JPMorgan's Silver Short Position Now at 195 Million Ounces
-- Published: Tuesday, 14 November 2017 | Print | Disqus
By Ed Steer
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price didn't do much of anything in Far East trading on their Monday morning. It began to crawl unsteadily higher starting around 1 p.m. China Standard Time. It had rallied three bucks or so by shortly after 11 a.m. in London trading -- and after a slight down/up dip around the COMEX open, chopped equally unsteadily sideways for the remainder of the day.
The low and high ticks definitely aren't worth looking up.
Gold finished the Monday session in New York at $1,277.90 spot, up $3.00 from Friday's close. Net HFT gold volume was a bit lighter today, whatever that means, at around 187,000 contracts.
The silver price appeared to be very carefully contained below the $16.90 spot mark during the entire Far East and most of morning trading on Monday in London. Once the noon silver 'fix' was in, it was sold down to its low of the day, which came a few minutes before the COMEX open. From that point it began to rally quietly higher -- and its $17.05 spot high tick came a few minutes after 1 p.m. The price didn't do much after that.
The low and high ticks in this precious metal were reported by the CME Group as $16.82 and $17.07 in the December contract.
Silver closed in New York on Monday at $17.035 spot, up 18 cents on the day. Net volume checked in at a bit over 56,000 contracts, which was pretty light.
Platinum was up about 3 bucks in mid-morning trading in the Far East yesterday, but was sold down to about unchanged in the last hour of trading going into the COMEX open. It rallied rather sharply from there -- and appeared to run into a seller of last resort a minute or so after 9 a.m. EST. It began to chop quietly lower once the London p.m. gold fix was in at 10 a.m. in New York -- and platinum finished the day at $931 spot, up 5 dollars from Friday's close.
Palladium was up 7 dollars by shortly before 11 a.m. CST on their Monday morning -- and from there it traded virtually ruler flat until shortly after 1 p.m. over there. The price pressure began at that point, culminating in a rather vicious spike down to its low tick of the day, which came shortly before 11 a.m. in Zurich. It recovered to the $985 mark in pretty short order -- and then inched higher until about 10:30 a.m. EST. It then inched equally quietly lower until 1 p.m. -- and then traded flat from there into the 5:00 p.m. EST close. Palladium was closed at $984 spot, down 4 bucks on the day.
The dollar index closed very late on Friday afternoon in New York at 94.39 -- and began to rally the moment that trading began at 5 p.m. EST in New York on Sunday afternoon. It rallied up to the 94.57 mark by around 7 p.m. EST -- and then chopped quietly lower in a very wide range for the rest of the Monday session. The 94.64 high tick came around 12:10 p.m. GMT in London -- and the 94.40 low tick came at, or minutes after, the COMEX open in New York. It certainly looked like the usual 'gentle hands' put in an appearance at that time. The index then rallied until shortly after 12 o'clock noon EST -- and sold quietly lower into the close. The dollar index finished the Monday session at 94.52 -- and up 13 basis points from Friday's close.
It's certainly obvious that the precious metal traded entirely independently from the dollar index was doing yesterday -- and that particularly applies to silver after the COMEX open.
Here's the 3-day dollar index chart so you can see Monday's action over the the entire 24-hours trading day, compared to what happened on Friday.
And here's the 6-month U.S. dollar index chart -- and I offer it today without the usual snide remarks.
The gold shares opened unchanged -- and then proceeded to chop around that mark until shortly before noon in New York trading. Then within twenty minutes they were down about half a percent into negative territory -- and continued to chop sideways from there for the remainder of the Monday session. The HUI closed down another 0.46 percent.
The silver equities opened down a hair -- and then rallied to their high ticks of the day, which came a few minutes after 10 a.m. EST. Then, despite the fact that the metal itself continue to rally until 1 p.m. in New York, the silver stocks began to head sharply lower, with their respective low ticks coming around 1:45 p.m. They rallied a bit from there until minutes before 3:30 p.m. in New York, but got sold off a tad going into the close. Nick Laird's Intraday Silver Sentiment Index/Silver 7 Index closed down 0.86 percent. Click to enlarge if necessary.
I'm speculating here, but I think there was a fair amount of fund selling yesterday after last week's poor share price performance, which were followed by the usual fund redemptions. But regardless of that, I certainly wasn't happy with the stock price action yesterday, particularly as it pertained to silver.
And here's the 1-year Silver Sentiment/Silver 7 Index chart -- and it's even more sad looking. Click to enlarge.
The CME Daily Delivery Report showed that zero gold and 2 silver contacts were posted for delivery within the COMEX-approved depositories on Wednesday. Morgan Stanley issued -- and ADM stopped. Nothing to see here, but if you wish to have a look anyway, the link to yesterday's Issuers and Stoppers Report is here.
The CME Preliminary Report for the Monday trading session showed that gold open interest in November remained unchanged at 71 contracts still open. Friday's Daily Delivery Report showed that 2 gold contracts were actually posted for delivery today, so that means that 2 more gold contract had to have been added to the November delivery month for the change in open interest to be zero. Silver o.i. in November also showed unchanged at 3 contracts still around, minus the 2 contracts mentioned in the previous paragraph. Friday's Daily Delivery Report showed that 1 silver contract was actually posted for delivery today, so that means that 1 more silver contract was added to November.
I was surprised to see that there was a tiny deposit in GLD yesterday, as an authorized participant added 9,496 troy ounces. This deposit was within one troy ounce of the 9,497 troy ounces that was taken out on 03 November. There were no reported changes in SLV.
The folks over at Switzerland's Zürcher Kantonalbank updated their website with the goings-on in their gold and silver ETFs as of the close of business on Friday, November 10 -- and this is what they had to report. Their gold ETF added 6,202 troy ounces -- and their silver ETF sold off 11,895 troy ounces.
There was a sales report from the U.S. Mint yesterday. They sold 3,500 troy ounces of gold eagles -- 500 one-ounce 24K gold buffaloes -- and 175,000 silver eagles.
There was no gold received over at the COMEX-approved depositories on the U.S. east coast on Friday, but there was 23,598.100 troy ounces/734 kilobars [U.K./U.S. kilobar weight] received over at Canada's Scotiabank. The link to that activity is here.
There wasn't a lot of activity in silver. There was 301,351 troy ounces received at Delaware -- and there was 100,521 troy ounces shipped out of Scotiabank. The link to that activity is here.
There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday. They reported receiving 1,000 of them -- and shipped out another 735. All of the activity was at Brink's, Inc. of course -- and the link to that, in troy ounces, is here.
I was not at all amused with what I saw in yesterday's Remembrance Day-delayed Commitment of Traders Report. It showed further deterioration in the short positions of both gold and silver...but it was particularly ugly in silver -- and that's where I'll start.
In silver, the Commercial net short position increased by a very chunky 10,613 contracts, or 53.1 million troy ounces of paper silver.
They arrived at that number by increasing their long position by 551 contracts, but they also added a whopping 11,164 short contracts -- and the difference between those two numbers is the change for the reporting week.
Ted said that the Big 8 traders, read JPMorgan, increased their short position by about 2,800 contracts -- and the '5 through 8' large traders added around 700 contracts to their short position as well. But it was Ted's raptors, the 34-odd small Commercial traders other than the Big 8, that did the heavy lifting during the reporting week, as they sold approximately 7,100 long contracts, which was a surprising amount in my opinion.
Under the hood in the Disaggregated COT Report, it was mostly Managed Money traders, as they added 4,282 long contracts, plus they covered 3,741 short contracts -- and the sum of those two numbers...8,023 contracts...was their change for the reporting week. The difference between that number and the change in the Commercial net short position works out to 10,613-8,023=2,590 contracts. And, as always has to be the case, that difference was made up by the traders in the other two categories...the 'Other Reportables' -- and the 'Nonreportable'/small traders.
As usual, Ted gave the entire 2,800 contract increase in the Big 4 short position to JPMorgan -- and, with yesterday's latest Bank Participation Report in hand, pegs their short position at the 39,000 contract mark, or 195 million troy ounces of paper silver held short...80 days of world silver production. The Big 8 traders, which obviously includes JPM, are short 210 days of world silver production. The Commercial net short position in silver is now up to 408.2 million troy ounces.
Here's the 3-year COT chart for silver -- and it ain't pretty. Click to enlarge.
In gold, the commercial net short position also increased, but 'only' by 4,639 contracts, or 463,900 troy ounces of paper gold.
They arrived at that number by selling 5,222 long contracts, plus they decreased their short position by 583 contracts as well -- and the difference between those two numbers is the change for the reporting week.
Ted said that the Big 4 and the big '5 through 8' traders only increased their short positions by approximately 100 contracts each during the reporting week and, like in silver, it was Ted's raptors, the 47-odd small commercial traders other than the Big 8 that did the real work, as they sold about 4,400 long contracts.
Under the hood in the Disaggregated COT Report it was all Managed Money traders, as they added 5,130 long contracts, plus they increased their short position by 383 contracts -- and the difference between those two number...4,747 contracts...was the their change for the reporting week. And, like in silver, the tiny difference between that number and the change in the commercial net short position...4,747-4,639=108 contracts, was made up by the traders in the other two categories.
The commercial net short position in gold is 21.53 million troy ounces.
Here's the 3-year COT chart for gold -- and this week's data almost, but not quite, falls into the non-material change category. Click to enlarge.
I don't have much to add to this COT commentary, except to say that nothing has been resolved from a COMEX futures market perspective in either precious metal -- and this past week's numbers take us even further way from that point. I've stolen three paragraphs about all this from Ted Butler's COT commentary from yesterday -- and you'll find that as the quote of the day in The Wrap section.
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 last Tuesday, a week ago today. 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 148 days of world silver production-and the '5 through 8' large traders are short an additional 62 days of world silver production-for a total of 210 days, which is seven months of world silver production, or about 510.3 million troy ounces of paper silver held short by the Big 8. [In the COT Report last week, the Big 8 were short 203 days of world silver production.]
In the COT Report above, the Commercial net short position in silver was reported as 408.2 million troy ounces. The short position of the Big 8 traders is 510.3 million troy ounces. The short position of the Big 8 traders is larger than the total Commercial net short position by a chunky 510.3 minus 408.2 = 102.1 million troy ounces. The reason for the difference in those numbers is that Ted's raptors, the approximately 34-odd small commercial traders other than the Big 8...are long that amount.
As I also stated in the above COT Report, Ted pegs JPMorgan's short position at about 39,000 contracts, or around 195 million troy ounces, which is up about 35 million troy ounces from what they were short in last week's COT Report. 195 million ounces works out to around 80 days of world silver production that JPMorgan is short. That's compared to the 210 days that the Big 8 are short in total. JPM is short about 38 percent of the entire short position held by the Big 8 traders.
I estimate the short position in silver held by Scotiabank/ScotiaMocatta at approximately 31 days of world silver production minimum, a number that hasn't changed much in the last while -- and that's most likely because they're not doing much in the COMEX futures market anymore as they continue to try and sell that 'pig-in-a-poke'. JPMorgan has been forced by circumstance to pick up Scotiabank's trading duties in silver and gold. So JPMorgan is by far the No. 1 silver short on Planet Earth -- and likely to remain that way indefinitely, unless they can engineer the mother of all price declines.
The two largest silver shorts on Planet Earth-JP Morgan and Canada's Scotiabank-are short about 111 days of world silver production between the two of them-and that 111 days represents 75 percent of the length of the red bar in silver in the above chart...three quarters of it. The other two traders in the Big 4 category are short, on average, about 18.5 days of world silver production apiece, which is unchanged from last week -- and the prior week. The four traders in the '5 through 8' category are short, on average...15.5 days of world silver production each, which is up a hair from last week's COT Report.
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 53 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 50.3 percent of the entire open interest in silver in the COMEX futures market -- and that number would be around 55 percent once the market-neutral spread trades are subtracted out. In gold, it's 46.9 percent of the total COMEX open interest that the Big 8 are short -- and something over 50 percent once the market-neutral spread trades are subtracted out.
For more than two months now, the Big 8 have been short a larger percentage of the total open interest in silver, than they have in gold.
In gold, the Big 4 are short 65 days of world gold production, which is unchanged from what they were short last week -- and the '5 through 8' are short another 25 days of world production, which is also unchanged from what they were short the prior week, for a total of 90 days of world gold production held short by the Big 8 -- which is, of course, also unchanged from what they were short in last week's report. Based on these numbers, the Big 4 in gold hold about 72 percent of the total short position held by the Big 8...which is unchanged from last week's COT Report as well. As a matter of fact, all these numbers have remained unchanged for the last three reporting weeks in a row.
The "concentrated short positions within a concentrated short position" in silver, platinum and palladium held by the Big 4 are about 70, 66 and 74 percent respectively of the short positions held by the Big 8. These three numbers are exactly unchanged for the the last three reporting weeks as well.
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 104,457 COMEX contracts in the November BPR, which is almost 50 percent of this week's commercial net short position shown in the above COT Report. In October's Bank Participation Report [BPR], that number was 108,444 contracts, so they've decreased their collective short positions by a rather immaterial 4,000 contracts. 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 64,788 COMEX gold contracts, which isn't much per bank. In the October BPR, 27 non-U.S. banks were net short 73,753 COMEX contracts, so the month-over-month change shows a decrease of about 9,000 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 31.5 percent of the entire open interest in gold in the COMEX futures market, which is a small decrease from the 34.7 percent they were short in the October 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, 5 U.S. banks are net short 36,445 COMEX silver contracts in November's BPR - and Ted figures that JPMorgan is the proud owner of all of it, plus a bit more...39,000 contracts worth. This means that the remaining 4 U.S. banks obviously have to be net long the silver market in order for the numbers to work out -- and they are long to the tune of 3,579 COMEX silver contracts. In October's BPR, the net short position of these U.S. banks was 32,021 contracts, so the short position of the U.S. banks has increased by about 4,400 contracts during the last reporting month, with virtually every contract accredited to JPMorgan.
Also in silver, 19 non-U.S. banks are net short 33,028 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 November's Bank Participation Report, 24 banks are net short 34.2 percent of the entire open interest in the COMEX futures market in silver-which is up a hair from the 33.4 percent that they were net short in the October 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 9,342 COMEX contracts in the November Bank Participation Report. In the October BPR, these same banks were short 10,913 COMEX platinum contracts, so there's been a drop of about 1,600 contracts in the short position of the 5 U.S. banks in question during the last reporting month, which isn't much of a change.
I suspect that, like in silver and palladium, JPMorgan holds virtually all of the platinum short position by itself.
Also in platinum, 17 non-U.S. banks are net short 7,961 COMEX contracts, which is a 16 percent increase from the 6,866 contracts they were net short in the October 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, 22 banks were net short 22.1 percent of the entire open interest in platinum in the COMEX futures market, which is down a bit from the 24.8 percent they were collectively net short in the October BPR. Click to enlarge.
In palladium, 4 U.S. banks were net short 9,928 COMEX contracts in the November BPR, which is up about 900 contracts/ten percent from the 9,053 contracts they held net short in the October BPR.
Also in palladium, 12 non-U.S. banks are net short 3,988 COMEX contracts-which is down a very decent amount from the 5,744 COMEX contracts that 11 non-U.S. banks were short in the October BPR. When you divide up the short positions of these non-U.S. banks more or less equally, they're immaterial.
But, having said all that, as of this Bank Participation Report, 16 banks are net short 39.0 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 October's BPR, the world's banks were net short 42.4 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. However, with Scotiabank's precious metals division ScotiaMocatta up for sale, it certainly appears that they are no longer a player in the precious metals market.
I have a very decent number of stories for you today, including a very worthwhile 35-minute video interview to start today's Critical Reads section.
Market analyst and trader Greg Mannarino, interviewed by USAWatchdog's Greg Hunter, says central banks and allied investment banks are rigging all markets, including the gold market, to prevent free-market price discovery.
Mannarino sees signs that the bond market is about to get away from them but for the moment, he says, "Nothing is real."
Mannarino adds that he has filed with the U.S. Securities and Exchange Commission a complaint about gold market rigging and encourages his readers to copy his complaint and send it to the SEC as their own.
He encourages people to begin to transact financially outside the central bank-controlled system by using gold, silver, and bitcoin.
Hunter observes that central bank smashes to the gold price, like Friday's, seem to be losing impact.
I listed to the entire 35-minute interview on Sunday -- and this kid is pretty sharp! It's certainly worth watching. I found it embedded in a GATA dispatch -- and the link to it is here.
Theresa May's misery risks infecting the U.K. economy. The British Prime Minister faces growing challenges to her leadership from her Conservative party's pro- and anti-European Union factions. Political disarray increases the risks that quitting the bloc will inflict serious harm on the economy. A softer Brexit is becoming harder to deliver.
A clear sign that investors are getting more nervous came on Monday when sterling shed a full cent against the U.S. dollar, falling below $1.31. The trigger was a Sunday Times report that 40 Conservative deputies had agreed to sign a letter of no confidence in May - eight short of the number needed to trigger a leadership contest. A sharp jump in options prices that reflect how much traders expect the pound to gyrate against the dollar in the next month underscores the market jitters.
Fair enough. May is struggling to convince other E.U. countries that Britain has made enough compromises on Brexit issues they want resolved before moving on to discussing trade. Ejecting her would require the Conservatives to spend weeks choosing a new leader. A general election might have to be called to confirm her replacement's mandate, possibly leading to a change of government. This would delay negotiations about trading arrangements to allow continued tariff-free movement of goods between Britain and the rest of the E.U. It would also make it harder to secure a transition period that would delay the impact of the new arrangements beyond the March 2019 Brexit date.
The longer the clock ticks without tangible progress on trading terms and conditions, the more likely businesses are to move jobs and investment out of the United Kingdom. Investors' patience will run out even sooner. They have so far assumed that the prime concern of British politicians is to minimise economic damage: the Breakingviews Brexit indicator, which incorporates signals from currency, bond, stock, and credit default swap prices, has been relatively stable in recent months. The more that May suffers, the more that markets will anticipate lasting economic pain.
The above four paragraphs are all there is to this brief Reuters article that appeared on their Internet site at 6:11 a.m. EST on Monday morning -- and it was updated about eight hour later. I thank Richard Saler for pointing it out. Another link to the hard copy is here.
Thousands of anti-E.U. protesters voiced their fury at Brussels yesterday in one of the largest ever demonstrations against the European bloc to take place in Italy.
The scale of the protest shocked police officers, and even prompted the local U.S. embassy to issue a security alert, warning of up to "10,000 people on the streets".
Among the urgent demands of the young protesters was an immediate Italian exit of the E.U. as well as a departure from the eurozone.
This follows polls yesterday that will alarm officials in Brussels, as eurosceptism remains on the rise in the country and anti-E.U. parties resurgent.
This news item was posted on the express.co.uk Internet site at 7:11 a.m. GMT on their Monday morning -- and was updated about four hours later. It's the first of two stories I found in yesterday's edition of the King Report -- and another link to it is here.
Recently, the people of two of Italy's most prosperous regions voted in a referendum, on whether they wished to have greater autonomy from Rome. The referendum is non-binding, but that's not what's most significant in the results.
What is significant is that over 95% of those who voted in Lombardy did so in favour of greater autonomy. In Veneto, the number in favour of greater autonomy was even higher, at 98%.
Roberto Maroni, president of Lombardy, said, "I now have a commitment... to go to Rome and give concrete actualization to the mandate that millions of Lombards have given me."
It may appear on the surface that Mister Maroni intends to make an appeal for independence, but this is not what will occur. He's a politician and won't invite Rome to jail him for sedition. His goal will instead be to demand that a greater amount of the national income that's generated by Lombardy and Veneto (about 20% of the total) remains within those regions.
This will not mean that he wants his people to be taxed less; his goal will be to retain a larger portion to be absorbed by the regional governments-to be in his own hands.
This worthwhile commentary by Jeff was posted on the internationalman.com Internet site yesterday -- and another link to it is here.
It is always tempting. The Syrian war is coming to an end, and the losses to those who bet on the losing side - suddenly in the glare of the end-game - become an acute and public embarrassment. The temptation is to brush the losses aside and with a show of bravado make one last bet: the masculine "hero" risks his home and its contents on a last spin of the wheel. Those in attendance stand in awed silence, awaiting the wheel to slow, and to trickle the ball forward, slot by slot, and to observe where it comes to rest, be it on black, or on the blood-red of tragedy.
Not only in romances, but in life, too. Saudi Crown Prince Mohammed bin Salman (MbS) has wagered all on black, with his "friends" - President Trump's son-in-law Jared Kushner, Abu Dhabi Crown Prince Mohammed bin Zayed (MbZ) and Trump himself daring MbS on. Trump, in his business life, once or twice has staked his future on the spin of the wheel. He too has gambled and admits to the exhilaration.
And in the shadows, at the back of the gaming room, stands Israeli Prime Minister Bibi Netanyahu. The idea of going to the casino was his, in the first place. If the hero lands on black, he will share in the joy, but if it is red ... never mind: Bibi's home is not forfeit.
Let us be clear, MbS is severing all the various fetters that hold the Saudi kingdom together and intact. Saudi Arabia is not just a family business: it is also a confederation of tribes. Their diverse interests were attended to, primordially, through the composition of the National Guard, and its patronage. The latter henceforth reflects, no longer, the kingdom's diverse tribal affiliations, but the security interests of one man, who has seized it for himself.
This very excellent commentary by Alastair showed up on the consortiumnews.com Internet site on Friday -- and it's certainly worth reading. I thank Larry Galearis for pointing it out -- and another link to it is here.
Now that the boy wonder Saudi Crown Prince Mohammed bin Salman has accelerated his ascent to the throne through a series of wide-scale purges last weekend and reckless foreign-policy moves abroad, both of us are feeling nostalgic for the good old days when the Saudis were scared of their own shadow.
During decades of service at the State Department, we longed for the day when risk-averse Saudi leaders would take greater ownership in solving their domestic and regional security problems and reduce their dependence on the United States. We were frustrated by their inaction and caution. Even former Secretary of State James Baker - who courted the Saudis for obvious reasons during the Gulf War - exploded in frustration after the Saudis failed to deliver a promised public statement on the Arab-Israeli peace process: "These guys could fuck up a two-car funeral."
But now the dog has finally caught up with the mail truck. The Saudis have become everything we wanted them to be - and by the looks of things, maybe a lot more than we bargained for. Under Mohammed bin Salman, Riyadh has morphed into an independent force striking out aggressively at home and adventurously abroad, dragging Washington with them. Here's why we have a serious case of buyer's remorse - and why the Trump administration needs to hit the reset button with King Salman and his impetuous son.
In a string of pretty spectacular foreign-policy failures (see: Yemen, Qatar, and now Lebanon may not be far behind), Mohammed bin Salman's most notable success abroad may well be the wooing and capture of President Donald Trump and his son-in-law, Jared Kushner. Americans have long been infatuated with kings and the kingdom. But King Salman and Mohammed bin Salman seem to have set a new land speed record in convincing the Trump administration that they hold the keys to war, peace, and the transformation of the region.
This commentary/opinion piece showed up on the 'prestigious' foreignpolicy.comInternet site last Friday as well -- and it's the second article that I found in yesterday's edition of the King Report. Another link to it is here.
While turbulent during the best of times, gigantic waves of change are now sweeping across the Middle East. The magnitude is such that the impact on the global price of oil, as well as world markets, is likely to be enormous.
A dramatic geopolitical realignment by Saudi Arabia is in full swing this month. It's upending many decades of established strategic relationships among the world's superpowers and, in particular, is throwing the Middle East into turmoil.
So much is currently in flux, especially in Saudi Arabia, that nearly anything can happen next. Which is precisely why this volatile situation should command our focused attention at this time.
The main elements currently in play are these:
A sudden and intense purging of powerful Saudi insiders (arrests, deaths, & asset seizures)
Huge changes in domestic policy and strategy
A shift away from the U.S. in all respects (politically, financially and militarily)
Deepening ties to China
A surprising turn towards Russia (economically and militarily)
Increasing cooperation and alignment with Israel (the enemy of my enemy is my friend?)
Taken together, this is tectonic change happening at blazing speed.
This is Part 1 of an extremely well written and must read commentary from Chris. It was posted on the peakprosperity.com Internet site on Friday. Another link to it is here. There is a Part 2 -- however, you have to "enroll"...i.e pay money...to read it. Brad Robertson was the first person through the door with this item. This commentary appeared on Zero Hedge on Saturday -- and has already had more than 844,000 views. I wasn't kidding when I said it was a must read.
Three days ago, we reported that based on various unconfirmed media reports, Saudi King Salman - reeling from a just concluded purge that arrested some of the country's wealthiest and most powerful royals and officials - was set to elevate his son, Crown Prince Mohammed bin Salman, to the throne in as little as 48 hours. Speculation peaked when Al-Arabiya tweeted, then quickly deleted, details of the allegedly imminent ascension ceremony.
In fact, transfer of power from the King to the Royal Prince would be merely a formality at this point: Prince Mohammed already controls almost all levers of government; he oversees defense, oil and economic policies, and - in applying the script of Syriana to real life - has vowed to wean the Saudi economy off its reliance on oil and return to a more moderate form of Islam.
But perhaps the most substantial confirmation that royal succession is indeed in the cards, is the official denial that took place overnight via Bloomberg, which reported that "King Salman isn't planning to abdicate in favor of his son, a senior Saudi official said, dismissing mounting speculation that Crown Prince Mohammed bin Salman will soon ascend to the throne."
Needless to say, if mounting speculation was baseless, Saudi Arabia would simply ignore it.
"There is no possibility whatsoever that the king will abdicate,'' the official said in response to written questions. Saudi kings usually stay in power even when bad health prevents them from carrying out their job, the official said on condition of anonymity. He noted the example of King Fahd, who stayed on as monarch until his death in 2005 despite being gravely ill in the last few years of his reign.
The denial continued: "Abdication is unthinkable especially since King Salman, 81, enjoys "perfect'' physical and mental powers, the official said. Those who suggest otherwise "do not understand royal customs and traditions in Saudi Arabia," the official said. "Or, perhaps, they do very well, which is why Riyadh felt the need to issue an official denial."
The irony is that by directly addressing the mounting speculation, the Saudi royal family merely adds credence to it. In a Catch 22 described by Graham Griffiths, an analyst at consultancy Control Risks in Dubai, the government will have difficulty credibly denying that speculation "because no one expects them to acknowledge it as a possibility before it happens. As a result, rumor and speculation will continue to abound."
This very interestingZero Hedge story, based on a Bloomberg news item. was posted on their website at 11:16 a.m. EST on Sunday morning -- and I thank Brad Robertson for passing it along. Another link to it is here.
The big news in Asia this week is not U.S. President Trump's grand but ultimately empty visit to China. It is the quiet steps China and South Korea have begun to take towards each other.
In a recent article for The Duran I discussed how Russian foreign policy seemed to be edging towards a solution to the Korean crisis involving direct Chinese - Russian brokered talks between North and South Korea which would not involve the U.S.
I also referred to the longstanding Russian projects to build railway lines and gas pipelines across North Korea to South Korea, providing South Korea via North Korea and Russia with a land bridge to Europe, whilst bringing the two Koreas together and binding them closer both economically and politically to the two Great Eurasian Powers ie. Russia and China.
I also speculated that these Russian plans - which I said had unquestionably been worked out in collaboration with China - might also involve the two Koreas coming together in some form of confederation with each other, this being an idea first mooted by North Korean President Kim Il-sung in the 1970s, and floated from time to time since.
This worthwhile article by Alex put in an appearance on theduran.com Internet site last Friday morning -- and I thank Larry Galearis for his second contribution to today's column. Another link to it is here.
President Trump is wrapping up his historic visit to Asia today. Trump's journey is the longest overseas trip of his presidency and the longest Asian visit of any president in 25 years.
After a stopover in Hawaii, Trump proceeded to Japan, where he met with Japanese Prime Minister Shinzō Abe, and then to South Korea where he met with President Moon Jae-in.
The capstone of the trip was Trump's arrival on Nov. 8 in Beijing for meetings with Chinese President Xi Jinping. Trump then headed for Vietnam late in the week and is concluding meetings in the Philippines today.
Much of the reporting on this trip has involved international trade, but it's a mistake to focus on that. This trip was a prewar gathering of allies (Japan and South Korea) and potential allies (China) in a last-ditch struggle to head off a hot war with North Korea, led by the reckless Kim Jong Un.
At this point, there are only four possible outcomes of the U.S.-North Korea confrontation over nuclear weapons:
Who to believe? This commentary by Jim showed up on the dailyreckoning.com Internet site on Monday sometime -- and another link to it is here. I thank Brad Robertson for sending it our way.
Ever increasingly I'm siding with those who believe in a rigged market in gold - and by gold's leading impact on the other precious metals too. We have just seen yet another instance of a totally insane volume of notional gold hitting the futures markets, surely designed to stop any positive momentum for gold in its tracks. I say insane because in a true fair market no-one in their right minds would put so much on the market in such a short space of time even if it involves only paper gold rather than actual bullion.
Yesterday's www.kitco.com chart - reproduced below - would seem to say it all. Gold had been trading in Europe above the $1,284 level - not great for the gold aficionados but perhaps sufficient to suggest a degree of positive momentum . But almost immediately after the COMEX opened, a stupendous amount of paper gold (over $4 billion worth - over 3 million ounces) was 'dumped' on the futures market in a matter of minutes. That this huge paper 'sale' only knocked the price back just over $10 will give the gold investor some comfort, but it certainly had the intended effect of putting a sharp dent in precious metals price prospects - at least until the next time.
These 'flash crashes' in the precious metals prices seem to be happening every time we start to see positive moves in the gold price. That cannot be coincidental! Ed Steer, who publishes a daily newsletter to subscribers called it "a picture-postcard waterfall decline" - an apt description looking at the above chart. Ed places the latest 'flash crash' firmly at the hands of JP Morgan and the other bullion banks which hold large short positions in the precious metals - particularly in gold and silver and thus have a vested interest in keeping the price suppressed.
Ed's views are well known on market manipulation and are not seen as reality by some precious metals market mainstream observers, but these 'coincidental' flash crashes do seem increasingly to support his viewpoint as a counter argument to what might be considered the mainstream financial establishment, which is very much in denial - probably because such manipulation appears to be an integral part of doing business in the sector.
The evidence of large scale market manipulation is almost overwhelming. There have been a number of very high profile admissions of guilt on manipulation in a myriad of markets - including the gold market - and we suspect these are but the tip of the iceberg.
This commentary by Lawrie is definitely worth your time. It showed up on the Sharps Pixley website on Saturday I believe -- and another link to it is here.
Yesterday the Financial Times continued its campaign to persuade the world that nothing deceptive is going on in the gold sector, publishing a long article lauding the German Bundesbank and its board member, Carl-Ludwig Thiele, for flawlessly arranging the repatriation of some of the central bank's gold from London, Paris, and New York.
At least the article, appended here, quotes the founder of Germany's "Repatriate Our Gold" campaign, Peter Boehringer, who just has been elected to the country's parliament, the Bundestag, from the Alternative for Germany list. Boehringer notes the Bundesbank's long resistance to transparency about the national gold reserves and the FT declines to call him a Nazi, an epithet risked by anyone in Europe who questions central banking and uncontrolled immigration.
The FT's article concludes with a somewhat rueful comment from Thiele: "We're the most transparent of all the central banks about our holdings of gold and there are still more questions. With gold there are always more questions."
But central banks can count on the Financial Times not to ask those questions -- starting with questions about the surreptitious swapping and leasing of gold done by central banks and their constant interventions in the gold market to prevent free markets from breaking out anywhere in the world.
This GATA dispatch from Saturday, complete with the above preamble by Chris Powell, includes the entire Financial Times article posted in the clear. It's worth reading -- and another link to it is here.
Disclosures in the October statement of account published by the Bank for International Settlements indicate that during October the bank increased substantially its use of gold swaps and other gold-related derivatives.
The information provided in the BIS monthly statement of account is not sufficient to calculate a precise amount of gold-related derivatives, including swaps, but it appears that the total exposure has risen above 570 tonnes of gold as of October 31.
This compares to an estimate of close to 500 tonnes as of August 31 and an audited figure of 438 tonnes as of March 31.
This is the BIS' highest level of gold swaps recorded since the bank began reporting the use of gold swaps in its annual report for the financial year ended March 31, 2010.
A review of the previous use of gold derivatives by the BIS reveals that the transactions in the year ending March 31, 2010, were far more substantial than anything done by the bank in the years immediately before.
This commentary by Robert was posted on the gata.org Internet site on Sunday -- and another link to it is here.
What is the world coming to when commodity market analyst and newsletter writer Dennis Gartman of The Gartman Letter starts relying on GATA for research?
From today's edition:
"Turning to gold, Friday was again a disaster as Fridays have been for the gold market all too often in the course of the past several years. Indeed, the best that gold can do at this point is hold its lows forged very late on Friday. The Bank for International Settlements reports that its 'swaps' position has gone to its highest level in history and that may have been the reason for the assault upon gold on Friday."
The disclosure about the BIS' latest gold swaps was made Sunday by GATA consultant Robert Lambourne.
Of course a little attribution to GATA would have been courteous, but if The Gartman Letter can acknowledge the surreptitious involvement in the gold market by the BIS and its likely suppressive influence on the price of the monetary metal, the word is probably getting around pretty well these days, even if no financial journalist dares yet question the BIS about what it's doing and on whose behalf.
While this does not necessarily foretell a return to free markets, truth, justice, and the American way as it used to be, it does suggest at least that the totalitarians are slowly being dragged into the open, which is the first step.
This GATA dispatch was posted on their Internet site at 1:51 p.m. EST on Monday afternoon -- and another link to it is here.
Until last quarter, the world's biggest hedge fund had, curiously, never held a position (according to our records) in any of the most liquid gold ETFs, whether the SPDR Gold Trust, the GLD, or the iShares Gold Trust, the IAU. That changed in the second quarter of 2017, when Bridgewater made its first tentative purchases in the gold ETF space, buying up 577,264 GLD shares, for $68.1 million, as well as 3.1 million IAU shares worth $36.8 million.
That was just the beginning, because as readers will recall, back on August 10 Ray Dalio urged investors to buy gold in case "things go badly." This is what Dalio said:
When it comes to assessing political matters (especially global geopolitics like the North Korea matter), we are very humble. We know that we don't have a unique insight that we'd choose to bet on. We can also say that if the above things go badly, it would seem that gold (more than other safe haven assets like the dollar, yen and treasuries) would benefit, so if you don't have 5-10% of your assets in gold as a hedge, we'd suggest you relook at this. Don't let traditional biases, rather than an excellent analysis, stand in the way of you doing this.
And that's also what he did, because in the third quarter Bridgewater was very busy buying gold: in fact, according to the just released 13F, after $3.8BN and $2.9BN positions in EM ETFs VWO and EEM, as well as a $1.3BN position in the SPY ETF, Bridgewater's 4th largest position as of September 30 was GLD, with 3.894 million shares, worth $473 million. In other words, in Q3, Ray Dalio went on a gold buying spree, increasing his GLD holdings by a whopping 575%.
It wasn't only GLD, however, because Bridgewater also nearly tripled its IAU holdings, increasing its paper iShares gold holdings by 266%, from 3.1 million shares to 11.3 million.
And now that Ray Dalio is rapidly buying up GLD, IAU and other gold holdings, we wonder how long before the momentum chasers send gold, both paper and physical surging, and whether this shift in momentum could potentially impact the ongoing surge in bitcoin.
This gold-related news item appeared on the Zero Hedge website at 3:41 p.m. EST yesterday afternoon -- and it comes courtesy of West Virginia reader Elliot Simon. Another link to it is here.
The PHOTOS and the FUNNIES
No critters today. These were the last two shot that I downloaded from my camera before packing it away for the winter, as it's mostly too cold to go outside for any length of time. These were taken on November 4 after our third snowfall of the season. The first one is of downtown Edmonton with the North Saskatchewan River in the foreground. Temperatures have been miles below normal for the last two weeks, but I was still surprised to see pan ice on the river this early. Thirty minutes after I took that photo, I was out at 'the pond' -- and this is what it looks like all frozen over with 15 cm/6 inches of mostly undisturbed snow on the ground. 'Click/double-click to enlarge'.
JPMorgan's net short position is now much larger than it was when it became known that it inherited Bear Stearns' short position in 2008. Not many remember, but the publication of the August 2008 Bank Participation Report revealed for the first time that JPM was the big short silver crook and my exposure of that fact led directly to the non-infamous five-year CFTC silver investigation by the Enforcement Division. Of course, that investigation was as phony as a three dollar bill. My point is that JPMorgan's short position in silver is now much larger than it was when the CFTC first saw fit to investigate back then.
It wasn't so much that JPMorgan's concentrated short position increased so much this reporting week, as is its sheer size at what are silver prices that can't be considered excessively high. Recent public earnings reports for the primary silver miners have indicated that not much, if any profit can be generated at current silver prices. Then where the heck is the economic legitimacy for the obscenely large concentrated short position? In fact, that's what's making me nervous about what lies ahead. A reasonable person would ask why, at current silver prices, would there be such large concentrated short positions?
Concentrated positions are not hallmarks of genuine free markets and the regulators know this. Such positions necessarily create potential risks that wouldn't be present in the absence of such dominating positions. This makes it a case that if something does go wrong with those holding big concentrated positions, the impact on the market is magnified. I don't think JPMorgan is in any jeopardy, but should another big silver short seller look to exit its position (say ScotiaMocatta) things could get dicey for the other big shorts. In this case dicey could mean up in price very big as well as down temporarily. -- Silver analystTed Butler: 13 November 2017
It certainly was a 'nothing' trading session on Monday, with volumes to match. No moving averages were broken, so there wasn't much in the way of either improvement or deterioration in the Commercial net short positions in either silver or gold.
As I mentioned in my discussion on the COT Report further up, still nothing has been resolved from a COMEX futures market structure in either precious metal -- and it's impossible to tell if it will happen to the downside, or the upside if 'da boyz' get over run. Ted's right-on-the-money commentary on this was as follows... "I'm even more concerned that however this current market structure gets resolved, it could be a doozy."
That it could!
Here are the 6-month charts for all four precious metals -- and for the second day in a row, there's not much to see. The 'click to enlarge' feature helps a bit with the first four charts.
And as I type this paragraph, the London open is less than ten minutes away -- and I note that the gold price was sold a few dollars lower -- and the current low was set shortly after 11 a.m. China Standard Time on their Tuesday morning. It's been chopping unsteadily higher since -- and is down $2.10 the ounce at the moment. The silver price was under similar price pressure in Far East trading -- and it's down 3 cents. Platinum is down a dollar, but palladium has been rallying very unsteadily -- and as Zurich opens, it's up 8 bucks.
Net HFT gold volume is a bit over 38,000 contracts -- and there's no roll-over/switch volume to speak of. Net HFT silver volume is around 5,900 contracts, which is very light -- and there's not much roll-over/switch volume there, either.
The dollar index chopped sideways until a few minutes before 2 p.m. CST on their Tuesday afternoon. It made it up to the 94.54 mark an hour later, but has sold pretty hard since -- and is currently down 12 basis points at 94.40 as London opens.
Today, at the close of COMEX trading, is the cut-off for this Friday's Commitment of Traders Report, which seems rather strange since I've just dealt with last week's report in today's column.
And as I post today's column on the website at 4:03 a.m. EST, I see that 'da boyz' spun their algos -- and then pulled their bids -- and gold was down 6 dollars in just seconds. It's recovered a bit off its current low -- and is down $6.30 the ounce. Ditto for silver -- and it's down 13 cents at the moment. Platinum and palladium weren't spared, with the former now down 4 dollars -- but well off its spike low tick. Palladium's gains have been cut by two thirds -- and it's up only 3 bucks currently.
Gross gold volume has blown out to around 77,00 contracts -- and net volume is about 73,000 contracts. Roll-over/switch volume has picked up a hair. Net HFT silver volume is sitting at 12,000 contracts, about double what it was just before the London open -- and roll-over/switch volume is higher by a tad in this precious metal as well.
The dollar index is off its low tick by a bit, but still down 11 basis points.
Heaven only knows what JPMorgan et al have in store for us during the COMEX trading session today -- and nothing will shock me when I fire up the computer later this morning after I roll out of bed.
That's it for another day -- and I'll see you here tomorrow.
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