Gold & Silver Daily
"No amount of money printing will do any good now"

¤ Yesterday In Gold & Silver

It was pretty much a nothing day in the gold market on Friday.  The tiny rally at the London open began to erode immediately---and the down/up price tick in the two hours surrounding the London p.m  gold fix was all the activity there was in new York.  The gold price continued to slowly sell off from there into the close of electronic trading.

The high and lows ticks are barely worth the effort to look up, but the CME Group recorded them as $1,228.90 and $1,214.80 in the February contract.

Gold finished the Friday session in New York at $1,221.80 spot, down $5.60 from Thursday's close.  Volume, net of December and January, was 130,000 contracts.

Silver traded a bit higher in Far East trading, but got sold down a dime around noon Hong Kong time---and the rally at the London open met the same fate as the gold price.  The silver price traded in a 20 cent range for the entire Friday session, so the high and low aren't worth looking up.

Silver finished the day at $17.035 spot, down 6 cents from Thursday.  Volume, net of December and January, was 32,000 contracts.

The platinum price didn't do much until the London open, but then rallied about six bucks to its high---and from there, it got sold down until the London p.m gold fix was done.  After that it chopped sideways in a $20 price range---finishing the day at $1,225 spot, down 12 bucks from Thursday.

Palladium closed the Friday session at $812 spot, down five bucks on the day.

The dollar index closed late on Thursday afternoon in New York at 88.55.  It's 88.62 high tick came at 3:00 p.m. Hong Kong time in their Friday afternoon, an hour before the London open.  From there it chopped down to its 88.12 low, which came minutes before 12 o'clock noon in New York.  It rallied back 10 basis points by 2 p.m.---and then traded flat into the close.  The index finished the Friday session at 88.335---down 21 basis points on the day.

The gold stocks opened down a bit, hitting their morning low minutes after the London p.m. gold fix, which came shortly after 10 a.m. in New York.  From there they rallied into positive territory, but that only lasted for fifteen minutes or so before they began to head quietly lower---and that trend continued right into the close, as the HUI finished down 1.71%.

Although gold closed up $30 on the week, the HUI closed down 0.4%.

The silver stock also opened down a hair, but turned on a dime after the gold fix was done---and by 11:30 a.m. they were up over 3 percent.  Sadly, that rally didn't last either---and by 2:45 p.m they were down about a percent.  From there they rallied back into positive territory by a hair, as Nick Laird's Intraday Silver Sentiment Index closed up 0.03%.

Although silver gained 75 cents during the prior week, the silver equities gained something less than 2 percent.

The CME Daily Delivery Report showed that 35 gold and 178 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  In gold, JPMorgan issued 35 contracts from its client account---and stopped 31 of of them in its in-house [proprietary] trading account.  The theft from their clients continues.

In silver, the three largest short/issuers were Scotiabank with 104 contracts, along with Jefferies and JPMorgan both out of their client accounts, with 38 and 25 contracts respectively.  The two biggest long/stoppers were HSBC USA and Jefferies with 139 and 29 contracts respectively. The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Friday trading session showed that December gold open interest dropped by 163 contracts, and is now down to 881 contracts still open---minus the 35 posted for delivery on Tuesday.  In silver, the December o.i. went down by only 14 contracts---and December open interest now sits at 383 contracts---minus the 178 mentioned two paragraphs ago.

There were no reported changes in GLD yesterday---and I was astonished to see another withdrawal from SLV.  This time an authorized participant took out 1,341,037 troy ounces.  Since December 1, there have been 9.2 million ounces of silver withdrawn from SLV---and nothing deposited.

The good folks over at Switzerland's Zürcher Kantonalbank finally got around to updating their gold and silver ETFs for the week ending Friday, December 5---and this is what they had to report.  Their gold ETF declined by another 22,117 troy ounces---and their silver ETF shed 174,272 troy ounces.

The U.S. Mint sold another 100,000 silver eagles again yesterday, but no gold eagles or buffaloes once again.

Month-to-date the mint has sold 16,500 troy ounces of gold eagles---2,500 one-ounce 24K gold buffaloes---and 1,722,500 silver eagles.  Based on these sales, which are really skewed towards silver, the silver/gold ratio so far this month works out to 90 to 1.  With the new 2015 production year coming up hard, I can't see 2014 silver eagle sales continuing much longer, because at the rate they've been pumping out the 2014 silver eagles in December, it appears that they haven't yet begun to ramp up production for the new calendar year as of yet.

There was only 1 kilobar of gold shipped out of the COMEX-approved depositories on Thursday---and in silver, nothing was reported received, but 491,721 troy ounces were shipped out for parts unknown.  The link to that activity is here.

Well, yesterday's Commitment of Traders Report was about as bad as it could possibly be.

In silver, the headline number in the legacy COT Report was ugly, as the Commercial net short position blew out by 8,771 contracts, one of the biggest numbers I can remember---and I can remember quite a bit.  The Commercial net short position now stands at 35,357 contracts, or 176.8 million troy ounces, which is really getting up there.

On the other side of those 8,771 contracts, the raptors [the Commercial traders other than the Big 8] sold 5,200 of their long contracts, while the '5 through 8' Commercial traders added about 400 contracts to their short position---and the 'Big 4' blew out their short position by around 3,200 contracts.  Ted says that JPMorgan's short position in silver appears to be back up around the 10,000 contract mark, or 50 million ounces.

Under the hood in the Disaggregated COT Report, the technical funds in the Managed Money covered 4,976 of their short contracts---and added 594 long contracts.  Ted says that these technical funds have about 10,000 short contracts still on their books, which isn't very much rocket fuel left to sustain any kind of big rally in silver going forward---and I know that he'll have lots more to say about this in his weekly review to paying subscribers later this afternoon.

In gold, the headline number in the legacy COT Report showed that the Commercial net short position jumped by an eye-watering 27,193 contracts, or 2.72 million troy ounces.  The Commercial net short position in gold now stands at 116,601 contracts, or 11.66 million troy ounces.

On the other side of the 27,193 contract deterioration, the raptors, the Commercial traders other than the Big 8, sold about 28,600 contracts of their long position, while the '5 through 8' largest traders added around 6,700 contracts to their short position.  But the 'Big 4' traders swam against the tide---and actually covered about 8,300 contracts of their short position.  I think I remember Ted telling me that JPMorgan's COMEX long position in gold was now 10,000 contracts, which is down from the 12 to 14,000 contracts they were long last week.  But I didn't write it down, so I reserve the right to be wrong about that.

As in silver, Ted will have more to say about the gold situation later today---and I'll steal any pertinent bits as a quote for one of my columns next week.

Still, there's no way to sugar coat this, as this week's COT Report was a disaster.  There's no sign whatsoever that JPMorgan et al are softening their iron grip on silver and gold prices---and to make matters worse, a huge chunk of Ted Butler's rocket fuel [the short positions of the technical funds in the Managed Money category] has already been used up---at great profits to them, but at the expense of the next rally.

I'm happy to report that I don't have all that many stories today, but I do have a decent number that I've been saving for today's column, so I hope you have enough time in what's left of your weekend to read the ones that interest you.


¤ Critical Reads

Wall Street’s Win on Swaps Rule Shows Washington Resurgence

Wall Street is re-emerging as a force in Washington as it closes in on one of its biggest wins against regulation since the financial crisis.

With must-pass spending legislation making its way through Congress this week, banks seized on an opportunity to attach a measure that would halt a planned restriction on derivatives trading they had long opposed. The industry’s lobbying extended to the highest levels of finance with JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon pressing lawmakers to support the change.

Wall Street’s success, after four years of struggling to persuade Congress to ease the Dodd-Frank Act, is a precursor to more fights next year against some of the law’s hallmarks: the consumer protection bureau and stiff oversight of big financial companies whose failure could threaten the financial system.

“The Wall Street interests -- the big banks -- they’re back,” said Richard Durbin of Illinois, the Senate’s second-ranking Democrat.

This Bloomberg news item appeared on their Internet site at 11:01 a.m. Denver time yesterday morning---and I thank West Virginia reader Elliot Simon for today's first story.


Some Accused of Insider Trading May Rethink Their Guilty Pleas

A ruling that tossed out the insider trading convictions of two hedge fund managers may have opened the door for others charged with wrongful trading to get their cases or pleas dismissed.

A federal judge in Manhattan, Andrew L. Carter Jr., on Thursday ordered the lawyers for the defendants in an unrelated insider trading case to come to court on Dec. 18 to discuss the implications of the ruling. The day before, a panel of the United States Court of Appeals for the Second Circuit overturned the convictions of the hedge fund managers Anthony Chiasson and Todd Newman.

Judge Carter said in his brief order that he wanted to discuss whether the appellate ruling affects a guilty plea by at least one of five defendants. In the case he is overseeing, five friends have been accused of receiving a secondhand tip about IBM’s plans to acquire SPSS for $1.2 billion in October 2009.

The move by the judge is a sign that the impact of the appellate court’s decision may have ramifications well beyond Mr. Chiasson and Mr. Newman. The ruling was notable because the appellate court significantly reined in prosecutors when pursuing cases of insider trading, especially against individuals who are far removed from the original source of an illegal stock tip.

This article appeared on The New York Times website at 9:11 p.m. EST on Thursday evening---and it's the first offering of the day from Roy Stephens.


Jim Rickards: Fairy tales from the Federal Reserve: 15 Reasons Fed Policies Belong in Fantasyland

Don’t ever think for a minute that the central bankers know what they’re doing. They don’t. And that’s my own view, but I’ve heard that recently from a couple central bankers. I recently had spent some time with one member of the FOMC, the Federal Open Market Committee, and another member of the Monetary Policy Committee of the Bank of England, which is the equivalent of their FOMC, both policymakers, both central bankers.

And they said the same thing, “We don’t know what we’re doing. This is a massive experiment. We’ve never done this before. We try something. If it works, maybe we do a little more; if it doesn’t work, we pull it away, and we’ll try something else.” And the evidence of this – again, I’ve heard this firsthand, and it’s my view – but the evidence for this is that their have been 15 separate fed policies in the last 5 years.

This 3:26 minute video clip, plus transcript, showed up on the Internet site on Thursday---and I thank Dan Lazicki for sharing it with us.


John Pilger: War by media and the triumph of propaganda

Why has so much journalism succumbed to propaganda? Why are censorship and distortion standard practice? Why is the BBC so often a mouthpiece of rapacious power? Why do The New York Times and The Washington Post deceive their readers?

Why are young journalists not taught to understand media agendas and to challenge the high claims and low purpose of fake objectivity? And why are they not taught that the essence of so much of what's called the mainstream media is not information, but power?

These are urgent questions. The world is facing the prospect of major war, perhaps nuclear war - with the United States clearly determined to isolate and provoke Russia and eventually China. This truth is being turned upside down and inside out by journalists, including those who promoted the lies that led to the bloodbath in Iraq in 2003.

The times we live in are so dangerous and so distorted in public perception that propaganda is no longer, as Edward Bernays called it, an "invisible government". It is the government. It rules directly without fear of contradiction and its principal aim is the conquest of us: our sense of the world, our ability to separate truth from lies.

This essay was posted on the Internet site on December 5---and it's certainly worth reading if you have the time.  I thank reader D'Anne Blume for sending it our way last Sunday.


U.K. stocks suffer worst weekly rout since 2011 on economy fears

The FTSE 100 suffered its worst week for more than three years, with more than £100bn wiped off the value of Britain’s biggest companies after investors took fright at signs of a Chinese slowdown, the oil rout and looming elections in Greece, plunging global stock markets into turmoil.

London’s benchmark index on Friday slumped 161.07 points to 6,300.63, a 2.5pc tumble that brought its drop since the open of trade on Monday to 6.6pc. The FTSE 100 fell every day this week.

The slide marked the heaviest weekly fall since August 2011 and knocked £112bn off the value of the index. Today alone saw the FTSE 100 lose almost £41bn, as bourses around the world all plunged. Germany’s DAX y lost 2.7pc, the CAC 40 in France dropped 2.8pc and the Italian FTSE MIB slid 3.1pc. On Wall Street, the Dow Jones Industrial Average had lost almost 200 points by the time trading in London had finished.

Globally, more than $1 trillion was wiped from equities this week, while the VIX index, a U.S. measure of volatility, rose 70pc.

This story appeared on The Telegraph's website at 6:15 p.m. GMT Friday evening---and I found it all by myself.


France drifts into deflation as ECB 'pea-shooter' falls short

France is sliding into a deflationary vortex as manufacturers slash prices to keep market share, intensifying pressure on the European Central Bank to take drastic action before it is too late.

The French statistics agency INSEE said core inflation fell to -0.2pc in November from a year earlier, the first time it has turned negative since modern data began.

The measure strips out energy costs and is designed to “observe deeper trends” in the economy. The price goes far beyond falling oil costs and is the clearest evidence to date that the eurozone’s second biggest economy is succumbing to powerful deflationary forces.

Headline inflation is still 0.3pc but is expected to plummet over the next three months. French broker Natixis said all key measures were likely to be negative by early next year.

This commentary by Ambrose Evans-Pritchard put in an appearance on the Internet site at 8:14 p.m. GMT on Thursday evening---and it's the second offering of the day from Roy Stephens.


Fitch Downgrades France to AA

Fitch Ratings has downgraded France's Long-term foreign and local currency Issuer Default Ratings (IDR) to 'AA' from 'AA+'. This resolves the Rating Watch Negative (RWN) placed on France's ratings on 14 October 2014. The Outlooks on France's Long-term ratings are now Stable. The issue ratings on France's unsecured foreign and local currency bonds have also been downgraded to 'AA' from 'AA+' and removed from RWN. At the same time, Fitch has affirmed the Short-term foreign currency IDR at 'F1+' and the Country Ceiling at 'AAA'.

In its debt sensitivity analysis, Fitch assumes a primary surplus averaging 0.5% of GDP over the next 10 years, trend real GDP growth averaging 1.5%, an average effective interest rate of 2.7% and GDP deflator of 1.5%. On the basis of these assumptions, the debt-to-GDP ratio would peak at 99.4% in 2017, before declining to 87.6% by 2023.

Fitch assumes the eurozone will avoid long-lasting deflation, such as that experienced by Japan from the 1990s. Fitch also assumes the gradual progress in deepening fiscal and financial integration at the eurozone level will continue; key macroeconomic imbalances within the currency union will be slowly unwound; and eurozone governments will tighten fiscal policy over the medium term.

What are these guys smoking?  How about junk status?  That's what France's bonds should really be rated at---along with just about every other country's bonds as well.  This Zero Hedge posting appeared on their Internet site at 4:13 p.m. EST yesterday afternoon---and I thank Elliot Simon for passing it around.


‘We want our jobs!’ Thousands march against Italian labor reforms

Some 40,000 protesters took to the streets of Rome on Friday, as Italy was gripped by protests against Prime Minister Matteo Renzi's reforms. Demonstrations turned violent in Milan and Turin as protesters clashed with police.

A general strike called by CGIL and UIL, two of Italy’s major trade unions, prompted huge rallies in over 50 cities nationwide. The unions have denounced government reforms, claiming they pose a threat to job security.

Strikers believe the burden of reform is being placed unfairly on workers.

Renzi has defended the reform program, saying that Italy, which is in the midst of a three-year recession – the longest since WWII – needs mobility of labor in order to jump-start the economy. Protestors, however, disagree. Thousands marched under the banner “Cosi non va!,” which roughly translates to “This is unacceptable!”

This news story showed up on the Russia Today website at 9:22 p.m. Moscow time on their Friday evening, which was 1:22 p.m. in New York.


Greek Stock Rout Means ASE Is 2014 Worst After Russia

Anxiety that voters will kick out leaders committed to Greece’s bailout wreaked havoc on markets, sending the nation’s shares for the biggest weekly slump since 1987 and making them this year’s worst performers behind Russia.

The ASE Index (ASE) has lost 20 percent this week, taking its decline for the year to 29 percent. Only Russia’s RTS Index did worse, with a 44 percent plunge. The rout spread to Greek bonds, with rates on three- and five-year notes jumping yesterday to the highest levels since the 2012 debt restructuring.

Greece’s government said this week it would start the process of electing a new president early. The risk is that Prime Minister Antonis Samaras will have to call a parliamentary election that anti-bailout party Syriza might win, reintroducing the turmoil that threatened the European currency union two years ago. Syriza wants a write-down on Greek debt held by euro-area member states and the European Central Bank.

This Bloomberg item, filed from London, appeared on their website at 7:36 a.m. Mountain Time yesterday morning---and I thank reader M.A. for sending it.


Russia targets Cyprus, Hungary, and Italy for sanctions veto

Moscow has begun lobbying what it sees as sympathetic EU capitals - Budapest, Nicosia, and Rome - to veto next year's renewal of Russia sanctions.

The first batch of E.U. measures - an asset freeze on Ukraine’s former president Viktor Yanukovych (now hiding in Russia) and 17 associates - expires in March. The next batch - visa bans and asset freezes on Russian officials linked to Russia's annexation of Crimea - ends in April.

The most painful sanctions - on Russian banks and energy firms, imposed after the Malaysian Airlines disaster - end in July.

Member states must agree by consensus to extend their validity---but if one or more of them break ranks, the sanctions will fall.

This article, filed from Brussels, appeared on the Internet site at 9:57 p.m. Europe time on Thursday evening---and it's another contribution from Roy Stephens.


John Batchelor Interviews Stephen F. Cohen about Russia, the Ukraine and Europe

Obama states that Russia is being isolated in the world but the reality seems to be that the rift between the E.U. and Washington is growing and Russia has simply changed course. Although Stephen Cohen does not discuss it, the bell may be tolling for Merkel's political future as that soon to be famous Letter of the 60 is a stern warning that better minds do not like Germany's course against Russia.  The point is that the E.U. is also being isolated from Russia - and Putin has continually stated that his actions with pipelines, trade and associations with China and other BRICKS nations makes this course inevitable. All too true.

Meanwhile there are glimmers of moderation now being heard in the United States. The Booker Institute authors have come out against Washington extremism which it considers dangerous and on a war footing. Cohen again hints about incompetency and dishonesty in the White House.

Cohen also postulates that Ukraine during these upheavals may actually disintegrate as it pushes for war and neglects its obligations to its own citizens in the West.

This very interesting audio interview was posted on the Internet site on Tuesday---and I thank Larry Galearis for sending it along.


Ukraine cheers U.S. vote for military aid, Russia outraged

Ukraine welcomed a U.S. bill that would allow Washington to provide lethal military assistance to the embattled country, but Russia expressed outrage at the "openly confrontational" legislation.

The bill -- passed late on Thursday and due to get final approval in Congress on Friday before being sent to U.S. President Barack Obama -- opens the way for up to $350 million (280 million euros') worth of U.S. military hardware to be sent to Ukraine, which has been fighting an eight-month war against Kremlin-backed separatists in its east.

It also threatens fresh sanctions against Russia, whose economy is crumbling under previous rounds of Western sanctions and a collapse in oil prices.

U.S. Secretary of State John Kerry is set to meet Russian Foreign Minister Sergei Lavrov in Rome on Monday amid the toughening American response.

Russia's foreign ministry said the new U.S. legislation put a "powerful bomb" under U.S.-Russia bilateral ties.

IF the president signs this bill, it will really up the ante a lot.  This AFP news item, filed from Kiev, appeared on the Internet site  yesterday evening EST---and I thank Jim Skinner for digging it up for us.


World Oil Demand Outlook Cut Again; Sub-$60 Price Seen Holding

Any hope that global demand would provide a floor for oil’s free fall was dashed as the leading energy forecaster cut its outlook for the fourth time in five months and crude extended its tumble.

Oil dropped 3.6 percent in New York after the International Energy Agency forecast weaker consumption next year and said supply from countries outside of the Organization of Petroleum Exporting Countries will rise faster than previously estimated.

This year’s 41 percent drop in crude has hurt the economies of oil-producing countries from Russia to Nigeria, reducing fuel demand. Brent crude is too low for 10 of OPEC’s 12 members to balance their budgets, yet not low enough to force producers to scale back output. The U.S. is producing the most oil in three decades and OPEC members have pumped more than the group’s target level for each of the past six months.

This very interesting Bloomberg news item, filed from London, appeared on their Internet site at 2:47 p.m. Denver time on Friday afternoon---and it's the second contribution of the day from reader M.A.


The Oil Market Actually Works, And That Hurts

It’s not about where WTI and Brent are at any given moment. Even if WTI is down another 3.60% today so far at $57.79. Whatever WTI tells us, the real world out there trumps it by a mile and a half. The prices at which oil actually sells in the real world are way below WTO and Brent standards, a very big and scary development. There are tons of parties that will sell at any price they can get. There is no better way to drive prices down further, it’s a vicious circle down a drain.

The market is setting future prices as we go along, that’s the – inevitable – mechanism. It’s called price discovery. We knew ISIS was selling at $30 or so, but tar sands at $30 and both Canada and Venezuela heavy crude at $40, that’s way more than an outlier. At WTI standard prices, too many can’t move nearly enough product anymore, and with credit having been slashed, moving product is the sole way to survive. How much of this ongoing process would you think we have we seen to date?

Here’s one of the first oil-producing countries about which serious alarm bells are raised. It’s not Venezuela or Nigeria, it’s Canada.

This short must read commentary appeared on Internet site yesterday---and my thanks go out to Dan Lazicki for finding it for us.


Russia sees promise in energy ties with India

Bilateral efforts to expand cooperation in the oil and gas sector between Russia and India hold "great promise," the Kremlin said Thursday.

"We are paving the way for long-term, true and mutually beneficial cooperation," Russian President Vladimir Putin said during a state visit to New Delhi.

Russia is examining its energy options as Western sanctions take their toll on its economy. In July, Russian Ambassador to India Alexander Kadakin told Indian business newspaper The Hindu the Kremlin was interested in spending as much as $40 billion to build a natural gas pipeline for India.

The pipeline would run along the southern border of Russian to India through the Himalayan region or mirror the route of the planned pipeline from Turkmenistan.

This short news item, filed from New Delhi, was posted on the UPI website, at 8:37 a.m. EST on Thursday evening---and it's another contribution from Roy Stephens.


20 deals in 24 hours: Russia-India relations given $100 billion-worth boost

The economic burden of Western sanctions has pushed Russia to the east in search of business opportunities. Judging by the outcome of President Putin’s visit to India - 20 high-profile deals struck – Moscow’s ‘pivot to Asia’ is getting a warm welcome.

Russian President Vladimir Putin achieved this during his visit to India spanning 23 hours and 15 minutes and at a summit meeting with Indian Prime Minister Narendra Modi that lasted barely a few hours.

By the time the two leaders finished their business in New Delhi’s Hyderabad House, 20 pacts were signed in the presence of Putin and Modi on 11 December and the two sides ended with US$100 billion commercial contracts.

Rich pickings by both sides included deals worth $40 billion in nuclear energy, $50 billion in crude oil and gas and $10 billion in a host of other sectors, including defense, fertilizers, space, and diamonds.

This op-edge piece showed up on the Russia Today Internet site at 12:07 p.m. Moscow time on Friday---and the stories from Roy just keep on coming.


Generations of Victims: Bhopal's Unending Catastrophe

Thirty years after the worst chemical accident in history, the disaster is hitting a new generation. The victims have received little help, professional clean-up has not happened and there are no signs the ongoing environmental catastrophe will end.

"The people can't see, smell or taste the poison," says Rachna Dhingra, "but it's there." It's in the water, in the flesh of fish and in the milk of the water buffalo, and it's in the dark mud that slum residents scrape from the shores of the lake to fill the cracks in their houses. Dhingra, 37, is standing on a small hill in her blue kurta, a long traditional Indian garment, angrily trying to talk sense into the fishermen. "This is suicide," she shouts.

Today's lake was once used as a solar evaporation pond, a dump for the unfiltered waste from the nearby chemical plant. More than 11,000 tons of material was dumped there, and now the soil and groundwater are contaminated with mercury, nickel and other heavy metals. Nevertheless, farmers water their animals at the lake every day, and women fetch water from it to wash their children and their laundry. The contaminated lake affects more than half a million people. For activist Dhingra, what is happening in Bhopal is an "endless catastrophe -- and the world simply looks away."

The murky lake is only about 500 meters (1,640 feet) from the grounds of the former Union Carbide plant. The rusty factory ruins form a backdrop to the corrugated metal roofs of the slum, almost a memorial. They are silent witnesses of the tragedy that began in Bhopal 30 years ago and continues today.

This 2-page essay appeared on the German website on Tuesday---and was another article because of content and length reasons that had to wait for my Saturday column.  I thank Roy Stephens once again for sending it.


The Curse Of Keynesian Dogma: Japan’s Lemmings March Toward The Cliff Chanting “Abenomics”

According to Takahiro Mitani, trashing your currency, destroying your bond market and gutting the real wages of domestic citizens is a sure fire ticket to economic success. Yes, that’s what the man says---“I have no doubt that the economy is in a recovery trend if you look at the long run….”

After two years of hoopla and running the BOJ’s printing presses red hot, however, there is not a shred of evidence that Abenomics will lead to any such thing. In fact, after the recent markdown of Q3 GDP even deeper into negative territory, Japan’s real GDP is no higher now than it was the day Abenomics was launched in early 2013; and, in fact, is no higher than it was on the eve of the global financial crisis way back in 2007.

This longish commentary by David Stockman is certainly worth reading---and I thank Roy Stephens once again for sharing it with us.


"More Scarecrows Than People": A Tragic Preview Of Japan's Terminal Collapse

A few weeks ago it was revealed that the mystery person behind the latest bout of monetary (if not so much fiscal) insanity in Japan is none other than Paul Krugman, a fact which has since assured the fate of Japan as a failed state: the demographically imploding country now has at best a few years (if not less) before it implodes into a hyper-inflationary supernova.

And for a very graphic, and tragic, preview of Japan's endgame - the direct result of following Keynesian and monetarist policies to a tee - we go to the Associated Press, which looks at the village of Nagoro, located "deep in the rugged mountains of southern Japan once was home to hundreds of families" and finds that now, only 35 people remain, outnumbered three-to-one by scarecrows that Tsukimi Ayano crafted to help fill the days and replace neighbors who died or moved away.

Wow!  An absolute must read if there ever was one!  I've known for more than a decade that this was Japan's future, but this AP story from Monday was like a two by four right between the eyes.  The story is courtesy of Manitoba reader U.M., who sent it to me earlier this week---and I stole the introductory paragraphs---and the headline---from the Zero Hedge piece about it.


Doug Noland: The Collapsing Periphery

This week saw things take a turn for the worse for the Faltering Periphery Bubble. On the back of crude oil’s $8.03 collapse (to five-year lows), Venezuela CDS surged another 1,402 bps to 4,151 bps. Ukrainian bond yields surged 517 bps this week to 28.63%. Russian ruble yields jumped another 95 bps to 12.82%. On the currency front, the Russian ruble was slammed for another 9.25% (down 43.6% y-t-d). The Colombian peso fell 3.7%, the South African rand 2.1%, Indonesia rupiah 1.4%, Chilean peso 1.1% and Indian rupee declined 0.8%. The Chinese renminbi declined a not insignificant 0.6% against the dollar this week.

Importantly, the Periphery’s core has fallen under major duress. The Mexican peso was hit for 2.7% (down 11.7%) this week, with the Brazilian real down 2.5% (down 11%) and the Turkish lira 1.7% (down 6.5%). Brazilian CDS surged 48 bps to a one-year high 212 bps. Mexican CDS jumped 22 bps to a one-year high 112 bps. Brazilian stocks sank 7.7%. Turkey CDS rose 36 bps to 185 (high since October). Indonesian rupiah yields jumped 34 bps to 8.11%.

With Emerging Market currencies faltering, local currency denominated debt has been under pressure. Yet, for the most part, dollar-denominated EM debt has performed well – that is, until this week. Importantly, the EM dollar-denominated bond dam gave way. Russia dollar bond yields surged 59 bps to 6.62%. Brazil yields jumped 47 bps to 4.56%. Turkey yields rose 45 bps to 4.45%; Mexico 18 bps to 3.53%; Peru 22 bps to 3.80%; and Colombia 28 bps to 3.94%. Venezuela dollar-denominated yields jumped 381 bps this week to 24.28%.

It is also fundamental to my current analysis that central bank reflationary measures have rapidly lost their capacity to hold the global Bubble together---and that the game would continue.  The game, however, has changed. Flagrant euro and yen devaluation propelled king dollar, in the process giving a powerful bear hug to already deflating Periphery Bubbles. King dollar placed further downside pressure on crude and commodities markets. Collapsing crude and commodities impaired financial and economic stability for scores of countries and companies – too many that had ballooned debt (much dollar-denominated) throughout the previous boom. Huge amounts of global debt have rather suddenly turned suspect, inciting a self-reinforcing flight out of currencies, debt markets and commodities. And the more flows reverse out of the Periphery and head to the bubbling Core, the more destabilizing the unfolding king dollar dynamic for the global financial “system” and economy.

With each passing week, Doug Noland's Credit Bubble Bulletin becomes all the more crucial to the understanding of the credit dynamic that now blankets Planet Earth.  As always, it's a must read from one end to the other---and I thank reader U.D. for passing it around last night before I got around to digging it up myself.


Chris Martenson interviews Mike Maloney about the Coming Wealth Transfer

Chris Martenson: Well it’s global this time, right? This is -- there’s nowhere to hide. (...)  What has happened when we’ve tried to print our way to prosperity before? What has happened? Why has it happened and what have been the consequences always been?

Mike Maloney: Whenever you try to print your way to prosperity it transfers well from the masses to the few. The few being the people running the game and then also the hucksters that are very nimble, the con artists and so on. You see these people get rich during the Weimar Hyperinflation. There were quite a few of these fancy salespeople that got rich; they didn’t stay rich once things stabilized again.

But it creates such a topsy turvy world that the normal person that does not know how to operate under these weird economic conditions cannot possibly keep up with things and wealth is transferred away from those people to the people that are very good at observing what’s going on that second and adjusting to it. But the one thing that I see as a constant throughout history is that gold and silver eventually do an accounting of all this -- the financial -- you know financial finessing that the governments are doing.

And when it does that it -- there is a transfer of wealth to the people that own gold and silver. And so -- it’s very rare moments in history. This does not happen often. But it’s a great opportunity and I’ve just -- you know if you look at gold right now the public’s opinion of gold is quite low because it’s been going down for three years.

This 43:35 minute audio interview [with transcript] showed up on Chris Martenson's Internet site last Saturday, but for obvious length reasons, it had to wait for today's column.  It's worth your time, if you have any left, that is---and I thank reader John Bastian for passing it around last Sunday.


Peter Boehringer explains the German gold repatriation campaign

In an interview with Rick Wiles of Tru News, Peter Boehringer of the German Precious Metals Society, a leader of the campaign to induce the Bundesbank to repatriate Germany's gold reserves, describes the campaign and the central bank's longstanding reluctance to provide information about the metal.

The interview, which was recorded on Thursday, begins at the 16-minute mark on the Internet site.  Chris Powell filed this GATA release from Munich early Friday afternoon local time.


Austria Considers Repatriating Its Gold

And just like that, the list of countries who want to repatriate their gold just increased by one more, because after Venezuela, Germany, the Netherlands, sorry Switzerland, and rumors of Belgium, we now can add Austria to those nations for whom the "6,000 year old barbarous relic bubble" is more than just "tradition."

From Bloomberg: Austrian Central Bank Mulls Relocating London Gold: Standard

The Austrian state audit court says central bank should address concentration risk of storing 80% of its gold reserves with the Bank of England, Standard reports, citing draft audit report. Court advises central bank to diversify storage locations, contract partners.

Austrian central bank reviewing gold storage concept, doesn’t rule out relocating some of its gold from London to Austria: Standard cites unidentified central bank officials. Austria has 280 tons gold reserves, according to 2013 annual report. Austrian Audit Court Will Review Nation’s Gold Reserves.

This Zero Hedge gold-related story is one I found embedded in a GATA release that Chris Powell filed from Toronto just before midnight EST last night.


Koos Jansen: Shanghai Gold Exchange chief's data disputes WGC's China demand estimates

Data from the chairman of the Shanghai Gold Exchange shows that the World Gold Council's estimates of China's gold demand are very understated, Bullion Star market analyst and GATA consultant Koos Jansen reports.

This commentary by Koos showed up on the Singapore-based Internet site yesterday sometime---and I found this story that Chris Powell filed on the Internet site just after midnight EST last night.



¤ The Funnies

Freegold Ventures Limited is a North American gold exploration company with three gold projects in Alaska. Current projects include Golden Summit, Vinasale and Rob. Both Vinasale and Golden Summit host NI 43-101 Compliant Resource Calculations.

An updated NI 43-101 resource was calculated on Golden Summit in October 2012 and using 0.3 g/t cutoff  the current resource is 73,580,000 tonnes grading 0.67 g/t Au for total of 1,576,000 contained ounces in the indicated category, and 223,300,000 tonnes grading 0.62 g/t Au for a total of 4,437,000 contained ounces in the inferred category. In addition to the Golden Summit Project the Vinasale also hosts a NI 43-101 resource calculation which was updated in March 2013. Indicated resources are 3.41 million tonnes averaging 1.48 g/t Au for 162,000 ounces, and Inferred resources are 53.25 million tonnes averaging 1.05 g/t Au for 1,799,000 ounces of gold utilizing a cutoff value of 0.5 grams/tonne (g/t) as a possible open pit cutoff. Please send us an email for more information,


¤ The Wrap

One must look away from the COMEX to understand how JPMorgan could be the world’s largest silver long (owner) since the data indicate that the bank still holds a short position on the exchange, albeit the smallest such short position in 7 years. The evidence suggests that JPMorgan used its control of silver prices by virtue of its dominant COMEX market share to depress prices, not only to accrue profits on its short position, but even more for the express purpose of accumulating physical silver on the cheap. What evidence?

The evidence lies in the intentionally poor price performance of silver over the past nearly 4 years and the fact that the world has produced as many as 300 million ounces of new silver that has been excess to total fabrication demand. This extra silver had to be bought by the world’s investors and those investors did not appear to be aggressive buyers. In other words, someone had to buy the silver and since the world’s investors did not appear to be ready buyers, the metal was most likely bought by a non-traditional buyer. JPMorgan most closely fits that description for two reasons. One, buying physical silver was the most practical and efficient manner of closing out JPM’s documented COMEX short position and two, the silver purchases would be kept confidential since no reporting requirements attach to physical ownership. By buying physical silver, JPMorgan could cover its massive COMEX short position absent prying eyes. - Silver analyst Ted Butler: 10 December 2014

Today's pop 'blast from the past' comes from an American rock band that formed in L.A. back in 1977.  This was their first big hit during the winter of 1978/79---reaching #5 on the U.S. Billboard Charts.  The link is here---enjoy!

Today's classical 'blast from the past' is an old Christmas chestnut that I drag out every year---and since there are only two weekends left before Christmas, I better stick it in here, as I have something else for next weekend already.  Despite the fact that this work was composed for a bass voice, here's now-Dame Emma Kirkby singing what I consider to be the definitive version of "But who may abide..." from Handel's Messiah, which he composed back in 1741 A.D.  It's 4:07 minutes of pure heaven on earth.  What a voice!  The link is here.

It was a pretty quiet day in the precious metal markets yesterday, but with the world's economy, particularly in the emerging market economies, in the initial stages of melt-down, it may not remain quiet much longer.  However, the 'orphan' rally that we had in the precious metals on Tuesday, along with yesterday's COT Report that covered it, was an indication that 'da boyz' are not going to let things get out of hand to the upside, at least for the moment.

Here are the 6-month charts for all four precious metals, plus WTIC, which hit a new low for this move down yesterday.

Although both gold and silver blasted through their respective 50-day moving averages like a hot knife through soft butter on Tuesday, they haven't been allowed to get anywhere since---and with the short positions of the technical funds whittled away to next to nothing, it's hard to see how the next rally will develop, unless these same funds start pouring onto the long side.  And if that's the case, JPMorgan et al will most likely meet them head on like they did on Tuesday.  And even though the Commercial net short positions in both gold and silver are now ripe for an engineered price decline, Ted Butler wonders whether these same technical funds that just covered most of their short positions at big profits, will stick their heads back in the lion's mouth by going back on the short side if 'da boyz' can make it happen.

So we wait.

Along with the U.S. provoking Russia at every turn---and oil prices at a level that is about to wreak financial and economic havoc in all oil-producing nations, other than a few in the Persian Gulf region---the stage is certainly set for some sort of crisis.  And if it doesn't unfold right away, the effects of both are certain to intensify dramatically in the not-too-distant future.

It's hard for me to believe that Russia/Ukraine situation is happening in isolation from what now has all the appearances of a credit market and financial implosion which, as Doug Noland pointed out earlier, is now firmly established in the emerging markets---and is now starting to infect the "Core Bubble Dynamics" as he so eloquently puts it.

Casting back to an Earnest Hemingway quote that has graced this column far too often, but which is worthwhile resurrecting at this particular juncture---"The first panacea for a mismanaged nation is inflation of the currency; the second is war.  Both bring a temporary prosperity; both bring a permanent ruin.  But both are the refuge of political and economic opportunists."

Here's a chart that Nick Laird sent me in the wee hours of this morning.  It's the "Major Markets Composite Index" going back to 1970---and it certainly doesn't require any explanation on my part, as the chart says it all.  The market swoon of the last few weeks---and this past week in particular---barely register on the far-right side of this graph, but the potential size of the down move from here is terrifying---and that's being kind.

No amount of money printing will do any good now---and I see nothing but very hard times ahead.

Somewhere in all of this, the precious metals should do well, but what event will trigger it, is hard to tell, as the powers-that-be in the COMEX futures market in gold and silver et al are still on the job.

And as I've said before recently, I'm comforted by the fact that Alan Greenspan has gone on record that at some point in the future, the price of gold will trade "materially" higher than it is now---and also by the fact that certain entities are buying massive amounts of physical silver in all forms, which will ensure that someday, silver will certainly become the new gold.

On that cheery note, I'm done for the day---and the week.

See you on Tuesday.

Ed Steer