-- Published: Tuesday, 18 August 2015 | Print | Disqus
By Ed Steer
15 August 2015 — Saturday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price traded lower by a few bucks in Far East trading on their Friday—and this trend reversed starting around 1:45 p.m Hong Kong time. The price crawled higher, but the HFT boyz weren’t allowed to let it out of the box. The high tick, such as it was, came minutes before 10:30 a.m. EDT in New York—and about fifteen minutes later, just before the London close, JPMorgan et al spun their algorithms—and down went the price. It recovered back to just above unchanged by 4:15 p.m. in electronic trading, but even that tiny gain was taken back in the last fifteen minutes of trading.
The high and low ticks, both which came in New York trading, were recorded by the CME Group as $1,120.40 and $1,111.10 in the December contract.
Gold was closed in New York yesterday at $1,113.70 spot, down a buck from Thursday. Net volume was pretty light at 94,000 contracts.
Here’s Brad Robertson’s 5-minute gold tick chart. All the volume that mattered occurred between the COMEX open and just after noon in New York, which is between 6:20 and 10:30 a.m. MDT on this chart. The vertical gray line is midnight EDT—add two hours for EDT—and don’t forget the ‘click to enlarge‘ feature.
The price pattern for silver was very similar to gold’s, except the engineered price decline at 10:45 a.m. in New York was far more brutal. After rallying quietly from mid-afternoon in Hong Kong trading, the price got knocked back a bit at, or just after, the noon London silver fix—but began to rally anew a minute or so before 9 a.m. EDT. That rally really began to develop legs once the London p.m. gold fix was done, with the high tick coming about 10:20 a.m. in New York. “Da boyz” and their algorithms showed up at 10:45 a.m.—and thirty minutes later they had silver down about 35 cents—and after that it traded very flat into the 5:15 p.m. close of electronic trading.
The high and low ticks in this metal were reported as $15.585 and $15.14 in the September contract.
Silver finished the Friday session at $15.245 spot, down 17.5 cents on the day. Net volume was 35,000 contracts—and it’s a very reasonable assumption that a decent chunk of that, ten percent or more, came on the smack-down by JPMorgan et al.
Platinum’s price path yesterday was very similar to silver’s—complete with the hit to the price, except “da boyz” went to work on the metal, at or just before, the London p.m. gold fix. Like gold it managed to struggle back into positive territory, but it wasn’t allowed to close there and, like gold, it finished lower by a buck at $990 spot.
Palladium was a mini version of the platinum chart—and it was allowed to close up on 2 dollars on the day at $617 spot. Here’s the chart.
The dollar index closed late on Thursday afternoon in New York at 96.35. It traded ten basis points either side of unchanged until minutes before 9 a.m. in London—and by 12:20 p.m. BST, the 96.09 low tick was in. ‘Gentle hands’ rallied it back to its 96.68 high tick, which came about 11:15 a.m. in New York. From there it chopped a bit lower into the close. The index finished the day at 96.58—up 23 basis points from Thursday’s close.
Here’s the 6-month U.S. dollar chart so you can keep score over the longer term.
The gold stocks opened up 2 percent and change—and held in there until “da boyz” showed up with their algorithms—and that was that. Most of the declines from their high tick were in by noon in New York—and the shares chopped sideways in a tight range after that. The HUI finished lower by 1.11 percent.
It was more or less the same with the silver equities. They hit their lows shortly before noon in New York, but then began to chop higher—and finished the day in positive territory. Nick Laird’s Intraday Silver Sentiment Index finished the Friday session up 0.57 percent.
For the week, the HUI closed higher by 8.47 percent—and the ISSI by 16.46 percent.
The CME Daily Delivery Report showed that, for the second day in a row there were zero gold and zero silver contracts posted for delivery within the COMEX-approved depositories on Tuesday. I find this highly usual considering the circumstances—and I’m already wondering what Ted will have to say about this later today.
The CME Preliminary Report for the Friday trading session showed that gold open interest in August dropped by 379 contracts, leaving 2,123 still open. Silver’s August o.i. was unchanged at 16 contracts.
There were no reported changes in GLD yesterday—and as of 7:54 p.m. EDT yesterday evening, there were no reported changes in SLV, either.
The U.S. Mint had another sales report yesterday—and for the second day in a row didn’t report selling any silver eagles. Ted was very suspicious of that fact—and so was I—and I know he’ll have more to say about it in his weekly review that will be posted on his website this afternoon EDT. Anyway, they sold 3,000 troy ounces of gold eagles—and 500 one-ounce 24K gold buffaloes.
Month-to-date the mint has reported selling 15,000 troy ounces of gold eagles—4,000 one-ounce 24K gold buffaloes—and 2,180,000 silver eagles of which, in my opinion, 810,500 of those were actually sold on July 31, but pushed forward into August.
Over at the COMEX-approved depositories on Thursday, they didn’t report receiving any gold, but 104,030 troy ounces were shipped out the door. And with the exception of 14 kilobars—450.100 troy ounces—all of it came out of JPMorgan’s vault. The link to that activity is here.
In silver, there was 559,835 troy ounces received, all of which went into JPMorgan’s vault—and only 28,937 troy ounces were shipped out the door. Ted figures that JPM still has about three million ounces or so owed to them—and he expects that all to arrive by month’s end. The link to that action is here.
There was big movement at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday. Only 100 kilobars were reported received, but a humungous 7,306 kilobars were shipped out, which represented 40 percent of the entire inventory being held at the Brink’s, Inc. depository. The link to that activity, in troy ounces, is here.
The Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday was, as Ted Butler said on the phone yesterday afternoon “disappointing, but not unexpected.”
In silver, the Commercial net short position jumped up by a very large 8,471 COMEX contracts, or 42.4 million troy ounces of paper silver. The Commercial net short position now sits at 111.3 million troy ounces. That’s still a pretty bullish number, but not as bullish as it was with last week’s COT Report—or the one from two weeks ago, for that matter. There’s certainly been some ‘slippage’—and that doesn’t include the further deterioration on Wednesday, the day after the cut-off for this week’s report.
Under the hood in the Disaggregated COT Report it was even worse, as the technical funds in the Managed Money category covered 8,374 short contracts, plus they added 2,485 contracts to their long positions, for a swing of 10,859 contracts. Balancing that out was a reduction of 2,427 contracts in the net long position in the “Other Reportables” category. The small traders in the “Nonreportable” category showed almost no change at all on a net basis.
Scrolling through the Legacy COT Report on the way to gold, one passes through copper—and the Commercial net short position in that metal continues to blow out on the long side, as they added another 1,991 contracts [net] to their long positions. JPMorgan et al are now long a bit over 40,000 COMEX copper contracts—and at 25,000 pounds per contract, that’s over 1 billion pounds. A billion pounds of copper is a cube 37 meters on a side, at least according to Google.
In gold, the Commercial net short position also increased, but only by 9,638 COMEX contracts, or 963,800 troy ounces. The Commercial net short position in that metal now stands at 2.4 million troy ounces which, by any historical measure, is still wildly bullish.
Under the hood in the Disaggregated Report the Managed Money traders reduced their net short position by 923 contracts, plus they added 4,934 contracts to their long position, for a total deterioration of 5,857 contacts. The traders in the “Other Reportables” went further short by selling 1,948 longs and buying 1,367 short positions. But the really big change was in the small “Nonreportable” trader category, as they ran for the hills—adding 2,964 longs and reducing their short position by 4,132 contract—which is a swing of 7,096 contracts off their record short position they held as of last week’s COT Report. As I said about these traders on August 8—“These small traders are net short an eye-watering 15,080 COMEX gold contracts—a record that I doubt I will ever see broken.”
Overall, the set-up is still bullish in both gold and silver, but if one includes the deterioration we had on Wednesday, which isn’t in this report, it certainly takes the keen edge off the “wildly bullish” situation that existed in the COT Report from two weeks ago in silver—and last week in gold. One would think that if JPMorgan et al were going to step aside and let the precious metals run away to the upside, they would do it when they were maximum long, not after they’ve give up a decent chunk of their potential profits. They could have ripped all these short holders a new one in the process, but have let a goodly number of them slip out the back door.
What that bodes for the future is unknown but, for the moment, it certainly has all the hallmarks of the “same old, same” old. However, as Ted pointed out earlier this week, it’s certainly too soon to tell. So if I’m sounding negative, it’s just me looking for black bears in dark rooms that may or may not be there.
So we wait some more.
Before leaving the Commitment of Traders Report behind, here’s Nick’s “Days of World Production to Cover COMEX Short Positions” of the Big 4 and Big 8 in each of the physically traded COMEX commodities. Last week’s COT Report showed the Big 4 and Big 8 short 112 and 178 days of world silver production. In this week’s report these same traders are short 114 and 181 days of world silver production. All the changes that mattered in this week’s COT Report must have involved the smaller commercial traders, Ted Butler’s raptors.
Nick Laird was kind enough to pass around the chart that shows the withdrawals from the Shanghai Gold Exchange for the week ending on Friday, August 7—and for that week they withdrew 56.105 tonnes.
I have a decent number of stories for your weekend reading pleasure, including quite a few that have been waiting for Saturday’s column for length or content reasons—and I hope you can find the time in what’s left of your weekend to read the ones that interest you.
CRITICAL READS
I just heard one of CNBC’s cheerleaders admonishing viewers not to worry about China’s full-on plunge into currency wars. You see, the US is growing strongly at 2-3% in the second half, jobs just keep on coming, and, besides, the USA is completely “decoupled” from whatever troubles may be brewing abroad.
So this regular CNBC noon time stock picker, channeling the iconic visage above, was buying the dips. In fact, she claimed to be picking up some of those swell consumer stocks that are sure to keep on keeping on.
This is getting downright ludicrous, but it does underscore the corruption of financial thought and discourse that he been engendered by the mad money printers in the Eccles Building. If you assume, as they do, that we are in the midst of some kind of timeless, repeating business cycle that can be deftly managed by the interest rates pegs and buy orders of the Fed’s open market desk, then its all just Fed-driven economic incrementalism.
To wit, the FOMC keeps “accommodating” more of an ether called “aggregate demand”, which, in turn, leads to rising production, jobs, incomes, profits and stock prices in an endless virtuous circle. That’s why the Wall Street touts are always expecting an economic acceleration in the next few quarters and a perpetually rising hockey stick of EPS.
And that’s why the hedge fund speculators and robo-traders keep buying the dips. Every quarter must be better than the last because the central bank has the GDP firmly emplaced on an up-escalator.
This very long commentary by David Stockman showed up on his website on Thursday—and it’s worth reading if you have the time. I don’t normally post any of David’s work, not because it isn’t good, because it is. The reason is length. He’s got what I call the “Adam Hamilton” syndrome. Every column is short story/novel—but I’ll let you do the editing on this one. I thank reader Richard Saler for sending it our way.
ASPEN. This fair summer camp for the (very) fortunate got double-whammy’d by the War Party on Sunday.
First there was a “debate” about whether ISIS should be “contained” or “defeated”. That was followed by a glowing progress report from General John Allen. He is President Obama’s Special Envoy for the Global Coalition of the Unwilling and Unable (to fight ISIS), and the gist of his speech was that 6,000 airstrikes since last August have been winning droves of hearts and minds in the Upper Euphrates valley.
This was all for the edification of the pooh bahs of the foreign policy establishment who were in town for the annual Aspen Strategy Group conclave. The latter bills itself as “a bipartisan foreign policy group that includes legislators, experts, journalists, policy practitioners, members of academia, and business leaders”.
No it’s not. It’s an off-campus exercise in mendacity, vapid group-think and narcissistic self-glorification by the perpetrators of Washington’s endless foreign policy catastrophes. Once a year they come to admire each other and split hairs about pointless tactical differences.
This is another commentary by David Stockman, this one from Tuesday—and it had to wait for Saturday’s column. It’s not as long as the previous one—and I’ve read part of it already—and the rest will follow today after I get out of bed. It’s an absolute must read for any serious student of the New Great Game—and it’s the first offering of the day from Roy Stephens.
After years of holding herself above the law, telling lie after lie, and months of flat-out obstruction, HIllary Clinton has finally produced to the FBI her server and three thumb drives. Apparently, the server has been professionally wiped clean of any useable information, and the thumb drives contain only what she selectively culled. Myriad criminal offenses apply to this conduct.
Anyone with knowledge of government workings has known from inception that Hillary’s communications necessarily would contain classified and national security related information. Thanks to the Inspector General for the Intelligence Community, it is now beyond dispute that she had ultra-Top Secret information and more that should never have left the State Department.
Equal to Ms. Clinton’s outrageous misconduct is that of the entire federal law enforcement community. It has long chosen to be deliberately blind to these flagrant infractions of laws designed to protect national security—laws for which other people, even reporters, have endured atrocious investigations, prosecutions, and some served years in prison for comparatively minor infractions.
This commentary appeared on the observer.com Internet site on Thursday afternoon—and is one of the stories that had to wait for Saturday’s column. I thank reader M.A. for sending it along.
Eric Hunsader, founder of Nanex LLC, the U.S. financial markets consultancy, did a quote and trade time-stamp analysis recently, and what he found is worse than even he, a frequent markets structure commentator, suspected.
High-frequency trading firms have a 500-microsecond second advantage for NASDAQ quote data over any firm that doesn’t use a direct feed from the exchanges to quote prices, he says.
This analysis, made possible by new software changes implemented by the New York Stock Exchange (which incidentally caused the high-profile outage), measure the difference in speed between data transmitted by exchanges to their direct feeds and data transmitted to the Security Information Processor, or SIP, which links the U.S. equity markets by processing and consolidating all bid/ask quotes and trades from every trading venue into a single, easily consumed data feed.
Hunsader says that the conventional wisdom used to be that any gap in processing times was attributable to the time it takes for the SIP to consolidate the data for all the exchanges and turn it into one feed. But his additional analysis shows that consolidation time is typically no more than 15 microseconds. That leaves 225 microseconds of unexplained time.
This interesting news item appeared on the marketwatch.com Internet site on Thursday—and it’s something I found in yesterday’s edition of the King Report.
On Monday, the last 20,000 of a total of 96 million ‘shadeballs’ were rolled into a reservoir in Los Angeles, NPR reports.
The black plastic balls are used as a cheaper alternative to tarps, which would normally be used to accomplish two main goals: 1. keep algae out, and 2. keep the water in.
The balls also help block the formation of cancer-causing agents called carcinogens, which can develop when sunlight reacts with certain chemicals in the water.
The covering of the reservoir’s surface is expected to save about 300 million gallons of water every year, according to NPR, and is part of California’s latest attempt to avoid worsening its ongoing four-year drought.
This very interesting article put in an appearance on the businessinsider.com Internet site on Wednesday—and it’s courtesy of Roy Stephens.
Men like Edward Mooradian are saving California. Indeed, there would hardly be any water left without them. And without water California, now in the fourth year of an epic drought, would be nothing but desert. That’s why it’s such a cynical joke and, most of all, a tragic reality, that men like Mooradian are also destroying California. In fact, they are actually aggravating the emergency that they are trying to mitigate. The Americans call this a catch-22, a situation in which there are no good alternatives. Either way, the game is lost.
On a Sunday morning in July, Mooradian is standing between rows of orange and lemon trees near Fresno in the Central Valley, the stretch of land in the heart of California that supplies the United States, Canada and Europe with fruit, vegetables and nuts. It is shortly before 8 a.m., but the temperature is already high and there is no wind. Mooradian, tanned and muscular, wearing a helmet and sunglasses, switches on the drill mounted on his truck. It gurgles furiously for a moment and drives a long pipe into the earth.
Mooradian is drilling for groundwater. He has been doing this day and night, seven days a week, ever since California’s rivers and lakes began drying up. His order book for the next few months is so full that he no longer answers the phone. Were he to answer, all he could do would be to put off the callers, and hearing the desperation in their voices depresses him. They all urgently need water, the farmers, who are on the verge of bankruptcy because of the drought, but also the families, the elderly and the sick, who have had to live for months or even years without a drop of running water, here in California, the vacation paradise that calls itself The Golden State.
Here’s another very interesting water-related essay. This one appeared on the German website spiegel.de on Thursday—and I thank Roy Stephens for this one as well.
Puerto Rico is approaching an inflection point that may prove to be more challenging than the commonwealth’s decision this month to skip a bond payment for the first time.
After borrowing internally, omitting debt-service payments and slowing tax rebates, the island is at risk of running out of cash to fund day-to-day operations. Puerto Rico must raise $400 million through a bank loan or a sale of short-term securities by November, Victor Suarez, Governor Alejandro Garcia Padilla’s chief of staff, said Aug. 10 in San Juan.
Garcia Padilla’s administration had already alienated creditors before defaulting on $58 million of bonds Aug. 3 by saying they need to restructure a $72 billion debt burden that it can no longer sustain. Puerto Rico appears to be betting that investors will provide access to capital markets again once the commonwealth unveils a debt-restructuring proposal Sept. 1.
“They’re going to have some severe liquidity issues,” said David Hitchcock, a Standard & Poor’s analyst in New York. “Without cash-flow financing, they’re going to have a very difficult time trying to just pay for ongoing operations as well as their upcoming debt payments in the next six months.”
This news item was posted on the Bloomberg website at 10 p.m. Denver time on Thursday evening—and updated about three hours later. I thank Patricia Caulfield for her first offering of the day.
ESA’s Rosetta today witnessed Comet 67P/Churyumov–Gerasimenko making its closest approach to the Sun. The exact moment of perihelion occurred at 02:03 GMT this morning when the comet came within 186 million km of the Sun.
In the year that has passed since Rosetta arrived, the comet has travelled some 750 million kilometres along its orbit towards the Sun, the increasing solar radiation heating up the nucleus and causing its frozen ices to escape as gas and stream out into space at an ever greater rate. These gases, and the dust particles that they drag along, build up the comet’s atmosphere – coma – and tail.
Rosetta’s measurements suggest the comet is spewing up to 300 kg of water vapour – roughly the equivalent of two bathtubs – every second. This is a thousand times more than was observed this time last year when Rosetta first approached the comet. Then, it recorded an outflow rate of just 300 g per second, equivalent to two small glasses of water.
Along with gas, the nucleus is also estimated to be shedding up to 1000 kg of dust per second, creating dangerous working conditions for Rosetta.
This absolutely fascinating news item about Comet 67P appeared on the European Space Agency’s website on Thursday—and it’s a must read if you find it of interest, which I certainly do. The embedded video clips are amazing. I thank reader M.A. for bringing it to my attention—and now to yours.
Greek Prime Minister Alexis Tsipras confronted a widening rebellion within his leftist Syriza party as parliament on Friday voted to approve the country’s third financial rescue by foreign creditors in five years.
The vote was held early Friday morning after lawmakers argued and debated through the night.
Eurozone finance ministers are expected to approve the vital aid for Athens later on Friday.
Unable to borrow on the international markets, another bailout is necessary to stop Greece enduring a disorderly default on its debts that could see it forced out of Europe’s joint currency.
This news item showed up on the france24.com Internet site on Thursday evening—and was updated yesterday sometime. I thank Roy Stephens once again.
Jean-Claude Juncker claims Greece will ‘irreversibly’ remain part of the eurozone, after vote by Greek MPs committed to radical economic and fiscal reforms.
Greece clinched a three-year bailout worth €86bn (£60bn) after parliamentarians in Athens backed the deal, and Germany backed down on its opposition to the third rescue of the bankrupt country in five years.
A meeting of eurozone finance ministers in Brussels representing the country’s main creditors agreed to launch the new bailout with €26bn being disbursed next week following six months of bitter recrimination that almost saw the country, under the left-wing government of Alexis Tsipras, becoming the first to exit the single currency.
The meeting was upbeat about finalising the bailout terms after Tsipras, secured approval from MPs for a huge package of legislation on Friday morning. The vote committed the indebted country to radical economic and fiscal reforms needed to secure the rescue money.
This news item appeared on theguardian.com Internet site at 11:20 p.m. BST yesterday evening, which was 6:20 p.m. EDT in Washington. My thanks go out to Patricia Caulfield for this one.
The people of Ukraine are finding new and innovative ways to avoid compulsory military service and the vigilante military recruiters who enforce it. Deepening resistance to the draconian measure is now a significant impediment to the very prosecution of the war.
Recruiters are routinely raiding public spaces to hunt down and grab men of conscription age (20-26) who fail to answer the call to war. They block exits to shopping centers, transit vehicles, parks and other public spaces and then conduct identification checks. Those found to have dodged service or whose call-up dates are approaching are hauled away or given strict instructions of when and where to report for duty.
Vesti.com reports on the new phenomenon by Ukrainians of creating online maps to mark the public places where recruiters commonly hunt. Men and their families use the maps as a guide to public spaces to avoid.
The first map appeared in the city of Dniepropetrovsk, reports Vesti. The phenomenon has quickly spread across the country. The maps are constantly updated. One such project uses Google Maps and calls itself “Hot Dances”.
Here’s a boot-on-the-ground essay about what’s going on inside the Ukraine right now. I’ve read part of it already—and just enough to know that it belonged in today’s column. The author’s first language isn’t English, but that takes nothing away from the quality of the piece. If the subject interest you, it’s definitely worth reading. It was posted on the counterpunch.org Internet site on Wednesday—and it’s courtesy of Roy Stephens.
There has been surge of heavy shelling this week by Kiev forces north of Mariupol, the worst in six months, and Russia has strongly protested to Kiev about a violation of the Minsk2A. There are now new worries about escalation and that something has changed in attitude about how Washington is going to “solve” the Donbass problem. And it may not involve the Minsk2A. Cohen makes the point that it is a NATO position that the Donbass cannot be taken without very active participation by the West, and that the “Russians cannot be defeated on their borders”. So there is a growing understanding in Washington that it would be a good idea to let the Donbass go. The latter was recently given expression in the Washington Post and also “sees Minsk2A as a Putin trick”. So policy change is in the works.
Western troops continue to Ukraine – which now include Australians – and Cohen continues to muse that the west part of Ukraine is becoming a kind of USA colony. And, of course, that will be seen as hugely provocative to Russia should a considerable build up of American troops take place there. A Vietnam scenario is again mentioned. He points out that “advisors” and “training forces” from the West traditionally accompany their wards to the front and should hostilities resume, Western casualties are highly likely, and these casualties would see more troops sent and so on.
So the discussion shifts to what will happen if the Donbass is “let go”. Cohen points out that Europe would see Washington therefore as being anti-Minsk2A. There are more serious questions arising here about what the Donbass rebels will do about Mariupol – which is part of the Donbass but controlled by Kiev. What will happen if the West actively supports a strong invasion attempt from the Mariupol region? Cohen points out that the E.U. wants no part of a failed state (but that may be quite separate from their getting involved militarily).
And the story shifts to Odessa where there is increasing evidence that this province under the Washington puppet, governor Saakashvili is increasingly becoming a kind of American enclave. This is a most provocative problem for Russia if there is an American plan to cause political harassment against the high percentage of cultural Russians living there. The Ukraine remains the most serious risk of war between Washington and Russia, and Cohen notes that the attention it is getting from the media is getting less and less even as the “flash point” for serious confrontation rises.
This 39:47 minute audio interview was recorded on Tuesday—and for length and content reasons, always has to await today’s column. I thank both Ken Hurt and Larry Galearis for contributing to this item.
Russia urged the United States on Friday to scrap plans to station parts of a missile shield system in Europe now that Iran has reached an agreement with world powers to limit its nuclear program.
Moscow has long opposed the plan, which it sees as a threat to its nuclear deterrence, and vowed to retaliate if it goes ahead. Washington has previously assured Moscow the shield was meant as protection from “rogue” states like Iran, and not directed against Russia.
Since the July agreement under which Tehran agreed to curb its nuclear program in exchange for an easing of U.N., U.S. and European Union sanctions, Moscow has stepped up its rhetoric against the missile shield.
“We don’t see any reason to continue with the program, let alone at such an accelerated pace and with a clear aim at the Russian nuclear potential,” Deputy Foreign Minister Sergei Ryabkov told reporters.
This Reuters article, filed from Moscow, was posted on their website at 9:27 a.m. EDT on Friday morning—and I thank Patricia Caulfield for sharing it with us.
In this interview he explains why the U.S. has made a terrible mistake in pushing for world hegemony
There’s good rapport with the interviewer, because she’s an old family friend, the granddaughter of his close ally and longtime foreign minister, Eduard Shevardnadze.
What Gorbachev says still carries weight in the West.
This 24:48 minute video interview put in an appearance on the Russia Today website last Sunday—and here it is posted on youtube.com. I haven’t watched all of it yet, but it’s certainly on my ‘to do’ list for the weekend. My thanks go out to Roy Stephens for bringing this to our attention.
In a SPIEGEL interview, former Soviet leader Mikhail Gorbachev discusses morals and politics in the nuclear age, the crisis in Russian-American relations—and his fear that an atomic weapon will some day be used.
SPIEGEL: Mikhail Sergeyevich, during your inaugural speech as general secretary of the Communist Party of the Soviet Union in March 1985, you warned of nuclear war and called for the “complete destruction of nuclear weapons and a permanent ban on them.” Did you mean that seriously?
Gorbachev: The discussion about disarmament had already been going on for too long — far too long. I wanted to finally see words followed by action because the arms race was not only continuing, it was growing ever more dangerous in terms of the number of weapons and their destructive capacity. There were tens of thousands of nuclear warheads on different delivery systems like aircraft, missiles and submarines.
SPIEGEL: Did you feel the Soviet Union was under threat during the 1980s by the nuclear weapons of NATO member states?
Gorbachev: The situation was that nuclear missiles were being stationed closer and closer to our adversary’s borders. They were getting increasingly precise and they were also being aimed at decision-making centers. There were very concrete plans for the use of these weapons. Nuclear war had become conceivable. And even a technical error could have caused it to happen. At the same time, disarmament talks were not getting anywhere. In Geneva, diplomats pored over mountains of paper, drank wine, and even harder stuff, by the liter. And it was all for nothing.
This interview was posted on the German website spiegel.de back on August 6—and is certainly worth reading. I thank reader M.A. for pointing it out to me yesterday morning.
Turkey’s nationalist opposition made clear on Friday it would not roll over and back a minority government, making President Tayyip Erdogan’s aim of taking the country to a snap election with the ruling party in control look increasingly difficult.
Talks on forming a grand coalition between the AK Party and the main opposition CHP broke down on Thursday, making an autumn election almost inevitable and leaving the ruling party having to turn to the nationalist MHP for support.
The uncertainty comes as the NATO member faces a confluence of national security threats, battling Islamic State insurgents on its borders and Kurdish militants at home. The lira currency hit a record low on Friday and stocks were little recovered after sharp falls the previous session.
This Reuters article, filed from Ankara, appeared on their Internet site at 3:46 p.m. yesterday afternoon EDT—and I thank Patricia Caulfield for finding it for us.
Iranian Foreign Minister Javad Zarif has just been to Islamabad to talk serious business with Pakistani Prime Minister Nawaz Sharif. And the serious business had to be Pipelineistan – as in what next for the Iran-Pakistan (IP) gas pipeline.
Zarif essentially said that IP is a go – again – as soon as sanctions against Iran start to melt, by late 2015 or early 2016. Iran has already invested $2 billion in the Iranian stretch of IP, and China will finance the Pakistani stretch.
This is a major Pipelinestan gambit, as Asia Times has previously reported. And as a side note, as soon as IP goes online, all those years of incessant harassing by successive Bush and Obama administrations will finally come down to nought.
Even before Zarif hit Pakistan something serious was going on in … Karamay. You may have not heard of Karamay, but this town in Xinjiang is right at the center of the Eurasian action; it has just hosted the 2015 China-Pakistan Economic Corridor Forum.
This short commentary by Pepe falls into the must read category for any serious student of the New Great Game—and it was posted on the Asia Times Internet site yesterday—and the first person through the door with this story was U.K. reader Tariq Khan.
China is ruled by a party that calls itself Communist, but its economic reality is one of rapacious crony capitalism. And everyone has been assuming that the nation’s leaders are in on the joke, that they know better than to take their occasional socialist rhetoric seriously.
Yet their zigzagging policies over the past few months have been worrying. Is it possible that after all these years Beijing still doesn’t get how this “markets” thing works?
The background: China’s economy is wildly unbalanced, with a very low share of gross domestic product devoted to consumption and a very high share devoted to investment. This was sustainable while the country was able to maintain extremely rapid growth; but growth is, inevitably, slowing as China runs out of surplus labor. As a result, returns on investment are dropping fast.
This op-ed piece by Paul was posted on The New York Times website yesterday sometime—and it’s another contribution from Patricia Caulfield. It’s worth reading.
Bursting Bubbles leave a mess – in the markets, throughout the real economy, in societies, in politics and with policymaking. Major Bubbles leave a trail of disarray and confusion – with the potential for a couple policy miscues to unleash mayhem. Think of the political paralysis and upheaval that has befallen Japan for the past 25 years. Think of post-mortgage finance Bubble divisiveness and political polarization here in the U.S. Look at the social tension and confused policymaking in Europe. The bursting of the historic Chinese Bubble has begun the process of eradicating genius while exposing a mess of monumental proportions.
For starters, never have so many Chinese owned (over-priced and poorly constructed) apartments. Never have Chinese citizens, governments, financial institutions and corporations accumulated so much debt. Never have the Chinese had so much invested in securities markets. China has zero experience with a multi-trillion (yuan or dollars) “shadow banking system.” Never have so many invested so much in “wealth management” vehicles and other sophisticated financial products, without a clue as to where their “money” was directed. And when it comes to corruption, I seriously doubt history offers a like comparison.
The Chinese – apartment owners, bankers, Internet financiers and policymakers – have never experienced the downside of a massive Credit Bubble. Never has China experienced Trillions of “money” that retains “moneyness” chiefly on the perception that the all-knowing central government will safeguard its value. Never have Chinese finance and spending had such major impacts around the world. China does, however, have a long history of financial panics.
A week after blaming short sellers and foreigners and employing unprecedented market intervention, officials this week espouse a preference for market forces to play a prominent role in setting the value of the Chinese currency. Credibility – so vital in markets and as the bedrock of money and Credit – can dissolve so quickly. Clearly, the Chinese will rely on market forces only so long as the markets are operating consistent with their policy aims.
Doug’s latest Credit Bubble Bulletin appeared on his website late on Friday evening—and it’s certainly a must read, at least for me.
Listen to Eric Sprott share his thoughts on why China chose to devalue the yuan, the continual weakness in the American and global economy, the increase in the price of gold, and a possible silver shortage.
Host Geoff Rutherford interviews Eric for 10:15 minutes. It was posted on the sprottmoney.com Internet site yesterday.
China’s Gold Surprise: 4 Stories
1. China Surprises for a Second Time This Week With More Gold Data: Bloomberg 2. Gold Jumps After China Reveals It Bought Another 19 Tonnes In July: Zero Hedge 3. China’s PBOC Buys 600,000 Ounces Of Gold In July – Annualised 225 Tonnes Per Year: goldcore.com 4. China gold reserves up 19 tonnes in July. Really?!: mineweb.com
The commentary by Mark O’Byrne over at the goldcore.com Internet site falls into the absolute must read category, as does Lawrence Williams’ offering in story #4.
One story each from Patricia Caulfield, Roy Stephens and reader M.A. I found the last story myself.
Global gold demand dropped 12% in the second quarter of the year, hitting a six-year low of 914.9 tonnes, data from the World Gold Council shows.
According to the industry body’s Gold Demand Trends, demand was down in all sectors, due mainly to a decline in consumption from top buyers India and China.
Positive figures coming out of Europe and the U.S. failed to offset the general drop, caused by directionless prices, the report adds.
Total gold supply was also affected in the three months to June 30. The total was down 5% to 1,033 tonnes, as an increase in mine production of 3% to 787 tonnes in Q2 2015 was offset by declining recycling levels — down 8% to 251 tonnes.
“It is fair to say that investment demand for the quarter remained muted given the continuing recovery in the U.S. economy and booming stock markets in India and China during the quarter,” said Alistair Hewitt, head of Market Intelligence at the World Gold Council.
So-called gold analysts are spouting the anti-gold World Gold Council stats like their the gospel. Well, they ain’t. This article appeared on the mining.com Internet site on Thursday—and I thank Nick Laird for sending it along last night.
After declining in June, Gold imports jumped 62.2 per cent to $2.96 billion last month, a development which will have adverse bearing on India’s current account deficit (CAD).
Imports of the precious metal stood at $1.82 billion in July, 2014. In June this year, the imports dipped 37 per cent to $1.96 billion.
The growth in gold imports has pushed the country’s trade deficit to an eight month high of $12.81 billion in July.
India is the largest importer of gold in the world, which mainly caters to the demand of the jewellery industry.
My back-of-the-envelope calculation shows that $2.96 billion dollars translates into a bit over 80 tonnes of the stuff. This brief gold-related news story, filed from New Delhi, was posted on The Economic Times of India website at 9:24 p.m. IST on their Friday evening.
The two biggest unions at South African gold-mining companies said wage negotiations have broken down, bringing the industry closer to a strike.
“The talks have collapsed in the sense that the Chamber of Mines has gone back to the original offer,” David Sipunzi, secretary general of the National Union of Mineworkers, the largest labor group at gold mines, told reporters in Johannesburg on Thursday. “If the attitude remains the same, we cannot rule out a strike.”
A strike would add to pressure on South Africa’s mining industry, already hurting from lower commodity prices and facing job cuts. A five-month work stoppage at platinum mines helped cut economic growth to 1.5 percent last year, the slowest pace since a recession in 2009. Gold dropped 5.7 percent this year and is trading near a five-year low.
This Bloomberg article appeared on their website at 9:08 a.m. MDT on Thursday—and I found it embedded in a GATA release yesterday.
Is there respite in sight for South Africa’s platinum mining sector as miner’s begin to talk seriously about cutting uneconomic production?
The miners and some of the miner-financed research bodies continue to insist platinum output is in deficit and that prices will pick up, but there is in reality little shortage in supply and prices have continued to fall alongside gold, which tends to set the lead for the whole precious metals complex – however incongruous this may be for what is in effect an industrial metal, not a monetary one.
While the platinum miners have indeed talked about cutbacks and closures, they have so far fallen short of implementing them due largely to union and government opposition. But Lonmin, as the weakest link in the chain, does look as though it will be the first to move to cut output.
Metals Focus comments in its note that because of the currently prevailing situation, more of the industry has become cash flow negative and the pressure to close the loss-making operations is building.
As Lawrie already knows, but there’s no mention of it in this article, platinum along with palladium have caught the same disease as gold and silver. Their respective prices are managed by JPMorgan et al gaming the technical funds in the Managed Money category in these two metals as well. Until that stops, nothing will change. It’s hard to believe that all precious metal miners are equally as stupid, but they obviously are. Maybe gutless would be a better choice of words. This lengthy article showed up on the mineweb.com Internet site very early yesterday morning BST.
The PHOTOS and the FUNNIES
THE WRAP
Sales of Gold Eagles had been mostly lackluster over the past four and a half years (compared to prior years), so a real dichotomy became apparent in the relative sales of Silver Eagles compared to Gold Eagles, further confirming my premise that JPMorgan was buying Silver Eagles (and not Gold Eagles). But that changed during June and July of this year as sales of Gold Eagles exploded out of nowhere, with sales over those two months as much as five times greater than in the months immediately preceding the sales surge. The surge in sales of Gold Eagles was so dramatic that I concluded that the Mint’s available inventory of Gold Eagles may have been wiped out.
Since there was no corresponding evidence collaborating that the surge in sales for Gold Eagles in June and July was plain vanilla retail buying demand, by process of elimination that meant that a big buyer or two had come into buying Gold Eagles. By collaborating evidence, I would include no notable buying of shares of mining stocks or small trader buying on the COMEX (in fact, small traders set new record short positions). It’s almost impossible for retail traders, as a whole, to be big net buyers in one area and big net sellers in another closely related area simultaneously. Armed with feedback from extremely reliable sources on the retail front, the recent big buying in both Silver and Gold Eagles, does not appear to have been primarily retail oriented.
The bottom line on all this is that based upon the latest sales report from the US Mint (thru yesterday 8/11) indicating 7500 oz of Gold Eagles sold and more than 2.1 million oz of Silver Eagles I now conclude that the big buyer of Silver Eagles is still buying as many as the Mint can provide; while whoever the big buyer(s) was in Gold Eagles during June and July has stepped aside. Again, this is subject to change on an almost daily basis as the Mint releases new data, but none of this should be considered bearish in any way. No one, big or little, buys that which is not expected to increase in price. And the spurt of buying suggests the buyer expects prices to climb soon. — Silver analyst Ted Butler: 12 August 2015
Today’s pop ‘blast from the past’ is one I ran into on youtube.com when I was looking for something else. This was originally released on an LP in 1972, but came out as a single in November of 1973. It was a #1 hit for Jim Croce—and deservedly so. The link is here.
Today’s classical ‘blast from the past’ is a piece by Pyotr I. Tchaikovsky that he composed in 1880. It’s an orchestral work entitled “Romeo and Juliet“—and styled as an Overture-Fantasy, and is based on Shakespeare’s play of the same name. Tchaikovsky reworked this piece three times before he was happy with it—and although the ink was dry on the third version on September 10, 1880, it didn’t receive its premiere until May 1, 1886, in Tbilisi, Georgia.
Here’s the London Symphony Orchestra conducted by Maestro Valery Gergiev. It’s a luscious recording—and best viewed full screen with the sound turned way up. I posted this before, but it’s been many years. The link is here. Enjoy!
It should be obvious to even the willfully blind that “da boyz” were taking no prisoners yesterday. A more in-your-face coordinated attack on all four precious metals could hardly be imagined. Of course we’ve seen this before, and much worse, on many occasions—and the only question remains is how long will this go on?
The COT Report was pretty much as expected, unfortunately—and although the set up is still bullish on an historical basis, I’m not overly amused by the current trend. But it would be unwise to call this the “same old, same old” situation as we’ve seen in the past. More time has to past before that judgement can be made.
Here are the 6-month charts for the Big 6 commodities once again—and although new lows in crude oil were widely reported on the Internet yesterday, including the price quoted by the folks over at ino.com, the chart below doesn’t show that. So I’m not sure who to believe, but at these prices it probably doesn’t matter.
Along with their three yuan devaluations last week, this new out-of-the-blue report on the increase of China’s gold reserves took everyone by surprise, including me. I’m not sure why they chose to bring out this increase when they did, or even why they did it, but it’s a good bet that even this new data only tells part of the story.
Nobody seriously believes that this is all the gold they have—and why they’re being so coy about it is lost on me at the moment, but may become clearer with the passage of time.
Here’s the chart showing the gold imports/purchases of some of the countries along the “New Silk Road” that China et al are implementing—and just their demand alone has exceeded world mine supply for the last couple of years. That doesn’t include the rest of the world, so one wonders where all the gold is coming from to satisfy it.
We get the July update from The Central Bank of the Russia Federation this week—and it will be interesting to see what they have to report when the data goes up on their Internet site on Thursday.
In closing today, I have no idea what to expect going forward as far as the precious metals are concerned. I know what should happen—but will it happen, or be allowed to happen, is the question? So far the Big 6 commodities are in lock down—and until that changes, we just have to wait it out with our faces pressed up against the glass trying to divine what comes next.
But know this for sure—and that is that the world’s current economic, financial and monetary system is a goner—and what replaces that—and how soon, is all that matters now.
I’m done for the day—and the week—and I’ll see you here on Tuesday.
Ed
http://www.edsteergoldandsilver.com/
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-- Published: Tuesday, 18 August 2015 | E-Mail | Print | Source: GoldSeek.com
