june 19/We await a banking holiday set for Monday in Greece/Russia dumps dollars for gold/

Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

 

Gold:  $1201.50 unchanged (comex closing time)

Silver $16.10 down 5 cents.

In the access market 5:15 pm

 

Gold $1200.50

Silver: $16.11

 

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 4 notices serviced for 400 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 247.75 tonnes for a loss of 55 tonnes over that period.

 

In silver, the open interest rose sharply by 3,547 contracts as Thursday’s  silver price was up by 19 cents.   The total silver OI continues to remain extremely high,  with today’s reading at 194.591 contracts now at multi-year highs despite a record low price. In ounces, the OI is represented by 973 million oz or 139% of annual global silver production (ex Russia ex China). 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 as they continue to raid as basically they have no other alternative.

In silver we had 0 notices served upon for nil oz.

In gold,  the total comex gold OI rests tonight at 419,870 for a gain of 2,641 contracts as gold was up by $25.10 yesterday. We had 4 notices filed for 600 oz.

 

we had no change in gold inventory at the GLD; thus the inventory rests tonight at 701.90 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, /no change in inventory at the SLV/327.874 million oz

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

1. Today, we had the open interest in silver rise by 3547 contracts to 194,591 despite the fact that silver was up by only 19 cents on Thursday.. The OI for gold rose by 2641 contracts up to 419,870 contracts as the price of gold was up by $25.10 yesterday.

(report Harvey)

2. Today, 7 important commentaries on Greece

zero hedge, Reuters/Bloomberg/Graham Summers/Phoenix Research Capital)

3.  COT report on gold and silver

(Harvey)

4. Gold trading overnight

(Goldcore/Mark O’Byrne)

5. Trading from Asia and Europe overnight

(zero hedge)

6. Trading of equities/ New York

(zero hedge)

7. Russia dumping dollars to buy gold. Reserves are now 1244 tonnes

8. This week’s wrap with Greg Hunter/USAWatchdog

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 2,641 contracts from 417,229 up to 419,870 as gold was up by $25.10  yesterday (at the comex close).  We are now in the big active delivery contract month of June.  Here the OI fell by 55 contracts down to 521. We had 6 notices served upon yesterday.  Thus we lost 49 contracts or an additional 4900 oz will not stand for delivery as they were no doubt cash settled.  The next contract month is July and here the OI rose by 66 contracts rising to 653.  The next big delivery month after June will be August and here the OI fell by only 541 contracts down to 273,941.  The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 51,836. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day) was fair at 202,221 contracts. Today we had 6 notices filed for 600 oz.

And now for the wild silver comex results.  Silver OI rose hugely by 3547 contracts from  191,044 up to 194,591 despite the fact that the price of silver was up by only 19 cents, with respect to Thursday’s trading. We continue to have our bankers pulling their hair out with respect to the continued high silver OI.  The front non active  delivery month of June saw it’s OI rise by 46 contracts to 73 contracts. We had 0 contracts delivered upon yesterday.  Thus we gained 46  silver contracts or an additional 230,000 oz that will stand for delivery in this non active June contract month.Somebody was very anxious to get hold of some physical silver.The next delivery month is July and here the OI surprisingly ROSE by 450 contracts up to 80,919. We have less than two weeks left to go before first day notice on June 30 and the front month is not contracting in volume at all. The estimated volume today was poor at 20,891 contracts (just comex sales during regular business hours. The confirmed volume on day (regular plus access market) came in at 75,691 contracts which is excellent in volume. We had 0 notices filed for nil oz today.

June initial standing

June 19.2015

Gold

Ounces

Withdrawals from Dealers Inventory in oz    99.93 oz (Brinks)
Withdrawals from Customer Inventory in oz 96.45 (Manfra) oz3 kilobars
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz 105,374.433 oz (Manfra, HSBC)
No of oz served (contracts) today 4 contracts (400 oz)
No of oz to be served (notices) 570 contracts (57,000 oz)
Total monthly oz gold served (contracts) so far this month 2659 contracts(265,900 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month 99.93 oz
Total accumulative withdrawal of gold from the Customer inventory this month  457,536.9  oz

Today, we had 1 dealer transaction

Dealer withdrawal:

we had one dealer withdrawal

i) Out of Brinks:  99.93 oz was withdrawn

total Dealer withdrawals: 99.93  oz

we had 0 dealer deposit

total dealer deposit: nil oz
we had 1 customer withdrawal

i) Out of Manfra: 96.45 oz (3 kilobars)

total customer withdrawal: 96.45 oz

We had 2 customer deposits:

i) Into Manfra: 964.50 oz (30 kilobars)

ii) Into HSBC: 104,409.933 oz

Total customer deposit: 110,390.321 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 4 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 3 notices were stopped (received) by JPMorgan customer account

To calculate the total number of gold ounces standing for the June contract month, we take the total number of notices filed so far for the month (2659) x 100 oz  or 265,900 oz , to which we add the difference between the open interest for the front month of June (521) and the number of notices served upon today (4) 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 (2659) x 100 oz  or ounces + {OI for the front month (521) – the number of  notices served upon today (4) x 100 oz which equals 317,600 oz standing so far in this month of June (9.977 tonnes of gold).  Thus we have 9.977 tonnes of gold standing and only 17.06 tonnes of registered or for sale gold is available.  We lost 49 contracts or 4,900 oz to probable cash settlements.

Total dealer inventory 548,744.939 or 17.06 tonnes

Total gold inventory (dealer and customer) = 7,965,349.882 (247.75 tonnes)

Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 247.75 tonnes for a loss of 55 tonnes over that period.

 

end

And now for silver

June silver initial standings

June 19 2015:

Silver

Ounces

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 84,846.770 oz (CNT)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory  929,899.17 oz (Brinks)
No of oz served (contracts) 0 contracts  (nil oz)
No of oz to be served (notices) 27 contracts(135,000 oz)
Total monthly oz silver served (contracts) 222 contracts (11,010,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month 526,732.4  oz
Total accumulative withdrawal  of silver from the Customer inventory this month 5,243,789.0 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 deposits:

i) Into Brinks; 929,899.17 oz

total customer deposit: 929,899.17  oz

We had 1 customer withdrawals:

i) Out of CNT: 84,846.77 oz

total withdrawals from customer; 84,846.77 oz

we had 0 adjustment

Total dealer inventory: 57.840 million oz

Total of all silver inventory (dealer and customer) 181.448 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 (222) x 5,000 oz  = 11,100,000 oz to which we add the difference between the open interest for the front month of June (27) 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:

222 (notices served so far) + { OI for front month of June (73) -number of notices served upon today (0} x 5000 oz ,= 11,465,000 oz of silver standing for the June contract month.

we gained 46 contracts or an additional 230,000 oz will stand for delivery in this non active delivery month of June.

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:

June 19.2015: no change in gold inventory/rests tonight at 701.90 tonnes.

June 18/no change in gold inventory/rests tonight at 701.90 tonnes

June 17/no change in gold inventory/rests tonight at 701.90 tonnes

June 16./no change in gold inventory/Rests tonight at 701.90 tonnes.

June 15/we lost a huge 2.08 tonnes of gold from the GLD/Inventor rests tonight at 701.90 tonnes

June 12/we had a small withdrawal of .24 tonnes of gold from the GLD/Inventory rests this weekend at 703.98 tonnes.

June 11/we had another huge withdrawal of 1.5 tonnes of gold from the GLD/Inventory rests tonight at 704.22 tonnes

June 10/ we had a huge withdrawal of 2.98 tonnes of gold from the GLD/inventory rests at 705.72

June 9/ no change in gold inventory at the GLD/Inventory rests at 708.70 tonnes

June 8/ a big withdrawal of 1.19 tonnes of gold from the GLD/Inventory rests at 708.70 tonnes

June 19 GLD : 701.90  tonnes.

 

end

 

And now for silver (SLV) Please note the difference between GLD and SLV.  GLD has been depleting of gold/SLV has been adding to its inventory.

June 19/no change in silver inventory/327.874 million oz

June 18 no change in silver inventory/327.874 million oz

June 17/no change in silver inventory/327.874 million oz

June 16./no change in silver inventory/327.874 million oz

June 15/we had no change in silver inventory/327.874 million oz

June 12/we had another addition to the tune of 956,000 oz/Inventory rests this weekend at 327.874.  Please note that there has been an addition on each of the past 5 days.

June 11.2015: we had another monster of an addition to the tune of 2.791 million oz/Inventory rests at 326.918

June 10/another monster of an addition to the tune of 1.126 million oz/Inventory rests at 324.127

June 9/ a monster of an addition to the tune of 3.393 million oz/inventory rests at 323.001 million oz.

June 8/no change in inventory/SLV inventory rests at 319.608 milion oz.

June 5 a huge addition of 1.433 million oz of silver added to the SLV/Inventory at 319.608 million oz

June 19/2015: no change in silver inventory/SLV inventory rests tonight at 327.874 million oz

 

end

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 8.0% percent to NAV in usa funds and Negative 7.9% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 62.2%

Percentage of fund in silver:37.7%

cash .3%

( June 19/2015)

2. Sprott silver fund (PSLV): Premium to NAV falls to +.36%!!!!! NAV (June 19/2015)

3. Sprott gold fund (PHYS): premium to NAV falls to – .37% to NAV(June 19/2015

Note: Sprott silver trust back  into positive territory at +.36%.

Sprott physical gold trust is back into negative territory at -.37%

Central fund of Canada’s is still in jail.

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.
* * * * *

end

At 3″30 the CME released the famed COT report which gives up position levels of our major players.

First let us head over to the Gold COT:

COT Gold, Silver and US Dollar Index Report – June 19, 2015
— Posted Friday, 19 June 2015 | Share this article | Comment – New!

Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
191,053 115,330 37,042 153,712 230,349 381,807 382,721
Change from Prior Reporting Period
4,240 3,607 3,300 3,435 1,483 10,975 8,390
Traders
134 92 67 54 50 221 184
 
Small Speculators  
Long Short Open Interest  
33,911 32,997 415,718  
-1,326 1,259 9,649  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, June 16, 2015
Our large specs:
\
Those large specs that have been long in gold added 4240 contracts to their long side.
Those large specs that have been short in gold added 3607 contracts to their short side.
Our commercials;
Those commercials that have been long in gold added 3435 contracts to their long side.
Those commercials that have been short in gold added a smallish 1483 contracts to their short side.
Our small specs:
Those small specs that have been long in gold pitched 1326 contracts from their long side.
Those small specs that have been short in gold added 1259 contracts sto their short side.
Conclusions:  commercials going net long again by 1952 contracts.
are they getting a little antsy??
And now the silver COT:
Silver COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
67,315 51,643 22,426 74,139 102,994 163,880 177,063
1,434 8,308 -1,865 2,792 -4,294 2,361 2,149
Traders
101 58 46 45 43 168 130
Small Speculators  
Long Short Open Interest  
27,894 14,711 191,774  
-111 101 2,250  
non reportable positions Change from the previous reporting period
COT Silver Report – Positions as of Tuesday, June 16, 2015

Our large specs:

Those large specs that have been long in silver added 1434 contracts to their long side.

Those large specs that have been short in silver added a huge 8309 contracts to their short side!!!!  and ????

Our commercials:

Those commercials who have been long in silver added 2792 contracts to their long side.

Those commercials who have been short in silver covered a huge 4294 contracts from their short side.

Our small specs:

Those small specs who have been long in silver pitched a tiny 111 contracts from their long side.

Those small specs who have been short in silver added a tiny 101 contracts to their short side.

Conclusions;  commercials go net long by almost 7000 contracts and large specs go massively short>>>this is an accident waiting to happen!!

 

 

 

 

Early morning trading from Asia and Europe last night:

 

Gold and silver trading from Europe overnight/and important physical

stories

(courtesy Mark O’Byrne/ Steve Flood/Goldcore)

THE FOLLOWING IS A MUST READ….

 

Greek Contagion Abyss Looms – Wealth Preservation Strategies

  • Greece, EU and Banks Staring Into Abyss
  • Markets Are “Irrationally Exuberant” – Gods Punish Hubris
  • “Invisible Hand” Propping Up Sanguine Markets
  • Short Term Considerations
  • Long Term Considerations
  • Best Case Outcomes
  • Worst Case Outcomes
  • Wealth Preservation Strategies

We are here, staring into the abyss. The greatest monetary experiment of the modern world – the euro, encapsulating the largest middle class market of consumers ever assembled is about to face its greatest test to date.

To say anxieties are high is an understatement. Normally the broad markets will weigh up downside risk as the markets formulate and assimilate varying views on matters of importance, but not so in this case.

euro_drachma

 

The markets are decidedly sanguine, as if an “invisible hand” is propping them up, guiding them, nudging them, buying any dips in stock and bond markets and maintaining calm.

The VIX measure of U.S. stock volatility, is languishing at 15 – not even whimpering. Gold, that other key barometer of risk, has only seen slight gains and languishes at $1,200 per ounce.

It is as if the fire alarms have been turned off despite the fire beginning to rage.

Is the Working Group on Financial Markets or Plunge Protection Team (PPT) working tirelessly through proxy Wall street banks to keep gold depressed and prop up leading benchmarks such as the S&P 500 and thus the wider markets?

There are many that believe that Wall Street banks and central banks work closely together and coordinate policy and market interventions. They are sometimes dismissed as “conspiracy theorists.” Despite much evidence showing that banks have manipulated and rigged markets frequently.

Ironically, those that dismiss this as conspiracy theory are the same people who would say that if the central banks and governments are not propping up and intervening in markets, they should be.

If central banks are not already “market makers of last resort” then it seems likely that they soon will be and indeed overnight the IMF has called for this.

Such interventions simply paper over the cracks for a period of time – meanwhile the fire is burning, the structure is crumbling and will ultimately collapse.

bail-ins-considerations

A Greek exit from the euro would change everything. The greatest change being simply doubt and fear regarding the outlook for other vulnerable EU nations, EU banks and the EU banking and financial system.

From that day forward every statement from every EU official will have a risk premium attached to it.

They will say this and that, but the market will here “maybe” this, “maybe” that. As such the costs of participation in every financial transaction will alter, as the accounting for “what if” scenarios slowly gets priced in.

This change in risk perception and pricing, rather counterintuitively, is in fact a good longer term development. The markets have become increasingly captive by non elected and elected officials within the world monetary apparatus.

These ‘hidden hands’ have, and are, over anxious and seek to to quell market volatility and market dislocation in what they believe to be in the interest of the  public good. They believe that market volatility is a bad bad thing – when in fact nothing could be further from the truth.

It was this same hubris and “super man” mentality that created the first global financial crisis and indeed financial crises throughout history.

The same mistakes are being made over and over again. Market hubris and official hubris is rife. How apt – Greek gods liked to punish those guilty of being overconfident and arrogant.

We are seeing this misdiagnosis being played out in the current negotiations between the Troika and the Greek government. Ultimately the effect of a Greek exit could manifest in any number of ways, with  far reaching consequences for our interconnected global capital market with all of its regulatory gaps, opaque credit structures and massive $200 trillion and growing debt burden.

Short term considerations

  • capital controls and extent of
  • bank collapse and bail-ins
  • credit market contagion
  • Greek euro exit
  • rising government bond yields and interest rates
  • geopolitical considerations and Russian influence

Long term considerations

  • higher interest rates
  • stock market fall
  • “PIIGS” contagion
  • global contagion?
  • effect on Germany (arguably the greatest Euro benefactor)
  • loss of confidence in ECB, monetary union and euro
  • increase in nationalism
  • makes Brexit more likely?

Best case outcomes

  • Greek default – ECB blinks and continues liquidity support
  • Greek get a deal to peg debt obligations to growth and spread repayments over the very long term
  • stability returns, bailout countries return to more solid economic growth as interest rates begin to slowly normalise
  • Greece and its new currency start recording significant growth in a post debt overhang world

Worst case outcomes

  • capital controls across Europe until Greek exit is managed
  • Greek exit in a messy way, euro credit seizes up as collateral bombs go off  – “Lehman II”
  • bail-ins imposed on depositors across world – further devastating depositors, small and medium enterprises and our economies
  • banks and hedge funds smell blood and start rounding on the next weakest member, shorting bonds and local markets, forcing an exit
  • likely Italy, Spain, Ireland, Portugal and in time France targeted in terms of interest rate sensitivity
  • Euro becomes a lame duck currency, all countries start to prepare for an exit orderly or otherwise. New euro launched with exclusively northern European industrial economies
  • collapse of western banking system…for a period of time

Wealth preservationstrategies

  • Speculate by going short euro and long drachma and Greek assets
  • Own USD, NOK, HKD, SGD, CHF in safe banks in safe jurisdictions
  • Diversify cash holdings to non European banks and offshore institutions
  • Own physical precious metals  in safe vaults in safe jurisdictions

Short term considerations

Greek banks have haemorrhaged over €30 billion since October. Over €2 billion was withdrawn between Monday and Wednesday and likely as much since then as the talks intensified and the situation worsened this week.

The problem can only have been exacerbated by an ECB official’s suggestion at a closed door meeting on Thursday – in response to a direct question from Dutch Fin Min Jeroen Dijsselbloem – that the Greek banks would not open on Monday as reported by Reuters.

The ECB later denied that this was the case but clearly capital controls are on the table. That being said Bloomberg reports that “the Governing Council of the European Central Bank plans to hold an unscheduled call on Friday to discuss Emergency Liquidity Assistance available for Greek lenders, according to two people familiar with the plans”.

Whether the ECB agrees to raise the ceiling on the ELA is not certain. The leak reported by Reuters suggests that certain parties are happy to provoke bank runs in order to force the hand of the Greek government.

bails-ins-infographic-goldcore

We may soon see capital controls imposed in Greece as depositors are bailed-in to try keep the banks afloat.

At the start of June the European Commission ordered 11 EU countries to enact the Bank Recovery and Resolution Directive (BRRD) within two months or be hauled before the EU Court of Justice.  EU regulators ordered 11 countries to adopt the new EU deposit bail-in rules.

Were another serious crisis to materialise with regard to European banks and markets in the coming days on the back of a Greek default it seems likely that emergency legislation would be put in place that would allow bail-ins to take place.

Whether the ECB provides ELA to save all Greek banks, just the strategically important banks or none at all will likely be decided as much by political factors as financial ones.

A widespread banking crisis would weaken the resolve of the Tsipras government but would present unforeseeable contagion risks to Europe’s interconnected financial system despite Dijsselbloem’s assurances that the EU is prepared for all eventualities.

In January, JP Morgan highlighted in a report that exposure to Greek debt among banks in France and Germany is relatively low but warned that peripheral nations – particularly Italy – were at risk of contagion.

It is unclear if core eurozone banks can absorb losses from Greek exposure but in the short term it would likely lead to a tightening in capital markets as distrust among financial institutions cause them to hold their reserves.

Italian, Spanish and Portuguese bond yields rose in a very jittery market after a eurozone finance ministers’ meeting ended yesterday with no breakthrough in the deadlocked Greek debt talks.
Italian, Spanish and Portuguese 10-year yields were five to seven basis points higher at 2.35 percent, 2.34 percent and 3.16 percent, respectively this morning.

In the short term, government bond yields could surprise and yields decline again. However in the medium and long term, government bond yields are only going to go one way and that is higher with attendant consequences for our $200 trillion in debt saturated world.

Longer term considerations

Geopolitical considerations are to the fore and yet rarely considered by most analysts.

Greece may decide that its interest – painful though it may be in the short term – lies outside of the eurozone. Certainly its experience since the launch of the euro in 2001 has been an unmitigated disaster.

Between 1960 and 2001 Greece enjoyed more or less constantly improving prosperity. Total production increased 600% in that period – more than double that of Germany. Post-euro Greece’s productivity has plummeted 26%.

Were it to pull out of the single currency, it would not be without powerful friends in the region. Today, Tsipras is visiting St. Petersburg for a meeting with President Putin where they will sign a non-binding agreement on bringing Russian gas into Europe via Greece.

The “Turkish Stream” project would see a pipeline from Turkey go through Greece and eventually to Austria via Serbia and Hungary. Russia seeks to bypass Ukraine and to bring NATO member Greece into its sphere of influence would greatly undermine NATO.

While the Greeks have insisted that they have no intention of availing of Russian financial assistance it is a fact that such assistance has been offered and remains an option.

The BRICS New Development Bank comes into operation next month.

Faith in the ECB would be greatly undermined and with it faith in the euro currency. For half of it lifetime the euro has been in crisis. With the exit of Greece it will be apparent that the architects of the euro system may not be omniscient and that the euro is by no means guaranteed a permanent existence.

Were Greece to exit the euro, wilfully or not, it would lead to surge in nationalism in Europe. We have seen hostility towards Greece being whipped up in sections of the German media and vice versa.

Among peripheral states there are large swathes of the population who now view the EU as a destructive force in their societies. As mentioned above, Greece was economically successful prior to the launch of the euro.

Both Spain and Italy were also industrial powerhouses pre-2001. But having to compete with their northern neighbours on an equal currency footing has destroyed their export capacity. In these countries many people believe that austerity has has been foisted upon them to protect a project that has not benefited their societies particularly well.

In the core of the eurozone there is also a surge in nationalism as taxpayers resent what they see as their subsidising of inefficient and unproductive welfare states. However, Germany has derived enormous benefit from the euro project through its ability to export across Europe to countries whose currencies should be much weaker than its own.

Germany and the other core nations may ultimately decide to go it alone and establish a new joint currency of the costs begin to outweigh the benefits of the current system. Indeed, plans were drawn up to do just that in 2011.

Alternatively the terrible experience of the single monetary union may out the German people and elites and indeed other Northern Europeans completely off monetary unions and we may see a reversion to national currencies.

The scepticism towards the EU displayed by many voters in the UK can only be reinforced as the current fiasco continues to unfold. David Cameron’s promised referendum on Britain leaving the EU will likely receive more support as Europe’s unmanageable problems continue to fester.

Stock markets, currently levitating on the panglossian narrative that we live in the best of all possible worlds – despite dismal PE ratios and stagnation in real economies around the globe – would likely be jolted from their slumber. With rising rates the ability to prop up markets with practically unlimited QE cash would be greatly impaired.

The contagion would likely spread to peripheral eurozone nations like Italy, Spain, Ireland and Portugal whose banks are still on life support. The ability of the powers that be to contain the cumulative effect of multiple bank crises on the eurozone core is debatable.

Wealth preservationstrategies

In the short term the dollar is regarded as a “safe-haven”. So long as the prevailing psychology remains the dollar should provide a degree of protection for those seeking to avoid euro contagion.

U.S. assets are still extremely popular despite increasingly poor fundamentals.

Allocations to global equities and bonds should be reduced.

Cash should be diversified and spread around in different non-European banks and institutions. For high net worth seeking wealth preservation in the form of cash, owning a few of the safer currencies remains advisable. These include the Norwegian krone, Singapore dollar, Hong Kong dollar and the Swiss franc.

The most effective hedging instrument and safe haven asset remains gold bullion. We advise clients to own physical gold and silver in the safest vaults in the safest jurisdictions in the world.

Must-read guides:

Protecting Your Savings In The Coming Bail-In Era

From Bail-Outs To Bail-Ins: Risks and Ramifications – includes 60 safest banks in the world

 

MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,198.15, EUR 1,058.86 and GBP 755.65 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,198.00, EUR 1,050.65 and GBP 752.42 per ounce.

Gold rose $15.00 or 1.26 percent yesterday to $1202.10 an ounce. Silver climbed $0.03 or 0.19 percent to $16.20 an ounce.

Gold in Singapore for immediate delivery was essentially flat at $1,200.11 an ounce near the end of the day,  while gold in Switzerland was also flat. Gold is tethered to the $1,200 an ounce level and remarkably gold traded in an extremely tight range of just $3.40 in the last 10 hours – between $1,198.20 an ounce and 1,201.60 an ounce.

gold-usd-goldcore-19-06-2015
Gold in USD – 1 Week

Gold is on track for its second weekly rise aided  by a softer dollar, the Greek debt debacle and the U.S. Federal Reserve chairperson, Janet Yellen’s, dovish comments from this week’s monetary policy statement.

The Fed said yesterday that a rate hike would come only after further improvement in the U.S. labor markets and more confidence that inflation would rise. The Fed is estimating lower rates now in 2016-2017, than those which had been forecasted in March. In addition, most policy makers are in favor of hiking rates only once this year or waiting until next year.

Shanghai Gold Exchange premiums were at $2 an ounce to the global benchmark, from a premium of about $1-$2 yesterday. In China, surging stock markets appear to have drawn investors away from the yellow metal in recent months but the recent sharp falls in the Chinese stock market may lead to renewed Chinese demand.

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Gold in GBP – 1 Week

In India, gold bars are now trading at discounts, which shows a dip in demand, attributed to the beginning of the rainy monsoon season.

The European Cental Bank (ECB) has called an emergency meeting today and the European Union (EU) has one scheduled on Monday. Trying to get an agreement for Greece to meet its debt repayments due at the end of the month is the agenda. The debtors and creditors are deeply divided.

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Gold in EUR – 1 Week

Gold has seen safe haven haven demand increase as a Grexit probability rises although many are surprised that the gains have been quite muted. This may be a case of muted so far and gold will likely outperform other assets in the coming days if the situation further deteriorates which seems likely.

In late morning European trading gold is up 0.02 percent at $1,200.57 an ounce. Silver is down 0.25 percent at $16.14 an ounce, while platinum is up 0.15 percent at $1,084.76 an ounce.

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USA treasuries on the shelf of Russia is declining and those funds are purchasing gold.  Russia has now 1244 tonnes to its official reserves.

(courtesy Dave Kranzler/IRD)

Russia Continues To Dump Dollars And Buy Gold

The enormous effort by eastern hemisphere countries to diversify their reserves out of the dollar and into physical gold is quite remarkable. The latest reports out of Russia show that is has cut its dollar exposure in half since January 2014 and appears to be accelerating its accumulation of gold:

OUT OF DOLLARS (source: Smaulgld.com, U.S. Treasury):