Casey Research Publication
"JPMorgan et al, which certainly includes the BIS, have an iron grip on prices"
 

¤ Yesterday In Gold & Silver

The gold price traded flat until it developed a slight negative bias starting at 2 p.m. Hong Kong time on their Friday afternoon---and by the time the COMEX opened, the price was down about three bucks.  "Da boyz" showed up at 8:30 a.m. as expected, as they ran the precious metals down---and the dollar index up.  The low tick came at precisely 9:30 a.m. EDT.  Gold chopped quietly higher for the remainder of the New York trading session, closing almost back at the COMEX opening price.

The high and low ticks were recorded by the CME Group as $1,178.00 and $1,162.10 in the August contract.

The gold price closed at $1,172.30 spot, down $4.10 from Thursday's close.  Net volume was very decent at 138,000 contracts.

Here's the 5-minute gold chart courtesy of Brad Robertson once again.  The big volume spike at 8:30 a.m. EDT was pretty impressive at close to 20,000 contracts---and after that, the volume fell off in a hurry.  The dark gray line is midnight Thursday---and add two hours for EDT.  Don't forget the 'click to enlarge' feature.

The silver price followed a similar, but surprisingly muted price path compared to gold.  The low in that metal came at, or shortly after, the London p.m. gold fix.  At that point it promptly rallied back above unchanged before getting sold down in the 1:30 p.m. EDT COMEX close.  From there it quietly rallied back into positive territory---and closed on its high tick of the day.

The low and high were recorded as $16.925 and $16.16 in the July contract.

Silver finished the Friday session in New York at $16.125 spot, up a nickel from Thursday's close.  Net volume was almost the same as Thursday's at 46,500 contracts.

Platinum traded very flat until 2 p.m. Zurich time on their Friday afternoon, which was twenty minutes before the COMEX open.  Then down it went as well, with the low coming more or less at the London p.m. gold fix  and, like silver and gold, rallied mostly higher as the Friday session drew to a close.  Platinum finished the session at $1,095 spot, down 3 bucks on the day.

Palladium, as usual, was a mini version of the platinum price pattern---and it closed on Friday at $750 spot, also down 3 dollars on the day as well.

The dollar index closed late on Thursday afternoon in New York at 95.58---and began to slide quietly lower from there, hitting its 95.36 low tick shortly before 9 a.m. BST in London.  It began creeping higher from there---and then blasted higher when the HFT boyz spun their algorithms at 8:30 a.m. EDT.  The 96.91 high tick came moments before the equity markets opened in New York.  The index fell down to around 96.30 an hour later---and after that it didn't do a lot, closing at 96.31---up 73 basis points on the day.

And here's the 6-month chart to put yesterday's dollar index action in a longer-term perspective.

The gold stocks gapped down about 2 percent at the open, hitting their lows when gold bullion hit its low, which was at the London p.m. gold fix.  Like gold, the shares rallied off their lows for the next forty minutes before falling back a bit---and then trading flat for the remainder of the day, despite the fact that gold rallied for the remainder of the Friday session.  The HUI finished down another 1.87 percent.

The silver equities followed a similar path, but the rally off their 9:40 a.m. lows was far more substantial---and blasted the stocks back into positive territory.  Then, like gold, they sold off a bit from there before trading very flat for the remainder of the Friday session.  And, like the gold shares, they did not respond to the subsequent rally in the metal itself, or to the fact that it finished in the black.  Nick Laird's Intraday Silver Sentiment Index closed up 0.17 percent.

The CME Daily Delivery Report showed that only 1 gold and 6 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  Nothing to see here for the second day in a row.

The CME Preliminary Report for the Friday trading session showed that June open interest in gold continues to fall.  Yesterday o.i. dropped by another 166 contracts, leaving 1,097 still open.  June o.i. in silver increased by 1 to 41 contracts.

Another day---and another withdrawal from GLD.  This time an authorized participant took out 38,357 troy ounces.  And as of 9:49 p.m. EDT yesterday evening, there were no reported changes in SLV.

There was another sales report from the U.S. Mint.  They sold 6,500 troy ounces of gold eagles---1,500 one-ounce 24K gold buffaloes---and 50,000 silver eagles.

Month-to-date the mint has sold 12,000 troy ounces of gold eagles---3,000 one-ounce 24K gold buffaloes---and 975,000 silver eagles.  Based on these numbers, the silver/gold sales ratio works out to 65 to 1.

There wasn't a lot of action in gold at the COMEX-approved depositories on Thursday.  But for the second day in a row there was a transfer from Canada's Scotiabank's depository to HSBC USA.  This time it was 10,023 troy ounces.

However, it was a big 'out' day in silver as only 35,915 troy ounces were received---and a chunky 1,204,482 troy ounces were shipped out the door.  The two big 'out' movements were at Canada's Scotiabank and the CNT depository---with one truckload apiece.   The link to the silver action is here.

Over at the COMEX-approved kilobar depositories in Hong Kong on their Thursday, they reported receiving 3,288 kilobars---and shipped out 4,622 kilobars.  The link to that activity, in troy ounces, is here.

The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday showed a pretty decent improvement in the Commercial net short position in silver---and almost no change in gold.

In silver, the Commercial net short position declined by 3,933 contracts, or 19.67 million troy ounces.  This reduced the total Commercial net short position down to 287.8 million troy ounces.  To be anywhere close to 'normal' at a bottom, the Commercial net short position should be a hair over 200 million troy ounces lower than it currently is.  That's how grotesque this situation is---and Keith Neumeyer had ever right to bitch and scream at the CFTC about it.  More companies should be doing the same thing---and for the same reason.  Another company did---and I have that info posted in the The Wrap.

Ted said that the short position of the Big 4 remained unchanged---and with the new numbers from the latest Bank Participation Report in hand, he pegs JPMorgan's short position at 20,000 contracts, up only a thousand from his guesstimate last week.  The '5 through 8' traders added 2,600 short contracts to their 6-year record high short position---and the raptors, the commercial traders other than the Big 8, bought 6,300 new longs.

Under the hood in the Disaggregated COT Report, the Managed Money traders, like the Pavlovian dogs they are, sold 4,324 long contracts---and purchased 1,324 short contracts.

As I said earlier, there wasn't much change in the Commercial net short position in gold, as it only decreased by a tiny 1,570 contracts, leaving the new Commercial net short position at 10.82 million troy ounces, which is almost unchanged on the week.

The Big 4 traders only covered 500 short contracts, but the '5 through 8' actually added 2,400 new short contracts to their positions---and the raptors added 3,400 long contracts.  Not much to see here.

But, of course, the engineered price decline began anew the day after the cut-off for yesterday's report which, as I pointed on in yesterday's column is a trick of theirs when they want to keep things hidden from public view as long as possible.

Without doubt, there's been very large improvements in the short positions in both gold and silver since Wednesday, but there is still more down-side work to do in both metals---and from a contract perspective, it's ugliest in silver.

Here's Nick Laird's most excellent and rightfully famous "Days of World Production to Cover COMEX Short Positions" for all physically-traded commodities on the COMEX.  The short position of the Big 8 in silver is the most grotesque it has ever been.  As Ted said above, the short position of the '5 through 8' traders [The Big 4 minus the Big 8] is at a 6-year high.  And not to be forgotten in all of this is that JPMorgan and Scotiabank are short about 90 days of world silver production between them---about 80 percent of the red bar.

Riddle me this, dear reader.  What would the silver price be if these two banks were forced to cover these short positions?  Whatever the price paid to accomplish that task, it would bankrupt both firms---just like it did Bear Stearns back in 2008.

Along with yesterday's Commitment of Traders Report came the companion Bank Participation Report [BPR] for June, for positions held in May.  And as I've said in the past---"This is data extracted directly from the above COT Report, which shows the COMEX futures contracts, both long and short, that are held by the U.S. and non-U.S. banks as of Tuesday's cut-off."

In gold, '3 or less' U.S. banks are net short 36,844 COMEX gold contracts. In the May BPR, these same banks were net short 22,885 gold contracts, so the COMEX short position in gold by the U.S. banks has increased by 61 percent in one month.  It would be a relatively safe bet to assume that if there are three U.S. banks involved, they are JPMorgan, HSBC USA and Citigroup.

Also in gold, '18 or more' non-U.S. banks were net short 48,106 COMEX gold contracts, an increase of 42 percent since the May BPR.  A goodly chunk of this amount, something under 50 percent, is most likely owned by Canada's Scotiabank, so the remainder of the 48,106 contracts split up between '17 or more' non-U.S. banks are more or less immaterial---unless they're all trading as a group, but I don't think that that's the case at all.

Here's Nick's chart of the Bank Participation Report for gold going back to 2000.  Charts #4 and #5 are the key ones here.  Note the blow-out in the short positions of the non-U.S. banks [the blue bars in chart #4] when Scotiabank's COMEX gold positions [both long and short] were outed in October of 2012.

In silver, '3 or less' U.S. banks are net short 18,459 COMEX silver contracts.  That's an increase of about 34 percent since the May BPR.  Since Ted pegs JPMorgan's short position at 20,000 COMEX contracts, that means that the remaining two U.S. banks [or maybe just one] has to be net long the COMEX silver market by around 1,500 contracts to make these numbers work out properly.  It also proves that JPMorgan is the only U.S. bank that's short the COMEX silver market.  If there are two other banks involved, they would be HSBC USA and Citigroup---and if only one, it would be HSBC USA.

Also in silver, '14 or more' non-U.S. banks are net short 29,703 COMEX contracts.  That's an increase of 49 percent from the May BPR.  As in gold, the biggest non-U.S. bank short in silver is Canada's Scotiabank.  I would estimate that between 75 and 80 percent of those 29,703 contracts are owned by Canada's Scotiabank, which makes the short positions of the remaining '13 or more' non-U.S. banks pretty much immaterial.

Here's the BPR chart for silver.  Note in Chart #4 the blow-out in the non-U.S. bank short position [blue bars] in October of 2012 when Scotiabank was brought in from the cold.  Also note August 2008 when JPMorgan took over the silver short position of Bear Stearns---the red bars.  It's very noticeable in Chart #4---and really stands out like the proverbial sore thumb in chart #5.

I estimate that between JPMorgan and Scotiabank, they are currently net short about 43,000 COMEX silver contracts between the two of them.

In platinum, '3 or less' U.S. banks are net short 7,699 COMEX contracts, an increase of only 7 percent from the May Bank Participation Report, which isn't a big change.  I'd guess that JPM is short well over half this amount by itself---and maybe only HSBC USA is short the rest.  Citi would be a small player, if they are at all.

Also in platinum, '17 or more' non-U.S. banks are net short 9,464 COMEX contracts, which is a small decrease [-2.2%] from the May BPR.  If there is a large player in platinum amongst the non-U.S. banks, I wouldn't know which one it is, but 17 divided into 9,464 contracts isn't a lot anyway, unless they're all operating in collusion---which I doubt.  But from the numbers it's easy to see that the platinum price management is an American show as well.

Here's the BPR chart for platinum---and please note that the banks were never a factor in platinum until mid 2009.  Now look at them!  If you want to know why the platinum price isn't going anywhere, despite the supply/demand fundamentals, look at the total long positions the banks have vs. their collective short positions.  Palladium too!  That tells you all you need to know.  The banks are net short about 22 percent of the entire COMEX futures market in platinum.

In palladium, '3 or less' U.S. banks are net short 6,285 COMEX contracts, which is a decrease of 20 percent from the May BPR.

Also in palladium, '11 or more' non-U.S. banks are net short 2,646 COMEX contracts which is a 16 percent improvement from the May BPR.

Here's the BPR chart for palladium updated with the June BPR data.  Like platinum above, just look at the long positions vs. the short positions held by the U.S. banks in Chart #5.  You couldn't make this stuff up!  You should note that the U.S. banks were almost nowhere to be seen in the COMEX futures market in this metal until the middle of 2007---and they became the predominant and controlling factor by the end of Q1 of 2013, where they remain today.  I would bet, that like platinum, JPMorgan holds the vast majority of the U.S. banks' short position in palladium---and maybe all of it.  And just as matter of interest, the banks, in total, are net short about 30 percent of the entire COMEX futures market in palladium, but it's the '3 or less' U.S. banks that are calling the shots in this metal---and in the other three precious metals as well.

As I say every month at this time, along with the odd Wall Street investment house such as Morgan Stanley and maybe Goldman Sachs, these are "da boyz'---the sellers of last resort---and you can call them what you like.  Until they decide, or are instructed to stand back, the prices of all four precious metals are going nowhere---supply and demand fundamentals be damned!

As Jim Rickards so correctly put it, the price management scheme is now so obvious they should be embarrassed about it.

But they obviously aren't.

Before heading into the stories, here's Nick's chart showing the withdrawals from the Shanghai Gold Exchange for the week ending May 29.  During that week, they reported a withdrawal of 37.082 tonnes.

Here are two more charts courtesy of Nick Laird over at sharelynx.com.  The first shows India's gold imports in March---and the second, their silver imports in March.  These are big numbers.

I have a lot of stories today, along with quite a few I've been saving for length or content reasons---and I hope you can find time in what's left of your weekend to read the ones that interest you the most.  But as is always the case, the final edit is up to you.

 

¤ Critical Reads

Where The May Jobs Were: Teachers, Waiters, Retail, and Temp Help

One of the defining features of jobs "recovery" and the main reason why wage growth has been so far below the Fed's expectations for years it has prevented wage inflation from appearing despite years of QE, is that the quality of jobs added month after month has disappointing. May was no difference.

Yes, the headline print of 280K job additions was great, but a quick look at how the BLS got there shows that nothing has changed because four of the five main job additions were, as usual for the lowest paid jobs.

Here is the breakdown:

  • Education and Health (i.e., teachers): +74,000
  • Leisure and Hospitality (i.e., waiters): +57,000
  • Retail Trade (i.e., minimum wage store clerks): +31,400
  • Temp Help: +20,100

In fact, these lowest quality jobs accounted for two-thirds of all jobs gains in May.

This brief Zero Hedge piece, with an excellent chart, appeared on their Internet site at 10:27 a.m. EDT yesterday morning---and its' courtesy of Dan Lazicki---and it's definitely worth a minute of your time.

The Do-It-Yourself Economy Just Hired 1 Million American Entrepreneurs

Animal spirits are returning to the American workforce.

The number of self-employed workers surged by 370,000 in May, according to the U.S. Labor Department's survey of households released Friday. And nearly 1 million workers have gone to work for themselves since just February.

The report is the latest sign that entrepreneurial activity is on the rise. The number of business start-ups rose in 32 of the 50 U.S. states last year, the Kansas City, Missouri-based Kauffman Foundation reported Thursday. The Kauffman Index of Start-up Activity, which is an indicator of new business creation, had the biggest increase in the past two decades.

"It is evidence of a growing do-it-yourself economy," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ. "The market for self-employed workers is booming and this is a sign of a pickup in entrepreneurial activity."

Well, dear reader, a sentence further down in this story states---"There is reason for some caution in interpreting the data."---and that would be excellent advice if you read this.  This Bloomberg article was posted on their website at 10:07 a.m. Denver time yesterday morning---and it's the second offering in a row from Dan Lazicki.

In 'year of Apple Pay', many top retailers remain skeptical

In a January earnings call with investors, Apple Inc Chief Executive Tim Cook made a confident prediction: "2015 will be the year of Apple Pay," he said.

Since then, the company has aggressively courted retailers - and claimed significant success. "We've spoken to all of the top 100 merchants in the U.S., and about half will accept Apple Pay this year, with many more the following year," a company spokesperson recently told Reuters.

But interviews with analysts, merchants and others suggest that Apple's forecast may be too optimistic and that many retailers remain skeptical about the payment system.

This longish, but very interesting story appeared on the Reuters website at 7:34 a.m. EDT on Friday morning---and I thank Orlando, Florida reader Dennis Mong for finding it for us.

Economic Crisis 2015 - Peter Schiff & Mike Maloney

Recently Peter Schiff visited Mike Maloney in California. During his stay they filmed nearly 3 hours of discussions about gold, silver, freedom, and the economy in general.

Dan Rubock over at GoldSilver.com sent me this 41:39 minute video interview on Tuesday, but for length reasons it had to wait for my Saturday column.  It's definitely worth your time if you have it.

Delusionary Thinking in Washington: The Desperate Plight of a Declining Superpower

Take a look around the world and it’s hard not to conclude that the United States is a superpower in decline. Whether in Europe, Asia, or the Middle East, aspiring powers are flexing their muscles, ignoring Washington’s dictates, or actively combating them. Russia refuses to curtail its support for armed separatists in Ukraine; China refuses to abandon its base-building endeavors in the South China Sea; Saudi Arabia refuses to endorse the U.S.-brokered nuclear deal with Iran; the Islamic State movement (ISIS) refuses to capitulate in the face of U.S. air power. What is a declining superpower supposed to do in the face of such defiance?

This is no small matter. For decades, being a superpower has been the defining characteristic of American identity. The embrace of global supremacy began after World War II when the United States assumed responsibility for resisting Soviet expansionism around the world; it persisted through the Cold War era and only grew after the implosion of the Soviet Union, when the U.S. assumed sole responsibility for combating a whole new array of international threats. As General Colin Powell famously exclaimed in the final days of the Soviet era, “We have to put a shingle outside our door saying, ‘Superpower Lives Here,’ no matter what the Soviets do, even if they evacuate from Eastern Europe.”

Strategically, in the Cold War years, Washington’s power brokers assumed that there would always be two superpowers perpetually battling for world dominance.  In the wake of the utterly unexpected Soviet collapse, American strategists began to envision a world of just one, of a “sole superpower” (aka Rome on the Potomac). In line with this new outlook, the administration of George H.W. Bush soon adopted a long-range plan intended to preserve that status indefinitely. Known as the Defense Planning Guidance for Fiscal Years 1994-99, it declared: “Our first objective is to prevent the re-emergence of a new rival, either on the territory of the former Soviet Union or elsewhere, that poses a threat on the order of that posed formerly by the Soviet Union.”

This longish essay certainly falls into the absolute must read category for any serious student of the New Great Game---and it appeared on the tomdispatch.com Internet site a week ago Friday.  I thank reader M.A. for sending it our way on Monday---and for obvious reasons it had to wait for today's column.

Edward Snowden: The World Says No to Surveillance

Two years ago today, three journalists and I worked nervously in a Hong Kong hotel room, waiting to see how the world would react to the revelation that the National Security Agency had been making records of nearly every phone call in the United States. In the days that followed, those journalists and others published documents revealing that democratic governments had been monitoring the private activities of ordinary citizens who had done nothing wrong.

Within days, the United States government responded by bringing charges against me under World War I-era espionage laws. The journalists were advised by lawyers that they risked arrest or subpoena if they returned to the United States. Politicians raced to condemn our efforts as un-American, even treasonous.

Privately, there were moments when I worried that we might have put our privileged lives at risk for nothing — that the public would react with indifference, or practiced cynicism, to the revelations.

Never have I been so grateful to have been so wrong.

This rather brief opinion piece by Edward, filed from Moscow, showed up on the 'hallowed' pages of The New York Times on Thursday---and it's the first offering of the day from Roy Stephens.  It's certainly worth reading.

Canada warns Russia it won't rejoin G7 with Putin in power

Canadian PM Stephen Harper has pledged to “strongly oppose” Russia rejoining the Group of Seven nations as long as Vladimir Putin is president. The G7 suspended Moscow last year over the conflict in Ukraine, but hasn't ruled out allowing it back.

"I don't think Russia under Vladimir Putin belongs in the G7. Period," Harper said in an exclusive interview with AP ahead of his trip to Ukraine and the G7 meeting in Bavaria this week. "Canada would very, very strongly oppose Putin ever sitting around that table again. It would require consensus to bring Russia back and that consensus will just not happen."

According to Harper, who faces re-election in October, Moscow is hard to get on with.

It's always embarrassing to have to keep apologizing in public that the leader of your country is a flaming ***hole, but that's certainly the case once again here.  I know that the Canadian people will do what's necessary to ensure that this man is put out to pasture for good in October---and that's spoken by a dyed-in-the wool small 'c' conservative, me!  I thank reader Jule Mounteer for bringing this story to my attention---and now to yours.

G7 Experiencing a 'Crisis of Legitimacy' as Leaders Accused of Hypocrisy

The G7 summit has been accused of suffering from a "crisis of legitimacy" ahead of the opening of Sunday's event in Germany, with leaders criticized for their perceived lack of action when it comes to pledges on improving global inequality, reducing climate change and implementing trade deals.

As the leaders of the U.S., U.K., Germany, France, Italy, Canada and Japan prepare to discuss a range of issues such as global food security and climate change in Bavaria's Elmau Castle, critics have slammed the G7 concept, accusing it of representing the height of hypocrisy.

"The very concept that seven of the richest nations have a mandate to enact policies and programs that impact the rest of the world is in itself a gross and unjust anachronism," Nick Dearden, director of U.K.-based activist group Global Justice Now said.

While much of the criticism of this year's G7 event has centered on Russia's non-attendance at the Bavarian summit, Dearden says the leaders of the countries involved talks are not matching their words with their actions.

This sputniknews.com article was posted on their website at 6:55 p.m. Moscow time on their Friday evening---and it's the second contribution of the day from Roy Stephens.

Greece cannot accept lenders' latest proposal: economy minister

Greece cannot accept the latest proposals for a cash-for-reforms deal put on the table by its international lenders but was prepared to negotiate a compromise, Greek Economy Minister George Stathakis said on Friday.

Greece delayed a key debt payment to the International Monetary Fund due on Friday as Prime Minister Alexis Tsipras demanded changes to tough terms from international creditors for aid to stave off default.

Stathakis said Greece had the money to pay, but had accepted an offer from the IMF to bundle four payments due in June into a single €1.6 billion lump sum due at the end of the month.

"We are looking forward to getting a deal as soon as possible," he told BBC Radio, but said that while Greece was ready to discuss compromises, it would not accept proposed fiscal adjustments for 2015 and 2016.

This Reuters article, filed from London, appeared on their website at 6:06 a.m. yesterday morning EDT---and it's the second contribution of the day from Dennis Mong.

Greece's creditors need a dose of reality – this is no time for European disunion -- Joseph Stiglitz

E.U. leaders continue to play a game of brinkmanship with the Greek government. Athens has met its creditors’ demands more than halfway. Yet Germany and Greece’s other creditors continue to demand that the country sign on to a programme proven to be a failure, and that few economists ever thought could, would, or should be implemented.

The swing in Greece’s fiscal position from a large primary deficit to a surplus was almost unprecedented, but the demand that the country achieve a primary surplus of 4.5% of GDP was unconscionable. Unfortunately, at the time that the “troika” – the European commission, the European Central Bank and the International Monetary Fund – first included this irresponsible demand in the international financial programme for Greece, the country’s authorities had no choice but to accede to it.

The folly of continuing to pursue this programme is particularly acute, given the 25% decline in GDP that Greece has endured since the beginning of the crisis. The troika badly misjudged the macroeconomic effects of the programme they imposed. According to their published forecasts, they believed that, by cutting wages and accepting other austerity measures, Greek exports would increase and the economy would quickly return to growth. They also believed that the first debt restructuring would lead to debt sustainability.

This op-ed piece by Stiglitz was posted on theguardian.com Internet site at 1:40 p.m. BST London time---and I thank South African reader B.V. for sharing it with us.  It's worth reading.

IMF has betrayed its mission in Greece, captive to EMU creditors

The International Monetary Fund is in very serious trouble. Events have reached a point in Greece where the Fund's own credibility and long-term survival are at stake.

The Greeks are not withholding a €300m payment to the IMF because they have run out of money, though they soon will do.

Five key players in the radical-Left Syriza movement – meeting in the Maximus Mansion in Athens yesterday – took an ice-cold, calculated, and carefully-considered decision not to pay.

They knew exactly what they were doing. The IMF’s Christine Lagarde was caught badly off guard. Staff officials in Washington were stunned.

On one level, the “bundling” of €1.6bn of payments due to the IMF in June is just a technical shuffle, albeit invoking a procedure last used by Zambia for different reasons in the 1980s. In reality it is a warning shot, and a dangerous escalation for all parties.

This longish, but must read commentary by Ambrose Evans-Pritchard put in an appearance on the telegraph.co.uk Internet site at 3:25 p.m. BST yesterday afternoon, which was 10:25 a.m. EDT in Washington.  It's the third offering of the day from Roy Stephens.

Greek Banks on Verge of Total Collapse: Bank Run Surges "Massively" as Depositors Yank €700 Million Today Alone

While the Greek government believes it may have won the battle, if not the war with Europe, the reality is that every additional day in which Athens does not have a funding backstop, be it the ECB (or the BRIC bank), is a day which brings the local banking system to total collapse.

As a reminder, Greek banks already depends on the ECB for some €80.7 billion in Emergency Liquidity Assistance which was about 60% of total deposits in the Greek financial system as of April 30. In other words, they are woefully insolvent and only the day to day generosity of the ECB prevents a roughly 40% forced "bail in" deposit haircut a la Cyprus.

The problem is that a Greek deposit number as of a month and a half ago is hopefully inaccurate. It is also the biggest problem for Greece, which has been desperate to prevent an all out panic among those who still have money in the banking system.

This Zero Hedge commentary showed up on their website at 2:49 p.m. EDT on Friday afternoon---and I thank reader 'David in California' for passing it around.

Putin holds phone call with Tsipras, agrees to meet in 2 weeks in Russia

Russian President Vladimir Putin has held a telephone talk with Greek Prime Minister Alexis Tsipras on Friday. They have discussed Russian gas supplies via Turkish Stream and agreed to meet at the St. Petersburg International Economic Forum in mid-June.

"Practical steps were discussed to implement agreements reached during the recent working visit of Alexis Tsipras to Russia, particularly the planned construction of the gas transport infrastructure across the territory of Turkey and Greece," the press service said.

The talks with the Russian president came hours before the Greek prime minister is due to address the country's parliament about the EU proposal.

The Russian and Greek leaders have recently stepped up contacts, especially regarding the Turkish Stream gas pipeline. It is planned for the pipeline to transport 47 billion cubic meters of Russian natural gas to the Turkish-Greek border.

This news item appeared on the Russia Today website at 10:32 a.m. Moscow time on their Friday morning, which was 3:32 a.m. EDT in Washington.  It's another contribution from Roy Stephens.

Soros Flaring Flames of Ukraine War to Force Regime Change in Russia

A leaked document attributed to investor George Soros outlines the billionaire's plan for Ukraine, which essentially boils down to an ambitious idea to use Kiev to topple Russian President Vladimir Putin, investigative historian Eric Zuesse said.

The confidential document, allegedly part of communications between Soros and Ukrainian authorities, was published by hacktivists from CyberBerkut, known for releasing embarrassing revelations with regard to the U.S. meddling in Ukraine.

"While it would be more desirable to have Russia as a partner than an enemy, that is impossible as long as Putin persists in his current policies," Zuesse quoted Soros as saying. In other words, Moscow should be a partner but Russian leader has to go, the historian said referring to Soros' stance.

This is not 'new' news, as I've posted something about this before---and the story from other sources has been floating around for about a month.  This iteration appeared on the sputniknews.com Internet site at 2:56 p.m. Moscow time yesterday afternoon---and I thank U.K. reader Tariq Khan for sending it our way.

Poroshenko Hands Over Roshen Share to Rothschild Under Trust Deal

Ukrainian President Petro Poroshenko confirmed on Friday his decision to sell his businesses and transfer his stake in the Roshen confectionary corporation under a trust agreement to Rothschild Investment Company.

“I signed a deal with the world-famous and the world’s best Rothschild Company, which is now looking for buyers. Three such potential buyers have already stepped forward and are analyzing the company’s legal status and financial performance,” Poroshenko said during a news briefing devoted to his annual address to parliament.

“The transfer will be done so that my name is not mentioned among Roshen’s owners,” Poroshenko added.

One of the world’s main confectionery producers, Roshen Corporation annually turns out around 450,000 tons of chocolate and jelly sweets, caramel, chocolate, biscuits, waffles, and cakes.

This is another story from the sputniknews.com website---and it's also courtesy of Tariq Khan.  It was posted on their Internet site at 5:07 p.m. Moscow time on their Friday afternoon, which was 10:07 a.m. in New York.

John Batchelor interviews Stephen F. Cohen

From FIFA to George Soros the Ukraine is turning into a melting pot of personalities and  hot spots of intrigue. John Batchelor and Stephen F. Cohen once more discuss the most serious news of this new Cold War.

On the Russia Washington front Senator John McCain and the usual suspects rev up the rhetoric against the corruption in FIFA and targets for vandalism the World Cup games for Moscow in 2018. Cohen notes that once more International games institutions are being politicised by Washington as a campaign to take this event from Russia, and it sets a precedent for a new and most inappropriate front for politics.

Then there is the very strange story of Mikhail Saakashvili, former president of Georgia becoming governor of the province of Odessa in Ukraine. He is now under indictment for various crimes in Georgia while in office there, and most importantly he was responsible for the 2008 Georgia War against Russia – as Washington’s man behind the hostilities. Cohen describes his history at length and refers to his appointment as “weird” and a “detonator” for problems ahead in the Ukrainian Civil War. He is a long term Russian hater who is to be governor of a province that is culturally like the Donbass- in a word Russian. And in Russia many Russians see Odessa as more part of Russia than Ukraine – similar to Crimea. Cohen thus considers Saakashvili a “time bomb” and a “provocation”.

There is much more in this broadcast as Cohen gives great context to comparing the ending of the Soviet Union under Gorbekev and the political realities of the new Russia under Putin. As usual the insights gained about Russia are not available anywhere else, and all of these broadcasts are important for those who follow the New Great Game.

Reader Ken Hurt was the first person through the door with this on Wednesday, but the entire preamble above is courtesy of Larry Galearis.  This 39:48 minute audio interview was posted on the johnbatchelorshow.com Internet site on Tuesday.

Sergey Lavrov interview on Bloomberg TV

This 24:20 minute video interview with Sergey showed up on thesaker.is Internet site back on June 3---and I'm not sure of the exact date of the Bloomberg interview, but it's most likely less than a week old.

I haven't watched it yet, but it's on my 'to do' list this weekend.  Roy Stephens sent it to me on Wednesday---and it's another one of those news items that had to wait for the weekend.

Russia’s largest bank issues first credit guarantees in yuan

Sberbank has issued its first yuan-denominated letters of credit that involve funding from the Export-Import Bank of China to Russia’s largest pharmaceutical company.

Pharmasyntez, Russia’s leading drug manufacturer, appealed to Sberbank with a request for funding credit guarantees in Chinese national currency as part of contracts for the supply of imported pharmaceutical products worth over 29 million yuan ($4.6 million), Sberbank said in a statement Friday.

Sberbank has become the first Russian bank to issue letters of credit in yuan; the decision was announced in November 2014.

“The development of cooperation with The Export-Import Bank of China expands Sberbank’s possibilities to finance clients’ foreign trade with Chinese counterparties.”

This story appeared on the Russia Today website at 5:02 p.m. Moscow time on their Friday afternoon---and I thank Roy S. for sharing it with us.

Media failure on Russia's official gold reserves -- Koos Jansen

Gold researcher and GATA consultant Koos Jansen corrects a news agency report this week that grossly exaggerated Russia's gold reserves.

His commentary is headlined "Media Failure on Russia's Official Gold Reserves" and it was posted on the Singapore-based website bullionstar.com yesterday.  I thank Chris Powell for providing the above two paragraphs of introduction---and it's definitely worth reading.

China’s five year plan---and the end of an era: Alasdair Macleod

China is in the late stages of constructing its thirteenth five-year plan, a process that commenced over a year ago and will result in a first draft in October. While the bulk of the plan will concern regional and domestic development, it is the international aspects that will concern the rest of the world. The plan, which will produce specific goals for 2016-20, is already having an effect on China's foreign and trade policy.

At its centre will be a shift of emphasis away from trade with the advanced nations, whose prospects are bound to subside towards their level of economic growth. Instead, to maintain the long-term objective of 7% growth in GDP China will turn her attention to improving Asia's infrastructure, a policy for which the building-blocks are now in place. The Silk Road Project is advancing from the drawing board, and the Chinese-led Asian Infrastructure Investment Bank (AIIB), which will arrange finance for projects totalling as much as $20 trillion over the next thirty years, was formally established this year.

Working in partnership with China through the Shanghai Cooperation Organisation (SCO) will be Russia, whose resources are central to Asia's modernisation. The SCO will eventually cover a territory from the Bering Strait to the Persian Gulf. To obtain extra resources, China has already established a dominant presence on the ground in Sub-Saharan Africa, secured the undivided attention of the Middle East by being its largest customer, and through its own diaspora can count on the cooperation of the South-East Asian nations currently in the West's sphere of influence. At the end of the thirteenth plan a substantial majority of the world's population will have become involved one way another.

The implications for the West are becoming apparent. We have already seen how Europe and Japan have clamoured to join the AIIB, despite their alliances with America. Unfortunately, America has been a Goliath to China's David: her mistake has been not to recognise the passing of her own era and embrace a future based on Asia.

This short, but must read article by Alasdair showed up on the goldmoney.com Internet site yesterday---and I thank Dan Lazicki for his final contribution to today's column.

Gold for the long haul – Now is the time! -- Lawrence Williams

Over the long haul, gold is the least risky and potentially most rewarding of all investment asset classes.”  So says New York-based specialist gold analyst, Jeff Nichols, in his latest Nicholsongold newsletter.  Admittedly Nichols falls into the gold bull camp, but is at the realistic end of gold analysis, seeing both potential upsides and downsides ahead.  His latest article is headed Gold: Now is the time, and in it he lays out the various factors which he sees as having the potential to drive the gold price in the medium to long term – and as noted in the first sentence of this article he sees a reasonable investment in physical gold (not gold derivatives) – perhaps 5% – 10% of an investment portfolio – as key to protecting one’s assets over time.

So what factors does he point to as being the likely positive points for investment in gold?  In truth he is primarily stating the obvious here, but it’s an ‘obvious’ which is often ignored by mainstream investors who seek more rapid returns than gold tends to offer.  But rapid returns are themselves risky – it’s all very well chasing the stock markets upwards but as investors have found to their cost, bull markets tend to be followed by a crash and investors are notoriously bad at recognising when a crash begins and by the time they try to take their profits it is usually too late.

But some of the factors which could very easily come into play could have both an adverse impact on the general stock markets and a positive impact on gold.

Lawrie comments on a Jeff Nichols piece that was posted on the Internet early this week.  But Nichols conveniently forgets to mention the fact that black swans don't matter in a rigged market.  All that matters is what's happening in the COMEX futures market---and as I keep saying, until JPMorgan et al get the word, precious metal prices aren't going anywhere.

Gold At $64,000 – Bloomberg’s ‘China Gold Price’

Bloomberg Intelligence suggest gold-backed yuan see gold at $64,000 per ounce
- “Chinese gold standard would need a rate 50 times bullion’s price”
- As China-U.S. relations deteriorate, gold-backed yuan possible
- Dollar and financial and monetary dominance of U.S. at risk
- U.S. and China war of words continues to escalate
- China rejects U.S. hegemony in Southeast Asia
- Currency war to escalate

If China were to partially back its yuan with gold it would require a gold price of $64,000 per ounce, 50 times gold bullion’s price today, according to a recent article from respected Bloomberg Intelligence.

It seems like an outlandish forecast. However, as tensions between the U.S. and China continue to escalate such a scenario is not actually as implausible as it may first appear.

This isn't the first time that I've seen such an outlandish gold price mentioned.  The first time was from blogger Adam Hamilton over a decade ago.  His number at the time was $51,000 the ounce.  This commentary by Mark O'Byrne was posted on the goldcore.com Internet site on Friday BST sometime---and it's certainly worth reading.  I would have found this story on my own, but Roy Stephens saved me the trouble---and I thank him for his last offering in today's column.

Silver manipulation? First Majestic questions CFTC -- Lawrence Williams

There is a continuous debate taking place as to whether the principal precious metals prices are being manipulated by the big money for whatever reasons, or indeed in the case of gold at the instigation of some big Central Banks of which the US Fed is reckoned to be the main culprit. The idea is completely dismissed as complete rubbish by most mainstream gold analysts – indeed most will never mention the possibility. But activist groups like the Gold Anti Trust Action Committee (GATA) have researched, and put forward, some compelling evidence, dating back many years, which does indeed suggest that the monetary establishment has certainly been predisposed towards controlling the gold price as a runaway yellow metal price is seen as a destabilising influence on the global fiat currency system in terms of suggesting a global lack of confidence in paper money.

The jury remains out here – those who believe in gold price manipulation and repression will not be moved from their viewpoints, while the mainstream still looks upon these proponents as representing the lunatic fringe – ‘gold cultists’ was the term used at the recent Bloomberg Precious Metals Forum in London. Be this as it may there is an indication that the ‘cultists’ may be gaining a little ground in that some hitherto reluctant very respectable mainstream media have at least recognised in print that there is a raft of opinion which holds this view, having totally ignored this in the past.

But that is gold – with all the political implications that exist. The depths of government economic policies may be devious and remain well hidden with the ultimate intent of maintaining confidence in the status quo. We continually see this in the form of economic indicator goalposts being moved to present data in a more favourable light, so why not organise surreptitious gold price controls to do the same? Who knows outside the economic establishment itself – and it’s not saying apart from denials of such a policy. But who believes such denials these days at any level of the political process?

This longish but absolute must read commentary by Lawrie put in an appearance on the mineweb.com Internet site at 4:59 p.m. London time on their Friday afternoon, which was 11:59 a.m. in New York.   I found it all by myself in the wee hours of this morning---and must admit that I was both surprised and gratified to see it.

 

¤ The Funnies

These four photos are from a couple of weeks ago.  These two ring-billed gulls had been standing on the shore and looking at me [and each other] for over half an hour without moving.  I generally ignored them.  Then things began to get more interesting---and until the final moments, I had no idea what was about to happen.  Fortunately, I had the camera at the ready---and the last shot is totally uncropped and right of the camera.  Twenty-five feet/eight meters distance is point blank range for a 400mm telephoto lens---and I couldn't even get them both totally in frame.

There are several more photos in this sequence, but modesty and decency prevents me from posting them here, as it's all "XXX rated seagull porn" without much foreplay involved.  If you send me US$29.95---plus three coupons from specially market boxes of Fruit Loops---I'll send you the photos.

















Avnel Gold (TSX:AVK) is a gold mining, exploration, and development company with operations in south-western Mali. The Company’s focus is to develop its 80%-owned Kalana Main Project into a low-cost, open-pit mining operation.

In Q1-2014, the Company reported the results of a PEA based upon a Mineable Resource of 1.58 million ounces at a diluted grade of 3.1 g/t. The PEA outlines a 14-year mine life recovering 1.46 million ounces at an average “AISC” of $577/oz with a capex of $149 million. At $1,110/oz and a 10% discount rate, the NPV was $194 million after-tax and imputed interest with an IRR of 53% on a 100% project basis. Similarly, at a 5% discount rate and at $1,300/oz, the NPV was $424 million with an IRR of 74%. Since the PEA, the open-pit diluted Indicated Resource has increased to 2.2 million ounces at a diluted grade of 3.06 g/t.

Avnel plans to complete its fully-funded 141-hole, 23,500-metre drill program in mid-2015, which is expected to provide for a steady flow of news over the coming months. This drilling will be form the basis for an updated Resource Estimate in Q3-2015 and DFS that is scheduled to be completed in Q1-2016. Please contact Jeremy Link with questions or for more information.

 

¤ The Wrap

Since  [last] Saturday, there have been several articles published highlighting the large number of June gold contracts still open and, while not stating explicitly that there would be a delivery default, described how such a default was possible; particularly since the amount of “registered” gold in the COMEX warehouse inventories was so low (around 370,000 oz) compared to the 550,000 equivalent ounces still open in the June contract.

A failure to deliver physical metal, in COMEX gold or silver or in any other commodity or on any other exchange, to a holder of a long position qualified to take delivery would not only be a delivery default, it would also most likely result in the closing of trading in that commodity and perhaps the closing of the exchange involved. It is the most serious issue possible from a contract and an exchange perspective and should not be referred to as just another thing. And there is no such thing as a minor or major default – any delivery default would be catastrophic for the exchange involved.

While I did note that conditions in the June COMEX gold delivery did look tighter than usual, due to tightening spread premiums and the level of remaining open interest, I generally avoid focusing on the registered vs. eligible categories of COMEX warehouse inventories, preferring to stick to the combined total warehouse inventories. The reason I do so is because the difference between registered and eligible gold and silver in the COMEX warehouses is strictly a matter of paper work. That appeared to be the case in delivery and warehouse developments this [past] week. -- Silver analyst Ted Butler: 03 June 2015

Today's pop 'blast from the past' was an easy choice today.  I've posted this before, but it's been a year or two---and it's one of my favourite pop/rock songs of all time.  It's Richard Harris 'singing' MacArthur Park---and the link is here.  There's a 3:14 minute tribute to this work---and it's linked here.  If you love the song, this youtube.com video is worth your while as well.

Today's classical 'blast from the past' was pretty easy too.  This year is the 150th anniversary of the birth of Jean Sibelius---and not a week goes by without hearing something on CBC FM by this Finnish composer.  Here's his violin concerto in D minor Op. 47---and South Korean violin prodigy Soyoung Yoon does the honours.  Her playing and interpretation is as good as it gets, as is the audio track---but the video quality is not quite what one would expect from a modern recording, but it's OK for the close ups.  The link is here.

I must admit that I was expecting JPMorgan et al to hit gold and silver harder than they did on the jobs numbers yesterday.  What the Friday session turned out looking like was just another slice off all four precious metal salamis.  Just eyeballing the charts below, I'd guess that we've got another $25 or so in gold left to the downside---and maybe 75 cents in silver, if these engineered price declines unfold as they have in the past.  But, as Ted keeps saying---and I mentioned in yesterday's column, it's the number of contracts and not the price that's important.

Here are the 6-month charts for all four precious metals, so you can see how "da boyz" are progressing, as we await the final washouts to the downside.

And before I forget, I'd like to mention that another company has sent off a letter to the CFTC about the goings-on the COMEX futures market in silver---and that came courtesy of CEO Jason Reid over at Gold Resource Corporation.  The amazing thing about his letter is that it's posted on the SEC's website---and the link to that is here.

Let's hope that there are lots more of these letters to come.

As for precious metal prices going forward, I certainly don't want to put a stake in the ground at this juncture.  For the moment JPMorgan et al, which certainly includes the BIS, have an iron grip on prices---and as I always say, until that changes, nothing changes.

Sure, there are lots of economic, financial and political black swans out there, but that matters not at the moment.

Some of the stories about gold coming from the China and Russia lately have all the appearance of rattling the cages of the Western financial system---and it remains to be seen if anything comes of it.  But as I've said on many occasions, if push really becomes shove, nothing would surprise me on this front.

The world is certainly going to hell in the proverbial hand basket---and it's now obvious in all quarters that the current financial and monetary system is floating off the rails.  That's been going on for years now, but the process appears to be accelerating on all fronts---and one has to wonder how long things can last before everything either blows up or melts down.

Will precious metals save us?  One hopes so, as I've pretty much bet the ranch on that outcome.  But, as I and others have said before, we should be careful what we wish for, as the world that emerges from the other side of whatever Armageddon awaits us ain't going to be pretty.

That's all I have for the day---and the week.

Ed Steer