only a matter of time before words become action to a much broader spectrum of the investing public.

It’s at that point when the price management scheme in the precious metals will meet its long-over due demise.  And as I said before, the PPT, or whatever you wish to call it, knows that too — and it fail both suddenly and spectacularly when it does.

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