Gold & Silver Daily
 

¤ Yesterday In Gold & Silver

It was a nothing day in gold yesterday---and the tiny gains from Far East and London trading began to disappear at 10:30 a.m. EDT---and the New York low was in at 11:00 a.m. EDT, the close of trading in London.  After that, the gold price traded sideways for the remainder of the Friday session.

The high and low ticks aren't worth looking up.

Gold finished the day at $1,231.00 spot, down 90 cents from Thursday's close.  Net volume barely moved the needle at only 80,000 contracts.

After the obligatory sell off at the 6 p.m. EDT open in New York on Thursday evening, the silver price didn't do much until a rally began once the noon London silver fix was put to bed.  That got halted right at the 9:30 a.m. EDT open of the equity market in New York---and at 10:30 a.m. the HFT boyz showed up, taking silver down to its spike low tick shortly before 11:30 a.m.  Within ten minutes, the silver price rallied back to unchanged on the day---and traded almost ruler flat into the 5:15 p.m. electronic close.

The high and lows were recorded by the CME Group as $17.355 and $17.135 in the December contract.

Silver closed yesterday at $17.205 spot, up a penny from Thursday's close.  Net volume was in the vicinity of  22,000 contracts.

The platinum price didn't do a lot on Friday---and also got sold down a bit at 10:30 a.m. EDT---just like gold and silver.  Platinum was closed down seven bucks.

Palladium made several rally attempts in early Zurich trading, but both got sold down before they could develop into anything.  Then at 10:30 a.m. in New York, the same not-for-profit sellers showed up in this metal as well---and palladium got closed down a couple of bucks.

The dollar index closed late on Thursday afternoon in New York at 85.83.  It slid to 85.75 by 2:30 p.m. Hong Kong time---and then rose quickly to its 85.88 high about 8:15 a.m. BST in London.  From there it headed lower at an ever faster pace, until someone caught the proverbial falling knife at the London p.m. gold fix at precisely 3 p.m. BST/10 a.m. EDT.  The low tick at that points was 85.57.  It 'rallied' back about twenty basis points before chopping sideways into the close.  The index finished the day at 85.73---which was down 10 basis points from Thursday's close.

The gold stocks chopped within a percent or so of unchanged during the entire New York session yesterday---and the HUI closed down a smallish 0.31%.

The silver equities, like the gold shares, tried to stay in positive territory, but the sell-offs across the board at 10:30 a.m. EDT in all four precious metals put the silver equities in a deeper hole---and although they struggled mightily back into positive territory, they couldn't manage a positive close, as Nick Laird's Silver Sentiment Index also finished the Friday session in the red by a tiny amount---0.12%.

The CME Daily Delivery Report showed that 50 gold and zero silver contracts were posted for delivery within the Comex-approved depositories on Tuesday.  The only short/issuer was Barclays out of their in-house [proprietary] trading account once again---and they also stopped 39 of those contracts in their client account.  The balance was picked up by Canada's Scotiabank.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Friday trading session showed that gold open interest in October rose 53 contracts---and now stands at 286 contracts.  Silver's remaining October open interest dropped from 8 contracts to 2 contracts.

There was another withdrawal from GLD yesterday, as an authorized participant took out 144,194 troy ounces.   And as of 6:59 p.m. EDT yesterday evening, there were no reported changes in SLV.

There was a decent sales report from the U.S. Mint yesterday.  They sold 5,000 troy ounces of gold eagles---1,500 one-ounce 24K gold buffaloes---and 125,000 silver eagles.

Month-to-date the mint has sold 55,500 troy ounces of gold eagles---20,500 one-ounce 24K gold buffaloes---3,940,000 silver eagles---and 400 platinum eagles.  Based on these numbers, the silver/gold sales ratio is a hair under 52 to 1.

There was no in/out movement in gold at the Comex-approved depositories on Thursday, but the gargantuan in/out movement in silver more than made up for it, as 2,451,366 troy ounces were received---and 846,366 troy ounces were shipped off for parts unknown.  The big deposit was at HSBC USA---and the big withdrawal was from Brink's, Inc.  The link to yesterday's action, which is worth a quick look, is here.

The Commitment of Traders Report for positions held at the close of Comex trading on Tuesday was in the ballpark of what I was expecting, but there was the odd surprise.

The first surprise was in silver---and it was a positive one, as the Commercial net short position actually declined by 1,669 contracts, or 8.3 million troy ounces.  The Commercial net short position is now down to 72.96 million troy ounces, which is pretty much on par with the lowest short position these traders have had for many years.

However, Ted Butler said it appeared that JPMorgan added 2,000 contracts to their short-side corner in the Comex silver market during the reporting week, so their short positions now stands at 12,000 contracts, or 60 million troy ounces which, using the number from the previous paragraph, represents about 82 percent of the total Commercial net short position.

Ted was rather surprised by this turn of events---and told me he was going to spend some time thinking about it between now and the time he posts his weekly review to paying subscribers early this afternoon EDT, so he may have something to add to his initial thoughts on this.

Under the hood in the Disaggregated COT Report, there was very little change in long and short positions in the Managed Money category, so all of the reporting week's activity was commercial trader vs. commercial trader,  along with a bit of long position reduction in the Nonreportable/small trader category.

The disappointment was in gold.  I was expecting/hoping that the Commercial net short positions wouldn't be much worse than the prior week's COT Report, or at least not over 20,000 contracts worse.  That was not the case, as the Commercial net short position blew out by 26,075 contracts, or 2.61 million troy ounces.

Most of the activity on the rally during the reporting week was the Managed Money going long and covering shorts, to the tune of 20,292 contracts.  The Nonreportable/small trader category covered 3,250 of their short positions, so the balance of the contracts, about 2,500 or so, involved the Commercial traders.  On the other side of all these trades---and capping the price in the process---was JPMorgan et al.  And while on the subject of JPMorgan, Ted said that they reduced their long-side corner in the Comex gold market by 2,000 contracts---and it now stands at 16,000 contracts, or 1.6 million ounces.

As I mentioned in yesterday's column, the price action since the Tuesday cut-off, which has been down three days in a row, has certainly reduced the Commercial net short position by a decent amount.  But, having said that, 'da boyz' could still skin the Managed Money crowd to the tune of 30-35,000 Comex contracts, if they wanted to put them all back on the short side again.  That would drive the price down to around the October 6 low price tick without too much trouble.

So, if the T.A. crowd is looking for a double bottom in gold, the powers-that-be are in a perfect position to oblige them, especially with the good start they've had to the process during the last three trading days of this week.

So we wait.

Before leaving the COT Report, there were also very decent improvements in the COT structure of both copper and platinum---and bit in palladium as well.  The only fly in the ointment---as I just mentioned---is in gold.

The Shanghai Gold Exchange reported their withdrawals for the week ending Friday, October 17---and the magic number for that week was 51.506 tonnes, which is a very chunky number once again.  Here's Nick Laird's excellent chart that shows the change.

Since this is my Saturday column, I have a fair number of stories for you today, including three or four that I've been saving for today.  I also have a fair number of big reads that fall into the must read category, so I hope you have enough time in what's left of your weekend, to read them all.

 

¤ Critical Reads

Sears to close more than 100 stores and lay off nearly 5,500 employees

Sears Holdings Corp is shuttering more than 100 stores and laying off at least 5,457 employees, investor website Seeking Alpha reported on Thursday, indicating the struggling retailer may be stepping up store closures.

Sears said in August it had closed 96 stores in the six months since February and planned to close a total of 130 under-performing stores during the full fiscal year. It added at the time that it may shutter additional stores beyond the 130 target.

Sears spokesperson Chris Brathwaite declined to comment on the number of planned closures, saying the company would provide an update when it reports quarterly earnings next month. Reducing operations to the best performing stores is key to Sears’ revival strategy, he said.

“While this has resulted in store closures where appropriate – decisions that we do not take lightly – we continue to have a substantial nationwide footprint with a presence in many of the top malls in the country,” Brathwaite said.

This news item appeared on theguardian.com Internet site at 3:33 p.m. EDT on Thursday afternoon---and I thank reader 'h c' for today's first story.

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The U.S. Housing Recovery Has Been Canceled Due To Data Revisions

Last month, when, with great amusement, we reported that "New Home Sales Explode Higher Thanks To... Record High Average New Home Prices?", we mocked the latest batch of bulls hit data released by the U.S. department of truth as follows:

New Home Sales rose a magnificent (seasonally-adjusted annualized rate) 18% in August - the biggest monthly rise since January 1992 albeit with a 16.3 90% confidence interval, meaning the final number may well be +1.7%. At 504k, new home sales are back at May 2008 levels (though obviously massively below the 1.4 million homes sold at the peak in 2005). As a reminder, May's 504K new home sales print was later revised later to 458K. But even more stunning, new home sales in The West rose a mind-numbing 50% in August (and up 84.4% YoY - nearly double). 

Well, it is now a month later, and here come the revisions: first, that 50% surge in the West was revised... 30K lower.

In short: the euphoric, consensus-beating data for every single month since May has been revised lower, by on average 6% and as much as 9%. Perhaps finally people will realize that there is only one number that matters in the Census bureau's monthly new home sales report: the ±15.7 90% confidence interval. Well, people maybe, but not algos, who only care about one thing: whether the data beat or missed.

Now we wonder: will all those market surges over the past 4 months which were based on erroneous headline data, all be revised lower? Sarcasm off.

This short Zero Hedge piece appeared on their website at 10:29 a.m. EDT on Friday---and it's worth your time.  I thank Manitoba reader U.M. for sharing it with us.

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A Furious Albert Edwards Lashes Out at Central Bankers: "Will These Morons Ever Learn?"

Albert Edwards is angry, and understandably so: almost exactly two weeks after warning readers to "sell everything and run for your lives" and the market was on the verge of its first correction in years, several powerful verbal interventions by central banks from the Fed, to the BOJ to the ECB have staged yet another massive rebound which has nearly wiped out all the October losses.

Central-planning aside (and ask how much the USSR would have wished for central planning to indeed have been "aside") we share his frustrations, almost to the point where we would reiterate word for word Edwards' furious outburst, as follows: "Simply put, the central banks for all their huffing and puffing cannot eliminate the business cycle. And they should have realised after the 2008 Great Recession that the longer they suppress volatility, both economic and market, the greater the subsequent crash. Will these morons ever learn?"

Obviously, they will never will because their very entire existence is based on the assumption that what they do can impact the business cycle when all it does is merely delay the inevitable. In this case, a recession whose arrival will be so violent, it will crush not only US stocks, but the overall economy, which has for the past 6 years existed purely on the Fed's CTRL-P fumes. Fumes, which by the looks of things, will evaporate at just the worst possible moment: just when half of the world's entire growth in 2015 is expected to come from the U.S. (the other half from China).

This commentary appeared on the Zero Hedge Internet site at 7:21 p.m. EDT on Thursday evening---and I found it yesterday's edition of the King Report.

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Doug Noland: More Wackoism

Central banks win the day and week.

Markets have grown completely dependent on “Do Whatever it Takes” central control. And six years into a historic global experiment in central bank monetary stimulus, the maladjusted global economy has become dependent upon inflated (and dangerously speculative) securities markets. Meanwhile, the consequences of reckless “money” printing spur deepening social and political tensions. As more begin to question contemporary central bank doctrine, the issue of economic inequality is finally becoming an issue.

There are so many signs pointing to the present as an extraordinary juncture in history. For one, the misconceptions, flaws and unfolding failure of contemporary central banking are coming into clearer view. Yet fragilities associated with a flagging global Bubble ensure only more radical monetary measures. In the name of fighting “deflation” risk, everything has become fair game. God only knows how much “money” they might end up printing.

Doug's weekly Credit Bubble Bulletin is always worth your while---and I thank reader U.D. for bringing this week's edition to our attention.  It was posted on the prudentbear.com Internet site on Friday evening.

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Tiny house sets London record

A house in London the size of two parking spaces has sold for £275,000 ($501,962) in what is likely to be a record for a property that size in the British capital, one of the world's most expensive cities.

It is so small that the bed is suspended over the cooker and you have to clamber over the worktop to get to it.

"There were 33 viewings and five offers," a spokeswoman for estate agents Winkworth said on Thursday.

With 27 years of residential real estate sales under my belt, I recognize a wildly out of control real estate market bubble when I see one---and this one takes the cake.  The story is worth reading---and the photos of the of the 'home' will blow you away.  The article showed up on The Sydney Morning Herald website at 1:12 a.m. local time on their Saturday morning. I thank reader 'h c' for his second offering in today's column.

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E.U. makes Britain pay for recovery

David Cameron is fighting to stop Britain being forced to pay an extra £1.7 billion to the European Union due to the success of the British economy.

The Prime Minister was ambushed with a demand from the European Commission for the extra cash because Britain’s economy has performed better than other economies in Europe since 1995.

The bill is due on December 1 and Mr Cameron is particularly enraged because Brussels accountants are also preparing to give France back £790 million as its economy performed less well than Britain’s.

Tories have been stunned by the news which comes just weeks before the critical by-election in Kent next month, which they will fight against Ukip, and as the European Parliament seeks additional increases to next year’s EU budget, at a extra cost to British taxpayers of £680 million.

You couldn't make this stuff up!  This amazing must read article appeared on The Telegraph's website at 9:39 p.m. BST on their Thursday evening---and I thank reader 'h c' for his third contribution to today's column.

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French Unemployed Hits Record High, Hollande Demands E.U. Budget "Must Be Adapted"

France's President Francois Hollande states confidently that "everyone should respect treaties," then 'Junckers' it with this stunningly hypocritical bullshit, "budget rules must be adapted" to support growth and France "has done what it has to do" on its deficit... one glance at the following chart suggests that Hollande has done nothing and has been enabled by Draghi... What a farce!!

How long before Schaeuble explodes?

This short news item, with an excellent chart, appeared on the Zero Hedge website at 12:12 p.m. EDT yesterday---and I thank reader U.M. for sending it along.

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Merkel: Lifting Sanctions Against Russia Unnecessary

German Chancellor Angela Merkel said Friday that lifting sanctions against Russia was unnecessary.

"We do not find it necessary to speak about lifting sanctions against Russia," Merkel said on the sidelines of the European Summit in Brussels, as quoted by Deutsche Welle.

The German chancellor explained her position by citing the fact that the Minsk agreements have not been fully implemented. In particular, ceasefire is not observed in eastern Ukraine.

On September 19, representatives from Russia, Ukraine, the self-proclaimed Donetsk and Luhansk people's republics and the Organization for Security and Co-operation in Europe (OSCE) formulated a memorandum of nine provisions to regulate the implementation of a ceasefire agreement between Kiev and independence supporters in eastern Ukraine reached during the previous talks of the so-called Contact Group in Minsk on September 5. Since then, both the Kiev forces and independence fighters have been accusing each other of violating the truce.

This 4-paragraph story showed up on the RIA Novosti website at 3:11 p.m. Moscow time on their Friday afternoon---and I thank reader M.A. for sending it our way.

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Hungary's Orban stonewalls U.S. corruption allegations

Hungary is demanding the U.S. hand over evidence after the Americans placed an entry ban on six officials close to Viktor Orban’s government last week.

The Hungarian prime minister in Brussels on Friday (24 October) told reporters that his country would not launch any investigation into the corruption allegations on the six without first seeing some proof.

“Without evidence you cannot accuse anyone,” he said. One of the accused is reportedly his own special advisor.

Orban told this website he was not proud that Hungary was the first E.U. member state to have a US-entry ban on officials.  Normally being first is something to be proud of, "but not in this case", he said.

This longish story, filed from Brussels, showed up on the euobserver.com website at 6:04 p.m. Friday evening Europe time---and it's courtesy of Roy Stephens.

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Renzi stirs up E.U. row ahead of eurozone meeting

Eurozone leaders are meeting on Friday to discuss the issue of public deficits and debt, as France and Italy are in breach of the EU rules.

Ahead of the meeting, Italian Prime Minister Matteo Renzi stirred up a row with outgoing EU commission chief Jose Manuel Barroso, who criticised his decision to publish a commission letter warning him about the budget deficit.

Renzi said he could not understand Barroso's "surprise" about the published letter, given that the Financial Times and Italian media had already "anticipated" it.

"I think it's time for total and open transparency, the time has come to put an end to secret letters in this building. With Italy there will be total clarity about anything that comes from Brussels, because we think that's the only way to help citizens understand what is going on," Renzi told journalists on the margins of an EU summit.

This article is the second one in a row from the euobserver.com Internet site.  It was posted there at 9:27 a.m. Europe time on Friday---and it's also courtesy of Roy Stephens.

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Italy’s in terminal decline, and no one has the guts to stop it

Everything that’s wrong with France is worse here.

The Rome Opera House sacked its entire orchestra and chorus the other day. Financed and managed by the state, and therefore crippled by debt, the opera house — like so much else in Italy — had been a jobs-for-life trade union fiefdom. Its honorary director, Riccardo Muti, became so fed up after dealing with six years of work-to-rule surrealism that he resigned. It’s hard to blame him. The musicians at the opera house — the ‘professori’ — work a 28-hour week (nearly half taken up with ‘study’) and get paid 16 months’ salary a year, plus absurd perks such as double pay for performing in the open air because it is humid and therefore a health risk. Even so, in the summer, Muti was compelled to conduct a performance of La Bohème with only a pianist because the rest of the orchestra had gone on strike.

After Muti’s resignation, the opera house board did something unprecedented: they sacked about 200 members of the orchestra and chorus, in a country where no one with a long-term contract can be fired. It was a revolutionary — dare one say Thatcherite? — act. If only somebody would have the guts to do something similar across the whole of the Italian state sector. But nobody will. Italy seems doomed.

This longish essay appeared on the spectator.co.uk Internet site on Friday BST---and it's certainly worth reading if you have the time.  My thanks got out to South African reader B.V. for bringing it to our attention.

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Eastern Europe Shivers Thinking About Winter Without Gas

As winter approaches, former Soviet satellite nations from Poland to Bulgaria are watching Russia and Ukraine’s stalled gas negotiations with growing trepidation.

The lack of discernible progress is sending a collective shiver down the spine of Eastern Europe, which retains vivid memories of Russian energy cuts during unusually cold winters in 2006 and 2009. The ensuing shortages led to shuttered factories and a return to wood for heating and cooking in rural areas.

Despite the two episodes, little has been done to diversify supplies within a region that remains highly dependent on energy delivery systems dating back to the Soviet era.

If Moscow and Kiev don’t reach a compromise before winter and OAO Gazprom fails to restart supplies to its western neighbor, Ukraine may resort to siphoning off gas carried through its territory. As in 2009, that could prompt Russia to cut transit through Ukraine altogether, leaving parts of eastern Europe exposed to severe shortages.

This very interesting Bloomberg article, co-filed from Prague and Belgrade, was posted on their Internet site at 5:48 a.m. Denver time on Friday morning---and I thank reader U.M. for finding it for us.

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Russia detains airport staff after Total CEO's runway death

Russian investigators detained four more staff members Thursday at the Moscow airport where the CEO of French oil giant Total died when his plane collided with a snowplough.

Those detained include an intern air traffic controller, her supervisor, who was in charge of flights at the time, and the heads of the airport's air traffic controllers and runway cleaners.

Investigators had already detained the driver of the snowplough and a court hearing on Thursday was expected to sanction his arrest.

On Thursday, investigators said the 60-year-old Vladimir Martynenko had 0.6g (per litre) of alcohol in his blood, double the Russian drink-driving limit.

This news story put in an appearance on the france24.com Internet site on Thursday sometime---and I thank Roy Stephens for sending it.  There was also a story about this on the RIA Novosti website---and it's headlined "Moscow Court Arrests Air Traffic Controller in Fatal Plane Crash"---and it's courtesy of reader M.A.

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Putin accuses U.S. of causing global instability

Russian President Vladimir Putin has accused the U.S. of undermining global stability, and warned that the world will face new wars if Washington does not respect the interests of other nations.

During a speech in the Russian city of Sochi, the President argued that while Moscow does not see Washington as a threat, U.S. foreign policy has created chaos. Citing the wars in Iraq, Libya and Syria, he went on to accuse the U.S. and its allies of “fighting against the results of its own policy”.

“They are throwing their might to remove the risks they have created themselves, and they are paying an increasing price,” Putin told political experts at the Black Sea resort.

“I think that the policies of the ruling elite are erroneous. I am convinced that they go against our interests, undermine trust in the United States,” he said without offering specific examples.

This right-on-the-money  article was posted on the independent.co.uk Internet site on Friday---and it's the second offering of the day from reader B.V.

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How to Start a War and Lose an Empire

A year and a half I wrote an essay on how the U.S. chooses to view Russia, titled The Image of the Enemy. I was living in Russia at the time, and, after observing the American anti-Russian rhetoric and the Russian reaction to it, I made some observations that seemed important at the time. It turns out that I managed to spot an important trend, but given the quick pace of developments since then, these observations are now woefully out of date, and so here is an update.

At that time the stakes weren't very high yet. There was much noise around a fellow named Magnitsky, a corporate lawyer-crook who got caught and died in pretrial custody. He had been holding items for some bigger Western crooks, who were, of course, never apprehended. The Americans chose to treat this as a human rights violation and responded with the so-called “Magnitsky Act” which sanctioned certain Russian individuals who were labeled as human rights violators. Russian legislators responded with the “Dima Yakovlev Bill,” named after a Russian orphan adopted by Americans who killed him by leaving him in a locked car for nine hours. This bill banned American orphan-killing fiends from adopting any more Russian orphans. It all amounted to a silly bit of melodrama.

But what a difference a year and a half has made! Ukraine, which was at that time collapsing at about the same steady pace as it had been ever since its independence two decades ago, is now truly a defunct state, with its economy in free-fall, one region gone and two more in open rebellion, much of the country terrorized by oligarch-funded death squads, and some American-anointed puppets nominally in charge but quaking in their boots about what's coming next. Syria and Iraq, which were then at a low simmer, have since erupted into full-blown war, with large parts of both now under the control of the Islamic Caliphate, which was formed with help from the US, was armed with US-made weapons via the Iraqis. Post-Qaddafi Libya seems to be working on establishing an Islamic Caliphate of its own. Against this backdrop of profound foreign US foreign policy failure, the US recently saw it fit to accuse Russia of having troops “on NATO's doorstep,” as if this had nothing to do with the fact that NATO has expanded east, all the way to Russia's borders. Unsurprisingly, US–Russia relations have now reached a point where the Russians saw it fit to issue a stern warning: further Western attempts at blackmailing them may result in a nuclear confrontation.

The American behavior throughout this succession of defeats has been remarkably consistent, with the constant element being their flat refusal to deal with reality in any way, shape or form. Just as before, in Syria the Americans are ever looking for moderate, pro-Western Islamists, who want to do what the Americans want (topple the government of Bashar al Assad) but will stop short of going on to destroy all the infidel invaders they can get their hands on. The fact that such moderate, pro-Western Islamists do not seem to exist does not affect American strategy in the region in any way.

This long essay, posted on the Information Clearing House website on Tuesday, had to wait for today's column.  It falls into the absolute must read category, especially for all serious students of the New Great Game---and if I had to distill today's column down to just one article, this would be it!  I had three or four readers send me this piece this week, but the first one through the door was Rob Bentley.

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Turkey to Refrain From Sanctioning Russia: Turkish Ambassador to Russia

Turkish authorities do not intend to impose sanctions on Russia if asked by the United States or the European Union, Turkish Ambassador to Russia Umit Yardim told RIA Novosti on Friday.

"I do not see the Russian-Turkish relations within the framework of these sanctions [against Russia]. Russia-Turkey relations develop naturally and they are special in their own way. We will keep our relations that way," Yardim said.

"While I worked in Iran, I realized that sanctions are not a method that leads to expected results in politics. Turkey follows the decisions made by the U.N. It concerns not only Turkey but all U.N. member states," the ambassador added.

This brief news item showed up on the RIA Novosti website at 3:48 p.m. Moscow time on their Friday afternoon---and it's courtesy of reader M.A.

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Pepe Escobar: A Caliph in a wilderness of mirrors

He's invincible. He beheads. He smuggles. He conquers. He's the ultimate jack-of-all-trades. No Tomahawk or Hellfire can touch him. He always gets what he wants; in Kobani; in Anbar province; with the House of Saud (which he wants to replace) trying to make Putin (who he wants to behead) suffer because of low oil prices.

If this was a remake of Orson Welles's noir classic The Lady from Shanghai, in the mirror sequence the lawyer (American?) and the femme fatale (Shi'ite?) would also get killed; but The Caliph of Islamic State would survive as a larger than life Welles, free to roam, plunder and "give my love to the sunrise" - as in a Brave Caliphate World shining in "Syraq" over the ashes of the Sykes-Picot agreement.

He's winning big in Iraq's Anbar province. The Caliph's goons are now closing in on - of all places - Abu Ghraib; Dubya, Dick and Rummy's former Torture Central. They are at a mere 12 kilometers away from Baghdad International. A shoulder-launched surface-to-air missile (or MANPAD) away from downing a passenger jet. Certainly not an Emirates flight - after all these are trusted sponsors.

Hit, in Anbar province, is now Caliph territory. The police forces and the province's operational command have lost almost complete control of Ramadi. The Caliph now controls the crucial axis formed by Hit, Ramadi, Fallujah; Highway 1 between Baghdad and the Jordanian border; and Highway 12 between Baghdad and the Syrian border.

This longish but interesting essay appeared on the Asia Times website ten days ago---and after thinking about it over the last weekend, I decided to stick it in today's column, as it was too long and off-topic for a weekday column.  The last person to send it to me was South African reader B.V.

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The Secret Casualties of Iraq’s Abandoned Chemical Weapons

The soldiers at the blast crater sensed something was wrong.

It was August 2008 near Taji, Iraq. They had just exploded a stack of old Iraqi artillery shells buried beside a murky lake. The blast, part of an effort to destroy munitions that could be used in makeshift bombs, uncovered more shells.

Two technicians assigned to dispose of munitions stepped into the hole. Lake water seeped in. One of them, Specialist Andrew T. Goldman, noticed a pungent odor, something, he said, he had never smelled before.

He lifted a shell. Oily paste oozed from a crack. “That doesn’t look like pond water,” said his team leader, Staff Sgt. Eric J. Duling.

The specialist swabbed the shell with chemical detection paper. It turned red — indicating sulfur mustard, the chemical warfare agent designed to burn a victim’s airway, skin and eyes.

I am never sure anymore about the accuracy of the international stories that are posted on The New York Times website, as this paper is basically a propaganda machine for the U.S. government when required to be.  So keep that in mind when you read this---and it certainly is worth reading.  It was posted on their Internet site ten days ago---and I thank Dan Lazicki for sending it our way---and it's another article that had to wait for my Saturday column.

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The Zombie System: How Capitalism Has Gone Off the Rails

A new buzzword is circulating in the world's convention centers and auditoriums. It can be heard at the World Economic Forum in Davos, Switzerland, and at the annual meeting of the International Monetary Fund. Bankers sprinkle it into the presentations; politicians use it leave an impression on discussion panels.

The buzzword is "inclusion" and it refers to a trait that Western industrialized nations seem to be on the verge of losing: the ability to allow as many layers of society as possible to benefit from economic advancement and participate in political life.

The term is now even being used at meetings of a more exclusive character, as was the case in London in May. Some 250 wealthy and extremely wealthy individuals, from Google Chairman Eric Schmidt to Unilever CEO Paul Polman, gathered in a venerable castle on the Thames River to lament the fact that in today's capitalism, there is too little left over for the lower income classes. Former US President Bill Clinton found fault with the "uneven distribution of opportunity," while IMF Managing Director Christine Lagarde was critical of the numerous financial scandals. The hostess of the meeting, investor and bank heir Lynn Forester de Rothschild, said she was concerned about social cohesion, noting that citizens had "lost confidence in their governments."

It isn't necessary, of course, to attend the London conference on "inclusive capitalism" to realize that industrialized countries have a problem. When the Berlin Wall came down 25 years ago, the West's liberal economic and social order seemed on the verge of an unstoppable march of triumph. Communism had failed, politicians worldwide were singing the praises of deregulated markets and US political scientist Francis Fukuyama was invoking the "end of history."

This 4-part essay appeared on the German website spiegel.de late in the afternoon Europe time on their Thursday---and had to wait for today's column as well.  The first person to send me this long but worthwhile read was Roy Stephens.

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Assange: Google Is Not What It Seems

In June 2011, Julian Assange received an unusual visitor: the chairman of Google, Eric Schmidt, arrived from America at Ellingham Hall, the country house in Norfolk, England where Assange was living under house arrest.

For several hours the besieged leader of the world’s most famous insurgent publishing organization and the billionaire head of the world’s largest information empire locked horns. The two men debated the political problems faced by society, and the technological solutions engendered by the global network—from the Arab Spring to Bitcoin.

They outlined radically opposing perspectives: for Assange, the liberating power of the Internet is based on its freedom and statelessness. For Schmidt, emancipation is at one with U.S. foreign policy objectives and is driven by connecting non-Western countries to Western companies and markets. These differences embodied a tug-of-war over the Internet’s future that has only gathered force subsequently.

In this extract from When Google Met WikiLeaks Assange describes his encounter with Schmidt and how he came to conclude that it was far from an innocent exchange of views.

This very long and somewhat disturbing article appeared on the newsweek.com Internet site during the lunch hour on the east coast on Thursday.  It's certainly worth reading if you have the time---and as I skimmed parts of it, James Perloff's classic tome "The Shadows of Power: The Council on Foreign Relations and the American Decline" came to mind for the second time this week.  I thank Michael Cheverton for bringing this Newsweek article to our attention.

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Casey Research: Blood in the Streets to Create the Opportunity of the Decade

Gold stocks staged spring and summer rallies this year, but haven’t able to sustain the momentum. Many have sold off sharply in recent weeks, along with gold. That makes this a good time to examine the book value of gold equities; are they objectively cheap now, or not?

By way of reminder, a price-to-book-value ratio (P/BV) shows the stock price in relation to the company’s book value, which is the theoretical value of a company’s assets minus liabilities. A stock is considered cheap when it’s trading at a historically low P/BV, and undervalued when it’s trading below book value. From the perspective of an investor, low price-to-book multiples imply opportunity and a margin of safety from potential declines in price.

We analyzed the book values of all publicly traded primary gold producers with a market cap of $1 billion or more. The final list comprised 32 companies. We then charted book values from January 2, 2007 through last Thursday, October 15. Here’s what we found.

Well, dear reader, there's no question that blood is definitely running in the streets as far as the precious metals complex is concerned, but the only reason that it is, is because of the iron grip that JPMorgan et al are exerting in the Comex futures market at the moment.  But if you're standing around with money to invest, this is as close to the bottom as you're likely to get.  This commentary on gold stocks showed up on the Casey Research website yesterday.

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Platinum and palladium price Fixing settled - now for gold

It was announced a week ago by the London Platinum and Palladium Fixing Company Limited (LPPFCL) that the responsibility for administering a new electronic Fixing process for the two metals has been awarded to the now Hong Kong-owned London Metal Exchange (LME). 

The LPPFCL had previously announced the setting up of a Request for Proposal (RFP) following a review of its Fixing process at the end of July. This was with the aim of appointing a third party to assume responsibility for the administration of the Fixing in place of the LPPFCL. The recent announcement was that the LME had been selected and has committed to become the new administrator of the Fixing process. 

The LPPFCL is now finalising arrangements for the transfer of the administration of the Fixing to the LME with effect from 1 December 2014 while the LME has in the meantime developed a bespoke platform (LMEbullion) that will provide for the necessary electronic pricing solution. 

The LPPFCL had been administering the pricing system for the metals for the past 25 years utilising a closed telephone call system but had decided, in the light of doubts being cast on the integrity of the various precious metals fixing processes, to seek a new electronic answer to pricing the metals.

These changes are all smoke and mirrors, dear reader, because as long as JPMorgan et al are allowed to run rampant in the Globex trading system with impunity, nothing will change, as the 'fix' will always be in.  This article by Lawrence Williams appeared on the mineweb.com Internet site yesterday---and I thank Manitoba reader U.M. for her final contribution to today's column.

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CNBC's Rick Santelli and the Swiss gold vote

Rick wades into the gold issue in Switzerland---and his comments on it start at the 1:15 minute mark of this 2:24 minute CNBC video clip from yesterday.  I thank Mark Magarian for sending it our way.

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Paying people their worth in gold -- a first in Singapore

How would you like to be paid your worth in gold? Singapore-based precious metals dealer BullionStar is doing just that by rewarding staff with the commodity as salary, and it says it is the first in the country to do so.

Here is how it works: If, for example, you earn S$3,200 a month, you can choose to be paid in two gold bars each worth S$1,600. Theoretically, if you are a high earner drawing a pay of S$51,000 a month, you can choose to be paid with a one-kilogram gold bar.

Sales manager Vincent Tie is one of six employees at BullionStar who has opted to receive his salary in bullion. About 20 to 40 per cent of the 38-year-old's basic pay is given in gold.

"If I save in a paper currency in a bank, the interest paid to me cannot beat the rate of inflation, so essentially I am losing purchasing power. That means that I am buying less with my wealth," Mr Tie said about why he went for the heavy metal option.

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¤ The Funnies

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

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


 
 

¤ The Wrap

Today's pop 'blast from the past' is by a North American rock group that started out in Chicago back in 1967.  Once the group got established, there was no stopping them, as the 1970s belonged to them.  They're second only to the Beach Boys in Billboard singles and chart success.  This 1984 ballad, with lead singer Peter Cetera doing the honours, has producer David Foster's fingerprints all over it---and the link is here.

I'm not sure how many plays have been performed or how much classical music has been written to the words of Shakespeare's Romeo and Juliet, but it's a lot over the centuries.  I was listening to Sergei Prokofiev's interpretation of it on CBC-FM a few days ago---and although interesting; I, like most people, prefer the Tchaikovsky version.  His third and final iteration of this work was completed in 1880, but was not premiered until May 1, 1886.

Here is The London Symphony with Maestro Valery Gergiev conducting---and this is as good as it gets.  The link is here.

Nothing much happened in the precious metals yesterday, except for the fact that silver's rally in New York was obviously dealt with in the usual manner---and three of the four precious metals were closed down on the day.  Volumes were light across the board.

Here are the 6-month charts for both gold and silver.  The engineered 'failure' at gold's 50-day moving average is still intact.

Tuesday and Wednesday of next week we get the FOMC wiener roast in Washington---and it will be interesting to see if the comments at 2 p.m. EDT on Wednesday will be used as another platform for 'da boyz' to hammer the precious metals, particularly gold, down to its October 6 low.

With the Commercial traders positioned in the 'Big 6' commodities to their maximum advantage---and further improvement possible if next week's FOMC news is used to beat this group of commodities into the ground one last time, we could see important never-to-be-seen-again lows in all of them.

If the powers-that-be want to avoid deflation at all costs, the only credible option they have left is to let commodity prices run to the upside for awhile---starting with the four precious metals,  plus copper and crude oil.  But as I've also mentioned before, this particular path is fraught with its own dangers, one being that once this inflation genie is out of the bottle, commodity prices included, it's always a tough one to get back in.  But it's a much preferable option to the one that's staring them in the face right now---and that's serious deflation.

Will they do it?  Beats me.  But the gold card is about the only one they have left to play, as money printing and their zero interest rate policy is now a spent force as an inflation-generating tool.

For these reasons, I'll be watching the Sunday night open in New York with great interest, along with the first three trading days of the new week.

I'm done for the day---and the week---and I'll see you here on Tuesday, or Wednesday if you live just west of the International Date line.