May 15/Three big USA reports indicate the USA economy is falling out of bed: i) Empire or NY manufacturing index ii)USA industrial production iii) University of Michigan consumer sentiment/5 major banks charged criminally for rigging foreign exchange and will pay big fines/Huge imports of gold into India last month, totaling 110 tonnes.

Good evening Ladies and Gentlemen:

 

 

Here are the following closes for gold and silver today:

Gold:  $1225.50 up $0.10 (comex closing time)

Silver $17.54 up 9 cents (comex closing time)

 

In the access market 5:15 pm

Gold $1224.00

Silver: $17.50

 

 

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 had a poor delivery day, registering 0 notice serviced for nil oz.  Silver comex filed with 14 notices for 70,000 oz

 

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 242.25 tonnes for a loss of 61 tonnes over that period. Looks to me like the comex is bleeding profusely!!

 

In silver, the open interest fell slightly by 73 contracts as Thursday’s silver price was up by 24 cents.  The total silver OI continues to remain extremely high with today’s reading at 180,310 contracts maintaining itself near multi-year highs 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.

 

In silver we had 14 notices served upon for 70,000 oz.

 

In gold,  the total comex gold OI rests tonight at 423,191 for a gain of 5,475contracts as gold was up by $7.00 yesterday. We had 0 notices served upon for nil oz.

 

Today, we had no change in  gold Inventory at the GLD. It rests tonight at 723.91  tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. On Tuesday  Koos Jansen informed me that last week 38 tonnes of gold was demanded by the Chinese. India reported that 110 tonnes of gold was imported into the country in the month of March.  That does not include the smuggled gold .

 

In silver, /no change in silver inventory at the SLV / and thus the inventory tonight remains at 320.750 million oz

 

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

 

1. Today we had the open interest in silver fall by a tiny 73 contracts as  silver was up in price yesterday by 14 cents.  The OI for gold rose by 5,475 contracts up to 423,191 contracts as the price of gold was up  by $7.00 yesterday. GLD had SLV had no changes to their inventory levels.

(report Harvey)

2,Today we had 1 major commentary on Greece today:

zero hedge

 3. Five major banks to plead guilty to rigging currencies

(Dam0n,Global Research)

4.Dave Kranzler of IRD discusses how the economy turned southbound basically falling over a cliff

(Dave Kranzler/IRD)
5. Three big reports out today all indicating the uSA economy is in deep trouble:

i) the NY Empire manufacturing index

ii) the USA industrial production

iii) U. of Michigan consumer sentiment

6. Michael Snyder delivers a terrific commentary on the USA shortage of water.

(Michael Snyder)

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 5475 contracts from  417,716 up to 423,191, as gold was up by $7.00 yesterday (at the comex close).  We are in our next non active delivery month of May and here the OI fell by 4 contracts falling to 141. We had 4 notices filed upon yesterday.  Thus we neither lost nor gained any  gold contracts  standing for delivery in May. The next big active delivery contract month is June and here the OI fell by 1,333 contracts down to 194,620. 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 77,843. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day) was good at 196,549 contracts as the bankers continued to use non backed paper against all of that demand. Today we had 0 notices filed for nil oz.

 

And now for the wild silver comex results.  Silver OI fell by 73 contracts from 180,383  down to 180,310 as the price of silver was up  in price by 14 cents, with respect to yesterday’s trading. We are into the active delivery month of May where the OI fell by 31 contracts down to 344. We had 31 contracts filed upon with respect yesterday’s trading.  So we neither lost nor gained any silver contracts standing for delivery in this May delivery month. The estimated volume today was poor at 25,643 contracts (just comex sales during regular business hours. The confirmed volume  yesterday (regular plus access market) came in at 68,803 contracts which is excellent  in volume. We had 14 notices filed for 70,000 oz today.

 

May initial standings

May 15.2015

Gold

Ounces

Withdrawals from Dealers Inventory in oz    nil
Withdrawals from Customer Inventory in oz  514.400 (Manfra)16 kilobars.
Deposits to the Dealer Inventory in oz 4032.15 (Delaware,HSBC)
Deposits to the Customer Inventory, in oz nil
No of oz served (contracts) today 0 contracts (nil oz)
No of oz to be served (notices)  141 contracts(14,100) oz
Total monthly oz gold served (contracts) so far this month 7 contracts(700 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month 164,151.8 oz
Total accumulative withdrawal of gold from the Customer inventory this month  53,054.3 oz

 

Today, we had 0 dealer transactions

 

 

total Dealer withdrawals: nil oz

 

we had 0 dealer deposit

total dealer deposit: nil oz
we had 1 customer withdrawal

 i) Out of Manfra: 514.400 oz (16 kilobars)

total customer withdrawal: 514.400  oz

 

We had 2 customer deposits:

i) Into Delaware:  32.15 oz  (1 kilobar)

ii) Into HSBC: 4,000.000 oz ???how is this exact weight possible

total customer deposit: 4032.15  oz

 

We had 0   adjustments:

 

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

To calculate the total number of gold ounces standing for the May contract month, we take the total number of notices filed so far for the month (7) x 100 oz  or 700 oz , to which we add the difference between the open interest for the front month of May (141) 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 May contract month:

 

No of notices served so far (7) x 100 oz  or ounces + {OI for the front month (141) – the number of  notices served upon today (0) x 100 oz which equals 14,800 oz standing so far in this month of May. (.46 tonnes of gold)

we neither gained nor lost any gold ounces standing in the May delivery month.

 

Total dealer inventory: 372,835.022 or 11.596 tonnes

Total gold inventory (dealer and customer) = 7,788,444.895. (242.25) tonnes)

Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 242.25 tonnes for a loss of 61 tonnes over that period. Lately the removals  have been rising!

 

end

And now for silver

May silver initial standings

May 15 2015:

Silver

Ounces

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 100,990.12 oz ( Scotia)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory  7,971.329 oz (Delaware)
No of oz served (contracts) 14 contracts  (70,000 oz)
No of oz to be served (notices) 330 contracts (1,650,000 oz)
Total monthly oz silver served (contracts) 2546 contracts (12,730,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  126,359.680 oz
Total accumulative withdrawal  of silver from the Customer inventory this month 3,099,486.2  oz

Today, we had 0 deposits into the dealer account:

total dealer deposit: nil   oz

 

we had 0 dealer withdrawal:

total dealer withdrawal: nil oz

 

We had 1 customer deposit:

i) Into Delaware:  7971.329 oz

total customer deposits;  7,971.329 oz

 

We had 1 customer withdrawals:

i) Out of Scotia:  100,990.12 oz

total withdrawals;  100,990.12 oz

 

we had 0 adjustments

 

Total dealer inventory: 60.162 million oz

Total of all silver inventory (dealer and customer) 177.485 million oz

 

The total number of notices filed today is represented by 14 contracts for 70,000 oz. To calculate the number of silver ounces that will stand for delivery in May, we take the total number of notices filed for the month so far at (2546) x 5,000 oz  = 12,730,000 oz to which we add the difference between the open interest for the front month of April (344) and the number of notices served upon today (14) x 5000 oz equals the number of ounces standing.

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

2546 (notices served so far) + { OI for front month of April (344) -number of notices served upon today (14} x 5000 oz = 14,380,000 oz of silver standing for the May contract month.

we neither gained nor lost any silver ounces standing in the May delivery month.

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

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

end

 

The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.

There is now evidence that the GLD and SLV are paper settling on the comex.

***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:

i) demand from paper gold shareholders

ii) demand from the bankers who then redeem for gold to send this gold onto China

vs no sellers of GLD paper.

And now the Gold inventory at the GLD:

May 15./no change in gold inventory at the GLD/Inventory rests at 723.91 tonnes

May 14./ a huge withdrawal of 4.41 tonnes of gold/Inventory rests at 723.91 tonnes

May 13.2015: no change in inventory at the GLD/Inventory rests at 728.32 tonnes

May 12/no change in inventory at the GLD/inventory rests at 728.32 tonnes

May 11/ no changes at the GLD/Inventory rests at 728.32 tonnes

May 8/ they should call in the Serious Fraud squad as the owners of the GLD just saw 13.43 tonnes of gold leave its vaults heading for China:

Inventory tonight:  728.32 tonnes

May 7. no change in gold inventory at the GLD/741.75 tonnes

May 6/no change in gold inventory at the GLD/741.75 tonnes

may 5/no change in gold inventory at the GLD/741.75 tonnes

may 4/no change in gold inventory at the GLD./741.75 tonnes

May 1/ we had a huge addition of 2.69 tonnes of gold into the GLD/Inventory rests tonight at 741.75 tonnes

April 30/ no change in gold inventory/739.06 tonnes of gold at the GLD

April 29/no change in gold inventory/739.06 tonnes of gold at the GLD

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).

May 15 GLD : 723.91  tonnes.

 

end

 

And now for silver (SLV)

May 15./no change in silver inventory at teh SLV/inventory rests tonight at 320.75 million oz

May 14/ a huge withdrawal of 1.912 million oz from the SLV/Inventory at 320.75 million oz.

May 13.2015: no changes at the SLV/Inventory rests at 322.662 million oz

May 12/no changes at the SLV/Inventory rests at 322.662 million oz

May 11/no changes at the SLV/Inventory rest at 322.662 million oz

May 8/ today we lost a huge 2.87 million oz of silver from the SLV/Inventory 322.662

May 7/no change in silver inventory/325.53 million oz

May 6/we had a huge withdrawal of 2.143 million oz of silver from the SLV/325.53 million oz

May 5/no change in silver inventory at the SLV/327.673 million oz

May 4/ no change in silver inventory at the SLV/327.673 million oz

May 1/no change in silver inventory at the SLV/327.673 million oz

April 30/no change in silver inventory at the SLV/327.673 million oz

April 29/ we lost 2.963 million oz of silver inventory from the SLV/inventory tonight 327.673 million oz

May 15/2015  no changes at the SLV/ inventory rests at 320.75 million oz

 

end

 

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

Central fund of Canada data not available today/

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 7.0% percent to NAV in usa funds and Negative 6.9% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 60.7%

Percentage of fund in silver:37.9%

cash .4%

( May 15/2015)

2. Sprott silver fund (PSLV): Premium to NAV rises to-0.51%!!!!! NAV (May 15/2015)

3. Sprott gold fund (PHYS): premium to NAV falls to -.27% to NAV(May 15/2015

Note: Sprott silver trust back  into negative territory at -0.51%.

Sprott physical gold trust is back into negative territory at -.27%

Central fund of Canada’s is still in jail.

 

end

At 3:30 pm we receive the COT report.

Let us head over to the gold COT:

Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
179,257 101,817 49,451 144,829 222,331 373,537 373,599
Change from Prior Reporting Period
6,152 1,152 -6,623 6,733 10,073 6,262 4,602
Traders
137 97 87 53 52 231 204
 
Small Speculators  
Long Short Open Interest  
32,075 32,013 405,612  
-638 1,022 5,624  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, May 12, 2015

Our large speculators:

Those large specs that have been long in gold added a large 6152 contracts to their long side and are happy campers tonight.

Those large specs that have been short in gold added 1152 contracts to their short side.

Our commercials;

Those commercials that have been long in gold added a rather large 6733 contracts to their long side.

Those commercials that have been short in gold added a whopping 10,073 contracts to their short side.

Our small specs:

Those small specs that have been long in gold pitched 638 contracts from their long side.

Those small specs that have been short in gold added 1022 contracts to their short side.

Conclusion; the commercials supplied the non backed paper in increasing quantities and our large specs gobbled them up. Generally this is bearish but now, I am not so sure..I think that the commercials are losing control.

 

And now for our silver COT:

Seems rather comatose

 

Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
65,302 35,964 20,088 68,337 106,440
-81 -1,796 -876 429 1,282
Traders
94 48 41 39 42
Small Speculators Open Interest Total
Long Short 174,919 Long Short
21,192 12,427 153,727 162,492
-247 615 -775 -528 -1,390
non reportable positions Positions as of: 155 114
Tuesday, May 12, 2015

Our large specs:

Those large specs that have been long in silver pitched a tiny 81 contracts from their long side.

Those large specs that have been short in silver covered 1796 contracts from their short side

Our commercials;
Those commercials that have been long in silver added 429 contracts to their long side.

Those commercials that have been short in silver added another 1282 contracts to their short side.

Our small specs:
Those small specs that have been long in silver pitched a tiny 427 contracts from their long side.

Those small specs that have been short in silver added another 615 contracts to their short side

Conclusion: nothing material happened

 

 

Early morning trading from Asia and Europe last night:

 

Gold and silver trading from Europe overnight/and important physical

stories

(courtesy Mark O’Byrne/Goldcore)

Gold Bullion Buying In Germany Surges Due To Growing Risk

– Global gold demand marginally lower but robust – WGC
– Gold investment demand surges 63% as jewellery demand falls
– German gold demand spikes 20% in first quarter
– France, Switzerland and Austria see “double digit” rise in demand
– Fear of conflict with Russia, ‘Grexit’ and currency debasement
– Indian gold demand rises 15%
– Germany knows lessons of history and Weimar hyperinflation

goldcore_chart1_15-05-15
Global gold demand remains robust as seen in the latest quarterly figures from the World Gold Council released yesterday.  Q1, 2015 gold demand was just 1% lower year on year but was 3% higher quarter on quarter due to a surge in investment demand which was 4% higher year on year and a whopping 63% surge in investment demand quarter on quarter.

European investors increased their purchases of gold during the first quarter according to the report. Increase in demand was highest in Germany while investors in France, Switzerland and Austria also showed strong interest in acquiring the precious metal, with “double digit” increases in demand.

goldcore_chart9_15-05-15

The WGC says that German demand for gold coins and bars “spiked” by 20% in the first quarter of 2015 compared to the same period last year.

CNN reported that it is unusual that there should be such strong demand out of Germany given the strength of the economy.

Although this ignores the strong cultural affinity that Germans have with gold and the fact that they are consistently, along with the Austrians and Swiss, the largest buyers of gold in Europe. What has changed is that more German people are buying gold and they are buying larger amounts due to the various risks challenging Europe and indeed the world.

France, Switzerland and Austria all saw strong demand for gold and it is known that in Greece, demand for gold bullion storage and gold sovereigns in particular was strong too during the quarter.

The first quarter saw the exacerbation of the Greek crisis with the election of Syriza, the initiation of QE by the ECB, massive currency volatility with the breaking of the Swiss Franc peg to the Euro, the failure of Austria’s bad bank and very tense relations between the West and Russia over Ukraine.

“The first three months of 2015 represented the strongest start to a year for European gold demand since 2011” when the European sovereign debt crisis was at its peak.

Gold Demand Trends Q1 2015 - World Gold Council

Germans are very concerned about inflation, currency debasement and devaluation due to Mario Draghi’s QE program. Germany had put up strong resistance to ECB euro ‘printing’ but in the end the ECB prevailed when Germany was assured it would not be liable for less reliable government bonds bought by other central banks.

Italian banker Mario Draghi said yesterday that the quantitative program has “proven so far to be potent, more so than many observers anticipated.” At a speech to the IMF at headquarters in Washington the ex-Goldman banker said that “while we have already seen a substantial effect of our measures on asset prices and economic confidence, what ultimately matters is that we see an equivalent effect on investment, consumption and inflation.”

goldcore_bloomberg_chart5_15-05-15
Draghi’s QE has not achieved any of its stated objectives. His pronouncement that it has been “potent” is therefore premature. History offers no assurances that these objectives will be met.

Indeed, even very recent history is not assuring. QE in Japan and in the U.S. has had little effect on the real economy. The primary beneficiaries, as Alan Greenspan recently pointed out, were the super-rich for whom it was a “terrific success.”

The fact that QE in the U.S. has not yet led to high inflation is not proof that it cannot happen. The Fed’s balance sheet is still bloated and we will not be in a position to judge the efficacy of the experiment until it has been fully wound down – if it ever is. Indeed, the recent string of poor economic data out of the U.S. suggests that rather than interest rate rises, the Fed may be forced to embark on QE4.

German are rightly concerned about currency debasement of the world’s reserve currency and indeed of all reserve and major currencies today including the euro. Some dismiss this concern as Germans being ‘paranoid’ about inflation. This is not fair to the Germans and shows a complete lack of awareness of history and the risks of currency debasement.

goldcore_chart3_15-05-15
It also shows a huge complacency and the dangerous thinking of this is a “new paradigm” and “this time is different.” This time is never different and the Germans know this.

Psychological scars were inflicted by the epic hyperinflation experienced by Germany in the Weimar Republic – a hyperinflation caused by unlimited currency creation by a desperate central bank. Germans have learnt the lessons of history – unlike many other nations today.

It is worth recalling the Germans experience of hyperinflation. In January of 1919 a single ounce of gold could be purchased for 170 Marks. Within a year the price had increased almost eightfold as currency printing devalued the Mark to over 1,000 Marks per ounce.

The price stabilised over the next year and then doubled in 1921 before surging over 9,300% throughout 1922.

With each passing year the currency fell in value to ever more absurd depths until by November 1923 an ounce of gold – which had cost 170 Marks only five years previously – was trading at 87,000,000,000,000 Marks per ounce.

goldcore_chart4_15-05-15
Silver saw similar price gains – or rather to put it more accurately silver too remained a store of value and maintained purchasing power as the currency collapsed.

The bitter hardship and instability arising out of this experiment by people who believed they knew best was only ‘stabilised’ by the fascist war machine and the rise of Hitler and the Nazis which resulted in further economic hardship and collapse after their defeat in World War II – largely at the hands of the Russians.

The Weimar experience teaches us the value of owning money that cannot be created out of thin air by government decree. The Germans have learnt this lesson.

It is ironic that the people living in the strongest economy in the EU and the one with the best outlooks are buying more gold than people in much more vulnerable countries. Gold buying in Ireland, Portugal, Spain and Italy remains very low despite people in these economies being even more exposed to financial risk than the Germans.

Before some market commentator decides to attack us and call us gold “bugs” who are predicting hyperinflation, let us qualify. We are not predicting hyperinflation.

We feel it is important to look at history and to acknowledge that hyperinflation is a possibility – especially if central banks continue to debase currencies en masse. Currently, it remains a low possibility, however what is a strong possibility and indeed is something we view as inevitable is very significant inflation and stagflation in the coming years and hence the need to own physical gold and silver in secure vaults internationally.

One of the most successful fund managers in the world, Ray Dalio, addressing the influential Council on Foreign Relations about gold, recently said, “it’s not sensible not to own gold”. He added, “there is no sensible reason other than you don’t know history and you don’t know the economics of it”.

He described gold as a currency comparable to the dollar or yen or euro and suggested that investors hold 10% of their savings in physical gold.

Gold Demand Trends Q1 2015 – World Gold Council

Storing Gold? 7 Key Must Haves – GoldCore

MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,216.30, EUR 1,071.23 and GBP 772.95 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,214.75, EUR 1,063.59 and GBP 768.91 per ounce.

This week, gold and silver are 2.5 and 5.8 per cent higher respectively and indeed gold and silver has seen gains in all major currencies.

Gold in USD - 1 Week

Gold consolidated on Wednesday’s strong gains yesterday and rose $7.00 or 0.58 percent to $1,221.80 an ounce, and silver climbed another $0.32 or 1.87 percent to $17.43 an ounce.

Gold in Singapore near the end of day trading was steady at $1,220.70 an ounce. Gold hovered near a 3 month high today and looks on track for its largest weekly gain in four months as economic data point to a sluggish U.S. economy and a likely delay in the U.S. Fed’s interest rate hike.

Gold in GBP - 1 Week

The weekly gains in all major currencies and the strong move through the resistance at the 100 day and the 200 day moving averages (sma) is bullish technically and bodes well for next week

Gold surged through its 100-day moving average at $1,210 per ounce like a knife through butter on Wednesday after it rallied sharply on the poor retail sales. The 100 day moving average was a level it hasn’t managed to convincingly break above since mid February. Gold continued its gains and then rose above the 200 day sma at $1,218.50 and it closed above that level again yesterday at $1,221.80 per ounce.

Premiums in Asia have pulled back a bit but are still selling above the global benchmark rate by $1 an ounce. All the data shows that demand in China and India remains very robust.

Gold in EUR - 1 Week

India, the world’s biggest gold consumer, has imported 60 tonnes of bullion in the first two weeks of May alone, Bloomberg TV reported on Friday quoting India’s Revenue Secretary, Shaktikanta Das.

The country imported a very robust 111 tonnes in April as it celebrated the key Akshaya Tritiya festival, when it is considered auspicious to buy gold, the channel reported, quoting Das.

Global gold demand eased 1 percent in the first quarter, the WGC have reported as a drop in Chinese jewellery demand narrowly outweighed a recovery in Indian buying and Western appetite for bullion-backed funds.

India’s total gold demand rose 15 percent to 192 tonnes in the first quarter, WGC’s quarterly demand report showed.

Silver’s nearly 6 per cent gains means that it is set for its biggest weekly gain in two months. Platinum is on track for a third consecutive weekly gain, but palladium looks to have a weekly decline.

In late European trading gold is down 0.37 percent at $1,216.46 an ounce. Silver is off 1.20 percent at $17.29 an ounce and platinum is down 0.41 percent at $1,154.00 an ounce.

The yellow metal is being supported by jittery bond markets, rising bond yields and dollar weakness this week.

Recent economic data, including the retail sales number yesterday, has been more negative than positive. This is contributing to volatility in bond markets and some selling pressure in equity markets There are increasing concerns about the economic outlook globally.

 

end

 

(courtesy Chris Powell/Dave Kranzler/Rory Hall)

 

GATA secretary tells Kranzler and Hall of gold’s deadly threat to all governments

Section:

11:26a ET Thursday, May 14, 2015

Dear Friend of GATA and Gold:

Your secretary/treasurer was interviewed this week by Dave Kranzler of Investment Research Dynamics and Rory Hall of the Daily Coin.

Among other topics they discussed disinformation about gold in the mainstream financial news media, the failure of gold market analysis to recognize daily trading by central banks, the likelihood that central banks are working together to keep the gold price down to facilitate transfer of the monetary metal from debtor nations to creditor nations, the control gold can exert over currency values, China’s possible plans for gold, gold’s deadly threat to all governments, and the infinitely bigger issues involved in gold price suppression: democracy, liberty, and free markets.

The interview is 40 minutes long, has a dramatic introduction from Charlie Chaplin, and is posted at You Tube here:

https://www.youtube.com/watch?v=Yo-hsJR5Ccw

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

 

end

a must read…

(courtesy Egon von Greyerz/Kingworldnews/Eric King)

 

With economy faltering, QE4 will burst bond bubble, von Greyerz tells KWN

Section:

1:10p ET Thursday, May 14, 2015

Dear Friend of GATA and Gold:

With economies faltering and money velocity collapsing, the Federal Reserve soon will begin a fourth installment of “quantitative easing,” the bond bubble will burst, currencies will crash, and the monetary metals will soar, Swiss gold fund manager Egon von Greyerz tells King World News today. An excerpt from the interview is posted at the KWN blog here:

http://kingworldnews.com/u-s-launch-of-qe4-to-trigger-frightening-bond-a…

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

 

end

 

My goodness:  India is trying to catch up to China in gold imports.

Last month India imported 111 tonnes.  (China is averaging around 40 tonnes per week)

(courtesy Bloomberg)

India’s gold imports top 100 tons for second straight month

Section:

Looks like people don’t need their government’s help in “monetizing” it by turning it into paper. To them it is already money.

* * *

By Vrishti Beniwal
Bloomberg News
Friday, May 15, 2015

Gold imports by India, the world’s second-largest consumer, exceeded 100 metric tons for a second month in April as easing of state curbs boosted demand for everything from necklaces to bangles and rings.

Shipments totaled 111 tons last month and are about 60 tons so far in May, Revenue Secretary Shaktikanta Das said in an interview in New Delhi today. Imports in March more than doubled to 125 tons from a year earlier because of seasonal demand and a drop in prices, according to the Finance Ministry.

India is set to become the world’s top consumer this year as economic growth accelerates and China’s booming equity markets reduce the appeal of bullion, according to P.R. Somasundaram, World Gold Council’s managing director in India. …

… For the remainder of the report:

http://www.bloomberg.com/news/articles/2015-05-15/india-s-gold-imports-s…

end

Andrew Maguire talks about gold and the manipulation with goldseek radio

(courtesy Andrew Maguire/Goldseek radio)

 

On GoldSeek Radio, London trader Maguire describes efforts to expose metals market rigging

Section:

8:30a ET Friday, May 15, 2015

Dear Friend of GATA and Gold:

In an interview with GoldSeek Radio’s Chris Waltzek this week, London metals trader Andrew Maguire describes his work with GATA, silver market rigging whistleblower Ted Butler, and a commissioner of the U.S. Commodity Futures Trading Commission, Bart Chilton, to alert U.S. regulators to manipulation of the monetary metals markets. Bullion banks are working with central banks to control metals prices with leverage in the futures markets at a ratio of as much as 100 to 1, Maguire says. Maguire’s interview is a half-hour long and can be heard at GoldSeek Radio here:

http://radio.goldseek.com/nuggets.php

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

end

 

And now overnight trading in stocks and currency in Europe and Asia

 

1 Chinese yuan vs USA dollar/yuan weakens to 6.2043/Shanghai bourse red and Hang Sang: green

2 Nikkei closed up by 162.68 points or .83%

3. Europe stocks all in the green/USA dollar index up to 93.84/Euro falls to 1.1352/

3b Japan 10 year bond yield: slight fall to .41% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 119.88/

3c Nikkei still just above 20,000

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

3e WTI 59.61 Brent 66.64

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. Last night Japan refused to increase it’s QE

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund falls to 67 basis points. German bunds in negative yields from 4 years out.

Except Greece which sees its 2 year rate falls slightly to 20.93%/Greek stocks down 1.67%/ still expect continual bank runs on Greek banks.

3j Greek 10 year bond yield falls to: 10.59%

3k Gold at 1214.00 dollars/silver $17.30

3l USA vs Russian rouble; (Russian rouble down 1/100 rouble/dollar in value) 50.08 , the rouble is still the best acting currency this year!!

3m oil into the 59 dollar handle for WTI and 66 handle for Brent/Saudi Arabia increases production to drive out competition.

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation. This can 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. It is not working: USA/SF this morning .9214 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0460 well below the floor set by the Swiss Finance Minister.

3p Britain’s serious fraud squad investigating the Bank of England/

3r the 3 year German bund remains in negative territory with the 10 year moving further away from negativity at +.67/the ECB losing control over the bond market.

3s Last week the ECB increased the ELA to Greece by another large 2.0 billion euros.This week, they raised it another 1.1 billion and thus at this point the new maximum was 80 billion euros. The ELA is used to replace depositors fleeing the Greek banking system. The bank runs are increasing exponentially. The ECB is contemplating cutting off the ELA which would be a death sentence to Greece and they are as well considering a 50% haircut to all Greek sovereign collateral which will totally wipe out the entire Gr. banking and financial sector.

3t Greece paid the 200 million euros owed to the IMF as interest payment on Wednesday. They did  pay the 700 million plus payment to the IMF on Wednesday but with IMF reserve funds.  It must be paid back in 27 days.

3 u. If the ECB cuts off Greece’s ELA they would have very little money left to function. So far, they have decided not to cut the ELA

4. USA 10 year treasury bond at 2.21% early this morning. Thirty year rate well below 3% at 3.01% / yield curve flatten/foreshadowing recession.

 

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

(courtesy zero hedge/Jim Reid Deutsche bank)

 

Futures Make Further Record Gains On Bad Economic Data, Lack Of Volume, News And Bund Selling

 

Was that it for the “reflation” aka Bund-rout trade? One look at German bonds this morning and the sharp, panic selloffs seen in recent days are completely gone making one wonder if the ECB is done selling Bunds the CTAs who were riding the momentum train have all been squeezed out of their long positions and now the trend back to -0.20% can resume only to be followed by another abrupt 6-sigma move as the ECB once again sells inventory to buy itself more monetization runway. As a reminder, the ECB has to buy debt until September 2016 and it won’t be able to if the 30-Year Bund is at -0.20% in a few months (or weeks).

Not helping the “reflation” trade is that that other momentum trade, higher oil, may have reached a peak as sanity and rational though once again prevail as the market notices that US production is once again rising crushing Saudi’s stated claim that it won the war on shale. Don’t be surprised if today’s Baker Hugher oil rig report shows the first rebound in 2015. Some of the smartest money is already betting on the next oil downturn, one which would promptly send global Treasury yields sliding back to recent tights.

In the meantime, while mutual fund and ETF flows continue to exit equity fund, stocks maintain their lower volume levitation, with S&P futures printing at new record highs this morning, as Europe rises on another newsless, volumeless overnight session. We already documentedthat the worse the US economy is, the higher stocks rise…

… which makes us wonder (as we have all along since 2009), if a US depression, coupled with everyone pulling their money out of the markets, will push the S&P to all time central-bank and stock buyback forced highs? The answer: sure, why not. Under central planning nothing at all makes sense.

Asian equities trade mixed with the Nikkei 225 (+0.8%) and ASX 200 (+0.7%) taking the impetus from a strong Wall Street
close. This was after the S&P 500 finishing at an all-time closing high following poor US PPI data adding to calls for a
delay in Fed rate lift off, with weak JPY also supporting Japanese stocks. Shanghai Comp (-1.6%) underperformed amid
liquidity concerns ahead of a CNY 3trl lock up of shares with 20 IPOs due to begin issuance next week. Meanwhile the Hang
Seng (+2%) rallied into the close after rumours began to emerge that the date for the Shenzhen link may be pushed
forward. KOSPI (-0.5%) declined after the BoK disappointed outside calls for a rate cut.

Today’s session has provided relatively subdued trade, as European equities trade higher after taking the lead from record closes the in the US amid heightened calls for a delay in a Fed rate hike. Elsewhere in Asia, the Hang Seng rallied into the close to finish the session higher by 2% after unconfirmed reports suggested that the date of the Shenzhen link will be  brought forward, however, the Hong Kong Exchange refused to comment on the rumours.

Bunds (+82 ticks) have edged higher after the moves seen yesterday in UST’s following the lacklustre US PPI data, as investors continue to focus on today’s upcoming US data in the form of US Empire Manufacturing, Industrial Production and Univ. of Michigan sentiment to gauge whether the US can break the recent stream of weak data.

The USD-index (+0.3%) is on track to halt its fourth consecutive daily fall this week as it recovers after printing a 3 month low yesterday. Meanwhile, major pairs trade marginally lower against the USD with little fundamental news driving price action as EUR/USD retreats from 3 month highs and drifts towards yesterday’s lows 1.1344. Elsewhere, NZD/USD remains near its session lows after Fonterra lowered its whole milk powder offer forecast and as such, AUD/USD followed in sympathy to come off 4 month highs. Elsewhere, USD/JPY moved higher after reports that the BoJ are said to assess the cutting of their Reserve rate as a possible option, however such a move will be met with scepticism as some officials believe that this would hinder the central banks efforts to increase their monetary base.

All that matters for FX is that while last week a stronger dollar was good for stocks and yesterday a weaker dollar was also good for stocks, today the important thing will be that a strong dollar is again good for stocks.

WTI and Brent crude remain relatively unchanged alongside the broad market trend, while spot gold eases off highs not seen since the middle February, albeit above its 200DMA at 1217.62. Meanwhile, copper prices were mildly lower as the lack of demand from China’s property sector weighs on the red metal, while Dalian iron ore futures were also weaker despite port inventories and declined to a 19 month low as sentiment in the market remains weak.

In summary: European shares rise, close to intraday highs, with the financial services and health care sectors outperforming and oil & gas, telcos underperforming. The Swiss and Dutch markets are the best-performing larger bourses, Spanish the worst. The euro is weaker against the dollar. Japanese 10yr bond yields fall; German yields decline. Commodities little changed, with zinc, silver underperforming and nickel outperforming. U.S. Empire manufacturing, net TIC flows, industrial production, capacity utilization, Michigan confidence, due later.

Market Wrap

  • S&P 500 futures up 0.2% to 2122
  • Stoxx 600 up 0.6% to 400.2
  • US 10Yr yield down 4bps to 2.19%
  • German 10Yr yield down 6bps to 0.64%
  • MSCI Asia Pacific up 0.6% to 153.1
  • Gold spot down 0.2% to $1219.1/oz
  • 77.8% of Stoxx 600 members gain, 19.5% decline
  • Eurostoxx 50 +0.4%, FTSE 100 +0.3%, CAC 40 +0.4%, DAX +0.4%, IBEX +0%, FTSEMIB +0.5%, SMI +1.3%
  • Asian stocks rise with the Hang Seng outperforming and the Shanghai Composite underperforming.
  • MSCI Asia Pacific up 0.6% to 153.1; Nikkei 225 up 0.8%, Hang Seng up 2%, Kospi down 0.7%, Shanghai Composite down 1.6%, ASX up 0.7%, Sensex up 0.6%
  • Euro down 0.43% to $1.1361
  • Dollar Index up 0.26% to 93.7
  • Italian 10Yr yield down 6bps to 1.79%
  • Spanish 10Yr yield down 8bps to 1.76%
  • French 10Yr yield down 6bps to 0.91%
  • S&P GSCI Index down 0.1% to 451.5
  • Brent Futures up 0% to $66.7/bbl, WTI Futures down 0.3% to $59.7/bbl
  • LME 3m Copper up 0% to $6403/MT
  • LME 3m Nickel up 0.9% to $13900/MT
  • Wheat futures up 0.4% to 516.3 USd/bu

Bulletin Headline Summary from Bloomberg and RanSquawk

  • European equities (Eurostoxx50 +0.5%) benefit from the record close in the S&P in a session that has provided a lack of pertinent newsflow
  • Bunds (+82 ticks) taking the lead from yesterday’s lacklustre PPI, as expectations of a Fed rate hike suffered another blow
  • Looking ahead sees the release of the US Empire Manufacturing, Industrial Production and Univ. of Michigan
  • Treasuries gain overnight with EGBs, 7Y-30Y maturities pare fourth consecutive weekly loss; next week’s eco calendar light before long holiday weekend.
  • Greek PM Tsipras plans to press fellow EU leaders to help resolve the deadlock in talks with creditors, inserting his country’s  crisis into an EU summit intended to discuss eastern Europe.
  • IMF European Dept. Director Poul Thomsen told IMF’s board Thursday that he didn’t press euro-area finance ministers during a meeting in Riga last month to restructure Greece’s debt, Kathimerini reports, without citing anyone
  • Expansion of BOJ easing isn’t needed now, Governor Kuroda said; BOJ to continue QQE to reach 2% inflation target as soon as possible
  • Barclays Plc will probably be fined for violating a three- year-old settlement over Libor rigging, but U.S. prosecutors will stop short of seeking a guilty plea, which they are demanding from UBS AG, people familiar with the matter said
  • At least $1t of global reserves will switch into Chinese assets if the IMF endorses the yuan as a reserve currency this year, according to Standard Chartered Plc and AXA Investment Managers
  • Obama promised Persian Gulf nations that the U.S. will come to their defense against any external attack and that any final deal signed with Iran will cut off the Islamic Republic’s path to a nuclear weapon
  • While he got no endorsement of the framework, Obama said all  agreed that a comprehensive, verifiable deal that blocks Iran from developing nuclear arms is in the best interest of the region
  • Proposed U.S. military “freedom of navigation” operations in the South China Sea may prod China to more clearly explain what it considers to be its territory — and why
  • Sovereign bond yields lower.  Asian stocks mostly higher, European stocks, U.S. equity-index futures gain. Crude oil, gold and copper lower

 

DB’s Jim Reid completes the overnight recap

 

There was no real clarity on market direction outside of a general view that rates are likely to structurally stay low and that this is not the start of a long back-up in yields. Most clients I met thought the Fed would raise in September purely because they’ve flagged it so hard that they might look foolish not doing so. I still think it would be a mistake with Nominal GDP so low but it’s clear that the Fed are getting impatient and want to give themselves some ammo for when it might be needed. The problem with this argument is that re-stocking the ammo might actually help accelerate the start of the next battle (a recession). So that’s a dangerous game. Most clients agreed that the Fed have a tough few months ahead. The credit investors I met were still broadly long. Supply, liquidity and rates were stopping them being longer but most saw little alternative other than to be invested in spread product.

While I was away this week, my team have been busy which is always good to know. Nick and Seb have published two notes over the last few days. One looking at the fact that credit has been remarkably resilient in the 4-week global rates sell-off. The other looking at credit and rates performance before and after European QE started and comparing this to a similar point in the US’s QE experience. The links to both reports are at the end today.

Turning to markets, it was a better day in US equities yesterday as the S&P 500 (+1.08%) wiped out the previous 3-days of declines this week to close at a fresh record high. The Dollar appeared to lend a helping hand as the DXY closed -0.17% lower to mark a -1.64% decline now over the past 3 sessions and taking the index to its lowest level since January 21st. It was a better day for Treasuries too as 10y yields closed 6.3bps tighter at 2.231% while 30y yields dropped 3.7bps off their recent highs to finish at 3.051%. The move also followed an ok 30y auction with the bid-to-cover ratio of 2.20x above the 2.18x seen in April’s auction with investor’s appearing to put the recent bond market volatility to one side.

Yesterday’s PPI data in the US appeared to temper inflation expectations somewhat, in turn helping to drag down the Dollar and Treasury yields. April’s headline (-0.4% mom vs. +0.1%) and core (-0.2% mom vs. +0.1% expected) prints came in well below expectations, dragging the annualized rates down to -1.3% yoy and +0.8% yoy respectively (from -0.8% and +0.9% respectively). The print comes on the back of the weaker import price index data that we saw on Wednesday. Elsewhere yesterday’s jobless claims data continued to paint a somewhat rosier picture for this month’s payrolls with the 264k reading below market expectations of 275k and helping to bring the four-week average of 272k down to a 15-year low. Fed funds expectations have been declining of late and yesterday the Dec15 contract fell another basis point to 0.305% and a new low. The Dec16 and Dec17 contracts both closed 6.5bps lower in yield meanwhile.

Moving on, the ECB’s Draghi, speaking in Washington yesterday late afternoon, reaffirmed his commitment to the QE program in full while acknowledging that a period of low interest rates will ‘inevitably result in some local misallocation of resources’ but that ‘it does not follow that it has to threaten overall financial stability’. Draghi said that although the effect of asset purchases has already resulted in a substantial effect on asset prices and economic confidence, what ultimately matters is that there is an equivalent effect on investment, consumption and inflation. To that effect and playing down any concerns over a possibly slowing in pace of asset purchases, Draghi said that ‘we will implement in full our purchase program as announced and, in any case, until we see a sustained adjustment in the path of inflation’.

Despite continued volatility and more substantial intraday ranges, 10y Bunds (-2.2bps) actually closed tighter yesterday for just the third time in the last 18 sessions. Having opened at 0.724%, yields hit an intraday high of 0.771% (and just shy of the intraday high we saw 7 days ago of 0.775%), only to then rally and hit a low of 0.676% before then closing at 0.700% – still a 9.5bps range on the day. There were similar moves in other core European bond markets while the peripherals generally outperformed as Italy (-3.6bps), Spain (-4.6bps) and Portugal (-4.3bps) all closed tighter. With little in the way of data in Europe yesterday, Euro bonds appeared to be following the Treasury market moves more than anything else. Equities also appeared to follow suit, as markets reversed some early weakness to close higher. The Stoxx 600 (+0.64%), DAX (+1.84%) and CAC (+1.36%) in particular firming.

On the back of the fresh record high for the S&P 500 yesterday, markets in Asia are generally mixed this morning. The Nikkei (+0.48%) and Hang Seng (+0.49%) are both trading firmer although the Kospi (-0.46%) and bourses in China (Shanghai Comp -1.44%, CSI 300 -1.49%) are softer. The latter in particular perhaps reflecting better data out of the region tempering further easing hopes after the April foreign direct investment print (+10.5% yoy vs. +2.0% expected) came in well above consensus. Bond markets are generally firmer, led by a further tightening for 10y Treasuries (-1.9bps) this morning.

Staying on China, yesterday the Ministry of Finance released data on fiscal revenue and expenditure in April. The findings showed that revenue remained weak but expenditure growth picked up significantly. Total government income growth was -4.7% yoy which compares to -6.1% in Q1 and +7.1% in 2014. On the expenditure side, national expenditure growth accelerated to +22% yoy from -0.2% in Q1 and +6.4% in 2014. In particular, transport (+57.8% yoy), environmental protection (+30.5% yoy) and social housing (+21.2% yoy) saw sharp increases in spending. Our China Chief Economist Zhiwei Zhang believes that the uptick in expenditure growth is the first sign of fiscal policy stance turning from contraction to expansion. Having been concerned about the lack of fiscal policy easing, April’s data makes Zhiwei more comfortable that growth may rebound in H2. Zhiwei expects fiscal spending growth to remain high and the fiscal deficit to expand to 3.7% of GDP this year. He continues to expect growth to slow to 6.8% in Q2 before then rebounding to 7.1% in H2.

Over in Greece progress continues to be slow as technical teams from Greece and its creditors resumed talks yesterday. Headlines are continuing to build with Greek press Ekathimerini suggesting that Greece’s creditors want to be presented with a list of proposed reforms from Athens by Sunday. In the meantime, European officials including Italian Finance Minister Padoan and EU Parliament Chief Schulz reiterated the risks of Greece leaving the Euro area. One move which will likely have helped ease talks is the apparent news that Greece is pushing ahead with the sale of its biggest shipping port Piraeus, according to Reuters. The article suggests that Greece has asked three firms to submit bids for a majority stake. This comes after previous worries that Athens would be seeking to block any potential asset sales. Ultimately however the bigger picture remains the same with both Greece and its creditors still seemingly not seeing eye-to-eye on taxations, pensions and the labour market. Time is not on their side with the gap still seemingly large.

Looking at today’s calendar now, it continues be quiet in the European timezone with just the March construction output print in the UK due. It’s a busier end to the week in the US however. We kick off with the May empire manufacturing print, followed by industrial and manufacturing production. April’s capacity utilization is also scheduled and we close out the day with the provisional University of Michigan consumer sentiment print for May.

end

 

 

With only 10 days left before pension payments must be paid, Greece has now decided to show the Nazi atrocities in a desperate war reparations bid:

(courtesy zero hedge)

 

Greece Shows Nazi Video To Commuters In Desperate War Reparations Bid

Two weeks ago, an unnamed EU official told Handelsblatt that it was “completely absurd” to think that Greece would be able to make a €750 million payment to the IMF on May 12. Essentially, the official said, it was logistically impossible. Impossible that is, unless you use money which is already at the IMF to pay the bill, then it becomes not only possible, but very easy logistically, even as the sheer absurdity of tapping SDR reserves to pay the Fund makes it very difficult to swallow politically.

At the time, we said the following: “So while things do not look particularly promising in terms of avoiding a Greek default in just 10 days’ time, Athens can always (re)play the war reparations card.” As it turns out, we were right on the money (no pun intended) because Greece did indeed effectively default, and now we learn that Syriza is once again playing the war reparations card, this time by looping a video of the Nazi occupation on public transportation.

Via CNN:

Greece is stepping up pressure on Germany to pay billions in compensation for war damages by running a video depicting Nazi crimes.

 

The 50-second video, displayed on public transportation in Athens, features graphic images of wartime suffering, including people starving to death, children being sent to concentration camps, and villages being destroyed. The video’s tagline is: “We claim what Germany owes to us.”

 

“The focus (of the campaign) is to rescue the historical memory of the Greek people,” said Kyriakos Zilakos, a Greek Defense Ministry spokesman.

 

Athens claims Germany owes Greece 279 billion euros ($317 billion) in reparations for war damages. Berlin has firmly rejected the claim and said the matter has long been closed. Germany paid Greece 115 million marks in 1960, as required by reparation agreements. On top of that, it also paid compensation directly to individual victims of the Nazi regime in Greece — forced laborers, for example.

 

But the Greek government is now saying the past payments were not enough.

 

“The issue of German debt is above all an ethical issue and the whole campaign aims at closing the wounds of the past,” Zilakos said.

http://player.theplatform.com/p/2E2eJC/nbcNewsOffsite?guid=x_lon_greece_150513

First, it’s worth mentioning that there’s something rather ironic about attempting to stir up an acute sense of nationalism via a video about Nazis , but irony aside, there’s also something a bit unnerving about the fact that the Greek government is now so desperate for cash that they are willing to sear WW II images into the minds of commuters, heightening already elevated anti-German sentiment in the process.

Meanwhile, Greece is selling off its largest port in an effort to raise cash and appease creditors. Here’s Reuters:

Greece on Thursday offered a concession to its international lenders by pushing ahead with the sale of its biggest port, Piraeus.

 

Greece has asked three firms to submit bids for a majority stake in the port, a senior privatisation official told Reuters, unblocking a major sale of a public asset as the EU and the IMF demand economic reforms from Athens.

 

Despite the conciliatory move, Germany’s Bundesbank showed no sign of easing off on its hardline stance towards Greece.

 

Bundesbank chief Jens Weidmann criticised weekly top-ups of emergency funding to Greek banks, saying in a German newspaper interview that this broke a taboo against the European central banking system financing governments.

As for Varoufakis, well … he dreams in drachma:

“I wish we had the drachma, I wish we had never entered this monetary union.And I think that deep down all member states with the eurozone would agree with that now. Because it was very badly constructed. But once you are in, you don’t get out without a catastrophe”

end
Lots of fun with this:  UBS after having ratted out on all of the other banks on the rigging of Libor will have to pay criminal fines on that other rigging:  foreign exchange.  This will set up huge damages to UBS as individuals and corporations sue the bank.  We still have one major rigging still to be settled upon:  the rigging of gold.
(courtesy zero hedge)

UBS Shocked To Learn Ratting Out Fellow Criminals Doesn’t Buy DOJ Immunity

Back in 2012, when the first massive marketwide-rigging scandal made the front pages, that of Libor (one which Zero Hedge discussed first in January 2009 withThis Makes No Sense: LIBOR By Bank and for which we won early points in the “you are a fringe tinfoil blog” category until proven correct as usual) the prosecution’s case was handed on a silver platter by one bank which hoped it would squeeze through the prosecutorial cracks by ratting out all of its heretofore complicit partners in crime: UBS.

And sure enough, UBS did indeed get away with a paltry fine, and the whole affair was quietly swept under the rug with a December 2012 settlement, in which the U.S. agreed not to prosecute the bank on the condition that it “commit no United States crime whatsoever” for the two-year term of the agreement, subsequently extended by an extra year.

Unfortunately for UBS, its reputation as a ratting squealer was all for nothing, because just over one year later UBS as well as virtually all the same banks that were manipulating Libor, were caught rigging that other massive, global market in secret online chatrooms such as the “Bandits” and the “Cartel“: foreign currency rates.

And also unfortunately for UBS which had sworn to commit no US crimes, it had just been caught committing at least one US crime. As a result, as Bloomberg reported earlier this week and as WSJ reported tonight, the US “Justice” Department is now tearing up and voiding the UBS 2012 settlement.

Actually, make that two crimes: “UBS also was viewed by the Justice Department as a repeat offender, having reached previous settlements including one in 2011 related to antitrust violations in the municipal-bond investments market.”

Actually, make that three crimes: “[Justice Department criminal division head Leslie] Caldwell’s message in the talks was stern: UBS was a recidivist having previously settled with the Justice Department over antitrust violations and had also obtained a deferred-prosecution agreement in 2009 to resolve charges it helped American taxpayers hide money overseas.”

Sure enough, UBS is shocked, shocked to find out there was criminal gambling going on in its world’s largest trading floor in Stamford, CT which is on its way to becoming a mini golf course. And again. And again.

UBS officials are confounded by the outcome, some of the people familiar with the negotiations said. The bank believes it provided early cooperation which helped prosecutors break open the foreign-exchange investigations and, as a result, was promised immunity by the antitrust division of the Justice Department.

 

But for prosecutors the punishment is seen as justified, the people said: The bank promised not to break the law in its 2012 deal and it violated those terms when its traders engaged in the currency-market misconduct after the 2012 agreement, they said. Prosecutors have been investigating whether traders colluded to move currency rates to benefit themselves to the detriment of clients.

We too would be shocked to learn that ratting out all our former peers and colleagues doesn’t pay off in the end.

The WSJ also adds, “the negotiations with the Justice Department are expected next week to result in UBS paying a fine of about $200 million to the Justice Department and pleading guilty to allegations that UBS traders manipulated the London interbank offered rate, or Libor, prior to 2012, according to some of the people.”

While the fine is paltry, the guilty plea will open the bank to a myriad of lawsuits from around the globe, which will surely result in billions of new recurring, non one-time “one-time, non recurring” legal fees, charges and further settlements as UBS is now open to litigation by anyone and everyone.

And while we applaud the DO”J” for doing its job for once, will it be too much just once not to assume everyone is an idiot and that clearly the DO”J” has a bias against foreign banks who are used as a buffer to avoid prosecution of domestic banks, which have mysteriously gotten away with virtually every criminal act known to man and mafia.

Such as JP Morgan for example. The same JP Morgan whose luck may have run out, because according to the WSJ, in addition to UBS, Barclays, Citigroup, RBS, and J.P. Morgan “are expected to plead guilty to criminal antitrust charges and pay between $500 million and more than $1 billion in penalties to various government entities, according to company disclosures and people familiar with the talks. On Thursday, J.P. Morgan disclosed in a financial filing that “any resolution acceptable to DOJ would require that the Firm plead guilty to an antitrust charge.

Curiously, it is none other than JPMorgan who courtesy of Troy Rohrbaugh happens to be the Chairman of the Fed’s Foreign Exchange Committee.

 

We are confident, however, that JPMorgan admiting guilt to a criminal anti-trust FX rigging charge will have zero impact on, and no conflicts of interest whatsoever with it remaining head advisor to the NY Fed on all issues FX.

And while there are several things we can be absolutely certain of i) the banks will pay a few more billion in settlements here and there, and maybe UBS will be barred from competing with Goldman and JPM in fields in which the US banks feel there is “too much competition” (because a Lehman-type raid on a key competitor would not quite work out just now), and ii) nobody will actually go to prison, we have one question: just which umbrella agreement with US prosecutors will UBS use for that “other other other” market UBS was most recently caught rigging: gold.

Actually, if UBS made the price of gold drop with its gold-rigging, it may well be that the Swiss bank just may get a commendation by the US DO”J” for that one.

 

end

And now 5 major banks are to plead guilty to rigging currency markets.

However the biggy is yet the come:  the rigging of gold/silver

 

(courtesy Andre Damon/Global Research)

Five Major Banks to Plead Guilty to Rigging Currency Markets

Five major international banks are expected to plead guilty as soon as next week to criminal charges in the US related to their deliberate manipulation of global foreign exchange markets, which allowed them to rake in billions of dollars at the expense of retirees, university endowments and municipalities.

Citigroup, JPMorgan Chase, Royal Bank of Scotland Group, Barclays and UBS are expected to plead guilty to felony fraud and antitrust charges. They will pay fines totaling several billions of dollars, according to bank and regulatory officials who spoke anonymously with the New York Times, Bloomberg and Reuters.

The effect of the guilty pleas will be essentially zero, beyond the immediate costs of the fines levied on the institutions. As the Times put it, “life will go on, probably without much of a hiccup.”

In the years since the financial crisis, federal regulators avoided bringing criminal charges against banks and their executives, opting instead for either cash settlements and so-called deferred-prosecution agreements, in which charges are delayed on the basis of the banks’ compliance with certain conditions.

In 2012, it became clear that major global banks, including UBS and Barclays, were systematically engaged in manipulating LIBOR (London Interbank Offered Rate), the benchmark global interest rate on the basis of which hundreds of trillions of dollars of financial contracts are valued.

In June of that year, Barclays was fined $200 million by the Commodity Futures Trading Commission and $160 million by the United States Department of Justice. This was followed by UBS’s agreement in December 2012 to pay regulators $1.5 billion in connection with the scandal and an agreement by Deutsche Bank in 2015 to pay $2.5 billion to regulators. Numerous other banks, including Citigroup and JPMorgan, were fined by European authorities.

UBS was offered a deferred-prosecution agreement in connection with the LIBOR scandal, but broke the terms of the agreement by manipulating the $5.3 trillion-a-day foreign exchange markets in the subsequent periods.

In late 2014, six banks—JPMorgan Chase, Citigroup, Bank of America, UBS, Royal Bank of Scotland and HSBC—agreed to pay $4.3 billion to federal regulators to settle civil charges.

The investigation charges also had a criminal component, which the Justice Department is now seeking to settle with guilty pleas from the banks. Unlike some previous cases, however, these guilty pleas are expected to come not merely from the subsidiaries of the banks, but from bank holding companies themselves.

Financial regulators have released voluminous records in connection with the foreign exchange scandal, showing how brazenly and openly bank traders discussed rigging currency rates, even as they knew their employers were being investigated for similar activities with regard to LIBOR.

Despite the unprecedented character of the pleas, the actual impact of the admissions of criminal wrongdoing by the banks is expected to be next to nothing.

As the Times reports,

“Behind the scenes in Washington, the banks’ lawyers are also seeking assurances from federal regulators—including the Securities and Exchange Commission and the Labor Department—that the banks will not be barred from certain business practices after the guilty pleas.”

In particular the banks are seeking waivers to retain their status as “well-known seasoned issuers,” allowing them to raise credit more easily, as well as the ability to operate mutual funds. The Times reports that “a majority of commissioners” of the SEC are in favor of granting such such waivers.

In fact, for the biggest corporations, being convicted of a felony is increasingly becoming legally irrelevant, and just one element of their normal operations. As the Times points out, the guilty pleas are merely “an exercise in stagecraft.”

One former Justice Department official told the Times that an “underlying assumption” of the Justice Department is that “the bank is not a criminal operation.” But the emergence of scandal after scandal, including the selling of toxic mortgage-backed securities that caused the financial crisis, the forging of foreclosure documents, widespread complicity in Bernard L. Madoff’s Ponzi scheme, money laundering, and tax evasion by Wall Street testifies to the fact that the banks are, in fact, criminal outfits.

Since taking office shortly after the onset of the financial crisis, the Obama administration has sought not to hold the banks to account and prevent criminal wrongdoing, but rather to conceal their crimes and, when this becomes impossible, to issue wrist-slap punishments that allow the banks to go on largely as before.

In these cases, the fines levied by financial regulators remain a cost of doing business, and pale in comparison with the billions of dollars made by the major banks every year through criminal activities.

The guiding principle of the Obama administration, in the words of former Attorney General Eric Holder, is that the giant banks are “too big to jail.” As the Times article explained, prosecutors are “mindful that too harsh a penalty could imperil banks that are at the heart of the global economy.”

In exchange for their services, top financial regulators are almost universally provided with high-paying positions in Wall Street after their stints with the government.

Most notably, Ben Bernanke, the former Federal Reserve chairman who funneled trillions of dollars in government funds to Wall Street, announced last month that he has been hired by Chicago-based hedge fund Citadel LLC. This followed the announcement in November 2013 that former Treasury Secretary Timothy Geithner joined the hedge fund Warburg Pincus.

To this day, not a single executive at any major bank has been criminally prosecuted for helping to cause the financial crisis, or any of the crimes that followed.

Oil related stories

 

WTI tumbles early this morning:

(courtesy zero hedge)

Saudi Victory? WTI Crude Tumbles To Key Support (Again)

It appears a slew of dismally disappointing economic data has finally broken the back of the camel… WTI Crude – on the heels of Saudi proclamations that they are winning the fight against US Shale – has tumbled back to the key $59.50 level…

 

 

Perhaps Goldman was right after all and higher prices will merely delay the required restructurings. And then there is this:

Blackstone Group LP’s distressed credit unit is backing away from investments in the most troubled energy companies based on its expectation that oil prices are due for a renewed decline.

Has the easy (and dumb) money funding dried up?

 

 end
Late in the day:  Crude rises and drops again as rig counts decline at the slowest pace in over 6 months;
(courtesy zero hedge)

Crude Pops-And-Drops As Rig Count Decline Slowest In Over 6 Months

Following the last 5 weeks slowing pace of decline of rig counts (with Wyoming and Pennsylvania regions actually adding marginal rigs), and the rise in crude prices, Baker Hughes reports the slowing pace of decline continues. Total rig count dropped 6 to 888 – the smallest decline since Decmber 5th. Texas’ Eagle Ford region added 1 rig. Crude’s initial reaction (after its v-shaped dump-and-pump this morning off $59.50 support again) was higher margionally but that quickly faded.

  • *U.S. OIL RIG COUNT DOWN 8 TO 660, BAKER HUGHES SAYS
  • *OIL RIGS IN PERMIAN BASIN FALL BY THREE TO 233: BAKER HUGHES
  • *OIL RIGS IN TEXAS’S EAGLE FORD GAIN BY 1 TO 87: BAKER HUGHES
  • *OIL RIGS IN WILLISTON BASIN FALL BY 1 TO 79: BAKER HUGHES

Slowest decline in 6 months…

 

Regionally, Kansas and Louisiana added the most rigs this week…

 

Crude’s initial reaction (after its v-shaped dump-and-pump this morning off $59.50 support again) was higher but that quickly faded…

 

Charts: Bloomberg

 
end

Your more important currency crosses early Friday morning:

Euro/USA 1.1352 down .0049

USA/JAPAN YEN 119.88 up .662

GBP/USA 1.5713 down .0057

USA/CAN 1.2029 up .0043

This morning in Europe, the Euro fell by a considerable 49 basis points, trading now well below the 1.14 level at 1.1352; 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, and rising peripheral bond yields .

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 66 basis points and trading just below the 120 level to 119.88 yen to the dollar.

The pound was well down this morning as it now trades just above the 1.57 level at 1.5713,still celebrating a conservative victory but still 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 down by a considerable 43 basis points at 1.2029 to the dollar.

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). Swiss franc is now 1.0280 to the Euro, trading well above the floor 1.05. This will continue to create havoc with the 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: this morning : up 139.38 points or 0.71%

Trading from Europe and Asia:
1. Europe stocks mostly in the green (slightly)

2/ Asian bourses mixed … Chinese bourses: Hang Sang 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 red/

Gold very early morning trading: $1214.00

silver:$17.30

Early Friday morning USA 10 year bond yield: 2.21% !!! down 2 in basis points from Thursday night and it is trading right at resistance at 2.27-2.32%. This is trouble!!!

USA dollar index early Friday morning: 93.84 up 45 cents from Thursday’s close. (Resistance will be at a DXY of 100)

 

This ends the early morning numbers, Friday morning

And now for your closing numbers for Friday:

Closing Portuguese 10 year bond yield: 2.29 down 11 in basis points from Thursday (continual central bank intervention/)

Closing Japanese 10 year bond yield: .40% !!! down 5 in basis points from Thursday/

 

Your closing Spanish 10 year government bond, Friday, down 11 points in yield (massive central bank intervention/)

Spanish 10 year bond yield: 1.73% !!!!!!

 

Your Friday closing Italian 10 year bond yield: 1.79% down 7 in basis points from Thursday: (massive central bank intervention/)

trading 6 basis point higher than Spain.

 

IMPORTANT CURRENCY CLOSES FOR TODAY

 

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

Euro/USA: 1.1459 up .0057 ( Euro up 57 basis points)

USA/Japan: 119.32 up .109 ( yen down 11 basis point)

Great Britain/USA: 1.5733 down .0037 (Pound down 37 basis points)

USA/Canada: 1.2015 up .0030 (Can dollar down 30 basis points)

The euro rose again today sharply. It settled up 57 basis points against the dollar to 1.1459 as the dollar fell badly again on most fronts even though we are witnessing massive central bank intervention to save the financial scene. The yen was down 11 basis points and closing well below the 120 cross at 119.32. The British pound lost some ground today, 37 basis points, closing at 1.5733. The Canadian dollar lost considerable ground to the USA dollar, 30 basis points closing at 1.1215.

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: 2.14% down 11 in basis points from Thursday (right at  the resistance level of 2.27-2.32%) Yesterday’s rescue courtesy of the central banks seems to be holding.

 

Your closing USA dollar index:

93.19 down 20 cents on the day.

 

European and Dow Jones stock index closes:

England FTSE down 12.55 points or 0.18%

Paris CAC down 35.49 points or 0.71%

German Dax down 112.79 points or 0.98%

Spain’s Ibex down 81.40 points or 0.71%

Italian FTSE-MIB  down 75.13 or 0.32%

 

The Dow up 20.32 or .11%

Nasdaq; down 2.50 or .05%

 

OIL: WTI 59.87 !!!!!!!

Brent: 66.90!!!!

 

Closing USA/Russian rouble cross: 49.33 up 7/10 rouble per dollar on the day.

 

end

 

And now your important USA stories:

NYSE trading for today

 

Gold & Silver Surge As Bond-Buying Bonanza Stalls Stocks

What goes up, must come down and while stocks have yet to factor in the Fed’s anti-gravity gun will end one day, bond yields roundtripped in the most dramatic way in 2 years this week. Quite a ride…

A reminder (after 5 macro misses today)

And (h/t @ImpartialExamin) from “Money, Bank Credit, and Economic Cycles”…

OK – with that off our chest. It was quite a week in general as consensus trades swinging around…

  • Silver 3rd best week in 15 months
  • Gold 2nd best week in 15 months
  • USDollar worst 5-week run since Oct 2010
  • WTI Crude was rescued last minute to its 9th up week in a row – first time since 1999
  • Bund yields up 4th week in a row (first time since June 2012)
  • 30Y Treasury yields dropped the most since Jan 6th in the last 2 days (2nd most in over 2 years)
  • Trannies in 2015 -5.9% worst start since 2009 (Down 11 of last 20 weeks, 5 of last 8)

Volume was awful the last two days…

After collapsing through Wednesday, bonds tore lower in yield today – all the way back to unchanged on the week...the biggest drop in yields in over 4 months.

The plunge in bond yields appears to be  catch up trade from the anti-correlation yesterday… very odd

Stocks held on to yesterday’s volumeless gains but rolled over after OPEX struck early…

Futures markets show the swings a little more effectively… from Friday’s payrolls print…

On the day, Trannies outperformed (after being the week’s loser into that)…

Shale stocks continue their slide – though bounced today…

The momo names remain battered, squeezed, and bruised…

The dollar tumbled on the week with today’s wild swings – selling EUR in Europe’s session then dumping USDs as US macro data disappointed… Bad data sparked USD selling…

Commodities were all higher on the week led by Silver’s surge…

But crude was rescued off $59.50 support into the green for the 9th week in a row…

This was odd though…

Charts: Bloomberg

end

The big  New York Empire Manufacturing index misses again for the 4th straight month.  Spending outlook plunges:

(courtesy zero )

Empire Manufacturing Misses For 4th Month In A Row As Spending Outlook Plunges To 15-Month Lows

Having plumbed the depth of 2-year lows in April, May’s Empire Manufacturing printed a disappointing 3.09 (against expectations of a bounce to 5.00 from -1.19). This is the 4th miss in a row and for context is the same level as we dropped to in January 2008. Number of employees and prices paid (and received) tumbled, new orders edged higher but crucially ‘hope’ plunged back to 3-month lows. Furtures expectations for CapEx and Tech Spending also collapsed.

 

 

The May general business conditions index advanced four points but, at 3.1, indicated that business conditions were only slightly better over the month. 30% of respondents reported that conditions had improved, while 27% reported that conditions had worsened.

Tech Spending expectations at 15 month lows… the biggest MoM decline since Nov 2008

 

Optimism Wanes

The index for future general business conditions fell seven points to 29.8, suggesting a positive but less favorable outlook than last month. The future new orders index held steady at 33.9, and the index for future shipments was little changed at 31.8. All three of these indexes remain well below the levels seen throughout most of 2014.

 

Both indexes for future prices fell, indicating that price increases were expected to be somewhat less widespread in the months ahead. The index for future employment fell six points, but at 16.7, it still suggested that employment levels were expected to rise. The capital expenditures index declined nine points to 15.6, and the technology spending index fell to 1.0.

Charts: Bloomberg

 

end

US Industrial Production Weakens For 5th Month – Longest Streak Since Great Recession

On the heels of the weakest print since May 2009 in March, April Industrial Production printed -0.3% (against expectations of a bounce to -0.03% from -0.64% – which was revised higher). This is the 5th monthly drop in a row – the longest streak since the Great Recession. This is the 2nd weakest YoY print, at a mere +1.93%, since Feb 2010. To add to the pain, Capacity Utlization missed expectations falling to its lowest since Jan 2014 (falling the most YoY since Dec 2009) and Manufacturing production was unchanged.

Worst streak of monthly drops since 2009…

 

2nd weakest YoY print since Feb 2010…

 

And Capacity Utilization plunged to its lowest since Jan 2014… with the biggest YoY decline since Dec 2009

 

Manufacturing output was unchanged in April, as a small increase in the production of durables was offset by a small decrease in the output of nondurables. Among durable goods industries, gains of more than 1 percent were posted by wood products; nonmetallic mineral products; electrical equipment, appliances, and components; and motor vehicles and parts. Machinery production fell 0.9 percent for the largest decrease within durables. The changes in output among nondurable goods industries were relatively smaller: Production by the food, beverage, and tobacco product industry contracted 0.6 percent for the largest decrease, while the biggest gain was registered by the index for printing and support activity, which increased 0.4 percent. The production of other manufacturing industries (publishing and logging) fell 0.4 percent.

end

 

Another big report:  the University of Michigan consumer sentiment crashes. Remember that the consumer is 70% of GDP:

 

 

UMich Consumer Sentiment Crashes As Surging Gas Prices Trump Stock Record Highs

Soaring gas prices dueled with soaring stock prices to leave University of Michigan Consumer Sentiment and it appears the former won. Printing at the weakest level since Oct 2014, UMich dropped to 88.6 (vs 95.9 expectations). This is the biggest miss on record.. and biggest MoM drop since Dec 2012. Both current conditons and expectations plunged despite surges in inflation expectations. Higher income expectations are starting to plunge – at their lowest in 7 months – and household finances are seenas the worst since July 2014. And finally, the survey’s spokspersonsays that respondents showed “concern over employment.”

 

In case you needed to understand what drives Consumer Sentiment (or perhaps exactly who UMich is actually surveying), here is the following….

 

Higher gas prices crush confidence… and stocks don’t matter

 

Charts: Bloomberg

end

 

 

This is why you cannot trust any data from the official sector:

(courtesy zero hedge)

(courtesy Michael Snyder)

The Greatest Water Crisis In The History Of The United States

Submitted by Michael Snyder via The Economic Collapse blog,

What are we going to do once all the water is gone?  Thanks to the worst drought in more than 1,000 years, the western third of the country is facing the greatest water crisis that the United States has ever seen.  Lake Mead is now the lowest that it has ever been since the Hoover Dam was finished in the 1930s, mandatory water restrictions have already been implemented in the state of California, and there are already widespread reports of people stealing water in some of the worst hit areas.  But this is just the beginning.

Right now, in a desperate attempt to maintain somewhat “normal” levels of activity, water is being pumped out of the ground in the western half of the nation at an absolutely staggering pace.  Once that irreplaceable groundwater is gone, that is when the real crisis will begin.  If this multi-year drought stretches on and becomes the “megadrought” that a lot of scientists are now warning about, life as we know it in much of the country is going to be fundamentally transformed and millions of Americans may be forced to find somewhere else to live.

Simply put, this is not a normal drought.  What the western half of the nation is experiencing right now is highly unusual.  In fact, scientists tell us that California has not seen anything quite like this in at least 1,200 years

Analyzing tree rings that date back to 800 A.D. — a time when Vikings were marauding Europe and the Chinese were inventing gunpowder — there is no three-year period when California’s rainfall has been as low and its temperatures as hot as they have been from 2012 to 2014, the researchers found.

Much of the state of California was once a desert, and much of it is now turning back into a desertThe same thing can also be said about much of Arizona and much of Nevada.  We never really should have built massive, sprawling cities such as Las Vegas and Phoenix in the middle of the desert.  But the 20th century was the wettest century for western North America in about 1,000 years, and we got lulled into a false sense of security.

At this point, the water level in Lake Mead has hit a brand new record low, and authorities are warning that official water rationing could soon begin for both Arizona and Nevada…

Lake Mead, the largest reservoir in the US, has hit its lowest level ever. Feeding California, Nevada and Arizona, it can hold a mind-boggling 35 cubic kilometres of water. But it has been many years since it was at capacity, and the situation is only getting worse.

 

“We’re only at 38 percent full. Lake Mead hasn’t been this low since we were filling it in the 1930s,” said a spokeswoman for the US Bureau of Reclamation in Las Vegas.

 

If it gets much lower – and with summer approaching and a dwindling snowpack available to replenish it, that looks likely –official rationing will begin for Arizona and Nevada.

And did you know that the once mighty Colorado River no longer even reaches the ocean?  Over 40 million people depend upon this one river, and because the Colorado is slowly dying an enormous amount of water is being pumped out of the ground in a crazed attempt to carry on with business as usual

The Colorado River currently supplies water to more than 40 million people from Denver to Los Angeles (as well as Las Vegas, Phoenix, Tucson, San Diego, Salt Lake City, Albuquerque, and Santa Fe—none of which lie directly on the river). According to one recent study, 16 million jobs and $1.4 trillion in annual economic activity across the West depend on the Colorado. As the river dries up, farmers and cities have turned to pumping groundwater. In just the last 10 years, the Colorado Basin has lost 15.6 cubic miles of subsurface freshwater, an amount researchers called “shocking.” Once an official shortage is declared, Arizona farmers will increase their rate of pumping even further, to blunt the effect of an anticipated sharp cutback.

The same kind of thing is going on in the middle part of the country.  Farmers are pumping water out of the rapidly shrinking Ogallala Aquifer so fast that a major crisis in the years ahead is virtually guaranteed

Farther east, the Ogallala Aquifer under the High Plains is also shrinking because of too much demand. When the Dust Bowl overtook the Great Plains in the 1930s, the Ogallala had been discovered only recently, and for the most part it wasn’t tapped then to help ease the drought. But large-scale center-pivot irrigation transformed crop production on the plains after World War II, allowing water-thirsty crops like corn and alfalfa for feeding livestock.

 

But severe drought threatens the southern plains again, and water is being unsustainably drawn from the southern Ogallala Aquifer. The northern Ogallala, found near the surface in Nebraska, is replenished by surface runoff from rivers originating in the Rockies. But farther south in Texas and New Mexico, water lies hundreds of feet below the surface, and does not recharge. Sandra Postel wrote here last month that the Ogallala Aquifer water level in the Texas Panhandle has dropped by up to 15 feet in the past decade, with more than three-quarters of that loss having come during the drought of the past five years. A recent Kansas State University study said that if farmers in Kansas keep irrigating at present rates, 69 percent of the Ogallala Aquifer will be gone in 50 years.

At one time, most of us took water completely for granted.

But now that it is becoming “the new oil”, people are starting to look at water much differently. Sadly, this even includes thieves

With the state of California mired in its fourth year of drought and a mandatory 25 percent reduction in water usage in place, reports of water theft have become common.

 

In April, The Associated Press reported that huge amounts of water went missing from the Sacramento-San Joaquin Delta and a state investigation was launched.

 

The delta is a vital body of water, serving 23 million Californians as well as millions of farm acres, according to the Association for California Water Agencies.

 

The AP reported in February that a number of homeowners in Modesto, California, were fined $1,500 for allegedly taking water from a canal. In another instance, thieves in the town of North San Juan stole hundreds of gallons of water from a fire department tank.

In case you are wondering, of course this emerging water crisis is going to deeply affect our food supply.  More than 40 percent of all our fruits and vegetables are grown in the state of California, so this drought is going to end up hitting all of us in the wallet one way or another.

And this water