Gold & Silver Daily
"The most blatant example of price management that one could hope to see"
 

¤ Yesterday In Gold & Silver

The gold price popped for about five bucks at the New York open on Sunday evening, but "da boyz" were there within fifteen minutes to put the kibosh on that.  From there it traded pretty flat until the London open---and then the selling pressure began anew.  By the COMEX open, the price was down five dollars.

Then ten minutes after the open, the gold price began to rally in earnest, breaking through its 50-day moving average in the process---and JPMorgan et al were there at the London p.m. gold fix to put an end to it all.  By the 1:30 p.m. EDT COMEX close, the price was engineered to slightly below its Friday close---and it traded flat from there.

The low and high ticks were reported by the CME Group as $1,184.00 and $1,204.70 in the August contract.

Gold was closed in New York yesterday at $1,188.80 spot, down $1.20 from Friday.  Net volume was huge at 165,000 contract, with virtually all of it in the current front month, which is August.

Here`s a partial 5-minute gold chart courtesy of Brad Robertson---and as you can tell, the volume to the upside on the rally was much higher than the volume required to engineer the gold price back to unchanged---and Ted Butler has a comment on that in The Wrap section.

It was more or less the same price pattern in silver, so I'm sure you can fill in the blanks on this metal on your own.

The low and high tick in that precious metal was recorded as $16.59 and $17.17 in the July contract.

Silver finished the Monday session at $16.705 spot---up a whole half a cent. Aren't these HFT guys and their algorithms just too cute for words?  Net volume was pretty high at 52,000 contracts, with about 8 percent of that amount being roll-overs out of the July contract. 

Ditto for platinum which, by the London p.m. gold fix, was up 11 dollars, but by the COMEX close, JPMorgan et al had the price at a 9 dollar loss, closing it at $1,101 spot.

The palladium chart was a mini version of the other three precious metals, but it was only closed down three dollars at $772 spot.

The dollar index closed late on Friday afternoon in New York at 96.85---and then had a pretty wild time of it starting on Sunday evening in New York. It made it back above the 97.00 level by mid-morning trading in the Far East on their Monday.  The two attempts it penetrate the 97 mark to the downside after that were met with the usual 'gentle hands'---except these same hands hit the 'sell precious metals' button at the London p.m. gold fix at the same moment they ramped the dollar.  The dollar index finished the Monday session at 97.43---up 57 basis points.

Here`s the 6-month U.S. Dollar Index chart so you can see the progress of the current `rally`.

The gold stock opened up, but began to head lower immediately, even though the gold price was till heading for the moon and the stars.  They stopped falling around the COMEX close and did little for the remainder of the day.  The HUI closed down 0.76 percent.  I thank Nick Laird for this chart.

The silver equities rallied against strong selling until their high ticks, which came at 11:00 a.m. EDT.  The low came about fifteen minutes before the COMEX close and, like their golden brethren, didn't do much after that.  Nick Laird's Intraday Silver Sentiment Index closed virtually unchanged, down only 0.08 percent.

Based on the price action in the precious metal shares, there can be little doubt that there was an active seller lurking in the background to ensure that their respective rallies didn't go anywhere.

The CME Daily Delivery Report for Day 3 of the June delivery month showed that 2,468 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday. The only short/issuer was JPMorgan out of its in-house [proprietary] trading account.  The three largest stoppers were HSBC USA in its in-house account with 1,570 contracts, JPMorgan in its client account with 422---and Canada's Scotiabank with 387 contracts. The link to yesterday's Issuers and Stoppers Report is here---and it's worth a look.

The CME Preliminary Report for the Monday trading session showed that gold open interest in June fell by 444 contracts, leaving 5,091 still open---minus the 2,468 shown above, of course.  In silver, June o.i. increased by 1---to 33 contracts outstanding.

There was a withdrawal from GLD yesterday.  This time an authorized participant removed 57,539 troy ounces.  And as of 8:55 p.m. EDT, there were no reported changes in SLV.

The folks over at Switzerland's Zürcher Kantonalbank updated their website with that changes in their gold and silver ETFs as of Friday, May 22---and both had withdrawals for the reporting week.  Their gold ETF declined by 21,118 troy ounces---and their silver ETF dropped by a chunky 285,063 troy ounces.

The U.S. Mint had a sales report to start the new month.  They sold 500 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---and 400,000 silver eagles.  Those silver eagle sales go along with the 375,000 they reported selling on Friday.

There was no in/out activity in gold worth mentioning at the COMEX-approved depositories on Friday.  There was more activity in silver, as 629,943 troy ounces were received---but only 3,056 troy ounces were shipped out.  Most of the 'in' activity was at the CNT Depository---and because I'm on the road, I don't have the link to that activity.

It was fairly quiet at COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  Only 3,208 kilobars were received---and 397 shipped out.  All the action was, as usual, at Brink's, Inc.

Here's a new chart that Nick Laird sent our way yesterday.  The top of the chart shows the China [in red] and India [in green] monthly gold demand going back to the start of 2008.  Please note the bottom chart, which shows monthly demand from these two countries vs. total monthly mining production.  Add in Russia---and you're about 100 percent.  Minus scrap, the rest of the world's gold demand is coming out of central bank vaults.

Because I'm still on the road, I've cut the stories back to the minimum which, in this case, is still quite a few.

 

¤ Critical Reads

Consumer Spending Stalled in April as Americans Saved More

Consumer purchases unexpectedly stalled in April as Americans used income gains to shore up savings, raising the risk the biggest part of the economy may take time to gain momentum after a slow start to the year.

The unchanged reading in purchases followed a 0.5 percent gain the prior month that was larger than previously estimated, Commerce Department figures showed Monday in Washington. The median forecast in a Bloomberg survey of 79 economists called for a 0.2 percent rise. Earnings increased 0.4 percent, more than projected, and the saving rate climbed.

Consumers, who’ve been using the money freed up by low gasoline costs to pay down debt or rebuild their balance sheets, would be more inclined to shop as wages accelerate. Sustained improvement in household spending, which accounts for almost 70 percent of the economy, is needed to ensure growth rebounds as Federal Reserve officials project.

This Bloomberg article was posted on their Internet site at 6:30 a.m. Denver time on Monday.  There's a 1:34 minute video clip as well.  I thank Dan Lazicki for today's first story.

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Margin Debt Breaks Out: Hits New Record 50% Higher Than Last Bubble Peak

For a few months in mid/late 2014 there was some concern among those who still don't get that in this New Paranormal market the only real buyers are central banks, that while the stock market kept on rising, and rising, NYSE margin debt was flat, and in fact the total amount of purchases on margin at the end of 2014 was nearly the same to those in January. Meanwhile the S&P 500 had soared to recorder highs.

A few things here: first, as we explained one year ago, in a world in which levered purchases take place via such shadow banking conduits as repo and primary broker arrangements, margin debt has become an anachronism from a bygone generation in which there wasn't $2.5 trillion in Fed reserves supporting the market, and is now almost entirely meaningless.

But for those who still cling on to margin debt as indicative of anything, the latest NYSE report should provide some comfort: finally the long-awaited breakout in participation has arrived, and after stagnating for over a year, investors - mostly retail - are once again scrambling to buy stocks on margin, i.e., using debt, and as of April 30, the amount of margin debt just hit a new all time high of $507 billion, $30 billion more than the month before, and nearly 50% higher than the last bubble peak reached in October 2007.

This Zero Hedge story showed up on their website early on Friday afternoon EDT last week---and it`s something I found in yesterday`s edition of the King Report.  It`s worth skimming.

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Is Our Economy's Cinderella Carriage About to Turn Into a Pumpkin?

The past six years of expansion have been as illusory as Cinderella's magic carriage.

The clock is about to strike midnight, and our Cinderella economy's magic carriage will revert to a pumpkin. The magic of the Federal Reserve's flood-the-fields policies of zero interest rates (ZIRP) and liquidity (via quantitative easing (QE) and other programs) had an expiration date of December 2014, judging by the negative gross domestic product (GDP) in the first quarter and the deep slump in corporate profits:

U.S. GDP falls 0.7%

U.S. corporate profits sink 5.9%, biggest drop since 2008

There are many other indications that the Fed's magic has worn off: new orders are slumping, for example.

This Charles Hugh-Smith commentary appeared on the Zero Hedge website yesterday morning---and it's the second offering of the day from Dan Lazicki.

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"By Almost Every Measure Stocks Are Overvalued" Warns Goldman After Slamming Corporate Buybacks

Over the weekend, we first reported that none other than Nobel prize winner Robert Shiller said that in his opinion, unlike 1929, this time everything - stocks, bonds and housing - was overvalued.

Curiously, none other than Goldman's chief equity strategist, David Kostin echoed this sentiment when in his latest weekly note to clients he said that "by almost any measure, US equity valuations look expensive. The typical stock in the S&P 500 trades at 18.1x forward earnings, ranking at the 98th percentile of historical valuation since 1976.

For the overall index, the aggregate forward P/E multiple equals 17.2x, a rise of 63% since September 2011, compared with the median expansion of 48% during 9 previous P/E expansion cycles. Financial metrics such as EV/EBITDA, EV/Sales, and P/B also suggest that US stocks have stretched valuations. With tightening on the horizon, the P/E expansion phase of the current bull market is behind us."

This commentary showed up on the Zero Hedge website at noon EDT on Monday---and it's courtesy of Orlando, Florida reader Dennis Mong.

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When Paper Wealth Vanishes: John P. Hussman

"The Federal Reserve hasn’t created a perpetual money machine. No, no, no, no, no. What the Fed has done is to encourage investors to chase yields and to speculate, to the point where stocks are now so overvalued that they can be expected to enjoy no further return at all over the coming decade. That’s how security pricing works. The higher the price an investor pays for a given stream of future expected cash flows, the lower the subsequent return an investor can expect to enjoy. The gains have already been had, at least on paper, though the holders who successfully realize these paper gains will do so through a needle’s eye.

The past few quarters appear to be part of that distribution process. Volume picks up as holders attempt to sell and those shares are absorbed by dip-buyers, followed by low-volume short squeezes as sellers back off, and then return after those rallies with additional rounds of distribution.  As long as only a few investors attempt to do so, any individual can cash out, but only by successfully selling their shares to some other investor at current levels.  In aggregate, investors can’t exit, because somebody has to hold the stuff.  For most investors, the majority of the paper gains that have emerged during the advancing half-cycle since 2009 will simply vanish over the completion of the cycle.

This longish commentary has a couple of excellent charts embedded.  It was posted on the hussmanfunds.com Internet site yesterday---and I thank reader U.D. for passing it around.

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Why to Pay Attention to Today's Buyback Boom

There has been a lot of debate recently about whether today’s buyback boom — a record $133 billion in buybacks for S&P companies were announced in April — is good or bad for the economy and for markets.

While some defend the buyback practice as a method of returning cash to shareholders, others, including my colleague Larry Fink, have argued that some companies today are focusing on maximizing short-term shareholder value at the expense of investing in the future.

In my opinion, today’s boom is just one economic distortion created by the Federal Reserve (Fed)’s excessively accommodative monetary policy.

The boom is, in essence, a response to today’s extraordinarily low interest rates, which have translated into abundant liquidity for corporations seeking to borrow cheaply in the capital markets.

This commentary is by Rick Rieder, who is the Managing Director of BlackRock’s Fundamental Fixed Income Fund---and is Co-head of Americas Fixed Income.  It's pretty short---and worth reading.  It appeared on the blackrockblog.com Internet site early yesterday---and it's the second contribution in a row from reader U.D.

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"The Fed Has Been Horribly Wrong" Deutsche Bank Admits, Dares to Ask if Yellen is Planning a Housing Market Crash

The reason why Zero Hedge has been steadfast over the past 6 years in its accusation that the Fed is making a mockery of, and destroying not only the very fabric of capital markets (something which Citigroup now openly admits almost every week) but the US economy itself (as Goldman most recently hinted last week when it lowered its long-term "potential GDP" growth of the US by 0.5% to 1.75%), is simple: all along we knew we have been right, and all the career economists, Wall Street weathermen-cum-strategists, and "straight to CNBC" book-talking pundits were wrong. Not to mention the Fed.

Indeed, the onus was not on us to prove how the Fed is wrong, but on the Fed - those smartest career academics in the room - to show it can grow the economy even as it has pushed global capital markets into a state of epic, bubble frenzy, with new all time highs a daily event across the globe, while the living standard of an ever increasing part of the world's middle-class deteriorates with every passing year. We merely point out the truth that the propaganda media was too compromised, too ashamed or to clueless to comprehend.

And now, 7 years after the start of the Fed's grand - and doomed - experiment, the flood of other "serious people", not finally admitting the "tinfoil, fringe blogs" were right all along, and the Fed was wrong, has finally been unleashed.

Here is Deutsche Bank admitting that not only the Fed is lying to the American people:

This long commentary, with a quite a few charts, was posted on the Zero Hedge website at 10:06 a.m. EDT yesterday morning---and I thank reader M.A. for sharing it with us.

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The End of the Safe Deposit Box for Wealth Storage

On 1 April 2015, Chase bank in the US advised clients who rent safe deposit boxes from them that there would be some changes in their policies. Of particular interest is the following condition:

Contents of box: You agree not to store any cash or coins other than those found to have a collectible value.”

Interesting. After all, cash and precious metals are traditional primary stores of wealth. Why single them out as no longer being acceptable?

As readers of this publication will know, the banking world, increasingly, is pushing people to put their wealth into cash, and their cash into banks in the form of deposits. In this effort, they’re being assisted by many of the world’s governments, which are rapidly increasing the level of legislation that controls what individuals are allowed to do with their own wealth.

This excellent commentary by Jeff Thomas appeared on the International Man website yesterday---and certainly falls into the must read category.

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Rule By The Corporations — Paul Craig Roberts

The Transatlantic and Transpacific Trade and Investment Partnerships have nothing to do with free trade. “Free trade” is used as a disguise to hide the power these agreements give to corporations to use law suits to overturn sovereign laws of nations that regulate pollution, food safety, GMOs, and minimum wages.

The first thing to understand is that these so-called “partnerships” are not laws written by Congress. The US Constitution gives Congress the authority to legislate, but these laws are being written without the participation of Congress. The laws are being written by corporations solely in the interest of their power and profit. The office of US Trade Representative was created in order to permit corporations to write law that serves only their interests. This fraud on the Constitution and the people is covered up by calling trade laws “treaties.”

Indeed, Congress is not even permitted to know what is in the laws and is limited to the ability to accept or refuse what is handed to Congress for a vote. Normally, Congress accepts, because “so much work has been done” and “free trade will benefit us all.”

This commentary by Paul put in an appearance on his website on Monday---and it's definitely worth reading.  The first person through the door with this story was South African reader B.V.

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Alexis Tsipras lambasts 'absurd proposals' for Greece debt-deal failure

Greece’s beleaguered prime minister, Alexis Tsipras, has blamed the “absurd proposals” of creditors keeping the debt-stricken country afloat for the failure to reach a deal that could release emergency aid to avert default.

In a hard-hitting article for the French daily Le Monde, the leader lambasted the uncompromising approach of the EU, European Central Bank and International Monetary Fund for five months of fruitless negotiations.

“The lack of an agreement so far is not due to the supposed intransigent, uncompromising and incomprehensible Greek stance,” he wrote. “It is due to the insistence of certain institutional actors on submitting absurd proposals and displaying a total indifference to the recent democratic choice of the Greek people.”

The Greek leader held a telephone call on Sunday night with the German chancellor, Angela Merkel, and France’s François Hollande to discuss the situation. All three leaders reiterated the need for a quick agreement, according to one official in Athens.

This news item showed up on The Guardian's website at 7:42 p.m. BST in London on their Sunday evening---and it's the first offering of the day from Roy Stephens.  Ambrose Evans-Pritchard has something to say about this as well in a Telegraph story from Sunday evening headlined "Defiant Tsipras threatens to detonate European crisis rather than yield to creditor "monstrosity""---and that one is courtesy of Martin Fluck.

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European Leaders Deciding on Greece's Fate Agree That Talks Must Intensify

European leaders and the head of the International Monetary Fund agreed to step up the intensity of talks over Greece’s fate after an extraordinary meeting in Berlin about ways to avert a default.

The top-level huddle lasted past midnight Tuesday morning at Germany’s government headquarters with Chancellor Angela Merkel, IMF chief Christine Lagarde, European Central Bank President Mario Draghi, French President Francois Hollande and European Commission President Jean-Claude Juncker in attendance. The goal was to hammer out an offer that Greece could consider in coming days, according to two people familiar with the plan.

After Merkel left, her office put out a statement saying the five leaders “agreed that work must now be continued with greater intensity” and that “they have been in closest contact in recent days and want to remain so in the coming days, both among themselves and naturally also with the Greek government.”

Efforts to end an impasse over funding have become urgent as the Mediterranean nation faces a debt repayment to the IMF on Friday. While Greece says it can make the payment, it’s the smallest of four totaling almost 1.6 billion euros ($1.78 billion) this month. The timing coincides with the expiration of a euro-region bailout by the end of June.

This news item appeared on the Bloomberg website very late Monday morning MDT---and was updated late Monday afternoon MDT.  It's the second offering of the day from Roy Stephens.  The original headline read "Greece's Creditor's said to meet in Berlin to discuss next steps".

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Greece must stop hoping for a miracle - it needs to leave the euro

It’s time for Greece to put itself out of its misery. It must stop hoping for a miracle, default on its debts and exit the euro. In the short term, this would probably precipitate another cataclysmic relapse into recession for Greece’s long-suffering people. But it is the only way out of the current logjam and has become a necessary, albeit not sufficient, condition for the country to make an eventual recovery.

Ideally, the Greek government would choose to press the Grexit button itself. But if it decides instead to cling on indefinitely, the rest of the eurozone should find a way of forcing it out of the single currency as soon as possible. That would go against the EU’s imperialistic mindset, for sure, and would violate the infamous acquis communautaire rule: the view that E.U. integration should never be allowed to be reversed in any area and in any country. But it’s the only way to end the current nonsense, and the only hope for a country that has been suffering horrendously for years.

The most powerful arguments in favour of both default and Grexit relate to political economy and electoral psychology. Greece’s debt burden is too big: it can never be repaid. The sooner everybody accepts this, the better. Just as importantly, however, most Greek voters seem to agree with the current government’s ideology: they want, by and large, to remain in the euro but don’t want to have to abide by its broadly orthodox rules on tax, spending and markets. This is fatally inconsistent: the only way for the euro to work, in the absence of massive, permanent handouts from Germany and other rich countries, is for member states to embrace free markets and radical labour market flexibility.

This right-on-the-money commentary was posted on the telegraph.co.uk Internet site at 9:18 p.m. Monday evening London time, which was 4:18 p.m. EDT in Washington.  I thank Roy Stephens for sliding this into my into my in-box just after midnight MDT this morning.

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Slovak PM calls for cancelation of anti-Russian sanctions

Slovak Prime Minister Robert Fico has called for cancelation of the European Union’s anti-Russian sanctions.

"The sanctions have not produced the expected effect. They have harmed both Europe and Russia. I don’t know who may be happy with that reciprocal damage," Fico said on the eve of his official visit to Russia, due Tuesday, in an exclusive interview with TASS First Deputy Director General Mikhail Gusman.

He said sanctions cannot be the content of politics. "They may only be the tool or one of the tools in the resolution of emerging complex situations," the premier underscored.

Second, he said, historical experience testifies to inefficiency of that mechanism of pressure.

This short article, filed from Bratislava, appeared on the tass.ru Internet site at 7:44 p.m. Moscow time on their Monday evening, which was 12:44 p.m. EDT in Washington.  I thank Roy Stephens for sending it along.

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‘Self-appointed advocate of new Ukraine’: Soros emails leaked by anti-Kiev hackers

George Soros advocates E.U. financial aid and military assistance to Ukraine to restore Kiev’s fighting capacity without violating the Minsk peace deal, claim anti-Kiev hackers citing leaked emails between the billionaire and Ukraine’s president.

The hacking group CyberBerkut claims it has penetrated Ukraine’s presidential administration website and obtained correspondence between Soros and Ukraine’s President Petro Poroshenko.

The hacktivists have published three files online, which include a draft of “A short and medium term comprehensive strategy for the new Ukraine” by Soros (dated March 12, 2015); an undated paper on military assistance to Kiev; and the billionaire’s letter to Poroshenko and Ukraine’s Prime Minister Arseny Yatsenyuk, dated December 23, 2014.

According to the leaked documents, Soros supports Barack Obama’s stance on Ukraine, but believes that the US should do even more.

I`ve known for a long time that Soros has been involved in stuff like this, not only in the Ukraine, but elsewhere as well.  Even though it`s worth reading, you should read it with an open mind and await further developments.  This story was posted on the Russia Today website at 8:58 p.m. Moscow time on their Monday evening---and I thank reader `h c` for sending it our way very late yesterday evening Denver time.

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Europe Shocked When Russia Does to It What Europe Did to Russia

The E.U. issued a press release this morning which could perhaps be summed up in two words - "not fair." Following the denial-of-entry by Russia of several EU politicians, Russia has released a list of 89 names who will face travel bans - of exactly the same type as E.U. and U.S. enforced upon numerous Russian elites. Europe is displeased that Russia would dare do unto them as they have done unto others... "we deem this measure as totally arbitrary and unjustified," they exclaimed, adding, "we don’t have any further information on the legal basis or the criteria or the process of these decisions."

The travel bans by Russia appear to be a response to the E.U.’s imposing several rounds of sanctions on Russia for its role in destabilizing Ukraine, including asset freezes and travel bans on 150 officials.

What goes around, comes around sweetheart!  Personally, it would have been better for Russia to let everyone in, as such tit-for-tat action is childish.  This is an area where the Russian's should take the moral high ground---and I'm disappointed that they didn't.  This Zero Hedge piece showed up on their website at 3:00 p.m. EDT yesterday afternoon---and I thank Dan Lazicki for sending it our way.

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World Bank improves Russia forecast on higher oil

The World Bank has issued a more optimistic economic forecast for Russia for 2015-2016, which assumes GDP will fall less than predicted in 2015 and start growing from 2016. The change of heart is linked to growing oil prices in the last two months.

The real GDP is now expected to decline by 2.7 percent in 2015, increase by 0.7 percent and 2.5 percent in 2016 and 2017 respectively. This is a change to the Bank's viewpoint in April when GDP was anticipated to shrink by 3.8 percent in 2015 and by 0.3 percent in 2016.

"The revised forecast is largely driven by the adjustment in oil prices over the previous two months that is supporting the ruble exchange rate and a slightly faster retreat of inflation. That would allow the Central Bank of Russia to pursue monetary easing at a more rapid pace for the rest of 2015, as a result bringing down borrowing costs and increasing lending to firms and households. Both investment and consumption growth would contract slightly less than previously expected," said Birgit Hansl, the World Bank’s top economist for the Russian Federation, on Monday.

This story showed up on the Russia Today website at 3:31 p.m. Moscow time on their Monday afternoon, which was 8:31 a.m. EDT in New York.  It's another contribution from Roy Stephens. 

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U.S. calls for ‘immediate halt’ to China island-building

The United States on Saturday vowed to keep sending military aircraft and ships to disputed parts of the South China Sea and called for an immediate halt to reclamation works by Beijing in the tense region.

U.S. Defense Secretary Ashton Carter told a high-level security conference in Singapore that Beijing's intensifying reclamation activity was "out of step" with international norms.

"First, we want a peaceful resolution of all disputes. To that end, there should be an immediate and lasting halt to land reclamation by all claimants," Carter said at the annual Shangri-La Dialogue on security with a high-level Chinese military delegation attending.

"We also oppose any further militarisation of disputed features," he said.

This AFP story put in an appearance on the france24.com Internet site on Saturday---and I thank Roy Stephens for sharing it with us.  There was also a BBC article about this from Saturday headlined `U.S. calls for land reclamation 'halt' in South China Sea`---and it`s courtesy of reader M.A.

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Why is Obama Goading China? -- Mike Whitney

U.S. Secretary of Defense Ashton Carter is willing to risk a war with China in order to defend  “freedom of navigation” in the South China Sea. Speaking in Honolulu, Hawaii on Wednesday, Carter issued his “most forceful” warning yet, demanding “an immediate and lasting halt to land reclamation” by China in the disputed Spratly Islands.

Carter said: “There should be no mistake: The United States will fly, sail, and operate wherever international law allows, as we do all around the world.” He also added that the United States intended to remain “the principal security power in the Asia-Pacific for decades to come.”

In order to show Chinese leaders “who’s the boss”, Carter has threatened to deploy U.S. warships and surveillance aircraft to within twelve miles of the islands that China claims are within their territorial waters. Not surprisingly, the U.S. is challenging China under the provisions of the U.N. Convention on the Law of the Sea,  a document the US has stubbornly refused to ratify.  But that’s neither here nor there for the bellicose Carter whose insatiable appetite for confrontation makes him the most reckless Secretary of Defense since Donald Rumsfeld.

So what’s this really all about?  Why does Washington care so much about a couple hundred yards of sand piled up on reefs in the South China Sea? What danger does that pose to U.S. national security? And, haven’t Vietnam, Taiwan and the Philippines all engaged in similar “land reclamation” activities without raising hackles in D.C.?

Carter is a screaming psychopath---and absolutely nothing is off the table with this nut job running things.  If you're a serious student of the New Great Game, dear reader, this falls into the absolute must read category.  It was posted on the counterpunch.org Internet site on the weekend---and I thank South African reader B.V. for bringing it to our attention.

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China Says It Could Set Up Air Defense Zone in South China Sea

A Chinese admiral said Sunday that Beijing could set up an air defense zone above disputed areas of the South China Sea if it thought it was facing a large enough threat, according to Chinese news media.

Adm. Sun Jianguo, deputy chief of staff of the People’s Liberation Army, speaking at a regional security forum in Singapore, said that China had not definitely said it would create a so-called air defense identification zone, but that any decision would be based on an aerial threat assessment and the maritime security situation. He also said other nations should not overemphasize the issue.

The creation of an air defense zone would be viewed by the United States and Southeast Asian nations as a huge provocation. In recent years, foreign officials have speculated whether one of Beijing’s next moves in the South China Sea would be to set up such a zone, which would further solidify China’s military presence in the waters.

I`m always leery of any article like this that shows up in The New York Times---and you should be as well, as it, along with several other New York papers, are basically mouthpieces for the U.S. government.  This article put in an appearance on their website on Sunday sometime---and it`s the final offering of the day from Roy Stephens---and I thank him on your behalf. 

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The Dollar Will Die with a Whimper, Not a Bang -- Jim Rickards

The same force that made the dollar the world’s reserve currency is working to dethrone it.

July 22, 1944, marked the official conclusion of the Bretton Woods Conference in New Hampshire. There, 730 delegates from 44 nations met at the Mount Washington Hotel in the final days of the Second World War to devise a new international monetary system.

The delegates there were acutely aware that the failures of the international monetary system after the First World War had contributed to the outbreak of the Second World War.

They were determined to create a more stable system that would avoid beggar-thy-neighbor currency wars, trade wars and other dysfunctions that could lead to shooting wars.

This U.S. dollar-gold commentary by Jim showed up on the dailyreckoning.com Internet site last Thursday---and I get the impression that this is a repeat, as I think I`ve posted this commentary, or one very much like it, before.  I thank Harold Jacobsen for sending it our way.

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Texas also aims to repatriate its gold ... from HSBC in New York

State Rep. Giovanni Capriglione asked the Legislature to create a Texas Bullion Depository, where Texas could store its gold, which is now in New York, and where others could keep their precious metals.

The Southlake Republican must have the golden touch, because the House and the Senate have signed off on his plan and his bill appears headed to Gov. Greg Abbott for consideration.

“We are not talking Fort Knox,” Capriglione said. “But when I first announced this, I got so many e-mails and phone calls from people literally all over the world who said they want to store their gold … in a Texas depository.

“People have this image of Texas as big and powerful … so for a lot of people, this is exactly where they would want to go with their gold.”

This gold-related news item put in an appearance on the star-telegram.com Internet site on Saturday---and I found it embedded in a GATA release.  The above headline is a Chris Powell invention.  The actual headline reads `A Gold Rush in Texas`.  The Zero Hedge spin on this from just before midnight EDT last night is headlined `Kyle Bass Was Right: Texas to Create Own Bullion Depository, Repatriate $1 Billion of Gold`---and it`s courtesy of reader M.A.

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How BitGold intends to become a new standard

When Josh Crumb and his colleague started out, they just wanted to figure out a way to allow people to pay for a cup of coffee with gold.

Yes, you read that correctly. With gold.

In the more than four decades since president Richard Nixon abolished the gold standard -- the pledge that a dollar was worth 1/35th of an ounce of gold -- there has been no formal link between the value of the precious metal and that of the dollar or any other of the worlds other chief currencies. That has driven a group of economists and policymakers crazy; they argue that the demise of the gold standard lies behind all of Americas economic woes since Nixons 1971 edict. Rand Paul, one of the current crop of Republican candidates for president, is among those arguing that its time to at least study the idea of linking the dollar to gold.

This article appeared on theguardian.com Internet site of all places.  It showed up there early Sunday afternoon BST---and it`s another gold-related story I found on the gata.org Internet site.

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Productivity, modernisation key in gold wage talks

South Africa’s gold mining industry needed to undergo a structural shift and significant modernisation to curb the socioeconomic pressures it was facing and to create a sustainable, uninterrupted operating environment, South Africa’s gold miners have stated.

In the latest update from their ‘This is Gold’ website, they noted that, by 2025, the country’s gold output would fall to 69 t, or one-half of current levels. This could potentially result in employment decreasing by 43% to 68 000 employees over the next decade.

While employee numbers had continued to decline in recent years, wages paid – in total and on average – had risen significantly.

In fact, average labour remuneration had risen by 11% a year over the past decade. On average, guaranteed pay for gold mine employees had risen to R13 435 a month in 2012 versus R10 972 a month in 2010.

Well, dear reader, I`m getting rather tired of hearing the plight of gold and silver miners, regardless of country of origin.  Every mining company out there knows precisely why their in their current predicaments, but won`t say or do anything about it.  What happened to their fiduciary responsibilities to their company, their employees---and their stockholders.  They don`t have a gonad to share between them, so I guess we shouldn`t expect much else than constant whining.  I wonder what their respective mothers would think if they knew how badly they had raised their sons.  This news item, filed from Johannesburg, showed up on the miningweekly.com Internet site on Friday SAST---South African Standard Time---and it`s the final offering of the day from South African reader B.V. 

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China gold demand holding up well: New record ahead? -- Lawrence Williams

We keep seeing reports in the mainstream media suggesting that Chinese gold demand is slipping away, but continuing strong gold withdrawal figures from the Shanghai Gold Exchange (SGE) seem to contradict these reports. While, as we have reported before, there are many doubts expressed as to whether SGE withdrawals are actually equivalent to Chinese consumer demand, there is no doubt that they do represent the underlying consumption situation.

Hong Kong-based Philip Klapwijk, the former executive chairman of GFMS prior to its acquisition by Thomson Reuters, did explain some of the discrepancies between the mainstream analysts’ Chinese consumption figures and SGE withdrawals (which differed last year by around 1,000 tonnes) as unrecorded cross border gold movement from mainland China into Hong Kong (technically illegal) in a presentation to the Bloomberg Precious Metals Forum a week ago, but he also noted that due to a clampdown by authorities this amount had ‘fallen off a cliff’ so far this year, which raises the question as to where all this gold being withdrawn from the SGE is going if it is not being technically ‘consumed’ in the mainland, or being ‘exported’ to Hong Kong.

The latest figure for SGE withdrawals, announced Friday, is for 42 tonnes for the week ended May 22, bringing the total so far this year to 945 tonnes in only 20 weeks. The levels are actually high for the time of year, which is usually a low period for SGE gold movements. Thus average weekly withdrawals so far this year have amounted to over 47 tonnes. While this includes the relatively high demand levels up to the Chinese New Year, it should also be recognised that the final four months of the calendar year also tend to see very high SGE withdrawal numbers.

This excellent and right-on-the-money must read commentary by Lawrie put in an appearance on the mineweb.com Internet site at 10:18 a.m. BST yesterday morning, which was 5:18 a.m. EDT.  I found this story all by myself!

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¤ The Funnies

Here`s a photo that Charleston, South Carolina reader Tony Beck sent my yesterday---and I thought it worth sharing.  It`s an underside shot of a swallow-tail kite that he took the other day.

Here`s a photo of the whole bird that I `borrowed` from the Internet.

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, ir@freegoldventures.com

 

¤ The Wrap

In the case of a cooling off of the weekly COMEX silver turnover, since I trace JPMorgan’s accumulation of hundreds of millions of ounces of silver as having started precisely when the unprecedented turnover began in April 2011, I can’t help but think that a cessation of the unusual weekly turnover may indicate the bank has completed or is close to completing its historic silver acquisition. This is highly speculative on my part, but there are other indications this may be the case. Of course, these are matters that must involve speculation for the simple reason that there is no reason to expect JPMorgan to disclose anything. 

As expected, JPMorgan did take (stop) 808 silver contracts in the just completed delivery period for the May COMEX futures contract in the bank’s own proprietary or house trading account. This is in addition to the 1500 maximum allowed amount taken in the March delivery contract. In ounces, that’s 4 million oz in May and 7.5 million oz in March. This is only a tiny part of the 350 million+ oz I claim JPM has acquired, but it is highly visible and (also) might be suggestive of conforming to my speculation that the bank is finishing up its silver accumulation. - Silver analyst Ted Butler: 30 May 2015 

Yesterday`s price action in all four precious metals was about the most blatant example of price management that one could hope to see.  Not that it matters, as no one will raise a finger in protest.

In an e-mail from reader David Caron yesterday, he pointed out the obvious---`Arguing that you don't care about manipulation of the markets, is like saying you don't care about your wealth or your net worth!`.  Since the mining executives can get their respective boards of directors to reprice their stock options at any time, they really don`t care.  But what about us shareholders on the outside looking in.

In my chat with Ted yesterday, he feels that because the `up` volume was so much larger than the `down` volume on yesterday`s price spikes, there was most likely more deterioration in the Commercial net short positions in both silver and gold---as the technical funds in the Managed Money category poured in on the long side once the critical 50-day moving averages were violated.

Here are the 6-month charts for all four precious metals as of the close on Monday, so you can see what ``da boyz`` did to us again.

And as I type this paragraph, the London open is a bit under twenty minutes away---and with the exception of platinum, which is up two bucks, the other three precious metals are down a hair from Monday`s close in New York.   Gold`s net volume is just a bit under 17,000 contracts, which is very high considering the lack of price action---and virtually all of it is in the August contract, which is the current front month, so it`s all of the HFT variety.  Silver`s net volume is 3,800 contracts, which is nothing special.  The dollar index has been chopping quietly lower all through Far East trading on their Tuesday---and is down 14 basis points at the moment.

Since today is Tuesday, the cut-off for this Friday`s Commitment of Traders Report is at the close of COMEX trading.  Hopefully all of Monday`s price action will be in it---and unless we have another volatile price day courtesy of JPMorgan et al, all today`s data should be in it as well.

And as I sent today`s column off to Stowe, Vermont at 4:40 a.m. EDT I note that only platinum is up on the day.  Gold`s net volume is approaching 25,000 contracts, which is very high---and silver`s net volume is pretty chunky as well, a bit under 6,000 contracts.  The dollar index made another attempt to take out the 97.00 level to the downside, but `gentle hands` were at the ready once again---and the index is now down only 25 basis points, but was down over 40 at one point.  I would guess that all this HFT volume is associated with keeping precious metal prices under control as the dollar index falls.

I have no idea what the Tuesday trading session in New York, but based on what I see at the moment, I`m not overly optimistic.

That`s all I have for today.  I have a plane to catch early this morning, so I`m off to bed.

See you tomorrow.

Ed Steer