april 13/EU rejects latest Greek reforms/Greece will not reform its pensions nor privatization/Greece prepares to Exit the EU/Russia lifts the ban on selling missiles to Iran/China rejects the Taiwanese application for the AIIB/James Turk states that London has run out of gold/GLD loses 1.75 tonnes/SLV gains 2.391 million oz/

Good evening Ladies and Gentlemen:



Here are the following closes for gold and silver today:



Gold:  $1199.30 down $5.30 (comex closing time)

Silver: $16.28 down 9 cents (comex closing time)


In the access market 5:15 pm

Gold $1199.30

Silver: $16.29



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



Following is a brief outline on gold and silver comex figures for today:


At the gold comex today,  we surprisingly had a poor delivery day, registering nil notices served for 0 oz.  Silver comex filed with  0 notices for nil oz .


Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 243.65 tonnes for a loss of 60 tonnes over that period. Lately the removals  have been rising!




In silver, the open interest rose by 1301 contracts with Friday’s silver price up by 20 cents. The total silver OI continues to remain extremely high with today’s reading at 172,711 contracts. The front April month has an OI of 175 contracts for a gain of 5 contracts. We are still close to multi year high in the total OI complex despite a record low price. This dichotomy has been happening now for quite a while and defies logic. There is no doubt that the silver situation is scaring our bankers to no end.


We had 0 notices served upon for nil oz.



In gold,  the total comex gold OI rests tonight at 392,635 for a gain of 1,689 contracts with gold up by a considerable $11.00 on Friday. We had 0 notices served upon for nil oz.



Today, we had a huge withdrawal of 1.75 tonnes in gold at the GLD/  Gold Inventory rests at 734.29  tonnes

In silver, /  /we have a huge addition of 2.39 million oz of silver at the SLV/ and thus the inventory tonight is 324.230 million oz


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


1. Today we had the open interest in silver rise by a huge  1,301 contracts despite a small rise in price on Friday (20 cents).  The OI for gold rose by only 1689 down to 392,635 contracts as the price of gold rose by a considerable  $11.00 on Friday.

(report Harvey/)

2. Koos Jansen reports on a huge 40 tonnes of gold demanded by China in the first week of April. (equals SGE withdrawals). Also Koos reports on volume rising at the International SGE.  Leverage here is zero as all settlements are in physical.

3.Greece paid the iMF on Thursday.  On Friday, it was announced that the ECB increased its ELA to Greece by 1.2 billion euros up to 73.2 billion euros as more depositors fled.  Today, the London’s Financial times has reported that Greece has decided that it will withhold the IMF payment in May and June so it can pay its pensioners. Also the reform package submitted by Greece is totally offside on its pension reform and on privatization.

(courtesy London’s Financial times/Zero hedge)

4. James Turk reports that gold is basically out of stock in London as it moves into backwardation again.

(James Turk, Rory Hall,Dave Kranzler IRD)

5. Bill Holter delivers another outstanding commentary on confidence and collateral

(Bill Holter)

6. China rejects Taiwan’s application into the AIIB.

(London’s Financial Times)

7.  Bank de Monte de Paschi di Siena in trouble again today, being offside with loans to Nomura in that phony deal orchestrated a few years ago


8. Russia lifts its ban on selling missiles to Iran.  It also states that the move by the west to isolate Russia will be fruitless

(zero hedge)


we have these and other stories for you tonight



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

Here are today’s comex results:


The total gold comex open interest rose by 1689 contracts from 390,946 up to 392,635 with gold up by $11.00 on Friday (at the comex close).  We are now in the active delivery month of April and here the OI rose by 8 contracts up to 2,470. We had 0 contracts filed upon on Friday so we gained 8 contracts or 800 oz will  stand for delivery in April. The next non active delivery month is May and here the OI rose by 27 contracts up to 484.  The next big active delivery contract month is June and here the OI rose by 851 contracts up to 264,543. June is the second biggest delivery month on the comex gold calendar. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 67,984  (Where on earth are the high frequency boys?). The confirmed volume on Friday ( which includes the volume during regular business hours + access market sales the previous day) was poor at 133,703 contracts. Today we had 0 notices filed for 0 oz.

And now for the wild silver comex results.  Silver OI rose by a huge 1301 contracts from 171,410 up to 172,711  despite the fact that silver was up by only by 20 cents, with respect to Friday’s trading . We are now in the non active delivery month of April and here the OI rose to 175 for a gain of 5 contracts.  We had 0 notices filed on Friday so we gained another 5 contracts or an additional 25,000 silver ounces will stand in this delivery month of April. The next big active delivery month is May and here the OI fell by 4,090 contracts down to 80,824 . The estimated volume today was poor at 18,396 contracts  (just comex sales during regular business hours. The confirmed volume yesterday  (regular plus access market) came in at 67,099 contracts which is excellent in volume. We had 0 notices filed for nil oz today.



April initial standings

April 13.2015



Withdrawals from Dealers Inventory in oz  nil
Withdrawals from Customer Inventory in oz 32.15 oz (Brinks) l kilobar
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz 40,097.741 oz (HSBC
No of oz served (contracts) today 0 contracts (nil oz)
No of oz to be served (notices)   2470 contracts(247,000) oz
Total monthly oz gold served (contracts) so far this month 686 contracts(68,600 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   oz

Total accumulative withdrawal of gold from the Customer inventory this month

  219,997.0 oz

Today, we had 0 dealer transaction

total Dealer withdrawals: nil oz



we had 0 dealer deposits


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 1 customer deposit:

i) Into HSBC: 40,097.741 oz

total customer deposit: 40,097.741 oz


We had 1 adjustment

Out of the HSBC vault:

202.886 oz leaves the customer vault and heads to the dealer vault of HSBC.

Today, 0 notices was issued from JPMorgan dealer account and 10 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 March contract month, we take the total number of notices filed so far for the month (686) x 100 oz  or  68,600 oz , to which we add the difference between the open interest for the front month of April 2470) and the number of notices served upon today (0) x 100 oz equals the number of ounces standing.

Thus the initial standings for gold for the April contract month:

No of notices served so far (686) x 100 oz  or ounces + {OI for the front month (2470) – the number of  notices served upon today (0) x 100 oz which equals 315,600 oz or 9.816 tonnes of gold.


we gained 8 contracts or an additional 800 oz will stand for delivery in this April contract month.





Total dealer inventory: 567,535.971 or 17.65 tonnes

Total gold inventory (dealer and customer) = 7,833,538.194  oz. (243.65) tonnes)


Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 60 tonnes have been net transferred out. However I believe that the gold that enters the gold comex is not real.  I cannot see continual additions of strictly kilobars.






And now for silver


April silver initial standings

April 13 2015:



Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 1,387,174.86 oz (CNT,HSBC,Scotia)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory 1,258,474.07 (JPM,CNT)
No of oz served (contracts) 0 contracts  (nil oz)
No of oz to be served (notices) 175 contracts(875,000 oz)
Total monthly oz silver served (contracts) 315 contracts (1,575,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  548,169.5 oz
Total accumulative withdrawal  of silver from the Customer inventory this month  8,117,267.5 oz


Today, we had 0 deposits into the dealer account:


total dealer deposit: nil   oz


we had 0 dealer withdrawals:


total dealer withdrawal: nil oz


We had 2 customer deposits:

i) Into JPM<:  1,200,224.07 oz

ii) Into CNT: 58,250.000 oz ????



total customer deposits:  1,258,474.07  oz

*this is the 4th day in a row that we had a huge deposit  silver arrive at JPMorgan customer side.


We had 3 customer withdrawals:



ii) Out of HSBC:  122,678.26 oz

iii) Out of CNT: 1,204,476.300 oz

iii) Out of Scotia;  60, 020.300 oz


total withdrawals;  1,387,174.86 oz


we had 1 adjustment:

i) Out of JPMorgan vault:

287,729.70 oz leaves the dealer at jPM and enters the customer side of JPMorgan.

Total dealer inventory: 62.947 million oz

Total of all silver inventory (dealer and customer) 174.939 million oz


The total number of notices filed today is represented by 0 contracts for nil oz. To calculate the number of silver ounces that will stand for delivery in April, we take the total number of notices filed for the month so far at (315) x 5,000 oz    = 1,575,000 oz to which we add the difference between the open interest for the front month of April (175) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing.

Thus the initial standings for silver for the April contract month:

315 (notices served so far) + { OI for front month of April(175) -number of notices served upon today (0} x 5000 oz =  2,450,000 oz standing for the April contract month.

we gained an additional 25,000 silver ounces standing in this April delivery month.


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

http://www.harveyorgan.wordpress.com orhttp://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:

April 13.2015: we had a withdrawal of 1.75 tonnes of GLD/Inventory at 734.29 tonnes

April 10/we had no change in inventory at the GLD/Inventory at 736.04 tonnes

April 9.2015 we have a huge addition of 2.98 tonnes of gold inventory/GLD inventory tonight stands at 736.04 tonnes

April 8.2015:no changes in the GLD/Inventory 733.06 tonnes


April 7. we had another withdrawal of 4.18 tonnes of gold at the GLD/Inventory rests at 733.06 tonnes

April 6. no changes in gold inventory at the GLD/Inventory at 737.24 tonnes

April 2/no changes in gold inventory at the GLD/Inventory at 737.24 tonnes

April 1/2015/ no changes in gold inventory at the GLD/Inventory at 737.24 tonnes

march 31.2015/ no changes in gold inventory at the GLD/Inventory at 737.24 tonnes

March 30/no changes in gold inventory at the GLD/Inventory at 737.24 tonnes.

March 27/no changes in gold inventory at the GLD/Inventory at 737.24 tonnes

March 26 we had another huge withdrawal of 5.97 tonnes of gold.  This gold is heading straight to the vaults of Shanghai, China/GLD inventory 737.24 tonnes


April 13/2015 /  we had a loss in inventory of 1.75 tonnes of  gold at the GLD/Inventory stands at 734.29 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 : 734.29 tonnes.




And now for silver (SLV):

April 13.2015: a huge addition of 2.391 million oz of silver at the SLV/Inventory rests at 324.230 million oz

April 10/ no changes in silver inventory at the SLV/Inventory rests at 321.839 million oz

April 9/2015 no changes in inventory at the SLV/Inventory rests at 321.839 million oz/

April 8.2015: no changes in inventory at the SLV/Inventory rests tonight at 321.839 million oz

April 7.2015: no changes in inventory at the SLV/Inventory rests tonight at 321.839 million oz

April 6. we had a small withdrawal of 136,000 oz/inventory tonight rests at 321.839 million oz

April 2/2015: no changes in inventory/SLV inventory rests this weekend at 321.975 million oz

April 1.2015: we had a huge withdrawal of 1.913 million oz of silver from the SLV vaults/Inventory 321.975 million oz

March 31.2015: no changes in inventory at the SLV/Inventory at 323.88 million oz

March 30.2015: no changes in inventory at the SLV/inventory at 323.888 million oz.

March 27. we had a huge withdrawal of 1.439 million oz leave the SLV/Inventory rests this weekend at 323.888 million oz

March 26.2015; no change in silver inventory/SLV inventory 325.323 million oz

March 25.2015:no change in silver inventory/SLV inventory 325.323 million oz



April 13/2015 we had a huge addition  in inventory at the SLV of 2.391 million oz/ inventory rests at 324.230 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  7.9% percent to NAV in usa funds and Negative 78.0% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.6%

Percentage of fund in silver:38.0%

cash .4%

( April 13/2015)

Sprott data: will update later tonight


Sprott gold fund finally rising in NAV

2. Sprott silver fund (PSLV): Premium to NAV falls to + 0.49%!!!!! NAV (April 13/2015)

3. Sprott gold fund (PHYS): premium to NAV falls -.39% to NAV(April 13/2015

Note: Sprott silver trust back  into positive territory at +0.49%.

Sprott physical gold trust is back into negative territory at -.39%

Central fund of Canada’s is still in jail.






And now for your more important physical gold/silver stories:


Gold and silver trading early this morning


(courtesy Goldcore/Mark O’Byrne)

Safety Deposit Box Heist in London Reminder of Need For Insurance and Top Level Security

– One week on and police appear no nearer to catching those responsible
– Crime only seems more audacious with every new detail that emerges
– CCTV has given tantalising glimpse of the six men who went into vaults
– Many victims of Hatton Garden robbery had all their wealth uninsured in safe deposit boxes
– UK as a jurisdiction has not been very secure in recent years, with numerous high-profile heists in London
– Shows vital importance of insurance for boxes and bullion storage
– Diversification on every level is key, including how and where bullion is stored


The highly-organised Easter weekend safety deposit boxes raid at a facility in Hatton Garden, London, demonstrates once again that holding tangible assets outside of the fragile banking system is a risky exercise, if the manner in which those assets are stored is not thoroughly secure and fully insured.

While many of those who stored valuables in the boxes were jewellers, reports are emerging of how some of the victims had their entire life savings, including cash and bullion, in boxes which they believed to be secure. Many had no insurance partly because they could not afford the extra cost and partly because they were convinced their property was secure in the Hatton Garden facility.

“The robbery was reported on Tuesday but by Friday we had still not been told whether our stuff had been taken” said one jeweller who asked to remain anonymous. “I had £350,000 worth of cash and jewels and I was in a terrible state”.

“By Friday, some of us owners had had enough and each paid the staff at the building £100 to have a look at the list of boxes missing. Mine was fine but a friend had his life savings completely stolen, worth £500,000.”


There appears to have been a shocking lapse in security surrounding the Easter weekend heist. The security lapse reflects badly both on the company and on the police.

“On Friday it emerged the Met received a call on Good Friday and were told an intruder alarm had gone off – but decided it did not require a response. Officers are now investigating why the call was given a grade that meant no police response was deemed necessary,” according to the BBC.

An alarm was reported to police but no response was deemed necessary. Yesterday, this decision was described as ‘totally incompetent’ by ex-head of the Flying Squad, John O’Connor.

Local residents reported loud drilling over the weekend. “I heard drilling late on Thursday but thought it was workmen after we had a huge power cut. When I heard the news, I realised it was the gang drilling into the vault,” said John Han.

Further questions are being asked regarding the competence – or worse – of the Met over why CCTV footage was not released in the critical period following the discovery of the robbery which may have helped to identify the thieves who may have left the country by now.

The footage was released by the Mirror newspaper on Saturday. “The Met Police said it had already recovered the footage ‘at the earliest opportunity’, but declined to comment on why it was only released after being published by the newspaper,” adds the BBC.

For our clients, the how of owning gold is important as the why and the manner in which bullion is stored is as important a consideration as the necessity to own bullion.

The nature of bullion ownership and having insurance is absolutely vital.

We operate a system of bailment and as such customers’ precious metal investments are held in custody, directly in their name. Customers can view the contents of their storage account at any time by visiting the GoldCore website and reviewing the contents, bar numbers and location of their holdings in their account. Reconciliation between the internal GoldCore client holdings  which can be seen online and with our storage partners is done on a daily basis.

Clients are able to review the assets under their subaccounts based on their unique subaccount number. Their assets are always fully insured through the storage providers.

GoldCore works with an independent audit company, Inspectorate International, who audits the assets held in GoldCore’s secure storage locations. This is done bi-annually and the results of this audit are shared with every customer that has assets in secure storage with GoldCore.

Every participant in the international bullion market requires adequate insuranceto cover loss, damage and indeed theft.

This applies to mining companies, refineries, mints, financial institutions, bullion transporters and storage specialists.

The insurance of precious metals vaults and storage depositories is predominantly underwritten by specialist risk underwriters operating through the international insurance market such as Lloyd’s of London.

Our clients’ bullion holdings are covered by ‘all risk’ insurance underwritten by specialist ‘specie’. This insurance agreement, which is governed by English law, covers precious metals and other valuables against physical loss, damage, theft or disappearance up to the value of $50 million for any one loss in any one location. The agreement can be viewed by GoldCore clients.

It is vital to ensure that your bullion provider and its storage partners have adequate insurance cover. With low cost bullion providers generally comes low levels and inadequate cover.

Diversification and owning bullion in the safest vaults in the world and in the safest jurisdictions in the world is key.

A safety deposit box in a facility in one’s own jurisdiction would play an important role in this type of diversification. It is important to have access to an allocation of one’s gold in the event of an international crisis causing a temporary disruption to access to an overseas vault or indeed capital controls or problems in the banking system and international payments system.

Sentinel Vaults Safety Deposit Boxes in Dublin Ireland

We believe, however, that such an allocation should always be insured and it should be just large enough to meet emergency requirements or an intended small-scale sale. The bulk of one’s bullion should be stored in highly secure specialised, professional bullion vaults.

We provide fully insured bullion storage service in the safest vaults in the safest jurisdictions in the world, such as those operated by Loomis International in Zurich (formerly Via Mat International) and Brink’s in Singapore.

The jurisdiction in which one stores larger allocations of gold is also important. London has seen a number of high profile jewellery and gold heists in recent years. This is somewhat understandable given the concentration of wealth in London but at the same time such events are virtually unheard of in other international financial hubs like Zurich or Singapore.

Allocating a small proportion of one’s wealth to physical gold is of vital importance in these days of geopolitical tension, desperate monetary experimentation by central banks and gargantuan unpayable global debt. At the same time, one needs to consider very carefully how one stores this gold.

The experience of many of the unfortunate safe deposit box holders at Hatton Gardens demonstrates that one cannot take security for granted. In the coming months and years, as the current monetary insanity comes to its logical conclusion, bullion will become a highly desirable target of both criminal elements and bankrupt governments.

Hence the need to own it in the safest ways possible.

Vital importance of nature of ownership and insurance is covered in our must read guide
How To Store Gold Bullion – The Seven Key Must Haves


Today’s AM LBMA Gold Price was USD 1,197.85, EUR 1,136.72 and GBP 820.54 per ounce.
Friday’s AM LBMA Gold Price was USD 1,201.90, EUR 1,133.49   and GBP 820.58 per ounce.

Gold in Euros - 1 Week

Gold climbed 1.1% percent or $13.10 and closed at $1,208.20 an ounce on Friday, while silver rose 1.79 percent or $0.29 closing at $16.49 an ounce. Gold finished up 0.57 percent for the week in dollar while silver slipped 1.49 percent. Gold in euros was over 3 percent higher and in sterling gold was over 2 percent higher for the week.

Gold prices in Singapore
were off 0.3 percent at $1,204.16 an ounce near the end of day trading. Comes U.S. gold for June delivery was unchanged at $1,204.30 an ounce.

Gold made a sharp reversal higher last week despite the stronger dollar and buoyant record hitting stock markets and this is bullish for the coming months.

On Friday, Federal Reserve Bank of Richmond president Jeffrey Lacker said he continued to favour a rate increase at the June policy meeting, suggesting some of the recent forecast-missing US data was weaker because of unseasonably adverse weather.

The yellow metal shrugged off the hawkish comments finishing up on Friday. The next FOMC meeting is scheduled April 28-29th.

Concerns about the health of the world’s number 2 economy, China, has been highlighted by poor economic data. Chinese exports fell 15 percent in March while import shipments dropped at their highest rate since the 2009 global financial crisis.

This is a shock and suggests that global economy is vulnerable to a slow down. The trade balance falling from $60.6 billion in February to $3.1 billion in March. Economists had $43.4 billion forecasted. The World Bank cut their Chinese economic growth forecasts for 2015 from 7.4 percent to 7.1 percent, and 2016 from 7.2 percent to 7 percent.

In late European trading, gold was trading down 0.66 percent at $1,199.42 per ounce. Silver was off 0.74 percent at $16.34 per ounce. Platinum also slipped 0.69 percent at $1,159.20 per ounce.

Breaking News and Award Winning ResearchHere




Two important points today:

1. Gold demand from China (Mainland) amounted to 40 tonnes this past week.

2. The  international gold contract is now blooming in volume.

Koos Jansen explains the International Gold exchange for us:

(courtesy Koos Jansen)


Posted on 11 Apr 2015 by

Shanghai International Gold Exchange Comes To Life

In September 2014 the Shanghai Gold Exchange (SGE) launched its International Board, the Shanghai International Gold Exchange (SGEI). After a slow start, the volume of the physical SGEI kilobar contract (iAu99.99) has transcended all other SGE contracts in week 15 (April 6- 10).

The primary goals for the launch of the SGEI was to facilitate gold trading in renminbi, improve price discovery in renminbi and internationalize the renminbi. The Chinese consider gold as an indispensable component of China’s financial market and for the renminbi to internationalize the renminbi-gold market has to internationalize. It could be that the spike in trading volume of iA99.99 was an incidental burp, it could also be we’re witnessing the Chinese international gold exchange entering its adolescence.

In any case, the chairman of the SGE, Xu Luode, has been very clear about his intentions with the SGEI. A few snippets from Xu…

December 2013:

The Shanghai Gold Exchange chairman Xu Luode said he considers the construction of an offshore gold exchange international gold market in the Shanghai Free Trade Zone, for the cross-border use of renminbi, it will be launched for the international offshore investors… The industry comments that it will be a tool to promote the internationalization of the renminbi, …

…the goal is to build Shanghai into an international gold exchange trading market with global influence.

May 2014 (direct quote):

The Chinese gold market is an important force, a positive energy in the international gold market but its influence does not correspond to its mass and scale. Last year China’s domestic gold mines produced 428 tonnes; at the same time China imported 1540 tonnes of gold, adding up to nearly 2000 tonnes. China’s import volume is significant but China’s influence on the price of gold is very small. Real influence still lies in the West. Data such as Non-farm payroll, or even a speech could impact the gold market in a big way. In this sense, the mass and scale of China’s gold market and its influence in the international gold market does not match. Through the SGE international board Chinese pricing power will increase.

Foreign investors can directly use offshore yuan to trade gold on the SGE international board, which is promoting the internationalization of the renminbi. The international board will form a yuan-denominated gold price index system named “Shanghai Gold”. Shanghai Gold will change the current gold market “consumption in the East priced in the West” situation. When China will have a right to speak in the international gold market, pricing will get revealed. New York prices gold through bidding whereas in London the gold price is fixed by five banks. However the London gold fixing price is now being questioned since these five banks are price-fixers while at the same time they are also the market’s most important participants.

China is fully qualified and may become the world gold market’s very important first class player.

February 2015 (direct quote):

The Chinese government regards the gold market as an indispensable component of China’s financial market and attaches great importance to its growth and development.

… As national efforts to internationalize the renminbi reach their crescendo, China’s domestic gold market is facing an auspicious window and timing for pursuing its internationalization and greater openness. 

… China, India, Dubai and Singapore all enjoy vibrant trading scenes and comparative advantages; however, in the eyes of many investors, the influence wielded by the Asian markets is still very limited as a whole. Using the International Board as a launch pad, China’s gold market will embrace greater openness and foster stronger ties with its neighbors and, together, elevate the trading and pricing influence of Asia in the world’s gold market.

…All products listed on the Exchange are denominated in renminbi. As more market participants gather to trade on the Exchange, and onshore investors and domestic funds become more intertwined with offshore investors and offshore funds, the sphere of influence of trading prices on the Exchange will gradually expand from nearby regions to the whole world and, at the same time, renminbi-denominated gold benchmark price will emerge as another financial index of global significance.

As a reminder, from PBOC Governor Zhou Xiaochuan in 2004:

Despite the declining function of gold as currency in the world, the activeness and development of investment activities with gold as the target indicate that gold still has a strong financial nature and remains an indispensable investment tool. In major financial centre’s in the world, the gold market – together with the money market, securities market and FX market – constitutes the main part of the financial market.

In the chart below we can see the weekly trading volumes of the most traded SGE contracts – Au99.95, Au99.99, Au(T+D) – and the most traded SGEI contract – iAu99.99.

Weekly volume SGE SGEI contracts

The largest spike in volume was on April 8, when total iAu99.99 volume was 31 tonnes for the day (counted unilaterally). Which is still far below the COMEX, where 382 tonnes in gold futures were traded on April 8, though, COMEX gold is leveraged more than 20:1.

Note, the SGE contracts can be traded by international members of the SGEI, and domestic members of the SGE are allowed to trade SGEI contracts. Though, a limited number of members of the SGE can trade iAu99.99 and are allowed to import this gold from the Free Trade Zone into the mainland. No international SGEI member can export the gold from the SGE (mainland) to abroad. For more information read The Workings Of The Shanghai International Gold Exchange.

Screen Shot 2015-04-11 at 7.31.56 PM

SGE Withdrawals

Unfortunately we don’t know who is exactly trading the iAu99.99 contracts, international or domestic members. Nor do we know if the traded gold is withdrawn from the vaults, and if withdrawn, if it’s subsequently imported into the mainland or exported from the Shanghai Free Trade Zone. Based on data released in February and low iAu99.99 volume we could be fairly sure SGEI trading didn’t substantially distort our proxy of Chinese wholesale gold demand, SGE withdrawals. From SGE Withdrawals In Perspective:

For now, the SGE withdrawal distortion ratio is at most 0.0246 (3/122). Measuring Chinese wholesale gold demand conservatively would be

SGE withdrawals – (0.0246 X SGEI volume)

However, now SGEI volume is surging it’s hard to say if this “distortion ratio” is still usable. If the volume is surging the trading pattern can also be changing. We have to wait for new information on withdrawals to come out (believe me I’m trying to get it out) before we can continue to make accurate estimates of Chinese wholesale gold demand measured by SGE withdrawals. Until then, the significance of SGE withdrawals from week 14 is unsure.

The most recent SGE withdrawal data is from week 13 (March 30 – April 3), when SGEI volume hadn’t peaked. In week 13 withdrawals from the vault of the Chinese bourse accounted for 40 tonnes, year to date 647 tonnes have been withdrawn. 647 tonnes corrected by 0.0246 as distortion ratio is 641 tonnes, which is up 9 % from 2014. According to my estimates China has net imported over 450 tonnes year to date.

Shanghai Gold Exchange SGE withdrawals delivery only 2014 - 2015 week 13

Shanghai Gold Exchange SGE withdrawals delivery 2015 week 13 dips

So much for now on the Chinese gold market, keep you posted!

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

Early Monday morning trading from Europe/Asia



(courtesy GATA)


Gold-Backed SDR “Is Quite Likely To Happen”, LSE’s Lord Desai Warns


As many are increasingly coming to terms with the ‘obvious failure of fiat currency’, the inevitavble question arises “what next?” Earlier this year, we discussed the possibility of a Chinese- or Russian-currency backed by gold, amid the increasing calls (domestically and abroad) for an end to USD Reserve hegemony; but this weekend, as Bloomberg reports, Lord Meghnad Desai, chairman of The Official Monetary and Financial Institutions Forum, stated that IMF Special Drawing Rights (SDR) should contain some gold to help stabilize the currency.


As Bloomberg reports,

“A bit of gold” could help stabilize SDRs,Lord Meghnad Desai, chairman of Official Monetary and Financial Institutions Forum, says at precious metals conference in Dubai.


“We could ask that gold be nominated as part of the SDR. That is one thing I think is quite likely to happen”


This will be easier if China increases its official gold holdings.

*  *  *

This is not the first time such a suggestion has been made…(as JC Collins of PhilosophyOfMetrics.com detailed)

The Coming SDR Gold Standard

Sometimes what at first appears to be conflicting information is anything but, and what was originally considered to be opposing forces or ideals can quickly become unified for the greater good.


There has been much discussion and division over whether the world was moving towards a multilateral super-sovereign reserve currency by way of the Special Drawing Right of the International Monetary Fund or towards a new gold standard by which all currencies would be valued once again on gold.


Positions have taken up defense on both sides and all waited to see which side was going to be right.  Were the BRICS countries going to overthrow the western banking cabal?  Was the US dollar going to inflate into oblivion?  Was the SDR going to become the new reserve currency?  Was a new gold standard going to be implemented instead?


So many questions with no clear outline or determinations on what exactly was going to happen.


I have contested all along that the SDR was going to become the super-sovereign reserve currency of the emerging multilateral financial system.  The supporters of a new gold standard have found this idea unworkable because gold is considered to be the only method of creating stability within the larger architecture of the global financial system.


But what if everyone is right?  Or more correctly, what if all the obvious points and leverage of each potential system can be utilized to create the larger macro stability from which the multilateral will inevitably emerge?


In the post Renminbi is Already a De Facto Reserve Currency, I discussed how the Chinese currency was being internationalized and would be added to the SDR basket valuation.


This basket is currently made up of four currencies, being the US dollar, the Japanese yen, the Euro, and the British pound.  Adding the renminbi to the basket is both important and necessary for any changes to the global financial architecture.


But this theory has never accounted for the importance obviously placed on gold and the manipulation and mass movement of the precious metal which has taken place over the last few years.


No doubt the gold moving east has a lot to due with balancing old sovereign bond debts and building up reserves to support the renminbi denominated contracts which have just begun at the Shanghai Gold Exchange.


But this doesn’t fully explain the demand by other countries for gold, such as Russia and India, or even Germany demanding its gold back from the United States.


But nether does a gold standard fit the facts as all participating countries and economies have stated in official publications and speeches that a new gold standard is unworkable and the SDR provided the best opportunity moving forward to balance the financial structure of the world.


In posts such as:

The Rise of the World Empire

Everything Will Be SDR Compliant

The Days of July – BRICS Still Seek SDR Solution

The Arcane SDR Supra-Sovereign Asset


I have attempted to explain and describe how the BRICS countries are aligned with the larger macro mandates of the SDR multilateral system and do not plan on overthrowing the western banks.  It is in fact a situation where the western and eastern banks are all controlled by the Bank for International Settlements.


It is interesting that over the last few days even certain conspiracy theorists which have been promoting the overthrow of the western banking cabal are now stating that the BIS and its central bank system will remain.


In most of my more esoteric posts I explain how the human mind seeks out division and from that division is born conflict.  Once symbols of division have been established it is almost impossible to shift the thinking of each position to see or observe a larger or more unified macro picture.


But once that realization is made the conscious thought pattern of all things takes a leap forward and what was once hidden in plan site becomes clearly visible and clarity resumes.


As we move closer to the end of this year and the ultimate point of transition to the multilateral, it is important to continue studying and observing the patterns which are taking place on the micro level.  These proxy resource wars and attempts to consolidate resources under regional currencies before the larger macro consolidation takes place will likely taper off as agreements are made and positions relinquished.


The US Congress will pass the required legislation to enact the 2010 IMF Code of Reforms which will allow for the necessary changes to the Executive Board of the IMF to take place.  This will also allow for the SDR basket to be opened and the renminbi and gold will be added to the overall valuation.


So once completed, the SDR basket valuation will consist of the following stores of value:


US Dollar

Japanese Yen

British Pound



and Gold.


From this point we need to study and observe the massive amount of Sovereign Wealth Funds which litter the background of the international financial architecture.


Energy exporters and pacific rim economies which have undervalued currencies have been pouring investment into SWF’s.   These funds are in a perfect position to promote the use of the SDR as a unit of account and store of value.


In the coming months and years you will see Sovereign Wealth Funds begin to purchase large amounts of SDR denominated bonds and securities.  This is likely where the solution to the derivatives issue will be found.  Somewhere in between Sovereign Wealth Funds and SDRM – Sovereign Debt Restructuring Mechanism, will be found the answer.


This will be the “reserve dollar” exit strategy for central banks and national treasuries.

*  *  *

Interested readers can study the following paper published by the University of Glasgow, titled Adding Gold into the Valuation of the SDR.and Collins encourages a strong review of the following document onFINAL+Vision_Sovereign_Wealth_Funds.  Especially section three, titled Sovereign Wealth Funds, Special Drawing Rights, and the New Global Financial Architecture.

*  *  *
As we concluded previously,

Some argue that “no other global currency is ready to replace the U.S. dollar.” That is true of other paper and credit currencies, but the world’s monetary authorities still hold nearly 900 million ounces of gold, which is enough to restore, at the appropriate parity, the classical gold standard: the least imperfect monetary system of history.

As the global currency war escalates, we suspect the answer to “what comes next” will come sooner than many think.




(courtesy Eric Dubin/Silver Doctors)

India To Grab 3,000 Tons Of Gold From Temples To Meet Physical Demand? – Eric Dubin

TND Exclusive:  Eric Dubin |Bharatiya-Janata-Party-Indian-Solar-Power

Indian Prime Minister Narendra Modi was elected with the expectation India would liberalize gold import duties and other restrictions.  Thus far, the Modi government has dragged its feet, executing only modest changes.

Plummeting crude oil import costs have helped tame India’s trade deficit.  But after curtailing normal gold demand in a stepped-up effort since the April 2013 gold cartel attack, Indian gold consumers are once again backing up the truck.  India imported an estimated 125 metric tons of gold last month, enough to strike fear among Modi officials preoccupied with India’s current account deficit.  Perhaps US Treasury Secretary Jack Lew placed a friendly call too.

Trial Balloon Time

What’s poor Modi to do?  Raid temples?  Apparently, government and industry sources believe gold imports of as much as 200 metric tons or more can be replaced annually if they can just convince Indian temples to deposit gold into the banking system in exchange for interest payments.  It’s not even clear if there is talk about letting the temples have title to the gold and the right to get it back at some point — not that that would ever happen!

Indian temples hold an estimated 3,000 metric tons of gold, collected over the millennia from donations.  For all we know, that might even be more gold than what remains unencumbered in official US government and Federal Reserve Bank of New York vaults!

The Modi government has also actively explored ways of setting up gold trusts at banks in an effort to meet Indian gold demand with certificate paper-based products.  Indian families control an estimated 17,000 metric tons of gold.

India_Gold_Demand_2015Thus far, gold certificate plans haven’t made major headway.  Gold certificates don’t wear particularly well around the necks of Indian brides.  It’s unclear if a meaningful percentage of the general public will go along with the Temple gold scheme either.  One Mumbai-based gold merchant and his father told Reuters, “I make donations to God; not to any temple trust.”

Ultimately, India should classify the importation of gold and silver as a currency transaction.  Gold and silver are money as well as commodities, and if Modi sought to display truly innovative thinking and testicular fortitude, he’d do away with the Current Account problem once and for all as that would be pursuant to India’s national interest.

Don’t hold your breath.




We brought this to your attention on Friday:

(courtesy New York Times/Ben Protess/GATA)


Deutsche Bank nears plea deal over Libor manipulation


By Ben Protess and Jessica Silver-Greenberg
The New York Times
Thursday, April 9, 2015

A long-running investigation into Wall Street’s manipulation of interest rates is heading into a stark final chapter as authorities around the globe push Deutsche Bank to pay a record penalty and accept a criminal guilty plea for the unit at the center of the case.

Deutsche Bank, Germany’s largest financial institution and one of several banks linked to the gaming of interest rates, is in talks to resolve the case as soon as this month, according to people briefed on the matter. A deal — which involves federal prosecutors as well as New York State’s financial regulator and regulators in London and Washington — would be one of the last cases to arise from the sweeping investigation into the London interbank offered rate, or Libor.

The contours of Deutsche Bank’s planned settlement, described by the people briefed on the matter who were not authorized to speak publicly, show the perils of going last. Collectively, the authorities are expected to collect more than $1.5 billion from Deutsche Bank, eclipsing all past settlements with banks accused of Libor manipulations. The Justice Department also conditioned the deal on one of the bank’s British subsidiaries’ pleading guilty to fraud, in what would be the most significant banking unit to accept a criminal plea in the Libor investigation. …

… For the remainder of the report:





(courtesy Chris Powell/GATA)


Somebody besides GATA calls attention to the Bank for International Settlements


9:34p ET Saturday, April 11, 2015

Dear Friend of GATA and Gold:

Zero Hedge tonight publishes a long excerpt from what may be the most recent serious treatment of the Bank for International Settlements, the 2013 book “Tower of Basel: The Shadowy History of the Secret Bank That Runs the World” by Adam LeBor —


— and while it’s worth reading, it may not convey much new to people who have been following GATA for more than a few months, since GATA often has called attention to the bank’s crucial role in rigging the gold market on behalf of its member central banks

Indeed, the BIS was the lead defendant in GATA’s first litigation about gold market rigging, brought in December 2000 by our consultant Reginald H. Howe:


Also called to your attention since then by GATA:

— In November 1983, 30 years before LeBor published his book, the financial journalist Edward Jay Epstein went over much the same ground in an article about the BIS for Harper’s magazine:


— A president of the Netherlands Central Bank who was simultaneously president of the BIS, Jelle Zijlstra, wrote in his memoirs in 1992 that the gold price was suppressed at the behest of the United States, a discovery made by gold researcher Jaco Schipper and conveyed to GATA three years ago:


— William R. White, then the director of the monetary and economic department of the BIS, told a BIS conference in Basel in June 2005 that a primary purpose of international central bank cooperation is “the provision of international credits and joint efforts to influence asset prices (especially gold and foreign exchange) in circumstances where this might be thought useful”:


— The BIS actually advertises to prospective members that its services include secret interventions in the gold market:


— According to its annual reports the BIS functions largely as a gold banking and gold market intervention service for its member central banks. On Page 110 of its report for 2013 the BIS says: “The bank transacts foreign exchange and gold on behalf of its customers, thereby providing access to a large liquidity base in the context of, for example, regular rebalancing of reserve portfolios or major changes in reserve currency allocations. The foreign exchange services of the bank encompass spot transactions in major currencies and Special Drawing Rights (SDR) as well as swaps, outright forwards, options, and dual currency deposits (DCDs). In addition, the bank provides gold services such as buying and selling, sight accounts, fixed-term deposits, earmarked accounts, upgrading and refining, and location exchanges.” See:


Of course none of this trading by the BIS for its members is ever publicized. It is known only to the BIS, its members, and their favored agents in the markets being rigged, even as the market riggers presume to lecture other market participants about proper procedure and undeveloped nations about the virtues of free markets, as if there are any free markets left.

In the part of his book excerpted tonight by Zero Hedge, LeBor notes that the enormous power, secrecy, and unaccountability of the BIS are inconsistent with the democracy purportedly maintained by some of the bank’s major members.

But reviewing LeBor’s book two years ago for The New York Times —


Michael Hirsh was probably right that the BIS “has been more of a witness to history than a maker of it, more Forrest Gump than Superman.” For, as Hirsch observed, “International finance is now largely dictated by global banking corporations, the Federal Reserve, the European Central Bank, and the other major central banks that make up the membership of the BIS. More often than not, they base their policy on national or regional interest.”

That is, offensive to democracy as its secret operations are, the BIS is more the servant of its members than their master. The big problem is not the BIS but that the political systems of the bank’s major members have been taken over by their domestic financial classes.

To recover its democracy each country will have to wage its own struggle. Satisfying as it might be, nuking Basel tonight wouldn’t really accomplish much. The bankers quickly would find themselves another clubhouse somewhere else, equip it with the most sophisticated computers and market-rigging programs, and be back in business in a week, with the trading room of the Federal Reserve Bank of New York picking up the slack in the interim — at least until some financial news organizations dared to attempt the sort of journalism they’ve long been leaving to Zero Hedge.

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





(courtesy Turd Ferguson/TF Metals)


Turd Ferguson gives his commentary on the Banking Participation Report for March.

Bank Participation Report Update

If it’s to be taken seriously, the latest Bank Participation Report from the CFTC shows a completion of the full “wash and rinse” cycle from January. Does this set the stage for a renewed move higher in price? Not necessarily. However, the decks are finally clear should renewed buying interest in paper metal materialize in the weeks ahead.

Before we begin, the usual background:

  • The CFTC’s Bank Participation Report is issued monthly from a survey taken at the Comex close on the first Tuesday of every month. The report summarizes the combined positions of the four largest U.S. banks (primarily JPM, MorganStanley, Citi, Goldman but occasionally others) and the twenty largest non-U.S. banks (Scotia, HSBC, DeutscheBank, UBS, Barclays and others).
  • These reports might be utter nonsense and complete falsifications, designed to mislead and misdirect. Just last year, JPMorgan was fined by the CFTC for “repeatedly submitting inaccurate reports relating to the required reporting of positions”. See here: http://www.cftc.gov/PressRoom/PressReleases/pr6968-14

I will leave it up to you, dear reader, to assign or withhold legitimacy to/from the data. My job is simply to report to you on what the data shows and, before you read further, I urge you to review this post from February, the past time I wrote on this subject:http://www.tfmetalsreport.com/blog/6601/banks-run

For the purpose of this post, let’s examine just three recent Bank Participation Reports….the report from January 5 with price at $1219, the report from February 3 with price at $1260 and last Friday’s report based upon data submitted last Tuesday with price at $1210. Data from the three reports is laid out below:  Gold report

January 5                    GROSS LONG                   GROSS SHORT                     TOTAL

U.S. Banks                             11,728                                         37,321                                 -25,593

Non U.S. Banks                    32,985                                        80,227                                -47,242

TOTAL                                  44,713                                       117,548                                 -72,835

February 3                  GROSS LONG                   GROSS SHORT                     TOTAL

U.S. Banks                               9,163                                        65,901                                 -56,738

Non U.S. Banks                     20,009                                      96,264                                -76,255

TOTAL                                    29,172                                      162,165                               -132,993

April 7GROSS LONG                   GROSS SHORT                     TOTAL

U.S. Banks                               11,404                                      40,999                                 -29,595

Non U.S. Banks                      23,222                                      67,814                                 -44,592

TOTAL                                   34,626                                      108,813                                -74,187

So, what stands out to you in this data? Here’s what I see:

  • To manage price and sentiment, The Banks moved to cap the January rally through the issuance of nearly 45,000 naked short contracts between January 5 and February 3. That’s the paper equivalent of nearly 140 metric tonnes of gold, conjured up from thin air to meet speculative trading demand.
  • The Banks also managed this buying pressure by selling more than 15,000 contracts of their existing long positions. This total move of just over 60,000 contracts served to absorb buying interest, dampen sentiment, cap price and reverse momentum.
  • In February and March, recently revised BLSBS data was used as cover to break technical indicators and chart patterns in order to send prices tumbling back lower.
  • Into this Spec selling, The Banks actively bought back almost all of the naked short positions they had created earlier in the year.
  • As of last Tuesday, the combined NET position of the 24 banks is now back to nearly the exact same level seen on January 5, before the January surge in price.

Wash. Rinse. Repeat.

Does this mean that, with this latest cycle complete, another price rally is imminent? Of course not. However, the combined total GROSS naked short position of the 24 banks is now back to levels last seen at the previous price bottom in December of 2014. So, from these levels, there’s no obvious reason for The Banks to act to drive prices lower, either. What we’re left with is a range-bound paper market that is looking for a catalyst either way.

As global physical demand remains high and, by all appearances, global physical supply remains tight, the price floor found near $1150 should continue to hold. As it does, renewed fundamental concerns should serve to drive prices gradually higher. Of course, The Banks will only act to suppress any new trend by once again issuing fresh naked paper. However, now that the latest wash-and-rinse cycle is complete, the “space” created on the Banks’ books should allow them to issue this fresh paper without first actively moving to rig price even lower.

Be cautious yet optimistic. In 2015, gold is still poised to recover from the late 2014 washout lows. In doing so, it will post its first positive annual return since 2012 and mark a revival of the secular bull market that began in 2002.




Another biggy:  James Turk describes that the gold in London is pretty much gone!!


(courtesy James Turk/Rory Hall/Dave Kranzler/IRD)


 – James Turk: The Gold In London Is Pretty Much Gone

I think London has been pretty much emptied out – I don’t think there’s a lot gold left in London that’s available for shipment elsewhere. – James Turk, Shadow of Truth podcast – LINK

The rate of the flow of gold from western bank and investment vaults into Asia accelerated in the first quarter of 2015.   India just announced that it imported 125 tonnes of gold in March, more than double the amount imported in March 2014.  And 625 tonnes of gold was withdrawn from the Shanghai Gold Exchange during Q1, up 10.8% from Q1 2014.   In that all gold purchased in China – other than the gold purchased by the PBOC – must pass through the SGE, withdrawals from the SGE represent the China’s gold demand (not including the PBOC).   China only produces 400 tonnes per year, or 100 tonnes per quarter.  This means recycled gold plus imports must account for balance of demand.

Just from combined demand from India and China, there is a supply deficit of gold.  In fact, the global gold market has been functioning with a supply deficit since at least the mid-1990’s.  Frank Veneroso was the first analyst/consultant to figure this out based on conversations in his meetings as a consultant with the world’s Central Banks.   Veneroso predicted that eventually the price of gold would have to explode higher once the demand completely overwhelmed the supply.

GATA picked up on Veneroso’s work and began a campaign to educate the world about the western Central Bank schemes being used to keep the price of gold suppressed in order to prop up the legitimacy of paper fiat currencies.

James Turk has been a long time consultant to GATA and, in my opinion, knows as much about the global gold market as anyone.   Turk was the first analyst to look at the original GLD prospectus in 2004 and conclude that it was little more than paper gold:

The GLD prospectus is quite clear that the shares are not backed by gold.  It says the structure was designed to track the price of gold.

Rory Hall (The Daily Coin) and I hosted James Turk on our Shadow of Truth project.  We cover the latest developments in the Greece/EU saga, the condition of “backwardation” in the London gold market and the catastrophic level of debt globally.  We also discuss in-depth why GLD likely has very little physical gold sitting in its vault that is legally owned by the Trust and the reasons why the supply/demand deficit will lead, eventually, to much higher prices for gold.

I try to read/listen anytime Turk is willing to share his knowledge with the public.  This is an incredible interview with someone who I consider to be as knowledgeable about the gold market as anyone in the world (other than maybe BIS insiders).  We think you’ll find it time well-spent to listen to the entire podcast:




(courtesy Bill Holter/Miles Franklin)


Credibility, Collateral and Confidence.


We live in a world where all currencies are “fiat”, none backed by gold, silver, oil or anything else.  Yes of course the dollar, otherwise known as the “petrodollar” has functioned and survived (so far) based on oil revenues being recycled back into U.S. Treasury bonds, but this has been changing over recent years.  The change has accelerated greatly over the last five years.  This era of “fiat” everywhere and real money nowhere is now 44 years long in the tooth and the very first time in human history there was no alternative currency with a real foundation.

  Before you tell me “the U.S. is the most powerful military nation in the world, we don’t need no stinkin’ backing”, think this through.  Though for a time, this “arrangement” worked and no one could stand up to the U.S., is this still true?  Can we impose our will with everyone and everywhere on the planet?  Or has our military technology been leapfrogged as evidenced by the USS Donald Cook last year?  Can’t countries just decide to do business with each other …at the exclusion of the U.S. and use their own currencies to settle?  Isn’t this what has begun to happen with China and other nations doing individual trade deals?  Countries’ trade moving away from the U.S. and away from using dollars is as simple as grade school kids gravitating away from the schoolyard bully and deciding to play in harmony amongst themselves.
  This 44 year old experiment has always needed “confidence” to exist.  At first it worked because the U.S. was not over indebted and had plenty of room to lever up or “reflate” if you will.  We still had plenty of untapped or unencumbered collateral left to borrow against, this is no longer so.  Once the 2nd Great Depression kicked off in 2007, the Treasury started to run trillion dollar deficits and have now doubled our indebtedness.  The Federal Reserve has more than quadrupled their balance sheet to well over $4 trillion that sits on the head of an equity needle of less than $70 billion, they are THE largest and most leveraged hedge fund in the world!  The monetary lunacy by no means is confined to the U.S., it spans the globe and is practiced everywhere.  Europe and Japan’s central banks have done the same, so has China to some extent but with a couple of large caveats.
  In order to have monetary confidence, there are two prime necessities, collateral and credibility.  In other words, who wants to do business with a bankrupt or someone who cheats or lies?  Any business partner or someone you will do business with must be both solvent and truthful, neither of these conditions still exist in the big three monetary nations of the West.  Each and every year since 2011 we have been told the Federal Reserve would end QE, begin to tighten and thus normalize interest rates.  As I have written several times before, the Fed cannot ever raise interest rates again, this would destroy derivatives, the economy, the Fed’s own balance sheet and create a situation where tax revenues would not be enough to pay the interest on federal debt.  Raising rates is not an option.  Unfortunately, it is the same situation in both Europe and Japan, they have no options left either http://www.zerohedge.com/news/2015-04-10/japan-qe-limit-approaching-goldman-says-boj-risks-losing-crediblity  .  Japan began a very outsized QE operation last year while the ECB began theirs just two months ago.
  Both of these central banks are running into the same problem the Fed did, namely they are and have already taken too much collateral out of the system.  “Collateral” is what underlies the shadow banking system’s ability to lend, without it credit dries up.  It is so bad in Japan that the BOJ is buying more treasuries than are even issued.  Not only are they at 100% monetization, they are beyond this.  In Europe, the situation is so bad that market participants don’t expect a tightening until 2020, (we’ll never get there).  This is the reason for the euro’s recent marked weakness, the realization of how poor business really is and the lack of any options available.
  My point for writing this very basic (maybe even boring) piece is to remind those who have been distracted by the propaganda.  The bottom line is this, the collateral necessary for the “grand plan” of reflation does not exist.  The available collateral has already been encumbered and used in previous efforts.  The answer, which has always been “reflation” is now an impossibility.
  I mentioned “China with a couple of large caveats” above and needs explaining before we finish.  First, China sits in the exact same position the U.S. did in 1929, they have the world’s largest manufacturing capacity in a world where demand for this capacity is and will continue to wane.  They have attracted huge amounts of capital just as the U.S. did.  The second large caveat is China has been importing massive amounts of gold and certainly amassed more than 10,000 tons.  The argument can be made they now have 20,000 tons or more.
  In my opinion, whether the number is 10,000, 20,000 or even 100,000 tons, it really does not matter.  It does not matter because a large part of whatever they have purchased has been delivered FROM Western vaults and highly likely including the FRBNY’s custodial holdings for other sovereigns.  You see, if the West is left with little to no gold because of clandestine back door sales or even theft, the difference between China having 10,000 tons and 20,000 or more tons is almost meaningless.  It is meaningless because China will have the ability to mark the price up in Western currencies and make it all but impossible to ever “catch up”.  The only way to accumulate gold would be the old fashioned way, “mine it”.  But this is a very slow and arduous process that takes real work …something of a rarity in today’s Western world and will never happen at current prices.
  With any announcement of how much gold China has hoarded will come the above realization of what comes next, the price of gold will explode!  With an announcement of gold holdings will come credibility that they have collateral followed by the “natural” confidence the U.S. once had …a fairly simple concept if you stand back to look at it.  Regards,  Bill Holter


1. Stocks higher on major Chinese bourses as bubblemania is the name of the game in Shanghai and Hong Kong  /Japan lower /yen falls to 120.68/Chinese exports collapse  (see below)

1b Chinese yuan vs USA dollar/yuan  weakens to 6.2164

2 Nikkei down by 2.17  or 0.01%

3. Europe stocks mixed/USA dollar index up to 99.94/Euro falls to 1.0527

3b Japan 10 year bond yield .34% (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 120.68/

3c Nikkei still  above 19,000

3d USA/Yen rate now well above the 120 barrier this morning

3e WTI  52.23  Brent 58.39

3f Gold down/Yen down

3gJapan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion.  Japan’s GDP equals 5 trillion usa.

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.

3h  Oil up  for WTI and up for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU

Except Greece which sees its 2 year rate slightly rises to 20.86%/Greek stocks closed today/ still expect continual bank runs on Greek banks.

3j  Greek 10 year bond yield:  11.29% (up 4 in basis point in yield)

3k Gold at 1199.50 dollars/silver $16.29

3l USA vs Russian rouble;  (Russian rouble up 1  rouble/dollar in value) 52.43 , despite the lower brent oil price/the rouble is the best acting currency this year!!

3m oil into the 52 dollar handle for WTI and 58 handle for Brent/Saudi Arabia increases production to drive out competition.

3n Higher foreign deposits out of China sees hugh risk of outflows and a currency depreciation.  This scan spell financial disaster for the rest of the world/China may be forced to do QE!!

30  SNB (Swiss National Bank) still intervening again in the markets driving down the SF

3p Britain’s serious fraud squad investigating the Bank of England/ the British pound is suffering

3r the 7 year German bund still is  in negative territory/no doubt the ECB will have trouble meeting its quota of purchases and thus European QE will be a total failure.

3s  The ECB increased the ELA to Greece by a large 1.2 billion euros on Friday.  The new maximum is 73.2 billion euros.  The ELA is used to replace depositors fleeing the Greek banking system.  The bank runs are increasing exponentially.

Greece repaid the IMF on Friday.  There will be nothing left April 24..


3t Deutsche bank to pay 1.5 billion euro fine for rigging Libor rates. Higher than expected. (see below)

4.  USA 10 year treasury bond at 1.97% early this morning. Thirty year rate well below 3% at 2.61%/yield curve flatten/foreshadowing recession.


5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.



(courtesy zero hedge/Jim Reid Deutsche bank)


China Stocks Soar To 7 Year High After Collapse In Exports; US Futures Slip On Continuing Dollar Surge

If there was any doubt that global trade is stalling, it was promptly wiped out following the latest abysmal Chinesetrade data which saw exports tumble by 15% – the most in over a year – on expectations of a 8% rebound, with the trade surplus coming in at CNY18.2 billion, far below the lowest estimate. While unnecessary, with the Chinese GDP growth rate this Wednesday already expect to print at a record low, this was further evidence of weak demand both at home and abroad. Weakness was seen in most key markets, and the strength of China’s currency was partly to blame, which again brings up China’s CNY devaluation and ultimately QE, which as we wrote some time ago, is the ultimate endgame in the global reflation trade which, at least for now until the CBs begin active money paradropping to everyone not just the 0.01%, is only leading to inflation in stocks and deflation in everything else.

This is what the “market” also promptly realized because just as the Chinese economy is stalling fast and landing hard, its stock market rose by another 2.2%, a fresh 7 year high, while the now amusing Hang Seng surged by 2.7%, rising above 28,000 as the local Chinese stock bubble has spilled over in full force in neighboring Hong Kong where the average P/E is now best described as an excel calculation error.

As such, Asian stocks trade mostly mixed with Chinese bourses outperforming underpinned by poor trade balance data which prompted speculation of further stimulus measures. The headline reading printed its smallest surplus in 13-months in CNY terms and a 2-yr low in USD terms (CNY) (Mar) M/M 18.1bln vs Exp. 250.00bln (Prev. 350.50bln). Shanghai Comp (+2.2%) touched a fresh 7yr high while the Hang Seng added 2.7%. Nikkei 225 (-0.25%) was unable to break above 20,000 amid profit-taking after last week’s surge.

Curiously, the Dollar surged promptly following the China news (which due to the CNY peg means even moreChinese weakness), and has now risen to a fraction above 1.05 in the EURUSD,rapidly approaching decade lows in the pair, while the USDJPY came within 20 pips of 121 overnight. Just as curiously, today USD strength is not conducive to a rise in the S&P futures, which at last check were just fractionally red. We attribute this to DE Shaw not recalibrating its ES correlation algos to track whatever FX pair is up for the day.

European equities have started the week relatively mixed with macro newsflow from a European perspective particularly light thus far. More specifically, the FTSE 100 has been seen lower throughout the session with a lot of UK mining names, including BHP, Rio Tinto, Glencore, Anglo American and Vedanta Resources all downgraded at Citi, with analysts at UBS also warning of the ramifications of lower iron ore prices. Elsewhere, the weaker EUR has aided some German export names but has not been enough to drag the DAX back into positive territory. From a fixed income perspective, things are also relatively quiet on that front with the GR/GE spread modestly wider as participants await any breakthrough in discussion between Greece and their European counterparts. This week sees around EUR 26.5bln of supply from the Eurozone but the absorption of this is likely to be offset by large redemption flow with EUR 17.3bln and EUR 12.5bln Italian and Dutch redemptions on Wednesday. Finally, today’s Italian auction was relatively well received and has subsequently provided some mild reprieve for Italian paper.

Over in the US, the Fed’s Kocherlakota (non-voter, dove) reiterated his stance that the Fed should hold off from raising rates until the second half of 2016. (BBG) Fed’s Williams (voter, dove) says the Fed must take into account early and gradual rate hikes against acting later and more aggressively. (RTRS).

In FX markets, the USD index has started the week off on the front foot despite a relatively steady open. This has largely stemmed from EUR weakness amid no fundamental news but helped USD/JPY to break above 120.50 and weigh on its major counterparts. As such, GBP also trades lower with yet more weight being placed on the currency by the ongoing UK political uncertainty. Elsewhere, focus resides on Antipodean currencies with AUD and NZD weighed on by the lacklustre Chinese trade balance data, an unwind of last week’s carry trade positions and lower iron ore prices.

In the energy complex, Crude futures saw a bid in early trade with WTI briefly breaking back above USD 53 & Brent above USD 59 as uncertainty around the Iranian nuclear deal continues to linger and volumes rolls into the Brent June contract from May ahead of May’s expiry on Wednesday.

Elsewhere, in precious metals markets, both spot gold and silver have fallen victim to the stronger USD with spot gold looking to test the USD 1,200 level to the downside. Finally, Copper prices traded relatively flat overnight while iron ore futures rebounded off record lows despite continued weak data from the world’s largest consumer China which fuelled speculation of further easing measures, while there were also reports from late last week that Australia’s Atlas Iron suspended mining operations due to the collapse in prices.

Q1 US reporting starts to build up some momentum this week with 35 of the S&P 500 companies reporting (or 14% of the market cap). Obviously over the full season the big talking point will be how much the dollar is impacting results and whether we’ll get an earnings recession. In fact, FactSet analysis has so far shown that of the 24 companies to have reported so far in the S&P 500, 16 have cited some sort of negative impact or sentiment towards the strong Dollar in their Q1 earnings transcripts so far. However some big banks (JP Morgan and Wells Fargo on Tuesday, Bank of America on Wednesday, Citigroup and Goldman Sachs on Thursday) report this week and these might out-perform given supportive financial market conditions so far in 2015.

In summary: European shares little changed with the personal & household and basic resources sectors underperforming and oil & gas, bank outperforming. EM stocks rallied for 11th day. China March exports unexpectedly fell. The Swiss and U.K. markets are the worst-performing  larger bourses, the Italian the best. The euro is weaker against the dollar. U.K. 10yr bond yields rise; German yields decline. Commodities gain, with wheat, corn underperforming and Brent crude outperforming. U.S. monthly budget statement due later.

Market Wrap

  • S&P 500 futures down 0.2% to 2090
  • Stoxx 600 down 0.1% to 412.5
  • Euro down 0.37% to $1.0565
  • Dollar Index up 0.37% to 99.71
  • US 10Yr yield up 1bps to 1.96%
  • German 10Yr yield little changed at 0.15%
  • MSCI Asia Pacific up 0.1% to 152.5
  • Gold spot down 0.6% to $1200.9/oz
  • Eurostoxx 50 -0.1%, FTSE 100 -0.3%, CAC 40 -0.1%, DAX -0.3%, IBEX +0.4%, FTSEMIB +0.5%, SMI -0.6%
  • Asian stocks little changed with the Hang Seng outperforming and the ASX underperforming.
  • MSCI Asia Pacific up 0.1% to 152.5; Nikkei 225 down 0%, Hang Seng up 2.7%, Kospi up 0.5%, Shanghai Composite up 2.2%, ASX down 0.1%, Sensex up 0.3%
  • Italian 10Yr yield up 1bps to 1.27%
  • Spanish 10Yr yield up 1bps to 1.24%
  • French 10Yr yield little changed at 0.43%
    S&P GSCI Index up 1.2% to 417.4
  • Brent Futures up 2.1% to $59.1/bbl, WTI Futures up 1.9% to $52.6/bbl
  • LME 3m Copper up 0.2% to $6048.5/MT
  • LME 3m Nickel up 0.4% to $12675/MT
  • Wheat futures down 1.9% to 514 USd/bu

Bulletin Headline Summary from Bloomberg and RanSquawk

  • European equities have seen a relatively mixed start to the week amid light newsflow and a particularly scarce economic calendar
  • The USD-index trades higher, weighing on its major counterparts with AUD weaker following a substantial miss on expectations for the Chinese trade balance and lower iron ore prices
  • Looking ahead, today sees an absence of tier 1 data on the calendar or notable earnings reports
  • Treasuries decline, 10Y yield approaching 2% level as markets await PPI, CPI and retail sales data later this week.
  • China’s exports slumped 14.6% in March, the most in more than a year, vs expectations for gain of 8.2%; raises questions over the durability of global demand and deepens  challenges for an economy grappling with overcapacity and a property slump
  • Greek Prime Minister Alexis Tsipras is thinking about holding new elections depending on results of negotiations with creditors, Bild reported, without saying where it got the information
  • The anti-euro The Finns party, which eight years ago got just 4% of the vote, is now dressing itself up for Cabinet seats as Finnish voters are set to oust the government after four years of economic failure
  • The nuclear negotiations between world powers and Iran may need to be extended for a third time because the chances of reaching a final agreement by the June 30 deadline seem increasingly remote
  • There’s pent-up demand for the U.S. dollar that will underpin years of appreciation because the world is “structurally short” the dollar, according to investor and former IMF economist Stephen Jen
  • Sovereign bond yields mixed. Asian stocks mostly higher. European equities gain, U.S. equity-index futures lower. Crude oil higher, copper and gold decline
  • Hillary Clinton says she’s running for President
  • Presidents Barack Obama and Raul Castro met in historic first encounter
  • ECB criticizes Greek draft law protecting indebted home owners
  • International Paper mulls GBP6b bid for Smurfit Kappa, Sky says
  • European banks seen selling $74b of property debt in 2015
  • Citigroup sees Gulf banks boosting borrowing after crude’s slump
  • Saudi Aramco mega deals boost EMEA Islamic loans to record start
  • Oil holds advance as recovery in Iran crude exports seen delayed
  • Peripheral spreads vs Germany narrowed on Friday, paring expansion seen earlier in the week, as European equities rose
  • Earlier widening took place amid supply and concerns over Greece


DB’s Jim Reid concludes the overnight event summary


Q1 US reporting starts to build up some momentum this week with 35 of the S&P 500 companies reporting (or 14% of the market cap). Obviously over the full season the big talking point will be how much the dollar is impacting results and whether we’ll get an earnings recession. In fact, FactSet analysis has so far shown that of the 24 companies to have reported so far in the S&P 500, 16 have cited some sort of negative impact or sentiment towards the strong Dollar in their Q1 earnings transcripts so far. However some big banks (JP Morgan and Wells Fargo on Tuesday, Bank of America on Wednesday, Citigroup and Goldman Sachs on Thursday) report this week and these might out-perform given supportive financial market conditions so far in 2015.

It’s also a big inflation week with UK (on the edge of first YoY deflation since 1960), German, European and US numbers out tomorrow, Wednesday, Friday and Friday respectively. With 10 year bund yields closing at 0.153% last week and so much debate about the Fed’s plans in 2015 these numbers are going to be very important over the coming months.

Before we get there however, trade data out of China is providing much of the early attention in the Asia timezone as we start the week. Disappointing numbers have strengthened the case for further stimulus in the region as exports (-14.6% yoy vs. +8.2% expected) in particular were notably weak. Imports also disappointed, with the -12.3% yoy print below the -11.3% expected. The poor numbers also come ahead of the Q1 GDP print for China on Wednesday. Similar to the bounce on Friday, markets are responding to the hope of further stimulus with the Shanghai Comp (+1.50%) and CSI 300 (+1.25%) both higher. The Hang Seng (+0.86%), Kospi (+0.46%) and Nikkei (+0.08%) are also higher.

As well as the aforementioned inflation data and US earnings, Greece will likely continue to be front and centre this week as markets hope to see some progress over its structural reform measures. In the mean time, a report over the weekend in German newspaper FAZ certainly attracted its share of attention. The report painted a fairly bleak picture on progress so far, suggesting that Eurozone officials were disappointed and shocked at the Greek government’s lack of progress and movement in its plans, particularly around discussions on the reduction of public service pensions. The report also appeared to confirm earlier suggestions that Greece’s creditors had given Athens until April 20th to present an acceptable list of reform measures, giving the EC, ECB and IMF time to assess the proposals ahead of the EU finance ministers meeting in Riga on April 24th. Technical teams from both the Greek and European side are due to reconvene for talks this week. This story seems to be never ending but at some point soon it will come to a head.

Quickly recapping markets on Friday, it was a strong end to what turned out to be a decent week for US equities as the S&P 500 and the Dow closed +0.52% and +0.55% higher respectively on the day. The S&P 500 in fact recorded its first back to back weekly gains in nearly two months. Despite gains being largely broad based, industrials (+1.80%) led after General Electric in particular jumped nearly 11% on the back of the news that it is to dispose of the bulk of its financial arm and return money to shareholders.

Price action was fairly subdued elsewhere in the US. The Dollar, as measured by the DXY, closed a touch higher (+0.18%) to close out a strong week (+2.9%) while 10y Treasuries finished 1.2bps tighter at 1.947%. Fedspeak offered few new surprises. The non-voting and dovish Minneapolis Fed President Kocherlakota reiterated his 2016 liftoff timing, remarking that it would be a mistake to raise rates this year given the subdued inflationary outlook. His views were in stark contrast to the hawkish Richmond Fed President Lacker however, who was also unchanged in his view of a June liftoff date given the transitory effects of recent soft data. Of more interest perhaps, Lacker did however comment that ‘I don’t see it as problematic to reduce rates having raised them once’, saying that although it may be unexpected, ‘presumably we’re setting rates where we ought to be’.

Closer to home on Friday, risk assets in Europe extended their strong run with the Stoxx 600 (+0.92%), DAX (+1.71%) and CAC (+0.60%) all finishing higher. The Euro (-0.52%) continued to weaken versus the Dollar, while bond markets remained well supported as 10y yields in the periphery tightened 2-4bps. There was similar strength in credit markets as Xover ended 6bps tighter. In truth there wasn’t too much data wise for the market to react to. In France industrial production (+0.6% yoy vs. +0.5% expected) was a touch above expectations, however manufacturing production (-0.8% yoy vs. -0.3% expected) weakened more than consensus estimates. In the UK meanwhile, data did little to help support the hawks. Construction output for February was significantly weaker than expected (-1.3% yoy vs. +1.9% expected) and both industrial (+0.1% yoy vs. +0.3% expected) and manufacturing (+1.1% yoy vs. +1.3% expected) production came in below market. The GBP weakened 0.55% on Friday to close at $1.463 and the lowest since June 2010. Election concerns were also not helping.

It’s a fairly busy calendar for us to look forward to this week as earnings season kicks up a gear in the US as mentioned while Greece headlines and the G20 finance ministers meeting on Thursday mark the non-data related highlights. The calendar starts off on the slower side this morning however with just Italian industrial production due in Europe and no releases scheduled for the US. It’s a different story on Tuesday headlined by the UK CPI/PPI/RPI readings for March where the market is expecting the headline inflation reading to stay at 0.0% yoy. Inflation data out of Italy is also due while industrial production for the Euro-area is scheduled. In the US, March retail sales are the highlight while PPI, NFIB small business optimism survey and business inventories are all expected. We start in China on Wednesday where retail sales, industrial production, fixed assets and most importantly Q1 GDP are all expected. In Japan industrial production and capacity utilization are expected. Inflation data will be the highlight in the European timezone with the final March CPI reading for Germany due as well as the preliminary number in France. The ECB meeting is also due to take place as well as the February trade data for the region. In the US on Wednesday we’ve got industrial production, empire manufacturing, capacity utilization, manufacturing production, NAHB housing market index and the release of the Fed’s Beige Book all due. There is little in way of data in the Asia or Europe timezones on Thursday, however in the US we’ve got housing starts, building permits, jobless claims and the Philadelphia Fed business outlook all due. We round off the week on Friday in Europe with the final March CPI reading for the Euro-area as well as employment indicators out of the UK. Inflation data will be the highlight over the in the US meanwhile with market consensus for a +0.1% yoy core. Average weekly earnings, leading index and University of Michigan consumer sentiment print round off the week’s prints. Fedspeak wise, we’ve got Kocherlakota, Bullard, Fischer, Lacker, Lockhart, Mester and Rosengren all due to speak.


Chinese trade surplus crashes as exports and imports collapse in March. This suggests that global trade is contracting badly throughout the entire globe.
(courtesy zero hedge)

China Trade Surplus Crashes As Exports & Imports Collapse In March

Forget the weather, it must be the smog. China just announced total carnage in its trade data for March:


So what exactly was the Chinese stock market ‘discounting’?

Trade Surplus collapses… (economists knew about year-end and forecast +250bn!!!)


As Exports crash and Imports continues to slide for the 5th month…


In US Dollars the picture is worse…


While year-end shenanigans will likely be blamed (and sure enough…)


Which is odd that all the data massively missed expectations which we assume Economists were aware of the calendar?

We suspect – given the weakness in other recent data – that this clarifies the fact that Beijing will have to devalue and fast. Their economy is crashing…

Which means Moar QE… Which means stocks limit up?

(courtesy London’s Financial times)

China rejects Taiwan as AIIB founding member

China has rejected Taiwan’s application to join its new Asian Infrastructure Investment Bank as a founding member, while signalling that the door is still open for the self-ruled island to join under a different name.

“We believe that a solution can be found regarding Taiwan’s participation in AIIB in a proper capacity through pragmatic consultation,” China’s Taiwan Affairs Office said on Monday.

Taiwan participates in the Asian Development Bank as “Taipei, China” and in other international organisations — as well as the Olympic Games — as “Chinese Taipei”. Presidential spokesman Charles I-Hsin Chen would not comment on whether Ma Ying-jeou’s administration would consider joining the bank under “other names or other scenarios”.

Mr Ma’s last-minute decision to apply to join the AIIB was the first test of how the bank might be influenced by China’s political priorities. The multilateral lender is partly modelled on the US-dominated World Bank and the ADB, which though based in Manila is heavily influenced by Japan.

A total of 47 countries applied to join the bank before the March 31 deadline for founding members, in spite of US efforts to dissuade its allies from joining.

Although the AIIB has proclaimed its multilateral aspirations, the statement from the Taiwan Affairs Office made it clear the rejection had been made in Beijing.

However, even if the decision had been made by all the founding members, the outcome might have been the same. Most nations maintain diplomatic relations with China and not Taiwan, which is regarded by Beijing as a renegade province.

“We are willing to take into consideration all opinions so that the issue of Taiwan’s participation can be solved properly,” the Taiwan Affairs Office said.

“But if the future of Taiwan’s accession fails to meet the precondition of ‘dignity and equality’,” Mr Chen said, “then Taiwan would prefer not to participate.”

Beyond the tricky politics in establishing the AIIB, the rush to join it highlights the new development bank’s potential to fund infrastructure such as power generation or coal transport — projects that the World Bank, for instance, no longer has a mandate to fund.

That could help create new business for the developed world’s engineering and heavy industrial companies, because China has pledged that AIIB funding will not be tied to contracts for Chinese groups.

Funding projects through a multilateral bank could also help China avoid risk. A decade of aggressive bilateral lending by its policy banks has left Beijing painfully exposed to economic downturns or political shifts in countries such asVenezuela, Sri Lanka or Zimbabwe.




This is a biggy!!

If Greece defaults, then we could see the entire ECB blow up along with its accompanying credit default swaps

(courtesy zero hedge)



“We Have Come To The End Of The Road” – Greece Prepares For Default, FT Reports



Update: as always is the case in Europe, nothing is confirmed until it is officially denied by officials, so here you go: GREEK GOVT OFFICIAL DENIES FT REPORT GREECE PLANNING DEFAULT

There was no explanation from the government official where Greece would get the €2.5 billion it needs to fund upcoming IMF interest and principal payments.

* * *


It should hardly come as a surprise that after the latest round of Greek pre-negotiation negotiations with the Troika, in which the Greek representative was said to behave like a taxi driver, who “just asked where the money was and insisted his country would soon be bankrupt” and in which the Eurozone members “were disappointed and shocked at Athens’ lack of movement in its plans, and in particular its reluctance to talk about cutting civil servants’ pensions” that the next Greek step is to fall back – yet again – to square zero: threats of an imminent default. Which is precisely what, according to the FT, has happened “Greece is preparing to take the dramatic step of declaring a debt default unless it can reach a deal with its international creditors by the end of April, according to people briefed on the radical leftist government’s thinking.”

A word of advice: now that the Eurozone, foolishly, thinks it is insulated from the consequences of a Grexit due to the ECB’s QE, it does not take to ultimatums or blackmail very well. In fact, it takes these very badly.

In any event, here again is the same old song, sung one more time, now by the FT:

The government, which is rapidly running out of funds to pay public sector salaries and state pensions, has decided to withhold €2.5bn of payments due to the International Monetary Fund in May and June if no agreement is struck, they said.

“We have come to the end of the road . . . If the Europeans won’t release bailout cash, there is no alternative [to a default],” one government official said.

A Greek default would represent an unprecedented shock to Europe’s 16-year-old monetary union only five years after Greece received the first of two EU-IMF bailouts that amounted to a combined €245bn.

Unfortunately for the Greeks, this threat has been used, abused, and denied so many times, nobody cares, or believes it will be used:

The warning of an imminent default could be a negotiating tactic, reflecting the government’s aim of extracting the easiest possible conditions from Greece’s creditors, but it nevertheless underlined the reality of fast-emptying state coffers.

Then again this time may be different because recall that as Reuters wrote over the weekend, “even if it survives the next three months teetering on the brink of bankruptcy, Greece may have blown its best chance of a long-term debt deal by alienating its euro zone partners when it most needed their support.

Indeed, it seems that the tone has changed dramatically in recent weeks and months, and at this point the rhetoric is one merely of managing expectations and avoiding deeper fallout once Greece is “let go.”

Quote the FT: “Germany and Greece’s other eurozone partners say they are confident that the currency area is strong enough to ride out the consequences of a Greek default, but some officials acknowledge it would be a plunge into the unknown.”

Negotiating tactic or not, the reality for Greece – which already has run out of money – is that it will run out of even the money it does not have (recall the government is now raiding public funds to avoid defaulting to the IMF) unless something changes:

The government is trying to find cash to pay €2.4bn in pensions and civil service salaries this month. It is due to repay €203m to the IMF on May 1 and €770m on May 12. Another €1.6bn is due in June.

The funding crisis has arisen partly because €7.2bn in bailout money due to have been disbursed to Greece last year has been held back, amid disagreements between Athens and its European and IMF creditors over politically sensitive structural economic reforms.

These included an overhaul of the pension system, including cuts in the payments received by Greek pensioners, and measures to permit mass dismissals by private sector employers.

One thing is certain: the biggest losers are – as always – ordinary Greeks, who are faced with certain capital controls in case of a Grexit and almost certain capital controls even if they do remain in the Eurozone.

In the short term, a default would almost certainly lead to the suspension of emergency European Central Bank liquidity assistance for the Greek financial sector, the closure of Greek banks, capital controls and wider economic instability.

Although it would not automatically force Greece to drop out of the eurozone, a default would make it much harder for Alexis Tsipras, prime minister, to keep his country in the 19-nation area, a goal that was part of the platform on which he and his leftist Syriza party won election in January.

More improtantly, a default would also afford Moscow (and Beijing) a territorial, political and financial presence in the European (Dis)union, now that Greece is being groomed to become the landing zone for the Southern Stream 2.0, a pipeline which has now terminally bypassed Bulgaria and instead will traverse Turkey and most likely Greece before entering Europe via Serbia, Hungary and Austria.

It will be ironic if soon all of Europe’s gas requirements will be contingent on the benevolence of the same Greek government which Merkel and her peers have taken such delight to slam in recent months, which at this rate, is about to become another proxy pawn controlled by Putin.

As for what happens to Europe and where attention will focus next, two Bloomberg headlines from earlier today show the way:




Monte Paschi has more troubles.  The loans it give Nomura to hide its exposure it now putting the bank offside

(courtesy Reuters)


Monte Paschi says Nomura exposure more than one third of capital


 Reuters) – Italian bank Monte dei Paschi di Siena (BMPS.MI) said on Friday it had overstepped regulatory limits with regards to its financial exposure to Japanese bank Nomura (8604.T), in a surprise disclosure that could raise questions about whether the Italian lender’s plans to raise capital and seek a buyer are on track.Monte dei Paschi di Siena, Italy‘s third largest bank, said in a statement that it was looking at all possible measures to cut the exposure, or potential risk related to loans to Nomura, which it said equalled more than one third of its core capital at the end of last year.Monte dei Paschi said it had been asked by Italian financial regulator Consob to release a statement explaining the results of a European Central Bank review of the Italian bank earlier this year. Monte dei Paschi had already emerged late last year as the worst performer in the ECB’s region-wide health check of European banks.In February, the ECB completed another assessment of the Tuscan lender, a review that looked specifically at Monte dei Paschi’s level of bad loans among other things.Most of the details of Monte dei Paschi’s 2014 financial accounts and European regulators’ demands on the bank have been disclosed. However, the lender’s unexpected late-night statement on Friday and the request by Italy’s market watchdog for more clarity on the bank’s financial strength came at a delicate time.Monte dei Paschi is about to embark on a 3 billion euro (2 billion pound) capital increase that it hopes will preface a sale to an Italian or international buyer.The bank said the ECB had urged it, during its February review, to seek a merger partner.In its statement on Friday, Monte dei Paschi said that on a consolidated basis exposure to Nomura was 34.68 percent of its regulatory capital base at the end of 2014, above the 25 percent regulatory limit.A source close to the matter said on Friday Monte Paschi’s exposure to Nomura was around 3 billion euros.The bank entered in 2009 a derivative contract with Nomura called Alexandria, which turned out to be loss-making and is at the centre of a judicial investigation in Italy.Prosecutors have said the bank entered the Alexandria contract and other complex derivative trades to conceal losses after stretching its finances to buy rival Antonveneta in 2007 for 9 billion euros.

Monte dei Paschi is seeking damages from Nomura over the trade, which included the purchase of Italian government bonds that the bank financed through a long-term repurchase agreement with Nomura. The Japanese bank has denied any wrongdoing and said it always acted correctly.

Monte Paschi said on Friday the European Central Bank gave an overall unfavourable assessment in its so-called SREP supervisory review of the bank due to the amount of bad loans it has as well as difficulty reaching adequate profitability levels and the bank’s “inability” to generate capital.

Monte Paschi, which needs to carry out a 3 billion euro cash call by July to plug the capital shortfall exposed by European regulators, said in the statement the ECB review also singled out a reputational risk due to lawsuits against the bank as well as vulnerability due to liquidity and sovereign debt risks.

At the end of December the Tuscan bank, which was hit hard by the euro zone debt crisis as well as loss-making derivative trades, including the one with Nomura, had around 23 billion euros in problematic loans, nearly one in five of its customer loans.

(Reporting by Silvia Aloisi and Danilo Masoni; Editing by Toni Reinhold




Two big stories out of Russia today:

The first:  Russia lifts the ban on selling anti aircraft missiles to Iran.

the USA is not happy campers today:

(courtesy zero hedge)


Proxy War Escalates: Russia Lifts Ban On Selling Anti-Aircraft Missiles To Iran


We showed yesterday the web of interconnected rifts and relationships among The Middle East’s local and proxy war members and it seems this morning tensions are escalating once again. As Bloomberg reports, Russian President Vladimir Putin signed a decree on Monday lifting a ban on the delivery of S-300 anti-missile rocket systems to Iran. The ban was introduced by former President Dmitry Medvedev in 2010 under pressure from the West following UN sanctions imposed on Iran over its nuclear program.

As Haaretz reports,

Russia says it cancelled a contract to deliver the advanced missile system to Iran in 2010 under pressure from the West following UN sanctions imposed on Iran over its nuclear program, but world powers and Tehran have now reached an interim deal on curbing Iran’s nuclear work.

*  *  *

“[The presidential] decree lifts the ban on transit through Russian territory, including airlift, and the export from the Russian Federation to the Islamic Republic of Iran, and also the transfer to the Islamic Republic of Iran outside the territory of the Russian Federation, both by sea and by air, of air defense missile systems S-300,” says the information note accompanying the document, RIA Novosti reported.

*  *  *

Of course what this really means is that the next Saudi airplane to crash over “east Iran” will lead to recriminations against Russia.. and more isolation.

Russian foreign minsiter Lavrov adds:





Second: “attempts to isolate Russia are fruitless and counterproductive.”….

so states Duma house speaker Naryshkin.


Russia Warns “Attempts At Isolation Are Counterproductive & Useless”


Attempts to isolate Russia and ignore its position are useless and counterproductive, State Duma Speaker Sergey Naryshkin said on Monday, ahead of the decision to lift sanctions on anti-aircraft missiles to Iran. With the Russian stock market among the top performers of the year and The Ruble the strongest currency in the world this year, it appears he may be on to something…

As TASS reports,

Attempts to isolate Russia and ignore its position are useless and counterproductive, State Duma Speaker Sergey Naryshkin said on Monday.

“Russia can and should make a special contribution into key discussions on the whole range of international issues,”Naryshkin said.

“Therefore, attempts to isolate Russia and neglect Russia’s opinion are counterproductive and useless,” he added.

*  *  *

The more Washington pushes Russia into ‘isolation’, the more, it would seem, the rest of the world seeks a way to defeat the bullying (or mitigate it).

*  *  *

It appears the world’s capital flows and investors would agree with the Russian Speaker…

*  *  *

While not funny per se, this reminded of…


Your more important currency crosses early Monday morning:





Euro/USA 1.0527 down .0071

USA/JAPAN YEN 120.68 up .588

GBP/USA 1.4597 down .0017

USA/CAN 1.2640 up .0092

This morning in Europe, the Euro collapsed again by 71 basis points, trading now well below the 1.06  level at 1.0527; Europe is still reacting to deflation, announcements of massive stimulation, a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, a possible default of Greece and the Ukraine.

In Japan Abe went all in with Abenomics with another round of QE purchasing 80 trillion yen from 70 trillion on Oct 31. The yen continues to trade in yoyo fashion as this morning it settled down again in Japan by 59 basis points and trading well above the 120 level to 120.68 yen to the dollar.

The pound was well down this morning as it now trades well below the 1.46 level at 1.4597  (very worried about the health of Barclay’s Bank and the FX/precious metals criminal investigation/Dec 12 a new separate criminal investigation on gold, silver and oil manipulation).

The Canadian dollar is well down by 92 basis points at 1.2640 to the dollar despite the  higher oil price this morning.

We are seeing that the 3 major global carry trades are being unwound.  The BIGGY is the first one;

1. the total dollar global short is 9 trillion USA and as such we are now witnessing a sea of red blood on the streets as derivatives blow up with the massive rise in the rise in the dollar against all paper currencies

2, the Nikkei average vs gold carry trade (still ongoing)

3. Short Swiss franc/long assets (European housing/Nikkei etc.  This has partly blown up (see  Hypo bank failure)

These massive carry trades are terribly offside as they are being unwound. It is causing global deflation ( we are at debt saturation already) as the world reacts to lack of demand and a scarcity of debt collateral.  Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT>

The NIKKEI: Monday morning : down 2.17  points or 0.01%

Trading from Europe and Asia:
1. Europe stocks mixed

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

Gold very early morning trading: $1199.50




Early Monday morning USA 10 year bond yield: 1.97% !!!  up 3  in basis points from Thursday night/

USA dollar index early Monday morning: 99.94 up 59 cents from Thursday’s close. (Resistance will be at a DXY of 100)




This ends the early morning numbers, Monday morning




And now for your closing numbers for Monday:



Closing Portuguese 10 year bond yield: 1.68% up 7 in basis points from Friday


Closing Japanese 10 year bond yield: .34% !!! down 1 in basis points from Friday


Your closing Spanish 10 year government bond,  Monday, up 2 in basis points in yield from Friday night.


Spanish 10 year bond yield: 1.25% !!!!!!


Your Monday closing Italian 10 year bond yield: 1.29% up 2 in basis points from Friday:


trading 4 basis points higher than  Spain.






Closing currency crosses for Monday night/USA dollar index/USA 10 yr bond: 4 pm


Euro/USA: 1.0578 down .0020  ( Euro down 20 basis points)

USA/Japan: 120.04 down .052  ( yen up 5 basis points)

Great Britain/USA: 1.4676 up .0064   (Pound up 64 basis points)

USA/Canada: 1.2591 up .0044 (Can dollar down 44 basis points)


The euro rose during the afternoon, but still it suffered further losses from Friday. It settled down 20 basis points to 1.0578. The yen was up 5 basis points points and closing just above the 120 cross at 120.04. The British pound gained considerable  ground today, 64 basis points, closing at 1.4676. The Canadian dollar  closed at 1.2591 to the USA dollar, down 44 basis points.

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. The losses on the oil front and huge losses on the USA dollar will no doubt produce many dead bodies.






Your closing 10 yr USA bond yield: 1.93% down 2 in basis points from Friday


Your closing USA dollar index:

99.44 up 9 cents on the day.



European and Dow Jones stock index closes:




England FTSE down 25.47 or 0.36%

Paris CAC  up 13.46 or 0.26%

German Dax down 36.20 or 0.29%

Spain’s Ibex up 117.10 or 1.00%

Italian FTSE-MIB up 131.66 or 0.55%



The Dow:down 80.66 or 0.45%

Nasdaq; down 5.58 or 0.11%



OIL: WTI 51.93 !!!!!!!

Brent: 57.98!!!!



Closing USA/Russian rouble cross: 52.26 up  1 1/4 rouble per dollar








And now your important USA stories:



NYSE trading for today.

Market Melts Down After Opening Buying-Panic

Just when you thought it was safe to BTFD on absolutely no news just because the US equity market opened…


What started off weak, then spiked into awesomeness… ended ugly…


and from Payrolls…


As Cash markets surged at the open (apart from Trannies which played catch up) as Small Caps led… Dow lost 18,000, S&P lost 2,100, and Nasdaq lost 5,000 – NOT OFF THE LOWS


Financials led on the day ahead of earnings hope.. every other sector closed red…


Nasdaq topped 5000 out of the gate – ripping back to the pre-Durable Goods Collapse levels… then gave it all back and some…(outside reversal day)


At over 47x LTM earnings, Russell 2000 hit record highs early in the day…


VIX spiked over 11%…but note the smash at the close!!!


After we warned Friday that the VIX term structure was excessively steep…



Bonds never bought it at all…


With all yields lower on the day (led by front-end strrength)…


The US Dollar ended the day practically unchanged –giving back all its overnight gains during the US session)… USDJPY was weak following Hamada’s comments…



Despite USD unch-ness, Gold, Silver, and Copper all slid lower on the day…


WTI Crude soared at the Asian close, running stops instantly to $53… that faed as Europe opened… re-ramped to test $53 stops ahead of US open… then dumped (following the biggest hedge fund buying week since the collapse began)


Charts: Bloomberg



Alasdair Macleod on the phoniness of USA unemployment data:

(courtesy Alasdair Macleod)


Confusion Over US Unemployment Continues

 Submitted by Alasdair Macleod via GoldMoney.com,Unemployment is the one statistic that one would have thought is easy to define: just total up the number of people on unemployment benefit and there’s your answer.It is however much more complex, particularly in a large country like the United States, whose potential labour force is estimated to be 250,080,000 across all 50 states plus Washington DC. Of this total 101,479,000 are not currently employed, a ratio of over 40%, and of these only 8,575,000 are deemed to be actually unemployed.The relevant figures are here.The reason this matters is unemployment is one of the three key variables macroeconomists use to formulate policy, the other two being GDP and the rate of price inflation. Indeed, the Fed’s Open Market Committee has set the unemployment rate as one of its two policy targets. This becomes questionable at best when the officially unemployed are less than 10% of those who could be in work but are not.

Looking at the distribution of benefits doesn’t help either. With benefits distributed on a rules-based system, many unemployed do not get benefits. For example, in the US there are 2,472,547 “insured unemployed” at the state level, compared with 8,575,000 officially unemployed, so less than one in three are actually on benefits and less than one in forty of those in the not-in-labour-force category, making this figure useless for policy guidance as well.

Insured unemployed are announced weekly with the Initial Claims announcement by the Department of Labor, while the number officially unemployed is announced separately by the Bureau of Labor Statistics (BLS) monthly on the first Friday of the month following. The BLS works on very tentative estimates while the insured unemployed figure, which is the hard number, forms only a small part of the overall picture.

Estimates for population growth add to the confusion. According to the BLS, the total number of people not in the labour force has actually increased over the last year to March by 279,000, though the number classified as unemployed has fallen by 1,804,000. Even these figures will be revised long after they are relevant in the light of the next population census; but on the face of it the increase in jobs is not keeping up with the estimated increase in the working population.

Job creation is an on-going process, admittedly hampered by the reluctance of banks to lend to smaller businesses, which form the bulk of any economy’s activity. Despite what the GDP numbers say about growth or its absence, economic progress continues with people buying better mobile communications, new autos and flat-screen TVs. The tragedy of unemployment is that these benefits are unaffordable to most of the unemployed. It’s not that they are work-shy: much of the problem is that in a zombie-like economy, scarce capital resources are not being redeployed productively while debt is mounting, so job creation becomes unnecessarily slow.

One would have thought disappointing unemployment numbers would add to the evidence that the US economy is weakening, already foreshadowed by falling commodity prices and the dramatic slide in shipping rates. We had such an event over Easter when the BLS announced non-farm payrolls was 120,000 less than expected, and the previous two months’ figures were also revised downwards by a further 69,000.

Is this confirmation of an economy about to slide?Maybe, but unemployment statistics are too unreliable as an indicator and should never have been adopted as a policy tool.




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