Zero-Bound or Worse Along the Road to Perdition

14 September 2019 — Saturday


The gold price was sold off a few dollars once trading began at 6:00 p.m. EDT in New York on Thursday evening — and from that point it crawled quietly and unevenly sideways until 2 p.m. China Standard Time on their Friday afternoon.  It began to head higher at that juncture, but ran into obvious resistance once London opened — and it crawled higher until 1 p.m. BST/8 a.m. EDT, which was its high tick of the day.  ‘Da boyz’ showed up at the point, or very shortly after — and the low tick was set at 3:00 p.m. EDT in after-hours trading in New York.  It edged a few dollars higher from there going into the 5:00 p.m. close.

The high and low ticks in gold were reported as $1,509.80 and $1,486.70 in the October contract…and $1,516.60 and $1,493.10 in December.

Gold was closed on Friday in New York at $1,487.90 spot, down $10.90 from Thursday.  Net volume was way up there at a bit under 352,000 contracts — and there was around 13,500 contracts worth of roll-over/switch volume in this precious metal.

Silver was sold down about a nickel starting at the open of trading on Thursday evening EDT.  It crept higher by about a dime starting shortly after 1 p.m. CST — and from the London open onwards, wasn’t allowed to do much.  It was started on its downward price path the same time as it was for gold…1 p.m. BST/8 a.m. EDT — and the low tick was set a couple of minutes before 3 p.m. in after-hours trading in New York.  It recovered a dime or so from there, but half of that tiny gain was gone by the 5:00 p.m. EDT close.

The high and low ticks in silver were recorded by the CME Group as $18.265 and $17.47 in the December contract…an 80 cent intraday move.

Silver was closed on Friday at $17.415 spot, down 64.5 cents from Thursday.  Net volume was very heavy, but not as heavy as you might expect…all things considered…at just under 96,500 contracts — and there was a bit over 11,000 contracts worth of roll-over/switch volume on top of that.

The platinum price was sold very quietly lower until around 11:30 a.m. CST on their Friday morning — and it didn’t do much from there until the dollar index took a header at 2 p.m. China Standard Time.  It began to head higher from there, but ran into ‘resistance’ once Zurich opened — and it crawled quietly higher until the COMEX open in New York.  It was sold down a bit from there, until shortly before 9 a.m. EDT — and then began to head sharply higher.  That rally was capped and turned lower at, or minutes before, the 10 a.m. EDT afternoon gold fix in London — and it was sold back below unchanged by a few dollars by a minute or so after 1 p.m. in COMEX trading.  Its rally attempts back above the unchanged market were all turned aside — and platinum was closed at $946 spot, down 3 dollars from Thursday.

The palladium price was down 15 bucks or so by 10 a.m. CST on their Friday morning — and then didn’t do much until around 2 p.m. CST.  It made it back to the unchanged mark by the Zurich open, but that was as high as it was allowed to get.  From there it was sold quietly and rather unevenly lower until shortly before 12 o’clock noon in New York.  It crept a bit higher until shortly before 2 p.m. EDT — and traded pretty flat from there into the 5:00 p.m. close.  Palladium was closed at $1,590 spot, down 10 dollars on the day.

The dollar index closed very late on Thursday afternoon in New York at 98.31 — and then opened 10 basis points higher once trading commenced around 7:45 p.m. EDT on Thursday evening, which was 7:45 a.m. China Standard Time on their Friday morning.  It crept very quietly lower from there until a very few minutes after 2 p.m. CST on their Friday afternoon — and then proceeded to head rather sharply lower.  It had one bounce on the way to the 98.00 mark — which occurred around 9:35 a.m. in London.  From that juncture it was bounced off that price mark a few times, until it began to ‘rally’ starting around 12:55 p.m. in London…7:55 a.m. in New York.  That lasted until 10:15 a.m. EDT — and it began to head quietly lower from there, but then took a real header from that juncture [at least according to the DXY chart below] — and it closed at 97.95.  The dollar index was adjusted higher — and it was officially closed at 98.26…down 5 basis points from Thursday.

It’s almost unnecessary to point out that the goings-on in the currency market had zero to do with what was happening in the precious metal price arena, as that was strictly a paper affair in the COMEX futures market.

Here’s the DXY chart for Friday, 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 Internet site.  The delta between its close…97.83…and the close on the DXY chart above, was 43 basis points on Friday.  Click to enlarge as well.

The gold stocks gapped up a bit at the open — and hung in there until JPMorgan et al. began to lean on the gold price around 10:15 a.m.  That sell-off lasted for about thirty-five minutes — and the shares chopped quietly sideways until 2 p.m. in New York trading.  They were sold off a bit more going into the 4:00 p.m. EDT close — and the HUI closed lower by 1.99 percent.

The silver equities performed in an identical manner as their golden brethren, expect their sell-off…not surprisingly…was a bit more severe.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 3.38 percent.  Click to enlarge if necessary.

And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart, updated with Friday’s data.  Click to enlarge as well.

Considering the severity of the sell-offs in both gold and silver…particularly silver…I though that the precious metal equities weren’t too badly beaten up.  And remember that there was a buyer for every share sold — and it’s a given that they hands that hold them now, are much, much stronger than the ones that sold them.

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 except for palladium, it’s a sea of red.  All of this week’s losses occurred on Monday, Thursday and Friday…mostly Friday, as ‘da boyz’ really worked over the precious metals yesterday.  Click to enlarge.

Here’s the month-to-date chart — and the big sell-offs in both gold and silver on Thursday and Friday after the long weekend [on record volumes] took their tolls on the performance of everything over that time period, plus what was added during the current week.  It’s pretty ugly — and the continuing suppression of the silver price, plus the ongoing underperformance of Buenaventura, Peñoles and Hecla Mining is certainly not helping the Silver 7 Index. Click to enlarge.

Here’s the year-to-date chart — and it’s still all green by a very decent amount, so all is not lost.  JPMorgan et al.’s continuing near death grip on the silver price is readily apparent in its lack-lustre price gains relative to gold — and in the underlying values of their associated stocks as well…notably the dismal year-to-date performance of the three silver stocks mentioned above. Click to enlarge.

It certainly appears that we’re at the start of another ‘wash, rinse, spin…repeat’ cycle.  However, I very much doubt that this current engineered price decline will last all that long although, as I’ve said before, it could be ugly…albeit brief.  It’s not a given that we’ll get a rate cut from the Fed on Tuesday, but I’ll be one of many that will be shocked if we don’t.  But this rush to zero-bound in interest rates is a headwind that JPMorgan et al. are fighting with increasing desperation with each passing week — and it will be all that much worse by next Saturday.

The CME Daily Delivery Report showed that 1 gold and 98 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

The lone gold contract was issued by Advantage — and stopped by Morgan Stanley.  Both transactions involved their respective client accounts.

In silver, the two short/issuers were Advantage and ABN Amro, with 74 and 21 contracts out of their respective client accounts.  The largest long/stopper was JPMorgan, picking up 43 contracts in total…42 for its client account — and 1 for its own account.  In second spot was Advantage, with 41 for its client account — and in very distant third place was Morgan Stanley, picking up 7 contracts for its client account as well.

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

So far in September, there have been 1,724 gold contracts issued/reissued and stopped — and that number in silver is a pretty chunky 8,197.

The CME Preliminary Report for the Friday trading session showed that gold open interest in September fell by 6 contracts, leaving 25 still open, minus the 1 lone contract mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 6 gold contracts were posted for delivery on Monday, so the change in open interest and deliveries match for a change.  Silver o.i. in September declined by 136 contracts, leaving 389 still around, minus the 98 contracts mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 231 silver contracts were actually posted for delivery on Monday, so that means that 231-136=95 more silver contracts just got added to the September delivery month.

There was a decent-sized withdrawal from GLD on Friday, as an authorized participant removed 188,545 troy ounces.  And, for the third day in a row, there were no reported changes in SLV.

In other gold ETFs on Friday, there was a net inflow of around 89,000 troy ounces…even through there were huge withdrawals from both GLD and the COMEX depositories.  In the silver ETFs, there was a net 931,000 troy ounces taken out yesterday…and that was mostly because of two big withdrawals from Deutsche Bank and Julius Baer.  Here’s the daily silver numbers from Nick’s website so you can see all this for yourself.  Click to enlarge.

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

Month-to-date the mint has sold 4,000 troy ounces of gold eagles — 500 one-ounce 24K gold buffaloes — and 686,000 silver eagles.

There was a tiny bit of movement in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.  Nothing was reported received — and only 64.302 troy ounces/2 kilobars [SGE kilobar weight] were shipped out.  For obvious reasons, I won’t bother linking this amount.

There was some activity in silver, as 856,324 troy ounces was received — and only 6,999 troy ounces were shipped out.  In the ‘in’ category, there was a small truckload…555,991 troy ounces…dropped off at CNT — and the remaining 300,333 troy ounces was deposited at Brink’s, Inc.  In the ‘out’ category, there was 5,981 troy ounces that departed CNT — and the remaining 1,018 troy ounces…one good delivery bar…was shipped out of Delaware.  The link to all this is here.

It was a very busy day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  There were 500 kilobars received — and 4,550 shipped out.  All of this activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.

Memmingen, City, Ducat 1730…..Bicentennial of the Augsburg Confession

Origin: Roman German Empire     Material: Gold     Full weight: 3.49 grams

Price: €3,665.00/USD$4,032

The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, September 10, certainly was nowhere near close to what Ted was hoping/expecting.  There was no change in Commercial net short position in silver at all — and not anywhere near as much as he was forecasting in gold.

In silver, the Commercial net short position increased by a piddling 90 contracts, which is no change at all.

They arrived at that number by reducing their long position by 2,217 contracts — and they also reduced their short position by 2,127 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, there wasn’t much change in any of the categories.  The Managed Money traders reduced their long position by 2,728 contracts — and also reduced their short position by 1,432 contracts.  It’s the difference between those two numbers…1,296 contracts…that represents their change for the reporting week.  The other categories also had changes of similar sizes.  Nothing to see here folks.

Looking in the Producer/Merchant category in the Commercial category, where JPMorgan hides out, they increased their net short position by 1,590 contracts…so JPMorgan may or may not have increased their short position by 1,000 contracts.  So that puts JPMorgan’s short position in the COMEX futures market in the 25-26,000 contracts…which is basically unchanged from last week.

Ted pointed out that the traders in the Swap Dealers category of the Commercial traders, did cover 3,760 short contracts, which they did so at a loss.

The Commercial net short position in silver remains unchanged from the prior week at 423.8 million troy ounces.

So despite the record volume levels in silver last week, it ended up being about 99.5 percent computer driven day trading, with no real positioning changes at all…as Ted mentioned yesterday afternoon in our usual Friday telecon.

Of course there were no moving averages broken during the big engineered price declines on Thursday and Friday of last week, so that may partially explain why the Managed Money traders stood their ground.

Here’s Nick’s 3-year COT chart for silver — and there’s nothing much to see.  Click to enlarge.

Silver’s configuration from a COT perspective is still bearish, but not as bad as gold — and yesterday’s price action may signal a more significant engineered price decline lies ahead.  But, as Ted also pointed out, it’s the only bearish factor for silver right now.

In gold, The commercial net short position fell by 32,130 contracts, or 3.21 million troy ounces of paper gold.

They arrived at that number by adding 8,344 long contracts — and they also reduced their short position by 23,786 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 only partly the Managed Money traders that made up the difference, as all three categories reduced their net long positions during the reporting week.  The Managed Money traders reduced their long position by 25,700 contracts — and also reduced their short position by 255 contracts.  It’s the difference between those two numbers…25,445 contracts…that represents their change for the reporting week.

As it must be, the difference between that number — and the commercial net short position…32,130 minus 25,445 equals 6,685 contracts.  That was made up by the traders in the other two categories, as the ‘Other Reportables’ reduced their net long position by 5,377 contracts — and the traders in the ‘Nonreportable’/small trader category reduced their net long position by 1,308 contracts.

In the commercial category, both the Producer/Merchants and the Swap Dealers covered short positions during the week…the former category by only 1,479 contracts — and the latter by a chunky 19,976 contracts.  Ted’s of the opinion that, like in silver, these contracts were closed out at a loss.

The commercial net short position in gold is now down to 30.56 million troy ounces.

Here’s the 3-year COT chart for gold — and the rather minor improvement should be noted.  Click to enlarge.

Like in silver, there were no critical moving averages broken during the reporting week.  So why the Managed Money traders were reducing their long positions in gold is a mystery…a mystery only equaled by the fact that there was no change at all in silver.  Why the dichotomy you ask???  Ted and I discussed this — and neither one of us had a satisfactory explanation.  However, he may have come up with one by the time he posts his weekly commentary on his website this afternoon.

But no matter how you slice or dice this…the Managed Money traders are set up to be fleeced by the commercial traders once again.  And as I said about silver, that process may have begun yesterday.

In the other metals, the Manged Money traders in palladium increased their net long position by a further 337 contracts — and as I mentioned last week, there are never big position changes in palladium.  The Managed Money traders are now net long the palladium market by 12,162 contracts…about 58 percent of the total open interest, which is grotesque.  Total open interest in palladium is 21,038 COMEX contracts.  In platinum, the Managed Money traders increased their net long position by another very big amount…5,128 contracts during the reporting week…the second big weekly increase in a row.  The Managed Money traders are now net long the platinum market by 25,735 COMEX contracts…a bit over 27 percent of the total open interest.  The traders in the other two categories are still net long platinum big time as well.  In copper, the Managed Money traders decreased their net short position in that metal by a whopping 18,824 COMEX contracts during the reporting week — and are net short the COMEX futures market by ‘only’ 52,090 contracts, or 1.30 billion pounds of the stuff. That’s a bit under 22 percent of total open interest…a huge 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 146 days of world silver production, which is up 1 day from last week’s report — and the ‘5 through 8’ large traders are short an additional 73 days of world silver production, unchanged from last week’s report — for a total of 219 days that the Big 8 are short, which is a bit over seven months of world silver production, or about 511 million troy ounces of paper silver held short by the Big 8. [In the prior week’s COT Report, the Big 8 were also short 218 days of world silver production.]

In the COT Report above, the Commercial net short position in silver was reported as 424 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 511 million troy ounces.  The short position of the Big 8 traders is larger than the total Commercial net short position by 511-424=87 million troy ounces.

The reason for the difference in those numbers…as it always is…is that Ted’s raptors, the 31-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 25-26,000 COMEX silver contracts…basically unchanged from last week’s COT Report.

25,000 COMEX contracts is 125 million troy ounces of paper silver, which works out to around 53 days of world silver production, unchanged last week’s COT Report.  As of Tuesday’s cut-off, JPMorgan is still by far the biggest silver short on the COMEX futures market.  Citigroup is in second place — and not that far behind.

The Big 4 traders in silver are short, on average, about…146 divided by 4 equals…36.5 days of world silver production each.  The four traders in the ‘5 through 8’ category are short 73 days of world silver production in total, which is 18.25 days of world silver production each, on average.

The Big 8 commercial traders are short 47.1 percent of the entire open interest in silver in the COMEX futures market, which is a bit of an increase from the 45.2 percent they were short in last week’s report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be something over the 50 percent mark.  In gold, it’s now 43.1 percent of the total COMEX open interest that the Big 8 are short, up a hair from the 42.9 percent they were short in last week’s report — and something approaching 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 2 days from what they were short in last week’s COT Report.  The ‘5 through 8’ are short another 31 days of world production, down 1 day from what they were short last week…for a total of 92 days of world gold production held short by the Big 8…down 3 days from last week’s report.  Based on these numbers, the Big 4 in gold hold about 66 percent of the total short position held by the Big 8…unchanged from last week’s COT Report.

The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 67, 70 and 78 percent respectively of the short positions held by the Big 8.  Silver is unchanged from a week ago, platinum is down 3 percentage points from last week — and palladium is up 2 percentage points from a week ago.

Once again, I don’t have all that many stories/articles for you today.


Doug Noland — Did not publish a commentary this week.  But he did have a ‘Just the Facts’ bulletin which you can skim/read if you wish — and that’s linked here.

All Major Economies Are Caught in an Inflate-or-Die Trap — Bill Bonner

We’re exploring the old adage: What goes around comes around. And what we see coming around almost everywhere is inflation.

We make haste to explain that we’re not talking about common consumer price inflation, but about inflation of the money supply, which could show up almost anywhere.

In the interest of conserving the reader’s time, here is our hypothesis: All major economies are caught in an “Inflate-or-Die” trap… and what went around Zimbabwe, Argentina, and Venezuela will be coming soon to an economy near you.

Central banks and governments are lowering rates, increasing deficits, and finding ways to dodge debt limits. The idea is always the same – to increase the amount of money in circulation. And here’s the latest. Bloomberg:

President Donald Trump said Thursday that he’s planning a tax cut directed at the middle class that will be announced in the next year.

“It will be a very substantial tax cut,” Trump told congressional Republicans at a retreat in Baltimore. He said the tax cut would be “very, very inspirational” without providing details.”

Cutting taxes without cutting spending leaves both taxpayers and the feds with more money to spend.

This worthwhile commentary from Bill was posted on the Internet site early on Friday morning EDT — and another link to it is hereGregory Mannarino‘s post market close rant on Friday is linked here — and it’s worth your while.

David Stockman on the Coming Financial Panic and the 2020 Election

International Man: We seem to be near the top of the “everything bubble.” Almost nothing is cheap… anywhere. What are your thoughts on where people should put their money for prudence and for profit?

David Stockman: I would recommend recognizing that the “everything bubble” is the most extreme, exaggerated, severe financial bubble in world history. It will inevitably collapse, and there will be massive losses, even greater than occurred in 2008 and 2001.

So, the first thing is to stay out of the casino. By that, I mean the financial-market stocks, bonds, and everything else.

These markets are so artificial. They’re just chasing what the central banks are doing. There’s no honest price discoveries or supply and demand; nobody’s discounting the future of economic growth, productivity, and investment. You’ve got the chart monkeys, 29-year-old day traders who are in charge of the market.

When the big correction comes, there are going to be massive losses, and the panic will be great. All correlations will go to 1—which means everything will fall: the good, the bad, and the indifferent.

There’s this old saying among traders that when the cops raid the house of ill repute, they carry out the good girls, the bad girls, and the piano player too. That’s essentially what’s going to happen.

This longish, but very worthwhile Q&A session with David, appeared on the Internet site on Friday sometime — and I thank Phil Manuel for pointing it out.  Another link to it is here.

Count Draghila“: A Furious Germany Reacts to Draghi’s Monetary “Horror

When it comes to Mario Draghi’s relationship with Germany’s notoriously fiscally (and monetarily) conservative public, it tends to be a love-hate affair. Actually, scrap the love part.

Back in March 2016, when the ECB cut rates and expanded its QE (in an operation that just like Thursday left market’s underwhelmed, and sent the EUR surging), Germany’s press responded not too kindly to Draghi’s monetary largesse with Handelsblatt, in an article titled “The dangerous game with the money of the German savers“, provided a metaphorical rendering of what is happening in Europe as follows:  Click to enlarge.

Fast forward three and a half years later, when Mario Draghi, one foot out of the ECB’s Frankfurt HQ on his way to retirement, doubled down in what appeared to be the final push in European monetary policy, when the central banker cut interest rates deeper into negative territory and promised bond purchases with no end-date to push borrowing costs even lower.

The fact that it was left open-ended (or until the ECB starts raising rates) was perhaps the biggest takeaway, and as Deutsche Bank’s Jim Reid noted “QE infinity is back if that’s not an oxymoron.” That said, there were some complications when Bloomberg reported that Europe’s top central bankers – the French, German and Dutch governors – all opposed more QE, as did Coeure and Lautenschlaeger and a couple of others. “So this was a contentious move and rightly so.”

But an even bigger surprise was Draghi’s veiled admission that the ECB is now out of ammo and that to boost the economy, Europe will need fiscal stimulus, i.e., issue more debt. Specifically, Draghi referred being “very concerned about the pension industry” and also suggested that the answer to speeding up positive side effects was fiscal policy. As Reid concluded, “it’s hard to therefore get away from feeling that even the ECB feel we’re nearing the end game in terms of the limits of monetary policy. Something that has been obvious to the outside world for sometime.”

And nowhere was this mood represented better than by Germany’s most popular tabloid, Bild, which on Friday accused Draghi of “sucking dry” the bank accounts of Germany’s savers, a day after the ECB cut interest rates deeper into negative territory. Next to a Dracula photomontage of Draghi, Bild’s headline read: “Count Draghila is sucking our accounts dry.”

The horror for German savers goes on and on,” Bild wrote.

This longish story was posted on the Zero Hedge website at 4:22 p.m. on Friday afternoon EDT — and another link to it is here.

Austrian 100-Year Bond Enters Bear Market as Negative Debt Collapses

For months, the world watched in stunned amazement as, alongside the relentless increase in global negative yielding debt which more than doubled in 2019 from $8 trillion to $17 trillion, the Austrian century bond due 2117 exploded higher and almost doubled in price from just above par to an all time high of 220 in late August.

What a different just a few weeks – and a smattering of good news – makes the euphoria is now officially over and as 10Y Treasury yields surge to 1.90% from a record low of 1.42% on September 3, now that downward momentum has been broken and CTAs are accelerating in the other direction, the Austrian century bond is doing what its Argentina peer did last month: it is tumbling, and as of the close of trading in Europe was down over 20%, officially entering a bear market.  Click to enlarge.

What about the amount of negative yielding debt? Well, after hitting a record high of $17 trillion in August, the stock of negative debt has tumbled by $2.5 trillion to $14.5 trillion, the biggest monthly drop in global negative-yielding debt on record.

This tiny 2-chart Zero Hedge article was posted on their website at 1:23 p.m. EDT on Friday afternoon — and another link to it is here.

Russia will only borrow in currencies other than U.S. dollar – finance minister

Russia will not take out loans in US dollars for the remainder of this year and the whole of 2020, turning instead to the yuan and euro, according to the Finance Ministry.

We will borrow in currencies other than the dollar,” Russian Finance Minister Anton Siluanov said on Thursday. He added that the country will not be taking any more loans in 2019.

This year we have no plans to borrow any more on foreign markets, we have fulfilled our program and even overfulfilled it. Next year, we’ll see. Probably it will be not only in euro but maybe in Chinese yuan,” Siluanov stated.

Back in March, Russia’s Finance Ministry issued Eurobonds worth €2.7 billion ($3 billion) with a maturity date in 2035. It also separately issued Eurobonds worth €750 million ($830 million) with a maturity date in 2025. In June, the Finance Ministry also placed additional Eurobonds worth €1.37 billion ($1.5 billion) with a maturity date in 2029, and €900,000 ($1 billion) with a maturity date in 2035.

Meanwhile, due to steadily growing gold and foreign currency reserves, Russia’s state-debt-to-GDP ratio last month turned negative for the first time since 2014, when the country’s economy was battered by Western sanctions and the oil market crash. As of August 1, Russian state debt (at federal, regional and municipal levels) amounted to 16.2 trillion rubles (around $247.3 billion). At the same time, liquid assets of federal government, regional authorities and non-budget funds stood at 17.6 trillion rubles (nearly $268.8 billion).

This brief news item showed up on the Internet site at 9:39 a.m. Moscow time on their Friday morning, which was 2:39 a.m. in Washington — EDT plus 7 hours.  I thank George Whyte for bringing it to our attention — and another link to it is here.

Stunned Silence Followed Trump’s G-7 Outburst: “Where’s My Favorite Dictator?

Oh how we wish this one were captured on video, but alas The Wall Street Journal could only vividly describe the epic moment when President Trump shouted across a crowded room, “Where’s my favorite dictator“? —while awaiting a meeting with Egypt’s president.

It apparently happened at last month’s Group of Seven summit in Biarritz, France but is only now being revealed by the paper:

Inside a room of the ornately decorated Hotel du Palais during last month’s Group of Seven summit in Biarritz, France, President Trump awaited a meeting with Egyptian President Abdel Fattah Al Sisi,” the WSJ reported Friday.

Mr. Trump looked over a gathering of American and Egyptian officials and called out in a loud voice: ‘Where’s my favorite dictator?’ Several people who were in the room at the time said they heard the question,” the newspaper reported. Onlookers described “a stunned silence” that followed.

People in the room said they were unclear if President Sisi actually heard it. The Journal commented, “Even if lighthearted, Mr. Trump’s quip drew attention to an uncomfortable facet of the U.S.-Egypt relationship.”

We might add that though uncomfortable the moment might have been for U.S.-Egypt relations, it’s one of those classic Trump moments where the president’s wild and off the cuff manner actually comically cuts straight to the reality better than anything else.

A week ago the U.S. State Department moved to waive human rights rules in order to vote through sending military aid to Egypt, totaling $1.3 billion.

With a whopping figure like that to prop up the Egyptian military ‘deep state’ headed by the Gaddafi-esque general, we’re sure Sisi will let Trump say whatever the hell he wants.

Trump’s comments were right on the money.  This Zero Hedge article was posted on their website at 6:25 p.m. EDT on Friday evening — and another link to it is here.

Zimbabwe Hikes Rates to 70% to Halt Hyperinflation 2.0

A week after the death of Robert Mugabe, and just a few months after the re-introduction of the ZimDollar, Zimbabwe faces another hyperinflation scare as inflation soars and the central bank hikes rates drastically to stall the currency’s collapse.

Just three months ago, The Reserve Bank of Zimbabwe (RBZ) issued a directive banning cash withdrawals from all Foreign Currency (FCA) Nostro Accounts following the promulgation of Statutory Instrument 142 of 2019, which reintroduced the local Zimbabwe Dollar and scrapped the multi-currency regime. Nostros/FCA holders will have to liquidate their balances to be usable in Zimbabwe. As Pindula News noted at the time, what this essentially means is that if one earns USD, deposited into their Nostro account, they can’t draw the cash but will have to get it in Zim Dollar using that day’s interbank rate.

And it hasn’t helped as the black market ZimDollar has collapsed since…Click to enlarge.

The southern African nation suffers from spiraling inflation and chronic shortages of foreign exchange, bread and electricity, prompting protests that have been brutally repressed.

Ncube reintroduced the Zimbabwe dollar, which the country had abandoned in 2009, and banned the use of foreign currency in June.

While Ncube has suspended the release of annual inflation statistics until February, economists estimate that the rate is between 230% and 570%. The nation’s 400,000 civil servants are demanding increased pay after the devaluation decimated their spending power.

This Zero Hedge news item put in an appearance on their Internet site at at 12:39 p.m. EDT on Friday afternoon — and another link to it is here.

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


Less than a kilometer from where I took the shot of the train in yesterday’s column…and just down stream, there was this group of thrill-seekers riding the rapids in the Thompson River.  I suppose it would be fun — and although my camera is very water resistant, it ain’t completely waterproof.  The spot where I took yesterday’s train photos from is at the very top right-hand corner of the first photo.  Click to enlarge.


However the weekend is coming — and those that would seek to control the gold price have been reluctant in the past to see the yellow metal end the week above such a key psychological level as $1,500 — and we may thus see a repeat of Thursday’s price movements today, with early strength in European trading perhaps being taken back in U.S. trade later in the day.  Déjà vu all over again in the words of Yogi Berra.” — Lawrie Williams…early on Friday morning BST in London, many hours before the COMEX open in New York

Today’s pop ‘blast from the past’ comes through rather sad circumstance.  Earlier this week I read a story about the passing of Edward Joseph Mahoney…an American singer, songwriter and multi-instrumentalist who had success in the 1970s and 1980s — and was known professionally as Eddie Money.  The link to the two songs from the 1970s that brought him the most fame and fortune are linked here…and here.

Today’s classical ‘blast from the past’ dates from 1868.  Edvard Grieg was a Norwegian composer and pianist. He is widely considered one of the leading Romantic era composers, and his music is part of the standard classical repertoire worldwide.  His piano Concerto in A minor, Op. 16…composed at the tender age of 24 years…is among the most popular of all piano concertos.

Here’s the incredibly gifted and even more incredibly lovely Alice Sara Ott doing the honours with an unknown orchestra out of the Far East somewhere.  If there’s a better version of this work in the public domain, I haven’t heard it.  It’s wonderful. The link is here.

There should be little if any doubt in anyone’s mind that ‘da boyz’ in New York were gunning for the Managed Money traders in both gold and silver yesterday.

Returning to Friday’s COT Report, the net short position of the commercial traders in gold fell 32,000 contracts during the reporting week, as of the close of COMEX trading on Tuesday — and that was on a price decline in gold of around $61…using the [December] data on the 6-month gold chart below.  That was a decent decline.  But as I stated in my COT commentary on gold, no moving averages of any great importance were broken to the downside during the reporting week, so that may explain this small amount of Managed Money selling and commercial buying that accompanied that engineered price decline.

But during the same reporting period, the silver price declined by around $1.35 the ounce — and the Commercial net short position remained unchanged at the end of it all — and on massive record volume to boot!  How can that be, you ask?  I don’t know…is the answer.

On Friday, silver was down over 70 cents intraday — and no moving averages of any importance were broken, either…so how much long selling did the Managed Money traders actually do, if they didn’t do much on a $1.35 price decline during the previous reporting week?

And the even more important question is how low do JPMorgan et al. have to engineer prices in order to get the selling they need to cover their short positions?  The answer is…a lot.  But can they or will they in this environment of “Print or Die” monetary debasement that’s going on all around us in real time?

Questions with no answers at the moment — and I look forward to what Ted has to say in his weekly commentary this afternoon.

But it should never be forgotten that JPMorgan, the ring leader in the precious metal price management scheme, can walk away from it at any moment they choose, sticking it to the remaining Big 7 traders…plus all the other short holders out there.  This single fact is the tall shadow that stands over the current negative market structures in both gold and silver.

Here are the 6-month charts for all four precious metals, plus copper and WTIC.  There was some rather significant downwards price action in gold, silver and platinum after the 1:30 p.m. COMEX close on Friday — and that data is not reflected in the charts below, so keep that in mind as you’re looking them over.

Copper had a decent gain on Friday, but that was certainly because the commercial traders are continuing to ring the cash register on the Managed Money traders, as they held a record net short position a bit over a month ago…so expect this short-covering rally to continue.  WTIC was closed at a new low for this current move down — and still below its 50 and 200-day moving averages.  Click to enlarge.

Every Saturday’s Wrap section now involves the agony of trying to come up with new adjectives, superlatives, or adages to describe the ‘Everything’ bubble that now engulfs our planet — and zero-bound interest rates on the road to perdition is the best I can do this week.

It should be obvious that there is no escape from this black hole that we’re all being sucked into.  I’ve pointed this out before in prior weeks and months, but after the ECB/Draghi debacle on Thursday, there can be no doubt.

Then on Tuesday, we have the FOMC meeting — and all eyes will be on the Eccles Building at 2 p.m. EDT on Wednesday when Powell gives us ‘The Word’.  Will it be 25 basis points…50…or none?

But whether it’s death by a thousand cuts, or death by one single thrust, there is no doubt that zero percent interest rates, or lower, lie in our future.  No other option exists as we slowly spiral down to whatever fate awaits us…or is being planned for us.

This situation will continue until something blows up…or melts down…or both.  What happens after that will be, as Jim Rickards says…”chaos“.  I still fear it could be worse.

When I saw my first Star Trek TV program [in black & white] back in 1967…I had no inkling at the time…nor did anyone else for that matter…that “Boldly going where no man [or woman] has gone before.” would also come to apply to the world’s monetary and financial system at some point far down the road.

And, sadly, there will be no Scotty to “Beam us up” the day that everything finally comes unglued.

But I suspect that long before Armageddon arrives, the flight to hard assets of all kinds will be on in earnest…even more than it already is.  And despite the current shenanigans in the COMEX futures market, at some point this JP Morgan-led price management scheme will fail…either by circumstance, or design.  And when it does, it will fail spectacularly.  Because, as Ted Butler has pointed out on numerous occasions recently, that’s the only way it can end — and I agree totally.

I’m still “all in”.

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