Dec 9.2014

My website is now ready     You can find my site at the following url: or  www

I will continue to send the  comex data down to my good friends at the Doctorsilvers website on a continual basis.

They provide the comex data. I also provide other pertinent data that may interest you. So if you wish you can view that part on my website.

Gold: $1231.50 up $36.80
Silver: $17.08  up $0.86

In the access market 5:15 pm

Gold $1231.50
silver $17.09

The gold comex today had a good delivery  day, registering 753   notices served for 75,300 oz.  Silver comex registered 5 notices for 25,000 oz.



A few months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 245.83 tonnes for a loss of 57 tonnes over that period.



In silver, the open interest fell by a small 823 contracts with yesterday’s rise in price of  $0.02.  Looks like some of the shorts are vacating the arena. For the past year, we have been witnessing massive liquidation of contracts despite the fact that it cost nothing to roll.  This makes no sense and it smacks of cash settlements which are totally illegal. Since I have been following comex data, I have never witnessed such a massive liquidation in both gold and silver.  The total silver OI still  remains relatively high with today’s reading  at 146,537 contracts. The big December silver OI contract fell by 29 contracts down to 602 contracts.



In gold we had a fall in OI with the rise in price of gold yesterday to the tune of $4.70.  The total comex gold  OI rests tonight  at 368,630  for a  loss  of 1490 contracts. The December gold OI rests tonight at 1935 contracts losing 28 contracts.






Gold started off last night down a few dollars and hugged the $1201 line until a little after midnight.


However by 2 am (London first fix) gold rose to $1205.  By comex opening, it rose to $1217.00 and then by London’s second fix at 10 am:  its zenith for the day at $1237.50. From there the bankers desperately tried to tame the huge demand for gold and they knocked the price down to its close at $1231.50 and at 1231.50 at the access market close.




Silver started its journey early last night at $16.34 and stayed straddling that area until midnight.  At the first London fix silver traded at $16.29.  Then immediately it rose to $16.80 by the 2nd London fix at 10 am.  It hit is zenith at $17.20 at 11 am and then straddled the $17.09 area until closing both at comex and at access closing time.



Today, we gained 2.69 tonnes  of gold Inventory at the GLD / inventory rests tonight at  721.81 tonnes.



In silver, we had no change in silver inventory

SLV’s inventory  rests tonight at 345.223 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:

all rates moved closer to the positive and out of backwardation!!

Now, all the months of GOFO rates( one, two, three  six and 12  month GOFO moved positive and moved closer to the positive needle.  They must have found a few bars to lease.  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 even though negative are still fully manipulated. London good delivery bars are still quite scarce.

The backwardation in gold is incompatible with the raid on gold. It does not make any economic sense.

Dec 9 2014

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

+.0975.%         + .10500  -%        -+1150   -%   +. 1275  .%          +. 1825%

Dec 8 2014:

+.072%           +.07500%       +.08250 %         +.095%    +.1775%






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

Here are today’s comex results:


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 today  by 1490 contracts from 370,120 down to 368,630  with gold up by $4.57 yesterday (at the comex close). We are now into the  big December contract month where the number of OI standing for the gold metal registers 1935 contracts for a loss of 28 contracts.  We had 2 delivery notices served yesterday so we lost 26 contracts or  2600 oz of gold will not stand for the December contract month.  The non active January contract month rose by 78 contracts up to 602.  The next big delivery month is February and here the OI fell to 230,922 contracts for a loss of 3,181 contracts. The  estimated volume today was fair at 106,136.  The confirmed volume yesterday was also fair at 118,114 even with the help of high frequency traders. The comex now has no credibility and many investors have vanished from this crooked casino. Today we  had 753  notices filed for 75,300 oz .

And now for the wild silver comex results.    Silver OI  fell by 823 contracts from  147,360 down to 146,537  even though  silver  was up by $0.02 yesterday.   The big December active contract month saw it’s OI fall by 29  contracts down to 587 contracts. We had 1 notice served upon yesterday.  Thus we lost 28 contracts or an additional 140,000 oz will not stand.  The estimated volume today was poor at 26,091. The confirmed volume yesterday was just as bad at 28,668. We had 5 notices filed for 25,000 oz today



December initial standings


Dec 9.2014



Withdrawals from Dealers Inventory in oz nil
Withdrawals from Customer Inventory in oz 96.45 oz  (3 kilobars)Manfra
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz nil  oz
No of oz served (contracts) today 753 contracts(75,300  oz)
No of oz to be served (notices) 1182 contracts (118,200 oz)
Total monthly oz gold served (contracts) so far this month  2604 contracts(260,400 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month  150,109.154 oz

Total accumulative withdrawal of gold from the Customer inventory this month

 145,900.00 oz

Today, we had 0 dealer transactions



total dealer withdrawal:  nil   oz

we had 0 dealer deposits:

total dealer deposit:  nil oz

we had 1 customer withdrawals

) Out of Manfra;  96.45 oz (3 kilobars)

total customer withdrawal:  96.45 oz

we had 0 customer deposits:


We had 1 adjustment:


i) Out of Scotia: 16,425.588 oz was adjusted out of the customer and this landed into the dealer account

Total dealer inventory:  737,549.196 oz or 22.94 tonnes

Total gold inventory (dealer and customer) =  7.903 million oz. (245.83) tonnes)

Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 57 tonnes have been net transferred out. We will be watching this closely!

Today, 0 notices was issued from  JPMorgan dealer account and 592 notices were issued from their client or customer account. The total of all issuance by all participants equates to 753 contracts  of  which 486 notices were stopped (received) by JPMorgan dealer and 0  notices were stopped (received) by JPMorgan customer account.

To calculate the total number of gold ounces standing for the December contract month, we take the total number of notices filed for the month (2604) x 100 oz to which we add the difference between the OI for the front month of December (1935) minus the # gold notices filed today (753)  x 100 oz  =  the amount of gold oz standing for the December contract month.

Thus the  initial standings:

2604  (notices filed for the month x 100 oz) + (1935)  the number of OI notices for the front month of December served upon – (753) notices served today equals 378,600 oz or 11.77 tonnes

we lost 26 contracts or 2600 oz that will not stand.




This initiates the month of December for gold.

And now for silver

Dec 9/2014:

 December silver: initial standings



Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 846,875.84 oz (CNT,Brinks,,HSBC)
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory 391,778.578 oz (CNT,Delaware)
No of oz served (contracts) 5 contracts  (25,000 oz)
No of oz to be served (notices) 582 contracts (2,910,000 oz)
Total monthly oz silver served (contracts) 2491 contracts (12,450,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  1,163,562.6  oz
Total accumulative withdrawal  of silver from the Customer inventory this month  4,048,678.4  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 withdrawal:

i) Out of CNT:  600,325.710 oz

ii) Out of Brinks: 226,525.600 oz (one decimal)


iii) Out of HSBC: 20,024.530 oz

total customer withdrawal  846,875.840  oz

We had 2 customer deposits:


i) Into CNT; 357,680.25 oz

ii) Into Delaware:  34,098.328 oz

total customer deposits: 391,778.578    oz

we had 0 adjustment


Total dealer inventory:  64.479 million oz

Total of all silver inventory (dealer and customer)   176.714 million oz.


The total number of notices filed today is represented by 5 contracts or 25,000 oz.  To calculate the number of silver ounces that will stand for delivery in December, we take the total number of notices filed for the month   (2491) x 5,000 oz to which we add the difference between the total OI for the front month of December (587) minus  (the number of notices filed today (5) x 5,000 oz =   the total number of silver oz standing so far in November.

Thus:  2491 contracts x 5000 oz  +  (587) OI for the November contract month – 5 (the number of notices filed today)  =15,365,000 oz of silver that will stand for delivery in December.

we lost 140,000  oz that will not  stand for the December silver contract.




for those wishing to see the rest of data today see:


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:


Dec 9.2014: we gained 2.69 tonnes of gold/inventory 721.81 tonnes


Dec 8.2014: we lost .900 tonnes of gold/inventory 719.12 tonnes

Dec 5.2014: no change in tonnage/720.02 tonnes

Dec 4 no change in tonnage/720.02 tonnes

Dec 3 no change in tonnage/720.02 tonnes/

December 2/2014; wow!! we had a huge addition of 2.39 tonnes of gold /Inventory 720.02 tonnes

December 1.2014: no change in gold inventory at GLD

Nov 28.2014: a loss  in inventory of 1.19 tonnes/tonnage 717.63 tonnes

Nov 26.2014: we lost 2.09 tonnes of gold heading to India and or China/inventory at 718.82 tonnes


Today, December 9  we gained back 2.69 tonnes of   inventory previously lost/ inventory now 721.81

inventory: 721.81 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 :  721.81 tonnes.






And now for silver:


Dec 9.2014: no change in inventory/345.223 million oz


Dec 8.2014: no change in inventory/345.223 million oz

Dec 5/2014: no change in inventory/345.223 million oz

Dec 4/we lost another 2.204 million oz of silver/inventory 345.223 million oz

dec 3. we lost 2.73 million oz of silver/inventory 347.427 million oz and back where we were on Dec 1.2014.

dec 2 wow@!!@ a huge addition of 2.20 million oz of silver/inventory 350.158 million oz.

December 1: no change in inventory/347.954 million oz

Nov 28.2014: no change in inventory/347.954 million oz

Nov 26.2014; no change in inventory/347.954 million oz




December 9/2014/  we had no change in silver/inventory  registers: 345.223 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.
(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 8.5% percent to NAV in usa funds and Negative   8.3% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold  62.0%

Percentage of fund in silver:37.5.%

cash .5%

( December 9/2014)   will update later  

2. Sprott silver fund (PSLV): Premium to NAV  falls to positive 0.43% NAV (Dec 9/2014)  

3. Sprott gold fund (PHYS): premium to NAV  falls to negative -0.44% to NAV(Dec 9/2014) 

Note: Sprott silver trust back hugely into positive territory at 0.43%.

Sprott physical gold trust is back in negative territory at  -0.44%

Central fund of Canada’s is still in jail.





And now for your most important physical stories on gold and silver today:



Early gold trading from Europe early Tuesday morning:


European Banks At Risk Of Bail Ins In 2015 – Moody’s and S&P Warn

Published in bailins  Gold  Market Updates  Precious Metals Update  on 9 December 2014

By Mark O’Byrne

Europe’s banks are vulnerable in 2015, due to weak macroeconomic conditions, unfinished regulatory hurdles and the risk of bail-ins according to credit rating agencies.

The economic outlook for European banks in 2015 will be hampered by weak profits, risks of bail-ins and litigation charges, Moody’s Investors Service announced Monday.

“Weak macroeconomic conditions will continue to weigh on Europe’s banking sector in 2015 and banks’ low overall profitability implies that Europe’s banking sector remains structurally vulnerable,” Moody’s Europe, Middle East and Africa financial institutions group managing director said in a statement.

“The European banking industry remains structurally vulnerable,” said Carola Schuler, managing director at Moody’s, in a presentation on the sector’s outlook.

The agencies said moves to reduce implied government support for the banking sector and force bank debt holders to participate by coming to the aid of wayward lenders would also put downward pressure on bank ratings.

“The European bail-in tool decreases the predictability of state support,” said S&P managing director Stefan Best in a separate presentation on banking prospects.

As a result, S&P has a negative outlook on certain European banks. The agency will review in early January its credit ratings for banks in Austria, Germany and the UK, three countries that plan to translate EU bank resolution and recovery rules into national law ahead of the scheduled EU start in January 2016.

Austria’s Erste Group and Raiffeisen Zentralbank [RZB.UL], Germany’s Deutsche Bank and Commerzbank , and the UK’s Barclays , HSBC , Lloyds and RBS are among those with negative outlooks on S&P’s list of large banks enjoying government support.

The credit rating agency’s forecast follows the European Central Bank’s (ECB) reduction of the euro zone’s 2015 growth estimate last week. ECB chief Mario Draghi reduced the forecast for the single currency area’s Gross Domestic Product (GDP) number for next year to 1 per cent. Falling oil prices and a weakening economic outlook were cited as reasons behind the 0.7 per cent reduction from the ECB’s September forecast.

Credit ratings agencies frequently warnings regarding bail-ins in recent months, have largely been ignored.

In March of this year, credit rating agency, Standard and Poor’s (S&P) warned that the move towards “bail-ins” and away from “bailouts” continues to evolve and posed risks to European banks and their credit ratings.

Bank of England plans to make bondholders and depositors bear the cost of bailing out failing banks led Moody’s to downgrade its outlook on the UK banking sector this August. The rating agency said that it had changed its outlook for the UK financial system from “stable” to “negative”, citing the developing global “bail in regime” of creditor and depositor bail-in.

Moody’s have warned of bail-ins numerous times in recent months. In June of this year, Moody’s cut the outlook for Canadian bank debt to negative over the new ‘bail-in’ regime.

Depositors in some Cyprus banks saw 50% or more of their life savings confiscated overnight.

The truth is that banks in most western nations are vulnerable to bail-ins in 2015 and the recent G20 meeting in Brisbane was a further move towards the stealth bail-in regimes.

More than seven years after the start of the financial crisis, banks have made strides towards improving financial stability but they are still struggling and pose risks.

The move by western nations towards bail-in regimes whereby “too big to fail” banks confiscate individual and companies deposits has been put in place with very little public discussion or awareness of the risks and ramifications of bail-ins.

The highlights of the G-20 meeting in Brisbane last month were the increasing tension between certain western leaders and Russian President Vladimir Putin, the ‘agreement’ that the governments of the twenty richest countries would have a clear target and generate 3% global growth, apparently by dictate and some obscure solutions for global warming or climate change.

A story which passed under the radar but which is of more significance to savers was the agreement to institutionalise in the legal systems of the member states the concept of bail-ins.

It will be recalled that the policy was first foisted upon Cyprus when their bloated financial sector got into trouble back in early 2013. It was then that deposits of banks were first considered as part of the bank’s capital and deposits over €100,000 were forcibly converted to shares of a now worthless bank.

To stem the public outcry across Europe it was emphasised that the rule of law need not apply in this instance because Cyprus was a haven for “dirty” and “hot” Russian money. The huge flows of similar hot money from all over the world into London and the UK and New York and the U.S. was ignored.

The debate in Europe continued with admissions and then denials that bail-ins of deposits was the new normal. Then, Ireland’s Finance minister, at a meeting of EU finance ministers in June 2013, let the cat out of the bag when he admitted that “Bail-in is now the rule.”

At the Brisbane summit new measures were announced dealing with the capital requirement of around 30 GSIBS, Globally Systemically Important Banks . The announcement was lauded by the bankers as a triumph for the taxpayer.

Anthony Browne of the British Bankers Association said, “The banking industry strongly supports this work, which is a really important step in ending ‘too big to fail’ and ensuring that never again will taxpayers have to step in to bail out banks.”

The fact that bond holders and depositors of the bank may have to “step in” to bail out the bank was not mentioned and nor were basic questions asked about the risks of bail-ins to savers and companies around the world.

Under the new regulations these banks would be required to have 16-25% of their capital on hand as a buffer should another banking crisis arise. What has been generally ignored is that deposits are not sacrosanct in this new arrangement.

The most crucial element of this new arrangement is that banks obligations to each other stemming from their activities in the derivatives markets are also prioritised above larger deposits. So far from ending the “too big to fail” paradigm – recent developments appear to have reinforced it.

In the U.S., the derivatives market involved financial transactions to the value of a phenomenal $297.5 trillion in March 2013. Deposits at U.S. commercial banks were valued at a mere $9.3 trillion.

If bail-ins take place, which now seems almost certain when banks get into difficulty again, there is a very significant risk that bail-ins alone will lead to a collapse in consumer and business confidence as consumers and businesses see their savings and capital confiscated. This alone will likely compound a difficult economic environment and lead to sharp recessions and depressions – economic contagion.

There is also the financial contagion risk. Much of the bonds are held by pensions funds, institutions and even leveraged investors like hedge funds. If much of the loss-absorbing debt is held by leveraged investors then there is a risk of contagion across the financial system and the contagion boomerang back to banks.

Oh what a tangled web, we weave …

Must-read guide and research on bail-ins here:
Protecting Your Savings In The Coming Bail-In Era


Today’s AM fix was USD 1,206.50, EUR 975.98 and GBP 770.98 per ounce.
Yesterday’s AM fix was USD 1,195.25, EUR 975.48 and GBP 766.73 per ounce.

Spot gold rose 0.2% to $1,206.80/oz in late morning trade in London today.

Gold jumped to a session high of $1208.85 in early afternoon trade in New York yesterday and ended with a gain of 1.14%. Silver surged to as high as $16.423 and ended with a gain of 0.55%.

Gold in EUR – 2014 YTD (Thomson Reuters)

Gold rose for a second day today, to trade back above $1,200 an ounce, as the U.S. dollar gave up early gains and Asian and European stocks followed their U.S. counterparts lower.

Gold jumped 1% on Monday on technical trading and physical buying. Gold in Singapore ticked marginally lower after the gains in New York but remained above the important $1,200/oz level.

We are bearish on gold in the short term and think that we may see futures selling pressurise gold into year end as was seen at year end last year (see chart). Gold ticked higher in early December last year prior to aggressive selling in the futures market pushed prices lower from December 10th, prior to gold bottoming on the last trading day of the year.

This potential weakness may create a buying opportunity in late December prior to a sharp rally in January and February as was seen last year.

Gold in USD – 1 Year (Thomson Reuters)

Sentiment towards gold remains bearish as seen in the SPDR Gold Trust, the world’s largest gold exchange-traded fund, which saw its holdings resume declines after a brief uptick and were close to six-year lows on yesterday.

A factor hurting sentiment is the recent strength in the dollar. Although, the dollar looks quite overvalued now and is due a correction which should support gold.

Since June, the dollar had begun to show weakness versus the Chinese yuan and we believe that this may be a precursor to dollar weakness in 2015, particularly in gold terms.

Get Breaking News and Updates on Gold Markets Here







(courtesy GATA/


Bank of England’s former deputy governor misleads about gold and credit creation


11:25p CET Monday, December 8, 2014

Dear Friend of GATA and Gold:

In an interview today with Russia Today’s Sophie Shevardnadze, Sir Howard Davis, former deputy governor of the Bank of England and former director of the London School of Economics, makes the most elementary mistake in his objection to restoration of a gold standard for currencies. That is, Davis says a gold standard “would radically reduce the amount of credit and would cause a worldwide depression that would make the 1920s look like a holiday.”

But of course the amount of credit supported by a gold standard would depend entirely on the price established for currency convertibility into gold, a price that could be revised from time to time. While Britain’s return to a gold standard for the pound in 1925 is now widely regarded as a deflationary mistake, it is because the pound’s value in gold was set too high, at the parity in force prior to the First World War and the inflation caused by the war. If the gold price for convertibility was set high enough, a gold standard could support infinite money and infinite credit.

That was established by the famous trillion-dollar platinum coin idea in the United States a few years ago:

Of course gold revaluation allowing an increase in money creation and credit would be instantly recognized as currency devaluation, while, at present, central banks can create infinite money and credit and, with surreptitious intervention in the gold and commodity markets to suppress prices and thereby destroy markets, can prevent most people from figuring out how their money is being devalued. Is thatreally why a gold standard is so objectionable to Davis — that it would make central banking a lot more transparent?

At least Davis acknowledges the occasional flaws of central banking and fiat money in regard to credit creation. “At times,” he sais, “given the paper money basis of our economy, maybe we allow credit to expand too rapidly, and essentially the story of the last financial crisis was that. We allowed credit to grow too quickly. But there are ways of dealing with that, through interest rates, bank capital ratios, etc., which can constrain credit growth, and you don’t need the really freezing shower of a gold standard to do that, which would destroy much of the world’s economy.”

But can central banks be relied upon to undertake in time the cautionary measures Davis cites, and to do it consistently?

Well, maybe someday, in a more virtuous era, they will, and allowing the money supply to be determined by the amount of a particular metal or two that can be dug out of the ground does seem awfully primitive.

But were the ancients so primitive in establishing such a metallic money system because they realized that anything more sophisticated requires perfectly mechanical virtue in administration and that, administered by mere mortals, a sophisticated system inevitably goes haywire as a result of human corruptibility?

And if today’s central bankers have achieved the supreme expertise and disinterestedness required to administer a sophisticated system, why do they do nearly everything in secret, and why is the world’s wealth constantly being siphoned upward away from the many and into the accounts of the very few?

Maybe Russia Today could interview Davis again and put such questions to him. In the meantime his interview is posted here:

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





Part II video of Chris Powell talking with Max Keiser

on gold’s return to the centre of the financial system:


(courtesy Chris Powell/Max Keiser)




GATA secretary talks with Max Keiser about gold’s possible return to the world financial system


11:20a CET Tuesday, December 9, 2014

Dear Friend of GATA and Gold:

In another edition of Russia Today’s “Keiser Report” program, your secretary/treasurer discusses with Max Keiser the possible return of gold to the world financial system — Russia’s interest in such a return and the longstanding United States policy against it. The segment begins at the 12:30 mark at YouTube here:

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




(courtesy Reuters/GATA)


India should allow banks to hold gold as reserves, World Gold Council report says


By Meenakshi Sharma and A. Ananthalakshmi
Tuesday, December 9, 2014

India should allow banks to use gold as part of their liquidity reserves, which would let them make more use of gold inside the country and reduce the need for imports, an industry body said today, seeing that as an alternative to import curbs.

The world’s second-biggest consumer of the metal should also consider setting up an exchange for transparent gold pricing and to streamline trade, according to a report commissioned by the World Gold Council. …

… For the remainder of the report:…




James Turk believes as do I that the bankers are manipulating the GOFO rates as well as Libor.  He gives a compelling argument why gold rose in the access market yesterday afternoon claiming that the physical demand for gold is overpowering the paper game


(courtsesy James Turk/Eric King/Kingworldnews)


Central banks manipulate gold interest rates too, Turk tells KWN


11:40a CET Tuesday, December 9, 2014

Dear Friend of GATA and Gold:

GoldMoney founder and GATA consultant James Turk tells King World News today that while gold interest rates are an indicator of conditions in the gold market, they too, like the gold price itself, are easily manipulated by central banks and that the zero-interest-rate policy of central banks has created abnormal conditions in all markets. An excerpt from the interview is posted at the KWN blog here:…

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




John Embry continues to pound the table on the phony spin by news agencies on  numbers officially released by various agencies:


(courtesy John Embry/Kingworldnews/Eric King)


Embry cites phony spin from news organizations about job numbers, oil prices


11:38p CET Monday, December 8, 2014

Dear Friend of GATA and Gold:

Phony spin permeates the news media about U.S. economic data, Sprott Asset Management’s John Embry tells King World News today, citing employment reports and analysis of the benefits of oil’s price decline. An excerpt from the interview is posted at the KWN blog here:…

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


Bill Holter tackles the negative interest rate policy which will come into effect in January.  Bill explains the ramifications of this:
(courtesy Bill Holter/Miles Franklin)
(N)egative (I)nterst (R)ate (P)olicy.
Negative interest rate policy (NIRP) has arrived to the U.S. for large deposits at commercial banks.  This is something we have already seen in Europe over the last few months and a sign (at least to me) that stress is again building.  As ofJanuary 1st, bank capital will be classified differently making some large and very mobile deposits at large banks a potential liability and thus not profitable .  This is being done because of the “mobility” of these deposits, the worry is the potential speed of flight capital if (when) it begins to run.
  Let me explain what I mean by “stress” and you can decide which one fits the best if not a combination of “all of the above”.  First, the real economies of the Western world are again slowing and in many cases declining again.  Remember, this is happening even though fiscally, deficits are being run everywhere and monetarily, loose policy runs rampant.  As the real economy continues to slow, “more power” is being screamed from the helm to the engine room.  “More”, as in more debt, more liquidity and more of what created the problem in the first place.  This explanation is fairly obvious.
  Two other and less obvious explanations  for NIRP are “velocity” and “making preparations”.  Looking at velocity, it continues downward with no signs whatsoever of reversing.  Money is being printed by the trillions but it’s not making it onto the streets.  The money is piling up at banks who are hoarding the cash and making a “risk free” (really?) return by carrying the deposits at central banks.  This works well for the banks and the central banks themselves …but not so much for the real economy as actual “flowing” money feels tight and scarce.  As far as the real economy is concerned, credit policy is anything but loose.
  The other aspect is that many large deposits (over the FDIC limits) are very “mobile”.  By this I mean they can move quickly.  So quickly in fact that back in 2008 there were “electronic” and overnight bank runs which no one saw …except the banks.  Banks “borrow low and lend high”, this is how they earn profits.  They traditionally borrowed via deposits and then turned around and lent these deposits out at a higher rate to earn a spread…banking 101 if you will.  But 2008 exposed a flaw in this model, as soon as even the whiff of a rumor of weakness at a bank would arise, this “hot money” would move to safer ground.  Whether this safer ground was another bank or even Treasury securities made no difference, the result was a bank(s) being left unfunded.  Their capital ran away and they were left with too many loans and assets (impaired?) carried by not enough capital.
  I know the above explanation was very simplistic, I did this so you could understand the “what or why” the Federal Reserve is changing the banking rules …they see something coming and are trying to prepare the system ahead of time.  I believe they see another crisis dead ahead and are trying to position banks where they have less hot and mobile money in their fundings.
  The problems as I see it are several fold.  The days leading up to Jan. 1st may see some hiccups if enough money does in fact move elsewhere.  Also, if this scheme does “work”, money moves and actually begins to turn velocity around, hyperinflation could be a very real result.  Fiat money is a very funny duck as it is strictly based on confidence, there is no way to tell at what point this confidence will turn once it starts to move.
The biggest problem as I see it could be a break in confidence, one which is caused by the perception  of “something else is better”.  If banks actually start to charge for holding balances, depositors will have to make some sort of decision.  They can move to another institution which blesses them with either no interest or less negative interest.  They can also buy Treasury securities or even stocks …or any other number of assets.  This would initially levitate markets even more because of the flow …but what happens when some “leakage” starts?  What happens when some depositors decide to buy “stuff”, any kind of stuff as a form of savings?  What happens if included in this stuff are commodities and other monies such as gold and silver?
  This then brings the actual currency into question.  If you cannot earn interest on anything then the comparisons of apples to apples will begin.  The question will arise, which is better, a $20 bill or 6 pounds of copper?  Which would you prefer twelve $100 bills or one ounce of gold?   Can a painting really be worth $100 million?  What does this say about the value of $100 million?  These questions are being asked every day, all day, all around the planet…but there will be a difference.  The difference being, more money will be forced to make these decisions.  “More money” because of the Fed’s January 1st edict!
  I am not here to tell you that I understand all of the ramifications or fallout, I do not.  What I do know is banking, the way it has been done even after morphing over the last 20 years is changing.  With this change will come consequences, some seen…some not.  The financial system has never been as leveraged as it is today, this is a fact.  Another fact is, leverage “forces” the actions of participants in ways they would not prefer during crisis.  Leverage will force some who would like to buy…to sell.  Leverage will cause a solvent someone today into insolvency tomorrow morning.  Not to pick on JP Morgan (though they more than deserve it), they hold some $70 trillion worth of derivatives, so does Deutschebank, does this qualify as “leverage”?  When the next panic comes, we are now too leveraged systemically for the current system to survive, but I digress.
  The grand scheme problem as I see it is the “push-pull” effect.  The central banks need to push money out and into the system.  This would aid the real economy and bolster “asset” prices.  Their catch 22 is they cannot make the decision “which” assets are levitated in value because they do not control which direction the money they have pushed will go.  Ideally, the money will stay within the box and continue playing with other paper assets.  Once the bleed into real assets really gets going, it will be noticed and attract other attention …and into other real assets.  They must create more money and more liquidity to keep the paper game going, it is exactly this debt and liquidity creation which will end up making the decision to flee …to safer assets.  In the end, the definition of “safer” will be not only what counts but the exact cause of the crisis.  The central banks are collectively trying as hard as they can to reflate, if they get their wish they will lose their currencies…pretty simple!  Regards,  Bill Holter
And now for the important paper stories for today:

Early Tuesday morning trading from Europe/Asia




1. Stocks  up on major  Asian bourses     with a  higher yen  value rising to 119.89

1b Chinese yuan vs USA dollar/  yuan crashes to 6.1878 

2 Nikkei down 122   points or 0.68%

3. Europe stocks all down   /Euro up/ USA dollar index down to 88.83./

3b Japan 10 year yield at .42% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 119.89

3c  Nikkei now below 18,000

3e  The USA/Yen rate comes below the 120 barrier

3fOil:  WTI  63.83  Brent:   66.75 /all eyes are focusing on oil prices.  A drop to the mid 60′s would cause major defaults.

3g/ Gold up/yen up;

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. Fifty percent of Japanese budget financed with debt (see Von Greyerz)

3j OIl attempts a feeble rally

3k Greece accelerates its bid for a new president/if they fail then a new election/Athens stock exchange down 10%

3l  all eyes on FOMC/Chinese bourses crash (Shanghai over 5% and Hang Sang over 3%/Abu Dhabi over 3% plunge

3m Gold at $1210 dollars/ Silver: $16.50

3n USA vs russian rouble:  54.16  ( slightly weaker against the dollar)

4.  USA 10 yr treasury bond at 2.25% early this morning.
5. Details: Ransquawk, Bloomberg/Deutsche bank Jim Reid



(courtesy zero hedge)/your early morning trading from Asia and Europe)


CHINA CRASHES!!!! (over 5%)  ATHENS CRASHES!! (over 10%) ABU DHABI plunges 3.5%


It Wasn’t Only China: Here Is What Else Is Crashing Overnight

Tyler Durden's picture

It wasn’t just China’s long overdue crash last night. In addition to the Shanghai Composite suffering its biggest plunge since August 2009, there has been a sharp slide in the USDJPY which has broken its uptrend to +∞ (and hyperinflation), and around the time Chinese gamblers were panicking, the FX pair tumbled under 120, although since then the 120 tractor beam has been activated. Elsewhere, the Athens stock exchange is also crashing by over 10% this morning on the heels of news that theGreek government has accelerated the process to elect the next president and possibly, a rerun of the drama from the summer of 2012 when the Eurozone was hanging by a thread when Tsipras almost won the presidential vote and killed the world’s most artificial and insolvent monetary union. And finally, the crude plunge appears to have finally caught up with ground zero, with ADX General Index in Abu Dhabi plunging 3.5%, also poised for the biggest drop since 2009. In fact the only thing that isn’t crashing (at least not this moment), is Brent, which did drop to new 5 year lows earlier under $66, but has since staged a feeble rebound.

So… another record high in the fully decoupled from the rest of the world (as well as reality and reationality) S&P500 any minute now?

Some more details on the overnight action from RanSquawk

European equities trade in the red across the board following on from both their US and Asia-Pacific counterparts. Yesterday, saw a negative close on Wall Street, with the slide in WTI prices placing a further squeeze on energy names. This sentiment filtered through to the Asian session, however, the main focus overnight was on Chinese equities. The Shanghai Comp. (-5.4%) saw its biggest 1 day loss since August 2009, with the move lower led by a surge in money-market rates after the Chinese Securities Depository and Clearing Corp raised the threshold for collateral it would accept for repurchase operations. The PBOC tried to stabilise this by intervening in FX markets, setting a stronger CNY fix. However, USD/CNY actually saw its largest intra-day rise since 2008. It is worth bearing in mind that this slide in Chinese equities comes after the recent rally, which has seen the Shanghai Comp. surge circa 30% over the past month to a 4yr high, while US and European equities trade in close proximity to record highs.

This negative sentiment filtered through to the European session with all indices red across the board, with energy and basic material names the laggard sectors. On a stock specific basis, the notable underperformer in Europe is Tesco (-11%) after issuing yet another profit warning, which has subsequently weighed on other UK supermarket names. Furthermore, the FTSE has also been placed under pressure due to its heavy composition of commodity-related names. Fixed income products have benefitted from the softness seen in stocks, with Bunds continuing to extend on their recent gains, as the flight to quality has benefitted core European products. However, the Greek spread continues to widen to the German benchmark amid political uncertainty and potential snap elections, which has also weighed on the Greek stock index (-6.5%), with financials in the index down as much as 8%.

In terms of the day ahead, we kick this morning off with October trade reports out of both Germany and France and follow this up with both industrial and manufacturing production out of the UK. Later today we’ve got further employment data out of the US to look forward to with the JOLTS job opening print for October. Although we note that this data is somewhat lagging compared to other recent indicators, the print is still important given it forms part of the Fed Chair Yellen’s dashboard of economic indicators. Elsewhere in the US this afternoon we get the NFIB small business optimism reading along with the October wholesale inventories and the IBD/TIPP economic optimism print.

Bulletin Headline Summary from Bloomberg and RanSquawk

  • European equities trade in negative territory after a heavy sell-off in China overnight (-5.4%) resulting from a spike higher in money-market rates and collateral tightening for repurchase agreements.
  • The USD-index has erased Hilsenrath-inspired gains, with the softness in stocks prompting a safe-haven bid into JPY and CHF with JPY further underpinned by an unwind of carry trade positions.
  • Looking ahead, today sees the release of US wholesale inventories, API inventories, with ECB’s Makuch, Praet and Constancio all due on the speaker slate.
  • Treasuries steady before week’s $59b auctions begin with $25b 3Y notes. WI yield 1.095% after drawing 0.998% in Nov.; would be highest stop since April 2011.
  • Fed officials are discussing the future of their vow to hold rates low for a “considerable time,” ahead of a meeting next week where they will weigh that pledge against signs of economic strength
  • China’s clearing agency said yesterday it won’t allow bonds rated below AAA or sold by issuers graded lower than AA to be used as collateral for short-term loans obtained through repo
  • The new rules sparked a retreat in lower-rated bonds of local government financing vehicles and contributed to the biggest tumble in Shanghai shares since 2009 as noteholders reassessed the appeal of owning such debt
  • China’s leaders gathered for an annual meeting to map their economic plans for next year under the theme of “new normal,” a phrase adopted by President Xi Jinping to reflect a push to manage slower expansion
  • China’s residential building boom is petering out, with the effects seen from slumping steel and cement prices, to electricity use, rail-freight traffic and retail sales
  • Oil prices will stay at about $65 a barrel for at least half a year until OPEC changes its collective production or world economic growth revives, said the head of Kuwait Petroleum Corp
  • Because energy accounts for as much as half the cost to produce food and metals, all sorts of commodities will keep dropping, according to SocGen and Citi
  • ECB plans to limit duration of emergency liquidity aid (ELA) to banks to six months, Handelsblatt reports, citing unidentified central bank staff
  • U.K. manufacturing output unexpectedly fell for the first time in five months in October, declining 0.7% after 0.6% gain in October; median est. in Bloomberg survey was for 0.2% increase
  • Greek stocks and bonds slumped after Prime Minister Samaras opted to bring forward the process of choosing a new head of state, risking parliamentary elections in Europe’s most indebted state as early as January
  • Sovereign yields mostly higher. Asian stocks lower, Shanghai falls 5.4%. European stocks and U.S. equity-index futures decline. Brent crude and gold higher, copper falls



The USD-index was initially seen higher overnight following the latest piece from WSJ’s Hilsenrath which suggested the Fed may drop the “considerable time” phrasing sooner rather than later”. However, the gains for the index were trimmed and subsequently reversed into losses, with the flight-to-quality alongside the slide in stocks benefitting JPY and CHF. Gains for JPY were further boosted by profit-taking in USD/JPY and an unwind of carry trade positions. Elsewhere, despite trading lower overnight, AUD has mounted a modest recovery vs. USD as energy prices pare some of yesterday’s heavy losses, while the latest production data from the UK provided a modest downtick for GBP.


Energy prices have posted a modest recovery of yesterday’s heavy losses which saw WTI settle down over 4% at the NYMEX pit close, which marked its lowest settlement price since July 2009, ahead of today’s API inventory report. Precious metals prices have also posted a modest recovery and trade in positive territory alongside the softness in the USD-index. However, iron ore prices were once again weighed on, this time as a result of JPMorgan cutting its 2015 iron ore price forecast by 24% to USD 67/ton, cut 2016 forecast by 23% to USD 65/ton. On a geopolitical front, Ukrainian Military has suspended combat in Eastern Ukraine and is ready to ‘observe a day of silence’, while Russia’s Lavrov says a `contact group` on the Ukraine to meet in coming days to discuss implementation of ceasefire plan in Eastern Ukraine.

* * *

DB concludes the overnight event recap

There’s still plenty to play for in 2014 and yesterday we got another date for the diary as Greece’s Presidential election process was accelerated to start next Wednesday December 17th with the results likely known on December 29th. Our expert George Saravelos thinks that if the vote is successful the Troika and government should be able to find common ground once this political risk is over but its all coming to a head slightly sooner than anticipated. The failure to elect a President by the existing parliament would lead to a national general election within 3-4 weeks, with the current SYRIZA opposition party leading in the polls (according to various opinion polls). So very large electoral uncertainty and the lack of an official financing backstop ensures a meaningful period of uncertainty ahead for Greece. In rounds 1 and 2 (Dec 17th and 22nd) the Government requires 200 out of 300 MPs which is extremely unlikely. In the final round (Dec 29th) they require 180 votes. George believes that the probability of an early election is 60/40. This risk has fallen a little of late as some swing voters have leaned towards the Government but this is becoming quite a binary event into year-end with the process starting on the same day as the Fed have their all important meeting. In itself this may not be a huge global macro story but it could indirectly lead to the first non mainstream party being elected after a few near misses in recent years. How they behave if they get elected may give us some clues about the end game in Europe. Would SYRIZA be successful in pushing for further debt restructuring and a different policy approach or will the negotiations with the EU force them to toe the existing line due to the consequences of not doing so? An interesting period ahead.

So the voting kicks off on FOMC day and talking of the Fed, they will surely be scratching their head at the fact the 10 year Treasuries is back to 2.26% only one trading day after the positive shock from payrolls. We traded at 2.25% just before Friday’s blockbuster report only to then hit intraday highs of around 2.34% yesterday before rallying hard into the close. It was a particularly data-light day in the US so some dovish notes from Atlanta Fed’s Lockhart (who will be a FOMC voting member next year) appeared to provide some direction. Specifically, Lockhart commented that ‘inflation is the one key element that does not seem to be consistent with what we are seeing in terms of growth and what we are seeing in the labour market’ and also that ‘if inflation goes completely sideways or begins to indicate a decline, disinflation, then I think it will raise some concerns’. The largely centrist figure went on to say that the Fed should be in no rush to drop the ‘considerable time’ language if it conveyed an imminent lift-off decision, although re-iterated his projection of a ‘midyear lift-off’. On that note, WSJ’s Hilsenrath reminded us that Fed officials are seriously debating dropping the ‚considerable time? language at the upcoming meeting but no decision has yet been made apparently.

The demand for Treasuries was probably also fuelled by what was a notably weaker day for risk assets yesterday. The S&P 500 came off its record highs to close -0.73% at the end of play whilst credit markets also softened with CDX IG +2bps and HY energy bonds generally off a couple of points. The day saw another big leg lower in Oil markets with both WTI (-4.24%) and Brent (-4.17%) closing at $63.05/bbl and $66.19/bbl, respectively. Both oil grades closed at their five year lows and are extending those declines in trading this morning. There were a few negative reports which may have added pressure on oil. Saudi Arabia last week reportedly (Bloomberg) sold crude into Asia at the deepest discount in at least 14 years whilst the head of Kuwait Petroleum Corp was on the wires saying that Oil prices will stay at about US$65/bbl for at least half a year until OPEC changes its collective production or world growth revives. Interestingly Kuwait yesterday also announced that it plans to spend about $7bn to develop heavy oil fields despite where oil prices are now which serves as a contrast to what its US peers are doing. Indeed ConocoPhillips is planning to cut its 2015 capex spending plans by 20% relative to what it did this year. Specifically the company plans to slow its activity in US shale exploration. Back to market moves, Energy stocks (-3.9%) led the sector declines in the S&P 500 yesterday by closing lower for its third consecutive day. Large cap names such as Exxon Mobil, Chevron and ConocoPhillips closed -2.26%, -3.67%, and -4.16%, respectively.

Turning our attention to this side of the Atlantic, there was something of a rally in both core and peripheral government bonds yesterday following comments by the ECB’s Nowotny. Looking at the price action, 10y benchmark yields in Germany (-7bps) and France (-6bps) tightened to 0.713% and 0.970% respectively whilst looking across the peripheral space, there were notable gains for Spain (-4.8bps), Portugal (-2.9bps) and Italy (-3.4bps) to 1.785%, 2.719% and 1.943% respectively – all fresh record lows. Indeed the latter has hit a record low despite a move on Friday after the market close by S&P to cut its sovereign rating to BBB- (stable) from BBB. Coming back to the comments from Nowotny yesterday, sentiment was somewhat lowered after the ECB member was quoted as saying that ‘we see a massive weakening in the eurozone economy’ as well as expressing concerns that inflation would fall further in 2015. On the subject of QE however, and in stark contrast the Bundesbank Chief’s Weidmann recently, Nowotny appeared to be more on board with the idea of public QE, specifically saying that it was ‘widely formulated’ that the central bank was considering all assets and instead saying that ‘of course we’re thinking specifically about government bonds’. Wrapping up the market moves, the Stoxx 600 closed -0.67% – not aided by a decline in the energy component although in reality all sectors finished the day in the red. Finally German industrial production came in at a modest miss, the +0.2% mom figure below market consensus of +0.4%.

Away from the declines in energy stocks, EM currencies are one other such asset class feeling the force of a plummeting oil price as well as a stronger Dollar. An article in the FT pointed out that an index measuring a variety of emerging market currencies has dropped to its lowest level since 2000. The falls appear to be wide-ranging, with the likes of oil-sensitive producers like Russia and Nigeria in particular suffering from the slump in prices and hitting all time lows whilst oil consuming countries including Turkey and South Africa are also suffering from a depreciating currency. Just staying on this topic of FX markets, there was news yesterday that Mexico’s central bank is planning a currency intervention following a drop in the Peso to a two year low at 14.39/$ – slumping around 10% over the last six months (Reuters). The central bank have stated that policy makers will auction $200m on days when the Peso weakens at least 1.5% from the previous close – mirroring similar support put in place in November 2011.

Refreshing our screens this morning Asian equity markets are mostly trading lower with the exception of China. China interest rate swaps rose to a 3 month high on news that the regulator has stopped accepting new applications for repo for lower graded credits spurring expectation of lower demand for these issues. The volatility has forced one of the top-tier issuers (State Grid Corp of China) to delay its planned bond sale. This weakness has also prompted demand for China 5y CDS which widened by about 2bps overnight. Malaysia is also bit of an underperformer as its CDS moved 6bp wider with the oil exporter suffering from the further declines in crude. Back to equities, the Hang Seng, Nikkei and KOSPI are all down -1.12%, -0.87% and -0.30% as we type. Staying within the region we also have the AUD moving sharply lower overnight. The Aussie is now trading at around 82.3 cents against the USD down from around 83.2 at the end of last week as RBA rate cut expectations continue to build.

In terms of the day ahead, we kick this morning off with October trade reports out of both Germany and France and follow this up with both industrial and manufacturing production out of the UK. Later this afternoon we’ve got further employment data out of the US to look forward to with the JOLTS job opening print for October. Although we note that this data is somewhat lagging compared to other recent indicators, the print is still important given it forms part of the Fed Chair Yellen’s dashboard of economic indicators. Elsewhere in the US this afternoon we get the NFIB small business optimism reading along with the October wholesale inventories and the IBD/TIPP economic optimism print.







In the early evening, the Central Bank of China were adamant to pop the equity bubble and in doing so, the yuan crashed to over 6.1950 to the dollar.  It recovered to 6.1878 but the Shanghai bourse and Hang Sang crashed:


(courtesy zero hedge)




PBOC Tries To Pop Equity Bubble, Tightens FX & Slashes Collateral/Margin Availability; Yuan Crashes Most Since 2008


Unlike the Federal Reserve – which openly encourages speculative wealth creation/redistribution and has never seen an equity bubble it didn’t believe was containedthe PBOC appears, by its actions tonight, to be concerned that things have got a little overheated in its corporate bond and stock markets as hot money ripped into the nation’s capital markets on hints of further easing and QE-lite a few months ago. In a show of force, the PBOC simultaneously fixed CNY significantly stronger (implicit tightening) and enforced considerably stricter collateral rules on short-term loans/repos. With Chinese stocks concentrated is even fewer hands than in the US (and recently fearful of the surge in margin trading), it appears the PBOC is trying to stall the acceleration is as careful manner as possible. The result, as Bloomberg notes, is amajor squeeze in CNY (biggest drop since Dec 2008), interest-rate swaps ripped higher along with corporate bond yields,  and most Chinese stocks sold off (with two down for every one up) though the latter is stabilizing now.


The actions… (via Reuters)

China Securities Depository and Clearing Corp (CSDC) said in an announcement after the market closed on Monday that with immediate effect, only corporate bonds with the highest rating of AAA and those issued by firms with a high rating of AA and above could be used for bond repo business.


Analysts say the regulators’ exclusion of lower grade bonds from being used in bond repurchase contracts, a key source of secondary liquidity in trade, increases the risk of trading such bonds, depressing demand and putting upward pressure on yields.


The move follows through on a decree issued by the State Council, China’s cabinet, in early October to clear debt issued by local government financial vehicles (LGFVs), even though the CSDC’s ban apparently covers a wider range of corporate bonds, the announcement shows.


“Along with the clarification and clearing of local government debt, our company could take further steps to compress and clear related bonds already being included in the collateral in line with market risk conditions,” the announcement said.


Given that more than 1 trillion yuan of outstanding corporate bonds are now deposited at the CSDC, analysts estimate that around 500 billion yuan of the bonds will be excluded from the repo business starting Tuesday, with the yields of credit bonds possibly being pushed up by a few dozens of basis points as their prices fall.

And a considerably stronger fix in CNY…

The fallout:

“As low-rated bonds cannot be used for repurchases on the exchange, this will force many financial institutions to deleverage,” said Zhou Hao, a Shanghai-based economist at Australia & New Zealand Banking Corp. “When there’s a liquidity issue, all bonds are sold off. They want to grab liquidity first today as you don’t know what will happen tomorrow.”


China Development Bank bond yields rose nearly 30 basis points at market open on Tuesday, traders said, as the market reacted to new corporate bond market restrictions announced on Monday afternoon.


The benchmark government bond future contract also reacted, sliding over 1 percent in morning trade.


The yield on government debt due October 2019 surged 14 basis points, the most for a five-year note since November 2013, to 3.88 percent, according to prices from the National Interbank Funding Center.


The yield on Kashi Urban Construction Investment Group Co.’s 800 million yuan of debt due November 2019 climbed 75 basis points to 7.17 percent, the biggest jump since July, exchange data show. The issuer is an LGFV.


Interest-rate swaps…

China’s interest-rate swaps climbed to a three-month high, bonds dropped and stocks retreated after policy makers narrowed the pool of corporate debt that can be used as collateral for short-term loans.


China Securities Depository and Clearing Corp. has stopped accepting new applications for repurchase agreements that involve notes rated below AAA or sold by issuers graded lower than AA, according to a statement posted on the agency’s website yesterday. The move means that about 470 billion yuan ($76 billion) of outstanding corporate bonds regulated by the National Development and Reform Commission can no longer be pledged for repos, according to Haitong Securities Co.


“The regulation will damp investor demand for lower-rated corporate bonds,” said Yang Feng, a Beijing-based bond analyst at Citic Securities Co., the nation’s biggest brokerage. “That may result in higher borrowing costs for local government financing vehicles.”


One-year interest-rate swaps, the fixed payment to receive the floating seven-day repurchase rate, rose 12 basis points to 3.50 percent as of 10:05 a.m. in Shanghai, according to data compiled by Bloomberg. It earlier jumped as much as 29 basis points to 3.67 percent, the highest since August.


Despite strongest FIX since March…



Most Chinese stocks fell after the benchmark index reached the most expensive level in three years and stricter collateral rules for short-term loans prompted investors to sell liquid assets.


China’s Shanghai Composite Index fell as much as 1.5 percent.


Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp. slumped at least 3 percent. China Securities Depository and Clearing Corp. stopped accepting new applications for repurchase agreements that involve notes rated below AAA or sold by issuers graded lower than AA, according to a statement posted on the agency’s website yesterday. China Oilfield Services Ltd. slid 3.6 percent in Hong Kong after crude declined to the lowest level in five years.


The Shanghai Composite Index (SHCOMP) dropped 0.1 percent to 3,018.67 at 10:37 a.m. local time, with two stocks falling for every one gaining.


“There’s a correction in the Shanghai Composite now after rising a lot the past days”

*  *  *

Of course – it is not holding as bond market weakness is provbiding the unintended consequence of helping stocks stabilize…

and is now at new record highs as speculators gamble on fighting the PBOC…


But Hang Senf is fading rapidly



despite the PBOC’s fear of leverage…

The regulation change is intended to reduce leverage in China’s stock market…


This is because equity rally has much to do with leverage, and more than 80 percent of flows are retail and come with material increase in leverage, Liu says in phone interview.


“Securities firms that provided personal loans to retail investors would borrow money via repos, and the regulation change triggered a liquidity squeeze”: Liu


Move more likely to make leverage less risky rather than curb stock performance, but that’s the chain effect: Liu

*  *  *

In summary:

  • The PBOC has aggressively taken action to reduce leverage in stock and bond market speculation
  • The PBOC has tightened monetary policy – raising FX and cutting collateral availability
  • The PBOC has created a major squeeze in USDCNY – stalling carry trades

We will see what kind of fallout this creates but for now stocks are holding up as FX and bond markets are turmoiling







And now the huge story of the day, the Shanghai composite plunging by 5.4%


(courtesy zero hedge)




China Crashes: Shanghai Composite Plunges 5.4% Amid Record Trading, Biggest Tumble Since 2009

Tyler Durden's picture

Those who have been following the ridiculous moves in the Shanghai Composite in recent months, knew it was only a matter of time before yet another major stock market (one which recently surpassed the Nikkei for the second largest spot in the world) crashed violently, further eroding faith in the centrall-planned “price discovery” process. The only question was when.

Following our report last night about China’s change in collateral rules, in which we noted that none other than the PBOC was now eager to pop the equity bubble following the PBOC simultaneously fixing the CNY significantly stronger (implicit tightening) and enforced considerably stricter collateral rules on short-term loans/repos – a move which according to estimates from Shenyin Wanguo Securities, would disqualify some 1.25 trillion yuan in corporate bonds as repo collateral, or 60% of all outstanding corporate bonds listed on China’s two stock exchanges – we were not surprised to see the tumble in the market-traded Yuan (which crashed the most in 6 years), and the surge in interest rate swaps, coupled by the plunge in corporate bonds. The only thing that puzzled us was why, after the correct kneejerk reaction lower in the Shcomp, did stocks proceed to surge even higher.

That said, we summarized it as follows:

  • The PBOC has aggressively taken action to reduce leverage in stock and bond market speculation
  • The PBOC has tightened monetary policy – raising FX and cutting collateral availability
  • The PBOC has created a major squeeze in USDCNY – stalling carry trades

We concluded as follows: “We will see what kind of fallout this creates but for now stocks are holding up as FX and bond markets are turmoiling.

* * *

We didn’t have long to wait, because literally a few short hours after we wrote that sentence, thishappened:


Because the higher they rise the quicker and more violently they plunge.  Here are the details via Bloomberg:

Benchmark index falls as much as 6.2%, most since Aug. 31, 2009, on record volume.

  • Value of shares changing hands on Shanghai and Shenzhen stock exchanges reaches 1.18t yuan at 2:51pm, highest on record
  • Shanghai Composite earlier rose as much as 2.4%
  • Index set to snap five-day 13% win streak
  • CSI 300 -4.8%; HSCEI -4.5% in H.K. trading
  • CSI 300 snaps record win streak, dropping for 1st time in 13 sessions
  • Shanghai margin trading, short-sell balance rose yday to 601.7b yuan

Ironically, and as has been the case throughout the western world, the crash in stocks promptly led to a capital reallocation, and all the earlier moves in other asset classes were quickly reversed as panicked speculators rushed out of stocks into everything else that had been sold off earlier:

  • Yield on 4.13% govt bond due Sept 2024 reverses rise, falling 12 bps to 3.730%
  • 1-yr IRS drops 4 bps to 3.3400%, reversing earlier rise by as much as 29 bps; 5-yr contracts down 6 bps to 3.5400% after rising by as much as 30 bps
  • 7-day repo rate rises 9 bps to 3.5719%
  • Yuan falls 0.21% to 6.1855 per dollar after earlier dropping by as much as 0.55%, most since Dec. 2008; PBOC sets reference rate 0.08% higher at 6.1231

That said, it is likely to get much worse before it gets better as the government will now be running and popping bubble after bubble until it extinguishes all the excess liquidity:

  • China Securities Depository and Clearing Corp.’s announcement yesterday will significantly reduce source of funds for securities firms and funds as these institutions usually pledge bonds for funding in exchange (bond repurchase) market, ANZ says in note; overall liquidity conditions could be tightened as many financial institutions will have to lower leverage ratio

The liquidity crunch may have already taken place, with the FT reporting that Industrial and Commercial Bank of China, China Construction Bank, Bank of China have raised rates on time deposits to 20% above benchmark over past week. Why else would they be doing this if not to entice depositors to park their cash at just these banks. And how long before everyone else follows, and what happens to inflation then and the biggest bubble of all: housing, which as we have been reporting since the beginning of the year, is teetering on the verge of total collapse?

Here is a more detailed narrative of the Chinese crash from the WSJ:

China’s stocks, currency and corporate bonds suffered their largest tumbles in years Tuesday after Beijing took fresh steps to rein in growing risks in the country’s debt-laden financial system.


The selloff started in the bond market, as traders rushed to sell and raise cash after a regulator banned investors from using low-grade corporate debt as collateral to borrow cash. The turmoil then spread to the yuan, which recorded its biggest two-day tumble ever. Later, the benchmark Shanghai index slumped 5.4% to record its biggest fall since 2009.


The sudden moves serve as a reminder to global investors about the country’s shaky finances, just as China opens up its capital markets more to overseas cash. Policy makers gathering in Beijing this week for a key summit are signaling to the investing public that they should prepare for a lengthy period of slower economic growth after years of amassing debt to fuel high growth levels.


The slump in the stock market was especially stark, though not entirely unexpected, after it had surged recently to become the world’s top performing index. Retail investors had fueled the rally, returning to stocks after once-popular investments, including high-yielding wealth management products and gold, turned sour.


“I was actually doing a presentation in my office during the last ten minutes of trading, when my boss asked to me to stop and asked everyone to look at stock prices.Then I saw the incredible fall of the Shanghai index and my stocks that have turned from black to red in just a few hours,” said Wu Yunfeng, a Shanghai-based retail investor.

And so another Meep Meep learns his lesson. If onlythis time it was for more than 15 minutes…




Here is a great explanation what the POBC did to curb the excess use of collateral in the shadow banking sector.

Approximately 200 billion is now offside:


(courtesy zero hedge)

55 Trillion Reasons Why Bank Of New York And State Street Better Not Get Any Ideas From China

Tyler Durden's picture

While everyone knows the direct consequence of China’s tinkering with collateral rules last night led to the biggest Chinese stock market crash in years, not many understand what caused this. In a nutshell, what China did was severely curb its shadow banking industry, when China’s securities clearing house said it raised the quality threshold for corporate bonds qualifying as collateral for repurchase agreements, or repos, which are short-term loans with maturities spanning from overnight to 182 days. And since the  proceeds of such repo deals are usually used to purchase stocks, suddenly a major source of “dry powder” for Chinese stock buying was violently and unexpectedly yanked away.

As those who are familiar with the US shadow banking industry are aware, this is precisely the very much unregulated lending pathway that froze up in the aftermath of the Lehman collapse, and which the Fed has been warning for years, is the most likely locus of the next financial crisis. Putting China’s action into numbers, Shenyin Wanguo Securities analyst Kang Chen calculated this collateral adjustment would disqualify some 1.25 trillion yuan (or $202 billion) in corporate bonds as repo collateral, or 60% of all outstanding corporate bonds listed on China’s two stock exchanges.

This may sound huge but it actually is quite tiny, especially if one looks at it in the context of the market cap loss on the Shanghai Composite overnight. What is far more curious is that China would proactively pursue the same kind of action that the US and all western banks are terrified of: clogging up a key shadow banking conduit in the form of well-functioning repos.

So what would a comparable action look like in the US? For the answer we go to the two biggest players in the US repo market, those legacy asset custodians who perform asset transformation by matching assets held by Client X with assets demanded by Client Y on a rented, or repo, or better yet, rehypothecated basis: State Street and Bank of New York.

Just how big is the total asset pool of repoable securities as represented by America’s two custodian banks? The answer: shown on the chart below.

One thing to note: when pundits discuss China’s shadow banking system, unlike in western nations where this relates more fo the method and tenor of funding (as well as including the traditional risk, maturity and credit transformations), such as “unsecured overnight” in China shadow banking usually refers to the source of funds, not so much whether repo or other shadow conduits are employed. But both go directly to the most important aspect of the modern hyper-financialized economy: leverage.

In any event, if China managed to lead to the biggest crash of its market since 2009 when it halted a tiny leverage pathway which amounted to just $200 billion, imagine what would happen if – for whatever reason – BoNY and/or State Street decided to cut off some of their $55 trillion in custody assets, which in a time of ZIRP, effectively doulble as virtually free “dry powder” for anyone who wants to use them.

In short: let’s hope that America’s two venerable custody banks don’t get any ideas from China and certainly don’t decide, any time in the near future, to slam the shadow banking system shut – a system whose “assets” at just these two banks are about 3 times greater than the market cap of the S&P500.

Source: STT 10-K, BK 10-K







The fall in the yuan caused a collapse of good collateral.

It also caused a collapse of the yen carry trade as the yen rose by 350 basis points.  Futures are indicating Japan to open down 700 points tonight.


We thus have multiple problems facing our bankers:

1, collapse in yen carry trade

2. collapse in oil derivatives

3. collapse in Venezuela and Abu Dhabi  (oil countries) setting off credit default risks


4. collapse in the long Nikkei/short gold trade which will have our bankers scurrying around looking for any physical gold they can find.


5. derivative risks in the collapse of oil itself

6. disappearance of good collateral as China pierces its equity bubble.


(courtesy zero hedge)




USDJPY Collapses 350 Pips, Drags Japanese Stocks Down 700 Points


China’s overnight destruction of $80 billion of eligible collateral from the great global carry trade has had destructive consequences on the massively crowded short JPY (long USDJPY) trade. Haviung already lost ground following the dismal downward revisions in GDP, USDJPY is down 350 pips from yesterday morning’s highs (This is the biggest 2-day drop in USDJPY in 18 months.) and the Nikkei 225 is down over 700 points in the same period… Abe approval ratings are plunging-er.


USDJPY -350 pips below 118.50 – the biggest 2-day drop in 18 months (since GDP was revised lower)


as Nikkei collapses from over 18,200 to 17,500 in 2 days…


As the great BoJ/Fed handover begins to fade…


The Nikkei is +12% YTD now (in JPY) and USDJPY is up 12.5% – leaving USD-based NKY investors underwater still.

*  *  *

Did the downward revision to Japanese GDP straw finally break the back of the Central Bank Omnipotence camel?


Charts: Bloomberg




Early this morning, Greece wants to move up elections on a new president.  If they do not get enough votes, then a snap election must be called.  The Athens stock exchange tumbled over 13% today.


Early this morning, Greek bonds inverted meaning recession:


(courtesy zero hedge)



Greek Bond Curve Inverts As Stocks Crater


Amid the collapse of the global carry trade, no nation on earth has benefited more (and is now suffering more) from the dash-for-trash, buy-the-pig-sty trade than Greek stocks and bonds. Combining carry unwinds with uncertainty over snap Presidential elections (which could usher in a left-wing anti-EU party into power)and a ‘technical-only’ extension of its handouts from Troika and Greek capital markets are in freefalll. The Athens Stock Index is down over 11% on the day, destroying 3 weeks of gains; the Greek 3Y bond price has collapsed (as the carry-traders pile out through small doors) inverting the yield curve – never a good sign.



As Bloomberg reports,

Greek stocks and bonds slumped after Prime Minister Antonis Samaras opted to bring forward the process of choosing a new head of state, risking parliamentary elections in Europe’s most indebted state as early as January.


Samaras today nominated Stavros Dimas, a 73-year-old former European Union commissioner, for the post. Voting will begin next week, on Dec. 17, with two further rounds possible. Samaras will have to rely on opposition votes to push through his pick for the mainly ceremonial post; without them, his government will fall.


“It is a high stakes gamble,” Holger Schmieding, chief economist at Berenberg Bank in London, said in an e-mailed note.“Snap parliamentary elections in January could then bring left-wing Syriza into power in Athens.”

Stocks are tumbling…

and so are bonds…


Leaving the yield curve inverted for the first time since the bailout…

Remember the long-end is mostly held implicitly by the ECB as collateral while the short-end is what ‘traders’ trade around… it is clear that the market wants out.

*  *  *

“Syriza may find itself winning an election, with less than a month before the program expires and Greece is left without a financial backstop,” said George Pagoulatos, a professor of European politics and economy in Athens.

But of course, when push comes to shove, no one wants to give up onmthe free-money EU gravy train so this will merely result in re-negotiation of the bailout terms.





Late in the day:  Athens stock exchange plummets by 13%. The most since 1987:


(courtesy zero hedge)




Greece Post Mortem: Worst Day Since 1987 Crash, Banks Destroyed, Bond Yields At Post-Bailout Highs


As the sun sets in Athens, we thought a moment of reflection was worthwhile. Greek stocks are now down 13% – the biggest single-day drop since (drum roll please) the crash of 1987… led by total carnage in Greek banks (down 15-25% on the day). Greek bond yields exploded, 3YR +183bps to a new post-bailout high at 8.32% (and inverted to 10Y).


Worst day since the 1987 crash for Greek stocks…


As every smart money hedge fund traders best trade of the year – Greek Banks are destroyed…


leaving 3Y bond yields smashed higher…


h/t @Not_Jim_Cramer




Another indicator to prove to us the global economy is coming to a halt.  The world is deflating fast due to lack of demand..


(courtesy zero hedge)







Baltic Dry Plunges Back Below $1000 – Lowest December Since 2008

Just a few short months ago, investors were “buy buy buy”-ing the fact that The Baltic Dry Index had resurged off multi-year lows ‘proving’ China’s renaissance and that world economic growth will re-approach Nirvana. Simply put, with collapsing commodity prices (iron ore for instance) and massive fleets of credit-driven mal-investment-based vessels, it should surprise no one that the shipping index just plunged back below 1000, now at its lowest for this time of year since 2008. Furthermore, the seasonal bounce always seen in Q3 was among the weakest ever. But apart from that, buy stocks…


Nothing like the normal seasonal bounce in Baltic Dry this year…


leaving it at the lowest for December since 2008…

*  *  *

Quite a recovery…

Charts: Bloomberg





The low price of oil is causing Venezuelan bonds to collapse.  These guys have only days left before they succumb


(courtesy zero hedge)




Venezuelan Bonds Crash To Lowest Price Since 1998


Bond prices in Venezuela have totally collapsed this morning – at 45c on the dollar, they are the lowest since 1998as the realization of the “abyss” they are staring into sparks an exodus from all credit positions in the country. VENZ 5Y CDS rallied 130bps which signals hedgers unwinding and the simultaneous sale of the underlying bonds implies broad-based capital flight (and profit taking) as 1Y CDS surges to record highs at 4830bps.


VENZ Bond prices collapse to 1998 lows…



Venezuela’s 1Y CDS has smashed to record highs implying imminent devaluation or default…


If you didn’t think this was serious, think again. (as Bloomberg reports)

The scores of money managers and analysts who crowded into Cleary Gottlieb Steen & Hamilton LLP’s panel discussion on Venezuela last week are a testament to the deepening concern over whether President Nicolas Maduro can make good on the nation’s debt obligations.


During the two-hour event on the 39th floor of the law firm’s downtown Manhattan office, some 150 attendees pressed the lawyers on an array of potential scenarios if Venezuela defaulted, according to interviews with six attendees who asked not to be identified because the meeting was private. Among the topics debated were whether the state oil company’s U.S. gasoline stations could be seized as collateral and whether it was legally possible for Venezuela to restructure the producer as an empty shell to avoid bondholder claims, they said.


For a country that hasn’t missed a foreign bond payment in decades, the questions reflect growing speculation the socialist revolution that transformed Venezuela over the past 15 years under Hugo Chavez and now Maduro has finally pushed the nation to the brink of economic collapse. After this year’s plummet in oil, which accounts for almost all of Venezuela’s exports, investors are now clamoring for insights from the law firm that represented Argentina in two defaults on how the government might defend itself when the money runs out.

Of course, Maduro is vehemnt that it’s not his fault…

Maduro said in a televised speech last night that ratings companies had imposed a “financial blockade” on Venezuela to prevent it from borrowing abroad, and that opposition politicians were to blame for the country’s economic woes.


“We have a financial blockade impeding us from getting financing we need to confront the fall in oil prices,” he said in Caracas. Venezuela has lower credit ratings “than countries at war or with Ebola. This has political causes.”

And it appears by the bond price plunge and modest CDS rally in 5Y suggests these various hedged VENZ bond holders did not like what they heard and unwound all their positions.

Which makes sense, as we concluded previously (read more here),

The punchline: “We are thus skeptical that the economic team’s plan to tap international lenders, including China, over coming weeks will yield any tangible results.”


What this means in simple terms is that Venezuela is now desperate for any cash. AsCNBC’s Silvana Ordonez reports, citing Diego Moya-Ocampos, a senior political risk analyst at IHS, “Clearly the government is trying to send signs to the market that they are working on necessary adjustments that the economy needs in order to honor international commitments and keep up with social policies, which are essential for political stability. However, these policy adjustments are not enough. This reflects simply that the government is desperately looking for funds to compensate for the lost revenues from declining oil prices.”

*  *  *



And now Nigeria is having problems due to the low oil price as its currency the Naira plummets to 184 to the dollar:


(courtesy zero hedge)


As Oil Prices Plunge, Nigeria Exclaims It Is Not Zimbabwe


Having already raised rates and devalued the Naira (and widened its trading bands), the Nigerian currency continues to collapse to new record lows as crude crashes lower and lower. Having tumbled 11.5% since oil prices peaked, the Naira is holdinga round 184/USD – over 9% above the new peg and dramatically outside of the new trading bands of +/-5% as it seems capital flight is out of control. That is probably why, as Bloomberg reports, Finance Minister Ngozi Okonjo-Iweala has commented that Nigeria won’t resort to printing money or imprudent borrowing as it adjusts to lower prices of oil. “This is not the first time this country has gone through lower oil prices and it will not be the last,” she said – making it very clear that Nigeria is not Zimbabwe (yet).



As Bloomberg reports,

Nigeria won’t resort to printing money or imprudent borrowing as it adjusts to lower prices of oil, the mainstay of its economy, Finance Minister Ngozi Okonjo-Iweala said.


“This is not the first time this country has gone through lower oil prices and it will not be the last,” she said at a conference in the capital, Abuja. “We should avoid the kind of fear that will paralyze us or make us do the wrong things out of fear and alarm.”


Nigeria, which is facing general elections in February, lowered its proposed budgeted oil price last week to $65 per barrel, the second cut in less than a month, signaling government revenue is set to plunge in Africa’s biggest crude producer.


Any borrowing will be done “judiciously,”Okonjo-Iweala said. Increased tax revenue and an expanding private sector would help the West African country offset the impact of falling oil prices, she said.


Global oil prices have plunged more than a third since June, prompting monetary policy makers to devalue the naira for the first time in three years, and threatening to erode public finances in a country that relies on crude sales for 70 percent of government income.

*  *  *

So they better hope oil comes back soon…

Your more important currency crosses early Tuesday morning:

Eur/USA 1.2372 up .0057

USA/JAPAN YEN  119.89  down  .741

GBP/USA  1.5649 flat

USA/CAN  1.1455   down .0027

This morning in  Europe, the euro is well up, trading now well above the  1.23 level at 1.2372 as Europe reacts to deflation and announcements of massive stimulation and crushed bourses.  In Japan  Abe went all in with Abenomics with another round of QE purchasing 80 trillion yen from 70 trillion on Oct 31. And now he wishes to give gift cards to poor people in order to spend. The yen continues to deteriorate like a rotten banana.   However this morning it continues with its dead cat bounce settling up  in Japan by 74  basis points and settling just below the 120 barrier to  119.89 yen to the dollar ( still heading towards 123).  The pound is flat this morning as it now trades just below  the 1.57 level at 1.5649.(very worried about the health of Barclays Bank and the FX/precious metals criminal investigation).  The Canadian dollar is down today trading at 1.1455 to the dollar.



 Early Tuesday morning USA 10 year bond yield:  2.25% !!!  flat  in  basis points from Monday night/



USA dollar index early Tuesday morning:  88.83 down 21 cents from Monday’s close

The NIKKEI: Tuesday morning down 122 points or 0.68% (Abe’s helicopter route to provide free cash)

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

2/    Asian bourses all deeply in the red…     Chinese bourses: Hang Sang  in the red (over 2% down), Shanghai in the red (down over 5%),  Australia in the red:  /Nikkei (Japan) red/India’s Sensex in the red/


Gold early morning trading:  $1210.00







Closing Portuguese 10 year bond yield:  2.82% up 10  in basis points from Monday

 Closing Japanese 10 year bond yield:  .42% !!! down 2   in basis points from Monday

Your closing Spanish 10 year government bond Tuesday up 4   in basis points in yield from Monday night.

Spanish 10 year bond yield:  1.83% !!!!!!

Your Tuesday closing Italian 10 year bond yield:  2.04% up 10 in basis points from Monday:

trading 21 basis points higher than Spain:




Closing currency crosses for Tuesday night/USA dollar index/USA 10 yr bond:

Euro/USA:  1.2367 up  .0052

USA/Japan:  119.68 down 0.957

Great Britain/USA:  1.5658  up .0007

USA/Canada:  1.1441 down .0040

The euro rose smartly in value during the morning then retreated a bit in the afternoon’s  session,  and it is up by closing time , finishing just above the 1.23 level to 1.2367.  The yen rose sharply in the morning, tailed off somewhat in the afternoon session, but by closing it was up 95.7 basis points on the day closing well below the 120 cross at 119.68. Early this morning, it broke the 118 barrier to hit its nadir at 117.91.  The British pound gained some  ground   during the afternoon session and it was up on the day closing  at 1.5658.  The Canadian dollar was well up  in the afternoon and was up on the day at 1.1441 to the dollar.

Currency wars at their finest today.

Your closing USA dollar index:   88.70  down 35 cents  from yesterday.

your 10 year USA bond yield , down 4   in basis points on the day: 2.21%!!!!

European and Dow Jones stock index closes:

England FTSE  down 142.68 or 2.14%

Paris CAC  down 111.54  or 2.55%

German Dax down 221.28 or 2.21%

Spain’s Ibex down  343.6 or  3.18%

Italian FTSE-MIB down  561.15    or 2.81%

The Dow: down 51.28 or 0.29%

Nasdaq; up 26.03??   or 0.55%

OIL:  WTI 63.74  !!!!!!!

Brent: 66.74!!!!




And now your final gold prices in the various currencies


Y %Change
52W High
52W Low
Gold (USD)
Gold (GBP)
Gold (CAD)
Gold (AUD)
Gold (INR)
Gold (CHF)
Gold (EUR)
Gold (JPY)
Gold (TRY)
Gold/Silver …
Silver (USD)
Silver (GBP)
Silver (CAD)
Silver (AUD)
Silver (INR)
Silver (CHF)
Silver (EUR)
Silver (JPY)



And now for your big USA stories

Today’s NY trading:


Markets Turmoiled As 5th Hindenburg Looms

Tyler Durden's picture

Summing today up in 7 seconds…



*  *  *

5th Hindenburg Omen in the last 6 days… Breadth todasy was horrible…


*  *  *

Wherever you look today there was dramatic moves in markets – Treasury yields plunged, credit spreads blew wider (especially HY and more especially energy), VIX jumped notably higher, USDJPY collapsed, gold and silver surged, oil rallied modestly…

But then – shortly after Europe closed… someone (cough BoJ cough) decided to catch USDJPY at 117.95 and lift it miraculously 170 pips to save risk assets from a serious day…



Mission NOT!! Accomplished…

The entire equity complex ripped higher led by “most shorted” stocks being squeezed and driving small caps to a big day… the Nasdaq avoids its first 2-day losing streak since the Bullard lows. But despite the best efforts the S&P could not hold green


Energy stocks were today’s best performers…


Despite the panic-buying v-shaped recovery – on par with the bounce at the Bullard lows, stocks remain red post-Payrolls…


Volume faded away on the upswing as one would expect…


Notably while VIX helped it did not ramp like stocks…


Treasury yields bounced but 30Y remains down 9bps on the week, flattening significantly…


Crushing the yield curve to iots flattest since 2009


The USD slid for the 2nd day in a row… but bounced hard after Europe closed…


But gold and silver surged (and did not lose much as everything ripped) and oil gained modestly…



While the broad HY market is indeed widening, the following chart should give some context (albeit comparing a CDS spread to an OAS is not perfect) on just how totally screwed the energy sector is…


Charts: Bloomberg

Bonus Chart: Who Do You Believe?



You’ve got to be kidding!!!

They are doing it again:


(courtesy zero hedge



If At First You Fail Miserably & Blow Up The Financial System, Do It Again!



Via Jim Quinn’s The Burning Platform blog,

Having government entities provide low down payment mortgages to people who can’t afford to buy a house is always a good move.

Keynesians like Krugman approve wholeheartedly. The housing market will get a nice boost and the working taxpayers will fund the bad debt through Fannie and Freddie. You own Fannie and Freddie. Everyone wins.

In case you forgot, the closing costs to sell a house are usually 8% of the home price. So these home buyers are immediately 5% underwater when they move in.

Sometimes I can’t believe I live in a world this fucked up. And no one notices and no one cares.

Where are the Republicans we elected to stop this shit?

*  *  *

Guest Post by Anthony Sanders

Fannie and Freddie officially approve 3% down payment mortgages (for 1st time homebuyers and lower incomes)


Here we go again! Mortgage giants Fannie Mae and Freddie Mac have now officially approved 3% down payment mortgages.

According to Brena Swanson at Housing Wire,

“The new lending guidelines released today by Fannie Mae and Freddie Mac will enable creditworthy borrowers who can afford a mortgage, but lack the resources to pay a substantial down payment plus closing costs, to get a mortgage with 3% down. These underwriting guidelines provide a responsible approach to improving access to credit while ensuring safe and sound lending practices,” FHFA Director Mel Watt said.


“To mitigate risk, Fannie Mae and Freddie Mac will use their automated underwriting systems, which include compensating factors to evaluate a borrower’s creditworthiness. In addition, the new offerings will also include homeownership counseling, which improves borrower performance. FHFA will monitor the ongoing performance of these loans,” Watt continued.

What are these compensating factors? Lower down payment mortgages required higher credit scores among other things. Also, the 3% down loans are intended only to first-time buyers, buyers who haven’t owned a home for at least a few years and those with lower incomes. Many of the loans will also require borrowers to undergo home-buyer counseling before making a purchase.

But will this work? Not unless the labor market increases substantially.



House price growth is slowing, but is still over 2x wage growth.



Let’s hope low downpayment loans perform better than the last time!!!!!





That is all for today


I will see you Wednesday night

bye for now



  1. Harvey,

    I have a theory on open interest in Gold and Silver…and how it drops dramatically into and through the delivery months. The bankers take BOTH the long and short side of thousands of contracts in two or more accounts. The bankers do this on top of their out right short positions. In one account they “buy”…and the other account they “sell”. So let’s use December as an example. The fed (that’s who the bankers really are), could liquidate 5,000 contracts on both their buy and sells one day…giving the appearance that the longs are bailing. Even now…when we are down to less than 2,000 contracts…what if they still hold 1,000 both long and short? They could liquidate 200 long and shorts on a given day…and we all think the longs are giving up and not rolling. Do you understand how this would work and would actually answer a lot of questions of “why” are buyers not buying back in on later months?

    Keep up the good work…



  2. Allen Meetze · · Reply

    Dear Mr. Organ,
    Back in September 2014 you stated that you believed there would be a default in December because a large player would demand physical gold. Please update your thoughts.


  3. Yes please advise latest theories mr Organ.



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