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3 New Intraday Lows at the London P.M. Gold Fix


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

By Ed Steer

07 October 2017 -- Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price traded mostly sideways in Far East trading on their Friday, but developed a slight positive bias around the time that London opened.  That lasted until shortly before the noon silver fix over there -- and the price began to slide a bit.  There was only a tiny price jiggle at the release of the jobs report at 8:30 a.m. in New York, but the price was pressured lower until the low tick of the day...and new intraday low for this move down...was set at the afternoon gold fix in London.  It rallied sharply from there, before getting capped at the London close -- and from that point chopped quietly, but unevenly higher for the rest of the Friday session.

 

The CME Group reported the low and high ticks at $1,262.80 and $1,279.20 in the December contract.

 

Gold finished the Friday session on its high tick of the day at $1,276.10 spot -- and up $8.30 from Thursday's close.  Not surprisingly, net volume was over the moon at something around 352,000 contracts.

And here's the 5-minute gold tick from Brad Robertson -- and all the volume that mattered -- and it was big volume -- began at 06:00 Denver time, which was 8 a.m. in New York -- and never really dropped off to anything remotely resembling background levels until after 14:00 MDT/4 p.m. EDT.

 

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

The silver price didn't do a thing until the COMEX open -- and the selling pressure began at that point -- and the price action at 8:30 a.m. on the release of the job numbers, was insignificant.  But when the equity market opened in New York at 9:30 a.m., JPMorgan et al went to work -- and the low tick of the day was set shortly after 10 a.m. EDT.  Then, with one short pause either side of the London close, the silver price blasted higher.  That lasted until minutes after 11:30 a.m. -- and the price was sold down a bit into the 1:30 p.m. EDT COMEX close.  Then it rallied quietly into the 5:00 pm. EDT close of trading.

 

The low and high ticks in this precious metal were recorded as $16.345 and $16.89 in the December contract, which was an intraday move of more than 3 percent -- and 'da boyz' set a new intraday low for this move down in the process.

 

Silver finished the day at $16.81 spot, up 23.5 cents from Thursday's close.  As expected, net volume was very beefy at just under 96,000 contracts.

Here's the 5-minute gold tick chart courtesy of Brad as well.  The volume that mattered in silver yesterday also began at 06:00 Denver time -- and was back to just about background by 12:00 MDT/14:00 EDT.

 

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

The platinum price didn't do much until the Zurich open -- and it began to crawl higher from there until about 1:30 p.m. CEST in Zurich -- and that was its high tick of the day.  The powers-that-be showed up at that juncture -- and gave it the same treatment as gold and silver from that point forward.  Then, like silver, it rallied until noon EDT, then got sold off into the COMEX close -- and rallied quietly from that point until trading ended at 5:00 p.m. EDT.  Platinum finished the Friday session at $914 spot, up a dollar on the day.

The trading pattern for palladium was similar to that for platinum, except JPMorgan et al waited until Zurich closed before laying the lumber to the price.  The low tick...$910 spot... was set at 1 p.m. in New York -- and it rallied a few dollars into the close from there.  Palladium finished the Friday session at $914 spot, down an even 20 bucks on the day.

The dollar index closed very late on Thursday afternoon in New York at 93.90 -- and traded flat once it began at 6:00 p.m. EDT on Thursday evening.  After a 90-minute 15 basis point up/down move between 8 and 9:30 a.m. CST on their Friday morning, the index began to chop somewhat unsteadily higher, reaching its zenith in the first hour of London trading.  It began to crawl lower from there.  There were some impressive shenanigans between 8:30 a.m. EDT and the London p.m. gold fix -- and once that was put to bed, the index fell 40 basis points going into the London close.  It regained a bit more than 10 basis points in just a few minutes, before quietly sliding lower for the remainder of the Friday session.  The dollar index closed in New York at 93.79...down 11 basis points on the day.

 

And if you can find any correlation between the dollar index and what the precious metals did yesterday, I'd like you to point it out, particularly in silver.

And here's the 6-month U.S. dollar index which is only provided for its entertainment value, with yesterday's 'action' being yet another case-in-point of why that is so.

 

 

The gold stocks were sold down a bit at the open -- and then traded sideways until the 'fix was in' in London.  They then rallied nicely back into positive territory, with their respective high ticks coming a few minutes before noon in New York.  They sold off a bit until 12:25 p.m. -- and then developed a slight positive bias for the rest of the Friday session.  The HUI closed higher by 1.34 percent.

It was almost the same price pattern for the silver equities, except once they reached their highs a few minutes before noon EDT, they then traded flat for the rest of the day.  Nick Laird's Intraday Silver Sentiment/Silver 7 Index closed up 1.53 percent.  Click to enlarge if necessary.

And here's the 1-year Silver Sentiment/Silver 7 Index.  Click to enlarge.

Here are the usual three charts from Nick that show what's been happening for the week, month-to-date -- and year-to-date.  The first one shows the changes in gold, silver, platinum and palladium for the past trading week, in both percent and dollar and cents terms, as of their Friday closes in New York - along with the changes in the HUI and the Silver 7 Index.

 

The weekly chart is a bit happier looking, at least as far as the equities are concerned.

The way the current month works out, the monthly chart for October is the same as the weekly chart for this week only, so I shan't bother including it.

 

But the year-to-date chart, particularly for the precious metal equities, is a little better after this week's share price action. 

As you are aware, I've been watching the share price activity quite closely -- and it's certainly more robust that one would think they would be considering the fact that JPMorgan et al are stomping on the underlying prices of the associated precious metals.  I still don't know what to make of it -- and I'm not prepared to speculate.

 


 

The CME Daily Delivery Report showed that zero gold and 5 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday. There's nothing to talk about with these amounts.  The link to yesterday's Issuers and Stoppers Report is here.

 

I mentioned in yesterday's column that the CME's Preliminary Report for the Thursday session hadn't been posted on their website by the time I filed Friday's column, so here's the data now.

 

The CME Preliminary [now Final] Report for the Thursday trading session showed that gold open interest in October fell by 196 contracts, leaving 238 still open, minus the 15 gold contracts posted for delivery on Monday.  Wednesday's Daily Delivery Report showed that 199 gold contracts were actually posted for delivery on Friday, so that means that 199-196=3 more gold contracts just got added to the October delivery month.  Silver o.i. in October declined by 19 contracts, leaving 537 still around, minus the 31 that were posted for delivery on Friday.  That means that another 31-19=12 silver contracts were added to the October delivery month.

 

The CME Preliminary Report for the Friday trading session showed that gold open interest in October fell by 22 contracts, leaving 216 left.  Thursday's Daily Delivery Report showed that 15 gold contracts are up for delivery on Monday, so that means that 22-15=7 gold contracts vanished from the October delivery month by the mutual consent of both the short/issuers and long/stoppers involved.  Silver o.i. in October declined by 15 contracts, leaving 522 still around, minus the 5 contracts mentioned in Friday's Daily Delivery Report above.  Thursday's Daily Delivery Report showed that 15 silver contracts were posted for delivery on Monday, so the numbers work out exactly for a change...15-15=0.

 

Much to my surprise -- and after three withdrawals in a row, there was a deposit of some size in GLD on Friday.  An authorized participant added 95,003 troy ounces.  There were no reported changes in SLV.

 

There was no sales report from the U.S. Mint yesterday.

 

Month-to-date, which is only the last five business days, the mint has sold 3,500 troy ounces of gold eagles -- 1,000 one-ounce 24K gold buffaloes -- and 150,000 silver eagles.

 

There was very little activity in gold over at the COMEX-approved gold depositories on the U.S. east coast on Thursday.  Only 3,761.550 troy ounces/117 kilobars [U.K./U.S. kilobar weight] were received -- and that went into JPMorgan's vault.  There was no 'out' activity -- and I shan't bother linking this amount.

 

There was quite a bit more activity in silver, as 745,093 troy ounces were reported received -- and 250,674 troy ounces were shipped out the door for parts unknown.  Of the 'in' amount...5,295 troy ounces ended up at JPMorgan -- and the rest...739,797 troy ounces...was left at Canada's Scotiabank.  All of the 'out' action was at Scotiabank as well -- and the link to all this, is here.

 

There was no report from the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday, as the semi-annual Golden Week continues.  But after their in/out activity on Wednesday, they're obviously open when they have to be...Golden Week, or no Golden Week.

 


 

I have four charts that Nick Laird passed along on Thursday evening.  The first two show gold and silver bullion coin sales for The Perth Mint, updated with September's data -- and compared to U.S. Mint sales for the same month, bullion sales 'down under' are booming -- 46,415 troy ounces of gold -- and 698,000 troy ounces of silver.  Click to enlarge for both charts.

The other two charts show gold and silver imports into India updated with August's data...45.87 tonnes of gold -- and 495.5 tonnes of silver.  Click to enlarge for both charts as well. 


 

As expected, yesterday's Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday, showed improvements in the short positions of the Commercial traders in both silver and gold, but it wasn't anywhere near the numbers that Ted -- and even I, were expecting.

 

In silver, the Commercial net short position only decreased by 3,549 contracts, or 17.7 million troy ounces of paper silver.

 

They arrived at this number by selling 2,799 long contracts, plus they reduced their short position by 6,348 contracts -- and the difference between those two numbers is the change for the reporting week.

 

Ted said that the Big 4...read JPMorgan...reduced their short position by around 1,200 contracts, the '5 through 8' large traders actually added approximately 400 contracts to their short position -- and Ted's raptors, the 37 small commercial traders other than the Big 8, increased their long position by about 2,700 contracts.

 

Under the hood in the Disaggregated COT Report, the Managed Money traders only contributed about two thirds of the change during the reporting week.  They did this by selling 1,141 long contracts, plus they added 1,278 short contracts -- and the sum of those two numbers...2,419 contracts...was the change for the reporting week.  The difference between this number -- and the change in the Commercial net short position...1,130 contracts...was made up, as it always is, by the traders in the other two categories...the 'Other Reportables' and the 'Nonreportable'/small traders.

 

The Commercial net short position in silver is now at 68,717 contracts, or 343.5 million troy ounces of paper silver -- and with the October Bank Participation Report in hand, Ted pegs JPMorgan's short position in the COMEX futures market in silver at 33,000 contracts.  So JPM is short 48 percent of the entire Commercial net short position in silver all by itself.

 

The Big 8 traders are short 471.4 million troy ounces -- and the difference between that number and the Commercial net short positions is because Ted's raptors, the smallest commercial traders other than the Big 8, are long that amount.

 

I must admit that I was disappointed with this report, as I was hoping for -- and expecting, more.  But it is what it is.  Here's the 3-year COT chart -- and as you can see at a glance, this week's changes are hardly material.  Click to enlarge.

In gold, the commercial net short position declined by only 9,048 contracts, or 904,800 ounce of paper gold.

 

They got to that number by selling 7,752 long contracts, plus they covered 16,800 contracts -- and the difference between those two number is the change for the reporting week. Ted said the Big 4 decreased their short position by approximately 2,300 contracts -- and the '5 through 8' large traders decreased their short position by around 4,100 contracts.  Ted's raptors, the 49 small commercial traders other than the Big 8, increased their long position by about 2,600 contracts.

 

Under the hood in the Disaggregated COT Report, it was all Managed Money traders -- and much more, as they sold 14,773 long contracts, plus the added 1,759 contracts to their short position, for a weekly swing of the sum of those two numbers, which is 16,532 contracts.  And as in silver, the traders in the 'Other Reportables' and 'Nonreportable'/small trader categories accounted for the difference between what the Managed Money traders and commercial traders did.

 

The commercial net short position in gold is now down to 22.44 million troy ounces of paper gold, which is still way up there.

 

Here is the 3-year COT chart for gold and, like for silver, the weekly change isn't all that material.  Click to enlarge.

It's a pretty safe bet that there has been more and even bigger improvements in the short position of the commercial traders since the Tuesday cut-off -- and that's especially true after what happen with silver and gold prices yesterday.  But a 'Full Monty' flush-out to the downside, if that's what 'da boyz' have planned, is still a long way off in both contract terms -- and the associated downside price action that accompanies it.

 


 

Here's Nick Laird's "Days to Cover" chart...which I consider to be the most important chart of all in my Saturday column...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 135 days of world silver production-and the '5 through 8' large traders are short an additional 59 days of world silver production-for a total of 194 days, which is six and a half months of world silver production, or about 471.4 million troy ounces of paper silver held short by the Big 8.  [In the COT Report last week, the Big 8 were short 191 days of world silver production.]

 

In the COT Report above, the Commercial net short position in silver was reported as 343.5 million troy ounces.  The short position of the Big 8 traders is 471.4 million troy ounces.  The short position of the Big 8 traders is larger than the total Commercial net short position by a chunky 471.4 minus 343.5 = 127.9 million troy ounces.  The reason for the difference in those numbers is that Ted's raptors, the approximately 37-odd small commercial traders other than the Big 8...are long that amount, which is a fact I also mentioned in my discussion on silver in the COT Report above.

 

As I also stated in the above COT Report, Ted pegs JPMorgan's short position at around 33,000 contracts, or around 165 million troy ounces, which is down about 15 million troy ounces from what they were short in last week's COT Report.  165 million ounces works out to around 68 days of world silver production that JPMorgan is short.  That's compared to the 194 days that the Big 8 are short in total.  JPM is short about 35 percent of the entire short position held by the Big 8 traders.

 

I estimate the short position in silver held by Scotiabank at approximately 31 days of world silver production, a number that hasn't changed much in the last while.  So JPMorgan is by far the No. 1 silver short on Planet Earth.

 

The two largest silver shorts on Planet Earth-JP Morgan and Canada's Scotiabank-are short about 99 days of world silver production between the two of them-and that 99 days represents about 73 percent of the length of the red bar in silver in the above chart...almost three quarters of it.  The other two traders in the Big 4 category are short, on average, about 18 days of world silver production apiece, up 2 days from last week.  The four traders in the '5 through 8' category are short, on average, a hair under 15 days of world silver production each, about 1.5 days higher than last week.

 

This is just more proof of the fact, if any was needed, that it's only what JPMorgan does in the COMEX silver market that matters, as it's only their position that every changes by any material amount.

 

The silver short positions of Scotiabank and JPMorgan combined, represents about 51 percent of the short position held by all the Big 8 traders.  How's that for a concentrated short position within a concentrated short position?

 

The Big 8 are short 51.4 percent of the entire open interest in silver in the COMEX futures market -- and that number would be a bit over 55 percent once the market-neutral spread trades are subtracted out.  In gold, it's 48.7 percent of the total COMEX open interest that the Big 8 are short -- and just under 55 percent once the market-neutral spread trades are subtracted out.

 

The Big 8...for the fifth week in a row...are now short a larger percentage of the total open interest in silver than they are in gold.

 

In gold, the Big 4 are short 64 days of world gold production, which is unchanged from what they were short last week - and the '5 through 8' are short another 27 days of world production, which is down 2 days from what they were short the prior week, for a total of 91 days of world gold production held short by the Big 8 -- which is down 3 days from what they were short in last week's report.  Based on these numbers, the Big 4 in gold hold about 70 percent of the total short position held by the Big 8...which is up one percentage point from the prior week.

 

The "concentrated short positions within a concentrated short position" in silver, platinum and palladium held by the Big 4 are about 70, 70 and 71 percent respectively of the short positions held by the Big 8.  These numbers are all unchanged compared to last week's COT Report.

 

Why JPMorgan has taken it upon itself to be the short seller of last resort in silver [and probably in the other three precious metals as well] for the last number of weeks, is still the great mystery that Ted has been thinking about for a while now.

 

****And as I've mentioned on previous occasions...before dropping the Days to Cover issue...you should go scroll back to the chart just to make note of how heavily shorted the four precious metals are compared to every other physically traded commodity on the COMEX****

 


 

The October Bank Participation Report [BPR] data is extracted directly from the above Commitment of Traders Report.  It shows the COMEX futures contracts, both long and short, that are held by all the U.S. and non-U.S. banks as of Tuesday's cut-off.  For this one day a month we get to see what the world's banks are up to in the COMEX futures market, especially in the precious metals-and they're usually up to quite a bit. 

 

In gold, 5 U.S. banks were net short 108,444 COMEX contracts in the October BPR, which is almost 50 percent of this week's commercial net short position shown in the above COT Report.  In September's Bank Participation Report [BPR], that number was 127,483 contracts, so they've decreased their collective short positions by about 17,000 contracts during the last month.  Four of the five U.S. banks would certainly include JPMorgan, HSBC USA and Citigroup -- and Goldman.  As for who the fifth 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 73,753 COMEX gold contracts, which isn't much per bank.  In the September BPR, 30 non-U.S. banks were net short 86,263 COMEX contracts, so the month-over-month change shows a decrease of about 12,500 contracts.  I suspect that there's at least one large non-U.S. bank in this group that might hold a third of this short position all by itself -- and the remaining contracts, divided up between the remaining 26 non-U.S. banks, would be immaterial.  Scotiabank comes to mind as that "one large non-U.S. bank".

 

As of this Bank Participation Report, 32 banks [both U.S. and foreign] are net short 34.7 percent of the entire open interest in gold in the COMEX futures market, which is a small decrease from the 37.7 percent they were short in the August 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 short position was outed by the CFTC.  Click to enlarge.

In silver, 4 U.S. banks are net short 32,021 COMEX silver contracts in October's BPR - and Ted figures that JPMorgan is the proud owner of all of it, plus a bit more...33,000 contracts worth.  This means that the remaining 3 U.S. banks obviously have to be net long the silver market in order for the numbers to work out, as these same banks are long 2,181 COMEX silver contracts as well.  In September's BPR, the net short position of these U.S. banks was 36,307 contracts, so the short position of the U.S. banks has decreased by about 4,300 contracts during the last reporting month, with virtually ever contract accredited to JPMorgan.

 

Also in silver, 19 non-U.S. banks are net short 29,203 COMEX contracts.  I would suspect that Canada's Scotiabank holds a goodly chunk of this amount all by itself, probably about half of that amount.  That most likely means that a number of the remaining 18 non-U.S. banks might actually be net long the COMEX silver market by a bit.  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 October's Bank Participation Report, 23 banks are net short 33.4 percent of the entire open interest in the COMEX futures market in silver-which is down a bit from the 36.9 percent that they were net short in the September BPR - with much, 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 10,913 COMEX contracts in the October Bank Participation Report.  In the September BPR, these same banks were short 14,853 COMEX platinum contracts, so there's been a drop of about 27 percent in the U.S. banks' short position from the prior month.

 

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

 

Also in platinum, 15 non-U.S. banks are net short 6,866 COMEX contracts, which is a huge 44.4 percent decrease from the 12,358 contracts they were net short in the September BPR.

 

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

 

And as of October's Bank Participation Report, 20 banks were net short 'only' 24.8 percent of the entire open interest in platinum in the COMEX futures market, which is a decent sized decrease from the 34.3 percent they were collectively net short in the September BPR.  Click to enlarge.

In palladium, 4 U.S. banks were net short 9,053 COMEX contracts in the October BPR, which is down 1,660 contracts from the 10,713 contracts they held net short in the September BPR. Also in palladium, 11 non-U.S. banks are net short 5,744 COMEX contracts-which is up a bit from the 4,829 COMEX contracts that these same banks were short in the September BPR.  When you divide up the short positions of the non-U.S. banks more or less equally, they're mostly immaterial.

 

But, having said all that, as of this Bank Participation Report, 15 banks are net short 42.4 percent of the entire COMEX open interest in palladium...which is a goodly chunk...and getting up there with the Big 8 traders in gold and silver.  In September's BPR, the world's banks were net short 44.4 percent of total open interest.

 

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.  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, there's a maximum of three U.S. banks-JPMorgan, HSBC USA and Citigroup-along with Canada's Scotiabank-that are the tallest hogs at the precious metal price management trough.

 

JPMorgan and Scotiabank still remain the two largest silver short holders on Planet Earth in the COMEX futures market, with JPMorgan back in the #1 spot by a country mile once again.

 

I have an average number of stories for you today, but if you're looking for the usual Cohen/Batchelor interview, there wasn't one this week.

 


CRITICAL READS 

Stocks, Bonds Sink as December Rate-Hike Odds Hit 80% After Worst Jobs Data in Over 7 Years

The utterly useless data gushed forth by the BLS this morning -- affected dramatically in all directions by Irma and Harvey - did not worry the algos, who sent December rate-hike odds soaring (to 80%) and sparked selling in bonds and stocks.

 

December is a done deal on the back of statistically ridiculous data which saw average hourly earnings rise at the highest level since the financial crisis.

 

Of course, that is not a surprise because as we reported earlier, "Any weakness will be attributed to hurricanes, while a beat on payrolls or wages would be seen as supporting a Federal Reserve interest rate increase in December."

 

Well, what happened is that the jobs drop was attributed to hurricanes, while the wage growth was attributed to the... economy?

 

The other big surprise, dear reader, was that there was almost no reaction at all in the precious metals at 8:30 a.m. when the job numbers were released.  That came later, particularly in silver.  This Zero Hedge article appeared on their Internet site at 8:56 a.m. EDT on Friday morning -- and it comes to us courtesy of Brad Robertson.  Another link to it is here.

 


No Way Out of This Black Hole of Debt -- Bill Bonner

Why can't Congress pass a serious tax reform measure?

 

Because the feds need money. They can only get money from the people who have it - the rich.

 

But the rich control the government and its tax-writing committees. So, the feds are stuck. And so is the entire economy.

 

Like the ancien régime in France before they started cutting off heads, the Deep State cannot reform itself. And the mob still must be appeased... with pensions, pills, and welfare payments - which cost money.

 

This contradiction can only be reconciled - temporarily - with credit.

 

This is why every major economy runs big deficits... and why there's a black hole of debt that is sucking all the world's major economies down... closer and closer to a debt disaster.

 

This excellent commentary by Bill showed up on the bonnerandpartners.com Internet site on Friday sometime -- and another link to it is here.

 


HSBC traders used code word to trigger front-running, prosecutor says

A group of HSBC Holdings currency traders in London and New York feverishly jumped ahead of a $3.5 billion client order after they were tipped off using the code words "my watch is off," a U.S. prosecutor told a federal judge.

 

The buying frenzy was launched after Mark Johnson, HSBC's former global head of foreign exchange whom the bank chose to lead the transaction, alerted the traders via a phone call that was recorded, the prosecutor said Thursday in Brooklyn. Johnson is on trial for fraud.

 

After the trial recessed for the day, prosecutor Carol Sipperly told U.S. District Judge Nicholas Garaufis that the government today wants the jury to hear the recordings, in Johnson can be heard tipping off a trader in Hong Kong, a signal that she said eventually reached others on both sides of the Atlantic. Prosecutors say Johnson and Stuart Scott, the bank's former head of currency trading in Europe, along with these other traders, bought pounds before the transaction, collectively making the bank $8 million in illicit profit.

 

This news story was posted on the Bloomberg website at 10:00 p.m. Denver time on Thursday evening -- and was subsequently updated about eighteen hours later.  I found it embedded in a GATA dispatch -- and another link to it is here.

 


Kevin Warsh to Lead the Fed in a New Direction -- Doug Noland

A top Wall Street executive was lauding the Fed's "brilliance" Friday morning on Bloomberg Television. Yet the Fed has done nothing close to brilliant for a long time now. The Bernanke Fed doubled-down on experimental inflationist monetary management. While there have been numerous zealous bouts of inflationism throughout history, I know of none that emerged from the test of time as esteemed policymaking. The proponents of contemporary central banking disregard a crucial fact: Now approaching a decade since the start of the crisis period, the world is more addicted than ever to ultra-low rates and massive QE. Inflationism is always a trap.

 

I was naïve. The degree to which the establishment would embrace inflationism caught me by surprise. Have they finally seen enough? Fed governor Jerome Powell has become the favorite candidate for those preferring to stay the course.

 

I would much prefer former Fed governor (2006-2011) Kevin Warsh at the helm of the Federal Reserve. He is viewed as the reformer candidate - somewhat of a disrupter that might shake things up a bit. From my perspective, he is more the outcast traditionalist in an age of monetary radicalism. Fed governor Warsh was the most outspoken member of the Fed's inner circle arguing against Bernanke's radical monetary doctrine.

 

Importantly, Warsh is not an inflationist - and for this he is on the receiving end of criticism from the left as well as the right. Willing to stand tall against the powerful consensus view, Warsh recognizes the great risks that come with monetary inflation. He was against QE and - despite the chorus of pundits convinced otherwise - Warsh was right.

 

Mr. Warsh is generally opposed to the Fed meddling in the markets. As Larry Kudlow suggested, the former Fed governor wants "the Fed out of the day trading business." Of course, overheated Bubble markets simply cannot contemplate a world where the Fed's number one priority is anything other than bolstering the markets - with routine assurances, low rates and QE on demand.

 

Doug's Credit Bubble Bulletin was posted on his Internet site just after midnight EDT this morning -- and another link to it is here.

 


Has The Israel Lobby Destroyed Americans' First Amendment Rights? -- Paul Craig Roberts

The Israel Lobby has shown its power over Americans' perceptions and ability to exercise free speech via its influence in media, entertainment and ability to block university tenure appointments, such as those of Norman Finkelstein and Steven Salaita. Indeed, the power of the Israel Lobby is today so widely recognized and feared that editors, producers, and tenure committees anticipate the lobby's objections in advance and avoid writers, subjects, and professors judged unacceptable to the lobby.

 

The latest example is The American Conservative's firing of former CIA officer Philip Giraldi. Giraldi wrote an article for the Unz Review about Israel's influence over American foreign policy in the Middle East. The article didn't say anything that the Israeli newspaper Haaretz hadn't said already. The editor of The American Conservative, where Giraldi had been a contributor for a decade and a half, was terrified that the magazine was associated with a critic of Israel and quickly terminated the relationship. Such abject cowardice as the editor of The American Conservative showed is a true measure of the power of the Israel Lobby.

 

Many seasoned experts believe that without the influence of the Israel Lobby, particularly as exerted by the Jewish Neoconservatives, the United States would not have been at war in the Middle East and North Africa for the last 16 years. These wars have done nothing for the U.S. but harm, and they have cost taxpayers trillions of dollars and caused extensive death and destruction in seven countries and a massive refugee flow into Europe.

 

For a superpower such as the United States not to be in control of its own foreign policy is a serious matter. Giraldi is correct and patriotic to raise this concern. Giraldi makes sensible recommendations for correcting Washington's lack of control over its own policy. But instead of analysis and debate of Giraldi's proposals, the result is Giraldi's punishment by an editor of a conservative publication anticipating the Israel Lobby's wishes.

 

Americans should think about the fact that Israel is the only country on earth that it is impermissible to criticize. Anyone who criticizes Israeli policy, especially toward the Palestinians, or remarks on Israel's influence, is branded an "anti-semite." Even mild critics who are trying to steer Israel away from making mistakes, such as former President Jimmy Carter, are branded "anti-semites."

 

This commentary by Paul, along with commentary by Philip Giraldi, was posted on Paul's website on Friday sometime -- and I thank Brad Robertson for sending it our way.  Another link to it is here.

 


Pound Spikes After May Says She Has "Full Support" of Her Cabinet

Amid speculation and doubts that U.K. Prime Minister Theresa May could be forced to resign as soon as Christmas amid a mutiny of Tory MPs following her disastrous conference speech, which resulted in the pound's biggest weekly decline since last October's flash crash, moments ago the U.K. Press Association reported that Theresa May said she is providing "calm leadership" with the "full support" of her cabinet, which sent the pound surging in knee-jerk reaction.

 

"What the country needs is calm leadership and that's what I'm providing with the full support of my cabinet," May told Sky News in an interview in her Maidenhead constituency.

 

Separately, the BBC reports that this morning the U.K. government has mounted an operation to show that nothing has changed in the Conservative Party in the last few days and that Theresa May's leadership remains on track and that she is, to use another of her famous phrases. just "getting on with the job."

 

Following the report, cable promptly spiked by as much as 30 pips, briefly regaining 1.31, before resuming a slide lower.

 

This story showed up on the Zero Hedge website at 7:33 a.m. EDT yesterday morning -- and it's the third contribution of the day from Brad Robertson.  Another link to it is here.

 


Russia's on the Way Back -- Jim Rickards

The point in reciting this history is that it's difficult for investors to separate the economic fundamentals of Russia from the media circus and political noise. If Russia were named "Volgastan," and not involved in U.S. politics, its economic position would be one of the most attractive emerging markets stories in the world.

 

Let's begin our independent analysis by reviewing the fundamentals.

 

Russia is the 12th largest economy in the world with about $1.3 trillion in GDP. That is slightly larger than Australia or Spain, and significantly larger than well-liked emerging markets economies such as Mexico, Indonesia, and Taiwan.

 

Russia's sovereign debt-to-GDP ratio is a microscopic 17%. Compare that to the U.S. debt-to-GDP ratio of 106%, more than six times larger. Other debt-to-GDP zombies are Japan (240%), France (96%) and the UK (89%).

 

The fact is, in the next liquidity crisis, you won't be hearing about Russian default. The U.S. and China are more likely to be in the eye of the storm.

 

This worthwhile commentary by Jim put in an appearance on the dailyreckoning.com Internet site yesterday -- and another link to it is here.

 


Trump couldn't engage in détente with Russia, but America's Middle East allies have

Russia is 'leading from the front' by creating partnerships with states in the Middle East, just as the U.S. 'lead from behind' strategy of employing non-state proxy actors to achieve its aims, has failed.

 

Over the last two months, Russia has been using increasingly direct language to state the following:

 

- The U.S. spares terrorists in Syria including al-Nusrea

 

- The biggest attacks on Syrian and Russian troops in Deir ez-Zor come from U.S.-proxy SDF held positions

 

- The U.S. and its proxies collude on the battle field with ISIS

 

- ISIS moves freely around U.S. controlled areas in Syria and attacks Syrian and Russian forces from those positions

 

These are incredibly serious allegations, although they are little different than what the Syrian government has been saying for many years. The allegations amount to backing up Damascus, Wikileaks and some of things said by candidate Trump, implying that the U.S. is seriously in cahoots with ISIS, that the known U.S. proxy SDF is a also in cahoots with ISIS and is de-facto a militant group working to undermine Syria's security and territorial unity and that the U.S. is not actually fighting terrorism in Syria, contrary to boasts from Washington.

 

This new story by Adam Garrie is certainly worth your while if you have the interest.  It was posted on theduran.com Internet site at 2:29 p.m. EDT on Friday afternoon -- and I thank Roy Stephens for pointing it out.  Another link to it is here.

 


The U.S. Plan C for Syria and Iraq: its reckless game with the Kurds

Following the failure of the regime changes wars in Syria and Iraq, and of the attempts to set up a 'Sunnistan' there, the U.S. stirs up the Kurds.

 

As ISIS fades and as the Syrian conflict winds down, regional tensions in the Middle East are escalating, as the attention of the Great Powers switches to the growing crisis in Iraq's and Syria's Kurdish areas.

 

The latest stage in the seemingly endless geopolitical struggle in the Middle East is currently underway, with the Kurds of Syria and Iraq taking centre-stage.

 

Though it is important not to attribute more structure and coherence to U.S. policy than it actually has, it appears that U.S. policy over the course the Syrian conflict in particular has evolved through three overlapping stages.

 

This very interesting article by columnist Alex Mercouris appeared on theduran.com website at 5:48 a.m. EDT on Friday morning -- and I thank Larry Galearis for pointing it out.  Another link to it is here.

 


Gold: The Only Russia Story That Matters -- Jim Rickards

The World Gold Council has reported that the Central Bank of Russia has more than doubled the pace of its gold purchases, bringing its reserves to the highest level since Putin took power 17 years ago.

 

Russia's desire to break away from the hegemony of the U.S. dollar and the dollar payment system is well-known. Over 60% of global reserves and 80% of global payments are in dollars. The U.S. is the only country with veto power at the International Monetary Fund, the global lender of last resort.

 

Perhaps Russia's most aggressive weapon in its war on dollars is gold. The first line of defense is to acquire physical gold, which cannot be frozen out of the international payments system or hacked.

 

With gold, you can always pay another country just by putting the gold on an airplane and shipping it to the counterparty. This is the 21st-century equivalent of how J.P. Morgan settled payments in gold by ship or railroad in the early 20th century.

 

Russia has now tripled its gold reserves from around 600 tonnes to 1,800 tonnes over the past 10 years and shows no signs of slowing down. Even when oil prices and Russian reserves were collapsing in 2015, Russia continued to acquire gold.

 

This very worthwhile story put in an appearance on the dailyreckoning.com Internet site on Friday -- and it's the final offering of the day from Brad Robertson.  Another link to it is here.

 


Gold Can Help India Set Global Agenda on Monetary Policy

Gold could well be on the cusp of a historic move - not merely from a price action standpoint - but from the perspective of how global monetary policy is conducted. Given the enormous misinformation that is prevalent about gold, it is useful to start with the basics.

 

Why Gold at all?

 

An overwhelming majority of the investment community perceives gold as a risk-off investment. Self-fulfilling price actions have possibly reinforced that misperception during times of crises.

I don't even look at gold as an investment. Gold is just money - has always been money - and if I may add, will always be money. Currencies are just money substitutes that derive their value because of backing by money. Indeed, currencies gained widespread acceptance not only because of backing by money but more importantly due to their fungibility with money.

 

Under the gold standard, the U.S. dollar was defined as 1/20th an ounce of gold and anybody could have taken a $20 note and exchanged it for an ounce of gold within the US banking system.

 

Incidentally, an Indian rupee was originally defined as 11.3 grams of silver. So for a bank or a goldsmith to issue a rupee note, he should first have 11.3 grams of silver in their vault.

 

This longish gold-related news item showed up on the Indian website swarajyamag.com at 5:00 p.m. IST on their Friday afternoon and, surprisingly enough, both GATA and Ted Butler get a mention.  I found this item on the gata.org Internet site yesterday -- and another link to it is here.

 


Hugo Salinas Price: The gold worm on the yuan hook

If China really starts facilitating an oil trade in yuan that are quickly convertible to gold in Shanghai, Hugo Salinas Price writes today, oil sellers will not be the only ones interested in such transactions. As the gold price rises from increased demand in the oil trade, Salinas Price writes, other sellers of commodities probably will start wanting gold in exchange as well.

 

Salinas Price, president of the Mexican Civic Association for Silver, concludes: "The implications I see for the Chinese move are vast. We may witness the return of the gold standard not as we had imagined, but simply as the result of a spontaneous turn to gold as a means of trade initiated by the Chinese measure."

 

Indeed, gold is so scarce relative to official government currencies that even smaller countries with substantial foreign-exchange surpluses could crash the U.S. dollar, the world reserve currency, and all the major government currencies simply by acquiring a large amount of physical gold, renouncing "paper gold."

 

This has been true for a long time but no country has had the inclination to try to bring down the financial order of Western imperialism. Perhaps such a risk can be taken only by a nation that possesses a nuclear deterrent.

 

Salinas Price's commentary is brilliantly headlined "The Gold Worm on the Yuan Hook" and it's posted at the association's internet site, plata.com.mx, here -- and certainly falls into the must read category.  Another link to this article is here.

 


 

"Most important" Ely Bronze Age gold torc on display

 

One of England's "most important Bronze Age finds" has gone on display for the first time near to where it was found.

 

The £220,000 gold torc was unearthed by metal detectorists in an east Cambridgeshire field last year.

 

It was probably left as a "gift to the gods" and its diameter is "larger than any adult male trousers" according to Neil Wilkin, from the British Museum.

 

The bracelet-like ring is more than 3,000 years old and was bought by Ely Museum using a series of grants.

 

It was declared treasure at an inquest and the finder and landowner will receive a reward.

 

This brief, but very interesting gold-related news item was featured on the bbc.com Internet site late on Friday BST -- and my thanks go out to Angus MacLean for bringing it to my attention -- and now to yours.  Another link to this story is here.

 


The PHOTOS and the FUNNIES 

Here are the last three photos from Sylvan Lake on the Needles Highway in Custer State Park in the Black Hills of South Dakota. The sun made a brief appearance for these last three shots -- and it certainly changes the mood in each.  The 'click to enlarge' feature really helps all three pictures.

 

 

 

 

 


The WRAP

With the passing of Tom Petty this week, today's pop 'blast from the past' was a pretty easy choice for me.  Here's Prince, Tom Petty, Steve Winwood, Jeff Lynne and others performing George Harrison's classic hit "While My Guitar Gently Weeps" at the 2004 Hall of Fame Inductions.  Prince steals the show of course, but Tom gets in his licks all the way through.  I've posted this a couple of times before, but it never grows old -- and I never tire of it.  The link is here.

 

Today's classical 'blast from the past' is one that I had on the stereo at home yesterday afternoon when I was siphoning a Pinot Noir out of primary fermentation.  I've posted this before, but it's been a while.  It's German composer Max Bruch's violin concerto No. 1 in G minor, Op. 26.  It's one of the most popular violin concertos in the classical repertoire -- and for very good reason.  Here's the luscious and very gifted Hillary Hahn doing the honours with the Frankfurt Radio Symphony Orchestra -- and the link is here.

 


 

It was a very interesting -- and unexpected, Friday trading session -- and the price move, down or up at the 8:30 jobs report, never materialized.  The low ticks in gold, silver and platinum, courtesy of JPMorgan et al, came at the afternoon gold fix in London, with palladium's low tick coming thirty minutes before the COMEX close.  The job numbers barely moved the precious metal needle yesterday -- and I'm not sure what to make of it, or read into it.

 

The lows at the fix in the first three were all new lows for this "wash, rinse, spin and repeat" cycle -- and palladium was knocked back to its 50-day moving average, which is the second time this week...the first being Monday...that it got slammed back to that average.

 

Here are the 6-month charts for all four precious metals, plus copper once again -- and you can see the low ticks on the dojis for yourself.  The 'click to enlarge' feature helps a bit with the first four graphs.

 

 

 

 

As Ted -- and by extension, myself have been saying for quite a while now, we may appear to be getting close to a bottom in price terms, particularly in silver and platinum, but the Commitment of Traders Report continues to show a huge long position still being held by the Managed Money traders -- and if that is yet to be flushed out, then much lower prices still lie ahead.

 

That's why the numbers in yesterday's COT Report were such a disappointment, because after four weeks of this downward price pressure, the internal structure of the COMEX futures market in silver and gold is still very bearish -- and yesterday's numbers barely helped the situation.

 

As you are aware, I've been watching what the precious metal equities are doing -- and they don't appear to be mirroring the decline in their underlying metals, so I'm sort of wondering if something else is afoot.  It's certainly useless to speculate, as all we can do is watch for the clues that 'da boyz' give us as they 'manage' precious metal prices.

 

China is back from its Golden Week off starting on Sunday night in North America -- and I'll be more than interested in what happens now that they're back in the saddle.  And although what goes on inside the Shanghai Gold Exchange has zero to do with how precious metal prices are set, I'm becoming more intrigued all the time with this Chinese oil trade in yuan that will be convertible to gold...with Hugo's latest commentary in today's column being yet another straw in the wind.  He certainly fleshes out what could be possible.

 

And as far as the rest of the political, economic and financial news is concerned, it's still a mess everywhere you care to look.  Nothing will change that -- and there's just no way out of the greatest financial mania the world has ever known.  None at all.  The comeuppance at the end will be painful -- and when the end does come shambling forth, I won't live long enough to see the greatest bear market in history breath its last.

 

That's it for the day -- and the week -- and I'll see you here on Tuesday.

 

Ed

https://www.edsteergoldandsilver.com/

 


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