Gold Closes Higher…But Gold Equities, Lower

04 January 2020 — Saturday


The gold price began to head higher about an hour after trading began in New York on Thursday evening, which was 8 a.m. China Standard Time on their Friday morning.  From that point, it continued very unevenly higher until trading ended at 5:00 p.m. in New York on Friday afternoon…closing on its high of the day.  And I should note that that I was somewhat surprised at the decent price activity that occurred after the COMEX close yesterday — not what one would expect on a Friday afternoon.

The low and high ticks in gold were reported by the CME Group as $1,530.40 and $1,556.60 in the February contract.

Gold finished the Friday session at $1,552.30 spot, up $23.60 from Thursday’s close.  Net volume, not surprisingly, was gargantuan at just under 403,500 contracts — and there was a bit under 35,500 contracts worth of roll-over/switch volume on top of that.

The silver price stair-stepped its way quietly higher starting shortly after trading began in New York at 6:00 p.m. EST on Thursday evening — and the high of the day was set a few minutes before the London open.  From that point, it was sold quietly lower until a few minutes before 4 p.m. in after-hours trading in New York — and a few pennies back below unchanged on the day.  But, like gold, it ticked a bit higher into the 5:00 p.m. EST close.

The low and high ticks in silver were reported as $18.04 and $18.325 in the March contract.

Silver was closed in New York on Friday at $18.015 spot, up 2 cents from Thursday — and miles off its $18.35 spot Kitco-recorded high tick of the day.  Net volume was extremely heavy at a bit over 103,500 contracts — and there was around 6,700 contracts worth of roll-over/switch volume in this precious metal.

Platinum had a 12 dollar up/down move in Far East trading on their Friday morning — and that lasted until around 1 p.m. China Standard Time on their Friday afternoon.  It began to head higher from that juncture — and was capped a few minutes before 11 a.m. in Zurich trading.  Then at noon over there, the price was sold quietly and very unevenly lower until a few minutes after 4 p.m. in the thinly-traded after-hours market — and it edged a few dollars higher into the 5:00 p.m. EST close from there.  Platinum was closed at $980 spot, up 2 bucks on the day, but 18 dollars off its Kitco-recorded high tick.

The palladium price crept higher until around 2 p.m. CST on their Friday afternoon — and then traded sideways until a few minutes after 10 a.m. in Zurich.  It was sold back to about unchanged at that point — and then didn’t do much for the next couple of hours.  Then at noon CET, it began to head steadily higher — and that rally lasted until a few minutes before noon in New York.  It crawled quietly sideways from that juncture until trading ended at 5:00 p.m. EST.  Palladium finished the day at $1,967 spot, up 26 dollars from its close on Thursday…but some distance off its Kitco-reported $1,994 spot high tick.

The dollar index closed very late on Thursday afternoon in New York at 96.85 — and opened down about 6 basis points once trading commenced around 7:45 p.m. EST on Thursday evening, which was 8:45 a.m. China Standard Time on their Friday morning.  It dipped a few basis points until around 10:45 a.m. CST — and then began to rally quietly, with the 97.11 high tick coming around 11:50 a.m. in London.  It began to head lower from there — and appeared to get rescued around 11:35 a.m. in New York,  It crept quietly higher into the 5:30 p.m. EST close from there.

The dollar index finished the Friday session at 96.84…down 1 basis point from Thursday, so call it unchanged on the day.

If there was any correlation whatsoever between what the currencies were doing — and what was happening in the precious metals arena, I failed to see it.

Here’s the Friday DXY chart from Bloomberg as per usual.  Click to enlarge.

And here’s the 5-year U.S. dollar index chart, courtesy of the good folks over at the Internet site.  The delta between its close…96.52…and the close on the DXY chart above, was 32 basis points on Friday.  Click to enlarge as well.

The gold stocks gapped up two percent at the open in New York on Friday morning, but then steady and relentless selling appeared — and that lasted until 3 p.m…before they edged sideways into the 4:00 p.m. EST close.  The HUI closed down 1.00 percent.

The price pattern in the silver equities was very similar, complete with the gap up at the open, except the trading action was far more choppy after that — and the lows of the day were set around 2:50 p.m. in New York trading.  From that point they crawled a bit higher into the close.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by 0.58 percent.  Click to enlarge if necessary.

The index would have been down substantially more than that, except for the fact that the most unlikely of white knights appeared during New York trading, as Peñoles closed up 5.29 percent.

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

It was yet another counterintuitive day in the price action of the precious metal equities…especially the gold stocks, which should have been on fire yesterday, but weren’t.  It’s almost like the big buyers that were in the market in December have decided to sell some of their holdings, perhaps in fear of an impending engineered price decline that we’ve always had when gold gets this overbought.  And it is overbought when you check the RSI trace on the 6-month chart in The Wrap — and silver is getting very close.

It has been suggested by several that the U.S. bullion banks have been selling some of their precious metal stocks to dampen this rally…but the fact is that nobody knows for sure — and we may or may not find out in the fullness of time.

The best that anyone can do is speculate — and that’s all I’m doing.

Since the month and year are only two trading days old, I’m only including the weekly change chart from Nick in today’s column.  And because of the way Nick computes these charts, this weekly chart includes the last five trading days.  Since Wednesday was New Years Day, the chart below contains last Friday’s data as well, so this chart is not entirely accurate.  Things will be back to normal next week.  Click to enlarge.

The CME Daily Delivery Report for Day 4 of January deliveries shows that 80 gold and 80 silver contracts were posted for delivery on Tuesday.

In gold, of the four short/issuers in total, the two largest were JPMorgan and Advantage, with 55 and 22 contracts.  Of the seven long/stoppers in total, the only two that mattered were also Advantage and JPMorgan, stopping 34 and 28 contracts.  All these contracts, both issued and stopped, involved their respective client accounts.

In silver, the two short/issuers were JPMorgan and Advantage, with 64 and 16 contracts out of their respective client accounts.  There were four long/stoppers.  Advantage stopped 21 contracts for its client account — and the CME Group, Scotia Capital/Scotiabank and JPMorgan stopped 30, 22 and 7 contracts for their respective in-house/proprietary trading accounts.  The CME Group immediately reissued their 30 contracts as 30×5=150 one-thousand ounce Micro Silver Futures contracts.  Advantage stopped 136 of them — and ADM picked up the remaining 14.

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

So far in January, there have been 2,120 gold contracts issued/reissued and stopped — and that number in silver is 314.

The CME Preliminary Report for the Friday trading session showed that gold open interest in January declined by 27 contracts, leaving 175 still around, minus the 80 mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 74 gold contracts were actually posted for delivery on Monday, so that means that 74-27=47 more gold contracts were added to the January delivery month.  Silver o.i. in January fell by 35 contracts, leaving 84 still open, minus the 80 mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 52 silver contracts were actually posted for delivery on Monday, so that means that 52-35=17 more silver contracts just got added to January.

There were no reported changes in GLD yesterday, but an authorized participant removed 1,175,719 troy ounces of silver from SLV.  And whether this was a ‘plain vanilla’ withdrawal, or a conversion of shares for physical, I’m sure Ted would think that JPMorgan owns it all now.

In other gold and silver ETFs on Planet Earth on Friday…net of all COMEX, GLD & SLV activity…there was a net 125,312 troy ounces of gold added, but a net 468,272 troy ounces was withdrawn — and that was only because 508,524 troy ounces was removed from SIVR.

Not surprisingly, there was no sales report from the U.S. Mint.

There was a bit of movement in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.  There was 4,822.500 troy ounces/150 kilobars [U.K./U.S. kilobar weight] received at Loomis International — and that’s all the in/out activity there was.  I won’t bother linking this.

There was more activity in silver, as 870,096 troy ounces was reported received — and 432,032 troy ounces was shipped out.  In the ‘in’ category, there was one truckload…600,092 troy ounces…that was received at Canada’s Scotiabank.  Then there was 252,810 troy ounces dropped off at Brink’s, Inc. — and the remaining 17,192 troy ounces arrived at CNT.  In the ‘out’ category, there were four depositories involved.  The three biggest were Scotiabank, shipping out 300,692 troy ounces…80,228 troy ounces from Loomis — and 50,159 troy ounces from CNT.  There was some paper activity as well…259,697 troy ounces was transferred from the Eligible category and into Registered over at CNT.  The link to all this, is here.

Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday, they reported receiving 736 kilobars — and nothing was shipped out.  All of this activity was at Loomis International — and the link to that, in troy ounces, is here.

Macedonia, Alexander III the Great, 336-323 B.C., Tetradrachma

Obverse: Head of Heracles with lion-skin
Reverse: Zeus on throne with eagle and sceptre

Origin: Ancient Greece  Material: Silver   Full Weight: 17.12 grams  Value: €395.00/US$441

I have a lot of stories for you today and, not surprisingly, a very decent number of them deal with the political fall-out of the assassination of Iranian General Qasem Soleimani, along with two top figures of Iraq’s PMU paramilitary force.


ISM Manufacturing Survey Crashes to Lowest Since June 2009

Manufacturing surveys from ISM and Markit have decoupled in the last few months (the latter rising, the former falling) but Markit’s PMI slipped back in December and expectations were for today’s ISM data to print slightly higher but still in contraction (sub-50).

However, the situation was considerably worse, ISM Manufacturing printed 47.2 in December (below the 49.0 expectation and 48.1 prior). This is the fifth straight month of contraction…Click to enlarge.

The deterioration was driven by the weakest gauges of new orders and production since April 2009. The data show American factories remain plagued by pullbacks in business investment at home, softer demand throughout the world and, until recently, an escalating trade war between the U.S. and China.

This is the lowest ISM print since June 2009. Year-over-year, ISM Manufacturing looks dismal – at levels that have historically lined up perfectly with U.S. recessions.

Better pay attention though as U.S. equity markets have more than priced in a dramatic rebound in Manufacturing.

Trade Accordingly.

This rather brief 3-chart article appeared on the Zero Hedge website at 10:07 a.m. EST on Friday morning — and it’s the first contribution of the day from Brad Robertson.  Another link to it is here.

Rail Traffic Continues to Plunge Amid Industrial Recession

U.S. freight railroads have long been used as a barometer of the country’s economic health, continue to show declines in traffic, suggesting the industrial recession could persist into 2020.

The Association of American Railroads (AAR) published a new report that shows U.S. weekly rail traffic for the week ending December 21 was down 10.5% to 507,589 carloads and intermodal units compared with the same week last year.

Total carloads for the week were 245,048 carloads, down 11.5% compared with the same week in 2018, while weekly intermodal volume was down 9.5% to 262,541 containers and trailers.

For the first 51 weeks of 2019, U.S. rail traffic across all segments was 12,780,814 carloads, down 4.8% from the same period last year; and 13,550,432 intermodal units, down 5.1% from last year. Total rail traffic in the first 51 weeks was 26,331,246 carloads and intermodal units, a 5.9% drop over last year.  Click to enlarge.

Canadian and Mexican railroads also reported traffic declines for the week and in the first 51 weeks as both countries are teetering if not already in a recession.

In a separate report, AAR described how 400,000 rail cars currently sit in storage amid slumping rail demand.

But it’s not just rail traffic that is tumbling, class-8 truck orders collapsed last month, all of this is a symptom of an industrial recession that shows no signs of abating into 2020.

This news item showed up on the Zero Hedge website at 6:05 p.m. EST on Friday evening — and another link to it is here.

Mark Your Calendar: Next Week the Fed’s Liquidity Drain Begins

What goes up, must come down, at least in theory.

Ever since the start of October when the Fed launched QE4 – or as some still call it “Not QE” – in response to the Sept repo crisis, figuring out the market has been pretty simple: if the Fed’s balance sheet goes up so does the S&P500, and vice versaClick to enlarge.

The good news for traders is that for the past three months, the Fed’s balance sheet rose 11 of 12 weeks, and declined just 1 of 12, and magically, the S&P did just that as well.

However, now that the year-end repo scare is history at least until the April 15 tax date and certainly the next year end, it’s time for the Fed to start shrinking its balance sheet, mostly by allowing existing term repo operations to expire without being rolled over. Conveniently, the FOMC Minutes released moments ago provided the Fed’s own big picture take on when the massive liquidity injection since mid-September, which expanded the Fed’s balance sheet by $415BN in three and a half months…

So with the Fed highlighting mid-January as the period when the liquidity injection goes into reverse, here is some more details on just which dates will be critical: as Curvature’s Scott Skyrm points out, these will be the days when the Fed’s term repos maturing over the next few weeks, supposedly without being rolled into further term repos, or as he puts it, “during January, it will be interesting to see how the market reacts to the term RP ops maturing:”

  • $25 billion leaves the market on Monday,
  • $28.8 billion on Tuesday,
  • $18 billion next Friday, etc.

Said otherwise, just next week the Fed will drain nearly $72 billion in liquidity if term repos aren’t rolled.

Of course, perhaps “interesting” is not the right word, because it is clear that if liquidity is drained without a matching injection, the market reaction will be anything but favorable.

Mark your calendars, indeed!  This Zero Hedge article, courtesy of Brad Robertson, put in an appearance on their website at 2:54 p.m. on Friday afternoon EST — and another link to it is here.

The Fed Just Monetized $6.4 Billion in Debt Sold Earlier This Week

Yesterday, when looking at the details of the Fed’s ongoing QE4, we pointed out that the New York Fed was now actively purchasing T-Bills that had been issued just days earlier by the U.S. Treasury, and which settled the day of the permanent open market operation, or POMO.

As a reminder, the Fed is prohibited from directly purchasing Treasurys at auction, as that is considered “monetization” and directly funding the U.S. deficit, not to mention is tantamount to “Helicopter Money” and is frowned upon by Congress and established economists. However, insert a brief, 3-days interval between issuance and purchase… and suddenly nobody minds. As we summarized:

for those saying the US may soon unleash helicopter money, and/or MMT, we have some ‘news’: helicopter money is already here, and the Fed is now actively monetizing debt the Treasury sold just days earlier using Dealers as a conduit… a “conduit” which is generously rewarded by the Fed’s market desk with its marked up purchase price. In other words, the Fed is already conducting Helicopter Money (and MMT) in all but name. As shown above, the Fed monetized T-Bills that were issued just three days earlier – and just because it is circumventing the one hurdle that prevents it from directly purchasing securities sold outright by the Treasury, the Fed is providing the Dealers that made this legal debt circle-jerk possible with millions in profits, even as the outcome is identical if merely offset by a few days.”

[J]ust as we first showed yesterday, the Fed – together with the Primary Dealers – appears to have developed a knack for monetizing, pardon, purchasing in the open market, bonds that were just issued. And sure enough, TM1 was sold just earlier this week, on Monday, Dec 30, with the issue settling yesterday, on Jan 2, just one day before today’s POMO, and Dealers taking down $15.9 billion of the total issue…and just a few days later turning around and flipping the Bill back to the Fed in exchange for an unknown markup.

These are not isolated incidents as a clear pattern has emerged – the Fed is now monetizing debt that was issued just days earlier, only because it was held however briefly by Dealers, who are effectively inert entities mandated to bid for debt for which there is no buy-side demand, it is not considered direct monetization of Treasurys. Of course, in reality monetization is precisely what it is, although since the semantic definition of the Fed directly funding the U.S. deficit is violated by a temporal footnote, it’s enough for Powell to swear before Congress that he is not monetizing the debt.

Oh, and incidentally the fact that Dealers immediately flip their purchases back to the Fed is also another reason why NOT QE is precisely QE4, because the whole point of either exercise is not to reduce duration as the Fed claims, but to inject liquidity into the system, and whether the Fed does that by flipping coupons or Bills, the result is one and the same.

This Zero Hedge story was posted on their website at 12:16 p.m. EST on Friday afternoon — and it’s another offering from Brad Robertson.  Another link to it is here.

Doomsday machine returns with Citibank’s credit default swaps

Lily Tomlin is credited with the quote: “No matter how cynical you get, it is impossible to keep up.” Wall Street regularly brings that message home.

According to the latest derivatives report from the Office of the Comptroller of the Currency (OCC), Citibank, the federally-insured, taxpayer-backstopped bank owned by Citigroup, has sold protection to other banks, hedge funds, insurance companies or corporations on a staggering $858 billion of credit default swaps. When a federally-insured bank sells protection to others on credit default swaps, it is effectively taking on the risk of a default event. At a time of unprecedented levels of debt in the system and growing warnings about leveraged loans, that seems like a very unwise move by Citigroup.

The OCC notes that Citibank has bought protection via a larger amount of credit default swaps — a total of $898.8 billion. (See Table 12 in the appendix of the report.) There is no guarantee, however, that these bets are properly aligned and will not, once again, blow up this bank along with a chunk of Wall Street firms or insurance companies that may be its counterparties.

Credit default swaps played a central role in the 2008 financial collapse on Wall Street, as did Citigroup. It is an indictment of every federal banking regulator in the United States, as well as Congress, that Citigroup has been allowed to return as a major player in this market while using its federally-insured Citibank once again as a pawn in this game.

Adding to the outrage, it was Citigroup that was responsible for overturning the portion of the Dodd-Frank financial reform legislation of 2010 that would have pushed these derivatives out of federally-insured banks.

It may also help to explain why the New York Fed continues to fling hundreds of billions of dollars each week at the trading houses on Wall Street while the Federal Reserve Chairman, Jerome Powell, insists that everything is just fine on Wall Street.

This longish, but worthwhile commentary was posted on the Internet site on Friday — and I found it on the Internet site.  Another link to it is hereGregory Mannarino‘s post market close rant for Friday is linked here.

Doug Noland: 2019 in Review

It cannot be overstated: Bubbles are of paramount importance – for markets, finance more generally, economies, and social and geopolitical stability. Two U.S. bursting episodes over the past twenty years would seem to make this proposition indisputable. I would add that Bubble Dynamics have never been more pertinent than they became over the past year. Apply monetary stimulus to a historic financial Bubble and you’re asking for serious trouble: The Story of a Perilous 2019.

Yet “Bubble” these days has no part in conventional analysis or dialogue – for central bankers, economists or market pundits. To even utter the word on CNBC or Bloomberg would suggest one is hopelessly detached from reality. From my vantage point, bullishness and New Paradigm thinking these days rivals that of the early-2000 peak. Today’s faith in central banking is unrivaled – the willingness to embrace egregious excess unmatched.

To summarize the 2019 policy backdrop in one world: capitulation.

The year of Monetary Disorder only exacerbated wealth inequalities. The country became only further divided. When it hardly seemed possible, the political environment digressed further into the embarrassing and alarming. President Trump was impeached. There should be ample shame to be spread around. Both parties should be ashamed of the fiscal recklessness that became firmly entrenched in 2019. Debt and deficits don’t matter. Where is the morality in leaving such debt to our children and grandchildren? As the Fed capitulated on “normalization,” markets completely renounced their function of disciplining excess.

In all the Roaring 2019 payoffs in securities, derivatives and asset markets, Capitalism atrophied into a shell of its former self. Chronically Unsound Money & Credit and the Inevitability of Monetary Disorder. Things can go crazy at the end of cycles. 2019 Welcomed Wacko and Unhinged. In a nutshell, it’s one hell of a portentous backdrop – that passes for now as a permanent plateau of prosperity. I’ll leave future prospects for another day.

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

America Will Not Be Great Forever — Bill Bonner

We’ve seen that all bubbles pop… all booms end… and all bull markets on Wall Street turn into bear markets.

Empires, like all things in nature, have life cycles, too. They are born, they grow to be fat and sassy. Soon, they are too big for their britches. Inevitably, the buttons pop. Pretty soon, you can’t take them out in public.

Americans began expanding their empire from the get-go, always pushing further and further west. By the late 1600s, they were at the foothills of the Appalachians. By the end of the 1700s, they were on the Mississippi. And by the middle of the following century, they were traveling from coast to coast in railroad cars.

They conquered territory from the Indians… bought it from the French and the Russians… beat back a schismatic attempt at independence by the southern states, and gained huge territories from the Mexicans, by hook or by crook, depending on how you look at it.

By the end of the 19th century, they already had an imperial possession halfway around the world – the Philippine islands – and were ready for the heyday of American hegemony… the 20th century.

That’s how the empire got its start. When it will meet its finish is anyone’s guess, but we think we know when the beginning of the end began.

This worthwhile commentary from Bill showed up on the Internet site on Friday morning sometime — and another link to it is here.

In First 2 Days of 2020, Canada’s Top CEOs Already Made More Than the Rest of Us Will This Year

Canada’s 100 highest-paid chief executives were paid record amounts in 2018 in comparison to the employees beneath them, according to a new report released Thursday.

The Canadian Centre for Policy Alternatives said the average CEO at a top publicly traded company would have made as much money as the average Canadian worker will make all year as of 10:09 a.m. Thursday morning. That’s the earliest time on record in the 13 years the centre has been tracking the numbers.

Those CEOs made 227 times more than the average worker made in 2018, the most recent year figures are available, the centre said. That’s up from 197 times average worker pay in 2017.

Growth in the vast gap between excessive CEO compensation and average incomes is an indicator of Canada’s income inequality juggernaut,” said report author and CCPA senior economist David Macdonald.

Wealth continues to concentrate at the very top while average incomes barely keep up with inflation.”

The report also found 79 per cent of the average CEO’s pay in 2018 came from bonuses related to company stock prices, even in some cases where companies were losing money.

I suspect the same is true in the U.S. and other countries as well, dear reader.  This interesting — and not altogether surprising news item showed up on the Internet site on Thursday afternoon EST — and it comes to us courtesy of Roy Stephens.  Another link to it is here.

EXTREMELY Dangerous Development in the Middle East — The Saker

I just got home and saw the news that General Qasem Soleimani has been murdered along with another 5-8 people by what was initially reported as a MRL strike (Russian sources say it was a drone attack). This was bad enough.

The Telegram channel of RIA News reports that the U.S. has claimed that it was responsible for that attack.

Frankly, I was hoping that Trump and/or Netanyahu had enough brains NOT to claim the attack, whether they did it or not. And, sure enough, it now appears that the U.S. did make that claim.

Now there is only one question left: can the Iranians let this murder go unpunished?

Maybe. But I can’t imagine that they will.

Next, no matter HOW the Iranians retaliate, the U.S. will use that as a pretext to attack Iran.

This very worthwhile commentary from the Saker, made up as events unfolded on the night of January 2…was posted on the Internet site late at night on that day — and it comes to us courtesy of Larry Galearis.  Another link to it is here.  Then there’s this commentary by Andrei Maryanov headlined “Trump Needs some History Update” — and it’s worth reading.  I thank Larry for that one as well.

U.S. Attacks Baghdad Airport, Killing Top Iranian General

On the outskirts of the Baghdad International Airport, a U.S. drone attacked a delegation including the top figure in Iraq’s Popular Mobilization Units (PMU), killing him as well as several others, including Iran’s Quds Forces commander, Gen. Qassem Soleimani. The White House confirmed President Trump ordered the attack, and emphasized that they considered Soleimani a “terrorist.”

Details are continuing to emerge on the attack and killings, but indications are that Gen. Soleimani is dead, as is Iraq’s PMU media chief Mohammed Reda al-Jabri, along with his guards. Iraqi state media also reported Abu Mahdi al-Muhandis, the head of the PMU, to have been killed in the attack. Five PMU and two “guests” were reported killed. Soleimani is assumed to be a guest, and Lebanese Hezbollah figure Muhammad al-Kawtharani is also reported to have been slain.
The PMU has already issued a statement on social media reporting on the deaths, and blaming them on a “cowardly U.S. attack.” Another PMU spokesman blamed the U.S. and Israel jointly.

This is certainly an act of war not just on Iran, but also against Iraq, which is almost certain to be livid over a U.S. attack against its largest civilian airport and assassination of two top figures of its PMU paramilitary force.

The Pentagon has issued a statement confirming the attack, trying to present it as purely defensive in nature, and claiming Soleimani was planning to kill U.S. diplomats. The attack comes just hours after Defense Secretary Mark Esper threatened to attack Iran, and amid repeated warnings for Americans to get out of Iraq, especially the Baghdad area.

The above five paragraphs are all there is to this tiny story that put in an appearance on the Internet site very late on Thursday night EST.  It’s another offering from Larry Galearis — and another link to it is here.

U.S. Will Come To Regret Its Assassination of Qassim Soleimani

Today the U.S. declared war on Iran and Iraq.

War is what it will get.

Earlier today a U.S. drone or helicopter killed Major General Qassim Soleimani, the famous commander of the Iranian Quds (‘Jerusalem’) force, while he left the airport of Baghdad where he had just arrived. He had planned to attend the funeral of the 31 Iraqi soldiers the U.S. had killed on December 29 at the Syrian-Iraqi border near Al-Qaim.

Soleimani had arrived in Baghdad on a normal flight from Lebanon. He did not travel in secret. He was picked up at the airport by Abu Mahdi al-Muhandes, the deputy commander of the al-Hashd al-Shaabi, an official Iraqi security force under the command of the Iraqi Prime Minister. The two cars they traveled in were destroyed in the U.S. attack. Both men and their drivers and guards died.

The U.S. created two martyrs who will now become the models and idols for tens of millions of youth in the Middle East.

The U.S. has won nothing with its attack but will feel the consequences for decades to come. From now on its position in the Middle East will be severely constrained. Others will move in to take its place.

This worthwhile photo-filled commentary showed up on the Internet site on Friday sometime — and it’s yet another offering from Larry Galearis.  Another link is hereThen there’s this story…which you don’t have to read…just the ‘Editor’s Note’ at the beginning, as the rest you already know.  Click here.

War Again on the Front Burner — Paul Craig Roberts

The nonsensical statement below from the Pentagon announcing that the U.S. government has committed an act of war against Iran should frighten everyone:

At the direction of the president, the U.S. military has taken decisive defensive action to protect U.S. personnel abroad by killing Qasem Soleimani, the head of the Islamic Revolutionary Guard Corps-Quds Force, a U.S.-designated Foreign Terrorist Organization.  This strike was aimed at deterring future Iranian attack plans. The United States will continue to take all necessary action to protect our people and our interests wherever they are around the world.”

Murdering a high-ranking official of a government is an act of war.  It is impossible for an act of war to protect U.S. personnel abroad.

It is impossible for an act of war against Iran to deter future Iranian attack plans.  Where there was no Iranian attack plan, there now is in response to the murder of Soleimani.

Committing an act of war does not “protect our people and our interests.”  It jeopardizes them.

This right-on-the-money commentary from Paul put in an appearance on his Internet site on Friday sometime — and it’s the final contribution of the day from Larry Galearis — and I thank him on your behalf.  Another link to it is here.

Round Two: U.S. Drone Airstrikes Kill Six Pro-Iran Militia Commanders

Whether he is eating ice cream or not, Trump appears to be on a rampage to recreate the end of The Godfather.

Less than 24 hours after a U.S. drone shockingly killed the top Iranian military leader, Qasem Soleimani, resulting in equity markets groaning around the globe in fear over Iranian reprisals (and potentially, World War III), the U.S. has gone for round two with Reuters and various other social media sources reporting that U.S. air strikes targeting Iraq’s Popular Mobilization Units umbrella grouping of Iran-backed Shi’ite militias near camp Taji north of Baghdad, have killed six people and critically wounded three, an Iraqi army source said late on Friday.

Iraqi official media has also confirm that two vehicles were targeted north of Baghdad, carrying commanders of the pro-Iran militias in the PMUs.

The strikes reportedly took place at 1:12 am local time.

Separate reports claim that Shibl al-Zaidi, a commander of Kataib Imam Ali brigades, an Iranian-backed militia and the PMU’s 40th Brigade, is among those the six who were killed in the strike.

And so, with the U.S. laying death and carnage from the sky across Iraq, reactions have ranged from the sarcastic and laconic to the objectively concerned, with some wondering how much further is Iraq going to let U.S. operate freely in country before they decide to kick their assets out? “These airstrikes really make the Iraqi government look weak like they can’t deal with their problems by themselves, which may or may not be true, but the point stands.

Of course, the other point is when and how will Iran respond, as it is now clear that if it does nothing it will only embolden the U.S. to pick off its top generals, while any substantial escalation could lead to a regional war.

This story was posted on the Zero Hedge website at 6:49 p.m. on Friday evening EST — and another link to it is here.

Our Real Existential Crisis — Extinction — Patrick Buchanan

If Western elites were asked to name the greatest crisis facing mankind, climate change would win in a walk.

Thus did Time magazine pass over every world leader to name a Swedish teenage climate activist, Greta Thunberg, its person of the year.

On New Year’s Day, the headline over yet another story in The Washington Post admonished us anew: “A Lost Decade for Climate Action: We Can’t Afford A Repeat, Scientists Warn.”

By the final year of the decade,” said the Post, “the planet had surpassed its 2010 temperature record five times.”

Hurricanes devastated New Jersey and Puerto Rico, and floods damaged the Midwest and Bangladesh. Southern Africa was gripped by a deadly drought. Australia and the Amazon are ablaze.”

On it went, echoing the endless reports on the perils of climate change to the planet we all inhabit.
Yet, from the inaction of the carbon-emitting countries like India, China, Russia and the USA, the gravity with which Western elites view the crisis is not shared by the peoples for whom they profess to speak.

For many First World countries, there are more compelling concerns. High among them is population decline, and, if birth rates do not rise, the near-extinction of many Western peoples by this century’s end.

I’ve posted stories about this before, particularly about the population demographics of countries like Japan.  But Pat takes it many steps further.  This commentary was posted on the Internet site on Friday — and I thank Phil Manuel for pointing it out.  It’s a very interesting read — and certainly worthwhile.  Another link to it is here.

U.S. Mint’s 2019 gold coin sales weakest on record, investors favor ETFs, stock market

Despite gold’s best year in nearly a decade, U.S. gold coin sales struggled as the U.S. Mint reported the worst year on record in terms of the American Eagle gold coins sales.

A total of 152,000 ounces of the gold American Eagle coins were sold in 2019, which is 38% less than in 2018, according to the latest U.S. Mint data. This marked the lowest sales on record since the U.S. Mint began recording the figures in 1986.

Sales of silver American Eagle coins were the worst since 2007 with only 14,863,500 ounces sold, down from the already weak figure of 15,700,000 reported in 2018. In 2007, sales were only at 9,887,000 ounces.

One of the reasons behind a strong gold price and weak demand for gold coins is investors choosing to hold gold in other forms, such as gold-backed ETFs and futures.

It was mainly professionals, hedgers and you had a lot of buying from South America,” RBC Wealth Management managing director George Gero told Kitco News on Thursday. “Money that normally could have gone into gold coins ended up going into gold ETFs or gold futures.”

Weak annual coin sales are in stark contrast with the ETFs performance.

The people who buy physical bullion are a different investor category than those that buy ETFs and their paper ilk…so it’s not exactly correct in that one stole sales directly from other.  This story was from the Internet site — and I found it on Sharps Pixley.  Another link to it is here.

India 2019 gold imports hits three-year low as record high prices dent demand

India’s gold imports in 2019 fell 12% from a year ago to the lowest level in three years as retail buying faltered in the second half after local prices rallied to a record high, a government source said on Friday.

Lower buying by the world’s second biggest consumer of the precious metal could weigh on global prices that jumped 18% in 2019, but help the government bring down the trade deficit and support the rupee.

India meets nearly all its gold demand through imports, which amounted to 831 tonnes imported in 2019, down from 944 tonnes a year ago, said the source, who is not authorised to speak to the media.

In value terms, 2019 imports fell nearly 2% to $31.22 billion, he added.

Gold imports in December dropped 18% from a year ago to 60 tonnes, the source said, adding that in value terms, December imports fell 4.3% to $2.46 billion.

This Reuters story, filed from Mumbai, appeared on their Internet site at 9:53 p.m. EST on Thursday evening — and I picked it up off the Sharps Pixley website as well.  Another link to it is here.


Bright and early next morning on August 4 we were back at Shuswap Lake — and I was gunning for those western grebes again, but under more favourable lighting conditions.  I managed to get off a couple of shots of this adult swimming away from me as fast as he/she could.  The second photo is of part of the park in Salmon Arm where I took the previous photo from.  The third and fourth shots were taken of and from a walkway that used to have lake water below it at one time.  But the lake level has dropped a lot over the last ten or so years — and those expensive ex-lake-side condos you see in the third shot are now looking at the lake as it would be seen from the walkway in the last photo…now many hundreds of meters away.  Click to enlarge.


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

Today’s pop ‘blast from the past’ dates from 1968 — and got as high as No. 2 on Billboard’s Top 100 — and finished No. 34 on the Billboard Year-End Hot 100 singles.  It’s an all American band — and they were far from being 1-hit wonders, as they had a string of big hits in the mid-to-late 1960s…but this was the biggest by far.  The link is here.  Another one of my favourites from this group is linked here.

Today’s classical ‘blast from the past’ is a little-known work that I took a real shine to the first time I heard it heaven only knows how many years ago on CBC-FM.  Johann Hummel was a classical composer in the Mozart era — and they were friends and drinking buddies before Mozart passed.

Like Wolfgang Amadeus Mozart, Hummel was a child prodigy. At the age of eight, he was offered music lessons by Mozart, who was impressed with his ability. Hummel was taught and housed by Mozart for two years free of charge and made his first concert appearance at the age of nine at one of Mozart’s concerts.

Hummel is most well known for his trump concerto, which I featured about a month ago, but his piano concertos went unplayed…until recently.  Described as “chandelier music” by the critics of the day, these two piano works sat in obscurity until about twenty years ago when British pianist Stephen Hough rescued them — and the revival was on.

Here’s his second piano concerto…in A minor, Opus 85 — and it’s from a recent concert given by the Russian National Orchestra conducted by Mikhail Pletnev, with the very talented Dmitry Shishkin (b. 1992) as a soloist.  As an encore he played Chopin’s Waltz in F major,  Opus 34 No. 3.  The link is here.  It’s delightful, the pianist is sensational — and the recording is first rate.  Enjoy!

I was happy to the gold price close on its high of the day for once, but I’m sure that if ‘da boyz’ in New York, along with their proxies overseas hadn’t been at battle stations all day long, the close would have been an order of magnitude higher.  As for silver, they’re still bound and determined to keep it below $18 spot on a closing basis.  They had it there at the COMEX close, but it finished the day two cents above it by 5:00 p.m in after-hours trading.  Volumes in both, as you already know, were ginormous.

So the Managed Money traders were adding to their already record long positions — and covering what little remains of their short position…as the Big 7/8 traders were forced to go record short against them to prevent precious metal prices, particularly gold, from exploding higher.

When I was talking to Ted yesterday, I seem to remember him telling me that the Big 7/8 traders went a further $1.2 billion in the short-side hole during this holiday-shortened week.

And as Ted has also pointed out several times over the last month…just how much more money are the Managed Money traders prepared to plow into the long side of the precious metal market — and how much pain can the Big 7/8 handle on the short side?  And that doesn’t include the hundreds, if not thousands of other short-side traders that are getting margin calls every day.

It’s the resolution of this current and unprecedented situation that will determine gold and silver prices in the short-to-medium term.

Here are the 6-month charts for the four precious metals, plus copped and WTIC.  Gold, as you can see, is well into overbought territory — and we’ll find out in reasonably short order whether we get an engineered sell-off from here or not.  But even if we do, its effects will only be temporary, as this bull market has miles to go.  Silver is touching oversold, but is not anywhere near as bad as the current situation in gold.  Ditto for platinum — and you’ll notice from its last three dojis that it has been closed well off its high ticks on each of those days.  It would really sail, if allowed.  Palladium continues to chug higher.  Click to enlarge.

Hemingway got it slightly wrong, as the first panacea for the U.S. is war — and about to be followed by inflation of the currency.  If they’re smart, this war is one that no other western country should stick its nose into…but currency debasement is coming for all.

It certainly appears that the gold card is being played, but its happening in ultra-slow motion at the moment — and the circumstances under which it’s happening are rather ominous.

But as I’ve stated for many, many years now…when the precious metal prices are allowed to rise…and at some point far faster than they’re rising now…it would happen concurrently with some economic, financial, monetary or military event as cover.  I was always cheering for one of the first three, or a combination of them — and always feared the last one.

It’s the worst case scenario as far as I’m concerned, because it leaves the door wide open for some sort of major false flag event along the lines of 9/11…which came to us courtesy of the U.S. deep state and its Middle East ‘allies’.  They won’t make the same obvious mistakes this time around, as the official story has been totally shot down in flames.  Even Trump, before he became president, mentioned that a new investigation into the events surrounding 9/11 would be something he would welcome.

Along with 9/11 came the Patriot Act that had been sitting on a shelf somewhere waiting for that moment — and the next false flag event will bring even more draconian measures with it…which I’m sure have already been finalized.

And as far as the U.S. financial/banking system is concerned, it’s done for.  As the Zero Hedge stories over the last few days have shown, the Fed is now monetizing the debt, albeit rather surreptitiously at the moment.  But it’s going to get far worse.  That phrase “print or die” is now happening out in the open in real time for all to see.

And as Gregory Mannarino has been pointing out — and which is equally obvious to all, the moment that the Fed stops its repo/QE4/debt monetization thingy…call it what you will…the U.S. financial system, along with its currency, is done for — and will take the rest of the world with it.

And as Hemingway stated in his 1926 novel, The Sun Also Rises…“How did you go bankrupt? Two ways. Gradually, then suddenly.”

The U.S. nation state has arrived at that point now — and it isn’t alone.  As I mentioned two paragraphs ago, when one goes, they’ll all go.

It has suddenly become a very dangerous world out there, so be careful.

I’m still “all in” — and I’ll see you here on Tuesday.