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Gold is Pouring Into ETFs World-Wide This Month

 -- Published: Sunday, 12 February 2017 | Print  | Disqus 

By Ed Steer

11 February 2017 — Saturday


The gold price was under a bit of selling pressure in the first two hours and change after trading began at 6:00 p.m. EST in New York on Thursday evening.  Then it traded pretty flat until about an hour before the London open.  It then got knocked down to its low tick of the day.  It rallied a titch into the COMEX open, but then was sold down until shortly after the equity markets opened in New York.  The rally that developed at that point had a lot more legs to it, but it was more than obvious that it was running into ‘resistance’ from “all the usual suspects”.  Most of the gains that mattered were in by around 11:30 a.m. EST — and it didn’t do much after that.

The low and high ticks were reported as $1,222.60 and $1,238.90 in the April contract.

Gold was closed in New York yesterday at $1,232.90 spot, up $5.10 from Thursday’s close.  Net volume was sky high once again at 221,000 contracts.

‘Da boyz’ and the HFT buddies laid a lickin’ on the silver price a bit over an hour after trading began in New York on Thursday evening.  The spike low tick of the day didn’t last long — and half of that was recovered almost right away.  From there it traded flat into the London open.  It began to inch higher from there — and began to rally with real authority very shortly after the COMEX open.  Like gold, this rally did not go unopposed, either — and the high tick of the day was set a minute or so after 11:30 a.m. in New York, just as it blasted through $18 spot.  It was sold down a bit after that — and crawled a few pennies higher into the close.

The low and high ticks in this precious metal were recorded by the CME Group as $17.545 and $18.02 in the March contract.

Silver finished the Friday session at $17.935 spot, up 32.5 cents from Thursday.  Net volume was very heavy at just over 65,600 contracts, but roll-over/switch volume out of the March contract was pretty heavy as well.

Here’s the 5-minute tick chart for silver courtesy of Brad Robertson.  You should note that the volume around the 17:20 Denver time mark on Thursday evening when silver got hit for two bits or so in the spot market, didn’t have much volume associate with it in the March contract, which is [I assume] what this chart represents.  After that, volume dropped off to next to nothing until 06:00 MST/08:00 in New York.  All the volume that really mattered occurred during the COMEX trading session as usual — and by noon in Denver/2 p.m. EST…volume was back to fumes and vapours.

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 was sold down pretty hard until shortly after noon in Shanghai on their Friday.  From there it chopped quietly and unsteadily higher until noon in Zurich — and then the price crept lower until the COMEX open.  The bids got pulled — and platinum crashed to it $990 low tick seconds later.  It began to rally in earnest shortly after 9 a.m. EST and, like silver and gold, ran into ‘resistance’ until the high tick was printed at the COMEX close.  It sold off 5 bucks from there, but recovered most of that by the 5:00 p.m. close of trading.  Platinum finished the Friday session at $1,009 spot, down 4 bucks from Thursday.

Like gold, palladium was sold down about 5 dollars in the first two hours and change after trading began at 6:00 p.m. on Thursday evening in New York.  From there it didn’t do much until an hour before Zurich opened — and by the time that it did, palladium was only down 2 bucks.  That rally continued…in fits and starts…until the high tick was printed around 11:40 a.m. in New York — and it followed a very similar price pattern as platinum after that.  Palladium finished the Friday session at $783 spot, up 15 dollars from Thursday’s close.

The dollar index closed very late on Thursday afternoon in New York at 100.66 — and then really didn’t do much until a rally developed starting around 11:30 a.m. China Standard Time on their Friday morning.  It chopped unsteadily higher until the 101.01 high tick was placed a minute or so before the equity markets opened in New York at 9:30 a.m. EST.  It headed equally unsteadily lower until the usual ‘gentle hands’ appeared at precisely 12:00 noon EST.  That rally ran out of gas around 2:20 p.m. — and it drifted lower into the close from there.  The dollar index finished the Friday session at 100.75 — and up 9 whole basis points from Thursday.

And here’s the 6-month U.S. dollar index chart — and it’s way too soon to say how much in the way of ‘legs’ this current dollar index ‘rally’ has.  Because if it wasn’t for those usual ‘gentle hands’…this current ‘rally’ wouldn’t exist at all.

The gold shares gapped down a bit at the open, but were back in positive territory to stay by shortly after 10 a.m. EST.  They topped out around 10:35 a.m. in New York trading — and then didn’t do much for the rest of the day.  The HUI closed up 1.31 percent.

The silver equities followed an almost identical price path as their golden brethren — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 1.30 percent.  I must admit that I was expecting a better performance than this considering how well the metal itself did.  Click to enlarge if necessary.

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

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

And here are the year-to-date changes…

The CME Daily Delivery Report showed that zero gold and 113 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  The only short/issuer that mattered in silver was International F.C. Stone once again, with 110 contracts.  The two largest long/stoppers were Canada’s Scotiabank with 89 for its own account, plus Citigroup with 13 contracts for its client account. The link to yesterday’s Issuers and Stoppers Report is here.

The Daily Delivery Report for the Friday trading session showed that  gold open interest in February rose by 9 contracts, leaving 1,361 still open.  Thursday’s Daily Delivery Report showed that 3 gold contracts were actually posted for delivery on Monday, so that means that 3+9=12 gold contracts got added to the February delivery month.  Silver o.i. in February fell by 46 contracts, leaving 239 still open.  Thursday’s Daily Delivery Report showed that 100 silver contracts were posted for delivery on Monday, so that means that 100-46=54 more silver contracts got added to the February delivery month.  These daily increases in silver open interest have been happening almost every delivery day in February so far — and if it means anything, Ted might have a comment on it in his weekly review this afternoon.

After a one day hiatus, there was another big deposit in GLD yesterday, as an authorized participant added 133,350 troy ounces.  And as of 7:05 p.m. EST yesterday evening, there were no reported changed in SLV.

Of the eight business days we’ve had so far in February, seven of them have involved deposits in GLD totalling 1.21 million troy ounces, which works out to US$1.36 billion dollars worth of gold.  Since January 30th, gold is up only about $40 an ounce — and you have to wonder who is piling into the gold market with such abandon on such a small price move.  I doubt very much that it’s John Q. Public.

And here’s a chart that Nick Laird passed around at midnight Denver time last night — and here are Nick’s comments that went with it…”Germans want the security of gold.  XetraGold up strong of late. Up 572,224 oz. for the week – 1,086,575 oz. for the month.

  Click to Enlarge.

There was a tiny sales report from the U.S. Mint yesterday.  The sold 1,000 one-ounce 24K gold buffaloes — and nothing else.

Month-to-date mint sales have been very quiet.  They’ve sold 14,500 troy ounces of gold eagles — 7,500 one-ounce 24K gold buffaloes — and only 250,000 silver eagles.

There was no in/out activity in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.

And, for a change, there wasn’t much going on in silver, either.  Only 3,011 troy ounces were received — and 331,737 troy ounces were shipped out.  All of that activity was at Delaware — and the link to that is here.

There was some decent action over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  Nothing was reported received, but 7,408 of them were shipped out.  All of that activity was at Brink’s, Inc. — and a 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 increases in the Commercial net short positions in both gold and silver.  The number in silver was not out of line with the price action.  But in gold, the increase was only a tiny amount, which surprised both Ted and myself.

In silver, the Commercial net short position increased by only 3,299 contracts, or 16.5 million troy ounces of paper silver.  They arrived at that figure by purchasing 807 long contracts, plus they added 4,106 short contracts.  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 around 800 contracts…the ‘5 through 8’ large traders by 400 or so contracts — and Ted’s raptors, the Commercial traders other than the Big 8, sold 2,100 of their long contracts.  It was “all for one, and one for all” this week in silver.

With the new Bank Participation Report in hand, Ted pegs JPMorgan’s short position at 23,000 contracts.  The commercial net short position now stands at 463.5 million troy ounces of paper silver.

Under the hood in the Disaggregated COT Report, the Managed Money traders only accounted for only 1,697 contracts of the totally weekly change of 3,299 contract…just over half.  They did that by purchasing 1,191 long contracts, plus they reduced their sort position by 506 contracts   As is the case every week, the rest of the weekly change was divvied up between the Other Reportables and Nonreportable/small trader category.

Silver was up less than 20 cents during the reporting week, but one would have thought that the Managed Money would have added more longs, or at least covered more shorts than they did.

Here’s the 3-year COT chart — the Commercial net short position continues to creep higher, but that disguises the fact that current set-up is still very bullish — and that JPMorgan is still in a position to double-cross the remaining seven traders in the Big 8 categories whenever it wishes to.  Click to enlarge.

In gold, the Commercial net short position increased by a tiny 2,343 contract, or 234,300 troy ounces of paper gold.  This is barely a rounding error — and an amazing sight, considering the fact that gold closed higher by almost 30 dollars during the reporting week.  They arrived at this number by adding 4,240 long contracts, plus they picked up 6,583 short contracts — and the difference between those two numbers is the change for the reporting week.

The commercial net short position in gold is now up to 13.41 million troy ounces, virtually unchanged from the prior week’s report.

Ted said that the Big 4 traders actually decreased their short position by a pretty hefty 3,200 contracts during the reporting week, which flies in the face of the increase in the total commercial net short position.  Ted said that the ‘5 through 8’ large traders increased their short position by around 600 contracts — and his raptors, the commercial traders other than the Big 8…decreased their long position by about 4,900 contracts.

But it was under the hood in the Disaggregated COT Report where the big surprise was, as the Managed Money traders ended the reporting week virtually unchanged. They only added 1,879 longs, plus they also added 1,567 short contracts, for a net change of 312 contracts.  Why would they be adding to their short positions during a price rally — and not covering them?  Why weren’t they piling in on the long side like they normally do?

These question were top-of-mind for Ted when I was on the phone with him yesterday — and it’s a given that he’ll have lots to say about all this in his weekly commentary to his paying subscribers this afternoon.

Here’s the 3-year COT chart for gold — and like its counterpart in silver above, it doesn’t hint at what’s going on out of sight as the Big 4 continue to reduce their short position in gold — nor does it show that the Managed Money traders have backed off going long, even though the gold price penetrated its 100-day moving average during the reporting week.  Click to enlarge.

What’s happening with the Manged Money traders or, rather, what’s not happening with the Managed Money traders in both silver and gold, will certainly determine how prices unfold going forward.

As Ted said in his quote in my Friday column…”The rally in gold and silver since Dec 20 has resulted in an upside penetration of every significant moving average, save for the 200-day moving average in each. I would have thought much more managed money buying, particularly in gold, would have occurred at this point on this rally. That it hasn’t, I still consider bullish.

Playing the devil’s advocate, I suppose the set up wouldn’t be as potentially bullish as I see it if it was known that the managed money technical funds were never going to buy big in COMEX gold or silver again.  I fully concede that without significant buying ahead from the managed money technical funds, a large part of my bullish outlook disappears.

Ted said that in his mid-week review on Wednesday — and I can hardly wait to see what he has to say about this issue now that he’s confronted with this latest report.

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 140 days of world silver production—and the ‘5 through 8’ traders are short an additional 52 days of world silver production—for a total of 192 days, which is more than 6 months of world silver production, or about 466.5 million troy ounces of paper silver held short by the Big 8. [In last week’s report the Big 8 were short 190 days of world silver production. – Ed]

In the COT Report above, the Commercial net short position in silver is 463.5 million troy ounces.  So the Big 8 Commercial traders…as usual…hold a short position larger than the Commercial net position — and it’s down again this week to the tune of 466.5 – 463.5 = 3.0  million troy ounces…give or take.  What that means in plain English is that Ted’s raptors, the commercial traders other than the Big 8, are only long the COMEX futures market by that amount.  Their long position has been declining every week for quite a while now.

In my conversation with Ted yesterday, he pegs JPMorgan’s short position at around 23,000 contracts, or 115 million ounces, which is up from the 22,000 contracts/110 million ounces it was a week ago.  115 million ounces works out to around 47 days of world silver production that JPMorgan is short.  That’s compared to the 192 days that the Big 8 are short in total.

The approximate short position in silver held by Scotiabank works out to around 53 days of world silver production.  For the twelfth 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 100 days of world silver production between the two of them—and that 100 days represents a bit over 71 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 20 days of world silver production apiece.  The four traders in the ‘5 through 8’ category are short, on average, 13 days of world silver production apiece.

To put it another way, the short positions of Scotiabank and JPMorgan combined, represents a bit more than 50 percent of the short position held by all the Big 8 traders combined.  How’s that for a concentrated short position?

The Big 8 are short 48.1 percent of the entire open interest in silver in the COMEX futures market — and that number would be around 53 percent once the market-neutral spread trades are subtracted out.  In gold it’s 40.4 percent of the total open interest that the Big 8 are short.

In gold, the Big 4 are short 41 days of world gold production, down from 42 days last week — and the ‘5 through 8’ are short another 19 days of world production, which is unchanged from the prior week, for a total of 60 days of world gold production held short by the Big 8.  This is the lowest I can remember it being in a long time.  Based on these numbers, the Big 4 in gold hold about 68 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 quite as bad as silver in that regard, but close enough to be considered the same, which is outrageous.

The “concentrated short positions within a concentrated short position” in silver, platinum and palladium held by the Big 4 are about 73, 73 and 71 percent respectively of the short positions held by the Big 8.  All these percentages are basically unchanged from last week’s COT Report.

The February 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 53,915 COMEX contracts in the February BPR.  In January’s Bank Participation Report [BPR], that number was 48,959 contracts, so they’ve increased their collective short positions by 4,956 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 41,868 COMEX gold contracts, which isn’t much per bank.  In the January BPR, 28 non-U.S. banks were net short 24,763 COMEX contracts, so the month-over-month change is a very decent increase of 17,105 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 are net short 23.1 percent of the entire open interest in gold in the COMEX futures market, which is a decent increase from the 17.3 percent they were short in the January 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.

In silver, 5 U.S. banks are net short 26,554 COMEX silver contracts—and it was Ted’s calculation from yesterday that JPMorgan holds around 23,000 silver contracts net short on its own — which is about 87 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 January’s BPR, the net short position of these five U.S. banks was 21,332 contracts, so there’s been an increase of 5,222 contracts in the net short positions of the U.S. banks since then — and JPMorgan owns most of it.  As Ted says, JPMorgan is the ‘Big Kahuna’ in silver as far as the U.S. banking system is concerned.

Also in silver, 22 non-U.S. banks are net short 37,473 COMEX contracts—and that’s up quite a bit from the 30,547 contracts that these same non-U.S. banks held short in the January BPR.  I’m still prepared to bet big money that Canada’s Scotiabank is the proud owner of the lion’s share of this short position—somewhere between 65 and 75 percent of the above number.  That most likely means that a number of the remaining 21 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 21 non-U.S. banks, are immaterial — and have always been.

As of this Bank Participation Report, the world’s banks are net short 33.0 percent of the entire open interest in the COMEX futures market in silver—which is up  from the 31.7 percent that they were net short in the January BPR — with much more than the lion’s share of that held by only two banks…Canada’s Scotiabank and JP Morgan.

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 14,526 COMEX contracts in the February Bank Participation Report.  In the January BPR, these same banks were short 10,775 COMEX platinum contracts, so there’s been a healthy increase of 3,751 contract increase in the U.S. banks’ short position from the prior month.  It should be noted that, for a change, these U.S. banks have a 217 contract long position.  For the three months prior to that, they held no long positions at all…only short positions.

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 9,389 COMEX contracts, which is a big increase of 2,498 contracts  from the 6,891 contracts they were net short in the January BPR.  But even with this big increase, their short positions are most likely immaterial compared to the short positions held by the 5 U.S. banks…or, more likely, 1 or 2 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 February’s Bank Participation Report, the world’s banks are net short 36.9 percent of the entire open interest in platinum in the COMEX futures market, which is up a huge amount from the 27.6 percent they were collectively net short in the January BPR.  The ‘click to enlarge‘ feature is a must here as well.

In palladium, 4 U.S. banks were net short 7,395 COMEX contracts in the February BPR, which is up a chunky 2,612 contracts from the 4,783 contracts they held net short in the January BPR.   This is the largest net short position in palladium that the U.S. banks have held since January of 2016.

Also in palladium, 12 non-U.S. banks are net short 3,047 COMEX contracts—which is a decrease of 747 contracts from the 3,794 COMEX contracts that these same banks were short in the January 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 35.6 percent of the entire COMEX open interest in palladium.  In January’s BPR, the world’s banks were net short 35.0 percent.

Here’s the palladium BPR chart.  You should note that the U.S. banks were almost nowhere to be seen in the COMEX futures market in this metal until the middle of 2007—and they became the predominant and controlling factor by the end of Q1 of 2013.  But their footprint is much smaller 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.  Click to enlarge.

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 also a fact that one of the non-U.S. banks in the Big ‘5 through 8’ category got bailed out of its COMEX short position in gold in July of last year.

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.

Here are two charts that Nick Laird passed around on Friday evening — and I thought they were worth sharing.  The first two shows gold and silver coin sales for The Perth Mint going back five years — and now updated with January’s sales data.

Gold coin sales were 72,745 troy ounces — and in silver, that number was 1,230,867 troy ounces.  Both are very impressive numbers.  Click to enlarge on both charts.

And here’s the last chart that Nick sent around.  It shows gold withdrawals from the Shanghai Gold Exchange, updated with January’s data.  There was 184.412 tonnes withdrawn last month.  Click to enlarge.

Once again I don’t have all that many stories for you today — and most of those I do have, are ones that I’ve been saving for today’s column for length and/or content reason.


Doug Noland: Bubbles, Money and the VIX

There’s a reason why crises tend to erupt in the money markets. Panic quickly ensues when markets suddenly sense their perceived safe and liquid holdings are at risk. The VIX is low today because of the perception that global financial institutions remain flush with liquidity, buoyed by rising asset prices, and under the safekeeping of central bankers and government officials. The perception of moneyness pervades “repo” markets, and robust repo and securities financing markets convey easy access to liquidity for securities dealers and derivative players. The VIX is low because of extraordinary confidence in counterparties and the functioning of derivatives markets more generally. The VIX is low based on faith that Beijing will backstop China’s entire over-heated Credit system.

It’s worth recalling that a year ago bank stocks were under intense pressure around the world. For example, from 2015 highs to 2016 lows, Japanese stocks dropped almost 50%. Similar losses were shared by banks throughout Asia and Europe. Especially in early-2016, fears were mounting that a Credit crisis in China could unleash financial and economic stress around the globe. As a weak link in global finance, European banks were feeling the contagion. In short, there was heightened nervousness that risk was seeping back into the international daisy-chain of various bank liabilities. “Moneyness” – a now global phenomenon – was in jeopardy.

Well, “whatever it takes” – from strong-handed Chinese officials, from the inflationist BOJ and ECB, and from a dovish Fed – nipped potential crisis in the bud. Promises of a couple Trillion additional QE crushed global yields and kept the game going. Markets have inflated significantly over the past year. What will central banks do for an encore?

It is a principal thesis of Bubble Analysis that, once commenced, monetary inflations turn progressively difficult to control. Credit inflations raise myriad price levels throughout the economy and asset markets. Especially after years of inflating asset and securities markets, it will not be possible for global central bankers to walk away from QE without major consequences. The world is currently at peak QE, with major uncertainties surrounding future operations.

Doug’s Credit Bubble Bulletin commentary appeared on his website in the wee hours of Saturday morning EST — and it’s always a must read for me.  Another link to it is here.

Water Officials: Spillway Threat at California’s Oroville Dam Is Easing

Two things have changed overnight at Oroville Dam and the giant reservoir behind it.

First: Inflow from the Feather River watershed into Lake Oroville, while still very high, has dropped from its peak levels Thursday.

Second: California Department of Water Resources managers followed through with a plan to ramp up releases down the dam’s wrecked spillway (for their rationale for doing that, see our earlier updates, below).

The rate of rise in the lake — see the DWR’s real-time data for yourself –has decreased from nearly a foot an hour at times Thursday to about 4 or 5 inches an hour Friday morning. The reservoir surface at 9 a.m. was reported to be 895 feet — up 45 feet from Tuesday when the spillway damage was discovered and just 6 feet below the dam’s emergency spillway.

The net result: That rate of increase would mean water from the reservoir would begin cascading over the emergency spillway sometime early Saturday morning. The lake, which has a stated maximum capacity of 3.5 million acre-feet, is now 98 percent full.

Mostly light rain and snow are expected across the Feather River watershed today before clear weather Saturday. Colder weather and a break from heavy rain could help reduce the volume of water flowing into the lake.

This incredible story, along with a lot of embedded photos, appeared on the Internet site yesterday — and it’s definitely worth reading if you have the interest.  I thank Roy Stephens for sending it our way — and another link to it is here.  The latest Lake Oroville Dam updates can be found on the State of California Water Resources website linked here.

Is California overdue for biblical, catastrophic flooding? History says it could be

Californians are always talking about the coming Big One, but what if the big one is a flood, not an earthquake?

With this recent cavalcade of rainstorms, there’s been renewed interest in a 2011 USGS study on the so-called “ARkStorm.” In it, the USGS lays out a case for a hypothetical “mega-storm,” one that could cause up to $725 billion in damage and impact a quarter of California’s homes.

The ARkStorm would bring with it catastrophic rains, hurricane-force winds and hundreds of landslides. Central Valley flooding alone is projected to span 300 miles.

If that sounds far-fetched, there’s historic precedent: Geological evidence indicates that California endures massive flooding caused by atmospheric rivers every 100-200 years. And settlers who moved to California after the Gold Rush soon found what the native population had known for centuries: Northern California is prime flooding territory.

The most prominent example is the Great Flood of 1862, a natural disaster that still ranks as the largest flood in the history of the American West. Between Dec. 1861 and Jan. 1862, the West Coast received a near-constant deluge of rain. Sacramento received a stunning 23 inches in that period, turning the city into a watery ghost town.

This amazing article put in an appearance on the San Francisco Chronicle website in the wee hours of Friday morning PST — and its worth reading.  The 9-photo sequence at the top of the story is worth your while as well.  I thank Brad Robertson for sending us this one — and another link to it is here.

Texas man’s obituary blasts him as possessing “no redeeming qualities

It seems that viral obituaries are all the rage these days, with writers making sure the deceased are remembered on their way out the door.

There have been obituaries mentioning Hilary Clinton, Donald Trump and even ones that read more like a treatment for the next Matthew McConaughey movie.

On the opposite end of the spectrum, enter the obituary of one Leslie Ray “Popeye” Charping of Galveston, Texas. Charping was a veteran and Naval boxing champion, but that about was the only positive thing said about him.

Charping died on Jan. 30, 2017 after a fight with cancer, aged 74. This was, according to the obit, “29 years longer than expected — and much longer than he deserved.

He leaves behind 2 relieved children; a son Leslie Roy Charping and daughter, Shiela Smith along with six grandchildren and countless other victims including an ex-wife, relatives, friends, neighbors, doctors, nurses and random strangers,” the obit continues.

And it goes downhill from there…

Brad Robertson sent me this piece on Friday — and I just couldn’t resist posting it.  It showed up on the Internet site yesterday — and they in turn borrowed it from their sister newspaper, the Houston ChronicleIf you need a good laugh, this would be it — and another link to it is here.

Canada’s AAA Rating Is on Thin Ice

A Triple-Eh credit rating?

For Canada, maintaining the trust of borrowers is a source of national pride, like winning the gold medal in Olympic ice hockey: hard-earned international validation of the nation’s skill, discipline and strong stewardship.

But Fitch Ratings is warning that the country’s prized standing in the eyes of creditors may suffer because of protectionist measures proposed by U.S. President Donald Trump. In a report Friday, a Fitch research team led by James McCormack wrote that nations with close ties to the world’s largest economy, such as Canada, are “most at risk” of damage to their credit fundamentals.

U.S. policy predictability has diminished, with established international communication channels and relationship norms being set aside and raising the prospect of sudden, unanticipated changes in U.S. policies with potential global implications,” Fitch wrote.

“Triple-Eh”….love it!  Someone has a sense of humour over at Bloomberg!  Like every other country in the West, Canada’s debt is junk as well, as it will never be repaid.  This news item, was posted on their Internet site at 11:30 a.m. Denver time on Friday morning — and it comes to us courtesy of Swedish reader Patrik Ekdahl.  Another link to it is here.

Vancouver’s Empty Mansions Highlight Middle-Class Housing Woes

Vancouver’s multimillion-dollar homes are increasingly out of reach for Vancouverites. And nothing speaks to the Canadian city’s affordability crisis more than its empty houses.

Vacant or temporarily occupied dwellings have more than doubled since 2001 to 66,719 last year as neighborhoods are hollowing out, said Andy Yan, director of Simon Fraser University’s City Program, who analyzed census data for Metro Vancouver released Wednesday. Observers worry the trend will undermine Canada’s fastest-growing regional economy.

Public scrutiny has focused on landlords, particularly from abroad, who park their cash in investment properties where windows remain dark throughout the year. Vancouver introduced a new tax on empty homes last month aimed at boosting the supply of rentals in a city facing a near-zero vacancy rate. The province also imposed a 15 percent tax on foreign buyers last August after discovering more than C$1 billion ($761 million) of global cash had flowed into local properties over a five-week period.

It’s unacceptable for so much housing to be treated as a commodity,” Vancouver Mayor Gregor Robertson said in a statement Thursday. “Housing is for homes first, and as investments second. Vancouver will continue to do all it can to maintain and protect affordable homes, and pursue all tools available to ensure the best use of all our housing.

This is another Bloomberg story, this one appeared on their website at 10:01 p.m. MST on Thursday night — and had to wait for a spot in today’s column.  I thank Chris Powell for pointing it out — and another link to it is here.

How corporate dark money is taking power on both sides of the Atlantic

It took corporate America a while to warm to Donald Trump. Some of his positions, especially on trade, horrified business leaders. Many of them favoured Ted Cruz or Scott Walker. But once Trump had secured the nomination, the big money began to recognise an unprecedented opportunity.

Trump was prepared not only to promote the cause of corporations in government, but to turn government into a kind of corporation, staffed and run by executives and lobbyists. His incoherence was not a liability, but an opening: his agenda could be shaped. And the dark money network already developed by some American corporations was perfectly positioned to shape it. Dark money is the term used in the US for the funding of organisations involved in political advocacy that are not obliged to disclose where the money comes from. Few people would see a tobacco company as a credible source on public health, or a coal company as a neutral commentator on climate change. In order to advance their political interests, such companies must pay others to speak on their behalf.

Soon after the second world war, some of America’s richest people began setting up a network of thinktanks to promote their interests. These purport to offer dispassionate opinions on public affairs. But they are more like corporate lobbyists, working on behalf of those who fund them.

We have no hope of understanding what is coming until we understand how the dark money network operates. The remarkable story of a British member of parliament provides a unique insight into this network, on both sides of the Atlantic. His name is Liam Fox. Six years ago, his political career seemed to be over when he resigned as defence secretary after being caught mixing his private and official interests. But today he is back on the front bench, and with a crucial portfolio: secretary of state for international trade.

This very excellent exposé was posted on Internet site back on Thursday, February 2 — and Patricia Caulfield sent it our way on Monday.  But for obvious reasons, it had to wait for my Saturday column — and it’s certainly worth reading if you wish to see what all the money and power in the world is thinking these days.  Another link to this longish commentary is here.

How Ukraine Annexed Crimea: A Frank Conversation With Nikki Haley

The speech by the new U.S. permanent representative to the U.N. Security Council, Nikki Haley, at a Security Council meeting on 3 February backed up the idea that the foreign policies of two American administrations – the previous one and the current one – will be continued. Haley said exactly the same as Samantha Power before her: «Our Crimea-related sanctions will remain in place until Russia returns control of the peninsula to Ukraine».

The White House supported Haley’s statement on the need for Crimea to be returned to Ukraine, and the White House Press Secretary, Sean Spicer, stated during a briefing that: «With respect to the sanctions, I think Ambassador Haley made it very clear of our concern with Russia’s occupation of Crimea. I think she spoke very forcefully and clearly on that».

It is interesting that Mrs. Haley was speaking about the territory of Crimea rather than the people. I wonder how this American imagines the «return» of the Crimean Peninsula to Ukraine – with the people or without them? It’s a pity that this question has remained unanswered.

Do the Crimean people regard themselves as Ukrainian? And does Nikki Haley know the answer to this most important question? It is unlikely that the U.S. ambassador to the U.N. wants to move the people out of Crimea so that she can give the peninsula back to Ukraine. Especially as she would have to move not only the living, but also the dead, since the ‘Ukrainian’ history of Crimea is very short, around a quarter of a century. It is surprising that the citizen of a country whose constitution begins with the words «We the people of the United States…» is doing everything to avoid a conversation at the level of «We the people of Crimea…» But everything really does look different from that position.

From the point of view of the people who live on the Crimean Peninsula, Ukraine annexed Crimea in 1991, grossly violating the rules of international law. Crimea became part of independent Ukraine illegally, and repeated attempts by the Crimean people to redress this injustice met with opposition from Kiev.

I posted this in my Thursday column, but said I’d stick in Saturday’s as well, in case you didn’t have time for it during the week…so here it is.  This amazing  background story on Crimea appeared on the Internet site yesterday — and it’s a must read in my opinion.  My thanks go out to Larry Galearis for sharing it with us — and another link to it is here.  And here’s a 26:11 minute video documentary called “Crimea For Dummies” — and it’s a must watch as well, as it’s a complete brain transplant for Westerners like us.

Ukraine Confronts the Trump Administration…and What is to be done? — John Batchelor Interviews Stephen F. Cohen

The response of Donald Trump to the renewed fighting in Ukraine is an interesting one in that some of his statements may show that he has a lot of questions about the conflict and at least is beginning to focus on the civil war and the larger questions about the role of Russia in it. Background to this is Russia signing the “Turkish Stream” gas pipeline deal with Turkey. Cohen’s opening words, however, are those of discouragement that the role of “fake news” is so strongly leading the narrative in Washington that it may become permanent. The U.S. MSM is reporting that the new fighting in Ukraine is completely initiated by Putin and the Donbass rebels. The reality is the reverse of this, of course, and Cohen’s position on the new fighting is it shows desperation by Kiev that fears the loss of Washington support. But can we not assume that Trump knows that the media narrative is false and it is doubtful he has much confidence in fake news like the American public? It may be an equal of a problem for him to find any verifiable facts from his own Intelligence Agencies given their history of issuing falsehoods during his recent election campaign. Gaining the true picture of events will likely continue to be Trump’s major problem throughout his administration. It is thus understandable that Trump’s statements about the recent fighting in Ukraine show little focus and lots of hesitation.

In the next segment the two pundits launched a discussion about Ukraine’s history with Russia and its subversion by Washington. Deplorably Trump has no Russia experts to give him any context for policies of his own with Ukraine. This segment is valuable as it gives the listener a step-by-step breakdown of what led to the Ukrainian Civil War – and Cohen is quite sure that Trump only has misinformation available about this history. Batchelor adds that several members of Trump’s own cabinet, and his U.N. representative (Nikki Haley, who Cohen ridicules) have come out with anti-Russian positions on the Ukraine Civil War, but so far Trump is non-committal. Cohen’s position on this is more flexible and considers this administration as “disorganized”. Perhaps unconsolidated would be a better term. Cohen also develops an argument that the new fighting is also in response to the war party (Sen. McCain and Sen. Graham) urging Poroshenko on, and Cohen opines that Trump could simply tell Poroshenko to back off the offensive behavior and it would cease. (And there would likely be a coup in Kiev as a result.) We should be reminded that Poroshenko must pursue the war or risk a Ukronazi assault on his presidency.

From my perspective Cohen is correct that he has enough power to stop the fighting in Ukraine but his own political war with the neocons are going to be distractions, and now we see that he has divisions within his own cabinet that are probably going  to be serious headaches. Already McCain and the war party has moved to exploit this situation, and for Trump the embarrassing statements from some of his top advisors means he may have made some bad people choices that he is stuck with early in his administration. Cohen’s concerns are about keeping Ukraine a viable nation, and he describes another worry that Washington may have no interest in salvaging that country. If recent history since WW2 is any guide, the country will be written off as a European or Russian problem as the most likely outcome. As for Trump’s problem of having no Russian advisors, perhaps someone should inform him about the John Batchelor Show.

This 40-minute audio interview was posted on the Internet site on Tuesday — and I thank Larry Galearis not only for the link, but also many thanks for his excellent executive summary which you see above.  As always, it has to wait for today’s column for length and content reasons — and another link to it is here.

The pivot to China — Pepe Escobar

When President Xi Jinping visited the United Nations in Geneva last month, before his landmark pro-globalization speech in Davos, he said China’s proposition to the world was to “build a community of shared future for mankind and achieve shared and win-win development.”

Then came the astonishing numbers. “In the coming five years, China will import US$8 trillion of goods, attract US$600 billion of foreign investment, make US$750 billion of outbound investment, and Chinese tourists will make 700 million outbound visits.

For most of the “community of shared future,” it didn’t take long for the implications to sink in.

Then came the threat of a U.S.-China trade war. The possible ending of the One China policy. The threat of a blockade in the South China Sea.

Then came The Letter. From Trump to Xi, sending good wishes to “the Chinese people.” Too little, too late – over a week after the start of the Year of the Rooster. Still, with great tact, the Foreign Ministry in Beijing stressed communication was always on, “led by China’s top diplomat, State Councillor Yang Jiechi, who outranks the foreign minister.”

Then, finally, came The Phone Call. The first time they ever talked. Trump told Xi he plans to respect the One China policy.  Game on.  What’s next?

This commentary by Pepe, filed from Hong Kong, appeared on the Asia Times website at 12:08 a.m. on their Saturday morning, which was 11:08 p.m. in Washington on Friday night — EST plus 13 hours.  I thank Roy Stephens for finding it for us just minutes after it showed up on their website — and another link to it is here.

Lord of the Ring: NASA Probe Obtains Close Up Photos of Saturn’s Wavemaker

A NASA spacecraft managed to obtain close-up images of a moon hidden within one of Saturn’s rings.

During a grazing pass over the outer edges of Saturn’s rings, NASA spacecraft Cassini managed to snap close up pictures of Daphnis, a moon concealed within the Keeler Gap – a 42-kilometer-wide gap in the planet’s A Ring.

One of Daphnis’ unique features is that the moon’s gravity makes waves along the edges of the Keeler Gap, in both the horizontal and vertical directions.

Cassini-Huygens is a joint effort between NASA, the European Space Agency (ESA) and the Italian Space Agency (ASI). Launched in 1997, the spacecraft Cassini arrived at its destination in 2004 and since then has been studying Saturn and its moons from orbit. Huygens, a probe carried by Cassini, landed on Saturn’s largest moon, Titan, in 2005.

This tiny story, along with two amazing photos, was posted on the Internet site way back on January 20th.  But it’s news to me, so I thought I’d share it.  I thank ‘aurora’ for sending it.  The pictures are definitely worth the trip — and another link to this brief news item is here.

Eco-warrior lays waste to Philippines’ mining industry

Mining industry chiefs had just assailed her order to shut down more than half of the Philippines’ mines, and Regina Lopez was in a combative mood: but, to keep her cool before an interview, she slipped into a side room and meditated for a few minutes.

There is a spiritual side to Lopez, the daughter of a media mogul who, at 18, left a life of privilege behind in the Philippines, took a vow of celibacy and became a yoga teacher and missionary in Africa, living in slums among the poor.

But Lopez is also a fiery environmental crusader. She has no qualms about attacking the powerful and flouting convention, just like the country’s blunt-spoken president, Rodrigo Duterte, who appointed her as his environment minister last year.

Since then, she has become the bane of big mining companies, which she accuses of earning “blood money” in the fifth-most-mineralised country in the world.

They are killing our rivers, our streams, they are mining in watersheds,” she said, her voice strident with emotion. “I’ve made a policy that there should be no mining in functioning watersheds because gold and nickel can never be more important than people’s lives.

This very interesting Reuters news story, filed from Manila, was posted on their Internet site a 7:42 p.m. EST on Thursday evening — and I thank Jerome Cherry for pointing it out.  Another link to it is here.

Demonetisation Shock to India’s Gold Bullion Demand ‘Only Temporary’

Gold bullion demand from India’s huge jewelry sector is set to recover from last year’s plunge according to dealers and retailers, as consumers make delayed purchases and the industry adapts following November’s shock demonetisation.

Holdings and spending of undeclared ‘black money’ were wiped out by the Modi government’s cancellation of India’s highest-denomination banknotes. Analysts now expect larger jewelry and bullion retail chains to benefit as the country’s more traditional, artisanal trade suffers.

India’s largest jewelry retailer, the Titan Company, said this week that sales of gold adornments across its 1,333 stores grew 14% year-on-year in the last 3 months of 2016, “despite initial headwinds on account of demonetization,” according to managing director Bhaskar Bhat.

The festival season was very good for both our jewelry and watches business.”

For two to three months, there was no business,” adds Vishal Jain, partner at jewelry supplier Sensuel – speaking at this week’s IIJS Signature trade fair at the Bombay Exhibition Centre – “but activity started to pick up again in late January. Now retailers need stock as the wedding season continues until late April.”

This gold-related news item appeared on the Internet site back on February 2 — and I found it on the Sharps Pixley website on Friday.  Another link to it is here.


The ‘Click to Enlarge‘ feature helps on both photos…


Today’s pop ‘blast from the past’ is one I heard the tail-end of in my car on Friday afternoon — and it crossed my mind when I was thinking about a suitable selection today.  The opening guitar riff is instantly recognizable — and iconic as you’ll find anywhere in rock ‘n roll over the last 50 years.  I’ve posted it before, but it never grows old.  The link is here.

Today’s classical ‘blast from the past’ is one I’ve posted before as well, probably around a year ago.  It’s concert pianist extraordinaire Anna Fedorova blowing the doors off Rachmaninoff’s Piano Concerto No. 2 in C minor, Op. 18 — which he composed between November 1900 and April 1901.  It was an instant and monster hit back in his day — and that hasn’t change a bit in 116 years.

It was recorded on September 1, 2013 with the Concertgebouw in Amsterdam.  The performance, along with the audio/video quality, is as good as it gets.  Full screen is a must — and the link is here.

I was certainly happy to see both gold and silver close higher yesterday, but wasn’t happy that their respective rallies ran into “all the usual suspects”.  But if they hadn’t, they would have quickly turned into Ted Butler’s “big ones” — as JPMorgan et al are the short buyers and long sellers of last resort.  They are the gatekeepers against a melt-up in all things physical — and a melt-down in all things paper.  That event may certainly be in our future, but it wasn’t to be yesterday.

Here are the 6-month charts for all four precious metals, plus copper once again.  The reason that Friday’s dojis look as bad as they do on the downside, is because of the fact they contain all the price data from after the COMEX close on Thursday — and for some of the precious metals, that’s when their respective low ticks were set by ‘da boyz’.

You should also note that copper had a huge ‘up’ day as well…closing higher by 11 cents a pound and with what looked like at intraday move of 13 cents.  Almost unheard of.

I must admit that the precious metal market is getting more intriguing with each passing week.  Here are a list of straws in the wind that Ted has either talked about for years, or have just popped up recently.

1]  The huge short covering in GLD and SLV into the end of January
2]  The large amount of gold going into GLD on such a tiny rally since January 30th.  That applies equally as much to the German gold ETF XetraGold, which is up 572,224 troy ounces on the week — and 1,086,575 troy ounces for the month, which is almost on par with GLD.
3]  The surprise return of Germany’s gold from the U.S.  three years ahead of schedule.
4]  The unprecedented changes in investment patterns by the Managed Money traders in both gold and silver on both the short and long side of the COMEX futures market.  Who gave them a talking to?  It’s like they all got the same memo about the same subject on the same day.  In my opinion, there’s nothing random about this at all.  It’s a certainty that Ted will have lots to say about this later today.
5]  The ongoing 6-year COMEX warehouse turnover in silver, accompanied by the ongoing and equally unprecedented accumulation of physical silver in all forms by JP Morgan.

I’m sure I’ve missed something, but at this hour of the morning, I’m not as sharp as I’d like to be.

The more I watch Trump and his sycophants, the more alarmed I’m becoming.  As much as I was deadly afraid of Hillary Clinton as President of the U.S…Trump et al are turning out to be real loose cannons with a danger all their own.   But it’s obvious that they’ve understood the blowback they’ve been getting…both foreign and domestic — and are trying to make amends on the fly.  Good luck to them.

But surrounding all that is a world-wide bubble economy — and financial system — that is stretched to its limits.  What pin awaits it is not known at the moment, but there are legions of them floating around…any one of which could precipitate, then detonate, the financial crisis that many have been expecting ever since we were saved from the last in 2009 by rampant money printing by the world’s central banks.

There will be nothing to save us this time — and unless the powers-that-be have something tucked up their sleeves that we, the great unwashed, have no knowledge of…we will most certainly descend into that world of chaos that Jim Rickards speaks of so eloquently in Chapter 9 [Behold a Black Horse] of his latest book…”The Road to Ruin: The Global Elites’ Secret Plan For the Next Financial Crisis“.

I’ve more or less given up on trying to call these markets, precious metal or otherwise, as I get the impression that there are other forces at work just out sight that we aren’t privy to.  But I suspect that my 5-item list just above, is related to it in some way.

All we can do is wait it out — and hope we’ve done enough.  I’ve done all I can — and my passport is current.

How…as I always like to say…did it come to this?

See you on Tuesday.



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