Gold & Silver Daily
"I expect the precious metal price management scheme to be one of the casualties"
 

¤ Yesterday In Gold & Silver

After rallying a decent amount in Far East trading, the high of the day was in very shortly before the London open on their Friday---and as I pointed out in The Wrap yesterday, volume was very heavy.  The gold price then got sold down $5 or so off its high---and traded flat until the noon silver fix.  At that point the HFT boyz showed up---and the low of the day came at precisely 8:30 a.m. in Comex trading.  The tiny rally attempt after that didn't get far---and the price chopped sideways in a very tight range for the remainder of the Friday session.

The high and low ticks were recorded by the CME Group as $1,324.30 and $1,305.70 in the December contract.

Gold finished the Friday session at $1,309.10 spot, down $3.90 from Thursday's close.  Volume, net of August and September, was very decent at 163,000 contracts---and well over a third of that occurred before the morning gold fix in London.

After the obligatory down spike at the New York open on Thursday evening, the silver price traded flat until 10 a.m. Hong Kong time.  From there it rallied to its high of the day, which came about 30 minutes before the noon London silver fix.  From there, it suffered the same fate as the gold price, with the low of the day coming at 8:30 a.m. EDT sharp as well.  The price rallied about 15 cents off that low---and then traded flat before getting sold off a dime or so as electronic trading wound down for the weekend.

The high and low tick was reported as $20.185 and $19.845 in the September contract.

Silver closed yesterday at $19.915 spot, down 3 cents from Thursday's close.  Net volume was 32,000 contracts and, like gold, a third of it was transacted before the morning gold fix in London.

Platinum rallied a bit in Far East trading as well, with the high tick coming at the Zurich open.  After that it got quietly sold off for the remainder of the Friday session, closing down $3 on the day.

Palladium went on a bit of a roller-coaster ride yesterday---and it managed to finish up $5 on the day.

The dollar index closed on Thursday afternoon in New York at 81.53.  The 81.60 high came at 9:30 a.m. Hong Kong time---and it chopped lower from there, with the low tick of 81.27 occurring at 10:30 a.m. EDT in New York.  From there it rallied a bit into the close, finishing the Friday session at 81.40---down 13 basis points on the day.

The gold stocks rallied sharply in the first 35 minutes of the New York trading session---and then slowly began to give all those gains back as the trading session wore on.  The low, in slightly negative territory, came a few minutes after 2 p.m.---and from there the gold stocks managed to keep their heads above water for the remainder of the day.  The HUI closed up 0.27%.

The silver equities rallied 3% by around 10:45 a.m. in New York---and then spent the rest of the day giving back half of those gains, as Nick Laird's Intraday Silver Sentiment Index closed up 1.54%.

The CME Daily Delivery Report showed that 112 gold and zero silver contracts were posted for delivery within the Comex-approved depositories on Tuesday.  The only short/issuer of importance was Barclays [for the second day in a row] with a 100 contracts out of its client account---and four of the five "usual suspects" were long/stoppers.  The link to yesterday's Issuers and Stoppers Report is here.

There was a withdrawal from GLD yesterday.  This time it was 57,728 troy ounces.  And as of 7:54 p.m. EDT yesterday evening, there were no reported changes in SLV.

The U.S. Mint had another small sales report yesterday.  They sold 1,500 troy ounces of gold eagles---and 1,500 one-ounce 24K gold buffaloes.

Month to date, the mint has sold 12,000 troy ounces of gold eagles---4,000 one-ounce 24K gold buffaloes---and 955,000 silver eagles.  Based on these sales, the silver/gold sales ratio for August is a hair under 60 to 1.

There wasn't much in/out movement in gold over at the Comex-approved depositories on Thursday, as only 3,500 troy ounces were reported received---and a tiny 198 troy ounces shipped out.  In silver, it was quite a bit busier, as 524,544 troy ounces were reported received---and 15,423 ounces were shipped out.  The link to the activity in silver is here.

As expected, the Commitment of Traders Report showed improvements in the Commercial net short positions in both silver and gold during the reporting week.

In silver, the Commercial net short position dropped by a very chunky 8,380 contracts, or 41.9 million ounces of paper silver.  The Commercial net short position now sits at 241 million troy ounces, which is still a sky-high number.

Ted mentioned that all of the improvement came from the technical funds in the "Managed Money" category, as that category of traders in the Disaggregated COT Report sold 6,040 long contracts---and they also added 5,868 short contracts---almost 12,000 contracts in total---as the Commercial traders gamed them for fun, profit and price management purposes.

With the new Bank Participation Report in his hands, Ted was able to recompute JPMorgan's short-side corner in the Comex silver market, which is now down to 18,000 contracts, an improvement of about 1,000 contracts from the prior reporting week when they were short 19,000 Comex contracts.

In gold, the Commercial net short position dropped by 17,290 contracts, or 1.73 million troy ounces of Comex paper gold.  The new Commercial net short position is now down to 13.16 million troy ounces.

Once again it was all brain-dead black-box technical fund selling in the "Managed Money" category of the Disaggregated COT Report that drove the price change, as these traders sold 11,905 long contracts---and they added 6,046 contracts to their short position at the same time which, in total, is 17,951 contracts worth of price pressure to the downside, all engineered by JPMorgan et al.

Ted Butler puts JPMorgan's long-side corner in the Comex gold market at 20,000 contracts, which is down 3,000 contracts from the prior reporting week.  Ted also mentioned that this is their smallest long-side corner in gold in a very long time.

Just looking at the numbers in this week's COT Report, Ted felt that everything that should have been reported in this week's report, was there---as there was some concern whether all the data from Tuesday's big down day would be be reported---and it appears that it was.

That's the good news.

The bad news is that the big rallies in both metals that occurred on Wednesday and Thursday, the day after the Tuesday cutoff for yesterday's COT Report, basically reversed "all of the above" improvements in gold, which broke back above its 50-day moving average.  Silver is still well below both its 50- and 200-day moving averages---and Ted figures that technical funds in the "Managed Money" category didn't reverse their positions to the same extent as they did in gold.

Of course we won't know for sure until next Friday's COT Report---and there are still two more trading days left in the reporting week.

Along with the Commitment of Traders Report came the companion August Bank Participation Report.  This report strips out the Comex long and short positions for all the banks on Planet Earth that hold positions in the Comex futures market---and for this one day a month we get to see these guys naked as jaybirds.

In gold, "3 or less" U.S. banks increased their net short position from 12,334 contracts in the July BPR, to 17,032 contracts in the August BPR.  Since Ted says that JPMorgan is long 20,000 Comex contracts, then this means that the other two U.S. banks must, by simple arithmetic, be short about 37,000 contracts between them.  These other two U.S. banks would be HSBC USA and Citigroup.

Also in gold, 21 non-U.S. banks are net short 63,049 Comex contracts, which is an increase in short position of 1,000 contracts since the July BPR.  I would guess that around 50% of the 63,000 contracts is held by Canada's Scotiabank---and the remaining 30,000 contracts split up more or less equally between the other 20 non-U.S. banks would border on the immaterial.

Here's Nick Laird's BPR chart for gold.  In this five-chart sequence, it's charts #4 and #5 that are the critical ones.  Note the blowout in the Comex short position in gold for the U.S. banks back in August of 2008---and the blowout in the non-U.S. banks in October of 2012.  The August 2008 blowout occurred when JPMorgan took over the gold short positions of Bear Stearns---and the October 2012 non-U.S. bank short position blowout was when Canada's Scotiabank was forced to declare the Comex positions held by its wholly owned Scotia Mocatta subsidiary, which you can read about about it on the Bank Participation Report home page linked here.

In silver, "3 or less" U.S. bank are net short 18,447 Comex contracts, which is an increase of about 1,000 contracts from the July BPR.  From the Commitment of Traders Report, Ted says that JPMorgan's short-side corner in the Comex silver market is 18,000 contracts, so it's pretty much a given that virtually the entire position shown above belongs to them---with maybe HSBC USA and Citigroup holding small net long positions.   As you can see, the silver price management scheme, from a U.S. bank perspective, is 100% run by JPMorgan.

Also in silver, "10 or more" non-U.S. banks are net short 24,135 Comex contracts, which is about a 25% increase/blow-out from the July BPR.  I'm of the opinion that Canada's Scotiabank probably hold 75% or more of this Comex short position.  If that's the case---and I'm totally convinced that it is [see the next paragraph], then the remainder of that short position, divided up more or less equally between the remaining "9 or more" non-U.S. banks is, like gold, pretty much immaterial.

Here's Nick's BPR chart for silver.  And, like gold, please cast your eyes on August 2008 and October 2012 once again---and for the same reasons.  In August 2008, JPMorgan took over the gargantuan short position held by Bear Stearns---and in October 2012, Canada's Scotiabank was forced to disclose its Comex positions in silver as well.  It's this data point that gives me the confidence to finger Scotiabank as the second-largest silver short on Planet Earth.

In platinum, "3 or less" U.S. banks are net short 11,197 Comex contracts, which is a 16% increase in their short position since the July BPR.  They hold virtually no long positions at all [see chart #5], so it's a good bet that these position are being held for price management purposes.  These "3 or less" U.S. banks are short almost 17% of the entire Comex futures market in platinum---and it's the safest bet in the world that JPMorgan holds the lion's share of that position.

Also in platinum, "12 or more" non U.S. banks are net short 8,408 Comex contracts, which is an improvement of about 5% from the short positions they held in this metal in July.  If there's a "Mr. Big" in the non-U.S. banks, it would probably be Barclays and maybe Scotiabank as well.  But, having said that, that many contracts divided by 12 banks doesn't amount to much when you consider what the "3 or less" U.S. banks hold.  It's a pretty safe bet that most of the non-U.S. banks positions are immaterial as well.

Note how the banks have increased their presence in platinum in the last five years.  Before that, they were virtually nowhere to be found.  This applies to palladium as well.

In palladium, "3 or less" U.S. banks are net short 9,229 Comex contracts, which is a 7% increase from the July BPR.  These U.S. banks are net short a hair more than 20% of the entire Comex palladium market.

Also in palladium, "12 or more" non-U.S. banks are net short 4,694 Comex contracts, which is exactly unchanged from the July BPR.  I doubt very much if any non-U.S. bank holds a material enough position to affect prices in the Comex futures market---and 4,694 divided by "12 or more" is a very small number, so their positions are immaterial as well.

Well, dear reader, this isn't rocket science, as it's all government data from the CFTC that proves beyond a shadow of a doubt, that "3 or less" U.S. banks---along with Scotiabank in silver and gold---run the price management scheme, and all under direction of the capo di tutti capi---JPMorgan Chase.

Here's another chart courtesy of Nick Laird.  It's the Chinese Gold Imports Through Hong Kong updated with June's import data.  As you can see, imports through H.K. are falling precipitously, as China is now hiding its tracks by importing more through Shanghai and Beijing.  Unless something changes before year's end, it's my opinion that this chart will no longer serve any useful purpose---and I'm posting it here now for informational purposes only.

I have a lot of stories for you today---and I hope you have enough time in what's left of your weekend to read the ones that interest you.

 

¤ Critical Reads

US-Based Junk Bond Funds Post Record $7.1 Billion Outflows: Lipper

Investors pulled a record $7.1 billion from U.S.-based junk bond funds in the latest week and bailed out of equity exchange-traded funds at the most frantic pace in six months, Lipper data released on Thursday showed, offering one of the biggest signals yet of a growing wariness over risk assets.

The outflows from junk bond funds, which were the biggest since Lipper records began in 1992, underscore growing investor concerns of stretched valuations in the securities after the sector's multi-year rally.

Stock funds, whose flows tend to move in tandem with those of high-yield bond funds, posted $16.4 billion in outflows, the most since February. Investors pulled $15.8 billion from U.S.-based stock ETFs, funds often used by institutional investors.

This Reuters story, filed from New York, showed up on their Web site at 8:11 p.m. EDT on Thursday---and I found it in yesterday's edition of the King Report.

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Corporate 1% in US Gets Wealthier While Cash Piles Up

Income inequality has company -- make that companies. A new wealth gap is opening among U.S. corporations, where cash holdings are growing more concentrated as the rich get richer.

Eighteen American businesses held 36 percent of corporate wealth in 2013, up from 27% in 2009, according to a report from Standard & Poor’s, a credit rating firm in New York. The bottom 80% have lost ground, with just 11%.

The top 1% is a Who’s Who of multinationals, including Microsoft Corp., Google Inc., Coca-Cola Co., Apple Inc. and Ford Motor Co., that reap a big share of profits from non-U.S. sales. Because tax law discourages moving that money back to the U.S., cash is piling up abroad and companies are taking novel steps to adapt, including borrowing against those assets to finance operations at home.

“Unlike individuals, corporations don’t want to be in that top 1%,” said analyst Andrew Chang, lead author of the S&P report. “This rising cash balance among the richest is tax-policy driven.”

This Bloomberg article appeared on their Internet site at 8:03 a.m. Denver time on Friday---and it's the first offering of many from Roy Stephens.

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The "Recovery" in One Chart: When Americans Can't Even Afford to Buy McDonald's for Nine Months in a Row

There is endless propaganda... and then there are McDonald's sales.

It is the latter that is by far the best indicator of how the US economy is progressing when stripped of all the bullshit seasonal adjustments, rhetoric and lies from the administration which focus on what is a glowing recovery, for the 1%. As for everyone else, they can't even afford a dollar meal.

The proof? McDonald's same-store sales for the last month, July, cratered by 2.5%, far worse than the 1.1% expected driven by a 7.3% collapse in Asian sales, but the number we focus on, US comp store sales, was a devastating 3.2%, on par with the worst decline in history, and the ninth consecutive month in which McDonald's has not posted an increase in U.S. same-store sales.

This brief article appeared on the Zero Hedge Web site at 8:14 a.m. EDT on Friday morning---and it's worth the read and the embedded chart is worth the trip all by itself.  I thank reader M.A. for sending it.

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Sprott Money Weekly Wrap-Up

This 7:45-minute audio clip featuring Eric Sprott was posted on the sprottmoney.com Internet site yesterday---and Eric has something to say about the crisis warning from Indian Central Bank Governor, along with the current geopolitical turmoil.

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Criminalizing Americans for Government Profit: Doug French

Forget protecting and serving; we’re all potential bad guys in the eyes of the law that looks to jail us, fine us, and seize our property for profit. Retired LAPD Deputy Chief of Police Stephen Downing told FoxNews Latino, “The federal government has turned policing into policing for profit.”

Cops are tracking down cash, rather than crime. Downing told Fox that departments now direct police assets to generate cash, instead of investigating murders and rapes. And there are plenty of abstruse laws to trip up even the most careful citizen. The American Bar Association task force reported that the body of federal criminal law is “so large… that there is no conveniently accessible, complete list of federal crimes.”

Columbia law professor John Coffee estimates the federal government has the criminal process at its disposal to enforce as many as 300,000 federal regulations. In his introduction to One Nation Under Arrest, Edwin Meese III writes, “It is only a slight exaggeration to say that potentially everything you do each day is subject to criminal law: driving, shopping, gardening, and even, yes, eating.”

In an interview with the Wall Street Journal, James L. Buckley, one of the very few men to have served in all three branches of government, noted that the US Code, the entire body of federal statutory law, has gone from one volume before the New Deal to 33 or 34 volumes by the 2012 edition, which is still being printed.

This essay appeared on the Casey Research Web site on Friday---and it's pretty much a must read for any U.S. citizen.

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Dear David, Sorry, but Your Money Is Trapped in the USA: David Galland

Recently, my colleague David Galland had a revealing experience. David attempted to invest abroad but was stymied by the U.S. government’s de facto capital controls.

While there are no official capital controls, the uniquely burdensome regulations associated with doing business with a “U.S. Person” creates a similar effect—that being that the vast majority of foreign banks, brokerages, and other financial institutions shun American clients, effectively making it much more difficult to move capital outside of the U.S.

IM contributor Jeff Thomas eloquently points out that “If the sheep are to be sheared, they must first be penned in so that they cannot escape.” This is exactly the point of capital controls: to lock in the wealth of a country so it cannot escape the shearing that is soon to come.

I’d suggest that you take David’s experience to heart and put in place some of the strategies he suggests before it’s too late.

This is another must read for all U.S. citizens, but I would think it's a must read for all, as this scenario may be visited upon your country as well at some point in time.  This commentary appeared on the internationalman.com Internet site on Friday.

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German Handelsblatt Releases Stunning Anti-West Op-Ed, Asks if "West Rabble-Rousers Are on the Payroll of the KGB"

Up until this point Angela Merkel, and German media in general, had been staunchly on the side of the West when it comes to dealing with Russia, Putin and realpolitik in broader terms. That changed dramatically today when Gabor Steingart, the chief editor of Handelsblatt, Germany's leading economic newspaper, came out with a stunning op-ed, in German, English and Russian, titled simply that "The West on the wrong path" in which the editor comes out very vocally against the autopilot mode German media has been on for the past several months and calls for an end to a strategy of sanctions and Russian confrontation that ultimately "harms German interests" and is a dead end.

This long read showed up on the Zero Hedge Web site at 12:57 p.m. EDT on Friday afternoon, and I thank South African reader B.V. for sharing it with us.

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Russian Sanctions Are Political Nightmare for Brussels

The Russian embargo on food imports from the EU will have not only economic but also political consequences.

Judging by the reactions of some European leaders, it can be speculated that Moscow managed to hit a vulnerable point of the European Union. Polish and Finnish officials have already expressed their intentions to seek financial compensation from the European Commission.

The problem is that although the European leaders have repeatedly mentioned the principle of European solidarity, there is no legal mechanism to compensate the countries suffering from Russian retaliatory measures. It is also safe to assume that finding additional funds in order to pay the compensations will be a difficult task, given the dire state of the European economy.

Certainly, those issues will not prevent political leaders from countries affected by the Russian embargo from demanding financial aid because for them it is the only viable political strategy.

This article appeared on the RIA Novosti Web site at 3:19 p.m. Moscow time on their Friday afternoon---and it's the second offering of the day from Roy Stephens.

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Russia "Biggest Threat to Global Trade Since the Oil Embargoes of the 1970s"

Vladimir Putin is digging in for a prolonged siege and a possibly permanent reversal of trade ties with the West. There can be no other way of interpreting the decision to ban many food imports from countries that have imposed sanctions, and the parallel threat to stop car imports and flights by Western airlines over Russian airspace.

Collectively, these moves would represent the most profound breakdown in global trade since the oil embargoes of the 1970s. Never mind the geo-political risks implicit in what's going on, these wider threats to globalisation are being almost wholly ignored by financial markets, where misplaced complacency continues to be the order of the day.

There's still time for Mr Putin to retreat from the brink, but he has shown few signs of it so far, repeatedly calling the West's bluff in his piecemeal annexation of Ukraine. The cosy assumption that reason will prevail has already been repeatedly shattered. Why would Mr Putin back off now?

I'd be very cautious with anything that comes out of The Telegraph these days regarding Russia, as the slant is negative in the extreme---and there's lot of that in this article that was posted there on Thursday.  I thank Roy Stephens for sending it.

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Ukraine Prepares to Impose Russian Gas Transit Ban, Commit Economic Suicide

While Ukraine has long since ceased being a customer of Gazprom (for the simple reason being that it can't afford to pay for historical gas purchases let alone future ones, and with a long cold winter just 3 months ahead, Kiev is praying that its brand new Western "allies" will give it the loans it needs to buy Europe-sourced gas), the bulk of Russia-sourced gas into Europe still transits through Ukraine.

Not surprisingly, Ukraine correctly understands this is the last trump card it has in any negotiation with the west, or the east. It is this trump card that went into play moments ago when Ukraine's Prime Minister who recently resigned and whose resignation was not accepted, said that Ukraine is considering banning the transit of all Russian "energy resources", i.e. European gas.

This news item appeared on the Zero Hedge Web site at 8:52 a.m. EDT on Friday morning---and it's worth reading.  I thank reader M.A. for sending it our way.  There's also a Bloomberg story on this headlined "Ukraine Threatens Oil and Gas Cut-Off in Russia Sanctions"---and a Russia Today article titled "Ukraine may block all transit from Russia in sanctions row - PM".  Both are courtesy of Roy Stephens.

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Kiev Gets World Bank Support

The Ukrainian government said it welcomed support from the World Bank as a way to build confidence with investors wary of Russian aggression.

The government in Kiev said it received $500 million in support from the World Bank, which it said was evidence of the bank's trust in Ukraine's ability to reform.

"The government welcomes today's decision of the World Bank's board of directors as another important step towards restoring the confidence of foreign investors to Ukraine, especially in the current difficult conditions of the Russian aggression against our country," a Thursday statement from Kiev said.

This UPI article, filed from Kiev, showed up on their Internet site at 9:04 a.m. EDT yesterday---and it's also courtesy of  Roy Stephens.

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Pepe Escobar: NATO Is Desperate for War

The North Atlantic Treaty Organization is desperate; it is itching for a war in battlefield Ukraine at any cost.

Let's start with Pentagon supremo, U.S. Defense Secretary Chuck Hagel, who has waxed lyrical over the Russian Bear's "threat": "When you see the build-up of Russian troops and the sophistication of those troops, the training of those troops, the heavy military equipment that's being put along that border, of course it's a reality, it's a threat, it's a possibility - absolutely."

NATO spokeswoman Oana Lungescu could not elaborate if it was "threat" or "reality", absolutely or not, but she saw it all: "We're not going to guess what's on Russia's mind, but we can see what Russia is doing on the ground - and that is of great concern. Russia has amassed around 20,000 combat-ready troops on Ukraine's eastern border."

In trademark, minutely precise NATOspeak, Lungescu then added that Russia "most probably" would send troops into eastern Ukraine under the cover of "a humanitarian or peace-keeping mission". And that settled it.

Hagel and his remote-controlled Romanian minion Lungescu obviously ignored its detailed explanation by Russian Air Force's spokesman: the "threat" or "build-up" happens to expire this Friday, the last day of Russian military exercises announced in advance.

This commentary by Pepe showed up on the Asia Times Web site yesterday---and I thank Roy Stephens for sending it our way.  It certainly falls into the must-read category.

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Exxon Drilling Russian Arctic Shows Sanctions Lack Bite

Sanctions, what sanctions?

Exxon Mobil Corp. will start drilling a $700 million well in the Arctic Ocean tomorrow, Russia’s government said, showing that for all the talk of action against Vladimir Putin’s oil industry, the largest U.S. energy company is undeterred.

As Russia’s relations with Europe and the U.S. deteriorated to the lowest point since the Cold war over the conflict in Ukraine, the European Union imposed a third round of sanctions last week, restricting the export of equipment used for offshore oil production. That doesn’t affect Exxon’s plans because the contract to hire the rig was signed before the measures were announced.

This Bloomberg article, filed from Moscow, appeared on their Web site at 8:02 a.m. MDT on Friday---and once again I thank Roy Stephens for sending it our way.

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Russia, China Agree More Trade Currency Swaps to Bypass Dollar

The Russian and Chinese central banks have agreed a draft currency swap agreement, which will allow them to increase trade in domestic currencies and cut the dependence on the US dollar in bilateral payments.

The draft document between the Central Bank of Russia and the People’s Bank of China on national currency swaps has been agreed by the parties,” and is at the stage of formal approval procedures, ITAR-TASS quotes the Russian regulator’s office on Thursday.

The Russian Central Bank is not giving precise details on the size of the currency swaps, nor when it will be launched. It says this will depend on demand.

According to the bank, the agreement will serve as an additional instrument for ensuring international financial stability. Also, it will offer the possibility to obtain liquidity in critical situations.

This news item appeared on the Russia Today Internet site at 4:11 p.m. Moscow time on their Friday afternoon---and the stories from Roy just keep on coming.

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Jihadists Rout Kurds in North and Seize Strategic Iraqi Dam

The crisis gripping Iraq escalated rapidly on Thursday with a re-energized Islamic State in Iraq and Syria storming new towns in the north and seizing a strategic dam as Iraq’s most formidable military force, the Kurdish peshmerga, was routed in the face of the onslaught.

The loss of the Mosul Dam, the largest in Iraq, to the insurgents was the most dramatic consequence of a militant offensive in the north, which has sent tens of thousands of refugees, many from the Yazidi minority, fleeing into a vast mountainous landscape.

In one captured town, Sinjar, ISIS executed dozens of Yazidi men, and kept the dead men’s wives for unmarried jihadi fighters. Panic on Thursday spread even to the Kurdish capital of Erbil, long considered a safe haven, with civilians flooding the airport in a futile attempt to buy tickets to Baghdad.

This New York Times story is from Thursday---and I'm not sure if the seizure of the Mosul Dam is true or not, because I carried stories in my Friday column denying that this event had occurred.  If you do, read it with caution.  I thank Roy Stephens once again.

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US Jets and Drones Attack Militants in Iraq, Hoping to Stop Advance

The United States launched a series of airstrikes against Sunni militants in northern Iraq on Friday, using Predator drones and Navy F-18 fighter jets to destroy rebel positions around the city of Erbil, the American military said Friday.

The strikes were aimed at halting the advance of militants with the Islamic State in Iraq and Syria toward Erbil, the Kurdish capital, which is home to a United States Consulate and thousands of Americans.

The action marked the return of the United States to a direct combat role in a country it left in 2011. Warplanes dropped 500-pound laser-guided bombs on a number of targets: a mobile artillery piece that was being towed from a truck and had begun shelling Erbil, a stationary convoy of seven vehicles, and a mortar position.

This is another story from The New York Times.  This one appeared on their Internet site yesterday sometime---and it's also courtesy of Roy Stephens.

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14 Beautiful Photos of Erbil, the Capital of Iraqi Kurdistan That ISIS Is Targeting

The Islamic State, or ISIS, has been taking swaths of territory in northern Iraq and Syria in recent weeks. Between taking the city of Mosul, targeting the Yazidis (an ethno-religious minority in Iraq), and battling the Kurdish peshmerga, ISIS has moved increasingly toward Kurdistan, the de facto state of northern Iraq’s Kurds.

Amid the chaos, U.S. officials and northern Iraqis have fled to Erbil, the capital of Kurdistan. U.S. President Barack Obama authorized military strikes against ISIS should they threaten Erbil

With a population of 1.5 million, Erbil is the largest city in Kurdistan. It is also one of the oldest continuously inhabited cities in the world, with life in the city dating as far back as 6000 B.C.

Since the winding down of the Iraq War, Erbil has become a hub for development, leading some to question whether it could become the next Dubai.

This wonderful photoessay showed up on the businessinsider.com Internet site at 12:57 p.m. EDT on Friday---and it's well worth your time.  It's also courtesy of Roy Stephens.

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Washington Opened the Gates of Hell in Iraq---Now Come the Furies: David Stockman

The late, great critic of the American Imperium, Chalmers Johnson, popularized the salient concept of “blowback”. That is, the notion that if you bomb, drone, invade, desecrate and slaughter—collaterally or otherwise— a people and their lands, they might find ways to return the favor.

But even Johnson could not have imagined the kind of blowback coming ferociously Washington’s way now. Namely, the mayhem being visited on much of Iraq by American tanks, armored personnel carriers, heavy artillery, anti-aircraft batteries and other advanced weaponry that has fallen into the hands of the very jihadist radicals that have been the ostensible target of Washington’s entire multi-trillion “war on terrorism”.

No question about it. The ISIS terrorists are winning against the hapless Iraqi military and even the formidable Kurdish peshmerga fighters—using some of the most lethal arms that the US military-industrial complex could concoct.

Yes, that wasn’t supposed to happen. During the bloody years after George W. Bush declared “mission accomplished” the Iraqi’s were ostensibly provided the arms and training to provide for their own defense. The American “occupation”, therefore, was really not all that. Instead, it was actually an exercise in “nation-building” that would bequeath to the people Washington had “liberated”  a self-governing democracy equipped with the means to insure internal order and external security. Washington politicians—including President Obama—gave endless speeches about that. You can look them up!

This short essay by David falls into the absolute must-read category for all serious students of the New Great Game---and it was posted on his Internet site yesterday.  My thanks go out to Roy Stephens once again.

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WHO Declares "Health Emergency", Admits "Stretched to Limit" on "Out of Control" Ebola Outbreak As Nigeria Cases Soar

CDC Director Frieden's worst nightmare is coming true.

Nigeria, of which he was "deeply concerned" due to the population density in Lagos for instance, has admitted 139 patients are now being monitored for Ebola (up from 8 mere days ago). This, along with "the outbreak moving faster than we can control it," drive the World Health Organization (WHO) to declare West Africa's Ebola epidemic, an "extraordinary event" and now constitutes an international health risk.

As Reuters reports, the agency said that, all states with Ebola transmission - so far Guinea, Liberia, Nigeria and Sierra Leone - should declare a national emergency, as former WHO official warned "governments appear to not have been engaged as necessary."

This Zero Hedge article, with various links, is definitely worth reading---and it was posted on their Internet site at 8:30 a.m. EDT yesterday---and I thank reader M.A. for sending it our way.

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Malaysia Airlines to Be Pulled from Stock Market

Malaysia Airlines will be taken off the stock market as part of a government bid to rescue the troubled company.

State investor Khazanah, which owns nearly 70% of the airline, is planning to buy out small shareholders as a first step to overhauling the national carrier.

The fund said it would announce more details by the end of August.

"The proposed restructuring will critically require all parties to work closely together to undertake what will be a complete overhaul," it said in a statement.

This news story, filed from Hong Kong, was posted on the money.cnn.com Internet site at 7:36 a.m. EDT on Friday---and it's another contribution from reader M.A.

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China Is Exporting Deflation to the World Again: Ambrose Evans-Pritchard

Two quick words of caution on the explosive rise in China’s exports in July. (Amazing how China always beats OECD states in compiling trade data).

The category known as “non-specified exports” rose by 92pc in a single month, according to Morgan Stanley this morning.

This is widely thought to be capital outflows, disguised in the trade data through over-invoicing. It typically occurs through Hong Kong and Taiwan.

The 17.5% rise in exports to Europe is probably real (since that data is harder to fiddle). Far from being healthy, it is alarming. Euroland is clearly not booming. A wealth of data suggests that the eurozone already has one foot in recession.

This Ambrose Evans-Pritchard blog appeared on The Telegraph's Web site yesterday sometime---and it's the second-to-last offering of the day from Roy Stephens.

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China to Build Lighthouses on Five Isles in Defiance of US Call

China plans to build lighthouses on five islands in the South China Sea, state media reported on Thursday, in defiance of calls from the United States and the Philippines for a freeze on such activity to ease tension over rival claims.

At least two of the islands upon which China said it will put up lighthouses appear to be in waters also claimed by Vietnam.

Overlapping claims in the South China Sea have fueled confrontation in recent months with China, which claims 90 percent of the sea, at odds with Vietnam and the Philippines in particular.

This Reuters piece, filed from Beijing, appeared on their Web site at 6:00 a.m. EDT on Thursday---and represents the final contribution of the day from reader M.A.

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Washington Threatens the World — Paul Craig Roberts

The consequence of Washington’s reckless and irresponsible political and military interventions in Iraq, Libya, and Syria has been to unleash evil. The various sects that lived in peace under the rule of Saddam Hussein, Gaddafi, and Assad are butchering one another, and a new group, ISIS, is in the process of creating a new state out of parts of Iraq and Syria.

The turmoil brought into the Middle East by the Bush and Obama regimes has meant death and displacement for millions and untold future deaths. As I write 40,000 Iraqis are stranded on a mountain top without water awaiting death at the hands of ISIS, a creation of US meddling.

The reality in the Middle East stands in vast contradiction to the stage managed landing of George W. Bush on the US aircraft carrier Abraham Lincoln where Bush declared “Mission Accomplished” on May 1, 2003. The mission that Washington accomplished was to wreck the Middle East and the lives of millions of people and to destroy America’s reputation in the process. Thanks to the demonic neoconservative Bush regime, today America is regarded by the rest of the world as the greatest threat to world peace.

The Clinton regime’s attack on Serbia set the pattern. Bush upped the ante with Washington’s naked aggression against Afghanistan, which Washington clothed in Orwellian language–”Operation Enduring Freedom.”

This essay by Paul showed up on his Internet site on Friday---and certainly falls into the must-read category---and I thank Roy Stephens for his final offering in today's column.

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Three King World News Blogs

1. David Stockman: "Expect Historic and Worldwide Financial Destruction"  2. James Dines: "Gold, World War III---and the End of the Age of Jobs and Travel"  3. Ronald-Peter Stoferle: "This is Going to Destabilize the Entire Global Financial System"

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]

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30 Coins US Mint Made to Test Designs, Metals Sold for More Than $500,000

Thirty coins stamped by the U.S. Mint in the 19th century to test designs and metals have sold at auction for more than a half-million dollars.

Dallas-based Heritage Auctions had expected the coins to sell Thursday night for more than $300,000. Heritage spokesman Noah Fleisher says they sold for a total of $505,440.

The biggest price was $76,375 for an 1871 silver dollar struck in aluminum and believed to be unique.

This very brief but very interesting AP article, filed from Dallas, showed up on the foxbusiness.com Web site yesterday sometime---and the photo slide show, if you're a coin collector, is worth the trip.  I thank Elliot Simon for bringing it to our attention.

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Gold and Silver Bullion Storage at the West Point Mint

As a break from the string of Gold Kennedy Half Dollar posts, I wanted to complete the series of articles from my tour of the West Point Mint. This final article takes a look inside a bullion storage department containing newly $2 billion in gold and silver.

The West Point Mint was originally called the West Point Bullion Depository and served as a storage facility for silver bullion. It once had the highest concentration of silver of any US Mint facility, earning the nickname “The Fort Knox of Silver.” In 1980, West Point also began storing gold bullion in its vaults. Shortly afterwards approximately $20 billion worth of gold was stored at the facility, making it second only to Fort Knox for gold storage.

In the following years, the West Point facility began to take on more production duties including minting commemorative gold coins and American Gold Eagle bullion coins. It gained status as an official branch of the US Mint on March 31, 1988. Production would continue to expand, eventually including commemorative silver coins, American Silver Eagles, American Platinum Eagles, American Gold Buffalo coins, as well as other numismatic items.

In addition to the extensive production activities, the West Point Mint continues to serve depository functions. During my recent visit to the facility, I had the opportunity to step inside one of the storage compartments.

This is another very interesting story---and it put in an appearance on the mintnewsblog.com Internet site yesterday---and it's the final contribution of the day from Elliot Simon.

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Dennis Gartman: Gold vs. "The Force"

Doug Casey of Casey Research refuses to see gold market manipulation because it contradicts his ideology that markets are always bigger than governments. (If only they were, since then no government on the planet would remain in its current configuration and totalitarianism would be impossible.)

The job of CPM Group's Jeff "Pay No Attention to That Man Behind the Curtain" Christian depends on his denying gold market manipulation, since the market manipulators are his own clients, central banks.

But with his commentary today recognizing gold market manipulation and naming it "The Force," financial letter writer Dennis Gartman may signify that the End Times are approaching, wherein the obvious can be simultaneously acknowledged and dismissed as what everybody supposedly knew all along, though the record will show only denial and ridicule of assertions of what is now acknowledged as obvious.

The above paragraphs of introduction are courtesy of Chris Powell---and Gartman's commentary was embedded in this GATA dispatch from yesterday.  It's definitely worth reading.

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¤ The Funnies







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¤ The Wrap

While it’s not guaranteed that the commercials will flush the technical funds from the long side in Comex gold, silver and copper on lower prices, the probabilities point that way. Even if we bounce in the very short term, it is likely to involve the commercials setting up the technical funds for an eventual clean out.  I don’t enjoy reporting at times like this and hope that my guesstimate of the probabilities turns out to be wrong. However, this has nothing to do with my long term expectations for silver. - Silver analyst Ted Butler: 06 August 2014

Today's pop "blast from the past" is 38 years young.  The audio quality on this youtube.com video is not the best, but it doesn't take away from the spirit of the performance one bit.  It's a rock classic for sure---and the link is here.

Today's classical "blast from the past" dates from 1881.  It's Brahms' Piano Concerto No. 2 in B-flat major---and was composed 22 years after his first piano concerto.  Although I like the first piano concerto, it's hard not to argue the second is by far the most popular---and certainly my favourite of the two.  It's a monster four-movement work---and Daniel Barenboim and The Munich Philharmonic Orchestra do it right.  The link is here.

It was sort of a nothing day in the precious metal market yesterday, but I'm still wondering about the huge volume in both gold and silver that occurred before the morning gold fix in London.  As I said in The Wrap on Friday, it's very unusual to have that level of volume with little price action to go along with it.

It's always possible that all the precious metals were trying to rally more than the charts showed---and that JPMorgan et al. were leaving nothing to chance by bombing the market and preventing any form of rally at all from manifesting itself in any of the precious metals.  That's the only explanation I can think of, as there's no other reason for volume to be that high at that time of day.

Here are the six-month gold and silver charts.

Well, with the situation in Ukraine really starting to come off the rails---and the real reason that flight MH17 crashed is almost of no importance now, as the West has tried the case already, found Russia guilty---and then ordered an immediate hanging---all without a shred of evidence to back it up.  The contents of the flight recorders are still nowhere to be seen.

I think the piece by Paul Craig Roberts in the Critical Reads section pretty much sums up the state of world affairs today, as the black swans are everywhere now.  Throw in the Ebola situation in Africa---and if you're not scared to death, you obviously don't understand the gravity of the situation.

With each passing day, I'm becoming more convinced that the current economic, financial and monetary system will be a deliberate casualty of whatever goes 'bump' in the night from this point forward---as the powers that be don't want the system to crash and burn without being able to point to some reason it all happened---and why it wasn't their fault.

If I were you, I wouldn't wait around to get your financial/monetary affairs in order.  I've done all I can---and I'm hoping/praying that it will be enough.

And as I've mentioned before, I expect the precious metal price management scheme to be one of the casualties as well---and at that the time that occurs, what the Commitment of Traders Report says will be totally irrelevant.  When it does blow up, I expect everything else to melt down in the process.

So we wait.

That's all I have for the day---and the week---and I'll see you here on Tuesday.