My website is still under construction. However I will be posting my commentary at
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I would like to thank you for your patience.
Gold: $1171.10 down $27.00
In the access market 5:15 pm:
The gold comex today had a poor day, registering 0 notices served for nil oz
In silver, the open interest continues to remain extremely high and today we are at multi year highs at 179,608 contracts.
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%
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
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)
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:
November silver: initial standings
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.
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:
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.
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)
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
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.
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%
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.
And now for our COT report/
First the gold COT:
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
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
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
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
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 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?”
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
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.
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.
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.
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)
Bloomberg came out on October 28 with an article about Chinese silver hitting a premium of 17 % this month.
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.
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 %.
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:
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:
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:
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:
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.
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
Submitted by cpowell on Fri, 2014-10-31 15:38. Section: Daily Dispatches
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 —
— another commentary by the TF Metals Report’s Turd Ferguson about strange movements of metal in the Comex warehouses —
— 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 —
— 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:
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 —
— 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 —
— 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
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.
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.
The big paper story today:
Bank of Japan takes over for Fed in pumping markets up
Submitted by cpowell on Fri, 2014-10-31 12:54. Section: Daily Dispatches
Futures Rally after Bank of Japan Ramps up Stimulus
By Rodrigo Campos
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:
And now Eric Sprott on the same subject as above:
One QE ends and another begins and still gold goes down, Sprott marvels
Submitted by cpowell on Fri, 2014-10-31 18:15. Section: Daily Dispatches
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:
CHRIS POWELL, Secretary/Treasurer
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
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 depressed. When 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.
(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:
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:
No wait, sorry, that’s reality – something that hasn’t mattered to markets since 2008. Here is the reason, all thanks to CTRL-P:
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:
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:
And the punchline:
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
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%.
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.
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!
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.
This was a double whammy though as Japan also announced it was shifting GPIF asset allocations…
And the result…
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!!!!
* * *
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:
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…
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…
Even though Abe and his cronies are starting to wake up to the reality…
* * *
And so – if you are betting on NKY strength… reliant on JPY weakness… think again. Abe and Kuroda are boxed in.
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…
* * *
Just ask the Venezuelans…
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.
Paid for by US taxpayers…
As Bloomberg 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.
* * *
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
Submitted by Tyler Durden on 10/30/2014 19:35 -0400
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:
To these nine points I would like to add a tenth:
To sum it all up:
* * *
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
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…
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
Biggest plunge in almost 6 years
The weakness has prompted furtherremarks from the central bank:
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
The NIKKEI: Friday morning up 104 points or 0.67%
Trading from Europe and Asia:
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
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
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
Submitted by Tyler Durden on 10/31/2014 16:06 -0400
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…
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…
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.
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.
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.
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:
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.
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.
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
On October 31, 2014 In Weekly News Wrap-Ups No Comments
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.
That is all for tonight
I will see you Monday night
bye for now