<![CDATA[Ed Steer's Gold & Silver Daily]]> http://www.caseyresearch.com/feeds/main Stay abreast of the news that's moving the gold and silver markets in The Gold & Silver Daily. en <![CDATA[59.7 Tonnes of Gold Withdrawn from the Shanghai Gold Exchange on October 24]]> http://www.caseyresearch.com/gsd/edition/59.7-tonnes-of-gold-withdrawn-from-the-shanghai-gold-exchange-on-october-24/ http://www.caseyresearch.com/gsd/edition/59.7-tonnes-of-gold-withdrawn-from-the-shanghai-gold-exchange-on-october-24/#When:05:52:00Z "Silver price is now back to where it was in the first quarter of 2010"

¤ Yesterday In Gold & Silver

The gold price wasn't allowed to do much in early Far East trading on their Thursday---and developed a negative bias around 1 p.m. Hong Kong time---and by the time JPMorgan et al were through, with the low tick coming at 11:30 a.m. EDT, they had gold down around fifteen bucks from it's Thursday close.  It recovered a few dollars off that low by noon, but then chopped sideways for the remainder of New York trading session.

The high and low tick were recorded as $1,216.50 and $1,195.50 in the December contract.

Gold closed yesterday at $1,198.80 spot, down $12.80 from Thursday's close.  Net volume was very high at 195,000 contracts.

The silver price didn't do much in Far East trading up until shortly before 2 p.m. Hong Kong time.  At that point the HFT boyz and their algorithms showed up---and the rest, was they say, was history.  The low tick was in at 11:15 a.m. EDT---and from there it bounced off that low a few times before rallying a bit.  After 12:30 p.m., the price chopped sideways in a tight range until the 5:15 p.m. EDT close of electronic trading.

The high and low in silver were reported as $17.205 and $16.33 in the December contract, which was an intraday move of a hair over 5 percent.

Silver finished the Thursday session at $16.46 spot, down 63 cents from Thursday's close.  That's a new low price for silver going back to March of 2010.  Net volume was a whopping 74,000 contracts.

Platinum also ran into the same not-for-profit seller shortly before 2 p.m. in Hong Kong.  It's low came minutes before 12 o'clock noon in New York.  It rallied a few bucks from there before trading flat for the remainder of the Thursday session.  Platinum was closed down 17 bucks.

The palladium price got smacked twice yesterday.  The first time was at the New York open at 6 p.m. on Wednesday evening---and the second time was at the London p.m. gold fix on Thursday.  Like platinum, JPMorgan et al set the low of the day just minutes before noon EDI---and the price didn't do much after that.  Palladium was closed down 16 dollars on the day.

The dollar index closed at 85.99 late on Wednesday afternoon in New York---and then took three steps up to its 86.41 high tick, which came shortly after London opened on their Thursday.  From there it quietly sold back to the 86.00 mark by 12:20 p.m. EDT.  It gained some back by 2 p.m.---and then traded sideways into the close.  The index finished the Thursday session at 86.18---up 19 basis points on the day.

Once again the gold shares got crushed, as the HUI closed lower by 7.44%---the biggest one-day decline that I can remember---and I can remember quite a lot.  The HUI is down almost 12 percent in the last two trading days.

The silver equities fared better, but that's only a relative term in this situation, as Nick Laird's Intraday Silver Sentiment Index got hammered for another 5.65 percent.

The CME Daily Delivery Report for Day 1 of the November delivery month showed that 2 gold and 44 silver contracts were posted for delivery on Monday.  In silver, the only short/issuer was Jefferies---and R.J. O'Brien and Canada's Scotiabank stopped 25 and 18 contracts respectively. The link to yesterday's Issuers and Stoppers Report is here.

As I said in yesterday's missive, barring any surprises, the November delivery month will be a yawner---and it's certainly lived up to its advanced billing.

The CME Preliminary Report for the Thursday trading session showed that November open interest declined by 207 contracts and now sits at only 67 contracts left---minus the two in the previous paragraph.  In silver, the November open interest is now down to 164 contracts, minus the 44 posted for delivery tomorrow that were mentioned above.

There was another withdrawal from GLD yesterday, as an authorized participant took out 38,449 troy ounces and, once again, there was no change in SLV.

Since there were no withdrawals or additions to SLV during the reporting week, which ended on Wednesday,  there was no report from Joshua Gibbons yesterday.

For the second day in a row, there was no sales report from the U.S. Mint.

I'll certainly be interested if they update their sales report for today, which is the last business day of the month.  If they don't, the sales report for Monday should be quite something, as the mint has now gotten into the practice of withholding sales at the end of the month if it pushes silver eagles sales for the current month, too high.

There was no gold received at the Comex-approved depositories on Wednesday, but 96,450.000 troy ounces were shipped out---and that amount is precisely 3,000 kilobars, probably heading to China.  The link to that activity is here.

It was a very quiet day in silver, as nothing was received---and only 7,060 troy ounces were shipped out.

Nick Laird surprised me with the latest withdrawal from the Shanghai Gold Exchange for the week ending October 24.  It was another very chunky amount, as 59.684 tonnes were reported withdrawn---and here's Nick's most excellent chart.

Once again I don't have a lot of stories for you today---but there are several in here that fall into the absolute must read category so I hope you can make time for them.

¤ Critical Reads

Q.E. central bankers deserve a medal for saving society

The final word on quantitative easing will have to wait for historians. As the US Federal Reserve winds down QE3 we can at least conclude that the experiment was a huge success for those countries that acted quickly and with decisive force.

Yet that is not the ultimate test. The sophisticated critique - to be distinguished from hyperinflation warnings and "hard money" bluster - is that QE contaminated the rest of the world in complicated ways and may have stored up a greater crisis for the future.

What we can conclude is that extreme QE enabled the US to weather the most drastic fiscal tightening since demobilisation after the Korean War, without falling back into recession. Much the same was true for Britain.

The Fed's $3.7 trillion of bond purchases did not drive up debt ratios, as often claimed. It reduced them.

Ambrose is a paid whore/mouthpiece for the 'establishment'---and will print whatever he's told to print.  This should be kept in mind should you read this commentary posted on The Telegraph's Internet site at 9:00 p.m. GMT on Thursday evening.  I thank Roy Stephens for his first offering in today's column.

The $75 trillion shadow hanging over the world

Global shadow banking assets rose to a record $75 trillion (£46.5 trillion) last year, new analysis shows.

The value of risky investment products, mortgage-backed securities and other non-bank entities increased by $5 trillion to $75 trillion in 2013, according to the Financial Stability Board (FSB).

Shadow banking, which is not constrained by bank regulation, now represents about 25pc of total financial assets - or roughly half of the global banking system. It is also equivalent to 120pc of global gross domestic product (GDP).

The FSB, which monitors and makes recommendations on financial stability issues, said that while non-bank lending complemented traditional channels by expanding access to credit, data inconsistencies together with the size of the system meant closer monitoring was warranted.

This commentary is also from The Telegraph.  It was posted there at 4:01 p.m. GMT on their Friday afternoon---and I thank South African reader B.V. for sharing it with us.

Prosecutors Suspect Repeat Offenses on Wall Street

It would be the Wall Street equivalent of a parole violation: Just two years after avoiding prosecution for a variety of crimes, some of the world’s biggest banks are suspected of having broken their promises to behave.

A mixture of new issues and lingering problems could violate earlier settlements that imposed new practices and fines on the banks but stopped short of criminal charges, according to lawyers briefed on the cases. Prosecutors are exploring whether to strengthen the earlier deals, the lawyers said, or scrap them altogether and force the banks to plead guilty to a crime.

That effort, unfolding separately from a number of well-known investigations into Wall Street, has ensnared several giant banks and consulting firms that until now were thought to be in the clear.

As I and others have been saying for years, unless they start throwing people in jail---Wall Street and their bankster friends aren't going to change their behaviour.  This essay appeared on The New York Times website at 3:56 p.m. EDT on Thursday---and I thank Phil Barlett for sending it along.

Russian lawmaker asks Nobel Committee to strip Obama of Peace Prize

A representative of the populist LDPR nationalist party claims in an official letter that the US President should be blamed for thousands of innocent people’s deaths and therefore cannot keep his 2009 Nobel Peace Prize.

More and more international experts are calling Obama’s presidency dark times. The reason for that is the brutal policy that he is conducting all over the world, like Napoleon or Hitler had done before. But I want to warn Obama so that he pays more attention to history and understands that he can end up like Hitler,” MP Roman Khudyakov said in an interview with Izvestia daily.

The politician added that under Obama the United States participated in the “dirty war” in the Middle East, financed the armed conflict in Ukraine and violated international law by torturing suspected terrorists. All this makes the US President complicit in the violent deaths of several thousand innocent civilians and such a person cannot remain the holder of the Nobel Peace Prize, Khudyakov said.

I wholeheartedly agree, as he should never have been awarded the Peace Prize in the first place.  This news item was posted on the Russia Today website at 9:50 a.m. Moscow time on their Thursday morning, which was 1:50 a.m. EDT.  It's the second contribution of the day from Roy Stephens.

France denies warship delivery, as Russian bombers skirt E.U. airspace

France's controversial warship deal with Russia is hitting the headlines again, with a cacophony of statements and denials after a Russian minister published a French invitation to the hand-over ceremony.

Russian deputy prime minister Dmitry Rogozin on Wednesday (29 October) published a letter on his Twitter page by the French constructor of Mistral warships, supposedly inviting Russian authorities to the ceremony in St. Nazaire on 14 November.

He tweeted that the Russian state-owned arms company Rosoboronexport was invited for the delivery of one ship and for next steps on construction of the second one in the contract.

But a spokesperson of the constructor (DCNS) said a few hours later that the Mistral delivery has not yet been confirmed.

This news story, filed from Brussels, showed up on the euobserver.com Internet site at 9:56 a.m. Europe time yesterday morning---and it's also courtesy of Roy Stephens.

France on alert after mystery drones spotted over nuclear plants

France has launched an investigation into unidentified drones that have been spotted over nuclear plants operated by state-owned utility EDF, its interior minister said on Thursday.

Seven nuclear plants across the country were flown over by drones between Oct. 5 and Oct. 20, an EDF spokeswoman said, without any impact on the plants’ safety or functioning.

“There’s a judicial investigation under way, measures are being taken to know what these drones are and neutralise them,” Interior Minister Bernard Cazeneuve told France Info radio on Thursday, without specifying the measures.

The drone sightings may renew concerns about the safety of nuclear plants in France, the world’s most nuclear-reliant country with 58 reactors on 19 sites operated by EDF.

This news item appeared on the france24.com Internet site yesterday sometime---and it's the second offering of the day from reader B.V.

Has the E.U. lost the ability to enact sanctions?

The E.U. has had a rotten time trying to punch its weight on the international scene. Internal disagreements and treaty limitations mean it is little wonder that it is known as an economic giant but a political dwarf.

With the U.S. increasingly urging the E.U. to share the burden of keeping world order, the Union is finding out that the main mischief-maker is not some stubborn member state but one of its own institutions - the European Court of Justice.

The E.U.'s highest court has been busy unravelling the foreign agenda of the Union – by consistently overturning sanctions enacted by Brussels.

In its most recent ruling on 16 October, the court struck down anti-terrorism sanctions imposed on the Tamil Tigers in 2006, citing that the council’s decision to place the group on a list of terrorist organisations had been based on "imputations derived from the press and the Internet". 

This euobserver.com story, filed from Brussels, put in an appearance on their website at 9:28 a.m. Europe time on their Thursday morning.  The offerings from Roy just keep on coming.

Russia Agrees to Terms With Ukraine Over Gas Supply

Russia agreed to terms for restoring natural-gas exports to Ukraine, laying the groundwork to prevent residents going without heat as temperatures drop.

The gas negotiations, brokered by the European Union, came as pro-Russian rebels stepped up attacks on Kiev government forces. European leaders said they hoped the deal would help improve ties between the two countries.

“This breakthrough will not only make sure that Ukraine will have sufficient heating in the dead of the winter,” European Energy Commissioner Guenther Oettinger said at a news conference in Brussels last night. “It is also a contribution to the de-escalation between Russia and Ukraine.”

This Bloomberg article, co-filed from Kiev and Brussels, appeared on their Internet site at 7:32 p.m. Denver time on Thursday evening.

Vladimir Putin is the Leader of the Moral World — Paul Craig Roberts

Vladimir Putin’s remarks at the 11th meeting of the Valdai International Discussion Club are worth more than a link in my latest column. These are the remarks of a humanitarian political leader, the like of which the world has not seen in my lifetime. Compare Putin to the corrupt war criminal in the White House or to his puppets in office in Germany, UK, France, Japan, Canada, Australia, and you will see the difference between a criminal clique and a leader striving for a humane and livable world in which the interests of all peoples are respected.

In a sane Western society, Putin’s statements would have been reproduced in full and discussions organized with remarks from experts such as Stephen F. Cohen. Choruses of approval would have been heard on television and read in the print media. But, of course, nothing like this is possible in a country whose rulers claim that it is the “exceptional” and “indispensable” country with an extra-legal right to hegemony over the world. As far as Washington and its prostitute media, named “presstitutes” by the trends specialist Gerald Celente, are concerned, no country counts except Washington. “You are with us or against us,” which means “you are our vassals or our enemies.” This means that Washington has declared Russia, China, India, Brazil and other parts of South America, Iran, and South Africa to be enemies.

This is a big chunk of the world for a bankrupt country, hated by its vassal populations and many of its own subjects, that has not won a war since it defeated tiny Japan in 1945 by using nuclear weapons, the only use of such terrible weapons in world history.

No one can read Putin’s remarks without concluding that Putin is the leader of the world.

I'd been saving Putin's incredible Sochi speech for my Saturday column, but current events have forced my hand---and here it is in now.  It's a long read, but an absolute must read, especially those who are serious students of the New Great Game.  It was posted on Paul's website on Sunday and, not surprisingly, it's courtesy of Roy Stephens.

Putin to Western Elites: Play-Time is Over

Most people in the English-speaking parts of the world missed Putin's speech at the Valdai conference in Sochi a few days ago, and, chances are, those of you who have heard of the speech didn't get a chance to read it, and missed its importance. Western media did their best to ignore it or to twist its meaning. Regardless of what you think or don't think of Putin (like the sun and the moon, he does not exist for you to cultivate an opinion) this is probably the most important political speech since Churchill's “Iron Curtain” speech of March 5, 1946.

In this speech, Putin abruptly changed the rules of the game. Previously, the game of international politics was played as follows: politicians made public pronouncements, for the sake of maintaining a pleasant fiction of national sovereignty, but they were strictly for show and had nothing to do with the substance of international politics; in the meantime, they engaged in secret back-room negotiations, in which the actual deals were hammered out.  Previously, Putin tried to play this game, expecting only that Russia be treated as an equal. But these hopes have been dashed, and at this conference he declared the game to be over, explicitly violating Western taboo by speaking directly to the people over the heads of elite clans and political leaders.

This commentary on Putin's speech was posted on the Zero Hedge website at 7:35 p.m. EDT yesterday evening---and I thank reader M.A. for sending it our way.  It's a must read as well.  Another commentary on this, written by Justin Raimondo, appeared on the antiwar.com Internet site on Thursday sometime---and it's definitely worth your while as well.  It's headlined "Putin’s Complaint"---and I thank International Man's senior editor Nick Giambruno for passing it around yesterday afternoon.

Iraqi Kurdish forces enter Syria to fight Islamic State

A first group of Iraqi Kurdish peshmerga fighters entered the besieged Syrian town of Kobani on Thursday to help push back Islamic State militants who have defied U.S. air strikes and threatened to massacre its Kurdish defenders.

Kobani, on the border with Turkey, has been encircled by the Sunni Muslim insurgents for more than 40 days. Weeks of U.S.-led air strikes have failed to break their stranglehold, and Kurds are hoping the arrival of the peshmerga will turn the tide.

The siege of Kobani -- known in Arabic as Ayn al-Arab -- has become a test of the U.S.-led coalition's ability to stop Islamic State's advance, and Washington has welcomed the peshmerga's deployment. It has intensified its air strikes in the past two days ahead of their arrival.

This Reuters article, filed from Suruç, Turkey, showed up on their website at 7;24 p.m. EDT yesterday evening---and it's the final offering of the day from Roy Stephens, for which I thank him.

Japan Pension Fund Said to Unveil Asset Allocations Today

Japan’s public pension fund will announce new asset allocations today, a government official said, as the Nikkei newspaper reported that the fund will raise its targets for Japanese and foreign stocks to 25 percent each.

The 127.3 trillion yen ($1.2 trillion) Government Pension Investment Fund will also reduce its domestic debt allocation to 35 percent of assets and increase overseas bonds to 15 percent, the newspaper reported, without saying where it got the information. The figures are exclusive of short-term assets. Health Minister Yasuhisa Shiozaki will today approve the changes, which will be implemented over the medium to long term, according to the Nikkei. The government official who spoke on the timing asked not to be named due to not being authorized to comment publicly on the matter.

The contents of the Nikkei report were news to him, Shiozaki told reporters today. Investors have been awaiting GPIF’s revised strategy since a government panel that reviewed public pensions said last year the fund was too reliant on domestic bonds. The expected tilt to higher-yielding assets comes as the Bank of Japan stokes inflation and as pension payouts mount for the world’s oldest population.

This Bloomberg article, co-filed from Sydney and Tokyo, was posted on their Internet site at 9:56 p.m.  MDT last night, which was 8:56 a.m. Friday morning in Japan.  I thank Howard Wiener for finding it for us.

Koos Jansen: Chinese Gold Demand 1,541 Tonnes Y.T.D.

First things first, Chinese gold demand is still very strong and it’s in a uptrend since July.

Apologies for my late reporting on the latest SGE withdrawals numbers – which are the best benchmark for Chinese gold demand. I was trying to figure out some details on gold trade rules between the mainland and the Shanghai Free Trade Zone. I still haven’t got confirmation, so will get back to it.

Chinese wholesale gold demand is at least 1541 metric tonnes year to date (inc. week 42 – until  October 17). Shanghai Gold Exchange (SGE) withdrawals, as disclosed by the Chinese SGE reports, were 52 tonnes in week 42 and according to my estimates China has approximately net imported 991 tonnes year to date.

Perhaps the ones with a sharp eye noticed the title of this post claims Chinese gold demand is 1541 tonnes year to date, but in the chart above we read total SGE withdrawals stand at 1547 tonnes year to date. Do SGE withdrawals still equal Chinese wholesale gold demand? Not anymore, sadly.

This gold-related story is definitely worth reading---and it was posted on the Singapore website bullionstar.com yesterday sometime.  I found it embedded in a GATA release.

¤ The Funnies









¤ The Wrap

Since the commercials are so collusive and in control of the technical funds’ trading activities, they can do with the technical funds as they see fit. I truly believe that the key to understanding the manipulation is to know that the commercials control everything that the technical funds do; just like a puppeteer controls a puppet. If it were otherwise, we wouldn’t see the clear pattern in managed money behavior in silver (and other COMEX/NYMEX metals) of massive technical fund buying as prices rise and selling on declining prices, always ending in extreme positions at reversal points.

With this in mind, the only explanation that seems plausible to me as to why the commercials let the technical funds off the hook the last two occasions of extreme managed money shorting is because the commercials were biding their time and waiting for a more opportune time to put it to the technical funds. Let’s face it, the technical funds have been like the goose that laid golden eggs for the commercials. You don’t cook and eat a goose like that without a thought. What I’m saying is that the commercials know that they can maneuver the technical funds into any extreme position at any time they want and that earlier in the year the commercials let the technical funds off the hook because they knew they could do it again whenever the commercials desired. (That’s my explanation, but if anyone has a different take, please drop me a note). - Silver analyst Ted Butler: 29 October 2014

Yesterday's price action in all four precious metals in general, but gold and silver in particular, should have come as no surprise, as JPMorgan et al attempt to drive as many of the Managed Money traders as possible off the long side and onto the short side in gold.

I must admit that I was more than taken aback by the hatchet job that they managed to perform on the silver price, because with the Managed Money already holding a record short position, the selling had to come from somewhere other than the Commercial category---and that only leaves the small traders in the Nonreportable category as the long sellers/short buyers.

Of course it's possible that the Managed Money has gone even shorter than they already have, but without a Commitment of Traders Report to look at, it's impossible to tell---and none of the price action of the last three trading days, including today, will be in the COT Report that comes out later this afternoon.

Here are the 6-month charts for both both gold and silver---and as I mentioned at the top of this column, the silver price is now back to where it was in the first quarter of 2010.

As of the close yesterday, the double bottom in gold was about 15 bucks away---and it's a given that they'll be gunning for it---plus more, if what they did to the silver price yesterday is any indication.

And as I type this paragraph at 12:45 a.m. EDT gold, which had traded mostly flat for the greater part of the thinly-traded Far East trading day on their Friday, came under pressure shortly before 1 p.m. Hong Kong time---and is down a bit more than 10 bucks.  Silver came under the same price pressure shortly after 9 a.m. Hong Kong time and is down about two bits.  Platinum isn't doing much.  Palladium tried to rally during the early going in Far East trading, but then got sold down below its New York close by 9 a.m. Hong Kong time---and is actually up a buck or so at the moment.  Volumes in both gold and silver are astonishingly high already.  The dollar index, which was trading flat, began to rally around 12:40 p.m. in Hong Kong---and is now up 40 basis points.

Today, at 3:30 p.m. EDT, we get the latest COT Report for positions held at the close of Comex trading on Tuesday.  I'd guess we'll see slight improvements in the Commercial net short positions in both gold and silver, but that is entirely inconsequential compared to what the report would show if one could be produced at precisely this moment.

It's obvious that JPMorgan et al are going all out to get as favourably positioned as possible in the Comex futures market, as I expect whatever lows are set going forward will never be seen again once the the inevitable rallies that will follow all this, begin.  The Fed meeting---and the ensuing 'strength' in the dollar index---are just the smoke screen that they're using to do the dirty.

And as I hit the 'send' button on today's column at 4:57 a.m. EDT, I see that the HFT boyz and their algorithms are back---showing up in all four precious metals at 7 a.m. GMT in London.  The LBMA must open at 7 a.m. and not 8 a.m GMT this week.  They dropped the gold price another $18 in minutes---and at one point silver was down over 50 cents from its Thursday close.  Both are now off their lows by a bit.  Platinum and palladium also got hit as well, but they've rallied back to almost unchanged, at least for the moment.

Here's the silver chart as of 4:55 a.m. EDT.

Gold volume has exploded to 95,000 contracts---and silver's volume is 21,000 contracts.  The dollar index, which had been up over 50 basis points at one time, is now up 'only' 42 basis points.

With today being month end---and Hallowe'en---it appears that JPMorgan et al have nothing but tricks up their sleeves for all the precious metal enthusiasts today---and I must admit that I'm not expecting great things when I roll out of bed and check the charts later this morning.

But this too, shall pass.

See you tomorrow.

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Fri, 31 Oct 2014 05:52:00 +0000
<![CDATA[Greenspan: “The Price of Gold Will Rise—Measurably”]]> http://www.caseyresearch.com/gsd/edition/greenspan-the-price-of-gold-will-rise-measurably/ http://www.caseyresearch.com/gsd/edition/greenspan-the-price-of-gold-will-rise-measurably/#When:06:12:00Z "The Wednesday trading session turned out exactly as I expected"

¤ Yesterday In Gold & Silver

The gold price developed a slight positive bias early in Far East trading, topping out shortly after London opened on their Wednesday morning.  From that point it drifted quietly lower, before getting sold down five bucks beginning at the Comex open in New York.  Minutes before 2 p.m. EDT, the price was up about three bucks off its interim 8:50 a.m. EDT low---and at 2 p.m. on the dot, the "Buy the dollar index/hit the precious metals" button was pushed---and that was it for the day in all four precious metals, with gold [not surprisingly] getting hit the hardest.  The gold price finished about three bucks and change off its 3:35 p.m. EDT low tick.

The high and low were reported by the CME Group as $1,230.40 and $1,208.20 in the December contract.

Gold finished the Wednesday trading session at $1,211.60 spot, down $16.20 from Tuesday's close.  Net volume was 122,000 contracts, but considering the price action, that wasn't a lot---at least in my opinion.

As usual, silver got hit the moment that trading began at 6 p.m. EDT in New York on Tuesday evening---and it didn't do a thing until the 8:20 a.m. Comex open.  The subsequent rally attempt---and there were a number of them leading up until 2 p.m. EDT---all got dealt with in the usual manner.  Then at that point, the HFT traders and their algorithms showed up---and "Bob's your uncle!"

The high and lows were reported as $17.315 and $17.015 in the December contract.

Silver closed yesterday at $17.09 spot, down 10.5 cents from Tuesday.  Net volume was the same as Tuesday's at 28,000 contracts.

Platinum didn't do a lot during the Wednesday session, but met the same fate at 2 p.m. EDT as both gold and silver---and was closed down 8 bucks.

Palladium made numerous attempts to break above the $800 spot mark, but a willing seller was always at the ready to make sure it didn't happen.  The metal also got hit at 2 p.m.---and was only allowed to close up 2 dollars.  It would have obviously finished the trading session materially higher if allowed to do so.

The dollar index closed late Tuesday afternoon in New York at 85.41.  It traded virtually ruler flat until 9:15 a.m. EDT on Wednesday morning, before getting sold down to its 85.20 low at 10:30 a.m. EDT.  Then shortly before 2 p.m. the index blasted higher as 'The Button' got pushed, with its 86.03 high tick coming about 2:45 p.m. in New York.  It traded sideways after that, closing at 85.99, which was up 58 basis points on the day.

The gold stocks opened down---and were in the hole to the tune of a bit more than 2 percent by around 11 a.m. in New York.  From there they rallied back to unchanged by around 1:20 p.m.  Then they got clubbed on the Fed news---and barely recovered off their lows going into the close.  The HUI got creamed for 4.05%.

Ditto for the silver equities.  The managed to rally into positive territory off their 11 a.m. New York low, but really got hammered starting at 2 p.m., although they did recover off their absolute lows.  Not that it mattered much, as Nick Laird's Intraday Silver Sentiment Index got bombed for a 4.21% loss.

That's the third or fourth time this month that the shares have been hammered to the downside out of all proportion to the declines in the underlying metals themselves---and it's becoming obvious that these dramatic sell-offs don't involve free-market forces.

The CME Daily Delivery Report showed that there were no deliveries to report, which is not surprising since I mentioned in this space yesterday that the October deliveries for both gold and silver were done.

And barring any surprise deliveries in the next 48 hours, the October deliveries in gold were reported as 1,268 contracts---and in silver it was 774 contracts, which is very decent for what is not a 'normal' delivery month for silver.

The CME Preliminary Report for the Wednesday trading session showed that there were zero contracts in either gold or silver still open in the October delivery month---and just eye-balling the remaining open interest for November in these two metals, it's apparent that the November will be pretty quiet on the delivery front as well.  November, like October, is not normally a big delivery month for either gold or silver, but there's always room for a surprise.

First Notice Day for the November deliveries is Friday---and whatever they show, I'll have them in Saturday's column.

There was another withdrawal from GLD yesterday.  This time an authorized participant took out 38,450 troy ounces.  And as of 10:06 p.m. yesterday evening, there were no reported changes in SLV.

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

There was very big in/out movement in both gold and silver at the Comex-approved depositories on Tuesday.  In gold, there was 22,505 troy ounces reported received---and 89,183 troy ounces shipped out.  The link to that activity is here.

In silver, there was 934,767 troy ounces received---and 343,435 ounces shipped out the door for parts unknown.  The link to that action is here.

Here's a nifty chart that Nick Laird sent our way last night---along with his comment that stated---"Support has now become resistance."  That's precisely right of course dear reader, but only if the Plunge Protection Team allows this chart pattern to stand.  The 'click to enlarge' feature works wonders here.

I don't have all that many stories for you today---and I hope there are at least a couple in here that interest you.

¤ Critical Reads

Fed ends QE3 and sends upbeat signals on economy

The Federal Reserve voted on Wednesday to end its bond-buying stimulus program commonly known as QE3 and sent several upbeat signals to markets that it was not worried about global weakness, low inflation or a wobble in financial markets.

In the statement, the Fed left unchanged its pledge that rates would remain near zero for a “considerable time.” But it qualified the statement, saying that if the economy improves faster than expected, than the first rate hike could come sooner than anticipated.

The statement also made a major change to the Fed’s view on labor markets. Instead of seeing “significant underutilization” in the labor market, which was in the September statement, the Fed now said that underutilization in labor resources “is gradually diminishing.”

This marketwatch.com article appeared on their website at 4:02 p.m. EDT yesterday---and today's first news item is courtesy of Casey Research's own Louis James.

Greenspan Sees Turmoil as Q.E. Boost to Markets Unwinds

Former Federal Reserve Chairman Alan Greenspan said he doesn’t think the Fed can unwind years of extraordinary stimulus without causing turmoil in financial markets.

“I don’t think it’s possible,” Greenspan said during an event today at the Council on Foreign Relations in New York, responding to a question about the likely market impact of the Fed’s exit.

While the Fed’s bond-buying program has been a “terrific success” in boosting asset prices, it hasn’t galvanized effective demand in the real economy, Greenspan said.

This brief Bloomberg piece showed up on their Internet site at 8:35 a.m. Denver time yesterday morning---and I thank reader Ken Hurt for sharing it with us.

And the Biggest Beneficiary of QE3 was...

Aside from the S&P 500 of course, which made billionaires out of millionaires (even if it failed to make billionaires into trillionaires this time around -  we will have to wait for QE4 or QE5 for that), some may wonder: who was the biggest beneficiary of QE3? It certainly wasn't the U.S. middle class, which has seen its real wages decline in 6 of the past 7 months, and its disposable income is back at levels not seen since the mid-1990s.

No, the biggest winner of QE3 is the same entity that we noted benefited the most from Q.E. over the past 6 years, and which even the WSJ realized was the primary beneficiary of the trillions in cash created out of thin air by the Fed, when in late September Hilsenrath wrote "Fed Rate Policies Aid Foreign Banks"...  something we first said back in 2011 with "Exclusive: The Fed's $600 Billion Stealth Bailout Of Foreign Banks Continues At The Expense Of The Domestic Economy, Or Explaining Where All The QE2 Money Went."

So yes, European banks: feel free to send your thank you cards to the Fed: without its $1.3 trillion cash injection who knows how many of you would have passed the ECB's "no deflation to model" most recent Stress Test.

A word of warning: let's all hope that now, with some $1.5 trillion in Fed cash on foreign (most insolvent European) bank balance sheet, or just about half of all Q.E. liquidity injections since the start of QE1, European banks are finally solvent. Or else, deflation, inflation, stagflation, hyperinflation, or what have you, the Fed will be storming right back in to bail out Europe's insolvent banks the U.S. middle class all over again.

This excellent article, along with two nifty charts, appeared on the Zero Hedge website at 3:18 p.m. EDT Wednesday afternoon.  It's worth reading---and I thank reader U.D. for sending it.

David Stockman: Good Riddance to Q.E.— It Was Just Plain Financial Fraud

QE has finally come to an end, but public comprehension of the immense fraud it embodied has not even started. In round terms, this official counterfeiting spree amounted to $3.5 trillion— reflecting the difference between the Fed’s approximate $900 billion balance sheet when its “extraordinary policies” incepted at the time of the Lehman crisis and its $4.4 trillion of footings today. That’s a lot of something for nothing. It’s a grotesque amount of fraud.

The scam embedded in this monumental balance sheet expansion involved nothing so arcane as the circuitous manner by which new central bank reserves supplied to the banking system impact the private credit creation process. As is now evident, new credits issued by the Fed can result in the expansion of private credit to the extent that the money multiplier is operating or simply generate excess reserves which cycle back to the New York Fed if, as in the present instance, it is not.

But the fact that the new reserves generated during QE have cycled back to the Fed does not mitigate the fraud. The latter consists of the very act of buying these trillions of treasuries and GSE securities in the first place with fiat credits manufactured by the central bank. When the Fed does QE, its open market desk buys treasury notes and, in exchange, it simply deposits in dealer bank accounts new credits made out of thin air. As it happened, about $3.5 trillion of such fiat credits were conjured from nothing during the last 72 months.

All of these bonds had permitted Washington to command the use of real economic resources. That is, to consume goods and services it obtained directly in the form of payrolls, contractor services, military tanks and ammo, etc and, indirectly, in the form of the basket of goods and services typically acquired by recipients of government transfer payments. Stated differently, the goods and services purchased via monetizing $3.5 trillion of government debt embodied a prior act of production and supply. But the central bank exchanged them for an act of nothing.

This right-on-the-money commentary appeared on David's website yesterday sometime---and my thanks go out to Roy Stephens for finding it for us.  West Virginia reader Elliot Simon sent this moneynews.com story on the same issue headlined "Financial Times: Q.E. Might Be a 'toxic legacy' Poisoning America".  It's worth reading as well.

Jim Rickards: "Central bankers are impotent"

Data coming out of the U.S. demonstrates lower mortgage yields and a surge in refinancings are adding to 4-year lows in gas prices to give consumers more disposable income. Jim says this isn’t as bullish as us what he thinks of the new data and also gives us his thoughts on divisions at the ECB.

The preamble to this must watch interview begins at the 4:20 minute mark of Russia Today's "Boom Bust" program---and it runs for a bit over eight minutes.  It was posted on the youtube.com Internet site on Monday sometime---and I thank reader Harold Jacobsen for bringing it to our attention.

Mortgage Purchase Applications Plunge to 19-Year Low

Presented with little comment...because realistically what is there to say about a so-called 'housing recovery' when the volume of applications for home purchases is the lowest since August 1995. Keep believing that lower rates will support home prices... keep believing the Fed's Q.E. worked... or face facts, this is not your mother's housing market any more.

This short Zero Hedge story has three must see charts---and it was posted on their website at 11:03 a.m. EDT yesterday---and I thank reader 'David in California' for sending it along.

Economic, Political Discontent Make for a U.S. Midterm Double Punch

A double punch of economic and political dissatisfaction marks public attitudes in the closing week of the 2014 midterm campaign – a dynamic that reflects poorly on the president’s performance, bolstering his Republican opponents.

The discontent in the latest ABC News/Washington Post poll is palpable. Despite its fitful gains, seven in 10 Americans rate the nation’s economy negatively and just 28 percent say it’s getting better. In a now-customary result, 68 percent say the country’s seriously off on the wrong track.

There’s no respite politically. Six in 10 express little or no trust in the federal government to do what’s right. Fifty-three percent think its ability to deal with the country’s problems has worsened in the last few years; among likely voters that rises to 63 percent.

Views of the president’s performance suffer in kind. Barack Obama’s job approval rating, 43 percent overall, is virtually unchanged from his career-low 40 percent two weeks ago. A steady 51 percent disapprove, essentially the same all year. His ratings on the economy – still the country’s prime concern, albeit one of many – are similarly weak, a 10-point net negative score.

This article was posted on the abcnews.go.com Internet site at 7:00 a.m. EDT on Tuesday morning---and it's something I found in yesterday's edition of the King Report.

Tax evasion targeted in pact signed by 51 countries

Finance ministers and tax chiefs from 51 countries signed an agreement on Wednesday to automatically swap tax information beginning in 2017.

Canada was not among the first 51 countries to agree to the effort to end tax evasion, but said it would be among 35 more countries joining the agreement in 2018. The first signatories will have to invest more over the next two years to prepare their tax departments.

“We expect this will provide tax authorities across the world with the details of billions of pounds of assets held overseas,” U.K. Finance Minister George Osborne said as countries signed the agreement in Berlin.

“Under the agreement a wide range of information will be exchanged on offshore accounts, including account balances, interest payments and beneficial ownership, and this will greatly increase the ability of governments to clamp down on tax evaders and to ensure that what they owe, they pay," he said.

This article appeared on the Canadian Broadcasting Corporation website at 3:41 p.m. EDT on Wednesday---and it's courtesy of reader 'h c'.

U.K. faces 'debt time bomb' from ageing population

Britain's ageing population has created a "debt time bomb" that can only be defused through a combination of significant spending cuts, faster increases in the state pension age and ending universal free healthcare, according to a respected think-tank.

The Institute of Economic Affairs (IEA) warned that the Government would need to slash public spending by a quarter in order to get Britain's debt mountain down to sustainable levels.

In a set of radical proposals, the IEA called on the Government to end "unhelpful" policies such as the "triple lock guarantee" that ensures the state pension increases by the higher of inflation, average earnings or a minimum of 2.5pc every year.

"Politicians must wake up to the size of the debt time bomb in the UK. Older generations have voted themselves benefits that will indebt future generations, meaning crippling tax hikes for our children and grandchildren," said Philip Booth, editorial director at the IEA.

A not unfamiliar 'baby boomer' problem in all Western countries these days.  This article showed up on the telegraph.co.uk Internet site at 5 a.m. GMT yesterday morning---and it's the second offering in a row from reader 'h c'.

Take your mortgage to the grave, older U.K. borrowers told

Older home owners will be told to take mortgages for life or leave their homes under plans to tackle Britain's interest-only mortgage crisis.

Several major banks will propose "lifetime" contracts to borrowers in their 50s and 60s who face a shortfall when their mortgage ends, The Telegraph understands.

The lenders will allow customers to repay just the interest on their debts until they die, at which point the properties will be sold and a large chunk of the proceeds passed to the bank.

"Lenders are trying to keep people in their homes, rather than repossess them, and these new deals will ensure the bank still owns most of the house when they die."

How morbid!  You couldn't make this stuff up.  This is another story from The Telegraph---and this one was posted there at 10 p.m. GMT on Tuesday evening.  It's the final offering of the day from reader 'h c', for which I thank him.

France to hand over first Mistral helicopter carrier on Nov 14 -- Russia

France may hand over the first of two Mistral helicopter carriers to Russia on November 14, Deputy Prime Minister Dmitry Rogozin said. He announced that Moscow had received an invitation to take delivery at France’s Saint-Nazaire shipyards.

“Rosoboronexport [Russia’s state owned arms exporter] has received an invitation to arrive in Saint-Nazaire on November 14, where 360 Russian sailors and 60 specialist trainers are already,” Rogozin said.

On that day, Vladivostok – the first of two Mistral-class helicopter carrier ships – should be handed over to Russia. The Deputy PM also assumed the second carrier, the Sevastopol, would also be in dock.

“We act from the fact that France must protect its own reputation as a reliable partner, including on issues of military cooperation," he said. France has always stressed that for them this would be “the litmus test of their national pride and sovereignty,” the Deputy PM added.

This Russia Today news item put in an appearance on their Internet site at 5:18 p.m. Moscow time on their Wednesday afternoon, which was 10:18 a.m. EDT in New York.  I thank Roy Stephens for sending it.

Deutsche Bank Replaces Executives as Legal Expenses Soar

Deutsche Bank AG, Germany’s biggest lender, is replacing its finance and legal chiefs as mounting litigation expenses wiped out quarterly profit and the firm begins talks to settle probes into alleged market rigging.

The bank swung to a net loss in the three months through September after setting aside 894 million euros ($1.1 billion) for litigation, the Frankfurt-based company said yesterday. It named Goldman Sachs Group Inc.’s Marcus Schenck to succeed Stefan Krause as chief financial officer and promoted Christian Sewing to the board to oversee the firm’s legal affairs.

“The number and level of executives being replaced point to a house-clean,” said Mark Williams, a former bank examiner for the Federal Reserve and now a lecturer at Boston University’s School of Management. “This type of regime change creates instability and you would only do it if you think it will restore stability.”

“The problems are much deeper than what we see” at Deutsche Bank, said Tom Kirchmaier, a fellow in the Financial Markets Group at the London School of Economics. “Why didn’t they promote someone from the inside for the CFO role? It’s puzzling. It would have been a natural choice.”

I posted a story about this in yesterday's column, but this Bloomberg piece, filed from Frankfurt at 5:01 p.m. MDT yesterday afternoon, is far more in depth---and I thank Elliot Simon for finding it for us.

Russia calls U.N. agency's conflict zone risk proposals 'superficial'

Russia, which the United States has accused of backing Ukrainian rebels who shot down a Malaysian airliner in July, called new proposals from the United Nations aviation body on mitigating risks over conflict zones rushed and "superficial", according to a document obtained by Reuters.

The  International Civil Aviation Organization (ICAO) launched a task force in July to look at ways to better share information about risks above conflict zones. The task force has laid out 12 proposals, seen by Reuters and confirmed by sources at the Montreal-based agency.

The Russian submission to the ICAO Council, which was also signed by Bolivia, says the agency "practically has lost" its role in investigating the downing of Malaysian Airlines MH17 and criticized a pilot program to share intelligence.

It said the agency’s pursuit of a centralized intelligence sharing mechanism was outside its mandate, and could lead to false information being given to pilots.

This Reuters article, co-filed from Montreal and Toronto, appeared on their website at 4:12 p.m. EDT on Wednesday afternoon---and it's another contribution from Roy Stephens.

Rosneft "Radical" Sanctions Retaliation Proposal Sends Russian Bonds, Currency Plunging

10-year Russian bond yields have broken above 10%, trading at the highest yields since 2009 as the Ruble plunges once again to fresh record lows against the dollar. These significant moves come on the heels of two notable headlines overnight.

First, German exports to Russia slumped 26.3% YoY in August (down a stunning 16.6% year-to-date with vehicle exports plunging 27.7%) as sanctions batter bilateral trade. Secondly, Rosneft has proposed what is being described as "radical" reactions to the West's sanctions, which the Kremlin has (for now) denied.

This Zero Hedge piece was posted on their website at 10:06 a.m. yesterday morning---and it's the second offering of the day from reader 'David in California'.  It's worth reading.

#62: Russia jumps record 30 places in ‘Doing Business’ ranking

Russia is now ranked 62nd in the World Bank’s new 2014 Doing Business report, which measures the ease of doing business in 189 countries worldwide. The country climbed 30 positions from 92nd spot in 2013.

Russia is ahead of Moldova in 63rd place and behind Greece in 61st.

Singapore, New Zealand, Hong Kong, Denmark, and South Korea are the top five countries in terms of ease of doing business in this year’s report.

The 189 economies are evaluated on how close their business regulations compare to the best global practices, with a higher score for a more efficient business climate and stronger legal institutions.

This news item appeared on the Russia Today website at 10:44 a.m. Moscow time on their Wednesday morning---and it's the final offering of the day from Roy Stephens, for which I thank him.

Hugo Salinas Price: The Fall in International Reserve Assets

Something important has happened since August 15, this year. I have been following  global central bank "international reserve assets" (excluding gold)  as tallied by Bloomberg, for the past 18 years, and I have seen them increase steadily over the whole of that time.  My source has been Doug Noland's "Credit Bubble Bulletin" over at www.prudentbear.com.

In September of last year, I wrote an article, "The Stalling Growth of International Reserves" published on my website, www.plata.com.mx

Now the quite extraordinary news is that International Reserve Assets are not just stalling, they are actually going into reverse.

Of course repricing gold would fix the International Reserves situation at once, dear reader---and that may be in the cards at some point.  This brief article put in an appearance on the plata.com.mx website yesterday---and I found it embedded in a GATA release.  It's worth the 90 seconds of time it will take to read it.

Lawrence Williams: The new London gold ‘fix’ – the battle has commenced

By virtue of having already developed benchmark setting software for the other principally traded precious metals one might assume that the Thomson Reuters/CME and LME proposals might be the front runners. 

However from a purely competition aspect the prospect of the organisation which runs the principal US gold trading market in COMEX (the CME) also setting the London benchmark price smacks of an almost monopolistic opportunity which might stand against it – although it obviously didn’t in the case of silver. 

The selection of CME might also generate apoplectic opposition from the North American gold investment community, indeed from gold bugs everywhere, given that they see the CME’s COMEX market as being uncontrollably rigged by some major banks through the use of gold futures (utilising vast paper gold transactions, hugely in excess of the amounts of physical gold available) to control (manipulate) physical market pricing.

This commentary by Lawrie appeared on the mineweb.com Internet site on Wednesday sometime---and I found it all by myself.

Greenspan: The Price of Gold Will Rise

Q: "Why do central banks (still) own gold?"

Greenspan: “This is a fascinating question.”  He did not answer the question, but he did point out: “Gold has always been accepted without reference to any other guarantee.”

While Greenspan did not want to comment on current policy, he was willing to give a forecast on the price of gold, at least in a Greenspanesque way.

Q:  Where will the price of gold be in 5 years?” 

Greenspan: “Higher.” 

Q: How much?” 

Greenspan: “Measurably.

It's a safe bet, considering Greenspan's ability at understatement---"measurably" means it will rise by a lot.  This commentary, which falls into the must read category, was posted on the merkinvestments.com Internet site on Wednesday---and the first reader through the door with the story was Ken Hurt.  Zero Hedge put its own spin on this in an article headlined "Alan Greenspan: Q.E. Failed To Help The Economy, The Unwind Will Be Painful, "Buy Gold".  Reader 'David in California' sent that one our way.

¤ The Funnies

Here are two of the latest photos from yesterday of the lava flow encroaching on Pāhoa Village on Hawai'i's 'Big Island'.  The 'click to enlarge' feature really helps here.











¤ The Wrap

When small men begin to cast big shadows, it means that the sun is about to set. -- Lin Yutang

Well, I'm sad to say that the Wednesday trading session turned out exactly as I expected it would, although I was hoping beyond hope that it might be different this time---but it wasn't.

But what should not be lost in this is the continuing engineered price declines in both gold and silver---and after 'da boyz' and their algorithms got through with both metals yesterday, there's only 20 or so dollars to go to get back to the October 6 low in gold.

But, as Ted Butler always points out, it's not the price, rather it's the number of long gold contracts that JPMorgan et al can get the Managed Money traders to puke up---and how deeply they can guide these same technical funds onto the short side of the gold market.  So how 'low' the price goes, will be a direction function of that process.

Here are the 6-month charts for both gold and silver.

Ted says that with silver, the Managed Money is all 'locked and loaded' with a record short position.  It's possible they may have added to their short position yesterday, but there's no way of knowing, because Wednesday's price action occurred a day after the cut-off for tomorrow's Commitment of Traders Report.  So we'll have to wait until the COT Report on November 7, which is a lifetime away at the moment.

And as I type this paragraph, the London open is about 50 minutes away.  I note that the two tiny rally attempts that occurred in gold---one shortly after trading began in New York yesterday evening---and the one that came shortly after 9 a.m. Hong Kong time, were both sold down.  But the real sell-off began around 1 p.m. Hong Kong time as the HFT boyz leaned on the price---and gold is now at a new low for this move down, and it probably won't be the low of the day.  Gold volume is already north of 32,000 contracts, which is very heavy for this time of morning---and 99 percent of it is in the current front month, which is December, so it's not normal trading volume.

Silver's tiny rally attempt in morning trading in the Far East on their Thursday met with the same fate as gold---and 'da boyz' really put the boots to the price shortly before 2 p.m. Hong Kong time.  The silver price is now knocking on the door of its old low set back on Friday, October 3.  Gold volume is just north of 12,000 contracts at the moment, which is also pretty big for this time of day.

After trading flat for most of the Far East session, platinum also met the same fate starting shortly before 1 p.m. Hong Kong time.  Palladium got hit shortly after trading began at 6 p.m. in New York last night---and has been allowed to trade flat since then.

The dollar index has been in rally mode almost since the open yesterday evening---and at the moment it's up 25 basis points.  But if you believe that these engineered price declines are a result of the 'strength' in the dollar index, do I have a bridge for you!  However, that's what the so-called experts will use as a reason for the decline in all precious metals.

I'd like to think that this is the last swing for the fences by JPMorgan et al, but it's just not possible to tell at the moment.  I think some comfort should be drawn from Greenspan's use of the world "measurable" because it confirms that there is an end game which, as I've said many times over the years, will certainly result in a re-pricing of not just the precious metals, but all commodities in general.  The only thing we don't know is the timing.  But looking at the current set-up in the Comex futures market, never have the stars been so favourably aligned---and that was Ted's opinion in his mid-week commentary yesterday, which was headlined "Resolution is Dead Ahead".

So we wait some more.

And as I hit the send button on today's column at 5:15 a.m. EDT, London has been open just over an hour---and as the charts below show, JPMorgan et al---along with their HFT buddies---are still at it.  Gold hit another new low---and is trading just above the $1,200 mark at the moment.  Silver was down almost 40 cents at its low tick that came about 8:30 a.m. GMT.  Platinum is barely off its low---and palladium is still trading flat after its sell-off in early Far East trading.

Gold volume is north of 48,000 contracts at the moment---and silver's volume is way up there as well at 17,000 contracts.  The dollar index is now up 38 basis points.

The powers-that-be certainly aren't wasting any time in this leg down of the current engineered price decline---and based on what I see at the moment, it could be a wild and woolly day once Comex trading begins at 8:20 a.m. EDT this morning---if not sooner.

So hang onto your hats---and I'll see you here tomorrow.

]]>
Thu, 30 Oct 2014 06:12:00 +0000
<![CDATA[Airport Trash Bags Go Under the ‘Gold’ Scanner in India]]> http://www.caseyresearch.com/gsd/edition/airport-trash-bags-go-under-the-gold-scanner-in-india/ http://www.caseyresearch.com/gsd/edition/airport-trash-bags-go-under-the-gold-scanner-in-india/#When:06:21:00Z "They were still there to put out these fires with "whatever it took""

¤ Yesterday In Gold & Silver

The down/up/down feature in morning trading in the Far East took a lot of Comex paper to put out---and the vertical spike at the Comex open took some more.  But, as dynamic as the gold chart looks, the scale makes it appear more impressive than it really was.

The low and high ticks are barely worth the efforts of looking up, as the CME Group recorded them as $1,222.20 and $1,234.40 in the December contract.

Gold finished the Tuesday trading session at $1,227.80 spot, up $2.70 from Monday's close.  Net volume wasn't overly heavy at 113,000 contracts---and I'd guess that around 25 percent of that amount was expended by JPMorgan et al to cap---and then nullify---the two rallies shown on the chart below.

Ditto for silver, although the volumes weren't overly heavy all things considered.

The low and high ticks in this precious metal were reported as $17.06 an $17.40 in the December contract, which was an intraday move of 2 percent.

Silver closed yesterday in New York at $17.195 spot, up 8.5 cents from Monday.  Net volume was 28,000 contracts.

Platinum and palladium had similar chart patterns to the other two metals, with 'da boyz' capping the rallies shortly after Comex trading began in New York on Tuesday morning.  It's the same old, same old across the board.  Here are the charts.

The dollar index closed at 85.58 late on Monday afternoon in New York---and then chopped lower hitting its 85.46 interim low shortly after 9:30 a.m. GMT---and two hours later it was at its 85.65 high.  Then the index didn't do a lot until the 8:20 a.m. EDT Comex open---and down it went, hitting its 85.29 low minutes after 9 a.m. EDT.  From there it chopped quietly higher, finishing the Monday session at 85.41---which was down 17 basis points from Monday's close.  In a lot of ways, the dollar index chart pattern on Tuesday was very similar to its chart pattern on Monday.

The gold stocks opened in the green, but dipped briefly into the red for about twenty minutes or so starting around 10 a.m. EDT.  From there they rallied somewhat unsteadily for the remainder of the day, closing almost on their high tick, as the HUI finished up 1.71%.  Here's Nick's chart.

The silver equities opened in the black---and at 10:30 a.m. EDT, it was up, up and way for the remainder of the Tuesday session, as Nick Laird's Intraday Silver Sentiment Index closed up 3.69%.

The CME Daily Delivery Report showed that 44 gold and zero silver contracts were posted for delivery within the Comex-approved depositories on Thursday.  The short/issuer of note was Canada's Scotiabank with 43 contracts and, once again, the big long/stopper was Barclays with 43 contracts in its client account.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Tuesday trading session showed that gold's open interest fell by 85 contracts down to 44 contracts---and as you can see from the deliveries posted in the previous paragraph for tomorrow, deliveries for October in gold are all done.  October o.i. in silver is already zero, as the last two contracts are being delivered into today.

There was another withdrawal from GLD yesterday.  This time it was 57,675 troy ounces.   And as of 9:43 p.m. EDT, there were no reported changes in SLV.

The good folks over at Switzerland's Zürcher Kantonalbank updated their website in the wee hours of this morning---and just before I was about to dispatch today's column to Vermont---and here's what they had to say about the activity in their gold and silver ETFs for the week ending on Friday, October 24.  Both these ETFs reported declines for the week.  Their gold ETF shed 29,029 troy ounces---and their silver ETF declined by 27,154 troy ounces.

There was another decent sales report from the U.S. Mint.  They sold 1,000 troy ounces of gold eagles---and 250,000 silver eagles.  Without question that was Ted's 'Mr. Big' at the trough, as retail bullion sales are still comatose.

There was no in/out activity in gold over at the Comex-approved depositories on Monday but, as usual, it was a different story in silver, as 533,326 troy ounces were received---and 359,326 troy ounces were reported shipped out.  The link to the action in silver is here.

I have fewer stories today than I did on Tuesday, so I hope you can find the time to read the ones you like.

¤ Critical Reads

Fed Will Likely Signal No Rate Hike Anytime Soon

The global economy has slumped. Turmoil has gripped financial markets. And the U.S. job market, despite steady gains, still isn't fully healthy.

Yet when the Federal Reserve meets this week, few foresee any major policy changes. The Fed is expected to complete a bond-buying program, which was intended to keep long-term interest rates low. And, to support the economy, it will likely reiterate it's in no rush to raise its key short-term rate.

The economy the Fed will discuss has been strengthening, thanks to solid consumer and business spending, manufacturing growth and a surge in hiring that's lowered the unemployment rate to a six-year low of 5.9 percent.

Still, global weakness poses a potential threat to U.S. growth. The housing industry is still struggling. And Fed Chair Janet Yellen has stressed that while the unemployment rate is close to a historically normal level, other gauges of the job market remain a concern. These include stagnant pay; many part-time workers who can't find full-time jobs; and a historically high number of people who have given up looking for a job and are no longer counted as unemployed.

And don't forget that Jim Rickards is on record as saying the interest rates will never rise again.  I concur.  This short AP story, filed from Washington, appeared on thestreet.com Internet site at 12:31 p.m. EDT on Monday---and I found it in yesterday's edition of the King Report.

U.S. Banks See Worst Outflow of Money in ETF Since 2009

The Financial Select Sector SPDR, an exchange-traded fund targeting banks and investment firms, had the biggest withdrawal last week since 2009 amid concern that low interest rates and market swings will hurt profits.

Investors pulled $913.4 million from the $17.5 billion ETF, whose top holdings include Berkshire Hathaway Inc., Wells Fargo & Co. and JPMorgan Chase & Co., a shift that turned its flow of funds negative for the year. About 143 million shares of the ETF have been borrowed and sold to speculate on declines, the most since June 2012, according to exchange data compiled by Bloomberg.

Banks have waited for years for higher rates and more robust trading to boost revenue from lending and market-making. Weaker-than-expected global growth could prompt the U.S. central bank to slow the pace of eventual interest-rate increases, Federal Reserve Vice Chairman Stanley Fischer said Oct. 11. The severity of market swings this month also boosts the risk that banks will incur losses while facilitating client bets, and it may slow mergers and acquisitions.

This Bloomberg article appeared on their website at 10:00 p.m. Denver time on Monday evening---and I thank reader 'David in California' for sending it along.

U.S. Home Ownership Rate Drops to 1983 Levels: Here's Why

The last time U.S. home ownership declined down to 64.4% (which the Census Bureau just reported is what U.S. home ownership declined to from 64.7% in Q2), was back in the fourth quarter of 1983.

It goes without saying that this is just about the most bearish news possible for those few who still believe in the American home ownership dream.

Of course, those who have been following real-time rental market trends would be all too aware there is no rebound coming to the home ownership rate. The reason is simple: increasingly fewer can afford to buy, instead having no choice but to rent, which in turn has pushed the median asking rent to record highs. In fact in the past two quarters, the asking rent was just $10 shy of its time highs at $756 per month.

This very worthwhile read, along with some first-rate charts, appeared on the Zero Hedge website at 11:18 a.m. EDT on Tuesday morning---and I thank Manitoba reader U.M. for sharing it with us.

Sprott Money Weekly Wrap-Up With Your Humble Scribe

Sprott Money's Jeff Rutherford and I spent 6:11 minutes talking to each other last Friday, but for technical reasons the audio link wasn't available until yesterday, so here it is now.

Mike Maloney: Did Hillary Really Say That?

This is not a democrat or republican issue. This is about the people in Washington being so disconnected from reality that they are dangerous...they don't understand how the economy works.

This 21:20 minute audio interview with Mike was posted on the hiddensecretsofmoney.com Internet site on Tuesday sometime---and I must admit that I haven't had time to listen to it yet.

Lloyds Cuts 9,000 jobs and shuts 150 branches as profits leap

Lloyds has predicted that visits to its branch counters will halve over the next three years after a £1bn investment in digital technology and the closure of 200 high street locations.

The bank on Tuesday unveiled a three-year cost-cutting plan that will see 9,000 job losses and its branch estate reduced by 6pc as it unveiled a 35pc rise in operating profits and set aside another £900m related to PPI mis-selling.

However, it said customers would benefit from an increase in digital services and committed to shutting branches at a slower rate than its rivals.

This article appeared on the telegraph.co.uk Internet site at 3:59 GMT yesterday---and I thank reader 'h c' for sending it.  And the 'thought police' over at The Telegraph have given the story a brand new headline, it's now a much softer sounding "Lloyds Bank closures: Branch transactions to halve within three years"

Rampant financial crime in City of London eroding public trust - BoE

A top Bank of England (BoE) official warns widespread financial crime in the City of London is eroding public trust. The BoE’s criticism surfaced as it launched a review to tackle market manipulation.

In her first public address since adopting the position of BoE Deputy Governor, Nemet Minouche Shafik denounced the actions of UK traders in foreign exchange, currencies and bonds markets, warning financial misconduct in these sectors goes well beyond a few rogue financiers.

Referencing LIBOR riggers’ behavior as unacceptable, she suggested fines for such fraudulent activity were inadequate and signified “salt rubbed into the wounds to public confidence in financial markets.”

She didn't mention the precious metal markets---and I'm sure that was deliberate.  This must read article appeared on the Russia Today website at 7:58 p.m Moscow time on their Tuesday evening, which was 12:58 p.m. EDT in New York.  I thank Harry Grant for sliding this into my in-box in the wee hours of this morning.

Life after Libor: bankers to face personal fines for rigging prices

Banks could face a significant new regulatory crackdown on their wholesale market activities as the financial authorities seek to prevent a repeat of the scandals that have destroyed the reputation of the sector in recent years.

The Bank of England – in conjunction with the Financial Conduct Authority and the Treasury – yesterday published a wide-ranging consultation document which holds out the possibility of a radical tightening of the supervisory regime for City institutions that trade in the foreign exchange, interest rate derivatives, commodities and also bond and equity markets.

The proposals include a beefing up of electronic surveillance tools to monitor traders’ activities and a new regime of fines on employees who breach internal guidelines on abuse. Another bold suggestion is to overhaul the infrastructure of capital markets, forcing open new electronic trading platforms to increase competition in markets that are often dominated by a relatively small number of firms.

This story put in an appearance on the independent.co.uk Internet site yesterday sometime---and it's the second offering of the day from reader 'h c'.

ECB stress tests vastly understate risk of deflation and leverage

The eurozone’s long-awaited stress test for banks has been overtaken by powerful deflationary forces and greatly understates the risk of high debt leverage in a crisis, a chorus of financial experts has warned.

George Magnus, senior advisor to UBS, said it was a “huge omission” for the European Central Bank to ignore the risk of deflation, given the profoundly corrosive effects that it can have on bank solvency. “Most of the eurozone periphery is already in deflation. They can’t just leave this out of their health check. It is a matter of basic due diligence,” he said.

The ECB’s most extreme “adverse scenario” included a drop in inflation to 1pc this year, but the rate has already fallen far below this to 0.3pc, or almost zero once tax effects are stripped out. Prices have fallen over the past six months in roughly half of the currency bloc, and the proportion of goods in the EMU price basket in deflation has jumped to 31pc.

“The scenario of deflation is not there, because indeed we don’t consider that deflation is going to happen,” said the ECB’s vice-president, Vitor Constancio.

This Ambrose Evans-Pritchard commentary was posted on The Telegraph's website at 7:35 p.m. GMT on Monday evening---and it's the third and final offering of the day from reader 'h c'.

U.K. opts out of Mediterranean migrant rescue mission

Britain has said it will not support the European Union’s planned search and rescue operations to help migrants left stranded in the Mediterranean Sea, even as Italy prepares to wind down its own rescue missions, which have saved thousands of lives.

The U.K.’s Foreign Office argued on Tuesday that the E.U.’s plans to patrol the Mediterranean would only encourage more migrants to attempt the dangerous sea crossing.

The operation, codenamed “Triton”, is headed by the European Union border agency Frontex and is set to begin in November.

"We do not support the planned search and rescue operations in the Mediterranean," said Baroness Joyce Anelay, a Foreign Office minister. "We believe that they create an unintended ‘pull factor’… thereby leading to more tragic and unnecessary deaths."

This news item appeared on the france24.com Internet site yesterday some time---and I thank South African reader B.V. for sending it our way.

Sweden's Crown Slides as Riksbank Cuts Rates to Zero

The Swedish crown hit a four-year low against the dollar and a four-month trough against the euro on Tuesday after Sweden's central bank surprised investors by cutting interest rates to a record low of zero percent.

Most analysts had forecast the Riksbank would lower its main interest rate, the repo rate, to 0.1 percent from 0.25 percent to fight a risk of deflation, and the central bank went a step further by forecasting a lower rate path for the future.

Riksbank chief Stefan Ingves said the central bank is ready to take unconventional measures that analysts said could include asset purchases, intervening in the currency market to sell crowns or imposing a cap like the Swiss National Bank.

This Reuters article, filed from New York, showed up on their Internet site at 3:25 p.m. EDT on Tuesday afternoon---and I found it embedded in a GATA release.  Reader U.M. sent the same story, but this one was from The Telegraph.  It's headlined "How low can you go? Sweden cuts interest rates to zero".

Despite "Healthy" Stress Test, Deutsche Bank Replaces CFO With Goldman Sachs Partner

Deutsche Bank executives are dropping like flies. Just days after receiving a clean bill of health from Europe's oh-so-stressful stress-tests, Deutsche Bank has decided that longtime finance chief Stefan Krause needs to be replaced.

Perhaps most interesting is the bank that faces 'serious financial reporting problems' in the U.S. and has a derivatives book literally the size of (actually 20 times bigger) than Germany, has decided the right man for the job is an ex-Goldman Sachs partner. Marcus Schenck, according to the WSJ, will replace Krause, having worked at German utility E.ON until last year when he joined Goldman.

This Zero Hedge news item appeared on their website at 1:27 p.m. EDT on Tuesday afternoon---and it's the second offering of the day from reader 'David in California'.

Poverty begins to bite in Germany

Almost a sixth of the German population is living below the poverty line, according to the country’s Federal Statistics Bureau.

The bureau on Monday reported on its website that about 13 million people, or 16.1% of the population, earns less than 60% of the average earning of the entire population. This is the guideline set out by the European Union (EU) to establish whether a person may be classified as living below the poverty line.

In 2013 this limit lay at €979 (about R13 700) per month. For a family of two parents with two children, it was €2 056 (about R28 900) per month.

Women and the aged were more vulnerable, according to the bureau. Also the unemployed above 18 years (a full 69.3%) were the victims of poverty. Only 8.6% of those with jobs lived below the poverty line.

This article, filed from The Hague, showed up on the fin24.com Internet site at 19:02 SAST yesterday---and I thank reader B.V. for his second contribution to today's column.

E.U. clears French, Italian budgets after changes

The European Union's head office said Tuesday it is giving the 2015 French and Italian budgets a provisional green light, saying last-minute commitments to keep deficits down kept them within limits.

E.U. Monetary Affairs Commissioner Jyrki Katainen said that he could not "immediately identify cases of 'particularly serious non-compliance'" with EU rules that force the euro member states to observe strict limits on spending.

France and Italy were accused of being too profligate in their budgetary spending plans at a time when the E.U. and the euro zone have been advocating strict austerity as the best way to beat the financial crisis.

Without naming any member state, Katainen said those that had come under initial suspicion of failing to play by those austerity rules "have responded constructively to our concerns."

This AP story, filed from Brussels, was picked up by the uk.news.yahoo.com Internet site yesterday sometime---and I thank West Virginia reader Elliot Simon for bringing it to our attention.

Russia to recognize separatist elections in Ukraine's Luhansk and Donetsk

Russia will recognize separatist elections in Ukraine's restive eastern region, Russian Foreign Minister Sergey Lavrov said Tuesday.

"Elections due to be held in the self-proclaimed Luhansk and Donetsk People's Republics on November 2 will be very important from the point of view of the legitimization of power," Lavrov told LifeNews television and the Izvestia newspaper.

Moscow's support for Nov. 2 elections, however, violates the agreed upon Minsk Protocol that established Dec. 7 as the date for early elections in Ukraine's Donetsk and Luhansk regions.

On Monday, U.S. President Barack Obama delivered a message to Moscow, urging Russia to support "legitimate local elections on December 7, in keeping with the agreement that Russia and separatist representatives signed in Minsk, Belarus, on September 5, 2014."

The above four paragraphs are all there is to this short UPI article, filed from Moscow, that appeared on their Internet site at 10:38 a.m. EDT yesterday morning---and it's courtesy of Roy Stephens.

China Fake Invoice Evidence Mounts as Hong Kong Figures Diverge

The gap between China’s reported exports to Hong Kong and the territory’s imports from the mainland widened in September to the most this year, suggesting fake export-invoicing is again skewing China’s trade data.

China recorded $1.56 of exports to Hong Kong last month for every $1 in imports Hong Kong registered, leading to a $13.5 billion difference, according to government data compiled by Bloomberg. Hong Kong’s imports from China climbed 5.5 percent from a year earlier to $24.1 billion, figures showed yesterday; China’s exports to Hong Kong surged 34 percent to $37.6 billion, according to mainland data on Oct. 13.

While China’s government has strict rules on importing capital, those seeking to exploit yuan appreciation can evade the limit by disguising money inflows as payment for goods exported to foreign countries or territories, especially Hong Kong. The latest trade mismatch coincided with renewed appreciation of China’s currency, leading analysts at banks and brokerages including Everbright Securities Co. and Australia & New Zealand Banking Group Ltd. to question the export surge.

This Bloomberg news item, filed from Beijing, was posted on their website at 9:31 p.m. Mountain Daylight Time on Monday evening---and it's another offering from reader U.M.

New London gold benchmark to go live in early Q1/2015 - LBMA

A new electronic gold price mechanism is expected to be in operation early in the first quarter of 2015, replacing the century-old gold benchmark, the London Bullion Market Association said on Monday.

The gold industry group said it has launched a survey to request further feedback from market participants on the proposed solutions. Participants will be asked to confirm which solution they will be willing to participate in, the LBMA said.

LBMA said it expects a market consensus will emerge in November after consultation with regulators. In addition, LBMA will undertake testing in December ahead of the launch early next year.

Isn't this special, dear reader!  China, the biggest gold producing and consuming country is not represented---and neither is India, the #2 user of the metal.  Is it just me, or is there something wrong with this picture?  This gold-related Reuters article was posted on their Internet site at 3:38 p.m. EDT on Monday afternoon---and once again I thank reader U.M. for sending it.

Airport trash bags go under the 'gold' scanner in India

Customs officials at Karipur Airport, which has emerged as one of the top four hotspots for gold smuggling into the country, now have a new headache in the form garbage gold.

With smugglers depositing contraband gold in garbage bags inside flights and retrieving them later, possibly with the help of garbage clearing staff, customs have been forced to take the unprecedented step of conducting X-ray scans on trash bags in flights arriving from the Gulf.

Customs officials said Karipur airport could possibly be the only airport in the country where garbage bags and even food trolleys have to be scanned through the X-ray machine for hidden gold.

The decision was taken following intelligence inputs, which proved right as officials seized 2 kg of gold from one such bags from an Air Arabia flight last week.

This very interesting article, filed from Kozhikode, India, appeared on The Times of India website at 12:27 a.m. IST this morning---and it's the final offering of the day from Manitoba reader U.M., for which I thank her.  It's worth reading.

Lawrence Williams: Hong Kong gold exports to China pick up strongly but...

...that’s only part of the story. SGE withdrawals seem to be going through the roof – and what about India?

All indicators suggest that there could indeed be a very large supply deficit building. But the markets seem to pay no attention whatsoever given they are no longer driven by supply/demand factors but by the [COMEX] futures markets involving massive amounts of paper gold.

We don’t know what the answer is here, and for how long this imbalance can go on, but it does colour our views as to the long-term gold price. One day gold will surely take off but whether it’s this week, next week, next month, next year or 10 year’s time still remains open to question.  It just depends on how long the big money, and perhaps governments, can keep playing the futures markets to keep commodity prices working to their advantage.

This must read story by Lawrie was posted on the mineweb.com Internet site yesterday---and I found it all by myself.

¤ The Funnies

If you live in Pāhoa Village on the 'Big Island' of Hawai'i---the photos below are what you would be looking at right now---all courtesy of the Puʻu ʻŌʻō vent in the eastern rift zone of the Kilauea volcano.  The first two photos were taken on Tuesday morning Honolulu Standard Time [HST]---and the last one very late on Monday morning HST.  Note the inflated flow behind the fence in the first two photos, which is now chest-high. There's a CBC story about it linked here---and the link to the appropriate page on the Hawai'ian Volcano Observatory website is here.

The East Rift, which has been in continuous eruption for more than 30 years, was going full blast when I was on the 'Big Island' for the total eclipse of the sun back in 1991.  I saw this sort of volcanic activity live---and it's not only the sight that's primordial, but the heat and sound that it produces as the molten rock crawls along seeking the sea, is not of this earth.  If you haven't been to the 'Big Island' you owe it to you to do so!

¤ The Wrap

The remarkable and unprecedented (before April 2011) physical turnover or movement of metal into and out from the COMEX-approved silver warehouses continued [last] week, thanks to an extremely active day on Friday, when 3.3 million oz. were moved. For the week, more than 6.7 million oz were physically moved (in and out of trucks), as total inventories rose 1.4 million oz. to 181.1 million oz.

Annualizing this week’s turnover, silver either came in or was moved out of the COMEX warehouses at roughly a 350 million oz. yearly rate, or close to 45% of annual world silver mine production---and ten times U.S. mine production. This is a remarkable occurrence that continues to be almost unmentionable in precious metals commentary. I would think there would be wide debate for this unusual and easy to verify development, but for some reason, that’s not the case. If there ever is a wider discussion, I would be interested in explanations away from my “silver is tight” version. - Silver analyst Ted Butler: 25 October 2014 

Well, it's hard to believe that JPMorgan et al could get more obvious than they were yesterday, but I'm sure we'll see days that are even more egregious than this one as the year winds down.  Of course, there wasn't huge volume associated with these price moves, but they were still there to put out these fires with "whatever it took".

Here are the 6-month charts for both gold and silver---and you'll note that yesterday's price action in gold didn't come close to breaking back above it's 50-day moving average.

Yesterday, at the close of Comex trading, was the cut-off for Friday's COT Report---and just eye-balling the reporting week just ended, I'd guess that we'll see improvements in the Commercial net short positions in both gold and silver.  But we're still a long way off in both dollars and contract terms in gold from the October 6 low.  Is there more pain to come?  I have no idea---and we may or may not get an indication at 2 p.m. EDT when 'The Creature' speaks.

And as I type this paragraph, the London open is twenty minutes away---and with the U.K. back on GMT from BST, the London open appears to occur an hour later for us here in North America for the rest of this week, until we go back on standard time this Sunday.

At the moment, gold is up a couple of bucks---and silver hasn't recovered from its usual 6 p.m. EDT smack down on Tuesday evening in New York.  Platinum is about unchanged---and palladium, which was knocking on the $800 door earlier, was met by a not-for-profit seller---and is only up 2 bucks at this point.   Volumes are fumes and vapours, as gold volume is only 8,400 contracts---and silver's net volume is a hair under 2,500 contracts.  The dollar index is down 7 basis points.  I would guess that traders are being somewhat cautious ahead of the Fed announcement later today---and I would be too, if I were them.

As Ted Butler pointed out in the above quote---for the umpteenth time I might add---the in/out activity in the Comex warehouse silver stocks is now bordering on the manic---and there's not a peep from any silver 'analyst' worth their salt, not even the lunatic fringe.  One would figure that with an obvious anomaly this large, it would be the talk of the town, but it ain't.  Ted asks why---and so do I.

Couple that with the huge off-take in gold reported by China, Russia and India, one could come to the conclusion quite naturally that a giant physical short squeeze in both metals may be at hand.  Also not to be forgotten in all of this is the continuing supply/demand deficits in both platinum and palladium.  Sooner or later something's got to give---and when it does, I'm prepared to speculate that it will probably end with a bang, rather than a whimper.

But it will only end when JPMorgan et al decide the time is right, or when they are instructed to stand aside---and not a moment before.

So we wait.

And as I send today's effort out the door at 5:05 a.m. EDT, I note that gold is back to unchanged, as is platinum.  Silver is down---and palladium's rally is still being thwarted, although it's up five bucks at the moment.  Gold volume is now a hair over 12,000 contracts---and silver's volume is barely over 3,000 contracts so, with the exception of palladium, not too much should be read into the current price action. 

The dollar index has recovered to almost unchanged from Tuesday's close in New York.  Not much to see here.

But, having said that, I expect the real price action to come this afternoon in New York when the smoke goes up the chimney at the Fed---and nothing will surprise me at that point.

That's all I have for today---and I'll see you here tomorrow.

]]>
Wed, 29 Oct 2014 06:21:00 +0000
<![CDATA[Australian Scholar Says Futures Markets Suppress Commodity Prices, Keep Producing Nations Poor]]> http://www.caseyresearch.com/gsd/edition/australian-scholar-says-futures-markets-suppress-commodity-prices-keep-prod/ http://www.caseyresearch.com/gsd/edition/australian-scholar-says-futures-markets-suppress-commodity-prices-keep-prod/#When:06:27:00Z "Today the kiddies gather as the FOMC meeting gets underway"

¤ Yesterday In Gold & Silver

The gold price got sold down a few dollars right at the 6 p.m. EDT open on Sunday evening in New York.  It rallied back to unchanged within a few hours, but all four attempts to rally above unchanged during the Monday trading session were met by a willing seller.  Then, once the 1:30 Comex close was in, the not-for-profit seller[s] sold gold down some more---and it closed on its absolute low tick of the day.

The price activity looks more impressive/alarming on the chart because of the scale, but regardless of that, the price capping was evident, including the sell-off late in electronic trading.  Nothing free market about this.

The high and low ticks weren't worth the effort of looking up.

Gold closed yesterday at $1,225.10 spot, down $5.10 from Friday.  Net volume was fumes and vapours at only 76,000 contracts.

And, as usual, silver also got sold off the moment trading opened on Sunday night as well.  the low tick came shortly after 1 p.m. Hong Kong time.  By ten minutes after the Comex open, the silver price was back to unchanged---and wasn't allowed to trade higher.  It, too, ran into a seller in electronic trading---and the price headed lower starting shortly after 2 p.m. EDT.

Silver traded within a 20 cent price range all day and, like gold, the high and lows ticks weren't worth looking up, but it was obvious that 'da boyz' were out and about in silver as well.

Silver finished the Monday trading session at $17.11 spot, down 10 cents from Friday's close.  Silver's net volume was very light, only 16,500 contracts.  I don't remember the last time that net silver volume was below 20,000 contracts, let alone a number this low.

Platinum rallied a few dollars in the early going, before getting sold down a bit shortly after 9 a.m. Hong Kong time on their Monday morning.  It rallied a bit in late trading in New York---and closed up 7 bucks.

Platinum also rallied a few dollars in early Far East trading---and then didn't do much until shortly before 2 p.m. in Zurich---and then it rallied a handful of dollars until the London p.m. gold fix.  From there it faded a few dollars into the 5:15 p.m. EDT close of electronic trading in New York.  Palladium finished up 5 dollars.

The dollar index closed late on Friday afternoon in New York at 85.73---and by 10 a.m. Hong Kong time on their Monday morning it had fallen down to 85.48.  By the Comex open it was back to within a couple of basis points of unchanged, but that's as high as it got.  The 85.44 low tick came at 10:30 a.m. EDT---and it rallied a bit into the close, finishing the Monday session at 85.58---down 15 basis points from Friday.

The gold stocks were down 2 percent by 10:00 a.m. EDT---and by 10:30 a.m. were almost back to unchanged.  But that was as close as they got, as the gold stocks chopped lower from there, until a kind soul sold the shares down another half percent in the last 15 minutes of trading, as the HUI closed down 1.26%.  Here's Nick's chart.

The silver equities got sold down almost 3 percent at the open---and the 'rally' that followed didn't get far.  The shares continued to drift quietly lower---as Nick Laird's Silver Sentiment Index closed a bit off its low tick, down 2.53%.

The CME Daily Delivery Report showed that 85 gold and 2 silver contracts were posted for delivery within the Comex-approved depositories on Wednesday.  Canada's Scotiabank issued all 85 contracts---and Barclays stopped 84 of them in its client account.  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 dropped 157 contracts down to 129 contracts---minus the 85 shown above.  There's not much left, but what is left has to be delivery in the next three business days.  Silver's October o.i. was unchanged at 2 contracts---and those were posted for delivery tomorrow, so October deliveries are done in silver.

There were no reported changes in GLD yesterday---and as of 5:44 p.m. EDT yesterday afternoon, there were no reported changes in SLV, either.

The good folks over at the shortsqueeze.com Internet site updated the short  interest in both GLD and SLV very late last week---and here's what they had to report.  The short interest in SLV increased from 15.02 million shares/ounces to 16.64 million shares/ounces, or 10.85 percent for the reporting period ending on October 15.

In GLD, the short interest rose from 1.469 million troy ounces to 1.555 million troy ounces, or 5.81 percent.

These aren't really large moves---and I would guess that this shorting is of the 'plain vanilla' variety as traders use these two ETFs to bet on the continued decline in price of the physical metal themselves.  This sort of activity should never be allowed in a physical precious metal fund, as there's no metal being deposited to back up these shorted shares.

There was another decent sales report from the U.S. Mint yesterday.  They sold 3,000 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---and 175,000 silver eagles.

There was more big in/out movement in both gold and silver at the Comex-approved depositories on Friday.  In gold, there was 16,075 troy ounces reported received---and 79,357 troy ounces shipped out.  The link to that activity is here.

In silver, there was 302,307 troy ounces received---and 1,260,853 troy ounces shipped out the door for parts unknown.  The link to that action is here.

Manitoba reader U.M. sent around a Bloomberg story yesterday about China's Imports through Hong Kong for September.  They haven't been 'officially' released, but some of the major media outlets get it on the sly about ten days before the official announcement.  Here are the first two paragraphs...

China’s gold imports from Hong Kong in September rose to the highest in five months as retailers and fabricators boosted purchases ahead of a holiday sales season.

Net imports totaled 61.7 metric tons last month, the most since April, according to calculations by Bloomberg News based on data from the Hong Kong Census and Statistics Department today. That compares with 25.6 tons in August and 109.4 tons a year earlier. Exports to Hong Kong from China rose to 30.1 tons in September from 12.4 tons in August, the statistics department said in a separate statement.

The link to to the rest of the story headlined "China Gold Imports Rise to Five-Month High Before Holiday Sales," filed from Beijing at 3:58 a.m. Denver time on Monday morning, is here.

I have a very decent number of stories for you today---and I'll leave the final edit up to you.

¤ Critical Reads

Christmas in October: Desperate Measures

The desperation of Wal-Mart and most of the other mega-retail chains is no more clearly evident than in their relentlessly ridiculous acceleration of holiday marketing displays. I was flabbergasted when I saw Halloween candy, decorations and costumes in row after row BEFORE Labor Day at my local Wal-Mart. Selling Halloween candy two months before Halloween is idiotic and a sure sign of desperation. Retailers have run out of merchandising ideas. I wouldn’t even consider buying Halloween candy until the week before Halloween. Do Wal-Mart freaks of the week actually buy Halloween merchandise in September?

So last week, still a full two weeks before Halloween, Wal-Mart had already converted their entire garden center into a Christmas wonderland of cheap mass produced Chinese cookie cutter Christmas decorations and lights that will blow out after three hours of use. They had also converted aisles at the front of the store to Christmas displays. Who the hell shops for Christmas crap in October? There is nothing like having cheap Chinese Christmas crap available for over two months to create a sense of urgency to buy. Wal-Mart and the rest of the mega-retailers have got nothing. They have no original merchandising ideas. They don’t even try anymore. They source low quality goods from China and compete solely on price. I can’t wait for the Easter candy to appear on Wal-Mart’s shelves in late December.

This article, complete with some 'pithy prose', appeared on theburningplatform.com Internet site on Saturday---and I thank reader U.D. for passing it around on the weekend.

Law Lets I.R.S. Seize Accounts on Suspicion, No Crime Required

For almost 40 years, Carole Hinders has dished out Mexican specialties at her modest cash-only restaurant. For just as long, she deposited the earnings at a small bank branch a block away — until last year, when two tax agents knocked on her door and informed her that they had seized her checking account, almost $33,000.

The Internal Revenue Service agents did not accuse Ms. Hinders of money laundering or cheating on her taxes — in fact, she has not been charged with any crime. Instead, the money was seized solely because she had deposited less than $10,000 at a time, which they viewed as an attempt to avoid triggering a required government report.

“How can this happen?” Ms. Hinders said in a recent interview. “Who takes your money before they prove that you’ve done anything wrong with it?”

The federal government does.

This news item appeared on The New York Times website on Saturday---and it's the second offering in a row from reader U.D.

The Day The POMO Died

For those who follow the Fed's daily intervention in the stock market, today is a historic, if bittersweet day: this is the day when the Permanent Open Market Operations (or POMO) as a result of the QE3 program launched in December 2012, finally die (at least until they are reincarnated yet again).

Today, at 11:00 am, the NY Fed's market desk will conclude its 933rd POMO since August 25 of 2005, when it will inject just about a $1 billion in the stock market in the form of a $0.85-$1.05 billion buyback of long-end bonds. And with that, Simon Potter's open market operations desk located on the 9th floor of Liberty 33, will be put on temporary hiatus.

And with that, QE3 will end.  Or not.

This Zero Hedge piece, with a couple of excellent charts, is worth your while---and I thank Manitoba reader U.M. for her first contribution to today's column.

Negative interest rates threaten to destroy not just savers but IMF as well

The International Monetary Fund has been forced to change the calculation of its most important interest rate after aggressive monetary easing around the world threatened to turn it negative.

Late on Friday the IMF said it was introducing a floor of 0.05 per cent for the interest rate on Special Drawing Rights, its own form of international currency.

The IMF's move shows how global financial conditions are now easier than they have ever been, more than five years after the end of the Great Recession, leading to the lowest interest rates in its 68-year history.

This Financial Times news item appeared on their website last Friday---and it's posted in the clear in this GATA release.  The FT headline reads "IMF Introduces Floor on Interest Rates".

Canadian household debt hits new high

The ratio of credit market household debt to disposable income hit 163.4 per cent in the second quarter, up from 161.8 per cent in the previous period, the agency said.

Credit market debt strips out trade accounts payable, or short-term credit — normally interest free in order to encourage commerce — that suppliers extend to small businesses, including home businesses.

That number is also about where households in the United States and the United Kingdom stood before home values crashed.

"Today’s report indicates that Canadian households are more financially vulnerable than had previously been thought," said TD economist Diana Petramala in a commentary.

This story appeared on the cbc.ca Internet site back on October 15---and I thank reader 'h c' for sending it our way.

E.U. commission warns U.K. about its rebate

The UK has to pay its outstanding €2.1bn bill by 1 December or face monthly penalties, EU budget commissioner Jacek Dominik said Monday (27 October) in a press conference.

Dominik said he was "surprised" to witness the "anger" of British Prime Minister David Cameron who last week vowed not to pay the bill at such short notice.

The commissioner said British officials knew since 17 October, when all member states were presented with their corrected share of the EU budget, based on changes in their gross national income (GNI) compared to what they had projected.

"What is extremely important is to remember that these figures are presented by member states based on their own statistics and approved by Eurostat," Dominik said.

This news item, filed from Brussels, showed up on the euobserver.com Internet site at 6:07 p.m. Europe time yesterday evening---and it's courtesy of Roy Stephens.

ECB fails 25 banks in health check but problems largely solved

Roughly one in five of the euro zone's top lenders failed landmark health checks at the end of last year but most have since repaired their finances, the European Central Bank said on Sunday.

Painting a brighter picture than had been expected, the ECB found the biggest problems in Italy, Cyprus and Greece but concluded that banks' capital holes had since chiefly been plugged, leaving only a modest €10 billion ($12.7 billion) to be raised.

Italy faces the biggest challenge with nine of its banks falling short and two still needing to raise funds.

The test, designed to mark a clean start before the ECB takes on supervision of the banks next month, said Monte dei Paschi had the largest capital hole to fill at €2.1 billion.

Whistling past the graveyard again, I'm sure.  This Reuters news item, filed from Frankfurt, was posted on their Internet site at 4:18 p.m. EDT on Sunday---and I thank Orlando, Florida reader Dennis Mong for sharing it with us.  Here a story from The Telegraph on the same issue.  It's headlined "ECB: 25 banks not strong enough to withstand another crisis".  I thank Roy Stephens for this one.

Three reasons why the ECB bank stress tests are sub par

For lovers of contingent capital, asset quality reviews, and tier one capital ratio, it was like Christmas.

As the clock struck 11 in London, the European Central Bank pushed out its modestly entitled “comprehensive assessment” of the financial health of the biggest banks in the Eurozone, which ran to 178 pages.

At the same hour, the European Banking Authority did likewise, pushing out its 51-page report, not to mention hundreds of pages of addendums, additional tables and charts.

For those who know their CRDs from their CRRs – that’s capital requirements directive and capital requirements regulation – the documents were a treasure trove of detailed analysis of the state of the continent’s banks as at December 31 last year.

This in-depth report by The Telegraph's Executive Business Editor appeared on their website at 7:04 p.m. GMT on Sunday evening---and it's courtesy of reader 'h c'.

The Scariest Number Revealed Today: $1.114 Trillion In Eurozone Bad Debt

As we previously reported, the ECB's latest stress test was once again patently flawed from the start. Why? Because as we noted earlier, in its most draconian, "adverse" scenario, the ECB simply refused to contemplate the possibility of deflation. And here's why. Buried deep in the report, on page 75 of 178, is the following revelation which contains in it the scariest number presented to the public today.

"Due to the fact that on average banks' internal definitions were less conservative than the simplified EBA approach, the application of the simplified approach led to an increase in NPE stock of €54.6 billion from €743.1 billion to €797.7 billion. The CFR and the projection of findings led to an additional increase in NPE of €81.3 billion, resulting in a total increase €135.9 billion to €879.1 billion of post-CFR NPEs across the participating banks as a result of the AQR. The impact of the application of the EBA simplified approach and the credit file review on the stock of NPEs varied amongst debtor geographies, with overall increases among SSM debtor geographies ranging from 7% to 116%."

Translated: due to a lotta ins, lotta outs, lotta what-have-you's, and the now traditional "fluidity" when it comes to European term definitions (recall that as of this year, in Europe hookers and blow contribute to (estimated) GDP otherwise the Eurozone would be in deep triple-dip recession, if not outright depression by now) the stress test, while concluding that Europe's banks are "safe", also uncovered some €136 billion in previously undisclosed NPE or "Non-Performing Exposure", aka Bad Loans - loans which will never be repaid.

Which in turn leads to the new bad loan total amount (that will also in the coming quarters be revised sharply higher) among Eurozone banks: a whopping €879 billion, or some $1.114 trillion at today's exchange rate. This amount to a stunning 9% of the the Eurozone's GDP and is precisely the reason why the ECB can't possibly even conceive of deflation, as without the much needed rising prices to inflate away this NPL debt tumor, Europe's banks are all insolvent, regardless of what today's stress test may have revealed about just a paltry 25 of them.

The above four paragraphs are the 'juice' of this Zero Hedge article---and it falls into the must read category.  It was posted on their Internet site at 7:10 p.m. EDT on Sunday evening---and I found it in yesterday's edition of the King Report.

Why Germany's households are more fragile than you think

On Sunday, the E.U. released the results of its latest round of testing on the financial health of the continent's lenders.

Meanwhile, the number crunchers at the European Central Bank have also been putting Europe's households under the microscope.

In a new working paper titled "Financial Fragility of Euro Area Households", the ECB examines how different parts of Europe may fare if economic conditions take a turn for the worse.

Specifically, the paper models what impact rising unemployment, falling house prices, and higher interest rates could have on household balance sheets, and the potential consequences for financial stability in the Continent.

The survey of 51,000 households across 14 euro-area countries reveal some surprising results about which countries are most vulnerable to a severe economic shock.

This interesting analysis appeared on The Telegraph's website at 5:00 a.m. GMT on Monday morning---and it's another offering from reader 'h c'.

Chief MH17 Investigator on German Claims: 'We Will Need Evidence'

SPIEGEL: Germany's foreign intelligence agency, the Bundesnachrichtendienst (BND), believes that pro-Russian separatists shot down the aircraft with surface-to-air missiles. A short time ago, several members of the German parliament were presented with relevant satellite images. Are you familiar with these photos?

Westerbeke: Unfortunately we are not aware of the specific images in question. The problem is that there are many different satellite images. Some can be found on the Internet, whereas others originate from foreign intelligence services.

SPIEGEL: High-resolution images -- those from US spy satellites, for example -- could play a decisive role in the investigation. Have the Americans provided you with those images?

Westerbeke: We are not certain whether we already have everything or if there are more -- information that is possibly even more specific. In any case, what we do have is insufficient for drawing any conclusions. We remain in contact with the United States in order to receive satellite photos.

This brief interview put in an appearance on the German website spiegel.de at 5:12 p.m. Europe time on their Monday afternoon---and my thanks go out to Roy Stephens for this story.  Roy also sent this Russia Today story from yesterday evening Moscow time---and it's headlined "MH17 might have been shot down from air – chief Dutch investigator".

Spain's export-led recovery comes at a price

Spain’s car industry has come back from the dead, saved by drastic wage cuts that transform the social character of Europe.

The French group Renault has restarted night shifts at its plant in Valladolid this month for the first time in a decade as demand surges for its snazzy bi-tonal Captur, much of it from South Korea of all places.

It is a moment that traumatised workers here in the heartland of old Castile never expected to see again after Spain’s economy crashed into depression six years ago, and then crashed yet deeper before hitting rock bottom in 2012. “We all thought this factory was going to be closed. It was a terrible time,” said Luis Estevez, a manager of the assembly plant.

Other countries may be mothballing lines or cutting shifts as Europe flirts with a triple-dip recession, but Spain’s 17 car factories are firing on all cylinders. Output has risen 20pc over the last two years, on track to reach 2.4m this year and 3m by 2017, leaving Britain, Italy, Russia and, above all, France ever further behind.

This Ambrose Evans-Pritchard article showed up on the telegraph.co.uk Internet site at 1:25 p.m. BST on Saturday---and it's another story courtesy of Roy Stephens.

Thousands of Hungarians protest against tax on Internet traffic

Thousands of Hungarians protested in Budapest on Sunday against a planned new tax on Internet data transfers, which they said would not only increase the tax burden but would also curb fundamental democratic rights and freedoms.

Prime Minister Viktor Orban's government, which has been widely accused of adopting anti-democratic policies, first unveiled plans for the new tax late on Tuesday in the draft 2015 tax bill submitted to parliament.

The draft tax bill contains a provision for Internet providers to pay a tax of 150 forints (0.38 pounds) per gigabyte of data traffic, though it would also let companies offset corporate income tax against the new levy.

"The move... follows a wave of alarming anti-democratic measures by Orban that is pushing Hungary even further adrift from Europe," the organisers of "100,000 against the Internet tax" said in a press release.

This Reuters article, filed from Budapest, appeared on their website at 8:39 p.m. GMT on their Sunday evening---and I thank West Virginia reader Elliot Simon for finding it for us.

IS group bids to cut off Kobane, Iraqi Kurds ready to join fight

Islamic State (IS) group fighters made a new bid to cut off the Syrian border town of Kobane from neighbouring Turkey Saturday as preparations gathered pace to deploy Iraqi Kurdish reinforcements.

The Kurdish regional government in northern Iraq unveiled plans on Friday for up to 200 well-trained peshmerga to join Syrian Kurdish forces defending Kobane in the coming week.

Kurdish news agency Rudaw said the first contingent could head to Kobane as early as Sunday but there was no immediate confirmation of that timetable.

Peshmerga ministry spokesman Halgord Hekmat declined to specify what route the Iraqi Kurdish forces would take, but they are expected to travel overland through Turkey, which has said it will allow them transit.

This article was posted on the france24.com Internet site on Saturday some time---and I thank Roy Stephens for sending it our way.

China launches direct trade between yuan, Singapore dollar, bypassing U.S. dollar

China on Monday announced direct trading between the renminbi and Singapore dollar beginning Tuesday, marking another step toward internationalizing the Chinese currency.

The announcement by China Foreign Exchange Trading System extended the yuan's list of direct onshore trade to more major currencies, including the U.S. dollar, the euro, British sterling, Japanese yen, Australian dollar, New Zealand dollar, Malaysian ringgit, and Russian ruble.

The move aims to boost bilateral trade and investment, facilitate the use of the two currencies in trade and investment settlement, and reduce exchange costs for market players, the foreign exchange trading system said in a statement.

The move is also expected to help Singapore in its bid to become a renminbi offshore center.

This news item appeared on the cntv.cn Internet site yesterday---and I found it over at the gata.org Internet site.

London hedge fund Red Kite holds more than half LME copper stocks - WSJ

London-based hedge fund Red Kite Group currently holds more than half of London Metal Exchange copper inventories, The Wall Street Journal reported, citing LME traders and brokers.

LME data shows that there is a dominant holder of the LME's copper stocks, accounting for between 50-80 percent of total metal holdings. That would be worth around $534-$854 million based on prices of $6,675 per tonne.

Total LME copper stocks are currently at 159,550 tonnes.

The WSJ cited comments from eight traders and brokers working for different firms active on the LME who said they believe Red Kite Group was the one buying.

The above four paragraphs are all there is to this short Reuters piece that appeared on their Internet site at 9:04 a.m. GMT yesterday morning---and I thank Elliot Simon for his second offering in today's column.  Reader M.A. sent the Zero Hedge spin on this headlined "Copper Surges After Report Mysterious London Buyer Has Cornered Up to 90% of Market".

Greenspan says he's not aware of gold price suppression through central bank leasing

The opportunity to question former Federal Reserve Chairman Alan Greenspan about central bank intervention in the gold market was spectacularly fumbled today during Greenspan's appearance at the New Orleans Investment Conference.

Interviewing Greenspan, conference moderator Gary Alexander asked if the former Fed chairman was aware of efforts by central banks to suppress the price of gold by leasing the metal to bullion banks, which would sell the metal into the market.

"I'm not aware of anything" like that, Greenspan replied, though of course central bank gold leasing to suppress gold's price was famously a subject of Greenspan's testimony to Congress in July 1998.

During a break in the interview, your secretary/treasurer urged Alexander to follow up with a question about that testimony -- and he did, but only to misquote it. Alexander asked Greenspan if he remembered testifying to Congress that "the Fed," not central banks generally, stood ready to buy gold, not lease it, to influence the price.

Greenspan replied that it was "not conceivable that I would have said that" -- and of course he never did.

This must read GATA release was posted on their website on Saturday afternoon CDT.

Gold price suppression documents cited in debate at New Orleans conference

Documents that were included in a PowerPoint presentation by your secretary/treasurer during his debate with Doug Casey of Casey Research on Thursday, October 23, at the New Orleans Investment Conference -- a debate whose proposition was "Gold Manipulation: Real or Imagined?," with your secretary/treasurer arguing that it is real -- are cited below, though, because of lack of time, not all of them were reviewed during the debate.

There are a lot of links in this post that I found on the gata.org Internet site yesterday.  So, if you're going to wade through them, I'd start by topping up your coffee if I were you.

Bill Holter analyzes gold manipulation debate at New Orleans conference

Market analyst Bill Holter, who writes for the Miles Franklin coin and bullion shop in Minnesota and GATA Chairman Bill Murphy's LeMetropoleCafe.com, analyzes the gold manipulation debate between your secretary/treasurer and Doug Casey of Casey Research at the New Orleans Investment Conference last Thursday.

Bill's commentary was posted on the GATA website yesterday.

Grant Williams: This Little [Swiss] Piggy Bent the Market

In April 1999, the revision of the Federal Constitution was approved (how else than through a referendum?), and it came into effect on January 1, 2000.

Oh... sorry... I almost forgot to mention that in September 1999 — after the revision had been adopted but before it had been officially enacted — the Swiss National Bank became one of the signatories to the Washington Agreement on Gold Sales, meaning that all that lovely Swiss gold which had been sitting there, steadily accumulating and making the Swiss franc one of the last remaining “hard” currencies on the planet, was eligible to be sold.

A single line in the Swiss National Bank’s own history of monetary policy identifies the beginning of the demise of one of the world’s great currencies: On 2 May, the SNB begins selling gold holdings no longer required for monetary policy purposes.

And there you have it. “No longer required for monetary policy purposes.

That’s what happens when you finally embrace the beauty of fiat. Not only do you get to sell gold, you get to call the proceeds of those sales “profits.”  The absurdity borders on breathtaking.

I spent a good deal of time talking to Grant at the Casey Conference in San Antonio last month---and we got along fabulously well.  This long treatise on the Swiss Gold Referendum falls into the absolute must read category, because it spells out in no uncertain terms what's at stake.

Swiss gold initiative advocates professionalize their campaign and need your help

The campaign in support of the gold referendum initiative in Switzerland on November 30 has been professionalized, erecting a comprehensive Internet site which, while in German, can be automatically translated into English if visited via a Google Chrome Internet browser.

Donations in support of the campaign are being collected at the Gold Switzerland Internet site, operated by Matterhorn Asset Management, whose managing partner, Egon von Greyerz, is a primary proponent of the initiative.

The referendum proposal would bar the Swiss National Bank from selling the country's gold reserves; require the bank to repatriate Swiss gold reserves from foreign vaults and vault all the national gold reserves in Switzerland itself; and hold at least 20 percent of Switzerland's foreign exchange reserves in gold.

Essentially the referendum proposal is a democratic revolt against unaccountable central banking and currency market rigging.

This commentary appeared on the GATA website yesterday as well---and if you're considering donating, this is a must read.

Swiss gold exports to India cross Rs 70,000 crore; banks turn wary after black money probe

As banks in Switzerland come under greater black money scrutiny, the quantum of gold having left Swiss shores for India so far this year has reached a record high level of over 11 billion Swiss francs (about Rs 70,000 crore).

The gold exports from Switzerland to India stood at over 2.2 billion Swiss francs (about Rs 15,000 crore) in September alone, which is double the figure for the previous month, shows latest data released by Swiss Customs Administration.

While industry watchers attribute the surge during September partly to increased demand for the yellow metal ahead of Diwali and other festivals in India, the sudden spike is also being seen suspiciously in the backdrop of gold being used for 'layering' purposes to move funds from Swiss banks amid growing scrutiny for suspected black money.

According to banking industry sources, banks operating in Switzerland, including those headquartered in the Alpine nation and the Swiss units of other European banks, have turned wary about dealing with their Indian clients in the wake of a growing scrutiny of such accounts.

This gold-related news item showed up on The Economic Times of India website at 2:30 p.m. IST on their Sunday afternoon---and it's courtesy of reader U.M.  Reader U.M. sent another story about this that appeared on thehindu.com Internet site just after midnight IST on their Monday morning.  It's got a great chart embedded---and it's headlined "Swiss gold exports to India soar; banks wary".

Black-gold rush? Not really

The doubling of India’s gold imports from Switzerland in September over the previous month has led to speculation that this was black money finding its way back into India. But a close look at the numbers suggests otherwise.  

India imported gold worth 2.2 billion Swiss francs in September, up from 1.1 billion Swiss francs in August, according to data released by the Swiss Customs Administration.

But India is not the only country to witness such a surge in imports of the yellow metal. Total gold exports from Switzerland have doubled from 3 billion Swiss francs in August to 6.4 billion Swiss francs in September.

Other Asian countries such as China, Hong Kong, Thailand and Singapore have also upped their share substantially.  For instance, in August, Hong Kong imported about 100 million Swiss francs worth of gold, which shot up to around 900 million Swiss francs in September. Thailand and China, too, witnessed a similar surge.

This article put in an appearance on thehindubusinessline.com Internet site yesterday sometime---and it's definitely worth reading.  It's another offering from reader U.M., for which I thank her.

As gold smuggling rises, India's tax office calls for lower import duty

Seizures of smuggled gold by the directorate of revenue intelligence has risen by an unprecedented 330 per cent during the April-September period as compared to last year, prompting the directorate to call on the finance ministry to bring down the import duty on the yellow metal and make smuggling less lucrative.

This development comes even as gold imports have jumped by around 450 per cent year-on-year in September touching $3.75 billion, which calls into question the effectiveness of the high import duty of 10 per cent.

Experts say that import duty has failed to as a deterrent and demand for gold has only gone up.

"There were 2,150 seizures of gold made by the DRI across the country worth over Rs 600 crore in the last six months. This is huge when compared to 500 seizures worth Rs 150 crore made last year during the same period," a government official told The Indian Express on the condition of anonymity.

This gold-related story showed up on the indianexpress.com Internet site at 1:16 a.m. IST on their Monday morning---and I found it embedded in a GATA release.

Australian scholar says futures markets suppress commodity prices, keep producing nations poor

Thirteen years ago the British economist Peter Warburton wrote that Western central banks were using the futures and derivatives markets and intermediary investment banks to control commodity prices giving rise to the adage: "The futures markets aren't manipulated. The futures markets are the manipulation."

Yesterday MineWeb's Lawrence Williams interviewed a mathematician and former stockbroker who holds a doctorate in math from the University of Melbourne, Australia, Fraser Murrell and who emphatically concurs, describing the futures markets as the mechanism by which the financially sophisticated West loots the developing world, which is dependent for its livelihood on the production of natural resources. The Western countries sustaining these futures markets, Murrell argues, thereby perpetuate poverty in the developing countries.

Of course this has been GATA's complaint for many years, but nobody at GATA has a Ph.D., just tinfoil hats.

As Chris Powell just said, GATA has been at this since 1999---but the real voice in the wilderness is silver analyst Ted Butler, as his 30th anniversary of pounding at the gates on this issue is fast approaching.  Murrell's work is basically a rehash of what Butler and GATA and Peter Warburton have been talking about all these years, but without attribution, of course.  It falls into the must read category and it, plus a few other links are embedded in this GATA release.  The first reader through the door with this mineweb.com article was Manitoba reader U.M.---and it's her final offering in today's column, for which I thank her.

Giant gold nugget found in California finds secret buyer

One of the largest gold nuggets in modern times pulled from Northern California's Gold Country has sold to a secret buyer.

The new owner of the so-called Butte Nugget and its exact price will both remain mysteries at the buyer's request, the San Francisco Chronicle reported Saturday.

But Don Kagin, the Tiburon-based coin dealer who brokered the deal, said that a "prominent Bay Area collector" paid about $400,000 for the nugget weighing 6.07 pounds. That wasn't far off from the asking price, he said.

"Let's just say it's a win-win for everybody, Kagin said, adding that the nugget went up for sale Thursday with the deal finalized on Friday.

This is, of course, a follow-up story now that the nugget has a happy seller---and probably an equally happy buyer.  This AP item was picked up by the foxnews.com Internet site on Sunday sometime---and I thank reader M.A. for today's last story.

¤ The Funnies









¤ The Wrap

This would be a very important and hugely legitimate endeavor for [First Majestic Silver CEO] Keith Neumeyer to pursue---and I highly encourage that he do so. But it’s also important for him to recognize that he better cross his t’s and dot his i’s when dealing with the likes of JPMorgan and the CME Group. You want to make sure you’re on highly factual (and legal) ground. Go after these dudes with anything less than all the facts and, figuratively speaking, you’ll end up picking your teeth off the ground with a broken arm. Armed with the facts they are reduced to silence.

It’s not my place to chastise and correct the misstatements that many seem to make in reporting on precious metals, as I’m not anyone’s schoolmarm. But Mr. Neumeyer may be uniquely positioned to do something monumental, namely, bring to the forefront a complaint of manipulation from a producer’s perspective. But misquote a single fact and it will all be for naught. - Silver analyst Ted Butler: 25 October 2014

Even though there was very little volume in either gold or silver yesterday, it was apparent---at least to me---that their respective prices were being quietly managed, as they weren't allowed to break above their Friday closes no matter how many attempts were made.

One thing that hasn't changed is the continuing price decline in gold after it's 'failure' at its 50-day moving average last week---which the 6-month gold chart below shows.  Not surprisingly, the silver price is following suit.

And as I write this paragraph, the London open is still over 90 minutes away.  Both gold and silver had interesting down/up/down moves between 8 and 10 a.m. Hong Kong time on their Tuesday morning---but both have been settled back to basically unchanged.  However, gold volume is already an eye-watering 30,000 contracts---and silver' volume is just under 4,000 contracts, so it's obvious that something big was up in gold, as it took JPMorgan et al a lot of Comex paper to put that fire out.  Platinum and palladium aren't doing much---and the dollar index is chopping around unchanged.

Today the kiddies gather as the FOMC meeting gets underway---and who knows what trick or treats they'll have for us tomorrow afternoon.  Not that it matters really, because except for the gold card, they are now impotent.

Of course what they say on Wednesday is of some importance to the precious metal markets, as the HFT boyz and their algorithms are, for the most part, ready to slam the metals the moment the clock strikes 2 p.m. EDT, whether the current Grand Vizier has opened her mouth or not.

Will that happen tomorrow?  Beats me---but I'm already bracing myself for it.

Today, at the close of Comex trading, is the cut-off for this Friday's Commitment of Traders Report---and I'm hoping that whatever happens in the Globex futures market makes is reported in a timely manner so that it makes it into that report.

And as I send this off to Stowe, Vermont at 4:59 a.m. EDT, I see that all four precious metals are rallying a bit---and are all up from Monday's close in New York, but all have run into 'da boyz' in the last few minutes.  Gold volume is now north of 37,000 contracts---and silver's volume is now over 6,700 contracts.  That's not overly large volume for silver, considering the price activity, but it certainly is for gold.  The dollar index is down 4 basis points---and heading back towards unchanged at the moment.

Before heading off to bed, I'd like to take this opportunity to comment on Casey Research's Chief Energy Investment Strategist Marin Katusa's new book, "The Colder War: How the Global Energy Trade Slipped from America's Grasp," which I've now read from beginning to end.

I've been following Putin's moves in the oil industry fairly closely over the years---and have posted a lot of stories about it in my daily column as well.  But the in-depth research and commentary by Marin took my knowledge to a whole new level when Putin's plans for Mother Russia were all fleshed out as they are here.

It was helpful that I'd read Zbigniew Brzezinksi's 1998 best-selling novel: The Grand Chessboard: American Primacy and its Geostrategic Imperatives"---Matthew Simmons "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy"---David Fromkin's classic tome: "A Peace to End All Peace: The Fall of the Ottoman Empire and the Creation of the Modern Middle East"---and lastly the relative chapters about the House of Saud as described by John Perkin's in his New York Times best-seller "Confessions of an Economic Hit Man," as this knowledge enabled me to judge the accuracy of what Marin had to say when he was recounting the history, energy-related or otherwise, about the events of the last 100 years in the Eurasian land mass as it was carved up the Western powers after World War One.

Marin's ability to capture all of this in 183 short pages, is an amazing feat of writing---and the highlights are all you really need to know to get a firm grasp of the situation in that energy-rich part of the world.

His book, in parts, reads like a spy novel---except it's all factual---and certainly falls in the "you-can't-make-this stuff-up" category, which he didn't.  I place Marin's book firmly in the absolute must read category---and especially so for those of you absorbed with the goings-on inside the New Great Game  vis-à-vis control of the remaining energy deposits on Planet Earth---which is what this book is really all about.

If you're interested---and you should be---you can read all about it here.  For $22 bucks, which includes shipping inside the U.S.A.---the purchase won't affect your standard of living any---and I consider it a bargain, even at twice that price.

That's all I have for today---and absolutely nothing will surprise me when I check the charts when I get up later this morning.

See you tomorrow.

]]>
Tue, 28 Oct 2014 06:27:00 +0000
<![CDATA[Shanghai Gold Exchange Weekly Withdrawal of 51.5 Tonnes for October 17]]> http://www.caseyresearch.com/gsd/edition/shanghai-gold-exchange-weekly-withdrawal-of-51.5-tonnes-for-october-17/ http://www.caseyresearch.com/gsd/edition/shanghai-gold-exchange-weekly-withdrawal-of-51.5-tonnes-for-october-17/#When:09:57:00Z "The gold card is about the only one they have left to play"

¤ Yesterday In Gold & Silver

It was a nothing day in gold yesterday---and the tiny gains from Far East and London trading began to disappear at 10:30 a.m. EDT---and the New York low was in at 11:00 a.m. EDT, the close of trading in London.  After that, the gold price traded sideways for the remainder of the Friday session.

The high and low ticks aren't worth looking up.

Gold finished the day at $1,231.00 spot, down 90 cents from Thursday's close.  Net volume barely moved the needle at only 80,000 contracts.

After the obligatory sell off at the 6 p.m. EDT open in New York on Thursday evening, the silver price didn't do much until a rally began once the noon London silver fix was put to bed.  That got halted right at the 9:30 a.m. EDT open of the equity market in New York---and at 10:30 a.m. the HFT boyz showed up, taking silver down to its spike low tick shortly before 11:30 a.m.  Within ten minutes, the silver price rallied back to unchanged on the day---and traded almost ruler flat into the 5:15 p.m. electronic close.

The high and lows were recorded by the CME Group as $17.355 and $17.135 in the December contract.

Silver closed yesterday at $17.205 spot, up a penny from Thursday's close.  Net volume was in the vicinity of  22,000 contracts.

The platinum price didn't do a lot on Friday---and also got sold down a bit at 10:30 a.m. EDT---just like gold and silver.  Platinum was closed down seven bucks.

Palladium made several rally attempts in early Zurich trading, but both got sold down before they could develop into anything.  Then at 10:30 a.m. in New York, the same not-for-profit sellers showed up in this metal as well---and palladium got closed down a couple of bucks.

The dollar index closed late on Thursday afternoon in New York at 85.83.  It slid to 85.75 by 2:30 p.m. Hong Kong time---and then rose quickly to its 85.88 high about 8:15 a.m. BST in London.  From there it headed lower at an ever faster pace, until someone caught the proverbial falling knife at the London p.m. gold fix at precisely 3 p.m. BST/10 a.m. EDT.  The low tick at that points was 85.57.  It 'rallied' back about twenty basis points before chopping sideways into the close.  The index finished the day at 85.73---which was down 10 basis points from Thursday's close.

The gold stocks chopped within a percent or so of unchanged during the entire New York session yesterday---and the HUI closed down a smallish 0.31%.

The silver equities, like the gold shares, tried to stay in positive territory, but the sell-offs across the board at 10:30 a.m. EDT in all four precious metals put the silver equities in a deeper hole---and although they struggled mightily back into positive territory, they couldn't manage a positive close, as Nick Laird's Silver Sentiment Index also finished the Friday session in the red by a tiny amount---0.12%.

The CME Daily Delivery Report showed that 50 gold and zero silver contracts were posted for delivery within the Comex-approved depositories on Tuesday.  The only short/issuer was Barclays out of their in-house [proprietary] trading account once again---and they also stopped 39 of those contracts in their client account.  The balance was picked up by Canada's Scotiabank.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Friday trading session showed that gold open interest in October rose 53 contracts---and now stands at 286 contracts.  Silver's remaining October open interest dropped from 8 contracts to 2 contracts.

There was another withdrawal from GLD yesterday, as an authorized participant took out 144,194 troy ounces.   And as of 6:59 p.m. EDT yesterday evening, there were no reported changes in SLV.

There was a decent sales report from the U.S. Mint yesterday.  They sold 5,000 troy ounces of gold eagles---1,500 one-ounce 24K gold buffaloes---and 125,000 silver eagles.

Month-to-date the mint has sold 55,500 troy ounces of gold eagles---20,500 one-ounce 24K gold buffaloes---3,940,000 silver eagles---and 400 platinum eagles.  Based on these numbers, the silver/gold sales ratio is a hair under 52 to 1.

There was no in/out movement in gold at the Comex-approved depositories on Thursday, but the gargantuan in/out movement in silver more than made up for it, as 2,451,366 troy ounces were received---and 846,366 troy ounces were shipped off for parts unknown.  The big deposit was at HSBC USA---and the big withdrawal was from Brink's, Inc.  The link to yesterday's action, which is worth a quick look, is here.

The Commitment of Traders Report for positions held at the close of Comex trading on Tuesday was in the ballpark of what I was expecting, but there was the odd surprise.

The first surprise was in silver---and it was a positive one, as the Commercial net short position actually declined by 1,669 contracts, or 8.3 million troy ounces.  The Commercial net short position is now down to 72.96 million troy ounces, which is pretty much on par with the lowest short position these traders have had for many years.

However, Ted Butler said it appeared that JPMorgan added 2,000 contracts to their short-side corner in the Comex silver market during the reporting week, so their short positions now stands at 12,000 contracts, or 60 million troy ounces which, using the number from the previous paragraph, represents about 82 percent of the total Commercial net short position.

Ted was rather surprised by this turn of events---and told me he was going to spend some time thinking about it between now and the time he posts his weekly review to paying subscribers early this afternoon EDT, so he may have something to add to his initial thoughts on this.

Under the hood in the Disaggregated COT Report, there was very little change in long and short positions in the Managed Money category, so all of the reporting week's activity was commercial trader vs. commercial trader,  along with a bit of long position reduction in the Nonreportable/small trader category.

The disappointment was in gold.  I was expecting/hoping that the Commercial net short positions wouldn't be much worse than the prior week's COT Report, or at least not over 20,000 contracts worse.  That was not the case, as the Commercial net short position blew out by 26,075 contracts, or 2.61 million troy ounces.

Most of the activity on the rally during the reporting week was the Managed Money going long and covering shorts, to the tune of 20,292 contracts.  The Nonreportable/small trader category covered 3,250 of their short positions, so the balance of the contracts, about 2,500 or so, involved the Commercial traders.  On the other side of all these trades---and capping the price in the process---was JPMorgan et al.  And while on the subject of JPMorgan, Ted said that they reduced their long-side corner in the Comex gold market by 2,000 contracts---and it now stands at 16,000 contracts, or 1.6 million ounces.

As I mentioned in yesterday's column, the price action since the Tuesday cut-off, which has been down three days in a row, has certainly reduced the Commercial net short position by a decent amount.  But, having said that, 'da boyz' could still skin the Managed Money crowd to the tune of 30-35,000 Comex contracts, if they wanted to put them all back on the short side again.  That would drive the price down to around the October 6 low price tick without too much trouble.

So, if the T.A. crowd is looking for a double bottom in gold, the powers-that-be are in a perfect position to oblige them, especially with the good start they've had to the process during the last three trading days of this week.

So we wait.

Before leaving the COT Report, there were also very decent improvements in the COT structure of both copper and platinum---and bit in palladium as well.  The only fly in the ointment---as I just mentioned---is in gold.

The Shanghai Gold Exchange reported their withdrawals for the week ending Friday, October 17---and the magic number for that week was 51.506 tonnes, which is a very chunky number once again.  Here's Nick Laird's excellent chart that shows the change.

Since this is my Saturday column, I have a fair number of stories for you today, including three or four that I've been saving for today.  I also have a fair number of big reads that fall into the must read category, so I hope you have enough time in what's left of your weekend, to read them all.

¤ Critical Reads

Sears to close more than 100 stores and lay off nearly 5,500 employees

Sears Holdings Corp is shuttering more than 100 stores and laying off at least 5,457 employees, investor website Seeking Alpha reported on Thursday, indicating the struggling retailer may be stepping up store closures.

Sears said in August it had closed 96 stores in the six months since February and planned to close a total of 130 under-performing stores during the full fiscal year. It added at the time that it may shutter additional stores beyond the 130 target.

Sears spokesperson Chris Brathwaite declined to comment on the number of planned closures, saying the company would provide an update when it reports quarterly earnings next month. Reducing operations to the best performing stores is key to Sears’ revival strategy, he said.

“While this has resulted in store closures where appropriate – decisions that we do not take lightly – we continue to have a substantial nationwide footprint with a presence in many of the top malls in the country,” Brathwaite said.

This news item appeared on theguardian.com Internet site at 3:33 p.m. EDT on Thursday afternoon---and I thank reader 'h c' for today's first story.

The U.S. Housing Recovery Has Been Canceled Due To Data Revisions

Last month, when, with great amusement, we reported that "New Home Sales Explode Higher Thanks To... Record High Average New Home Prices?", we mocked the latest batch of bulls hit data released by the U.S. department of truth as follows:

New Home Sales rose a magnificent (seasonally-adjusted annualized rate) 18% in August - the biggest monthly rise since January 1992 albeit with a 16.3 90% confidence interval, meaning the final number may well be +1.7%. At 504k, new home sales are back at May 2008 levels (though obviously massively below the 1.4 million homes sold at the peak in 2005). As a reminder, May's 504K new home sales print was later revised later to 458K. But even more stunning, new home sales in The West rose a mind-numbing 50% in August (and up 84.4% YoY - nearly double). 

Well, it is now a month later, and here come the revisions: first, that 50% surge in the West was revised... 30K lower.

In short: the euphoric, consensus-beating data for every single month since May has been revised lower, by on average 6% and as much as 9%. Perhaps finally people will realize that there is only one number that matters in the Census bureau's monthly new home sales report: the ±15.7 90% confidence interval. Well, people maybe, but not algos, who only care about one thing: whether the data beat or missed.

Now we wonder: will all those market surges over the past 4 months which were based on erroneous headline data, all be revised lower? Sarcasm off.

This short Zero Hedge piece appeared on their website at 10:29 a.m. EDT on Friday---and it's worth your time.  I thank Manitoba reader U.M. for sharing it with us.

A Furious Albert Edwards Lashes Out at Central Bankers: "Will These Morons Ever Learn?"

Albert Edwards is angry, and understandably so: almost exactly two weeks after warning readers to "sell everything and run for your lives" and the market was on the verge of its first correction in years, several powerful verbal interventions by central banks from the Fed, to the BOJ to the ECB have staged yet another massive rebound which has nearly wiped out all the October losses.

Central-planning aside (and ask how much the USSR would have wished for central planning to indeed have been "aside") we share his frustrations, almost to the point where we would reiterate word for word Edwards' furious outburst, as follows: "Simply put, the central banks for all their huffing and puffing cannot eliminate the business cycle. And they should have realised after the 2008 Great Recession that the longer they suppress volatility, both economic and market, the greater the subsequent crash. Will these morons ever learn?"

Obviously, they will never will because their very entire existence is based on the assumption that what they do can impact the business cycle when all it does is merely delay the inevitable. In this case, a recession whose arrival will be so violent, it will crush not only US stocks, but the overall economy, which has for the past 6 years existed purely on the Fed's CTRL-P fumes. Fumes, which by the looks of things, will evaporate at just the worst possible moment: just when half of the world's entire growth in 2015 is expected to come from the U.S. (the other half from China).

This commentary appeared on the Zero Hedge Internet site at 7:21 p.m. EDT on Thursday evening---and I found it yesterday's edition of the King Report.

Doug Noland: More Wackoism

Central banks win the day and week.

Markets have grown completely dependent on “Do Whatever it Takes” central control. And six years into a historic global experiment in central bank monetary stimulus, the maladjusted global economy has become dependent upon inflated (and dangerously speculative) securities markets. Meanwhile, the consequences of reckless “money” printing spur deepening social and political tensions. As more begin to question contemporary central bank doctrine, the issue of economic inequality is finally becoming an issue.

There are so many signs pointing to the present as an extraordinary juncture in history. For one, the misconceptions, flaws and unfolding failure of contemporary central banking are coming into clearer view. Yet fragilities associated with a flagging global Bubble ensure only more radical monetary measures. In the name of fighting “deflation” risk, everything has become fair game. God only knows how much “money” they might end up printing.

Doug's weekly Credit Bubble Bulletin is always worth your while---and I thank reader U.D. for bringing this week's edition to our attention.  It was posted on the prudentbear.com Internet site on Friday evening.

Tiny house sets London record

A house in London the size of two parking spaces has sold for £275,000 ($501,962) in what is likely to be a record for a property that size in the British capital, one of the world's most expensive cities.

It is so small that the bed is suspended over the cooker and you have to clamber over the worktop to get to it.

"There were 33 viewings and five offers," a spokeswoman for estate agents Winkworth said on Thursday.

With 27 years of residential real estate sales under my belt, I recognize a wildly out of control real estate market bubble when I see one---and this one takes the cake.  The story is worth reading---and the photos of the of the 'home' will blow you away.  The article showed up on The Sydney Morning Herald website at 1:12 a.m. local time on their Saturday morning. I thank reader 'h c' for his second offering in today's column.

E.U. makes Britain pay for recovery

David Cameron is fighting to stop Britain being forced to pay an extra £1.7 billion to the European Union due to the success of the British economy.

The Prime Minister was ambushed with a demand from the European Commission for the extra cash because Britain’s economy has performed better than other economies in Europe since 1995.

The bill is due on December 1 and Mr Cameron is particularly enraged because Brussels accountants are also preparing to give France back £790 million as its economy performed less well than Britain’s.

Tories have been stunned by the news which comes just weeks before the critical by-election in Kent next month, which they will fight against Ukip, and as the European Parliament seeks additional increases to next year’s EU budget, at a extra cost to British taxpayers of £680 million.

You couldn't make this stuff up!  This amazing must read article appeared on The Telegraph's website at 9:39 p.m. BST on their Thursday evening---and I thank reader 'h c' for his third contribution to today's column.

French Unemployed Hits Record High, Hollande Demands E.U. Budget "Must Be Adapted"

France's President Francois Hollande states confidently that "everyone should respect treaties," then 'Junckers' it with this stunningly hypocritical bullshit, "budget rules must be adapted" to support growth and France "has done what it has to do" on its deficit... one glance at the following chart suggests that Hollande has done nothing and has been enabled by Draghi... What a farce!!

How long before Schaeuble explodes?

This short news item, with an excellent chart, appeared on the Zero Hedge website at 12:12 p.m. EDT yesterday---and I thank reader U.M. for sending it along.

Merkel: Lifting Sanctions Against Russia Unnecessary

German Chancellor Angela Merkel said Friday that lifting sanctions against Russia was unnecessary.

"We do not find it necessary to speak about lifting sanctions against Russia," Merkel said on the sidelines of the European Summit in Brussels, as quoted by Deutsche Welle.

The German chancellor explained her position by citing the fact that the Minsk agreements have not been fully implemented. In particular, ceasefire is not observed in eastern Ukraine.

On September 19, representatives from Russia, Ukraine, the self-proclaimed Donetsk and Luhansk people's republics and the Organization for Security and Co-operation in Europe (OSCE) formulated a memorandum of nine provisions to regulate the implementation of a ceasefire agreement between Kiev and independence supporters in eastern Ukraine reached during the previous talks of the so-called Contact Group in Minsk on September 5. Since then, both the Kiev forces and independence fighters have been accusing each other of violating the truce.

This 4-paragraph story showed up on the RIA Novosti website at 3:11 p.m. Moscow time on their Friday afternoon---and I thank reader M.A. for sending it our way.

Hungary's Orban stonewalls U.S. corruption allegations

Hungary is demanding the U.S. hand over evidence after the Americans placed an entry ban on six officials close to Viktor Orban’s government last week.

The Hungarian prime minister in Brussels on Friday (24 October) told reporters that his country would not launch any investigation into the corruption allegations on the six without first seeing some proof.

“Without evidence you cannot accuse anyone,” he said. One of the accused is reportedly his own special advisor.

Orban told this website he was not proud that Hungary was the first E.U. member state to have a US-entry ban on officials.  Normally being first is something to be proud of, "but not in this case", he said.

This longish story, filed from Brussels, showed up on the euobserver.com website at 6:04 p.m. Friday evening Europe time---and it's courtesy of Roy Stephens.

Renzi stirs up E.U. row ahead of eurozone meeting

Eurozone leaders are meeting on Friday to discuss the issue of public deficits and debt, as France and Italy are in breach of the EU rules.

Ahead of the meeting, Italian Prime Minister Matteo Renzi stirred up a row with outgoing EU commission chief Jose Manuel Barroso, who criticised his decision to publish a commission letter warning him about the budget deficit.

Renzi said he could not understand Barroso's "surprise" about the published letter, given that the Financial Times and Italian media had already "anticipated" it.

"I think it's time for total and open transparency, the time has come to put an end to secret letters in this building. With Italy there will be total clarity about anything that comes from Brussels, because we think that's the only way to help citizens understand what is going on," Renzi told journalists on the margins of an EU summit.

This article is the second one in a row from the euobserver.com Internet site.  It was posted there at 9:27 a.m. Europe time on Friday---and it's also courtesy of Roy Stephens.

Italy’s in terminal decline, and no one has the guts to stop it

Everything that’s wrong with France is worse here.

The Rome Opera House sacked its entire orchestra and chorus the other day. Financed and managed by the state, and therefore crippled by debt, the opera house — like so much else in Italy — had been a jobs-for-life trade union fiefdom. Its honorary director, Riccardo Muti, became so fed up after dealing with six years of work-to-rule surrealism that he resigned. It’s hard to blame him. The musicians at the opera house — the ‘professori’ — work a 28-hour week (nearly half taken up with ‘study’) and get paid 16 months’ salary a year, plus absurd perks such as double pay for performing in the open air because it is humid and therefore a health risk. Even so, in the summer, Muti was compelled to conduct a performance of La Bohème with only a pianist because the rest of the orchestra had gone on strike.

After Muti’s resignation, the opera house board did something unprecedented: they sacked about 200 members of the orchestra and chorus, in a country where no one with a long-term contract can be fired. It was a revolutionary — dare one say Thatcherite? — act. If only somebody would have the guts to do something similar across the whole of the Italian state sector. But nobody will. Italy seems doomed.

This longish essay appeared on the spectator.co.uk Internet site on Friday BST---and it's certainly worth reading if you have the time.  My thanks got out to South African reader B.V. for bringing it to our attention.

Eastern Europe Shivers Thinking About Winter Without Gas

As winter approaches, former Soviet satellite nations from Poland to Bulgaria are watching Russia and Ukraine’s stalled gas negotiations with growing trepidation.

The lack of discernible progress is sending a collective shiver down the spine of Eastern Europe, which retains vivid memories of Russian energy cuts during unusually cold winters in 2006 and 2009. The ensuing shortages led to shuttered factories and a return to wood for heating and cooking in rural areas.

Despite the two episodes, little has been done to diversify supplies within a region that remains highly dependent on energy delivery systems dating back to the Soviet era.

If Moscow and Kiev don’t reach a compromise before winter and OAO Gazprom fails to restart supplies to its western neighbor, Ukraine may resort to siphoning off gas carried through its territory. As in 2009, that could prompt Russia to cut transit through Ukraine altogether, leaving parts of eastern Europe exposed to severe shortages.

This very interesting Bloomberg article, co-filed from Prague and Belgrade, was posted on their Internet site at 5:48 a.m. Denver time on Friday morning---and I thank reader U.M. for finding it for us.

Russia detains airport staff after Total CEO's runway death

Russian investigators detained four more staff members Thursday at the Moscow airport where the CEO of French oil giant Total died when his plane collided with a snowplough.

Those detained include an intern air traffic controller, her supervisor, who was in charge of flights at the time, and the heads of the airport's air traffic controllers and runway cleaners.

Investigators had already detained the driver of the snowplough and a court hearing on Thursday was expected to sanction his arrest.

On Thursday, investigators said the 60-year-old Vladimir Martynenko had 0.6g (per litre) of alcohol in his blood, double the Russian drink-driving limit.

This news story put in an appearance on the france24.com Internet site on Thursday sometime---and I thank Roy Stephens for sending it.  There was also a story about this on the RIA Novosti website---and it's headlined "Moscow Court Arrests Air Traffic Controller in Fatal Plane Crash"---and it's courtesy of reader M.A.

Putin accuses U.S. of causing global instability

Russian President Vladimir Putin has accused the U.S. of undermining global stability, and warned that the world will face new wars if Washington does not respect the interests of other nations.

During a speech in the Russian city of Sochi, the President argued that while Moscow does not see Washington as a threat, U.S. foreign policy has created chaos. Citing the wars in Iraq, Libya and Syria, he went on to accuse the U.S. and its allies of “fighting against the results of its own policy”.

“They are throwing their might to remove the risks they have created themselves, and they are paying an increasing price,” Putin told political experts at the Black Sea resort.

“I think that the policies of the ruling elite are erroneous. I am convinced that they go against our interests, undermine trust in the United States,” he said without offering specific examples.

This right-on-the-money  article was posted on the independent.co.uk Internet site on Friday---and it's the second offering of the day from reader B.V.

How to Start a War and Lose an Empire

A year and a half I wrote an essay on how the U.S. chooses to view Russia, titled The Image of the Enemy. I was living in Russia at the time, and, after observing the American anti-Russian rhetoric and the Russian reaction to it, I made some observations that seemed important at the time. It turns out that I managed to spot an important trend, but given the quick pace of developments since then, these observations are now woefully out of date, and so here is an update.

At that time the stakes weren't very high yet. There was much noise around a fellow named Magnitsky, a corporate lawyer-crook who got caught and died in pretrial custody. He had been holding items for some bigger Western crooks, who were, of course, never apprehended. The Americans chose to treat this as a human rights violation and responded with the so-called “Magnitsky Act” which sanctioned certain Russian individuals who were labeled as human rights violators. Russian legislators responded with the “Dima Yakovlev Bill,” named after a Russian orphan adopted by Americans who killed him by leaving him in a locked car for nine hours. This bill banned American orphan-killing fiends from adopting any more Russian orphans. It all amounted to a silly bit of melodrama.

But what a difference a year and a half has made! Ukraine, which was at that time collapsing at about the same steady pace as it had been ever since its independence two decades ago, is now truly a defunct state, with its economy in free-fall, one region gone and two more in open rebellion, much of the country terrorized by oligarch-funded death squads, and some American-anointed puppets nominally in charge but quaking in their boots about what's coming next. Syria and Iraq, which were then at a low simmer, have since erupted into full-blown war, with large parts of both now under the control of the Islamic Caliphate, which was formed with help from the US, was armed with US-made weapons via the Iraqis. Post-Qaddafi Libya seems to be working on establishing an Islamic Caliphate of its own. Against this backdrop of profound foreign US foreign policy failure, the US recently saw it fit to accuse Russia of having troops “on NATO's doorstep,” as if this had nothing to do with the fact that NATO has expanded east, all the way to Russia's borders. Unsurprisingly, US–Russia relations have now reached a point where the Russians saw it fit to issue a stern warning: further Western attempts at blackmailing them may result in a nuclear confrontation.

The American behavior throughout this succession of defeats has been remarkably consistent, with the constant element being their flat refusal to deal with reality in any way, shape or form. Just as before, in Syria the Americans are ever looking for moderate, pro-Western Islamists, who want to do what the Americans want (topple the government of Bashar al Assad) but will stop short of going on to destroy all the infidel invaders they can get their hands on. The fact that such moderate, pro-Western Islamists do not seem to exist does not affect American strategy in the region in any way.

This long essay, posted on the Information Clearing House website on Tuesday, had to wait for today's column.  It falls into the absolute must read category, especially for all serious students of the New Great Game---and if I had to distill today's column down to just one article, this would be it!  I had three or four readers send me this piece this week, but the first one through the door was Rob Bentley.

Turkey to Refrain From Sanctioning Russia: Turkish Ambassador to Russia

Turkish authorities do not intend to impose sanctions on Russia if asked by the United States or the European Union, Turkish Ambassador to Russia Umit Yardim told RIA Novosti on Friday.

"I do not see the Russian-Turkish relations within the framework of these sanctions [against Russia]. Russia-Turkey relations develop naturally and they are special in their own way. We will keep our relations that way," Yardim said.

"While I worked in Iran, I realized that sanctions are not a method that leads to expected results in politics. Turkey follows the decisions made by the U.N. It concerns not only Turkey but all U.N. member states," the ambassador added.

This brief news item showed up on the RIA Novosti website at 3:48 p.m. Moscow time on their Friday afternoon---and it's courtesy of reader M.A.

Pepe Escobar: A Caliph in a wilderness of mirrors

He's invincible. He beheads. He smuggles. He conquers. He's the ultimate jack-of-all-trades. No Tomahawk or Hellfire can touch him. He always gets what he wants; in Kobani; in Anbar province; with the House of Saud (which he wants to replace) trying to make Putin (who he wants to behead) suffer because of low oil prices.

If this was a remake of Orson Welles's noir classic The Lady from Shanghai, in the mirror sequence the lawyer (American?) and the femme fatale (Shi'ite?) would also get killed; but The Caliph of Islamic State would survive as a larger than life Welles, free to roam, plunder and "give my love to the sunrise" - as in a Brave Caliphate World shining in "Syraq" over the ashes of the Sykes-Picot agreement.

He's winning big in Iraq's Anbar province. The Caliph's goons are now closing in on - of all places - Abu Ghraib; Dubya, Dick and Rummy's former Torture Central. They are at a mere 12 kilometers away from Baghdad International. A shoulder-launched surface-to-air missile (or MANPAD) away from downing a passenger jet. Certainly not an Emirates flight - after all these are trusted sponsors.

Hit, in Anbar province, is now Caliph territory. The police forces and the province's operational command have lost almost complete control of Ramadi. The Caliph now controls the crucial axis formed by Hit, Ramadi, Fallujah; Highway 1 between Baghdad and the Jordanian border; and Highway 12 between Baghdad and the Syrian border.

This longish but interesting essay appeared on the Asia Times website ten days ago---and after thinking about it over the last weekend, I decided to stick it in today's column, as it was too long and off-topic for a weekday column.  The last person to send it to me was South African reader B.V.

The Secret Casualties of Iraq’s Abandoned Chemical Weapons

The soldiers at the blast crater sensed something was wrong.

It was August 2008 near Taji, Iraq. They had just exploded a stack of old Iraqi artillery shells buried beside a murky lake. The blast, part of an effort to destroy munitions that could be used in makeshift bombs, uncovered more shells.

Two technicians assigned to dispose of munitions stepped into the hole. Lake water seeped in. One of them, Specialist Andrew T. Goldman, noticed a pungent odor, something, he said, he had never smelled before.

He lifted a shell. Oily paste oozed from a crack. “That doesn’t look like pond water,” said his team leader, Staff Sgt. Eric J. Duling.

The specialist swabbed the shell with chemical detection paper. It turned red — indicating sulfur mustard, the chemical warfare agent designed to burn a victim’s airway, skin and eyes.

I am never sure anymore about the accuracy of the international stories that are posted on The New York Times website, as this paper is basically a propaganda machine for the U.S. government when required to be.  So keep that in mind when you read this---and it certainly is worth reading.  It was posted on their Internet site ten days ago---and I thank Dan Lazicki for sending it our way---and it's another article that had to wait for my Saturday column.

The Zombie System: How Capitalism Has Gone Off the Rails

A new buzzword is circulating in the world's convention centers and auditoriums. It can be heard at the World Economic Forum in Davos, Switzerland, and at the annual meeting of the International Monetary Fund. Bankers sprinkle it into the presentations; politicians use it leave an impression on discussion panels.

The buzzword is "inclusion" and it refers to a trait that Western industrialized nations seem to be on the verge of losing: the ability to allow as many layers of society as possible to benefit from economic advancement and participate in political life.

The term is now even being used at meetings of a more exclusive character, as was the case in London in May. Some 250 wealthy and extremely wealthy individuals, from Google Chairman Eric Schmidt to Unilever CEO Paul Polman, gathered in a venerable castle on the Thames River to lament the fact that in today's capitalism, there is too little left over for the lower income classes. Former US President Bill Clinton found fault with the "uneven distribution of opportunity," while IMF Managing Director Christine Lagarde was critical of the numerous financial scandals. The hostess of the meeting, investor and bank heir Lynn Forester de Rothschild, said she was concerned about social cohesion, noting that citizens had "lost confidence in their governments."

It isn't necessary, of course, to attend the London conference on "inclusive capitalism" to realize that industrialized countries have a problem. When the Berlin Wall came down 25 years ago, the West's liberal economic and social order seemed on the verge of an unstoppable march of triumph. Communism had failed, politicians worldwide were singing the praises of deregulated markets and US political scientist Francis Fukuyama was invoking the "end of history."

This 4-part essay appeared on the German website spiegel.de late in the afternoon Europe time on their Thursday---and had to wait for today's column as well.  The first person to send me this long but worthwhile read was Roy Stephens.

Assange: Google Is Not What It Seems

In June 2011, Julian Assange received an unusual visitor: the chairman of Google, Eric Schmidt, arrived from America at Ellingham Hall, the country house in Norfolk, England where Assange was living under house arrest.

For several hours the besieged leader of the world’s most famous insurgent publishing organization and the billionaire head of the world’s largest information empire locked horns. The two men debated the political problems faced by society, and the technological solutions engendered by the global network—from the Arab Spring to Bitcoin.

They outlined radically opposing perspectives: for Assange, the liberating power of the Internet is based on its freedom and statelessness. For Schmidt, emancipation is at one with U.S. foreign policy objectives and is driven by connecting non-Western countries to Western companies and markets. These differences embodied a tug-of-war over the Internet’s future that has only gathered force subsequently.

In this extract from When Google Met WikiLeaks Assange describes his encounter with Schmidt and how he came to conclude that it was far from an innocent exchange of views.

This very long and somewhat disturbing article appeared on the newsweek.com Internet site during the lunch hour on the east coast on Thursday.  It's certainly worth reading if you have the time---and as I skimmed parts of it, James Perloff's classic tome "The Shadows of Power: The Council on Foreign Relations and the American Decline" came to mind for the second time this week.  I thank Michael Cheverton for bringing this Newsweek article to our attention.

Casey Research: Blood in the Streets to Create the Opportunity of the Decade

Gold stocks staged spring and summer rallies this year, but haven’t able to sustain the momentum. Many have sold off sharply in recent weeks, along with gold. That makes this a good time to examine the book value of gold equities; are they objectively cheap now, or not?

By way of reminder, a price-to-book-value ratio (P/BV) shows the stock price in relation to the company’s book value, which is the theoretical value of a company’s assets minus liabilities. A stock is considered cheap when it’s trading at a historically low P/BV, and undervalued when it’s trading below book value. From the perspective of an investor, low price-to-book multiples imply opportunity and a margin of safety from potential declines in price.

We analyzed the book values of all publicly traded primary gold producers with a market cap of $1 billion or more. The final list comprised 32 companies. We then charted book values from January 2, 2007 through last Thursday, October 15. Here’s what we found.

Well, dear reader, there's no question that blood is definitely running in the streets as far as the precious metals complex is concerned, but the only reason that it is, is because of the iron grip that JPMorgan et al are exerting in the Comex futures market at the moment.  But if you're standing around with money to invest, this is as close to the bottom as you're likely to get.  This commentary on gold stocks showed up on the Casey Research website yesterday.

Platinum and palladium price Fixing settled - now for gold

It was announced a week ago by the London Platinum and Palladium Fixing Company Limited (LPPFCL) that the responsibility for administering a new electronic Fixing process for the two metals has been awarded to the now Hong Kong-owned London Metal Exchange (LME). 

The LPPFCL had previously announced the setting up of a Request for Proposal (RFP) following a review of its Fixing process at the end of July. This was with the aim of appointing a third party to assume responsibility for the administration of the Fixing in place of the LPPFCL. The recent announcement was that the LME had been selected and has committed to become the new administrator of the Fixing process. 

The LPPFCL is now finalising arrangements for the transfer of the administration of the Fixing to the LME with effect from 1 December 2014 while the LME has in the meantime developed a bespoke platform (LMEbullion) that will provide for the necessary electronic pricing solution. 

The LPPFCL had been administering the pricing system for the metals for the past 25 years utilising a closed telephone call system but had decided, in the light of doubts being cast on the integrity of the various precious metals fixing processes, to seek a new electronic answer to pricing the metals.

These changes are all smoke and mirrors, dear reader, because as long as JPMorgan et al are allowed to run rampant in the Globex trading system with impunity, nothing will change, as the 'fix' will always be in.  This article by Lawrence Williams appeared on the mineweb.com Internet site yesterday---and I thank Manitoba reader U.M. for her final contribution to today's column.

CNBC's Rick Santelli and the Swiss gold vote

Rick wades into the gold issue in Switzerland---and his comments on it start at the 1:15 minute mark of this 2:24 minute CNBC video clip from yesterday.  I thank Mark Magarian for sending it our way.

Paying people their worth in gold -- a first in Singapore

How would you like to be paid your worth in gold? Singapore-based precious metals dealer BullionStar is doing just that by rewarding staff with the commodity as salary, and it says it is the first in the country to do so.

Here is how it works: If, for example, you earn S$3,200 a month, you can choose to be paid in two gold bars each worth S$1,600. Theoretically, if you are a high earner drawing a pay of S$51,000 a month, you can choose to be paid with a one-kilogram gold bar.

Sales manager Vincent Tie is one of six employees at BullionStar who has opted to receive his salary in bullion. About 20 to 40 per cent of the 38-year-old's basic pay is given in gold.

"If I save in a paper currency in a bank, the interest paid to me cannot beat the rate of inflation, so essentially I am losing purchasing power. That means that I am buying less with my wealth," Mr Tie said about why he went for the heavy metal option.

¤ The Funnies

¤ The Wrap

Today's pop 'blast from the past' is by a North American rock group that started out in Chicago back in 1967.  Once the group got established, there was no stopping them, as the 1970s belonged to them.  They're second only to the Beach Boys in Billboard singles and chart success.  This 1984 ballad, with lead singer Peter Cetera doing the honours, has producer David Foster's fingerprints all over it---and the link is here.

I'm not sure how many plays have been performed or how much classical music has been written to the words of Shakespeare's Romeo and Juliet, but it's a lot over the centuries.  I was listening to Sergei Prokofiev's interpretation of it on CBC-FM a few days ago---and although interesting; I, like most people, prefer the Tchaikovsky version.  His third and final iteration of this work was completed in 1880, but was not premiered until May 1, 1886.

Here is The London Symphony with Maestro Valery Gergiev conducting---and this is as good as it gets.  The link is here.

Nothing much happened in the precious metals yesterday, except for the fact that silver's rally in New York was obviously dealt with in the usual manner---and three of the four precious metals were closed down on the day.  Volumes were light across the board.

Here are the 6-month charts for both gold and silver.  The engineered 'failure' at gold's 50-day moving average is still intact.

Tuesday and Wednesday of next week we get the FOMC wiener roast in Washington---and it will be interesting to see if the comments at 2 p.m. EDT on Wednesday will be used as another platform for 'da boyz' to hammer the precious metals, particularly gold, down to its October 6 low.

With the Commercial traders positioned in the 'Big 6' commodities to their maximum advantage---and further improvement possible if next week's FOMC news is used to beat this group of commodities into the ground one last time, we could see important never-to-be-seen-again lows in all of them.

If the powers-that-be want to avoid deflation at all costs, the only credible option they have left is to let commodity prices run to the upside for awhile---starting with the four precious metals,  plus copper and crude oil.  But as I've also mentioned before, this particular path is fraught with its own dangers, one being that once this inflation genie is out of the bottle, commodity prices included, it's always a tough one to get back in.  But it's a much preferable option to the one that's staring them in the face right now---and that's serious deflation.

Will they do it?  Beats me.  But the gold card is about the only one they have left to play, as money printing and their zero interest rate policy is now a spent force as an inflation-generating tool.

For these reasons, I'll be watching the Sunday night open in New York with great interest, along with the first three trading days of the new week.

I'm done for the day---and the week---and I'll see you here on Tuesday, or Wednesday if you live just west of the International Date line.

]]>
Sat, 25 Oct 2014 09:57:00 +0000
<![CDATA[First Majestic Silver CEO Wants Silver Miners to Form Counter-Cartel Against Futures Shorters]]> http://www.caseyresearch.com/gsd/edition/first-majestic-silver-ceo-wants-silver-miners-to-form-counter-cartel-against-futures-shorters/ http://www.caseyresearch.com/gsd/edition/first-majestic-silver-ceo-wants-silver-miners-to-form-counter-cartel-against-futures-shorters/#When:06:12:00Z "An engineered rally 'failure' at the 50-day moving average would be the perfect way to pull it off"

¤ Yesterday In Gold & Silver

The gold price traded pretty flat for most of the early going in the Far East trading session on their Thursday.  The tiny rally that developed at noon Hong Kong time, ran into a willing seller around 2:30 p.m.---and the price chopped lower until the Comex open.  It traded sideways from there into the London p.m. gold fix---and once that was out of the way, 'da boyz' and their algorithms showed up---and the low tick was printed at the 4 p.m. BST London close, which was 11 a.m. EDT in New York.  The gold price traded quietly higher from there before running into a determined seller short after 3 p.m. in electronic trading---and it traded sideways into the 5:15 p.m. close.

The high and low ticks were reported by the CME Group as $1,244.90 and $1,226.30 in the December contract.

Gold finished the Thursday session at $1,31.90 spot, down $9.10 from Wednesday's close.  Net volume was 128,000 contracts.

After opening lower, as per usual, the silver price chopped sideways, hitting its high tick at the same time as gold, just before 2:30 p.m. Hong Kong time---and about forty minutes before the London open.  The low of the day was printed around 12:40 p.m. in London---and the subsequent rally [such as it was] got capped shortly before the equity markets opened in New York.  From there the silver price chopped sideways in ten cent price range for the remainder of the day.

The high and low in silver were recorded as $17.25 and $17.035 in the December contract.

Silver closed in New York yesterday at $17.195 spot, up 2.5 cents from Wednesday's close.  Net volume was 28,000 contracts.

Platinum rallied six or seven bucks at the open in New York on Wednesday evening and, like gold and silver, hit its high shortly before 2:30 p.m. Hong Kong time on their Thursday afternoon.  Except for a tiny rally at the Comex open, the platinum price also got sold down, with its low tick coming at 11 a.m. EDT  in New York. Platinum rallied back ten bucks from there---and closed down only 2 bucks.

Palladium also rallied at the open in New York open on Wednesday evening.  But the attempted sell-off in palladium at 2:20 p.m. Hong Kong time met with little success---as the rally that began after the spike down at 11 a.m. EDT took the metal to its $778 the ounce high just before 12:30 p.m. in New York.  The rally got cut off at the knees at that point---and the metal didn't do much after that.  Palladium closed up 14 dollars.

The dollar index closed late on Wednesday afternoon in New York at 85.75---and then it did nothing of significance during the entire Thursday session, closing at 85.83---up 8 basis points.

The gold stocks gapped down at the open, but rallied back to unchanged shortly after 10 a.m. EDT, before getting sold down again.  Then they traded sideways before developing a positive bias at the 1:30 p.m. EDT close of Comex trading.  The gold shares really took off to the upside a few minutes before 3 p.m., but once they were in the green to the tune of 1 percent or so, there was a willing seller there to drop them back to unchanged.  However, they did manage to close slightly in the black, as the HUI finished the Thursday session up 0.21%---which is quite amazing when you consider that gold was closed down nine bucks on the day.  Some traders appeared to be bottom fishing.

The silver equities followed a very similar pattern at the beginning, but their low tick came shortly before 11:30 a.m. in New York---and they rallied steadily from there, culminating in an identical spike to gold's that also began shortly before 3 p.m.---and it met the same fate.  Nick Laird's Intraday Silver Sentiment Index closed up 0.63%.

The CME Daily Delivery Report showed that zero gold and 8 silver contracts were posted for delivery within the Comex-approved depositories on Monday.  Nothing to see here.

The CME Preliminary Report for the Thursday trading session showed that there are still 233 gold contracts open in October, down 2 contracts from yesterday's report.  Silver's open interest in October is now down to 10 contracts---minus the 8 from the previous paragraph, so the silver is just about done for the month---unless a surprise buyer demanding physical delivery shows up between now and next Thursday.

There were no reported changes in GLD yesterday---and as of 9:40 p.m. EDT yesterday evening, there were no reported changes in SLV, either.

Since yesterday was Thursday, the folks over at the iShares.com Internet site updated the in/out activities of SLV as of the close of trading on Wednesday.  Joshua Gibbons, the "Guru of the SLV Bar List" reported on that--and here's what he had to say: "Analysis of the 22 October 2014 bar list, and comparison to the previous week's list -- 1,150,689.2 troy ounces were removed (all from Brinks London). No bars were added or had a serial number change."

"The bars removed were from: Russian State Refineries (0.4M oz), Uralelectromed (0.2M oz), Almalyk (0.2M oz), and 11 others."

"As of the time that the bar list was produced, it was overallocated 60.7 oz.  All daily changes are reflected on the bar list.  All of the bars removed are ones that had been in there for many years."

The link to Joshua's website is here.

For the second day in a row, there was no sales report from the U.S. Mint.

The was a big shipment in gold out of the Comex-approved depositories on Wednesday, as 321,500.000 troy ounces were shipped out JPMorgan's vault---and that works out to precisely 10,000 kilobars of the stuff---and probably China bound.  The link to that activity is here.

For a change, there wasn't much in/out activity in silver.  Nothing was reported received---and only 66,519 troy ounces were shipped out.  The link to that 'action' is here.

It was a very slow news day yesterday---and the pickings were slim.

¤ Critical Reads

Warren Buffett loses $2.5 billion in three days on Coca-Cola and IBM

It's not been a good week for billionaire investor Warren Buffett, as his bet on Coca-Cola and American tech giant IBM have cost him more than $2 billion in just three days.

On Monday, Buffett lost nearly $1 billion after shares in IBM plummeted to a three-year low after it badly missed third-quarter earnings estimates and announced it would pay $1.5 billion to ditch its loss-making chip division.  That’s bad news for Buffett considering his investment firm, Berkshire Hathaway, is the largest investor in IBM.

Yesterday, Buffett's week of hell continued after Coca-Cola shares plummeted six per cent in New York trading after it reported flat sales and lowered its guidance for the year.

The set of disappointing results from both companies come after Buffett admitted he made a "huge mistake" investing in Tesco, which has seen its share price more than halve in the past 12 months following a series of profit warnings.

This article appeared on the independent.co.uk Internet site on Wednesday BST sometime---and today's first story is courtesy of reader 'h c'.

Shrinking is the New Growth: CAT Did it Through Buybacks, Not Sales

Those who have been following Caterpillar actual top-line performance know that things for the industrial bellwether have been going from bad to worse, with not only retail sales declining across the globe, as documented here previously, but with the current stretch of declining global retail sales now longer than during what was seen during the Great Recession.

And yet, moments ago, CAT, which is a major DJIA component, just reported blow-away EPS of $1.72, far above the $1.35 expected. How did it achieve this stunning number which has pushed DJIA futures higher by almost half a percent?

Simple: first there was the usual exclusions, with “restructuring costs” adding back some $0.09 to the bottom line number.

But the punchline was this: “In addition to the profit improvement, we have a strong balance sheet and through the first nine months of the year, we’ve had good cash flow.  So far this year, we’ve returned value to our stockholders by repurchasing $4.2 billion of Caterpillar stock and raising our quarterly dividend by 17 percent,” Oberhelman said.”

This Zero Hedge piece showed up on David Stockman's website yesterday sometime---and it's the first offering of the day from Roy Stephens.  It's worth your time.

Foreign central banks cut U.S. bond stakes to lowest since May

Foreign central banks slashed their holdings of U.S. Treasuries at the Federal Reserve to their lowest level since May, Fed data released on Thursday showed.

Analysts said the decline in U.S. government bond holdings likely stemmed from a combination of factors including booking profits on the recent rally in Treasuries, and the dollar which hit a four-plus year peak earlier this month.

"Some central banks might be selling dollars to arrest its rise against their currencies. While export-oriented countries typically like a stronger dollar, they don't want it go up too fast because they could make some imports very expensive," said Christopher Low, chief economist at FTN Financial.

This Reuters article appeared on their Internet site at 6:08 p.m EDT yesterday evening---and I found it in a GATA release that Chris Powell sent out just after midnight.

Interest rates could stay low permanently, says Bank of England deputy governor

Interest rates could now be permanently lower, a prominent member of the Bank of England’s committee of interest rate setters has warned.

Ben Broadbent, deputy governor for monetary policy at the Bank of England, said on Thursday that the low level of interest rates has “recently fuelled talk of a “secular stagnation””.

He said that “rates are likely to stay low for some time yet”, while whether the downward path of interest is a “secular” phenomenon remains “anyone’s guess”.

The Bank of England’s Monetary Policy Committee (MPC) voted to maintain Bank rate at its historic low of 0.5pc this October, as policymakers voted 7-2 to keep rates on hold.

As Jim Rickards said some time ago---no interest increases ever again.   But Broadbent won't admit that its the interference of the central banks in the free market that caused this problem in the first place. This article appeared on the telegraph.co.uk Internet site at 9:29 a.m. BST on their Thursday morning.  This is the second offering of the day from reader 'h c'.

Bank of England targets end of bank bail-out era

The Bank of England could fire bank bosses on the spot and replace them with outside executives should the bank collapse under new rules designed to prevent taxpayers bailing out banks.

The Bank would step in and take control of a failing bank over a 48-hour period, usually a weekend, and decide how to deal with it in order to protect customers.

Instead of the Government stepping in, long-term bondholders would exchange debt for equity in the bank under a so-called “bail-in” method should it collapse.

If these methods, which were detailed by the bank on Thursday, had been in place when RBS went under in 2008, not a single penny of taxpayer funds would have been used to rescue the bank.

Ah, yes---preparing for the next collapse of the banking system in England---and soon to show up in your country as well.  This article appeared on The Telegraph's website at 4:14 p.m. BST yesterday---and I thank U.K. reader Tariq Khan for sharing it with us.

E.U. Banking Stress Tests: 'Far-Reaching Reforms Are Needed'

On Sunday, Europe will release the results of its banking stress tests. In an interview, former PIMCO head Mohamed El-Erian speaks with SPIEGEL about what to expect and how Europe's core countries are failing to adequately confront a flagging economy.

SPIEGEL: Mr. El-Erian, the results of the stress test on European banks will be published on Sunday. If you had a billion dollars to bet for or against European banks, what would you do?

El-Erian: Stock markets are altogether overvalued; people took risks in financial markets that were too high. Banking stocks often exaggerate the development: If stock markets rise, bank shares rise higher. If stock markets fall, they fall deeper. Therefore, I would buy neither stocks nor bank bonds prior to a correction. I would focus on highly secured banking bonds.

SPIEGEL: How poorly are Europe's banks doing?

El-Erian: Soon, banks will no longer be the biggest risk to the financial system and the economy. And five years from now, many credit institutions will be smaller than they are today, having discontinued some types of business, and will better support the real economy.

This short interview was posted on the German website spiegel.de at 4:48 p.m. Europe time on their Thursday afternoon---and it's worth reading.  It's the second contribution of the day from Roy Stephens.

Could France sell the Mona Lisa to pay off its debts?

France is in debt to the tune of 2,000 billion euros. Could selling off the country’s art make a dent in that figure?

Leonardo da Vinci’s Mona Lisa is probably the best known work of art in the world.  Her enigmatic smile beams down on hundreds of thousands of tourists a year at the Louvre Museum in Paris.

She could also bring a smile to France’s cash-strapped government if a sale could ease the national debt.

Heavily-indebted Portugal is doing something similar, putting its state-owned collection of Miro paintings up for sale.

This very interesting article showed up on the france24.com Internet site way back on September 2---and I thank reader M.A. for digging it up for us.

Barroso clashes with Italy over published budget warning

European Commission president Jose Manuel Barroso has hit out at Italy for publishing a letter the commission sent asking Rome to justify its budget for 2015.

"It was a unilateral decision by the Italian government to publish the letter on the finance ministry's website. The commission was not in favour of that letter being made public," Barroso said on Thursday (23 October).

The letter, sent Tuesday, says Italy's draft budget, submitted last week along with other national budgets for review in Brussels, "plans to breach" the debt and deficit rules underpinning the euro.

"According to our preliminary analysis Italy plans a significant deviation from the required adjustment path towards its medium-term budgetary objective," says the letter.

This news item, filed from Brussels, appeared on the euobserver.com Internet site at 3:32 p.m. Europe time yesterday afternoon---and I thank Roy Stephens for sending it.

Blackwater contractors convicted

A federal jury here on Wednesday convicted one former Blackwater contractor of murder and three of his colleagues of voluntary manslaughter in the deadly shootings of 14 unarmed civilians killed in Baghdad's Nisour Square seven years ago. The judge in the case ordered the men detained pending sentencing.

The massacre, which resulted in a wave of popular anger in Iraq against the United States, and especially the army of private security contractors which it employed there, contributed heavily to the Iraqi government's later refusal to sign an agreement with Washington to extend the US military presence there.

It also sealed the reputation of Blackwater, a "private military" firm headed by Erik Prince, a right-wing former Navy Seal, as a trigger-happy mercenary outfit whose recklessness and insensitivity to local populations jeopardized Washington's interests in conflict situations.

Seven years is better than never, I suppose.  This Asia Times article appeared on their website yesterday sometime---and I thank reader M.A. for sliding it into my in-box very late last night MDT.

China Cuts Saudi Oil Imports Amid Colombia Shipment Boost

China reduced oil imports from Saudi Arabia even as the world’s largest crude exporter cuts prices to lure Asian customers amid intensifying competition from Colombia to Oman.

Oil deliveries from Saudi Arabia fell 2.7 percent to 4.74 million metric tons last month from a year earlier, according to data released today by the General Administration of Customs in Beijing. Shipments from Colombia surged 389.6 percent, while Russian deliveries increased by 56.8 percent.

Asian consumers are benefiting from a wider choice of suppliers offering cheaper crude, from Venezuela to Alaska and Nigeria, as the highest U.S. production in almost 30 years cuts American demand. Saudi Arabia reduced prices for oil for Asia to the lowest in almost six years as it aims to maintain market share even as global benchmark prices have dropped about 25 percent from June.

“Chinese refiners are favoring supplies from Oman and South America over Saudi Arabia as their prices relative to output are more competitive,” Amy Sun, an analyst with Shanghai-based ICIS-C1 Energy, a consultant, said by phone from Guangzhou. “China is also increasing imports from Russia with a new contract signed last year.”

This Bloomberg news story, filed from Shanghai, showed up on their website at 4:05 a.m. Denver time on Wednesday morning---and I thank South African reader B.V. for sending it our way.

China's economic growth slows to 7.3%, near six-year low

China's economic growth cooled to 7.3 per cent between July and September from a year earlier, the weakest expansion since the global financial crisis and reinforcing expectations that Beijing will need to roll out more stimulus to avert a sharper slowdown.

With a faltering property market increasingly dragging on manufacturing and investment, the reading was the slowest for the world's second-largest economy since early 2009, when the growth rate tumbled to 6.6 per cent.

Economists polled by Reuters had expected third-quarter growth to cool to 7.2 per cent from 7.5 per cent in the second quarter, adding to worries about flagging global growth which have sent financial markets tumbling in recent weeks.

On a quarter-on-quarter basis, growth eased to 1.9 per cent versus expectations of 1.8 per cent and down from 2.0 per cent in the second quarter.

This article put in an appearance on The Sydney Morning Herald website on their Tuesday---and it's the third and final contribution of the day from reader 'h c'.

Whitlam and Australia's forgotten coup

John Pilger marks the death of former Australian prime minister Gough Whitlam with the one story missing from the 'tributes' to a man whose extraordinary political demise is one of America's dirtiest secrets.

Across the political and media elite in Australia, a silence has descended on the memory of the great, reforming prime minister Gough Whitlam, who has died. His achievements are recognised, if grudgingly, his mistakes noted in false sorrow. But a critical reason for his extraordinary political demise will, they hope, be buried with him.

Australia briefly became an independent state during the Whitlam years, 1972-75. An American commentator wrote that no country had “reversed its posture in international affairs so totally without going through a domestic revolution”. Whitlam ended his nation’s colonial servility. He abolished Royal patronage, moved Australia towards the Non-Aligned Movement, supported “zones of peace” and opposed nuclear weapons testing.

Although not regarded as on the left of the Labor Party, Whitlam was a maverick social democrat of principle, pride and propriety. He believed that a foreign power should not control his country's resources and dictate its economic and foreign policies. He proposed to "buy back the farm". In drafting the first Aboriginal lands rights legislation, his government raised the ghost of the greatest land grab in human history, Britain’s colonisation of Australia, and the question of who owned the island-continent’s vast natural wealth.

I came close to deleting this before I'd even read it, but once I had, I'm happy to present it to you today.  This falls into the absolute must read category---and it was posted on the Hong Kong Internet site Asia Times yesterday.  I thank Roy Stephens for sharing it with us.

Climate change proved to be 'nothing but a lie', claims top meteorologist

The debate about climate change is finished - because it has been categorically proved not to exist, one of the world's leading meteorologists has claimed.

John Coleman, who co-founded the Weather Channel, shocked academics by insisting the theory of man-made climate change was no longer scientifically credible. 

Instead, what 'little evidence' there is for rising global temperatures points to a 'natural phenomenon' within a developing ecosystem.

In an open letter attacking the Intergovernmental Panel on Climate Change, he wrote: "The ocean is not rising significantly."

"I have studied this topic seriously for years. It has become a political and environment agenda item, but the science is not valid."

Amen to that, dear reader!  This article appeared on the express.co.uk Internet site on Thursday sometime---and I consider it well worth reading.  I thank reader M.A. for bringing it to my attention---and now to yours.

Market Update: #HeartofGold & Gold Symposium Update

Last week, ABC Bullion was delighted to attend the 7th annual Gold Investment Symposium, which was held at the Sofitel Sydney Wentworth Hotel. As we have for the past few years now, we were proud to sponsor the event alongside our sister company Custodian Vaults, and were delighted to catch up with not only a number of key industry contacts, but also to talk to many of the attendees, including a large number who are clients of ABC Bullion.

Considering the general pessimism and apathy regarding gold as an investment right now, attendance was not as high as it was back in 2011 when gold was threatening to push through the USD $2000oz mark.

From a contrarian perspective, this is of course encouraging news, and whilst no one was denying or attempting to gloss over the pain that the last three years has brought, their was a general perception that maybe, just maybe, the precious metal community has weathered the worst of this corrective storm, and there will be more profitable times ahead.

Some news from "the land down under"---as we don't hear much from them.  It was posted on the abcbullion.com.au Internet site eight days ago---and my thanks go out to Wesley Legrand for sharing it with us.

First Majestic CEO wants silver miners to form counter-cartel against futures shorters

First Majestic Silver CEO Keith Neumeyer, interviewed by Future Money Trends, argues that silver miners should form a counter-cartel to combat the investment houses selling silver short on futures markets.

My congratulations to Keith Neumeyer and Co. for stepping up to the plate on this issue.  I certainly hope that silver producers both big and small will rally around the flag that First Majestic has planted in the ground here, especially the producers based out of Vancouver.

This call to arms is not without dangers though, as Vancouver-based producers such as Pan American Silver and Silver Standard Resources will certainly not support such an initiative, as their masters at The Silver Institute wouldn't allow it.  Let's see what happens---but for moment I thing we should all be grateful to Keith, along with the entire organization, for having the gonads to do what was necessary. 

And if you want to help out here, you should contact the I.R. departments of any silver companies that you own shares in.  A few keystrokes into your computer's search engine will bring up the required 1-800 number or e-mail address---and be polite, but forceful---and don't procrastinate, do it NOW!

The interview runs for 15:41 minutes---and can be heard at their website linked here.  I found this in a GATA release posted on their Internet site very late last night.

Chris Powell: The crucial questions financial journalism won't ask and central banks won't answer

Remarks by Chris Powell, Secretary/Treasurer, Gold Anti-Trust Action Committee Inc...New Orleans Investment Conference...Thursday, October 23, 2014

For many years this conference has bravely invited GATA Chairman Bill Murphy and me to speak here about the evidence of manipulation of the gold market, particularly manipulation undertaken directly or indirectly by central banks, and every year there has been new documentation to report. This documentation has been compiled at GATA's Internet site, GATA.org.

The last two months have brought confirmation that, as we long have suspected, GATA has outlined only a small part of the surreptitious market manipulation being undertaken by central banks -- that this manipulation is actually comprehensive, that it covers nearly every major market in the world.

This confirmation is largely the work of Eric Scott Hunsader, founder of the market data and research company Nanex in Winnetka, Illinois, who publicized, through the Zero Hedge Internet site, documents recently filed with the U.S. government, two of them with the Commodity Futures Trading Commission and one with the Securities and Exchange Commission.

The first document is a letter to the CFTC, dated January 29 this year, from CME Group, the operator of the major futures exchanges in the United States, and signed by CME Group's managing director and chief regulatory counsel, Christopher Bowen: The letter notifies the CFTC of changes to CME Group's discount trading program for central banks. That is, the letter reveals that central banks are getting discounts for trading all futures on CME Group's exchanges, including the New York Commodity Exchange, the major mechanism for "price discovery" in the monetary metals.

This speech that Chris gave yesterday in New Orleans falls into the absolute must read category, so top up your coffee and have at it.  It was posted on the gata.org Internet site late last night.

¤ The Funnies

Here's a photo of yesterday's partial eclipse of the sun, which was very noticeable here in Edmonton yesterday afternoon.  This photo is one I stole from the spaceweather.com Internet site.  It was taken by James W. Young in Wrightwood, California.  The sunspot cluster visible in this photo is larger than the planet Jupiter.





¤ The Wrap

Since the price highs ($21.50) of mid-July thru the current COT Report, commercial traders, as a group, have purchased 42,400 net silver contracts on the COMEX, or the equivalent of 212 million oz. (This is the headline COT number). The technical funds have sold approximately 50,000 net contracts (long liquidation, but mostly new short selling) in that time (250 million oz), or more than 100% of what the commercial bought (other traders account for the difference). My point is that the technical funds did all the selling in silver---and about the same in the other metals. How could this not be, forget being the prime influence, the sole price influence?

The difference in market structure from July until today is the only difference that matters in all five metals. [Gold, silver, platinum, palladium, copper, plus crude oil---the Big 6. - Ed] There have been no demonstrable changes in actual supply and demand in any of these metals (except, perhaps, to the bullish side of the equation). The only documented change is in market structure on the COMEX/NYMEX. I don’t doubt that China, Russia and India have bought important quantities of gold and silver over the past two years, but that buying has not caused the price of each to increase. The only possible explanation for price behavior for the last few months and years comes from COMEX/NYMEX positioning, as documented in the COT Report. - Silver analyst Ted Butler: 22 October 2014

I wasn't entirely surprised by yesterday's price decline in gold, as the 'failure' of gold to break through its 50-day moving average is something that I indicated might occur---and now appears to be the case.

And as Ted Butler mentioned in his quote from yesterday---"Gold appears to be the only metal experiencing technical fund buying to date---and that still raises the possibility of the commercials rigging gold prices lower temporarily to lure the technical funds who bought, back to the sell side. In that case, silver may come under pressure, but it’s hard to see how many technical funds can be maneuvered to sell, seeing as managed money shorts are already at an all-time record high."

An engineered rally 'failure' at the 50-day moving average would be the perfect way to pull it off, as the T.A. analysts just eat this stuff up, even though they know perfectly well that their models [respected, in most cases] aren't worth a tinker's damn in a managed price environment.  But they have to keep up appearances, as their paycheques/paychecks depend on them not seeing it, or breathing a word of it to their readers/paying subscribers even if they do.

Here are the 6-month gold and silver charts updated with yesterday's data.

And as I write this paragraph, the London open is less than 15 minutes away.   The gold price, which got sold down a bit in early Far East trading, has now rallied back to unchanged---as have silver and platinum.  Palladium is actually up five bucks on the day.  Gold volume currently sits at 13,500 contracts---and silver's volume is a hair under 3,000 contracts.  The dollar index is drifting quietly lower---and is down 8 basis points at the moment.

Today we get the latest Commitment of Traders Report for positions held at the close of Comex trading on Tuesday.  As Ted Butler and I have mentioned on several occasions, we'll see more deterioration in the Commercial net short position in gold---and a quick peek at the price action during the reporting week certainly confirms that.  It's just a matter of how bad it is.  I'm guessing something similar to last week's number---and hopefully under 20,000 contracts if it isn't.

Of course Wednesday's and Thursday's price action will have already negated a large chunk of this expected deterioration and, depending on what happens during the remainder of the Friday trading session, today's COT Report may turn out to be 'yesterday's news'---a not uncommon phenomenon when JPMorgan et al want to keep their market-rigging activities out of the public gaze for as long as possible.

As for silver, the quiet price action during the reporting week indicates that there shouldn't be too much change in the Commercial net short position in either direction.

And as I send this out the door at 4:55 a.m. EDT, I see that all four precious metals got sold down a hair at the London open, but have now rallied an equal amount since---and are all back to unchanged from yesterday's close in New York.  Palladium is the only exception, as it's still up six bucks.  Net gold volume is now up to just under 25,000 contracts---and silver's volume is sitting at an even 5,000 contracts.  The dollar index is back to basically unchanged.

Once again I'll be watching the price action in gold closely to see if JPMorgan et al can continue to engineer the price lower for the third day in a row---and with today being the last trading day of the week, that outcome wouldn't surprise me.

Enjoy your weekend, or what's left of it if you live west of the International Date Line---and I'll see you here tomorrow.

]]>
Fri, 24 Oct 2014 06:12:00 +0000
<![CDATA[It’s Official—China’s Gold Demand in 2013 Was 2,199 Tonnes]]> http://www.caseyresearch.com/gsd/edition/its-official-chinas-gold-demand-in-2013-was-2199-tonnes/ http://www.caseyresearch.com/gsd/edition/its-official-chinas-gold-demand-in-2013-was-2199-tonnes/#When:06:26:00Z "Mining executives don't care what happens to their public stockholders"

¤ Yesterday In Gold & Silver

The gold price didn't do much of anything in Far East or early London trading on their Wednesday---and the smallish rally that developed once the noon London silver 'fix' was in, got in the neck at precisely 8:30 a.m. EDT---ten minutes after the Comex open.  From there it chopped sideways until the 1:30 p.m. Comex close.  Then further selling pressure entered the market---and gold got closed almost on its low tick.

The high and low were recorded by the CME Group as $1,250.20 and $1,240.70 in the December contract.

Gold finished the trading day in New York yesterday at $1,241.00 spot, down $8.40 from Tuesday's close.  Net volume was 103,000 contracts.

As usual, silver got hit the moment that trading began in New York on Tuesday evening---and never recovered.  The tiny rally that developed right at the Comex open ran into 'da boyz' and their algorithms---and silver, like gold, was closed almost on its low tick.

The high and low were recorded as $17.535 and $17.115 in the December contract, which was an intraday move of more than 2 percent.

Silver closed in New York yesterday at $17.17 spot, down 34.5 cents.  Net volume was pretty decent at 36,000 contracts.

Platinum hit its high at 9 a.m. Tokyo time---and then got sold down to unchanged.  The real selling pressure began the moment that Zurich opened---and platinum was closed on its absolute low of the day, down twenty bucks from Tuesday.

Palladium did very little on Wednesday, at least up until its brief spike shortly after 11:30 a.m. in New York yesterday morning.  From that spike high it got sold down with a vengeance as the powers-that-be closed it down an even 10 bucks from Tuesday's close.

The dollar index closed late on Tuesday afternoon in New York at 85.40---and after a brief dip to its 85.24 low around 2:10 p.m. Hong Kong time on their Thursday afternoon, it chopped higher until around 2:40 p.m. EDT---and from there it traded pretty flat into the close.  The index finished the Wednesday session at 85.75---up another 35 basis points.

Here's the 6-month U.S. dollar index so you can see what's happened since its low in early May.

The gold stocks gapped down at the open---and the rally that developed shortly after the London p.m. fix didn't last.  It was down hill all the way from there, as the HUI closed on its absolute low tick, down 3.17%.  [NOTE: My new HUI chart is courtesy of Nick Laird, for which I thank him]

The performance of the golds stocks looked terrific compared to the silver equities, as they got crushed to the tune of 6.37%.

Once again the sell-off in the precious metal shares was out of all proportion to the loses in the underlying metal.

The CME Daily Delivery Report showed that 1 gold and 10 silver contracts were posted for delivery within the Comex-approved depositories on Friday.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Wednesday trading session showed that gold open interest in October dropped to 235 contracts---and October o.i. in silver was cut from 102 contracts down to 14 contracts, from which must be subtracted the deliveries posted in the previous paragraph.  The October delivery month, which concludes one week from today, will go off the board without incident.

There was anther withdrawal from GLD yesterday.  This time an authorized participant took out 67,293 troy ounces.  And as of 9:27 p.m. EDT yesterday evening, there were no reported changes in SLV.

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

There were no in/out movements in gold at the Comex-approved depositories on Tuesday but, as usual, it was a totally different story in silver, as  585,333 troy ounces were received---and 446,684 troy ounces were shipped out.  Almost all the action was at Brink's, Inc. and the CNT Depository.  The link to that action is here.

I don't have all that many stories today, so I hope you have the time to read the ones you like.

¤ Critical Reads

Kyle Bass warns Q.E. end will shake up markets

Central banks meeting next week will expose a huge divergence in monetary policy between several major economies, putting the macro environment in focus and weighing on foreign exchange, hedge fund manager Kyle Bass said Wednesday.

The founder of the $1.7 billion hedge fund Hayman Capital thinks the Fed likely will taper its bond-buying stimulus to zero next week. The Bank of Japan, however, likely will announce it will do whatever it takes to prevent the world's third-largest economy from heading into a major crisis.

"They still run 10 percent fiscal deficits. We think they're going to run a current account deficit of 2 to 4 percent next year and Japan is going to have to buy more bonds and the U.S. is going to buy no more," Bass said on "Squawk on the Street." "And so when the training wheels come off the market in central bank land, macro becomes functionally much more relevant."

There are three CNBC video clip with Kyle that run concurrently.  In total, all three run for 7 minutes.  They showed up on their website around 9 a.m. EDT on Wednesday morning.  They're worth watching.  I thank reader David Ball for today's first story.

McDonald's Franchisees Say the Company is Bankrupting Them

McDonald's franchisees are furious that the company's aggressive promotions and costly restaurant upgrades are squeezing their profits, according to a new survey.

"Growth for McDonald's is over," one franchisee wrote in response to the survey by the financial services firm Janney Capital Markets.

"I am just hoping to be flat," another franchisee said. "[The] customer has lost faith in the brand."

"We are leaderless," said a third. A fourth franchisee complained, "They are being successful in bankrupting us."

This very interesting news item appeared on the businessinsider.com Internet site at 4:48 p.m EDT on Monday---and it's courtesy of reader Brad Robertson.

Manufacturing moving from China to U.S. - survey

Large manufacturers are increasingly moving production back to the United States from China, according to a new report by The Boston Consulting Group released Thursday.

In the third annual survey of US-based senior executives at manufacturing companies with annual sales of at least $1 billion, the number of respondents who said their companies were currently reshoring to the U.S. from China increased 20 percent from a year ago.

Given the fact that China's wage costs are expected to grow, do you expect your company will move manufacturing to the United States?" the August survey asked executives at an unspecified number of companies that currently manufacture in China.

The executives who said "Yes, we are already actively doing this" rose to roughly 16 percent in the "Made in America, Again" survey in August from 13 percent a year earlier and seven percent in the first survey in the series, in February 2012.

This AFP news item appeared on the france24.com Internet site at 9:05 a.m. Europe time this morning---and I thank South African reader B.V. for sliding it into my in-box shortly before I filed today's column.

Fed spotted JPMorgan 'Whale' risks years before scandal: inspector

The Federal Reserve's New York branch knew about risks JPMorgan Chase & Co was taking with its massive "London Whale" derivatives bets four years before they imploded, but it failed to act properly to head them off, the U.S. central bank's inspector general said.

The Fed's Office of Inspector General said on Tuesday one of the key flaws it uncovered in its probe of the 2008 transaction at the Wall Street bank was the New York Fed's over-reliance on certain personnel who left the supervisory team in 2011. That created a "significant loss of institutional knowledge" within the team assigned to inspect JPMorgan, the report said.

In what amounts to another recent black eye for the New York Fed's bank supervision unit, the report also noted that competing supervisory priorities and limited resources contributed to a failure to conduct key follow-up examinations.

This Reuters article, co-filed from New York and Washington, put in an appearance on their Internet site at 1:59 p.m. EDT on Tuesday afternoon---and it's a story I found in yesterday's edition of the King Report.

All the Markets Need is $200 Billion a Quarter From the Central Bankers

The central-bank put lives on.

Policy makers deny its existence, yet investors still reckon that whenever stocks and other risk assets take a tumble, the authorities will be there with calming words or economic stimulus to ensure the losses are limited.

A put option gives investors the right to sell their asset at a set price so the theory goes that central banks will ultimately provide a floor for falling asset markets to ensure they don’t take economies down with them.

Last week as markets swooned again, it was St. Louis Federal Reserve President James Bullard and Bank of England Chief Economist Andrew Haldane who did the trick. Bullard said the Fed should consider delaying the end of its bond-purchase program to halt a decline in inflation expectations, while Haldane said he’s less likely to vote for a U.K. rate increase than three months ago.

Just a softer way of saying the President's Working Group on Financial Markets, now shortened to the Plunge Protection Team.  This Bloomberg offering, filed from London, showed up on their Internet site at 5:18 a.m. Mountain Daylight Time on Tuesday morning---and it's the second item in a row that I plucked from yesterday's edition of the King Report.

Currency wars are back: 'Export your deflation to someone else'

Brazil Finance Minister Guido Mantega popularized the term “currency war” in 2010 to describe policies employed at the time by major central banks to boost the competitiveness of their economies through weaker currencies. Now, many see lower exchange rates as a way to avoid crippling deflation.

Weak price growth is stifling economies from the euro region to Israel and Japan. Eight of the 10 currencies with the biggest forecasted declines through 2015 are from nations that are either in deflation or pursuing policies that weaken their exchange rates, data compiled by Bloomberg show.

“This beggar-thy-neighbor policy is not about rebalancing, not about growth,” David Bloom, the global head of currency strategy at London-based HSBC Holdings Plc, which does business in 74 countries and territories, said in an Oct. 17 interview. “This is about deflation, exporting your deflationary problems to someone else.”

This Bloomberg news item, filed from London, appeared on their Internet site at 8:24 a.m. Denver time yesterday morning.  It---and the headline---were something I found at the gata.org Internet site.

Why it’s now too late for Germany to rescue the eurozone alone

The eurozone is yet again in a nasty state.

As it suffers from low growth and low inflation, the two combine to make a nasty cocktail. Without much of either, unemployment remains stuck at an eye-watering high 11.5pc, and government debt burdens are likely to feel increasingly heavy.

The European Central Bank (ECB) has announced a variety of acronyms - CBPP3, TLTROs, and an ABS purchase scheme - all stimulus measures designed to combat the euro area’s low inflation crisis.

Yet so far, they’ve been insufficient to raise expectations of future inflation, implying that the firepower just isn’t strong enough. Economists are hoping that the ECB will deploy outright quantitative easing, and start buying up the sovereign bonds of eurozone governments.

This article appeared on the telegraph.co.uk Internet site at 2:14 p.m. BST on their Wednesday afternoon---and it's courtesy of South African reader B.V.

France moves to make presidents impeachable

The French parliament voted Tuesday in favour of a draft law that could, for the first time, make it possible to remove the country’s president from office through a US-style impeachment.

The bill, already passed by France’s lower house, was approved by the Senate by 324 votes to 18.

It will now go to France’s Constitutional Council, which must decide if the bill complies with the French constitution, before becoming law.

If approved, the law would represent a radical change to the legal status of the French head of state – who has so far enjoyed greater legal protection than almost any other Western leader.

This news item was posted on the france24.com Internet site yesterday---and it's the second offering in a row from reader B.V.

Christophe de Margerie: Total’s mustachioed maverick

Asked in 2010 if oil companies were right to make deals with the world’s despots and dictators, Christophe de Margerie, the boss of Total who died in a plane crash in Russia Monday night, gave a typically unequivocal answer: “bloody right.”

It was a reply that summed up a man unapologetic about doing whatever was necessary to keep the oil and profits flowing, no matter the opinion of the public, politicians or regulators.

De Margerie’s bushy, walrus-like facial hair earned him the nickname “Big Moustache”, but in his younger years he went by a different sobriquet – “Mr Middle East” – heading Total’s operations in that area from 1995.

It was a job that saw him scour for oil in some of the world’s most politically volatile places and made him a natural choice to head the French oil giant’s exploration and production department when the role became vacant in 2002.

This very interesting but longish commentary/obituary appeared on the france24.com Internet site on Tuesday Europe time---and it's the fourth article of the day from reader B.V.

Ukraine's multi-billion dollar gas debt: Who pays?

Ukraine plans to buy $770 million worth of gas (2 billion cubic meters) from Russia this winter to keep the heat on. The question is: who is going to pay the bill?

All three parties, Russia, the E.U., and Ukraine met in Brussels on Tuesday and confirmed Kiev will pay $385 per 1,000 cubic meters of Russian supplied gas through the end of March. Before Ukraine can start purchasing gas, they need to pay off $1.45 billion in debt.

“There’s one obstacle: Ukraine failed to pay for Russian-supplied gas for seven months,” Oettinger said Tuesday. It will be difficult for Ukraine to find a benefactor, since, as Oettinger pointed out, its credit history is less than stellar. The economy is in ruin and may already need extra IMF money to stay afloat.

This Russia Today article showed up on their website at 2:53 p.m. Moscow time on their Internet site yesterday---and I thank Roy Stephens for sending it our way.  Reader Jim Skinner sent a story from the fortune.com Internet site on this issue.  It's headlined "Russia calls Europe's bluff on Ukraine gas deal."

Russia says Ukraine should find money to pay for gas within a week

Ukraine should be able to find ways of paying for Russian gas supplies within a week, Russian Energy Minister Alexander Novak said on Wednesday, suggesting a standoff would end once Moscow received financial guarantees from Kiev.

The latest round of gas talks between Moscow and Kiev ended late on Tuesday in Brussels with no agreement in a dispute that prompted Russia to cut off gas supplies to its neighbor in mid-June, potentially hurting flows west to the European Union.

But while Novak said he was optimistic for new talks on Oct. 29, Ukrainian Prime Minister Arseny Yatseniuk said he was skeptical about building ties with Russia, underlining how efforts to reach a deal are hampered by a wider political conflict between the two countries.

Another conflicting story on Ukraine's gas issue.  This Reuters article, filed from Moscow, was posted on the their website at 7:14 a.m. EDT on Wednesday---and it's the second offering of the day from reader Jim Skinner.

Russia Loses Oil Ally in de Margerie after Moscow Crash

Christophe de Margerie’s last act as chief executive officer of Total SA left no room for doubt about his feelings toward Vladimir Putin’s Russia.

In a Moscow speech hours before the plane crash that took his life two days ago, de Margerie said U.S. and European Union sanctions on the country were “unfair and unproductive,” and that he opposed efforts to render it “isolated from the major global economic and political process.”

Appearing before a receptive audience that included Prime Minister Dmitry Medvedev and a host of Russian executives, he cited his work as co-chair of a Franco-Russian business body alongside Gennady Timchenko -- a commodities billionaire who was one of the first targets of U.S. sanctions.

De Margerie’s death removes from the scene a businessman who rarely shied away from geopolitical debates and became one of Russia’s most outspoken allies in its efforts to avoid economic quarantine, willing to say what others only dared think. Although European corporate giants from Siemens AG to Renault SA have built close relationships with Russia, most business leaders have preferred to keep their lobbying private to avoid offending governments committed to punishing Putin.

This very interesting Bloomberg article appeared on their website at 6:24 a.m. MDT yesterday---and I thank reader M.A. for sending it.

Good fundamentals make ruble ‘stable’ currency - Russian Central Bank

Russia’s currency has taken a significant 20 percent plunge this year against the dollar and euro, but analysts are confident that Russia’s sturdy stash of foreign reserves and miniscule external debt make the ruble one of the ‘most stable’ currencies.

Russia’s vast gold and foreign currency reserves will help weather the ruble’s rough patch. At more than $450 billion, they are the third largest reserves in the world.

"We believe that the fundamental factors that determine the value of our currency were unchanged. Fundamentally the balance of our budget, the absence of significant external debt of our state. Precisely because of this ruble is one of the most stable currencies," Deputy Chairman of the Bank of Russia, Mikhail Sukhov, told TASS Wednesday.

The Central Bank has already spent more than $10 billion in October to stymie the ruble’s fall, and $50 billion since the beginning of the year. However, the bank has signaled it won’t continue to prop up the ruble with billions more.

This must read article appeared on the Russia Today website at 4:16 p.m. Moscow time on their Tuesday afternoon---and it's the final offering of the day from Roy Stephens.

U.S. Embassy in Baghdad Shelled With Rockets: Reports

The U.S. Embassy in Iraq located in central Baghdad has been shelled with rockets, Al-Mustakillah news agency reported Wednesday citing a security source.

"On Tuesday night the US Embassy was hit with three rockets. They were fired from a park area in the Dora district [in southern Baghdad]," the agency's source said.

Earlier on Tuesday, Al-Sumaria TV channel reported a mortar shelling of the so-called "green zone" in the center of the capital, housing government buildings and foreign missions. Security forces surrounded the area to repel a potential attack.

The above three paragraphs are all there is to this brief story that appeared on the RIA Novosti website yesterday at 2:02  p.m. Moscow time.  It's the second offering of the day from reader M.A.

Big nations snub Beijing bank launch after U.S. lobbying

China will officially launch a new $50 billion Asia Infrastructure Investment Bank on Friday as it steps up its challenge to global financial institutions like the World Bank that it feels are dominated by America and its allies.

But only 20 mostly small economies, many of them effectively client states of China, will become founding members of the bank at Friday's ceremony in Beijing after Washington lobbied furiously to stop other countries from signing up.

When it first unveiled its plan to establish the bank last year, Beijing extended a broad invitation and several European states, as well as Australia, Indonesia, and South Korea initially showed interest.

But thanks to pressure from the US -- conveyed by US diplomats in Beijing, Washington, and other capitals -- none of these countries will join the bank at this stage, although some are hoping to be involved later.

This Financial Times article, which is worth reading, appeared on their website yesterday---and it was posted in the clear in this GATA release.

Nelson Bunker Hunt, 88, Oil Tycoon With a Texas-Size Presence, Dies

Nelson Bunker Hunt, the down-home Texas oil tycoon who owned a thousand race horses, drove an old Cadillac and once tried to corner the world’s silver market only to lose most of his fortune when the price collapsed, died on Tuesday in Dallas. He was 88.

His death, at an assisted living center, followed a long period of treatment for cancer and dementia, The Dallas Morning News reported.

“A billion dollars ain’t what it used to be,” he said in 1980 after silver stakes he had amassed with two brothers, Herbert and Lamar, fell to $10.80 from $50.35 an ounce. In barely two months, their holdings and contracts for purchases — corralling a third to half the world’s deliverable silver — had plunged from a $7 billion value in January to a $1.7 billion loss in March.

With the Hunts unable to cover enormous margin calls, the debacle endangered financial markets and brokerage houses, forcing federal regulators and the nation’s banks to step in with a $1 billion line of credit, a bailout that saved the system from a stampede and the Hunts from a meltdown.

This very interesting fairy tale, at least considering what's mentioned in the above four paragraphs, showed up on The New York Times website yesterday---and I thank Casey Research's BIG GOLD editor, Jeff Clark, for bringing it to my attention---and now to yours.  It's worth reading---but I hope its written with less bias than their reporting on the Ukraine/Russia situation.  For that reason you should read it with your b.s. meter on its most sensitive setting.

Gold Is Undervalued – Ned Goodman

Ned Goodman, president and chief executive officer of Dundee Corp., believes gold is undervalued while equities are poised for a crash.

Speaking at a keynote luncheon at the Quebec Mining Exploration Xplor 2014 Convention in Montreal, Quebec, Goodman was blunt regarding gold prices and where they’re heading.

“We think gold is very undervalued at current gold prices,” Goodman said. “I think gold will hit $1,200, and when it does, be a buyer because I think that will be a good place to be.”

Touching on stock markets, Goodman didn’t pull any punches, calling it a Botox market where all deficiencies are simply covered and propped up to look healthy.

This story appeared on the kitco.com Internet site yesterday at 2:38 p.m. EDT yesterday---and it's the second contribution in a row from BIG GOLD editor Jeff Clark.

Keith Barron, PhD: "I believe we’ve seen Peak Gold*"

On behalf of Matterhorn Asset Management, financial journalist Lars Schall talked with exploration geologist and mining entrepreneur Dr. Keith Barron.

Keith is a scientist and he explains in no uncertain terms what is going on in the mining industry, the false accounting relative to the cost of exploration, what happened when gold went up to 1,900, why gold versus USD simply must go to at least 5,000, why ‘gold above ground’, if anything, is overstated and why the Swiss Gold Initiative is indeed very important and not just for the Swiss People, as well as Keith Barron’s view on Silver.

Barron is a day late and a dollar short on this topic, as several other gold commentators/mining executives have already been down this road already this year.  This 47:17 minute interview was posted on the goldswitzerland.com Internet site yesterday---and I found it in a GATA release.

Gold miners' outstanding forward sales jump 61 percent in Q2/14 - report

The volume of gold sold forward by mining companies jumped 61 percent in the second quarter after Russia's Polyus Gold added a major new hedge position, an industry report showed on Wednesday.

In their quarterly Global Hedge Book Analysis, released on Wednesday, Societe Generale and GFMS analysts at Thomson Reuters said they are predicting net hedging for the year of 40 tonnes, the most since 1999.

They forecast in July that gold producers would return to net hedging this year for the first time since 2011.

Volumes of hedging predicted for this year are still well below the levels seen in the late 1990s. Net producer hedging in 1999 reached 506 tonnes, according to GFMS data.

I'm sure you've heard the expression "much ado about nothing."  Well, despite the headline, that's what this Reuters story is.  However, it's worth your while as a trip down memory lane---and I thank Manitoba reader U.M. for sending it.

Goldcorp chief says Asian buying will support price of gold

Demand from China and other parts of Asia will support the price of gold, the chief executive of one of its largest miners said, as the precious metal traded near its strongest level in six weeks.

Chuck Jeannes of Goldcorp said he saw "as much clarity in the market as there has ever been," with a "floor" created by strong demand whenever gold reached or fell below about $1,200 per ounce.

"The anecdotal evidence is that gold goes down and physical demand goes up," Mr. Jeannes said in an interview with the Financial Times. "A huge number of physical buyers in the world see gold as a bargain below $1,200."

You wonder how people such as him make it to positions of responsibility when they don't know anything about how their product is priced in the market---and run screaming when you attempt to explain it.  The above three paragraphs from a Financial Times article from yesterday, is all that's posted in the clear in this GATA release.  The rest is subscriber protected.

Koos Jansen: It's official -- China's gold demand in 2013 was 2,199 tonnes

The China Gold Association has confirmed that China's gold off-take in 2013 reached 2,200, Bullion Star market analyst and GATA consultant Koos Jansen reported yesterday. That would constitute most of world gold mine production and the figure apparently does not include purchases by the People's Bank of China, which remain the most sensitive state secret.

"Why the Western media don't report on these numbers is a mystery," Jansen writes. "This data is not a secret. Yet the Chinese have been trying to hide it as much as possible---and it looks like either they're being helped by Western institutions, or these institutions are ignorant."

Of course there is still another explanation: that Western financial news organizations and the World Gold Council very much intend not to deal with this issue honestly, since doing so would impugn the whole Western financial system, built as it is on currency and commodity market rigging.

This must read commentary was posted on the Singapore website bullionstar.com on Tuesday---and this is another gold-related news item I found posted on the gata.org Internet site.

This Dhanteras, gold coins are in, jewellery is out

Instead of the usual rush for jewellery, this Dhanteras sees a reversal of buyer's preferences, with more people opting for the traditional gold coin. We talk to some shopkeepers and buyers to understand this shift in choices

For many families in the city, a visit to their family jeweller today is as important as lighting lamps on Diwali. Jewellers too look forward to the festival of Dhanteras all year long, in the hope of making up for slow sales and the lean months. Unlike last year, this Dhanteras, the gold rate is lower compared to the last few months, which has given many store owners hope for a busy shopping day today.

But in an interesting twist, the low gold rate hasn't motivated people to increase their Dhanteras budget and buy jewellery instead of the traditional gold coins. Shoppers told DT why they would prefer to wait for the remaining festive days to pass before making any major ornamental purchases and why they will stick to the traditional coin purchases instead. Crowded shops, busy salespeople and `formality shoppers' make Dhanteras a bad day for investing in jewellery because like they say, buying an ornament is an experience that can be done once the hustle and bustle of Diwali is over.

This article showed up on the Times of India website at 11:41 a.m. IST on Tuesday---and I thank reader U.M. for finding it for us.

Kolkata’s gold panners reap rewards at India festival time

As 40-year-old Mohammed Iqbal sifts through sludge in the back alleys of Kolkata’s jewellery market for gold dust, his weathered face brightens slightly at the recent uptick in work.

For generations, the city’s group of “newaras” — gold dust scavengers — have been scratching a living by panning for fine particles swept from the 2,000-odd jewellery workshops operating in the alleys.

Iqbal estimates he normally earns just 150 to 200 rupees ($2.40 to $3.20) a day from selling flecks of the precious metal that he painstakingly finds on the ground and in the drains of the grimy alleys.

But the onset of India’s raucous festival season, especially the biggest Hindu celebration of Diwali on Thursday, brings a relative bonanza for Iqbal, with his income more than doubling.

This extremely interesting AFP story appeared on the aquila-style.com Internet site early yesterday morning EDT---and I thank reader U.M. for sliding it into my in-box late yesterday evening MDT.  It's also her final contribution to today's column.

Huge, honkin’ gold nugget hits the market in San Fransisco

Here we go again — what is believed to be the biggest gold nugget found in modern times in California’s historic Gold Country is going on sale Thursday in San Francisco.

This 6.07-pound whopper is being sold by Tiburon coin dealer Don Kagin, the same dealer who is selling the $10 million worth of gold coins that made such a stir this year after they were found in a couple’s backyard in the Sierra.

The “Butte Nugget,” so named because it was found by a gold hunter in the Butte County mountains, will be unveiled at the prestigious San Francisco Fall Antiques Show. The show opens Thursday at Fort Mason.

This very interesting news item put in an appearance on the sfgate.com Internet site at 10:33 a.m. Pacific Daylight Time yesterday---and my thanks go out to reader Carl Lindfors for digging it up for us.  And if you don't want to read the article, you should at least look at the picture.

¤ The Funnies

This drake mallard duck was dabbling in the shallows a bit more than 10 meters away, which is point blank range for a 400mm lens.  He is resplendent in his new breeding plumage, as the drakes all look so drab in in the summer/early fall when they're in the eclipse phase.

I don't normally crop creature photos this close, but wanted to show the iridescent green head from two different angles as the late-morning sun shone on it.  Plus it also accentuates two common English phrases so well---'water off a duck's back' and 'duck tail'.  Both of which show their lineage in these two shots.  The red reflection in the water is, as usual, from the building in the distant background.

¤ The Wrap

Based strictly on price action---and as I indicated in Saturday's weekly review---most likely there has been further technical fund buying and commercial selling in COMEX gold futures in the reporting week [that] ended on Tuesday, October 21. I would guess at least 15,000 additional technical fund contracts were bought net in gold---and perhaps more than 20,000 contracts. I don’t sense much technical fund buying in silver, copper, palladium and platinum in the COT report to be issued this Friday, but if there was any technical fund buying in silver, it was flushed out in Wednesday’s rotten silver price performance.

Gold appears to be the only metal experiencing technical fund buying to date---and that still raises the possibility of the commercials rigging gold prices lower temporarily to lure the technical funds who bought, back to the sell side. In that case, silver may come under pressure, but it’s hard to see how many technical funds can be maneuvered to sell, seeing as managed money shorts are already at an all-time record high. - Silver analyst Ted Butler: 22 October 2014

I must admit that the price action in all four precious metals on Wednesday didn't surprise me in the slightest.  But the shocker was the hammering that their associated equities took, especially the silver stocks.  As you know, I've commented on the disconnect between the movements in the metals themselves and their underlying share prices on several occasions since the low of two weeks ago---and yesterday's action draws a similar response from me.

The gold stocks are now back to where they were when gold painted its $1,184 low tick in the wee hours of Thursday morning on Monday, October 6---and the silver shares are even lower than that.

If you're looking for answers, the only one I can think of is that some precious metal mutual fund[s] had to unload a pile of shares because of redemptions---and its only a matter of time before Rick Rule is out telling all and sundry that it's a perfect buying opportunity.  I don't know how you feel about it dear reader, but after more than three years of this, I'm tired of somebody telling me to buy the dips.  I, like you, just want to see the stocks that we already own, do what we know they're supposed to do.

Of course the mining executives don't care what happens to their public stockholders, because they'll just get their respective boards of directors to reprice their millions/billions in stock options---so it's no skin of their noses if their shareholders are getting wiped out in a rigged market.

Here are the 6-month charts for the 'Big 6' commodities.  Note that we've had 'failure' in gold at its 50-day moving average, something I mentioned yesterday---and it only remains to be seen whether JPMorgan et al will continue this downward trend, or this is just a blip as we continue to move higher in price.

 

 

 

 

 

And as I write this paragraph, the London open is five minutes away.  All four precious metals, which had been up a bit on the day, had their prices turned lower starting about 45 minutes before the London open---and only platinum remains in positive territory at the moment.  Gold volume is a bit under 13,000 contracts---and silver's volume is around 2,900 contracts.  The dollar index is up a handful of basis points.

As October winds down, we have options and futures expiry for the November contract/delivery month in both gold and silver coming up next week.  But unless there's surprise, I expect November deliveries to be a mere shadow of what transpired during the October delivery month.  The reason I say that is because the current gold open interest in November is only 352 contracts---and in silver, it's 122 contracts.  Nothing to see here.  The big delivery month of the year in both metals is December---and what transpires in that month could prove interesting.

And as I hit the send button on today's column at 4:55 a.m. EDT, I note that all four precious metals are under renewed selling pressure now that London has been open a couple of hours---and all four are down a bit more from their New York closes on Wednesday.  Net volume in gold is around 23,000 contracts at this point---and silver's net volume is about 5,200 contracts, neither of which are particularly large numbers for this time of day.  The dollar index is now down a couple of basis points.

That's all I have for today---and I await the New York open with great interest to see what JPMorgan et al have in store for us during the Comex trading session.

See you tomorrow.

]]>
Thu, 23 Oct 2014 06:26:00 +0000
<![CDATA[Chinese and Indian Gold Buyers Back in the Market in a Big Way]]> http://www.caseyresearch.com/gsd/edition/chinese-and-indian-gold-buyers-back-in-the-market-in-a-big-way/ http://www.caseyresearch.com/gsd/edition/chinese-and-indian-gold-buyers-back-in-the-market-in-a-big-way/#When:09:05:00Z "JPMorgan et al. aren't going to let prices run too far to the upside"

¤ Yesterday In Gold & Silver

The gold price didn't do much in early Far East trading, but began to chop higher starting shortly after 11 a.m. Hong Kong time.  It peaked out at the 10:30 a.m. BST London a.m. gold fix---and then got sold down to it's closing price on Monday.  The short covering rally that began minutes after the Comex open ran into the usual not-for-profit sellers about 15 minutes later---and then gold chopped lower until shortly before 4 p.m. in electronic trading.  From that point it rallied a few dollars into the close.

The low and high ticks, such as they were, were reported by the CME Group as $1,245.70 and $1,255.60 in the December contract.

Gold finished the Monday trading session in New York at $1,249.40 spot, up $2.50 on the day---and obviously well off its high, as is usually the case.  Net volume was 128,000 contracts with about a third of that coming before 9 a.m. BST in London trading.

The silver price action was almost a carbon copy of the gold chart, so I'll spare you the details; and as usual, silver got sold down the moment trading began in New York on Monday evening.

The low and highs were reported as $17.355 and $17.655 in the December contract.

Silver closed yesterday in New York at $17.515 spot, up 9 cents from Monday.  Net volume was decent at 32,500 contracts.

Both platinum and palladium also followed a very similar price path as gold and silver right up until the Comex open.  Rallies in both began shortly after that---and both ran out of gas/got capped at the London p.m. gold fix.  The platinum price drifted lower into the close---and the palladium price traded almost ruler flat from 10 a.m. EDT onwards.  Platinum closed up $10---and palladium closed up $14.  Here are the charts.

The dollar index closed late on Monday afternoon at 85.02---and after dipping to its Tuesday low of 84.75 about 35 minutes before the London open, the index began to rally---and closed right on its 85.40 high, up 38 basis points on the day.

The folks over at finance.yahoo.com decided to provide access to only their interactive HUI chart starting yesterday---and have blocked access to their basic chart, which is what I've always used.  Unfortunately, you can't copy an interactive chart---and the new chart I was thinking of using doesn't have the line on it for the previous day's closing prices, so I'm stuck with this little one for now.  If you have a favourite HUI chart that you like to use, please send me the link, as I need something other than the dinky chart below.

Having got that out of the way, the gold stocks gapped up about 2% at the open---and then chopped sideways until shortly after 12:30 p.m. EDT.  Then, mysteriously, the shares got sold down into negative territory once again, although they did rally a bit during the last 30 minutes of trading.  The HUI closed down 0.28%.

The silver equities started the day off well into the black, but they too ran into a seller at the same time as the gold shares, but managed to hang on to some of their gains, as Nick Laird's Intraday Silver Sentiment Index closed up 0.86%.

The CME Daily Delivery Report showed that 154 gold and 100 silver contracts were posted for delivery within the Comex-approved depositories on Thursday.  Once again it was the "Barclays Show" in gold, as their proprietary trading account issued 154 contracts---and 152 of those contracts were stopped in its client account.  In the last three business days, 604 gold contracts have been transferred from one Barclays pocket to another.

In silver, the only short/issuer was ABN Amro with 100 contracts---and the three long/stoppers were Jefferies, Scotiabank and R.J. O'Brien.  There have already been 754 silver contracts posted for delivery in October, which is quite a few considering that October is not a traditional delivery month.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in October dropped by 219 contracts---and those were the Barclays deliveries scheduled for today.  Open interest in the current month is now down to 388 contracts---minus the 154 Barclays contracts mentioned in the previous paragraph.  Silver open interest in October now stands at 102 contracts, down 3 contracts from Monday's report.

There were no reported changes in GLD yesterday---and as of 9:42 p.m. EDT yesterday evening, there were no reported changes in SLV.

The good folks over at Switzerland's Zürcher Kantonalbank updated their website with the changes in their gold and silver ETFs for the week ending, Friday, October 17---and this is what they had to report:  Their gold ETF declined by another 12,660 troy ounces, but their silver ETF went in the other direction for the second week in a row, adding 71,103 troy ounces.

It was a big sales day over at the U.S. Mint.  They sold 8,000 troy ounces of gold eagles---2,000 one-ounce 24K gold buffaloes---and 715,000 silver eagles.  Knowing what's going on in the physical retail market in real time, I can tell you without a word of lie that a huge chunk of these sales are not to the average retail investor.  This is most likely Ted Butler's 'Mr. Big' in action.

Over at the Comex-approved depositories on Monday, they didn't receive any gold, but 24,278 troy ounces were shipped out, with virtually every bar coming out of Scotiabank's warehouse.  The link to that activity is here.

In silver, there were 607,638 troy ounces received---and 425,900 troy ounces shipped out the door.  The link to that action is here.

I have a more reasonable number of stories for you in today's Critical Reads section---and I hope you'll find the odd one that interests you.

¤ Critical Reads

"Plunge Protection" Behind Market’s Sudden Recovery

Mysterious forces were trying their best, but they couldn’t keep the stock market from swooning [last] Wednesday.

They failed in the morning, despite massive purchases of stock index futures contracts. Within minutes of the market’s opening, the Dow Jones Industrial Average was down 350 points. Later in the day — after a lot of shocking ebb and flow — the Dow bottomed out with a decline of 460 points.

It was only in the last hour of trading that the market saviors managed to trim the Dow loss to just 173 points. And they succeeded only after Janet Yellen’s private, upbeat remarks about the economy were leaked.

Welcome to a new kind of stock market — one that the average investor should refuse to be invested in.

No surprises here, dear reader.  New York Post columnist John Crudele calls it the way it was.  This article appeared on their Internet site at 11:08 p.m. EDT on Monday evening---and I thank Howard Wiener for today's first story.  It's worth reading.

Top Mortgage Firm Accused of Abuses

One of the nation's largest servicers of home loans may have denied struggling borrowers the chance to fix loan problems and avoid foreclosures, New York's financial regulator has alleged.

An investigation by the state's Department of Financial Services found that Ocwen Financial Corp. inappropriately backdated foreclosure warnings and letters that rejected mortgage loan modifications, making it nearly impossible for borrowers to appeal the company's decision.

Many borrowers who had fallen behind on loan payments also received warning letters months after the deadline for avoiding foreclosure had passed, department investigators found.

Potentially hundreds of thousands of backdated letters may have been sent to borrowers, likely causing them "significant harm," Benjamin Lawsky, New York's Superintendent of Financial Services, wrote in a letter to Ocwen released Tuesday.

This AP story showed up on their Web site at 5:11 p.m. EDT on Tuesday afternoon---and I thank Manitoba reader U.M. for her first offering of many in today's column.

New Rules Adopted in Hopes of Spurring Home Loans

With the financial crisis and subprime mortgage bust receding further into history, the government is loosening some financial rules, hoping to inject more life into the country's still-recovering housing market.

Both banks and borrowers stand to benefit from the new rules unveiled Tuesday by six federal agencies. While banks will see relaxed guidelines for packaging and selling mortgage securities, fewer borrowers likely will need to make hefty down payments. The board of the Federal Deposit Insurance Corp. voted 4-1 Tuesday to adopt the new rules, and two other agencies approved them as well. The Federal Reserve has scheduled a vote for Wednesday, and two other agencies are expected to adopt the rules soon.

The regulators have dropped a key requirement: a 20% down payment from the borrower if a bank didn't hold at least 5% of the mortgage securities tied to those loans on its books. The long-delayed final rules include the less stringent condition that borrowers not carry excessive debt relative to their income.

Borrow and spend till you puke, but these changes are still a year away at least.  This AP story was picked up by the news.yahoo.com Internet site mid afternoon EDT---and it's courtesy of West Virgina reader Elliot Simon.

Fed Emergency Update - Mike Maloney

"Ever since the 2008 crisis, I've been telling audiences that that crisis never ended, that the Federal Reserve is doing extreme emergency manoeuvres that show that there's still something very wrong with the world economy. Right now the entire economy really is on artificial life support." - Mike Maloney - October 20, 2014.

This 10:40-minute video commentary, complete with attached charts, was posted on the hiddensecretsofmoney.com Internet site on Tuesday sometime---and from what I've seen so far, it's worth watching.

Dr. Dave Janda Interviews Your Humble Scribe

I spent about 25 minutes talking to the good doctor on a variety of issues on Sunday---and it was posted on the davejanda.com Internet site on the same day.

Forex-Rigging Fines Against Banks Could Reach $41 Billion Worldwide, Citi Report Says

Probes into allegations that traders rigged foreign-exchange benchmarks could cost banks as much as $41 billion to settle, Citigroup Inc. analysts said.

Deutsche Bank is seen as probably the "most impacted" with a fine of as much as 5.1 billion euros ($6.5 billion), Citigroup analysts led by Kinner Lakhani said yesterday, estimating that the Frankfurt-based bank's settlements could reach 10% of its tangible book value, or its assets' worth.

Using similar calculations, Barclays could face as much as 3 billion pounds ($4.8 billion) in fines and UBS penalties of 4.3 billion Swiss francs ($4.6 billion), they wrote in a note first sent to clients on Oct. 3.

But nobody will go to jail, so the ethics don't change.  This Bloomberg article, filed from London, showed up on their Web site at 9:37 a.m. Denver time yesterday morning---and I found it in a GATA release.

EU Fines JPMorgan, UBS, Credit Suisse for Taking Part in Cartels

JPMorgan, UBS and Credit Suisse were fined a total of 94 million euros ($120 million) by the European Commission for taking part in cartels in the financial sector.

The Commission handed JPMorgan a 61.7-million-euro fine for rigging the Swiss franc Libor benchmark interest rate between March 2008 and July 2009. It was also fined 10.5 million euros for participating in a cartel on Swiss franc interest rate derivatives.

UBS' penalty in the derivatives cartel came to 12.7 million euros and that of Credit Suisse was 9.2 million euros. Royal Bank of Scotland alerted the Commission about both cartels and escaped total fines of 115 million euros.

The penalties are the latest by the European Commission, which along with authorities around the world, has handed down billions of euros in fines against top banks for rate-rigging, breaking trade sanctions and other misbehavior.

But nobody is going to jail, so what's the point?  This Reuters story, filed from Brussels, was updated at 11:31 a.m. EDT yesterday, as reader Harry Grant sent it to me at 8:01 a.m. EDT yesterday.  Reader U.M. sent the Zero Hedge take on this headlined "Europe Demands Banks Hand Over Their Lunch Money Following Swiss Franc Libor Rigging".  The ZH folks are certainly less charitable than those over at Reuters.

ECB to Spend €1 Trillion on Covered Bonds to Kick-Start Euro Economy

The European Central Bank (ECB) has embarked on a spending spree that could see it pump €1tn (£790bn) into the eurozone’s financial system.

After months of debate, on Monday the Frankfurt-based central bank began buying covered bonds in the next stage in its battle to revive the eurozone economy and keep deflation at bay.

ECB president Mario Draghi has made it clear the programme should return the ECB’s accumulated assets to 2012 levels, which means that by the time officials in Frankfurt have finished, its balance sheet could have risen from €2tn to €3tn. The aim of the move is to ease bank credit in the 18-member currency union after a difficult year that has seen a decline in business lending hamper recovery.

Covered bonds have an income stream of debt repayments backed by pools of home or commercial property loans; 90% of the global market is based in Europe, especially in Denmark, Germany, Spain, France and Sweden.

Mortgage-backed securities [MBS] Europe style.  I posted a story about this in Tuesday's column, but this offering from theguardian.com Web site at 5:17 p.m. BST on Monday is more comprehensive---and is something I borrowed from yesterday's edition of the King Report.

No Russia-Ukraine Gas Deal at EU Talks; Moscow Queries Finances

Russia and Ukraine failed to reach an accord on gas supplies for the coming winter in EU-brokered talks on Tuesday but agreed to meet again in Brussels in a week in the hope of ironing out problems over Kiev's ability to pay.

After a day of talks widely expected to be the final word, European Energy Commissioner Guenther Oettinger told a news conference the three parties agreed the price Ukraine would pay Russia's Gazprom - $385 per thousand cubic meters - as long as it paid in advance for the deliveries.

But Russian Energy Minister Alexander Novak said Moscow was still seeking assurances on how Kiev, which earlier in the day asked the EU for a further 2 billion euros ($2.55 billion) in credit, would find the money to pay Moscow for its energy.

Dependent on Western aid, Ukraine is in a weak position in relation to its former Soviet master in Moscow, though Russia's reasons were unclear for wanting further assurances on finances, beyond an agreement to supply gas only for cash up front.

This Reuters news item, filed from Brussels, appeared on their Web site at 5:29 p.m. EDT on Tuesday afternoon---and I thank Jim Skinner for digging it up for us.  It's worth reading.

Ukraine Used Cluster Bombs, Evidence Indicates

The Ukrainian Army appears to have fired cluster munitions on several occasions into the heart of Donetsk, unleashing a weapon banned in much of the world into a rebel-held city with a peacetime population of more than one million, according to physical evidence and interviews with witnesses and victims.

Sites where rockets fell in the city on Oct. 2 and Oct. 5 showed clear signs that cluster munitions had been fired from the direction of army-held territory, where misfired artillery rockets still containing cluster bomblets were found by villagers in farm fields.

The two attacks wounded at least six people and killed a Swiss employee of the International Red Cross based in Donetsk.

If confirmed, the use of cluster bombs by the pro-Western government could complicate efforts to reunite the country, as residents of the east have grown increasingly bitter over the Ukrainian Army’s tactics to oust pro-Russian rebels.

This article, filed from Donetsk, Ukraine, put in an appearance on the New York Times Web site on Monday sometime---and I thank Roy Stephens for sending it.

Turkey to Let Iraqi Kurds Cross to Syria to Fight ISIS

Turkey will allow Iraqi Kurdish forces, known as peshmerga, to cross its border with Syria to help fight militants from the group called the Islamic State who have besieged the Syrian town of Kobani for more than a month, the Turkish foreign minister announced Monday.

The decision represents an important shift by the Turkish government, which has angered Kurdish leaders and frustrated Washington for weeks by refusing to allow fighters or weapons to cross its border in support of the Kurdish fighters defending the town. Speaking at a news conference in Ankara, the Turkish foreign minister, Mevlut Cavusoglu, said that his government was “helping the pesh merga cross over to Kobani.”

The announcement, along with an American decision to use military aircraft to drop ammunition and small arms to resupply Kobani, reflected escalating international pressure to push back Islamic State militants. As the United States-led coalition has increased its airstrikes as well as its coordination with the Kurdish fighters, who have provided targeting information, the militants have lost momentum after appearing close to overrunning the town.

This is another story from the New York Times Web site.  This one was posted there on Monday as well---and filed from Mursitpinar, Turkey---and it's also courtesy of Roy Stephens.

Jim Rickards: China GDP Figures Are Bogus

Jim Rickards, chief global strategist at West Shore Funds, explains why he's not closely watching China's gross domestic product figures.

This 4:21-minute CNBC Squawk Box video clip appeared on their Web site at 8:15 p.m. EDT on Monday evening---and I thank Harold Jacobsen for bringing it to our attention.  It's worth your time if you have it.

James G. Rickards: In the Year 2024

Writing for The Daily Reckoning, fund manager, author, and geopolitical strategist James G. Rickards imagines life in the year 2024 as being under the totalitarian control of a world central bank that has outlawed not only gold but also markets and money itself.

While Rickards' nightmare scenario is the perfectly logical consequence of the trend of central banking, we still have a few years to push the world toward a different future.

Rickards' essay is headlined In the Year 2024 and it's posted at The Daily Reckoning Web site---and it falls into the absolute must-read category.  [NOTE: I posted a story that critiqued Jim's article in yesterday's column.  It was headlined All the world’s gold to be confiscated and buried in Switzerland by 2020 argues Jim Rickards.  Now that I've read the original Rickards article, courtesy of reader Dan Lazicki, the title to the story is highly misleading, as is the author's commentary in spots, and I'm glad that I have the real deal for you today. Ed]

The first two paragraph of introduction are courtesy of GATA's Chris Powell---and I found the original Rickards essay posted on the gata.org Internet site yesterday.

Citi Buys Deutsche Commodities Trading Book in Expansion Push

Citigroup Inc has bought Deutsche Bank AG's energy and metals book, a source familiar with the matter said, in the latest sign of expansion from the U.S. firm in commodities trading as rivals retrench.

Citi won Deutsche's oil, metals and power books this summer and autumn, the source said, after a bidding round that saw several Wall Street firms and trading houses chasing the opportunity to take on the positions of a once top-five commodities bank.

The deal will help Citi close the gap with top banking rivals in commodities trading, even as some exit the sector under increased regulatory scrutiny and lower margins.

Deutsche Bank, which once competed with Barclays and JPMorgan Chase & Co to challenge the long-running energy and metal franchises of Goldman Sachs and Morgan Stanley, announced it was largely exiting the sector late last year.

But, dear reader, Deutsche Bank is keeping its precious metal trading division.  This Reuters news item, filed from London, was posted on their Web site at 1:59 p.m. EDT on Monday afternoon---and I thank reader M.A. for another offering in today's column.

First Swiss Gold Poll Shows Pro-Gold Side in Lead at 45%

GoldCore's Mark O'Byrne reported yesterday that the first opinion poll on Switzerland's gold repatriation referendum proposal shows 45% of respondents in favor and 39% opposed.

Chris Powell wrote the above---and I borrowed the headline from a GATA release as well, but the first person through the door with this story was reader U.M.

UBS: Swiss Gold Exports At 7-Month High; Physical Demand Absorbing Investor Liquidations

Swiss trade data show gold exports hit a seven-month high in September and that the flow to Eastern from Western nations continues, says UBS. Swiss exports were 172.6 metric tonnes last month, the most since February.  Gold shipments to China jumped to 12 tonnes after averaging around three tonnes during the previous four months.

Shipments to Hong Kong increased to 24.7 tonnes, the most since April. Switzerland exported 58.5 tonnes to India last month, the largest shipment year to date and nearly twice the average monthly volume, UBS says.

Meanwhile, September gold imports into Switzerland were also high at 194.6 tonnes. Inflows from the U.K. jumped to 63.3 tonnes from 8.6 in August. “This suggests that a good portion of investor liquidations in September, that pushed the prices through the $1,200 psychological level, were absorbed by physical demand, with metal making its way from London vaults into Swiss refineries for refining/recasting and ultimately shipped to physical buyers in Asia,” UBS says.

This short commentary appeared on the kitco.com Internet site yesterday at 9:38 a.m. EDT---and you may have to scroll down a bit to get to it, but you've read most of it already.  It's another contribution from Manitoba reader U.M., for which I thank her.

Dhanteras Sales Jump 20% over Lower Gold, Silver Prices

This Dhanteras saw jump in sales of jewellery in various parts of the country by at least 20% over last year following lower gold and silver prices in the retail markets. People are preferring lightweight jewellery and gold coins over traditional jewellery. In Ahmedabad the local jewellers expected the business to cross Rs 250-300 crore till Diwali (October 23).

Average gold prices that were around Rs 32,500 per 10 grams during last Diwali, were hovering around Rs 27,500 per 10 grams this year. Also, silver prices this year before Diwali were around Rs 39,000 per kg compared to around Rs 49,000 per kg last year during Diwali.

In Ahmedabad, upbeat over the lower prices of the yellow metal, as many as 60 jewellers under the Ahmedabad Jewellers' Association had launched the grand shopping festival "Swarna Utsav" which concludes on Diwali, with primary objective to recover the losses incurred by them in the past six months due to lack of business.

"During Dhanteras the sales of gold and silver has been significantly higher than last year. We expect sales to rise by 15-20% this year over last season," said Shantibhai Patel of the Ahmedabad Jewellers' Association. He said that this was due to lower price of the precious metals.

This gold-related news item appeared on the bullionbulletin.in Internet site at yesterday IST sometime---and it's another story from reader U.M.

Chinese and Indian Gold Buyers Back in Market in a Big Way

What has been particularly strange about the gold market over the past two years is that the stronger the physical demand appearing for gold, the weaker the gold price has tended to get.

In the past few months, the gold price has fallen back from around $1,340 down at one time to $1,190 and now hovering back seemingly trying to breach $1,250 on the upside again, yet by all accounts demand in the two biggest consuming nations has been soaring and they are, between them, taking in virtually everything the world’s gold mines can produce.

The two countries are India and China. A mild relaxation of some of the import controls put on gold in the former saw gold imports rise to around 95 tonnes in September, while the weekly withdrawal statistics from the Shanghai Gold Exchange show that gold demand has latterly also picked up extremely well in China after a good start to the year, but then a marked downturn from March to August.

Indeed the latest weekly figures from the SGE could be seen as particularly strong given that the markets were closed for half the period due to China’s Golden Week holiday. While the total for the two weeks at around 68 tonnes may not seen spectacular, given that these purchases were actually made in only five days (September 29 and 30 and October 8, 9 and 10) due the long holiday market closure could suggest that Chinese demand is indeed soaring enormously.

Supply and demand no longer matter in all key commodities as the banks have hijacked the price discovery mechanisms on the Globex/Comex---and Lawrie knows that.  This commentary appeared on the mineweb.com Internet site yesterday---and it's worth skimming.

Top Bullion Consumer China Works on First Gold Forwards, Options

The Shanghai Gold Exchange (SGE) is working on plans for China's first forwards and options in gold, sources say, potentially putting China ahead in the race to set an Asian pricing benchmark that might eventually rival the London gold fix.

China, which overtook India last year to become the world's biggest consumer of gold, bans trading in commodity options and forwards at present to limit speculation.

But Beijing is setting the stage for the launch of such derivatives as it opens up its markets, and gold could be among the first commodities on the list, although it remains unclear when trading might start.

The state-run SGE, at the forefront of China's efforts to dominate bullion pricing, opened an international bourse last month and foreign banks have shown strong interest in trading its yuan-denominated contracts. The exchange now wants to expand its product line to boost liquidity.

This longish Reuters article, co-filed from Singapore and Shanghai, appeared on their Web site at 2:50 a.m. IST on their Wednesday morning---and it's also courtesy of reader U.M.  It's also her last contribution to today's column, for which I thank her on your behalf.

China Admits 40% of Magnetic Rare Earths Supply Is Illegal

World's dominant supplier of rare earth elements reveals a huge portion of supply used in magnets is illegally mined; much larger than initially anticipated

China – the world's leading producer of rare earth elements – has revealed that 40% of its supply used in high strength magnets is from illegally mined sources in the country.

The figure was revealed by rare earths expert Prof. Dudley Kingsnorth of Industrial Minerals Company of Australia (IMCOA) at a high level conference in Milan, the European Rare Earths Competency Network (ERECON).

Prof. Kingsnorth, who is the leading source of data in the rare earths market, was citing experts within China who are not only involved in the mining of the elements but also the government-led rare earths association.

I had a story about this in my Tuesday column, but this one is far more comprehensive.  It was posted on the mining.com Web site yesterday---and I thank reader M.A. for bringing it to my attention, and now to yours.

¤ The Funnies

Here are two of the four photos that I kept from my hour or so of sitting around the old pond late Sunday morning.  At this time of year---and at this latitude in North America---all that's left in the way of birds is the migratory waterfowl, plus a few magpies---and they won't head south until the arrival of the first snow of the season finally forces them to leave.

This first photo is a group of Canada geese neatly surrounding an immature common goldeneye duck.  This shot is from about 50 meters or so.

The second shot is from less than 20 meters---and it's a study in depth of field, as even though I had the f-stop cranked up to the DLA of the camera, at this distance and using a 400mm telephoto lens, sharp depth of field is only about a meter at most, as the geese in the foreground and background are progressively more out of focus.  The red colour in the water is the reflection of a building in the distant background.  I have too many photos of Canada geese already---and I only took this one because they were all nicely lined up.

I didn't take this seagull photo below, but I can tell you that it was taken with an ultra-wide angle lens---14mm or wider---as everything from 10 centimeters to 10 kilometers away is in razor-sharp focus.  And because of that, the photo looks almost surreal.

¤ The Wrap

There were additional withdrawals from the big silver ETF, SLV, this [past] week and again the withdrawals seem counterintuitive when held up against [the] price action (mostly flat) and trading volume (mostly subdued). From the recent top of 350 million oz, some 6.5 million oz of silver have been delisted from the SLV, as shares outstanding has dropped accordingly. I can’t prove it, but my strong sense is that a big buyer might be converting shares of SLV to direct physical metal ownership so as to avoid reporting more than a 5% stake to the SEC. My strong sense results from me wanting to do exactly the same thing were I so fortunate to be able to do so financially. Try to imagine having the money to buy as much silver as you could. Next, imagine how you would actually go about it and didn’t want to openly disclose the purchase while it was being made. If you can imagine a better way than by what I am speculating might be occurring in SLV presently, please drop me a line.

I confess to maybe hearing and seeing things that might not exist, particularly when so many unusual things appear to be present in silver, but the sales reporting pattern for Silver Eagles from the U.S. Mint still suggests a big buyer is present.  Sales for the month are impressive, but more notable is the uneven pattern of daily sales; some days 50,000 coins are reported sold, or none at all---and on other days, more than 500,000. If broad public retail demand was behind the recent surge in Silver Eagles, that would manifest itself with steady day-to-day reported sales. Since that is not the pattern at all, the most plausible explanation would be a single big buyer picking the time and price for purchase. Regardless, it should still be close to a record year for sales of Silver Eagles. - Silver analyst Ted Butler: 18 October 2014

With the obvious price capping in both gold and silver at the Comex open yesterday morning and, to a certain extent, platinum and palladium as well---it leaves little doubt in my mind that JPMorgan et al. aren't going to let prices run too far to the upside, regardless of the supply/demand fundamentals.

Of course the Managed Money shorts in both gold---and particularly silver---still have boat loads of positions to cover, but based on the price action since the lows of last week, especially in gold, any rally that is allowed, will be well contained.

There's always the possibility that something could go sideways that changes all that, but at the moment, that's the way I see it.  The share price action is equally as lousy---and as I've stated several times since the lows in both metals, it appears that they are being actively managed as well.

The message from the powers-that-be is clear, as it appears they don't want investors anywhere near the precious metal complex, at least for the time being.

Here are the six-month charts for the "Big 6" commodities---

And as I type this paragraph, the London open is about 20 minutes away.  Both gold and silver are down small amounts---and platinum and palladium are both trading unchanged at the moment.  Gold volume is just under 12,000 contracts---and silver's volume is just under 2,700 contracts.  The dollar index is down 13 basis points.  Nothing much to see here.

Just looking at the six-month gold chart above, you can see some of the Managed Money headed for the exits the moment the price broke above gold's 50-day moving average---and how the seller of last resort and their algorithms were there to drive the price back down to its 50-day moving average once again, just to stop more shorts from getting the same idea.  I'll be extremely interested in how the price is allowed to react once that moving average is broken with some authority---and I'm also concerned, as I mentioned yesterday, that 'da boyz' could engineer a rally "failure" at this juncture as well.

So we wait some more.

And as I send this off to Stowe, Vermont at 4:45 a.m. EDT, I note that all four precious metals are trading lower since London opened, with silver down the most of all, of course---and these smallish selloffs are probably coming on the back of the reversal in the dollar index.  It was down 13 basis points two hours ago---and is now up 10 basis points.  Gold volume is up to a bit over 21,000 contracts---and silver's volume is now at 5,700 contracts---neither of which is very heavy for this time of day.

I'm off to bed---and I'll see you here tomorrow.

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Wed, 22 Oct 2014 09:05:00 +0000
<![CDATA[Russia’s Central Bank Purchases 1.2 Million Ounces of Gold in September]]> http://www.caseyresearch.com/gsd/edition/russias-central-bank-purchases-1.2-million-ounces-of-gold-in-september/ http://www.caseyresearch.com/gsd/edition/russias-central-bank-purchases-1.2-million-ounces-of-gold-in-september/#When:06:25:00Z "I'm not prepared to read much into yesterday's price action"

¤ Yesterday In Gold & Silver

The gold price got sold down a few dollars in the first two hours of trading after the market opened at 6 p.m. EDT on Sunday evening---and then traded flat until noon Hong Kong time on their Monday.  From that point, gold had three tiny rallies, with the last one ending in a vertical spike just a few minutes before the Comex opened in New York.  And just minutes after the Comex open, that spike got dealt with in the usual manner.  The New York low came shortly before 11:30 a.m.---and from there the price rallied quietly higher into the close.

The low and high ticks were recorded by the CME Group as $1,234.90 and $1,249.30 in the December contract.

Gold finished the Monday trading session in New York at $1,246.90 spot, up $8.70 from Friday's close.  Net volume was pretty light at only 91,000 contracts, so it wasn't difficult for anyone with an agenda to move the price---either up or down.

Silver also got sold down at the 6 p.m. EDT open in New York on Sunday---and its low tick of the day came shortly before 9 a.m. Hong Kong time on their Monday morning.  From there, the silver price rallied in a similar fashion to gold, but began to rally anew shortly after the price was capped at the Comex open in New York. The high tick of the day came at, or shortly after, the London p.m. gold fix---and then it got smoked for all its New York gains, plus a bit more.  From its 11:30 a.m. EDT low in New York, it chopped quietly higher for the remainder of the trading day.

The low and high were reported as $17.25 and $17.52 in the December contract.

Silver finished the Monday session at $17.425 spot, up 15.5 cents, but would have obviously closed considerably higher if JPMorgan et al hadn't been in the room.  Net volume was pretty light as well, only 22,000 contracts.

Platinum traded mostly flat for the first two hours of the Monday trading session---and then it quickly rallied about fifteen bucks.  From that point it chopped slowly higher, hitting its high tick shortly after 1 p.m. in Zurich.  From there it got sold down a bit, before trading sideways from 11 a.m. EDT onwards.  Platinum finished the day up 11 bucks.

Palladium rallied five bucks after two hours of trading---and then tacked on another five in mid-morning trading in New York.  Price couldn't get, or wasn't allowed, over the $762 spot price---and it closed at $760 spot, up nine bucks from Friday's close.

The dollar index closed late on Friday afternoon in New York at 85.20.  It rallied a bit during Far East trading, with the 85.37 high tick coming about ten minutes before London opened.  It was all down hill from there, with the 84.92 low tick coming about 3:10 p.m EDT---and from there it rallied back and closed a hair above the 85.00 mark at 85.02---down 18 basis points on the day.

The gold stocks opened up a bit more than a percent---and didn't do much until their 10:20 a.m. EDT low.  From there they rallied in a choppy fashion for the rest of the day---and the HUI closed up 2.22%.

The silver equities gapped up about 1.5 percent at the open, before falling back almost immediately---and from there they spend the remainder of the Monday session crawling back to their earlier high.  It took a large portion of the day to get there---and then stay there.  The silver equities closed just off their high tick---and Nick Laird's Intraday Silver Sentiment Index closed up 1.69%.

The CME Daily Delivery Report showed that 220 gold and 5 silver contracts were posted for delivery within the Comex-approved depositories on Wednesday.  For the second day in a row it was Barclays as the only short/issuer out of its in-house [proprietary] trading account---and also for the second day in a row, they were also the biggest long/stopper with 218 contracts in their client account.  The link to yesterday's Issuers and Stoppers Report is here.

As I just mentioned, the delivery activity in gold on Monday was a carbon copy of what was reported on Friday, where Barclays issued 230 gold contracts from its proprietary trading account---and stopped 228 of them in its client account.  I'd sure to know what that's all about.

The CME Preliminary Report for the Monday trading session showed that October open interest in gold dropped by 230 contracts---and that was the 230 contracts issued by Barclays on Friday for delivery today.  Gold open interest in October is now down to 607 contract---minus the 220 that was posted, also by Barclays, for delivery tomorrow.  October open interest in silver is down to 105 contracts after deducting the 72 contracts from Friday being delivered today as well.  October o.i. is now down to an even 100 contracts after subtracting the 5 contracts being delivered tomorrow.

GLD reported a good-sized withdrawal yesterday, as an authorized participant withdrew 288,402 troy ounces---a hair under nine tonnes of the stuff.  And as of 6:48 p.m. EDT yesterday evening, there were no reported changes in SLV.

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

It was a pretty busy day in both gold and silver over at the Comex-approved depositories on Friday.  In gold, there was 12,860.000 troy ounces reported received---and 96,482.150 troy ounces shipped out.  The entire deposit, which works out to 400 kilobars, was made into the vaults over at Canada's Scotiabank---and of the exactly 3,001 kilobars reported shipped out, 3,000 were removed from JPMorgan's vault.  The link to that action is here.

Is it just me, or is a larger percentage of the in/out activity in Comex gold now in the form of kilobars, rather than the standard LBMA 100 and 400 troy ounce good delivery bars?

It was another very decent day in silver too, as 417,902 troy ounces were reported received---and 870,227 troy ounces were shipped out the door.  The link to that activity is here.

Since the 20th of the month fell on a week day, the good folks over at The Central Bank of the Russian Federation updated their website with their September data, including their gold reserve activity.  It was a big month for them, as they added a very chunky 1.2 million troy ounces.  This is the biggest one-month purchase they've ever made, besting their next biggest addition of 1.1 million ounces back in May of 2010.

Russia's Central bank reserves now stand at 37.0 million troy ounces---and Nick Laird's most excellent chart tells all.

Just as a matter of interest, the 1.2 million troy ounces [37.33 metric tonnes] is considerably more gold than Russia digs out of the ground in one month.  I get the impression from this big deposit in September that they have gold stashed away somewhere that doesn't show up in the books of the central bank, as a deposit that size can't be explained any other way.

It's my Tuesday epistle, so I have a fair number of stories for you today---and the final edit is yours.

¤ Critical Reads

Blood Red From Big Blue: Why IBM is Crashing---in Charts

Remember when three short months ago we revealed what was "the scariest chart in IBM's history", namely the one, showing IBM's total debt to equity ratio, which has exploded and surpassed Lehman highs, as the company scrambled to issue more and more debt and use it to repurchase more and more stock?

With this chart, incidentally, we also explained why IBM's ridiculous stock repurchasing strategy, which had seen $37.7 billion in stock buybacks since 2012, or more than the total debt issuance of $33.6 billion during the same period could not continue and why, inevitable, IBM would have a massively disappointing quarter.

Well, that quarter just hit, when moments ago in an early press release, IBM reported abysmal adjusted EPS of only $3.68, a huge miss to the $4.32 Wall Street expected, mostly a function of one simple thing: the buyback "strategy" finally hit a brick wall.

This very interesting Zero Hedge article appeared on their website at 7:42 a.m. EDT yesterday morning---and I thank reader Dan Lazicki for today's first story.

Santelli & Schiff: "A Messy Exit is a Given... Ending Q.E. Will Plunge U.S. Into Severe Recession"

"Markets are slowly coming to grips with reality is not going to be as easy as everybody thought," Peter Schiff tells CNBC's Rick Santelli, noting the pick up in volatility across asset classes recently.

What The Fed clearly does not understand, Schiff blasts, is that "you cannot end quantitative easing without plunging the U.S. into a severe recession." Because of the Fed's extreme monetary policy and the mal-investment that flows from it, Schiff says, "The US economy is more screwed up now than it's ever been in history."

Most prophetically, we suspect, Santelli agrees that "a messy exit is a given," and Schiff believes they know that and that is why QE4 is coming simply "because it hasn't worked and they can't admit it's been a dismal failure."

This 2:40 minute CNBC video clip showed up on the Zero Hedge website yesterday at 5:49 p.m. EDT---and I thank Manitoba reader U.M. for her first contribution of the day.

Fears That Pimco and Other Big Firms Could Be Unable to Unload Risky Bonds

When it comes to high-risk bonds, the asset management giant Pimco has pretty much cornered the global market.

Be it bonds issued by the automotive financier Ally Financial or the student loan financier SLM in the United States, or government bonds in Spain and Italy, Pimco holds a commanding position in these high-yielding securities.

But as Pimco’s portfolio managers double down on their bet that high-risk bonds will thrive in a world of low interest rates, a growing number of global regulators are warning that the positions being taken on by the big asset management firms pose a broad danger to the financial system.

These concerns were amplified this week as stock markets gyrated, the yields of high-risk corporate and European bonds spiked upward and, crucially, trading volumes evaporated.

This longish article showed up on The New York Times website last Thursday---and is worth reading, at least until your eyes begin to glaze over.  I found it in yesterday's edition of the King Report.

FBI Director: If Apple and Google Won't Decrypt Phones, We'll Force Them To

Everyone is stoked that the latest versions of iOS and Android will (finally) encrypt all the information on your smartphone by default. Except, of course, the FBI: Today, its director spent an hour attacking the companies and the very idea of encryption, even suggesting that Congress should pass a law banning the practice of default encryption.

It's of course no secret that James Comey and the FBI hate the prospect of "going dark," the idea that law enforcement simply doesn't have the technical capability to track criminals (and the average person) because of all those goddamn apps, encryption, wi-fi network switching, and different carriers.

It's a problem that the FBI has been dealing with for too long (in Comey’s eyes, at least). Today, Comey went ballistic on Apple and Google's recent decision to make everything just a little more private.

This very interesting news item showed up on the motherboard.vice.com Internet site early afternoon last Thursday---and my thanks go out to Roy Stephens for his first offering of the day.

Vote all you want. The secret government won’t change.

The voters who put Barack Obama in office expected some big changes. From the NSA’s warrantless wiretapping to Guantanamo Bay to the Patriot Act, candidate Obama was a defender of civil liberties and privacy, promising a dramatically different approach from his predecessor.

But six years into his administration, the Obama version of national security looks almost indistinguishable from the one he inherited. Guantanamo Bay remains open. The NSA has, if anything, become more aggressive in monitoring Americans. Drone strikes have escalated. Most recently it was reported that the same president who won a Nobel Prize in part for promoting nuclear disarmament is spending up to $1 trillion modernizing and revitalizing America’s nuclear weapons.

Why did the face in the Oval Office change but the policies remain the same? Critics tend to focus on Obama himself, a leader who perhaps has shifted with politics to take a harder line. But Tufts University political scientist Michael J. Glennon has a more pessimistic answer: Obama couldn’t have changed policies much even if he tried.

Though it’s a bedrock American principle that citizens can steer their own government by electing new officials, Glennon suggests that in practice, much of our government no longer works that way. In a new book, “National Security and Double Government,” he catalogs the ways that the defense and national security apparatus is effectively self-governing, with virtually no accountability, transparency, or checks and balances of any kind. He uses the term “double government”: There’s the one we elect, and then there’s the one behind it, steering huge swaths of policy almost unchecked. Elected officials end up serving as mere cover for the real decisions made by the bureaucracy.

No surprises here.  This author has just stumbled on the "powers that be" but doesn't give them a name.  G. Edward Griffin spells it out exactly in his book "The Creature From Jekyll Island"---or James Perloff's "The Shadows of Power: The Council on Foreign Relations and the American Decline".  This article appeared on the bostonglobe.com Internet site on Sunday---and I thank reader M.A. for sending it along.

7 weeks of eruption: Stunning aerial video of Iceland’s Bardarbunga volcano

A breathtaking video filmed by an Icelandic helicopter pilot has documented the continuous eruption of the Bardarbunga volcano in northeast Iceland. Enormous fiery bubbles of lava and steam can be seen bursting from the ridges in the ground.

Helicopter pilot Gísli Gíslason captured the wondrous images while on several trips over the volcano – some of which were taken on Friday, and others a few days previously.

“Almost seven weeks have now passed since the Holuhraun lava eruption began. The eruption is continuing with few changes. The eruption is showing no signs of slowing down,” he wrote in the video’s description.

The Bardarbunga (Bárðarbunga) volcano is part of the second-tallest mountain in Iceland and located in the country’s Holuhraun lava fields - a volcanic system that spans some 200 kilometers by 25 kilometers.

This very interesting article, with lots of photos to along with the video clip, appeared on the Russia Today website at 8:48 p.m. Moscow time on their Thursday evening, which was 12:48 p.m. in New York.  It's courtesy of reader M.A.

One simple reason why global stock markets are reeling

It is no mystery why global liquidity is evaporating. Central banks have turned off the tap. They have reduced net stimulus by roughly $125 billion a month since the end of last year, or $1.5 trillion annualized.

That is a shock for the financial system. The ratchet effect has been incremental, but relentless. We are finally seeing the consequences, with the usual monetary policy lag.

The Fed and People‘s Bank of China (PBOC) have stopped their two variants of global QE altogether (for now). Others have chopped their purchases of bonds by half or more. The Brazilians are net sellers, and in a sense they carrying out reverse QE. The Russians have just joined them again.

Fed tapering has taken out $85bn a month. The markets are having to go it alone as of this month, without their drip feed. Less understood is the effect of global reserve accumulation by the BRICS, emerging Asia, and the Petro-states. This has collapsed.

Here's Ambrose Evans-Pritchard, on behalf of his handlers, wringing his hands that the money printing is coming to a halt.  At the end, he echoes Jim Rickards when he states "...until the blinking starts at the Fed and the People‘s Bank. QE4 is creeping onto the table already."  It's the second offering of the day from Roy Stephens.

Mark Carney launches investigation after real-time payment system crash delays house purchases

Mark Carney has launched an investigation into how one of the central pillars of the UK’s payments infrastructure collapsed for 10 hours, delaying hundreds of billions worth of deals.

The Bank of England Governor pledged to discover what had gone wrong and whether officials had responded properly after the enforced closure of the £277bn-a-day CHAPS payment system, which affected thousands of house purchases and major interbank money transfers.

The Bank said it would be carrying out “a thorough, independent review of the causes of today’s disruption”. “The review will cover the causes of the incident, the effectiveness of the Bank’s response and the lessons learned for future contingency plans. Its findings will be presented to Court which will then publish the full report and the response,” it added.

MPs had earlier in the day called on the Bank to explain the fault, attributed to a “technical issue related to some routine maintenance”.

This news item put in an appearance on the telegraph.co.uk Internet site at 9:30 p.m. BST on their Monday evening---and I thank West Virginia reader Elliot Simon for sending it our way.

ECB Unleashes (Covered) Bond Buying Program, Sovereigns Sell O

Draghi, we have a problem. Just as Coeure 'promised' the ECB, according to he FT, began its bond-buying program this morning. However, peripheral sovereign bond-buying front-runners banking on the ECB greater fool to offload to are disappointed as they are go no easy money love. The initial program is covered-bond-buying (similar to U.S. MBS, but a considerably smaller market) and the ECB will reveal how much it has bought each Monday afternoon (starting next week). Greek bonds are suffering the most with 5Y yields at cycle highs once again and prices at lows (vanquishing all of Friday's gains).

As the Financial Times reports:

The European Central Bank has started to buy covered bonds, launching its latest attempt to stave off a vicious bout of economic stagnation in the eurozone.

The purchases are the first in a bond-buying programme that is expected to see the ECB place billions of euros of covered bonds and asset-backed securities on its balance sheet over the next two years in an attempt to revive lending and growth across the region.

The ECB confirmed that the central bank had begun purchasing the assets on Monday. The purchases of asset-backed securities are expected to start later this year.

The central bank will reveal how much it has bought every Monday afternoon, starting next week.

This story appeared on the Zero Hedge website at 8:40 a.m. EDT on Monday morning---and it's worth reading.  It's the second contribution of the day from reader U.M.

Credibility meets compromise in Europe's bank stress test

When Europe announced its latest health check of top banks early last year it promised a "comprehensive assessment" of how well prepared they were to withstand another financial crisis.

In practice, a spirit of comprehensive compromise has been just as important. 

A series of Reuters interviews with officials, bankers and others involved in the European Central Bank's financial inspection of the euro zone's biggest banks shows that in the seven months since it began, the ECB has had to shoot down countless pleas from banks and national supervisors for special treatment.

At the same time, according to sources who spoke on condition of anonymity, supervisors have revised the way they value assets and banks have failed to provide all the data demanded - multiple compromises that could cumulatively threaten the tests' reputation as tough and consistent.

This Reuters article, filed from London, was posted on their website at 7:12 a.m. EDT yesterday---and I thank Harry Grant for sharing it with us.

The Reckoning For Swiss Banks is Far From Over

IN 2008 Bradley Birkenfeld, an American working for UBS, blew the whistle on the giant Swiss bank's offshore operations, which had helped thousands of rich Americans to dodge their taxes.

Among the lurid details that he revealed was the use of encrypted laptops, the smuggling of diamonds in toothpaste tubes for clients, and evidence of bankers travelling to America on tourist visas to avoid arousing suspicion.

UBS was sent reeling by the revelations. In recompense, in 2009 it paid a $780m fine to the American government and turned over data to the authorities on more than 4,000 clients.

The biggest fish to be caught in the net is now about to have his day in court. On October 14th jury selection started in a federal court in Florida for the trial of Raoul Weil, who as head of UBS's global private-banking business was responsible for the division that had fallen foul of the authorities. In 2009 America issued an international arrest warrant for Mr Weil. He was nabbed last year at an Italian hotel, while on holiday with his wife, and was extradited to the United States, where he has been under house arrest.

This news story showed up on the businessinsider.com Internet site at 4:40 p.m. EDT on Sunday afternoon---and it's the second article in a row from Harry Grant.

Deadly Ukraine Crash: German Intelligence Claims Pro-Russian Separatists Downed MH17

After completing a detailed analysis, Germany's foreign intelligence service, the Bundesnachrichtendienst (BND), has concluded that pro-Russian rebels were responsible for the crash of Malaysian Airlines Flight MH17 on July 19 in eastern Ukraine while on route from Amsterdam to Kuala Lumpur.

In an Oct. 8 presentation given to members of the parliamentary control committee, the Bundestag body responsible for monitoring the work of German intelligence, BND President Gerhard Schindler provided ample evidence to back up his case, including satellite images and diverse photo evidence. The BND has intelligence indicating that pro-Russian separatists captured a BUK air defense missile system at a Ukrainian military base and fired a missile on July 17 that exploded in direct proximity to the Malaysian aircraft, which had been carrying 298 people.

Evidence obtained shortly after the accident suggested the aircraft had been shot down by pro-Russian militants. Both the governments of Russia and Ukraine had mutually accused each other of responsibility for the crash. After a Dutch investigative commission reviewed the flight recorder, it avoided placing any blame for the crash. Some 189 residents of the Netherlands perished in the downing of Flight MH17.

The news item appeared on the German website spiegel.de at 8:08 a.m. Europe time on their Sunday---and I thank Jim Skinner for finding it for us.  A companion story appeared on the RIA Novosti website on Sunday evening Moscow time.  It's headlined "German Intelligence Agency Chief Says Kiev Falsified Data on MH17 Crash" and it's courtesy of reader M.A.

Oil prices won’t recover above $100 – Russian Finance Ministry

Decreasing oil prices are “inevitable” and the chance they will exceed $100 per barrel is “unlikely” the Russia’s Finance Ministry said. However, the Russian budget can withstand lower prices.

“The market is biased in favor of excess supplies. That is why price reduction is inevitable; it will have a structural character. We are unlikely to see prices higher than $100 per barrel in the near future,” Maksim Oreshkin, the head of the Russian Finance Ministry's strategic planning department told RBC TV in an interview.

“In general, the current downward price movement is structural. Investments in oil production have increased dramatically in the past ten years,” Oreshkin said.

Russian officials have stressed there will be no sharp rise in Russia’s budget deficit, but the country's largest bank, Sberbank, says an oil price of $104 is required to balance the 2015 budget. A drop of prices to $80 per barrel could cost Russia 2 percent of GDP.

The Russians have to look no further than the Comex to discover why oil prices are where they're at.  This Russia Today article showed up on their Internet site at 11:19 a.m. Moscow time on their Monday morning, which was 3:19 a.m. in New York.  I thank reader 'h c' for digging it up on our behalf.

Egypt signs with six international firms to dredge new Suez Canal

Egypt signed contracts with six international firms on Saturday to carry out dredging of the new Suez Canal, the flagship project in President Abdel Fattah al-Sisi's program to revive an economy battered by years of political turmoil.

The companies are National Marine Dredging Company of the United Arab Emirates; Royal Boskalis Westminster and Van Oord, both based in the Netherlands; Jan de Nul Group and Deme Group, both of Belgium; and U.S.-based Great Lakes Dredge and Dock Company.

Lieutenant General Mohab Memish, head of the Suez Canal Authority, announced the consortium at a news conference in Cairo alongside Prime Minister Ibrahim Mehleb.

Egypt hopes the new canal will more than double revenues from the waterway by 2023 to $13.5 billion from $5 billion. It also plans to develop 76,000 sq km (29,000 sq miles) in the area into an international industrial and logistics hub to attract more ships and generate income.

This Reuters news story, filed from Cairo, showed up on their Internet site at 2:30 p.m. EDT on Saturday afternoon---and I thank South African reader B.V. for bringing it to our attention.

U.S. airdrops supplies to Kurds battling IS militants in Kobane

U.S. military aircraft dropped weapons, ammunition and medical supplies late on Sunday to Kurdish forces battling the Islamic State (IS) group, also known as ISIS or ISIL, in the Syrian border city of Kobane.

U.S. Central Command said C-130 cargo aircraft had made "multiple" drops of supplies provided by the authorities in Iraq’s autonomous region of Kurdistan that were "intended to enable continued resistance against ISIL's attempts to overtake Kobane".

Early on Monday, a spokesman for Kurdish forces in Kobane confirmed they had received a large quantity of weapons and ammunition.

The airdrops Sunday were the first of their kind and followed weeks of U.S. and coalition airstrikes in and near Kobane, which is located on Syria’s northern border with Turkey.

This news item put in an appearance on the france24.com Internet site yesterday sometime---and it's courtesy of Roy Stephens.

The Iraqi Army Never Was

In a bloody ISIS attack on an Iraqi Army base just north of Fallujah on September 21, upwards of 500 government soldiers perished or disappeared, fleeing into the marshlands, the woods, or to the next base camp four miles away. Few were left behind alive, surrounded by militant fighters who by all accounts were supposed to be less equipped, less trained, and less organized than Iraq’s professional fighting force.

But the Iraqi security forces, into which American taxpayers poured some $25 billion over the course of a decade, had in the span of a summer, crumbled.

While pro-war critics blame the Iraqi military’s failures on the current administration for leaving the country too soon, American veterans and journalists who spoke with TAC say the army was corrupt, incompetent, and unmotivated from the beginning, and that top U.S. officials papered over this inconvenient fact for years in order to protect their commands and maintain public support for the U.S. intervention.

No surprises here.  This longish, but very interesting article appeared on theamericanconservative.com website back on Thursday, October 9---and is definitely worth the read if you have the time and/or the interest.  It's the second offering of the day from reader Dan Lazicki.

Iran acts to comply with interim nuclear deal with powers: IAEA

Iran is taking further action to comply with an interim nuclear agreement with six world powers, a monthly U.N. atomic agency report showed, a finding the West may see as positive ahead of a November deadline for clinching a long-term deal.

The report by the International Atomic Energy Agency (IAEA), seen by Reuters, made clear that Iran is meeting its commitments under the temporary deal, as it and major powers seek to negotiate a final settlement of a decade-old nuclear dispute.

It said Iran had diluted more than 4,100 kg of uranium enriched to a fissile concentration of up to 2 percent down to the level of natural uranium. This was one of the additional steps Iran agreed to undertake when the six-month accord that took effect early this year was extended by four months in July.

Refined uranium can be used to fuel nuclear power plants, Iran's declared goal, but can also provide the fissile core of a nuclear bomb if processed to a much higher degree, which Western states fear may be the country's ultimate aim.

This Reuters article, filed from Vienna, appeared on their Internet site at 1:36 p.m. EDT on Monday---and it's another contribution from reader U.M.

Saudi, Kuwait Seen Curbing Oil Output at ’Opportune Time’

Saudi Arabia and Kuwait halted production at a jointly run oil field late this week, a move that could help ease a supply glut that has pushed global prices down 25 percent.

The 300,000-barrel-a-day Khafji field, located in the neutral zone between the two countries, was being shut because of environmental concerns, a person familiar with Saudi Arabian oil policy said yesterday, who asked not to be identified because the information isn’t public.

The shutdown comes as Saudi Arabia and other OPEC members face increasing pressure to scale back production while supply expands from the U.S. and other countries and demand growth slows. Asia’s oil market has become particularly flooded as the U.S. imports fewer cargoes.

This oil-related Bloomberg news item was co-filed from San Francisco, Manama, Bahrain---and Houston.  It appeared on their Internet site at 7:20 p.m. Denver time last Friday evening---and it's the second article I borrowed from yesterday's edition of the King Report.

China sets tougher restrictions on illegal mining, exporting of rare earths

China is stepping up efforts to restrict illegal mining and exporting of rare earths with a five-month campaign that ultimately aims mainly to avoid a further plunge in prices.

Launched earlier this month and until March 31, five official bodies will work together to investigate and punish illegal miners and smugglers of the highly coveted elements.

Provincial and city governments will supervise the effort, Investor Intel reports.

This is not the first time China attempts to streamline the rare earth industry by giving control to state-owned miners and setting production quotas on a small number of authorized companies.

This article appeared on the mining.com website on Monday---and it's another offering from reader M.A.

All the world’s gold to be confiscated and buried in Switzerland by 2020 argues Jim Rickards

In what pretends to be a history looking back from the future ‘Currency Wars’ author and fund manager Jim Rickards argues that by 2020 all the gold of the G-20 nations will be confiscated and buried in a former nuclear bunker under a mountain in Switzerland to take it out of the global financial system.

This is the conclusion to the astonishing tour de force article that kicks off his new monthly newsletter ‘Rickards’ Strategic Intelligence’ for Agora Financial, publisher of highly successful financial newsletters like Chris Mayers’ ‘Capital & Crisis’. Has the normally sober and thoughtful Mr. Rickards lost his marbles?

I must confess to having my doubts on reading his first issue with one absurd conclusion leading to another and then to a totally unrealistic world gold confiscation scenario. How would that happen? The G-20 meetings struggle to agree on a final communique. How could they agree something like that?

Mr. Rickards doesn't stop there. In his world not only does money die and cease to exist but there is a sort of death of capitalism that Marx prescribed and Stalin tried to implement without notable success. There are no markets, bonds nor money by 2024 and equality rules.

WTF!  Whatever Jim is smoking, I don't want any of it.  And don't look to me for answers on this one, dear reader, as I'm just as much in shock as you are.  This amazing commentary appeared on the arabianmoney.com Internet site on Sunday evening---and it is certainly a must read.  I thank Dr. Dave Janda for sending it along.

Taking Your Gold for “The Greater Good”

But returning to the subject of a crash in the paper-gold market, this suggests that the spin that allows the banks of the world to simply steal all deposits over €100,000 could easily be applied to a similar, ongoing banking scam in the paper-gold market.

Let’s say that, rather than wait for the Emperor’s new clothes to be seen to be an illusion, the banks of the world decide to preempt this embarrassment in a proactive manner. Let’s say that, with the support of their friends in the governments, an announcement is made to the public that a decision has been reached that will aid tremendously in saving the “essential” banks. And—here’s the best part—it would not impact the “little man” who has already had to bear so much abnegation as a result of the greed of the rich.

The announcement states that the banks have been given the go-ahead to simply cancel the paper-gold certificates that they have sold. This will enrich the banks by billions of dollars, and the only losers will be the greedy rich who have so much money to burn that they have purchased gold certificates.

Were the banks to do this, they would, instead of being vilified for selling assets that they did not possess, be praised for taking affirmative action for “The Greater Good.”

This commentary appeared on the internationalman.com Internet site on Monday.

In Silver Doctors interview, GATA secretary discusses developments in market manipulation

Interviewed for about a half hour last week by Silver Doctors, your secretary/treasurer discussed recent developments in market manipulation, speculated that gold will be revalued overnight by major central banks as part of a general world currency revaluation, and cautioned that China's drive to obtain gold isn't intended to establish a free market in gold but to wrest control of the gold market from the United States.

The interview was conducted last Wednesday---and the audio interview, which runs for 32:17 minutes, appeared in a GATA release on Saturday.  It's worth your time.

Mad about yellow: India's love affair with gold

We worship it, buy it for investment, wear it as jewellery, weave it into cloth and even eat it. India's love affair with gold crosses the boundaries of religion and also class — and reaches its zenith in the run-up to Diwali.

"We buy at least a small gold coin in our family every Dhanteras and get the house repainted after Dussehra to welcome Goddess Lakshmi home," says Kandivali resident Ravindra Dave.

Dave is not alone, of course. Most Hindu families work towards purchasing gold at this time. "The ritual is akin to inviting Lakshmi, the goddess of wealth and prosperity," explains Anant Joshi, a priest from Bhuleshwar. "While some prefer jewellery, most buy gold coins with Lakshmi embossed on the front and her symbol, the Shri Yantra, embossed on the other side. Some have both Lakshmi and Lord Ganesha, the remover of obstacles, embossed on the coins."

This gold-related news article, filed from Mumbai, showed up on the dnaindia.com Internet site at 9:09 a.m. IST on their Sunday morning.  It's another offering from reader U.M.

Government to Re-Impose Gold Import Curbs to Check Trade Deficit

Barely months after gold import rules were eased, the government is looking to re-impose curbs as the country's insatiable appetite has led to a surge in the yellow metal coming into India, threatening to undermine the improvement in external balances.

The finance ministry's revenue department has flagged the issue and asked the Department of Economic Affairs and the Reserve Bank of India to review the May 21 relaxation in the import rules issued by the latter.

The so-called 80-20 rule was relaxed in May by the RBI at the behest of the finance ministry after jewellers, bullion dealers, authorised dealer banks, and trade bodies sought easier rules. Under the 80-20 scheme, nominated agencies were allowed to import gold on the condition that 20 percent of the import would be exported. The easing of rules meant more entities were allowed to import gold.

The trade deficit worsened to an 18-month high of $14 billion in September following a 450 percent rise in gold imports as importers rushed to take advantage of lower prices. "Gold imports have risen since the norms were relaxed....There is a concern," a finance ministry official said. "We have written to the DEA and the RBI."

This article, filed from New Delhi, put in an appearance on The Economic Times of India website at 4:02 a.m. India Standard Time on their Monday morning---and I found it posted on the gata.org Internet site.

Reserve bank of India will not change gold import rules, says sources

Reserve bank of India will not change its gold import rules, sources with knowledge of the matter said, responding to a report that the world's second-largest consumer of the precious metal was keen to limit imports.

The central bank has already eased some import controls by allowing seven trading houses to import the metal, driving a sharp jump in overseas buying despite a record import duty of 10 percent.

A surge rise in gold imports widened the trade deficit to an 18-month high of $14.25 billion in September, creating concerns for the new government of Prime Minister Narendra Modi, an unidentified Finance Ministry official told the Economic Times newspaper.

The ministry also sent a letter to the central bank seeking a review of the May relaxations, according to the report. But two officials familiar with the central bank's policies told on Monday it was not considering any change.

This article, also from the Economic Times of India appeared on their website at 7:47 p.m. EST on their Monday evening---17 hours before the previous Times of India article posted above.  It's the final offering of the day from Manitoba reader U.M.---for which I thank her.

Koos Jansen: The Chinese precious metals market is on fire

China's gold demand, as signified by off take from the Shanghai Gold Exchange, has reached "extraordinary" levels in recent days, while silver is growing shorter in supply as well, according to gold researcher and GATA consultant Koos Jansen.

Jansen's analysis is headlined "The Chinese Precious Metals Market is on Fire" and it was posted on the Singapore Internet site bullionstar.com at 11:07 p.m. local time on their Sunday evening.  It's worth reading---and it's another gold-related item I found in a GATA release yesterday.

¤ The Funnies

The first photo below is one I took a couple of Sunday's ago at the usual location, but never bothered to download off the camera until this past Sunday evening.  It's a female common merganser with Canada Geese all around.  It was taken from over 100 meters away---and even though I used a 400mm telephoto lens, I still had to crop the heck out of it to get the bird to appear a decent size---and it's at the limit of what I consider to be an 'acceptable' shot.

¤ The Wrap

As I mentioned previously, JPMorgan’s concentrated short position in COMEX silver is now lower than it has been since acquiring Bear Stearns in early 2008. If anything, JPM’s COMEX silver short may even be lower than I have calculated, simply because it is no longer that large relative to the holdings of the three other big shorts. With just over 34,000 contracts held short by the big 4, once you subtract JPM’s 10,000 short contracts, the remaining three shorts average 8,000 contracts each. This is a far cry from years earlier when JPMorgan singlehandedly held as many as 40,000 contracts of COMEX silver net short and represented close to 70% of the big 4’s total silver shorts. Both the longer term and recent trends seem to indicate JPMorgan may not wish to remain the prime silver manipulator as it clearly had been in the past.

Throw in my previous speculation that JPMorgan has been buying physical silver over the past three and a half years with a reckless abandon and may, in fact, be Mr. Big when it comes to buying in SLV and in Silver Eagles; it is easy to conclude that JPM may hold an extreme net long position in silver despite holding 10,000 COMEX contracts (50 million oz) short. As such, it would appear JPMorgan could be positioned much better for an upside move in silver than at any time in the bank’s history, both before and after Bear Stearns. And as a bonus to the bank, none of its suspected holdings on the long side of silver would appear to be reportable; thus keeping the holdings and any eventual gains undisclosed. - Silver analyst Ted Butler: 20 October 2014

With such low volume, I'm not prepared to read much into yesterday's price action in gold or silver, although seeing their respective rallies get capped either at the Comex open, or the London p.m. gold fix, should have come as no surprise, as the New York bullion banks are up and running during those hours.

Here are the 6-month charts for the 'Big 6'---and there's not much to see in the four precious metals, but both copper and West Texas Intermediate were under selling pressures again yesterday.

Gold came within a dollar or so of closing above its 50-day moving average yesterday---and is now at that point as of 12:30 p.m. Hong Kong time on their Tuesday afternoon.  It will be interesting to see what JPMorgan et al do at this point as the Managed Money starts to cover their short positions.  Will 'da boyz' let the price run, or will we see a 'failure' at this point?  Beats me, but we won't have long to wait to find out.

And as I type this paragraph, the London open is an hour and forty minutes away.  The gold price didn't do much in morning trading in the Far East on their Tuesday, but did add a couple of dollars to the price with a tiny rally that started shortly after 11 a.m. Hong Kong time and, as I mentioned above, is now at, or a hair above, its 50-day moving average.  Silver, which got sold down about 15 cents by 11 a.m. Hong Kong time is now a nickel above the unchanged mark.  Platinum and palladium are a few dollars higher as well.  The volume in gold is already very decent at 19,000 contracts---and silver's volume is about 3,800 contracts.   The dollar index, which had made it just above the 85.00 mark by the close of trading on Monday in New York, is now down 20 basis points.

Today, at the close of Comex trading, is the cut-off for this Friday's Commitment of Traders Report, so I'll be paying particular attention to the price action in all of the 'Big 6' commodities as the Tuesday trading session in New York plays out, especially in gold.

As I hit the 'send' button on today's column at 4:55 a.m. EDT, I see that gold rallied up until shortly before 9 a.m. in London trading---and has been trading flat since.  But it's much too soon to tell if that's the end of the 'rally' or not.   Volume has now blown out to 38,000 contracts, so it's obvious that even this tiny rally is being met with a blizzard of Comex paper---and I'm certainly not happy about that.  The silver price is now back to unchanged, but has been trading mostly lower since its 11 a.m. low tick in Hong Kong.  Volume is now up to 6,200 contracts.  Platinum is up 8 dollars----and palladium is currently up two bucks.  The dollar index is down 15 basis points.

And as I head off to bed, I'd like to mention Marin Katusa's new book one more time.  Marin is the Chief Energy Investment Strategist here at Casey Research---and the book is titled "The Colder War: How the Global Energy Trade Slipped from America's Grasp".  There's a 1-minute video clip about it at the youtube.com Internet site---and you can watch it by clicking here.  But the real 'juice'---along with how to pre-order it---is linked here.

It could prove to be an interesting day for gold---and the price action during the New York session could tell us a lot about what may happen going forward, at least in the short term.

See you here tomorrow.

]]>
Tue, 21 Oct 2014 06:25:00 +0000
<![CDATA[China Gold Production Seen Falling, Prompting More Imports]]> http://www.caseyresearch.com/gsd/edition/china-gold-production-seen-falling-prompting-more-imports/ http://www.caseyresearch.com/gsd/edition/china-gold-production-seen-falling-prompting-more-imports/#When:09:59:00Z "Sooner or later the forces of nature---and the markets---will not be denied"

¤ Yesterday In Gold & Silver

There wasn't a lot of price action in gold yesterday.  What action there was occurred between the noon silver fix in London---and the Comex close in New York.

The high and low tick are barely worth the effort of looking up---and the CME Group recorded them as $1,242.10 and $1,232.00 in the December contract.

Gold finished the Friday session at $1,238.20 spot, down 70 cents from Thursday's close.  Net volume was very much on the lighter side at only 109,000 contracts.

The price chart in silver looked very similar to the gold chart---and silver traded in a two bit range for the entire day.

The high and low in silver were recorded as $17.44 and $17.22 in the December contract.

Silver closed in New York yesterday at $17.27 spot, down 9.5 cents from Thursday's close.  Net volume was pretty light at only 25,000 contracts.

Platinum rallied right from the moment that the markets opened in New York on Thursday evening, but that ended/got capped just after 10 a.m. Hong Kong time.  It got sold down a bit going into the Zurich open---and then didn't do much for the remainder of the day.  Platinum closed up 12 bucks.

Palladium also rallied in the early going---and then developed a negative bias around noon Hong Kong time---and slid a hair until about 10:15 a.m. in Zurich.  Then it rallied anew until noon Europe time---and then traded pretty flat for the remainder of the Friday session, closing up 13 dollars.

The dollar index closed late Thursday afternoon in New York at 84.96---and then chopped around before sliding to its 84.77 low at precisely 8 a.m. in New York.  The subsequent rally topped out at 85.23 around 11:25 a.m. EDT---and it didn't do a lot for the rest of the day.  The index finished back above the 85.00 mark at 85.20.

The gold stocks spent all of two minutes in the black at the open of trading at 9:30 a.m. EDT yesterday---and it was all down hill from there, as the HUI closed virtually on its low tick of the day, down 3.47%.  This sell-off was out of all proportion to the tiny loss in the metal itself.

And as bad  as the gold shares performed, the silver equities got shelled, as Nick Laird's Intraday Silver Sentiment Index closed down an eye-watering 4.62%.  There was no reason for this magnitude of sell-off either.

The CME Daily Delivery Report showed that 230 gold and 72 silver contracts were posted for delivery within the Comex-approved depositories on Tuesday.  In gold, it was the strangest thing, as Barclays was the only short/issuer with 230 contract out of its in-house [proprietary] trading account.  They were also the biggest long/stopper with 228 contracts in their client account. One has to wonder what that was all about.  In silver, the two short/issuers were Jefferies and ABN Amro with 52 and 20 contracts apiece.  There were four different long/stoppers, but Jefferies stopped 26 of them.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Friday trading session showed that gold's open interest in October declined by 129 contracts, and is now down to 837 contracts.  Silver's October open interest was unchanged at 174 contracts.  From these numbers, one must subtract the deliveries mentioned in the previous paragraph.

There were no reported changes in GLD yesterday---and as of 7:44 p.m. EDT yesterday evening, there were no reported changes in SLV.  But when I was editing at 5:02 a.m. EDT this morning, I see that the folks over at the iShares.com Internet site showed a withdrawal from SLV of 1,150,380 troy ounces.

There was another sales report from the U.S. Mint.  They sold 6,000 ounces of gold eagles---2,000 one-ounce 24K gold buffaloes---and 50,000 silver eagles.

Month-to-date the mint has sold 42,500 troy ounces of gold eagles---17,000 one-ounce 24K gold buffaloes---3,100,000 silver eagles---and 400 platinum eagles.  Based on these sales, the silver/gold sales ratio stands at 52 to 1.

There was a small amount of gold shipped out of the Comex-approved depositories on Friday, as 2,411 troy ounces were withdrawn from Scotiabank's depository.

Of course, things were a lot different in silver.  Nothing was reported received, but a huge 1,716,910 troy ounces were shipped out the door---and the link to that action is here.

The Commitment of Traders Report, for positions held at the close of Comex trading on Tuesday, October 14, was pretty much what I was expecting to see in both silver and gold.

In silver, the Commercial net short position was virtually unchanged, as it only declined by 20 contracts, which isn't even a rounding error.  The Commercial net short position still sits at 16,260 contracts, or 81.3 million ounces.

But under the hood in the Disaggregated COT Report, things were a little different, but in a good way.  The Managed Money in the technical fund category sold another 572 long contracts and went short an additional 1,226 contracts.  That, I believe is a new record short position in the Managed Money category, so the rubber band is stretched about as tight as it can get in silver.

Ted Butler said it appeared that JPMorgan covered another 500 contracts of their short-side corner in the Comex silver market, which is another new low since they inherited that gargantuan short position from Bear Stearns back in 2008.  They now hold 10,000 contracts net short, or 50 million ounces, which is a sizeable chunk of the total Commercial net short position which, from two paragraphs ago, worked out to 81.3 million troy ounces.

In gold, the Commercial net short position increased by a rather chunky 15,416 contracts, or 1.54 million ounces of paper gold---and that's all because of the rally in gold during the reporting week.  The Commercial net short position in gold is now up to 7.88 million troy ounces.

The traders in the Managed Money category accounted for most of the buying as they went net long to the tune of 12,333 contracts.

Ted said that JPMorgan sold another 3,000 contracts of their long-side corner in the Comex gold market---and their long position is now down to 18,000 contracts, or 1.8 million ounces.

And because of last week's rally in gold, Ted's concern now is that gold has become vulnerable to a sell-off, as the Commercials may attempt to engineer a decent price decline in order to force these newly minted long contract holders into puking up all these long contracts they just bought.

As it stands three days after Tuesday's cut-off, the traders in the Managed Money category are pretty much maximum short in all of the 'Big 6' commodities now, except for gold.  'Da boyz' may certainly be tempted to make it six out of six.

We'll see.

Since this is my Saturday column, I get to unload my in-box---and I have quite a few for you today that I've been saving from earlier in the week.

¤ Critical Reads

Mike Maloney: Massive Market Divergence in 3 Charts

In his latest video update, Mike Maloney shows one of the most concerning data points for today's stock markets: decreasing volume. This is happening even while markets are levitated by Federal Reserve stimulus and negative interest rates.

After showing the volume action of the DOW, Maloney adds his thoughts: "This is not a healthy market. This means that less and less of the real investors are in there, and more and more of this is black box trading. The problem with that is that when the markets change every black box is going to be selling at once, so what is being set up here is probably the biggest market crash in history."

This 4:19 minute video clip by Mike was posted on the hiddensecretsofmoney.com Internet site on Tuesday---and I've been just too busy to get to it.  It's definitely worth watching---and there's a transcript [with charts] as well.

Doug Noland: The Downside of "Do Whatever it Takes"

Considering the global backdrop, I actually see a curious lack of extreme views (at least from the bear side). Instead, we’re at the stage of the cycle where even “bearish” pundits go out of their way to distance themselves from “the world is ending” prognosis. I guess I would be considered an extremist, though I don’t see the world ending anytime soon. But this week did offer further evidence that history’s greatest financial Bubble is at significant risk.

Friday’s rally did a lot to paper over what was a disturbing week for global markets. The mini-melt-up successfully took a great deal of value out of index and stock put options that expired Friday. Those wanting market protection will now have to pay up for expensive puts that expire in November, December or later.

But don’t let the S&P 500’s modest 1.0% decline fool you. It was an extraordinary week. Japan’s Nikkei index was hammered for 5.0%, increasing 2014 losses to 10.8%. Japanese two-year yields traded to a record low 0.005%. After beginning the week at 6.60%, Greek 10-year bond yields traded to 9% on Thursday (before closing the week at 8.07%). Wild instability returned to European debt (and equities) markets. Portugal’s 10-year yields were up 75 basis points by Thursday, before a rally cut the week’s increase to 35 bps. Germany’s DAX equities index dropped 2.87% on Wednesday then rallied 3.12% on Friday. Italian stocks sank 4.44% and then rallied 3.42%.

If only Bubbles lasted forever. And, unfortunately, the longer they persist and the bigger they inflate, the more problematic the unavoidable collapse. This important reality is ignored at everyone’s peril. Determination to avoid collapse only ensures greater and more precarious Bubble distortions and maladjustment. “World Braces as Deflation Tremors Hit Eurozone Bond Markets,” read another U.K. Telegraph headline. And Bullard and the global central bank community fret a “collapse in inflation expectations.” It is important to recognize that disinflation and collapsing “inflation expectations” are symptomatic of a bursting global financial Bubble. They provide early evidence of what will be a spectacular failure in experimental “activist” central banking.

Doug doesn't miss a thing in this week's edition of his Credit Bubble Bulletin, posted at the prudentbear.com Internet site yesterday evening.  It certainly falls into the absolute must read category.

Jim Rickards on Fox Business News

The first part of this interview runs for 3:33 minute---and is linked here.  The second part of the video interview runs for 1:24 minutes---and it's linked here.  You've heard some of this before, but some of it has been modified---and there's new material as well.  I thank reader Harold Jacobsen for sending it our way.

Friday Humor: Forget QE4, Presenting QE5

Forget helicopters---here's the future of central-planning.

Don't leave The Eccles Building without one.

I thank Joe Nordgaard for sending this Zero Hedge funny, which he sent our way in the wee hours of this morning.

Sprott Money Weekly Wrap Up

Listen to Eric Sprott Share his Views on Ebola, the Economic Slump Around the World and the Disingenuousness in the Precious Metals Markets.

Jeff Rutherford interviews Eric for 15:17 minutes---and the audio commentary was posted on the sprottmoney.com Internet site yesterday.  It's a must listen, especially the first part where discusses the current Ebola situation.

The CIA owns everyone of any significance in the major media.”

As a former member of the major media prior to its concentration in few hands by the Clinton regime, I have reported on many occasions that the Western media is a Ministry of Propaganda for Washington. In the article below one of the propagandists confesses. -Paul Craig Roberts

Published on Russia Insider News

“The CIA owns everyone of any significance in the major media.” — former CIA Director William Colby

Our Exclusive Interview with German Editor Turned CIA Whistleblower

Fascinating details emerge. Leading U.S.-funded think-tanks and German secret service are accessories. Attempted suppression by legal threats. Blackout in German media.

Repenting for collaborating with various agencies and organisations to manipulate the news, Ulkotte laments, “I’m ashamed I was part of it. Unfortunately I cannot reverse this.

This absolute must read commentary showed up on the Paul Craig Roberts website on Thursday sometime---and my thanks go out to Roy Stephens for his first contribution of the day.

James Perloff: A Century of Mainstream Media Lies

Newspapers were the first vehicle that mainstream media (MSM) used to manipulate Americans into war. The Spanish-American War (1898) was fought over Cuba, which had been a colony of Spain since 1511. By the 19th century, Cuba had become the world’s wealthiest colony and largest sugar producer, and its assets were coveted by the Illuminist cabal, which also wanted Spain neutered as a world power. National City Bank, then America’s preeminent bank, controlled the McKinley White House, loaned the government $200 million to fight the war, and took control of Cuba’s sugar industry afterwards (see Ferdinand Lundberg’s classic 1937 book, America’s Sixty Families).

To get young men to fight and die in Cuba for the banksters, it was necessary to persuade Americans – for the first time – that the U.S. military’s duty was not only self-defense, but “righting wrongs” overseas. It was before and during this war that the media honed a skill that would prove perennially useful: manufacturing fake atrocity stories.

The “Yellow Press,” as it was then appropriately called, was spearheaded by William Randolph Hearst’s New York Journal and Joseph Pulitzer’s New York World. Together they fabricated outlandish atrocity tales about Cuba, such as Spaniards roasting Catholic priests. On October 6, 1896, Hearst’s Journal carried this headline: “CUBANS FED TO SHARKS. Cries Heard at Night – They are Taken Outside the Harbor, and the Silent Ferryman Comes Back Alone.” Pulitzer’s World raved: “RAIDED A HOSPITAL– More than Forty Sick and Wounded Cubans Butchered.” But no hospital even existed in the region the World described.

Hearst’s reporters rarely ventured outside Havana’s bars. Some never even traveled beyond Florida, where they forwarded tales spun by Cuban émigrés. And some stories Hearst invented himself in New York.

I've read James Perloff's classic tome "The Shadows of Power: The Council on Foreign Relations and the American Decline."  It's right up there with G. Edward Griffin's "The Creature From Jekyll Island: A Second Look at the Federal Reserve"---and if you haven't read these two books, it's not too late to correct that oversight.  And, like the Paul Craig Roberts piece posted above, this falls into the absolute must read category as well.  I thank South African reader B.V. for sending it our way last Sunday, but for content reasons, it had to wait for today.

Kudos to Herr Weidmann For Uttering Three Truths in One Speech

Once in a blue moon officials commit truth in public, but the intrepid leader of Germany’s central bank has delivered a speech which let’s loose of three of them in a single go. Speaking at a conference in Riga, Latvia, Jens Weidmann put the kibosh on QE, low-flation and central bank interference in pricing of risky assets.

These days the Keynesian chorus in favor of policy activism is so boisterous that a succinct statement to the contrary rarely gets through—-especially at Rupert Murdoch’s Wall Street yarn factory. But here’s what penetrated even Brian Blackstone’s filters:

The biggest bottleneck for growth in the euro area is not monetary policy, nor is it the lack of fiscal stimulus: it is the structural barriers that impede competition, innovation and productivity,” he said.

This commentary appeared on David Stockman's website on Wednesday---and I thank Mark Hancock for sharing it with us.

Handelsblatt: "Four German Banks on the Brink"

Several days ago we were confused why, out of the blue, a €1 billion loan BWIC appeared that was dumping German non-performing loans. After all, the whole point of the European "recovery" fable to date has been to deflect all the attention from the "pristine" German banks, up to an including world-record derivatives juggernaut Deutsche Bank,  and to focus on Greece and other insolvent peripheral European nation. Earlier today, German Handelsblatt provided an answer, when it reported that "four German banks are on the brink", i.e., four banks of which three are known, HSH Nordbank, IKB and MunchenerHyp, will likely fail the ECB's stress test whose results are due to be announced next Friday.

Keep in mind that this is a significant fraction of the 24 German banks that are undergoing the ECB's Stress farce test. So one wonders: if one in six German banks is so unsafe even the ECB (which kept Cypriot banks going well past their insolvency) will give them a black stamp (because in Europe failing a bank stress test is first of all impossible since both Bankia and Dexia passed theirs with flying colours, but more importantly a death sentence), what does that leave for the rest of Europe's banks, all of which are in far more dire shape than sleepy Germany?

This very interesting news item appeared on the Zero Hedge website at 11:05 a.m. EDT on Thursday morning---and it's the first offering of the day from Manitoba reader U.M.

The Reckoning: Helmut Kohl Tapes Reveal a Man Full of Anger

Schwan recorded more than 600 hours of interviews with Kohl in a total of 105 conversations between March 12, 2001 and October 27, 2002. Even during his tenure in office, Kohl had ruminated over his place in history. He sees himself on a level with former German Chancellors Otto von Bismarck, Konrad Adenauer and Willy Brandt. He is probably justified in doing so.

In the Schwan conversations, Kohl's objective was to document his own view of the Kohl era -- they are an extremely valuable treasure for historians. And the tapes served as the basis for Kohl's three-volume memoirs, which were ghost-written by Schwan. The relationship between the two, however, has soured of late, with Kohl having sued Schwan for possession of the tapes, a spat which is likely to worsen with the release this week of Schwan's book about the interviews.

The interviews contain, at least in part, Kohl's "historic legacy," according to the December 2013 ruling of a Cologne court on the ownership of the tapes. And they add new facets to Kohl's image. They reveal him to be a man who views both his rivals and the world at large through the lens of a calculating machtpolitiker (power politician).

This long 4-part exposé appeared on the German website spiegel.de late Tuesday afternoon Europe time---and for content and length reasons, had to wait for today's column.  It is, of course, courtesy of Roy Stephens.

Europe will reconcile with Russia, and soon. It can’t afford not to

After months of escalating tensions over Ukraine and talk of a new cold war, Russia and the West could soon reach a surprising rapprochement. The eurozone economy is suffering badly and sanctions against Russia are partly to blame. Winter is also upon us, and that reminds every-one Vladimir Putin still holds the cards when it comes to supplying gas.

The clincher, though, is that Ukraine is heading towards financial meltdown. Unless an extremely large bailout is delivered soon, there will be a default, sending shock waves through the global economy. That’s a risk nobody wants to take — least of all Washington, London or Berlin.

Sanctions against Russia were always going to hit western Europe hard. The eurozone did 12 times as much trade with Russia as the United States did last year — that’s one reason Washington’s attitude towards corralling Russia’s economy has been somewhat more gung-ho.

This article appeared on the spectator.co.uk Internet site on Friday---and it's another contribution from reader B.V.

Putin says gas deal with Ukraine for winter months only, Poroshenko says no deal at all

Kiev and Moscow have failed to resolve their gas supplies dispute, Ukrainian President Petro Poroshenko said after meeting Russia’s leader. According to Putin, only an agreement for winter supplies has been reached, but details are still to be worked out.

“We agreed on the basic parameters of the gas contract,” Poroshenko told reporters in Milan where leaders from Europe and Asia gathered for the ASEM Summit. According to the Ukrainian president, the Ukrainian side is looking for sources of funding to pay off the arrears.

The optimistic statement came after Poroshenko met with Russian Energy Minister Aleksandr Novak and the head of Gazprom Aleksey Miller.

But emerging from a meeting Russia’s President Vladimir Putin later in the day, the Ukrainian leader said that no agreement had been reached. New talks have been scheduled for October 21; the E.U. is once again set to mediate the process.

This story showed up on the Russia Today website at 1:19 p.m. Moscow time on their Friday afternoon, which was 5:19 a.m. in New York.  It's the second offering of the day from Roy Stephens.

Putin: Ukraine's new Donbass law 'not perfect, but a step in right direction'

The new law giving special status to troubled regions in eastern Ukraine is 'not perfect,' but might be used to finally stabilize the situation in the area, Russian President Vladimir Putin said after a meeting with his Ukrainian counterpart in Milan.

"Perhaps it's not a perfect document, but it's a step in the right direction, and we hope it will be used in complete resolution of security problems," Putin said after closed-door talks with Ukrainian President Petro Poroshenko on Friday.

The two presidents met in Milan privately on the sidelines of the Asia-Europe Meeting (ASEM), a summit of Asian and European leaders.

The document on special status for the Donetsk and Lugansk regions was signed by Poroshenko on Thursday.

This Russia Today news item was posted on their Internet site at 5:51 p.m. Moscow time yesterday afternoon---and it's another contribution from Roy Stephens.

Putin says both sides in Ukraine’s conflict fail to implement Minsk accords

Russian President Vladimir Putin said that the warring sides in Ukraine are not implementing the Minsk accords to the full extent.

“The landmark for Ukraine’s settlement must be the Minsk agreements,” Putin told reporters after the Asia-Europe Meeting summit. “Unfortunately, these agreements are not being implemented by the both sides, either by Novorossiya’s militias or by Ukraine’s representatives.”

The Russian president said that “the Minsk agreements are not being implemented to the full extent due to a number of reasons - objective and subjective.”

“I proceed from the fact that all the sides should work for putting these agreements into practice,” he said.

This news item, filed from Milan, appeared on the itar-tass.com Internet site at 10:15 p.m. Moscow time yesterday evening---and I thank Roy Stephens for sending it.

U.S. dusted off old USSR-break-up strategy for use in Ukraine - former FSB chief

The current turmoil in Ukraine and the military conflicts in Georgia and the Caucasus are a direct result of the anti-Russian policy of the US administration, claims the former head of Russia’s Federal Security Service.

Nikolai Patrushev who headed the FSB from 1999 until 2008 said in an interview with the Russian government daily Rossiiskaya Gazeta that intelligence analysts established a current anti-Russian program being executed by American special services dates back to the 1970s, and is based on Zbigniew Brzezinski’s “strategy of weak spots”, the policy of turning the opponent’s potential problems into full scale crises.

The CIA decided that the most vulnerable spot in our country was its economy. After making a detailed model US specialists established that the Soviet economy suffered from excessive dependency from energy exports. Then, they developed a strategy to provoke the financial and economic insolvency of the Soviet state through both a sharp fall in budget income and significant hike in expenditures due to problems organized from outside,” Patrushev told reporters.

The result was the fall in oil prices together with the arms race, the war in Afghanistan, and anti-government movements in Poland, all of which eventually led to the breakup of the Soviet Union, said the former Russian security chief. He stressed that each of these factors bore hallmarks of US influence.

The Russians have long memories for those who transgress against them---and they certainly haven't forgotten what happened to them under Ronald Reagan back in the 1980s.  The piece I posted in yesterday's column headlined "How the Soviet Empire's Fall Was Engineered" is precisely what he's talking about in this Russia Today story.  It was posted on their website at 1:06 p.m. Moscow time on their Thursday afternoon---and this article is courtesy of reader B.V.

Russian Foreign Minister Lavrov speaks to the World — Paul Craig Roberts

Dear Readers, I now have for you the complete English transcript of Russian Foreign Minister Sergey Lavrov’s speech to the United Nations. Lavrov’s speech, together with President Putin’s remarks in his Serbian press conference (excerpts posted on this site) clearly indicate that the moral leader of the world is Russia, not Washington.

The Russians have come out of tyranny as America descends into tyranny. Washington’s barbarity in the world is unprecedented. For 13 years Americans have permitted their government to bomb women, children and village elders in seven countries based entirely on lies and the selfish interests of the ruling elite. Washington has spewed depleted uranium everywhere, causing massive birth defects and health problems. We must remember that Washington is the only government that dropped nuclear weapons on helpless civilian populations. The victims were Japanese when the Japanese government was trying to surrender.

Putin’s warning to the White House Fool that humanity’s existence requires that Obama “remember what consequences discord between major nuclear powers could bring for strategic stability” is a pointed demand that the White House Fool halt Washington’s aggression toward Russia. We have had enough, Putin said. We are a patient people, but we are running out of patience with your idiocy.

This is long, but definitely worth reading if you have the time.  It was posted on Paul's Internet site yesterday---and once again it's Roy Stephens bringing this story to our attention.

U.S. in controversial first talks with Syrian Kurdish party

U.S. officials have held direct talks for the first time with a Kurdish political party in Syria linked to Turkey’s PKK, seen by the U.S. and others as a terrorist organisation, the U.S. State Department said Thursday.

The talks with Syria’s Kurdish Democratic Union Party, known as the PYD, took place in Paris over the weekend and come as the U.S. seeks to build a wider coalition against the Islamic State group (IS).

“We have for some time had conversations through intermediaries with the PYD (Kurdish Democratic Union Party). We have engaged over the course of just last weekend with the PYD,” State Department spokeswoman Jen Psaki told a briefing.

The PYD has close ties to the PKK, a Turkish Kurdish party that waged a militant campaign for Kurdish rights and has threatened to abandon a peace process with Turkey in response to the current attack on the Syrian town of Kobane by IS militants.

This news story put in an appearance on the france24.com Internet site on Thursday sometime---and I thank Roy Stephens for another contribution to today's column.

ISIS fighters withdraw from Syria's embattled Kobani - Russia Today sources

Islamic State fighters have been driven out of Kobani, the Kurdish town that straddles the Syrian-Turkish border, after weeks of heavy fighting, according to Kurdish sources speaking to RT.

A Kurdish commander said that ISIS retreated overnight – withdrawing by 2 km east and 9 km west.

The Kurds are now clearing the city. The Islamists have left behind suicide bombers hiding in the ruins of the various buildings in the city.

"We can still hear sporadic gunfire and explosions coming from Kobani," RT's Murad Gazdiev reports from the Turkish-Syrian border.

However, a victory announcement from the Kurdish fighters is yet to be made because the whole of the city has not been secured.

This news item showed up on the Russia Today Internet site at 12:15 p.m. Moscow time on their Friday afternoon, which was 4:15 a.m. EDT.  My thanks go out to Roy Stephens once again.

The Chinese in Africa: Empire builders or new pioneers?

The influx of investment and people from China has become one of the defining narratives of Africa over the past two decades.

China, by all accounts, has identified Africa as the source of much-needed raw materials for its phenomenal growth, and Chinese business entrepreneurs see its sparsely populated interiors as a potential new frontier for manufactured goods.

This story of China in Africa has, however, largely been couched in government rhetoric and clouded by stereotypes.

Former New York Times Shanghai bureau chief Howard French attempts to lift the veil of secrecy that clouds many of the Chinese business dealings and give readers a glimpse of who the Chinese living and working in Africa really are.

This extremely interesting story is worth reading in my opinion.  It was posted on the South African website Mail & Guardian on Friday, October 10---and I thank South African reader B.V. for sending it our way last Saturday.

China Flinches---and Injects $32 Billion Into Banks

The country's central bank will inject $32 billion into the country's banking system, according to The Wall Street Journal. The capital will go to 2o major and regional banks.

This is what the government refers to as "targeted easing," but many analysts say that these small jolts of stimulus will simply worsen China's mounting debt problems without solving the root of the issue.

"China’s debt problem lies with the corporate sector," wrote Societe Generale analyst Wei Yao in a recent note. "The cure should be capacity consolidation and debt restructuring, rather than another stimulus package targeted to boost investment demand."

This article showed up on the businessinsider.com website at 11:47 a.m. EDT on Friday morning---and it's the second-last contribution from Roy Stephens.

China, Russia said to mull high-speed Moscow-Beijing rail line

China and Russia are considering building a high-speed rail line thousands of kilometres from Moscow to Beijing that would cut the journey time from six days on the celebrated Trans-Siberian to two, Chinese media reported Friday.

The project would cost more than $230 billion and be over 7,000 kilometres (4,350 miles) long, the Beijing Times reported -- more than three times the world's current longest high-speed line, from the Chinese capital to the southern city of Guangzhou.

The railway would be a powerful physical symbol of the ties that bind Moscow and Beijing, whose political relationship has roots dating from the Soviet era and who often vote together on the U.N. Security Council.

I had a companion story to this in yesterday's column headlined "China to put Russia on fast track to high-speed rail"---and that dealt with the new rail line from Moscow to Kazan, with a comment about the Beijing/Moscow system.  The above story is only about this huge project---and the Moscow/Kazan high-speed rail line is not even mentioned.

This AFP article appeared on the france24.com Internet site at 9:25 a.m. yesterday morning Europe time---and it's the final offering of the day from South African reader B.V., for which I thank him.

North Korea in grip of leadership tension

North Korean leader Kim Jong-eun's extended absence from public view opened a flood gate of rumors. It went from a military coup to broken ankles, with gout, diabetes and obesity also mentioned. International concern with Kim's absence was justified, given the immense power this 31-year-old leader inherited from his father, Kim Jong-il, who passed away in December 2011.

An objective assessment of Kim's dismal performance during the past two-and-one-half years is compelling: North Korea has become a more isolated and despised nation. The missile launches, nuclear test, threats of a pre-emptive nuclear attack, the brutal execution of his uncle, Jang Song-thaek, and the routine vitriol coming out of Pyongyang all contributed to North Korea's pariah status.

Thus the initial hope that this young leader would move North Korea in a more positive direction gave way to despair, when North Korea assumed a more strident and belligerent attitude; an attitude that alienated its leadership from all countries, including China. It would not have been unreasonable to assess that this period of failed leadership was the catalyst for a military coup by those seniors in North Korea who wanted to reverse this negative trajectory; who wanted North Korea to engage economically with the international community and have United Nations sanctions lifted. Indeed, it could have been those in North Korea who wanted to re-establish North Korea's special relationship with a China that provides North Korea with the crude oil, aviation fuel and food aid necessary for the well-being of the country.

This commentary showed up on the Hong Kong website Asia Times site on Friday---and it's the final offering of the day from Roy Stephens, for which I thank him on your behalf.

LBMA gets 8 proposals to replace century-old gold fixing

Intercontinental Exchange Inc., the London Metal Exchange, and CME Group Inc. and Thomson Reuters Corp. are among firms shortlisted to develop and run a replacement for the century-old London gold fixing benchmark.

Autilla Ltd. (Sapient) and EBS are also on the short list, the London Bullion Market Association said in a statement today. Ten companies submitted eight proposals, some of them joint.

The LBMA, which said last week firms will present at a seminar on Oct. 24, expects a market consensus to emerge next month and the chosen method adopted by year-end or early 2015.

The 'fix' will still be in no matter who runs it---and it certainly won't be any more transparent than it already is.  This Bloomberg story, filed from London, appeared on their website at 10:13 a.m. Denver time yesterday morning---and I found it embedded in a GATA release.

LBMA names Morgan Stanley as gold/silver market maker

The London Bullion Market Association (LBMA) said on Thursday it appointed Morgan Stanley as a market maker, underscoring the ambitions of some banks to expand into precious metals trading while others exit due to stringent regulations.

LBMA said it named Morgan Stanley & Co International Plc, a unit of U.S. investment bank Morgan Stanley, as a spot and options market-making member effective Thursday.

Currently, LBMA has 13 market makers which serve in either one, two or all three of the spot, options and forwards markets. They make markets by quoting two-way prices in both gold and silver products to other market makers.

Just three weeks ago, LBMA named Citigroup as a spot market-making member.

It's a very safe bet that Morgan Stanley and Citigroup are two of the big gold and silver shorts on the Comex---and handily fall into the 'Big 4' or 'Big 8' Commercial trader category.  They've always been there, but not as market makers.  I found this Reuters story, which was filed from New York yesterday, on the mineweb.com Internet site in the wee hours of this morning.

LME takes battle to Washington after London warehouses win

Fresh from a court win in Britain, the London Metal Exchange now faces one of its biggest hurdles yet in its years-long crisis over its warehousing policy that consumers say has inflated prices: convincing U.S. lawmakers its reforms are enough.

When Britain's Court of Appeal handed a victory to the LME last week, knocking out a challenge to the reforms by Russian aluminum giant Rusal last week, the LME's head of business development, Matt Chamberlain, was in Washington, a source familiar with the matter said.

Chamberlain was there to plead the exchange's case with lawmakers who have been pushing for even greater change to the LME's warehouse policy.

Senator Sherrod Brown was among the people the LME visited, a spokeswoman for the Senator said. The Ohio Democrat has been a fierce critic of the LME, urging U.S. regulators to crack down on the 137-year old exchange, and threatening to write rules that would compel regulators to intensify oversight of the exchange on U.S. turf.

This Reuters news item, filed from New York, showed up on the mineweb.com Internet site on Friday sometime---and it's courtesy of Manitoba reader U.M.

Riddle of inventory levels keeps platinum investors shy

Investors are unlikely to rush back into platinum any time soon after a minimal price reaction to its biggest-ever supply shock highlighted a major problem: no-one knows how much metal exists above ground or more importantly who holds it.

Analysts predicted a surging market as a record five-month labour stoppage in top producer South Africa wiped out more than one million ounces of output worth $1.28 billion.

Yet platinum, used mostly in automotive catalytic converters which clean up exhaust emissions, also failed to react to a 2.4 million ounce accumulation of metal into exchange-traded funds since 2010. The metal has lost seven percent this year and now sits close to 2009 levels around $1,200 an ounce.

Well, dear reader, I'd like to remind you of the two earlier stories in today's column about 'media lies and fabrications'---and I'd just like you to keep that it mind when you read this Reuters piece, filed from London yesterday---and posted on the mineweb.com Internet site.  It's the second offering in a row from reader U.M.

“Save Our Swiss Gold ” - Game Changer For Gold?

We believe that the “Save Our Swiss Gold” campaign has the potential to be a game changer in the gold market - both in terms of the ramifications for the current global monetary system and in terms of higher gold prices. 

There has been a lack of coverage of this important story and there is therefore a lack of awareness about the possible implications for the gold market. Thus, in the weeks prior to the referendum on November 30th, we are going to analyse the referendum, the important context to the referendum and the ramifications of a yes or a no vote. - Mark O’Byrne, Head of Research, GoldCore

Here's another longish commentary on what the ramifications of a 'yes' vote in Switzerland will have on the gold market.  It's certainly worth reading if you have the time---and it was posted on the goldcore.com Internet site yesterday.  I thank reader M.A. for sending it along.

Jim Rickards Interviewed for Anglo Far-East's Physical Gold Fund

This 40:15 minute interview conducted by John Ward appeared on the physicalgoldfund.com Internet site---and I thank Harold Jacobsen for sharing it with us.  But if you go through the list of topics being discussed, you'll see a lot of familiar themes, which I'm sure he's updated based on current events.

I haven't listened to it yet, but it will be on my "to do" list for today or tomorrow.

China gold production seen falling, prompting more imports

Growth in gold mine output from number one producer China is set to slow significantly in coming years in the face of declining ore grades and waning profitability, analysts Business Monitor International said on Friday.

Lower mine production will pave the way for rising imports to meet persistent strength in demand from Chinese consumers, BMI analyst Xinying Chia said, while domestic mining companies will also look overseas to boost production.

In an interview with the Reuters Global Gold Forum, Hong Kong-based Chia said Chinese mine output growth was expected to slide to 0.9 percent in 2018, from around 6 percent this year.

"Many domestic miners are grappling with the problems of depleting reserves, falling ore grades and rising cash costs," Chia said.

This Reuters article, filed from London, appeared on their Internet site at 8:28 a.m. EDT on Friday---and it's another article I found posted on the gata.org Internet site.

The sky is falling! Should you buy gold and silver?

Fear is stalking the global stock markets. Stock indices have been falling back sharply seeing a move to what might be seemed safer assets like bonds and gold. The falls have been precipitated by some poor economic data suggesting that most major economies are not out of the recessionary mire yet and, in the U.S. in particular, the realisation that the Fed is getting down to near eliminating its latest Quantitative Easing programme in total, although there may be some succour in that it tends to be putting back the day that it may allow interest rates to rise. And what happens in the U.S. markets tends to have a strong follow-through impact on markets in other parts of the world. 

A number of pundits have been predicting a stock market crash for some time now. The investing public though, just as it has in the past ahead of previous stock price crashes, has ignored this, seeing the market as an ever-increasing money-making mechanism. Thus the world’s major stock indices have been on a tear moving higher and higher without there being anything serious in the way of increasing corporate profits to support this. Suddenly it could all come crashing down – that’s what has happened in the past. While the Dow, S&P, TSX, FTSE, DAX etc. are not yet in free fall they are beginning to look like they could be heading that way.

So, should one buy gold as the safe haven it has proven to be in the past. Inflation – which is generally assumed to be gold-positive – just has not happened despite the vast amounts of liquidity the U.S. Fed and other central banks have pumped into the markets. Indeed much of the talk now is about the increasing possibility of deflation. What most don’t realise is that gold performs just as well, if not better, in a deflationary environment vis-a-vis the stock markets than it does in an inflationary scenario.

This commentary by Lawrence Williams showed up on the mineweb.com Internet site on Friday---and my thanks go out to Manitoba reader U.M. for her final offering in today's column.

¤ The Funnies

¤ The Wrap

While both fell about the same percentage over the past few months, some important distinctions between oil and silver are that silver is at record extremes of managed money short selling---and well below the cost of production for primary producers.  Crude oil prices may have fallen enough to reverse upward here or soon, but silver is more advanced on both counts. Plus, there are continued signs that the supply/demand situation is relatively tighter in silver than they are in crude oil.

Lastly, silver is a natural as a safe haven demand in what are increasingly tenuous financial times. Yes, it’s true that silver has been underperforming just about everything under the sun for some time, but that has only resulted in it becoming more of an outstanding undervalued asset. Silver investment demand has, can, and will turn into a torrent at a moment’s notice and if ever there were a time for it to soar, that time would appear to at hand. - Silver analyst Ted Butler: 15 October 2014

I've got two pop 'blasts from the past' for you today---and both by the same group, as they were the only two big hits they had back in the late 1970s---but what hits they were!  It's been more than a year since I posted them last, so it's time for a revisit.   The group is 'The Babys'---and although the name may not ring a bell, the tunes are classics.  The lead singer, John Waite, as wonderful as he is, is bested by the girls singing back-up vocals.  They're just terrific.  The link to the first recording is here---and the second one is linked here.

Today's classical 'blast from the past' was first performed in what is now called Oslo in Norway back on 24 February 1876.  It's the incidental music from Henrik Ibsen's 5-act play, Peer Gynt.  The play is not performed often in North America; but the music, written by Norway's legendary composer Edvard Grieg---who composed this music in his very early 30s---has found a permanent home in the classical repertoire---and rightfully so.

I, for one, never tire of listening to it.  This youtube.com video was uploaded on 05 May 2013---and has already had 675,000 hits, which is a monstrous number for a classical work.  The quality of the audio and video is first rate---and best watched 'full screen'.  The Spanish Radio and Television Symphony Orchestra [based out of Madrid] do the honours here---and the performance is as good as it gets.  Guillermo Garcia Calvo conducts. The link is here.

The memories of the potential for a global meltdown in all things paper---and the melt up in all things physical everywhere on Planet Earth on Wednesday---is almost a distant memory now.  There were lots of voice out there saying that everything was fine---and that there was "nothing to see here, folks---please move along."  But, as Doug Noland pointed out in his weekly Credit Bubble Bulletin in the Critical Reads section, The Truman Show continues---as "this past week did offer further evidence that history’s greatest financial Bubble is at significant risk."

That would be an understatement.

Since that event, the gold and silver prices have been mostly in lock down, even though JPMorgan et al continued to engineer the price lower on platinum, palladium, copper and crude oil, which continued up until trading ended on Thursday in New York.

Here are the 6-month charts for all the 'Big 6' commodities.  Copper matched its Thursday low tick in Friday trading---and platinum, palladium and copper all finished off their low ticks of Thursday.

Looking at the precious metal equities, the price action yesterday was out of all proportion to the intraday and closing price of these two metals---and that's not the first time that we've seen this counterintuitive share price action lately.

As I mentioned earlier this week, John Embry has always suspected [as have I] that the powers-that-be were actively intervening in the precious metal equity markets---and yesterday's share price action seemed to fall into that category as well.

Looking back at the week, it's a certainty that if it hadn't been for the Plunge Protection Team's active intervention in the markets at 9:40 a.m. EDT on Wednesday, it would certainly be a different world today.

Doug Noland put it this way: "I find the backdrop surreal. And the more everyone acts as if it’s all business as usual, the more worried I get. As crazy as I know it sounds, I am these days reminded of my bewilderment when studying the period leading up to the 1929 stock market crash. How could they not have seen it coming? How could everyone remain so bullish (“a permanently high plateau”) considering what in hindsight was an obvious – and quite ominous – deterioration in the market and global economic outlook. I also think often of a quote from that period: “Everyone was determined to hold their ground, but the ground gave way.” Can the world’s central bankers hold everything up?"

Who knows for sure, dear reader, but they've been at it in the U.S. ever since the PPT intervened in the crash of 1987---and 27 years later, the bubble in all thing paper has become global in scope.  The attempt by the world's stock markets to return to their intrinsic values on Wednesday was, once again, thwarted---but Jim Rickards' snowflakes continue to fall.

Sooner or later the forces of nature---and the markets---will not be denied.  At that point the Fed will get buried---and the ball will be in the IMF's court, SDRs in hand.   It's my bet that they'll be backed by gold---and the gold price used to back them will be many orders of magnitude higher than it is now.

Before heading off to bed, I'm excited to announce the premiere of Casey Research's documentary-style film on the only way for American’s to legally minimize their taxes without leaving the U.S. in America’s Tax-Free Zone, a FREE online video – which premiered on Thursday to the International Man audience.

This documentary runs almost half an hour and features a discussion of the current tax situation in Puerto Rico and, generally, how to take advantage of it---with guest commentators, Doug Casey and Peter Schiff, as well as several others.  You can check it out by clicking here.

That's all I have for the day---and the week.  I hope you enjoy what's left of your weekend---and I'll see you here on Tuesday---Wednesday if you live just west of the Dateline.

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