An Unprecedented and Eye-Opening COT Report

11 January 2020 — Saturday


The gold price was sold quietly lower until around noon China Standard Time on their Friday — and then had a bit of an up/down move in London, before trading flat into the jobs report at 8:30 a.m. in New York.  Its rally at that point ran into “all the usual suspects” — and that gain had all disappeared by around 9 a.m. EST.  It began to head quietly higher from there — and that lasted until a few minutes after 11:30 a.m. — and it crawled lower for the next three hours.  Then it began creep higher in the after-hours market — and closed almost on its high of the day.

The low and high ticks were reported by the CME Group as $1,546.70 and $1,564.10 in the February contract.

Gold finished the Friday session in New York at $1,562.10 spot, up $10.10 from Thursday’s close.  Net volume was very heavy once again at a bit over 283,500 contracts — and there was a hefty 69,500  contracts worth of roll-over/switch volume out of February and into future months on top of that.

Silver’s price path was similar to gold’s in most respects, except for the fact that the rally after the up/down move on the jobs numbers was somewhat more robust.  Like gold, that tiny rally was capped and turned lower a few minutes after 11:30 a.m. in New York — and it was sold a bit lower going into the 1:30 p.m. EST COMEX close.  It then traded flat until around 4 p.m. in the very thinly-traded after-hours market…and it ticked a few pennies higher until trading ended at 5:00 p.m. EST.

The low and high ticks in silver were recorded as $17.86 and $18.175 in the March contract.

Silver finished the Friday session at $18.07 spot, up 21.5 cents on the day.  Net volume was on the heavier side at around 70,700 contracts — and there was 11,000 contracts worth of roll-over/switch volume in this precious metal.

Platinum was sold down about five dollars or so in morning trading in the Far East — and the low of the day was set around noon in Shanghai on their Friday.  It headed very unevenly higher until it obviously ran into ‘something’ very shortly after the 11 a.m. EST Zurich close.  From that juncture it crawled a few dollars lower until trading ended at 5:00 p.m. in New York.  Platinum was closed at $976 spot, up 11 dollars from Thursday.

Palladium certainly wanted to fly again yesterday, but there were forces in the market that didn’t think that was a good idea, as it was forced to chop sideways in a very wide range — and finished the Friday session at $2,096 spot, down 3 bucks on the day…43 dollars off its Kitco-recorded high tick — and 46 dollars off its low tick.  A very thinly-traded low-volume market indeed!

The dollar index closed very late on Thursday afternoon in New York at 97.4500 — and opened down about 2 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.  After poking its nose above unchanged an hour later for a brief moment, it began to crawl lower until a ‘rally’ developed beginning at precisely 3:00 p.m. CST on their Friday afternoon, which was an hour before the London open.  That ‘rally’ ended on its 97.58 high tick at exactly 11:00 a.m. in London — and it began to head quietly and unevenly lower until the 97.30 low tick was set about 12:25 p.m. in New York. [And you’ll excuse me for thinking that the usual ‘gentle hands’ showed up to stop its fall at that point.] It crept a bit higher until a few minutes after 2 p.m. EST — and then edged a bit lower into the 5:30 p.m. close.  The dollar index finished the Friday session at 97.36…down 9 basis points from its close on Thursday.

The only correlation between the currencies and the precious metals occurred in New York, starting around 9 a.m. — after the up/down move in gold on the jobs report.

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

And here’s the 5-year U.S. dollar index chart, courtesy of the fine folks over at the Internet site.  The delta between its close…97.08…and the close on the DXY chart above, was 28 basis points on Friday.  Click to enlarge as well.

The gold shares jumped up a bit at the open — and then continued quietly higher until a few minutes after 12 o’clock noon in New York trading.  They were sold a bit lower until the dollar turned lower — and the gold price turned higher a few minutes after 2 p.m. EST.  They then crept a bit higher until trading ended at 4:00 p.m.  The HUI closed up 1.87 percent.

The silver equities rallied at the open — and their respective highs were set about 10:50 a.m. in New York.  They began to slide from there until around 3:30 p.m. — before ticking a bit higher into the close.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index finished the day up only 0.91 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.

The gold stocks did just OK — and that is all, but the silver share price action didn’t impress me in the slightest.  Peñoles actually closed down 0.90 percent, Hecla was only up 0.33 percent — and Wheaton Precious Metals closed unchanged.  The star of the day was Coeur Mining…up 2.34 percent.  I was underwhelmed.

Here are the usual two charts from Nick that show what’s been happening for the week, month — and year-to-date. The first one shows the changes in gold, silver, platinum and palladium for the past trading week, in both percent and dollar and cents terms, as of their Friday closes in New York — along with the changes in the HUI and the Silver 7 Index.

Here’s the weekly chart — and it’s not very happy looking, is it?  The precious metal equities were under heavy selling pressure long before their respective precious metals reached their current high ticks during the reporting week.  Once again, as was the case all last year, palladium was the star.  Click to enlarge.

I’m not posting the month-to-date chart, as it’s the same as the year-to-date chart for the rest of this month.

Here’s the year-to-date chart.  It doesn’t look much different than the weekly chart, as there are only two extra trading days represented in this chart, since the 2020 calendar year is only seven business days old.  It will have more relevance as time marches on.  Click to enlarge.

As Ted has been pointing out for some time now, how silver and gold prices unfold from here depends on whether or not the Big 7/8 commercial traders on the short side are able to snooker the Managed Money traders out of their historic and unprecedented net long positions.  To date, they haven’t been very successful.  And as occurred in this week’s COT Report, some of the commercial traders/Big 7 covered their short position for big loses for the very first time.  I look forward to what Ted has to say about this in his weekly review later today.  But as for the negative start to the year for the precious metals…this too shall pass.

The CME Daily Delivery Report showed that 9 gold and 2 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

In gold, of the two short/issuers, the only one that mattered was Advantage, with 8 contracts out of its client account.  There were four long/stoppers in total, with the biggest being Scotia Capital/Scotiabank, with 3 contracts for its own account, as it doesn’t have a client account.  The other three long/stoppers…JPMorgan, Advantage and ADM, picked up 2 contracts each — and all for their respective client accounts.

In silver, the sole short/issuer was JPMorgan.  Scotia Capital/Scotiabank picking up 2 contracts for its own account — and ADM stopped the other 2 for its client account.

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

Month-to-date there have been 2,537 gold contracts issued/reissued and stopped — and that number in silver is 381 contracts.

The CME Preliminary Report for the Friday trading session showed that gold open interest in January dropped by 32 contracts, leaving 31 still open, minus the 9 contracts mentioned a few short paragraphs ago.  Thursday’s Daily Delivery Report showed that 37 gold contracts were actually posted for delivery today, so that means that 37-32=5 more gold contracts just got added to the January delivery month.  Silver o.i. in January fell by 31 contracts, leaving just 10 contracts still around, minus the 4 contracts mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 33 silver contracts were actually posted for delivery on Monday, so that means that 33-31=2 more silver contracts were added to January.

There was another hefty withdrawal from GLD on Friday, as an authorized participant removed 244,585 troy ounces.  There were no reported changes in SLV.

The short report numbers for both GLD and SLV showed up on The Wall Street Journal‘s website yesterday — and it showed that the short position in SLV declined from 11.06 million shares/troy ounces, down to 10.01 million troy ounces…a drop of 9.56 percent.  The short position in GLD rose from 980,000 troy ounces, up to 1,063,000 troy ounces…an increase of 8.39 percent.  These are not material changes — and the current levels of shorting in these two ETFs is of little concern.

In other gold and silver ETFs on Planet Earth on Friday…minus COMEX, GLD & SLV activity…there was a net 105,903 troy ounces of gold added, plus a very chunky 724,092 troy ounces of silver was added as well.

And nothing, of course, from the U.S. Mint.

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday was 4,700 troy ounces of gold that was dropped off at HSBC USA.  I won’t bother linking this.

Their wasn’t much activity in silver, either.  There was nothing reported received — and 201,233 troy ounces was shipped out of Canada’s Scotiabank.  There was some paper activity, as one truckload…608,525 troy ounces…was transferred from the Registered category — and back into Eligible.  I suspect that Ted would think that this was JPMorgan or one of its clients doing this transfer in order to save on storage charges.  The link to this is here.

There was a bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They reported receiving 150 of them — and shipped out 100.  All of this activity happened over at Brink’s, Inc. — and that link to that, in troy ounces, is here.

Here are two charts that Nick Laird passed around very late on Friday evening.  They show the amount of physical gold and silver in all known depositories, ETFs and mutual funds as of the close of business on Friday, January 10.  For the calendar week just past, there was a net 397,000 troy ounces of gold withdrawn — and in silver, that number was 1,961,000 troy ouncesClick to enlarge for both.

The Commitment of Traders Report, for positions held at the close of COMEX trading on Friday January 3, came in exactly as Ted said it would.  Despite the big price increases during the reporting week in both silver and gold, the commercial net short position in both declined by respectable amounts.

What that means is, that for the very first time, some traders in the Big 8 category closed out their short positions in both gold and silver at a loss.  And as I said earlier, I know that Ted will have more to say about all this in his weekly review later today.

In silver, the Commercial net short position declined by 5,478 contracts, or 27.4 million troy ounces.

They arrived at that number by adding 1,936 long contracts — and also reduced their short position by 3,542 contracts.  The sum of those two numbers is their change for the reporting week.

Under the hood in the Disaggregated COT Report, all three categories reduced their net long positions…the Managed Money traders by 1,854 contracts, the ‘Other Reportables’ by 621 contracts — and the ‘Nonreportable’/small traders by a rather hefty 3,003 contracts.

Add those numbers up — and they total the 5,478 contract change in the Commercial net short position, which they must do.

The Commercial net short position in silver is down to 91,174 contracts, or 455.9 million troy ounces of paper silver.

With the new Bank Participation Report in hand, Ted pegs JPMorgan’s short position at 15,000 contracts…down about 1,500 contracts from where he put them in this past Monday’s COT Report.

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

Ted and I were discussing the possibility that there was even more short-covering going on since the Tuesday cut-off…especially during that monster volume day on Wednesday.  Ted said that high volume/high price volatility days like that [and on Thursday] are made to measure for someone attempting to cover short positions.  However, we’ll have to wait until next Friday’s COT Report to see if that is in fact the case.  It certainly should be…it’s just a matter of how big the numbers will be.

In gold, the commercial net short position declined by 10,410 contracts, or 1.04 million troy ounces of paper gold.

They arrived at that number by reducing their long position by 473 contracts, but they also reduced their short position by a rather hefty 10,883 COMEX contracts — and it’s the difference between those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report it was, like in silver, all three categories that reduced their net long positions during the reporting week…the Managed Money traders by 2,975 contracts, the ‘Other Reportables’ by 2,659 contracts — and the ‘Nonreportable’/small traders by a chunky 4,776 contracts.

And also like for silver, the sum of those three numbers adds up to the 10,410 contract change in the commercial net short position, which it must.

The commercial net short position in gold has been reduced down to 35.61 million troy ounces and, like the Commercial net short position in silver, wildly bearish on its face.

And with the new Bank Participation Report in hand, Ted pegs JPMorgan’s short position in gold around the 34,000 contract mark, down about 2,000 contracts from what they showed in this past Monday’s COT Report.

Here’s the 3-year COT chart for gold from Nick — and the weekly change should be noted.  Click to enlarge as well.

Also like for silver, there’s a reasonable chance that the commercial net short position in gold will show another decline in next week’s COT Report — and it should be far larger than the one reported above.  Of course we still have two more trading days left before the Tuesday cut-off for next week’s report, so we’ll see what ‘da boyz’ have in store for us between now and then.

Despite the bearish headline COT numbers in gold [and silver] there are big changes going on under the surface that only Ted, with his lifetime of experience in this, is able to see.  I wouldn’t have noticed it at all unless he had pointed out what was happening in real time as the week progressed.

In the other metals, the Manged Money traders in palladium decreased their net long position by by 696 COMEX contracts during the reporting week — and are net long the palladium market by 11,784 contracts…a bit over 47 percent of the total open interest.  Total open interest in palladium is 24,888 COMEX contracts.  As I keep harping on, it’s a very tiny and very illiquid market. It doesn’t take more than a handful of contracts to move the price by a significant amount, as you may have noticed this past week.  In platinum, the Managed Money traders increased their net long position by a further 772 contracts.  The Managed Money traders are net long the platinum market by 46,583 COMEX contracts…a bit over 45 percent of the total open interest. The other two categories [Other Reportables/Nonreportable] are still mega net long against JPMorgan et al. as well.  In copper, the Managed Money traders decreased their net long position in that metal by a fairly hefty 10,112 COMEX contracts during the reporting week.  They are now net short copper by a smallish 813 COMEX contracts, so they are basically market neutral.

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, December 31. 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 155 days of world silver production…down 5 days from last week’s COT Report — and the ‘5 through 8’ large traders are short an additional 75 days of world silver production…down 2 days from last week’s COT Report — for a total of 230 days that the Big 8 are short…down 7 days from last week’s report. This represents a bit over seven and a half months of world silver production, or about 537 million troy ounces of paper silver held short by the Big 8.  [In the prior reporting week, the Big 8 were short 237 days of world silver production.]

In the COT Report above, the Commercial net short position in silver was reported by the CME Group as 456 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 537 million troy ounces.  So the short position of the Big 8 traders is larger than the total Commercial net short position by around 537-456=81 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.

Another way of stating this is that if you removed the Big 8 commercial traders from that category, the remaining traders in the commercial category are net long the COMEX silver market.  It’s the Big 8 against everyone else…a situation that has existed for about three decades in both silver and gold — and now in platinum as well.

As I mentioned in my COT commentary in silver above, Ted figures that JPMorgan is short around 15,000 contracts, down about 1,500 contracts from the 16,500 COMEX contracts in last week’s COT Report.  That works out to around 75 million troy ounces of paper silver…which works out to around 32 days of world silver production that JPMorgan is short…down 3 days from last week’s report.

Based on the numbers in the paragraph below, that leaves JPMorgan in the #2 or #3 spot of the Big 4/8 traders…unchanged from where I put them in Monday’s COT Report.  Citigroup is by far the largest, with HSBC USA and one other to round out the Big 4.

As per the first paragraph above, the Big 4 traders in silver are short around 155 days of world silver production in total. That’s about 38.75 days of world silver production each, on average.  The four traders in the ‘5 through 8’ category are short around 75 days of world silver production in total, which is around 18.75 days of world silver production each, on average.

The Big 8 commercial traders are short 45.8 percent of the entire open interest in silver in the COMEX futures market, which is down from the 48.2 percent they were short in Monday’s COT report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be around the 50 percent mark.  In gold, it’s now 38.8 percent of the total COMEX open interest that the Big 8 are short, down a hair from the 39.7 percent they were short in last week’s report — and around 45 percent, once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 66 days of world gold production, down 4 days from last week’s COT Report.  The ‘5 through 8’ are short another 40 days of world production, up 2 days from last week’s report…for a total of 106 days of world gold production held short by the Big 8…down 2 days from last week’s COT Report.  Based on these numbers, the Big 4 in gold hold about 62 percent of the total short position held by the Big 8…down 3 percentage points from last week’s 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, 72 and 59 percent respectively of the short positions held by the Big 8…the red and green bars on the above chart.  Silver is down about 1 percentage point from last week’s COT Report…platinum is also down 1 percentage point from a week ago — and palladium is also down about 1 percentage point week-over-week as well.

And as Ted has been pointing out for years now, JPMorgan is, as always, in a position to double cross the other commercial traders at any time and walk away smelling like a rose — and that’s because of the massive amounts of physical gold and silver they hold.

The January Bank Participation Report [BPR] data is extracted directly from yesterday’s Commitment of Traders Report.  It shows the number of futures contracts, both long and short, that are held by all the U.S. and non-U.S. banks as of Tuesday’s cut-off in all COMEX-traded products.  For this one day a month we get to see what the world’s banks are up to in the precious metals —and they’re usually up to quite a bit.

[The January Bank Participation Report covers the time period from December 4 to January 7 inclusive.]

In gold, 4 U.S. banks are net short 109,567 COMEX contracts in the January BPR.  In December’s Bank Participation Report [BPR] these same 4 U.S. banks were net short 100,534 contracts, so there was an increase of 9,033 COMEX contracts from a month ago.

JPMorgan, Citigroup and HSBC USA would hold the lion’s share of this short position.  But as to who other U.S. bank might be that is short in this BPR, I haven’t a clue, but it’s a given that their short position would not be material.

Ted mentioned on the phone yesterday that JPMorgan is short around 34,000 contracts of the total net short position held by the 4 U.S. banks as of Tuesday’s COT Report.  That’s around 32 percent of the total short interest held by these same banks.  I suspect that JPMorgan may not be the biggest short holder in COMEX gold futures.  That title most likely belongs to Citigroup now.

Also in gold, 35 non-U.S. banks are net short 115,544 COMEX gold contracts.  In December’s BPR, 32 non-U.S. banks were net short 104,690 COMEX contracts…so the month-over-month change shows an increase of 10,854 contracts.

So all banks, both U.S. and non-U.S., were going short against all comers during December.

At the low back in the August 2018 BPR…these same non-U.S. banks held a net short position in gold of only 1,960 contacts!

However, as I always say at this point, I suspect that there’s at least two large non-U.S. bank in this group, one of which would include Scotiabank.  It’s certainly possible that it could be the BIS in the No. 1 spot.  But regardless of who this second non-U.S. bank is, the short positions in gold held by the remaining 33 non-U.S. banks are immaterial.

As of this Bank Participation Report, 40 banks [both U.S. and foreign] are net short 28.7 percent of the entire open interest in gold in the COMEX futures market, which is down a hair from the 29.3 percent they were short in the December BPR.

Here’s Nick’s BPR chart for gold going back to 2000.  Charts #4 and #5 are the key ones here.  Note the blow-out in the short positions of the non-U.S. banks [the blue bars in chart #4] when Scotiabank’s COMEX short position was outed by the CFTC in October of 2012.  Click to enlarge

In silver, 4 U.S. banks are net short 33,983 COMEX contracts in January’s BPR.  In December’s BPR, the net short position of these same 4 U.S. banks was 31,818 contracts, so the short position of the U.S. banks is up 2,165 contracts month-over-month — and I would suspect that increase comes courtesy of JPMorgan.

As in gold, the three biggest short holders in silver of the four U.S. banks in total, would be JPMorgan, Citigroup and HSBC USA…with Citigroup in No. 1 spot…and JPM in No. 2 or 3 position.  Whoever the remaining U.S. bank may be, their short position, like the short position of the smallest U.S. bank in gold, would be immaterial in the grand scheme of things.

Also in silver, 24 non-U.S. banks are net short 46,947 COMEX contracts in the January BPR…which is up a bit from the 43,879 contracts that 21 non-U.S. banks were short in the December BPR.  I would suspect that Canada’s Scotiabank [and maybe one other, the BIS perhaps] holds a goodly chunk of the short position of these non-U.S. banks.  I believe that a number of the remaining 22 non-U.S. banks may actually net long the COMEX futures market in silver.  But even if they aren’t, the remaining short positions divided up between these other 22 non-U.S. banks are immaterial — and have always been so.

As of January’s Bank Participation Report, 28 banks [both U.S. and foreign] are net short 34.6 percent of the entire open interest in the COMEX futures market in silver—down a bit from the 36.8 percent that they were net short in the December BPR.  And much, much more than the lion’s share of that is held by Citigroup, HSBC USA, JPMorgan, Scotiabank — and maybe one other non-U.S. bank, which I suspect may be the BIS.

Here’s the BPR chart for silver.  Note in Chart #4 the blow-out in the non-U.S. bank short position [blue bars] in October of 2012 when Scotiabank was brought in from the cold.  Also note August 2008 when JPMorgan took over the silver short position of Bear Stearns—the red bars.  It’s very noticeable in Chart #4—and really stands out like the proverbial sore thumb it is in chart #5.  Click to enlarge.

In platinum, 4 U.S. banks are net short 27,057 COMEX contracts in the January Bank Participation Report.  In the December BPR, these same banks were net short 21,506 COMEX contracts…so there’s been a huge increase month-over-month…5,551 contracts worth…26 percent.

[At the ‘low’ back in July of 2018, these same four U.S. banks were actually net long the platinum market by 2,573 contracts. That’s quite a change for the worse since then.]

Also in platinum, 21 non-U.S. banks are net short 26,150 COMEX contracts in the January BPR, which is also up big from the 22,834 COMEX contracts that these same 21 non-U.S. banks were net short in the December BPR…3,316 contracts…14.5 percent.

It’s obvious that the banks have been shorting this current rally in platinum all the way up — and as you can tell, the banks hold a record shot position.  One can only imagine what the price of platinum would be if the banks weren’t in there as short sellers of both first and last resort.

[Note: Back at the July 2018 low, these same non-U.S. banks were net short only 1,192 COMEX contracts.]

And as of January’s Bank Participation Report, 25 banks [both U.S. and foreign] are net short a grotesque and obscene 51.9 percent of platinum’s total open interest in the COMEX futures market, which is up from the 48.7 percent that 26 banks were net short in December’s BPR.

Here’s the Bank Participation Report chart for platinum. Click to enlarge.

In palladium, 4 U.S. banks are net short 6,813 COMEX contracts in the December BPR, which is pretty much unchanged from the 6,831 contracts that these same 4 U.S. banks were net short in the December BPR.

Also in palladium, 14 non-U.S. banks are net short 1,845 COMEX contracts—which is down from the 2,179 COMEX contracts that 15 non-U.S. banks were short in the December BPR.

But when you divide up the short positions of these 14 non-U.S. banks more or less equally, they’re completely immaterial…especially when compared to the positions held by the 4 U.S. banks.

And as you already know, palladium is very tiny market — and these numbers attest to that.

As of this Bank Participation Report, 18 banks [both U.S. and foreign] are net short 34.8 percent of the entire COMEX open interest in palladium…down a hair from the 35.3 percent of total open interest that 19 banks were net short in December.

Here’s the palladium BPR chart.  And as I point out every month, you should note that the U.S. banks were almost nowhere to be seen in the COMEX futures market in this precious metal until the middle of 2007—and they became the predominant and controlling factor by the end of Q1 of 2013 — and are even more so today.  Click to enlarge.

JPMorgan et al. are facing some rather serious and long-term headwinds, which are getting stronger by the week and month.  But that fact hasn’t stopped them from going short against all comers during the last month.

And as Ted mentioned on the phone yesterday, some of the Big 8 commercial traders closed out their short positions in both gold and silver at a loss during the last reporting week…so these headwinds are starting to have an effect.

But, as always — and because of their massive physical holdings in both silver and gold, JPMorgan continues to be in a position to double cross the rest of the short holders in both silver and gold if they so choose.  And as I said in this space last month….whether they will they or they won’t, remains to be seen.

I have a lot of stories/articles for you again today…including a couple that I’ve been saving for today’s column for the usual length and/or content reasons.


December Jobs Miss Big: Payrolls Tumble to 145K as Wage Growth Slumps to 17 Month Low

While it is safe to say that the Fed – and markets – will largely ignore today’s payroll print in a time when the central bank is injecting $100BN in in liquidity every month regardless of the macro data, it is still notable that the December payrolls report was a disappointing 145K, missing expectations of 160K (and the whisper number of 180K), and 111K lower from the downward revised 256K in December (revised from 266K).

The change in total non-farm payroll employment for October was revised down by 4,000 from +156,000 to +152,000, and the change for November was revised down by 10,000 from +266,000 to +256,000. With these revisions, employment gains in October and November combined were 14,000 lower than previously reported.  After revisions, job gains have averaged 184,000 over the last 3 months.

Looking below the surface, the biggest surprise was manufacturing employment which after a surge in January as the GM strike ended, slumped once again in December, down -12,000, the second biggest drop since the summer of 2016.

The unemployment rate came in at 3.5%, as expected, however a look at the composition revealed some weakness as black unemployment jumped to 5.9%, the highest since July 2019.

There was more bad news (or good news if you are the Fed): average hourly earnings rose a disappointing 0.1% M/M in December, well below the consensus estimate of 0.3%, and just 2.9% Y/Y, which was the worst annual increase in July 2018. The silver lining: this was largely due to wages for managers and supervisors as the average hourly wages for production and non-supervisory position rose 3.7%, just shy of the cycle high recorded in November.

So what does all this mean? Well, the headline jobs print – while disappointing – is hardly a disaster, and confirms that the overall economy is slowing, hardly a shock. Meanwhile the fading wage reflation impulse will be wonderful news for the Fed which has already indicated it won’t hike any time soon, and the lack of wage pressures only confirms that Powell will not tighten for a long, long time, if ever.

This Zero Hedge story put in an appearance on their Internet site at 8:34 a.m. Friday morning EST — and it’s the first offering of the day from Brad Robertson.  Another link to it is here.

Truck Manufacturing Orders Plunge to Decade Low in 2019

The painful decline in Class 8 orders that we have been documenting on a month-by-month basis has resulted in truck manufacturing orders hitting a decade low in 2019, according to Americas Commercial Transportation (ACT) Research Co., a leading publisher of commercial vehicle industry data, market analysis, and forecasting services for the North American market.

Full year volume for Class 8 orders was 181,000 for the year, compared to 490,100 units in 2018.

Sales in December followed the year’s trend, ticking lower on a year over year basis despite showing a 14% sequential rise.

Federal tax rate cuts in 2018 encouraged carriers to expand their fleets, resulting in major backlogs and tough comparable numbers for 2019, according to the Triad Business Journal.

In addition to the tough comps, ACT President and Senior Analyst Kenny Vieth also blamed the issues on “lower freight demand” in 2019.

Vieth said: “Overbuying through 2019 and insufficient freight to absorb the ensuing capacity overhang continued to weigh on the front end of the Class 8 demand cycle in December. Recalling July and August, orders were down 80% from the corresponding months in 2018.”

As we have documented throughout the year, some truck manufacturers, like Mack Trucks and Volvo Trucks, announced layoffs. Volvo announced last year that it would lay off 700 people at its Dublin, Virginia plant. Daimler laid off 900 workers in October 2019 and Navistar will lay off 1,300 workers this month.

Some trucking companies that we have profiled, like Terrill Transportation, have closed down entirely.

This brief Zero Hedge news item showed up on their Internet site at 8:45 p.m. EST on Friday evening — and another link to it is here.

Federal Reserve Admits It Pumped More than $6 Trillion to Wall Street in Recent Six Week Period

If the Federal Reserve was looking for a media lock-down on news about the trillions of dollars in cumulative repo loans it has funneled quietly to Wall Street’s trading houses since September 17 of last year, it could not have found a better cloud cover than Donald Trump. First the impeachment proceedings bumped the Fed’s money spigot from newspaper headlines. Then, this past Friday, as the Fed released its December meeting minutes at 2:00 p.m., with its highly anticipated plans to be announced for the future of this vast money giveaway to Wall Street, that news was ignored as the media scrambled to cover Trump’s “termination” of General Qasem Soleimani, the head of Iran’s Quds Force, which raised the immediate specter of a retaliatory strike against the U.S. by Iran.

The Fed’s minutes revealed that after multiple expansions of this vast money spigot, which was previously set to lapse in January after getting the Wall Street trading houses through the year-end money crunch, instead it may be extended through April. The minutes read as follows:

The manager also discussed expectations to gradually transition away from active repo operations next year as Treasury bill purchases supply a larger base of reserves. The calendar of repo operations starting in mid-January could reflect a gradual reduction in active repo operations. The manager indicated that some repos might be needed at least through April, when tax payments will sharply reduce reserve levels.”

Corporate and individual tax payments occur every April. The Fed offers no explanation as to why this April is different and requires a multi-trillion-dollar open money spigot from the Fed.

The Fed’s minutes also acknowledge that its most recent actions have tallied up to “roughly $215 billion per day” flowing to trading houses on Wall Street. There were 29 business days between the last Federal Open Market Committee (FOMC) meeting and the latest Fed minutes, meaning that approximately $6.23 trillion in cumulative loans to Wall Street’s trading houses had been made in that short span of time.

I’m more than a little leery of this $6 trillion figure, dear reader, but thought I’d post the article anyway.  This commentary appeared on the Internet site on Monday — and I thank Gordon Foreman for pointing it out. Another link to it is hereGregory Mannario‘s  semi ‘R‘ rated post market close rant for Friday is linked here — and I thank Roy Stephens for pointing it out.  It’s worth watching.

We Need to Decipher Who Our Real Enemies Are

What a market! And this was just after President Trump showed how easy it would be to cause a real disaster, by provoking Iran to fire missiles at U.S. bases in Iraq.

But then, he also showed how easy it was to avert a disaster.

The pattern is, by now, very familiar. Mr. Trump uses it in all his celebrity squabbles, trade wars, and political brawls. He says or does something outrageous… then, he backs away.

Gold, the ultimate disaster meter, shot up on news of the killing of Iranian General Suleimani. Then, it too quickly backed off. Gold stocks lost 5% almost immediately.

And finally, Mr. Trump signaled “all clear.”

But “all clear” is just what the stock market… and the U.S. economy… ain’t.

This slightly longish, but interesting commentary from Bill showed up on the Internet site on Friday morning sometime — and another link to it is here.

David Stockman on What Triggers the Next Financial Collapse

International Man: You have sounded the alarm on a coming financial crisis of historic proportions. How do Trump’s trade policies figure into your view that a crisis is coming?

David Stockman: Trump’s trade policies only create more risk and rot down below.

They’re just kicking the can down the road. With this latest move by the Fed, they have cut the interest rates three times and short-term rates are back at 1.55%. They’re pumping their balance sheet back up—it’s up $300 billion just since September.

The Fed has reverted to all of the things that have created the underlying rot—and that means when finally things break loose, it’s going to be far worse than it would have otherwise been.

Given that they’re kicking the can down the road, they’re building the pressure in the system to really explosive levels.

The trade chaos that Trump’s creating is probably the catalyst that will bring down the whole house of cards.

This Q&A with David was posted on the Internet site very early on Friday morning EST — and another link to it is here.

Doug Noland:  Issues 2020

When I began posting the CBB in 1999, I expected “Bubble” to be in the title for no longer than a year or two. It was to be the “Credit Bulletin,” inspired by Benjamin Anderson’s “Economic Bulletin” from the 1920’s. Yet here we are in 2020 with Bubbles everywhere, including in my blog title. In 1999, I would have said that was an impossibility.

There are many things that proved not as impossible as I had believed. What was deemed acceptable monetary policy badly mutated. Mutant monetary management fundamentally altered the tolerance for debt and deficits. Finance and financial markets were similarly transformed, with yet to be appreciated consequences for (grossly simplifying here) Capitalism, societies and geopolitics.

So many changes, but I’m not changing. In my initial CBB I committed to “calling them as I see them and letting the chips fall where they may.” Let them fall.

The Bubble will either further inflate or burst.” Regular readers will surely recognize this as what has become an annual ritual of my “Issues” pieces. Some might view it as a cop out; others may be reminded of Einstein’s definition of insanity. Yet Bubbles do have defined characteristics. They are at their core creatures of increasingly powerful momentum. Stimulus will intensity and broaden inflationary effects while enlarging the overall Bubble scope. Especially in the age of unshackled central banks, the timing of their demise is uncertain. Importantly, however, that they become progressively perilous over time remains a certainty.

Despite today’s amazing bullishness, there is a lengthy list of Emerging Market vulnerabilities. There are cracks in India, Indonesia and Turkey, to name a few. Asian finance, in particular, is hopelessly unsound. The huge banking systems in Hong Kong and Singapore offer potential for negative surprises. Similar to Chinese finance, the “offshore” financial centers are accidents in the making. I wouldn’t bet against global money market problems. The world is one serious bout of “risk off” deleveraging away from exposing massive leverage and chicanery. It’s difficult for me to see the year pass without serious market liquidity issues. That’s the way I see Issues 2020. I restrained myself.

Doug’s longish, but very worthwhile weekly commentary was posted on his Internet site in the very wee hours of Saturday morning — and another link to it is here.

Europe’s New Bond Sales Top $100 Billion in Record-Shattering Week

Europe’s bond market is wrapping up its biggest week ever, with over $100 billion of new debt sales underscoring its status as a major global funding vehicle.

Issuers from China, Indonesia, Japan and the U.S. joined local borrowers in tapping Europe’s super-low funding costs and increasingly mature bond market, helping push sales for the week to €92.5 billion (US$103 billion). U.S.-Iranian tensions also added extra impetus to the traditional year-start rush, as issuers dashed to get deals done before any market deterioration.

It has been a remarkable week given the events in the Middle East,” said Frazer Ross, head of EMEA investment grade DCM syndicate at Deutsche Bank AG. “All areas of the market are functioning well.”

Sales in Europe are well ahead of the issuance in the U.S., where about $84 billion in new debt has been offered this week.

Demand from Europe’s bond buyers has shown few signs of decline, even with 2020’s blockbuster start coming after a record year for issuance in 2019. Secondary-market bond spreads have barely flickered amid this week’s deal deluge, and issuers including E.On SE, Banco Santander SA and Portugal drew large order books.

This Bloomberg news item was posted on their website at 4:44 a.m. Pacific Standard Time on Friday morning — and it comes to us courtesy of Swedish reader Patrik Ekdahl.  Another link to it is here.

The Donald’s Assassination of General Soleimani: As Stupid As It Gets — David Stockman

During more than a half-century of Washington watching we have seen stupidity rise from one height to yet another. But nothing—just plain nothing—compares to the the blithering stupidity of the Donald’s Iran “policy”, culminating in the mindless assassination of its top military leader and hero of the so-called Islamic Revolution, Major General Qassem Soleimani.

To be sure, we don’t give a flying f*ck about the dead man himself. Like most generals of whatever army (including the U.S. army), he was a cold-blooded, professional killer.

And in this day and age of urban and irregular warfare and drone-based annihilation delivered by remote joy-stick, generals tend to kill more civilians than combatants. The dead civilian victims in their millions of U.S. generals reaching back to the 1960s surely attest to that.

Then again, even the outright belligerents Soleimani did battle with over the decades were not exactly alms-bearing devotees of Mother Theresa, either. In sequential order, they were the lethally armed combatants mustered by Saddam Hussein, George W. Bush, the Sunni jihadists of ISIS and the Israeli and Saudi air forces, which at this very moment are raining high tech bombs and missiles on Iranian allies and proxies in Syria, Lebanon and Yemen.

The only reason these years of combat are described in the mainstream media as evidence of Iranian terrorism propagated by its Quds forces is that the neocons have declared it so. That is, by Washington’s lights Iran is not allowed to have a foreign policy and its alliances with mainly Shiite co-religionists in Iraq, Syria, Lebanon and Yemen are alleged per se to be schemes of aggression and terror, warranting any and all retaliations including assassination of its highest officials.

This long commentary by David appeared on the Internet site on Tuesday — and for length reasons I thought it best to wait for today’s column.  I thank Larry Galearis for sending it our way — and another link to it is here.

America Escalates Its “Democratic” Oil War in the Near East — Michael Hudson

The mainstream media are carefully sidestepping the method behind America’s seeming madness in assassinating Islamic Revolutionary Guard general Qassim Suleimani to start the New Year. The logic behind the assassination was a long-standing application of U.S. global policy, not just a personality quirk of Donald Trump’s impulsive action. His assassination of Iranian military leader Suleimani was indeed a unilateral act of war in violation of international law, but it was a logical step in a long-standing U.S. strategy. It was explicitly authorized by the Senate in the funding bill for the Pentagon that it passed last year.

The assassination was intended to escalate America’s presence in Iraq to keep control of the region’s oil reserves, and to back Saudi Arabia’s Wahabi troops (Isis, Al Quaeda in Iraq, Al Nusra and other divisions of what are actually America’s foreign legion) to support U.S. control of Near Eastern oil as a buttress of the U.S. dollar. That remains the key to understanding this policy, and why it is in the process of escalating, not dying down.

I sat in on discussions of this policy as it was formulated nearly fifty years ago when I worked at the Hudson Institute and attended meetings at the White House, met with generals at various armed forces think tanks and with diplomats at the United Nations. My role was as a balance-of-payments economist having specialized for a decade at Chase Manhattan, Arthur Andersen and oil companies in the oil industry and military spending. These were two of the three main dynamic of American foreign policy and diplomacy. (The third concern was how to wage war in a democracy where voters rejected the draft in the wake of the Vietnam War.)

The media and public discussion have diverted attention from this strategy by floundering speculation that President Trump did it, except to counter the (non-)threat of impeachment with a wag-the-dog attack, or to back Israeli lebensraum drives, or simply to surrender the White House to neocon hate-Iran syndrome. The actual context for the neocon’s action was the balance of payments, and the role of oil and energy as a long-term lever of American diplomacy.

This longish but very much worth reading commentary by Michael put in an appearance on the Internet site on Monday — and it’s the first offering of the day from Swedish reader Patrik Ekdahl.  Another link to it is here.  The article I borrowed that Hudson article from is worth looking over as well.  It’s headlined “How the U.S. Wages War to Prop up the Dollar” — and linked here.

The Saker Interviews Michael Hudson

The Saker: Trump has been accused of not thinking forward, of not having a long-term strategy regarding the consequences of assassinating General Soleimani. Does the United States in fact have a strategy in the Near East, or is it only ad hoc?

Michael Hudson: Of course American strategists will deny that the recent actions do not reflect a deliberate strategy, because their long-term strategy is so aggressive and exploitative that it would even strike the American public as being immoral and offensive if they came right out and said it.
President Trump is just the taxicab driver, taking the passengers he has accepted – Pompeo, Bolton and the Iran-derangement syndrome neocons – wherever they tell him they want to be driven. They want to pull a heist, and he’s being used as the getaway driver (fully accepting his role). Their plan is to hold onto the main source of their international revenue: Saudi Arabia and the surrounding Near Eastern oil-export surpluses and money. They see the U.S. losing its ability to exploit Russia and China, and look to keep Europe under its control by monopolizing key sectors so that it has the power to use sanctions to squeeze countries that resist turning over control of their economies and natural rentier monopolies to U.S. buyers. In short, U.S. strategists would like to do to Europe and the Near East just what they did to Russia under Yeltsin: turn over public infrastructure, natural resources and the banking system to U.S. owners, relying on U.S. dollar credit to fund their domestic government spending and private investment.

This is basically a resource grab. Soleimani was in the same position as Chile’s Allende, Libya’s Qaddafi, Iraq’s Saddam. The motto is that of Stalin: “No person, no problem.”

This longish Q&A session, which I haven’t read all of yet…but what I have read puts it in the must read category…was posted on the Internet site on Thursday — and was another article that I thought best to save for Saturday’s column.  I thank Larry Galearis for sending it our way — and another link to it is here.

U.S. Rebuffs Iraq P.M. Request to Talk Troop Exit: It’s “Our Right” as a “Force For Good” to Stay

Perhaps entirely to be expected, the U.S. administration has unambiguously rejected Iraqi Prime Minister Adel Abdul-Mahdi’s urgent call for Washington to enact a U.S. troop ‘withdrawal mechanism’ in Iraq. In a Thursday phone call to Secretary of State Mike Pompeo, the Iraqi leader urged the administration to “send delegates to Iraq to prepare a mechanism to carry out the parliament’s resolution regarding the withdrawal of foreign troops from Iraq.”

Echoing prior statements of Mark Esper, the State Department underscored Friday that it’s “our right” as a “force for good” in the region to maintain “appropriate force posture in the Middle East” in a statement by spokesperson Morgan Ortagus. She stated the U.S. considers that a troop pullout is not on the table for discussion with Baghdad officials.

At this time, any delegation sent to Iraq would be dedicated to discussing how to best recommit to our strategic partnership — not to discuss troop withdrawal, but our right, appropriate force posture in the Middle East,” Ortagus said. The words also appear aimed at Abdul-Mahdi’s assertion that U.S. forces were operating “without permission“.

America is a force for good in the Middle East,” she added. “Our military presence in Iraq is to continue the fight against ISIS and as the Secretary has said, we are committed to protecting Americans, Iraqis, and our coalition partners.”

And yet President Trump has previously declared the total demise of the Islamic State’s “territorial caliphate” — which has long been the main rationale for the Pentagon being there.

This Zero Hedge news item showed up on their website at 3:20 p.m. on Friday afternoon EST — and another link to it is here.  Then there’s this ZH story from Friday morning headlined “Iraqi P.M. to Pompeo: U.S. Must Establish Mechanism For Troop Withdrawal” — and it comes courtesy of Brad Robertson.

In Stunning Reversal, Iran Admits Accidentally Shooting Down Ukrainian Passenger Jet

After multiple denials, and demands for proof from foreign entities – accusing them of spreading “psychological warfare” lies, President Hassan Rouhani has admitted Iran accidentally shot down the Ukrainian jetliner that took off from Tehran’s international airport amid this week’s tensions.

In a pair of tweets, Rouhani admitted that “Armed Forces’ internal investigation has concluded that regrettably missiles fired due to human error caused the horrific crash of the Ukrainian plane and death of 176 innocent people,” adding that “The Islamic Republic of Iran deeply regrets this disastrous mistake.”

The army said Ukraine International Airlines Flight 752 was flying close to a sensitive Islamic Revolutionary Guard Corps military site when it was downed because of “human error,” adding that the “culprits” would be identified and referred to judicial authorities.

In the aftermath of the incident, Rouhani arranged for “compensation” payments to the victims’ families, and ordered reforms of the country’s air defense system to prevent similar disasters in the future.

Iran will reportedly send the black boxes of the crashed jet to France as it lacks the technology to decode them, the state-run Islamic Republic News Agency reported.

This Zero Hedge item was posted on their Internet site at 2:11 a.m. EST on Saturday morning — and another link to it is here.  I’d read about it many hours earlier in a story about it linked here.

The Renewable Green Energy Myth: 50,000 Tons of Non-Recyclable Wind Turbine Blades Dumped in Landfill

Funny, no one seemed to consider what to do with the massive amount of wind turbine blades once they reached the end of their lifespan.  Thus, the irony of the present-day Green Energy Movement is the dumping of thousands of tons of “non-recyclable” supposedly renewable wind turbine blades in the country’s landfills.

Who would have thought? What’s even worse, is that the amount of wind turbine blades slated for waste disposal is forecasted to quadruple over the next fifteen years as a great deal more blades reach their 15-20 year lifespan.  Furthermore, the size and length of the newly installed wind turbine blades are now twice as large as they were 20-30 years ago.

The wind turbine blades are a toxic amalgam of unique composites, fiberglass, epoxy, polyvinyl chloride foam, polyethylene terephthalate foam, balsa wood, and polyurethane coatings.   So, basically, there is just too much plastic-composite-epoxy crapola that isn’t worth recycling.  Again, even though there are a few small recycling centers for wind turbine blades, it isn’t economical to do on a large scale.

As I mentioned, the wind power units built today are getting much taller and larger.  Check out the 83.5 meter (274 feet) long wind turbine blade being transported for a 7 Megawatt system:  Click to enlarge.

This picture was taken in 2016.  So, in about 15-20 years, this blade will need to be replaced.  Just think of the cost to remove three massive blades this size, cut them up, transport them to the landfill and cover them with tons of soil.  Now, multiply that by tens of thousands of blades. According to the data from Hochschule Bremerhaven & Ahlstrom-Munksjo, the wind industry will generate 50,000 tons of blade waste in 2020, but that will quadruple to 225,000 tons by 2034.  I have read that some estimates show an even higher amount of blade waste over the next 10-20 years.

This very interesting article appeared on the Internet site on Thursday — and for obvious content reasons, had to wait for my Saturday column.  It’s worth reading for sure, as are the embedded links — and I thank Brad Robertson for pointing it out.  Another link to it is here.

How to return to sound money — Alasdair Macleod

Given the current fiat money system is on a path towards its own destruction it is not surprising that there has been increasing talk of a monetary reset. Without a completely different approach and by retaining the same institutions and macroeconomic concepts, any such reset is bound to fail.

This article provides a template for an enduring sound money solution that will deliver economic progress while eliminating destructive credit cycles. It posits that a properly constructed gold and gold substitute monetary system, which also includes the removal of bank credit inflation as a means of providing investment capital, is the only way that lasting stability and prosperity can be achieved. As well as the establishment of an incorruptible monetary system, the state’s role in the economy must be curtailed, budgets always balanced, banking reformed, and the private sector allowed to accumulate the wealth necessary to provide the investment for producers to produce.

Monetary reform involves a clear understanding of why free markets succeed and why socialism, together with neo-Keynesian macroeconomics, are responsible for the impending monetary and economic collapse. It will require a complete change of socio-political and economic cultures, but properly approached it can be done.

This very long commentary/opinion piece from Alasdair almost classifies as a short novel.  It put in an appearance on the Internet site on Thursday — and for length reasons, had to wait for today’s column.  I found it in a GATA dispatch — and another link to it is here.

Keith Barron: Gold will Easily Climb Past $2,000 During this Long Bull Market

Keith discusses his early interest in geology and what led him to explore Ecuador for old Spanish mines. He was fortunate enough to make a significant gold discovery while exploring the region back around 2001. This discovery led him to retire, having sold Aurelian Resources in 2008, netting him $100 million.

Finding retirement boring, him and his team began researching European records for details on old mines in Ecuador. Narrowing down the search region in 2016, they claimed a large parcel of land in Ecuador, which is the base for his new company Aurania Resources.

Keith outlines where he thinks gold and silver are heading along with the risks of the current geopolitical and banking climate.

This 25-minute audio interview showed up on the Internet site on Thursday — and for length reasons, it had to wait for today’s column.  I thank Judy Sturgis for bringing it to our attention — and another link to it is here.

Gold bar found beneath Mexico City street was part of Moctezuma’s treasure

A new scientific analysis of a large gold bar found decades ago in downtown Mexico City reveals it was part of the plunder Spanish conquerors tried to carry away as they fled the Aztec capital after native warriors forced a hasty retreat.

Mexico’s National Institute of Anthropology and History (INAH) announced the findings of new tests of the bar in a statement on Thursday, a few months before the 500-year anniversary of the battle that forced Hernan Cortes and his soldiers to temporarily flee the city on June 30, 1520.

A day earlier, Aztec Emperor Moctezuma was killed, or possibly assassinated, according to the native informants of one Spanish chronicler, which promoted a frenzied battle that forced Cortes, his fellow Spaniards as well as their native allies to flee for their lives.

A year later, Cortes would return and lay siege to the city, which was already weakened with supply lines cut and diseases introduced by the Spanish invaders taking a toll.

The bar was originally discovered in 1981 during a construction project some 16 feet (5 meters) underground in downtown Mexico City – which was built on the ruins of the Aztec capital Tenochtitlan – where a canal that would have been used by the fleeing Spaniards was once located.

This very interesting Reuters story was filed from Mexico City at 9:24 p.m. on Thursday evening EST — and I found this item on the Internet site.  Another link to it is here — and the embedded photo is worth a look.


After our brief stop in Sicamous on August 4, we were off to Revelstoke…with brief stops at Craigellachie and Three Valley Gap.  Craigellachie in Eagle Pass was the spot where east met west in Canada when the Canadian Pacific Railway was under construction.  ‘The Last Spike’ was pounded home at this location in November of 1885.  Located less than a 100 meters off the Trans-Canada Highway, it’s a busy tourist spot in the summer — and the first two photos were taken there.  The CPR track bed is just behind the chain-link fence in the second shot. The last photo was snapped at Three Valley Gap, also in Eagle Pass, using the lake of the same name as a backdrop.  I’ll have more photos of this location in Tuesday’s column.  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’ needs no introduction — and you’ll know it right from the opening guitar riff.  It’s 55 years young this year — and to let you know how long ago that was, there’s a comment below the tune that reads…”Makes me nostalgic for an era I don’t even know about.”   It’s the dead of winter in Merritt — and we have about 15 cm/6 inches of fresh snow on the ground and some bitterly cold temperatures on the way, so I thought it appropriate.  The link is here.  Enjoy!

Today’s classical ‘blast from the past’ is one I haven’t posted in many a year.  It’s Antonín Dvořák’s Symphony No. 8 in G major, Op. 88…which he composed and orchestrated within a two-and-a-half-month period from 26 August to 8 November 1889 at his summer resort in Vysoká u Příbramě, Bohemia.  Dvořák conducted the premiere in Prague on 2 February 1890.

Here’s the Rotterdam Philharmonic Orchestra in a live recording from 16 December 2016…under the baton of Canadian-born conductor Yannick Nézet-Séguin.  The video and audio quality are first rate — and the link is here.

I’m not sure what should be read into Friday’s price action in either gold or silver.  I was expecting the Big 7/8 traders to stomp their respective prices into the dirt when the jobs report was released at 8:30 a.m. EST.  Instead, we got a rally that they squashed within the next thirty minutes, but there wasn’t a thing after that — and both closed up decent amounts on the day.

Looking at the 6-month charts below, there’s a rather terrifying amount of altitude between their current prices and their respective 50-day moving averages…particularly in gold, so I’m as nervous as long-tailed cat in a room full of rocking chairs at the moment.  Will they…or won’t they…or even can they?  I just don’t know, nor does anyone else — and only time will tell.

But as I’ve mentioned in more than one spot in this commentary, this week’s COT Report showed that some of the Big 8 commercial traders were covering short positions at a loss during this reporting week.  And as Ted says, it’s the very first time they’ve done that…so under the surface, things are not the way they always have been.

Here are the 6-month charts for the four precious metals, plus copper and WTIC — and except for silver, they gained back what they lost on Thursday…plus a bit more.  Copper closed up a penny — and WTIC came awfully close to taking out its 50-day moving average to the downside.  Click to enlarge.

As is well known now, the Iranian government ‘fessed up to shooting down that Ukrainian passenger plane — and as I had already suspected, it was by accident.  It’s a human tragedy for sure, but at least they owned up to it.

How that changes the dynamic over there remains to be seen, but I’m speculating that it defuses it.

The U.S. deep state, along with several Middle East countries are just itching for a fight, but they should be very careful what they wish for, as Iran has already stated quite clearly that the first attack on its soil will be pretty much seen as a declaration of war — and the oil refineries of the Persian Gulf could be in flames within hours…including Iran’s.  But with the current revelation coming from the Iranian government regarding the shoot-down, a false flag operation at this particular juncture would be ham-handed — and seen precisely for what it was.

So it’s back to the drawing board for the U.S. deep state et al…unless they really want to get even more blatant in their actions.

But as Gregory Mannarino has been correctly going on about for several months now, the deep state, Wall Street and the New York banking fraternity desperately want higher oil prices — and this Iran war thingy was their ticket to that.

Higher oil prices is another way of getting higher inflation, which is desperately needed to inflate away the massive piles of debt that currently exist.  I suspect that the oil card was to be used instead of the gold card…with the rising price of oil setting the stage for the end of the price management scheme in the precious metals in the process.  That in turn would drive commodity prices hugely higher — and they would then have more inflation than they could possibly want.  Now this particular chain of events is very much in doubt.

I await their next move with great interest.

On an entirely different topic, I received two e-mails this week from American subscribers complaining vociferously about the stories/articles/commentaries that I have been posting in my column this week about the current Middle East conflict — and the U.S. involvement in it.  I wish to share one of these exchanges I had early yesterday morning, so you can see my viewpoint as a Canadian living here in Merritt, B.C.  Here goes…


I’m not paying my subscription to get a steady onslaught of anti-American drivel. I can get that B.S. for free by turning on cable news. If this stimulates most of your subscribers, even those living in the U.S., then good on ya. That ain’t me.


Hi Paul,

None of what I post is anti-American people.  I live in Canada and love the U.S. My daughter and I were in Washington State for four days a couple of weeks ago — and it was fantastic.  We had such fun — and the people we met were great.  It was a wonderful experience, as it always is whenever I travel south of the 49th parallel.

You’re taking what I’m posting personally — and you shouldn’t be.

These commentaries [by the people that write them] are directed at the U.S. government, its military, the CIA et al., Wall Street, the big U.S. banks — and the entire ‘deep state’ crowd in general…both U.S. and foreign.  The average Joe in the street in the U.S…or here in Canada…or any other country for that matter, are just victims of these guys.  That includes you and I.

I yearn for the old days of the 1950s and 1960s…before the start of the Vietnam war…the ‘good old days’ for me.

If I could be Marty McFly [with his looks and youth] and get into Doc Brown’s DeLorean time machine and go back to 1955…I would stay there.  I’m sure a decent chunk of my subscriber base feels the same way in some respects.

I hope this puts my articles in some sort of context — and as I said, they should never been taken personally…as they are not directed at the common man/woman on Planet Earth.

With good wishes,



Thank you for taking the time to respond to my message. Trust me. I am very anti-deep state, particularly with regard to the U.S. version. My perception, however, is that the usual suspects with an anti-U.S. govt bone to pick get their messages posted with no opposing viewpoint. I hope you can understand why after 3-4 days of this I was getting impatient with the daily “onslaught”.

I do enjoy your service very much and was not looking forward to canceling my subscription. I appreciate you reaching out, and wish to extend my condolences to the friends and families of the 170 Canadians senselessly murdered by the Iranian regime. The finger of blame should be pointed in the right direction.



Hi Paul,

As I stated in my column on that story about the airplane shoot-down, I highly suspect that the Iranian’s did it, although I would also suspect that it was accidental, rather than deliberate.  They certainly didn’t want/need that aggravation on top of what they already have.  But that doesn’t lessen the tragedy of it.  The Iranian government will get hung for it — and rightfully so.

I can understand why you might think that those “with an anti-government bone to pick” have no opposing viewpoint.  But if I posted those sorts of stories, all I would be doing is putting up whatever the deep state-controlled media wants the sheeple to believe — and I just can’t stomach doing that.

It’s a dilemma for me — and I’m sure you can see the spot I’m in…because a lot of my subscribers would be equally outraged if I did.


Gotcha. Thanks, Ed.


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