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JP Morgan’s COMEX Silver Stash Tops 83 Million Troy Ounces

 -- Published: Sunday, 8 January 2017 | Print  | Disqus 

By Ed Steer

07 January 2017 — Saturday


The gold price was under a bit of selling pressure during the Far East trading session on Friday.  That lasted until the London open — and then it rallied back towards unchanged.  That rally, such as it was, got cut off at the knees at precisely 11:00 a.m. GMT in London.  From there it chopped lower until the low tick of the day was placed around 2 p.m. EST in the thinly-traded after-hours market in New York.  It inched quietly higher from there into the close.

Gold traded within a ten dollar price range everywhere on Planet Earth on Friday, so I shall dispense with the high and low ticks.

Gold finished the Friday session in New York at 1,172.20 spot, down $8.00 from Thursday’s close.  Net volume was very high once again at just under 195,000 contracts.

Silver was down about a nickel by shortly before 1 p.m. China Standard Time on their Friday afternoon.  Then, as I said in The Wrap in Friday’s column, ‘da boyz’ spun their algos, pulled their bids — and silver was down two bits in seconds.  It chopped very unsteadily higher from there — and every rally attempt that looked like it was going to break above unchanged, was stopped in its tracks, especially the one that started at the COMEX open.  Silver was pretty much forced to trade sideways for the entire Friday session.

The high and low ticks in this precious metal were recorded by the CME Group as $16.715 and $16.26 in the March contracts.

Silver closed yesterday at $16.435 spot, down 11 cents from Thursday’s close.  Net volume was pretty impressive once again at just under 64,000 contracts.

Here’s the 5-minute tick chart for silver courtesy of Brad Robertson.  The only reason I’m posting it is to show the JP Morgan-engineered smack-down that occurred shortly after 10:00 p.m. Denver time — and the volume spike that accompanied it.  There certainly was nothing free market about that event.  There was also big volume on the sell-off that happened minutes after the COMEX open [06:30 a.m. MST] when silver tried to break out to the upside — and got hammered lower for its efforts.

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‘ feature is a must.

Platinum didn’t do much yesterday, or wasn’t allowed to do much…you choose.  It spent most of the day in negative territory — and all rally attempts appeared to be carefully turned aside.  But it did rally enough in late New York trading to close exactly unchanged at $966 spot.

The palladium price chopped around a dollar or two either side of unchanged until the COMEX open in New York yesterday.  It rallied in fits and starts from there until it ran into a price ceiling at the $758 spot mark — and that’s where it traded until it was sold down a small handful of dollars into the 5:00 p.m. close of trading.  Palladium finished the Friday session at $754 spot, up 17 dollars from Thursday.

The dollar index closed very late on Thursday afternoon in New York at 101.40 — and began to rally unsteadily once trading began at 6:00 p.m. on Thursday evening.  It made it up to around 101.75 just minutes before the London open, but was back to the 101.50 mark by around 9:30 a.m. GMT.  Then minutes before 11 a.m. GMT a ‘rally’ began.  It almost flamed out at the 102.00 mark in the two hours of trading after the job numbers were released, but ‘gentle hands’ showed up at precisely 11 a.m. EST — and the 102.29 high tick was printed a minute or two before the 2 p.m. in afternoon trading in New York.  It sold off a bit from there — and closed on Friday at 102.21 — up 81 basis points on the day.

I would speculate here that despite the big dollar index rally, gold, silver and platinum would have closed well up on the day if allowed to trade freely — and palladium would have closed at an even higher price than it already had.

And here’s the 6-month U.S. dollar index charts — and you can read into it whatever you wish.  To me it just shows another market that the powers-that-be are managing to serve their own agenda.

And here’s the 3-year U.S. dollar index so you can see the longer term.  It’s a long way back to the 80.0 mark from where we are today.

The gold stocks opened down a bit — and their tiny rally into the London p.m. gold fix was as high as they got.  They were sold lower until around 2:40 p.m. in New York — and then edged higher into the close.  The HUI finished the Friday session down 3.82 percent.

It was pretty much the same price path for the silver equities, but Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down ‘only’ 2.80 percent.  Click to enlarge if necessary.

And here’s a chart from Nick that tells all.  It shows the changes, in both percent and dollar and cents terms in all four precious metals as of Friday’s closes in New York — along with the changes in the HUI and Silver Sentiment/Silver 7 Index.  Because it covers the weekly and month-to-date, plus the year-to-date period all in one go, only one chart is necessary this week, instead of the usual three that normally show up here.  The Click to Enlarge feature really helps.

I shan’t bother posting the year-to-date chart because, for obvious reasons, it’s the same as the weekly and month-to-date chart for this week only.

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

The CME Preliminary Report for the Friday trading session showed that gold open interest in January dropped by 5 contracts, leaving 165 still open.  Thursday’s Daily Delivery Report showed that zero gold contracts were posted for delivery on Monday, so that means that 5 short/issuers in gold were let off the January delivery hook by those holding the long side of their contracts.  Silver o.i. in January remained unchanged at 355 contracts.  Thursday’s Daily Delivery Report showed that 1 silver contract was actually posted for delivery on Monday, so that means that 1 silver contract was added to the January delivery month.

There were no reported changes in GLD yesterday — and as of 6:02 p.m. EST yesterday evening, there were no reported changes in SLV, either.

There wasn’t much activity in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.  Nothing was reported received — and only 8,037.500 troy ounces/250 kilobars [U.K./U.S. kilobar weight] were shipped out.  All of that amount came out of Canada’s Scotiabank.  I shan’t bother linking this activity.

It was another huge day in silver, as 1,081,872 troy ounces were received — and another 2,126,813 troy ounces were shipped off to parts unknown.  JPMorgan received a net 232,233 troy ounces, so that amount puts them over the 83 million ounce mark.  There was a large 1,303,242 troy ounces shipped out of CNT — and most of the rest of the in/out activity was at Canada’s Scotiabank.  A link to that action is here.

By the way, the 1,519,209 troy ounces of silver that was ‘adjusted’ out of existence at the Delaware depository on Tuesday, still had not been adjusted back in as of Thursday’s report.  Ted is of the opinion that it was the correction of a book-keeping error when year-end inventory was done.  Having been in the inventory management business myself for many years, such a scenario is entirely possible.

Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday, they reported receiving 2,014 of the them — and shipped out 324.  All of this activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.

Friday’s Commitment of Traders Report was a pleasant surprise in most respects.  But because of the holiday-shortened trading week — and the fact that all of Tuesday’s rally volume…which was the cut-off date for the report…may not have been in this report, it is somewhat suspect.  But the numbers are what they are.

In silver, the Commercial net short position rose by a smallish 1,807 contracts, or 9.04 million troy ounces of paper silver.  The fact that it wasn’t a bigger number was something that Ted was happy about.  They arrived at that number by purchasing 519 long contracts, plus they added 2,326 short contracts as well — and the difference between those two numbers was the change for the reporting week.

Ted said that the Big 4 traders increased their short position by about 900 contracts — and the ‘5 through 8’ large traders decreased their short position by around 100 contracts.  Ted’s raptors…the commercial traders other than the Big 8…made up the difference by selling about 1,000 contracts of their long position.

Under the hood in the Disaggregated COT Report, the Managed Money traders went long by 3,493 contracts, plus they increased their short position by 376 contracts as well.  The net change for the reporting week was the difference between those two numbers, which works out to 3,117 contracts.  That was a lot more than the change in the Commercial net short position — and the difference was made up as it always is, by the goings-on inside the other two groups of traders in this report — and that’s the ‘Other Reportables’ and the Nonreportable/small trader category.

Based on these numbers, it appears that the Managed Money trader with the large short position in the Big 4 category was still there as of the close of trading on Tuesday — and I’ll be waiting to see if he’s fled the scene in next week’s report after the rally we’ve had since the Tuesday cut-off.

The Commercial net short position in silver now stands at 379.1 million troy ounces of paper silver.

With the new Bank Participation Report in hand, Ted left JPMorgan’s short position in silver unchanged from last week…at 18,000 contracts.

Here’s the 3-year COT Report chart — and not the usual 9-year chart that I normally post, so you can see the current activity in more detail.  And as I’ve already mentioned, there’s not a lot to look at, as there wasn’t much in the way of changes during the reporting week.  Click to enlarge.

In gold, the Commercial net short position actually declined by 3,355 contracts during the reporting week, or 335,500 troy ounce of paper gold.  They arrived at this number by purchasing 7,435 long contracts, plus they increased their short position by 4,080 contracts as well.  The difference between those two numbers was the change for the reporting week.

Ted said that the Big 4 traders actually increased their short position by around 600 contracts during the reporting week — and the ‘5 through 8’ large traders only covered about 3,100 short contracts.  We’re both of the opinion that because of these numbers, there are still one or two Managed Money traders with large short positions in gold, still firmly ensconced in the Big 4 and big ‘5 through 8’ categories.  Ted’s raptors, the commercial traders other than the Big 8, made up the difference by adding around 900 contracts to their long position.

Under the hood in the Disaggregated COT Report, the Managed Money traders sold 2,809 long contracts, plus the added precisely 4,000 contracts to their short position.  So the change for the reporting week was the sum of those two numbers…which is 6,809 contracts, which is more than double the change in the commercial net short position.  Like in silver, the difference was made up by the traders in the Other Reportable/Nonreportable/small trader categories.

The commercial net short position in gold is down to  11.76 million troy ounces.

Here’s the 3-year COT chart for gold — and although the change was small, at least it went in the right direction for this precious metal.   Click to enlarge.

Although this COT Report was useful in some respects, it’s timing over the holidays — and its truncated coverage — made even more complex by the fact that there were big price changes on the cut-off date, sort of make it an orphan.  As I said on Thursday, Friday’s COT Report was mostly ‘yesterday’s news’ before it was posted.  There will be a lot more certainty in next Friday’s COT Report — and there are still two more reporting days left to go for that one.

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 130 days of world silver production—and the ‘5 through 8’ traders are short an additional 48 days of world silver production—for a total of 178 days, which is just about 6 months of world silver production, or about 432.5 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 379.1 million troy ounces.  So the Big 8…as usual…hold a short position larger than the Commercial net position to the tune of 432.5 – 379.1 = 53.4  million troy ounces…give or take.

Ted pegs JPMorgan’s short position at around 18,000 contracts/90 million ounces — which works out to around 37 days of world silver production that JPMorgan is short.  That’s compared to the 178 days that the Big 8 are short in total.

The approximate short position in silver held by Scotiabank works out to around 58 days of world silver production.  For the seventh week in a row, Scotiabank is the King of the silver shorts in the COMEX futures market.

The two largest silver shorts on Planet Earth—JPMorgan and Canada’s Scotiabank—are short about 95 days of world silver production between the two of them—and that 95 days represents around 73 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 18 days of world silver production apiece.  The four large traders in the ‘5 through 8’ category are short 12 days of silver production apiece.

And to put it another way, the short positions of Scotiabank and JPMorgan combined, represents a bit over 50 percent of the short position held by all the Big 8 traders combined.

And as bad as those number are, the Big 8 are short 52.7 percent of the entire open interest in silver in the COMEX futures market — and that number would be well over 55 percent once the market-neutral spread trades are subtracted out.  In gold it’s 37.5 percent of the total open interest that the Big 8 are short.

In gold, the Big 4 are short 40 days of world gold production, unchanged from last week — and the ‘5 through 8’ are short another 17 days of world production, a decline from 18 days last week, for a total of 57 days of world gold production held short by the Big 8.  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?  At least it’s not as bad as silver in that regard.

The “concentrated short positions within a concentrated short position” in silver, platinum and palladium held by the Big 4 are about 73, 69 and 64 percent respectively of the short positions held by the Big 8.

And the fact that there are now Managed Money traders temporarily intruding in the Big 4 and Big 8 categories, changes nothing with respect to this chart, as we’re not talking about the Commercial net short position here.

The January 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 48,959 COMEX contracts in the January BPR.  In December’s Bank Participation Report [BPR], that number was 41,561 contracts, so they’ve increased their collective short positions by 7,398 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, 28 non-U.S. banks are net short 24,763 COMEX gold contracts, which isn’t much per bank.  In the December BPR, 28 non-U.S. banks were net short 38,078 COMEX contracts, so the month-over-month change is a decent decrease of 13,315 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 of last year.  I’m suspecting it could be Canada’s Scotiabank, but I could be wrong about that.

As of this Bank Participation Report, the world’s banks were net short 17.3 percent of the entire open interest in gold in the COMEX futures market, which is a decent decrease from the 20.2 percent they were short in the December BPR — and even bigger drop from the 25.1 percent they were short in November.

This is the lowest net short position in gold that I can remember the world’s banks ever having — and I’m not sure what should be read into that at the moment, but I thought I’d point it out.

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 21,332 COMEX silver contracts—and it was Ted’s calculation from yesterday that JPMorgan holds around 18,000 silver contracts net short on its own — which is about 85 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 a bit more short now than they were in last month’s report.  In December’s BPR, the net short position of these five U.S. banks was 20,900 contracts, so there’s a smallish increase of 432 contracts in the net short positions of the U.S. banks since then.  As Ted says, JPMorgan is the ‘Big Kahuna’ in silver as far as the U.S. banking system is concerned.

Also in silver, 21 non-U.S. banks are net short 30,547 COMEX contracts—and that’s up a bit from the 28,019 contracts that these same non-U.S. banks held short in the December 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—somewhere between 75 and 90 percent of the total net short position.  That most likely means that a decent number of the remaining 20 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 31.7 percent of the entire open interest in the COMEX futures market in silver—which is up  from the 30.7 percent that they were net short in the December 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 10,775 COMEX contracts in the January Bank Participation Report.  In the December BPR, these same banks were short 9,509 COMEX platinum contracts, so there’s been an increase of 1,266 contract increase in the U.S. banks’ short position from the prior month.  It should be noted that, for the third month in a row, these same 5 U.S. banks hold zero long contracts in platinum, along with the 10,775 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, 17 non-U.S. banks are net short 6,891 COMEX contracts, which is a tiny increase of 202 contracts  from the 6,689 contracts they were net short in the December 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 16 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 27.6 percent of the entire open interest in platinum in the COMEX futures market, which is up a bit from the 24.0 percent they were collectively net short in the December BPR.  The ‘click to enlarge‘ feature is a must here as well.

In palladium, 4 U.S. banks were net short 4,783 COMEX contracts in the January BPR, which is up 195 contracts from the 4,588 contracts they held net short in the December 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 3,794 COMEX contracts—which is a decrease of 1,041 contracts from the 4,835 COMEX contracts that these same banks were short in the December BPR.  When 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, having said all that, as of this Bank Participation Report, the world’s banks are net short 35.0 percent of the entire COMEX open interest in palladium.  In December the world’s banks were net short 34.1 percent. In November’s BPR they were net short 24.4 percent.

Despite the small amounts that the world’s bank are net short in the palladium market, they still represent a significant chunk of the COMEX open interest…even more than in silver.  On a gross basis, these 18 banks are net short a chunky 41.3 percent of the entire COMEX open interest in palladium.  But once netted out, it’s only what the U.S. banks are net short that matters.

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.

I have a bunch more charts that I could stick in today’s column that Nick passed around on Friday evening, but today’s column is already chock full, so they’ll just have to wait until my Tuesday missive.

I don’t have all that many stories for you today — and a fair number of them are ones that I’ve been saving for today’s column for length or content reason.


Jobs Disappoint In Obama’s Final Month, Rise Only 156K, But Average Hourly Earnings Jump

With Wall Street expecting a 178K payrolls print for president Obama’s final full monthly December jobs report, the headline December non-farm payrolls increase of just 156K is likely to disappoint. However, the poor December number will likely be offset by a revision to the November print from 178K to 204K, even as October was revised downward from 142K to 135K, for a net revision of the past two months to 19K higher.

For all of 2106…job growth totaled 2.2 million for the year, less than the increase of 2.7 million in 2015.

The unemployment rate printed at 4.7% as predicted, fractionally higher from last month’s 4.6%.

However, the big silver lining in today’s jobs report, and what Wall Street will likely mostly focus on, is the jump in average hourly earnings, which rose 0.4% in December, up from the disappointing November -0.1% decline, and ahead of the 0.3% expected by consensus. It was also the best print since 2009. On an annual basis, the increase was 2.9%, also on of the highest gains since the crisis, strengthening the case for the Fed to hike on multiple occasions in 2017.

On the other hand, average weekly earnings continued their muted performance, rising 2.3% Y/Y in December.

This news item was posted on the Zero Hedge website at 8:37 a.m. on Friday morning EST — and another link to this 3-chart story is here.

“We’re Gonna Need More War” — November Factory Orders Plunge Most Since August 2014 Despite Defense Spike

Following October’s pre-election surge in new factory orders, November saw orders plunge 2.4% MoM (worse than expected) and the biggest drop since Aug 2014. This drop comes despite a 103% MoM rise in defense aircraft orders as non-defense aircraft orders crashed 73.8%. Factory Orders also dipped back into negative territory YoY.

And Year-over-year, Factory Orders declined for the 23rd month of the last 25…

It appears we are going to need more war to keep this dream alive…

Does this look like a healthy economy being handed to Trump?

This tiny 3-chart article showed up on the Zero Hedge website at 10:09 a.m. EST yesterday morning — and another link to it is here.  The charts are worth a quick look.

In Break With Precedent, Obama Envoys Are Denied Extensions Past Inauguration Day

President-elect Donald J. Trump’s transition staff has issued a blanket edict requiring politically appointed ambassadors to leave their overseas posts by Inauguration Day, according to several American diplomats familiar with the plan, breaking with decades of precedent by declining to provide even the briefest of grace periods.

The mandate — issued “without exceptions,” according to a terse State Department cable sent on Dec. 23, diplomats who saw it said — threatens to leave the United States without Senate-confirmed envoys for months in critical nations like Germany, Canada and Britain. In the past, administrations of both parties have often granted extensions on a case-by-case basis to allow a handful of ambassadors, particularly those with school-age children, to remain in place for weeks or months.

Mr. Trump, by contrast, has taken a hard line against leaving any of President Obama’s political appointees in place as he prepares to take office on Jan. 20 with a mission of dismantling many of his predecessor’s signature foreign and domestic policy achievements. “Political” ambassadors, many of them major donors who are nominated by virtue of close ties with the president, almost always leave at the end of his term; ambassadors who are career diplomats often remain in their posts.

A senior Trump transition official said there was no ill will in the move, describing it as a simple matter of ensuring that Mr. Obama’s overseas appointees leave the government on schedule, just as thousands of political aides at the White House and in federal agencies must do. The official, who spoke on the condition of anonymity about internal deliberations, said the ambassadors should not be surprised about being held to a hard end date.

This article, filed from Washington, appeared on The New York Times website on Thursday — and I thank Brad Robertson for pointing it out.  Another link to it is here.

Trump Aims to Cut the Neocon Deep State Off at the Knees — Charles Hugh Smith

The Neocon-Neoliberals must be fired and put out to pasture before they do any more harm.

I have long held that America’s Deep State–the unelected National Security State often referred to as the Shadow Government–is not a unified monolith but a deeply divided ecosystem in which the dominant Neocon-Neoliberal Oligarchy is being challenged by elements which view the Neocon-Neoliberal agenda as a threat to national security and the interests of the United States.

I call these anti-Neocon-Neoliberal elements the progressive Deep State.

If you want a working definition of the Neocon-Neoliberal Deep State, Hillary Clinton’s quip–we came, we saw, he died–is a good summary: a bullying, arrogance-soaked state-within-a-state pursuing an agenda of ceaseless intervention while operating a global Murder, Inc., supremely confident that no one in the elected government can touch them.

Until Trump unexpectedly wrenched the presidency from the Neocon’s candidate. The Neocon Deep State’s response was to manufacture a mass-media hysteria that Russia had wrongfully deprived the Neocon’s candidate (Hillary Clinton) of what was rightfully hers: the presidency. (The Neocons operate their own version of the divine right of Political Nobility.)

This right-on-the-money commentary was posted on his website on Thursday — and I thank reader U.D. for passing it around.  Another link to it is here.

Inside Quebec’s Great, Multi-Million-Dollar Maple-Syrup Heist

It was the Lufthansa heist of the syrup world. In the summer of 2012, on one of those July days when the first hint of autumn cools the northern forest, Michel Gauvreau began his precarious climb up the barrels in St.-Louis-de-Blandford, a town outside Laurierville, where part of the Reserve was stored in a rented warehouse. Once a year, FPAQ takes an inventory of the barrels. Gauvreau was near the top of the stack when one of the barrels teetered, then nearly gave way. “He almost fell,” Cyr said, pausing to let the picture form. A small man, astride a tower of syrup, realizing, suddenly, there’s nothing beneath his feet. Normally, weighing more than 600 pounds when filled, the barrels are sturdy, so something was clearly amiss. When Gauvreau knocked on the barrel, it tolled like a gong. When he unscrewed the cap, he discovered it empty. At first, it seemed like this might have been a glitch, a mistake, but soon more punk barrels were found—many more. Even barrels that seemed full had been emptied of syrup and filled with water—a sure sign of thieves who’d covered their tracks. My God, they could be in Thunder Bay by now! In most cases, when a boring, bureaucratic job turns interesting, there’s trouble.

Inspectors called FPAQ HQ and sounded the alarm. Just like that, the facility was swarming with cops. It was a great mystery. There were no security cameras. Who would steal syrup? And, even if some sick bastard wanted to, what would he carry it away in? How far could he get?

The investigation was headed by the Sûreté du Québec police, which was soon joined by the Royal Mounties and U.S. Customs. They promised to spare no expense. These heartless criminals would be brought to justice, and the syrup, described as “hot,” would be recovered. About 300 people were questioned, 40 search warrants executed. It was not O.J. and the knife. It was not the bearded doctor and one-armed man. But it was special, strange. There was something stirring about making off with all that syrup; it boggled the mind. It felt less like a crime than a prank, what you might do to your brother if you were all-powerful and he had a lot of syrup. Of course it was serious business to FPAQ; nearly 540,000 gallons of syrup had been stolen—12.5 percent of the Reserve—with a street value of $13.4 million. It became known as the Great Maple Syrup Heist and was said to be among the most fantastic agricultural crimes ever committed, which, granted, is an odd subset. Everyone figured it was people who’d done it—Martians don’t love syrup—but no one could figure out how. “Try to think up the scenario and it’s impossible,” a friendly hotel waiter told me in Montreal. “Syrup is heavy. And sticky. How do you hide it? Who do you get to smuggle it? Where can you sell it? It’s like stealing the salt out of the sea.”

I promise that I’m not making this up!  This lengthy, but somewhat tongue-in-cheek essay put in an appearance on the Internet site a month ago — and ‘aurora’ sent it to me on Tuesday.  For obvious reasons it had to wait for my Saturday column.  Another link to it is here.

Deutsche Bank Whistleblower Eric Ben-Artzi Explains What it Takes to Blow the Whistle on Fraud

Ben-Artzi: “The problem is not that you have misbehavior on Wall Street. It’s that you have misbehavior by the people who are supposed to enforce the law, by the prosecutors, by the regulators.

Deutsche Bank whistleblower Eric Ben-Artzi raised quite a few eyebrows this summer, when he publicly rejected a multi-million dollar award from the Securities and Exchange Commission via an op-ed in the Financial Times.

The award was Ben Artzi’s share of a $55 million settlement between the SEC and Deutsche Bank that concluded a five-year investigation into allegations that the bank had overvalued its derivatives portfolio at the height of the financial crisis, hiding potential trading losses. Ben-Artzi, a former risk officer at Deutsche Bank, was one of three whistleblowers who came forward in 2010-2011 and notified regulators of improper accounting at Deutsche Bank.

As a whistleblower, Ben-Artzi was entitled to 15 percent of the settlement under the Dodd-Frank Act. However, he publicly rejected his share of the award—which he estimates at $3.5 million after fees and payments to lawyers, experts, and his ex-wife.

In October, Ben-Artzi was interviewed by Guy Rolnik, a Clinical Associate Professor of Strategic Management at the University of Chicago Booth School of Business and co-director of the Stigler Center (also, one of the editors of this blog), via video conference. During the interview, he explained at length both his reasons for becoming a whistleblower, and what he has learned about the American judicial system, and the role of the revolving door within the SEC.

This very interesting 40:23 minute video Q&A appeared on the Internet site back on December 20th.  There’s also a full transcript as well.  I thank Veronica Shelford for bringing it to our attention — and for obvious reasons it had to wait for today’s column.  Another link to it is here.

Obama Accuses Putin of Attacking Democracy:  John Batchelor Interviews Stephen F. Cohen

House Intelligence Chairman Devin Nunes said he has not seen evidence that Russia tried to swing the 2016 election to President-elect Trump.

The California Republican is the top congressman in charge of overseeing and funding U.S. intelligence agencies and activities, and he has access to sensitive material.

In a wide-ranging interview Monday with the Washington Examiner‘s weekly podcast “Examining Politics,” to be broadcast Thursday, Nunes said that he has not seen intelligence proving that Russian strongman Vladimir Putin unleashed his government’s computer hackers on the U.S. in a direct bid to defeat Democratic nominee Hillary Clinton.

There’s no proof that we have from intelligence sources that I’ve seen that show that the Russians were directly trying to help Trump,” Nunes said.

Larry Galearis is down with the flu this week — and was unable to provide his usual executive summary for us.  I wish him — and his good wife, who’s also down with the flu bug — a speedy recovery.  In lieu of that, I borrowed the above commentary right from John Batchelor’s website.  I consider this Cohen/Batchelor interview a must listen every week, if you really want to know what’s happening in this arena.  I thank Ken Hurt for sending this interview our way this week — and another link to it is here.

Marc Faber’s Big India Bet For 2017

In an exclusive interview with Tanvir Gill of ET Now, Marc Faber, The Gloom, Boom & Doom Report, says it is increasingly becoming a stock pickers’ market and those who are in the right sectors, thrive.

This 23:41 minute video interview showed up on the Internet site at 11:27 p.m. IST on their Friday night — and I thank Ken Hurt for this interview as well.

Chinese Volatility Explodes: Yuan Tumbles Most In One Year After Biggest 2-Day Rally Ever

While China’s unprecedented currency moves have quickly become the main talking point across global markets which otherwise have started off 2017 in an eerily calm fashion, it is the sudden surge in two-way volatility that has emerged a major threat to global market stability.

Case in point, the offshore Yuan fell as much as 1.1% to 6.8623 a dollar in Hong Kong, the most in exactly one year, after a record 2.5% surge over the past two sessions. This took place as a result of conflicting signals, as on one hand China continued to drain liquidity and sent overnight deposit rates into all time high territory, yet on the other the PBOC raised its fixing less than projected, but still the most since 2005, and Goldman Sachs advised its clients that the best time to short the yuan are just after interventions – like the recent one – which flush out bearish positions, or when China concerns were off traders’ radar screens.

Chinese policy makers have several reasons to engineer a stronger or stable yuan in the short term. U.S. President-elect Donald Trump has pledged to label the country a currency manipulator on his first day in office, while the exchange rate came close to breaking through the psychologically-important level of 7 per dollar earlier this week. Policy makers also want to avoid a flood of capital outflows as citizens’ annual foreign-exchange quotas reset for the new year.

Meanwhile, Goldman warned that the Yuan will probably drop to 7.3 per dollar by December, emerging-market strategists led by Kamakshya Trivedi in London predicted in a note dated Thursday.

The squeeze will have a temporary impact,” Luke Spajic, head of emerging Asia portfolio management at Pacific Investment Management Co., said in Hong Kong. “But I don’t think it necessarily changes the challenge, and the challenge is they still have to worry about the $50 billion to $60 billion a month of outflows and what they’re going to do about the value of their currency. And they have to face the fact that the U.S. is probably going to keep hiking rates.

This longish Zero Hedge news item was posted on their Internet site at 6:58 a.m. on Friday morning EST — and it comes to us courtesy of Richard Saler.  Another link to it is here.  Mish Shedlock had an article on this as well.  It’s headlined “Yuan Intervention Poised to Fail: All Not Well in Middle Kingdom” — and it’s worth a look as well.

Solar Could Beat Coal to Become the Cheapest Power on Earth

Solar power is now cheaper than coal in some parts of the world. In less than a decade, it’s likely to be the lowest-cost option almost everywhere.

In 2016, countries from Chile to the United Arab Emirates broke records with deals to generate electricity from sunshine for less than 3 cents a kilowatt-hour, half the average global cost of coal power. Now, Saudi Arabia, Jordan and Mexico are planning auctions and tenders for this year, aiming to drop prices even further. Taking advantage: Companies such as Italy’s Enel SpA and Dublin’s Mainstream Renewable Power, who gained experienced in Europe and now seek new markets abroad as subsidies dry up at home.

Since 2009, solar prices are down 62 percent, with every part of the supply chain trimming costs. That’s help cut risk premiums on bank loans, and pushed manufacturing capacity to record levels. By 2025, solar may be cheaper than using coal on average globally, according to Bloomberg New Energy Finance.

These are game-changing numbers, and it’s becoming normal in more and more markets,” said Adnan Amin, International Renewable Energy Agency ’s director general, an Abu Dhabi-based intergovernmental group. “Every time you double capacity, you reduce the price by 20 percent.

As wonderful as solar is — and I’m all for it — when the sun goes down, there is zero electricity available.  So unless you have battery or grid back-up…you’re toast.  This Bloomberg story appeared on their Internet site on Monday — and I thank Swedish reader Patrik Ekdahl for finding it for us.  Another link to it is here.

How The West Has Been Selling Gold Into A Black Hole — Koos Jansen

In December 2016 Chinese wholesale gold demand, measured by withdrawals from the vaults of the Shanghai Gold Exchange (SGE), accounted for 196 tonnes, down 9 % from November. December was still a strong month for SGE withdrawals due to the fact the gold price trended lower before briefly spiking at the end of the month, and the Chinese prefer to buy gold when the price declines.

In total Chinese wholesale gold demand reached an astonishing 1,970 tonnes in 2016. But will these huge tonnages bought by China ever have an impact on the gold price? I think it will.

As in previous years, SGE withdrawals were mostly supplied through imports, in 2016 at approximately 1,300 tonnes. And as in previous years, SGE withdrawals were roughly twice the size of Chinese consumer gold demand. The latter is published by all “leading” consultancy firms, such as the World Gold Council and Thomson Reuters GFMS. Because these firms have systematically under-reported and eclipsed Chinese gold demand since 2007, a significant share of the financial industry is unaware China has imported 5,000 tonnes in the past years, which is not allowed to be exported. My hypothesis is that this 5,000 tonnes decline in above ground gold reserves outside of the Chinese domestic market will make gold rally stronger in a future bull market than it did in previous bull markets. To the extent many investors are uninformed about the shrinking volume of troy ounces available outside of China, their ignorance will boost any price rally coming.

In this post I would like to share my thoughts on how the gold price is correlated to trade in above ground reserves, and how China has slashed these reserves to the tune of 5,000 tonnes, which will significantly impact the next leg up in gold.

This loooong and chart-filled commentary by Koos put in an appearance on the Singapore-based Internet site on Friday sometime — and I found it embedded in a GATA release.  If you are going to tackle it, I suggest you pack a lunch, but a snack might do.  Another link to it is here. chart shows metal gained in all major currencies in the last 15 years has posted a chart of gold’s performance in major currencies since 2002, and it shows far more green than red and net gains in all of them, ranging from a low of 156 percent in the Chinese yuan and a high of 496 percent in the Indian rupee.

This neat table of numbers is definitely worth a look if you have the interest.  As Chris Powell stated in the introductory paragraph above, it was posted on the Internet site — and I found it on the website yesterday.

First Majestic Silver CEO Neumeyer endorses class-action suits against market rigging

Interviewed on Friday by Daniela Cambone of Kitco News, First Majestic Silver CEO Keith Neumeyer endorses the class-action lawsuits in federal court in New York targeting investment banks for manipulating gold and silver prices.

Neumeyer remarks that he considers activism against the market rigging to be his duty to First Majestic’s shareholders, but that other monetary metals mining company executives want nothing to do with the issue. He cites GATA’s work.

This 7:46 minute must watch video interview showed up on the Internet site yesterday.  I thank Chris Powell for the above paragraphs of introduction, but the first person through the door with this item yesterday was Cameron Payne.  Another link to it is here.


In the “too cute for words” category comes these two photos courtesy of Franklin BaumgartnerA Baby Koala Clings To His Mother While She Undergoes Surgery.   Lizzy the koala was taken to a wildlife hospital in an Australian zoo, with her son holding on to her side. Poor Lizzy had been hit by a car. Her little boy, Phantom, only 6-months-old, was luckily unharmed and screamed when they tried to remove him from his mother, so they just let him be.


Today’s pop ‘blast from the past’ dates from 1976 — and is the love theme from the movie “A Star is Born“.  Of course it’s Barbara Streisand doing the honours — and the link is here.

Today’s classical blast from the past is one I’ve posted before, but it’s been years, so it’s time to feature it again.  I’m hesitant to post long symphonic works, but sometimes it just can’t be helped.

Scheherazade, Op. 35, is a symphonic suite composed by Nikolai Rimsky-Korsakov in 1888 and based on One Thousand and One Nights, sometimes known as The Arabian Nights.  This orchestral work combines two features typical of Russian music and of Rimsky-Korsakov in particular: dazzling, colorful orchestration and an interest in the East, which figured greatly in the history of Imperial Russia, as well as orientalism in general.  It is considered Rimsky-Korsakov’s most popular work.

Here’s the Vienna Philharmonic Orchestra doing the honours — and the world renown Valery Gergiev conducts.  It runs for 42:43 minutes — and the link is here.  This is as good as it gets.

Although Ted pointed out on the phone yesterday that gold and silver prices rose by about the same amount in percentage terms during the reporting week, the price action in silver felt lousy.

On top of that, there was huge volume in both precious metals all week long, including yesterday when the prices chopped sideways for most of the day.  As interesting as Friday’s COT Report was, it’s the price/volume action since the Tuesday cut-off that now matters most.

There was certainly Managed Money buying on most days since the cut-off, but it remains to be seen as to who the short buyers and long sellers of last resort were as the Managed Money traders drove the price higher as they feasted on the long side.  Was it just the big ‘5 through 8’ large traders — and Ted’s raptors…the commercial traders other than the Big 8?  Or were JPMorgan and the other big shorts in the Big 4 category forced to increase their short positions in order to prevent prices from blasting higher?

That’s the big unknown that won’t be resolved until we see next Friday’s Commitment of Traders Report — and there are still two more days in the reporting week left to go.

The other question that remains to be answered is whether the large Managed Money traders that were embedded in the Big 4 and 8 categories in both silver and gold up until last Tuesday’s cut-off, are still there.  Since both gold and silver are above their respective 20-day moving averages — and those big shorts were still hanging around as of Tuesday’s cut-off, we’re left to wonder whether or not they’ll remain there until gold and silver prices rally above their respective 50-day moving averages.  That may or may not be settled by the COMEX close on Tuesday…so we’re left hanging — and speculating until then.

Can prices go higher from here?  Sure, but from the amount of price resistance we’ve seen from ‘da boyz’ since this rally began in earnest on Tuesday, I’d guess we’re not going to get too far, But I’ll reserve judgement on that until I get a look at next Friday’s COT Report, which is a life-time away in these markets at the moment.

Here are the 6-month charts for all four precious metals, plus copper.  As you can tell, JPMorgan et al aren’t too worried about platinum and palladium, as they’re being allowed to rally in leaps and bounds for the most part — but it’s obvious that rallies of that size in silver and gold will not be tolerated, at least for the moment.  That’s why the powers-that-be have been at ‘battle stations’ as I called it in Friday’s column, trying to keep a lid on the prices of the two precious metals that matter the most.

The black swans floating around out there at the moment are legion…monstrously overpriced equity markets everywhere on Planet Earth, a dollar index that wants to crash and burn, a yuan that the Chinese would love to devalue to halt capital flight — and even that pseudo-currency Bitcoin is on the rampage now.

On top of all that is the upcoming change in presidents in the United States — and the ugly feud that has broken out between President-elect Trump and the CIA.  The last president that took on the CIA died of lead poisoning in Dallas, Texas back on November 22, 1963 — a day, even as a Canadian high school student at the time, that’s burned in my memory forever.

I’m sure the last thing that the world’s central banks want right now would be run-away gold and silver prices.  They may want that at some point, especially JP Morgan…since it’s sitting on the world’s largest silver stash, but not at this particular juncture.

So many unknowns — and too many black swans.  It remains to be seen how long the Deep State can keep all these plates spinning.  Something will cave in somewhere — and when that point is reached, all the power and all the money in the world won’t be able stop the big melt-down, or melt-up, as the case may be.

January 2017 might be a month for the history books before it’s all over.

So we wait some more.

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



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