The slight bump above the $1,200 spot price shortly after 3 p.m. Hong Kong time turned out to be the high tick of the day on Friday. From that point, it took the rest of the London and New York trading sessions to shave about seven buck off the price. The highs and lows aren't worth the effort of looking up.
Gold finished the trading day yesterday at $1,194.20 spot, down $3.70 from Thursday's close. Net volume was very quiet at 74,000 contracts.
The silver price spent most of yesterday trying to break above the $16 spot price mark---and finally succeeded in a smallish rally that began the moment the London p.m. gold fix was done for the day. After that it chopped sideways for the remainder of the New York trading session.
The low and high ticks were reported by the CME Group as $15.83 and $16.11 in the March contract.
Silver finished the day on Friday at $16.065 spot, up 19 cents from Thursday. Net volume was 23,000 contracts.
Platinum did even less than gold, as it traded in a ten dollar price range for the entire session yesterday---and its attempt to breach the $1,200 spot price mark in afternoon trading in Hong Kong was somewhat less than successful. Platinum closed at $1,196 spot, down 2 bucks from Thursday.
Palladium did even less from a price perspective, at least up until around 1 p.m. in Zurich---and then away it went to the upside. The rally ended around 12:30 p.m. in New York---and didn't do much after that. Palladium closed the day back above the $800 mark at $804 spot, up 13 dollars from Thursday's close.
The dollar index closed late on Thursday afternoon in New York at 89.23---and then didn't make a move of any significance until shortly before 10 a.m. in New York. By 11:45 EST the index was at its 89.62 high---and traded virtually ruler flat after that, finishing the Friday session at 89.60---up another 37 basis points.
The gold stocks opened down a percent or so, but within fifteen minutes, they were in positive territory. But starting shortly after 10:30 a.m. EST, they began to chop quietly lower---and they slid into negative territory to stay shortly before noon. The HUI finished down 1.18%.
The silver equities started the trading session in a similar manner, but once in positive territory, stayed there. At one point they were up well over 3 percent, but by the end of the day, Nick Laird's Intraday Silver Sentiment Index closed up only 1.31%. We'll take it!
The CME Daily Delivery Report showed that 3 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.
The CME Preliminary Report for the Friday trading session showed that December's gold open interest declined by 156 contracts---and is now down to 584 contracts still open. And for the third day in a row, December open interest remained unchanged at 101 contracts.
I was happy to see that an authorized participant added a decent amount of gold to GLD yesterday. This time it was 96,069 troy ounces. There was a withdrawal of 862,004 troy ounces from SLV.
Once again there was no sales report from the U.S. Mint.
There was little in/out movement in gold and the COMEX-approved depositories on Thursday. Nothing was reported received---and 3,408 troy ounces were shipped out. In/out shipments were far more substantial in silver, as 301,576 troy ounces were received---and 872,352 troy ounces were shipped out.
The Commitment of Traders Report, for positions held at the close of trading on Tuesday, wasn't anywhere near as good as either Ted or I were hoping for---but there's a decent possibility that not all of Tuesday's price/volume action was included in the report. If that in fact is the case, then we'll have to wait for the next COT Report, which won't show up on the CFTC's website until Monday, December 29.
In silver, the Commercial net short position declined by only 1,360 contracts, or 6.8 million troy ounces. The net short position in silver edged down to 170 million ounces, which is nowhere near bullish territory.
Ted says the Big 4 Commercial traders increased their short position by a smallish 300 contracts---and the remaining '5 through 8' big traders increased their short position by 600 contracts. Ted says the JPMorgan's short position is still around the 10,000 contracts mark, or 50 million ounces.
Under the hood in the Disaggregated COT Report, the Managed Money added 3,740 contracts to their short positions---and sold 529 long contracts. The raptors, the Commercial traders other than the 'Big 8', took the other side of all trades from the Big 8 and Managed Money traders.
In gold, the Commercial net short position declined by about the same number of contracts in silver. In this case it was 1,510 contracts, or 151,000 troy ounces. The Commercial net short position in gold now sits at 11.51 million troy ounces.
The Big 8 short traders continue to whittle away at their overall COMEX short position in in this metal---and that was the case again this week. Their short position is now down to the lowest its been in almost five years. Ted says that JPMorgan's COMEX long position in gold is still around the 10,000 contract mark.
Under the hood, the Managed Money traders covered 4,239 contracts of their short position---but also sold 3,077 contracts of their long position.
In actual fact, there's not much to see in this report and, as always, it seems like we're waiting for the next report to add clarity to the one we've just been handed.
It came as no surprise to me that The Central Bank of the Russian Federation added more gold to their reserves. Since the 20th of the month fell on the weekend, they updated their website with November's data yesterday---and it showed that they purchased another 600,000 troy ounces during that month. This is close to one month of Russian gold production. Here's Nick Laird's most excellent chart showing this.
My back-of-the-envelope calculation shows that Russia's central bank has purchased 152.4 tonnes of gold for their reserves so far this year. Of course the big question will be what they do in December---add, sell, or stand pat---and we won't know until they update their website with December's data on Tuesday, January 20, 2015.
Now, if the Russian central bank could just be talked into buying all their silver production for the next five years, an action such as that would certainly be the talk of the town---and silver's current spot price would be history in a heartbeat.
Nick also passed around two other charts that involve Russia's gold reserves. One shows their value in U.S. dollars over the years---and the other in Russian roubles. These charts are current as of the end of November---and both of them would looks substantially different if month-to-date data for December could be added in. No further proof is necessary to show that gold protects against currency debasement.
I have a decent number of stories for a Saturday, including a reasonable number that I've been saving for length or content reason.
Six years after President George W. Bush began the auto bailout, the Obama administration on Friday declared a profitable end to the sweeping federal interventions in Wall Street and Detroit, saying a final sale of stock from General Motors’ former finance arm had closed a turbulent chapter of the financial crisis.
The programs “that helped restart the flow of credit to meet the critical needs of small businesses and consumers are now closed,” declared Treasury Secretary Jacob J. Lew. “And while the goal was always to stabilize the economy, and not to make a profit, it is important to recognize the return we have earned for taxpayers.”
The government actions, initially seen as necessary in Washington and on Wall Street to prevent a collapse of the economy on the order of the Great Depression, agitated the political world, helping give rise to the Tea Party movement on the right and the Occupy Wall Street movement on the left. And even as the nation climbed out of recession and slowly recovered, many Americans were left with little trust in the nation’s government and financial institutions.
This news item, filed from Washington, appeared on The New York Times website on Friday---and the 'thought police' have provided a new headline. It now reads "U.S. Declares Bank and Auto Bailouts Over, and Profitable". I thank Phil Barlett for today's first story.
Banks added to their wins in Washington this month by getting a reprieve from the Volcker Rule that will let them hold onto billions of dollars in private-equity and hedge-fund investments for at least two more years.
The Federal Reserve granted the delay yesterday after banks said selling the stakes quickly might force them to accept discount prices. Goldman Sachs Group Inc. has $11.4 billion in private-equity funds, hedge funds and similar investments, while Morgan Stanley has $5 billion, securities filings show.
“This is a great holiday present by the Fed,” said Ernest Patrikis, a former Federal Reserve Bank of New York general counsel who is now a partner at White & Case LLP.
This Bloomberg article, filed from Washington, appeared on their website at 10:00 p.m. Denver time on Thursday evening---and it's the second offering in a row from Phil Barlett.
As the headlines have made clear for years, JP Morgan Chase has a long rap sheet of illegal conduct and, although overlooked, it includes enabling Bernie Madoff's $64.8 billion Ponzi scheme, the largest in history, which caused net losses of more than $17 billion and untold human wreckage.
Six years ago on December 11, 2008, federal agents arrested Madoff, the ringleader of the Ponzi scheme -- as a coda to an age of regulator and prosecutorial incompetence and neglect, Madoff was not caught; he was arrested after turning himself in. This happened in the middle of the largest financial crash since 1929, when the country's economy was collapsing and when a second Great Depression was a very real possibility. Although not responsible for the crash and collapse, Madoff in handcuffs was in some ways the face of Wall Street greed and criminality.
However, that is a false and misleading picture of crime on Wall Street.
After all, how could this one guy possibly pull off such a crime and at that scale and for so long? He couldn't have and didn't. Like most substantial illegal and criminal financial activities, Madoff had a very close relationship with a big Wall Street bank: JP Morgan Chase, the country's largest bank. Given the focus on the crash and economic calamity in 2008 and JP Morgan Chase's years-long efforts to prevent any information from being publicly disclosed, JP Morgan's role in enabling this massive crime wasn't publicly known for years.
This commentary appeared on the Huffington Post Internet site at 2:02 p.m. yesterday---and I thank Harry Grant for sliding it into my in-box shortly after I'd filed today's missive.
At the Justice Department, senior officials like to congratulate themselves on the headline-making, big bucks settlements they have imposed upon banks and lenders for their part in causing the 2008 mortgage meltdown that sparked the biggest American financial crisis since the Great Depression.
But wait a moment. Those settlement figures are not quite what they seem. Buried deep in the announcements of the astronomical sums that Wall Street banks are being forced to pay is a dirty secret: A big chunk of the hundreds of billions of dollars banks have paid in settlements to various federal agencies and regulators since 2010 is deductible from the taxes banks and lenders pay.
When is a fine not a fine? When it can be put against your tax bill.
Because settlements can be deducted from tax liabilities, for nearly every dollar a bank or lender has pledged to pay in cash or pony up in other ways—such as through buying back soured mortgage-backed securities, extending cheaper loans or forgiving failed loans held by struggling homeowners—up to 35 cents will find its way back into bank coffers, a reflection of the 35 percent federal corporate tax rate.
This very interesting article appeared on the newsweek.com Internet site way back on October 27---and I found it in a GATA release yesterday.
If forced to venture a guess, I’d say the Chinese were actively supporting the ruble and Russian debt on Wednesday and Thursday. Early Thursday from Reuters: “China is closely monitoring the slide in the Russian rouble, the foreign exchange regulator said on Thursday, as the currency of one of its major energy importers struggles to avoid a free-fall… Chinese Foreign Ministry spokesman Qin Gang, speaking at a later news conference, added that he believed Russia would overcome its problems. ‘Russia has rich resources, quite a good industrial base. We believe that Russia has the ability to overcome its temporary difficulties,’ Qin said.”
I’ll speculate that the Chinese were becoming increasingly nervous – nervous about Russia, nervous about EM [Emerging Markets] and nervous about China. Global markets on Tuesday again found themselves at the precipice. The ruble collapse was inciting a more general flight out of EM currencies, bonds and stocks. Marketplace liquidity was evaporating – leading to brutal contagion at the Periphery and increasingly destabilizing de-risking/de-leveraging at the Core. In short, Bubble Off was taking over – in yet another market “critical juncture.” The ruble (miraculously) reversed course, EM rallied, global markets for the most part reversed and the “Core” U.S. equities market took flight. From Wednesday lows to Friday’s highs, the Dow surged 800 points, or 4.7%. Bubble On. “Risk on” no longer does justice.
Most would likely challenge my view of the markets being on the “precipice” during Tuesday trading. Let me back up my claim. Tuesday trading saw a major Emerging Market CDS (Credit default swap) index jump to the highest level since the tumultuous summer of 2012.
My thesis has been that the “global government finance Bubble” has burst at the Periphery. EM sovereign, corporate and financial debt is the global “system’s” weak link. Dollar-denominated EM debt in particular is unfolding crisis’ “toxic” debt. Regrettably, Brazil is right in the thick of it---and last week I wrote that the EM dollar-denominated debt dam had given way. This dynamic was clearly in play early in the week.
I've been waiting for Doug's Friday Credit Bubble Bulletin all week long---and now that it's up at the prudentbear.com Internet site, it doesn't disappoint. It's the most important must read in today's column---and I found it there before reader U.D. could pass it around.
The U.S. government's transferring to itself this month liabilities for defaulted derivatives resulting from bank failures is alarming for the haste with which it was enacted, GoldMoney research director Alasdair Macleod writes on Friday.
"Instead of a normal consultative procedure allowing the legislators to draft the appropriate clause," Macleod writes, "the wording was lifted at short notice from a submission by Citibank, which has some $61 trillion worth of derivatives on its own books, with virtually no alterations. Either the insertion was correcting an oversight at the very last minute or, alternatively, it has suddenly become an urgent matter for the too-big-to-fail banks. The coincidence of current market volatility and this hurried legislation cannot be lightly dismissed and suggests it is the latter."
Macleod's commentary is headlined "Derivatives and Mass Financial Destruction" and it's posted at GoldMoney's Internet site---and it's definitely worth reading. I found it on the gata.org Internet site---and I thank Chris Powell for wordsmithing "all of the above".
A dangerous new trend is the successful manipulation of the financial markets by the Federal Reserve, other central banks, private banks, and the US Treasury. The Federal Reserve reduced real interest rates on US government debt obligations first to zero and then pushed real interest rates into negative territory. Today the government charges you for the privilege of purchasing its bonds.
People pay to park their money in Treasury debt obligations, because they do not trust the banks and they know that the government can print the money to pay off the bonds. Today Treasury bond investors pay a fee in order to guarantee that they will receive the nominal face value (minus the fee) of their investment in government debt instruments.
The fee is paid in a premium, which raises the cost of the debt instrument above its face value and is paid again in accepting a negative rate of return, as the interest rate is less than the inflation rate.
Think about this for a minute. Allegedly the US is experiencing economic recovery. Normally with rising economic activity interest rates rise as consumers and investors bid for credit. But not in this “recovery.”
This commentary by Paul showed up on his web site on Wednesday. Several readers were kind enough to send it my way, but until now I've decided to pass on it. It's worth reading as well---and I thank David Caron for sending me this copy of it.
Normalization of relations with Cuba is not the result of a diplomatic breakthrough or a change of heart on the part of Washington. Normalization is a result of US corporations seeking profit opportunities in Cuba, such as developing broadband Internet markets in Cuba.
Before the American left and the Cuban government find happiness in the normalization, they should consider that with normalization comes American money and a US Embassy. The American money will take over the Cuban economy. The embassy will be a home for CIA operatives to subvert the Cuban government. The embassy will provide a base from which the US can establish NGOs whose gullible members can be called to street protest at the right time, as in Kiev, and the embassy will make it possible for Washington to groom a new set of political leaders.
In short, normalization of relations means regime change in Cuba. Soon Cuba will be another of Washington’s vassal states.
This short commentary by Paul pretty much sums up what Washington's plans are for Cuba---and it was posted on his Internet site yesterday. I thank Dan Lazicki for sharing it with us.
A City banker has been arrested by the Serious Fraud Office in connection with its investigation into the rigging of the £3.5 trillion-a-day foreign exchange markets.
The banker is the first person to be detained in connection with the global foreign exchange rate-rigging scandal and was held following a dawn raid on his Essex home.
“In connection with a Serious Fraud Office investigation, we can confirm one man was arrested in Billericay on 19 December,” an SFO spokesman said. “ Officers from the City of London Police assisted with the operation.”
The arrest follows a record-breaking £2bn fine imposed on five global banks for their role in the scandal. About 30 bankers have been sacked or suspended but until now no arrests have been made.
This article, which is definitely worth reading, appeared on The Guardian website at 4:26 p.m. GMT on Friday afternoon and its the first offering of the day from South African reader B.V.
The North Sea oil industry could lose 15,000 jobs in Scotland and production might fall by 10pc as drillers cut back in response to falling oil prices but predictions that the region is “close to collapse” are exaggerated, Sir Ian Wood has said.
Sir Ian was responding to comments made by Robin Allan, chairman of the independent oil explorers association Brindex, who said yesterday that it is now “almost impossible to make money” in the North Sea with prices at levels around $60 per barrel.
However, Sir Ian – who is one of the most respected figures in the UK oil industry and who recently led the Government review into maximizing North Sea output – also warned that drillers faced a “tough time” ahead.
"It’s important to have a balanced perspective at this time,” he said in statement. “The UKCS (UK Continental Shelf) does face a very difficult year to 18 months which will see a slow down in investment, the loss of some offshore production, up to 10pc, and the possible loss of around 15,000 jobs within an industry which employs 375,000, although this is difficult to estimate.”
This news item put in an appearance on the telegraph.co.uk Internet site at 1:40 p.m. GMT yesterday afternoon---and it's the second offering in a row from reader B.V.
A former employee of Geneva-based private bank Reyl has been handed a two year suspended prison sentence for violating confidentiality agreements. He had alleged in 2013 that around 15 French politicians had secret accounts with the bank.
Pierre-Gerbier Condamin admitted sharing financial information and violating trade secrets to the Federal Criminal Court in Bellinzona that pronounced the verdict on Friday.
He also admitted to fabricating the list of French tax evaders and falsifying documents to prove its existence.
In 2013, Condamin claimed that he held a list of well-known French names with undeclared Swiss bank accounts and had testified at a French parliamentary commission investigation into tax evasion charges against former French budget minister Jerôme Cahuzac.
This article was posted on the swissinfo.ch Internet site at 4:52 p.m. Europe time yesterday---and it's courtesy of Harry Grant.
A lawmaker from a small right-wing party claimed Friday he had been offered a bribe worth up to 3 million euros ($3.68 million) to vote in favor of electing Greece's new president, in the latest twist in the bailed-out country's fraught presidential vote.
Greece faces early general elections if its 300-member parliament fails to elect a president by the third round of voting on Dec. 29. In Wednesday's first round, the sole candidate and government nominee garnered 160 votes; 180 are needed for election.
Actor Pavlos Haikalis of the Independent Greeks claimed during a phone-in to a live television program that he was offered about 700,000 euros in cash, a loan repayment and advertising contracts, with the alleged bribe's total value amounting to about 2-3 million euros ($2.4-$3.7 million). He didn't identify the person, but said he had informed a prosecutor about two weeks ago and had turned over audio and video material.
Haikalis later alleged that the man who contacted him claimed to be acting on behalf of Prime Minister Antonis Samaras and a banker.
This AP story was picked up by the uk.news.yahoo.com Internet site late yesterday afternoon Europe time---and I borrowed the headline from the Zero Hedge spin on this story. I thank Harry Grant once again for bringing it to our attention.
Greek-Cypriot Attorney General Costas Clerides announced that five Bank of Cyprus officials are facing serious charges that could result to 20-year prison sentences.
The Bank of Cyprus is the bailed in lender of the country whose economy faced difficulties in 2012. The five Bank of Cyprus officials will be the first bankers to be charged in the collapse of the country’s primary lender, which had to seize 47.5 percent of deposits over 100,000 euros in order recapitalize.
he five men who will be charged are Andreas Eliades, former Bank of Cyprus CEO, Yiannis Kypris, current CEO, Theodoros Aristodemou, former board chairman, Andreas Artemi, former board vice chairman and Yiannis Pehlivanidis, the former deputy CEO who overlooked the bank’s operations in Greece. Furthermore, the Bank of Cyprus, as a legal entity, will also be charged.
Following a year-long criminal investigation, the five men are facing charges of stock market manipulation, providing false and misleading statements, failing to provide information to investors, as well as other charges that have yet to be been announced.
This news item was posted on the greekreporter.com Internet site on Thursday sometime---and it's the third contribution in a row from reader Harry Grant.
Although Washington (Kerry) is ostensibly moderating in some ways (but not including sending lethal materiel to Ukraine and NATO for a potential confrontation with Russia), Putin may now be counting to the EU to split away from the march to war. Europe cannot punish Russia through sanctions at the behest of Washington without ruining its own economy. Putin recognizes this as increasingly do Europeans. There is discussion in Russia and Europe about the crisis and (still) none in the United States. Cohen is very worried about the lack of discussion in the United States and this may be the basis for the disastrous foreign policy disasters of the past three presidents.
Putin, the statesman, does not want war in Europe, and Cohen may not want to think about whether Washington does want war. He does, however, once more put all the blame for this mess with Washington. Meanwhile Kiev is spending on military materiel and not on energy for heat and electricity for its freezing population - certainly with pressure from Washington. To nullify the Ukraine problem Putin has three options. 1) invade Ukraine and put a new government in Kiev; 2) cease all trade with Ukraine and send home 3 million Ukrainian workers residing in Russia (likely with the growing economic problems anyway); 3) take Ukraine to court and force capitulation through bankruptcy. I suspect Putin will pick #3 if time permits. We are reminded that Putin has not treated west Ukraine as an enemy state but instead has tried to negotiate a peaceful settlement throughout this crisis. This is rarely even hinted about in North American [N.A.] prostitute articles from leading news sources. Propaganda in N.A. trumps reality thoroughly.
Cohen also sees a danger for Ukraine to disintegrate and some of its territory going to Hungary and Poland - as this ethnic mix is present in numbers in the west of the country for this to become attractive to those governments. Putin would not consider a failed state on its borders an advantage to anyone - thus his ostensible policy of appeasement and appeal to reason and law. Appeals for U.N. involvement have so far yielded nothing for him to end the crisis. We should also blame Washington for this.
This 39:46 minute audio commentary, with no transcript, was posted on the johnbatchelorshow.com Internet site on Tuesday---and I thank Larry Galearis for sharing it with us.
The Ukraine Freedom Support Act, signed by US President Barack Obama on Thursday, authorizes providing anti-tank weapons, surveillance drones to Ukraine, and allows the White House to impose sanctions on Russian energy giant Gazprom and arms exporter Rosoboronexport.
The bill, “the Ukraine Freedom Support Act of 2014,” authorizes but does not mandate the president to impose expanded sanctions against Russia’s defense, energy and financial sectors. On Ukraine, the bill calls for support – from providing lethal weapons to reducing energy dependence. Several national security provisions in the bill, as well as the wording of certain sections give the president flexibility in the implementation of the text.
''The President is authorized to provide defense articles, defense services, and training to the Government of Ukraine for the purpose of countering offensive weapons and reestablishing the sovereignty and territorial integrity of Ukraine, including anti-tank and anti-armor weapons, crew weapons and ammunition, counter-artillery radars to identify and target artillery batteries, fire control, range finder, and optical and guidance and control equipment, tactical troop-operated surveillance drones, and secure command and communications equipment,'' the document reads.
This story, filed from Washington, appeared on the sputniknews.com Internet site at 7:50 a.m. Moscow time on their Friday morning, which was ten minutes before midnight in New York on Thursday evening. I thank reader M.A. for sending it.
Ukraine’s credit rating was cut by Standard& Poor’s, which said a default could become inevitable as central bank reserves are melting and a bailout is being held up as fighting in the country’s easternmost regions continues.
S&P lowered the long-term sovereign rating one level to CCC-, nine steps below investment grade, assigning a negative outlook, according to a report published today. The country’s 2017 dollar bonds gained, the hryvnia was little changed.
“A default could become inevitable in the next few months if circumstances do not change, for instance if additional international financial support is not forthcoming,” S&P analysts led by Ana Jelenkovic said in a statement from London.
Ukraine’s government needs $15 billion on top of a $17 billion international bailout, according to the European Union, to stay afloat as the bloodiest conflict since World War II ravages industry in the country’s Donetsk and Luhansk regions. The government estimates gross domestic product will contract 7 percent this year, while foreign reserves are at the lowest in more than a decade.
This Bloomberg story, filed from Kiev, appeared on their website at 1:19 p.m. MST yesterday afternoon---and I thank Manitoba reader U.M. for her first contribution to today's column.
Belarusian President Alexander Lukashenko has ordered his cabinet ministers to stop trading using the Russian rouble. Instead, the country - who is one of Russia’s closest allies - will trade only in dollars or euros, after Russian President Vladimir Putin admitted on Thursday his country may be on the verge of a two year recession.
“Lately I keep hearing that the Russian rouble is falling and that is 40% of our export market and we stand to carry losses. So what can we do, when this is what our partner and that is what the situation is in Russia and in Ukraine, they are also our partners,” Lukashenko told his cabinet of ministers in the Belarusian capital of Minsk on Thursday night.
“The set objective is to trade with Russia not in roubles but in dollars,” Lukashenko said. “That is how we will pay pay the Russian federation for energy, not in roubles but in dollars.”
“We must work and trade with Russia in a way that they too pay us in dollars or in euro,” Lukashenko added.
This interesting article appeared on the newsweek.com Internet site at 7:44 a.m. EST on Friday morning---and I thank Casey Research's own Louis James for passing it around yesterday.
Economic hardship is being created by the foreign-controlled Bank of Russia's monetary policies, to spread mass discontent and facilitate a Maidan in 2015 to remove Putin. So claims Evgeny Fedorov, citing the colonialist Central Bank law, established after Washington's victory in the Cold War, and the system of fifth-column levers, methodically operated to steer the revolution.
Evgeny Fedorov is a Deputy of the State Duma and the coordinator of the National Liberation Movement for restoring sovereignty of Russia.
I've listened to part of this already---and will watch the rest of it over the weekend. This youtube.com video clip was posted on 23 November---and I thank reader "Wojtek from Warsaw" for bringing this to my attention---and now to yours. I consider it a must watch.
China offered enhanced economic ties with Russia at a regional summit this week as its northern neighbor struggled to contain a currency crisis.
“To help counteract an economic slowdown, China is ready to provide financial aid to develop cooperation,” Premier Li Keqiang said at a Dec. 15 gathering in Astana, Kazakhstan. While the remark applied to any of the five other nations represented at the meeting of the Shanghai Cooperation Organization group, it was directed at Russia, according to a person familiar with the matter who asked not to be named as the plans weren’t public.
Any rescue package for Russia would give China the opportunity of exercising the kind of great-power leadership the U.S. has demonstrated for a century -- sustaining other economies with its superior financial resources. President Xi Jinping last month called for China to adopt “big-country diplomacy” as he laid out goals for elevating his nation’s status.
“If the Kremlin decides to seek assistance from Beijing, it’s very unlikely for the Xi leadership to turn it down,” said Cheng Yijun, senior researcher with the Institute of Russian, Eastern European, Central Asian Studies at the Chinese Academy of Social Sciences in Beijing. “This would be a perfect opportunity to demonstrate China is a friend indeed, and also its big power status.”
This Bloomberg article, co-filed from Hong Kong and Beijing, was posted on their website at 7:33 p.m. Denver time early Friday morning---and my thanks go out to reader U.M. for sending it along.
Something strange is going on in China. On one hand, as the chart below shows, China's trade surplus is growing and growing, and just hit record highs. In other words, China is - on paper - receiving record amounts of foreign currencies in exchange for its (mostly) goods exports.
Yet on the other hand, a chart from Deutsche Bank shows something very peculiar: even as China's foreign reserves should be rising, they are not only dropping, but just suffered their biggest quarterly drop in the past decade!
This validates what the TIC data has shown recently, namely that China has not only not been adding to US Treasury but reduced its TSY holdings to the lowest since February 2013, and that contrary to what some have alleged, China is not using Belgium as an offshore-based conduit for Treasury accumulation.
A bigger question is just what is China buying "off the books" to account for this reserve decline, amounting to about $100 billion in Q3, or is this merely due to even more off the books "capital flight" as some has speculated. Or is China indeed actively buying commodities - either as shown here previously for Commodity Funding Deals involving gold or in physical bulk, perhaps to quietly fill up its new Strategic Petroleum Reserve - and bypassing the official ledger in doing so. If so, which commodities is China buying, and how big will the foreign reserve plunge be in the fourth quarter.
This very interesting Zero Hedge posting, with some excellent charts, is certainly worth a few minutes of your time---and it's the second contribution in a row from reader U.M.
November 18, 2014: it’s a day that should live forever in history. On that day, in the city of Yiwu in China’s Zhejiang province, 300 kilometers south of Shanghai, the first train carrying 82 containers of export goods weighing more than 1,000 tons left a massive warehouse complex heading for Madrid. It arrived on December 9th.
Welcome to the new trans-Eurasia choo-choo train. At over 13,000 kilometers, it will regularly traverse the longest freight train route in the world, 40% farther than the legendary Trans-Siberian Railway. Its cargo will cross China from East to West, then Kazakhstan, Russia, Belarus, Poland, Germany, France, and finally Spain.
You may not have the faintest idea where Yiwu is, but businessmen plying their trades across Eurasia, especially from the Arab world, are already hooked on the city “where amazing happens!” We're talking about the largest wholesale center for small-sized consumer goods -- from clothes to toys -- possibly anywhere on Earth.
The Yiwu-Madrid route across Eurasia represents the beginning of a set of game-changing developments.
This commentary is a must read, especially if you're a serious student of the New Great Game. It was posted on the tomdispatch.com Internet site on Thursday---and the first person through the door with it was Brad Robertson.
Being killed by remote control is a uniquely scary prospect to most of us. But we are now close to the point where drone technology has become ubiquitous, as it can be used for a variety of purposes by anyone with a bit of money to spend.
The drones on offer today can go miles into the sky, and there have been numerous cases already where the situation could have spiraled out of control, like when a plane nearly missed a drone.
Bruno Kramm, chairman of the Pirate Party in Germany, explains that the pocket drones also “pose a huge risk to privacy… the more this technology gets developed, the more there is the possibility it can really go deeper into our privacy… it’s really like a danger of spy technology that everybody can use in their daily life.”
By posting videos online, groups of drone enthusiasts are showing just how easy it is to build a lean, mean killing machine that shoots things at you and flies away. Many have used their toys to illustrate just “how dangerous they would be in the hands of a civilian.”
I've had this very interesting but disturbing story in my in-box for a couple of weeks---and really haven't had spot to stick it in, so I'm posting it here. You can bet that this idea is in the advanced development stages by militaries all over the world by now. It showed up on the Russia Today website back on December 7---and I thank Roy Stephens for digging it up for us.
Citigroup Inc. bought the bulk of Credit Suisse Group AG’s commodities business, continuing an expansion into a market as its biggest rivals retreat, according to two people briefed on the transaction.
The purchase includes positions in base and precious metals, iron ore, coal, crude oil and oil products, U.S. and European natural gas, and freight, said the people, who asked for anonymity because the deal hasn’t been made public. Employees won’t change firms as a result, said the people, who didn’t provide details about the terms of the transaction.
Five years after selling its Phibro LLC energy-trading unit, New York-based Citigroup has reasserted itself in commodities amid a pullback by banks including JPMorgan Chase & Co. and Goldman Sachs Group Inc. Regulatory scrutiny has mounted, with the Federal Reserve warning last month that it may impose new restrictions as lawmakers question whether banks’ role in the markets could threaten financial stability.
Citigroup has embarked on a multi-year effort to gain revenue and market share in commodities, Jose Cogolludo, global head of sales, said in an interview last December. Earlier this year, the bank bought Deutsche Bank AG’s trading positions for metals, oil and power, one of the people said.
This Bloomberg news item appeared on their website at 10:38 a.m. Mountain Standard Time [MST] yesterday---and my thanks go out to reader U.D. for sharing it with us.
Last year, we gave the experts $10,000 to play with but this year, we bumped it to $100,000. Of course, we also asked them which investments they absolutely would avoid in 2015 and their New Year’s resolution.
Rickards on Investing
“Number one, it’s really, really important to be diversified,” Jim Rickards starts off. However, the best-selling author explains that being diversified doesn’t mean owning fifty stocks, “that’s not diversification, that’s one asset class.”
Rickards says to invest in completely different classes. “[T]he biggest challenge facing investors today is that we have inflation and deflation fighting each other at the same time and you don’t know which way it’s going to tip, and you need to be prepared for both.”
These very interesting comments by Jim were posted on the kitco.com Internet site at 11:20 a.m. EST on Friday morning---and I thank Harold Jacobsen for bringing it to our attention.
Mark O'Byrne, executive director at Goldcore Ltd., says Russia is more likely to dip into its dollar reserves than sell gold to stem the ruble's decline. He speaks to Anna Edwards, Mark Barton and Manus Cranny on Bloomberg Television's "Countdown."
This 5:51 minute Bloomberg Europe video clip put in an appearance on their website at yesterday sometime---and I thank Ken Hurt for digging it up for us. It's worth watching.
Bullion Star market analyst and GATA consultant Koos Jansen calls attention to comments this week by Russian President Vladimir Putin indicating that Russia is not selling its gold reserves.
And he also gives an interview summarizing gold repatriation efforts by central banks.
The links to both of these gold-related stories are embedded in this GATA release from yesterday. I must admit that I haven't had the time to look at either one, but I certainly plan on doing so in what's left of my weekend.
Yesterday, when we reported the latest rumor of Russian gold selling, this time out of SocGen, we said that "it should be noted that SocGen and its "sources" have a conflict: in an indirect way, none other than SocGen is suddenly very interested in Russia stabilizing its economy because as we wrote before, "Russia Contagion Spreads To European Banks : French SocGen, Austrian Raiffeisen Plummet" which also sent SocGen's default risk higher in recent days. So if all it will take to stabilize the RUB sell off, reduce fears of Russian contagion, and halt the sell-off of SocGen stocks is a "source" reporting what may or may not be the case, so be it."
Moments ago, as if to deter further speculation that Russia is indeed converting hard money earned from real resources for fiat paper, the Russian monetary authority made it quite clear, that at least in November, Russia not only did not sell any gold, but in fact bought another 600K ounces in the month of November.
This Zero Hedge article was posted on their website at 9:40 a.m. EST yesterday morning---and I thank Manitoba reader U.M. for her final contribution to today's column.
India's import volumes of gold and silver in November were "spectacular," Bullion Star market analyst and GATA consultant Koos Jansen reported yesterday. It seems that between them India and China are acquiring nearly all the annual production of the world's gold mines.
But surely the Bundesbank won't mind if the U.S. government and allied bullion banks dip into the German gold reserves vaulted into the United States for use as necessary in gold price control operations.
This commentary, along with some excellent charts, certainly falls into the must read category---and it's another story that I found on the gata.org Internet site yesterday.
Cypress Development Corp. is a Canadian gold, silver and base metals exploration company developing projects in Red Lake, Ontario, Canada, and in Nevada, U.S.A.
Cypress holds a 100% interest in the approximately 1140 acre Gunman Zinc-Silver Project located in White Pine County, northeast of Eureka, Nevada. Three RC drill programs totaling approx. 38,000 feet have been completed by Cypress on the Gunman project with significant grades between 5% to 33% per ton zinc and 0.5 to 15.0 oz per ton silver over considerable widths encountered. Zinc could represent the next big base metal play due to ongoing demand growth and the closures of 3 major mines in Canada, Australia and Ireland and not enough supply coming on stream from new projects. Sentiment could shift towards zinc, with prices potentially rallying in anticipation of tightening supplies. Please visit our website for more information.
From the close on Friday, December 12 through Tuesday’s low, the price of silver fell $1.50, or close to 9%. No other commodity, including crude oil, fell as much as silver did over that time. Generally, such a large percentage decline in any world commodity in less than two trading days is a pretty big deal and would only occur if there was some easily documented major supply/demand development. I follow silver pretty closely---and not only was I not able to uncover any major change in silver’s actual supply/demand situation, I couldn’t find even a minor development that would have accounted for the sudden large price decline. I would ask you to think about that for a moment.
Any investor or analyst of any world commodity must be able to account for and rationalize a 9% price move in less than two trading days; otherwise he or she couldn’t possibly understand the dynamics of that commodity. Yet I received virtually no requests to explain the price drop. The facts are clear – the price of silver did decline by nearly 9% and there were no actual supply/demand developments to explain the decline. Therefore, something else had to account for the sudden silver price decline and judging by the lack of readers questioning why, the actual cause of the decline must have been fairly widely known.
Of course, the only possible explanation for what would normally be a massive price drop in any world commodity is trading activity on the COMEX. While this is nothing new to subscribers, my sense is that COMEX price rigging has reached such an incredibly dominant influence over the price of silver (and other commodities, like gold and copper) that it is more widely understood than ever before. I believe it has gotten to the point where it is impossible to even attempt to offer an alternative plausible explanation for large price moves in silver and other metals apart from COMEX trading without looking like a fool. I also believe that the growing and widespread recognition that prices are set on the COMEX greatly undermines the life expectancy of continued future price manipulation. - Silver analyst Ted Butler: 17 December 2014
Today's pop 'blast from the past' is one that has graced this column before, but it's been a year or so. The group---and the tune from 1977---need no introduction. Turn up your speakers and enjoy. The link is here.
I thought I'd throw a Christmas song in here from the movie "Home Alone". I didn't like the movie at all, as I've obviously outgrown that sort of humour. However, the musical score by John Williams has outlived it, as has this Christmas piece which is now a classic---at least at our house---and it gets a fair amount of air time on the local radio stations here in Edmonton this time of year as well. I hope you enjoy it---and the link is here.
Every year at this time I post Handel's "Messiah". If you took a vote amongst audiophiles and ancient music affectionados of the world, of which I am one, this recording by Christopher Hogwood and the Academy of Ancient Music is definitive. I've owned the CD of this concert since 1991 when it was first released in that medium. The Emma Kirkby piece I posted last Saturday is taken from this work. No matter which version you listen to, it's not a short piece. This one runs 2:16:23---and I hope you enjoy however much you choose to listen to. The link is here.
Except for silver and palladium, there was hardly a creature stirring in the precious metal market yesterday---and the volumes certainly reflected that. I'm getting the impression that with the Christmas season now upon us, it may be rather quiet in the precious metals for the remainder of the year---barring something out of left field, of course.
I shall dispense with the 6-month charts for any of the precious metals, as there really isn't much to look at. However, here are the 2-year charts for natural gas and crude oil. It appears that crude oil has found a bottom, at least temporarily---and natural gas got sold down to a low not seen since November 2013.
I must admit that the year is ending sort of up in the air for the precious metals. As you already know, if it wasn't for the powers-that-be, we'd be looking at precious metal---and all commodity prices---many orders of magnitude higher than they are now.
Someday, as Alan Greenspan has alluded to recently, this will be the outcome. But when, is the question. All four precious metals are basically in a structural deficit---and have been for some time, so sooner or later this will manifest itself in the price. At that moment, it certainly isn't being allowed to show up in the COMEX futures market.
However, in an unpublished article on silver that I've got stashed away on my hard drive, I had this to say---
"In one form, the price management scheme in gold and silver, along with copper and crude oil, is a just another kind of imperialism that's being practiced by the Anglo/American financial alliance against the 'producer' class. Along with other kinds of force, they are now using the COMEX futures market [along other financial instruments] to prevent the commodity-producing nations from becoming economic powers that could individually, or as a group, challenge the supremacy of the 'West' in general, or the U.S.A. in particular---"rich nations which insist on being poor"---as Gold Anti-Trust Action Committee's secretary/treasurer Chris Powell so eloquently put it some years back---and most recently in this September video interview on The Larry Parks Show in New York."
"Gold manipulation, silver manipulation or price management of the entire commodities complex---call it what you will. But if the nations that comprise the "hewers of wood---and drawers of water" on Planet Earth ever decided to rise up against the current Western financial establishment---and put their markers down on this 21st century form of enslavement, there will certainly be a New World Order, but it won't be the one that the current powers-that-be have in mind."
It's within the power of Russia and/or China to bring it all crashing down if they so choose---and as other commentators besides myself have said---all they have to do is play the gold/precious metal card---and it would be all over in an instant.
And as I've also said before, if push really becomes shove in today's economic, monetary and political environment, it may come to that.
Enjoy what's left of your weekend---and I'll see you on Tuesday.