Another .99 tonnes leaves GLD/No change in SLV/FOMC no changes but gold whacked in access market

Oct 29.2014:

My website is still under construction.  However I will be posting my commentary at

harveyorgan.wordpress.com and at the silverdoctors website on a continual basis.

I would like to thank you for your patience.

Gold: $1224.30 down $4.90
Silver: $17.22 up 4 cents

In the access market 5:15 pm:

Gold $1212.00
silver $17.10

The gold comex today had a good notice day registering 44 notices served for 4400 oz
A few months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 264.8 tonnes for a loss of 38 tonnes.

In silver, the open interest continues to remain extremely high and we are still at multi year highs at 173,733 contracts.
To boot, the December silver OI remains extremely high at 117,631.

Today, we had another withdrawal in gold  inventory of 0.99 tonnes at the GLD . Inventory rests tonight at 742.40 tonnes.

SLV’s inventory remains unchanged and rests at 343.415 million oz.

.

Today is the announcement day from the Fed and we have a couple of commentaries on that

Expect gold and silver to be under the weather for the remainder of the week.

We have a few important stories to bring to your attention today…

Let’s head immediately to see the major data points for today.

First: GOFO rates/We are now in  backwardation!!

All months basically moved slightly in both directions  with the first two GOFO months still in the negative. On the 22nd of September the LBMA stated that they will not publish GOFO rates. However today we still received today’s GOFO rates.

It looks to me like these rates are now fully manipulated.

London good delivery bars are still quite scarce.

Oct 29 2014

1 Month Rate: 2 Month Rate 3 Month Rate 6 month rate 1 yr rate

-.0775%                  -.0425%               + .0025%          + .07%          + .16%

Oct 27 .2014:

1 Month Rate 2 Month Rate 3 Month Rate 6 month Rate 1 yr rate

-.08% +          -.04%                  +-0025%           +.07        + .16%

end

Let us now head over to the comex and assess trading over there today,

Here are today’s comex results:

The total gold comex open interest rose by a small margin of 95 contracts from 414,315 up to 414,410 with gold up $0.10 yesterday. Not too many longs left the arena. We are now in the active delivery month of October and generally this is a very poor month for deliveries. The October contract month surprisingly fell by 85 contracts down to 44. We had 55 notices filed yesterday, so we lost 30  gold contracts or an additional 3,000 oz will not  stand for the October contract month. The November contract month saw its OI fall by 27 contracts down to 221. The December contract fell by 3,342 contracts down to 272,037. The estimated volume today was poor at 86,104 contracts. The confirmed volume yesterday was also poor at 131,335.

The total silver Comex OI fell by a tiny 908 contracts despite the fact that silver was up yesterday to the tune of 7 cents. The shorts are now in a state of shock as OI remains elevated despite the constant raids on silver . Tonight the silver OI complex rests at 173,733 contracts. In ounces, this represents 869 million oz or 124.0% of silver annual production (annual production of 700 million oz ex China). In commodity law generally the OI is represented by 3 to 5% of annual production. These silver contracts are in very strong hands and as I have indicated to you on countless occasions, this will continue to bring nightmares to our bankers. Probably this is as good a reason as ever for the bankers to raid on a continual basis trying to force those longs to puke their interests, and again they failed today.

We are in the non active silver contract of October and here the OI lowered by 2 contracts. We had 2 notices served upon yesterday so we neither gained nor lost any silver contracts  standing for the October contract month. November is also a non active delivery month and here the OI rose by 5 contracts to 135 contracts.

The December silver contract is a biggy contract month and tonight it  fell by a marginal 1,638 contracts down to 117,631 contracts. No doubt the December contract month may provide all the fireworks if our major entity tries to take delivery of much of the comex silver. So far nobody wishes to leave the silver arena. In ounces, the December contract equates to 588 million oz or 84.0% of annual global production (ex China). The estimated volume today was poor at 23,163!!!. The confirmed volume yesterday was also poor at32,863 contracts. Bill Holter and I strongly believe that only one entity could possibly behind the majority of these longs and that entity is the sovereign Chinese government.

Data for the October delivery month.

October final standings  (in all probability)

Oct 29.2014

Ounces

Withdrawals from Dealers Inventory in oz

14,050.77 oz (Brinks)

Withdrawals from Customer Inventory in oz

 75,100.972 (Manfra,Scotia)

Deposits to the Dealer Inventory in oz

nil

Deposits to the Customer Inventory, in oz

22,505.000 oz (700 kilobars)

No of oz served (contracts) today

44 contracts( 4400 oz)

No of oz to be served (notices)

0 contracts (nil oz)

Total monthly oz gold served (contracts) so far this month

 1268 contracts  (126,800 oz)

Total accumulative withdrawals  of gold from the Dealers inventory this month

 70,724.27  oz

Total accumulative withdrawal of gold from the Customer inventory this month

1,117,468.1 oz

Today, we had 1 dealer transactions

i) Out of the dealer Brinks:  14,050.77 oz

total dealer withdrawal:  14,050.77 oz  oz

total dealer deposit:  nil oz

we had 2 customer withdrawals:

i) Out of Manfra;  32.15 oz  (one kilobar)

ii) Out of Scotia:  75,100.972 oz

total customer withdrawals :75,133.122   oz

we had 2 customer deposits:

i) Into JPMorgan:  16,075.000 oz  (500 kilobars)

ii) Into Scotia:  6430.00 oz (200 kilobars)

total customer deposit: 22,505.000 oz  (700 kilobars)

We had 0 adjustments:

Total Dealer inventory: 890,128.693oz or   27.68 tonnes

Total gold inventory (dealer and customer) =  8.447 million oz. (262.27) tonnes)

Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 41 tonnes have been transferred out. We will be watching this closely!

Today, 0 notices was issued from  JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 44 contracts  of which 0 notices were stopped (received) by JPMorgan dealer and 0  notices stopped by JPMorgan customer account.

  

 We had 44 notices served upon our longs for 4400  oz of gold.  In order to calculate what will be  standing for delivery in September, I take the number of contracts served so far  this month at 1268 x 100 oz  = 126,800 oz,to which I add the difference between the open interest for the front month of October(44)  minus the number of notices served upon today (44)  x 100 oz  =  126,800 oz or 3.934 tonnes.

We lost a rather large 3,000 gold ounces standing for the October contract month.

Thus: October  standings: (probable final standings)

1268 contracts x 100 oz = 126,800 oz +  (44 ) – (44)x 100     =  126,800 oz or 3.934 tonnes

 And now for silver:

Oct 29/2014:

 October silver: Probable final standings

Silver

Ounces

Withdrawals from Dealers Inventory   93,111.15 (Delaware)
Withdrawals from Customer Inventory 250,324.79 oz
(CNT,)
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory 934,767.71 oz (Brinks/Delaware)
No of oz served (contracts) 0 contracts  (10,000 oz)
No of oz to be served (notices) 0 contracts (nil oz)
Total monthly oz silver served (contracts) 774 contracts (3,890,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month 2,573,732.0
Total accumulative withdrawal  of silver from the Customer inventory this month 9,105,103.5 oz

Today, we had 0 deposits into the dealer account:

 total dealer deposit: nil oz

we had 1 dealer withdrawal:

i) Out of Delaware:  93,111.15 oz

total  dealer withdrawal: 93,111.15  oz

We had 1 customer withdrawals:

i) Out of CNT: 250,324.79 oz

i

total customer withdrawal 250,324.79 oz

We had 2 customer deposits:

i) IntoBrinks:  599,651.45 oz

total customer deposits: 599,651.45     oz

we had 1 adjustments:

i) Out of JPMorgan:  121,477.72 oz was adjusted out of the dealer and back into the customer account of JPMorgan

Total dealer inventory:  66.532 million oz

Total of all silver inventory (dealer and customer)   180.931 million oz.

The CME reported that we had 0 notices filed for nil  oz today. To calculate what will stand for this  active delivery month of October, I take the number of contracts served for the entire  month at 774 x 5,000 oz per contract or 3,870,000 ounces upon which I add the difference between the open interest for the front month of October (2) – the number of notices served upon today (2) x 5000 oz per contract

Thus Oct. final  standings for silver:  774 notices x 5,000 oz per notice or 3,870,000 oz + (0) –  (0) x 5,000 oz  =  3,870,000 oz,

we thus have the same silver standing in the October contract month as Tuesday.

This should complete the October silver month and a rather large 3.87 million oz stood for delivery.

It looks like China is still in a holding pattern ready to pounce when needed.

end



The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.

There is now evidence that the GLD and SLV are paper settling on the comex.



***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold.  I can visualize demand coming to the buyers side:


i) demand from paper gold shareholders

ii) demand from the bankers who then redeem for gold to send this gold onto China

 

vs no sellers of GLD paper.

 

 

And now the Gold inventory at the GLD:

October 29.2014: we had another .99 tonnes of gold removed from the GLD/inventory 742.40 tonnes

Oct 28.2014: we had another withdrawal of exactly 2 tonnes of gold heading to Shanghai;  Inventory 743.39 tonnes

Oct 27.2014: no change in gold inventory at the GLD/inventory 745.39 tonnes.

 

Oct 24.2014: a huge withdrawal of 4.48 tonnes of gold at the GLD/Inventory 745.39 tonnes.  This gold is heading to friendly territory: namely Shanghai.

 

Oct 23.2014: no change in gold inventory at the GLD/Inventory at 749.87 tonnes.

 

Oct 22.2014: we lost another 2.1 tonnes of gold at the GLD. Inventory rests at 749.87 tonnes.  This tonnage no doubt is off to Shanghai.

 

Oct 21.2014: no change in inventory/GLD inventory rests tonight at 751.96 tonnes.

 

Oct 20.2014: wow!! a massive 8.97 tonnes of gold leaves the GLD heading to the friendly shores of Shanghai./Inventory 751.96

 

Oct 17.2014: No change in gold inventory at the GLD/Inventory 760.93 tonnes

 

Oct 16.2015: GLD gained back 1.79 tonnes of gold/inventory 760.93 tonnes

 

Oct 15.2014  GLD lost back the gold it gained yesterday to the tune of 2.09 tonnes/Inventory back to 759.14 tonnes

 

Oct 14.  GLD inventory/stays the same at 761.23 tonnes

 

Today, Oct 28 we lost 0.99 tonnes   gold inventory   at the GLD

inventory: 742.40 tonnes.

The registered  vaults at the GLD will eventually become a crime scene as real physical gold  departs for eastern shores leaving behind paper obligations to the remaining shareholders.   There is no doubt in my mind that GLD has nowhere near the gold that say they have and this will eventually lead to the default at the LBMA and then onto the comex in a heartbeat  (same banks).

GLD gold:  742.40 tonnes.

end

And now for silver:

October 29.2014 no change in silver inventory at the SLV inventory/343.415 million oz

October 28.2014: no change in silver inventory at the SLV/Inventory at 343.415 million oz

Oct 27.2014: no change in silver inventory at the SLV

Oct 24.2014: as of 6 pm, there is no change in silver inventory at the SLV. Note the difference between gold and silver.  Gold leaves the vault of GLD as little silver leaves the SLV.  (I guess it means that there is no silver to give to the banker participants)/Inventory:  343.415 million oz

Oct 23.2014: no change in silver inventory at the SLV (as of 6 pm est

Inventory: 343.415 million oz

Oct 22.2014: no change in silver inventory at the SLV ( as of 6 pm est)

Inventory: 343.415

Oct 21.2014; no change in silver inventory at the SLV (as of 6 pm est)

Oct 20.2014: we lost 1.15 million oz of silver inventory at the SLV/inventory 343.415 million oz

Oct 17.2014: no change in silver inventory/344.565 million oz

Oct 16.2014: no change in silver inventory/344.565 million oz

Oct 15.2014 no change in silver inventory/344.565 million oz

Oct 14.2014 today we had a loss of 1.201 million oz/SLV inventory rests at 344.565 million oz

Oct 13.2014: no change in silver inventory so far:

345.766 million oz

 Today, Oct 29.2014: no change/inventory at 343.415 million oz

end

And now for our premiums to NAV for the funds I follow:

Note:  Sprott silver fund now deeply into the positive to NAV

Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)

1. Central Fund of Canada: traded  at Negative 8.3% percent to NAV in usa funds and Negative   8.0% to NAV for Cdn funds

Percentage of fund in gold  60.7%

Percentage of fund in silver:38.70%

cash .7%


.( Oct 29/2014)   

2. Sprott silver fund (PSLV): Premium to NAV falls to positive 3.75% NAV (Oct 29/2014)  

3. Sprott gold fund (PHYS): premium to NAV  falls to negative -0.65% to NAV(Oct 27/2014)

Note: Sprott silver trust back hugely into positive territory at 3.75%. 

Sprott physical gold trust is back in negative territory at  -0.65%



Central fund of Canada’s is still in jail.

end

Now  your more important physical stories today:

(courtesy Mark O’Byrne)

Omniscient Federal Reserve Captures The Capital Market, For Now. Gold Beckons.

Published in Market Update  Precious Metals  on 28 October 2014

By Stephen Flood

3

A cursory glance at the various financial news media this morning shows nothing particularly unusual for these unusual times. The ECB have paraded a list for stress tested banks and the market shrugged. However, there is a disturbing thread running through most of the stories to which we have become immune but which would have been considered highly unusual at almost any time in the twentieth century. And that thread is the influence of the Federal Reserve in practically every key market in the world.

The markets have become increasingly captured by Federal Reserve policy, watching what might be and what might change. “Schrodinger’s Cat” is the name given to the idea that the observer (Federal Reserve) of an experiment can by virtue of their very presence affect the subject (Markets) being observed. The Federal Reserve is far, far from a passive influence within the markets, poised to prop up the market should an unthinkable catastrophe threaten, no, now they are THE market.

They control almost every facet of the market directly or in most cases indirectly. They have almost limitless power to monetise debt and force their will on the market for as long they wish or along as enough people believe in them in the absence of alternative. And therein lies the keys: market confidence and acceptable alternative monetary systems.
Reuters report that, among other factors, last week’s slight weakness in gold was caused by fears that the Fed might signal their intention to raise rates at the conclusion of their two-day meeting tomorrow. This, despite the Fed signalling last week that rates may have to remain at their current rate in light of the situation in Europe. Bloomberg reports that the Fed is expected to keep rates stable. The Wall Street Journal doesn’t offer an opinion on the outcome but regards the issue as one of great importance.

What we find odd is how a central bank, whose function is to act as lender of last resort to banks in times of crisis has expanded its mandate to micromanage the economy itself. During the twentieth century such a scenario could never have occurred in the U.S. and Western Europe. It would have been equated with the Marxism and central planning of the Soviet Union.

Robert Fitzwilson defined capitalism succinctly in his interview with KWN on Sunday: “Capital used to be derived solely from hard work, ingenuity and productivity as a surplus after costs. That surplus capital was utilized for reinvestment by the owner or sent through financial intermediaries such as banks to people in need of capital for productive purposes.” He went on to explain how this principle has been undermined: “That centuries-old system has been virtually made irrelevant by the modern ability of the central banks to create and supply unlimited amounts of what serves in our day as capital, fiat currency.”

Now, this new style of capitalism may be viable – we wouldn’t claim to know – but it depends entirely on the honour and integrity of the people managing the system. Marxism was similarly dependent. And if “by their fruits you shall know them” then it is quite clear that the system is being managed by oligarchs on behalf of their cronies. Noam Chomsky muses over how the cures prescribed by the rich for the poor always fail but still seem to have the unforeseen consequence of making the rich even more wealthy. Over the weekend Hillary Clinton echoed the claim made by president Obama that it was the federal government and not businesses who create employment as reported by Zerohedge. Are we in the midst of the transition from free-market economy to a centrally planned one? Is this the dawn of the U.S.S.A.?

In Europe the situation is no different. The experience of peripheral nations like Ireland and Greece show that the so-called troika have taken upon themselves the job of managing national economies (while reneging on their duties such as acting as a lender of last resort). The ECB removed democratically elected scoundrel Berlusconi from office in Italy only to replace him with a former Goldman Sachs banker.

So what does this mean for owners of gold and those considering acquiring it? We cannot begin to speculate. But we would look at the experience of every other centrally planned economy in history and note that it ended in currency collapse, massive wealth destruction and tears. Our usual prescription still applies. We advise clients to own gold in fully segregated and fully allocated accounts in ultra-secure vaults in the safest jurisdictions in the world.

See Essential Guide to  Storing Gold In Switzerland here

GOLDCORE MARKET UPDATE
Today’s AM fix was USD 1,228.25, EUR 967.58 and GBP 762.23 per ounce.
Yesterday’s AM fix was USD 1,230.50, EUR 970.58 and GBP 764.29 per ounce.
Gold and silver both finished last week down at 0.53% and 0.52%.

Spot gold closed at $1,226.38 yesterday and spot silver closed at $17.11 per ounce. A Bank Holiday was observed in Ireland on Monday.

Investors and traders are focused on the U.S. Federal Open Market Committee (FOMC) regular meeting today and tomorrow. Wednesday afternoon’s policy statement will be very closely scrutinized by the market place. Most believe the Fed will formally end its monthly bond-buying program, called QE(quantitative easing)3.

A delay in any interest rate rise by the U.S. Fed could boost gold, a non-interest-bearing asset.

In London, gold in Swiss storage traded up 0.2% at $1,227.86 an ounce by 1033 GMT, off an early low of $1,222.20 an ounce, its lowest since October 15th. U.S. gold futures for December delivery were down $1.40 an ounce at $1,227.90. In other precious metals, spot platinum was up 0.3% at $1,251.90 an ounce and spot palladium gained 1% to $785.25.

Data reported yesterday showed China’s net gold imports from Hong Kong jumped to a six-month high in September as purchases ramped up ahead of its National Day holiday.

Get Breaking News and Updates on the Gold Market Here 

end
I brought this to your attention yesterday, but again it is worth repeating
a must read..
courtesy Grant Williams/GATA)

Grant Williams: This little piggy bent the market

Submitted by cpowell on Tue, 2014-10-28 17:01. Section: 

1p ET Tuesday, October 28, 2014

Dear Friend of GATA and Gold:

In his latest “Things That Make You Go Hmmm. …” letter Singapore-based fund manager Grant Williams examines the history, objectives, and prospects of Switzerland’s gold initiative referendum proposal, along with the duplicity and hypocrisy of the Swiss National Bank. Williams’ letter is headlined “This Little Piggy Bent the Market” and it’s posted at the Mauldin Economics Internet site here:

http://www.mauldineconomics.com/ttmygh/this-little-piggy-bent-the-market

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

end

Money is free in Sweden, if the central bank likes you

Submitted by cpowell on Tue, 2014-10-28 12:54. Section: 

Sweden’s Crown Slides as Riksbank Cuts Rates to Zero

By Anirban Nag
Reuters
Tuesday, October 28, 2014

LONDON — The Swedish crown hit a four-year low against the dollar and a four-month trough against the euro on Tuesday after Sweden’s central bank surprised investors by cutting interest rates to a record low of zero percent.

Most analysts had forecast the Riksbank would lower its main interest rate, the repo rate, to 0.1 percent from 0.25 percent to fight a risk of deflation, and the central bank went a step further by forecasting a lower rate path for the future.

Riksbank chief Stefan Ingves said the central bank is ready to take unconventional measures that analysts said could include asset purchases, intervening in the currency market to sell crowns or imposing a cap like the Swiss National Bank. …

… For the remainder of the report:

http://www.reuters.com/article/2014/10/28/us-markets-forex-idUSKBN0IG00R..

end

MineWeb’s Lawrence Williams: Large supply deficit in gold is likely ahead

Submitted by cpowell on Wed, 2014-10-29 12:22. Section: 

8:23a ET Wednesday, October 29, 2014

Dear Friend of GATA and Gold:

While the mainstream financial news media are determined to overlook it, MineWeb’s Lawrence Williams writes, China and India alone appear to be taking each month more gold than is being produced. “All indicators suggest that there could indeed be a very large supply deficit building,” Williams writes. He adds: “One day gold will surely take off but whether it’s this week, next week, next month, next year, or 10 years’ time remains open to question. It just depends on how long the big money, and perhaps governments, can keep playing the futures markets to keep commodity prices working to their advantage.”

Williams’ commentary is headlined “Hong Kong Gold Exports to China Pick Up Strongly But. …” and it’s posted at MineWeb here:

http://www.mineweb.com/mineweb/content/en/mineweb-gold-news?oid=257958&s…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

end

Axel Merk: Greenspan admitted that Fed is not politically independent

Submitted by cpowell on Wed, 2014-10-29 17:22. Section: 

1:20p ET Wednesday, October 29, 2014

Dear Friend of GATA and Gold:

Fund manager Axel Merk of Merk Investments today calls attention to a few comments made Saturday by former Federal Reserve Chairman Alan Greenspan at the New Orleans Investment conference — including acknowledgment that the Fed is not politically independent, as is often claimed, and his expectation that the price of gold will rise. Merk’s commentary is headlined “Greenspan: Price of Gold Will Rise” and it’s posted in the “Insights” section of the Merk Investments Internet site here:

http://www.merkinvestments.com/insights/2014/2014-10-29.php

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

end
The following was brought to your attention, namely Russia buying a massive 37 tonnes of gold last month.
This certainly caught the eye of Nicolas Larkin of Bloomberg
(courtesy Larkin/Bloomberg) and special thanks to Robert H for sending this to us:
Russia Buys Most Gold for Reserves Since Financial Crisis of ’98
By Nicholas Larkin –
Oct 29, 2014
Russia boosted gold reserves by the most since defaulting on local debt in 1998, driving its bullion holdings to the largest in at least two decades.
The country expanded its stockpile, the world’s fifth-biggest, by 37.2 metric tons in September to 1,149.8 tons, according to data on the International Monetary Fund’s website. The increase, valued at about $1.5 billion, was the biggest since November 1998. Russian reserves, which overtook those of Switzerland and China this year, almost tripled since the end of 2005 and are at the highest since at least 1993, the data show.
A weakening ruble in the face of currency interventions is stoking speculation the Bank of Russia will accelerate its switch to a free float. The country, which defaulted on $40 billion of local debt in August 1998, is draining reserves as tumbling oil prices and U.S. and European sanctions over President Vladimir Putin’s intervention in Ukraine worsen the ruble’s losses and dollar shortage. Gold prices slid the most in 15 months in September.
“From the perspective of a sovereign which is concerned about aspects of geopolitical risk, it makes sense that they would have a bias toward physical gold,” Brian Lucey, a finance professor at Trinity College Dublin and formerly an economist for the Central Bank of Ireland, said today by phone. With lower gold prices, Russia may have viewed it “as good a time as any to pick it up,” he said.
2011 Record
Gold for immediate delivery slipped 6.1 percent in London last month, the most since June 2013, and reached this year’s low on Oct. 6, according to Bloomberg generic pricing. It traded at $1,228.05 an ounce today, 36 percent below its 2011 record. Prices averaged $1,237.96 last month, valuing Russian additions at $1.48 billion.
The Bank of Russia spent $65 billion this year to slow the ruble’s decline as the crisis in Ukraine soured relations with the U.S. and Europe and spurred capital outflows. Currency reserves held by the world’s largest energy exporter fell $68 billion this year to $443.8 billion on Oct. 17.
Russian policy makers sold $200 billion in seven months to prop up the ruble after the collapse of Lehman Brothers Holdings Inc. six years ago, slashing reserves by almost 40 percent. They don’t want to “repeat the experience” and may move faster to a free float and inflation targeting, Credit Suisse Group AG said in an Oct. 15 research note.
Central banks are adding gold to reserves again after reducing holdings for about two decades from the late 1980s. Nations may add as much as 500 tons to holdings this year, after increases of 409 tons last year and 544 tons in 2012, the London-based World Gold Council said in August.
Russian Production
Russia mined 248.8 tons of gold last year, ranking third among global producers after China and Australia, according to GFMS, a research unit of Thomson Reuters Corp. Bloomberg LP competes with Thomson Reuters in selling financial and legal information and trading systems.
Gold accounts for about 10 percent of Russia’s total reserves, according to the council. That compares with about 70 percent for the U.S. and Germany, the biggest bullion holders, the data show. Italy and France have the next-largest reserves.
“In most countries, the ratio of gold holdings compared to foreign-exchange reserves is still relatively low, so there’s still room to buy more gold,” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said today by phone. “Buying gold might be a protection against devaluing currencies.”
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net
 
To contact the editors responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.netDan Weeks, Nicholas Larkin
end
(courtesy Dave Kranzler/IRD)
 

Thru today (Oct 28) the U.S. mint has sold 4,365,000 silver eagles.  This is by far the highest total for October on record, with 3 business days left in the month.   It remains to be seen if 2014′s yearly total will exceed last year’s  42,675,000.  But if November and December continue at the September/October 4 million-plus rate, 2014 will smash last year’s record. Either way, the U.S. mint is selling more ounces of silver than all U.S. mines combined produce annually.

As most of you know the roughly 93% of the physical silver inventory – 1,062 tonnes has been removed this year from the Shanghai Futures Exchange – see this LINK.

Perhaps more interesting has been the drainage of silver from the Comex silver warehouses – since late February –  while the paper silver futures open interest has been soaring (source:  24hgold.com, edits are mine) – click to enlarge:

ComexEligible

An “eligible” vault account holds silver being kept by investors at the Comex but not available to be sold or delivered.  Close to 20 million ounces have been removed from the “customer” accounts since February, held in vaults operated by banks like JP Morgan, Scotia and HSBC.  Yet, at the same time, the paper silver futures open interest has soared to near all-time highs.  At the beginning of January, there were approximately 132k contracts of silver open interest.  As of yesterday, the amount was over 173,000 – close to an all-time high.

To put this in perspective, 173k contracts represents 865 million ounces of silver.  Compare this to the 66.7 million ounces reported by the banks to be in their “registered” vault account (registered = the silver available to be delivered).   In other words,  there’s 7.65x more paper silver that has been sold to investors/speculators than there is physical silver available to be delivered.  This is a Ponzi scheme that only the upper managements at Enron, JP Morgan and Madoff & Co. + the Secretary of the U.S. Treasury could appreciate.   No wonder investors holding their silver at the Comex are taking it OUT of the Comex.

With the above ground physical supply of silver disappearing from sight, at some point investors will come to realize that silver in the ground is a lot more valuable than it is being valued in the stock market currently.   I have written a new research report on a silver explorer/producer that I believe is currently undervalued even with the price of silver at $17.  Furthermore, it is significantly undervalued relative to the amount of silver it will likely uncover on the properties it already owns.  You can access this report HERE or here:

This is a “de-risked” silver producer which went free cash flow positive during its 3rd quarter, will ramp up its production significantly next year and has one of the lowest cost per ounce cost structures in the world for a silver producer.  It makes money down to $12/oz. silver!

 end

The terrific summary of events concerning Alan Greenspan at the New Orleans conference:
(courtesy Bill Holter Part I)
Alan Greenspan, “cleansing his legacy” Part 1
While deciding how to write this piece regarding the interviews of Alan Greenspan, it dawned on me that has to be done in 2 parts.  GATA followers had very high hopes Mr. Greenspan could be pinned down with nowhere to go regarding the central banks foray’s into the gold market, these hopes were dashed …sort of.  In this piece I will try to relate to you what was said in the first of two interviews of Alan Greenspan by Gary Alexander.  Along the way I plan to give my opinions of what was said and where injected logic might be helpful.
  The interview started off with questions of Mr. Greenspan’s early years as a follower of Ayn Rand.  She was described as “pure logic”, and with her, reason was everything.  The former chairman described his time working with Rand as living in a theoretical world.  He admitted to his written piece in 1966 in the support of gold as money and the gold standard.  Leaving the private sector and joining the public he said was “leaving the theoretical world and entering the practical world”.  He told of an early paper he wrote where he suggested agricultural subsidies made no sense, not even to farmers.  He said Washington was up in arms over the paper and it was this that opened his eyes.  He realized he had to “conform” his actions even if he did not change his philosophy.  It was at this point Mr. Greenspan said “I couldn’t work in today’s world” and everything must be compromised.  What he politely was saying is either “sell out or stay out”.
  When asked about his time on the Social Security board under Ronald Reagan, Greenspan said he was then and is still now in favor of privatizing the program but it “had to funded”.  He made two comments in this segment which I am not sure how connected they were to the current topic of Social Security, he said he “believes he has changed the world” and “printing money makes systems fall apart”.  The are both true statements and in my opinion the beginning moves to “cleanse his legacy”.  My opinion of this first of three parts was Mr. Greenspan trying to explain that he had to conform to Washington where his (Rand’s) idealism could not work.  He did say and I quote,  “I never changed my philosophy or views, I had to change my actions to conform”.  Ayn Rand had many famous quotes, the one which I believe would drain the blood from Mr. Greenspan’s face is as follows: “There is a level of cowardice lower than that of the conformist: the fashionable non-conformist”.  This is exactly how I believe Mr. Greenspan is trying to portray his legacy, the fashionable non conformist.
  The 2nd part of the interview, Gary Alexander asked several questions of Mr. Greenspan’s chairman years.   The question regarding going back to a gold standard was answered with “a gold standard is not possible in a welfare state”.  Without saying it, you can understand his thought process here, under a gold standard there is no way for politicians to conjure (free) money out of thin air to give away, only with debt based money can this be done.  When asked if the Fed or central banks tried to control the price of gold he answered a flat “no” and then added “only other central banks”.  This to me was curious as “other central banks” during those years were strict puppets of the Fed.  So there was no admission of Fed intervention but at least he “pointed a finger” so to speak.
  Finally, Gary asked about “bubbles” and whether or not the low rates from 2001-2004 which he presided over were the cause of the housing crisis?  Greenspan morphed into his old Congressional testimony form and passed the buck on this one.  He said the major cause to the housing bubble were Fannie Mae and Freddie Mac.  He said they were “subsidized” federally and built up loan portfolios too high.  HUD, MBS and affordable housing issues along with the loosening of credit standards were the root cause of the bubble, not abnormally low rates.  He also mentioned the adjustable rate market as what in his words “blew the market apart”.  Without any further comment, I will just say one word …”disingenuous”.
  The final part of the interview dealt with his years after the Fed.  Mr. Greenspan recounted how Paul Volcker never spoke publicly while he was in office regarding monetary policy and neither would he.  He was asked about 0% interest rates and inflation.  His answer was true in my opinion and one which I have written of many times (even though we certainly have much higher inflation “leaking out” than is being reported).  He said very low interest rates, massive credit creation and money supply growth have not translated to hyperinflation (yet) because of low “velocity”.  The banks so far are sitting on massive quantities of money supply and are earning a “risk free” .25 basis points.  As long as the banks don’t begin to lend or use the cash, inflation will remain subdued but the balances are like “kindling wood” which if ignited could start a raging fire.  He also mentioned there is much capital coming in from European banks thirsting for positive yields as Europe is inverted.
  Close to the end was the best part because the former chairman in my opinion was given a couple of tough questions where he was forced to lie and also told part truths.  He was asked if there were any discussions between the Fed and the Treasury regarding deficits and our national debt.  In my notes I wrote “never” as being the answer to which I can only say “REALLY???”.  You never, ever, ever spoke to the Treasury Secretary or an underling regarding the country’s debt?  Isn’t that what you “purchase” day in and day out …”Treasuries”?  You never, ever were given a heads up as to “how much” of this debt was going to be issued by the Treasury in case the Fed had to step up and purchase in their role as lender of last resort?  Actually, I can remember Greenspan testifying before Congress that monetary policy “couldn’t solve all problems”, the budget needed to be more in balance (a Congressional job) and the deficits needed to be lessened.  I won’t bother to do the research but I am sure there are records of phone calls and meetings between the chairman and Treasury secretary, there are plenty of records between Geithner and Bernanke.  Did he and Robert Rubin ask how each other’s family were doing and whether or not it was going to rain the next day?  Like I said, “really?”.
  His answer to the “too big to fail” question was very good and I say BRAVO…except he did not have the backbone to let it happen on his watch!  He postulated that TBTF was the recipe to stagnation and that “creative destruction” is a necessary evil for capitalism.  Creative destruction, meaning “bankruptcy” as punishment for a poor business decision or decisions.  He went on to recount how well the RTC worked in the early 1990’s and actually ended up costing less than projected by letting the markets heal and clean the wounds.  In his opinion, the RTC cannot be duplicated now.
  I do want to point out the obvious here and why the RTC can never be duplicated again.  The 2008 crisis and now any new crisis cannot ever be allowed the punishment of pure Mother Nature… although this is exactly what will happen, let me explain.  Even though this is exactly what should have been allowed in 1991, 2001 and again in 2008, “they” wouldn’t let it happen.  They wouldn’t (couldn’t) let it happen because the financial system itself was getting bigger and bigger, so big that a daisy chain of bankruptcies was feared would cascade into an outright deflation and take government finances with it.  You see, in a fiat/deficit world the government must have the ability to borrow …in order to pay,…interest that is.  If markets were to go totally dysfunctional it would mean the Treasury would have no way of actually paying current interest and settling maturing debt.
  So, there can now never be this “creative destruction” that Mr. Greenspan is speaking of these years later.  “Inflate or die” lived and breathed down his neck while chairman of the Federal Reserve.  He tried to talk a good game but if you know and understand financial and economic history, his modus operandi today is merely to cleanse his legacy before the final collapse and reset of the global financial system.  In my opinion , he had a perfect opportunity in 1991 to allow “creative destruction”, he missed it and we went to war with Iraq to help the reflation.  His last and final chance was 2001 but by then, the odds favor that it would have been the total destruction of the financial system due to size and leverage.  Since 2001 there has been and can never be a “creative destruction”.  2008 saw TARP, ZIRP, $16 trillion of secret Fed loans and all the rest to forestall the destruction…next time there will be nothing available to hold back Mother Nature’s wrath.
  Finally, he was asked if interest rates and gold 5 years from now would be higher or lower to which he answered “higher and higher”.  When asked “how much?” he replied “considerably”!
  This finishes part one, the second interview was much more interesting to me and there was much more discussion of gold, stay tuned!  Regards,  Bill Holter
Early Wednesday morning trading from Europe/Asia

1. Stocks mostly up on  Asian bourses   with the higher yen  values   to 108.07

2 Nikkei up 224 points or 1.46%

3. Europe stocks up/Euro up USA dollar index down at 85.36.  Chinese bourse Shanghai up as  the yuan slightly strengthens  in value  to 6.11154 per usa dollar/yuan.

3b Japan 10 year yield at .47%/Japanese yen vs usa cross now at 108.07/

3c  Nikkei now below 15,000

3d  FOMC two day meeting results

3e  Facebook implodes

3fOil:  WTI  82.22   Brent:     86.88

3g/ Gold down/yen up;  yen above 108 to the dollar/

3h/  Sweden enters the ZIRP club pushing its interest rate to zero

3i Gold at $1227.00 dollars/ Silver: $17.21

4.  USA 10 yr treasury bond at 2.29% early this morning.
5. Details Ransquawk/Bloomberg/Deutche bank/Jim Reid

(courtesy zero hedge)

Flat Futures Foreshadow FOMC Statement Despite Facebook Flameout

Tyler Durden's picture

Submitted by Tyler Durden on 10/29/2014 06:50 -0400

Futures are largely unchanged ahead of today’s, if not the year’s, key event: the FOMC meeting in which Janet Yellen will announce the end of QE3, and with that the market will finally realize that the training wheels from the past 6 years are off, if only until the next market tantrum, or European/Chinese gray swan, pushes the Fed right back in.

As Deutsche Bank observes, the Fed has been wanting to hike rates on a rolling 6-12 month horizon from each recent meeting but never imminently which always makes the actual decision subject to events some time ahead. They have seen a shock in the last few weeks and a downgrade to global growth prospects so will for now likely err on the side of being more dovish than in the last couple of meetings. They probably won’t want to notably reverse the recent market repricing of the Fed Funds contract for now even if they disagree with it. However any future improvements in the global picture will likely lead them to step-up the rate rising rhetoric again and for us this will again lead to issues for financial markets addicted to liquidity. And so the loop will go on for some time yet and will likely trap the Fed into being more dovish than they would ideally want to be in 2015.

But for now, expect a creeping hawkishness to finally be realized by a broken market that has levitated on nothing but implicit and explicit Fed support for the past 6 years. In the meantime, for those curious how to trade today’s FOMC, DB’s Alan Ruskin notes that over the last two yearsthe S&P 500 has on average been 0.35% down on the day of the statement when there is no press conference. When there is one the index is up 0.87%, perhaps reflecting the dovish nature of Bernanke and Yellen relative to the committee.There is also more volatility across different asset classes on press conference days. Alan speculates that this is perhaps due to the market’s interpretation of the dots that appear at press conference meetings.

So will yesterday’s epic short squeeze be undone? Tune in in just over 7 hours to find out.

In the meantime, despite yesterday’s amazing Facebook flameout which rivaled the Antares rocket explosion, in which a conference call announcement about the company’s rapidly slowing growth and soaring expenses sent the company, held by nearly 130 hedge funds, plunging by over 10%, yet another rollercoaster night of Yen-carry levitation has assured that all initial losses in the Emini are made up futures are flat to start the day.

Once again, price action for European equities has centred around the slew of large cap companies reporting throughout the session, with European indices trading in the green with the exception of the IBEX and FTSE MIB. More specifically, Spanish heavyweight BBVA (-1.9%) is leading the Spanish banking sector lower, with Saipem and STMicroelectronics placing further weight on peripheral stocks following their respective earnings reports. In terms of other notable stocks news Sanofi (-4.0%) have announced they have ousted their CEO, while Total (+1.3%) have provided the CAC with some reprieve after their positive pre-market update. Despite the modest upside for stocks, fixed income markets trade in a relatively unchanged with today’s covered Bund auction failing to provide the German benchmark with any sustained price action.

Turning to Asia markets are generally stronger across the board following the positive lead from the US. Bourses in Japan, Hong Kong, China and Korea +1.6%, 1.4%, +1.2% and +1.7% respectively as we type. Focusing on Japan, the September industrial production print surprised to the upside (2.7% mom v 2.2% exp) but all eyes will be on the conclusion of the Bank of Japan policy meeting on Friday for whether a refresh of policy is attempted or hinted at. Asian credit markets are also on a firmer footing overnight with IG spreads around 1-2bp tighter across benchmark names while new issues are also being well absorbed.

JGBs trade marginally lower by 2 ticks, although lead futures touched a record high despite strength in Japanese stocks, supported by the BoJ who offered to buy JPY 1.05trl of debt. The Nikkei 225 (+1.5%) broke back above its 100 DMA at 15440.81 and 50% fib-level of the Sep-Oct sell-off, further buoyed by Japanese IP which printed an 8-month high (2.7% vs. Exp. 2.2%, Prev. -1.8%). Shanghai Comp (+0.2%) and Hang Seng (+0.9%) also traded higher, with the latter erasing its post Hong-Kong protests led losses.

Looking at the rest of the day ahead, we’ve got a fairly quiet calendar in the US with just the mortgage application print to look forward to. in Europe the notable readings include the September retail sales for Spain and consumer confidence in France. All eyes will be on the FOMC statement today though.

Bulletin Headline Summary from Bloomberg and RanSquawk

  • European equities trade mostly in the green with the exception of Spain and Italy as large cap earnings dictate the state of play amid a lack of notable macro Eurozone commentary.
  • Both fixed income and FX markets remain tentative as participants begin to position ahead of today’s eagerly anticipated FOMC meeting.
  • Looking ahead, attention will turn towards the upcoming DoE release, 2yr FRN and 5yr note auction and a stream of large cap US earnings, although the main focus for the session will likely be placed on the FOMC meeting.
  • Treasuries gain as market awaits FOMC policy statement at 2pm in Washington DC; Fed expected to keep “considerable time” language, end QE.
  • Fed won’t provide new economic projections, Yellen not scheduled for post-meeting presser; click here for Decision Day Guide
  • The end the Fed’s third round of bond purchases is proving to be a non-event for MBS, partly because even though the central bank won’t be adding more of the bonds to its balance sheet, it will still be buying enough to prevent holdings from shrinking
  • Bank of England Deputy Governor Jon Cunliffe said slowing inflation and a bleaker outlook for the economy justify keeping emergency stimulus for longer
  • EU said no nation has broken budget rules by a big enough margin to warrant immediate action, a move that gives France and Italy more time to win approval for their draft spending plans
  • Pimco, seeking to stem redemptions after its co-founder Bill Gross left unexpectedly, was dropped as manager of a $6.16b strategy offered by a unit of Prudential Financial Inc
  • Iraqi Kurdish fighters armed with mortars and Katyusha rocket launchers arrived in Turkey today on their way to the Syrian town of Kobani, where they’ll join the fight against Islamic State, according to live footage on NTV television
  • The U.S. vowed to continue its commercial space launch program just hours after a rocket carrying supplies to the International Space Station exploded over a Virginia launch pad
  • North Korean leader Kim Jong Un is seeking to erase the remaining influence of his dead uncle, executing about 10 senior Workers’ Party officials on charges from graft to watching South Korean soap operas, according to an aide to a South Korean lawmaker
  • Sovereign yields mostly lower. Asian and European stocks gain; U.S. equity-index futures mixed. Brent crude and copper gain, gold little changed

US Event Calendar

  • 7:00am: MBA Mortgage Applications, Oct. 24 (prior 11.6%) Central Banks
  • 2:00pm: Fed seen maintaining overnight bank lending rate of 0%-0.25%
  • Fed seen ending QE program
  • 11:30am: U.S. to sell $15b 2Y FRN
  • 1:00pm: U.S. to sell $35b 5Y notes

ASIA

JGBs trade marginally lower by 2 ticks, although lead futures touched a record high despite strength in Japanese stocks, supported by the BoJ who offered to buy JPY 1.05trl of debt. The Nikkei 225 (+1.5%) broke back above its 100 DMA at 15440.81 and 50% fib-level of the Sep-Oct sell-off, further buoyed by Japanese IP which printed an 8-month high (2.7% vs. Exp. 2.2%, Prev. -1.8%). Shanghai Comp (+0.2%) and Hang Seng (+0.9%) also traded higher, with the latter erasing its post Hong-Kong protests led losses.

The World Bank said China has buffers to prevent disorderly debt unwind and sees China GDP growth slowing to 7.1% in 2016. Elsewhere, Deutsche lowered China’s GDP growth forecast by 0.5pp to 7.3% for 2014 and by 1pp to 7.0% for 2015. (RTRS)

FIXED INCOME & EQUITIES

Once again, price action for European equities has centred around the slew of large cap companies reporting throughout the session, with European indices trading in the green with the exception of the IBEX and FTSE MIB. More specifically, Spanish heavyweight BBVA (-1.9%) is leading the Spanish banking sector lower, with Saipem and STMicroelectronics placing further weight on peripheral stocks following their respective earnings reports. In terms of other notable stocks news Sanofi (-4.0%) have announced they have ousted their CEO, while Total (+1.3%) have provided the CAC with some reprieve after their positive pre-market update. Despite the modest upside for stocks, fixed income markets trade in a relatively unchanged with today’s covered Bund auction failing to provide the German benchmark with any sustained price action.

FX

FX markets remain relatively tentative ahead of the FOMC, with the modest upside for AUD seen overnight being sustained throughout European trade following a flurry of bids in AUD/JPY. Elsewhere, GBP was unreactive to the UK Mortgage approvals data (61.3K vs. Exp. 62.0K) which came in at its lowest level since July 2013 as the release painted a relatively similar picture to recent mortgage-related data points. Furthermore, comments from BoE’s Cunliffe who said the BoE can keep stimulus longer than previously thought, citing softening in UK pay and inflation data also failed to weigh on the UK currency. However, in recent trade EUR/GBP has just broken above 0.7900, with the move said to be spurred by the usual month-end buying from a large European central bank.

COMMODITIES

WTI and Brent crude futures trade in the green after API Crude Oil Inventories (+3200k vs. Prev. +1200k) showed a lower than expected build in today’s DOE crude report (Exp. +3650k, Prev. +7111k). However, prices remained unscathed to comments from OPEC’s Sec Gen who said that if oil prices stay at USD 85/bbl, a lot of oil will go out of the market, adding that OPEC does not have a price target and they ‘just leave it to the market’. Elsewhere, precious metals markets remain relatively steady ahead of the FOMC release.

* * *

DB’s Jim Reid Conludes the Overnight Recap

Two weeks ago today’s FOMC conclusion was looking set to be a pretty exciting event. However the fact that the S&P 500 has rallied 9.03% off the intra-day lows that week to now only be around 1.3% off the all time highs probably means it will be a much more predictable affair. However it’s likely that recent events will have had an impact in our opinion.

Our take is that the Fed has been wanting to hike rates on a rolling 6-12 month horizon from each recent meeting but never imminently which always makes the actual decision subject to events some time ahead. They have seen a shock in the last few weeks and a downgrade to global growth prospects so will for now likely err on the side of being more dovish than in the last couple of meetings. They probably won’t want to notably reverse the recent market repricing of the Fed Funds contract for now even if they disagree with it. However any future improvements in the global picture will likely lead them to step-up the rate rising rhetoric again and for us this will again lead to issues for financial markets addicted to liquidity. And so the loop will go on for some time yet and will likely trap the Fed into being more dovish than they would ideally want to be in 2015.

On the specifics for today, DB’s Peter Hooper expects the Committee to maintain a modestly dovish stance with relatively few changes other than those necessitated by the ending of QE. A big question mark will be as to whether they explicitly mention the recent volatility or tighter financial conditions similar to what they did in September last year. Peter doesn’t think so as back then Treasury yields had climbed over 100bps and the labor market had showed signs of slowing which hasn’t happened this time round. Peter thinks they are concerned about there being an ‘investor put’ if they make too much of the volatility of two weeks ago. For us though its easy for them to act like this now that markets have recovered but it might be a little circular. The rebound started with Bullard’s about turn suggesting that QE might be extended and also as markets started to price out 2015’s interest rate rises. The rally soon got extra legs when speculation arose that the ECB might be considering buying corporate bonds. So if the Fed use this rebound to be too hawkish then it may backfire so we’d expect some compromise probably in the form of keeping considerable time in and emphasising the global risks to growth and inflation.

DB’s Alan Ruskin makes some interesting observations about the FOMC. Firstly he says that over the last two years the S&P 500 has on average been 0.35% down on the day of the statement when there is no press conference. When there is one the index is up 0.87%, perhaps reflecting the dovish nature of Bernanke and Yellen relative to the committee. There is also more volatility across different asset classes on press conference days. Alan speculates that this is perhaps due to the market’s interpretation of the dots that appear at press conference meetings.

Ahead of all this markets shrugged off some mixed data in the US yesterday to rally strongly. The good news came from the Conference Board Consumer Confidence report that topped estimates (94.5 v 87.0) to print at a seven year high. The Richmond Fed manufacturing survey also came in stronger than expected (20 v 11). The bad news though came from September’s durable goods data. The volatile headline series fell unexpectedly (-1.3% mom v +0.5% mom expected) and the core capex reading (ex. aircraft and defense) also weaker. A weak core capex adds downside risk to the Q3 GDP numbers as our US colleagues pointed out earlier this week. The other notable data release in the US yesterday was the S&P/Case Shiller house price index which came in slightly below expectations (+5.57% yoy v +5.70% expected).

With the S&P 500 (+1.19%) and the Russell (+2.86%) rallying, US Treasuries were unsurprisingly weaker. 10yr yields closed +3bp to 2.29%. Commodities were also stronger with WTI, Brent, and Copper up +0.5%, +0.2% and +0.8% on the day.

Turning to Asia markets are generally stronger across the board following the positive lead from the US. Bourses in Japan, Hong Kong, China and Korea +1.6%, 1.4%, +1.2% and +1.7% respectively as we type. Focusing on Japan, the September industrial production print surprised to the upside (2.7% mom v 2.2% exp) but all eyes will be on the conclusion of the Bank of Japan policy meeting on Friday for whether a refresh of policy is attempted or hinted at. Asian credit markets are also on a firmer footing overnight with IG spreads around 1-2bp tighter across benchmark names while new issues are also being well absorbed.

Looking at the rest of the day ahead, we’ve got a fairly quiet calendar in the US with just the mortgage application print to look forward to. Over on this side of the Atlantic, the notable readings include the September retail sales for Spain and consumer confidence in France. All eyes will be on the FOMC statement today though.

end

EUR/USA:  1.2740  up .0003

USA/JAPAN YEN  108.07   down .050

GBP/USA  1.6118 down .0022

USA/CAN  1.1149 down .0021

This morning in  Europe, the euro is slightly up, trading now just above the 1.27 level at 1.2740

  as Europe reacts to deflation.  The yen is up a little and it closed in Japan rising by 5 basis points at

108.07 yen to the dollar.  The pound is down from Tuesday as it now trades just above the 1.61 level to 1.6118.
The Canadian dollar is slightly up trading at 1.1149 to the dollar.

 Early Wednesday morning USA 10 year bond yield:  2.29% !!!    up 2 in  basis points from  Tuesday night/   (USA economy not doing so well with this low yield)

USA dollar Index early Wednesday morning: 85.36 down 5 cents from Tuesday’s close

end

The NIKKEI: Wednesday morning up 224 points or 1.46%

Trading from Europe and Asia:
1. Europe  all in the green (except Spain)

2/    Asian bourses mostly in the green  / Chinese bourses: Hang Sang  in the green, Shanghai in the green,  Australia in the gr:  red/Nikkei (Japan) green/India’s Sensex in the green

Gold early morning trading:  $1227.00

silver:$ 17.21

end

Your closing Spanish 10 year government bond Wednesday/ par in basis points in yield from Tuesday night.

Spanish 10 year bond yield:  2.14% !!!!!!

Your Wednesday closing Italian 10 year bond yield: down 3 in basis points:

trading 36 basis points higher than Spain:

Italian  10 year bond yield;  2.50%!!!!!

end

 IMPORTANT CLOSES FOR TODAY

Closing currency crosses for Wednesday night/USA dollar index/USA 10 yr bond:   Europe falling apart this afternoon

Euro/USA:  1.2646 down .0091

USA/Japan:  108.82 up  .700

Great Britain/USA:  1.6018  down 0.0123

USA/Canada:  1.1201 up .0031

The euro fell quite a bit in value during this afternoon’s  session, and it was down  by closing time , closing well below the 1.27 level to 1.2646.  The yen was well down during the afternoon session,and it lost 70 basis points on the day closing well above the 108 cross at 108.82.   The British pound lost huge ground  during the afternoon session and  it was down for the day as it closed at 1.6018

The Canadian dollar was down during the afternoon session, and it was down on the day closing at 1.1202.

Your closing USA dollar index:

85.95 up 55 cents  on the day

your 10 year USA bond yield ,up 8 in basis points on the day: 2.35%

European and Dow Jones stock index closes:

England FTSE up  51.70 or 0.81%

Paris CAC  down 2.09 or 0.05%

German Dax up 14.62 or 0.16%

Spain’s Ibex down 147.60 or  1.41%

Italian FTSE-MIB down 319.82    or 1.64%

The Dow: up 187.81   or 1.12%

Nasdaq; up 78.36   or 1.75%

OIL:  WTI 82.15

Brent: 87.17

end

The big news:  talks renew after Russia cuts off gas through the Ukraine:

(courtesy Reuters) and special thanks to Robert H for sending this to us

Ukraine, Russia try again to forge gas deal at Brussels talks

BY BARBARA LEWIS

BRUSSELS Wed Oct 29, 2014 1:00pm GMT

 (Reuters) – Ukraine and Russia begin new gas crisis talks on Wednesday, but wrangling over Ukraine’s upfront cash payments threatens to push a deal out of reach, even as temperatures have fallen below zero in Kiev.

Russian state utility Gazprom halted supplies to Kiev in June because of Ukraine’s unpaid gas bill, which Moscow says is around $4.5 billion (2.8 billion pounds).

For months, the cut-off has had little impact. But pressure is mounting for a deal as peak winter demand looms and European Energy Commissioner Guenther Oettinger, who has been mediating the talks, prepares to leave office at the end of the week.

The two sides came close in September, but then differences gaped wide last week over Kiev’s ability to pay.

Oettinger told German television on Wednesday there was a 50 percent chance of a breakthrough in the talks, which begin in the afternoon in Brussels. If he cannot broker a solution, it will be down to his successor, who takes office on Nov. 1.

Weekend elections returned a pro-Western parliament in Kiev, potentially stoking tensions with Moscow, although Russia’s EU envoy, Vladimir Chizhov, said the mood could be more relaxed now the vote has taken place.

“During the last rounds of talks, let’s not conceal it, the pre-election situation had its influence on Ukrainian side,” Chizhov told Russian agency RIA Novosti. The only unresolved problem, he said, was where to get the money from for winter supplies.

NOT JUST ABOUT THE MONEY

Ukraine’s Naftogaz has set aside $3.1 billion in a special escrow account to pay off a chunk of its debt to Gazprom, but Russia is also demanding prepayment for winter supplies before it is willing to turn the taps back on.

Kiev says it is working to raise more money from all possible sources of financing, including the European Union. The executive European Commission is considering Ukraine’s request last week for a further loan of 2 billion euros.

But Kiev also says money alone may not be enough.

“I have an impression that the Russian side doesn’t want to agree,” Ukrainian Finance Minister Oleksander Shlapak told reporters in Kiev on Tuesday.

Analysts also said it could be very hard to come up with enough assurances to satisfy Russia. Ukraine at the same time is pushing for written guarantees that any agreement on price will be lasting.

For all sides, there is much at stake.

Russia provides around one third of the European Union’s gas, roughly half of which is shipped via Ukraine.

Ukraine in turn relies on Russia for around 50 percent of its own gas and despite storage has a winter shortfall of around 3 billion to 4 billion cubic metres (bcm), depending on the weather.

For Russia, the gas sector contributes approximately a fifth of the national budget.

Economic sanctions on Russia, which EU officials at a closed-door meeting on Tuesday decided to leave unchanged for now, are sapping an already weakeconomy. But Moscow could well be willing to endure much more hardship for political ends.

“Economic factors are generally not given precedence when national security concerns are at stake,” Pasquale De Micco, a national expert from the European Parliament’s policy department, said in a research paper on Europe’s gas supply options.

“What is certain is that a gas war risks harming both parties in the short term and that it would hamper future efforts to re-establish mutually trusting relations.”

(Additional reporting by Vladimir Soldatkin and Ekaterina Golubkova in Moscow, Natalia Zinets and Pavel Polityk in Kiev and; Michael Nienaber in Berlin; editing by Jane Baird)

 end

The following story caused the urgent meeting to get the gas flowing again via the Ukraine:
(courtesy Robert Lea/London’s Daily Mail)

Europe plunged into energy crisis as Russia cuts off gas supply via Ukraine

By ROBERT LEA

  • Gas prices rise in London
  • Bulgaria reaches ‘crisis’ point

Russia cut gas exports to Europe by 60 per cent today, plunging the continent into an energy crisis ‘within hours’ as a dispute with Ukraine escalated.

This morning, gas companies in Ukraine said that Russia had completely cut off their supply.

Six countries reported a complete shut-off of Russian gas shipped via Ukraine today, in a sharp escalation of a struggle over energy that threatens Europe as winter sets in.

Bulgaria, Greece, Macedonia, Romania, Croatia and Turkey all reported a halt in gas shipments from Russia through Ukraine.

Croatia said it was temporarily reducing supplies to industrial customers while Bulgaria said it had enough gas for only ‘for a few days’ and was in a ‘crisis situation’.

The EU demanded the two sides reopen talks as the row immediately sparked fears of gas supply shortages and rising energy prices in the UK.

The UK is suffering one of its coldest nights this century with temperatures plunging to as low as -10C.

Though Britain is one of Gazprom’s largest importers – relying on the company for some 16 per cent of consumption in 2007, according to The Times, the gas is supplied through a complicated swap scheme that means supplies themselves may not be affected.

Prices, on the other hand, rose during trading in London today.

dmitry medvedev and vladimir putin

Dmitry Medvedev and  Vladimir Putin on the slopes last week. Putin ordered Gazprom to cut supplies to and through Ukraine by around three-fifths

The dispute, coupled with Israel’s military operation in Gaza, also pushed oil up to a three-week high of $49.91 in New York yesterday.

Russia, whose main export is oil, stands to benefit from a recovery in prices.

‘Without prior warning and in clear contradiction with the reassurances given by the highest Russian and Ukrainian authorities to the European Union, gas supplies to some EU member states have been substantially cut,’ the EU said in a statement.

‘The Czech EU Presidency and the European Commission demand that gas supplies be restored immediately to the EU and that the two parties resume negotiations at once with a view to a definitive settlement of their bilateral commercial dispute,’ the presidency and the Commission said in a joint statement.

They added that the EU would ‘intensify the dialogue with both parties so that they can reach an agreement swiftly’.

Overnight the Russian Prime Minister Vladimir Putin ordered the state energy giant Gazprom to cut supplies to and through Ukraine by around three-fifths amid accusations its neighbour has been siphoning off and stealing Russian gas. es, a row between the two that has become almost annual.

The effects of the dispute on the rest of Europe however is stark, said Ukraine’s main gas supplier.

Around 80 per cent of the gas European Union countries receive from Russia comes through Ukraine.

While Germany and France are much more exposed, it is reckoned in some estimates that 15 per cent of Britain’s supplies come from Russia through pipelines into the UK’s east coast.

‘They [the Russians] have reduced deliveries to 92million cubic metres per 24 hours compared to the promised 221million cubic metres without explanation,’ said Valentin Zemlyansky of the Ukrainian gas company Naftogaz.

‘We do not understand how we will deliver gas to Europe. This means that in a few hours problems with supplies to Europe will begin.’

Wholesale gas prices have already risen on the back of the rallying price of oil, up 50 per cent in the last fortnight to more than $48 a barrel on the back of Middle East tension over Israeli incursions into Palestinian-held Gaza.

The dispute stokes fears Britain is overreliant on imported gas. North Sea stocks are dwindling, though initiatives are in place to build the Langeled pipeline from Norway, improve underground long-term storage facilities and receive liquefied natural gas by ship from Africa and Asia.

Eastern and central European countries are already reporting supply problems, including the Czech Republic which has the current presidency of the EU. The EU as a whole depends on Russia for 25 per cent of its gas supplies.

end

The rouble collapsed today to above 42 to the dollar.

Something is going on with Rosneft as Russia readies for a retaliatory move:

(courtesy zero hedge)

Rosneft “Radical” Sanctions Retaliation Proposal Sends Russian Bonds, Currency Plunging

Tyler Durden's picture

Submitted by Tyler Durden on 10/29/2014 10:06 -0400

10Y Russian bond yields have broken above 10%, trading at the highest yields since 2009 as the Ruble plunges once again to fresh record lows against the dollar. These significant moves come on the heels of two notable headlines overnight. First, German exports to Russia slumped 26.3% YoY in August (down a stunning 16.6% year-to-date with vehicle exports plunging 27.7%) as sanctions batter bilateral trade. Secondly, Rosneft has proposed what is being described as “radical” reactions to the West’s sanctions, which the Kremlin has (for now) denied.

Bonds and Ruble are tumbling…

As German exports to Russia collapsed (via Xinhua)

German exports to Russia dropped significantly in August as the Ukraine crisis hit their bilateral trade, official data showed on Wednesday.

In August, German exporters delivered goods worth 2.3 billion euros (about 2.9 billion U.S. dollars) to Russia, the German Federal Statistical Office (Destatis) said. Compared to the same month of previous year, the exports slumped by 26.3 percent.

From January to August, German exports to Russia fell by 16.6 percent year on year. Vehicles and motor vehicle products was hit the worst, suffering a decline of 27.3 percent.

The drops showed a deteriorating bilateral trade between the two countries. From 2010 to 2012, German exports to Russia enjoyed high growth every year. In 2011, the exports rose by 30.8 percent.

And Rosneft unveils new “radical” sanctions (via Interfax)…

Russian presidential aide Andrei Belousov said he had received proposals from Rosneft on how to react to Western sanctions, and these proposals are being reviewed.

“I would say that the radicalism of the proposals for now exceeds the sharpness of today’s situation,” Belousov told journalists on Wednesday.

“We are in the process of studying [the proposals],” he said.

Commenting on Rosneft’s proposals, Economic Development Minister Alexei Ulyukayev said: “It’s a very complex document, complexly formulated. I don’t think it is grounds for making any decisions.”

The Kremlin has denied the rumor

Russian presidential spokesman Dmitry Peskov denied on Wednesday reports that Russian oil major Rosneft allegedly prepared proposals on new retaliatory sanctions.

“This absolutely does not correspond to reality, this information that Rosneft allegedly prepared proposals of anti-sanctions nature,” Peskov said.

“Preparations of any proposals are out of the question,” Peskov said. “This is not true that there are some proposals from Rosneft.”

*  *  *

It seems someone is really upset as Sechin news just reported: Rosneft to file lawsuit against Kommersant daily – the entity that broke the story.

And now for your big USA stories

Today’s NY trading:

(courtesy zero hedge)

Buyers Focus On Dollars, 30 Year After Fed, Stocks Shrug

Tyler Durden's picture

Submitted by Tyler Durden on 10/29/2014 16:06 -0400

Stocks slid slowly lower into the FOMC statement, then tumbled as no matter how hard talking heads tried they could not find a silver lining in the hawkish tone reflected across near universal sell-side confirmation. Stocks tumbled, commodities tumbled, and the USDollar surged but the Treasury curve flattened dramatially as 30Y was well bid and the rest of the curve offered (2Y surged higher in yield). The last few minutes saw the ubiquitous levitation to VWAP which lifted Small Caps briefly into the green briefly and stocks all ended higheer from the FOMC statement. By the close, the USDollar was up notably, stocks lower, gold down 1.5%, oil up over $82, and the Treasury curve flattened dramatically (5Y +8bps, 30Y -2bps).

S&P ramped to VWAP…

“Off the highs” to start, dump’n’pump on FOMC, sellers resumed on hawkish tone then rescue bid lifted stocks back to unch…

Post-FOMC, stocks dumped and pumped…

Financials were the big winners post FOMC… homebuilders not so much…

Credit markets were not playing along with the equity exuberance in the last few minutes and financial stocks remains wildly optimistic compared to credit…

HY credit didnt bounce and is not buying it…

The USD surged on the FOMC statement…

The long-bond also rallied notably (30Y yields dropped 6bps on the FOMC) and flattened…

Quite a divergence post-FOMC in the Treasury Complex…

5s30s collapsed back to catch up with stocks in the oddest decoupling we have seen in a while…

Commodities all slumped after the FOMC, led by Gold…

Silver was the biggest loser post FOMC but all fell…

Charts: Bloomberg

end

The Fed’s FOMC statement:  really nothing changed as they are keeping zero interest rates for a considerable period of time:

(courtesy zero hedge)

FOMC Ends The QE Dream, Keeps “Considerable” Period Hopes Alive – Full Statement Redline

Tyler Durden's picture

Submitted by Tyler Durden on 10/29/2014 14:00 -0400

“Steady as she goes” was expected… having kept the “considerable time” dream alive last month, the FOMC ended QE3 on schedule but remained ‘data-dependent’ on reviving it…

  • *FED ENDS THIRD ROUND OF QUANTITATIVE EASING AS PLANNED
  • *FED SEES `SOLID JOB GAINS’ WITH LOWER UNEMPLOYMENT
  • *FED: UNDERUTILIZATION OF LABOR RESOURCES GRADUALLY DIMINISHING
  • *FED REPEATS RATES TO STAY LOW FOR `CONSIDERABLE TIME’
  • *FED REPEATS RISK OF BELOW-TARGET INFLATION DIMINISHED SOMEWHAT
  • *FED SAYS LOWER ENERGY PRICES TO HOLD DOWN INFLATION NEAR TERM
  • *KOCHERLAKOTA DISSENTS AT FOMC, SEEKING QE CONTINUATION

And so now the “flow” has stopped; given that “bond buying” did not work, we are reminded of Alan Greenspan’s warning that  “I don’t think it’s possible” for the Fed to end its easy-money policies in a trouble-free manner.

Here is how the Fed pretends it has rarely been more optimistic about the economy:

The Committee judges that there has been a substantial improvement in the outlook for the labor market since the inception of its current asset purchase program. Moreover, the Committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability. Accordingly, the Committee decided to conclude its asset purchase program this month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions. 

Pre-FOMC: S&P Futs 1975, 10Y 2.32%, Gold $1225, WTI $82.75
What next? Is it the ‘stock’ or the ‘flow’?

A reminder of what happened at the last FOMC…

end

Wall Street’s reaction to the FOMC meeting:  Risk is off…

(courtesy zero hedge)

First Sell-Side Responses To FOMC Trickle In: “This Should Be A Risk Off Trade”

Tyler Durden's picture

Submitted by Tyler Durden on 10/29/2014 14:31 -0400

The initial reactions from the sell-side are arriving and while CNBC’s Bob Pisani believes “this is very bullish” the sell-side appears to disagree.

First Goldman:

Looks a bit more hawkish to us… Do note inflation expectations have come down. Forward guidance… considerable time following end of  purchase program this month. Plosser and Fischer voted in favor aka must be sufficiently happy with something else in the statement? Kocherlakota only dissent

Deutsche’s Lavorgna can’t even find an excuse to push out liftoff…

Citi Warns:

Fed comes in with a bit of a Hawkish tilt as it rids of key policy line around labor market and keeps “considerable time.”  The buying program has ended. Hawks Fisher and Plosser voted for the action, while Kocherlakota  voted against it, which is a flip from recent votes.

“The dove dissenting says it all,” trader quips.

And Brean Capital’s Peter Tchir adds:

Hawkish statement:

1) QE gone.

2) The hawks were on board, and a dove took the time to dissent – in our Fed “U” shape pattern, we think the shift to hawkish overall Fed has commenced and the pure hawks are appeased and winning and the pure doves, losing.

3) Job highlighted and as Yellen said back at Jackson Hole – structural unemployment is higher than she thought, so less slack, and as San Fran Fed said recently, when a period occurs where wages were sticky, once they finally start to rise, it happens very quickly

Is March back on the table? If they are only fighting inflation now, they have less ability to enact more dovish policy.

I think this should be a “risk off” trade.  

Initial reaction might be “risk on” as they are touting the economy and growth and talk about a great GDP print tomorrow, but

Growth going forward is frought with risk, especially with a less helpful Fed, which will support the long end of treasuries – not the front end.

The market started its big reversal on Bullard’s comments and I find it hard to believe that having his comments not be reflected at all in the statement means we have to head back lower.

HY has been a bit heavy past few days, and since we never saw a true “clearing level” we should see that.

  • Short HYG/JNK or TRS.
  • Curve flatteners look great to me.
  • Strong dollar.
  • Weak commodities.
  • Short risk.

*  *  *

And Renaissance Macro notes: Fed Statement ‘Neutral to Marginally Hawkish’

“Stronger language” on labor mkt “partially offset by the retention of the considerable time language,” Neil Dutta, economist at Renaissance Macro Research, writes in note.

The phrase considerable time is now “more explicitly tied to data dependence”

*  *  *

end

This is proof that the housing recovery is finished..

(courtesy zero hedge)

Mortgage Purchase Applications Plunge To 19-Year Lows

Tyler Durden's picture

Submitted by Tyler Durden on 10/29/2014 11:03 -0400

Presented with little comment.. because realistically what is there to say about a so-called ‘housing recovery’ when the volume of applications for home purchases is the lowest since August 1995. Keep believing that lower rates will support home prices… keep believing the Fed’s QE worked… or face facts, this is not your mother’s housing market any more…

The Recovery…

The long-term…

The transmission channel is officially broken…

Charts: Bloomberg

end

That is all for today

I will see you tomorrow night

Do not forget that they will put continuous pressure on gold and silver

for the remainder of this week due to options expiry

bye for now

Harvey

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