jan 16.2015/Huge gain of 9.56 tonnes of gold into GLD!!/Strange loss of 1.34 million oz of silver from the SLV/ Huge losses from the Swiss Franc unpegging/All 4 major GREEK banks receiving emergency FUNDING through the ELA/Huge bank runs on all the major Greek banks/

Written Jan 19.2015:  due to the huge news of the German repatriation, I will provide a short commentary on that plus other news.  There will be no data on the comex today.

Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:


Gold: $1276.90 up $12.20   (comex closing time)
Silver: $17.74 up 74 cents  (comex closing time)



In the access market 5:15 pm


Gold $1280.50
silver $17.79




Gold/silver trading:  see kitco charts on right side of the commentary.


What a day.  Late last night we got word that two brokerage firms are in serious trouble due to these guys being on the wrong side of the Long USA dollar/short Swiss Franc trade. Then today, many more firms stated that they have lost serious money on the trade. What is interesting on the Swiss unpegging of its currency (the peg was 120 Swiss Franc/1 Euro) was this was done in total  secrecy.  Christine Lagarde was totally unaware that this was forthcoming.  Generally the bankers know in advance but this time everyone was in total darkness.  Again we are witnessing central banks not trusting one another. You can bet the farm that there will be huge derivative losses on the Swiss unpegging.


Late in the day we got word that all 4 major Greek systemic banks have asked for emergency funding (ELA) as depositors bail out of all banks. I cannot see how Greece can remain in the Euro Monetary Area.


The gold comex today had a poor delivery day, registering 0 notices served for nil oz. Silver comex registered 120 notices for 600,000 oz.

Three months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 247.23 tonnes for a loss of 56 tonnes over that period.


In silver, the open interest rose  by 77 contracts with yesterday’s silver price being up by 11 cents.  The total silver OI continues to  remains relatively high with today’s reading at 157,013 contracts. However the bankers are still loathe to supply much of the non backed silver paper. The January silver OI contract rose by 74 contracts up to 200.


In gold we had a gigantic increase in OI with the huge rise  in price of gold  yesterday to the tune of $30.30. The total comex gold OI rests tonight at 421,911 for a gain of 18,889 contracts. The January gold contract remains constant at 87 contracts.




Today we had a huge addition of  gold inventory at the GLD to the tune of 9.56 tonnes/ /Inventory 717.15 tonnes


In silver, we had another huge reduction in   silver inventory at the SLV of 1.340 million oz

SLV’s inventory rests tonight at 325.011 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 in the negative direction/  All months are in contango and thus positive in rates.


Sometime in January the LBMA will officially stop providing the GOFO rates.


Jan 16 2015


+.10%                     +1025%                       +.105%                +.1075            .135%


Jan 15 2014:



+.105%                   +.1075%                 +.1075 %             +.1175%               +.1475%






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



Here are today’s comex results:



The total gold comex open interest rose today by 18,829 contracts from 403,082 all the way up to 421,911 with gold up by $30.30 yesterday (at the comex close).  We are now onto the January contract month.   The non active January contract month saw it’s OI contracts remain constant at 87 for a loss of 0 contracts. We had 0 contracts served yesterday.  Thus we neither  lost nor gained any  gold contracts standing for delivery in this January contract month.   The next big delivery month is February and here the OI rose by 10,762 contracts to 189,258 contracts with few moving to April. The estimated volume today was poor at 121,113. The confirmed volume yesterday was excellent at 323,074 contracts, even though  the high frequency traders gave some help  with respect to volume.  Today we had 0 notices filed for nil oz . The world reacted to the unpegging of the Swiss Franc.



And now for the wild silver comex results. Silver OI rose by 77 contracts from 156,936 up to 157,013 with  silver up by 11  cents yesterday. The front January contract month saw its OI rise to 200 contracts for a gain of 74 contracts. We had 0 notices filed yesterday, so we gained 74  silver contracts or an additional 370,000 oz will stand for silver in the January contract month. As I mentioned yesterday, somebody was in great need of physical silver  and they seem to be robbing the cookie jar for very valuable silver. The next big contract month is March and here the OI fell by 462 contracts down to 102,432.  The estimated volume today was poor at 21,651. The confirmed volume yesterday was excellent at 63,612. We had 0 notices filed for nil oz today. The rise in silver is certainly scaring our bankers from supplying more non backed paper. The OI in silver has seen a slow and steady rise for the past few weeks.


January initial standings


Jan 16.2015



Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz 32.15 oz (Brinks) 1 kilobar
Deposits to the Dealer Inventory in oz nil  oz
Deposits to the Customer Inventory, in oz nil
No of oz served (contracts) today 0 contracts(nil  oz)
No of oz to be served (notices)  87 contracts (8700 oz)
Total monthly oz gold served (contracts) so far this month  8 contracts(800 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month

Total accumulative withdrawal of gold from the Customer inventory this month

 2539.9 oz

Today, we had 0 dealer transactions

total dealer withdrawal: nil oz


we had 0 dealer deposit:

total dealer deposit: nil oz


we had 1 customer withdrawal


i) out of Brinks:  32.15 oz


total customer withdrawal: 32.15 oz


we had 0 customer deposits:

total customer deposits; nil  oz


We had 0 adjustments


Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 contracts of which 0 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 (8) x 100 oz  or 800 oz to which we add the difference between the January OI (87) minus the number of notices served upon today (0) x 100 oz  = 9500 oz , the amount of gold oz standing for the January contract month. (.2954 tonnes of gold)


Thus the initial standings:

8 (notices filed for the month x 100 oz) +OI for January (87) – 0(no. of notices served upon today) 9500 oz (.2954 tonnes).


We neither lost nor gained any gold ounces standing for delivery today.


Total dealer inventory: 770,487.09 oz or 23.96 tonnes

Total gold inventory (dealer and customer) = 7.948 million oz. (247.23) tonnes)


Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 56 tonnes have been net transferred out. We will be watching this closely!


This initializes the month of January for gold.





And now for silver


Jan 16 2015:



 January silver: initial standings





Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory 686,095.32 oz (BRINKS,SCOTIA,)  oz
Deposits to the Dealer Inventory  602,440.600 (CNT)
Deposits to the Customer Inventory 600,248.170 oz (Scotia)
No of oz served (contracts) 120 contracts  (600,000 oz)
No of oz to be served (notices) 80 contracts (400,,000 oz)
Total monthly oz silver served (contracts) 354 contracts (1,770,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal  of silver from the Customer inventory this month  5,810,595.4 oz

Today, we had 1 deposit into the dealer account:

i) Into CNT:  602,440.600 oz (one decimal)

total dealer deposit: 602,440.600   oz


we had 0 dealer withdrawal:

total dealer withdrawal: nil oz


We had 1 customer deposit:


i) Into Scotia:  600,278.170 oz

total customer deposit  600,278.17 oz



We had 2 customer withdrawals:

i) Out of Brinks:  635,713.89 oz

ii) Out of Scotia: 50,381.43 oz


total customer withdrawal: 686,095.32 oz



we had 2 adjustments

i) out of CNT:  1,046.09 oz was adjusted out of the customer and this landed into the dealer account of CNT


ii) Out of Delaware:  156,674.700 oz was adjusted out of the customer and this landed into the dealer account of Delaware.



Total dealer inventory: 66.313 million oz

Total of all silver inventory (dealer and customer) 174.430 million oz.

The total number of notices filed today is represented by 120 contracts for 600,000 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 (354) x 5,000 oz  to which we add the difference between the OI for the front month of January (200) – the Number of notices served upon today (120) x 5,000 oz  = 2,170,000 oz the number of ounces standing so far for the January delivery month.


Initial standings for silver for the January contract month:

354 contracts x 5000 oz= 1,770,000 oz  +OI standing so far in January  (200)- no. of notices served upon today(120) x 5,000 oz   equals 2,170,000 ounces standing for the January contract month.



we gained 74 contracts or an additional 370,000 oz will stand for the January contract month.

Again somebody was in great need of silver.


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

http://www.harveyorgan.wordpress.com or http://www.harveyorganblog.com







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:



Jan 16.2015 we had a huge addition of 9.56 tonnes of gold into the GLD/New inventory 717.15 tonnes.  (where on earth did they obtain that quantity of physical gold??)


Jan 15/ no change in inventory at the GLD today/inventory 707.59 tonnes


Jan 14.2015  we had a small withdrawal of .23 tonnes of gold from the GLD/inventory 707.59 tonnes


Jan 13.2015 no change in gold inventory/GLD inventory tonight at 707.82 tonnes


Jan 12 no change in gold inventory/GLD inventory tonight at 707.82 tonnes


January 9.2015: an addition of 2.99 tonnes of gold/Inventory 707.82 tonnes


Jan 8.2015: no change/inventory 704.83 tonnes


Jan 7.2015: we lost another exact 2.99 tonnes of gold inventory at the GLD/Inventory at 704.83 tonnes


Jan 6.2015: we lost 2.99 tonnes of gold inventory at the GLD//inventory 707.82 tonnes





Today, Jan 16/2015 /a huge addition of 9.56 tonnes of   gold   inventory at the GLD ) /Inventory rests tonight at 717.15 tonnes


inventory: 717.15 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 : 717.15 tonnes.






And now for silver (SLV):



Jan 16.2015: we had another withdrawal of 1.34 million oz of silver inventory/Inventory 325.011 million oz

(something is up!!)


Jan 15.2015 we had a huge withdrawal of 1.628 million oz/Inventory 326.391 million oz


Jan 15.2015: no change in silver inventory/327.979 million oz



Jan 13.2015 no change in silver inventory/327.979 million oz/


Jan 12.2015 we had a huge withdrawal of 1.915 million at the SLV/inventory at 327.979 million oz.


Jan 9.2015: we had a huge addition of 1.437 million oz at the SLV/Inventory 329.894 million oz


Jan 8.2015: no change in silver inventory/inventory at 328.457 million oz.

Jan 7.2015:  we had another loss of 958,000 oz of silver from the SLV/Inventory 328.457 million oz

jAN 6.2015: we had a small loss of  149,000 oz/inventory 329.415 million oz




Jan 16/2015 / a huge withdrawal of 1.34 million oz of  silver from the SLV/ inventory at the SLV

registers: 325.011 million oz







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

Note: Sprott silver fund now for the first time into the negative 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  5.6% percent to NAV in usa funds and Negative 5.9 % to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 62.1%

Percentage of fund in silver:37/4%

cash .5%



( Jan 16/2015)



2. Sprott silver fund (PSLV): Premium to NAV falls to + 1.35%!!!!! NAV (Jan 16/2015)

3. Sprott gold fund (PHYS): premium to NAV falls to negative -0.60% to NAV(Jan 16/2015)

Note: Sprott silver trust back  into positive territory at +1.35%.

Sprott physical gold trust is back in negative territory at -0.60%

Central fund of Canada’s is still in jail.





At 3:30 pm we receive the COT which lays out positions of our major players:


First the gold COT:


Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
192,959 62,733 40,729 129,436 267,112 363,124 370,574
Change from Prior Reporting Period
5,254 -2,794 -170 -991 14,013 4,093 11,049
130 76 73 51 61 214 185
Small Speculators  
Long Short Open Interest  
38,984 31,534 402,108  
3,994 -2,962 8,087  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, January 13, 2015


Our large specs:


Those large specs that have been long in gold added a large 5254 contracts to their long side

Those large specs that have been short in gold covered 2794 contracts from their short side.


Our commercials:


Those commercials that have been long in gold pitched 991 contracts from their long side

Those commercials that have been short in gold continued to supply the non backed paper to the tune of 14,013.


Small specs;


Those small specs that have been long in gold added another 3994 contracts to their long side


Those small specs that have been short in gold covered 2962 contracted from their short side.

The commercial side is very heavy on its short side.


And now for silver:


Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
59,808 19,869 15,845 61,363 108,167
4,897 -3,003 945 -1,092 6,103
74 51 48 40 49
Small Speculators Open Interest Total
Long Short 157,282 Long Short
20,266 13,401 137,016 143,881
-347 358 4,403 4,750 4,045
non reportable positions Positions as of: 135 131
Tuesday, January 13, 2015   © SilverSeek.c


Our large specs;

Those large specs that have been long in silver added a rather large 4897 contracts to their long side

Those large specs that have been short in silver covered 3003 contracts from their short side.


Our commercials:

Those commercials that have been long in silver pitched 1092 contracts from their long side.

Those commercials that have been short in silver added a whopping 6103 contracts to their short side.


Our small specs:

Those small specs that have been long in silver pitched a tiny 347 contracts from their long side

Those small specs that have been short in silver added a tiny 358 contracts to their short side.

Conclusion: something has got to give on both gold and silver as the commercials continue to hugely into the negative






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




Early gold trading from Europe early Friday  morning:


(courtesy Mark O’Byrne)


Ukraine Lurches to Full Scale War as Russia Drastically Reduces Gas Supply to EU



Vladimir Putin has ordered the Russian state energy giant Gazprom to cut natural gas supplies to and through Ukraine to the EU in a little reported move. It took place late on Wednesday and was overshadowed by the Swiss National Bank market turmoil yesterday.

Russian Prime Minister Putin instructs Gazprom chairman Alexei Miller during a meeting yesterday

Russia has shut off gas supplies through Ukraine to six EU states, ostensibly due to Ukraine’s alleged illegal siphoning gas from the pipeline. The European Union warned that the sudden cut-off to some of its member countries was ‘completely unacceptable’. The move comes just as winter begins to bite across Europe.

The pipeline crossing Ukraine supplies over 60% of the entire EU’s natural gas. Six countries – Greece, Bulgaria, Macedonia, Croatia, Romania and Turkey – report a complete halt of gas coming in from Russia.

Yesterday, Ukraine confirmed that Russia had completely cut off their supply. Croatia said it was temporarily reducing supplies to industrial customers while Bulgaria said it had enough gas only ‘for a few days’ and was already in a ‘crisis situation’.

There is the risk of an energy crisis and it is worrying that the move comes about at a time of increased maneuverings and posturing by NATO and the Russian army and deepening conflict in Ukraine.

Ukraine lurched back toward full-scale conflict today as troops loyal to the new Ukraine government battled with pro-Russian forces for control of an eastern airport.

Ukraine said yesterday that cease fire violations have surged to a new record, while the nation’s security council warned the unrest may spark a “continental war” and German Chancellor Angela Merkel called for emergency talks.


Russia is planning to divert it’s EU bound natural gas to a pipeline through Turkey opening at the Turkey-Greece border. Bloomberg quotes Valentin Zemlyansky of the Ukrainian gas company Naftogaz,  “They [the Russians] have reduced deliveries to 92 million cubic metres per 24 hours compared to the promised 221 million cubic metres without explanation,”

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

Russian Energy Minister, Alexander Novak put it bluntly, “The decision has been made. We are diversifying and eliminating the risks of unreliable countries that caused problems in past years, including for European consumers.”

Bloomberg reports, “Gazprom, the world’s biggest natural gas supplier, plans to send 63 billion cubic meters through a proposed link under the Black Sea to Turkey, fully replacing shipments via Ukraine, Chief Executive Officer Alexey Miller said during the discussions.”

“We have informed our European partners, and now it is up to them to put in place the necessary infrastructure starting from the Turkish-Greek border,” Miller said.

Such a project would likely take months to implement. In the mean-time many Europeans may not have access to gas to warm their homes through winter and many industries will also be without gas – effecting production, employment in already struggling economies.

Whether or not Russia is calling Europe’s bluff in a bid to ease sanctions is unclear at this point. It appears that Turkey, an erstwhile NATO member, is warming to Russia, possibly due to the instability that western actions in the Middle East have brought to Turkey’s doorstep.

Earlier this week Turkish President Erdogan made the stunning accusation that “the West” staged the attacks in Paris last week.

The French, also, have been considering a foreign policy independent of the NATO status-quo. France is in the process of completing two battle ships for sale to Russia. Earlier this month President Hollande stated that sanctions against Russia should be lifted.

Tensions and suspicions are escalating even within the Western block. The EU does not have many cards left to play in dealing with Russia.

Tensions in the EU may arise as natural gas required for industry may have to be diverted to households to avoid social upheaval.

Geopolitical tensions are escalating across the world, concurrent with indications of an imminent and severe recession globally.

Gold has played an important role in protecting peoples wealth in uncertain times and will do so again in the coming years.

REVIEW of 2014 – Gold Second Best Currency, +13% in EUR, +6% GBP

OUTLOOK 2015 – Uncertainty, Volatility, Possible Reset – DIVERSIFY



Today’s AM fix was USD 1,258.25, EUR 1,082.37 and GBP 826.76 per ounce.
Yesterday’s AM fix was USD 1,235.25, EUR 1,055.41 and GBP 811.76 per ounce.

Gold in USD - 5 Days (Thomson Reuters)

Gold surged in dollars, pounds and especially euros yesterday after the SNB caused turmoil in markets. Spot gold surged $30.50 or 2.48% to $1,258.50 per ounce and gold in euro terms rose by 4 per cent from EUR 1,044 to over EUR 1,085 per ounce, as investors sought safety in the precious metal after Switzerland decoupled the franc from the euro.

Gold in EUR - 5 Days (Thomson Reuters)

Gold is up almost 3.5% this week in dollar terms its largest gain in nearly a year. In euro terms gold is is up 5.3 percent and in sterling terms by 3.6 percent.

2015 year to date, gold is up 5.5 percent in dollar terms, 11.6 per cent in euro terms and almost 8 per cent in sterling terms. Overnight, spot gold in Singapore rose to $1,263.11 prior to determined selling  pushed prices a little lower. In London, prices reached a low of $1,255 prior to a bounce to $1,262 per ounce.

There was a pullback in gold futures prices for the first time in six days on speculation that prices had risen too much after the spike to a four-month high. Gold’s rally sent its 14-day relative-strength index (RSI) to close to 70, a level that signals to some traders and analysts that prices may be poised to correct lower.

Gold in GBP - 5 Days (Thomson Reuters)

Traders and analysts surveyed by Bloomberg were bullish on gold for a seventh week, noting the chancel for more QE in Europe and speculation the U.S. Federal Reserve will delay raising interest rates.

Demand in China remains very robust and has got off to another cracking start with withdrawals on the Shanghai Gold Exchange (SGE) at a very robust 61 metric tonnes in the first week of the year (January 4th to 9th).  Chinese demand is high ahead of the Chinese Lunar Year as jewelers and bullion dealers stock up on jewelry and gold coins and bars.


Gold continues to flow from West to East as indicated in the continuing very high demand from China and India and the developing architecture for physical gold trading in China.

The Shanghai Gold Exchange and World Gold Council announced this week that they have partnered to develop the Shanghai Free Trade Zone as a global gold market. The Shanghai Gold Exchange is the largest physical gold exchange worldwide and the World Gold Council is the global authority on the gold industry representing mining organizations.

Together, these two organizations are joining hands to support the development of both domestic and international gold buying in China by leveraging the opportunity provided by the internationalisation of the Chinese gold market, through the Shanghai Free Trade Zone (FTZ), to support market expansion. The agreement will support the development of gold investment products and solutions for the industry and investors both regionally and globally.

Sales of U.S. Silver Eagle coins for January have started strong with 3.6 million sold compared to 4.7 million for the entire month of January last year.  The U.S. Mint began selling Gold Eagles last week with 51,500 ounces reported on the first day of sales.

2014 sales of American Eagle Silver bullion coins were 44,006,000 ounces. The figure was driven by fourth quarter sales, with December up 104% year-on-year. Based on U.S. mint figures sales of Silver Eagles eclipsed Gold Eagles’ by 59% in 2014.

Today, silver rose 0.4 per cent to $17.10 an ounce. Palladium rose 0.4 percent to $770 an ounce and platinum lost 0.2 percent to $1,260.50 an ounce.

From GoldCore Trading Desk
We have seen surging demand for gold and silver in January. Buy side trades are up 25% and volume is up 85% for same period last year. Buy orders and volume are also higher than the 3 year average for this time of year. The sell side is flat, with no change seen. The ratio of gold buying to silver buying is 60:40 – in favour of gold.






Koos gives a detailed account on how China received all of its gold from various countries


(courtesy Koos Jansen)






Posted on 16 Jan 2015 by

China Continues To Drain Global Gold Inventory

Withdrawals from the Shanghai Gold Exchange (SGE), the best indicator for Chinese wholesale demand, have been strong in 2014. In total 2,102 tonnes was loaded out from the SGE vaults. Mid 2014 withdrawals were relatively low, then they ramped up in September.

In this post we’ll examine where this gold was sourced from.

Shanghai Gold Exchange SGE withdrawals delivery monthly 2009 - 2014

At this moment we don not know exactly what the composition was of the supply side of SGE withdrawals in 2014 – scrap, mine or import, though SGE chairman Xu Luode gave us a hint at the ninth China Gold & Precious Metals Summitthat took place in early December:

As regards the concerns over the Chinese gold demand, chairman of the Shanghai Gold Exchange Xu Luode told the conference that the gold market in 2014 is still a CHINA YEAR. …China has imported over 1,100 tonnes of gold by November this year and the whole year’s bullion import is estimated to reach 1,200 – 1,300 tonnes, a number only next to the year of 2013.

As I have demonstrated before the main feeder for China’s gold hunger is the London Bullion Market (the UK), though in 2013 this was more so than in 2014. Let’s go through the most recent customs data published by the largest suppliers to China mainland: the UK, Switzerland, Hong Kong, Australia and the US.

The UK

The great gold exodus from West to East started early 2013; 12.5 Kg London Good Delivery bars (995 purity) from the UK are shipped to Switzerland, where it’s refined into 1 Kg (9999 purity) bars and send forward to the East. The big change since 2014 is that more gold is being send directly to China instead of going via Switzerland and Hong Kong, partially because China has increased its refining capacity.

In total the UK net exported 173 tonnes in November, up 282 % m/m; the biggest outflow since July 2013. Net export to Switzerland also saw a huge spike in November, 118 tonnes, up 179 % m/m, the largest tonnage in 9 months.

In the next chart I have added SGE withdrawals to UK gold trade – since January 2013 we can see a correlation between net export from London and withdrawals in China.

UK Gold Trade 2012 - November 2014

January – November total UK net gold export stands at 447 tonnes, net gold export over this period to Switzerland was for 579 tonnes.

In November UK gold export to China was 30 tonnes, up 186 % m/m, an all time record. Aggregated net gold export (January – November) heading for the mainland was 105 tonnes.

UK - China Gold Trade 2012 - November 2014

For all UK trade data I have used the tonnage disclosed by Eurostat.


The Swiss imported 1,597 fine tonnes in the first eleven months of 2014; export was 1,616 tonnes over this period.

Switzerland gold trade 2011 2014 November

I would like to emphasize fine tonnes in the chart above. Thanks to a commenter on this blog (named sb) I have calculated the fine content of Swiss gold trade. One of Switzerland’s core businesses is refining gold; this means the import tonnage disclosed by Swiss customs is of a significant lower purity than the exported tonnage. A good example is 2014:

Switzerland gold trade November 2014

First the data: in November import was 219 tonnes, up 137 % m/m, a record for 2014; export was 232 tonnes, up 20 % m/m, a record for 2014 as well. Net outflow was 12.5 tonnes.

Additionally, we can see the more Switzerland is importing the higher the purity of the imported gold. Here is why; there is a certain amount global mines can produce as doré every month (low purity), when demand exceeds this amount the Swiss need to import bullion bars, which makes the overall purity of import rise. The last chart clearly illustrates that the more gold is passing through, the more is drained from global bullion bar inventory.

The top destinations of Swiss gold are India, Hong Kong, Singapore and China mainland.

Switzerland gold trade largest traders Jan Nov 2014

Export to China matches, again, the trend of SGE withdrawals; relative weakness from May until August, strength from September till present.

Switzerland China gold trade November 2014

In November Swiss gold export to China was 35 tonnes, down 18 % m/m. Switzerland net gold export January – November heading for China was 187 tonnes.

Hong Kong

Hong Kong is Asia’s main trading hub. Gigantic amounts of gold are imported, most of which is destined for the mainland, though Hong Kong has also net imported hundreds of tonnes itself since 2013.

Hong Kong gold trade November 2014

I’ve been excepting most of Hong Kong’s stock will ultimately be drained by China. From Koos Jansen, June 21, 2014:

In 2013, the year Chinese demand for physical gold exploded, Hong Kong gross gold import was 2239 metric tonnes. The bulk of this was exported to China mainland (net 1158 tonnes), but a staggering 597 tonnes was left behind.

… It will be interesting when Hong Kong becomes a net exporter.

Not by staggering amounts, but Hong Kong is currently a net exporter for four months in a row.

Hong Kong monthly gold trade January 2013 - November 2014

Hong Kong started net exporting in August when demand in China was relatively weak; I expect these net exports to further increase, as Chinese demand accelerated in September through December.

In the first eleven months of 2014 Hong Kong net exported 742 tonnes to mainland China – down 30 % y/y.

Hong Kong - China gold trade 11-2014

In November net export to China was 99 tonnes, up 28 % m/m, a record since February. Note, again, the SGE withdrawal pattern in exports.

Hong Kong - China gold trade monthly January 2009 - November 2014


Australia is the second largest miner in the world, producing roughly 250 tonnes a year. Gold that is nearly all exported, as the ozzies themselves do not have an appetite for yellow metal comparable to Indians or Chinese.

Export data of the land of down under can be tracked through COMTRADE – that copies its data from the Australian Bureau Of Statistics. This data is deceiving though, as I’ve just found out. Australia discloses gold export to China, also when it’s shipped via Hong Kong. This results in double counting, as Hong Kong counts this gold as exported to China as well.

When I compared Australia’s export to China data from COMTRADE with Hong Kong’s import from Australia datafrom the Hong Kong Census And Statistics Department, I noticed they are nearly the same. This is an accounting inaccuracy by the Australian Bureau Of Statistics in my opinion.

Australia COMTRADE vs HK census

To make sure the COMTRADE numbers are reliable I double-checked them with numbers from GTIS – that copies its data from the Australian Bureau Of Statistics as well.

Australia Gold Trade Data Comparison png

These data sets are the same – the differences are negligible.

I asked Bron Suchecki, manager at the Perth Mint in Australia, if he knew whether his company sends gold destined for China always via Hong Kong or not. He replied (published with permission):

Generally, little of what gets shipped from the Perth Mint to Hong Kong would stay there – most would be in transit to China. There are many reasons for why Chinese bound metal would transit through Hong Kong, including logistics (more flights Perth to Hong Kong than Perth to China) and the breaking up of the usual one tonne plus sized deals we do with bullion banks into smaller shipments for their end customers.

In another email he explained the Perth Mint mostly sells to Bullion Banks, who are subsequently the legal exporters from Australia to China or Hong Kong. There for he doesn’t know how gold destined for China is shipped.

This comment Bron posted at his own blog, he stated about Perth Mint shipments to China in 2013… 

The Perth Mint probably accounted for 15% of that 1500t China import. 

The 15 % (225 tonnes) doesn’t reflect a precise tonnage, however I think it shows Australia exports more gold to China than is disclosed by COMTRADE/GTIS (180 tonnes).

Conclusion: the numbers I used in this post for gold export from Australia to China have been double counted (I’ll put a link in to this post for clarity). Although we know Australia exports huge quantities to China, we don’t know how much is shipped in addition to what travels via Hong Kong. I don’t feel comfortable, therefor, using any of Australia’s export numbers at this stage.

The USA        

Right, so what’s the score? We are chasing 1,100 tonnes, thus far we’ve got 105 tonnes from the UK, 187 tonnes from Switzerland and 752 tonnes from Hong Kong, all added up makes 1,044 tonnes. Where could the remaining 56 tonnes could have come from? Not from the US, according to data from USGS.

The US exports substantial amounts of gold to Switzerland and Hong Kong, but very little to China itself. Worth mentioning, however, is that in September the US for the first time exported a few tonnes of bullion directly to China.

US - China gold trade
Is the US going to send larger amounts of bullion in the future directly to China?

Needless to say the 6 fine tonnes that were exported from the US do not fill the 56 tonnes gap. Were the remaining 50 tonnes came from I don’t know. It can be from mines in Africa or central Asia.

Koos Jansen
E-mail Koos Jansen on: koos.jansen@bullionstar.com




Ambrose Evans Pritchard talks about the huge deflationary forces that has erupted due to the Swiss Franc unpegging:





(courtesy Ambrose Evans Pritchard/UKTelegraph)



Ambrose Evans-Pritchard: World deflationary forces have swept away Swiss defenses


By Ambrose Evans-Pritchard
The Telegraph, London
Thursday, January 15, 2015

The Swiss National Bank has lost control. It is the latest in a list of venerable central banks to be overwhelmed by deflationary forces and global economic disorder.

The country is already in deflation. The Swiss franc ended Thursday 13 percent higher after the SNB abandoned its three-year efforts to defend a currency floor of 1.20 to the euro. “We have a free exchange rate once again,” said the SNB’s president, Thomas Jordan.

Indeed, but nobody is fooled by the SNB’s attempt to spin this as benign. “This is a huge hit to their credibility,” said Deutsche Bank.

The official statement claimed that the exchange floor is no longer needed and that “overvaluation has decreased as a whole since the introduction of the minimum exchange rate.”

This is eyewash.

“They have had to throw in the towel. They couldn’t hold the line anymore,” said David Owen, from Jefferies Fixed Income. “This is going to cause extreme pain for parts of the Swiss economy but the SNB are trapped.” …

… For the remainder of the report:


Chris Powell takes on Bron Suchecki/director of the Perth mint
(courtesy Chris Powell/Bron Suchecki)


Bron Suchecki: Straining at gold gnats while swallowing central bank camels


3:51p ET Thursday, January 15, 2014

Dear Friend of GATA and Gold:

The Perth Mint’s Bron Suchecki today replies to your secretary/treasurer’s criticism yesterday of his suggestion that production of gold by marginal mines is keeping the gold price down. (See http://www.gata.org/node/14956.) Your secretary/treasurer argued that production by marginal mines is an awfully insignificant factor in gold pricing compared to the production of imaginary gold — paper gold or gold credits — by central banks, an issue that respectable market analysts refuse to address.

Suchecki writes today that he’s well aware of the influence of central banks in the gold market and has written about it quite a bit over the years. He also writes that he doubts that he would be considered respectable by the mainstream financial news media, insofar as his employer is in the business of selling gold and benefits from a higher gold price.


Maybe, but to GATA Suchecki long has seemed respectable enough — that is, intelligent, incisive, and informed — always to be required reading. In any case as long as central banks create so much more “supply” than marginal mines do, his observation about those mines will strike us as trivial and a distraction, which was the point of the criticism.

And we’ll bet that nobody at a financial conference or in a financial news publication ever disparaged him as a mere “conspiracy theorist” for pointing out that central banks often meet and communicate secretly to plan and undertake secret interventions in the gold market and other markets, conduct that nevertheless matches exactly the definition of “conspiracy”:


Suchecki’s commentary is headlined “Straining at Gold Gnats While Swallowing Central Bank Camels” and it’s posted at his Internet site, Gold Chat, here:


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




(courtesy John Hathaway/GATA)


John Hathaway: Gold market has been rigged but trust in the riggers is declining


9:40a ET Friday, January 16, 2015

Dear Friend of GATA and Gold:

Gold market rigging by central banks and their investment bank agents is the main topic of the year-end investor letter by John Hathaway, portfolion manager for Tocqueville Asset Management.

Hathaway writes: “We believe that a breakdown of trust in financial intermediaries — including bullion banks, ‘synthetic’ gold substitutes such as ETFs, and derivatives, as well as the integrity of central-bank custodial relationships — is behind the growing clamor to repatriate physical gold bars owned by sovereign states. …

“Grant Williams of Vulpes Investment Management explains, ‘Because of the mass leasing and rehypothecation programs [the use by financial institutions of clients’ assets, posted as collateral] by central banks, there are multiple claims on thousands of bars of gold. The movement to repatriate gold supplies runs the risk of causing a panic by central banks.’ …

“Loss of trust is the genesis of bank runs. Bullion banking is a fractional-reserve system in which large amounts of credit are extended based on a relatively small quantity of physical metal. Sovereign gold bars are a major component of the credit base. We believe this is a story to watch very closely in the coming year.

“It seems to us that that the circle of those disparaging gold has dwindled to a rear guard of hard-core, dollar-centric addicts still hooked on a monetary policy designed to herd investors into risky assets. In a truly Orwellian transposition, gold, the safest asset in history, is maligned by the financial media as risky, while financial assets at near-record valuations are viewed as compelling. In the simplistic logic that passes for financial wisdom, if equities are good, then gold must be bad. If there has been a Greenspan/Bernanke put for equities, why not a Yellen cap for gold?

“Such a notion might explain the fearless manner in which gold has been periodically trashed. A skidding $US gold price confirms that all is well. ‘Synthetic’ gold, created by bullion banks for propriety-trading desks, high-frequency traders, and commodity traders, is dumped (often following Fed policy pronouncements) onto thin markets during non-trading hours to trigger stops and spread panic. No physical gold changes hands during such raids. Sellers abandon any pretext of ‘best execution,’ the usual standard for discrete distribution of positions. Instead, the raids are crafted to smash the price with as much noise as possible.

“We believe that the gold market has been manipulated, which to us is no surprise. Rigging has become a central feature of financial markets since the onset of quantitative easing. Too-big-to-fail banks, U.S. and European, have admitted to manipulating Libor, energy, and currencies. …”

Hathaway’s letter is posted at the Tocqueville Internet site here:


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







Bill Holter discusses the two huge stories of yesterday:

1. the unpegging of the Swiss Franc

2. the Russians stopping the gas distribution through the Ukraine


a must read….



(courtesy Bill Holter/Miles Franklin)


The “Tactical” Nuclear Option(s)!






WOW!  Two huge news stories within 24 hours.  First, Russia decided to shut off the gas pipeline to southern Europe, next the Swiss dropped their 1.20 floor peg to the euro.  The first story is absolutely huge but has been completely overshadowed by the Swiss.  In my opinion, the Russian move is part of the “war” chess game, the move by the Swiss is your beginning to multiple resets leading into a complete economic and financial reset!

  Let me start with Russia.  They had already tightened the gas spigot to southern Europe by some 60%.  This is gas which travels through the Ukraine.  As of yesterday, it has been reported the flow has completely stopped.  Why now you ask?  Well, several “timing” reasons come to mind.  First and most obvious is “it’s cold outside” as Europe is in the middle of winter.  Playing the gas card now has maximum impact.  Secondly and most importantly, Europe is in the process of deciding whether or not to go along with the more severe economic and financial sanctions concocted by Washington.  As a side note, as if it was not very important on its own, France must decide whether or not they will deliver the 2nd Mistral warship contracted with Russia.
  Shutting the gas off at this moment is Vladimir Putin telling Europe, “you are either with us or against us, make your decision and make it NOW!”.   I had a very astute friend describe the situation as follows,    “This move by Russia makes perfect economic sense, because Russia or anybody should NEVER reward bad behavior, and to acquiescence is always a reward.   I guess that the Western government leaderships never got that memo”.  He added, “the second shoe to drop will be Russia requiring payment for oil in yuan”.  Also very astute but stops short of the ultimate “killer”, Mr. Putin could simply require payment in gold.  This would blow the doors off of the entire Western financial system as they have already divested 100 year’s worth of gold reserves!
  The second tactical nuke to hit Europe was the Swiss National Bank breaking the floor peg of 1.20 to the euro.  Within minutes, the euro dropped to parity and then some.  The Swiss also lowered their “negative interest rates” to -.75% from -.25% in an effort NOT to attract capital.  Apparently this did not work!  You can look at what the Swiss did from several angles, each one of them very negative to future world events.  First, whether you like it or not, this is a very big negative vote for the Eurozone itself.  The Swiss may be looking at near future current events and trying to isolate themselves.  They could be looking a Mario Drahgi announcing full on monetization next week, or, they might be looking at the Greek vote and likely (in my opinion) exit from the Eurozone.  In any event, their action is no vote of confidence.
  Please remember, the SNB has a huge (greater than 50%) of their reserves in euros.  This effectively “took a couple of toes off” as the majority of their reserves have just effectively been devalued.  Their stock market opened down 15% as their foreign trade and tourism will now be damaged.  The move to revalue higher will make imports much cheaper but devastate their export economy.  It will actually bankrupt some exporters with skinny profit margins.  Put bluntly, the Swiss can now look forward to a very steep recession if not an outright depression.
  The move by the SNB viewed from a macro standpoint is also an eye opener regarding central banking and central bankers.  They had previously “promised” (as recently as this past Monday) this 1.20 peg versus the euro, they have now reneged.  Many European and Swiss businessmen made plans and invested money into businesses which now are untenable.  Many businesses will be flat put out of business and original capital lost.  “Trust” has been broken by the central bank.  The obvious question is “who is next”?  We here in the U.S. have been “fed” (pun intended) a continuous diet of the Fed beginning to tighten, will they retain any respect at all when another round of QE (loosening) is announced?  Though this is the first instance of a central bank shocking the world, it will not be the last.  These “shocks” will serve only one purpose, they will illustrate that central banks no longer are in “control”.
  –As a side note and this paragraph is being inserted during my editing, Christine Lagarde of the IMF was interviewed by CNBC yesterday and admitted the Swiss move was a surprise to them.  She went on to talk about the importance of “coordination and communication” between central banks.  So, I guess the SNB went totally “rogue” on their decision and have acted purely out of personal preservation?  I am not saying this tongue in cheek, this is exactly what the Swiss have done!  This is what I have talked about all along, when the “moment” came, it would be “every man for himself” …this certainly qualifies.–
  Putting these two events together, the oil shutoff and monetary shock together, I view several very obvious conclusions.  Russia is “courting” Europe and “helping them” decide to abandon the U.S. and to do business eastward.  The Swiss I believe are trying to insulate themselves from a breakup of the Eurozone.  Standing WAY back and viewing not only the forest but all of the “forests”, this is the very public beginnings of a global reset.  No matter what you want to think, the Swiss have just “reset” their entire system and currency versus the euro and thus the entire world!  Yes I know, this is just one country.  I am trying to tell you this may only be one country but it is the beginning reset for all countries, assets, economies and financial systems!
  Before finishing, it is also important to see the reaction in the gold market.  Gold has exploded $30+ higher in reaction.  Gold clearly sees the Swiss action as a monetary warning sign of what is to come.  What is coming is a global reset brought on by a currency and credit crisis.  Gold is money.  Gold is the ULTIMATE money!  The Swiss franc has been seen as a “safe haven” currency.  They are now “taking” more interest than they were when they first went negative.  The Swiss franc is also greatly supported…by a currency which was devalued by 15% (30% at one point) overnight …which shrinks their reserve base by more than a whopping 10%!  Will the world look to currencies like the Swissie or will it look to gold as a safe place to avoid the crisis and the looming reset(s)?
  I think this question can be answered with another set of questions.  Can the Swiss franc actually “default”?  Can an ounce of gold default?  Do global currencies depend on economies which may (most likely are) be leveraged too far?  Switching gears with these questions, how would the Chinese answer these questions?  This may be the most important question of all because the old saying “he who has the gold …makes the rules”.  We know for a fact the Chinese “have the gold”.  We highly suspect (via common sense evidence) that the U.S. and the West in general has offloaded much of their gold.  Could China force a global reset into gold at much higher prices?
  Folks, this is truly it!  The Swiss have fired the opening “re set” volley!  The leverage employed all throughout the West will force “sales”, and will force “purchases” of various markets, currencies, commodities, credits and “money”.  Close your eyes to this at your own peril, time is now very short to secure your chair in this global game of musical chairs!  A global reset has begun!  Regards,  Bill Holter






And now for the important paper stories for today:



Early Friday morning trading from Europe/Asia



1. Stocks mainly down on major Asian bourses / the  yen rises  to 116.54

1b Chinese yuan vs USA dollar/ yuan weakens  to 6.2073
2 Nikkei down 245 points or 1.43%

3. Europe stocks mixed  /Euro collapses// USA dollar index up to 92.49/

3b WOW!!! Japan 10 year yield at .24% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 116.54/

3c Nikkei now slightly below 17,000

3e The USA/Yen rate well below the 120 barrier this morning/
3fOil: WTI 47.30 Brent: 49.59 /all eyes are focusing on oil prices. This should cause major defaults.

3g/ Gold par/yen down;

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 rises this morning for both WTI and Brent

3k Swiss stocks down this morning /the entire 10 yr bonds of all major countries rise in price (fall in yield) as the world seeks safe haven status.The only exception was Greece which say their 10 year yield rise as banks sought emergency ELA funding

3l Foreign exchange brokers annihilated with the Swiss peg removal (see below)

3m Gold at $1262. dollars/ Silver: $17.01

3n USA vs Russian rouble:  ( Russian rouble  par per dollar in value)  65.32!!!!!!

3 0  oil rises into the 47 dollar handle for WTI and 49 handle for Brent

3p  volatility high/commodity de-risking!/Europe heading into outright deflation including Germany/Germany has low unemployment/Italy very high unemployment (high jobless rate)/Germany bad factory order numbers/

3Q ECB still unsure of QE format weighs down European bourses/OMT opinion gives green light to outright QE on conditions/sends the Euro southbound

4. USA 10 yr treasury bond at 1.74% early this morning. Thirty year rate well below 3%  (2.37%!!!!)/yield curve flattens/foreshadowing recession
5. Details: Ransquawk, Bloomberg/Deutsche bank Jim Reid



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




Market Wrap: Global Markets Weighed As Damage From SNB Evaluated, FX Brokers Carried Out


One day after the SNB stunner roiled markets, overnight global markets have seen – as expected – substanial downward pressure, with the Swiss market slide resuming post open, while European stocks have seen some pressure despite what is now an assured ECB QE announcement next week. However, the one trade that can not be mistaken is the global rush into the safety of government paper, with every single treasury yielding less today than yesterday (the Swiss 10Y was trading below 0% at last check), except for Greek 10Y which are wider on deposit run fears. That said, with capital market liquidity absolutely non-existent even the smallest trade has a disproportionate effect on futures, and expect to see much more rangebound trading until the damage report from the SNB action is fully digested, something which will take place over the weekend.

The problem is that even if Central Banks manage to stabilize markets today, and by now there is no doubt that only central banks are left trading with themselves, retail investors may no longer care especially in the aftermath of the overnight FX bloodbath which has seen countless FX brokers shut down as their balance sheet was unable to withstand the stress from the SNB action, and as reported earlier, Alpari U.K. limited says it has entered insolvency; FXCM, the largest U.S. retail foreign-exchange brokerage, said client debts threatened its compliance with capital rules and a New Zealand-based dealer went out of business. In other words, it will take a long time to evaluate just how massive the fallout from SNB has been, before any sort of direction to the markets can resume.

Over in Asia, the SNB’s surprise decision to eliminate its EUR/CHF 1.20 floor dampened risk appetite sending the Nikkei 225 (-1.4%) to levels last seen on October 31st, the day that the BoJ expanded QQE. Elsewhere, the Shanghai Comp (+1.2%) bucked the trend extending on yesterday’s gains and is now on course for a 10th consecutive week of gains, the longest streak since May 2007. This follows Thursday’s data showing FY14 Chinese New CNY loans at a record high, a sign monetary conditions are loosening in the region and also the PBoC expanding its relending quota by CNY 50bln to support agriculture and small companies.

In Europe, following on from yesterday’s surprise SNB move, the SMI (-5.7%) continues to underperform as Swiss exporters and banks come under considerable pressure following the stronger CHF. The fallout continues today with retail brokers Alpari entering insolvency, FXCM breach their capital requirements with a USD 225mln hold and many others feeling the pain. Core European equity markets are all in the red (Eurostoxx50 -0.35%) but prices have been propped up by dovish comments from ECB’s Coeure who provided some further insight into the main event next week and said that in order for QE to be efficient, ‘it would have to be big’. This did help German 10y yields reach new record lows of 0.436%.

In FX, the EUR/CHF was under selling pressure as Asian entrants digested the SNB surprise decision drifting below parity once again however, EUR/CHF has since pared the earlier weakness lifting the cross back above parity. Poor liquidity is leading to very choppy trade conditions in all currencies and many traders are sitting on the side-lines after nursing losses yesterday. Elsewhere, EUR/USD continued its downward trend and broke below 1.16 as EUR/GBP printed fresh lows in the backdrop of very thin liquidity post-SNB. Separately, the NOK has seen some minor strength as Norway’s Jensen (Fin. Min.) and Olsen (Norges Gov.) sound upbeat over the Norwegian economy as there were some outside market bets that the Norges Bank may change policy given the SNB yesterday and ECB next week and the upbeat discussions offer no hints of any easing of policy.

Bucking the trend if only for the time being, is oil, with WTI and Brent crude futures extend on gains as they both trade higher by over USD 1.00 on nothing fundamental, however, the EIA cut their 2015 non-OPEC estimate and said that the rebalancing of the oil market may happen in the H2 of this year as demand comes back. Furthermore, the WTI/Brent crude spread has widened to USD 1.91 after they briefly traded below parity on Tuesday. Gold continues to trade above its 200DMA after breaking it on safe haven bids yesterday on track for its largest weekly gains in 11 months.

In Summary: European shares advance, near session high, with the oil & gas, basic resources sectors outperforming and construction and travel & leisure underperforming. Swiss market drops for a second day, Swiss 10-year yield drops below zero for first time. Franc weakens ~4.2% to 1.0179 per euro after ~23% rise yesterday. Most European bonds yields fall, Greek bond yields rise. Greek lenders request emergency liquidity as deposit outflows increase. Crude oil gains, IEA sees oil-price recovery, cuts 2015 non-OPEC output estimate. The Swiss and U.K markets are the worst-performing larger bourses, the Italian the best. The euro is weaker against the dollar. Commodities gain, with natural gas, gold underperforming and Brent crude outperforming. U.S. CPI, industrial production, capacity utilization, Michigan confidence due later.

Market Wrap:


  • S&P 500 futures unchanged at 1986.5
  • Stoxx 600 up 0.3% to 349.4
  • US 10Yr yield up 1bps to 1.72%
  • German 10Yr yield down 3bps to 0.45%
  • MSCI Asia Pacific down 0.6% to 138
  • Gold spot down 0.3% to $1258.5/oz
  • Euro down 0.35% to $1.1592
  • Dollar Index up 0.12% to 92.47
  • Italian 10Yr yield down 5bps to 1.69%
  • Spanish 10Yr yield down 5bps to 1.54%
  • French 10Yr yield down 5bps to 0.63%
  • S&P GSCI Index up 1% to 386.7
  • Brent Futures up 2.4% to $49.4/bbl, WTI Futures up 1.9% to $47.1/bbl
  • LME 3m Copper up 0.6% to $5663/MT
  • LME 3m Nickel up 0.6% to $14556/MT
  • Wheat futures up 1% to 538 USd/bu

Bulletin headline summary from RanSquawk and Bloomberg

  • Following, the removal of the EUR/CHF floor the SMI continues to underperform in Europe, although comments from ECB’s Coeure capped some of the weakness seen in European equities.
  • Looking ahead US CPI, US IP and Michigan are all due later today alongside comments from Fed’s Kocherlakota, Williams (voter), Bullard and large cap earnings from Goldman Sachs, Charles Schwab and PNC Financial Services Group.
  • Treasury yields rise overnight before today’s release of Dec. CPI; yesterday saw 2Y and 3Y yields close at lowest levels since October, 5Y lowest since June 2013, 10Y lowest since May 2013, 30Y record low 2.397%.
  • Bonds around the world extended their record-setting rally this year as Switzerland’s unexpected decision to abandon its currency cap and make interest rates even more negative drove demand for the safest assets
  • Gold futures declined for the first time in six days on speculation that prices advanced too fast after the Swiss National Bank unexpectedly scrapped its euro currency cap
  • The ECB is studying the experiences of the U.S. and Britain with QE to decide what volume of bonds it may buy as part of its own program, an executive board member said
  • Two Greek lenders are seeking to borrow from the nation’s central bank emergency line, a sign banks may be struggling to fund their activities amid an outflow of deposits
  • Oil advanced in New York, paring an eighth weekly decline, as the International Energy Agency lowered forecasts for supplies from outside OPEC and said prices could recover
  • Losses mounted from the Swiss currency shock as the largest U.S. retail FX brokerage said client debts threatened its compliance with capital rules, a dealer in New Zealand went out of business and a British broker said it was insolvent
  • Russian net capital outflows probably doubled last year and the government may resort to currency restrictions if the pace doesn’t ease in 2015, according to a Bloomberg survey of economists
  • Belgian police said they killed two terrorists and foiled a “major” attack as security forces across Europe swooped on suspected Islamist cells amid heightened alert after last week’s massacre in France
  • Sovereign 10Y yields lower except Greece which is ~45bps higher. Asian stocks drop; European stocks mostly lower, U.S. equity-index futures decline. Crude higher; copper and gold rise


DB’s Jim Reid concludes the overnight recap



In terms of the wider market impact yesterday in Europe, there were contrasting moves between Swiss equities and the wider European market. With regards to the former, the SMI (-8.67%) closed sharply lower. Swatch (-16.5%), UBS (-11.1%) and Holcim (-11.0%) in particular were notable decliners with Reuters quoting Swatch’s CEO saying that the moves in the currency is an economic ‘tsunami’ for Switzerland. Outside of Switzerland, European equities did well with both the Stoxx 600 (+2.58%) and Dax (+2.20%) rallying as markets appeared to lean on the hope that the SNB move was a hint that we are getting a larger move from the ECB soon. Credit markets also closed firmer with Crossover finishing 11bps tighter.

There was a significant tightening in short end bond yields too. Swiss bonds rallied across the curve, led by 2y yields which closed 17.3bps tighter at -0.528%. All Swiss government bonds up to 8-years in maturity are now trading in negative territory, with 10y yields at just 0.044%. Elsewhere 2y Bunds moved further into negative territory and extended record lows, closing 2.4bps tighter at -0.144%. In fact, 8 European countries now have negative 2y yields whilst yesterday’s tightening in 5y Dutch bonds saw them join Finland, Germany and Switzerland with as countries with negative 5y yields. Data took something of a backseat in Europe yesterday with the 2014 German GDP print coming in as expected at +1.5%, our European colleague noting that the reading implies that Germany returned to growth in Q4.

All in all our view that Euro equities might out-perform US equities in 2015 got a boost as Europe had a good day but the US struggled as equities and credit sold off further whilst the weaker tone continued to lend a firm bid to Treasuries with yields taking a sharp leg lower. The -0.92% close in the S&P 500 extended the run of consecutive declines to five days now (8 out of 10 in 2015), taking the index back down to the lowest level since December 16th. Credit too sold off, IG23 finishing 1.6bps wider. As mentioned earlier, yesterdays volatility in oil markets didn’t help with energy stocks closing -1.21% lower and US HY energy names widening a further +6bps after both WTI (-4.60%) and Brent (-3.19%) closed lower at $46.25/bbl and $48.27/bbl respectively. Banks (-2.58%), however led declines for equity markets after both Bank of America and Citigroup reported somewhat subdued earnings. Interestingly, we also had the previously flagged Q4 earnings from the major oil-services company Schlumberger after market close. Unsurprisingly the headlines looked weak with the company taking a $1.7bn charge over the quarter as well as announcing that it’s to cut 9,000 jobs, roughly 7% of the workforce. Expect to see similar headlines from energy names as we move through the earnings season.

Back to fixed income markets, yesterday’s rally in US Treasuries saw the benchmark 10y yield rally 14bps to finish at 1.715%, rallying for the fifth straight day. The demand for Treasuries has seen the 10y yield now tighten 45bps already through 2015. 30y yields also hit fresh record lows, closing 10.1bps tighter at 2.368%. Gold too had a strong day, closing 2.77% higher to its highest level since September at $1262/oz. Data was generally mixed. Although the Empire Manufacturing print improved 11pts to 9.95 in January, the Philadelphia Fed survey painted a more subdued outlook with the index falling 18pts to 6.3. Elsewhere jobless claims climbed to 316k, back above 300k for the first time in seven weeks. Finally PPI was modestly better than expected with both the headline (-0.3% mom vs. -0.4% expected) and core (+0.3% vs. +0.1% expected) trending better. With much of the focus on the SNB, comments from the Fed’s Rosengren in the WSJ saying that he is ‘not particularly confident’ that inflation will move back towards 2% and instead urging patience on lift-off appeared to fly under the radar somewhat. Specifically, Rosengren also went on to say that ‘if we don’t see any evidence in wage and price data for a year, then I’d wait a year before I’d do something’.

Refreshing our screens quickly this morning, Asian equities are following the US lead and are trading lower as we type. The Nikkei (-1.85%), Hang Seng (-0.76%), ASX (-0.60%) and Kospi (-1.46%) are all lower although Chinese equities (+1.13%) continue to move higher. Bond yields across the region are grinding tighter however, with 10y JGB’s trading as low as 0.219% at one stage whilst 10y yields in Australia are 13bps lower.

In terms of today’s calendar, much of the attention this morning will be on the final inflation print in Germany as well as the Euro-area CPI number later. Across the pond this afternoon, focus will be on the December CPI print in the US with the market looking for -0.4% mom with energy driving the headline print. The core print however is expected to rise +0.1% mom which would result in a +1.7% annualized rate. Elsewhere this afternoon, industrial and manufacturing production, capacity utilization and the University of Michigan survey are due. On top of this we are expecting comments out of the Fed’s Kocherlakota, Williams and Lockhart – so a busy day all round.





Late last night, we received news that two major foreign exchange brokerage companies which house many forex traders have suffered  significant losses.  Many clients of these brokerage firms all went long dollars and short Swiss Franc with “the knowledge” that the SNB will never remove the peg. Not only did the Swiss National Bank lie but also they told nobody.  Even Christine Lagarde of the IMF was totally unaware and shocked by the move. Due to the total secrecy all players on the short end (and it is huge) were basically blown up. The foreign exchange players will walk away from their debt leaving the brokerage firm on the hook for the losses.  This is a huge story!!


 First:  the official news last night
(courtesy zero hedge)

2 FX Brokers Suffer “Significant Losses” After SNB Surprise, “In Breach Of Regulatory Capital Requirements”

In a re-run of the catastrophic trading losses that occurred around the Russian Ruble collapse last month (as we described here and here in great detail), two FX brokers (US-based FXCM and New Zealand-based Excel Markets) announced tonight that they “can no longer meet regulatory minimum capitalization requirements,” due to “significant losses” suffered by clients. For FXCM these losses mean a $225 million negative equity balanceand they are actively discussing alternatives with regulators. For Excel Markets, it is over… “we will not be able to resume business…Client positions will be closed within the next hour.”

FXCM is in trouble…


FXCM an online provider of forex trading and related services worldwide, announced today due to unprecedented volatility in EUR/CHF pair after the Swiss National Bank announcement this morning, clients experienced significant losses, generated negative equity balances owed to FXCM of approximately $225 million.

As a result of these debit balances, the company may be in breach of some regulatory capital requirements.

We are actively discussing alternatives to return our capital to levels prior to today’s events and discussing the matter with our regulators.

*  *  *

And Excel Markets is done (as ForexLive’s Adam Button explains)… Forex broker Excel Markets calls it quits on SNB shocker

Clients of New Zealand forex broker Global Brokers NZ Ltd, which operates Excel Markets, have been told the company “can no longer meet regulatory minimum capitalization requirements of N$1,000,000 and will not be able to resume business.” Client positions will be closed within the next hour.

Here is the statement (the emphasis, bolding and caps is theirs):

The dramatic move on the Swiss franc fueled by the Swiss National Bank’s unexpected policy reversal of capping the Swiss franc against the euro has resulted in rare volatility and illiquidity. Both our primary and backup liquidity providers became unresponsive or illiquid for hours after the event. The majority of clients in a franc position were on the losing side and sustained losses amounting to far greater than their account equity. When a client cannot cover their losses it is passed onto us.




Global Brokers NZ Ltd. STP’s 100% of order flow and has sustained a total loss of operating capital.GBL can no longer meet regulatory minimum capitalization requirements of N$1,000,000 and will not be able to resume business. Losses incurred on trades that could not be exited due to illiquidity were losses incurred directly with the liquidity provider and we do not have the ability to reimburse those. Please note the interbank market for francs was illiquid for hours after the event and no traders with an open franc position were able to close it for a significant period of time, at any broker.


News of the impact of this event on companies and traders is just beginning to come to light. As Directors and Shareholders we would like to offer our sincerest apologies for this devastating turn of events, and to thank you for being such a supportive group.


We ask that you place withdrawal requests for your account balance at your earliest convenience and allow for minor delays as our team begins to experience higher than usual service volumes.

In my opinion, any broker that uses ALL CAPS deserves whatever they get.

We’re encouraged that client funds are segregated. They won’t be the last to go under on this and we hope that everyone has been prudent with client money.

*  *  *

Which likely explains the carnage after the market close today in EURCHF





Second story:


Then early this morning, we witness that the largest foreign exchange brokers are witnessing their stock  crash by 90% because of huge losses by clients. Last night we had 2 brokerages in trouble.  This morning it was 4:


(courtesy zero hedge



 Largest Retail FX Broker Stock Crashes 90% As Swiss Contagion Spreads


As we first reported last night, FXCM was among the first of many retail FX brokers (and the largest) to see its clients suffer massive losses from yesterday’s Swiss Franc surge following the SNB decision to unleash market forces. There are now at least 4 retail FX brokers (FXCM, Excel Markets, OANDA, and Alpari) who have announced “issues” but FXCM, being among the largest and publicly traded is the most transparent example of wjust what can go wrong when average joes are allowed 100:1 leverage. FXCM is now stuck chasing clients for money they do not (and will never) have.. and its stock is down 90%, trading a $2 this morning (down from $17 on Wednesday). As Credit Suisse notes, time is running out as regulators “tend to be impatient once capital requirements are breached.”


FXCM crashes…


And the crashes some more as Credit Suisse suggests it’s all over


We suspect there will be considerably more to come as CME’s triple margin kicks in today…

*  *  *

So far 4 brokers have issues…

UK-based Alpari

From Alpari’s statement:

The recent move on the Swiss franc caused by the Swiss National Bank’s unexpected policy reversal of capping the Swiss franc against the euro has resulted in exceptional volatility and extreme lack of liquidity.  This has resulted in the majority of clients sustaining losses which has exceeded their account equity. Where a client cannot cover this loss, it is passed on to us. This has forced Alpari (UK) Limited to confirm today, 16/01/15, that it has entered into insolvency. Retail client funds continue to be segregated in accordance with FCA rules.

This is what Alpari’s CEO, James Hughes, who dubbed the SNB move as “horribly irresponsible”, for obvious reasons now, said:

“I’m sure this isn’t the last we’ll hear on the subject and the SNB are going to be heavily scrutinised in the coming weeks for what appears to be a horribly irresponsible move on their part. For years central banks have tried to avoid days like today by being transparent and making moves like this over time while drip feeding their intentions to the markets. The SNB have shown themselves to be amateurs today and there is many people that will suffer considerably as a result.”

* * *

FXCM is in trouble…


FXCM an online provider of forex trading and related services worldwide, announced today due to unprecedented volatility in EUR/CHF pair after the Swiss National Bank announcement this morning, clients experienced significant losses, generated negative equity balances owed to FXCM of approximately $225 million.

As a result of these debit balances, the company may be in breach of some regulatory capital requirements.

We are actively discussing alternatives to return our capital to levels prior to today’s events and discussing the matter with our regulators.

*  *  *

National Futures Association is in contact with FXCM…
“We are in contact with the firm and the CFTC and have no further comment at this time”: Karen Wuertz, spokeswoman for the National Futures Association, the futures industry’s self-regulatory agency.
*  *  *

And Excel Markets is done (as ForexLive’s Adam Button explains)… Forex broker Excel Markets calls it quits on SNB shocker

Clients of New Zealand forex broker Global Brokers NZ Ltd, which operates Excel Markets, have been told the company “can no longer meet regulatory minimum capitalization requirements of N$1,000,000 and will not be able to resume business.” Client positions will be closed within the next hour.

Here is the statement (the emphasis, bolding and caps is theirs):

The dramatic move on the Swiss franc fueled by the Swiss National Bank’s unexpected policy reversal of capping the Swiss franc against the euro has resulted in rare volatility and illiquidity. Both our primary and backup liquidity providers became unresponsive or illiquid for hours after the event. The majority of clients in a franc position were on the losing side and sustained losses amounting to far greater than their account equity. When a client cannot cover their losses it is passed onto us.




Global Brokers NZ Ltd. STP’s 100% of order flow and has sustained a total loss of operating capital.GBL can no longer meet regulatory minimum capitalization requirements of N$1,000,000 and will not be able to resume business. Losses incurred on trades that could not be exited due to illiquidity were losses incurred directly with the liquidity provider and we do not have the ability to reimburse those. Please note the interbank market for francs was illiquid for hours after the event and no traders with an open franc position were able to close it for a significant period of time, at any broker.


News of the impact of this event on companies and traders is just beginning to come to light. As Directors and Shareholders we would like to offer our sincerest apologies for this devastating turn of events, and to thank you for being such a supportive group.


We ask that you place withdrawal requests for your account balance at your earliest convenience and allow for minor delays as our team begins to experience higher than usual service volumes.

In my opinion, any broker that uses ALL CAPS deserves whatever they get.

We’re encouraged that client funds are segregated. They won’t be the last to go under on this and we hope that everyone has been prudent with client money.

*  *  *

Which likely explains the carnage after the market close today in EURCHF


*  *  *

Canadian firm OANDA says suffered loss on Swiss Franc move…

Brokerage says client enquiries, withdrawals and deposits are being handled as normal, according to a statement on its website:
In the wake of unprecedented market events this morning, OANDA demonstrated its ongoing commitment to doing right by its clients.
 Despite suffering losses and vanishing liquidity in the institutional hedging market, OANDA remained true to its 14-year legacy of transparency, integrity and fairness to our clients. OANDA did not re-quote or amend any CHF cross client trades. We even took the further step of forgiving all negative client balances that were caused when clients could not close out their positions fast enough.
Client inquiries are being handled normally and those making withdrawals and deposits are able to do so as normal.
OANDA is proud of its strong reputation for fairness and integrity. We thank our customers for their continued loyalty and welcome new traders who want to experience outstanding service and execution.

*  *  *

4 down – more to come…






Late this morning, Deutsche bank, Interactive Brokers and Barclays claim that they have lost hundred of millions due to the Swiss Franc loss:


Third story/(courtesy zero hedge)


Deutsche, Interactive Brokers, Barclays Lost Hundreds Of Millions Due To Swiss Franc Volatility


Yesterday, in the aftermath of the Swiss shocker, we tweeted what was quite obvious to anyone who realized that speculators were most short the CHF since the summer of 2013:

We have yet to find out just which hedge funds were blown up yesterday, but we already do know that numerous retail FX brokers did get blown up and as reported earlier, the largest retail broker FXCM is trading down 90% in the pre-market.

And now, thanks to Dow Jones, we start to learn just how much pain the bank themselves suffered:


This is just the beginning. Expect to hear horror stories when macro hedge funds finally clear up their P&L as a result of yesterday’s mauling.







Fourth story;  Citibank now out with massive losses on Swiss Franc unpegging:


(courtesy zero hedge)




It’s Not Just ‘Retail’: Head Of European FX Sales Out After Citi Admits Massive Loss


All morning, mainstream media has been down-playing the insolvency of various retail-focused FX brokers using words like “contained” and even suggesting retail ‘moms-and-pops’ should not be allowed to trade FX. Now, we get more news from a non-retail institution:


So should Citi be banned from FX trading too? It appears so – Citi’s head of European FX sales is ‘said to leave’ the company.


As Bloomberg reports,

Citigroup Inc., the world’s biggest currencies dealer, lost more than $150 million after the Swiss central bank decided to let the franc trade freely against the euro, according to a person briefed on the matter.


The losses occurred on the New York-based bank’s trading desks and aren’t tied to its relationships with FXCM Inc. and other retail trading platforms, said the person, who asked for anonymity because the information hasn’t been disclosed publicly.



Citigroup Inc.’s head of European investor sales, foreign exchange and local markets, Alex Jackson, left the firm this week, a person with knowledge of the matter said.


His departure isn’t related to investigations into the rigging of the foreign-exchange market, according to the person, who asked not to be identified because the move isn’t public.

*  *  *

See what happens when you can’t rig themarket?






Late in the afternoon, Goldman Sachs admits that it too was short the Swiss Franc in this overcrowded trade.


(courtesy zero hedge)


Goldman Admits It, Too, Was Short The Swiss Franc

Turns out it wasn’t just Goldman’s muppet clients who were slaughtered by one of Goldman’s “Top Trades” for 2015, when the reco to short the CHKSEK plunged 16.5% and the trade was stopped out. It was Goldman itself. From the Goldman Sachs Asset Management disclosure on the impact of the SNB floor removal:

What changed?  In recent months, SNB reserves have started to pick up (an increase of CHF400bn from Jan 10 to today), while the European Central Bank (ECB) is closer to introducing a sovereign Quantitative Easing (QE) program. Maintaining the exchange rate floor in a Eurozone QE scenario would likely have required substantial interventions by the SNB.

So in case there still was confusion, Goldman has blessed its former employee to turn on the printing presses in Europe. That much is clear.

However, this is more important:

In our portfolios with currencies, we have been short the CHF on the grounds that it was an expensive currency which we expected would experience capital outflows as European growth normalized. We were surprised by the sudden removal of the peg. Although the CHF real effective exchange rate is lower than during the European crisis of 2011, it has actually appreciated in recent months. We exited a substantial portion of our CHF short today and are monitoring the situation closely.

And yet, this makes little sense considering Goldman, in its earnings call explaining why it just had the worst FICC quarter since Lehman, also said this:


So who is lying? Goldman or Goldman.




Then this bailout:


Knight 2.0: Jefferies Rescues FXCM With $300 Million Bailout, CNBC Reports


In an apparent replay for 2012’s Knight Trading algo-implosion $400 million cash-infusion bailout, Jefferies (owned by NY-based I-bank Leucadia) is riding its white horse to the rescue of FXCM and its $200-million-plus client losses:


Leucadia will get $250m in senior notes as part of the deal, CNBC says. So – in summary – a central bank blew up an FX broker and a mid-market junk-bond underwriter bailed them out… must be good for a green close for the week in stocks!

No statement from either side yet.

* * *

So FXCM can back to more of the same?







The rise in the Swiss franc will create havoc for mortgage holders in Hungary and Poland.  Many homeowners decided to take mortgages in Swiss Francs instead of their local currencies because of the low interest rate.  They are paying for it now!! Even the banks are having heavy exposure as they lent out Swiss francs and they too are on the hook:


(courtesy zero hedge)




What The Soaring Swiss Franc Means For Hungarian And Polish Mortgages


Spoiler alert: nothing good, because what until yesterday was, indicatively, a 1 million mortgage (in HUF or PLN terms) is suddenly a 1.2 million mortgage. But what about the details?

Here they are, courtesy of Goldman Sachs.

Poland. Total balance of SFr denominated mortgage loans in Poland stood at PLN131 bn at the end of November which corresponds to 22% and 15% of retail and total lending respectively, and some 8% of Polish GDP. The individual exposures of banks under our coverage differ significantly with MBK, PKO having >20% of Swiss franc loans while the balances of PEO and BHW amount to <5%. SFr lending remains a legacy product, the balance of which has been declining over the recent years (-22% since 2009) and is expected to fall further. Implications from strong depreciation of PLN vs. SFr predominantly relate to the risks of asset quality and to a lesser extent capital and liquidity. Strong performance of SFr denominated exposures over the last 5 years (2009-14) that came against 28% depreciation of PLN vs. SFr is largely attributable to the fact that mortgage installments remained stable because of declining LIBOR rates. In a press release published today (January 15), the KNF disclosed that according to their stress test, the depreciation of PLN by 30% to circa 4.5 level should not have meaningful and systemic implications for the sector (CET1 – 20bp to 13.3%), while a 50% move (towards 5.1 level) could see banks’ CET1 ratios come under moderate pressure (CET1 -100bp to 12.5%). We cut our earnings estimates for Polish banks by 3% in 2015 and -3% in 2016 to better reflect weaker asset quality and topline trends; we modestly lower our CET1 forecasts.

Hungary. Total balance of SFr denominated loans in Hungary stood at HUF3.9 tr at the end of November,which corresponds to 26% of total lending and, similar to Poland, is largely FX retail lending. Importantly, the high nominal exposure is only temporary given that Hungarian authorities have already started a process of conversion of retail FX lending into HUF. The conversion rates were set in early November (CHF256; €309) and selected banks (OTP, ERST, RBI) have indicated that they have subsequently obtained necessary € and SFr liquidity. The conversion of FX mortgage loans is expected to come into effect as of February 1, 2015. Based on current information we do not expect a meaningful direct impact from the recent FX move.




The oil rig count collapses again to 4 year lows. Expect derivative failures here with the oil collapse


(courtesy zero hedge)


US Oil Rig Count Collapses To Over 4 Year Low (as Production Hits Record High)


US oil rig count tumbled almost 6% YoY – its biggest annual drop in 15 months. However, the 13% collapse in the last 8 weeks is accelerating faster than the 2001 and 2008 crisis and has dropped rig count to its lowest since October 2010. At the same timeproduction is surging – in fact at its highest pace on record… the game of chicken continues.


Rig count is collapsing


As WSJ shows below, extraction is surging as drilling plunges…


More to come – as T.Boone Pickens so eloquently told us.






Looks like the EU will not purchase Greek debt.  This is causing massive bank runs on Greek banks as depositors are vacating all Greek banks.

Greece will have to exit the EU and start all over again with Drachma:


(courtesy zero hedge)

Greek Debt Will Not Be Included In Bond-Buying Plan; ECB’s Knot Warns QE “Distorts Markets”



Once again the clear preference for holding Swiss Francs over Euros was evident today as EURCHF re-collapsed from over 1.02 to under 0.9750 now. Overnight news from Greece suggesting bank runs are under way was then added to as Bloomberg reports, Greece is set to run out of cash by mid-year if it can’t break the deadlock over its rescue program, according to two international officials. Now, in the final “FU” to Greece, following Wolfgang Schaeuble’s earlier comments that Greece does not have a debt problem, Der Spiegel reports after the European close that ECB QE will not include Greek bonds due to their low rating… but will see national central banks buying own-country debt.


Overnight we reported on the Greek bank runs

Two Greek systemic banks reportedly submitted the first requests to the Bank of Greece for cash via the emergency liquidity assistance (ELA) system on Thursday, in response to the pressing liquidity conditions resulting from the growing outflow of deposits as well as the acquisition of treasury bills forced onto them by the state.


Banks usually resort to ELA when they face a cash crunch and do not have adequate collateral to draw liquidity from the European Central Bank, their main funding tool. ELA is particularly costly as it carries an interest rate of 1.55 percent, against just 0.05 percent for ECB funding.


The requests by the two lenders will be discussed by the ECB next Wednesday.


Bank officials commented that lenders are resorting to ELA earlier than expected, which reflects the deteriorating liquidity conditions in the credit sector.


Besides the decline in deposits, banks were dealt another blow on Thursday with the scrapping of the euro cap on the Swiss franc. Bank estimates put the impact of the euro’s drop on the local system’s cash flow at between 1.5 and 2 billion euros.


Deposits recorded a decline of 3 billion euros in December – a month when they traditionally expand – while in the first couple of weeks of January the outflow continued, although banks say it is under control.


A major blow to the system’s liquidity has come from the repeated issue of T-bills: In November the state drew 2.75 billion euros in this way, in December it secured 3.25 billion euros, and it has already tapped another 2.7 billion in January. Of the above amounts, a significant share – amounting to 3 billion euros according to bank estimates – was in the hands of foreign investors who will not renew them, so they have to be bought by the Greek banks.


Local lenders had also resorted to ELA in 2011 to cope with the outflow of deposits and consecutive credit rating downgrades of the state (and the banks) that made Greek paper insufficient for the supply of liquidity by the Eurosystem. In May 2012, due to the uncertainty of the twin elections at the time, local banks drew 124 billion euros in ELA to handle the unprecedented outflow of deposits.

Then this morning Bloomberg reports… Greece is screwed…

Greece is set to run out of cash by mid-year if it can’t break the deadlock over its rescue program, two international officials with knowledge of the matter tell Bloomberg’s Nikos Chrysoloras and Rebecca Christie.


Nation could probably stretch past the end of Feb. — as far as PM Antonis Samaras has assured his nation’s financing — if tax flows continue and there’s no disruption to emergency liquidity support for Greek lenders, said the officials, who spoke on condition of anonymity


In July and August, two bond repayments to ECB totaling EU6.7b ($7.7b), probably would overwhelm available buffers, they said


Greek FinMin spokesman declined to comment; European Commission declined to comment

But Germany’s Schaeuble says… s’all good


However… Europe appears to be telling Greece to get lost…


Greek bonds are re-tumbling.

And there is apparently one sane voice left on the ECB Council:


But seems to confirm it’s coming…



*  *  *

It appears the run for CHF ‘safety’ is re-picking up…


We suspect more to come…





Oh OH!! late in the day we get this news: it is all 4 major systemic banks in Greece are asking for emergency ELA funding:


(courtesy zero hedge)




The Greek Bank Run Spreads To All Four Largest Banks

While moments ago Greece was downgraded by that paragon of analytical and timing virtue, Fitch, to a negative outlook from stable, that is largely meaningless for a nation, devoid of tax revenues and increasingly deposits, which is suddenly imploding at an ever-faster motion.

What is relevant is that following yesterday’s report that two Greek banks had suffered sufficiently material deposit withdrawals to force them to apply for the unpopular and highly stigmatizing Emergency Liquidity Assistance program with the ECB, now the other two of Greece’s largest banks have also succumbed to reserve depletion after the Greek bank run appears to have gone viral. As Greek Capital.gr reports, now all four Greek banks have requested ELA assistance from the same ECB president who earlier today is said to have unceremoniously kicked out Greece from the ECB’s QE program.

As a reminder, this is what we learned yesterday via Kathimerini:

Two Greek systemic banks reportedly submitted the first requests to the Bank of Greece for cash via the emergency liquidity assistance (ELA) system on Thursday, in response to the pressing liquidity conditions resulting from the growing outflow of deposits as well as the acquisition of treasury bills forced onto them by the state.


Banks usually resort to ELA when they face a cash crunch and do not have adequate collateral to draw liquidity from the European Central Bank, their main funding tool. ELA is particularly costly as it carries an interest rate of 1.55 percent, against just 0.05 percent for ECB funding.


The requests by the two lenders will be discussed by the ECB next Wednesday.

And now this, from Capital.gr, google translated:

All four banks in request precautionary ELA


People at the Bank of Greece confirmed that it has submitted a request from the four banks to provide liquidity through the ELA and the Bank of Greece, in the prescribed procedure, has informed the European Central Bank. Not specified amount of requests.


To the question of why Capital.gr requested liquidity through “national” ELA and not by the ECB, despite what has been interrupted and remains active financing from Frankfurt, no details were given. Note that all four Greek systemic banks open until February 28 the ECB funding to guarantee Greek government securities.


The provision of liquidity by ELA is significantly “more expensive” than the ECB, which remains less than 0.5%. The difference between the two mechanisms is that in the case of ELA guarantees can use banks are almost all assets of the loan portfolio, while the ECB needed Greek government securities.


It should however be noted that banks also have bonds of the EFSF by the recapitalization which of course no bank wants to “spend” in moments of uncertainty, preferring to exploit even at higher cost securities loans can not use EDU easy neither the ECB nor the capital market. 


Earlier, the Bank of Greece rounds had confirmed the information that already two Greek banks have resorted precautionary liquidity in ELA. The representative of the National Bank, Dimitris Spyropoulos, speaking at Capital.gr said earlier that the National Bank has not had recourse to ELA and does not plan to appeal.


The request of the Greek banks will be discussed next Thursday on the ECB Governing Council in Frankfurt. Information indicates that one of the banks turned to the ELA not participated in the auction of Treasury bills held Tuesday. 


Meanwhile, according to a report in Bloomberg, the Alpha Bank has submitted a request to the Bank of Greece for stimulating fluid through the ELA, the agent to invoke bank executive.


The request was a precautionary measure, and the bank does not expect that you will need to use the funds of ELA on time, said earlier in the official Bloomberg. According to the same publication and Eurobank submitted a request for precautionary line of the ELA.


According to a publication of Dow Jones Newswires, representative of Alpha Bank said the bank wanted the funding as a precautionary measure and does not intend to use it. “We are just superstitious, and be on the safe side. It is the general situation in Greece. There are many cash withdrawals, “said spokesman of Alpha Bank to Dow Jones Newswires.

More here.

Belarus is hyperinflating i.e. they are undergoing a Zimbabwe!!
(courtesy zero hedge)

Meanwhile, Belarus Has FX Problems Too…

This is what US$2 looks like in Belarusian Rubles…



h/t @EvgenyFeldman



Imagine how great their stock market is doing!!??







Your more important currency crosses early Friday morning:


Eur/USA 1.1586 down .0049

USA/JAPAN YEN 116.54  up .397

GBP/USA 1.5185 up .0006

USA/CAN 1.2007 up .0050

This morning in Europe, the euro continues on  its  downward spiral, trading  down  and now well below the 1.16 level at 1.1586 as Europe reacts to deflation, and  announcements of massive stimulation.     In Japan Abe went all in with Abenomics with another round of QE purchasing 80 trillion yen from 70 trillion on Oct 31.  He now wishes to give gift cards to poor people in order to spend. The yen continues to trade in yoyo fashion.  This morning it settled down again in Japan by 40 basis points and settling just below the 117 barrier to 116.54 yen to the dollar.  The pound was  up this morning as it now trades just below the 1.52 level at 1.5185.(very worried about the health of Barclays Bank and the FX/precious metals criminal investigation/Dec  12 a new separate criminal investigation on gold,silver oil manipulation). The Canadian dollar is falling apart (oil down/all of Target stores closing/all of Sony stores closing) trading at 1.2007 to the dollar. It seems that the three major global carry  trades are being unwound. (1) The total dollar global short is 9 trillion USA, and as such we now witness a sea of red blood on the streets as derivatives blow up with the massive rise in the dollar against all paper currencies.We also have the second big yen carry trade unwind as the yen refuses to blow past the 120 level.(3) the Nikkei vs gold carry trade as the Nikkei now collapses causing those short gold to purchase our scarce physical yellow metal. These massive carry trades are causing deflation as the world reacts to a lack of demand. Bourses around the globe are reacting in kind to these events.




Early Friday morning USA 10 year bond yield: 1.74% !!!  down 2  in basis points from Thursday night/


USA dollar index early Friday morning: 92.49  up 14  cents from Thursday’s close



The NIKKEI: Friday morning : down 245 points or 1.43%

Trading from Europe and Asia:
1. Europe stocks mixed.

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

Gold early morning trading: $1262





Closing Portuguese 10 year bond yield: 2.53% down 12 in basis points from Thursday


Closing Japanese 10 year bond yield: .26% !!! down 1 in basis points from Thursday


Your closing Spanish 10 year government bond, Thursday  down 5 in basis points in yield from Thursday night.

Spanish 10 year bond yield: 1.50% !!!!!! (expect huge QE)
Your Friday closing Italian 10 year bond yield: 1.66% down 8 in basis points from Thursday: (expect huge QE)


trading 16 basis points higher than Spain:





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



Euro/USA: 1.1572  down .0063

USA/Japan: 117.55 up 1.406

Great Britain/USA: 1.5160 down .0020

USA/Canada: 1.1970 up .0012

The euro collapsed today and by closing time  finished down again and well below the 1.16 level to 1.1572. The yen was well down in the afternoon, but it was done by closing  to the tune of 141 basis points and closing well below the 118 cross at 117.55 still causing much grief again to our yen carry traders who need a much lower yen. The British pound lost some  ground  during the afternoon session and it was down  on the day closing at 1.5160. The Canadian dollar was up in the afternoon but it was down on the day at 1.1970 to the dollar.

As explained above, the short dollar carry trade is being unwound, the yen carry trade , the Nikkei/gold carry trade, and finally the long dollar/short Swiss franc carry trade are all being unwound and these reversals are  causing massive derivative losses. And as such these massive derivative losses is the powder keg that will destroy the entire financial system. You can see the evidence in today’s huge stories with the Swiss franc unpegging.






Your closing USA dollar index: 92.49 up 14 cents from Thursday.


your 10 year USA bond yield , up 6  in basis points on the day:






European and Dow Jones stock index closes:



England FTSE  up 51.49 points or 0.79%

Paris CAC up 56.42 or 1.31%

German Dax  up 135.53 or 1.35%

Spain’s Ibex  up  56.40 or 0.56%

Italian FTSE-MIB up 410.02 or 2.18%


The Dow: up 190.86 or 1.10%

Nasdaq; up 63.56 or 1.39%


OIL: WTI 48.55 !!!!!!!

Brent: 49.90!!!!



Closing USA/Russian rouble cross: 65.18  par in roubles per dollar on the day.





And now for your more important USA economic stories for today:



(Your trading today from the New York):


“Buying Panic” Lifts Stocks Green Post-QE Amid Gold’s Best Week Since Oct 2011


Despite massive volatility and turmoil this week, today’s bounce in crude and stocks is all anyone remembers… so!


But – in reality – it was total chaos…

  • Silver – best week since Aug 2013
  • Gold – best week since Oct 2011
  • WTI Crude – first positive week in last 8 weeks
  • S&P 500 – worst week in last 5 weeks
  • VIX – Highest weekly close since Dec 2012
  • Treasury Yields – 3rd weekly drop in a row to new record for 30Y
  • EURUSD – worst week since Jul 2012
  • CHFUSD – best week ever ever ever

Year-to-date… Silver and Gold the leaders (followed by bonds) with Stocks and Oil the laggards…


The week in stocks…


And an almost perfect roundtrip from yesterday’s open…


And today’s exuberant-fest thanks to fun-durr-mentals


Total buyingh panic rampfest today just managed to get stocks green post-QE…


Homebuilders were the week’s biggest loser, Energy rebounded on oil price’s dead cat bounce (despite Energy credit’s record high closing spread at 1058bps)


Just as an FYI – the manipulation and tinkering is becoming so obvious and widespread as the following chart shows – average trade size of S&P 500 e-minis is now at a record low 2.7 contracts!!!! All machines all the time….

Treasury yields plunged on the week but today saw some bounce…


HY Credit notably decoupled from stocks early on but as the rampfest started so HY pulled higher too….


The USD closed the week notably higher to new 12 year highs – for the 5th week in a row…


CHF was up 15.25% on the week against the USD)


Despite the USD strength, gold and silver surged and oil levitated back to green for the first positive week in the last 8… (copper recovered its China crash)


Oil’s bounce lifted energy stocks – AGAIN!! – but once again. it decoupled from credit


Charts: Bloomberg





This morning we have Goldman Sachs report on tumbling revenue:


(courtesy zero hedge)


Goldman Tumbles On Worst FICC Revenue Since Lehman, Average Employee Comp Drops To 2012 Levels


Unlike the the other banks, whose financial results have become absolutely meaningless when attempting to divind their financial conditions (although as we showed, the broad trends for the first three, JPM, Wells and BofA have been substantially lower), Goldman Sachs is a breath of fresh air because the hedge fund without deposits is unable to resort to the traditional balance sheet gimmicks used be the other TBTF banks, and the only thing that matters is its P&L.

Which is also the problem, because for those curious why the stock is currently sliding and hitting 3 month lows, the reason is that said P&L in the one most important category, FICC revenue, was nothing short of the Jefferies-hinted disaster, and at $1.218 billion, it was not only a huge miss to expectations of $1.6 billion, but was 30% lower compared to a year ago, and is the lowest FICC revenue since Lehman.

And while the FDIC-backed hedge fund may have beaten on the EPS and top line, the reason why investors are less than excited, is because as the chart below shows, the trend is most certainly not the friend of either Lloyd Blankfein or Goldman’s shareholders.


The result in Goldman’s own words, only $2 billion set aside in compensation accrual in Q4 – the lowest amount since the abysmal, for the company, Q4 2011.

It also means that the average compensation for any of Goldman’s 34,000 workers just dropped to “only” $373,265 on a trailing 12 month basis, the lowest since Q2 2012!

USA industrial production drops by the most in 11 months:
(courtesy zero hedge)

Industrial Production Drops By Most In 11 Months (After Biggest Surge Since 2010)

Industrial Production dropped 0.1% in December (slightly worse than expected) after November’s 1.3% surge – the biggest sicne may 2010. Not since Jan 2014’s Polar Vortex has Industrial Production dropped more than this. The 5.5% surge in vehicle production – as suspected – was entirely unsustainable and dropped 0.9% in December and Utilities collapsed 7.3% on the month – the worst dropo since Jan 2006.

Industrial Production dropped most since Jan 2014…


led by Motor Vehicles…


and Utilities…


Charts: Bloomberg



Consumer prices tumble as the consumer has reached debt saturation:


(courtesy zero hedge)



Consumer Prices Tumble Most In 6 Years, Core Inflation Misses


Great news! The cost of ‘stuff’ that Americans buy dropped 0.4% last month, or rahter great news for anyone but economists for whom this is the worst possible outcome imaginable – after all what will spur insolvent Americans, where the middle class no longer exists, to spend their money today if they don’t think prices will rise tomorrow?

This 0.4% drop (slightly worst than expected) is the biggest monthly drop since Dec 2008. The drop is led by a 9.4% collapse MoM in gasoline prices. Ex Food and Energy, CPI rose 1.6% YoY (less than expected 1.7% rise) missing for the 2nd month in a row. The question is – will the Fed see this as ‘transitory’ (ignoring the EIA’s call for low oil prices for longer) or use it as another excuse to re-uncork QE?

The biggest drop in 6 years.



The full breakdown shows prices broadly falling… with a total collapse in the prices for fuel and gasoline…


From the report:



The food index rose 0.3 percent in December after a 0.2 percent increase in November. The index for food at home rose 0.3 percent with five of the six major grocery store food groups increasing. The index for dairy and related products posted the largest increase, rising 0.6 percent after declining in November.


The fruits and vegetables index rose 0.4 percent, with the fresh vegetables index rising 2.4 percent but the index for fresh fruits declining 1.3 percent. The index for meats, poultry, fish, and eggs increased 0.3 percent as the index for beef and veal continued to rise, advancing 0.7 percent. The index for other food at home increased 0.3 percent, and the cereals and bakery products index advanced 0.2 percent. The nonalcoholic beverages index, in contrast, declined in December, falling 0.4 percent after rising in each of the previous three months. The food at home index has risen 3.7 percent over the last 12 months, with all six groups rising over the span. The index for food away from home rose 0.3 percent in December after a 0.4 percent increase in November, and has risen 3.0 percent over the last year.




The energy index continued to decline, falling 4.7 percent in December after a 3.8 percent decrease in November. This was its sixth decline in a row, and the index has fallen 13.3 percent over the six month span. The gasoline index fell 9.4 percent in December and has declined 22.4 percent since June. (Before seasonal adjustment, gasoline prices fell 11.1 percent in December.) The fuel oil index also continued to decline, falling 7.8 percent, its largest decline since June 2012. However, the index for natural gas turned up in December, rising 1.5 percent after falling in October and November. The electricity index also increased in December, rising 0.8 percent.


All items less food and energy


The index for all items less food and energy was unchanged in December. The shelter index increased, advancing 0.2 percent, with the indexes for rent, owners’ equivalent rent, and lodging away from home all rising 0.2 percent. The medical care index rose 0.5 percent in December. The index for prescription drugs rose 0.9 percent, and the hospital services index increased 0.5 percent. The tobacco index advanced in December, increasing 0.8 percent, and the personal care index rose 0.1 percent. A wide array of declines offset these increases. The apparel index fell 1.2 percent in December following a 1.1 percent decline the prior month. The index for airline fares, which rose in October and November, fell sharply in December, declining 5.0 percent. The index for used cars and trucks fell 1.2 percent, the same decline as last month. The index for household furnishings and operations fell 0.3 percent, as did the alcoholic beverages index. The index for new vehicles declined 0.1 percent, the same decrease as in November.

The reson why the USDJPY soared on the report is that this is great news for all those liquidity addicts, and broadly commentators who think the Fed now (and really always) has no choice but to resume QE4.

So once again, let’s hear it for Joyflation.





We will wrap up this week, with Greg Hunter’s commentary:


(courtesy Greg Hunter/USAWatchdog/com)


WNW-173 Swiss Franc & Euro Decouple, Russia Cuts Gas, Road to WWIII


By Greg Hunter’s USAWatchdog.com   (1.16.15) 

My top story is Switzerland and the surprise move to remove its cap against the Euro.  This cap kept the two currencies roughly the same value–but not anymore.  The move was such a surprise that even IMF Chief Christine Lagarde admitted the move by Swiss National bank (SNB) caught her off guard.  It also caught currency traders by surprise as the Swiss franc soared by as much as 30%.  Gold also spiked on the news.   Why was this every-man-for-himself action taken by the SNB?  It appears more money printing is coming, and this time it will come from the European National Bank (ECB.)  It appears Switzerland wants protection from inflation.

My friend Gregory Mannarino from TradersChoice.net gave me his take today.  Mannarino says the Swiss are getting ahead of an announcement that will probably come from the ECB next week that it, too, is going to embark on massive Federal Reserve style QE, or money printing.  The Swiss did not want to print even more money to maintain the so called “cap” or peg that kept the two currencies basically the same value.  That’s not all.  Mannarino says the Euro will continue to plunge on the new probable money printing announcement, and that will produce a spike in the U.S dollar.  As the U.S dollar moves up, the Fed will have the cover needed to bring it back down by introducing another round of money printing we affectionately call QE4.

Why would the Fed do this during a “recovery”?   I’ll say it again, as I’ve said it a hundred times, there is no recovery!  Look at this headline: “Consumer Spending Not in Line with Forecast.”  That is putting it mildly.  Here’s my headline: “Retail spending hit a wall and cratered in the fourth quarter.”  Oh sure, oil prices have fallen and consumers are getting a little boost, but it will not make up for all the losses the big banks are going to have with the losses in energy and derivatives.  Citi Group and JP Morgan are in deep trouble, and they are both going to need bailouts probably this year.  Just Citi Group alone and its holding company have a combined $135 trillion in derivatives exposure.  Citi Group’s earnings are tanking.  Egon von Greyerz predicted QE4 before the end of the second quarter.  My money says he’s right.

The U.S is not the only one having problems.  Russia just cut off gas deliveries for six Eastern European countries.  There has been a 60% cut in supply to Europe.  This will cause even more financial problems in the Eurozone.  It will be even more of a reason for the ECB to print money to bail out businesses and banks.  We have all been waiting for the next Russian move, and no one should be surprised that January would not be the ideal month to cut supplies unless you were giving the Europeans some payback.  Russia has been crippled with sanctions.  Ukraine has been reportedly stealing Russian gas.  What did they think Russia was going to do?  My surprise is why it took so long.  On top of that, Russia is dumping the dollar and leaving the petro dollar system.  It is reportedly going to sell more than $88 billion in U.S. liquid dollar assets.  It is going to get payment in rubles or no-dollar transactions.

Then, there is the news that Russia is adding to its “combat capabilities” in Crimea.  The war in Eastern Ukraine is heating up, and it’s going to get hotter.  The U.S. and NATO are also stepping up their presence in the Baltic Sea and Eastern Europe in general.  Everybody in leadership knows this is getting worse, but you are not hearing much on the mainstream media.  Also, things are set to ratchet up in the Middle East with the President asking for troops to fight ISIS in Iraq and Syria.  America’s top General Martin Dempsey told Congress recently that it would take “80,000 competent Iraqi security forces to recapture lost territory” and take back Iraq from Isis.  There are probably less than 1,000 competent Iraqi troops.  You know American boots are going to be on the ground, and that will be almost all of the forces needed to defeat the Islamic State terrorists.  We are being set up militarily and financially for World War III.  The only question is when.

Finally, anti-Islam protests are heating up in Europe after the Charlie Hebdo attack and a separate attack on a kosher market.  There is no doubt there is a problem with radical Islam.  There is Boko Haram in Nigeria where 2,000 were recently murdered.  There are the more than 140 murdered in Pakistan by radical Islam late last year.  There have been countless stories of atrocities with the Islamic State in Iraq and Syria.  It is clear there is a problem, and most of it comes from al-Qaeda related groups.  If just 1% of the 1.6 billion Muslims are radical, that represents 16 million potential terrorists.  Radical cleric Anjem Choudhury called the latest cartoon from Charlie Hebdo “an act of war,” but not all Muslims want violence.  Case in point, did you know that a Muslim from Mali working in that kosher market in France saved the lives of six Jews, including a baby?  He led the group to the freezer during the deadly attack, turned it off and told everyone to stay calm until the attack was over.  He saved them.  This story was reported in the Israeli press.

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

We  will see you on Tuesday.

bye for now



One comment

  1. Harvey,

    The GLD/SLV gain/loss you posted were from yesterday. Today GLD tacked on an amazing 13.74 tonnes to 730.89 tonnes.


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