17.65 Million Ounces of Silver Disappear Into World Depositories This Past Week

17 August 2019 — Saturday


The gold price attempted to rally about two hours after trading began in New York on Thursday evening but, as always, it ran into ‘resistance’ almost right away — and the high tick of the day was set shortly before 9 a.m. China Standard Time on their Friday morning.  It was then sold unevenly lower until at, or shortly before, the morning gold fix in London — and then crept higher until the afternoon gold fix. It was sold lower at that juncture as well — and the low tick was set right at the 11:00 a.m. EDT London close.  It began to head higher from there, but ran into ‘something’ around 2:40 p.m. in the thinly-traded after-hours market — and it was sold a bit lower into the 5:00 p.m. New York close.

The high and low ticks in gold were reported by the CME Group as $1,532.10 and $1,508.00 in the October contract — and $1,538.60 and $1,513.90 in December.

Gold was closed on Friday in New York at $1,512.80 spot, down $10.10 on the day.  Net volume in October and December combined was just under 342,000 contracts — and there was only 8,000 contracts worth of roll-over/switch volume in this precious metal.

With some minor exceptions in the times of some of its price inflection points, the silver price followed the same price pattern as gold everywhere on Planet Earth on Friday, so I’ll spare you the play-by-play.

The high and low ticks in silver were recorded as $17.315 and $17.03 in the September contract.

Silver was closed yesterday at $17.075 spot, down 15.5 cents from Thursday.  Net volume wasn’t overly heavy…at least compared to prior days…at just over 60,500 contracts — and there was 11,500 contracts worth of roll-over/switch volume out of September and into future months.

The platinum price was sold quietly lower until it hit the $830 spot mark at 1 p.m. in Zurich trading.  It was bounced off that price multiple times over the next two hours — and then took off higher starting at 9 a.m. in New York.  That nice rally came to an end a few minutes before 2 p.m. in after-hours trading — and it didn’t do much of anything after that.  It did managed to close on its high tick of the day at $848 spot, up 11 dollars from Thursday.

The palladium price chopped sideways in about a five dollar price range either side of unchanged on Friday — and finished the day at $1,430 spot, up 2 bucks from Thursday’s close.

The dollar index closed very late on Thursday afternoon in New York at 98.14 — and opened down 1 basis point once trading commenced at 7:45 p.m. EDT on Thursday evening, which was 7:45 a.m. China Standard Time on their Friday morning.  It rose and fell about 20 basis points between that time and around 2:05 p.m. CST — and then began to head higher an hour later…five minutes after the London open.  That rally moderated by quite a bit starting around 8:45 a.m. BST — and its 98.34 high tick was set around 10:20 a.m. in New York trading.  It fell out of bed at that point — and the 98.11 low tick was set around 2:40 p.m. EDT.  It recovered a bit — and back above unchanged by the 5:30 p.m. close.  It showed a close of 98.20 on the DXY chart below…but was marked down to 98.14 after the close…unchanged from Thursday.

And if you can see any correlation between the dollar index and what gold and silver prices were doing, I’d love to hear from you.

Here’s the DXY chart, courtesy of Bloomberg as always.  Click to enlarge.

And here’s the 5-year U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site — and you can read into it whatever you wish.  The delta between its close…98.01..and the close on the DXY chart above, was 13 basis points on Friday.  Click to enlarge as well.

The gold stocks gapped down a bit at the open in New York on Friday morning, then more or less followed the machinations of the gold price for the remainder of the day.  The HUI closed down 1.24 percent.

It was more or less the same price path for the silver equities, except Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 2.08 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 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 the huge underperformance of the silver equities is the unhappy stand-out here.  The gold shares also finished lower, despite the small weekly gain in the underlying precious metal.  Click to enlarge.

Here’s the month-to-date chart — and the underperformance of the silver stocks this past week have erased all of the gains that occurred during the month, despite the fact that the silver price is up 5.24 percent month-to-date.  The gold stocks are outperforming their golden brethren, but not by the amount they should be. Click to enlarge.

Here’s the year-to-date chart — and it pretty much speaks for itself.  The gold stocks are doing well, but not as well as they should be.  JPMorgan et al.’s near death grip on the silver price is more than obvious in its lack-lustre price gain relative to gold — and in the underlying values of the associated stocks as well.  Click to enlarge.

And like last week in this space, it still remains to be seen if JPMorgan et al. can pull off another round of engineered price declines in both silver and gold, considering the current financial and monetary environment that they’re facing.  But the lousy performance of the silver equities is certainly not something I’m happy to see, or that I have any plausible explanation for.  But it may be the powers-that-be’s attempt to keep investors away from both silver and its equities until they’re reading to let the prices rip.  That may be working for the silver equities, but the amount of physical silver [and gold] that’s disappearing into all the world’s ETFs and mutual funds at the moment, paints an entirely different picture.

The CME Daily Delivery Report showed that 824 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

In gold — and not surprisingly, as you’ll discover a bit further down, the only short/issuer worthy of the name was HSBC USA with 764 contracts out of its own account.  In very distant second spot was Advantage, with 58 contracts from its client account.  There were nine long/stoppers in total — and the only four that mattered were: JPMorgan with 403 contracts for its client account…International F.C. Stone with 144 for its client account…Australia’s Macquarie Futures, with 116 contracts for its in-house/proprietary trading account…and Advantage with 100 contracts for its client account as well.

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

So far this month there have been 6,053 gold contracts issued/reissued and stopped — and that number in silver is 1,993.

The CME Preliminary Report for the Friday trading session showed that gold open interest in August rose by a very hefty 505 contracts, leaving 1,606 still open, minus the 824 contracts mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that only 28 gold contracts were actually posted for delivery on Monday, so that means that 505+28=533 more gold contracts just got added to the August delivery month.  Silver o.i. in August fell by 47 contracts, leaving just 2 still around.  Thursday’s Daily Delivery Report showed that 47 silver contracts were actually posted for delivery on Monday, so the change in open interest and the deliveries match.

And as a point of interest, there are 2,236 ten-ounce COMEX mini gold contracts still open in August — and that’s a lot.  It will be of interest to see who the short/issuer is on those, as I haven’t seen that amount of 10-ounce bars being received at any COMEX gold depository so far this month.

There was a withdrawal from GLD yesterday, as an authorized participant took out 28,290 troy ounces — and there were no reported changes in SLV.

For the business week just past, there was 584,000 troy ounces of gold, along with 17.6 million troy ounces of silver added to all the world’s know depositories, mutual funds and ETFs. That amount of silver was more than all the silver that was mined during the past seven days.  Why is it that only Ted Butler — and by extension, myself…are the only ones talking about this?  I’ll have the charts for that in my Tuesday column.

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

Month-to-date the mint has sold 3,000 troy ounces of gold eagles — 1,000 one-ounce 24K gold buffaloes — and 252,000 silver eagles.  There is no retail demand worthy of the name at the moment.

There was a fairly chunky gold deposit over at the COMEX-approved depositories on the U.S. east coast on Thursday, as HSBC USA took in another 160,755.000 troy ounces/5,000 kilobars [SGE kilobar weight].  As Ted pointed out on the phone yesterday, this is considerably more than the remaining total open interest in gold in August, so may be there are more gold deliveries coming that haven’t shown up on the Daily Delivery Report as of yet. [There were – Ed]  There was also 2,411.250 troy ounces/75 kilobars [U.K./U.S. kilobar weight] received at Manfra, Tordella & Brookes, Inc.  The only ‘out’ activity was 225.050 troy ounces/7 kilobars [U.K./U.S. kilobar weight] that departed Canada’s Scotiabank.  The link to this activity is here.

There was almost no activity in silver at all, as nothing was reported received — and only 8,992 troy ounces was shipped out.  I won’t bother breaking this amount down, or linking it.

There was a bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They received 200 of them — and shipped out 131.  This activity was at Brink’s, Inc. as usual — and the link to that, in troy ounces, is here.

The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday was  a positive surprise in both gold and silver…but especially so in silver.  The reason for these positive surprises was, as Ted pointed out on the phone yesterday afternoon, gold was up $25-30 during the reporting week — and silver was up about 50 cents.

In silver, the Commercial net short position declined by a very hefty 10,033 contracts, or 50.2 million troy ounces…the second big weekly decline in a row.

They arrived at that number by increasing their long position by 7,903 contracts — and they also reduced their short position by 2,130 contracts.  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 more…as they decreased their long position by a chunky 10,716 contracts — and they also added 2,186 short contracts.  It’s the sum of those two numbers…12,902 contracts…represents their change for the reporting week.

The difference between that number — and the Commercial net short position…12,902 minus 10,033 equals 2,869 contracts…was made up, as it has to be, by the traders in the other two categories…as both increased their net long positions during the reporting week:  The ‘Other Reportables’ by 2,339 contracts — and the ‘Nonreportable’/small traders by 530 contracts.

The Commercial net short position in silver is down to 326.1 million troy ounces of paper silver.

Ted figured that JPMorgan covered about another 5,000 contracts of their existing short position — and pegs them at around the 15,000 contract mark as the of the Tuesday COMEX close cut-off.

Here is the 3-year COT chart for silver, courtesy of Nick Laird — and this second weekly decline in the Commercial net short position should be duly noted.  Click to enlarge.

Despite the fact that the Commercial net short position in silver remains large, the lasts two weeks of positive changes is certainly not bearish.  If we do get another engineered price decline from here, it shouldn’t be as bad as they have been in the past.  On the other hand, there’s nothing stopping JPMorgan from letting the price rip to the upside from here, or at any other time of their choosing.

In gold, despite the $25-30 dollar increase in price during the reporting week, the commercial net short position remained basically unchanged…decreasing by an insignificant 598 contracts, or 59,800 troy ounces of paper gold.

They arrived at that number by reducing the long position by a tiny 187 contracts — and decreasing their short position by 785 contracts — and it’s the difference between those two numbers that represents their change for the reporting week…which is basically nothing at all.

Under the hood in the Disaggregated COT Report, it was all Managed Money traders, plus more that accounted for the change, as they decreased their long position by 3,056 contracts — and added 166 short contracts — and it’s the sum of those two numbers…3,222 contracts…that represents their change for the reporting week.

The difference between that number — and the commercial net short position…3,222 minus 598 equals 2,624 contracts…was made up, as it must be, by the traders in the other two categories, as both increased their net long positions by smallish amounts during the reporting week:  The ‘Other Reportables’ by 767 contracts — and the ‘Nonreportable’/small traders by 1,857 contracts.

The commercial net short position in gold is unchanged from last week at 32.37 million troy ounces.

Here’s Nick’s 3-year COT chart for goldClick to enlarge.

Considering the price increase in gold during the reporting week, this COT Report could have turned out to be even more wildly bearish than it already is.  So I suppose we should be thankful for small mercies.  But a brutal engineered price decline cannot be ruled out…although I’m certainly not rooting for one.  However, having just said that, I see nothing out there that indicates that JPMorgan et al. have loosened their iron grip on any of the precious metals.

In the other metals, the Manged Money traders in palladium decreased their net long by a further 1,055 contracts.  The Managed Money traders are still net long the palladium market by 10,196 contracts…about 46 percent of the total open interest.  Total open interest in palladium is 22,254 COMEX contracts.  In platinum, the Managed Money traders decreased their net long position by a further 938 contracts during the reporting week.  The Managed Money traders are now net long the platinum market by only 6,547 COMEX contracts…8.5 percent of the total open interest.  In copper, the Managed Money traders decreased their net short position in that metal by a rather smallish 5,102 COMEX contracts during the reporting week — but are still net short the COMEX futures market by a eye-watering 70,012 contracts, or 1.75 billion pounds of the stuff…just off their record short position from a week ago. That’s a hair under 24 percent of total open interest…which is a preposterous amount.

Here’s Nick Laird’s “Days to Cover” chart updated with the COT data for positions held at the close of COMEX trading on Tuesday. It shows the days of world production that it would take to cover the short positions of the Big 4 — and Big ‘5 through 8’ traders in each physically traded commodity on the COMEX. Click to enlarge.

For the current reporting week, the Big 4 traders are short 129 days of world silver production, which is down 5 days from last week’s report — and the ‘5 through 8’ large traders are short an additional 71 days of world silver production, down 8 days from last week’s report — for a total of 200 days that the Big 8 are short, which is a bit under seven months of world silver production, or about 466.8 million troy ounces of paper silver held short by the Big 8. [In the prior week’s COT Report, the Big 8 were short 213 days of world silver production.]

In the COT Report above, the Commercial net short position in silver was reported as 326.1 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 466.8 million troy ounces.  The short position of the Big 8 traders is larger than the total Commercial net short position by 466.8 minus 326.1 equals 140.7 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 figures that JPMorgan is short around 15,000 COMEX silver contracts…down from the 20,000 contracts that they were short in the prior week’s COT Report.

15,000 COMEX contracts is 75 million troy ounces of paper silver, which works out to around 32 days of world silver production…the middle of the pack of the Big 4 traders…as per the next paragraph.  I would suspect that this puts Citigroup back in the No. 1 spot as the biggest short in silver — and JPMorgan at No. 2.

The Big 4 traders in silver are short, on average, about…129 divided by 4 equals…32.25 days of world silver production each.  The four traders in the ‘5 through 8’ category are short 71 days of world silver production in total, which is 17.75 days of world silver production each, on average.

The Big 8 commercial traders are short 40.0 percent of the entire open interest in silver in the COMEX futures market, which is a smallish decrease from the 41.5 percent they were short in last week’s report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be something around the 45 percent mark.  In gold, it’s now 45.5 percent of the total COMEX open interest that the Big 8 are short, up a bit from the 44.7 percent they were short in last week’s report — and a bit over 50 percent, once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 61 days of world gold production, down 1 day from what they were short in last week’s COT Report.  The ‘5 through 8’ are short another 33 days of world production, up 2 days from what they were short last week…for a total of 94 days of world gold production held short by the Big 8…up 1 day from last week’s report.  Based on these numbers, the Big 4 in gold hold about 65 percent of the total short position held by the Big 8…down 1 day 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 64, 69 and 79 percent respectively of the short positions held by the Big 8.  Silver is up about 1 percentage point from a week ago, platinum is down 1 percentage point from last week — and palladium is also down 1 percentage point from a week ago.

The Broighter Gold or more correctly, the Broighter Hoard, is a hoard of gold artefacts from the Iron Age of the 1st century B.C. that were found in 1896 by Tom Nicholl and James Morrow on farmland near Limavady, in the north of Ireland (now Northern Ireland).

The find was described as a lump of mud when initially shown. Moreover, the boat had been so badly damaged by ploughing, that it took a goldsmith to later work out its structure.

The hoard includes a 7-inch-long (18 cm) gold boat, a gold torc and bowl and some other jewellery. A design from the hoard has been used as an image on the 1996 issue of the Northern Ireland British one-pound coins and the gold ship featured in a design on the last Irish commemorative one-pound coins. The Broighter Collar and Broighter Ship also featured on definitive postage stamps of Ireland from 1990–1995. The National Museum of Ireland, who now hold the hoard, describe the torc as the “finest example of Irish La Tène goldworking“. Replicas of the collection are kept at the Ulster Museum in Belfast.  Click to enlarge for photos 2 &3 only.

I have an average number of stories and articles for you today, including a Cohen/Batchelor interview.


America Has Been Declining Since 2000 — Bill Bonner

When the calendar rolled over on January 1st, 2000, the dreaded Y2K disaster didn’t happen.

The ATMs and credit cards worked as before.

Instead, America rolled over. At least, that is our hypothesis.

Neither New York nor Washington has been sacked yet. Americans have not been put to the sword. Our armies are still unbeaten in the field.

But after January 2000, stocks (our most important capital assets) began to fall.

Measured by gold, the Dow is worth less than half what it was worth at the turn of the century.
The stock market famously “looks ahead”; is it looking ahead to a weaker, poorer America?

We don’t know. But in the 21st century, GDP growth rates slowed. Debt increased. Imports soared; exports slumped. And the perversities and absurdities increased.

This interesting and worthwhile commentary from Bill put in an appearance on the bonnerandparners.com Internet site early on Friday morning EDT — and another link to it is hereGregory Mannarino’s afternoon rant on Friday is linked here.

Class 8 Truck Orders Crash 81% to Lowest Monthly Total Since 2010

Preliminary North America Class 8 net order data shows the industry booked 10,200 units in July, an astonishing 81% year over year fall, according to ACT Research.

This is also down 21% from June and marks the lowest monthly order tally since February 2010. Net trailer orders also continued to plunge, according to data released about a week ago.

Kenny Vieth, ACT’s President and Senior Analyst said in late July that heavy truck and trailer industries would be heading for a market correction in 2020. He stated:

Data that support our forecast of an impending market correction continue to mount, with the biggest driver of the change for both Class 8 and trailers being the continued building of new equipment inventories in 2019 that will require right-sizing in 2020. Since March 2018, ACT’s forecasts have targeted 2019’s third quarter as the point at which the supply of Class 8 tractors and demand for freight services would likely tip so far as to break the current period of peak vehicle production, as demand reverts to the mean. Current data and anecdotes make a strong case that the call for a Q3 inflection remains intact.”

Mr. Veith is off by more than a year, as the correction began twelve months ago — and shows no sign of letting up.  This Zero Hedge article appeared on their website back on August 7 — and I don’t know how i missed it.  It comes to us courtesy of Brad Robertson — and another link to it is here.

Consumer Confidence Crashes as Rate-Cut Triggered “Apprehensions About a Recession

But, but, but… yesterday CNBC was telling us about how strong the consumer is and how bonds must be wrong.

UMich Consumer Sentiment collapsed in August (flash data) ,slumping to 92.1 from July’s 98.4, missing all forecasts in Bloomberg’s survey of economists. The gauge of current conditions decreased to 107.4 while the expectations index dropped to 82.3, bringing both readings to the lowest levels since early this year.

Current economic conditions are at their weakest since Trump was elected (Nov 2016).  Click to enlarge.

Consumers “strongly reacted” to the proposed increases in tariffs on Chinese goods, a subject that was spontaneously cited by 33% of those surveyed, near the recent peak of 37%, according to the report. Americans also concluded, following the Federal Reserve’s first interest-rate cut in a decade, that they may need to be more cautious about spending in anticipation of a potential recession, the report said.

This brief Zero Hedge article was posted on their Internet site at 10:10 a.m. on Friday morning EDT — and I thank Brad for this one as well.  Another link to it is here.

Wednesday’s Market Plunge Shines Harsh Light on Big Banks and their Derivative Counterparties

As we’ve previously reported, five mega banks on Wall Street hold the fate of the entire financial system of the United States in their crony, frequently soiled hands. Yesterday’s trading action clearly showed the ugly warts between those banks and their derivative counterparties in the insurance industry. And even though their crony regulator, the Securities and Exchange Commission, allows the banks to trade their own stocks in darkness in their own internal Dark Pools, someone else clearly got the upper hand yesterday.

The Dow Jones Industrial Average lost a whopping 800 points or 3.05 percent but each of the five mega banks outpaced the Dow’s losses on a percentage basis. That’s not a good thing when Congress has left the fate of a nation in such perilous hands – especially when those very same banks caused the greatest financial crash in 2008 since the Great Depression.

Citigroup, the bank that received the largest government bailout in U.S. history in 2008, including a secret $2.5 trillion in almost zero rate loans from the Federal Reserve, led the losses among the Wall Street mega banks yesterday with a decline of 5.28 percent. Bank of America was next with a loss of 4.69 percent. Goldman Sachs lost 4.19 percent with JPMorgan Chase following on its heels with a decline of 4.15 percent.

Two other stocks now trade pretty much in tandem with the Wall Street mega banks on big down-draft days. Those companies are Prudential Financial and Lincoln National – both are insurance companies with significant counterparty exposure to Wall Street banks’ high-risk derivatives. Prudential Financial lost 3.80 percent while Lincoln National was down an outsized 4.74 percent yesterday.

But the really eyebrow-raising selloff occurred yesterday in the shares of the giant insurer, AIG. AIG’s shares shed 4.86 percent yesterday.

This rather brief but not surprising commentary was posted on the wallstreetonparade.com Internet site on Thursday sometime — and I thank Jim Gullo for pointing it out.  Another link to it is here.  Another article from the same website bears the Chris Powell headline “Rivals prop up Citi because if it goes down, they all do” — and I found that on the gata.org website last night.

Forget the Yield Curve, it’s Argentina’s Collapse That Highlights the Market’s Biggest Problem

Distracted by Hong Kong social unrest and focused on yield curve inversions and negative yields worldwide, it is not surprising the ‘average Joe’ investor is missing the real forest fire for the trees.

With almost $17 trillion in global debt now yielding below zero…Click to enlarge.

and more than half of the world’s sovereign yield curves inverted…

It is easy to be worried about the state of the global economy (and theoretically therefore the state of global financial markets), but, as Bloomberg‘s Cormac Mullen notes, the biggest alarm bell for investors this week wasn’t the inverted U.S. yield curve; the market dislocation in Argentina was a clear signal to get out of illiquid securities soon or face exaggerated losses at the next significant meltdown.

“President Mauricio Macri’s stunning rout in primary elections led to fears of another sovereign default. Argentina’s stock market plunged nearly 40%, the peso slid 15% and bonds slumped in a 4-sigma event — statistical speak for just 0.006% likely to happen.

The point isn’t to highlight the potential risk should a populist end up in the Casa Rosada, it’s to flag what can happen when event risks meet illiquid markets.

Just look at the reaction the Argentine currency. The gap between bid and offer prices surged to over 7 pesos per dollar on Monday.”

For now, asset managers have to cope with what Blanque called “the sacred cow” – although a better phrase would be “constant risk” of allowing clients to withdraw funds on a daily basis.

It is a bomb, given the risks of liquidity mismatch,” he warns. “We don’t know if what is sellable today will be sellable in six months’ time.”

That’s not the only we don’t know. As Blanque concluded, “we don’t know the channels of transmission, we don’t know how the actors will act. It is uncharted territory.”

And that, precisely, is why central banks can never again allow risk asset prices to drop: the alternative means gating not one, or two, or a hundred funds, but halting the entire market, because once everyone start selling and price discovery finally returns to a market that has been dominated by central banks for the past decade, several generations of traders and investors who have grown up without price discovery will be shocked to discover just where “fair” market prices reside.  [Emphasis mine – Ed]

So stop worrying about the yield curve, it’s the liquidity collapse when everyone runs for the exits that is the real existential threat.

This long and chart-filled Zero Hedge commentary is worth your while. It showed up on their Internet site at 2:18 p.m. on Friday afternoon EDT — and is the second offering of the day from Brad Robertson.  Another link to it is here.

Powell Issues Gag Order To Fed Presidents: Report

Following the recent dismal communication failures first by N.Y. Fed president John Williams, and following that, Powell’s own notorious July 31 “mid-cycle adjustment” press conference, a recurring lament among the investment community has been for the Fed to just keep its mouth shut, instead of continuing to yap and confirming that it is absolutely clueless about the economy and the future.

In a surprising twist, the Fed may actually be listening.

According to the Spectator, chair Powell has banned any public appearances by any Fed Board member, noting that “appearances at conferences have been canceled, all scheduled interviews have been abandoned and any comments on or off the record are outlawed.”

This unprecedented action, the Spectator reports, is a reflection of two pressures.

  • First, economic indicators increasingly suggest the U.S. is heading into a recession with the Dow plunging 800 points on Wednesday.
  • Second, relations with the White House have reached a new low, with president Trump pinning the success of his presidency upon a strong economy as a recession – Trump believes – would destroy his reputation and kill his reelection chances. As a result, Trump has – correctly – blamed the current woeful state of the global economy on the Fed. The problem is that Trump also “owned” the same state of both the economy and the market for the past two years, so any recession will be entirely his, just as Yellen (and Bernanke) intended, and shift attention away from the Fed.

Continuing a series of outbursts aimed at the Fed, Trump again lashed out at Powell (and the Fed) claiming they are responsible for the slide in the stock market. To be sure, Trump has been doing this for a long time, realizing he will need a foil if when the market and economy crash, and has – for better or worse – picked the Fed as the scapegoat.

This news item appeared on the Zero Hedge website at 11:14 a.m. EDT on Friday — and it’s yet another contribution from Brad Robertson.  Another link to it is here.

Doug Noland: Comeuppance

The Chinese Credit machine sputtered in July. Growth in Total Aggregate Financing dropped to $144 billion, almost 40% below consensus estimates. This was less than half of June’s $320 billion increase and the slowest expansion since February. The sharp slowdown was beyond typical seasonality, with the month’s growth in Aggregate Financing 18% below July 2018. Despite July’s weak growth, Total Aggregate Financing was still up 10.7% over the past year.

Loans to the non-financial corporate sector collapsed in July to $42 billion, about a third June’s level. Somewhat offsetting this decline, Corporate bond issuance almost doubled in July to $32 billion.

China is now only a faltering apartment Bubble away from a period of major economic upheaval and acute financial instability.

At this point, Treasury yields have little association with the U.S. economy. The structure of the Treasury curve (along with Federal Reserve monetary policy) has detached from U.S. economic performance. Treasuries are instead caught up in an unprecedented global market phenomenon. Sovereign debt, after all, has traded for hundreds of years. Yet bonds have never traded with negative yields. Never have global bond prices spiked in unison, with yields collapsing to unprecedented lows across the globe.

I understand why market professionals, pundits and journalists focus on the conventional “recession risk” explanation for sinking Treasury yields and the inverted curve. For one, there is insufficient awareness as to the deep structural impairments that today permeate global finance. Besides, no one wants to contemplate that global bond yields might portend serious problems ahead – that global yields are signaling the reemergence of Crisis Dynamics.

But I’ve never wavered from the view that this would end badly. Never have I believed that manipulating and distorting markets would achieve anything but epic Bubbles and inevitable terrible hardship. I’ve not seen evidence to counter the view that the longer the global Bubble inflates the greater the downside risk (moreover, such risk grows exponentially over time). And not for one minute did I believe zero rates and QE would resolve deep financial and economic structural issues. Indeed, I have fully expected reckless monetary mismanagement to ensure a global crisis much beyond 2008. From my analytical perspective, the global Bubble has followed the worst-case scenario.

It’s been a full decade of government and central bank backstops, with the “Trump put” a relatively late addition. It sure appears the Trump, central bank and Beijing “puts” have lost some potency. And in about a month we’ll have a better read on the “Fed put.” It’s a reasonable bet the stock market will go into the September 18th FOMC meeting with a gun to its head: “50 bps or we’ll shoot!

This very worthwhile commentary from Doug, which is always a must read for me, put in an appearance on his website in the wee hours of Saturday morning sometime — and another link to it is here.

Tales of the New Cold War: Russia’s nuclear-powered fear of First Strike — John Batchelor interviews Stephen F. Cohen

Part 1:  This week’s subject is nuclear brinkmanship between Russia and China (and allies) and NATO and the United States, and is introduced by the news of the explosion of a Russian test missile in Russia’s arctic region. Official word was that a nuclear powered engine drove the missile and also reported some weak radiation reached a nearby village (Nyonosksa) and a “closed city” (military research centre) – Serov in the Sverdlovsk Oblast. It was said that the missile had been a nuclear powered, hypersonic cruise missile. Cohen made a brief foray into the dangers of this new cold war and commented that the West is not discussing this visible evidence of effort and cost of the war threat at all, while the Russians are only talking about it somewhat. The Western media, however, gloats about the failure, but misses the point that this project is part of a more dangerous arms race. Cohen blames Washington for this with George W. Bush withdrawing unilaterally from the Anti-ballistic Missile Treaty. This withdrawal meant that in war opponents were free to first strike with nukes without fear of retaliation. Not surprising the Russian response was to develop missiles that were extremely difficult to defend against. The professor goes on to describe that nuclear accidents developing nuclear weapons have happened on both sides with security opts laid on to hide the events from the public.

The conversation moves to the Russian public response to the accident and we find that there was a run on iodine as a treatment for radiation, and Cohen and Batchelor liken this response to school children hiding under their desks during a nuclear attack. Neither would work. Conclusion: nuclear accidents are dangerous in the new cold war.

Batchelor then asks whether Russians are worried about an American first strike? And Cohen says yes, to the extent that Putin is criticized for ignoring these fears to some extent. On the U.S. side to this question, there is no discussion even as the professor insists it should be an important question voiced at candidate debates in the USA.

Part 2: This segment sees a change in direction in the discussion to the Russian domestic scene, specifically the recent tens of thousand strong protests near the Kremlin over Russia’s recent procedural debacle and economic problems. For the historian this is a sign of democratization of Russia and an area that Putin has seen political problems before – as with the recent pension question. This democratization started under Gorbachev and continued under Putin, and it has seen very large protests in the past. This one was relatively small according to Cohen. However, the fact that it occurred in Moscow gives it added importance for Putin. Much of Putin’s major support comes from here – and especially from the younger voters.  The professor continues in describing the process of putting together a protest, and he also notes that the Russian protests are rather non-violent . This one was centered on who were listed (and not listed) as candidates in a forthcoming election with a secondary complaint about the economic issues. The secondary issues bring in more people to the protest.

The last half of  Part 2 is a short discussion about the Meuller Report and his last testimony. John Batchelor described it as a “disappointment” and Cohen agreed that it was “crushingly so”. The professor goes on to say that many politicians and media moguls had invested so much in the Russiagate ruse that when his probe and report said there was nothing there, the disappointment was high. And John Batchelor complained that there was no apology to the Kremlin, and Cohen agrees that many Democrats carry on the fiction about Russian complicity in the election.  Russiagate will be laid to rest potentially by the Barr investigation into the roots of the conspiracy.


One point that Stephen Cohen has made numerous times is the danger of no discussion in America about the dangers of the new cold war in bringing about nuclear war between the super powers. And I agree, he should mention it often and he makes the point again in this podcast. Although he states that there is “some discussion” in Russia, it may be more accurate to say that relatively speaking all aspects of the dangers of war between these major powers are frequently discussed in speeches by Putin, and in the topics of their media programs that focus on geo-strategic topics. This is a huge contrast  to the American reality where seemingly the discussion about possible war is rarely mentioned, (in a media industry that does not even have existing programming for such discussions) and where the topic is demoted to accusations of Russian meddling in American political processes. This dichotomy is not accidental but is political. The problem with discussing the dangers of nuclear war with American citizens would reveal that conventional wars with nuclear powers would likely quickly escalate to nuclear exchanges. There is also the danger of war starting accidentally, or through minor military clashes. This too is not discussed.  There is little danger (relatively) in the USA at this time initiating a first strike nuclear attack, as there is no profit in destroying ones own country when the other country retaliates with similar damage. So in order to maintain an aggressive, war for profit for the Military Industrial Complex, the people must not fear conventional wars of conquest for the American Empire. For the same reason neither side mentions those cold war driven accidents as described at the open of the podcast. But American silence about the dangers of war is a huge fundamental difference between the two super powers — and potentially remains the leading danger in starting the real war that will end all wars. And Cohen is correct…Washington is clearly the most irresponsible of the two.

This 2-part audio interview, each of which is 20-minutes long, was posted on the audioboom.com Internet site on Tuesday sometime.  As always, I thank Larry Galearis for his excellent executive summary and personal comments.  The link to Part 1 is in the headline — and here.  The link to Part 2 is here.

U.S. Unveils Seizure Warrant For Iran’s Grace 1 Tanker

Apparently the month long saga of the Grace-1 is not at all over, and may now seriously escalate even after it was set free from custody. Just as the Iranian supertanker was released from custody off Gibraltar and is preparing to make its way into the Mediterranean, a seizure warrant filed by the U.S. Department of Justice was unsealed in a U.S. district court late Friday.

Documents allege “a scheme to unlawfully access the U.S. financial system to support illicit shipments to Syria from Iran by the Islamic Revolutionary Guard Corps,” the DoJ said in a statement.

The seizure warrant and forfeiture complaint alleges the now Iranian-flagged tanker along with its over two million barrels of oil aboard it and $995,000 “are subject to forfeiture,” citing terrorism forfeiture statutes, and bank fraud and money laundering.

The scheme involves multiple parties affiliated with the IRGC and furthered by the deceptive voyages of the Grace 1,” US Attorney for the District of Columbia Jessie Liu said in a press release. “A network of front companies allegedly laundered millions of dollars in support of such shipments.”

The warrant is addressed to “the United States Marshal’s Service and/or any other duly authorized law enforcement officer.”

According to Reuters, the Grace 1 – now renamed the Adrian Darya after Iran began flying its flag over the previously Panamanian-flagged tanker – may not have made it far though it was filmed moving on Friday. “The tanker shifted its position on Friday, but its anchor was still down off Gibraltar and it was unclear if it was ready to set sail soon,” the report said.

Given that no doubt the U.S. warrant means leaders in Tehran will be livid, and now with the possibility that American military assets could potentially make a move to actually board the vessel or perhaps even block its as yet unknown route, this puts the fate of the U.K.-flagged Stena Impero — still under IRGC control — in jeopardy.

Wow!  Let’s see what this situation escalates into from here.  This Zero Hedge news story appeared on their website at 8:20 p.m. EDT on Friday evening — and I thank both Larry Galearis and Roy Stephens for contributing to it.  Another link to it is here.

U.S. Axis of Aggression in Gulf — Finian Cunningham

When Washington announced a few weeks ago the formation of a maritime “international coalition” to “protect shipping” in the Persian Gulf, many observers were skeptical. Now skepticism has rightly turned to alarm, as the proposed U.S.-led “coalition” transpires to comprise a grand total of just three nations: the U.S., Britain and Israel.

The term “coalition” has always been a weasel word used by Washington to give its military operations around the world a veneer of international consensus and moral authority. If the U.S. goes ahead with deploying forces in the Persian Gulf the guise of “coalition” is threadbare. It will be seen for what it is: naked aggression.

Iran promptly warned that if the U.S., Britain and Israel move on their intention to deploy in the Persian Gulf, it will not hesitate to defend itself from a “clear threat”.

Britain has ordered this week another warship, HMS Kent, to the Gulf. The move, significantly, occurred as Trump’s hawkish national security advisor John Bolton was in London for two-day official meetings with P.M. Boris Johnson and other senior ministers. Bolton praised Britain’s decision to join the U.S.-led Operation Sentinel mission, rather than an alternative proposed European naval mission. It’s not clear if HMS Kent is simply replacing another British warship in the Gulf, HMS Duncan, or if this is a further buildup in force. Either way, the line up of U.S., Britain and reportedly Israel is a foreboding potential offensive.

Israeli leaders have in the recent past repeatedly called for military attacks on Iran, claiming without evidence that the Islamic Republic is secretly building nuclear weapons, thus allegedly posing an existential threat to the Jewish state, despite the latter possessing an estimated 200-300 nuclear warheads.

Given the Trump administration’s manic hostility towards Tehran, which it labels a “terrorist regime”, and given the long history of U.S.-British treachery against Iran, it is understandable the alarm being aroused if Washington, London and Tel Aviv proceed with their flotilla in the Gulf.

This commentary from Finian showed up on the strategic-culture.org Internet site on Tuesday sometime — and I found it in a Zero Hedge article that Brad Robertson sent our way.  Another link to it is here.

I didn’t find any precious metal-related stories that I thought worth posting.


After a hectic morning — and early afternoon on May 27, we drove into downtown Hope for lunch.  Note the wood carvings on the left in photo 1 — and as a backdrop in photo 2.  Hope holds chainsaw and wood carving competitions and exhibitions — and these chainsaw wood carvings are displayed and exhibited through the downtown core.  Click to enlarge.


It’s hard to believe that Woodstock happened 50 years ago this week…half a century.  Where the hell has all that time gone since?  Here’s the song the defined that event more than any other.  The link is here.

Today’ classical ‘blast from the past’ is one that I’ve featured before, but it’s been a while, so it’s time for a revist.  It’s Max Bruch’s Scottish Fantasy in E-flat major Op. 46 and…like last week’s ‘blast from that past’…a diabolical key if there every was one!

Completed in 1880 it, like last week’s ‘blast from the past’, was dedicated to the virtuoso violinist Pablo de Sarasate — and is a four-movement fantasy on Scottish folk melodies.

Although Bruch visited Scotland for the first time only a year after the premiere of the work, he had access to a collection of Scottish music at Munich library in 1868. In paying homage to Scottish tradition, the work gives a prominent place to the harp in the instrumental accompaniment to the violin. The Scottish Fantasy is one of several signature pieces by Bruch that is still widely heard today, along with his first violin concerto and Kol Nidrei for cello and orchestra.

Bruch composed the work in Berlin during the winter of 1879–1880. Despite the dedication to Sarasate, virtuo violinist Joseph Joachim was involved in the fingering and bowing of the solo part.

Here’s violinist Stefan Jackiw, whom I’ve never heard of before, accompanied by the Orquesta Sinfónica de Galicia.  Rumon Gamba conducts — and it is wonderful.  The link is here.

It was a quiet day in the gold and silver on Friday — and appeared to be of the ‘care and maintenance’ variety.  The commercial traders were there once again if you knew where to look.  The first time was during the rallies in early morning trading in the Far East — and twice during the New York trading session, with the most egregious coming at around 10:30 a.m. when the dollar index began to fall like a rock.  At that point someone was there to ensure that silver and gold were sold lower as well.

And as I’ve pointed out on several occasions during this week, the latest being in today’s COT discussion, gold is still hugely in bearish territory — and silver is not that far behind, despite the big improvements in the Commercial net short position in that precious metal over the last two reporting weeks.

At some point, as Ted has repeatedly mentioned, this situation has to get resolved…either in the same ‘wash, rinse, spin’ cycle that has been going on for what seems like forever…or the Big 8 traders [sans JPMorgan] finally get over run.  It has to be one or the other, as there is no third way.

So we wait some more.

Here are the 6-month charts for the Big 6 commodities — and except for the decent rally in platinum yesterday, there’s not a lot to see.  Click to enlarge.

This Jeffrey Epstein saga may not seem like its connected to anything that I normally write about, or post stories and articles on, but I can assure that it is…at least in my opinion.

I knew the moment that he was arrested that he would never live to go on trial — and I certainly wasn’t alone in that view…either amongst my readers, or on the Internet at large.

This was a ‘wet operation‘ by the U.S. Deep State — and proof that there’s nobody they can’t get to if they have to.  Epstein had a lot of sexual dirt on a pile of people, as the names of the powerful, famous and politically connected that had surfaced so far in that affair was eye-opening — and those are just the ones that were made public.  I’m sure that the list was longer than anyone could possibly imagine.  He had to be silenced — and he was.

As I’ve said on many occasions over the years, one should never underestimate the power that they have — and the ‘Epstein Affair’ was just latest in a long list of Deep State activities.  The other big examples of their power over the years that I’ve either read about, or lived through first hand were Pearl Harbor, the assassination of John F. Kennedy, Watergate — and don’t get me started on 9/11.  Then there’s Afghanistan, Iraq, Syria and Libya…the list is almost endless.

Now I’m wondering about this ‘Everything Bubble’ that appears to have reached critical mass. It’s my opinion that it did not come about by either chance or bad policy…but by deliberate acts over the years — and is a direct and inevitable consequence of unlimited fiat currency printing, backed by nothing except more fiat currency.

It’s a system that could not — and will not survive.  The Deep State knows that all too well.  They allowed and encouraged its development — and continue to keep it propped up to this day.  But at some point they will also precipitate its demise.

I’m not sure whether it was Winston Churchill or President Obama’s former Chief of Staff Rahm Emanuel that coined the phrase “You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.”…or words to that effect.

After 9/11 the U.S. got the Patriot Act, a monstrous piece of legislation that was said to have been cobbled together in just six weeks.  More thoughtful and deep-thinking legal minds opined at the time that such a piece of legislation would take years to assemble — and that the document had been more or less completed long before — and was just waiting for this event, or one like it.

It’s certainly no secret that the Deep State has had it in for Donald Trump ever since he got elected president.  The fight to get rid of him has been fought tooth-and-nail in the public domain…and it has been ugly.  In the end it was all proven to be wall-to-wall lies.

But I doubt they have given up.  They aren’t about to pull another ‘Kennedy’ on him, as no thinking person now believes that official Lee Harvey Oswald fairy tale any more — and the success of “Watergate against Nixon back in the early 1970s, turned into Trump’s “Russiagate” forty-five years later.  That one failed.

The sociopathic/psychopathic types that populate the Deep State will not accept failure — and the one sure way to get him would be to torpedo the U.S. economy, as his re-election chances would evaporate in lock-step with a crashing stock market.  Patrick Buchanan had some words to say about that earlier this week in a commentary headlined “Trump’s Great Gamble” — and it’s linked here.

That in turn would take the rest of the world’s economies with it — and throw the planet into a depression that none of us, including this writer, would live to see the end of.

But the U.S. Deep State is only concerned about power…world power — and they’ve been more than actively involved in the last few years trying to torpedo Russia, Europe, China — and a whole raft of other countries that won’t bow to their wishes…including us folks here in Canada.  If you doubt me, you need to read John Perkins’ classic tome “Confessions of an Economic Hit Man“.  The only difference between what he describes in his book — and what’s going on now, is that everything back in Perkins’ day was covert…now the U.S. Deep State is right out in the open about it.

So sometime between now and the Presidential election in January, I expect things to turn very ugly, not only in the U.S…but world wide — and they’re being pushed strongly in that direction already.  The U.S. Deep State, amongst others, including the major central banks of the world I suspect, will be up to their necks in it.

And at some point along that path, the price of precious metal will be released from the iron grip that JPMorgan et al. have on them at the moment.  Then our day in the sun will arrive, but I do have some fear that another set of draconian legislation…either existing, or sitting on a shelf waiting for this event…may suddenly put in an appearance, like the Patriot Act six weeks after 9/11…and maybe a new gold-backed world currency as well.

So I’m still playing it the way I see it — and I’m still “all in”.

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