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U.K. Currency Shock Sees Sterling Gold Surges 5% in One Minute “Flash Crash”

 -- Published: Sunday, 9 October 2016 | Print  | Disqus 

By Ed Steer

08 October 2016 — Saturday


The gold price traded a few dollars either side of unchanged until the COMEX open in New York yesterday morning.  There was a bit of a pop on the job numbers, but that was over and done with by 9:01 a.m. EDT.  It headed lower from there — and ‘da boyz’ set a new low tick for this move down around 11:30 a.m. in New York.  Then, for the most part, it rallied quietly from there into the 5:00 p.m. close of the thinly-traded afters hours market.

The high and low ticks were recorded as $1,267.60 and $1,243.20 in the December contract.

Gold finished the Friday session in New York at $1,257.60 spot, up $2.40 from Thursday’s close.  Net volume was extremely heavy at 247,000 contracts.


And here’s the 5-minute gold tick chart courtesy of Brad Robertson.  Of course the only volume of consequence came during the COMEX trading session, which was between 6:20 and 11:30 a.m. Denver time on the chart below.

The vertical gray line is 10:00 p.m. Denver time, midnight in New York — and noon China Standard Time [CST] the following day in Shanghai—and don’t forget to add two hours for EDT.  The ‘click to enlarge‘ is a must here.


The price pattern in silver was a virtual carbon copy of what happened in gold, so I’ll spare you the detailed description.

The high and low ticks in this precious metal were reported by the CME Group as $17.685 and $17.115 in the December contract.

Silver finished the Friday trading session at $17.525 spot, up 24 cents from Thursday’s close.  Net volume was very heavy as well at just over 82,000 contracts.


And here also is the 5-minute tick chart for silver — and it’s courtesy of Brad as well.  And, like the 5-minute tick gold chart posted above, all the price/volume action that really mattered was also during the COMEX trading session in New York yesterday.

As with the 5-minute gold chart above, the vertical gray line is 10:00 p.m. Denver time, midnight in New York — and noon China Standard Time [CST] the following day in Shanghai—and don’t forget to add two hours for EDT.  The ‘click to enlarge‘ is a must here as well.


In almost all respects, the platinum price action on Friday was a mini version of what happened in both silver and gold, right down to the intraday low tick, which came minutes after 11:30 a.m. in New York.  Platinum finished the Friday session at $966 spot, up 4 bucks on the day.


Ditto for palladium, as it closed up 2 dollars, at $668 spot.


The dollar index closed very late on Thursday afternoon in New York at 96.69 and, for the second day in a row, it chopped quietly higher right from the open on Thursday evening in New York — and made it as far as the 97.00 mark shortly before 1 p.m. JST, before chopping more or less sideways until the COMEX open.  The 97.19 up/down spike high came minutes after 11 a.m. BST in London.  Once the job numbers were released, the index headed south with some authority, with the 96.40 low of the day coming at the 9:30 a.m. open of the equity markets in New York.  It ‘rallied’ from there until around 11:40 a.m. EDT, which was more or less the low price tick for all four precious metals — and began to head lower from there.  The index finished the day at 96.52 — down 17 basis points from its Thursday close.


And here’s the 3-year dollar index chart which, as always, I’m posting for purely entertainment purposes, because if all the world’s currencies were allowed to trade freely, this chart wouldn’t look like it does now.


The gold stocks gapped up about 3 percent at the open, but began to fade immediately, with their respective low ticks coming at 11:40 a.m. EDT, which was the dollar index high tick in New York as I mentioned in my discussion on the U.S. dollar index above.  From there they rallied back into positive territory, peaking out at 2 p.m. before fading back to unchanged — and that’s where they closed, as the HUI finished the Friday session down 0.01 percent.


The silver equities traded in an identical manner, but managed to stay in positive territory after the 2 p.m. fade.  Nick Laird’s Intraday Silver Sentiment/Silver 7 index closed higher by 1.00 percent.  Click to enlarge if necessary.


And here are three charts from Nick that tell all.  The first one shows the changes in gold, silver, platinum and palladium for the past week, in both percent and dollar and cents terms, as of Friday’s closes in New York — along with the changes in the HUI and Silver Sentiment/Silver 7 Index.  The Click to Enlarge feature really helps on all three charts.


And the chart below shows the month-to-date changes as of Friday’s close — and they’re identical to the weekly changes for the obvious reason.


And below are the year-to-date changes as of the close of trading yesterday.


The CME Daily Delivery Report showed that 3 gold and zero silver contracts were posted for delivery on Tuesday.

The CME Preliminary Report for the Friday trading session showed that October open interest in gold rose by 50 contracts, leaving 301 still open.  Thursday’s Daily Delivery Report showed that 3 gold contracts were posted for delivery on Monday, so that means that another 50+3=53 gold contracts were added to the October delivery month yesterday.  Silver o.i. in October also rose…by 15 contracts, leaving 111 still around.  Thursday’s Daily Delivery Report showed that 9 silver contracts were posted for delivery on Monday, so that means that another 15+9=24 silver contracts were added to the October delivery month yesterday as well.

I was all prepared for a monster drop in GLD yesterday, because it was long overdue.  But when I checked their website at 6:35 p.m. EDT yesterday evening, my jaw hit the floor.  I stared at the number for a bit before typing it in today’s column, because what it showed was that an authorized participant added 362,449 troy ounces.  If you’re looking for an explanation, other than a reporting error, I don’t have one — and I can hardly wait to here what Ted has to say about this.  And as of 6:42 p.m. EDT yesterday evening, there were no reported changes in SLV.

In our long discussion on the phone yesterday, I had commented to Ted my surprise about no withdrawals from either GLD or SLV so far this week.  Although we could both rationalize SLV, as they’re always a day late and a dollar short in the addition and withdrawal category…that couldn’t explain the goings-on at GLD, as these guys are quick with both when warranted.  I speculated that the lack of withdrawals was a sign that ‘deep pockets’ with unlimited financing was buying up everything that John Q. Public was selling.  That speculation fit like a hand in a glove [but not O.J.’s glove] until this unexpected deposit occurred yesterday after out discussions.  This really threw a spanner in the works.

So, we await developments.

For the fifth day in a row there was a sales report from the U.S. Mint — and this one was an eye-opener as well.  They sold 20,500 troy ounces of gold eagles — and you’d have to go back to April or May, before you would find a 1-day sale of that amount.  They also sold a chunky 3,500 one-ounce 24K gold buffaloes — but only 50,000 silver eagles.

The mint sales for the first week of October are phenomenal.  They sold 45,500 troy ounces of gold eagles — 8,000 one-ounce 24K gold buffaloes — and 1,405,000 silver eagles.  I’d be prepared to bet a fair chunk of change that it ain’t John Q. Public/Joe Six-Pack buying them.  Maybe the big deposit in GLD yesterday fits into this category as well.

There wasn’t a lot of activity in gold over at the COMEX-approved depositories on Thursday.  Nothing was reported received — and only 1,934 troy ounces were reported shipped out.  All of that amount came out of Brink’s, Inc.  I shan’t bother linking this activity.

It was much busier in silver, of course, as 620,918 troy ounces were received — all at Canada’ Scotiabank — and 501,273 troy ounces were shipped out the door.  And, with the exception of the 80,911 troy ounces that left Scotiabank’s vault, the remaining 420,362 troy ounces came out of CNT Depository, Inc.  The link to that action is here.

There was a fair amount of gold received over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday, as 3,550 kilobars were shipped in, but only 105 kilobars were shipped out.  All of the action was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.

The Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday was a crushing disappointment in gold, but about as expect by Ted Butler in silver.  This was a tough week to handicap from a COT perspective — and it was obvious, at least to me, that nowhere near all of Tuesday’s price/volume data made it into Friday’s report.

In silver, the Commercial net short position declined by 9,922 contracts, or 49.6 million troy ounces of paper silver, taking the new Commercial short position down to ‘just’ 90,896 COMEX contracts, or 454.5 million troy ounces.  This is a short position that still extends out beyond the orbit of Jupiter, if not further — and is still wildly bearish.

The Commercial traders arrived at this week’s decline by adding 724 long contracts, plus they covered 9,198 short contracts, all courtesy of the Managed Money traders  — and the total of those two number is the net change for the week — 9,922 contracts.

Ted said that the Big 4 decreased their short position by a hefty 4,000 contracts — and the Big ‘5 through 8’ covered about 2,800 contracts of their short position as well.  Ted’s raptors, the Commercial traders other than the Big 8, added around 3,100 contracts to their already existing long position in this precious metal.  And with the new Bank Participation Report in hand, Ted pegs JPMorgan’s new short position at 28,000 contracts, which is a drop of 5,000 from last week’s COT Report.

Under the hood in the Disaggregated COT Report, the Managed Money traders ran for the hills to the tune of 12,184 contracts, which was quite a bit more than the change in the Commercial net short position.  They did this by selling 8,801 long contracts, plus they added 3,383 short contracts — mostly courtesy of JPMorgan et al — who provided the ‘liquidity’ for fun, profit and price management purposes.

The difference between the Commercial net short position and the changes in the Managed Money category was made up by the traders in the ‘Other Reportables’ and ‘Nonreportable’/small trader category

Here’s the 9-year chart for the silver COT Report — and as I mentioned already, it’s still ugly in the extreme, despite the improvements during the reporting week.  Click to enlarge.


In gold, the Commercial net short position dropped by only 43,352 contracts, or 4.34 million troy ounces of paper gold.  I must admit that I was expecting a number around twice that amount.  The leaves the Commercial net short position in this precious metal at 27.12 million troy ounces.  They arrived at that number by covering 54,644 short contracts, but they also sold 11,292 long contracts, the difference between those two numbers was the change for the reporting week.

The Big 4 traders decreased their short position by a huge 25,500 contracts…the Big ‘5 through 8’ covered around 10,400 of their short contracts as well…and Ted’s raptors, the Commercial traders other than the Big 8, decreased their short positions too, and by about 7,500 contracts.

But under the hood in the Disaggregated COT Report, the Managed Money traders put on a somewhat bigger show than the above change in the Commercial net short position indicates.  The Managed Money traders headed for the hills to the tune of 55,061 contracts.  They accomplished this by dumping 37,386 long contracts, plus they added 17,675 contracts to their short position.  The total of those two numbers is the change for the reporting week.

And, like in silver, the difference between the Commercial net short position and the changes in the Managed Money category, were made up by the ‘Other Nonreportables’ and the ‘Nonreportable/small trader category.

Here’s the 9-year COT chart for gold — and it’s still at nose-bleed levels no matter how you care to interpret it — despite the improvements during the reporting week just past.  Click to enlarge.


However, in a lot of respects, yesterday’s COT Report is already yesterday’s news — and that’s for two reason…1] whatever data from Tuesday that didn’t make it into yesterday’s report, will be in next weeks, plus…2] we’ve set new low closes, or new intraday price lows, in both gold and silver in the three trading days since the Tuesday cut-off.  And provided prices don’t melt up in the last two reporting days, this coming Monday and Tuesday, we will get a far more accurate picture of where we stand from a COT perspective.

BUT, no matter how much improvement we get in next week’s report, we’ll still be miles away from a bullish configuration.  However, as Ted has said, a counter-trend rally from here to relieve the oversold positions in all four precious metals is a distinct possibility in the interim.

So we wait some more.

Here’s Nick Laird’s “Days to Cover” chart updated with yesterday’s COT data for positions held at the close of COMEX trading on Tuesday.  It shows the days of world production that it would take to cover the short positions of the Big 4 — and Big ‘5 through 8’ traders in each physically traded commodity on the COMEX.  Click to enlarge.


As I say in every Saturday column without fail—the short positions of the Big 4 and 8 traders in silver continues to redefine the meaning of the words ‘obscene’ and ‘grotesque’.  They’re just a little less ‘obscene and grotesque’ this week.  For the current reporting week, the Big 4 are short 146 days [just under 5 months] of world silver production—and the ‘5 through 8’ traders are short an additional 62 days of world silver production—for a total of 208 days, which is 7 months of world silver production, or 505.4 million troy ounces of paper silver held short by the Big 8.

And it should be pointed out here that in the COT Report above, the Commercial net short position in silver is 454.5 million troy ounces.  So the Big 8 hold a short position larger than the Commercial net position—and by a whopping 50.9 million troy ounces.

And if that isn’t bad enough, the Big 8 are short 50.8 percent of the entire open interest in silver on the COMEX futures market.  How insane is that?  And if you subtract out the market-neutral spread trades, it’s a reasonable assumption the Big 8 are short about 55 percent of the total open interest in silver.  In gold it’s up to 44.9 percent of the total open interest that the Big 8 are short.

And as an aside, the two largest silver shorts on Planet Earth—JPMorgan and Canada’s Scotiabank—are short about 94 days of world silver production between the two of them—and that 94 days represents around 65 percent [just under two thirds] of the length of the red bar in silver in the above chart.  The other two traders in the Big 4 category are short, on average, about 26 days of world silver production apiece.

And based on Ted’s estimate of JPMorgan’s short position of 28,000 contracts, JPMorgan is short around 58 days of world silver production all by itself.  Because of that, the approximate short position in silver held by Scotiabank works out to around 36 days of world silver production.

In gold, the Big 4 are now short 67 days of world gold production — and the ‘5 through 8’ another 20 days of world production, for a total of 87 days. Based on these numbers, the Big 4 in gold hold 77 percent of the total short position held by the Big 8 — and that’s a new record by a hair.  How’s that for a concentrated short position within a concentrated short position???

And just as an aside the “concentrated short positions within a concentrated short position” in silver, platinum and palladium held by the Big 4 are 70, 69 and 64 percent respectively of the short positions held by the Big 8.  And despite the improvements in the Commercial net short positions in all four precious metals during the reporting week just past, these “concentrated short positions within a concentrated short position” have barely changed.

And, like I said in last Saturday’s column, the CME Group, the CFTC and the mining industry just sit there like dorks and do nothing.

The October Bank Participation Report [BPR] data is extracted directly from the above Commitment of Traders Report.  It shows the COMEX 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.  For this one day a month we get to see what the world’s banks are up to in the COMEX futures market, especially in the precious metals—and they’re usually up to quite a bit.

In gold, 5 U.S. banks are net short 67,949 COMEX contracts in the October BPR.  In September’s Bank Participation Report [BPR], that number was 90,188 contracts, so they’ve decreased their collective short positions by a rather chunky 22,239 contracts during the reporting period.  Three of the five banks would include JPMorgan, Citigroup—and HSBC USA.  As for who the fourth and fifth banks might be—I haven’t a clue, but I doubt very much if their positions, long or short, would be material.

Also in gold, 26 non-U.S. banks are net short 57,932 COMEX gold contracts.  In the September BPR, 29 non-U.S. banks were net short 79,044 COMEX contracts, so the month-over-month change is pretty decent…a decline of 21,112 contracts.  And it’s still a mystery as to which non-U.S. bank in the Big ‘5 through 8’ category got bailed out of their huge short position in gold in July.

As of this Bank Participation Report, the world’s banks were net short 23.1 percent of the entire open interest in gold in the COMEX futures market, which is a decent decline from the 28.7 percent they were short in the September BPR.  And considering the changes since the Tuesday cut-off, the above number has dropped even more.

Here’s Nick’s chart of the Bank Participation Report 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 gold positions [both long and short] were outed in October of 2012.  Click to Enlarge is a must here.


In silver, 5 U.S. banks are net short 28,053 COMEX silver contracts—and it was Ted’s back-of-the-envelope calculation from yesterday that JPMorgan holds around 28,000 silver contracts net short position on its own — which is more or less the entire net short position shown above.  This means that the collective short and long positions of the other 4 U.S. banks can be no more than a few hundred contracts each an/or in total.  JPMorgan is the entire net short position in the U.S. banking industry.  In September’s BPR, the net short position of these five U.S. banks was 30,374 contracts, so there’s been a smallish 2,321 contract decrease in the net short positions of the U.S. banks since then, all of it involving JPM.  Based on the October BPR numbers in silver, it’s a mathematical certainty [as I said just above] that the other 4 U.S. banks are about market neutral in the COMEX futures market in silver — and if they are net short, or net long…it’s only by a few hundred contracts at the very most.  As Ted says, JPMorgan is the ‘Big Kahuna’ in silver as far as the U.S. banking system is concerned — and these numbers prove it in spades.

Also in silver, 19 non-U.S. banks are net short 31,946 COMEX contracts—and that’s down a bit from the 34,722 contracts that 15 non-U.S. banks held short in the September BPR.  I’m still prepared to bet big money that Canada’s Scotiabank is the proud owner of a goodly chunk of this short position—well over half of the total.  That most likely means that a few of the remaining 18 non-U.S. banks might actually be net long the COMEX silver market.  But even if they aren’t, the remaining short positions divided up between the 18 remaining non-U.S. banks would be immaterial.

As of this Bank Participation Report, the world’s banks are net short 30.2 percent of the entire open interest in the COMEX futures market in silver—which is down a bit from the 32.6 percent that they were net short in the September BPR — with the lion’s share of that held by only two banks…JPMorgan and Canada’s Scotiabank.

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, 5 U.S. banks are net short 12,906 COMEX contracts in the October Bank Participation Report.  In the September BPR, these same banks were short 14,998 COMEX platinum contracts, so there’s been a 2, 092 contract decline from the prior month.  It should be noted that these same 5 U.S. banks hold only 141 long contracts in total, along with the 12,906 they are short — and you read that right!

I suspect that, like in silver and palladium, JPMorgan holds virtually all of the platinum short position of the 5 U.S. banks in question.

Also in platinum, 15 non-U.S. banks are net short 6,620 COMEX contracts, which is a big decline from the 8,441 contracts they were net short in the September BPR, so their short positions are immaterial compared to the short positions held by the 5 U.S. banks.

If there is a large player in platinum among the non-U.S. banks, I wouldn’t know which one it is.  However I’m sure there’s at least one big one in this group.  The reason I say that is because before mid-2009 when the U.S. banks showed up, the non-U.S. banks were always net long the platinum market by a bit—see the chart below—and now they’re net short.  The remaining 14 non-U.S. banks divided into whatever contracts are left, isn’t a lot, unless they’re all operating in collusion—which I doubt.  But from the numbers it’s easy to see that the platinum price management scheme is an American show as well, with one big non-U.S. bank possibly involved.  Scotiabank perhaps?

And as of this Bank Participation Report, the world’s banks are net short 28.1 percent of the entire open interest in platinum in the COMEX futures market, which is down a bit from the 30.2 percent they were collectively net short in the September BPR.  The ‘click to enlarge‘ feature is a must here as well.


In palladium, 4 U.S. banks were net short 4,259 COMEX contracts in the October BPR, which is virtually unchanged from the 4,231 contracts they held net short in the September BPR.  Even if JPMorgan held all these contracts themselves, and they just might, it’s a pretty small amount.

Also in palladium, 14 non-U.S. banks are net short 3,737 COMEX contracts—which is a small increase from the 3,157 COMEX contracts that these same banks were short in the September BPR.  And if you divide up the short positions of the non-U.S. banks more or less equally, they’re immaterial, just like they are in platinum.

But, having said all that, as of this Bank Participation Report, the world’s banks are still net short 28.6 percent of the entire COMEX open interest in palladium.  In September’s BPR they were net short 29.1 percent.

Here’s the palladium BPR chart.  You should note that the U.S. banks were almost nowhere to be seen in the COMEX futures market in this metal until the middle of 2007—and they became the predominant and controlling factor by the end of Q1 of 2013.  But their footprint is pretty small now.  However, as I mentioned a couple of paragraphs ago, I would still be prepared to bet big money that, like platinum and silver, JPMorgan holds the vast majority of the U.S. banks’ short position in this precious metal as well.


As I say every month at this time, the three U.S. banks—JPMorgan, Citigroup, HSBC USA—along with Canada’s Scotiabank— are the tallest hogs at the precious metal price management trough. However, it’s a fact that one of the non-U.S. banks in the Big ‘5 through 8’ category got bailed out of its short position in gold in July.

But JPMorgan and Canada’s Scotiabank still remain the two largest silver short holders on Planet Earth in the COMEX futures market — and I would suspect that might apply to gold as well.

Not that I wish to overload you with charts, but this is just in from Nick Laird.  It shows that China’s Central Bank added 5 tonnes to its gold reserves in September — and if you believe that’s all they added, I have piece of Florida swamp land that became available after yesterday’s hurricane went through.  Click to enlarge.


I have a decent number of stories for you today, including a couple of repeats from Thursday’s column — and I hope you have enough time in what’s left of your weekend to read/listen/watch the ones that interest you.


U.S. created lower-than-expected 156,000 jobs in September

Job creation edged lower in September as the labor market showed there still may be room to run.

Nonfarm payrolls increased 156,000 for the month and the unemployment rate ticked up to 5 percent, the Bureau of Labor Statistics reported Friday. Economists surveyed by Reuters had expected 176,000 new jobs and the jobless rate to hold at 4.9 percent. The total was a decline from the upwardly revised 167,000 jobs in August (compared with the original number of 151,000).

This is within the broad range of expectations,” said Mark Hamrick, senior economic analyst at “The main point is, slow and steady does win the race for this recovery, which began in the summer of 2009.”

Since 2009 you say?  I’ve seen glaciers that move faster than the rise in the U.S. employment rate.  This Reuters article has all the talking heads cheer-leading it, both in the article itself — and in the embedded video clip.  This news item appeared on their website around 9 a.m. EDT on Friday morning.  I found it on the Sharps Pixley website very late on Friday evening Denver time — and another link to this story is here.

Goldman sees U.S. auto sales entering slow lane, downgrades sector

Earnings at U.S. automakers are expected to decline in the next two years as negative pricing and lower production weigh on North America results, Goldman Sachs said, downgrading the sector to “cautious” from “neutral”.

Major automakers posted September U.S. sales that were slightly lower than a year ago, despite big consumer discounts, as pickup truck volumes fell for both General Motors Co and Ford Motor Co.

The US auto cycle peaked in 2015 and is currently being held at a plateaued level by increasing OEM incentives,” analysts David Tamberrino and Mariel Kennedy wrote in a note.

The analysts said they expected seasonally adjusted annualized rate (SAAR) to hold steady from current levels into next year, followed by a gradual decline.

This Reuters article found a home over at the Internet site on Thursday morning EDT — and I found it in yesterday’s edition of the King Report.  Another link to this story is here.

USA’s Day of Reckoning: Hidden Secrets of Money 7 — Mike Maloney

History shows that once or twice in a generation a global crisis comes along that radically devastates people’s way of life. A fundamental shift so big and drastic and overwhelming that it destroys their standard of living and impacts every area of their lives. We are about to experience one of those events.

As Mike Maloney outlines in his brand new episode of the Hidden Secrets of Money, that next major event is deflation. And the culprit will be a relatively obscure monetary term that will impact virtually every area of your life: money velocity. You may not know exactly what money velocity means, but we will all soon experience it firsthand. In fact, money velocity will be the culprit of not just deflation, but the resulting inflation—and maybe hyperinflation—that will immediately follow.

This 30-minute video presentation put in an appearance on the Internet site on Wednesday, but for length reasons it had to wait for today’s column.  It’s certainly worth watching if you have the time — and another link to it is here.

How Bankers Live With Themselves

How can bankers live with themselves after the destruction wrought by their industry? That’s in part what the Dutch journalist Joris Luyendijk sets out to uncover in his new book, Among the Bankers: A Journey Into the Heart of Finance, which was published overseas last year under the title Swimming with Sharks. The book attempts to lay bare not the technical workings of a very opaque industry, but the emotional and moral considerations of those who operate within it.

Luyendijk, a reporter at The Guardian who has a background in anthropology, poses that question of conscience over and over again. To answer it, he conducted hundreds of interviews with people who work in the City, London’s version of Wall Street.

Early on, Luyendijk finds out that despite an unwritten code of silence, bankers are eager to talk about their jobs once promised anonymity. They tell him candid tales of the long hours, the competitive culture, the money, the stress. One woman said of her colleague, “I sit next to this girl who has a son whom she never sees. She gets in early, goes out very late, and the nanny sits at home.” Some are desperate to brag to Luyendijk about their clients or their best deal; others want to share how bad they feel, how uncomfortable they are with the depiction of their work. “Banking today is like playing Russian roulette with someone else’s head,” one banker said.

This book review was posted on Internet site back on September 27 — and it’s worth reading.  I thank Kim Lipscomb for bringing it to our attention.  Another link to it is here.

More Confessions of an Economic Hit Man: “This Time, They’re Coming For Your Democracy

Twelve years ago, John Perkins published his book, Confessions of an Economic Hit Man, and it rapidly rose up The New York Times’ best-seller list. In it, Perkins describes his career convincing heads of state to adopt economic policies that impoverished their countries and undermined democratic institutions. These policies helped to enrich tiny, local elite groups while padding the pockets of U.S.-based transnational corporations.

Perkins was recruited, he says, by the National Security Agency (NSA), but he worked for a private consulting company. His job as an undertrained, overpaid economist was to generate reports that justified lucrative contracts for U.S. corporations, while plunging vulnerable nations into debt. Countries that didn’t cooperate saw the screws tightened on their economies. In Chile, for example, President Richard Nixon famously called on the CIA to “make the economy scream” to undermine the prospects of the democratically elected president, Salvador Allende.

If economic pressure and threats didn’t work, Perkins says, the jackals were called to either overthrow or assassinate the non-compliant heads of state. That is, indeed, what happened to Allende, with the backing of the CIA.

Perkins has just reissued his book with major updates. The basic premise of the book remains the same, but the update shows how the economic hit man approach has evolved in the last 12 years. Among other things, U.S. cities are now on the target list. The combination of debt, enforced austerity, underinvestment, privatization, and the undermining of democratically elected governments is now happening here.

You’ve heard me talk about John Perkins and his book countless times in this column.  Here’s an interview that appeared on the Internet site — and it was picked up by Zero Hedge very early on Tuesday morning — and obviously had to wait for today’s column.  It’s certainly worth your while if you have the interest.  I thank James Gullo for pointing it out — and another link to it is here.

The United States as Destroyer of Nations — Daniel Kovalik

In the aftermath of the U.S. invasion of Iraq in 2003 – an invasion which many Iraqis believe left their country in the worst condition it has been since the Mongol invasion of 1258 — there was much discussion in the media about the Bush Administration’s goal for “nation-building” in that country.   Of course, if there ever were such a goal, it was quickly abandoned, and one hardly ever hears the term “nation-building” discussed as a U.S. foreign policy objective anymore.

The stark truth is that the U.S. really has no intentions of helping to build strong states in the Middle East or elsewhere. Rather, as we see time and again – e.g., in Yugoslavia, Sudan, Libya, Yemen, Syria, Somalia, Ukraine – the goal of U.S. foreign policy, whether stated or not, is increasingly and more aggressively the destruction and balkanization of independent states. However, it is important to recognize that this goal is not new.

Indeed, South Korean human rights scholar Dong Choon Kim, writing of the U.S. war in Korea (1950 – 1953) – a war which he opines was at least arguably genocidal – explains that even back then, the nation-building of Third World peoples was viewed as an act of subversion which had to be snuffed out.   As he explained, “[t]he American government interpreted the aspiration for building an independent nation as an exclusive ‘communist conspiracy,’ and thus took responsibility for killing innocent people, as in the case of [the] My Lai incident in Vietnam.” [1] Thanks to the U.S. war on Korea, Korea to this day remains a country divided in half, with no prospects for unification anytime soon. Kim explains that the Korean War “was a bridge to connect the old type of massacres under colonialism and the new types of state terrorism and political massacre during the Cold War. . . .   And the mass killings committed by U.S. soldiers in the Korean War marked the inception of military interventions by the US in the Third World at the cost of enormous civilian deaths.”

Similarly, the U.S. objective in Vietnam was the destruction of any prospect of an intact, independent state from being created. As Jean-Paul Sartre wrote as part of the International War Crimes Tribunal that he and Bertrand Russell chaired after the war, the U.S. gave the Vietnamese a stark choice: either accept capitulation in which the country would be severed in half, with one half run by a U.S. client, or be subjected to near total annihilation. [2] Sartre wrote that, even in the former case, in which there would be a “cutting in two of a sovereign state . . . [t]he national unit of ‘Vietnam’ would not be physically eliminated, but it would no longer exist economically, politically or culturally.”   Of course, in the latter case, Vietnam would suffer physical elimination; bombed “’back to the Stone Age’” as the U.S. threatened. As we know, the Vietnamese did not capitulate, and therefore suffered near-total destruction of their country at the hands of the United States. Meanwhile, for good measure, the U.S. simultaneously bombed both Cambodia and Laos back to the Stone Age as well.

No surprises here — as this is just an extension of John Perkins’ “jackals” that he speaks of in the previous Zero Hedge piece.  This article was posted on the Internet site yesterday — and it’s definitely worth reading, even if you’re not a student of the New Great Game.  I thank Roy Stephens for sending it — and another link to it is here.

U.S. cuts cord on Internet oversight

The U.S. government [last] Saturday ended its formal oversight role over the internet, handing over management of the online address system to a global non-profit entity.

The U.S. Commerce Department announced that its contract had expired with the Internet Corporation for Assigned Names and Numbers, which manages the internet’s so-called “root zone.”

That leaves ICANN as a self-regulating organization that will be operated by the internet’s “stakeholders” — engineers, academics, businesses, non-government and government groups.

The move is part of a decades-old plan by the U.S. to “privatize” the internet, and backers have said it would help maintain its integrity around the world.

This very interesting AFP story was picked up the Internet site last Saturday — and for content reasons had to wait for this Saturday’s column.  I thank Roy Stephens for sharing it with us — and another link to it is here.

Washington Tries to Break BRICS: The Rape of Brazil Begins — F. William Engdahl

Washington’s regime change machinery has for the time being succeeded in removing an important link in the alliance of large emerging nations by railroading through a Senate impeachment of the duly elected President, Dilma Rousseff. On August 31 her Vice President Michel Temer was sworn in as President. In his first speech as president, the cynical Temer called for a government of “national salvation,” asking for the trust of the Brazilian people. He indicated plans to reform, and has also signaled his intention to overhaul the pension system and labor laws, and cut public spending, all themes beloved of Wall Street banks, of the International Monetary Fund and their Washington Consensus. Now after less than three weeks at the job, Temer has unveiled plans for wholesale privatization of Brazil’s crown jewels, starting with oil. The planned Wall Street rape of Brazil is about to begin.

It’s important to keep in mind that elected President Rousseff was not convicted or even formally charged with any concrete act of corruption, even though the pro-oligarchy mainstream Brazil media, led by O’Globo Group of the billionaire Roberto Irineu Marinho, ran a media defamation campaign creating the basis to railroad Rousseff into formal impeachment before the Senate. The shift took place after the opposition PMDB party of Temer on March 29 broke their coalition with Rousseff’s Workers’ Party, as accusations of Petrobras-linked corruption were made against Rousseff and former president Luiz Inácio Lula da Silva.

On August 31, 61 Senators voted to remove her while 20 voted against removal. The formal charge was “manipulation of the state budget” before the 2014 elections to hide the size of the deficit. She vehemently denies the charge. Indeed, the Senate issued its own expert report that concluded there was “no indication of direct or indirect action by Dilma” in any illegal budgetary maneuvers. According to the Associated Press, “Independent auditors hired by Brazil’s Senate said in a report released Monday that suspended President Dilma Rousseff didn’t engage in the creative accounting she was charged with at her impeachment trial.” Under an honest system that would have ended the impeachment then and there. Not in Brazil.

In effect, she was impeached for the dramatic decline in the Brazilian economy, a decline deliberately pushed along as U.S. credit rating agencies downgraded Brazilian debt, and international and mainstream Brazilian media kept the Petrobras corruption allegations in the spotlight. Importantly, the Senate did not ban her from office for 8 years as Washington had hoped, and she has promised an electoral return. The Washington-steered Temer has until end of 2018 to deliver Brazil to Temer’s foreign masters before his term legally ends.

No surprises here.  This longish Engdahl piece showed up on his Internet site back on September 24 — and reader ‘Dave’ sent it to me last Sunday.  For obvious reason it had to wait for my column today — and it’s certainly worth reading if you have the interest.  Another link to it is here.

Doug Casey: Why the Euro Is a Doomed Currency

For a long time, I’ve advocated that the world’s governments should default on their debt. I recognize that this is an outrageous-sounding proposal.

However, the debts accumulated by the governments of the U.S., Japan, Europe and dozens of other countries constitute a gigantic mortgage on the next two or three generations, as yet unborn. Savings are proof that a person, or a country, has been living below their means. Debt, on the other hand, is evidence that the world has been living above its means. And the amount of government debt and liabilities in the world is in the hundreds of trillions and growing rapidly, even with essentially zero percent interest rates. This brings up several questions: Will future generations be able to repay it? Will they be willing to? And, if so, should they? My answers are: No, no and no.

The “should they” is one moral question that should be confronted. But I’ll go further. There’s another reason government debt should be defaulted on: to punish the people stupid enough, or unethical enough, to lend governments the money they’ve used to do all the destructive things they do.

I know it’s most unlikely you’ve ever previously heard this view. And I recognize there would be many unpleasant domino-like effects on today’s over-leveraged and unstable financial system. It’s just that, when a structure is about to collapse, it’s better to have a controlled demolition, rather than waiting for it to collapse unpredictably. That said, governments will perversely keep propping up the house of cards, and building it higher, pushing the nasty consequences further into the future, with compound interest.

With that in mind, a few words on the euro, the E.U. and the European Central Bank are in order.

This excellent commentary by Doug appeared on the Internet site yesterday — and it’s certainly worth your while.  Another link to it is here.

Tales of the New Cold War: Options on the Syria Table — John Batchelor Interviews Stephen F. Cohen

As the geopolitical world destabilizes, the few sources of objectivity, like the John Batchelor Show, become increasingly vital to us all, and this week’s podcast is no exception. Batchelor begins with the collapse of the diplomatic relationship between Russia and Washington in Syria. Russia is furious as it watches Turkey resupply advanced NATO weaponry to the terrorists in Aleppo. Again an American “no fly zone” is being discussed in Washington. Concurrently President Obama is planning to visit Iran and Victoria Nuland (State Department) is in discussion in Brussels with European allies and thence on to Moscow to try to reassure Russia about the Ukrainian situation. All of these events are fraught with more failure and not likely to improve a peace scenario, says Batchelor, and he asks whether there are any solutions out there? Cohen’s answer is not reassuring; he sees the recent failure in Syria is the first major failure in the first effort towards détente – amongst a long list of failures that have stretched over decades. The end result is a new (recognized) proxy war in Syria. In Russia, Cohen continues, war preparations are ordered by Putin (civil defence exercises); in Washington, we hear more anti Russian main stream media histrionics and talk of more sanctions.

At this time White House discussions are about the question of whether to bomb Assad. This would certainly start a war with Russia according to Gen. Joseph Dunford (Chairman of the United States Joint Chiefs of Staff), and Cohen states that the “ugly truth” in the Syrian matter is that Washington refuses to give up on removing Assad and it is using terrorists as its means; Russia, on the other hand has a policy of destroying these terrorists and keeping the legitimate government in Damascus. As such both countries have directly opposite goals. And Cohen is horrified that when the Department of Defence sabotaged the ceasefire against the president’s cooperation policy, it created a constitutional crisis that was not even discussed! This last point emphasizes the profound changes in American political realities and one could argue that government institutions are not functioning well anymore – even for those in the U.S. government.

The resupply of NATO weapons to the terrorists (ISIS) continues, and (now out in the open) Washington has threatened Russia with an Article 5 declaration if Russia attacks them. Given that an Article 5 is not allowed if the country involved (in this case Turkey) is there illegally (it is), Russia must be questioning how much legality even enters into the discussion anymore. Batchelor also delivers a bombshell in that the present ISIS forces are a complete creation of the Turkish Secret Police! He also states that Turkey’s Erdogan has promised Obama to “deliver Assad”, and that puts Turkey in a potential war scenario with Russia. So the war situation is vastly more complicated and dangerous than ever. Cohen mostly agrees and proceeds to explain how these events have delivered political setbacks to the various fronts in the NCW (New Cold War). Washington, he goes on, has backed itself into a corner in Syria of either doing nothing more or going to war. Is this a goal or is it a product of lack of vision?

There have been huge changes in one week and most of them very dangerous. From my point of view the Syrian situation can result in a general war between Russia, Turkey and Washington if: Turkey attacks Assad’s forces, Russia attacks NATO supply lines to ISIS, Washington orders a no fly zone and attacks Assad, or Russia orders a no fly zone to protect Assad (assume Assad is attacked by Turkey or US forces). The most likely of the above is Erdogan attacking Assad’s forces at the behest of Washington and expecting the NATO Article 5 umbrella for protection. This should not be possible given the illegality of Turkey’s actions, but we should recall that Washington is essentially spreading anarchy in global affairs to further its hegemonic ambitions. One can only hope that European members of NATO will rebel and use the legality of the event as an excuse to disobey Washington. As Cohen states we are at a point of danger equal to the Cuban missile Crisis. How real is the risk of a war with Russia? The chaos in the M.E. is a described in a leaked US policy decision first made public by retired General (US) Wesley Clark after 9/11 wherein the Pentagon listed 7 countries to be marked for regime change in the region. It included Syria. But there are no strong strategic need for the US to have destroyed any of them except as a means to increase the security environment for Israel and (locally) pipeline/energy politics for the Saudis and their Sunni neighbours. But ISIS is now a threat to Israel as well. And war with Russia now seems to have become the motive for continuing the Syrian War.

I posted this interview in my Friday column, but as I said then, I’d be posting it again in today’s column in case you didn’t have time for it yesterday…so here it is.  I thank Ken Hurt for the link but, as always, the largest THANK YOU of all goes to Larry Galearis for excellent executive summary.  It’s certainly a must listen, even if you’re not a serious student of the New Great Game.  And if you don’t listen to the interview, you should at least read the above.  It was posted on the Internet site on Tuesday — and another link to it is here.

Russian options against a U.S. attack on Syria — The Saker

The tensions between Russia and the USA have reached an unprecedented level. I fully agree with the participants of this CrossTalk show – the situation is even worse and more dangerous than during the Cuban Missile Crisis. Both sides are now going to the so-called “Plan B” which, simply put, stand for, at best, no negotiations and, at worst, a war between Russia and the USA.

The key thing to understand in the Russian stance in this, an other, recent conflicts with the USA is that Russia is still much weaker than the USA and that she therefore does not want war. That does not, however, mean that she is not actively preparing for war. In fact, she very much and actively does. All this means is that should a conflict occur, Russia you try, as best can be, to keep it as limited as possible.

The main reason why we can expect the Kremlin to try to find asymmetrical options to respond to a U.S. attack is that in the Syrian context Russia is hopelessly outgunned by the U.S./NATO, at least in quantitative terms. The logical solutions for the Russians is to use their qualitative advantage or to seek “horizontal targets” as possible retaliatory options. This week, something very interesting and highly uncharacteristic happened: Major General Igor Konashenkov, the Chief of the Directorate of Media service and Information of the Ministry of Defence of the Russian Federation, openly mentioned one such option. Here is what he said:

“As for Kirby’s threats about possible Russian aircraft losses and the sending of Russian servicemen back to Russia in body bags, I would say that we know exactly where and how many “unofficial specialists” operate in Syria and in the Aleppo province and we know that they are involved in the operational planning and that they supervise the operations of the militants. Of course, one can continue to insist that they are unsuccessfully involved in trying to separate the al-Nusra terrorists from the “opposition” forces. But if somebody tries to implement these threats, it is by no means certain that these militants will have to time to get the hell out of there.”

This longish commentary showed up on the Internet site on Wednesday — and it comes to us courtesy of ‘aurora’.  It’s certainly a must read if you’re a serious student of the New Great Game — and it’s certainly worth reading even if you’re not.  Another link to it is here.  This is another article that was posted in Friday’s column, that I said I would include in my Saturday missive, so here it is.

China Foreign-Exchange Reserves Drop as Yuan Pressures Build

China’s foreign-exchange reserves declined more than expected in September, amid speculation the central bank resumed selling dollars to support the yuan.

The stockpile shrank to $3.17 trillion last month, the People’s Bank of China said in a statement Friday. That’s the lowest since April 2011 and below the median estimate of $3.18 trillion in a Bloomberg survey of economists. The decline is a reflection of both currency intervention and capital outflows, according to Zhao Yang, Nomura Holdings Inc.’s chief China economist.

Declines in the world’s biggest currency stockpile have slowed this year after falling from a record $4 trillion in June 2014 amid speculation the yuan would continue to depreciate and the Federal Reserve would raise borrowing costs. Investors are pricing in a 63 percent probability that the Fed will raise interest rates by year-end, according to Fed funds futures prices tracked by Bloomberg.

The drop shows that yuan depreciation pressures remain intact despite the PBOC’s efforts to stabilize the currency,” said Kenix Lai, a Hong Kong-based foreign-exchange analyst at Bank of East Asia Ltd. “The likelihood of a Fed interest-rate increase in December — as the U.S. economy improves — is adding to the stress.

This Bloomberg article showed up on their Internet site at 7:41 p.m. Denver time on their Thursday evening — and was updated about seven hours later.  I thank Richard Saler for pointing it out.  Another link to this news item is here.

Solar panels surpass coal-fired electricity in previously ‘unthinkable’ feat

Solar panels generated more electricity than coal in the past six months in a historic year for getting energy from the sun in the UK, according to a new analysis.

Research by the Carbon Brief website found that solar generated nearly 7,000 gigawatt hours of electricity between April and September, about 10 per cent more than the 6,300GwH produced by coal during the same period.

The figures represent a dramatic turnaround in the U.K.’s electricity supplies.

The first ever day when solar produced more than coal was only on 9 April – when there was no coal-fired electricity for the first time since 1882. But then May became the first ever month when this happened.

This very interesting story was posted on the Internet site on Wednesday — and had to wait for a spot in today’s column.  I thank Swedish Subscriber Patrik Ekdahl for sending it our way.  Another link to this article is here.  There was an equally interesting article on the Internet site on Sunday headlined “Cut-throat competition is slashing offshore wind power costs to unthinkable levels” — and I couldn’t read it for a second time, because it’s blocked for me now.  You may have more luck.  I thank Roy Stephens for bringing it to our attention.

Goldman Sachs Sees ‘Buying Opportunity’ If Gold’s Slump Gets Worse

Goldman Sachs Group Inc. says that a strategic buying opportunity may open up in gold should prices drop substantially below $1,250 an ounce, with bullion offering investors a way to protect themselves against risks to global growth and limits to central banks’ effectiveness.

While the decline over the past month has been in line with the bank’s bearish outlook, there could be a case for purchases if the sell-off deepens, according to analysts including Jeffrey Currie and Max Layton. On Friday, bullion dropped to as low as $1,241.51 an ounce before recovering to $1,253.92, on course for the biggest weekly slump in almost two years.

We would view a gold sell-off substantially below $1,250 as a strategic buying opportunity, given substantial downside risks to global growth remain, and given that the market is likely to remain concerned about the ability of monetary policy to respond to any potential shocks to growth,” Currie and Layton wrote in the Oct. 6 report.

Goldman said it remains broadly neutral on the outlook for bullion through the year-end after the correction. The bank noted that the drop in prices hadn’t been driven by sales of bullion from holdings in exchange-traded funds, which have expanded this week as of Thursday.

The move lower does not appear to be driven by physical gold ETF liquidation,” the analysts said. “The drivers of strong physical ETF and bar demand for gold during 2016 are likely to remain intact, including continued strong physical demand for gold as a strategic hedge.

This gold-related Bloomberg article put in an appearance on their Internet site at 9:13 p.m. MDT on Thursday evening — and was subsequently updated about 14 hours later.  I thank Patrik Ekdahl for sending it our way — and another link to it is here.

U.K. Currency Shock Sees Sterling Gold Surges 5% in One Minute “Flash Crash”

Sterling gold surged 5% in less than a minute overnight in Asia with prices rising from £994/oz to £1,043.40/oz as sterling had a massive “flash crash.” Sterling plummeted in the second biggest fall in its history – only slightly less than the collapse after the Brexit vote.

Despite gold’s peculiar, sharp fall in dollar terms on Tuesday and 4.1% loss for the week, sterling gold is another 1.7% higher this week – from £1,010/oz to £1,027/oz –  again showing gold’s importance in hedging against currency devaluation.

The latest sterling crash heightened concerns about the vulnerability of the British pound due both to “Hard Brexit” concerns and the outlook for the debt laden U.K. economy.

The pound collapsed about 10 percent from levels around $1.2600 to $1.1378 “in a matter of seconds” according to Reuters. The pound recovered most of the falls and most analysts said it was due either to a “fat finger” trade or more likely the automated algorithmic computer trades that now dominate the increasingly casino like, global foreign exchange market.

Thomson Reuters, which owns the Reuters foreign exchange brokerage platform RTSL, said a particular trade had been canceled and that the low for sterling was revised to $1.1491 – still a near 10% fall versus the dollar and the weakest level for sterling since 1985.

This gold-related story was posted on the Internet site on Friday BST sometime — and it’s worth reading if you have the interest.  Another link to it is here.

Doug Noland: Hurricane Matthew, Near Misses and Flash Crashes

Rising financial stocks notwithstanding, I’d be remiss for not suggesting that this week’s big movers (pound, yen, bunds, European periphery debt, Treasuries and gold) all have big derivatives markets. Are markets now more vulnerable to illiquidity and so-called “flash crashes” because of heightened stress (and risk aversion) at Deutsche Bank and the other big derivatives operators more generally?

I’ll posit that to sustain the global government finance Bubble at this point requires both ongoing securities market inflation and ever-increasing monetary inflation. Rather suddenly it seems that global central banks are much less confident in QE infinity. There is serious disagreement in Japan as to how to move forward with monetary policy. And there were even this week rumors of ECB “tapering” ahead of the March 2017 designated end to its QE program. Say what? Are the ECB “hawks” ready to take control?

Meanwhile, markets seem to be pointing to an important downside reversal following this year’s historic melt-up in global bond prices. With Italian, Portuguese and UK bonds leading this week’s losers list, it’s tempting to imagine that fundamentals might start to matter again. And it’s going to be a real challenge to sustain global Credit growth in the face of rising bond yields. All bets are off if China’s latest attempt to tighten mortgage Credit actually works. That’s one scary Credit Bubble, and there are already indications that outflows are picking up again from China.

Doug’s weekly Credit Bubble Bulletin is always a must read for me — and I suggest the same for you as well.  It appeared on this Internet site around 2 a.m. EDT this morning.  Another link to it is here.


Here’s a last look at that white-fronted/speckled goose as winter closes in.  Because of its broken wing, he won’t be making any more trips anywhere, but he did manage to survive the spring, summer and fall.  The people who work in the buildings around the pond have been trying to the Department of Fish and Wildlife to pick up this bird and save it, but so far their pleas have fallen on deaf ears.  The second shot is of the “the pond“…complete with the red building in the background.  I would guess that 95 percent or more of the bird photos I’ve presented in this column over the years were taken around this small body of water.   It’s amazing what Mother Nature provides inside a city if you just make the effort to go looking for it.  The ‘Click/Double-click to enlarge‘ feature really helps on both shots.






Today’s pop ‘blasts from the past’ date from the late 1970s.  The Babys, a British rock group, only had two hits, but what hits they were!  I’ve posted these before, but it’s been several years, so it’s time for a revisit.  The first one is linked here — and the second one is here.

Edvard Grieg’s Piano Concerto in A minor, Op. 16, composed in 1868 at the tender age of 24 years, was the only concerto Grieg completed. It is one of his most popular works and among the most popular of all piano concerti.

Being a modest man, he took his new work to virtuoso pianist Franz Liszt for his approbation, who then played through it a prima vista, gave very good comments on it, which influenced him later.  Grieg lived long enough to be proclaimed Norway’s greatest classical composer, which he indeed was.

Here’s the incomparable Russian pianist Evgeny Kissin doing the honours as soloist — and Sir Simon Rattle conducts the Berlin Philharmonic Orchestra.  It’s a wonderful performance. The link is here.

My speculation that JPMorgan et al would crush the precious metal prices on the numbers never materialized.  But I do take some solace in the fact that they did take another decent slice out of the gold and platinum salamis on an intraday basis on Friday — and briefly kissed silver’s 200-day moving average at the same time.

It was wild and crazy day in the precious metals, plus the currencies — and I wouldn’t want to hazard a guess as to what should be read into yesterday’s price action.  But as Ted pointed out on the phone yesterday, if the 200-day moving averages hold for both gold and silver, then very decent counter-trend rallies could be in the cards — and I’ll be more than interested in what happens at the 6 p.m. EDT open on Sunday evening, plus the Monday morning trading session in the Far East as well.

Since this is my Saturday column, I’ve included the 6-month charts for the Big 6+1 commodities.








It’s hard to know where to begin when you stand back and look at the state that the world is in today.  Not only is it getting more dangerous as the U.S. attempts to prod both Syria and Russia into open conflict, but on an economic, financial and monetary basis, it is becoming more wildly unstable with each passing week.

To steal a paragraph from Doug Noland Credit Bubble Bulletin this morning: “Especially since 2012, global central bankers have fully embraced “whatever it takes.” This historic gambit just didn’t work, and this unfolding failure is proving extraordinarily divisive. Societies and political parties are deeply divided. Central banks from Tokyo to Frankfurt to Washington are deeply divided. This ensures an extraordinarily uncertain future. Things are simply no longer lined up for markets to always get their way.

There is no way out of this that I can see.  Sooner rather than later there will come a market event that all the derivatives and money-out-of-thin-air just won’t fix — and with the financial and monetary world being as fragile and interconnected as it is [with Deutsche Bank being the poster child for that at the moment] the conflagration would turn global overnight — and we’ve seen that happen before.  This is an event which Jim Rickards, plus many others including myself, have been going on about for years.

As to what the powers-that-be do at that juncture remains to be seen, but in an attempt to save their fiat currency system, with or without SDRs, I’m sure whatever measures they chose will be draconian at best.  I would think that any move in that direction would be the last straw for all things paper — and I wouldn’t be surprised if they closed the markets for a brief period while they tried to figure out what to do.  The problem with that of course is the fact that when the markets reopen, what would anything be worth?  Because at that juncture, even the ever-smiling bought and paid for whores in the East Coast main stream media — and on Wall Street — would be unable to conceal the fact that all their cheer-leading since the crash of 1987 has been the 21st century equivalent of selling snake oil out of the back of a covered wagon.

Let’s just hope that our stashes of gold and silver bullion, plus their associated equities, are allowed to live up to their advanced billing.

And I’m still “all in”.

See you on Tuesday.


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