12 January 2019 — Saturday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price began to rally quietly as soon as trading began in New York at 6:00 p.m. EST on Thursday evening. That lasted until about fifteen minutes after the London open — and from that point it was sold equally quietly lower until trading ended at 5:00 p.m. EST in New York.
The high and low ticks for gold certainly aren’t worth looking up.
Gold finished the Friday session at $1,286.80 spot, up 80 cents from Thursday’s close. Net volume was very quiet at a bit under 160,000 contracts — and there was heavy roll-over/switch volume once again…around 44,500 contracts.
Silver also rallied in Far East trading on Friday, but was halted in its tracks at the $15.70 spot mark at the 2:15 p.m. China Standard Time afternoon gold fix in Shanghai. From there it chopped quietly sideways for about four hours, but with that $15.70 spot ceiling always in place. It began to head quietly lower starting shortly before 10 a.m. GMT in London. There was a big down/up dip between 9 a.m. in New York — and the 11 a.m. EST London close — and from there it traded pretty flat until a few minutes before 1 p.m. EST. Quiet selling pressure resumed at that point — and that lasted for a few hours before it began to chop quietly sideways into the 5:00 p.m. EST close.
The high and low ticks in silver were reported by the CME Group as $15.78 and $15.59 in the March contract.
Silver was closed in New York yesterday afternoon at $15.57 spot, up 3.5 cents on the day. Net volume was nothing out of the ordinary at 57,500 contracts — and there was a bit over 5,500 contracts worth of roll-over/switch volume in that precious metal.
The platinum price crawled unevenly higher in Far East and Zurich trading until minutes before 2 p.m. Central European Time [CET] — and up 5 dollars at that juncture. But then the selling pressure appeared — and it was sold lower until shortly before 1 p.m. in COMEX trading in New York. It didn’t do a thing after that. Platinum was closed yesterday at $808 spot, down 10 dollars on the day.
The palladium price stair-stepped its way higher until minutes before 1 p.m. CST on their Friday afternoon — and at that point, it was up 11 dollars. It edged very quietly lower from there until around 11:45 a.m. CET in Zurich — and then it took off to the upside. That rally ran into ‘something’ about forty-five minutes later — and it was sold down hard from there into the 11:00 a.m. EST Zurich close. It bounced a bit higher from that point, but that tiny gain was all taken back by 1 p.m. EST — and it traded flat into the 5:00 p.m. EST close from there. Palladium was closed at $1,303 spot, down 8 dollars on the day. At its high tick, it was up 18 bucks…so it was another day where it would have closed at heaven only knows what price if allowed to trade freely.
The dollar index closed very late on Thursday afternoon in New York at 95.54 — and it opened ten basis points lower once trading began at 7:44 p.m. EST on Thursday evening. It began to head unevenly lower from there until around 12:45 p.m. CST in Far East trading — and then chopped unsteadily sideways until 9:00 a.m. in New York. It blasted higher from there until around 9:45 a.m. EST — and the 95.75 high tick was set at 9:46 a.m. It began to head lower from that point — and actually dipped below unchanged by a bit, but those ‘gentle hands’ appeared at 12:26 p.m. — and lifted it up until 3:18 p.m. — and it edged a few basis points lower into the close from there. The dollar index finished the Friday session at 95.67…up 13 basis points.
Gold and silver prices obviously reacted to that dollar index price spike at 9 a.m. in New York…but the effect was short lived.
Here is the DXY chart courtesy of Bloomberg once again. Click to enlarge.
And here’s the 6-month U.S. dollar index chart — and the delta between its close…95.27…and the close on the intraday chart above, was 40 basis points on Friday. Click to enlarge.
The gold shares opened up a bit — and then proceed to chop quietly sideways until a few minutes before the 1:30 p.m. COMEX close. At that juncture, they began to head lower — and dipped into the red by a bit. That lasted until minutes before 3:15 p.m. EST — and they rallied back to finish in the green by the smallest amount possible. The HUI closed up 0.01 percent, so call it unchanged once again. That’s been happening a lot recently.
The silver equities had a bit of a wilder ride than their golden brethren, but spent most of the Friday trading session in negative territory by a bit. They also rallied a small amount during the last forty-five minutes of the Friday session — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 0.34 percent. Click to enlarge.
And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart. Click to enlarge as well.
Here are the usual charts from Nick that show what’s been happening for the week, month-to-date — 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 both gold and silver weren’t allowed to do much during the reporting week, with both finishing very close to the unchanged mark — and palladium is still on a tear. But even though gold finished up a hair on the week — and silver did the same, except lower for the week…their respective equities went in the opposite direction. Click to enlarge.
Here is the month-to-date/year-to-date chart — and even though gold and silver prices are up tiny amounts month/year-to-date, the silver equities are outperforming their golden cousins by a country mile so far. Click to enlarge.
And because it’s January, the month-to-date/year-to-date numbers are the same, so I shan’t bother with the Y.T.D. chart.
With no COT or Bank Participation Reports, it’s hard to tell what’s going on under the hood — and what JPMorgan may or may not be doing on the short side. Ted feels that both metals are ‘market neutral’ from a COMEX futures point of view — and this DoJ investigation into JPMorgan’s price management schemes in the precious metals is still ongoing. So we’ll just have to wait and see how things turn out.
The CME Daily Delivery Report showed that 8 gold and 29 silver contract were posted for delivery within the COMEX-approved depositories on Tuesday.
In gold, the sole short/issuer was Advantage — and they also picked up 2 contracts as a long/stopper as well. JPMorgan picked up the other 6. All contracts, both issued and stopped, involved their respective client accounts.
In silver…Advantage, ADM and International F.C. Stone issued 19,7 and 3 contracts from their respective client accounts. JPMorgan stopped 12 contracts…6 for its clients — and 6 for its own account. Goldman stopped 11 contracts for its client account.
The link to yesterday’s Issuers and Stoppers Report is here.
So far in this non-traditional delivery month for either precious metal, there have been 533 gold contracts issued and stopped — and that number in silver is 615.
The CME Preliminary Report for the Friday trading session showed that gold open interest in January dropped by 37 contracts, leaving 59 left, minus the 8 contracts mentioned a few paragraphs ago. Thursday’s Daily Delivery Report showed that 45 gold contracts were actually posted for delivery on Monday, so that means that 45-37=8 more gold contracts were just added to the January delivery month. Silver o.i. in January fell by 111 contracts, leaving 505 left, minus the 29 contracts mentioned a few paragraphs ago. Thursday’s Daily Delivery Report showed that 142 silver contracts were actually posted for delivery on Monday, so that means that 142-111=31 more silver contracts were added to January.
And, for a change, there were no reported changes in either GLD or SLV on Friday.
There was another sales report from the U.S. Mint yesterday. They sold 2,000 troy ounces of gold eagles — 500 one-ounce 24K gold buffaloes — 50,000 silver eagles — and 500 one-ounce platinum bullion coins.
Month/year-to-date, the mint has sold 48,500 troy ounces of gold eagles — 18,500 one-ounce 24K gold buffaloes — 2,846,000 silver eagles — and 22,800 one-ounce platinum bullion coins.
The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday was 128.600 troy ounces/4 kilobars [U.K./U.S. kilobar weight] that were shipped out of Canada’s Scotiabank — and I won’t bother linking this.
There was far more activity is silver, of course, as 1,581,348 troy ounces was reported received — and 996,831 troy ounces were shipped out. But of that amount, there was an intra-bank transfer of 396,380 troy ounces from HSBC USA — and into JPMorgan. So the both the in/out numbers are reduced by that amount. The remaining ‘in’ activity was two truckloads…1,184,968 troy ounces that arrived at CNT. The remaining ‘out’ activity was one truckload…600,450 troy ounces…and that departed CNT as well. The link to all this is here.
There was very little going on over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday. Nothing was reported received — and only 13 kilobars were shipped out. That occurred at Brink’s, Inc. — and I won’t bother linking this activity, either.
The Hildesheim Treasure, unearthed on October 17, 1868 in Hildesheim, Germany, is the largest collection of Roman silver found outside imperial frontiers. Most of it can be dated to the 1st century A.D. The trove consists of about seventy exquisitely crafted solid silver vessels for eating and drinking — and is now kept in the Antikensammlung Berlin (Altes Museum). It is generally believed that the treasure was the table service of a Roman commander, perhaps Publius Quinctilius Varus, who was militarily active in Germania. However, others also suggest that the treasure may have been war spoils rather than a table service.
The hoard was buried about 2 meters below the ground on Galgenberg Hill, and was found by Prussian soldiers. Most scholars now accept that the entire Hildesheim Treasure was produced in frontier workshops of the northwestern Roman provinces.
The trove contains plates, tureens, cups, goblets, trays, scoops, egg-holders, saltcellars, a small folding three-legged table, a candelabrum and a three-legged pedestal. One of the finest items is the so-called Minerva Bowl (or Athena Bowl). It features a detailed image of Minerva, who sits on a rock throne and holds a cane in her right hand and a shield in the left hand. The goddess is wearing her battle headgear and flowing robe, further from Minerva’s right hand is her symbol, the owl. The bowl has two handles, each measuring 3.4 cm in length. The bowl itself weighs 2.388 kg, having 25 cm in diameter and 7.1 cm in depth. Click to enlarge.
I have very little in the way of stories for you today, but I do have a couple that I’ve been saving for the weekend because of length and/or content reasons.
The Donald goes to “The Wall” and the debate goes on. POTUS visited America’s southern border towns, trying to drum up support for his long-promised border wall.
Meanwhile, as we saw yesterday, so far, we’re losing ground financially. The country is at least $1.2 trillion poorer today than it was in 2016.
Our job here is to connect the dots. To many readers, that means separating Heaven from Hell… good from evil… “us” from “them.”
But that is far beyond our ken. We only try to laugh from time to time… and at the right thing. And since money is the source of so much of our mirth, we won’t give it up here.
Lately, we’ve been pointing to a deep hole – a $21 trillion hole of debt.
When you’ve dug yourself into a hole, the first thing to do is to stop digging. No American president in 50 years has been able to do that.
This commentary by Bill appeared on the bonnerandpartners.com Internet site on Friday morning EST — and another link to it is here.
TruePublica, a British website that has avoided the 9/11 issue, has had its fill of ignorant journalists at the BBC, Huffington Post and other propagandists for the military/security complex. The constant, shrill demeaning of experts and distinguished people who have raised questions about the official story has convinced TruePublica that skeptics who need so much shouting down must have a point.
The media has never examined the evidence or explained the analysis provided by scientists, architects, engineers, pilots, and the first responders who experienced the explosions of the World Trade Center twin towers. The media has never asked for the release of the multiple videos that recorded whatever struck the Pentagon. The media has never investigated whether cell phones worked in 2001 from the altitudes at which the official story claims calls were made.
Instead two-bit punk presstitutes, such as the BBC’s Chris Bell and the Huffington Post’s Jess Brammer and Chris York, label experts with knowledge and integrity “conspiracy theorists.” These presstitutes knowingly use a cover-up term that the CIA put into use via its media assets to discredit the expert skeptics of the Warren Commission Report on the assassination of President Kennedy.
The fact that the carefully presented evidence is never engaged except with name-calling is a strong indication that the evidence is true and cannot be refuted.
The success of the 9/11 Lawyers’ Committee in obtaining the consent of the US Attorney for the Southern District of New York to “comply with the provisions of 18 U.S.C. 3332,” which requires the convening of a federal grand jury to examine the unexamined 9/11 evidence, has impressed TruePublica as no U.S. attorney would convene a grand jury on the basis of a conspiracy theory. Clearly compelling evidence has been presented to the U.S. Attorney.
Obviously, Washington expects the Justice (sic) Department to escape from the bind into which it has been put by the Lawyer’s Committee, an escape that the presstitute media will aid and abet. Nevertheless, the escape will likely reinforce the public’s view that the government is afraid of the evidence and is no more likely to follow it than in the case of President Kennedy’s assassination, Robert Kennedy’s assassination, the Israeli attack on the U.S.S. Liberty — and a large number of other officially covered up crimes.
More and more people will come to realize that ad hominem name-calling is not an acceptable response to evidence.
This longish, but very worthwhile commentary from Paul, was posted on his website on Tuesday — and I thought it best to wait to post it in Saturday’s column. I found it on the Zero Hedge Internet site on Wednesday — and another link to it is here.
I have mentioned the very visible decline of the USA and its associated Empire in many of my articles already, so I won’t repeat it here other than to say that the “ability to exert influence and impose its will” is probably the best criteria to measure the magnitude of the fall of the USA since Trump came to power (the process was already started by Dubya and Obama, but it sure accelerated with The Donald). But I do want to use a metaphor to revisit the concept of ‘catastrophe’.
If you place an object in the middle of a table and then push it right to the edge, you will exert some amount of energy we can call “E1”. Then, if the edge of the table is smooth and you just push the object over the edge, you exercise a much smaller amount of energy we can call “E2”. And, in most cases (if the table is big enough), you will also find that E1 is much bigger than E2 yet E2, coming after E1 took place, triggered a much more dramatic event: instead of smoothly gliding over the table top, the object suddenly falls down and shatters. That sudden fall can also be called a “catastrophe”. This is also something which happens in history, take the example of the Soviet Union.
Some readers might recall how Alexander Solzhenitsyn repeatedly declared in the 1980s that he was sure that the Soviet regime would collapse and that he would return to Russia. He was, of course, vitriolically ridiculed by all the “specialists” and “experts”. After all, why would anybody want to listen to some weird Russian exile with politically suspicious ideas (there were rumors of “monarchism” and “anti-Semitism”) when the Soviet Union was an immense superpower, armed to the teeth with weapons, with an immense security service, with political allies and supporters worldwide? Not only that, but all the “respectable” specialists and experts were unanimous that, while the Soviet regime had various problems, it was very far from collapse. The notion that NATO would soon replace the Soviet military not only in eastern Europe, but even in part of the Soviet Union was absolutely unthinkable. And yet it all happened, very, very fast. I would argue that the Soviet union completely collapsed in the span of less than 4 short years: 1990-1993. How and why this happened is beyond the scope of this article, but what is undeniable is that in 1989 the Soviet Union was still an apparently powerful entity, while by the end of 1993, it was gone (smashed into pieces by the very nomenklatura which used to rule over it). How did almost everybody miss that?
This very long, but very thoughtful commentary showed up on thesaker.is Internet site yesterday — and I thank Larry Galearis for pointing it out. It’s certainly worth reading if you have the interest. Another link to it is here.
Industrial output is in crashing. Retail sales have stagnated. Business confidence has dropped, and investment is heading south. A sharp slowdown might have been expected for Britain heading out of the European Union, America where the president is busily ripping up half a century worth of carefully constructed trade agreements, or China, which has been on a decade of wild, credit-fuelled growth. But the real slowdown is happening in the one place where few economists expected it. It is now painfully obvious that the eurozone is heading into a sharp recession.
The numbers coming out of all its main economies, from Germany to France, Italy and Spain, are relentlessly bad. What does that mean? Far from winding up quantitative easing, the European Central Bank will be forced to step in with emergency measures to rescue a failing economy — but it may well prove too little, too late.
2018 was meant to be the year when the eurozone consolidated its steady recovery, agreed on reforms to fix the flaws in the single currency, pressed forward with reforms to boost its competitiveness, and gave the rest of the world a lesson in balanced, sustainable growth. Over the past year, a ton of investors’ money has bought into the Euro-boom story. Steady recovery would drive voters away from populist parties, encourage reform, and create a virtuous circle of expansion and renewal.
The script has not quite worked out as planned, however. Today brought yet another wave of disappointing numbers. Italian industrial production was down 2.6 percent year on year. In Spain, industrial output was also down 2.6 percent, the fastest rate of contraction since May 2013. The day before, we learned that French industrial output was down by 1.3 percent in November, and Germany, which is meant to be the main engine of the continent, recorded a decline 1.9 percent for the month, as well as re-calculating October’s data to show a steeper drop than reported earlier.
The eurozone is now seeing a synchronised slowdown right across all its major economies. Germany looks certain to be in technical recession, defined as two consecutive quarters of shrinking output, and France and Italy will not be far behind. Spain, which had been growing faster than most of the continent, is slowing and so will the smaller economies. Add all that up, and it clear the whole continent is heading into a fresh downturn, even though employment and output have yet to recover their 2008 levels.
This worthwhile news item was posted on the telegraph.co.uk Internet site on Friday. It’s behind their subscription wall, but is posted in the clear in its entirety in this GATA dispatch — and another link to it is here.
Seventeen of the 19 countries using the euro stopped issuing the €500 denomination as of Jan. 27, according to a statement on the website of the European Central Bank and reported by Agence France Press.
The statement added, “Austria and Germany will both continue printing the banknotes until April 26 in order to ensure a smooth transition and for logistical reasons.”
The highest-denomination note is being discontinued because the European Central Bank suspects that its high value makes it a payment method of choice for money laundering by criminals and for financing terrorist activities.
The ECB’s statistics show that €500 bills comprise only 2.4 percent of the total number of bank notes in circulation, and a little over 20 percent of the total value. At the end of November 521 million of them were in circulation.
At current exchange rates, €500 is about US$570. Switzerland continues to issue its 1,000-franc note, which is worth about US$1,014.
This article is one I found on the coinworld.com Internet site on Friday afternoon — and another link to it is here.
The U.S. dollar has serious fundamental issues: Trillion-dollar fiscal deficits; large structural Current Account Deficits; huge government, corporate and household debt loads; fragile securities markets; a maladjusted Bubble Economy; political dysfunction and, potentially, Washington chaos; and festering geopolitical risks.
The world’s reserve currency is fundamentally unsound. The dollar is also the nucleus for a financial apparatus financing much of the world’s levered speculative holdings. De-risking/Deleveraging Dynamics in 2018 saw waning liquidity and widening funding and hedging costs in the entangled world of dollar funding markets. With the likes of Goldman Sachs and Deutsche Bank seeing CDS prices rise significantly late in 2018, mounting systemic fragility would appear a serious Issue 2019.
China’s currency has serious fundamental issues: A vulnerable banking system approaching $40 TN of assets (more than quadrupling since the crisis), with Trillions of potentially suspect loans; a troubled “shadow” banking apparatus; an historic housing Bubble with an estimated 65 million vacant units; a deeply maladjusted economic structure; Bubble economic and financial structures dependent upon ongoing loose financial conditions and rapid Credit expansion; huge financial and economic exposures to the emerging markets and the global economy more generally; a population with significantly elevated expectations prone to disappointment and dissatisfaction; and mounting geopolitical risks. In short, China’s historic Bubble is increasingly susceptible to a disorderly collapse.
Bubbles are mechanism of wealth redistribution and destruction. This reality has been at the foundation of my ongoing deep worries for the consequences of history’s greatest global Bubble. We’ve witnessed the social angst, a deeply divided country and waning confidence in U.S. institutions following the collapse of the mortgage finance Bubble. I fear that the Bubble over the past decade has greatly increased the likelihood of geopolitical tensions and conflict. Aspects of this risk began to manifest in 2018, as fissures developed in the global Bubble. Geopolitical conflict is a critical Issue 2019. Trade relations are clearly front and center. Going forward, I don’t believe we can disregard escalating risks of military confrontation.
It is my long-held view that the Fed (and the other major central banks) will see no alternative than to resort to QE when global markets “seize up.” Ten-year Treasury yields at 2.70%, German bund yields at 22 bps and JGBs at zero don’t seem inconsistent with this view. It’s been a decade (or three) of Monetary Disorder. Now come the consequences, commencing with acute market and price instability. I believe this instability will end in a serious and prolonged crisis. There will be policy interventions, of course. But it will become increasingly clear that flawed monetary doctrine and policies are more the problem than the solution. In an increasingly acrimonious world, how closely will policymakers coordinate crisis responses? Will central bankers stick with “whatever it takes”? How quickly will they react to the markets – and with how much firepower? Uncertainty associated with monetary policymaking in a global crisis environment is an Issue 2019.
Doug’s weekly commentary always falls into the must read category for me — and it will be the first thing I do after I’ve posted today’s column on the website. It appeared on his in the very wee hours of Saturday morning EST — and another link to it is here.
Part 1: The show this week concerns the consternation of Washington with Trump’s withdrawal statements for U.S. forces in Syria. Most of this outrage is summed up by the Economist Magazine where the stated worries are that Russia is supplanting the U.S. as the regional power in the M.E. and that old standby allies like Saudi Arabia are leaning more and more towards cooperation with Russia. Cohen’s response is interesting as he states that in better times troop withdrawals would be met with approval, not scorn, and he also raises for discussion the question of what role these troops really played in Syria? He continues stating that there are still 30,000 terrorists still there and therefore what use are the 2,000 U.S. troops stationed there? He mentions three: a potential diplomatic bargaining chip, a thwart to Iran, and what he calls a symbolic position. But essentially they play no role except as another tripwire for a hot war with Russia, and thus concludes that withdrawing troops is a good thing.
But what does Trump’s opposition say about this, and Batchelor wants to know why they say it? Batchelor’s view is Trump wants to reduce the war risks, but wants to understand how the opposition movement is motivated. Cohen states clearly that there is no national interest for U.S. troops to be there, nor its Euro allies, but Russia is fighting a terrorist threat it sees as spreading eventually to Russia. For Trump and his opponents, except, notably, Rand Paul (and very few others), the opposition is against all of Trump’s foreign policies – and clearly this is not about isolationism. Cohen then notes that rationality of the opposition has nothing to do with logic. A secondary motive theme is that this opposition (MSM) is hegemonic – the “global footprint” so honoured by the media. He also noted that the Soviet Union had a similar opposition group to Gorbachev as he “shrank” the Warsaw Bloc.
Part 2: Batchelor begins this podcast with the mention of the additional complication of a withdrawal from Afghanistan – with the usual opposition. They see Russia filling the power void in Eurasia and even Eastern Europe with the loss to American hegemony. Trumps somewhat wayward comments about the Soviet Union’s involvement in Afghanistan does not differ significantly from the U.S. arguments for fighting there now. Cohen notes the difference, however, that ISIS evolved into a terrorist movement with sovereignty ambitions, and there was an obvious need for the U.S. to cooperate against them with Russia. But Washington, under two administrations considered Russia more the enemy than ISIS. So, Cohen continues, Trump’s admission that the U.S. beat ISIS is completely wrong, but his generals support this view, including a hostile position against Russia. Cohen then muses about whether those generals are making foreign policy? And what does that say about American democracy? The two pundits also discuss where Russiagate is leading? Will it be the election issue, or an impeachment issue beforehand?
Batchelor next brings up the topic of an “escalation cycle” where events unfold and cannot be stopped – and he is talking about a war scenario. Cohen’s answer: “Yes and No”. He agrees with being in an escalation cycle, but says it is not too late to stop it. Putin sees his legacy as about leadership and rebuilding a destroyed country, not going to war, and he wants this new cold war over. Cohen then ends with a surprising statement that (at least) in Afghanistan Putin wants the U.S. troops to stay as they stopgap ISIS from moving north from that country as a threat to Russia. He is still hopeful for cooperation against the global terrorist threat.
Once more there is an omission in the discussion about why the United States is at all involved in Syria – against Syria. Cohen states correctly that fighting ISIS was not the main issue, but he does not state that it is in Israeli interests that the U.S. destabilizes that country that was already under attack by ISIS and Israel. This only helps Israeli ambitions, and so far American national interests are suffering, for example, by the falling out with Turkey and Washington. Russia was asked to intervene in Syria, and we know that Israel lobbied/ requested similar action from Washington even though the American presence was illegal. This is also a blunder, as Israeli and Russian relations are also injured and potentially could worsen if Israeli bombing and missile attacks on Syria continue. The trip wire presence of U.S. forces in Syria is therefore a double danger, and both Israel and Washington are facing national security setbacks for this relationship. We can add to this list with the mounting failures for U.S. involvement in the Yemen War, rifts between allies Saudi Arabia and Qatar, the failing Sunni movement against Iran in general, and the increasingly hostile Iraqi government. The recent statements by John Bolton to delay U.S. troop withdrawals again reinforces this support relationship with Israel and its foreign policy goals in Syria, and this writer wonders if John Bolton is president or Trump?
This 2-part audio interview appeared on the audioboom.com Internet site on Tuesday sometime — and it’s another item that I though should be saved for the weekend. As always, I thank Larry Galearis for his excellent executive summary — and personal comments. Each part is about 20 minutes long. The link to Part 1 is in the headline — and here. And the link to Part 2 is here.
U.S. debt to GDP exceeds 100%, in the danger zone that has historically led most countries into a banana-republic-style sovereign-credit crisis, loss of currency value, and credit collapse. The ratio has hovered near the 100% level since 2013 without adverse consequences. Over the past year, the dollar has been generally strong relative to other currencies. However, we think that the risks are high that significant change is afoot; and if so, exposure to gold will prove timely.
For the record, gold outperformed equities in 2018, declining 1.6% vs. a loss of 4.4% for the Standard and Poor’s 500. As almost all investors can attest, the S&P index masked the full extent of the decline in equity markets due to high concentration of the index in a handful of stocks that outperformed run-of-the-mill stocks. Gold outperformed all currencies last year except for the Swiss franc and the Japanese yen. It also held its own against bonds, roughly matching the 0.9% increase in the U.S. 10-year bond. Some points to consider:
1) Gold has historically outperformed equities during periods of market stress. Counting 11 episodes beginning from the 1987 market crash, gold has increased an average of 6.8% while the S&P has declined 19.4%.
2) During six recessions since the 1970s, gold increased on average 20.8%.
3) Since 2000, gold has outperformed bonds and equities despite a substantial draw-down from 2011
Why 2000? Because, in our view, 2000 marked the dawn of radical monetary practice by world central banks. Under adverse scenarios for financial assets of short- and medium-term duration, gold exposure has been a winning strategy. And as we see it, gold has also been a winning strategy since monetary policy became unhinged nearly two decades ago.
John sent this commentary my way on Friday morning — and it was posted on the tocqueville.com Internet site on Thursday sometime. Another link to it is here.
If you were to listen to most travel guides on Dubai, you would think the desert city materialised out of the air a decade ago.
The city exploded in prosperity after the United Arab Emirates discovered oil in 1966, leading to a development boom that has resulted in the world’s tallest building, second biggest mall, most luxurious hotel, and more skyscrapers than any city besides New York and Hong Kong.
Dubai was settled as a port city in the early 1800s, when it became a centre for fishing and pearling, and a crossroads of sea and land trade routes through Asia and the Middle East. That trading history can be seen in the souks, or markets native to the Middle East and North Africa. These are colourful places where traders of various nationalities hawk their wares, as your senses are attacked from every direction.
Dubai has many souks, although some of the modern-day versions consist of rows of air-conditioned shops, all housed under a common roof. These souks are generally dedicated to certain items: spices, perfume, clothing. But the most extravagant is the Gold Souk, where people come from all over the world to get a deal.
This long, but very interesting photo-filled essay put in an appearance on the South China Morning Post website last Sunday — and I’ve been saving it for today. I thank Jim Gullo for sending it along — and another link to it is here.
The PHOTOS and the FUNNIES
This new photo series titled “Wildlife photographer of the year people’s choice award” appeared on The Guardian‘s website back on December 26 — and it’s yet another offering from Patricia Caulfield.
This first photo is entitled “Three Kings” — and was snapped by award-winning South African photographer Wim Van Den Heever. It’s captioned “Wim came across these king penguins on a beach in the Falkland Islands just as the sun was rising. They were caught up in a fascinating mating behaviour – the two males were constantly moving around the female using their flippers to fend the other off.” He obviously used a fill-flash for this photo. Click to enlarge.
This second photo is entitled “Bond of Brothers” by award-winning New Zealand photographer David Lloyd. The caption reads “These two adult males, probably brothers, greeted and rubbed faces for 30 seconds before settling down. Most people never have the opportunity to witness such animal sentience, and David was honoured to have experienced and captured such a moment.” Click to enlarge.
Today’s pop ‘blast from the past’ is 41 years young…and this American rock band’s first single. The tune was a huge success in the U.S. — and reached number 5 on the BillBoard Hot 100 chart that year. The group went on to further fame and glory after that. The link is here.
Today’s classical ‘blast from the past’ is one I’ve featured before, but only once — and it was a long time ago. When I did feature it, it was only the second movement.
Joaquín Rodrigo Vidre, 1st Marquis of the Gardens of Aranjuez, commonly known as Joaquín Rodrigo, was a Spanish composer and a virtuoso pianist. Rodrigo was born in Sagunto, Valencia, and completely lost his sight at the age of three after contracting diphtheria. He wrote his compositions in Braille, which was transcribed for publication.
Rodrigo’s music is among the most popular music of the 20th century. In particular, his Concierto de Aranjuez…composed in Paris in 1939…is considered one of the pinnacles of Spanish music — and of the guitar concerto repertoire. The central adagio movement is one of the most recognizable in 20th-century classical music, featuring the interplay of guitar with cor anglais.
Here’s Pepe Romero with the Danish Radio Symphony Orchestra — and it is wonderful. And as with any guitar solo with orchestral accompaniment, they have to ‘mic it’…or the orchestra will bury the guitarist, no matter how loudly he tries to play. The link is here.
Although there was obvious interference in all of the precious metals on Friday, like there has been most of this week, I’m not going to read too much into it, because volumes have been very light…especially yesterday — and Thursday.
If you check the Kitco gold and silver charts above one more time, you’ll note that those two precious metals had almost identically managed price paths on both those day. And as I’ve pointed out a couple of times already this week, when volumes are this low, it’s very easy for anyone with an agenda to manage prices in whatever direction they choose.
But make no mistake about it, ‘da boyz’ are still there. However, the more important question is whether or not JPMorgan is active as short seller at the moment. And with no Commitment of Traders Report for three weeks now — and no monthly Bank Participation Report showing December’s activity, it’s impossible for Ted tell what they’ve been up to.
Here are the 6-month charts for all four precious metals, plus copper and WTIC. And for the second day in a row it should be noted that gold, silver, platinum’s low closes for the day occurred after COMEX trading was done at 1:30 p.m. EST, those low closing price ticks don’t appear on the Friday dojis on the chart below. Click to enlarge for all.
Despite the fact that the Fed has thrown in the towel for the benefit of the equity and bond markets at home — and world-wide, the die had already been cast…and the Rubicon crossed, some time ago. The “animal spirits” that kept driving the equity markets ever higher, are no longer functioning as they have in the past. The obvious global economic decline is now visible to all — and no amount of jaw-boning or money printing will save it now.
The artificial markets that have existed ever since the powers-that-be intervened during the market crash of 1987 are now so monstrous, grotesque and distorted that nothing can save them going forward. Although the markets are now ‘too big to fail’…they have also become ‘too big to bail’. The Federal Reserve and the various and sundry other central banks are pretty much powerless against the inevitable collapse.
As the Saker said in his lengthy commentary in the Critical Reads section above…”Eventually the USA will rebound; I have no doubts about that at all. This is a big country with millions of immensely talented people, immense natural resources and no credible threat to its territory. But that can only happen after a real *regime* change (as opposed to a change in Presidential Administration) which, itself, is only going to happen after an “E2 catastrophe” collapse. Until then, we will all be waiting for Godot.”
That’s basically what we’re all doing right now…waiting — and for a long time, especially in the precious metals. Now that wait has commenced in the general equities markets and financial system world-wide. The collapse of the latter two will finally bring redemption to the former — and it already appears to have started.
And as I’ve said before on too many occasions to count, the inevitable will not occur without a fight from the powers-that-be. But at some point, not only will their efforts prove ineffective, they will actually become counterproductive, as it’s now plain to everyone everywhere that the current state of financial and economic affairs only exists on Planet Earth today because ultra-low interest rates — and endless money printing has made it so.
And as George Galloway stated in his commentary in Friday’s column…”The old order is dying; the new one cannot be born. If we are not careful, we will soon be alive in the time of monsters.”
All we can hope for is that monsters that we get in the future, are are better than the monsters ruling Planet Earth today. But that remains to be seen.
I’m done for the day — and the week — and I’ll see you here on Tuesday.