June 2/No Deal yet with Greece/however Greece is set to sign with Russia on the southstream gas pipeline/huge turmoil today in the currency exchanges and in the bond markets/

Good evening Ladies and Gentlemen:


Here are the following closes for gold and silver today:

Gold:  $1194.10 up $5.80 (comex closing time)

Silver $16.78 up 2 cents (comex closing time)


In the access market 5:15 pm

Gold $1193.50

Silver: $16.79


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 good delivery day, registering  2,468 notices serviced for 246,800 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 245.32 tonnes for a loss of 57 tonnes over that period.

In silver, the open interest rose by 675 contracts despite the fact that Monday’s silver price was down by 2 cents.   The total silver OI continues to remain extremely high with today’s reading at 178,179 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 0 notices served upon for nil oz.

In gold,  the total comex gold OI rests tonight at 398,456 for a gain of 737 contracts as gold was down $1.10 on Monday. Whenever we approach first day notice, the entire open interest for the gold or silver complex collapses as does the amount of gold/silver OI standing in the front active delivery month.

Today, we had no change in inventory at the GLD,   thus the inventory rests tonight at 714.07 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.


In silver, /we had a huge addition of 1.243 million oz in silver inventory at the SLV/Inventory rests at 318.313 million oz

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

1. Today,  had the open interest in silver rise by 675 contracts despite the fact that silver was down in price by 2 cents yesterday.  The OI for gold rose by 737 contracts up to 398,456 contracts as the price of gold was down by $1.10 on Monday. We again witness the collapse in the front month OI for no apparent reason.

(report Harvey)

2,Today we have 3 major commentaries on Greece. The first two deal with the ongoing negotiations trying to salvage a deal to release about 7 billion euros of original bail out money.  The last commentary deals with Greece abandoning the west and joining Russia with the building of the Southstream gas pipeline through Greece.

(zero hedge )

3. Bill Holter’s topic today: “Did you hear about this?”

(Bill Holter/Holter/Sinclair collaboration)

4 Koos Jansen comments on the lack of evidence of audit reports on Fort Knox gold

(Koos Jansen)

5. Two stories on today’s dollar flash crash

(zero hedge)

6.  German bunds falter badly in price (yields rise dramatically). Not sure if this was market driven or orchestrated by the ECB

(zero hedge)

7. HSBC is now facing $34 billion in civil actions on phony asset backed mortgages


8. Arthur Berman states that unless OPEC cuts production oil will falter in price shortly

(Arthur Berman/OilPrice.com)

9.USA factory orders falter

(zero hedge)

10. Precious metals trading overnight from Asia/Europe


11. Trading from Asia and Europe overnight

(zero hedge)

12. Trading of equities/ New York

(zero hedge)


we have these plus other stories to bring your way tonight. But first……..


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 737 contracts from 397,719 up to 398,456 as gold was down by $1.10 yesterday (at the comex close). For at least the past 18 months, we have been witnessing a total contraction of open interest in an active precious metals month once we are about to enter first day notice as well as the dumping of front month open interest, once we surpass first day notice, and today the tradition continues. We are now in the big active delivery contract month of June.  Here the OI fell by 447 contracts down to 5,088. We had only 3 notices served upon yesterday.  Thus we lost 444 contracts or an additional 44,400 oz will not stand for delivery.  No doubt, again, we had a huge number of cash settlements.  The next contract month is July and here the OI fell by 12 contracts down to 467.  The next big delivery month after June will be August and here the OI rose by 756 contracts  to 258,720.  The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 68,767. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day) was poor at 177,390 contracts. Today we had 2,468 notices filed for 246,800 oz.

And now for the wild silver comex results.  Silver OI rose by 675 contracts from  177,504 up to 178,179 despite the fact that the price of silver was down in price by 2 cents, with respect to Monday’s trading.  The front non active  delivery month of June saw it’s OI rise by 1 contract up to 33. We had 2 contracts delivered upon yesterday.  Thus we gained 3 contracts or an additional 15,000 oz will stand for delivery in this non active June contract month. The estimated volume today was poor at 21,069 contracts (just comex sales during regular business hours. The confirmed volume yesterday (regular plus access market) came in at 61,135 contracts which is very good in volume. We had 0 notices filed for nil oz today.

June initial standing

June 2.2015



Withdrawals from Dealers Inventory in oz    nil
Withdrawals from Customer Inventory in oz  16,075.000 oz (Delaware) 500 kilobars
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz  32,001.17 oz (HSBC)
No of oz served (contracts) today 2468 contracts (246,800 oz)
No of oz to be served (notices) 2620 contracts (262,000 oz)
Total monthly oz gold served (contracts) so far this month 2514 contracts(251,400 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month nil
Total accumulative withdrawal of gold from the Customer inventory this month  17,455.60 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 withdrawals

i) Out of Scotia 16,075.000 oz (500 kilobars)

total customer withdrawal: 16,075.000 oz


We had 1 customer deposit:

i) Into HSBC; 32,001.17 oz

Total customer deposit: 32,001.17 oz oz


We had 1  adjustment:

i) Out of JPMorgan;  a monstrous 177,408.492 oz was adjusted out of the customer and this landed in the dealer account of JPMorgan.  This will no doubt be used in the settling process.

Today, 2468 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 2468 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 422 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 (2514) x 100 oz  or 251,400 oz , to which we add the difference between the open interest for the front month of June (5088) and the number of notice served upon today (2468) x 100 oz equals the number of ounces standing.

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

No of notices served so far (2514) x 100 oz  or ounces + {OI for the front month (5088) – the number of  notices served upon today (2468) x 100 oz which equals 513,400 oz standing so far in this month of June (15.968 tonnes of gold).  Thus we have 15.968 tonnes of gold standing and only 17.04 tonnes of registered or for sale gold is available:


Total dealer inventory 547,860.327 or 17.04 tonnes

Total gold inventory (dealer and customer) = 7,887,348.464 (245.32 tonnes)


Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 245.32 tonnes for a loss of 57 tonnes over that period.




And now for silver

June silver initial standings

June 2 2015:



Withdrawals from Dealers Inventory 114,943.64 oz (Scotia)
Withdrawals from Customer Inventory 30,805.23 oz (Scotia)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory  22,054.500 oz (Delaware,CNT)
No of oz served (contracts) 0 contracts  (nil oz)
No of oz to be served (notices) 33 contracts(165,000 oz)
Total monthly oz silver served (contracts) 199 contracts (995,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month 114,943.6
Total accumulative withdrawal  of silver from the Customer inventory this month 64,048.0 oz

Today, we had 0 deposits into the dealer account:

total dealer deposit: nil   oz


we had 1 dealer withdrawal:

i) Out of Scotia:  114,943.64 oz

total dealer withdrawal: 114,943.64 oz


We had 2 customer deposits:

i) Into Delaware;  2966.900 oz

ii) Into CNT 19,087.600 oz

total customer deposit: 22,054.500  oz


We had 1 customer withdrawal:

i) Out of Scotia:  30,805.23 oz

total withdrawals from customer;  30.805.23 oz


we had 0 adjustments


Total dealer inventory: 58.189 million oz

Total of all silver inventory (dealer and customer) 179.789 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 June, we take the total number of notices filed for the month so far at (199) x 5,000 oz  = 995,000 oz to which we add the difference between the open interest for the front month of June (33) 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 June contract month:

199 (notices served so far) + { OI for front month of June (33) -number of notices served upon today (0} x 5000 oz = 1,160,000 oz of silver standing for the June contract month.

we gained 3 contracts or an additional 15,000 oz will stand for delivery in this month of June.

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:

June 2/no change in gold inventory at the GLD/Inventory rests at 714.07 tonnes

June 1/ we had a huge withdrawal of 1.79 tonnes of gold from the GLD/Inventory rests tonight at 714.07 tonnes

May 29/ no changes in gold inventory at the GLD/Inventory rests at 715.86 tonnes

May 28/ no changes in gold inventory at the GLD/Inventory rests at 715.86 tonnes

may 27: no changes in gold inventory at the GLD/Inventory rests at 715.86 tonnes

may 26.2015/we had a slight addition of .600 tonnes of gold to the GLD inventory/inventory rests at 715.86 tonnes

May 22.2015: no changes in gold inventory at the GLD/Inventory rests at 715.26 tonnes

May 21./no changes in gold inventory at the GLD/Inventory rests at 715.26 tonnes

May 20./we had another withdrawal of 2.98 tonnes of gold leaving the GLD. Inventory rests tonight at 715.26 tonnes

May 19/no changes in gold inventory at the GLD/Inventory at 718.24 tonnes

June 2 GLD : 714.07  tonnes.




And now for silver (SLV)

June 2/ we had a huge addition of 1.243 million oz of silver inventory at the SLV./Inventory rests at 318.313 million oz

June 1/no change in inventory at the SLV/Inventory rests at 317.07 million oz

May 29/no changes in inventory at the SLV/Inventory rests at 317.07 million oz

May 28/a small deposit of 143,000 oz of silver added to the SLV/Inventory rests at 317.070 million oz

May 27/we had another 1.003 million oz withdrawn from the SLV/Inventory rests tonight at 316.927 million oz

May 26.2015: no change in SLV /Inventory rests at 317.93 million oz

May 22.2015: no changes in SLV/Inventory rests at 317.93 million oz

May 21.no changes at the SLV/Inventory rests at 317.93 million oz

May 20/no changes at the SLV. Inventory rests at 317.93 million oz/


June 2/2015: a huge deposit of 1.243 million oz of inventory/SLV inventory at 318.313 million oz/




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


Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)

1. Central Fund of Canada: traded at Negative 8.4% percent to NAV in usa funds and Negative 8.5% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.2%

Percentage of fund in silver:38.5%

cash .3%

( June 2/2015)


2. Sprott silver fund (PSLV): Premium to NAV falls to-0.31%!!!!! NAV (June 2/2015)

3. Sprott gold fund (PHYS): premium to NAV rises to -29% to NAV(June 2/2015

Note: Sprott silver trust back  into negative territory at -0.31%.

Sprott physical gold trust is back into negative territory at -.29%

Central fund of Canada’s is still in jail.


Last week Sprott formally launches its offer for Central Trust gold and Silver Bullion trust:

SII.CN Sprott formally launches previously announced offers to Central GoldTrust (GTU.UT.CN) and Silver Bullion Trust (SBT.UT.CN) unitholders (C$2.64)
Sprott Asset Management has formally commenced its offers to acquire all of the outstanding units of Central GoldTrust and Silver Bullion Trust, respectively, on a NAV to NAV exchange basis.
Note company announced its intent to make the offer on 23-Apr-15 Based on the NAV per unit of Sprott Physical Gold Trust $9.98 and Central GoldTrust $44.36 on 22-May, a unitholder would receive 4.45 Sprott Physical Gold Trust units for each Central GoldTrust unit tendered in the Offer.
Based on the NAV per unit of Sprott Physical Silver Trust $6.66 and Silver Bullion Trust $10.00 on 22-May, a unitholder would receive 1.50 Sprott Physical Silver Trust units for each Silver Bullion Trust unit tendered in the Offer.
* * * * *



Early morning trading from Asia and Europe last night:


Gold and silver trading from Europe overnight/and important physical



(courtesy Mark O’Byrne/Goldcore)


Greece Government Favours Drachma – Vows Will Not “Bow to Blackmail”


– Merkel, Hollande, Juncker, Lagarde and Draghi in “emergency” meeting re Greece
– Bankrupt Greece must find €1.6 billion to pay IMF in June
– First instalment of €300 million due on Friday
– Leaders of EU, IMF and ECB hold emergency summit in Brussels
– 58% of Syriza membership in favour of returning to Drachma
– Unforeseeable consequences and risks of ‘Grexit’

An emergency meeting was held in Berlin last night between Angela Merkel, Francois Hollande, EU Commission President Junker, Christine Lagarde of the IMF and ECB president Mario Draghi. The meeting was reported to have continued past midnight.

The discussions were apparently aimed at formulating a “take it or leave it” offer that would be acceptable to the Syriza government that would allow the remaining €7 billion of the existing bailout package to be unlocked so that cash can be handed back to Greece’s creditors and avoid a default.

Greece, a country whose own finance minister has described it as “bankrupt” is due to pay the IMF €1.6 billion over the course of June. The first instalment of four – totalling €300 million is due this Friday.

There were fears that the country would not be able to pay its public sector wages in May demonstrating the very fragile state of its finances. It would appear that the European leadership and that of the IMF and ECB also fear the state of Greece’s finances and its ability to make its payments to the IMF this month.

A recent poll suggests that 58% of Syriza supporters would rather return to the Drachma than to remain in the single currency while severe austerity measures are imposed. Syriza have a 26 point lead over the next most popular party, New Democracy.

From this point of view it is, therefore, not entirely politically untenable for Syriza to choose the default and exit option should the “institutions” fail to respect Prime Minister Tsipras’s “red line” on VAT hikes, pension cuts and labour market reforms.

Greek 10-year bond yields have been creeping higher – currently at 11.49% – indicating that the markets view the risk of a default as being quite high.

The “institutions”, however, are likely to want to keep Greece in the fold at any cost. In a softening of tone Junker told German newspaper Süddeutsche Zeitung yesterday:

“Anyone who doesn’t see there is a humanitarian crisis in Greece is deaf and blind to what is happening there.”

The unforeseeable risks posed by a default and “Grexit” to the Euro project are too great for the powers that be to wilfully allow it to happen. It could trigger credit default swaps and a derivatives crisis in the banking system.

It might also lead to a geopolitical crisis should erstwhile NATO member Greece turn to Russia for financial assistance in the form of funding, trade, economic and other cooperation agreements.

The consequences of making an acceptable offer to Greece may also be unforeseeable. In the short term it may buy time but in the longer term it is hard to see how Greece can come off life-support without a large scale write-off of some of its debts.

It may also embolden anti-austerity groups across Europe, particularly those in heavily indebted Italy and Spain.

The threats posed by the Greek situation to the euro – and indeed the threat posed by the entire European economic situation to the euro – make holding gold outside the banking system a vital form of financial insurance.

History and recent academic studies show that gold protects wealth from financial and economic risks.



Today’s  AM LBMA Gold Price was USD 1,188.75, EUR 1,083.17 and GBP 779.91 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,187.30, EUR 1,088.29 and GBP 780.40  per ounce. 

Gold fell $0.40 or 0.03 percent yesterday to $1,189.30 an ounce. Silver rose $0.01 or 0.06 percent to $16.74 an ounce.

Gold in US Dollars - 1 Week

Gold in Singapore for immediate delivery was marginally lower at $1,189.30 an ounce while gold in Switzerland was also in lockdown and continued tethered to the $1,190 level.

 Gold remains capped under the psychological $1,200 an ounce level. Gold saw a sharp rally yesterday to over $1,203.50 per ounce from $1,185 per ounce. Gold was up nearly $20 or 1.5% and on track for its biggest daily rise in more than a fortnight prior to determined selling which saw prices back to exactly where they had started – down 40 cents for the day.

Gold saw even greater gains in euro terms as the euro weakened due to concerns about Greece but the euro has strengthened today which has capped gold’s gains.

Some attributed gold’s sharp rally to U.S. Federal Reserve Vice Chairman Stanley Fischer’s dovish comments that it would be a mistake to assume that financial crises are at an end. However, if this was the case it is hard to fathom why gold suddenly reversed the move higher and then gave up the gains nearly as quickly as they had been gained.

Mixed economic data is not giving a clear picture of the U.S. economy. This week’s jobs figures  on Friday will be watched closely for any clues on the interest rate hike long mooted by the Fed.

The largest gold backed ETF, SPDR Gold Trust holdings dipped yesterday by 0.25 percent to 714.07 tonnes its, the lowest since mid January.

Meetings continue between the IMF, ECB, German Chancellor Angela Merkel, French President Francois Hollande and Jean-Claude Juncker European Commission President to discuss a “final proposal” ahead of Greece’s deadline on  Friday for its first300 million payment due to the IMF.

In late European trading gold bullion is down 0.10 percent at  $1,187.87 an ounce. Silver is off 0.43 percent at $16.67 an ounce. Platinum is up 0.21 percent at $1,106.10 an ounce while palladium is marginally lower at $776.10 per ounce.

Platinum is trading near an 11 week low, and is at a discount of $90 an ounce to gold, which is its cheapest to the yellow metal since January 2013.

Breaking News and Research Here




(courtesy Avery Goodman/Seeking Alpha)


Avery Goodman: Gold supply tightness spreads from London to New York


1:27p ET Monday, June 1, 2015

Dear Friend of GATA and Gold:

Tightness in the physical gold market seems to have spread from London to New York, securities lawyer Avery B. Goodman writes today, noting that more gold could be claimed for delivery in the June gold futures contract on the New York Commodities Exchange than there is registered gold in Comex warehouses, a circumstance that Goodman thinks may be unprecedented.

Goodman writes that a default on Comex contracts is unlikely because the U.S. government almost certainly would make gold available surreptitiously, perhaps through the secret gold swap arrangements whose arrangements the Federal Reserve confirmed, perhaps inadvertently, to GATA in 2009. But if the gold price is not allowed to rise significantly, Goodman adds, there will be bigger supply problems.

Goodman’s commentary is headlined “Gold Market Tightness Puts COMEX Clearing Members on the Edge Of Default” and it’s posted at Seeking Alpha here:


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


As we have explained to you on many occasions…..
(courtesy Times of India)

To most Indians, gold paperization scheme has little appeal


Gold Monetisation Scheme May Not Attract Major Segment of Gold Owners

By Chandralekha Mukerji
The Times of India, Mumbai
Monday, June 1, 2015


The gold monetisation scheme aims to unlock the value of the common man’s gold jewellery lying idle in a locker. This is why the minimum deposit has been kept as low as 30 grams and returns have been made tax-free to sweeten the deal.

However, these may not be enough to lure people to park their gold in a scheme that offers 1 gram for every 100 in a year. The Times reached out to a cross-section of consumers and found they were not very enthused by the scheme.

Experts say the scheme will not appeal to major segments that invest in gold. Buyers of gold jewellery, for instance, won’t like to part with their ornaments.

All the gold that Jammu-based Jitendra has is in the form of jewellery for his wife Neha. “She uses that jewellery, so the 1-2% return offered by the scheme is irrelevant for a small investor like me,” he says.

Also, gold jewellery, especially inherited, has sentimental value and many won’t like to see it melted down.”People may still deposit the coins and bullion. However, convincing Indians, who think 10 times before even using their jewellery as collateral, to actually melt them for a minuscule return of 1-2% will be very difficult,” says Mimi Partha Sarathy, managing director of Sinhasi Consultants, a Bengaluru-based wealth management firm.

The melting part is a big put-off. Pune-based engineer Lahariya, 29, has 20% of his investment portfolio in gold, mostly jewellery. “Even though my wife uses it occasionally, I cannot put it in a scheme that requires me to melt it. It’s better lying idle in a locker,” says Lahariya.

But emotional attachment is only one factor.

The average gold investor is a conservative person who doesn’t like to part with his gold for a certificate from the bank. Bengaluru-based Lalitha Iyer, 56, who recently retired from Wipro, is a keen investor in real estate and gold.

“On the face of it, it looks like a good scheme. However, I’m concerned about the security and genuineness in case I want to redeem in it gold form at the end of the tenure,” says Iyer.

A bigger problem is that submitting your gold could open a can of tax worms. True, the bank will not ask any questions when you submit the gold. But this is not an amnesty scheme and the tax department might want to know if you have paid wealth tax on the gold in previous years.

Though wealth tax has been abolished, even inherited jewellery was liable to wealth tax until the previous financial year.

“People with significant gold holdings will be wary. After all, you are asking them to declare their assets at a bank which can be easily backtracked,” says Sumeet Vaid, founder & CEO at Freedom Financial Planners. “Most of the holdings are unaccounted with no purchase receipts, especially inherited items.

Even if the purchase is from accounted sources, investors do not usually keep receipts of purchase,” says Anil Rego, CEO and Founder, Right Horizons Wealth Planners.

Even so, this is a great opportunity for those who buy gold bullion as an investment. If you are the kind of person who buys gold coins and bars on a regular basis, you can use this scheme to enhance your returns. Just buy the gold and submit it to the bank.

This is precisely what Nashik-based Sandeep Kulkarni intends to do when buying gold for his baby daughter Adnika.

“Instead of buying jewellery for her, I will buy 24-carat gold bars and get 1-2% additional return on the investment,” he says.

As an investment, right now, it looks as if investment in the scheme will surely fetch a 1% higher price for every year that you keep the gold in the scheme. However, keep in mind that you will be getting the interest in the form of gold.

If the price of gold goes up, it’s very good for you because even the interest will go up (though marginally).

If the price is Rs 27,000 for 10 grams today and rises to Rs 30,000 by next year, the investor gets gold worth Rs 30,300.

If the value of gold falls, you lose in the same proportion.

If the price falls to Rs 25,000, you will get gold worth Rs 25,250.



Have fun with this:

(courtesy Koos Jansen)

Koos Jansen: U.S. government lost 7 Fort Knox gold audit reports


1:42p ET Tuesday, June 2, 2015

Dear Friend of GATA and Gold:

Seven of the official audits of the U.S. gold reserve have disappeared, or at least that’s what the U.S. government has told gold researcher and GATA consultant Koos Jansen, who filed freedom-of-information requests for access to them.

Jansen’s experience is reminiscent of GATA’s request to the Federal Reserve in 2009 for access to the Fed’s gold records. The Fed purported to be unable to find records GATA already had found on the Fed’s own Internet site and sought to conceal most other such records:


Jansen’s commentary is headlined “U.S. Government Lost 7 Fort Knox Gold Audit Reports” and it’s posted at Bullion Star here:


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



(courtesy Dave Kranzler/IRD/GATA)


(courtesy John Embry/Kingworldnews/Eric King/GATA)


Embry, in KWN interview, sees three scenarios for monetary metals prices


11:35a ET Tuesday, June 2, 2015

Dear Friend of GATA and Gold:

Sprott Asset Management’s John Embry, interviewed today by King World News, offers three scenarios for monetary metals prices:

“They will either remain viciously suppressed, as they have been for nearly four years, or they will explode higher as the paper market suppression is finally overcome by the realities of the physical market,” Embry says. “We also cannot rule out an overnight resetting of the price of gold after China discloses its massive gold hoard to the world. The timing of all this is imprecise but it is getting inexorably closer by the day.”

An excerpt from the interview is posted at the KWN blog here:


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


And now Bill Holter, with his important message to us:


Did you hear about this?



 You really have to wonder how it is that so much is going on all around us yet almost nothing is being reported by the mainstream press.  I know it is hard to do, but imagine yourself 20 or 30 years ago, could what is currently happening ever be “slept through” as it is today?  Could markets have just snoozed it off as if nothing bad “could” happen?

  For example, the U.S. economy is in another recession.  The 1st quarter GDP was revised to show a decline of -.7%.  Do you know why the number was not worse?  Because the BLS used as a very “special” assumption, a NEGATIVE inflation rate, if they used just a 1% inflation rate, GDP would have reported negative 2% plus!  But wait, the funny part is this, the Fed at the same time is again bringing up tightening interest rates.  Again, imagining yourself 20-30 years ago, the speculation would be “when will the Fed begin to loosen” …and here is one of your problems, the Fed CANNOT do ANYTHING to turn up the economy.  The Fed has fired all its bullets and cannot loosen further.  Yes they can start up another QE (the opposite of what they are taking about now) but I believe even they fear the reaction this time around.  What would they do if the selling pressure increased on the announcement of another QE?  Can’t happen you say?  I hope you’re right!
  The Chinese stock market took an 11% nosedive over the last two days of the past week, did you hear about this?  Is it “unimportant”?  Or how about COMEX having 26 tons of gold standing for June delivery with only 11 tons currently on hand?  You probably didn’t hear about this one because they will just cash “settle” (they have already begun as 2,800 contracts “disappeared” last night), nothing to see here, move along.  How about David Cameron promising an “in or out” referendum pertaining to the British and the EU?  Or the right wing in France demanding a similar referendum?  Probably not important enough either?
  Or how about this list; Goldman warns “too much debt” threatens the world economy… China places artillery on disputed South Sea islands… Margin debt 50% higher than last peak… Russia backs alternative to SWIFT… 5 billion euro bank run in Greece … or just plain old Greece?  Even worse than all of these pieces of “real news” that didn’t make the news, did you hear about Yemen?  Or more specifically a (or several) nukes were lit up?  Yes, nuke(s) went off in Yemen late last week and the press (yawn) decided it wasn’t “newsworthy”.
  Shifting gears just a bit, I want to bring up a topic I have not seen anyone even talk about.  Do you remember last November when Congress, the Senate in particular was “shaken up”?  “We” (the American people) threw the bums out!  I can remember it vividly, Congress would now be able to hamstring a president running roughshod over the Constitution.  I thought it might be a glimmer of hope …I thought WRONG!  Has anything been done to reverse or retard Obamacare?  The answer of course is no, nothing.  I ask you this, what exactly did we get for our votes to evict the “bums”?…  …How about Loretta Lynch!   How did she get confirmed as Attorney General?  As Ted Cruz said, “she looked Senators in the eye and told us she intends to disregard the law” http://www.breitbart.com/big-government/2015/04/24/exclusive-ted-cruz-loretta-lynch-was-confirmed-because-gop-establishment-wanted-her-to-be/  .  I ask, was there even a purpose to the last election?  Or better yet, once the financial system comes down and social unrest unleashes martial law, was that our LAST election? 
  I am not kidding here folks, the rule of law is gone in the U.S., our financial system is a totally rigged sham and people believe they are “wealthy”… are they really ? W e have zero press left to hold anyone’s feet to the fire or accountable for anything.  More people now “take” than “pay” and we are so broke as a nation we can’t even afford to pay attention!  What could possibly go wrong?  The worst thing of all is if you were to bring up even one of the above “cluster bombs” at a summer BBQ, it is YOU who are the nutcase!  Our Forefathers are in tears.
Regards, Bill Holter
Holter-Sinclair collaboration

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


1 Chinese yuan vs USA dollar/yuan strengthens to 6.1981/Shanghai bourse green and Hang Sang: red

2 Nikkei closed down by 26.68  points or .13%

3. Europe stocks mostly in the red/USA dollar index down to 96.87/Euro rises to 1.1030/

3b Japan 10 year bond yield: slight rises to .42% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 124.78/

3c Nikkei still just above 20,000

3d USA/Yen rate now well above the 124 barrier this morning

3e WTI 60.74 and Brent:  65.31

3f Gold up/Yen up

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 up for WTI and up for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund rises to 57 basis points. German bunds in negative yields from 4 years out.

Except Greece which sees its 2 year rate fall  to 24.35%/Greek stocks down 0.79%/ still expect continual bank runs on Greek banks /Greek default inevitable/

3j Greek 10 year bond yield rises to: 11.42%

3k Gold at 1191.00 dollars/silver $16.72

3l USA vs Russian rouble; (Russian rouble falls 1/5  rouble/dollar in value) 53.27 , the rouble is still the best acting currency this year!!

3m oil into the 60 dollar handle for WTI and 65 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 .9402 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0371 well below the floor set by the Swiss Finance Minister.

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

3r the 4 year German bund remains in negative territory with the 10 year moving still near negativity at +.57/

3s Four weeks ago, the ECB increased the ELA to Greece by another large 2.0 billion euros.Two weeks ago, they raised it another 1.1 billion and then last Wednesday they raised it another tiny 200 million euros thus at this point the new maximum was 80.2 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 700 million plus payment to the IMF last Wednesday but with IMF reserve funds.  It must be paid back in on June 9.

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 2.22% early this morning. Thirty year rate just below 3% at 2.98% / yield curve flatten/foreshadowing recession.


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


(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)

Futures Slide Then Rebound On Endless “Unnamed Source” Greek Chatter, Dollar Slides; China Surges

Once again it’s all about Greece, with the latest iteration of a “Greek deal is imminent” rumor making the rounds and, just like yesterday, sending futures in the green, just a little over an hour after the increasingly more illiquid E-mini future has slid 0.7%. The EUR, where the bulk of Virtu headline kneejerk reacting algos are to be found, has surged over 100 pips overnight on more hope and optimism.

The catalysts are several, including a Die Welt article repeating what we said last night, that there is now essentially an agreement among the Troika on the Greek proposal, as well as a Bloomberg note out earlier saying “representatives from creditor institutions said to be wrapping up proposal to end impasse on Greek bailout talks, two people familiar with the matter say.” 

To be sure the note is about as vague as it gets, and it is still unclear whether proposal will allow for modifications, one of the people says. Creditors haven’t decided how proposal will be communicated; one possibility would be for French, German leaders to present offer to Greek PM Alexis Tsipras, one of the people says. Of course, the whole thing may well be just more EUR position squaring by “source” for Bloomberg, which like Reuters, also makes substantial profits from FX and market volatility due to its market making business. The punchline: “People asked not to be named as talks are private.

None of this is new, and the song and dance are well known: Europe will not provide concessions out of concerns this may stoke “anti austerity” movements in Spain and Portugal, bond of whose bonds were seen tumbling earlier today, while Greece will ultimately cave but at the risk of a political crisis at home and new elections, thereby handing the victory over to the Troika. As such, best to observe from a distance.

In other overnight news, the SHCOMP was up another 1.7% overnight, and is almost back to its 8 year high of 4,986, with the CHINEXT index up 4.92% overnight and up 14% from Friday’s lows. Perfectly normal for a global asset bubble.

Elsewhere, Australia’s RBA keeps cash rate target steady at 2.00%; repeats lower AUD needed, policy needs to be accommodative.

In India the RBI cuts repo rate by 25bp to 7.25% as widely anticipated; cash reserve ratio unchanged at 4.0%

BoJ’s Kuroda discussed global economy in meeting with PM Abe, did not discuss FX, reiterates FX levels must reflect fundamentals and stay stable; Separately finmin Aso repeats that currency moves are being watched closely.

A closer look at European markets shows that Bunds have continued to extend on yesterday’s US data-inspired losses with the latest comments surrounding Greece appearing to offer a more promising outlook for negotiations. More specifically, EU’s Moscovici has said that he has observed ‘real progress’ concerning negotiations with Greece with these comments coming in the backdrop of source reports yesterday that EU officials were going to meet to discuss potential agreements and further plans for Greece, aiming to unveil a plan in the coming days. From a technical perspective, the move lower in Bunds has seen the German 10yr yield break above 0.6% to reach its highest level in a week.

Volumes in Bunds are relatively heavy with 450k contracts having gone through already against the 15-day average of 748k with analysts at IFR also noting real money sellers in both USTs and Bunds of notable size adding to existing shorts and/or cutting duration. From a fundamental perspective, other than slightly more upbeat Greek headlines, today also sees a syndication from Spain with books already said to be in excess of EUR 9.5bln. Data has also been better than expected with Eurozone CPI and UK construction PMI weighing on Gilts.

From an equity stand-point despite starting the session off relatively directionless, stocks in Europe have taken a turn lower after being subject to technical selling with the DAX breaking below its 100DMA at 11357.79 and the FTSE 100 taking out its low seen last week. On a sector specific basis, consumer staples are the underperforming sector with British American Tobacco trading lower amid reports of a potential GBP 5.5bln lawsuit with Pernod Ricard in the red after their latest market update.

In FX, the DXY is sliding and the USD is broadly weaker today with gains in the EUR seeing the greenback give back some of yesterday’s gains. The EUR has benefitted from a combination of the aforementioned Greek optimism and higher European yields, while the latest Eurozone CPI data also showed an uptick and beat expectations (0.3% vs. Exp. 0.2%, Prev. 0.0%). GBP has also gained some ground this morning against the USD following better than expected construction PMI data (55.9 vs. Exp. 55.0). Elsewhere, AUD has managed to hold onto its gains in the wake of the RBA rate decision whereby the central bank kept rates on hold as expected and failed to offer any explicit easing bias.

In the commodity complex, both WTI and Brent crude futures have been provided a boost by the weaker USD heading into Friday’s OPEC meeting with the cartel widely expected to stand pat on their current production target given the recent rebound seen in oil prices. In metals markets, spot gold and spot silver trade relatively unchanged while Copper prices have risen in a rebounded from yesterday’s lows.

Looking ahead, today sees the release of US Factory Orders, API Crude Inventories and potential comments from Fed’s Brainard

Bulletin Headline Summary from Bloomberg and RanSquawk

  • Bunds have continued to slide in the wake of recent Greek headlines, with Eurozone CPI topping expectations and the German 10yr yield breaking above 0.6%
  • Higher European yields have supported EUR and as such has dampened sentiment for European equities
  • Treasuries decline, extending losses seen after yesterday’s better than forecast ISM Manufacturing and as IG issuers priced $10.525b including $2.5b 100Y from Petrobras.
  • Representatives from Greece’s creditors are meeting to wrap up new proposal aimed at breaking a deadlock for disbursement of new bailout funds, according to people familiar
  • Creditors haven’t yet decided whether they will allow  the new proposal to be modified; also being debated is the manner in which it would be presented to Greece
  • PM Tsipras said Greece has submitted its own proposal last night; “We are not waiting for them to submit their own plan back to us,” Tsipras told reporters yesterday. “Greece is the one that submits the plan”
  • Euro area consumer prices rose 0.3% in May, more than expected and the first increase in six months
  • India’s central bank lowered rates for a third time this year and said it’d wait to assess monsoon rains before acting again, an outlook that disappointed investors looking for more cuts to spur weak economic growth
  • In a sign of the tumult in the health insurance industry under Obamacare, companies are seeking wildly differing rate increases in premiums for 2016, with some as high as 85%, according to information released by federal government: NYT
  • HSBC Holdings Plc will announce a plan next week to cut thousands of jobs, Sky News reported, citing unidentified people close to the matter
  • Sovereign 10Y bond yields higher. Asian, European stocks lower, U.S. equity-index futures decline. Crude oil gains, copper and gold fall


DB’s Jim Reid concludes the overnight wrap:


Greece continues to be the other headline grabber at present. Late last night at a meeting in Berlin which included German Chancellor Merkel, the IMF’s Lagarde, ECB President Draghi and French PM Hollande, the leaders agreed to step up work with ‘real intensity’ over the coming days. A statement from Merkel’s camp said that the leaders ‘have been in closest contact in recent days and want to remain so in the coming days, both among themselves and naturally also with the Greek government’. The lack of any other material news however, specifically around the key sticking points holding up progress, may well disappoint markets this morning.

Before this the initial focus yesterday was on Tsipras’ op-ed on the weekend, although this was largely played down as political PR. There were comments once again from the EU’s Oettinger that both sides were striving for a deal by Friday, but we note that Oettinger has little, if any, role in the negotiation process. Germany’s Vice-Chancellor Gabriel meanwhile urged for a deal this week, saying that ‘I believe that all the proposals are now on the table and we can only hope that those holding political responsibility, also those in responsibility in Greece, will use the little time that is left to reach decisions’. So another day passes with no agreement reached and time continuing to tick down. Interestingly, despite the time pressure there was little mention of bundling payments from the Greece side yesterday. For now however, it’ll no doubt be another day of headlines.

Turning now to markets in Asia this morning, it’s a fairly bleak picture in equities with the Nikkei (-0.28%), Shanghai Comp (-0.04%), Hang Seng (-0.74%) and Kospi (-1.13%) falling. In fact, as it currently stands the Nikkei is on track to bring to an end 12 consecutive days of gains, the joint-second longest streak since 1970 (the longest being 15 days in 1988). The rally has been supported by a weakening of the Yen, which at one point traded above ¥125 (versus the Dollar) intraday this morning for the first time since 2002. Data in the region was supportive meanwhile, with April labour cash earnings of +0.9% yoy well ahead of expectations of +0.3%, while real cash earnings (+0.1% yoy) are back in positive territory for the first time since April 2013. Elsewhere, in Australia the AUD is +0.60% after the RBA left rates unchanged at 2.00%.

Back to yesterday, it was actually a tale of two halves somewhat for markets in the US yesterday. 10y Treasuries initially fell nearly 2bps in yield in the early afternoon, hitting an intraday low of 2.104% after disappointing PCE deflator readings for April. The 0.0% mom headline reading was both below expectations of +0.1% and also down from +0.2% last month, in turn helping to drag down the annualized rate to +0.1% yoy from +0.3% previously. There was similar weakness in the core meanwhile with the monthly +0.1% print below expectations of +0.2%, and the annualized rate dragged down one-tenth of a percent to 1.2% yoy. There was similar disappointment in the personal spending reading (0.0% mom vs. +0.2% expected) although personal income data (+0.4% mom vs. +0.3% expected) was slightly ahead of consensus.

Yields quickly bounced off their tights for the day following the release of the ISM manufacturing and prices paid however. The former printed at 52.8, ahead of expectations of 52.0 and a 1.3pt increase on April with the employment component in particular rising 3.4pts on the month. The reading was also the first monthly increase since October last year and gave markets a lift after worries that we might see some weakness filter through following the soft Chicago PMI on Friday. The ISM prices paid meanwhile was also better than market consensus (49.5 vs. 43.0 expected) while the final manufacturing PMI for May was revised up 0.2pts to 54.0. Finally construction spending for April was strong (+2.2% mom vs. +0.8% expected), with significant upward revisions to the February (+0.6%) and March (+1.1%) prints. Our US colleagues noted that, following the upward revisions, the data points towards Q1 real GDP being revised to -0.5% from the -0.7% downward revision on Friday. Yesterday’s data, in the view of the Atlanta Fed, largely canceled each other out, resulting in no change to the current GDPNow forecast model for Q2 of 0.8%.

Yesterday’s data saw the Dollar bid return as the DXY firmed +0.50%, wiping out much of the weakness in the index at the back end of last week. Equity markets also saw a modest rise with the S&P 500 (+0.21%) and Dow (+0.16%) both finishing higher. Oil markets reversed some of Friday’s gains however as Brent in particular ended 1.04% lower at $64.88/bbl.

The Boston Fed’s Rosengren also attracted some attention yesterday, reiterating his dovish stance by saying that he would like to begin raising rates as soon as possible but that ‘the conditions haven’t been right’. In particular, Rosengren highlighted the risks in Greece as well as the slowdown in China as concerns, before going on to say that ‘in my view, such a pace of GDP growth does not meet some of the economic preconditions we look for when we begin a tightening cycle’. Fed VC Fischer was also vocal yesterday, in particular saying that the term ‘liftoff’ is misleading and that it would be more appropriate to describe the expected Fed Funds path trajectory as ‘crawling’ in nature.

Equity markets in Europe yesterday mirrored their US counterparts for the most part. Indeed, the Stoxx 600 (+0.18%), DAX (+0.19%) and CAC (+0.35%) all finished higher, shrugging off weakness in Greek equities (-1.44%). Credit markets were soft however as Crossover in particular ended 6bps wider. European data flow was fairly mixed on the whole. The final May manufacturing PMI for the Euro-area was revised down one-tenth a point to 52.2, albeit up versus April (52.0). Regionally, Germany was revised down 0.3pts to 51.1 while France was revised up 0.1pts to 49.4. The peripherals continue to outperform however. Spain’s reading was revised up 1.3pts to 55.8 (a new high) while Italy was revised up 1.2pts to 54.8. The official reading for the UK was revised up less than expected to 52.0 (vs. 52.5 expected) from the initial 51.9 flash reading. Elsewhere, there were few surprises to take out of the German CPI reading where both the monthly (+0.1% mom) and annualized (+0.7% yoy) readings for May printed in line.

Looking at today’s calendar now, the advanced May reading for Euro area CPI will likely be the highlight this morning while there will also be some attention on labour market data out of Germany and Spain. Money supply data for the UK is also due up. Across the pond this afternoon in the US, we get the ISM NY along with April factory orders, the IBD/TIPP economic optimism reading and finally vehicle sales data for May. The Fed’s Brainard is also due to speak today on monetary policy.



Tuesday morning;

The Troika last night wrote their demands and now it is up to Greece to accept or reject:

(courtesy zero hedge)

Greece, Troika Submit Conflicting Eleventh Hour Deal Proposals

On Monday evening, it appeared as though things had finally, after five arduous months of negotiations, come to a head in Greece’s standoff with the IMF and EU creditors. Prime Minister Alexis Tsipras’ penned a lengthy op-ed over the weekend which seemed to indicate that the Greeks were at the end of their rope.

On the heels of Tsipras’ tirade, French President Francois Hollande, German Chancellor Angela Merkel, ECB chief Mario Draghi, and European Commission President Jean-Claude Juncker convened an emergency meeting in Berlin on Monday and Die Welt said Tsipras was apparently ready to discuss pension reform, a sticking point in talks thus far.

Tsipras apparently submitted what he called a “realistic” final proposal ahead of the meeting.

Here’s more color from Bloomberg

The brinkmanship over Greece’s future intensified after Prime Minister Alexis Tsipras said his government submitted a new proposal aimed at breaking the stalemate just as creditors set about finalizing theirs.

Tsipras is waiting for European leaders to show their hand after they held top-level talks in Berlin on


Monday night aimed at hatching a plan to unlock funds and avoid the country defaulting. The goal of the meeting was to hammer out an offer from creditor institutions that Greece could consider in coming days, according to two people familiar with the plan. The Greek government said it hadn’t received any draft agreement.


“After submitting a complete proposal for a deal last night to institutions, we are not waiting for them to submit their own plan back to us,” Tsipras told reporters on Tuesday. “Greece is the one that submits the plan”…


Representatives from the creditor institutions were said to be wrapping up their proposal, two people familiar with the matter said. It was still unclear whether it would allow for modifications, one of the people said.

…and two rather ominous soundbites from Tsipras:


The PM probably meant “next day” metaphorically, but earlier this morning, Bloomberg, citing two people familiar with the matter, reported that “representatives from creditor institutions [are] said to be wrapping up a proposal to end [the] impasse on Greek bailout talks.”

Sure enough, rumors are now hitting the wires that Die Welt — the same Die Welt who last night reportedthat Greece may be ready to cross its “red lines” — is out saying that an EU official has indicated the troika has now reached an agreement on a deal. 

WSJ is running something similar and the bottom line seems to be that, fed up Syriza’s unwillingness to concede its election mandate, the troika will now write the agreement for Greece and Tsipras can either sign it or not. Apparently, the IMF has scaled back its demands for EU creditor writedowns (another loss for Athens) but remains skeptical of the entire undertaking.

Via WSJ:

Greece’s creditors have reached a consensus on the terms of a proposed deal to put to the Greek government, according to two people familiar with the talks.


Officials representing European institutions and the International Monetary Fund on Tuesday morning completed the draft of an agreement to unlock bailout aid for Greece, after key European and IMF leaders met in Berlin late Monday to overcome differences between Greece’s creditors, they said.


Eurozone governments and the IMF have agreed to press Greece for far-reaching economic overhauls, while the IMF has softened its insistence that Europe offer explicit commitments to relieve some of Greece’s debt burden, the people said.


Greece’s high debt remains a contentious issue in the background between the IMF and European lenders, led by Germany, but is not holding up the creditors’ proposal to Greece.IMF head Christine Lagarde warned at the Berlin meeting that debt restructuring will become necessary if Greece doesn’t enact thorough economic overhauls that improve its budget balance and lift its growth trajectory, these people said.


The creditors’ proposal for an agreement is expected to be put to Greece’s government soon. Greek Prime Minister Alexis Tsipras is expected to face politically explosive demands for tough reforms of Greece’s pension system, labor laws and other areas, as well as creditors’ insistence on painful budget measures to ensure that Greece runs a fiscal surplus before interest.


Greece’s creditors have opted to write a draft agreement for Mr. Tsipras to accept after months of negotiations with Greek officials made only slow progress.


Creditors admit that Mr. Tsipras could face huge political difficulties if and when he asks his ruling left-wing Syriza party to accept a tough deal.

In other words, Greeks should be prepared to see some of Syriza’s campaign promises compromised in the coming days and weeks. What that will mean for the shape of the government remains to be seen, but one thing seems certain, some manner of political reshuffle or upheaval is in the cards.

It sure looks like the EU et al crushed any semblance of a Greek deal:
(courtesy zero hedge)

Dijsselbloem Crushes Greek Deal Optimism, Says Deal “Not Theoretically Possible” This Week

Remember a couple of hours ago when WSJ reported that, after an emergency meeting between the IMF and EU creditors, the troika decided to help Greek PM Alexis Tsipras out by simply drafting an agreement for him and placing an X next to the line where he needed to sign? Well, it now appears that either those reports were misinformed or Tsipras has come back and politely asked to the troika to read the alternative proposal he sent over on Monday evening because Eurogroup President Jeroen Dijsselbloem has just thrown quite a bit of cold water on the idea that a deal will be struck this week.


And in case there was any doubt about our contention that the institutions intend to break Syriza’s campaign mandate once and for all:


As for the IMF payment on Friday, that looks like a no:


So: default on the IMF’s June 5 payment?

Or perhaps it was all just a scramble to push the EUR lower after one of its sharpest surges in the past decade.

OH!OH! the USA will not like this;  Greece to sign a MOU with Russia for a major gas pipeline:
(courtesy zero hedge)

Greece Breaks America’s Heart, Will Sign MOU With Russia For Gas Pipeline

Greece has received what The New York Times recently described as “dueling sales pitches” on two proposed natural gas pipelines.

One proposal comes from Russia, where the Kremlin is keen to use the tumultuous negotiations between Athens and creditors to advance Moscow’s energy and geopolitical interests. Moscow hopes to essentially buy Athens’ participation in the Turkish Stream pipeline which, as a reminder, will allow Russia to bypass Bulgaria by piping gas through Turkey, then through Greece, Serbia, and Hungary straight to the Austrian central hub. 

(Greece’s options)

Some have suggested over the past several months that Athens may be able to secure an advance on its potential profits from the pipeline, thus giving Greece some much needed breathing room in what have a series of suffocating negotiations with the troika. This would suit Vladimir Putin just fine as it would allow him to solve the South Stream ‘problem’ while securing a Greco-Russo economic and energy alliance just as Europe debates how to proceed with regard to the conflict in Ukraine. For its part, Europe has responded by filing antitrust charges against Gazprom.

The US proposal involves The Southern Gas Corridor, a project aimed at “improving the diversity of the EU’s energy supply” — in other words, it’s an attempt to help break Gazprom’s stranglehold. Essentially, the corridor will allow the EU to tap into Caspian gas via a series of connecting pipelines running from Azerbaijan to Italy.

(The US-endorsed pipeline project)

Early last month, US State Department envoy Amos Hochstein met with Greek foreign minister Nikos Kotzia to make the pitch and told Greece that participating in The Southern Gas Corridor would help make the country attractive to investors again.

(Hochstein and Kotzia in May)

It appears Moscow may have made the better sales pitch (or perhaps it was the fact that Russia lobbied Athens far more aggressively) because Greece is set to sign an MOU for the Greek portion of The Turkish Stream pipeline in June.

RT has more:

Greece plans to sign a document on political support for Gazprom’s Turkish Stream project at the St. Petersburg International Economic Forum in June, its Energy Minister announced on Monday. The country plans to invest $2 billion in its construction.


A memorandum on political support for the gas pipeline project will be prepared by June 18-20, when the International Economic Forum (SPIEF-2015) will be held in Russia’s St. Petersburg, Greek Energy Minister Panagiotis Lafazanis announced on Monday…


Greece’s part of the pipeline, which will be delivering Russia’s gas on from the Turkish border, will cost some $2 billion, Lafazanis said in an interview with the Rossiya24 channel. The minister said that a Greek state company will be involved in the project, adding that there has been “big interest” from many companies wishing to take part in the construction and future operation of the pipeline…


The new pipeline, which Gazprom plans to build from Turkey to the border with Greece, will be part of the Turkish Stream project aimed at delivering Russian gas to Europe without the participation of Ukraine. Russia intends to completely abandon its gas supplies through Ukraine by 2019. The EU would construct the pipelines leading further on from Greece.

According to Lafazanis, the Western-backed proposal and The Turkish Stream are not competitors and Greece will, if it can, participate in both initiatives.

Via The Greek Reporter:

“We do not considered them to be rivals. On the contrary, we think they both contribute to energy supply of European countries. That’s why it is odd that the Russian project is raising concern and doubts in the US and the European Union. We will not submit to the interests and wishes of any third country.Greece is nobody’s property. We move based on the interests of our people and our national interests. The country must become a development hub for Europe’s energy supply.”

The US and Europe of course do not see things that way as indicated by the following quote from The US Embassy in Athens:

The United States is concerned that Greek consideration of an extension of a “Turkstream” pipeline across Greece will not increase energy diversification, may be of concern to EU competition authorities, and is not a long-term solution to Greece’s energy needs.

Essentially, Greece and the West have just suffered a bad breakup, and the West is not keen on Greece dating anyone else for the foreseeable future and so presumes to exercise a kind of post-split overbearing paternalism to ensure Athens can fend for itself in a world occupied by anti-NATO vultures who have been circling for the better part of six months. Greece, however, is prepared to make its own way.

Or, as Vladimir Putin puts it: ”

“Just because Greece is debt-ridden, this does not mean it is bound hand and foot, and has no independent foreign policy.”


(courtesy zero hedge)
Early this morning, for no apparent reason, the dollar crashes as all currencies rise against the dollar.  Not only that but the 10 yr German bunds collapsed in price (rose to yield to .71%)

Dollar Flash-Crashes On Sudden EUR Spike Amid Carnage In Bunds

Driven by no immediate fundamental or news catalyst, EURUSD is spiking (running stops to almost 1.1200) sending the USD index into yet another flash-crash this morning… as the carnage in bunds continues (+11bps to 65bps)…

USD Index is tumbling suddenly…


driven by a spike above 1.1100 in EURUSD… (highs at 1.1196! – 200 pips off lows)


Amid carnage in Bunds… (2nd biggest yield spike since 2012)



Charts: Bloomberg

By the end of the day, the Euro is up 300 basis points in the last 24 hours.  The USA drop is the 2nd biggest drop in over 6 years.
(courtesy zero hedge)

EURUSD Up 300 Pips In Last 24 Hours, Dollar’s 2nd Biggest Drop In 6 Years

As EURUSD surges towards 1.1200 once again, we note that it is now 300 pips stronger than 24 hours ago. This is the 2nd biggest collapse in the USD since March 2009… Treasuries and Bunds are getting monkey-hammered… and US stocks just want higher (as Dax slides)…

Euro surging…


Roundtripping to May 22nd’s plunge…



This is the 2nd biggest down day for the Dollar since March 2009…


Charts: bloomberg



We are not sure with the ECB helped orchestrate the rise in German bund yields in order for them to engage in their necessary QE. The problem of course is the huge rise in yields on the bunds sets off a derivative mess again as does the violent rise in currency values against the dollar.

(courtesy zero hedge)

German Bund Carnage Ends With Worst Day In 3 Years

10Y Bund yields exploded over 17bps today to top 71bps for the biggest absolute yield increase since August 2012. Initially triggered off hotter-than-expected EU inflation, one can’t help but wonder if the magnitude and linearity of the move had an invisible hand helping it out “to make room for more ECB buying.”

One can’t help but wonder – just as we saw previously and was rumored across many trading desks – if the ECB is not enabling this decompression to give themselves some more room for buying…



Now comes the civil suits:

(courtesy Reuters and special thanks to Robert H for sending this to us)

HSBC must face U.S. lawsuits over $34 billion mortgage debt losses
Mon, Jun 01 22:59 PM BST

By Jonathan Stempel

NEW YORK (Reuters) – HSBC Holdings Plc (HSBA.L) was on Monday ordered to face three U.S. lawsuits accusing it of breaching its duties as a trustee overseeing residential mortgage-backed securities that suffered more than $34 billion (£22 billion) of losses in the global financial crisis.

U.S. District Judge Shira Scheindlin in Manhattan said the plaintiff investors, including funds from BlackRock Inc (BLK.N), Allianz SE’s (ALVG.DE) Pacific Investment Management Co and TIAA-CREF, could pursue claims accusing HSBC of breach of contract, and concealing known defects in mortgage loans backing 283 trusts.

“Based on plaintiffs’ detailed allegations, it is indeed plausible to infer that HSBC had actual knowledge of breaches in representations and warranties in the specific loans at issue,” Scheindlin wrote in a 53-page decision. “How HSBC gained this actual knowledge, or whether in fact it had actual knowledge, may be determined through discovery.”

The judge also said the plaintiffs could pursue a conflict of interest claim accusing HSBC of refusing to “rat out” misconduct by loan servicers, hoping that they would “return the favour when the roles were reversed.”

Scheindlin dismissed some claims, including for negligence and negligent misrepresentation. She gave the plaintiffs 30 days to amend their complaints, and scheduled a June 24 conference.

HSBC spokeswoman Juanita Gutierrez declined to comment.

Trustees are appointed by bond issuers to ensure that payments are funnelled to investors, and to handle much of the back-office work after securities are sold.

But trustees have in recent years also become a target for investors who lost money on poorly underwritten mortgages, and who accuse the trustees of breaching their duties by failing to force lenders and bond issuers to buy those loans back.

The lawsuits against HSBC covered securities issued between 2004 and 2008, court papers show.

“Our clients are extremely pleased with Judge Scheindlin’s order, sustaining actionable claims on all the RMBS trusts in our action,” said Blair Nicholas, a lawyer for the BlackRock, Pimco and TIAA-CREF plaintiffs, in a phone interview. That lawsuit involved 271 of the 283 trusts.

Lawyers for plaintiffs in the other lawsuits did not immediately respond to requests for comment.

The cases are all in the U.S. District Court, Southern District of New York. They are Royal Park Investments SA/NV et al v. HSBC Bank USA NA, No. 14-08175; BlackRock Balanced Capital Portfolio et al v. HSBC Bank USA NA, No. 14-09366; and Phoenix Light SF Ltd et al v. HSBC Bank USA NA, No. 14-10101.

(Reporting by Jonathan Stempel in New York; Editing by Richard Chang)




Oil related stories:

Oil will drop unless OPEC cuts production:

(courtesy Arthur Berman/Oil Price.com)

Expect The Recent Oil Rally To End Badly If OPEC Doesn’t Cut

Submitted by Arthur Berman via OilPrice.com,

The U.S. rig count dropped by 10 rigs this week after only falling by 3 last week. No doubt some analysts will say that this increase is somehow important and that a return to normal–i.e., high oil prices–is around the corner.

Well, don’t get too excited because the rig count that matters–the horizontal Bakken, Eagle Ford and Permian plays–only fell by 2 rigs after not falling last week. This is a normal fluctuation when oil is $100/barrel.


Table 1. Rig count summary by play through May 29, 2015. Source: Baker Hughes & Labyrinth Consulting Services, Inc.

(click image to enlarge)

The rig count decline is effectively over as shown below in Figure 1.


Figure 1. Tight oil horizontal rig counts. Source: Baker Hughes & Labyrinth Consulting Services, Inc.

(click image to enlarge)

Production has fallen and will fall more but rig count is the wrong measure at this time. The real measure is capital given to U.S. tight oil companies. And there seems to be plenty of really stupid capital that thinks that investing now means buying low. Good luck with that once oil prices fall.

Figure 2. Bakken, Eagle Ford and Permian “Shale” tight oil production. Source: Drilling Info & Labyrinth Consulting Services, Inc.

(click image to enlarge)

There have been a steady stream of articles championing the ingenuity of U.S. tight oil producers for figuring out how to maintain production with fewer rigs. It doesn’t strike me as ingenious to produce more oil at low prices that ensure losing money.

OPEC will meet on Friday (June 5, 2015) and most doubt that a production cut will result. If that is the outcome,expect the recent rally in oil prices to end badly. If producers cared about their investors and shareholders, they would be slashing production by shutting in wells. That might help oil prices rebound sooner and then, they could sell the oil at a profit instead of losing money while celebrating their own ingenuity.

API inventories build which causes crude to slide in price last in the day:
(courtesy zero hedge)

Crude Slides After API Shows Another Inventory Build

Just when everyone thought it was fixed, crude inventories start building again as API reports (for the 2nd week):


This follows a surprising 1.3 million barrel build last week reporrted by API. WTI slipped back to $61.00 after hours…



Your more important currency crosses early Tuesday morning:


Euro/USA 1.1030 up .0108

USA/JAPAN YEN 124.78 down .085

GBP/USA 1.5230 up .0035

USA/CAN 1.2527 up .0002

This morning in Europe, the Euro rose by a healthy 108 basis points, trading now just above the 1.10 level at 1.1030; 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, rising peripheral bond yields and today crumbling bourses.

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 up again in Japan by 9 basis points and trading well above the 124 level to 124.78 yen to the dollar.

The pound was up this morning as it now trades well below the 1.53 level at 1.5230, 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 2 basis points at 1.2527 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 1.0328 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 : down 26.68 points or 0.13%

Trading from Europe and Asia:
1. Europe stocks mostly in the red

2/ Asian bourses mostly in the red … Chinese bourses: Hang Sang red (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: $1191.00


Early Tuesday morning USA 10 year bond yield: 2.22% !!! up 3 in basis points from Monday night and it is trading under resistance at 2.27-2.32%.


USA dollar index early Tuesday morning: 96.87 down 52 cents from Monday’s close. (Resistance will be at a DXY of 100)


This ends the early morning numbers, Tuesday morning

And now for your closing numbers for Tuesday:


Closing Portuguese 10 year bond yield: 2.84 up 10 in basis points from Monday (getting ominous)

Closing Japanese 10 year bond yield: .43% !!! up 2 in basis points from Monday/

Your closing Spanish 10 year government bond, Tuesday, up 12 points in yield (very ominous)

Spanish 10 year bond yield: 2.09% !!!!!!


Your Tuesday closing Italian 10 year bond yield: 2.13% up 15 in basis points from Friday: (very ominous)

trading 4 basis point higher than Spain.




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

Euro/USA: 1.1149 up .0228 ( Euro up 228 basis points)

USA/Japan: 124.09 down  .770 ( yen up 77 basis points)

Great Britain/USA: 1.5338 up .0143 (Pound up 143 basis points)

USA/Canada: 1.2413 down .01127 (Can dollar up 112 basis points)

The euro rose smartly today. It settled up 228 basis points against the dollar to 1.1149 as the dollar collapsed against all the various major currencies. The yen was up 77 basis points and closing just above the 124 cross at 124.13. The British pound gained huge ground today, 143 basis points, closing at 1.5338. The Canadian dollar gained huge ground back against the USA dollar,113 basis points closing at 1.2413.

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: 2.27% up 9 in basis point from Tuesday (just at the resistance level of 2.27-2.32%)


Your closing USA dollar index:

95.92 down a monstrous 147 cents on the day.


European and Dow Jones stock index closes:


England FTSE down 25.31 points or 0.36%

Paris CAC down 20.84 points or 0.41%

German Dax down 107.25 points or 0.94%

Spain’s Ibex up 33.30 points or 0.30%

Italian FTSE-MIB up 140.49 or 0.60%


The Dow down 28.43  or 0.16%

Nasdaq; down 6.41  or 0.13%


OIL: WTI 61.34 !!!!!!!



Closing USA/Russian rouble cross: 52.75 up 3/4 roubles per dollar on the day.




And now for your more important USA stories.


NY trading for today:

Quite a volatile day!!

Blood On The Street In The Big Boys’ Markets: Bonds & Dollar “Blatter”-ed

We suspect more than a few professional traders can find some analagous context with this clip after today’s turmoil… (forward to 1:30 if it does not automatically jump)

Quite a day…

  • 0400ET Early drop on hotter-than-expected EU inflation
  • 0500ET Ramp on Greek deal rumors once again
  • 0815ET Airline Bomb Threats send stocks lower
  • 0830ET BTFDers ignore those headlines – stocks jump
  • 0915ET Dijsselbloem dismisses deal – stocks drop
  • 0945ET S&P touches 50DMA and bounces
  • 1000ET Terrible Factory Orders data – stocks surge
  • 1130ET Rip to new highs as algos latched on to Crude’s spike – run stops
  • 1200ET VIX monkey-hammered lower surges stocks
  • 1400ET Stocks start to rollover on no news
  • 1430ET NYMEX Closes, oil-stock link fades and stocks drop into red
  • 1445ET RTRS headline bullshit on EU agreement on terms for Greece
  • 1500ET Great Auto Sales data bumped stocks briefly but faded

*  *  *

While stocks traded like an EKG today, the big story is in FX and Bond markets where turmoil was an understatement…

The USDollar was crushed today… down a stunning 1.8% as EUR spiked over 2% ahead of tomorrow’s ECB conference


This is the 2nd biggest down day for the Dollar since March 2009…


All driven by a huge roundtrip in EURUSD…


Bond yields were smashed higher – in Bunds…


And Treasuries… 30Y Yields broke above 3.00% once again


Stocks and bonds recoupled yesterday but once EU inflation hit and spanked Bunds, TSYs and US equities decoupled once again…


Stocks and USDJPY carry decoupled as they plunged this morning and algos flipped to EURJPY as the driver…


*  *  *

Ok so how did stocks do on the day…


In cash – exactly the same pattern as yesterday!



And since Friday’s close…The Dow is clinging to Green, Trannies outperforming (despite oil’s rally)


S&P bounced off its 50DMA…


VIX was once again gappy and noisy…


Despite all the carnage in the dollar, commodities were kinda blah… positive but modest…


Although stocks and Oil recoupled after Europe closed…then decoupled after NYMEX close (note the 2 pumps in Crude early on that led stocks)


Charts: Bloomberg

Bonus Chart: Deja vu all over again…

We are continually seeing deterioration with much of the USA data now being released.  The high USA dollar was having a devastating effect on USA manufacturing and their economy in general.  Today it was factory orders that suffered:
(courtesy zero hedge)

Factory Orders Scream Recession, Drop 6% From Year Ago In Sixth Consecutive Drop

Following this morning’s disappointing tumble in ISM New York (with 5 of the 6 components plunging), Factory Orders tumbled 0.4% MoM in April (against expectations of a modest 0.1% decline). This comes after March’s exuberance-inspiring upwardly revised 2.2% MoM surge (which ended a 7 month streak of MoM drops). Down 6.4% against 2014, this is the 6th month in a row of YoY declines in Factory Orders – something not seen previously outside of a recession. Stocks love this terrible news (for now).

Here’s what we said going in…

And sure enough, it was dismal….



On a MoM basis, the picture is even worse…  9 misses in the last 10 months… 8 negative prints in the last 9 months

Charts: Bloomberg

Well that about does it for tonight
I will see you tomorrow night

One comment

  1. will m · · Reply

    nice report Harvey
    thanks well done


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: