Gold & Silver Daily

¤ Yesterday In Gold & Silver

The gold price got sold down five dollars or so in early Far East trading---and then traded flat from about 10:20 a.m. Hong Kong time until the 8 a.m. London open.  Then the selling pressure began anew.  The low tick came about 12:40 p.m. BST, which was 7:40 a.m. in New York.  The price spent the rest of the day chopping quietly higher, gaining back about five bucks of its earlier loss.

The high and low ticks were recorded as $1,181.60 and $1,198.50 in the April contract.

Gold closed in New York yesterday afternoon at $1,185.00 spot, down $13.40 from Friday's close.  Net volume was 136,000 contracts, with the largest chunk of that in the new front month which is June.

The silver price chart looked very similar to the gold price chart---and the rally off the 12:40 p.m. BST London low got dealt with around 10:45 a.m. in New York.  After that the silver price also chopped slightly higher into the close.

The high and low in that precious metal was reported by the CME Group as $16.99 and $16.625 in the May contract.

Silver closed on Monday afternoon at $16.69 spot, down 28 cents---and back below its 50-day moving average.  Net volume was about average at 28,500 contracts.

JPMorgan et al continue their assaults on both platinum and palladium this week.  Platinum began to sell off starting around 9 a.m. Hong Kong time---and the low came at 1 p.m. EDT in New York.  It gained about five dollar off its low going into the 5:15 p.m. close of electronic trading.  Platinum was closed at $1,118 spot, down another 18 bucks.

The long knives were out for palladium once again, as "da boyz" took it down to $721 spot at its low tick, which came a few minutes after 1 p.m. EDT in New York.  Palladium closed at $726 spot, down another 10 bucks from Friday's close.  From its March 1 high of around $835 the ounce, palladium has been taken to the cleaners to the tune of around $115---with about half of that "loss" coming during the last two trading days.  There were no changes in the supply/demand fundamentals for the metal because, like platinum, this was paper trading in the COMEX futures market by "all the usual suspects."

The platinum and palladium markets are extremely tiny---and it doesn't take much effort from the powers-that-be to shove these metals around.

The dollar index closed late on Friday afternoon in New York at 97.39---and spent most of the Monday session working up to its 98.07 high, which came around 11:30 a.m. in New York.  After 4 p.m. EDT, it faded a bit into the close, finishing the day at 97.96---56 basis points.

The gold stocks never got a sniff of positive territory.  They had a tiny rally at the open from the gold rally that began at 7:40 a.m. EDT, but once gold got sold down around 10:45 a.m., the shares followed---and they proceeded to chop sideways for the remainder of the day.  The HUI closed down another 2.35 percent. 

The silver equities followed an almost identical price path---and Nick Laird's Intraday Silver Sentiment Index fell another 2.84 percent.

The CME Daily Delivery Report for Monday was a blank, as the balance of the deliveries in the March contract had been posted on Friday---and will be physically delivered today.

But today is First Notice Day for delivery into the April contract---and the numbers were posted on the CME Group's website late yesterday evening EDT.  Here they are---and I'm not impressed, as only 3 gold and zero silver contracts posted for delivery within the COMEX-approved depositories on Wednesday.  The link to yesterday's Issuers and Stoppers Report is here.

There were no changes reported for GLD yesterday---and as of 9:08 p.m. EDT there were no changes in SLV, either.

The CME Preliminary Report for the Monday trading session appeared on their website hours earlier than normal yesterday evening---and it showed that there were 7,476 gold contracts open in April, but I'll be surprised if even half of that amount is left by the end of Wednesday trading, as there's always a lag in reporting.  In silver, there were 110 contracts open in the April contract, which was unchanged from Friday's report.  April is not a traditional delivery month for silver---and that's why there's such a small amount.

Regarding March deliveries, which will be completed today, silver analyst Ted Butler has some not-to-be-missed observations about JPMorgan in today's quote---and those comments are a must to read.

There was a sales report from the U.S. Mint yesterday.  They sold 4,500 troy ounces of gold eagles---and 286,500 silver eagles.

I'm still waiting for the Royal Canadian Mint to post its 2014 annual report so we can get a look at silver and gold maple leaf sales for last year.  I expect to see a decent decline in gold maple leaf sales for the 4th quarter---and the year as a whole.  But they will probably report a "surprise" pick-up in silver maple leaf sales in the last quarter of 2014, after a slow 3rd quarter.  Year-over-year it will probably be another record, or close to record, sales year for silver maple leafs---the same as silver eagles in the U.S.A.---and for the same reason---Ted Butler's "big buyer," as retail sales of bullion are still in the toilet everywhere in North America.

There was no in/out gold activity worth mentioning [5 kilobars shipped out] at the usual COMEX-approved depositories on Friday, but at the two new "Gold Kilo Stocks" warehouses, it was a frantic day at Brink's, Inc. once again.

After inquiring directly to CME Group yesterday afternoon, Ted Butler found out that both of these new "Gold Kilo Stocks" depositories are CME depositories located in Hong Kong, not in the eastern U.S. like the other six.  That certainly explains why they're in kilobars although, as I've already mentioned on several occasions, more and more of the stocks moving in and out of the COMEX-approved depositories on this side of the Pacific are in kilobar form as well.

That also explains the difference in weights reported.  In the U.S., the kilobar weights are registered in and out as 32.150 troy ounces per bar.  In Hong Kong, they use a far more accurate measure---32.1507466---but may be rounded off a bit, but not as much as is done in the U.S.  This doesn't make much difference when you're talking a few bars, or a few hundred bars, but it adds up when you're talking thousands of them.  One of these days these depositories will have to reconcile this difference---and I'm prepared to bet that it's the U.S. depositories that will have to make the adjustment, because the way they're doing it is not accurate.

Anyway, Brink's, Inc. Hong Kong had another busy day, as 4,660 kilobars were reported received---and 3,025 kilobars were shipped out.  That's 4.660 metric tonnes in---and 3.025 metric tonnes out.  In troy ounces it works out to 149,823 in---and 97,256 out.  The link to that activity is here.

In silver, there was 605,368 troy ounces reported received---and 3,966 troy ounces shipped out.  Most of the activity was at Brink's, Inc---and the link to that action is here.

Here's a chart the Nick Laird passed around late on Sunday evening Denver time.  It showed that the Federal Reserve Bank of New York shipped 9.58 tonnes of gold back to its owners during February.  The chart covers a 2-year period, with one bar per month.

Since today is Tuesday, I have a lot of stories saved from the weekend---and Monday.  The final edit is entirely up to you.


¤ Critical Reads

Legendary Hedge Fund Manager: Europe and the U.S. Are Dysfunctional and Broke

Paul Singer is deeply pessimistic on the state of the developed world.

The conservative, cantankerous hedge fund manager thinks economic stimulus in Europe isn’t likely to work and that the U.S. political system will remain dysfunctional, even with Republican midterm gains.

“With euro interest rates at record lows, we cannot imagine that the ECB’s recently announced QE [quantitative easing] program will improve Europe’s serious economic situation,” Singer said of the European situation in a private letter to investors. “On the other hand, QE might have unpredictable and large negative repercussions if it triggers a generalized loss of confidence.”

ECB refers to the European Central Bank, which is engaged in quantitative easing, or the buying billions of dollars of bonds each month to try to spur regional economies.

This commentary appeared on David Stockman's website on Sunday sometime---and I thank Roy Stephens for today's first article.


Experts Fear World May Be Headed for Yet Another Financial Crisis

Only six years after the end of the worst financial crisis since the 1930s some experts are worried another one may be on its way.

Some are "warning that the global community has failed to learn the lessons of the Greek debt crisis — or even of Argentina’s default in 2001, the consequences of which are still being contested furiously in courts on both sides of the Atlantic," writes The (U.K.) Guardian's Heather Stewart.

Some of the concern stems from the soaring dollar, plunging oil prices and the Federal Reserve's preparation to raise interest rates.

The dollar has reached multi-year highs against a range of currencies in recent weeks, oil prices have hit six-year lows, and many economists expect a Fed rate move in September.

"We’re going to have another financial crisis," Ann Pettifor, director of Policy Research in Macroeconomics, told The Guardian.

This story from The Guardian put in an appearance on the Internet site at 5:36 p.m. EDT on Sunday afternoon---and it's its worth reading.  I thank Orlando, Florida reader Dennis Mong for sending it our way.


Kyle Bass Video. "Equities are my biggest liquidity worry"

Kyle Bass spoke at the February 10th Buttonwood Gathering hosted by The Economist magazine.  In this video, Kyle is on stage with:  Ashvin Chhabra, Merrill Lynch Wealth Management, Rebecca Patterson, Bessemer Trust---and Philip Coggan, The Economist.

This 38:56 minute video panel discussion appeared on the Internet site yesterday---and I thank Tres Knippa for passing it around.


U.S. university, foundation invested in frozen Chinese stocks

The University of Michigan, defense contractor Lockheed Martin Corp. and a foundation helping Appalachian children all own stakes in an overseas investment fund backing two major Chinese companies, which recently froze their stocks and missed financial reporting deadlines.

The American organizations invested in the $1.4 billion fund — managed by New York banking giant Morgan Stanley — for their endowments or retirement funds, parts of which could be at risk amid news that auditors have yet to sign off on the Chinese companies' books.

Those delays sometimes mean accounting troubles are ahead, which could put the investments in jeopardy. But the companies declined to explain the reasons for the unusual delays, and would say only that the auditors' work wasn't finished.

"This is not something an auditing firm would do lightly," said Paul Gillis, a former partner for PricewaterhouseCoopers in China who teaches accounting at Peking University. "There are only two reasonable explanations for being late: One is management incompetence. Two is they're fighting with the auditors---and neither one of those is good," he said.

This AP story, filed from Washington, showed up on the Internet site yesterday afternoon EDT---and I thank West Virginia reader Elliot Simon for sharing it with us.


WTI Tumbles to $47 Handle; Energy Stocks Don't Care at All

There's virtually no commentary with these two charts that were posted on the Zero Hedge website at 1:45 p.m. EDT on Monday.  They're worth a quick peek---and it's the first offering of the day from Dan Lazicki.


Bill Bonner: The “Deep State” Is Now in Charge

This is the last in our series on how America’s money, economy and government have changed since the collapse of the Bretton Woods agreement and the end of gold-backed money.

Today, we keep the focus on government… and what it has become. The period is hardly coincidental: On August 15, 1971, President Nixon hammered the last nail in the coffin of honest money.

It was not the only reason for the profound changes that followed. There was also the opening up of Communist China to capitalism, the fall of the Soviet Union and the rise of the Internet, to name just a few. But the new credit-based money system was the least obvious change… and probably the most important.

The credit-based dollar brought about a new economy. It changed the way people thought and the way their government operated. Now, deep pools of money determine which candidates are presented to voters.

And there is a new branch of government: the “Deep State.” It is not mentioned in the Constitution. And it operates above and beyond the visible process of democratic government.

This commentary was posted up on the Internet site yesterday---and it's the second contribution of the day from Roy Stephens.


Future Shop stores closed across Canada, some to re-brand as Best Buy

Dozens of Future Shop stores have been closed across Canada, its parent company Best Buy Canada Ltd. announced Saturday – a move that shocked workers.  Some didn't know they were out of a job until they got to work.

The company said it was shutting down 66 Future Shop stores effective immediately. Meanwhile, another 65 stores will be closed for a week while they are converted to Best Buy stores.

The company said approximately 500 full-time and 1,000 part-time positions will be eliminated as a result of the consolidation.

"The company has been struggling for a long time," said retail analyst and CEO of CustomerLab, Jim Danahy. "It's the idea that people would show up to work this morning with no notice from their employer to find the door locked. That's the surprise. It's a head scratcher."

This article appeared on the website on Saturday morning EDT---and it, along with other store closings across Canada recently, shows the perilous state of the retail industry both here---and in the U.S.


Sweden’s feminist foreign minister has dared to tell the truth about Saudi Arabia. What happens now concerns us all

If the cries of ‘Je suis Charlie’ were sincere, the western world would be convulsed with worry and anger about the Wallström affair. It has all the ingredients for a clash-of-civilisations confrontation.

A few weeks ago Margot Wallström, the Swedish foreign minister, denounced the subjugation of women in Saudi Arabia. As the theocratic kingdom prevents women from travelling, conducting official business or marrying without the permission of male guardians, and as girls can be forced into child marriages where they are effectively raped by old men, she was telling no more than the truth. Wallström went on to condemn the Saudi courts for ordering that Raif Badawi receive ten years in prison and 1,000 lashes for setting up a website that championed secularism and free speech. These were ‘mediaeval methods’, she said, and a ‘cruel attempt to silence modern forms of expression’. And once again, who can argue with that?

The backlash followed the pattern set by Rushdie, the Danish cartoons and Hebdo. Saudi Arabia withdrew its ambassador and stopped issuing visas to Swedish businessmen. The United Arab Emirates joined it. The Organisation of Islamic Co-operation, which represents 56 Muslim-majority states, accused Sweden of failing to respect the world’s ‘rich and varied ethical standards’ — standards so rich and varied, apparently, they include the flogging of bloggers and encouragement of paedophiles. Meanwhile, the Gulf Co-operation Council condemned her ‘unacceptable interference in the internal affairs of the Kingdom of Saudi Arabia’, and I wouldn’t bet against anti-Swedish riots following soon.

I posted this story in my Saturday column, but it didn't show up until later in the day---and there's a chance that you may have missed it, so here it is again---and it's definitely worth your time.  I thank South African reader B.V. for finding it for us.  By the way, I had "issues" with three or four other stories in Saturday's missive, so if you were having hyperlink problem on stories you wanted to read, but couldn't, everything is fixed now---and the link to the Critical Reads section of Saturday's column is here.


Alexis Tsipras vows to stop Greek 'bleeding' as creditors continue to frustrate Athens

Greece's prime minister has vowed not capitulate to the country's eurozone creditors, reviving controversial calls for debt relief as his government battles to unlock bail-out cash.

Addressing his parliament on Monday evening, Alexis Tsipras said he would seek an “honest compromise” with Greece’s international paymasters, but warned he would not submit “unconditionally” to demands for further austerity on his stricken economy.

Mr Tsipras, who spoke after a frustrating day of progress between his government and officials from the Brussels Group, insisted he would stop “the Greek people’s bleeding” as he ruled out measures such as hiking VAT.

The Leftist premier also repeated his claims for Second World War reparations from Germany, and insisted on debt relief from Greece's lenders.

This new item was posted on The Telegraph's website at 8:14 p.m. BST yesterday evening---and it's another contribution from Roy Stephens.


Fall of oligarch who bankrolled Ukraine's war

He is the billionaire Ukrainian oligarch who offered a bounty of $10,000 for the capture of any Russian "saboteur" and bolstered his country against the advance of Moscow-backed separatists.

Ihor Kolomoisky was appointed governor of Dnipropetrovsk region in south-east Ukraine last year and poured millions of dollars into volunteer battalions that headed out to fight rebel militia to the east.

A portly man with unruly grey hair and a beard, Mr Kolomoisky, 52, quickly became seen as the country's second-most powerful person after Petro Poroshenko, the president – and a patriot ready to reach into his wallet to stave off Russian aggression.

But this week Mr Poroshenko sacked his ally after a business dispute escalated and Mr Kolomoisky sent armed men to occupy the offices of two state energy companies in the capital, Kiev.

This very interesting news item was posted on the Internet site at 8:00 a.m. BST on Sunday morning in the U.K.---and I received it from a reader who wishes to remain anonymous.


Ukraine 'Lost Without Trace' Five Indian Warplanes During Planned Upgrade

Five of India’s 40 AN-32 military transport aircraft being upgraded in Ukraine have gone missing "without a trace"; Ukrainian diplomat says the government is unable to help.

India says five of its 40 AN-32 military transport aircraft have gone missing "without a trace" while the planes underwent upgrades in Ukraine.

"These five aircraft are almost lost as it is difficult to trace them and diplomatic efforts to find their whereabouts have failed," the website DefenseNews quotes an Indian Air Force official as saying.

In 2009, India signed a contract with Ukraine's state-owned arms trading agency, Ukrspetsexport Corp., to upgrade its 104 AN-32 transport aircraft at a cost of US$400 million, as the fleet had reached its life expectancy.

You couldn't make this stuff up!  This rather amazing news item appeared on the Internet site at 5:38 p.m. Moscow time on their Monday afternoon, which was 10:38 a.m. in Washington.  It is, of course, courtesy of Roy Stephens.


Putin’s New Mediterranean Strategy -- F. William Engdahl

While attention has been focused in recent weeks on the role of Russia and President Vladimir Putin in brokering a new ceasefire in eastern Ukraine, the Russian president has made time for two crucial state missions—one to Cyprus and one to Egypt. What they both share in common is a border on the shore of the eastern Mediterranean Sea, a strategic body of water whose importance in the escalating NATO confrontation with Russia cannot be underestimated.

For more than 2000 years the Mediterranean Sea has been one of the world’s most strategic waters. It joins Middle East oil and gas with markets in the European Union. It joins Indian Ocean shipping, increasingly from China, India, South Korea and the rest of Asia to European markets and to the Atlantic Ocean through the Egyptian Suez Canal. It joins the vital Russian Black Sea Fleet naval base in Crimea to both the Atlantic and Indian Ocean. In brief it connects Europe, Eurasia and Africa.

With this in mind, let’s look at Putin’s most recent travels.

This short essay showed up on the Internet site on Sunday sometime---and it's certainly a must read for any serious student of the New Great Game.  I thank Roy Stephens for sending it along.


Iranian Sanctions—–After Two Decades, The Time To Lift Them Is Here

With the agreed deadline for reaching a “political framework” for a final comprehensive nuclear agreement only a few days away, the fate of the negotiations now hang on closing the gap between the P5+1 and Iran on removing sanctions.

The issues associated with Iran’s nuclear program have now been pretty much resolved, except for limits on Research and Development. But on sanctions relief, all the evidence indicates that the two sides have not advanced beyond where they were last November, when they were very far apart.

Part of the problem is the West’s myopic perspective on the issues. The Obama administration clings to the belief that the only reason Iran is negotiating is that it was so seriously hurt by the sanctions. It fails to grasp the depth of Iranian commitment to removing the sanctions as a matter of national pride as well as to be able to achieve a higher level of economic development.

In fact, Iranian national security strategists have been scheming for two decades about how to accumulate enough bargaining chips to induce the United States to negotiate an end to the sanctions imposed during the Clinton administration. An independent Iranian analyst told me some years ago that senior Iranian national security officials had been saying in private conversations from 2003 to 2005 that they viewed Iran’s future stockpile of enriched uranium as bargaining chips for the eventual negotiations with the United States.

This essay by Gareth Porter was originally posted on the Internet site on Sunday---and it was picked up by David Stockman's website---and given the headline show above.  The actual headline reads "Sanctions---and the Fate of the Nuclear Talks".  My thanks go out to Roy Stephens once again.


Iranian Defector: 'U.S. Negotiating Team Mainly There to Speak on Iran’s Behalf'

An Iranian journalist writing about the nuclear negotiations between the United States and Iran has defected. In an interview Amir Hossein Motaghi, has some harsh words for his native Iran. He also has a damning indictment of America's role in the nuclear negotiations.

“The U.S. negotiating team are mainly there to speak on Iran’s behalf with other members of the 5+1 countries and convince them of a deal," Motaghi told a TV station after just defecting from the Iranian delegation while abroad for the nuclear talks. The P 5 + 1 is made up of United States, United Kingdom, Russia, China, France, plus Germany.

This interesting story showed up on the website late Saturday afternoon GMT---and I thank reader Karen Nelson for bringing it to our attention.


McCain Suggests Israel "Go Rogue," Blow Up Iran Negotiations By Starting War

As Iran talks appear to be coming to a close with a successful agreement that would both lead to the lifting of international sanctions and restrictions that would prevent the country from obtaining nuclear weapons, most in the international community are relieved.

Yet Republicans have teamed up with their counterparts in the Israeli political system to do everything they can to obstruct a deal – with tactics such as drafting new sanctions legislation and warning the Iranian leadership that the nuclear agreement will not outlast President Obama.

But this past week Senator John McCain ratcheted up this sabotage to a new level. During a floor speech he gave on March 24th, the senator suggested that Israel “go rogue” and that if they don't they may not survive the next 22 months of the Obama presidency.

This article put in an appearance on the website on Sunday---and once again my thanks go out to Roy Stephens for sharing it with us.


A Middle East Holocaust — Paul Craig Roberts

For people in the Anglo-American world who have a moral conscience, the facts are soul-wrenching. The populations of the countries whose governments comprised “the Coalition of the Willing” are contaminated with war crimes committed by their governments in the Iraq Genocide. A progressive modern state was obliterated, and 2.7 million Iraqi people were murdered.

The crime was covered up with propaganda that demonized Saddam Hussein and created fear of nonexistent weapons of mass destruction.

The Iraqi genocide was based on a lie, and both Bush and Blair knew it. The two satanic leaders simply decided to destroy a people who they first demonized and marginalized.

Cheney and the neocons continue to justify the genocide and the illegal torture regime that they created in order to produce fake “terrorists” as a justification for their war crimes. The Western media, especially the New York Times, is also complicit in the Iraqi Genocide as are the insouciant Western peoples themselves who stood by cheering while millions of people were destroyed on the basis of a blatant and transparent lie.

This right-on-the-money commentary appeared on the Paul Craig Roberts website yesterday---and certainly falls into the absolute must read category.


Saudi oil infrastructure at risk as Mid-East conflagration spreads

Saudi Arabia’s escalating intervention in Yemen is a high-stakes gamble that risks back-firing in a series of complex ways, ultimately endangering Saudi oil infrastructure and the security of global energy supply.

Military analysts say there is little chance that air strikes by a Saudi-led coalition of Sunni countries will subjugate the Iranian-backed Houthi forces in Yemen. It may require a full-blown invasion by land forces to secure control. Large concentrations of Saudi armour and artillery are already massing near the border, though this may simply be a negotiating ploy.

The longer the conflict goes on, the greater the risks that it will stir up internal hatred in a country that has traditionally been relatively free of sectarian violence. Adam Baron, from the European Council on Foreign Relations, said the inflammatory comments about the Sunni-Shia struggle by politicians across the region are becoming “self-fulfilling prophecies”.

Al-Qaeda in the Arabian Peninsular (AQAP) – thought to be the most lethal of the jihadi franchises, and a redoubt for Saudi jihadis – already controls a swathe of central Yemen and is the chief beneficiary of the power vacuum.

This commentary by Ambrose Evans-Pritchard appeared on the Internet site at 9:00 p.m. BST yesterday evening, which was 4:00 p.m. EDT.  I thank Roy Stephens for sliding this into my in-box in the wee hours of this morning.


Banks Slash Dividends as Loans Sour From Beijing To Pearl River

China’s biggest banks are accelerating cuts to their dividend payouts as bad debts pile up from struggling exporters in the Pearl River Delta, coal companies in the nation’s west and manufacturers in the Bohai Rim near Beijing.

Three of the nation’s four largest banks, including Industrial & Commercial Bank of China Ltd., this week cut their payment ratios for 2014 by the most in three years. ICBC’s fell to 33 percent from 35 percent a year earlier. The smaller China Citic Bank Corp. last week eliminated its payment altogether.

Rising charges for bad debts -- ICBC more than doubled provisions in the fourth quarter -- are cutting profits just as regulators require banks to hold extra capital. The average gain in net income for four of the five biggest banks -- ICBC, Agricultural Bank of China Ltd., Bank of China Ltd. and Bank of Communications Co. -- was 6.7 percent, the weakest in more than a decade, their results showed this week.

This Bloomberg article, co-filed from Shanghai and Beijing, showed up on their Internet site last Thursday---and I thank Elliot Simon for sending it along.


Russia to apply for China-led infrastructure bank AIIB – Deputy PM

Russia decided to apply to join the China-led Asian Infrastructure Investment Bank (AIIB), the country’s Deputy Prime Minister Igor Shuvalov said on Saturday.

“I would like to inform you about the decision to participate in the AIIB,” which was made by Russian President Vladimir Putin, Shuvalov said at the Boao Forum for Asia.

Shuvalov added that Russia welcomes China’s Silk Road Economic Belt initiative and is happy about stepping up cooperation.

"We are delighted to be able to step up cooperation in the format of the Eurasian Economic Union (EEU) and China...the free movement of goods and capital within the EEU brings economies of Europe and Asia closer. This is intertwined with the Silk Road Economic Belt initiative, launched by the Chinese leadership," he said.

This article was posted on the Russia Today website in the wee hours of Saturday morning Moscow time---and I thank Roy Stephens for finding it.  There was also a story on the South China Morning Post website headlined "Russia to join China-led Asian bank; Beijing opens door to Taiwan membership"---but I couldn't get it to load.  Maybe you'll have more luck.  It's also covered in more depth in this Zero Hedge article from Saturday headlined "De-Dollarization Continues as Russia Seeks AIIB Membership"---and I thank reader 'David in California' for that one.


How should America compete with China?

Never in the history of American foreign policy has so much egg adhered to so little face as in the matter of Asia Infrastructure Investment Bank. All of America’s allies, including Britain and Australia, have elected to join the Chinese-led institution. That is a grand validation of China’s One Belt/One Road vision for infrastructure upgrades across the whole Eurasian landmass. China’s President Xi Jinping envisions $2.5 trillion of trade between his country and the “Silk Road” nations over the next decade. Rather than fret about the impact of a slowing (or shrinking) world economy on China’s export-driven prosperity, China is seeking to shape the economic environment around it.

It is not only the Obama administration that has been wrong-footed by the world’s embrace of China’s economic ambitions, but almost the whole of America’s foreign-policy elite. With almost no exceptions, American analysts have misunderstood China. One school argues that China inevitably will collapse of its own weight, because authoritarian governments supposedly are incapable of efficient allocation of resources; another warns of a Chinese plan for world domination.

Infrastructure is one of China’s great achievements. As The New York Times observed in a Sept. 13, 2013 report, China’s high-speed rail system already serves more passengers than the 54 million Americans who board domestic flights every day, and has transformed China’s economy. With 600 million Chinese migrating from the low-productivity countryside to higher-productivity employment in urban areas, the high-speed rail network has made business ventures possible that were not conceivable before.

This short, but very worthwhile read appeared on the Asia Times Internet site on Sunday sometime---and it's the final contribution of the day from Roy Stephen---and I thank him on your behalf.


This Is What The AIIB Is About -- Koos Jansen

Until March 31 countries can submit for membership of the Asian Investment Infrastructure Bank (AIIB), a financial institution proposed by China, which has the purpose of being a multilateral framework to finance infrastructure projects in the wide Eurasian region. In recent weeks many Western countries have submitted for membership, the US rejected application as it fears strong cooperation between Asia and Europe will weaken the US dollar hegemony. On April 15 the final list of the founding members will be disclosed.

In October 2013 the initial idea for the AIIB was first put forward by Chinese President Xi Jingping “on constructing a 21st Century Maritime Silk Road to promote maritime cooperation”. The project has currently developed into the New Silk Road Economic Belt.

The AIIB is very much about developing the infrastructure connecting Asia, Europe and Africa. For China to import resources such as oil, have strong export channels and to strengthen ties with trading partners. The main significance of the AIIB is non-US cooperation which will further weaken the US dollar hegemony and change the international monetary environment in the years to come.

This commentary by Koos showed up on the Internet site yesterday sometime.


Japan nears deflation as consumer prices stop rising

Annual core consumer inflation in Japan, the world's third-largest economy, stopped rising for the first time in nearly two years in February.

The core consumer price index (CPI) was flat from a year ago, stripping out the effect of last year's sales tax increase in April.

The last time the core CPI did not rise was in May 2013, when it was flat.

The latest figures are moving further away from the Bank of Japan's (BoJ) inflation target of 2%.

This short article appeared on the Internet site on Friday---and I thank Dan Lazicki for bringing it to our attention.


Australia's Prime Minister Gives Green Light to $100 Billion Asian Infrastructure Investment Bank

Prime Minister Tony Abbott has cleared the way for Australia to join the new multi-billion-dollar, China-led Asian Infrastructure Investment Bank but says some issues remain before Australia could consider full membership.

Abbott announced Australia would sign a memorandum of understanding that will allow Australia to be involved in negotiations to set up the $100 billion bank.

"Key matters to be resolved before Australia considers joining the Asian Infrastructure Investment Bank include the bank's board of directors having authority over key investment decisions, and that no one country control the bank," Abbott said in a statement.

This news item was posted on The Sydney Morning Herald website on Sunday---and I found it embedded in a GATA release that Chris Powell filed from the Philippines yesterday afternoon local time.


Australia to Start Taxing Bank Deposits

Up until now, the world's descent into the NIRP twilight of fiat currency was a function of failing monetary policy around the globe as central bank after desperate central bank implemented negative and even more negative (in the case of Denmark some four times rapid succession) rates, hoping to make saving so prohibitive consumers would have no choice but to spend the fruits of their labor, or better yet, take out massive loans which they would never be able to repay. However, nobody said it was only central banks who could be the executioners of the world's saver class: governments are perfectly capable too.  Such as Australia's.

According to Australia's ABC News, the "Federal Government looks set to introduce a tax on bank deposits in the May budget."

Ironically, the idea of a bank deposit tax was raised by Labor in 2013 and was criticized by Tony Abbott at the time. Much has changed in two years, and as ABC reports, assistant Treasurer Josh Frydenberg has indicated an announcement on the new tax could be made before the budget.

This disturbing article appeared on the Zero Hedge website just before midnight on Sunday evening EDT---and I thank reader M.A. for sending it our way.


Former Canadian foreign minister, former U.S. House speaker join Barrick advisory board

Former Canadian foreign affairs minister John Baird has a new job as an adviser to global mining giant Barrick Gold, the corporation has confirmed.

In its annual report, the company listed Baird and former U.S. lawmaker Newt Gingrich as members of its international advisory board.

Barrick Gold says the group is made up of 10 external advisers who meet about once a year to provide advice to the board of directors and management on geopolitical and strategic matters.

This news item appeared on the Internet site on Saturday morning EDT---and I found it on the website.


Reflections in a Golden Eye: Rejection, repatriation and redemption in the gold market

Let the seller beware! The German citizen/investor who put away a few rolls of 20 mark gold coins (.2304 tr ozs. shown below) in 1918 would have done so at 119 marks per ounce. By early 1920 the previous rapid inflation had suddenly given way to deflation. Had that gold owner decided to cash in on gold's significant gains thinking runaway inflation was over, a 100,000 mark investment would have made him or her a millionaire.

The glow, however, would have quickly worn off.

By late 1921 the runaway inflation had resurfaced but now with a vengeance. Gold shot to 4,000 marks per ounce. By mid-1922 gold reached 10,000 marks per ounce and the wholesale price index went from 13 to 70.  By late 1922, the roof caved in. Gold traded at 134,000 marks per ounce.  In January, 1923, it cracked 1,000,000 marks per ounce.  By midyear, it broke the 100 million marks per ounce barrier and at the peak of the hyperinflationary breakdown, it sold for over 100 billion marks per ounce.

The individual who thought he or she had the cat by the tail and cashed-in his or her golden chips during the 1920's deflation became a millionaire. In short order though, that millionaire became a pauper as wave after wave of hyperinflation washed over the German economy. One moral from this somewhat frightening tale is that becoming a millionaire or even a billionaire on one's gold holdings was inconsequential. Another is not to give up one's hedge until there is ample evidence that it is no longer needed.

Momentary nominal profits can be illusory.

Yes---and you can ask anyone from Zimbabwe about that as well.  This interesting, but longish commentary by Michael Kosares showed up on the Internet site on Monday.


U.S. dollar influence on gold prices likely to diminish amid huge demand from emerging markets

The U.S. dollar's inverse relationship with gold has changed dramatically over the past decades and is likely to shift further as demand moves East and the world moves to a multi-currency system, according to the World Gold Council.

The organisation responsible for the development of the gold industry said in a report that gold prices are driven by multiple interconnected factors, and the US centric explanations about gold prices are risky for investors.

The council noted that gold market commentators, especially in the U.S., tend to link the changes in gold prices to the U.S. dollar and U.S. interest rates. While the US variables are important, the large demand for physical gold from emerging markets would make faulty any theory that relies too heavily on U.S.-metrics.

Generally, there is an inverse correlation between gold and the dollar. However, the council's analysis shows it is asymmetrical: Gold price increases more when the dollar weakens, than it falls when the dollar strengthens.

This is mostly a rehash of a WGC story that appeared late last week on the Internet site---and that's appeared in this space already---but there is some updated information in it.  It's worth skimming, but that's about all.  It appeared on the Internet site on Friday morning---and it's courtesy of Elliot Simon.


China gold flows to hit Q1 record -- Lawrence Williams

Withdrawals from the Shanghai Gold Exchange (SGE) remain exceptionally high despite being expected to drop following the Chinese New Year holiday. In the three weeks of trading since the holiday’s end, withdrawals from the exchange have totalled 149 tonnes which would seem to belie other reports that demand is slipping.

The latest figure from the SGE is for the movement of 53 tonnes out of the Exchange during week 11 (ended March 20), following 51 tonnes a week earlier and 45 tonnes in week 9. Total to March 20 is thus already 561 tonnes. So withdrawals from the SGE appear to be rising week on week at a time when they would normally expect to be falling back after the holiday buying spree has ended. Should the gold flows out of the exchange continue at this kind of rate, then the Q1 total figure will be of the order of 620-630 tonnes – comfortably a new Q1 record.

Even at the lower end of the likely Q1 flow level this would be 10% up on the previous highest Q1 withdrawal amount, which was 564 tonnes (this has almost been reached already with flows for seven working days yet to be announced) recorded a year ago when the full year figure was 2,102 tonnes. Q1 withdrawals will thus undoubtedly set a new record.

This commentary by Lawrie showed up on the Internet site at 11:27 BST yesterday morning.  It's certainly worth reading.



¤ The Funnies

Here are the last four hummingbird photos that reader M.A. sent me about ten days ago.  The first one is a violet-crowned woodnymph---and judging by the posture and the position of the feet, whatever he was perched on, has been Photoshopped out.

This is a wine-throated hummingbird.  I posted a photo of one of these early last week, but this shot is in his full "attitude on" mode with gorget flashing---and in hummingbird speak to another male, it means "*%$# off!".  They also have quite a vocal repertoire in this "attitude on" mode as well.

The same can be said of the male hummingbird in the photo directly below as well.  The two photos below did not identify the species.

Cypress Development Corp. is a Canadian gold, silver and base metals exploration company developing projects in Red Lake, Ontario, Canada, and in Nevada, U.S.A.

Cypress holds a 100% interest in the approximately 1140 acre Gunman Zinc-Silver Project located in White Pine County, northeast of Eureka, Nevada. Three RC drill programs totaling approx. 38,000 feet have been completed by Cypress on the Gunman project with significant grades between 5% to 33% per ton zinc and 0.5 to 15.0 oz per ton silver over considerable widths encountered. Zinc could represent the next big base metal play due to ongoing demand growth and the closures of 3 major mines in Canada, Australia and Ireland and not enough supply coming on stream from new projects. Sentiment could shift towards zinc, with prices potentially rallying in anticipation of tightening supplies.


¤ The Wrap

For the month, JPMorgan stopped (accepted) exactly 1,500 contracts of physical delivery, or 7.5 million oz, out of a total of 2,583 total deliveries issued, or 58% of total silver deliveries. Because JPMorgan took these silver deliveries in its house account, we know it was for the bank’s own benefit and risk and not on behalf of clients. While I believe JPMorgan was behind the 3.5 million oz of silver that was withdrawn from the SLV during the last week or so, there is no question that the bank took in 7.5 million oz of physical silver in the COMEX March deliveries. The 7.5 million oz is certain, the 3.5 million oz is likely and suggestive that JPM just got hold of another 11 million oz of physical silver.

Interestingly, 1,500 contracts happens to be the limit imposed by the COMEX as to the maximum number of silver contracts that any one speculator may stop in any one delivery month. Therefore, we also know that JPMorgan, as a speculator for its own account just took the maximum number of silver contracts allowed for the month. At the very least, this would be in conformity with my consistent speculation that JPMorgan has acquired a massive amount of physical silver and, apparently, is not yet finished with that accumulation. And it appears clear that JPMorgan held all 1,500 contracts prior to the start of the March delivery process and simply waited (until the last delivery day) for the sellers to deliver. In other words, this wasn’t a haphazard or impromptu development, and is in keeping with JPM’s deliberate role in the silver price manipulation. - Silver analyst Ted Butler: 28 March 2015

I must admit that yesterday's price action didn't surprise me too much.  As I said on Saturday, "da boyz" looked like they appeared to turning gold and silver lower---and that's precisely what they did on Monday.  With silver now closed below its 50-day moving average, it's a good bet that the technical funds in the Managed Money category were beginning to sell some of their newly acquired long positions---and/or going short.

Here are the 6-month charts for all four precious metals once again---and the graphs are courtesy of

As I write this paragraph, the London open is ten minutes away---and you already know, JPMorgan et al have been active in both gold---and particularly in silver during the Far East trading session on their Tuesday.  At the moment, gold is only down five bucks, but at its low of the day at the moment.  Silver got smacked for about two bits, with the current low coming shortly before lunch time in Hong Kong.  Platinum is trading flat---and palladium is actually up five dollars on the day.

Gold volume is just over 23,000 contracts, which is very decent considering the price action---and the time of day---with virtually all of it in the new front month, which is June.  Silver's net volume is just over 5,000 contracts.  The almighty U.S. dollar is up 25 basis points at the moment.

With today being the last trading day of the month---and the quarter, it wouldn't surprise me in the slightest if "da boyz" hit the metals hard during the New York session today.

Today, at the close of COMEX trading, is also the cut-off for the next Commitment of Traders Report, which will be published on Friday---and they're open, even though it's Good Friday.  I'll be very interested in what that report says, particularly in gold after last Friday's huge surprise.

I mentioned in Saturday's column that I would steal what I could from Ted's weekly review about the "huge surprise" in the gold COT numbers---but now that I see how much he wrote, I'll have to pass on it.  What he said makes sense, but the "doubting Thomas" in me is still there---and I'll believe it once I have a look at Friday's numbers.

And as I send this off to Stowe, Vermont at 5:15 a.m. EDT, I see that both gold and silver have been chopping more or less sideways since I last wrote about them two and a half hours ago---and platinum and palladium are now up decent amounts from Monday's close in New York.

Net gold volume is around 33,000 contracts---and silver's net volume is about 7,500 contracts.  The dollar index continues to power higher---and is up 67 basis points at the moment.  Crude oil is down another $1.15 a barrel.

Nothing will surprise me during the the remainder of Tuesday's session, nor should it you.

That's more than enough for one day---and I'll see you here tomorrow.

Ed Steer