10 December 2016 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM

Gold was sold lower by a bit starting an hour after trading began in New York at 6:00 p.m. on Thursday evening, with the Far East low tick coming around 10 a.m. China Standard Time on their Friday morning.  It began to crawl higher starting around 1 p.m. over there, but was capped shortly before 10 a.m. in London.  It was sold off pretty hard until precisely 1 p.m. GMT/8:00 a.m. EST — and the subsequent very sharply rally met its ended at exactly 8:30 a.m. in New York.  It was all down hill from there with the absolute low tick — and a new low for this move down — set minutes before 2:45 p.m. in the thinly-traded after-hours market.  It recovered a few dollars from there, before chopping sideways into the 5:00 p.m. close.

The high and low ticks were recorded by the CME Group as $1,173.80 and $1,159.50 in the February contract.

Gold finished the Friday session in New York at $1,159.60 spot, down $10.80 on the day.  Considering that a new low closing price for this move down was set, net volume wasn’t overly heavy at 146,000 contracts.

And here’s the 5-minute gold tick chart courtesy of Brad Robertson as usual.  Not all of the early morning trading data is there for the Far East trading day, but you can see the elevated volume levels around 19:00 Denver time Thursday evening/10 a.m. in Shanghai on Friday, when the interim low was set.  The volume increased once the selling pressure picked up in morning trading in London and, as usual, the big volume was in New York, even in the thinly-traded after-hours market as well.

The vertical gray line is 10:00 p.m. Denver time, midnight in New York — and 1:00 p.m. China Standard Time [CST] the following afternoon in Shanghai—and don’t forget to add two hours for EST.  The ‘click to enlarge‘ is a must for this chart.

It was mostly the same price pattern in silver, expect for the fact that when the early morning rally in London got capped, the price wasn’t sold lower until at, or just before, the noon silver fix.  Then it got the same treatment as gold for the rest of the day, including the rally that began at precisely 1 p.m. in London and ended precisely thirty minutes later at 8:30 a.m. EST.  The low tick of the day came at precisely the same time as gold as well.

The high and low tick in this precious metal was reported as $17.185 and $16.89 in the March contract.

Silver was closed yesterday at $16.815 spot, down 18 cents from it’s close on Thursday.  All things considered, volume wasn’t overly heavy at just over 40,000 contracts.

Here’s the 5-minute tick chart for silver from Brad as well — and all of the price/volume data from early morning trading in the Far East is on it.  Volume picked up again on the early morning rally in London — and was pretty decent for the rest of the day.  Things quieted down quite a bit once ‘da boyz’ had set the low tick in New York in the after-hours market at 12:45 p.m. Denver time on the chart below.

As per the 5-minute gold chart above, the vertical gray line is 10:00 p.m. Denver time, midnight in New York — and 1:00 p.m. China Standard Time [CST] the following afternoon in Shanghai—and don’t forget to add two hours for EST.  The ‘click to enlarge‘ is a must for this chart as well.

The platinum price was sold lower in Far East trading but, like gold and silver, rallied a bit in early Zurich trading.  Then also like gold and silver, JPMorgan et al were there shortly before 11 a.m. Europe time to begin leaning on the price.  The sell-off really became serious at 8:30 a.m. in New York — and ‘da boyz’ set the low tick of the day a few minutes after 12 o’clock noon EST.  Its price recovery from there was allowed to last until the COMEX close — and it was sold off a bit from there until 2:45 p.m. in the thinly-traded after hours market…just like silver and gold.  It traded sideways after that.  Platinum was closed in New York on Friday at $914 spot, down 21 dollars from Thursday.  At its low tick, they had the price down about 30 bucks.

Palladium was also sold lower until 10 a.m. CST on their Friday morning.  It chopped higher from there, but was capped in Zurich at the same time as the other three precious metals.  The decent rally into the COMEX open met the same fate as the others at 8:30 a.m. EST — and by the time the short buyers/long sellers of last resort were done, they had palladium down 8 dollars at $728 spot.

It was just another day when all four precious metals would have closed higher if allowed to trade freely, which they obviously weren’t — and that was despite the engineered rally in the dollar index.

The dollar index closed very late on Thursday afternoon in New York at 101.12 — and traded flat once the markets opened in New York at 6:00 p.m.  There was a sharp 20 basis points rally starting around 9:25 a.m. China Standard Time that ended at 10 a.m. over there — and that was most likely the cause of the smallish sell-offs in the precious metals in morning trading in Shanghai.  Once that rally was done, it began to head lower.  It hit its 101.01 low tick a few minutes before 10 a.m. GMT in London — and at that juncture the usual ‘gentle hands’ appeared before it could slip below the 101.00 mark.  The subsequent rally topped out at the 101.74 mark around 12:15 p.m. in New York — and it crawled lower for the rest of the Friday session, closing at 101.58 — up 46 basis points on the day.

“There are no markets anymore…only interventions."

And here’s the 6-month U.S. dollar index chart which, as you already know, is a study in pure fiction.

The gold shares gapped down a bit at the open — and continue lower from there.  Their respective low ticks came around 2:45 p.m. when JPMorgan et al set the low price tick in gold.  They recovered a hair from there to close just off their lows, as the HUI finished the Friday session down 4.11 percent.

It was the same general chart pattern for the silver equities, as Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 5.08 percent.  Click to enlarge if necessary.

And here are the usual 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 — and the Click to Enlarge feature really helps on all three.

And the chart below shows the month-to-date changes as of Friday’s close.

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

The CME Daily Delivery Report showed that zero gold and 118 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  In silver, International F.C. Stone was the sole issuer — and it was Ted Butler’s “Three Musketeers”…JPMorgan [63], Canada’s Scotiabank [26] and Macquarie Futures [11]…as long/stoppers once again — and all for their own accounts.  The link to yesterday’s Issuers and Stoppers Report is here.

As Ted pointed out on the phone — and as I pointed out in Friday’s column — of the 2,790 silver contracts issued so far this month, JPMorgan has already stopped 1,280 contracts for its own account in December — and none for its clients.  It’s well on its way to stopping the legally allowed monthly amount — and that’s 1,500 contracts — a feat it has performed several times over the last year or so.  Macquarie Futures has stopped 863 silver contracts for its own account this month as well.

The CME Preliminary Report for the Friday trading session showed that gold open interest in December fell by 82 contracts, leaving 1,325 still open.  Thursday’s Daily Delivery Report showed that only 70 gold contracts were actually posted for delivery on Monday, so that means that another 82-70=12 short/issuers were let off the delivery hook by the long/stoppers holding the other side of the trade.  Silver o.i. in December declined by 158 contracts, leaving 668 contracts still around, minus the 118 mentioned two paragraphs ago.  Thursday’s Daily Delivery Report showed that only 121 silver contracts were actually posted for delivery on Monday.  That means that 158-121=37 short/issuers were also let off the delivery hook by the long/stoppers.

Another day — and another withdrawal from GLD.  This time an authorized participant took out 104,846 troy ounces.  With every withdrawal, you have to ask yourself who ends up with that gold, because somebody owns it.  And if not GLD…then who, is the question?  And as of 6:26 p.m. EST yesterday evening, there were no reported changes in SLV.

The folks over at the shortsqueeze.com Internet site updated the changes in the short positions for both SLV and GLD as of the close of trading on November 30.  There was a big increase in the short position of SLV, from 9.26 million shares/troy ounces, up to 12.20 million shares/troy ounces — and that works out to a jump of 31.7 percent.  The short position in GLD also rose…from 748,200 troy ounces, to 882,420 ounces, an increase of 17.9 percent.

I’m sure that Ted will have something to say about this in his weekly review later today.

For the third day in a row there was no sales report from the U.S. Mint, so I’d guess that they’re done for the month — and the year, although I’ll wait another week just to be on the safe side.

Month-to-date the mint has sold 28,500 troy ounces of gold eagles — 5,500 one-ounce 24K gold buffaloes — and 240,000 silver eagles.  All those sales occurred in only two business days, so I’d guess that JPMorgan was having one last helping at the trough.

There was no gold reported received over at the COMEX-approved depositories on the U.S. east coast on Thursday, but a very decent 114,380 troy ounces were shipped out of Canada’s Scotiabank.  The link to that activity is here.

There was no ‘in’ activity in silver, either — and 638,487 troy ounces were shipped out.  The lion’s share of that…600,019 troy ounces…came out of JPMorgan’s vault.  The rest came out of Brink’s, Inc. — and the link to that is here.

It was a bit quieter over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They reported receiving 1,808 of them — and shipped out 591.  As per usual, all this activity was at Brink’s, Inc. — 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, showed almost no change in silver…which is the best that could have been hoped for — and a decent improvement in gold.

In silver, the Commercial net short position increased by a paltry 295 contracts/1.48 million troy ounces, which is barely a rounding error in the grand scheme of things.

They arrived at this position by picking up 1,175 long contracts, but they also added 1,470 short positions — and the difference between those two numbers is the change for the reporting week.

Ted says that the Big 4 traders actually added about 400 contracts to their short position, but the raptors, the Commercial traders other than the Big 8, added around 400 contracts to their current long position, so these two groups of traders cancelled each other out.  It was the ‘5 through 8’ large traders adding around 300 contracts to their short position that actually made up the change for the reporting week.

Under the hood in the Disaggregated COT Report, it was all the Managed Money traders on the other side, plus a bunch more.  They sold 803 long contracts, but they only added 1,264 short contracts, for a total change of 2,067 contracts.

I noted that the ‘unblinking’ non-technical Managed Money traders are sitting on a core 56,000 contract long position at the very bottom of this price cycle — and I’m still wondering not only who these guys are, but also if they’re related [at very distant arm’s length] to the Big 4 traders in silver.

The other stand-out feature that Ted mentioned on the phone yesterday, was that the Managed Money traders [on a net basis] have not gone onto the short side in silver at all over the last four COT Reports.  I just know he’ll have more to say about this in his weekly review later today.

The Commercial net short position is currently sitting at 378.7 million troy ounces of paper silver.

Here’s the 9-year COT chart for silver — and as you can tell, the change in the Commercial net short position this week, compared to last, is not noticeable.

In gold, the Commercial net short position in gold declined by 12,879 contracts, or 1.29 million troy ounces of paper gold.

They arrived at this position by selling 6,391 long contracts, but they also covered 19,270 short contracts — and the difference between those two numbers is the change for the reporting week.

Ted says that the Big 4 traders covered about 8,900 of their short contracts — and his raptors, the Commercial traders other than the Big 8…increased their long position by 8,500 contracts.  The surprise came in the ‘5 through 8’ large traders category, as their short position increased by 4,500 contracts.  It was Ted’s opinion that this group of traders did, in fact, cover short positions on a net basis for the reporting week, but what has happened [as has happened in the past under these conditions] is that a member of the Managed Money traders now has a short position so large, that they’ve now become a temporary member of the ‘5 through 8’ category.

Under the hood in the Disaggregated COT Report, it was all the Managed Money traders, plus more, as they sold 11,230 long contracts, plus they added 13,393 contracts to their short position, for a swing of 24,623 contracts for the reporting week…which was almost double the change in the Commercial net short position.  And as I pointed out in the previous paragraph, one Managed Money trader added enough short positions during this reporting week, that it vaulted them into a temporary spot in the ‘5 through 8’ large trader category…a spot normally held by a Commercial trader.

The Commercial net short position in gold is now down to 15.49 million troy ounces.

Here’s the 9-year COT chart for gold as well — and this week’s improvement in the Commercial net short position is quite noticeable.

JPMorgan et al appear to be in the process of taking back all the gains in silver that occurred since the big surprise price spike on Wednesday — and we won’t know how successful they were until next Friday’s COT Report.  But there are still two trading days…Monday and Tuesday…left in that reporting week — and it will be interesting to see how they make out during that time period.

It doesn’t appear likely that the Managed Money traders will show up on the short side in silver in any great numbers now.  There certainly are more short positions being put on by the Managed Money traders in gold, but they’re only a small fraction of what they used to be — and if ‘da boyz’ hope to drive prices much lower from here, they’re going to have to rely on Managed Money short selling, which has been mostly M.I.A. for the last month, especially in silver.  Long selling by these Managed Money traders in these two precious metals is now down to fumes and vapours.

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.  These are the same Big 4 and ‘5 through 8’ traders discussed in the COT Report above.  Click to enlarge.

For the current reporting week, the Big 4 are short 127 days of world silver production—and the ‘5 through 8’ traders are short an additional 49 days of world silver production—for a total of 176 days, which is a bit under 6 months of world silver production, or about 427.7 million troy ounces of paper silver held short by the Big 8.

In the COT Report above, the Commercial net short position in silver is 378.7 million troy ounces.  So the Big 8…as usual…hold a short position larger than the Commercial net position to the tune of 427.7 – 378.7 = 49.0 million troy ounces…give or take.  And don’t forget that Ted pegs JPMorgan’s short position at around 19,000 contracts/95 million ounces — which works out to around 39 days of world silver production that JPMorgan is short.  How concentrated — and ridiculous is that?

And as bad as those number are, the Big 8 are short 53.6 percent of the entire open interest in silver in the COMEX futures market — and that number would be closer to 60 percent once the market-neutral spread trades were subtracted out.  In gold it’s up to 42.7 percent of the total open interest that the Big 8 are short.

The two largest silver shorts on Planet Earth—JPMorgan and Canada’s Scotiabank—are short about 83 days of world silver production between the two of them—and that 83 days represents around 65 percent 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 22 days of world silver production apiece.

As I stated just above, based on Ted’s estimate of JPMorgan’s short position of 19,000 contracts, JPMorgan is short around 39 days of world silver production all by itself.  Because of that, the approximate short position in silver held by Scotiabank works out to around 44 days of world silver production.  For the third week in a row, Scotiabank is the King of the silver shorts in the COMEX futures market.

In gold, the Big 4 are short 42 days of world gold production, down from 45 days last week — and the ‘5 through 8’ are short another 18 days of world production [up from the 16 days last week], for a total of 60 days.  Based on these numbers, the Big 4 in gold hold about 70 percent of the total short position held by the Big 8.  How’s that for a concentrated short position within a concentrated short position?

The “concentrated short positions within a concentrated short position” in silver, platinum and palladium held by the Big 4 are about 72, 70 and 68 percent respectively of the short positions held by the Big 8.

The December 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 41,561 COMEX contracts in the December BPR.  In November’s Bank Participation Report [BPR], that number was 66,869 contracts, so they’ve decreased their collective short positions by a rather significant 25,308 contracts during the reporting period.  Three of the five banks would include JPMorgan, HSBC USA and Citigroup.  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, 27 non-U.S. banks are net short 38,078 COMEX gold contracts.  In the November BPR, 28 non-U.S. banks were net short 64,227 COMEX contracts, so the month-over-month change is a huge decrease of 26,149 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 20.2 percent of the entire open interest in gold in the COMEX futures market, which is a decent decrease from the 25.1 percent they were short in the November BPR.

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 20,900 COMEX silver contracts—and it was Ted’s back-of-the-envelope calculation from yesterday that JPMorgan holds around 19,000 silver contracts net short on its own — which is about 90 percent of the entire net short position shown in this month’s BPR.  This means that the remaining 4 U.S. banks aren’t net short by much — but are more short now than they were in last month’s report.  In November’s BPR, the net short position of these five U.S. banks was 23,186 contracts, so there’s a smallish decrease of 2,286 contracts in the net short positions of the U.S. banks since then, all of it involving JPM.  As Ted says, JPMorgan is the ‘Big Kahuna’ in silver as far as the U.S. banking system is concerned.

Also in silver, 23 non-U.S. banks are net short 28,019 COMEX contracts—and that’s down a bit from the 30,742 contracts that 21 non-U.S. banks held short in the November 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—pretty close to 75 percent of the total net short position.  That most likely means that a decent number of the remaining 22 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 these remaining non-U.S. banks are immaterial — and have always been so.

As of this Bank Participation Report, the world’s banks are net short 30.7 percent of the entire open interest in the COMEX futures market in silver—which is up about twelve percent from the 27.4 percent that they were net short in the November BPR — with much more than 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 9,509 COMEX contracts in the December Bank Participation Report.  In the November BPR, these same banks were short 9,127 COMEX platinum contracts, so there’s been a smallish increase in the U.S. banks’ short position from the prior month.  It should be noted that, for the second month in a row, these same 5 U.S. banks hold zero long contracts in platinum, along with the 9,509 contracts they are short — and yes, 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, 18 non-U.S. banks are net short 6,689 COMEX contracts, which is an increase of 882 contracts  from the 5,807 contracts they were net short in the November BPR, so their short positions are most likely 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 17 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 24.0 percent of the entire open interest in platinum in the COMEX futures market, which is up a bit from the 21.0 percent they were collectively net short in the November BPR.  The ‘click to enlarge‘ feature is a must here as well.

In palladium, 4 U.S. banks were net short 4,588 COMEX contracts in the December BPR, which is up big from the 3,447 contracts they held net short in the November 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 4,835 COMEX contracts—which is a monster increase from the 2,121 COMEX contracts that these same banks were short in the November BPR.  But if you divide up the short positions of the non-U.S. banks more or less equally, they’re mostly immaterial, just like they are in platinum — but not as immaterial as they were in November’s BPR.

But, having said all that, as of this Bank Participation Report, the world’s banks are net short 34.1 percent of the entire COMEX open interest in palladium.  In November’s BPR they were net short 24.4 percent.  That’s a huge increase!

It’s obvious that the world’s banks are going short palladium in lockstep with its current rally, as the Managed Money traders go long.

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, HSBC USA and Citigroup—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, with Canada’s Scotiabank currently in the #1 spot.  I would suspect that might apply to gold as well, although it may not in the case of Scotiabank, if the non-U.S. bank that got bailed out in July turns out to be them.  The jury is still out on that one.

I have a decent number of stories for you today, including some I’ve been saving for my Saturday column for length and/or content reasons — and I hope you’ll find a few in here that are of interest.

CRITICAL READS

The Used Car Pileup

2017 is shaping up to be an excellent year to purchase a used car. That’s great news for consumers — but a big worry for auto manufacturers, rental companies and auto finance groups.

A pile-up of nearly new cars returning off lease is set to cause trouble for the U.S. car industry.

Thanks in part to low interest rates, leasing has become an increasingly popular way to drive away a new car. It accounts for almost a third of all new car transactions in the U.S. and it’s also huge in the U.K. For BMW and Mercedes-Benz in particular, it’s been a boon for sales.

Typically a lease lasts about three years, after which the customer returns to the showroom for another vehicle — which is when things could get difficult for the industry.

“There’s going to be a lot of units coming back over the next several years,” Ford Motor Co. warned last month. “They’re going to get to levels that we have never seen on an absolute basis in the industry before“.

In 2017,  about one million more off-lease vehicles will be available in the U.S. compared with 2015. That additional volume will put downward pressure on used car prices.

This news item showed up on the Bloomberg website at early on Wednesday morning EST — and I found it embedded in a Zero Hedge article that was posted on their website at 8:00 p.m. EST last night.  Another link to it is here.

Jim Rickards — The U.S. Economy Is Too Weak

This rt.com video interview with Jim on their “BoomBust” business program begins at the 14:00 minute mark — and runs for about eight minutes.  It was posted on their Internet site on Thursday sometime — and I thank Brad Robertson for pointing it out.

Interview with Marc Faber, author “Gloom, Boom & Doom Report”

The iconic investor and economist Marc Faber thinks that “Western recession is overdue” and Donald Trump “may end up being a mainstream Republican.” Talking with bne Intellinews Editor-at-Large Liam Halligan in Warsaw, the Author of the widely-read Gloom, Boom & Doom monthly newsletter discusses “de-globalisation” and the implications of Brexit. He also shares his views on Central and Eastern Europe – where, he says, stocks are “very undervalued relative to the rest of the world”.

This 25-minute audio interview with Marc was conducted on December 6 — and posted on the intellinews.com Internet site — and I must admit that I haven’t had time to listen to it yet.  I thank Ken Hurt for sending it along — and another link to it is here.

Washington Post admits article on ‘Russian propaganda’ and ‘fake news’ based on sham research

Facing threats of legal action, The Washington Post has been forced to add an editor’s note distancing the paper from a dubious website, PropOrNot, which it had initially endorsed as a group of nonpartisan experts on “Russian propaganda.”

This brief 3:55 minute news clip appeared on the Russia Today website on Thursday — and it comes to us courtesy of Roy Stephens.

Doug Casey on Cuba

Editor’s Note: Fidel Castro, the longtime Cuban politician and revolutionary, recently passed away. Doug Casey had the chance to meet the Cuban leader back in 1994. Here is an article Doug wrote about Cuba and his encounters with Fidel. It was written in the 1990s, but it’s still as relevant as ever.

Half the fun of Cuba is getting there.

I was there in the 1990s with about a dozen financiers from Europe. The contingent from England, Norway, and Switzerland came over together from London, changing planes in Miami for Panama. When an impertinent customs clerk asked one of them where he was going, he innocently responded “Cuba.” All six men were hustled into a locked room, with all kinds of armed and uniformed types milling about, and were detained there for two hours while agents ran background checks on them. The government couldn’t have cared less if they missed their connection. Your tax dollars at work, winning friends and influencing people for America.

It used to be there were no restaurants, no shops, no cars, and few hotels in Cuba. People were malnourished, and even at a couple of official receptions the staples were olives and Spam, because that was what they were able to barter for.

This commentary was posted on the internationalman.com Internet site on Friday sometime — and another link to it is here.

Russia threatens retaliation over latest round of Canadian sanctions

Canada has quietly imposed additional sanctions on Russian nationals over the annexation of Crimea and Moscow’s ongoing support for separatists in eastern Ukraine.

The new measures, including asset-freezing and a prohibition on business dealings, were passed by the Liberal cabinet on Nov. 28 and released, without much fanfare compared with the former Conservative government, on the Global Affairs Canada website the same day.

There are 15 individuals named in the regulation, which was to be formally posted Thursday in the Canada Gazette, the government’s official publication of record.

Six of the people are members of Russia’s national assembly — known as the Duma — who were elected from Crimea in September in the first vote since the takeover.

As a Canadian, I’m personally embarrassed by this, because Mr. ‘Happy Face’ Trudeau in Ottawa didn’t dream this up by himself.  Roy Stephens, who sent me this story, had this to say about it…”Sunny Ways and his minions haven’t a clue. This is crass political pandering on an international scale and only serves to further Canada’s reputation as a light-weight gopher for the U.S.  How embarrassing for the nation.”  I couldn’t have said it better myself.  This news story put in an appearance on the cbc.ca Internet site on Friday sometime — and another link to it is here.

Europe’s comfort blanket is being pulled away — Ambrose Evans-Pritchard

The long-feared moment of bond tapering in the eurozone has arrived. The comfort blanket is being pulled away – gently – for the first time since the region first crashed into a debt crisis.

The European Central Bank has tried to cushion the blow with dovish rhetoric and a glacially slow exit but there is no denying that monetary policy has reached a critical turning point. “The ECB has delivered an unwelcome surprise,” said Luigi Speranza from BNP Paribas.

Europe’s incipient tightening has begun just as the US Federal Reserve prepares to raise interest rate next week, probably the first of several rises over the next twelve months as the incoming Trump administration launches a fiscal boom.

It comes as China takes action to choke off a property bubble and rein in shadow banking. The world’s three big monetary blocs will all be draining liquidity at the same time.

The ECB will wind down quantitative easing from €80bn to €60bn a month when the current programme expires in March. Societe Generale says that this is just the start, predicting more tapering of €10bn in June, and then further cuts of €10bn at each meeting – a truly drastic outlook.

This commentary by AE-P showed up on the telegraph.co.uk Internet site at 9:11 p.m. GMT on Thursday evening, which was 4:11 p.m. in New York — EDT plus 5 hours.  I thank Roy Stephens for his second contribution in today’s column — and another link to it is here.

U.K.’s Cameron Sees Euro in Trouble While Defending Brexit Vote

Former U.K. Prime Minister David Cameron told a U.S. audience that the euro area will face further turmoil because the joint currency has inflicted “decades of lost growth” on some countries, the Daily Telegraph said.

In his first major speech since resigning after the Brexit referendum in June, Cameron warned that the way the euro operates means weaker economies suffer because Europe lacks a unified tax system, the U.K. newspaper reported on Friday.

“I see more trouble ahead,” Cameron was quoted as telling students at DePauw University in Greencastle, Indiana. “It is not working as it was intended. Some countries have seen decades of lost growth.”

Cameron insisted he was right to call the Brexit vote, which his campaign to stay in the European Union lost by 52 percent to 48 percent, because the debate over the U.K.’s E.U. membership had “poisoned” British politics for 40 years. It’s the first time that Cameron, who is writing a book, has commented in detail on the state of western politics since his defeat and the election of Donald Trump.

This Bloomberg article appeared on their Internet site at 6:00 a.m. EST on Friday morning — and I thank Swedish reader Patrik Ekdahl for sharing it with us.  Another link to it is here.

Merkel Under Fire from Critics within the CDU

It ended in a duel. Once again, it pitted Jens Spahn, state secretary in the Finance Ministry, against Angela Merkel, chancellor of Germany. And once again, Spahn emerged victorious.

Just a few meters separated the two when Spahn stepped up to the microphone at the Christian Democratic Union (CDU) party convention in the city of Essen. Merkel, head of the CDU, had earlier sent her allies — Interior Minister Thomas de Maizière and CDU General Secretary Peter Tauber — onto the stage to try to convince convention delegates that the party should not reverse its course on dual citizenship. When Merkel began her current term in 2012, the CDU hammered out a compromise with its coalition partner, the Social Democrats (SPD), reversing the ban on dual citizenship for children born to foreign parents living in Germany.

Now, at the CDU convention earlier this week, there was a movement afoot to do away with dual citizenship once again. And Merkel didn’t stand a chance.

“Of course you have to make compromises in a governing coalition,” said Spahn. “But we’re at a party convention.” The applause was so loud that it was immediately clear that he would emerge victorious and, ultimately, a majority of the delegates present voted to throw out the deal with SPD. Spahn, who is just 36 years old, showed Merkel, who has led the CDU for 16 years, where the limits of her power were.

This news item was posted on the German website spiegel.de at 6:19 p.m. Europe time on their Friday evening, which was 12:19 p.m. in New York — EDT plus 6 hours — and it comes to us courtesy of Roy Stephens.  There’s been a headline change, as it now reads “Merkel Critics Deal a Blow to Chancellor” — and another link to it is here.

ECB rejects bailout extension for Monte dei Paschi as shares plummet

The European Central Bank has thrown the rescue plans for the world’s oldest bank into doubt by rejecting its request for more time to prepare a €5bn fundraising, leaving it more likely that Italy will be forced to step in and rescue the firm.

Monte dei Paschi di Siena, which failed the Europe-wide stress tests over the summer and has been racing to arrange new financing, had asked the ECB for an extension until January 20.

The central bank has rejected its plea and remains in talks with the Italian Treasury and MPS chairman Alessandro Falciai about the way forward. It is not clear whether the eventual rescue would hit the households that own MPS bonds, which may be wiped out in a “bail-in” structure.

This short piece, with more further down, appeared on a business blog on the telegraph.co.uk Internet site at 4:40 p.m. GMT yesterday afternoon — and it’s another offering from Patrik Ekdahl.  Another link to it is here.

Doug Noland: Renzi Falls…Markets Rise

Italian bank stocks (FTSE Italia bank index) declined a modest 2.3% Monday on the back of Sunday’s resounding defeat of Italian Prime Minister Renzi’s political reform referendum. The bank index then proceeded to surge 9.0% Tuesday, 4.5% Wednesday and another 3.6% Thursday, for a stunning 27% rally off November 28th trading lows. As they say, “par for the course.” Italian 10-year sovereign yields rose eight bps Monday, yet by Wednesday’s close yields were actually lower on the week. Italian sovereign CDS ended the week little changed. Italian stocks gained 7%.

Following Brexit, Trump’s win and Renzi’s defeat, hedging market risk has been relegated to the status “senseless lost cause”. A short squeeze and unwind of hedges fueled this week’s 12.7% Italian bank rally, along with a 9.5% surge in European banks that reverberated in Asia (Japan banks up 5.6%), the U.S. (banks up 5.4%) and globally. Especially in Europe, a reversal of bearish hedges created powerful buying power. It’s a common trading strategy to purchase put options with proceeds from selling out-of-money call options. Increasingly in the U.S. and in Europe, equities trade as if those on the wrong side of derivative (calls) trades are being forced to hedge exposure by aggressively purchasing stocks into a rapidly rising market. It’s a self-reinforcing market dislocation similar to that which not many months back fueled a historic collapse in global bond yields.

One is left to assume that there must be some silver lining to Renzi’s defeat and resignation. From a fundamental perspective, it’s not obvious where to look. Italy’s anti-establishment Five Star Movement and Northern League political parties are salivating at the thought of new elections possibly early in the year (some speculating February). The Continent’s anti-euro and anti-establishment parties are emboldened. Meanwhile, the slow-motion Italian banking train wreck is chugging along.

This Credit Bubble Bulletin from Doug showed up on his website just before midnight Denver time last night — and it always falls into the must read category for me.  Another link to it is here.

Tales of the New Cold War: The New McCarthyism — John Batchelor Interviews Stephen F. Cohen

The focus for this week’s broadcast is the “New McCarthyism” contrasted with the McCarthyism of the 1950s and the destructive impacts on the United States. This is an esoteric subject area in many ways and hence therein lays the problem in understanding for many citizens. The elites that have taken control of both the media and the politics of the country, notwithstanding the Trump phenomenon, know this and hitherto have manipulated perceptions to take the country in unhealthy and dangerous directions. We now see TPTB open a new political attack on the Fourth Estate – at least against those elements that would still possess the ways and means for open discussions about Putin and Russia. We have seen the now infamous Washington Post list of what amounts to the free press in the US that would dare to question the acceptable narrative on Putin and Russia.  This is complimented with and followed by a congressional bill for the 114 Congress to put together a committee to create active measures against “anti-American activities” by alternate media. Cohen reminisces about the damage of the first McCarthy “Red Scare” did to the country, what damage has been done so far with this new one, and warns about what is ahead if this continues.

The other discussion here is about the source of the New Cold War, that it is bipartisan and a project of the elites. For example, this was shown with the Clinton campaign allegations, the vilification of Putin and his “interference” against her – and “support” for Trump. And that this is largely a liberal based phenomenon that is not supported as readily by the conservative/libertarian camp is a difference from the previous “Red Scare”.  For Cohen it is a relief that the electorate was largely unmoved (if not alienated) by this effort in the Clinton campaign. With all the fear mongering going on, virtually all of it with lies treated as facts, only one has a glimmer of truth to it: that Putin is manoeuvring to undermine NATO. Obviously, considering the real threat that NATO represents to Russia there should be no objective blame placed on Russia for this.

Cohen does not know what can put an end to this neo-McCarthyism, perhaps an editorial position change from a major newspaper might do it. He goes on to state that President Eisenhower ended the last one. I am inclined to think the same common sense process might succeed this time too. We have watched the media self destruct itself during the short period of an election campaign and it is now recognized that this is the source of the propaganda and lies. Can a more direct legislative attack on the remaining Fourth Estate do more damage? Yes, it can, but likely with declining support from the people. And Washington will directly lose credibility. The question is how quickly?

What the elites are doing is a cynical process to move the country in one direction, and if one agrees with this view, the media credibility seem to be an acceptable loss for them.

He also makes a statement that most people have very fixed views by the time they reach their forties in age; hence those that have flexible intellects are increasingly marginalized (a process augmented by demographics). Again for this writer the question remains: Do the elites desire the war outcome with Russia and if so why is the fear of a nuclear confrontation no longer an influence on this effort? Cohen alludes that part of the new political attack is due to a fear for a Trump détente by the war party- that they are putting more and more obstacles in place for the new president. But a lot of this is a trend that has been in play likely since the Clinton presidency. As usual, there is much more to hear in the podcast.

This 40-minute audio interview was posted on the audioboom.com Internet site on Tuesday — and I thank Ken Hurt for sending the link.  But the biggest kudos are rightly reserved for the always excellent executive summary prepared for us on a weekly basis by Larry Galearis — and I thank him on your behalf.  Another link to this audio interview is here — and is a must listen for any serious student of the New Great Game.

Rolling Back the Empire: Washington’s Proxy-Army Faces Decisive Defeat in Aleppo

Syrian Army helicopters dropped leaflets on parts of eastern Aleppo on Sunday warning anti-government fighters to surrender while they still had the chance. Hundreds of jihadists have already laid down their weapons and surrendered while a hard-line corps of dead-enders continue to fend off the  rapidly advancing army.

The situation is looking increasingly hopeless for the ragtag group of insurgents that have lost  more than half the territory they held in just the last week. Every attempt they’ve made to break through Syrian Army lines has been repelled leaving them to defend a few shrinking districts where they will either surrender or die.

On Sunday, Russian Foreign Minister Sergey Lavrov delivered an ultimatum to the remaining militants that clarified the position of the Syrian government and its allies. he said:

“Those groups which refuse to leave eastern Aleppo will be treated as terrorists.  By refusing to walk out from eastern Aleppo they will in fact go ahead with armed struggle. We will treat them accordingly, as terrorists and extremists, and support the Syrian army in its operation against such armed gangs.”

This very brief commentary by Mike Whitney showed up on the counterpunch.org Internet site on Thursday — and it’s definitely worth reading if you’re a serious student of the New Great Game.  I thank Larry Galearis for this article as well — and another link to it is here.

Turkey-backed rebels close in on Islamic State-held Syrian city al-Bab

Turkey-backed rebels closed in on an Islamic State-held city in northern Syria on Friday, foreign minister Mevlut Cavusoglu said, with Turkish tanks and warplanes supporting the assault.

Hundreds of Arab and Turkmen fighters seized at least two villages west of al-Bab, the rebels said. The city is of strategic importance to Turkey, partly because Kurdish-dominated militias have also been trying to take it from the jihadists.

Turkish state media said late on Thursday that Ankara had sent 300 commandos to northern Syria to reinforce “Euphrates Shield”, the operation it launched three and a half months ago to push both Islamic State and Kurdish fighters back from the border.

The advance of the Turkish-backed forces potentially pits them against both Kurdish fighters and Syrian government forces in an increasingly complex battlefield.

Ankara is determined to prevent the Kurdish YPG militia, which it sees as a hostile force, from joining up cantons it controls along the Turkish border, fearing that would embolden Kurdish separatism at home.

This Reuters story, filed from Istanbul, showed up on their website at 2:11 p.m. EST on Friday afternoon and it’s from the Zero Hedge website via Brad Robertson.  Another link to this news item is here.

Giraffes, Towering and Otherworldly, Are ‘Vulnerable’ to Extinction

The majestic giraffe, the world’s tallest land mammal and a prime attraction at zoos worldwide, is threatened with extinction because of illegal hunting and a loss of its habitat, according to a report published on Thursday by an international monitoring group.

The giraffe population has declined by 40 percent over the past three decades and now stands at about 97,600, according to the findings by the International Union for the Conservation of Nature, which designates endangered species.

While the largest giraffe populations reside in national parks and reserves, those protected areas have proved to be inadequate, one of several alarming conclusions about the animals’ future in the group’s latest Red List of Threatened Species report.

“While global attention has been on threats to elephants and rhinos, giraffes have been off the radar, and we’ve been losing them in significant numbers,” said Liz Bennett, the vice president for species conservation for the Wildlife Conservation Society, which was not involved in the report. “People and governments need to start acting to save giraffes, fast.”

This rather sad story appeared on The New York Times website on Thursday — and I thank Patricia Caulfield for pointing it out.  For obvious content reasons, it had to wait for my Saturday missive — and another link to it is here.

South Korea President Park Impeached In Corruption Scandal

Overnight, political turmoil migrated to Asia after South Korean lawmakers voted 234-56 to impeach President Park Geun-hye over accusations of bribery, abuse of power and violating her constitutional duties, setting the stage for her to become the country’s first elected leader to be expelled from office in disgrace.

The impeachment motion was carried by a wider-than-expected margin in a secret ballot in parliament, meaning more than 60 of Park’s own conservative Saenuri Party members backed removing her. The votes of least 200 members of the 300-seat chamber were needed for the motion to pass. The Constitutional Court must now decide whether to uphold the motion, a process that could take up to 180 days.

“I solemnly accept the voice of the parliament and the people and sincerely hope this confusion is soundly resolved,” Park said at a meeting with her cabinet, adding that she would comply with the court’s proceedings as well as an investigation by a special prosecutor.

As Reuters reports, Park, whose abysmal approval rating stands at just 5%, has resisted demands that she step down immediately. Under the constitution, Park’s duties were assumed by Prime Minister Hwang Kyo-ahn on an interim basis until the court rules.

This is the Zero Hedge spin on a Reuters story from Friday.  It was posted on their Internet site at 6:58 a.m. EST — and it comes to us courtesy of Richard Saler.  Another link to it is here.

James Rickards vs. Ann Pettitfor: IS GOLD MONEY? The Future of the International Monetary System

This long debate between these two, which occurred in London, runs for 1 hour and 34 minutes — and was conducted on November 30th.  It showed up on the youtube.com Internet site on December 4 — and I received it from Harold Jacobsen on December 5.  For obvious length reasons, it had to wait for today’s missive — and I must admit that I haven’t had time to listen to it yet.

With gold little is as it seems — Lawrie Williams

Jansen comments as follows: “In reality gold is everlasting and cannot be consumed (used up), all that has ever been mined is still above ground carefully preserved in the form of bars, coins, jewelry, artifacts and industrial products. Partly because of this property the free market has chosen gold to be money thousands of years ago, and as money the majority of gold trade is conducted in above ground reserves. Indisputably, total gold supply and demand is far in excess of mine production and retail demand.”

Jansen’s assertion certainly makes some of the seemingly strange goings on in terms of gold pricing perhaps a little more understandable, although not any more transparent.  Meanwhile Deutsche Bank’s admission of price rigging in the silver market together with its assertion that some other major global financial institutions have been doing likewise, is raising a host of other questions regarding precious metals pricing.  Some commentators  have been suggesting that if manipulation of the silver market was rife, then its highly likely that the gold market has been rigged too which will hardly be a surprise to followers of these markets — and justifies some of the accusations that GATA has been making for years.  What remains uncertain in the case of gold in particular is that if it indeed has been happening, which seems highly likely, whether the price rigging has just been conducted by the major financial institutions acting on their own, or whether with the support of government institutions and central banks (which is the GATA position).

What this all means, of course, is that the gold price moves in mysterious ways unfathomable to the person in the street.  With likely regulatory complicity we don’t see this situation ending in the near future unless stimulated by an equity market crash which overwhelms the power of the financial establishment to rein it back.  But then this latter is seen as being increasingly likely by many astute financial observers who see it as not a case of ‘if’, but ‘when’.

This must read commentary by Lawrie put in an appearance on the Sharps Pixley website yesterday — another link to it is here.

The PHOTOS and the FUNNIES

Here are two more of the finalists in this ongoing saga for the 2016 Comedy Wildlife Photography Awards.  Click to Enlarge.

The WRAP

In last week’s ‘blast from the past’ I posted a Beatles tune from way back in the 1960s — and I’m going to revisit that time period through them once again.  This song, which you should know instantly, came from their 1965 album ‘Rubber Soul‘.  Where the hell has all that time gone?  It’s ranked 23rd on the Rolling Stone “The 500 Greatest Songs of All Time” — and richly deserves to be there.  The link is here.

Today’s classical ‘blast from the past’ is one of my most favourite classical compositions of all time — and I never tire of listening to it.  I’ve posted it before, but it’s been a while.  It’s Tchaikovsky’s overture-fantasia from Romeo and Julliet which appeared in its final form around September 10, 1880…but did not receive its premiere until May 1, 1886 in Tbilisi, Georgia.  This recording, done at the Proms back in 2007, features the London Symphony with Maestro Valery Gergiev at the podium.  The audio recording is superb in every respect — and although the video isn’t up to today’s HD standards, it doesn’t really matter.  The link is here.  Enjoy!

With a new low tick in gold set yesterday, it doesn’t appear that we’re finished to the downside in that precious metal as of yet.  And as I said in my comments on silver, it appears that JPMorgan et al are in the process of taking back all the gains that came with the surprise rally in silver on Wednesday.

Of course, as Ted Butler correctly points out, prices can only go lower if the Managed Money traders are prepared to add to their current short positions in both silver and gold, because they’ve sold just about all the long positions that they have, so there’s no much to be had there by ‘da boyz’.  As I mentioned in my comments on the COT Report, the Managed Money traders have added nothing to their short positions in silver during the last four weeks — and probably won’t do so in the future.  So if they’re not prepared to go short, how can silver prices go much lower?

In gold, there has been some shorting by the Managed Money traders over the last month, but not nearly to the extreme that they normally do on these engineered price declines.  And as Ted says, unless these traders are prepared to add to their short positions, the gold price can’t go much lower, either.

Yesterday’s price/volume activity appeared to confirm that there wasn’t much short selling going on in either gold or silver.  But we won’t know that for sure until next Friday’s COT Report, with Monday and Tuesday’s data still to be added.  So I await these trading days with some interest to see how the powers-that-be make out covering their still very large [on an historical basis] short positions…particularly in silver.

Here are the 6-month charts for all four precious metals, plus copper, once again — and JPMorgan et al were only able to set a new low price for gold yesterday.  But if you read my comments on platinum and palladium in the discussion in the Bank Participation Report, the world’s banks have been going short these two precious metals as their respective rallies unfolded in November.

Ted’s of the opinion, I’m certainly not about to disagree with him, that if the Managed Money traders aren’t prepared to go on the short side as much as they have on an historical basis, then we’re likely close to the bottom for this set of engineered price declines in gold and silver.

As for when the next rally may start, we’ll know…as Ted always says…when we see it in the rear-view mirror — and not a moment before.

But, like you I’m sure, that moment can’t come too soon for us.

I don’t know about you, dear reader, but after 16 years of putting up with this bulls hit, I’m tired of it all.  And the salt in the open wound is that the regulatory agencies that are supposed to watching out for us, are actually helping the foxes raid the hen house.  And the mining companies [plus their ilk at the World Gold Council and The Silver Institute] are complicit by their very silence.

Ted says that he’s expecting the next rally, particularly in silver, to be the really big one — and I’m not about argue the point, as JPMorgan is never been in a better position to reap the rewards of its ill-gotten gains — and stick it to the other Commercial traders in the process, if they wish to do so.

JPMorgan’s lust for silver appears to be insatiable ever since it opened its silver warehouse starting less than week before the May 1, 2011 drive by shooting as silver touched $50 the ounce — and they’ve been buying every physical ounce that hasn’t been nailed down since then, which includes the December delivery month now in progress.

In closing, I’ll just repost Ted’s quote that appeared in my Tuesday column, as it outlines quite nicely his thinking on all this…

I’m convinced the price take-down over the past month in gold and silver was as deliberate and highly orchestrated as any I’ve ever seen. I know I’m talking about a price manipulation which shouldn’t be condoned in any way – but the manipulation itself was masterful, nonetheless. The largest amount of gold and silver ounces repositioned were of the COMEX paper variety by far, but the 2.5 million physical ounces of gold withdrawn from GLD was worth $3 billion, hardly chump change. There’s no doubt in my mind that whoever primarily orchestrated the price decline on the COMEX, not only bought back a large number of gold and silver short futures contracts, but much of the physical gold and silver dishoarded by investors in GLD and SLV, as well. Along with stopping big physical deliveries on the COMEX.
 
Speaking of JPMorgan, I sense the bank’s octopus reach for physical metal continues to extend into Gold and Silver Eagles. This past month featured weak retail demand for these coins, just as the same weak retail demand was reflected in redemptions in GLD and SLV. Yet the U.S. Mint sold more Gold Eagles in November than in any month this year. These circumstances can’t be explained away from it being the work of a big buyer. And the only reason I can come up with why JPMorgan hasn’t been buying more Silver Eagles is that its overall silver buying has become too obvious in too many venues. The bottom line on all this is JPMorgan is taking extraordinary measures to buy as much physical silver and now gold as it can. Maybe you should too. — Silver analyst Ted Butler: 03 December 2016

Of course, more gold and silver has been ‘divested’ from both SLV and GLD since Ted wrote these comments a week ago — and it’s easy to assume that all of it ended up with JPMorgan, or any other of his “big buyers” that are out there.  The list of prospects/suspects would only include the largest of the big bullion banks, so that limits it to three at most — Scotiabank, HSBC USA, or JPMorgan, as it just doesn’t lay around in the street once it leaves those ETFs.

Someday we may find out what happened to it all. But then again, maybe we won’t.

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

Ed