Oct 31/Huge Stimulus from Japan/Equivalent of 108 billion USA of bond purchases/month/no change in GLD or SLV inventory/gold and silver whacked again/

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: $1171.10 down $27.00
Silver: $16.07 down 31 cents

In the access market 5:15 pm:

Gold $1173.00
silver $16.15

The gold comex today had a poor  day, registering  0 notices served for nil oz
A few months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 261.94 tonnes for a loss of 41 tonnes.

In silver, the open interest continues to remain extremely high and today we are at multi year highs at 179,608 contracts.
To boot, the December silver OI remains extremely high at 123,353.

Today, we had no change in gold Inventory at the GLD/ inventory rests tonight at 741.20 tonnes.

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

.

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 a positive directions  with the first one month GOFO  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 31 2014

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

-.025%                  +0025%               + .0325%          + .0925%          + .185%

Oct 29 .2014:

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

-.045% +          -.015%                  +-0225%           +.08        + .18%

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 fell by a narrow margin of 1196 contracts from 419,455 down to 418,259 with gold down $26.90 yesterday. Not too many longs left the arena despite the huge whack in gold yesterday.  The October contract month is now off the board. The next delivery month is November and here the OI actually fell by 207 contracts.  The big December contract month saw it’s Oi fall by 2-56 contracts down to 273,348.  The estimated volume today was very good at 297,270 with the help from Bart’s high frequency boys.  The confirmed volume yesterday was also good at 226,686. Strangely on first day notice, we had only 2 notices filed for 200 oz.

The fun begins with the silver comex results.  The total OI rises to a new multi year record of 179,608 a rise of 3,164 contracts from yesterday with silver down a whopping 83 cents.In ounces, this represents a total of 898 million oz or 128% of annual global supply.  The next non active silver contract month is November and here the OI fell by 355 contracts down to 164.  The big December active contract month saw it’s OI surprisingly rise by 4588 contracts up to 123,353. In ounces this is represented by 616 million oz or 88.1% of annual global production  (production = 700 million oz – China). The estimated volume today was humongous at 80,317.  The confirmed volume yesterday was also huge at 93,369. We also had 44 notices filed on first day notice for 220,000 oz.

Data for the November delivery month.

November initial standings

Oct 31.2014

Ounces

Withdrawals from Dealers Inventory in oz

3,547.67 (Brinks)

Withdrawals from Customer Inventory in oz

 64.30 (Manfra, )

Deposits to the Dealer Inventory in oz

nil

Deposits to the Customer Inventory, in oz

75,100.972 (HSBC)

No of oz served (contracts) today

  2 contracts( 200 oz)

No of oz to be served (notices)

65 contracts (6500 oz)

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

 2 contracts  (200 oz)

Total accumulative withdrawals  of gold from the Dealers inventory this month

   3,547.67  oz

Total accumulative withdrawal of gold from the Customer inventory this month

 64.30 oz

Today, we had 1 dealer transactions

we had one dealer withdrawal out of Brinks:  3,547.67 oz

total dealer withdrawal:  3,547.67  oz

total dealer deposit:  nil oz

we had 1 customer withdrawals:

i) Out of Manfra;  64.3 oz  (two kilobasr)

i

total customer withdrawals :64.30  oz

we had 1 customer deposits:

i) Into HSBC;  75,100.972 oz

total customer deposit: 75,100.972 oz

We had 1 adjustments:

i) out of HSBC: 904.043oz was removed from the dealer and this landed into the customer account at HSBC.

Total Dealer inventory: 885,779.97 or   27.55 tonnes

Total gold inventory (dealer and customer) =  8.422 million oz. (261.97) tonnes)

Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 41 tonnes have been net 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 2 contracts  of which 0 notices were stopped (received) by JPMorgan dealer and 0  notices were stopped by JPMorgan customer account.

To calculate the total number of gold ounces standing for the November contract month, we take the total number of notices filed for today (2) x 100 oz to which we add the difference between the OI for the front month of November (67) – the number of gold notices filed today (2)  x 100 oz  =  the amount of gold oz standing for the November contract month.

Thus the in intial standings:

2  (notices filed today x 100 oz +   (67) OI for November – 2 (no of notices filed today = 6700 oz (.208 tonnes)

 And now for silver:

Oct 31/2014:

 November silver: initial standings

Silver

Ounces

Withdrawals from Dealers Inventory   nil oz
Withdrawals from Customer Inventory 419,317.29 oz
(Delaware, CNT, Scotia)
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory nil oz
No of oz served (contracts) 44 contracts  (220,000 oz)
No of oz to be served (notices) 120 contracts (600,000 oz)
Total monthly oz silver served (contracts) 44 contracts (220,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal  of silver from the Customer inventory this month 419,317.29 oz

Today, we had 0 deposits into the dealer account:

 total dealer deposit: nil oz

we had 0 dealer withdrawal:

total  dealer withdrawal: nil  oz

We had 3 customer withdrawals:

i) Out of Delaware: 1006.80 oz

ii) Out of CNT: 90,994.57 oz

iii) Out of Scotia;  301,943.244

total customer withdrawal 419,317.29 oz

We had 0 customer deposits:

total customer deposits: nil     oz

we had 0 adjustments:

Total dealer inventory:  66.185 million oz

Total of all silver inventory (dealer and customer)   180.805 million oz.

The total number of notices filed on first day notice total 44 for 220,000 oz.  To calculate the number of silver ounces that will stand

for delivery in November, we take the total number of notices filed today (44 ) x 5,000 oz to which we add the difference between

the total OI for the front month of November(164) minus  (the number of notices filed today (44) x 5,000 oz =   the total number of silver oz standing so far in November.

Thus:  44 contracts x 5000 oz  +  (164) OI for the November contract month – 44 (the number of notices filed today)  = amount standing or 820,000 oz

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:

Oct 31.2014: no change in gold inventory at the GLD despite the raid/inventory at 741.20 tonnes

October 30.2014: we had another 1.2 tonnes of gold leave the GLD and heading to Shanghai/Inventory 741.20 tonnes

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 31 no change in   gold inventory   at the GLD

inventory: 741.20 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:  741.20 tonnes.

end

And now for silver:

October 31.2014: despite the huge raids yesterday and today:  no change in silver inventory at the SLV/inventory at 343.415 million oz

October 30.2014; no change in silver inventory at the SLV/inventory at 343.415 million oz

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 31.2014: 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 8.8% percent to NAV in usa funds and Negative   9.0% to NAV for Cdn funds

Percentage of fund in gold  60.9%

Percentage of fund in silver:38.50%

cash .6%


.( Oct 31/2014)   

2. Sprott silver fund (PSLV): Premium to NAV rises to positive 4.68% NAV (Oct 31/2014)  

3. Sprott gold fund (PHYS): premium to NAV  falls to negative -0.88% to NAV(Oct30/2014)

Note: Sprott silver trust back hugely into positive territory at 4.68%.

Sprott physical gold trust is back in negative territory at  -0.88%

Central fund of Canada’s is still in jail.

end

And now for our COT report/

First the gold COT:

Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
195,885 95,146 39,781 146,345 245,209 382,011 380,136
Change from Prior Reporting Period
-11,244 -3,999 9,013 6,916 882 4,685 5,896
Traders
130 93 73 53 54 214 198
 
Small Speculators  
Long Short Open Interest  
32,399 34,274 414,410  
-1,332 -2,543 3,353  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, October 28, 2014

Our large speculators:

Those large specs that have been long in gold pitched a huge 11,244 contracts from their long side and they were rewarded.

Those large specs that have been short in gold covered 3999 contracts from their short side

Our commercials;

Those commercials that have been long in gold added 6,916 contracts to their long side

Those commercials that have been short in gold added a tiny 882 contracts to their short side

Our small specs:

Those small specs that have been long in gold pitched 1332 contracts from their long side

Those small specs that have been short in gold covered 2542 contracts from their short side.

Commercials go net long and then they raid!!

and now for silver

Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
57,469 51,537 20,011 71,215 85,370
233 1,132 1,676 1,117 681
Traders
92 67 52 49 38
Small Speculators Open Interest Total
Long Short 173,733 Long Short
25,038 16,815 148,695 156,918
515 52 3,541 3,026 3,489
non reportable positions Positions as of: 165 137

Strange data:

Our large specs:

Those large specs that have been long in silver added a tiny 92 contracts to their long side

Those large specs that have been short in silver added a tiny 67 contracts to their short side

Our commercials:

Those commercials that have been long in silver added a tiny 52 contracts to their long side

Those commercials that have been short in silver added a tiny 49 contracts to their short side

Our small specs;

Those small specs that have been long in silver added a tiny 515 contracts to their long side

Those small specs that have been short in silver added a tiny 52 contracts to their short side.

Conclusion;  quite comatose.

Now  your more important physical stories today:

(courtesy Mark O’Byrne)

Fed Ends QE? Greenspan Says Gold “Measurably” “Higher” In 5 Years

Published in Market Update  Precious Metals  on 30 October 2014

By Mark O’Byrne

13

As expected, the Fed announced yesterday it would end its six year money printing and bond buying programme.

Given the fragile nature of the U.S. economy, Eurozone economy and indeed the global economy, Fed critics continue to believe that this may be a short term hiatus prior to a resumption of QE, if asset prices start to fall or economic growth falters.

Former Federal Reserve Chairman Alan Greenspan admitted yesterday to the Council on Foreign Relations (CFR), that QE and the Fed’s bond buying program, which aimed to lower unemployment and spur stronger economic growth, fell short of its goals.

It has been a busy week for the man once known as “Maestro”. The end of last week saw him engage in public discussions with the likes of Marc Faber and Peter Schiff at the New Orleans Investment Conference.

Ominously, Greenspan warned at the New Orleans Investment Conference that the Fed’s balance sheet is a “pile of tinder” and gold is a “good place to put money these days” as it will rise “measurably” in the next 5 years.

He told the CFR that the bond buying program was ultimately a mixed bag. He said that the purchases of Treasury and mortgage backed securities did help lift asset prices and lower borrowing costs. But it didn’t do much for the real economy.

“Effective demand is dead in the water” and the effort to boost it via bond buying “has not worked,” Greenspan said. Boosting asset prices, which aids the already wealthy, however, has been “a terrific success.”

When asked about QE, Greenspan made the unusually frank admission that “the Fed’s balance sheet is a pile of tinder, but it hasn’t been lit … inflation will eventually have to rise.”

Greenspan, who headed the Federal Reserve from 1987 to 2006 surprised guests in New Orleans when he stated bluntly, “I never said the central bank was Independent!” in response to criticism that the Fed was financing social programmes.

This stunning admission, if true, begs the obvious question: to what extent are the current policies of the Fed and other central banks the result of careful reasoning by independent monetary experts and to what extent are they being dictated by politicians desperate for public popularity and reelection or worse still by unelected powerful banks and bankers?

Greenspan said that currency debasement had failed to foster economic growth and unemployment had not been alleviated. However, at least asset prices had been boosted which he described as a “terrific success.”

So Wall Street reaped tremendous benefits from QE while main street flounders and taxpayers, both living and yet to be born, have the privilege of footing the  USD 4,000,000,000,000 bill – that is $4 trillion. He also indicated that ending QE would “unleash significant volatility in markets.”
In what may be the saving grace of his legacy, he continues to expound the virtues of gold.

In New Orleans, he was asked why central banks still own gold. His answer was encouraging if a little vague, “Gold has always been accepted without reference to any other guarantee.” When asked where the price of gold was headed in the next five years he said “measurably” “higher.”

Question: “Where will the price of gold be in 5 years?”
Greenspan: “Higher.”
Question: “How much?”
Greenspan: “Measurably.”

He told the CFR that “gold is a good place to put money these days given it’s value as a currency outside of the policies conducted by governments.”

So, the primary policy the Fed has – which is to put a floor under favoured markets and support U.S. bond and asset prices and give the process a complicated sounding title – has failed, according to the ‘Maestro’ who devised said policy.

What happens next? We don’t know but for once we would be inclined to follow Mr. Greenspan’s advice.

As we discussed last year, Mr. Greenspan is not the only person to have chaired a major central bank who views gold as a highly relevant strategic asset.

Mario Draghi, head of the ECB and former governor of the Bank of Italy, has this to say:

“Well you’re also asking this to the former Governor of the Bank of Italy, and the Bank of Italy is the fourth largest owner of gold reserves in the world, which is out of all proportion to the size of the country. But I never thought it wise to sell it, because for central banks this is a reserve of safety, it’s viewed by the country as such.”

“In the case of non-dollar countries it gives you a value-protection against fluctuations against the dollar, so there are several reasons, risk diversification and so on.”

The smart money continues to understand the importance of gold as diversification.

Marc Faber, who also spoke at the New Orleans Investment conference, summed up our view perfectly when he suggested that each individual should be their own central banker, holding the reserve currency that is gold as insurance against government bungling.

GOLDCORE MARKET UPDATE
Today’s AM fix was USD 1,205.75, EUR 958.09 and GBP 753.59    per ounce.
Yesterday’s AM fix was USD 1,228.00, EUR 963.67 and GBP 761.65 per ounce.
Gold fell $17.40 or 1.42% to $1,211.20 per ounce yesterday and silver slid $0.14 or 0.81% to $17.07 per ounce.

Gold for Swiss storage or immediate delivery dropped 0.7% to $1,203.22 an ounce in late trading in London. The yellow metal hit $1,201.53 today, its lowest since October 6th.

Gold for December delivery slid 1.8 % to $1,202.50 on the Comex in New York. Futures trading volume was 65% above the average for the past 100 days for this time of day, data compiled by Bloomberg show.
Silver for immediate delivery slipped 1.5% to $16.60 an ounce in London. Platinum fell 0.7% to $1,251.75 an ounce. Palladium lost 0.9% to $787.50 an ounce, after a five-day bull run.

Gold fell on the expected Fed announcement and confirmation that the Fed is to end QE and their highly unorthodox money printing and six year monthly bond purchasing programme.
The move was not unexpected by precious metals market participants and therefore the sudden sharp selling raised some eyebrows. Indeed, it has all the hallmarks of continuing manipulation of the gold and silver futures market.

If the mooted end of QE is bearish for gold and silver, then it is also equally bearish if not more so for overvalued stock and bond markets. Yet, those markets saw far less volatile trading and saw minor losses – the S&P closed down just 0.14%.

The move lower yesterday also took place despite very high global coin and bar demand in recent days which would ordinarily have led to higher prices. It also comes at a time of heightened geopolitical and economic concerns and the emergence of the Ebola virus. Not to mention, the bullish “Save Our Swiss Gold” initiative.

Is yesterday’s trading another sign of manipulation? If it walks like a duck and quacks like a duck …

Gold is testing support at $1,200/oz and below that is support at the triple bottom at $1,180/oz.
Prudent money will continue to dollar cost average into coins and bars on price weakness.

end

Silver still in backwardation in Shanghai and the price of silver still has a premium of 4%.

Once the premium goes to zero, then China will seek the silver metal from both the comex and the lBMA and possibly the SLV

if any metal there exists.

(courtesy Koos Jansen)

posted on 31 Oct 2014 by

The Great Chinese Silver Market Debate

Bloomberg came out on October 28 with an article about Chinese silver hitting a premium of 17 % this month.

Have a look at Bloomberg’s chart on Chinese silver premiums.

Regular readers know I’m one of the few that reports on the pure price of silver in China being cheaper than in London, because all Chinese commodity exchanges quote silver including 17 % VAT. If we subtract 17 % from the quoted prices, the pure price of silver in China is currently trading at a 4 % discount to London, not at a premium like Bloomberg states. As we can see in my chart below the premium is negative.

Shanghai Gold Exchange silver premium

By the way, silver is still trading in backwardation on the Shanghai Futures Exchange (SHFE), since August 6. This has caused the discount to decline to 4 %.

SHFE silver backwardation October 29, 2014

Obviously Bloomberg and I have a disagreement on the Chinese silver market – comparable to my disagreement with the World Gold Council on the Chinese gold market. Though, the Silver Institute agrees with me on the Chinese silver market. In their report The Chinese Silver Market, published in 2012, they stated: 

As mentioned earlier in this report, since the liberalization of the Chinese silver market, all
silver transactions are subject to 17% VAT in China. In other words, local smelters need to pay 17% tax on silver contained in imported concentrates (typically based on international prices). However, as domestic prices (excluding tax) have been trading consistently lower than the international price, it is not surprising that local smelters tend to prefer low silver content in imported concentrates. It is worth stressing here that silver prices quoted on commodity exchanges in China have already included a 17% VAT.

What is remarkable is that Bloomberg reports on a very high silver premium in China mainland, yet, they link this to a scheme in which traders export ingots labelled as acoustic wire to profit from a tax rebate. Quote:

Silver in China has been the most expensive relative to London in about three years as exporters stepped up overseas shipments to qualify for a tax rebate, draining inventories of the metal.

…exporters boosting shipments by classifying ingot as acoustic wire, said Liu Xu, a precious-metals analyst at Capital Futures Co. in Beijing.

…“It’s an open secret in the local silver industry that a lot of exports have been thinly-veiled attempts to profit from tax rebates,” Liu said. “There isn’t that much demand overseas for acoustic wire for stereos. Yet a lot of shipments this year have been labeled as wire.”

What’s wrong with this story? Why would any foreigner import silver ingots from China when it’s 14 % more expensive than in London? Doesn’t make sense right?

This is my view: it could very well be silver ingots are exported as acoustic wire from China because the pure price of silver in China is cheaper than in London (not more expensive as Bloomberg states). However, to arbitrage the price difference, foreign importers would need to be able to pay the pure price of Chinese silver, excluding VAT.

It can go like this. The exporter buys silver ingots, for example, on the SHFE and is required to pay the pure price plus 17 % VAT. When he would export this as ingots there is no VAT rebate for him from the government, this law was passed in 2008, so he would have to charge his trading partner the price of silver plus 17 % VAT to balance the VAT he paid at the SHFE. If the foreign importer is charged with VAT from another country he can’t get restitution, he would pay for the pure price of silver imported plus 17 %.

The Chinese government implemented the aforementioned law to withhold silver ingots/bullion from leaving the country. Of course silver is exported in many other forms, like in solar panels or acoustic wire. The next quote is from the law passed in 2008 that ended VAT rebates on silver ingot export.

Translated by my friend LK, gold investor from Hong Kong:

Department of Treasury, State Dept of Taxation Notice on Adjustment on Export Rebates of Textiles and other Commodities.

Document Number: Taxation[2008]111.

Issuing Unit: Department of Treasury, State Dept of Taxation

Issuing date: 2008-07-30

To each province, Self-Administrative Region, Municipal, Planning cities (bureaus), State Administration of Taxation, Finance Bureau of Xinjiang Production and Construction Corps:

At the approval of the State Department, export rebates for certain commodity products are adjusted as follows:

1. Some textile, garment export rebate is raised from 11% to 13%; Export rebate for certain bamboo products is raised to 11%. For exact details please see Appendix 1. 

Export rebates for these products are cancelled: Pine kernels, certain agricultural chemicals, certain organic arsine chemicals, taxol and its products, rosin, silver, No. 0 zinc, certain paint products, certain battery products, carbon anode. For exact information please see Appendix 2.

Implementation Timing

The aforementioned export rebate changes take place on Aug 1, 2008. Applicability is determined by the date specified on the form “Export of Goods Customs Declaration (for Export Rebates)”.

Appendix 2. List of goods no longer qualified for export rebates:

Screen Shot 2014-10-29 at 7.47.31 PM

If the exporter ships the ingots as acoustic wire he apparently receives a 17 % VAT rebate (the VAT of acoustic wire is paid back by the Chinese State Administration of Taxation to the exporter). In an article Bloomberg published October 30 they stated:

Outbound shipments of silver this year have at times been classified as acoustic wire as traders sought a 17 percent export rebate used to encourage domestic high-end manufacturing, Liu Xu, an analyst at Capital Futures Co., said Oct. 29.

There you have it, silver ingots don’t get a rebate when exported, acoustic wire does get a rebate. This is how the exporter can sell silver abroad for China’s cheaper pure price. So, the exporter found a way to arbitrage the price difference between Shanghai and London. If the difference is 4 %, both the exporter and the importer can have a piece of the pie. This scheme could perfectly cause high demand for silver in Shanghai and the concurrent backwardation on the SHFE. Bloomberg’s analysis, stating silver is trading at a premium in China, I think is incorrect – wouldn’t be the first time.

Exporting silver ingots as acoustic wire is another example of fraud and circumventing protectionism. Let’s hope governments will realize some day that capitalism can only thrive in free markets.

Koos Jansen

end

Pay attention to Andrew Maguire who has a pulse on demand for gold coming from the LBMA

(courtesy Andrew Maguire/others/GATA)

I know this much is true

Section:

11:40a ET Friday, October 31, 2014

Dear Friend of GATA and Gold:

Another day, another attack on the monetary metals in the futures markets, another commentary by London metals trader Andrew Maguire at King World News that the price decline has prompted huge offtake of real metal —

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/10/31_M…

— another commentary by the TF Metals Report’s Turd Ferguson about strange movements of metal in the Comex warehouses —

http://www.tfmetalsreport.com/blog/6272/information-deemed-be-reliable

— speculation by Colorado securities lawyer Avery Goodman and others that the attack is another coordinated central bank operation, this time to discourage support for the referendum campaign that would require Switzerland to commit more of its foreign exchange reserves to gold —

http://seekingalpha.com/instablog/337451-avery-goodman/3393985-what-lies…

— and more anguished calls to your secretary/treasurer from people seeking investment advice, wondering whether there’s any point in sticking around the monetary metals sector, calls that are silly not just because your secretary/treasurer is not an investment adviser but a mere scribe and archivist but also because ever since he appeared at the New Orleans Investment Conference last Saturday former Federal Reserve Chairman Alan Greenspan, supposedly a renowned authority, has been recommending gold:

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

http://www.washingtonpost.com/blogs/wonkblog/wp/2014/10/30/wonkbook-gree…

For whatever it may be worth your secretary/treasurer knows only this:

1) That for the time being central banks and the governments they control remain in charge of the gold price and most prices through the rigging mechanisms of gold reserve leasing and swapping and the futures markets, where they are able to deploy infinite money in secret.

2) That as the world’s economy continues to weaken, with wealth being transferred from the masses to the elites, central banks and the governments they control will resort to still more totalitarian methods to maintain their control.

3) That questions about these methods, such as those specified with supporting documents here —

http://www.gata.org/node/14606

— should be directed to central banks and the governments they control as well as to financial news organizations, though of course financial news organizations, especially in the West, remain unlikely ever to commit actual journalism in regard to gold particularly and central bank interventions generally.

4) That the World Gold Council, nominally the representative of the gold mining industry and gold investors, will continue to publish erroneous and misleading data about gold’s function in the international monetary system and obtuse and irrelevant reports like this one —

http://www.gold.org/news-and-events/press-releases/report-highlights-res…

— so that the council might seem busy while central banks wage uncontested war against the monetary metal.

5) That most gold and silver mining industry executives will continue to have no idea about the monetary nature of their product and the surreptitious mechanisms of its pricing and will remain silent and incurious even as the prices of their products sink well below the cost of production and the share prices of their companies fall to zero.

6) That, nevertheless, GATA will press on in pursuit of a constituency for free and transparent markets, limited and accountable government, and fair dealing among nations and peoples.

7) And that someday, some year, some decade, some century we shall know the truth and if it doesn’t make us free it at least will give us a clue about becoming so.

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

end

A huge commentary from Alasdair Macleod..

Alasdair tackles the time from 1983 to 2002 on China’s gold strategy. He strongly believes that China bought 20,000 tonnes from that time period and probably another 5-10,000 tonnes from 2002 until now. He is probably correct when he says that they had accumulated so much gold that they then allowed its private citizens to hoard as they already amassed a hoard untouched by the west.  If so this is a game changer!!

(courtesy Alasdair Macleod)

China’s gold strategy

China first delegated the management of gold policy to the People’s Bank by regulations in 1983.

This development was central to China’s emergence as a free-market economy following the post-Mao reforms in 1979/82. At that time the west was doing its best to suppress gold to enhance confidence in paper currencies, releasing large quantities of bullion for others to buy. This is why the timing is important: it was an opportunity for China, a one-billion population country in the throes of rapid economic modernisation, to diversify growing trade surpluses from the dollar.

To my knowledge this subject has not been properly addressed by any private-sector analysts, which might explain why it is commonly thought that China’s gold policy is a more recent development, and why even industry specialists show so little understanding of the true position. But in the thirty-one years since China’s gold regulations were enacted, global mine production has increased above-ground stocks from an estimated 92,000 tonnes to 163,000 tonnes today, or 71,000 tonnes* ; and while the west was also reducing its stocks in a prolonged bear market all that gold was hoarded somewhere.

The period I shall focus on is between 1983 and 2002, when gold ownership in China was finally liberated and the Shanghai Gold Exchange was formed. The fact that the Chinese authorities permitted private ownership of gold suggests that they had by then acquired sufficient gold for monetary and strategic purposes, and were content to add to them from domestic mine production and Chinese scrap thereafter rather than through market purchases. This raises the question as to how much gold China might have secretly accumulated by the end of 2002 for this to be the case.

China’s 1983 gold regulations coincided with the start of a western bear market in gold, when Swiss private bankers managing the largest western depositories reduced their clients’ holdings over the following fifteen years ultimately to very low levels. In the mid-eighties the London bullion market developed to enable future mine and scrap supplies to be secured and sold for immediate delivery. The bullion delivered was leased or swapped from central banks to be replaced at later dates. A respected American analyst, Frank Veneroso, in a 2002 speech in Lima estimated total central bank leases and swaps to be between 10,000 and 16,000 tonnes at that time. This amount has to be subtracted from official reserves and added to the enormous increase in mine supply, along with western portfolio liquidation. No one actually knows how much gold was supplied through the markets, but this must not stop us making reasonable estimates.

Between 1983 and 2002, mine production, scrap supplies, portfolio sales and central bank leasing absorbed by new Asian and Middle Eastern buyers probably exceeded 75,000 tonnes. It is easy to be blasé about such large amounts, but at today’s prices this is the equivalent of $3 trillion. The Arabs had surplus dollars and Asia was rapidly industrialising. Both camps were not much influenced by western central bank propaganda aimed at side-lining gold in the new era of floating exchange rates, though Arab enthusiasm will have been diminished somewhat by the severe bear market as the 1980s progressed. The table below summarises the likely distribution of this gold.

Gold Supply 31102014.jpg

Today, many believe that India is the largest private sector market, but in the 12 years following the repeal of the Gold Control Act in 1990, an estimated 5,426 tonnes only were imported (Source: Indian Gold Book 2002), and between 1983 and 1990 perhaps a further 1,500 tonnes were smuggled into India, giving total Indian purchases of about 7,000 tonnes between 1983 and 2002. That leaves the rest of Asia including the Middle East, China, Turkey and South-East Asia. Of the latter two, Turkey probably took in about 4,000 tonnes, and we can pencil in 5,000 tonnes for South-East Asia, bearing in mind the tiger economies’ boom-and-bust in the 1990s. This leaves approximately 55,000 tonnes split between the Middle East and China, assuming 4,850 tonnes satisfied other unclassified demand.

The Middle East began to accumulate gold in the mid-1970s, storing much of it in the vaults of the Swiss private banks. Income from oil continued to rise, so despite the severe bear market in gold from 1980 onwards, Middle-Eastern investors continued to buy. In the 1990s, a new generation of Swiss portfolio managers less committed to gold was advising clients, including those in the Middle East, to sell. At the same time, discouraged by gold’s bear market, a western-educated generation of Arabs started to diversify into equities, infrastructure spending and other investment media. Gold stocks owned by Arab investors remain a well-kept secret to this day, but probably still represents the largest quantity of vaulted gold, given the scale of petro-dollar surpluses in the 1980s. However, because of the change in the Arabs’ financial culture, from the 1990s onwards the pace of their acquisition waned.

By elimination this leaves China as the only other significant buyer during that era. Given that Arab enthusiasm for gold diminished for over half the 1983-2002 period, the Chinese government being price-insensitive to a western-generated bear market could have easily accumulated in excess of 20,000 tonnes by the end of 2002.

China’s reasons for accumulating gold

We now know that China had the resources from its trade surpluses as well as the opportunity to buy bullion. Heap-leaching techniques boosted mine output and western investors sold down their bullion, so there was ample supply available; but what was China’s motive?

Initially China probably sought to diversify from US dollars, which was the only trade currency it received in the days before the euro. Furthermore, it would have seemed nonsensical to export goods in return for someone else’s paper specifically inflated to pay them, which is how it must have appeared to China at the time. It became obvious from European and American attitudes to China’s emergence as an economic power that these export markets could not be wholly relied upon in the long term. So following Russia’s recovery from its 1998 financial crisis, China set about developing an Asian trading bloc in partnership with Russia as an eventual replacement for western export markets, and in 2001 the Shanghai Cooperation Organisation was born. In the following year, her gold policy also changed radically, when Chinese citizens were allowed for the first time to buy gold and the Shanghai Gold Exchange was set up to satisfy anticipated demand.

The fact that China permitted its citizens to buy physical gold suggests that it had already acquired a satisfactory holding. Since 2002, it will have continued to add to gold through mine and scrap supplies, which is confirmed by the apparent absence of Chinese-refined 1 kilo bars in the global vaulting system. Furthermore China takes in gold doré from Asian and African mines, which it also refines and probably adds to government stockpiles.

Since 2002, the Chinese state has almost certainly acquired by these means a further 5,000 tonnes or more. Allowing the public to buy gold, as well as satisfying the public’s desire for owning it, also reduces the need for currency intervention to stop the renminbi rising. Therefore the Chinese state has probably accumulated between 20,000 and 30,000 tonnes since 1983, and has no need to acquire any more through market purchases given her own refineries are supplying over 500 tonnes per annum.

All other members of the Shanghai Cooperation Organisation** are gold-friendly or have increased their gold reserves. So the west having ditched gold for its own paper will now find that gold has a new role as Asia’s ultimate money for over 3 billion people, or over 4 billion if you include the South-East Asian and Pacific Rim countries for which the SCO will be the dominant trading partner.

*See GoldMoney’s estimates of the aboveground gold stock by James Turk and Juan Castaneda.
**Tajikistan, Kazakhstan, Kyrgyzstan, Uzbekistan, India, Iran, Pakistan, and Mongolia. Turkey and Afghanistan are to join in due course.

end

The big paper story today:

(courtesy Reuters/GATA)

Bank of Japan takes over for Fed in pumping markets up

Section:

Futures Rally after Bank of Japan Ramps up Stimulus

By Rodrigo Campos
Reuters
Friday, October 31, 2014

U.S. stock index futures rallied on Friday alongside most markets globally after the Bank of Japan significantly ramped up its stimulus program just days after the U.S. Federal Reserve wound down its own package of economic incentives.

If futures’ gains hold after the open, the S&P 500 will test its record high set more than a month ago.

The BOJ’s board voted 5-4 to accelerate purchases of Japanese government bonds while tripling its purchases of exchange-traded funds and real-estate investment trusts.

At the same time, Japan’s $1.2 trillion Government Pension Investment Fund announced new allocations for its portfolio, including raising its holdings of domestic and foreign stock holdings to 25 percent each from 12 percent. A Nikkei newspaper report on this announcement on Thursday contributed to an afternoon rally in U.S. stocks. …

… For the remainder of the report:

http://www.reuters.com/article/2014/10/31/us-markets-stocks-idUSKBN0IK11…

end

And now Eric Sprott on the same subject as above:

One QE ends and another begins and still gold goes down, Sprott marvels

Section:

2:11p ET Friday, October 31, 2014

Dear Friend of GATA and Gold:

One “quantitative easing” program ends and another one begins and still the monetary metals go down, Sprott Asset Management’s Eric Sprott remarks in wonder to King World News today. He worries that the world economy is getting so weak that governments may close all markets before long. An excerpt from the interview is posted at the KWN blog here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/10/31_B…

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

end

Gold and silver demand keeps rising

(courtesy Lawrence Williams/Mineweb)

Gold and silver dive yet Chinese demand keeps rising

Following the confirmation of the end of the US Fed’s QE programme, gold and silver prices have come crashing down.

 Author: Lawrence Williams
Posted: Friday , 31 Oct 2014

LONDON (MINEWEB) –

Gold and silver prices have been on a sharp downwards path since the US Fed went ahead and announced the end of QE – helped by some big sales on the futures (paper gold) markets. Kick the gold bugs while they are down seems to be the mantra of the day. Given the end to US QE had been telegraphed months in advance, the latest precious metals price move could have been seen as somewhat surprising – but the big money knows when to strike to its maximum advantage. Gold this morning had been driven back to the $1 170 an ounce level and silver below $16 – the lowest since early 2010.  Both were showing a small pick-up at the time of writing.

But there are some factors which suggest the latest gold and silver price takedown may have been overdone. While QE in the US may be ending, that in Europe may be taking off again. Even in the US the Fed seems wary about allowing interest rates to increase and in Europe they are at rock bottom. But the big anomaly in the gold and silver price decline is again Asian demand. Contrary to many reports Chinese demand, as reported by the Shanghai Gold Exchange (SGE), appears to be taking off again in a big way.

Nick Laird of Sharelynx reports that the latest weekly withdrawals figure from the SGE hit 59.7 tonnes, which makes total Chinese gold demand – so far this year – over 1 600 tonnes. And if the big weekly withdrawal figures continue for the rest of the year, Chinese demand is again on the way to the 2 000 tonne mark. While SGE withdrawal levels are still well below those of 2013, as the chart below shows, they are getting back there after a hiatus period mid-year. The chart shows full-month withdrawals to September, and October is heading perhaps to the 220-230 tonne mark (close to record high levels), despite the SGE being closed for a week at the beginning of the month for the Golden Week holiday. Gold price and demand just doesn’t gel – but then it should be remembered that in 2013 Chinese demand was enormous, yet the gold price fell consistently throughout the year.

Chart courtesy of Nick Laird’s www.goldchartsrus.com

This all appears to be a great example of futures trading distorting the markets to the advantage of those with the big money which can play them. See: Futures markets keep precious metals prices depressedWhen we wrote this article it was primarily referring to futures trading on the American exchanges but we have since been reminded that the bulk of the trade in gold futures is on the London markets.

On a straight supply/demand basis current Chinese weekly demand is really close to total weekly global new mined supply. Add in Indian demand, which is at a sufficient level to worry the country’s government again with respect to its current account deficit given imported gold’s huge impact. This is also running at very high levels – perhaps at least 50% of that being seen in China. It is a little more difficult to get a handle on the Indian levels given the impact of smuggling due to the 10% import tax, but between them at the moment Chinese and Indian demand together look to be hugely in excess of global mined supply. And that is all, of course, without taking into account gold demand from the rest of the world.

So we have a huge anomaly developing again between gold supply and demand, together having some analysts wonder where on earth all this supply is coming from. The logical answer is perhaps leased gold from central banks, but as most of this appears to be disappearing into firm hands in the East which will not readily come back on the market, the big question is how can this leased gold ever be returned? The short answer is that it cannot.

But, we are living in a world which has spawned a global financial system built on unrepayable debt and money printing out of thin air – yet life goes on regardless. Will the whole system ever come crashing down…? Logic and history suggests it will – eventually. But eventually could be an awful long way ahead as long as the politicians can keep on convincing the general public that the system works. The old adage that you can fool some of the people all of the time, and all of the people some of the time is well in play – but is it becoming you can fool all of the people all of the time in this day and age?

 

And now for our more important paper stories today:

Early Friday morning trading from Europe/Asia

1. Stocks  up on  Asian bourses   with the lower yen  values   to 111.92

 1b USA vs Chinese yuan strengthens  (yuan weakens) to 6.11330

2 Nikkei up 756 points or 4.83%

3. Europe stocks up/Euro down USA dollar index up at 86.54.

3b Japan 10 year yield at .47%/Japanese yen vs usa cross now at 111.92/

3c  Nikkei now above 15,000

3d  Abe goes all in with another QE/it is now all up to Japan to stimulate the world/will be known

as the great Yen massacre!!!

3e  Japanese companies going bankrupt with the high yen vs dollar at over 111.

3fOil:  WTI  80.42   Brent:     85.36

3g/ Gold down/yen down;  yen above 111 to the dollar/

3h/ Japan is to buy the equivalent of 108 billion usa dollars worth of bonds per MONTH or $1.3 trillion

Japan’s GDP equals 5 trillion usa/thus bond purchases of 26% of GDP

3i  Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt.

3j Gold at $1172.00 dollars/ Silver: $16.12

4.  USA 10 yr treasury bond at 2.33% early this morning.
5. Details Ransquawk/Bloomberg/Deutche bank/Jim Reid

(courtesy zero hedge)

Shocking Bank Of Japan Trick And QE Boosting Treat Sends Futures To Record High

Two days ago, when QE ended and knowing that the market is vastly overstimating the likelihood of a full-blown ECB public debt QE, we tweeted the following:

It’s all up to the BOJ now

Little did we know how right we would be just 48 hours later.

Because as previously reported, the reason why this morning futures are about to surpass record highs is because while the rest of the world was sleeping, the BOJ stunned those few who were looking at Bloomberg screens with a decision to boost QE, announcing it would monetize JPY80 trillion in JGBs, up from the JPY60-70 trillion currently and expand the universe of eligible for monetization securities. A decision which will forever be known in FX folklore asthe great Halloween Yen massacre.

In retrospect, the BOJ’s announcement should have been anticipated. Recall that yesterday, the biggest non-story was the regurgitated headline that the Japanese Pension fund would boost its holdings of domestic and foreign stock from 12% to 25%, while slashing its Japan bond holdings from 60% to 35%, something that had been leaked previously. The full changes:

  • Domestic stocks raised to 25% from 12%
  • Japan bonds cut to 35% from 60%
  • Overseas shares 25% from 12%
  • Foreign debt 15% from 11%

But while Japan’s eagerness to bet its retirees lifetime savings on GoPro had been well-known previously, it also meant that someone would have to step in and buy the hundreds of billions of JGBs the GPIF had to sell in what over the past year became the world’s most illiquid bond market, often going for days without a single transaction.

That someone, a few hours ago, was revealed to be the Bank of Japan, which in addition to now clearly becoming the only buyer of only resort for Japanese bonds, has tipped its hands that it is going all in on pushing the Nikkei higher at all costs, even if it means crushing the domestic economy, something which even Keynesian “experts” say will be the outcome if the Yen continues to slide below 110 for the dollar.

So for all those wondering why futures are back to all time highs, here is the reason:

  • ITALIAN SEPT. UNEMPLOYMENT RATE RISES TO 12.6%, MATCHING RECORD

No wait, sorry, that’s reality – something that hasn’t mattered to markets since 2008. Here is the reason, all thanks to CTRL-P:

  • KURODA SAYS EASED TO MAINTAIN POSITIVE CHANGES IN EXPECTATIONS
  • KURODA: TODAY’S DECISION SHOWS BOJ’S UNWAVERING DETERMINATION

In other words, several days after Larry Fink mysteriously visited Abe, the BOJ announced it would do everything in its power push the Nikkei into green for the year, which it did with its announcement overnight, and to truly crush the local population’s buying power.

Kuroda also had some truly comedic one liners:

  •  KURODA: DON’T THINK EXIT FROM EASING WILL BE DIFFICULT

And now that Japan has gone all in on runaway inflation, we expect that Abe’s reign of terror to be cut short as finally the people’s anger at this Keynesian madman on top of it all will finally explode.

The good news in all of this is that the desperation is increasingly palpable, and since Japan is about to go pro in deflation exporting to the US and mostly Europe, expect even more violent reprisals from the world’s other central banks and so on until finally it is only central banks left trading with each other. Much like today.

In the meantime, here is what is going on:

  • S&P 500 futures up 1.2% to 2011.6
  • Stoxx 600 up 1.4% to 335.5
  • US 10Yr yield up 1bps to 2.32%
  • German 10Yr yield down 1bps to 0.84%
  • MSCI Asia Pacific up 1.3% to 142.2

And the punchline:

  • Gold spot down 2.2% to $1172.3/oz

Because in the new normal diluting your currency even more is even more negative for undilutable currencies.

Some more details on what the latest massive central bank intervention did to what only laughably can one now call “markets” via BBG: European shares rise with the bank and financial services sectors outperforming and media, retail underperforming. Asian stocks rise led by Nikkei as Bank of Japan’s Kuroda raises stimulus to another record. Euro-area inflation data matched forecasts. Companies including RBS, WPP, IAG, Banco Popular, BNP, AB-InBev released results. German Xetra trading halted by computer malfunction. The French and Italian markets are the best-performing larger bourses, Swedish the worst. The euro is weaker against the dollar. French 10yr bond yields fall; Irish yields decline. Commodities decline, with silver, gold underperforming and natural gas outperforming.

Bulletin headline from Bloomberg and RanSquawk

  • The BoJ takes centre stage overnight after unexpectedly increasing their QQE programme by JPY 10trl, sending the Nikkei 225 surging higher by 4.8% to its highest level since 2007, the e-mini S&P through 2,000, USD/JPY above 111.00 to its highest level since Jan’08 and spot gold to its lowest level since 2010.
  • ECB’s Nowotny lifts Bunds after deviating from his usual hawkish script by adopting a never say never approach to an ECB QE programme.
  • Looking ahead, attention turns towards US personal income & spending, Chicago PMI and Univ. of Michigan confidence.
  • Treasuries extend second week of losses after Fed ends QE as Bank of Japan expands what was already an unprecedentedly large monetary-stimulus program, boosting stocks and sending the yen tumbling.
  • BOJ, which also cut its forecasts for inflation and growth, voted to raise annual target for enlarging the monetary base to JPY80t ($724b), up from JPY60t-JBP70t
  • Japan’s $1.1t Government Pension Investment Fund announced it will put half its holdings in local and foreign stocks, start investing in alternative assets and cut its domestic bond allocations to 35% of assets from 60%
  • Euro-area inflation rose 0.4% in October, up from a five-year low in October and in line with median estimate in Bloomberg survey; a separate report showed unemployment holding at 11.5% in September
  • Russia’s central bank increased its key interest rate to 9.5% from 8%, more than forecast, bringing it to the highest level since it was introduced 13 months ago to halt a currency run that’s stoking inflation
  • Chinese bank deposits dropped following a crackdown on lenders manipulating their numbers and “illicit” means of attracting money, threatening to weigh on credit growth and hinder efforts to reignite the economy
  • Hong Kong protesters said they may attempt to visit Beijing next week to seek talks with China’s top leaders while the nation plays host to a global summit
  • Lloyds Banking Group Plc may still register Scottish Widows Plc, its 200-year-old Scottish insurance division, in England even after voter rejected independence in a referendum last month, said two people with direct knowledge of the deliberations
  • Critics and allies agree Israel PM Netanyahu has much to gain on home front by defying Obama; the latest falling-out was sparked by Israel’s plan to build more than 1,000 homes for Jewish residents in areas of Jerusalem the Palestinians claim for their hoped-for state
  • Sovereign yields mostly lower. Asian stocks surge, led by Nikkei +4.8% to highest in seven years. European stocks, U.S. equity-index futures gain. Brent crude lower, copper -1.1%, gold -2.2%

ASIA

JGBs trade up 6 ticks at 146.68, after paring their earlier sharp gains as Japan’s GPIF panel approved cutting JGB allocation to 35%, according to sources. Prices touched a fresh record high after the BoJ unexpectedly increased its JGB purchases by JPY 30trl per year. The Nikkei 225 closed up 4.8%, at its highest level since 2007, after the BoJ unexpectedly increased their QQE program. Furthermore, the index was also supported by reports that Japan’s GPIF panel approved raising domestic stock holding to 25%, according to government sources. The Hang Seng closed up 1.3% after opening at its best levels since Sep. 25, while the Shanghai Comp closed up 1.2%, both indices bolstered by several upbeat corporate earnings.

FIXED INCOME & EQUITIES

The aforementioned action taken by the GPIF very much set the tone for the European open, with cash futures opening firmly in the green (Eurostoxx 50 currently +1.7%). On a sector specific basis, financial names lead the way for Europe following strong earnings reports from RBS (+3.4%) and BNP (+3.9%). However, gains for the sector have been capped following further downward momentum for Italian banks after Moody’s have initiated a review for a potential downgrade on various peripheral banks.

Despite opening lower, the downside for Bunds was short-lived following some comments from ECB’s Nowotny who went against the grain of his usual hawkish rhetoric, more specifically, the central banker said never say never to QE in Eurozone, while refusing to rule out expanding the purchasing programme to include more corporate bonds. This saw a gradual turnaround in Bunds as they broke above 151.00, with further positive sentiment provided by, a weak German retail sales report and the fact that the GPIF have increased ratio of foreign bonds to 15% vs. Prev.11%.

FX

The main focus for FX markets today has been the broad-based USD strength which has dominated a bulk of the price action in FX markets and pushed JPY lower against its major counterparts with USD/JPY breaking above 111.00 to reach its highest level since Jan’08. Elsewhere, NZD saw some strength overnight after Fonterra announced that China has lifted its temporary suspension on base powder exports which has been in place since August 2013. Despite initially, being out-muscled by the greenback, the RUB clawed back some ground after the Russian central bank unexpectedly hiked rates by 150bps, with the market looking for just a 50bps cut. However, the move lower in USD/RUB was capped by the bank not abolishing rule-based interventions.

COMMODITIES

Movements in the USD-index have dictated the state of play for the commodity complex, with spot gold falling to its lowest level since 2010, while both WTI and Brent crude futures reside in the red. For base metals, copper is poised for its first monthly advance since July ahead of tomorrow’s Chinese official PMI release with the red metal benefitting from improved Asian investor appetite. More specifically for energy prices, Brent crude is heading for a sixth consecutive loss which would be the longest decline since 2002 as global supplies and the stronger USD continue to weigh on investor sentiment.

(courtesy zero hedge)

Markets Explode Higher As Bank Of Japan Goes All-In-er; Increases QE To JPY 80 Trillion/month

UPDATE: *NIKKEI 225 EXTENDS ADVANCE TO 5%

NKY is up 1000 points from FOMC

and what do u expect to happen to JGBs when Stocks rip 1000 points… yep they’re rallying!

  • Yield on 10-yr govt bond declines 3.5 bps to 0.435%, while 20-yr yield also slides 3.5bps to 1.285%, both lowest since April 2013.
  • 5-yr yield falls 1 bp to 0.110%, level unseen since March 2013
  • Lead 10-yr bond futures climb to record 146.78

In a surprise move given all the recent congratulatory bullshit from Abe and Kuroda on breaking the back of Japan’s deflation and bring about recovery (forgetting to mention record high misery index, surging bankruptcies and a crushed consumer), the Bank of Japan (by a 5-4 vote) raised its bond-buying program from JPY 70 trillion to 80 trillion… and triple its ETF buying to JPY 3 trillion. This move, on the heels of more confirmation of broader foreign asset purchases in Japan’s GPIF sent USDJPY instantly gapping 1 big figure higher to 110.30 and Nikkei futures instantly rose 400 points. S&P futures are also surging. Gold and silver are tanking and TSY bonds are selling off.

  • *BOJ UNEXPECTEDLY TARGETS BIGGER EXPANSION OF MONETARY BASE
  • *BOJ TARGETS 80T YEN ANNUAL EXPANSION IN MONETARY BASE
  • *BOJ SEES RISKS IN CHANGING DEFLATIONARY MINDSET
  • *BOJ AIMS FOR ANNUAL INCREASE OF 80T YEN IN JGB HOLDINGS
  • *BOJ EXPANDS PURCHASES OF ETFS TO 3T YEN
  • *BOJ: ETFS TRACKING JPX-NIKKEI INDEX 400 ELIGIBLE FOR PURCHASE
  • *BOJ: WILL CHECK RISKS, ADJUST POLICY AS APPROPRIATE

BoJ Statement

This was a double whammy though as Japan also announced it was shifting GPIF asset allocations…

From this…

To this…

  • GPIF’s current portfolio targets are 60% for Japanese bonds, 12% each for local and overseas stocks, 11% for foreign bonds, 5% for short-term assets
  • GPIF will today boost allocation targets for Japanese and foreign stocks to 25% each, while reducing its domestic debt allocation to 35%

And the result…

  • *YEN DROPS TO 6-YR LOW AT 110.12 PER DOLLAR AFTER BOJ
  • *NIKKEI 225 SURGES MOST SINCE JUNE 2013 AFTER BOJ ADDS TO EASING

Nikkei 225 is up 700 points from this afternoon’s 2-week old headline and broken markets!!

S&P futures are surging…

Gold was pushed lower…

Ironically Gold is up in JPY terms…

Treasuries are being sold heavily…

*  *  *

It seems money does grow on trees…

*  *  *

A gentle reminder – Blackstone’s Larry Fink met Shinzo Abe two days ago… (the same Blackstone that warned of carnage if selling ever begins in corporate bond land)… clearly the Japanese panicked!

Welcome to your fundamental-driven markets!! The farce is almost complete. The day after The Fed stops QE, The BoJ raises its bond AND STOCK buying program!!!!

*  *  *

Coming soon…

Even though Kuroda said Japan could control hyperinflation through monetray policy..

end

Now the war of words:

Fed Launches First Currency War Salvo, Tells ECB Not To Push Too Far

Now that The Fed is (however briefly) out of the money-printing business, it appears to have turned its attention to the rest of the world’s “despicable monetary policy” actions and fired what seems to be the first warning shot of ‘currency wars 2.0’, as MarketNews reports:

  • ECB SOURCE SAY EUR3 BILLION BALANCE SHEET TARGET NOT IN THE CARDS: MNI
  • ECB SOURCE FED HAS NOTICED EUR SLIDE AND ECB MUST NOT PUSH TOO FAR: MNI

One wonders how long before Jack Lew also proclaims Japan a ‘currency manipulator’ (and, gasp, the Eurozone) especially after Germany’s Wolfgang Schaeuble reminded the world this morning that “growth can’t be helped by printing money.” You don’t say…

The EUR reacted…

 

end
The following commentary was written just prior to the announcement of huge stimulus coming from Japan.
The author believes that the plunging yen will lead to 140% surge in bankrupticies
(courtesy TSR report)

Careful What You Wish For: Plunging Yen Leads To 140% Surge In Bankruptcies

Due to the depreciation of the JPY, leading to soaring raw material costs (crushing SME profitability), TSR reportsthat Japanese bankruptcies year-to-date in 2014 are up a stunning 140% having unerringly surged since Abenomics was unleashed. Despite constant reassurance and propaganda from various political leaders each and every night that Japan is on the right track… it simply is not and if there is a better indicator of the death spiral Abe has unleashed than surging bankruptcies, we are unaware of one.

Bankruptcies are soaring since Abenomics began…

As TSR additionally notes,

By industry, 81 of the transportation industry such as automobile cargo transportation industry (composition ratio 37.9%) is at most, fuel prices remain high is affected. Next, review the manufacturing industry 44 (20.6%), Wholesale 41 (19.2%), service industries other 19 cases (8.9%), and has spread retailing 11 (up 5.1%) in a wide range of industries.

Depreciation of the yen impact leads to soaring raw materials, profit deterioration deplete the strength of small and medium-sized enterprises. In addition to the deterioration in earnings, depending on trends of the future of the exchange rate, are also concerned about such further sales slump due to price competition.

But as Bloomberg reports,

“We’ve seen that the threat of an exchange rate weaker than 110 yen per dollar made a lot of people uneasy, so if the yen were to strengthen to 105 per dollar, I doubt we’d hear any complaints.”

A survey released last month by the Osaka Chamber of Commerce and Industry showed the majority of respondents viewed an exchange rate of 95-105 yen per dollar to be ideal. Japan Chamber of Commerce and Industry Chairman Akio Mimura said this month a “pleasing” level for the yen would be 100 per dollar, Kyodo reported.

An increasingly weaker yen won’t necessarily benefit Japan’s large exporters. Nintendo Co. booked a 15.5 billion-yen ($142 million) gain in the fiscal first half from the lower currency.

The median forecast among analysts surveyed by Bloomberg News is for the currency to weaken to 114 per dollar by the end of 2015 as U.S. and Japanese monetary policies diverge. It hasn’t been that weak since 2007.

Even though Abe and his cronies are starting to wake up to the reality…

Prime Minister Shinzo Abe said on Oct. 7 that yen depreciation is hurting small companies and households, almost two years after triggering the currency’s slide with a call for unlimited monetary easing to end deflation.

Little more than a week later, Kuroda said a weak yen can depress the non-manufacturing sector and real incomes, before reiterating on Oct. 28 that declines in the currency have been positive overall for Japan’s economy.

Confidence among small businesses unexpectedly fell this month, according to a survey of 1,000 companies by Shoko Chukin Bank released Oct. 28. The measure languished for a seventh month below the line that signals a balance between optimists and pessimists.

*  *  *

And so – if you are betting on NKY strength… reliant on JPY weakness… think again. Abe and Kuroda are boxed in.

end

Kyle Bass talks on the absurdity of today’s huge stimulus from Japan:

(courtesy zero hedge/Kyle Bass (expert on Japanese economy)

Only A Few More QEs To Go Until Argentina

Because nothing says economic strength like nominal equity market gains

A gentle reminder from the past…

Amid the euphoria… Kyle Bass provided a few minutes of sanity this morning in an interview with CNBC’s Gary Kaminsky. Bass starts by reflecting on the ongoing (and escalating) money-printing (or balance sheet expansion as we noted here) as the driver of stock movements currently and would not be surprised to see them move higher still (given the ongoing printing expected).

http://plus.cnbc.com/rssvideosearch/action/player/id/3000143907/code/cnbcplayershare

However, he caveats that nominally bullish statement with a critical point, “Zimbabwe’s stock market was the best performer this decade – but your entire portfolio now buys you 3 eggs” as purchasing power is crushed. Investors, he says, are “too focused on nominal prices” as the rate of growth of the monetary base is destroying true wealth. Bass is convinced that cost-push inflation is coming (as the velocity of money will move once psychology shifts) and investors must not take their eye off the insidious nature of underlying inflation – no matter what we are told by the government (as they will always lie when its critical). Own ‘productive assets’, finance them at low fixed rates (thank you Ben)…

*  *  *

Just ask the Venezuelans…

end

Last night, we had an agreement between Russia and Ukraine on supplying gas to Europe.

The money will be lent to the Ukraine to purchase the gas from the iMF.  Thus the Ukraine goes deeper into debt

(courtesy zero hedge)

Thank You US Taxpayers: Russia-Ukraine Agree Terms On Gas-Supply Through March

Good news for the cold-showering, snow-covered Ukrainians… Russia has reached an interim agreement to supply natural gas to Ukraine through March according to Bloomberg. Of course, this will be paid for by more IMF loans (thank you US Taxpayer), pushing Ukraine further into debt and more dependent upon the West.

  • *RUSSIA CONFIRMS GAS SUPPLY RESUMPTION TERMS AGREED WITH UKRAINE
  • *GAZPROM, NAFTOGAZ CEOS SIGN AMENDMENT TO CONTRACT
  • *RUSSIA, UKRAINE, EU AGREEMENT TO COVER DELIVERY THROUGH MARCH

Terms…

  • *OETTINGER: RUSSIA TO CHARGE UKRAINE $385/KCM THROUGH MARCH
  • *UKRAINE READY TO IMMEDIATELY PAY $1.45B OF GAS DEBT: OETTINGER
  • *NAFTOGAZ TO PAY $1.6B AS 2ND GAS DEBT INSTALLMENT BY YEAR-END

Paid for by US taxpayers…

  • *UKRAINE TO USE EU, IMF AID TO PAY FOR RUSSIAN GAS: OETTINGER

As Bloomberg reports,

Ukraine and Russia reached an interim natural-gas supply deal in talks brokered by the European Union to secure flows before the heating season, a Russian Energy Ministry spokeswoman said.

The accord agreed by Russian Energy Minister Alexander Novak, his Ukrainian counterpart, Yuri Prodan, and EU Energy Commissioner Guenther Oettinger will enable resumption of deliveries of gas from Russia to Ukraine after they were halted in June in a pricing and debt conflict.

Russian Energy Ministry spokeswoman Olga Golant, speaking by phone, confirmed the agreement.

The 28-nation EU was seeking to avoid a repeat of 2006 and 2009, when disputes between the former Soviet republics over gas debts and prices led to fuel transit disruptions and shortages across Europe amid freezing temperatures.

AP reports,

Moscow and Kiev have clinched a deal that will guarantee that Russian gas exports flows into Ukraine throughout the winter despite their intense rivalry over the fighting in eastern Ukraine.

In Thursday’s signing ceremony following protracted negotiations, the two sides promised to get the gas flowing into Ukraine again after a long and bitter dispute over payments.

EU Commission President Jose Manuel Barroso announced the “very important agreement” between the two sides.

Talks to guarantee that Russian gas imports flow into Ukraine throughout the winter appeared to be at an impasse Thursday because of doubts over payments from Kiev.

A European Union official says the negotiations, which were supposed to produce an agreement Wednesday, broke up inconclusively early Thursday, with a draft for a ‘common understanding’ sent to Moscow and Kiev for consideration. The official asked not to be named because an agreement had yet to be reached.

Ukrainian Prime Minister Arseniy Yatsenyuk said the amount his government would pay for Russian gas would fall in line with global oil prices, which have tumbled in recent weeks.

Yatsenyuk said at a Cabinet meeting in Kiev that Ukraine could pay $365 per 1,000 cubic meters from the start of next year, down from the $385 rate agreed earlier this month. He said that figure may be adjusted downward to $378 until the end of the year.

Russian President Vladimir Putin and his Ukrainian counterpart, Petro Poroshenko, agreed earlier this month on the broad outline of a deal, but financial issues, centering on payment guarantees for Moscow, have since bogged down talks.

The EU has said previously that Ukraine would settle its energy debt to Russia with a $1.45 billion payment by the end of the month and $1.65 billion more by the end of the year. It has said for new gas deliveries, Ukraine would pay $385 per 1,000 cubic meters, which Russia should deliver following advance payments by Ukraine.

*  *  *

 end
Please pay attention to the following.  Putin is announcing to the west that there is going to be a new world order.
Study the 10 points carefully!!
(courtesy zero hedge)

Putin To Western Elites: Play-Time Is Over

Via Club Orlov blog,

Most people in the English-speaking parts of the world missed Putin’s speech at the Valdai conference in Sochi a few days ago, and, chances are, those of you who have heard of the speech didn’t get a chance to read it, and missed its importance. Western media did their best to ignore it or to twist its meaning. Regardless of what you think or don’t think of Putin (like the sun and the moon, he does not exist for you to cultivate an opinion) this is probably the most important political speech since Churchill’s “Iron Curtain” speech of March 5, 1946.

In this speech, Putin abruptly changed the rules of the game. Previously, the game of international politics was played as follows: politicians made public pronouncements, for the sake of maintaining a pleasant fiction of national sovereignty, but they were strictly for show and had nothing to do with the substance of international politics; in the meantime, they engaged in secret back-room negotiations, in which the actual deals were hammered out. Previously, Putin tried to play this game, expecting only that Russia be treated as an equal. But these hopes have been dashed, and at this conference he declared the game to be over, explicitly violating Western taboo by speaking directly to the people over the heads of elite clans and political leaders.

The Russian blogger chipstone summarized the most salient points from Putin speech as follows:

1. Russia will no longer play games and engage in back-room negotiations over trifles. But Russia is prepared for serious conversations and agreements, if these are conducive to collective security, are based on fairness and take into account the interests of each side.

2. All systems of global collective security now lie in ruins. There are no longer any international security guarantees at all. And the entity that destroyed them has a name: The United States of America.

3. The builders of the New World Order have failed, having built a sand castle.Whether or not a new world order of any sort is to be built is not just Russia’s decision, but it is a decision that will not be made without Russia.

4. Russia favors a conservative approach to introducing innovations into the social order, but is not opposed to investigating and discussing such innovations, to see if introducing any of them might be justified.

5. Russia has no intention of going fishing in the murky waters created by America’s ever-expanding “empire of chaos,” and has no interest in building a new empire of her own (this is unnecessary; Russia’s challenges lie in developing her already vast territory). Neither is Russia willing to act as a savior of the world, as she had in the past.

6. Russia will not attempt to reformat the world in her own image, but neither will she allow anyone to reformat her in their image. Russia will not close herself off from the world, but anyone who tries to close her off from the world will be sure to reap a whirlwind.

7. Russia does not wish for the chaos to spread, does not want war, and has no intention of starting one. However, today Russia sees the outbreak of global war as almost inevitable, is prepared for it, and is continuing to prepare for it. Russia does not war—nor does she fear it.

8. Russia does not intend to take an active role in thwarting those who are still attempting to construct their New World Order – until their efforts start to impinge on Russia’s key interests. Russia would prefer to stand by and watch them give themselves as many lumps as their poor heads can take. But those who manage to drag Russia into this process, through disregard for her interests, will be taught the true meaning of pain.

9. In her external, and, even more so, internal politics, Russia’s power will rely not on the elites and their back-room dealing, but on the will of the people.

To these nine points I would like to add a tenth:

10. There is still a chance to construct a new world order that will avoid a world war. This new world order must of necessity include the United States—but can only do so on the same terms as everyone else: subject to international law and international agreements; refraining from all unilateral action; in full respect of the sovereignty of other nations.

To sum it all up:

play-time is over. Children, put away your toys. Now is the time for the adults to make decisions. Russia is ready for this; is the world?

*  *  *

Full text of Vladimir Putin’s speech and a question and answer session at the final plenary meeting of the Valdai International Discussion Club’s XI session in Sochi on 24 October 2014 can be found here

end

This did not last long.  After rising 5% yesterday, the Russian rouble crashes the most in 6 years even though the interest rate was raised today.

Putin is not a happy camper!

(courtesy zero hedge)

Despite Surprise Rate-Hike, Russian Ruble Crashes Most In 6 Years

Yesterday’s record-breaking surge in the Rubleappears, as we warned, to have been front-running today’s rate-hike announcement… and despite its surprise size, it is disappointing the market. The 5%-plus swing higher in the Ruble yesterday has been notably retraced as the Russian currency plunges (biggest drop in almost 6 years) after the central bank hiked rates 150bps(expectations were broadly of a 50bps hike) but it appears the ‘whisper’ number was a 200bps hike and a shift in FX policy to more active intervention. The inituial rip rally instantly faded and despite low liquidity due to Russian holidays, USDRUB is back over 43 – which would be a new record low close if it holds.

Russian Central Bank disappointed…

  • *RUSSIAN CENTRAL BANK RAISES KEY RATE TO 9.50% (up from 8%) 
  • *BANK OF RUSSIA DOESN’T ANNOUNCE CHANGES TO FX POLICY
  • *BANK OF RUSSIA SEES SIGNS FOR SLOWING INFLATION IN MID-TERM
  • *BANK OF RUSSIA READY TO EASE IF EXTERNAL CONDITIONS IMPROVE

22 of 31 economists in Bloomberg survey forecast 50bps increase; 2 predicted move to 9%; increases of 25bps and 75bps forecast by 1 each; 5 economists projected no change

The reaction:

  • *RUBLE EXTENDS DECLINES, WEAKENS 2.9% VS BASKET

Biggest plunge in almost 6 years

Analysts react:

  • *RUSSIAN RATE RISE WON’T `SIGNIFICANTLY’ SUPPORT RUBLE: NORDEA
  • *RUBLE WEAKNESS IS `BEYOND SPHERE OF MONETARY POLICY’: NORDEA
  • *RBS: RATE RISE WON’T ELIMINATE FX SHORTAGE BEHIND RUBLE DROP

The weakness has prompted furtherremarks from the central bank:

  • *BANK OF RUSSIA CONDUCTS INTERVENTIONS IN LINE WITH FX POLICY
  • *BANK OF RUSSIA INTERVENES ONLY AT EDGE OF RUB FLOATING CORRIDOR
  • *BANK OF RUSSIA: TIGHTENING HASN’T YET OFFSET IMPACT OF WEAK RUB

end

Opening Portuguese 10 year bond yield:  3.33% down one basis point
Closing Portuguese 10 year bond yield: 3.21% down 13 basis point from this morning.
Opening Japanese 10 year bond yield: .47% par from yesterday
Closing Japanese 10 year bond yield: .46%down 1 in basis points from this morning.
And now for our more important currency crosses this Friday morning:
EUR/USA:  1.2576  down .0037

USA/JAPAN YEN  111.65   up 2.65

GBP/USA  1.6004 up .0003

USA/CAN  1.1191 down 0003

This morning in  Europe, the euro is well down, trading now just below the 1.26 level at 1.2576

  as Europe reacts to deflation and bourses crumble. Abe went all in with Abenomics with another round of QE purchasing 80 trilllion yen from 70 trillion. The yen is down a ton and it closed in Japan falling by 265 basis points at

111.91 yen to the dollar.  The pound is marginally up from Wednesday as it now trades just above the 1.60 level to 1.6003.
The Canadian dollar is up trading at 1.1191 to the dollar.

 Early Thursday morning USA 10 year bond yield:  2.33% !!!    up in  basis points from  Thursday night/

USA dollar Index early Thursday morning: 86.54 up 39 cents from Thursday’s close

end

The NIKKEI: Friday morning up 104 points or 0.67%

Trading from Europe and Asia:
1. Europe  all in the green

2/    Asian bourses all 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/Australia in the green/India in the green/Japanese Nikkei in the green.

Gold early morning trading:  $1172.00

silver:$ 16.12

Your closing Spanish 10 year government bond Friday/ down 7 in basis points in yield from Wednesday night.

Spanish 10 year bond yield:  2.09% !!!!!!

Your Friday closing Italian 10 year bond yield:  2.36  down 11 in basis points:

trading 27 basis points higher than Spain:

 IMPORTANT CLOSES FOR TODAY

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

Euro/USA:  1.2531 down .0076

USA/Japan:  112.22 up 2.99

Great Britain/USA:  1.5994  down .0002

USA/Canada:  1.1271 up .0077

The euro fell quite a bit in value during this afternoon’s  session, and it was down  by closing time , closing well below the 1.26 level to 1.2531.  The yen was down a tonne during the afternoon session,and it lost 299 basis points on the day closing well above the 112 cross at 112.22.   The British pound lost some ground  during the afternoon

session but was down on the day breaking the 160 barrier at 1.5994.  The Canadian dollar was down a lot in the afternoon and was down on the day at 1.1271 to the dollar.

Currency wars at their finest today.

Your closing USA dollar index:   86.73   up 73 cents  on the day!!!!

your 10 year USA bond yield ,up 3 in basis points on the day: 2.34%

European and Dow Jones stock index closes:

England FTSE up  82.92 or 1.28%

Paris CAC  up 91.85 or 2.22%

German Dax up 212.03 or 2.33%

Spain’s Ibex up 214.10 or  2.09%

Italian FTSE-MIB up 589.38    or 3.07%

The Dow: up 194.21   or 1.13%

Nasdaq; up 60.89   or 1.33%

OIL:  WTI 80.58

Brent: 86.01

end

And now for your big USA stories

Today’s NY trading:

Today will be known as the Halloween Yen (and Gold/silver massacre)

(courtesy zero hedge)

The Halloween Yen Massacre Sends Market To All-Time Highs

Headlines:

  • USDJPY rose 2.7% today – biggest day in 18 months back to Oct 2007; +3.7% on the week – bighest week since Dec 2009
  • Nikkei +7.7% today – biggest day since March 2009; +10% on the week – biggest week since Dec 2009
  • Russell 2000’s up over 6% – best month in 15 months
  • Russell +1.2% year-to-date
  • Nasdaq at March 2000 highs
  • 5Y yields up 12bps on the week – biggest increase in 6 months
  • 2Y yields up 11bps on the week – biggest increase in over 3 years
  • 5s30s flattened 10bps on the week – biggest flattening in 7 months
  • Silver -6.1% on the week – worst week in 16 months
  • Gold -4.7% on the week – worst week in 16 months

Perhaps the look on Jeff Cox’s face sums up the day as talking head after talking head stepped up to reassure investors that the market is not beholden to central banks… despite the most in-your-face example of it since the PPT in 2008…
Oddly, despite all the mainstream media hype, being “short” the weakest balance sheet companies(based on Goldman’s “most shorted” index) has actually outperformed all major stock indices year-to-date

But year-to-date bonds remain the biggest winners, silver the big laggard and the S&P up exactly the same amount as the USD….

October ended up being quite a month for stocks… best month for Small Caps in 15 months

And off the Bullard QE4 lows…

as the week’s strength was all about fundamentals…

The day was odd to say the least – all the action occurred overnight and stocks actually faded off opening highs all day… until the close when we melted up…

As any question of sustainability was thrown out the window as VIX was heavily bid… until the late day when it melted up

HY Credit was not buying the exuberance either…

as stocks and bonds swung around each other…

Of course it was really all about USDJPY and Nikkei – that is a 1230 point rally in the Nikkei! and a 3 handle rip in USDJPY

Kuroda is happy

Nikkei’s move since the FOMC in context

On the week, Treasuries closed higher in yield with a notable bear flattener… (30Y +2bps, 5Y +12bps)

The USDollar was strong all week, especially post FOMC as EUR and JPY weakness dominated

Commodities were weak as the US rallied but PMs were crushed…

Charts: Bloomberg

end

The big story last week as the world shuns the dollar!

(courtesy Simon Black/ the Sovereign Man

The Dollar Decline Continues: China Starts Direct Convertibility With Asia’s #1 Financial Hub

Submitted by Simon Black via Sovereign Man blog,

Earlier this week some of the biggest financial news of the year made huge waves all over Asia.

Yet in the Western press, this hugely important information has barely even been mentioned.

Singapore dollar news The dollar decline continues: China begins direct convertibility to Asias #1 financial center

While this is ignored in the US so far, it’s front page news in Asia

So what’s the news?

The Chinese government announced that the renminbi will become directly convertible with the Singapore dollar… effective immediately.

Singapore-Development-Growth

It’s clear this deal has been in the works for a while, and it’s another major step towards the continued internationalization of the renminbi and unseating of the dollar as the world’s dominant reserve currency.

For decades the renminbi has been a tightly controlled currency. It’s only been in the last few years that the Chinese government started loosening those controls, primarily in response to the obvious need for a dollar competitor.

The entire world is screaming for an alternative to the dollar and the US government.

Since the end of World War II, the US has been in the driver seat. The Fed essentially sets global monetary policy. Foreign banks are forced to rely on the US banking system. Nearly every nation on earth must hold US dollars and buy US government debt just to be able to trade with one another.

These were sacred privileges entrusted to the US government. And they have been abused time and time again.

The US government spies on its allies. It uses its banking system as a weapon to threaten foreign companies. It fines foreign banks billions of dollars for doing business with countries it doesn’t like.

They discredit themselves by continuing to indebt future generations and failing to make tough fiscal decisions.

And the Fed has printed so much money that major foreign institutions are left with no choice but to seek an alternative. Enough is enough.

China is taking the lead in providing the world with another option. And they’re not exactly doing this under cover of darkness. These moves have been widely telegraphed, at least to anyone paying attention.

For the last few years the Chinese government has entered into new ‘swap agreements’ at blazing speed, allowing other nations’ central banks and governments to hold the renminbi in reserve.

They’ve concluded direct trade arrangements (notably with Russia) to settle oil and gas deals in renminbi.

This summer we saw the establishment of a Chinese-led supranational bank intended to compete directly with the IMF.

Just last week the British government issued a new government bond denominated in renminbi.

And now this– direct convertibility between China and the #1 financial center in Asia, making it possible for ANYONE to trade and hold renminbi through Singapore.

It’s so obvious where this train is headed.

But again, this story is hardly covered in the Western press. They’re living in a dream world where King Dollar still reigns and the US is the only superpower in the world.

Nonsense. It’s imperative to stop listening to the propaganda and start paying attention to facts:

The US government has accumulated more debt than any other nation in the history of the world… and is in a position where they must borrow money to pay interest on the money they’ve already borrowed.

The Federal Reserve (which issues the US dollar) continues to erode its balance sheet. According to last Wednesday H.4.1 report, the Fed’s capital base is a minuscule 1.26% of its total assets.

A year ago it was 1.42%. That was bad enough. But on a proportional basis, the Fed has lost another 11.3% of its capital in the last twelve months.

And according to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), international bank payments denominated in renminbi have nearly tripled in value in the past two years.

These are all objective facts which point to the same conclusion: this current dollar/debt-based system is on the way out.

It’s not going to happen overnight, but we’re already seeing a slow and orderly exit. And we can see the rest of this trend unfolding years in advance.

Ignoring this could be very hazardous to your financial well-being. And while the Western media might be totally clueless, there are plenty of options for forward-thinking individuals.

  • Consider holding Hong Kong dollars in addition to US dollars. Hong Kong dollars are currently pegged to the US dollar, so the currency risk is minimal. But if the US dollar declines sharply, Hong Kong (controlled by China) could easily de-peg. This mitigates your downside risk.
  • Consider trading paper currency savings for productive REAL assets like farmland and private businesses which capitalize on key growth trends.

There are dozens of other solutions out there. You’ll be able to find some that are just right for your circumstances.

*  *  *

Our goal is simple: To help you achieve personal liberty and financial prosperity no matter what happens.

end

Let us conclude this week’s wrap with Greg Hunter of USAWatchdog

(courtesy Greg Hunter/USAWatchdog)

WNW 164-Ebola Circus Continues, Fed Ends QE, Obama Care Cost Update

By Greg Hunter’s USAWatchdog.com 

The Ebola circus continues, and the Obama Administration officials look like clowns.  Let’s just take a look at a few of the headlines.  “Health System Not Prepared for Ebola” is a headline from the AP, and that is in stark contrast to what we have been told.  “Small clusters could overwhelm the system” is what the article says.  So, this begs the question of why no quarantine?  Some governors in places like New Jersey, New York and Illinois think quarantine is the way to go.  It is scientific technique on how to contain infectious disease, but that is not what the Obama Administration thinks.  Some in the MSM think the same thing.  This opinion piece says the decision by these governors is “hasty” and“adds to the Ebola problem.”  Really?  Well, that is not what the Pentagon thinks because it is“isolating troops back from Africa for 21 days.”  Some of the talking points are downright bogus.   They say things like we should treat these returning health care workers like “conquering heroes.”  Who is going to think these folks are “heroes” if they come back and infect people?  Africa’s best chance of beating this is if America stays strong and uninfected.  If America is consumed by Ebola, or even the fear of Ebola, West Africa hasn’t got a chance.

The Federal Reserve supposedly ended its QE program this week.  That is where they printed money to buy bonds to hold interest rates down.  So, what’s going to hold interest rates down now?  Are they just going to put all this Federal debt out for bids and let the market set the interest rates?  Can the Federal government, home buyers, car buyers, credit card holders and the overall economy afford higher rates?  You’ve got to be kidding.  Gregory Mannarino of TradersChoice.netsays the Fed can’t just say it wants low interest rates.  It has to do something to keep them low.  Mannarino thinks the Fed is now going to force the big banks that got all this QE to buy Treasury and other government debt.  Mannarino told me that he thinks the Fed is going to continue to print money to finance another form of QE.  He says the money printing has not ended and will never end.  The Fed is just going to call it something else.  The Fed also says the economy and employment have improved, and the third quarter had a 3.5% growth rate.  John Williams of ShadowStats.com says the 3.5% growth rate is “Happy election eve numbers” and says it was boosted by “guessed at trade numbers and defense spending.”  Williams says look for a downside revision.  If the economy was really that good, would we have nearly 93 million people notin the workforce?  There are 46 million people on food stamps, and half of Americans make less than $28,000 a year.  Would mortgage applications be hitting 19 year lows?  Would former Fed Head Alan Greenspan be warning about “turmoil” in the economy because of ending QE?  Oh, and “Maestro” Greenspan is also telling people to buy gold?  Let that sink in, Greenspan is telling people to buy gold!!

Violence appears to be flaring up in Israel again.  An Israeli was shot at the famous Temple Mount religious site, also known as the al-Aqsa Mosque.  The site was closed down after the shooting of an Israeli right-wing activist.   Now, Palestinian Authority President Mahmoud Abbas is calling for a“day of rage.”  Violence is expected.

Finally, I just received notification that my health care provider is going to raise my premium again for next year by about a $100 bucks a month.  My health care has gone up by about 60% since Obama Care was signed into law.  Blue Cross and Blue Shield of North Carolina says that it’s going up because not enough young people have signed up.  I have no problem with Blue Cross and Blue Shield.  Health care costs money, especially with a bad law.  Health care was supposed to be cheaper because of Obama Care, but for most people—it’s not.  Multiply those increases by millions of policyholders and you can imagine what is going to happen to the economy.  What really gripes me is the Democrats lied as a party to get this economy killing plan passed.

Join Greg Hunter as he analyzes these stories and more in the Weekly News Wrap-Up.

Video Link

http://usawatchdog.com/wnw-164-ebola-cir
cus-continues-fed-ends-qe-obama-care-cost-update/

-END-

That is all for tonight

I will see you Monday  night

bye for now

Harvey

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