Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1094.10 up $3.90 (comex closing time)
Silver $14.82 up 15 cents.
In the access market 5:15 pm
Gold $1094.00
Silver: $14.82
First this comment from Dennis Gartman very early this morning in the wee hours:
Dennis Gartman very early this morning… “Finally, today is Friday and Friday’s have not been gold’s friend. It is reasonable then to fear yet another attack upon gold today, given that support at $1075 seems to obviously targetable. What we shall therefore find interesting is not if gold is taken to the bearish woodshed today, for that is to be expected; but what if it is not? What if there is an attack today and it is foiled? That would have our attention.”.
First, here is an outline of what will be discussed tonight:
At the gold comex today, we had a poor delivery day, registering 4 notices for 400 ounces Silver saw 0 notices for nil oz
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 233.45 tonnes for a loss of 69 tonnes over that period.
In silver, the open interest fell by 1154 contracts despite the fact that silver was up 12 cents in price yesterday. The total silver OI continues to remain extremely high, with today’s reading at 183,063 contracts In ounces, the OI is represented by .9150 billion oz or 131% 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 429,869. We had 4 notices filed for 400 oz today.
We had a small change in gold leaving the GLD today to the tune of .24 tonnes / thus the inventory rests tonight at 667.69 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. I thought that 700 tonnes is the rock bottom inventory in GLD gold, but I guess I was wrong. However we must be coming pretty close to a level of only paper gold and the GLD being totally void of physical gold. In silver, we had no changes in silver inventory at the SLV, / Inventory rests at 326.209 million oz.
We have a few important stories to bring to your attention today…
1. Today, we had the open interest in silver fell by 1154 contracts down to 183,063 even though silver was up 12 cents in price yesterday. Again, we must have had some short covering. The OI for gold fell by 2432 contracts to 429,869 contracts despite the fact that gold was up by $4.50 yesterday. We still have close to 22 tonnes of gold standing with only 15.206 tonnes of registered gold in the dealer vaults ready to satisfy that which stands.
(report Harvey)
2.COT report
(Harvey)
3.Gold trading overnight, Goldcore
(/Mark OByrne)
4. One story on the plummeting stock market and economy inside China
(zero hedge)
5 Trading of equities/ New York
(zero hedge)
6. Two oil related stories
(zero hedge)
7. USA stories:
i)
the jobs report/six commentaries
zero hedge/Dave Kranzler/IRD/BLS
ii Media stocks are getting hammered
(zero hedge)
iii) Hedge Fund Och Ziff being investigated for bribery
(Mike Krieger)
iv. Einhorn’s hedge fund also in trouble
(zero hedge)
v) this week’s wrap with Greg Hunter
On the physical side of things:
A)Craig Hemke finally writes about the strange data coming form the gold and silver comex, namely kilobars and exact weight of deposit/withdrawals ie. xxx.000 oz.
(Craig Hemke/TFMetals)
B Dave Kranzler of IRD comments on the GLD gold looting
(Dave Kranzler)
C Bill Holter delivers a great commentary titled:
“The Rumblings of War.”
plus other commentaries…
Here are today’s comex results:
The total gold comex open interest fell from 432,301 down to 429,869 for a loss of 2432 contracts despite the fact that gold was up $4.50 yesterday. For the past two years, we have strangely witnessed two interesting developments with respect to the gold open interest: 1) total gold comex collapse in OI as we enter an active delivery month, and 2) a continual drop in the amount of gold standing in an active month, and today the latter basically stopped its decline. What is interesting is that the LBMA gold is witnessing a 7.40 premium spot/next nearby month as gold is now in backwardation over there. We are now in the contract month of August and here the OI fell by 37 contracts falling to 3838 contracts. We had 8 notices filed upon on yesterday and thus we lost a tiny 29 contracts or 2900 additional ounces will not stand for delivery. The next delivery month is September and here the OI fell by 181 contracts down to 2642. The next active delivery month if October and here the OI fell by 195 contracts down to 26,518. The estimated volume on today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was fair at 161,790. The confirmed volume on yesterday (which includes the volume during regular business hours + access market sales the previous day was poor at 101,036 contracts. Today we had 4 notices filed for 400 oz.
And now for the wild silver comex results. Silver OI fell by 1154 contracts from 184,211 down to 183,063 despite the fact that silver was up in price by 12 cents yesterday . We continue to have some short covering as our bankers pulling their hair out with respect to the continued high silver OI as the world senses something is brewing in the silver arena. We are in the delivery month of August and here the OI fell by 27 contracts falling to 33. We had 27 delivery notice filed yesterday and thus we gained 0 contracts or an additional zero ounces will stand for delivery in this non active August contract month. The next major active delivery month is September and here the OI fell by 3818 contracts to 109,846. The estimated volume today was excellent at 47,962 contracts (just comex sales during regular business hours). The confirmed volume yesterday (regular plus access market) came in at 42,263 contracts which is excellent in volume. We had 0 notices filed for nil oz.
August contract month: initial standing
August 7.2015
| Gold |
Ounces |
| Withdrawals from Dealers Inventory in oz | nil |
| Withdrawals from Customer Inventory in oz | 72,966.710 oz (JPMorgan,Brinks, Manfra) |
| Deposits to the Dealer Inventory in oz | nil |
| Deposits to the Customer Inventory, in oz | 8,955.955 oz (Delaware,Scotia) |
| No of oz served (contracts) today | 4 contracts (400 oz) |
| No of oz to be served (notices) | 3834 contracts (383,400 oz) |
| Total monthly oz gold served (contracts) so far this month | 3183 contracts(318,300 oz) |
| Total accumulative withdrawals of gold from the Dealers inventory this month | nil |
| Total accumulative withdrawal of gold from the Customer inventory this month | 365,104.8 oz |
Today, we had 0 dealer transactions
total Dealer withdrawals: nil oz
we had 0 dealer deposits
total dealer deposit: zero
total customer withdrawal: 72,966.710 oz
We had 2 customer deposits:
i) Into Delaware: 450.100 oz (14 kilobars)
ii) Into Scotia: 8,505.895 oz
Total customer deposit: 8,955.955 oz
We had 1 adjustment
ii) out of JPMorgan: 143,550.418 oz was adjusted out of the dealer and this landed into the customer account of JPMorgan.
JPMorgan has 7.1966 tonnes left in its registered or dealer inventory.
(231,469.56 oz)
.
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 0 notices were stopped (received) by JPMorgan customer account
To calculate the total number of gold ounces standing for the August contract month, we take the total number of notices filed so far for the month (3183) x 100 oz or 318,300 oz , to which we add the difference between the open interest for the front month of August (3838) 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 August contract month:
No of notices served so far (3183) x 100 oz or ounces + {OI for the front month (3838) – the number of notices served upon today (4) x 100 oz which equals 701,700 oz standing so far in this month of August (21.825 tonnes of gold).
Thus we have 21.825 tonnes of gold standing and only 15.206 tonnes of registered or dealer gold to service it.
We lost a tiny 2900 ounces that will not stand for delivery in this active month of August.
Total dealer inventory 488m876.97 or 15.206 tonnes
Total gold inventory (dealer and customer) = 7,505,573.854 oz or 233.45 tonnes
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 233.45 tonnes for a loss of 69 tonnes over that period. The gold comex is bleeding gold.
end
And now for silver
August silver initial standings
August 7 2015:
| Silver |
Ounces |
| Withdrawals from Dealers Inventory | nil |
| Withdrawals from Customer Inventory | 281,553.58 oz (Delaware, Scotia) |
| Deposits to the Dealer Inventory | nil |
| Deposits to the Customer Inventory | nil |
| 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) | 45 contracts (225,000 oz) |
| Total accumulative withdrawal of silver from the Dealers inventory this month | 85,818.47 oz |
| Total accumulative withdrawal of silver from the Customer inventory this month | 4,321,226.7 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 0 customer deposits:
total customer deposits: nil oz
We had 2 customer withdrawals:
i) Out of Delaware: 1003.82 oz
iii) Out of Scotia: 280,549.76 oz
total withdrawals from customer: 281,553.58 oz
we had 0 adjustments
Total dealer inventory: 55.829 million oz
Total of all silver inventory (dealer and customer) 172.100 million oz
The comex has been bleeding both gold and silver.
The total number of notices filed today for the August contract month is represented by 0 contracts for nil oz. To calculate the number of silver ounces that will stand for delivery in August, we take the total number of notices filed for the month so far at (45) x 5,000 oz = 225,000 oz to which we add the difference between the open interest for the front month of August (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 August contract month:
45 (notices served so far)x 5000 oz + { OI for front month of August (33) -number of notices served upon today (0} x 5000 oz ,= 390,000 oz of silver standing for the August contract month.
we neither gained nor lost any silver ounces in this delivery month of August.
for those wishing to see the rest of data today see:
http://www.harveyorgan.wordpress.comorhttp://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:
August 7./a tiny withdrawal of .24 tonnes in gold inventory at the GLD/Inventory rests at 667.69 tonnes
August 6/no change in gold inventory at the GLD/Inventory rests at 667.93 tonnes
August 5.we had a huge withdrawal of 4.77 tonnes from the GLD tonight/Inventory rests at 667.93 tonnes
August 4.2015: no change in inventory/rests tonight at 672.70 tonnes
August 3.2015: no change in inventory at the GLD./Inventory remains at 672.70 tonnes
July 29/no change in inventory/rests tonight at 680.13 tonnes
July 28/no change in inventory/rests tonight at 680.13 tonnes
July 27/no change in inventory/rests tonight at 680.13 tonnes
July 24.2015/we had another massive withdrawal of 4.48 tonnes of gold form the GLD/Inventory rests at 680.13 tonnes.
July 23.2015: we had another withdrawal of 2.68 tonnes of gold from the GLD/Inventory rests at 684.63 tonnes
july 22/another withdrawal of 2.38 tonnes of gold from the GLD/Inventory rests at 687.31
July 21.2015: a massive withdrawal of 6.56 tonnes of gold from the GLD.
Inventory rests at 689.69 tonnes. China and Russia need their physical gold badly and they are drawing their physical from this facility.
July 2o.2015: no change in inventory
July 17./a massive withdrawal of 11.63 tonnes in gold tonnage tonight from the GLD/Inventory rests at 696.25 tonnes
July 16./we lost 1.19 tonnes of gold tonight/Inventory rests at 707.88 tonnes
August 7 GLD : 667.69 tonnes
end
And now SLV:
August 7.no changes in SLV/Inventory rests this weekend at 326.209 million oz
August 6/no changes in SLV/inventory rests at 326.209 million oz
August 5/ a small withdrawal of 142,000 oz of inventory leaves the SLV/Inventory rests tonight at 326.209 million oz
August 4.2015: a small withdrawal of 476,000 oz of inventory at the SLV/Inventory rests at 326.351 million oz
August 3.2015; no change in inventory at the SLV/inventory remains at 326.829 million oz
July 29/no change in silver inventory/326.829 million oz
July 28/we had a huge withdrawal of 2.005 million oz from the SLV/Inventory rests at 326.829 oz
July 27/no change in silver inventory/inventory rests tonight at 328.834 million oz
July 24/no change in silver inventory/inventory rests tonight at 328.834 million oz
July 23.2015; no change in silver inventory/rests tonight at 328.834 million oz
july 22/no change in silver inventory/inventory rests at 328.834 million oz.
July 21.we had a massive addition of 1.241 million oz into the SLV/Inventory rests tonight at 328.834 million oz.
Please note the difference between gold and silver (GLD and SLV). In GLD gold is being depleted and sent to the east. In silver: no depletions, as I guess this vehicle cannot supply physical metal.
July 20/no change
july 17.2015/no change in silver inventory tonight/inventory at 327.593 million oz
July 16./no change in silver inventory/rests tonight at 327.593 million oz
August 7/2015: tonight inventory rests at 326.209 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 11.2 percent to NAV usa funds and Negative 11.1% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.8%
Percentage of fund in silver:37.9%
cash .3%
( August 7/2015)
2. Sprott silver fund (PSLV): Premium to NAV falls to -1.29%!!!! NAV (August 7/2015) (silver must be in short supply)
3. Sprott gold fund (PHYS): premium to NAV rises to – .69% to NAV(July August7/2015)
Note: Sprott silver trust back into negative territory at- 1.29%
Sprott physical gold trust is back into negative territory at -.69%
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 CentralGoldTrust (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 we obtain the COT report which gives position levels of our major players:
First the gold COT:
| Gold COT Report – Futures | ||||||
| Large Speculators | Commercial | Total | ||||
| Long | Short | Spreading | Long | Short | Long | Short |
| 184,792 | 154,892 | 46,290 | 170,826 | 185,646 | 401,908 | 386,828 |
| Change from Prior Reporting Period | ||||||
| 1,815 | -3,620 | 1,925 | -5,894 | -6,340 | -2,154 | -8,035 |
| Traders | ||||||
| 126 | 127 | 81 | 51 | 50 | 213 | 230 |
| Small Speculators | ||||||
| Long | Short | Open Interest | ||||
| 32,365 | 47,445 | 434,273 | ||||
| -1,855 | 4,026 | -4,009 | ||||
| non reportable positions | Change from the previous reporting period | |||||
| COT Gold Report – Positions as of | Tuesday, August 04, 2015 | |||||
Our large speculators:
Those large specs who have been long in gold added 1815 contracts to their long side.
Those large specs who have been short in gold finally decided that they had enough and started to cover their shorts to the tune of 3620 contracts.
Our commercials:
Those commercials who have been long in gold pitched a rather large 5894 contracts from their long side.
Those commercials who have been short in gold covered a huge 5840 contracts from their short side.
Our small specs;
Those small specs that have been long in gold pitched 1855 contracts from their long side.
Those small specs that have been short in gold added 4026 contracts to their short side.
Commercials go net long again to the tune of 446 contracts which would be bullish.
end
And now for our silver COT:
| Silver COT Report: Futures | |||||
| Large Speculators | Commercial | ||||
| Long | Short | Spreading | Long | Short | |
| 66,772 | 58,367 | 21,357 | 76,161 | 89,917 | |
| -353 | -2,462 | -512 | -3,469 | -1,786 | |
| Traders | |||||
| 99 | 67 | 44 | 49 | 37 | |
| Small Speculators | Open Interest | Total | |||
| Long | Short | 185,848 | Long | Short | |
| 21,558 | 16,207 | 164,290 | 169,641 | ||
| -140 | 286 | -4,474 | -4,334 | -4,760 | |
| non reportable positions | Positions as of: | 172 | 127 | ||
| Tuesday, August 04, 2015 | |||||
Our large specs:
Those large specs that have been long in silver pitched a tiny 353 contracts from their long side.
Those large specs that have been short in silver covered 2462 contracts from their short side.
Our commercials:
Those commercials that have been long in silver pitched a large 3469 contracts from their long side.
Those commercials that have been short in silver covered 1786 contracts from their short side.
Our small specs;
Those small specs that have been long in silver covered a tiny 140 contracts from their long side.’
Those small specs that have been short in silver added a tiny 286 contracts to their short side.
Conclusions: commercials go net short by 1683 contracts which would be a little bearish. It looks to me like the commercials are trapped and cannot get out of their silver mess.
end
And now for your overnight trading in gold and silver plus stories
on gold and silver issues:
(courtesy/Mark O’Byrne/Goldcore)
History Always Repeats … Gold Protects From Capital Controls and Devaluations
- Simplistic gold analysis speculates solely on price
- Forgets vital importance of diversification
- Lorcan Roche Kelly’s analysis lacks all context
- Ignores huge physical demand for gold coins and bars
- Today’s world is very different to the world of the 1980s and 1990s
- Alas, financial crisis has been postponed not averted
- Physical gold will have value when paper and digital wealth is devalued, confiscated or inaccessible …
An article on Bloomberg comparing the gold market in the late 1970s – dramatically peaking in 1980 – to that of recent years has suggested that “gold could soon get very boring” and a “repeat of that trend would leave gold at around $1,000 an ounce in 2035.”
We have long noted the importance of focussing on gold as a diversification and therefore not focussing solely on gold’s price. Price predictions are foolhardy at the best of times and when we occasionally venture into that space, we are always cautious and give caveats.
What is odd about this call for gold to fall nearly 10% in dollar terms in the next 20 years is that it is completely devoid of any kind of all important historical, geopolitical, macroeconomic or indeed monetary context.
So too it completely ignores the supply demand fundamentals in the physical gold market and the huge demand for gold coins and bars today that is leading to bottlenecks, delays and rising premiums.
The article on gold by Lorcan Roche Kelly says that “the 2011 gold price spike looks a lot like its 1980 spike” and provides charts that indicate the same. Price spikes in many assets can frequently look remarkably similar when overlaid in a chart.

Especially if you are selective in the time periods shown. If you only select a certain time period, it can be used to support a hypothesis. But given the very limited set of data and singular comparison, such comparisons are simplistic, may not be representative and may be liable to mislead.
If such analysis regarding the stock market was done, it would be roundly laughed at and dismissed out of hand.
Following the 1980 parabolic price move – when gold rose 24 times in 9 years – prices fell sharply and then remained fairly static for the next twenty years. On this basis, Kelly concludes that another prolonged and “boring” period may be ahead for gold prices.
He argues that the price stabilised in the 1980’s because the inflation “panic” of the 1970s had subsided.
The actual significant bout of inflation and indeed stagflation did indeed subside but only after Fed Chairman, Paul Volcker had increased interest rates to over 15%.
Similarly, he argues that the “panic” of the financial crisis caused the 2011 spike and that those fears are now subsiding and so gold prices have fallen and are now stabilising at lower levels.
While those fears may indeed be subsiding – and we are not convinced that they are given the incredible demand for physical gold and silver coins and bars across the world in recent weeks – we doubt that they will remain subdued for long.
The issues which led to the crisis – i.e. excessive debt at every level of society – have not been dealt with. Ultra-easy monetary policy and QE have, in fact, caused global debt levels to balloon since 2011. Central banks are now stuck in a debt-trap.
Leveraged speculation has led to massive inflation in financial assets and yet the real economy globally remains stagnant – as demonstrated by collapsing commodity prices. The companies that use these commodities are cutting back due to lack of demand and deflation once again looms on the horizon.
Western central banks continue to postpone raising interest rates because if and when they do it may pop the last vestiges of the economy which give the illusion of health – the stock and bond markets.
Incidentally, many commentators erroneously suggest that rising interest rates are automatically negative for gold but not, somehow, for the other financial assets which are utterly dependent at this stage on low interest rates – particularly property.
Historical data does not back this up and shows that in periods of rising nominal rates – when rates are chasing inflation – gold also rises.
The period to which Kelly refers, the 1980s and 1990s followed a period of severe monetary discipline and came about at the end of a long period of interest rate tightening.
The metaphorical chaff had been separated from the wheat and it was followed by a period of strong economic activity. We are now in a twilight zone period following a bout of unprecedented monetary profligacy and experimentation the consequences of which are yet to manifest.
The 1980s was a period of stabilising geopolitical tensions. The enmity between the global superpowers, the U.S. and U.S.S.R. were being resolved peacefully. With the end of the Cold War, for a time it seemed like peace might prevail globally.
Unfortunately we are now in a period of increasing destabilisation across the Middle East and North Africa and rising tensions between the U.S. and Europe on one side and Russia and China on the other.
We are in a period of historic indebtedness which will have a devastating effect on the currencies of the U.S. (debt to GDP, 101%), Japan (debt to GDP 230%), and the Eurozone when rates rise and debt can no longer be serviced.
Indeed, the 1980s and 1990s could not be more different than the present period.
We would like to believe that a period of peace and prosperity lies ahead of us. Unfortunately, the facts do not support this panglossian assertion.
If history truly repeats it is more likely that we see hyperinflation and the sharp devaluation of paper and digital currencies in the coming years given that no experiment with money printing has ever had a positive outcome.
The macroeconomic, geopolitical and monetary conditions today or more akin to the challenging 1970s than the more benign, declining interest rate environment of the 1980s and 1990s.
Therefore, seeking historical parallels the 1970s may be a better guide to future gold prices:
Gold 1970-1980
The recent price falls were not a surprise. We said in an interview on Bloomberg when gold was near $1,900 that there was going to be a correction and that in a worst case scenario gold could replicate the 1970s bull market when gold fell nearly 50%.
In the 1970s, gold rose from $35/oz in 1971 to over $197/oz by January 1975. In the next 21 months, gold fell in value by nearly 50% to $103/oz by late August 1976.
This led to many pronouncements that gold’s bull market was over and the bubble had burst.In the next 40 months from August 1976 to January 1980, gold rose 8 fold from nearly $100/oz to $850/oz.
We see think there is a real possibility of the same pattern playing out in the coming months.
Roche Kelly’s piece makes a historical price comparison which lack any sense of all important historical context. Indeed, it does not even look at gold’s last bull market and the clear precedent of a 50% correction.
As an Irishman, Roche Kelly should also understand the importance of considering assets including gold in local currency terms. In Ireland, people who owned gold during the property and stock market crash protected and grew their wealth.
Similarly, people in Greece who owned gold during the property and stock market crash protected and grew their wealth. Indeed, gold was one of the few forms of physical savings and money that Greeks could access during the draconian capital controls and deposit withdrawal restrictions which continue to this today.
In euro terms, the currency used by some 337 million Europeans on a daily basis, gold rose 12% in 2014 and is another 2% higher in 2015. People in Ireland, in Greece, in Germany and throughout Europe invest in physical gold in euros, not dollars. This underlines once again gold’s importance as a way to hedge currency risk.
We would remind readers of the words of Ray Dalio, founder of one of the most massive hedge fund companies in the world, Bridgewater, and regarded by Bloomberg Markets as one of the “50 Most Influential People”.
In May, when addressing the Council on Foreign Relations he said, “it’s not sensible not to own gold.”
He added
“there is no sensible reason other than you don’t know history and you don’t know the economics of it”.
Owning physical gold is a historically – and academically – proven safe haven asset. This means that it preserves wealth and protects people in times of crisis. When one buys physical gold it is as a form of insurance rather than as a speculative means to make a profit. Profit is a secondary motivation.
We do not buy house insurance with the expectation of a dividend or interest payment. Nor should we expect such from gold. It can and has made many people very wealthy indeed but this should not be the primary reason for owning gold.
To conclude, Lorcan Roche Kelly may be right and gold prices may be at $1,000 per ounce in 2035. This in itself is the value of gold – it will always have a value. There is no guarantee that the government bonds, nor the fiat and digital currencies throughout the world today will have a value or indeed will be accessible.
Diversification and holding some of your investments, savings and pension in gold outside of the current fragile financial system remains prudent.
MARKET UPDATE
Today’s AM LBMA Gold Prices were USD 1,091.35, EUR 998.99 and GBP 703.01 per ounce.
Yesterday’s AM LBMA Gold Prices were 1,085.00, EUR 996.05 and GBP 694.56 per ounce.
Gold and silver on the COMEX were nearly unchanged yesterday – up $4.30 and up 5 cents respectively – to $1,089.30/oz and $14.65/oz.
Gold futures for December delivery rose 0.2 percent to $1,092.50 an ounce on the Comex in New York. Silver for immediate delivery gained 0.5 percent to $14.83 an ounce.
Platinum rose 0.4 percent to $958.46 an ounce, while palladium gained 1 percent to $608 an ounce.
Both PGM metals reached multi year lows on Tuesday, with platinum sinking to a six-year low of $945.24 and palladium to $589.10, the lowest price since October 2012.
Breaking News and Research Here
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end
(courtesy Jim Sinclair/Bill Holter)
I have provided below Bill Holter’s extremely important paper
(courtesy Jim Sinclair/Bill Holter/GATA)
Jim Sinclair: For China, Treasuries and gold are powerful weapons
10:35p ET Thursday, August 6, 2015
Dear Friend of GATA and Gold:
Mining entrepreneur and market analyst Jim Sinclair writes tonight that China will not take kindly to the International Monetary Fund’s postponement of the inclusion of the yuan in the agency’s Special Drawing Rights currency. China, Sinclair says, may retaliate by dumping U.S. Treasuries and blowing interest rates upward or forcing the Federal Reserve to monetize billions of bonds. China also may retaliate, he adds, by pulling the veil off the central bank gold market-rigging operation. Sinclair’s commentary is headlined “The Rumblings of War” and it’s posted at JSMineset.com here:
http://www.jsmineset.com/2015/08/06/the-rumblings-of-war/
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@gata.org
end
Finally, others are beginning to notice what I have relaying to you for the past few years: kilobars and exact ounces of deposit/withdrawal at the comex. Craig Hemke now also believes that the data is suspect!!
(courtesy Craig Hemke/TFMetals/GATA)
TF Metals Report: JPMorgan gold vault hubbub
4p ET Thursday, August 6, 2015
Dear Friend of GATA and Gold:
The TF Metals Report’s Turd Ferguson today finds suspicious inconsistencies in the gold warehouse data reported by CME Group for the New York Commodities Exchange. His commentary is headlined “JPMorgan Gold Vault Hubbub” and it’s posted at the TF Metals Report here:
http://www.tfmetalsreport.com/blog/7046/jpmorgan-gold-vault-hubbub
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
end
Dave Kranzler on my favourite subject: the looting of gold from the GLD:
(courtesy Dave Kranzler/IRD)
Dave Kranzler: GLD looting continues
2:11p ET Thursday, August 6, 2015
Dear Friend of GATA and Gold:
Many signs are developing of high demand for gold amid the recent spike down in prices, Dave Kranzler of Investment Research Dynamics reports today, like the bullion bank raiding of the exchange-traded fund GLD. Kranzler’s analysis is headlined “Massive Shortages in Gold and Silver Developing — GLD Looting Continues” and it’s posted at IRD here:
http://investmentresearchdynamics.com/massive-shortages-in-gold-and-silv…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
end
(courtesy Jeffrey Lewis/GATA)
Jeffrey Lewis: Living with rigged markets
1:35p ET Thursday, August 6, 2015
Dear Friend of GATA and Gold:
In his new commentary, “Living with Rigged Markets,” Silver Coin Investor proprietor Jeffrey Lewis notes that the sort of questions GATA lately has been putting to supposed gold market analysts about the gold market apply well to the silver market too. Lewis’ commentary is posted at Silver Coin Investor here:
http://www.silver-coin-investor.com/Living-With-Rigged-Markets.html
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
I sure hope they don’t:
(courtesy Bron Suchecki/GATA)
Bron Suchecki: Will gold miners hedge, as in the 1990s, into a falling price?
8:30a ET Friday, August 7, 2015
Dear Friend of GATA and Gold:
Perth Mint research director Bron Suchecki writes today that while gold mining companies already running at a loss at the current low prices may have to hedge their production to survive, the practice will harm the industry generally if other companies engage in it. Suchecki’s analysis is headlined “Will Gold Miners Hedge, As In the 1990s, Into a Falling Price?” and it’s posted at the Perth Mint’s Internet site here:
http://research.perthmint.com.au/2015/08/06/will-gold-miners-hedge-like-…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
end
(courtesy Dominic Frisby/Moneyweek)
China is hiding 9,500 tonnes of gold
Read more: http://uk.businessinsider.com/china-is-hiding-9500-tonnes-of-gold-2015-8#ixzz3iA8v4D9f
How much gold does China have?
The question won’t go away, because the answer is vital.
The answer could define, in no uncertain terms, how important or irrelevant gold is in the modern world.
Is gold obsolete, or does it still have a significant role to play?Today we consider that question, and look once again at China’s gold…
Gold – useless shiny pet rock or the very essence of money?
Some people argue that gold is just an inert, useless metal, good for little more than jewellery. Its role in finance is as obsolete as the horse is in transport, or the telegraph in communication. The world has moved on. As Ben Bernanke famously said, it is just a ‘tradition’.
At the other extreme are those who argue that gold is essential. It is nature’s money, it is honest money, it is sound money. The serial abuses perpetrated by commercial banks, central banks and governments mean the resumption of its historical role is inevitable. It is just a matter of time.
I get both arguments, but it’s the price of gold, I suppose, that tells us which argument is winning.
When gold was over $1,800 an ounce and rising, with the first Greek crisis, quantitative easing everywhere and a global financial crisis barely two years behind us, the ‘gold-is-money’ arguments looked strong.
Now gold is at $1,100 and falling, stock markets are strong, economies have recovered and the Greek crisis is – well, still there – the ‘gold-is-history’ argument has the upper hand.
So what China – this enormous, emerging superpower – thinks and does becomes immensely important to the argument.
Some argue that the fact China has turned itself into the world’s largest gold producer, as well as vying with India to be the world’s largest importer, is telling. It shows that China ‘understands’ gold, that it thinks gold is important, perhaps even that gold is money. Some go on to argue that China doesn’t like fiat dollars or euros, and that it wants the yuan to be the global reserve currency, backed, at least in part, by gold.
Others say there are a simply lot of Chinese people and many of them like jewellery. Any official purchases are nothing more than a gentle balancing of the books.
If China came out and announced 8,000 tonnes of official gold holdings – enough to rival those of the US – the statement would be both aggressive and breathtaking. This new and mighty nation, an economic and military rival to the United States of America, now has a hoard to match that in Fort Knox. China clearly sees that gold is a strategic monetary asset!
But it didn’t. The announcement, when it came a few weeks back, that it holds a disappointing 1,658 tonnes was, if anything, designed to rock the boat as little as possible.
It is a significant advance on the 1,054 tonnes announced in 2009. But it is not enough to make anyone realistically think it has designs for a new gold-backed reserve currency.
In fact, given that over 10,000 tonnes have either been produced in or imported to China over the same period, a 604-tonne rise in official reserves is a major disappointment. In fact, it’s such a disappointment that many people are now saying the real number is higher.
So how much gold does China have? And where did the other 9,500 tonnes go?
Where is all of China’s gold hiding?
Bron Suchecki of the Perth Mint has done his homework on this subject here. Bron’s background and his tendency towards understatement in a gold world full of hyperbole mean his judgment on this is as sound as anyone’s.
He makes the point that China has encouraged private accumulation. Studying gold flows, he argues that China is aiming for private citizens to accumulate 55% of flow – with the remaining 45% going to commercial banks and the central bank (the People’s Bank of China – PBOC).
His conclusion is that China has understated its official gold – but not by as much as many people were hoping. He arrives at the overall figure of 2,400 tonnes.
Commercial banks are holding another 2,060 tonnes, while there are 6,490 tonnes in the hands of private buyers – for a grand total of 10,950 tonnes in China.
Perth Mint
This tallies with analyst Koos Jansen’s findings, although Jansen argues there are closer to 14,000 tonnes of gold in China (private and official). This figure is based around what happened to privately-owned jewellery after the revolution – whether it stayed private or was taken by the government and sold to import other goods. This is a disputed subject, which we won’t go into here.
To put those numbers in some kind of visual context, imagine a cube with each side measuring just over a foot (32cm). Each face of the cube would be a bit larger than a 12-inch record sleeve. That’s how big a tonne of gold is.
The United States, the richest country in the world, has 8,133 of the cubes (making up 74% of its foreign exchange reserves). It’s quite amazing that so much wealth can be compressed into such a small size. Germany has 3,383. Here in the UK we have just 310 of these boxes. Oops. China produces more than that every year.
It’s estimated that the total amount of gold mined throughout all of history, most of which still exists, amounts to about 170,000 tonnes, or just over.
Maybe China is simply looking for insurance too
So all in all, that 2,400-tonne China figure, if we can accept it, is frustrating. It doesn’t resolve the argument that is the premise for today’s Money Morning. It suggests that China is less ambivalent about gold than the rest of the world – it clearly likes it – but it doesn’t make a clear statement about gold’s role in the modern world (at least as the Chinese see it), nor about Chinese gold-backed-reserve-currency ambition or a plan to collapse the dollar.
If it does have such an ambition – and I have to say I find the idea unlikely, for various reasons – there are no immediate plans to implement it. We could be waiting rather a long time for that one.
You could, however, make the argument that Chinese commercial banks and official gold should be counted together, given that most commercial banks there are state-owned. In which case, you have a rather more sit-up-and-take-notice figure of 4,500 tonnes or thereabouts.
You could also note the total amount of gold held in China. Suchecki estimates around 11,000 tonnes, Jansen closer to 14,000. Nick Laird of Sharelynx has the figure closer to 15,000. Meanwhile, Laird estimates total US holdings (private and public) at 26,000-27,000 tonnes. At its current rate of accumulation, it won’t be long before China matches the US.
But perhaps what is most interesting is the enormous volume of gold that has been bought privately – some 6,500 tonnes – and that China has encouraged its citizens to do this.
Perhaps it is as unsure about fiat currency as the rest of us. It wants its citizens to own gold – just in case.
Read the original article on MoneyWeek. Copyright 2015. Follow MoneyWeek on Twitter.
Read more: http://uk.businessinsider.com/china-is-hiding-9500-tonnes-of-gold-2015-8#ixzz3iA99Tmh1
end
And now an extremely important topic for discussion tonight courtesy of Bill Holter
(courtesy Bill Holter/Holter-Sinclair collaboration)
The Rumblings of War.
What I think happened was China played “good boy” with the West and lied about their gold holdings. They announced enough gold to allow them into “the club” but not so much as to “offend” or intimidate anyone in the West. Their announcement was clearly bogus as they are importing 600 tons every three months …and we are to believe it took them six years? China had requested both “publicly and officially” to be included in the SDR. They were publicly humiliated with this move by the IMF. The Chinese are a very proud people, public humiliation would be last on my list of aggressions toward them!
Make no mistake, they will retaliate. I believe just as the IMF did this while China is having market problems and during a period of weakness, China will return the favor to the U.S. …at a very inopportune time for us. When our markets are convulsing, probably this fall, you can expect one of two responses from the Chinese. They will either come public with a true and VERY LARGE number for their gold holdings, or they will threaten to and actually dump some Treasury securities/dollar holdings…or both! I believe their response will be timed to hit us just as in a boxing match, when we are tired, down or vulnerable …for maximum effect.
Whether you want to believe it or not, the U.S. is in a financial war with nearly the rest of the entire world. To not include a rising China into the SDR makes no sense and is an impossible feat in the long term unless China decides it is not their desire. I see no upside whatsoever to this action. Does it “buy time” and postpone the inevitable? Maybe not. The action of poking the hornets nest may actually accelerate the collapse!
Bill Holter.
And now your overnight Friday morning trading in bourses, currencies, and interest rates from Europe and Asia:
1 Chinese yuan vs USA dollar/yuan remains constant at 6.2096/Shanghai bourse: green and Hang Sang: green
2 Nikkei up 60.12 or 0.29%
3. Europe stocks mixed /USA dollar index flat at 97.79/Euro up to 1.0930
3b Japan 10 year bond yield: rises to 43% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 124.67
3c Nikkei still just above 20,000
3d USA/Yen rate now just above the 124 barrier this morning
3e WTI 44.70 and Brent: 49.43
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.
3h Oil down for WTI and down for Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund slightly falls to .71 per cent. German bunds in negative yields from 4 years out.
Except Greece which sees its 2 year rate rises to 20.68%/Greek stocks this morning up by 2.03%: still expect continual bank runs on Greek banks /
3j Greek 10 year bond yield falls to : 11.60%
3k Gold at $1090.95 /silver $14.75
3l USA vs Russian rouble; (Russian rouble down 12/100 in roubles/dollar) 64.15,
3m oil into the 44 dollar handle for WTI and 49 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 .9828 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0748 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.
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 closer to negativity to +.75%
3s The ELA rose another 900 million euros to 90.4 billion euros. The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”. Greece votes again and agrees to more austerity even though 79% of the populace are against.
4. USA 10 year treasury bond at 2.23% early this morning. Thirty year rate below 3% at 2.89% / yield curve flatten/foreshadowing recession.
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)
With All Eyes On Payrolls US Futures Tread Water; China Rises As Copper Crashes To New 6 Year Low
After going nowhere for the past week, last night Chinese equities opened with a bid tone and traded in the green all day long, resulting in the Shanghai composite ending the week with a gain of 2.2%, on what is gradually becoming a replica of US low volume levitation (to be expected after a third of market participants have now exited the market). The reason for the overnight sentiment: Bloomberg reported that the China Securities Finance Corp, the local plunge protection team, is seeking access to an extra 2 trillion yuan, for a total of CNY5 trillion with which to prop up stocks. In other words, the gradual nationalization of the Chinese stock market first observed here weeks ago, is no longer gradual, which is ironic considering the following two headlines hit just moments ago:
- PBOC REITERATES TO PURSUE PRUDENT MONETARY POLICY
- CHINA PBOC SAYS TO MAINTAIN APPROPRIATE LIQUIDITY
What is appropriate liquidity? Just enough to prevent any selling.. of stocks that is. Because whatever you do don’t look at commodities, where copper just dropped to a new 6 year low, as aluminum declined 0.5%, nickel down 0.6%, zinc drops 0.9%, lead loses 0.7%. All very “healthy” indicators of where the Chinese economy is headed.
Elsewhere in Asia, Japanese equities shrugged off a weak opening and morning session to end with modest gains. Earnings optimism associated with a weakening JPY was an oft written about topic. SoftBank rose as it joined the list of companies planning share buybacks. Toshiba was booted from the JPX- Nikkei 400 Index stemming from their accounting fraud. The stock was up .5% The BOJ left monetary policy unchanged, as expected. Gov. Kuroda’s comments were consistent with previous views although he did say that a U.S. rate hike did not pose a risk to Japan. In fact, as long as the BOJ is printing, the thinking goes that nothing poses a risk to Japan.
The big Asia loser was Australia as the four large banks continued to be hit hard on capital ratio concern. ANZ, which raised A$3b in capital finished the week down 7.8%. UBS wrote that more capital will be needed.
Which brings us to today’s main event, the July non-farm payrolls – once again the “most important ever” as the number will cement whether the Fed hikes this year or punts once again to the next year, and which consensus expects to print +225K although the whisper range is very wide: based on this week’s ADP report, NFP may easily slide under 200K, while if using the non-mfg PMI as an indicator, a 300K+ print is in the cards. At the end of the day, it will be all in the hands of the BLS’ X-13ARIMA seasonal adjusters, and whatever goalseeked NFP print the labor department has been “strongly hinted” is the right one.
The bigger issue is whether today good news will be good news (and bad will be bad) in a sign of the upcoming start of rate normalization, or whether a terrible print will send stocks soaring as the case of a September (or December) rate hike is killed once and for all. But the real data point to watch is not the monthly change in payrolls, nor the unemployment rate, but the average hourly wage growth, expected at 0.2%, up from 0.0%, and which in the ECI is any indication, is about to plummet which also would put the Fed on indefinite standby mode.
So ahead of today’s nonfarm payrolls report the price action has been relatively subdued with European equities lingering moderately in the red (Euro Stoxx: -0.3%) mostly in sympathy with the weak U.S. close. Disappointing Industrial Production reports from Germany and France also dampened the mood.
On a sector breakdown European media names including ITV and Mediaset have been weighed upon by Viacom disappointing earnings yesterday, with selling otherwise relatively broad-based. Elsewhere, price action in fixed income markets has been particularly muted with volumes in the bund particularly light, with T-Notes range bound ahead of the non-farm payroll report.
US equity futures are down slightly at this moment, perhaps still digesting yesterday’s dramatic rout if not so much in the broader market, then certainly in various “story” and media stocks, as the “day the content died” still reverberates around trading floors.
In FX, the Asia-Pacific session saw AUD the best performing currency underpinned by the latest quarterly SOMP from the RBA . The bank cut GDP forecasts which was widely expected, however revised higher inflation expectations and more importantly continued to signal a neutral policy stance. NZD initially fell after Fonterra cut their milk pay-out forecast by a wider than expected amount, however the currency recovered as Fonterra stated that it will provide support to farmers by an additional NZD 0.50/kg. Elsewhere, the BoJ kept monetary policy steady at a JPY 80trl annual rise in monetary base, as expected.
The European morning initially saw EUR/GBP move higher amid no new fundamental catalysts, subsequently providing EUR pairs with upside and the EUR strength weighing on the USD-index, however with the majority of the move pared heading into the North American open withthe USD-Index flat heading into US hours. In terms of US specific news flow , sentiment for USD index has been dampened by the Atlanta Fed GDP tracker now only showing 1.0% growth for Q3. Note that the Atlanta Fed Q2 forecast was correct therefore adding weight to this quarter’s forecast.
After initial strength during the European morning, commodities went on to pare most of their gains to head into the US session relatively flat on the day with WTI and Brent Sep’15 futures remaining below USD 45 and USD 50 handles respectively. Gold is moderately higher on the day but remains on track for its longest weekly losing streak since 1999.
Looking ahead, all eyes will be on today’s non-farm payrolls release (Exp. 225k) as participants continue to assess whether the Fed will lift rates next month amid their data dependent stance.
Bulletin Headline Summary From Bloomberg and RanSquawk
- USD-Index is flat heading into the North American crossover amid light newsflow in the European session as participants await the US non-farm payroll report
- Commodities head into the US session relatively flat on the day with WTI and Brent Sep’15 futures remaining below USD 45 and USD 50 handles respectively
- Today’s highlight is the US non-farm payrolls release (Exp. 225k) as participants continue to assess whether the Fed will lift rates next month amid their data dependent stance
- Treasury yields little changed overnight ahead of this morning’s nonfarm payrolls which are expected to come in at +225k; trailing one-year average is +244k, according to Bloomberg data.
- With energy costs falling and the pound surging, BoE Governor Carney said inflation will stay “muted” and there may even be another period of price declines, reducing the chance of a rate increase this year
- Wall Street’s biggest bond dealers are amassing the most Treasuries since March last year, even as the Federal Reserve prepares to raise interest rates as soon as next month
- Hedge funds focused on raw materials lost money on average in the first half, the Newedge Commodity Trading Index shows, and diminishing investor demand spurred Cargill’s Black River Asset Management unit to shut its commodities fund last month
- Puerto Rico’s default Monday on bonds sold by its Public Finance Corp. underscored the risks of debt backed only by a legislature’s pledge to repay
- Donald Trump lived up to his billing at center stage of a spirited first Republican presidential debate, taking aim at America’s “stupid leaders” and calling for a wall along the U.S.-Mexico border with a “big, beautiful door”
- Senator Chuck Schumer, an influential New York Democrat, said he will oppose the Iran nuclear agreement, a setback for President Barack Obama’s effort to ensure the deal survives a review by U.S. lawmakers
- $2.25b IG deals priced yesterday, $435m high yield. BofAMLCorporate Master Index OAS widens +1 to new YTD wide 159; YTD low 129. High Yield Master II OAS -11 to 540; reached YTD wide 549 on July 27; YTD low 438
- Sovereign 10Y bond yields mixed. Asian, European stocks mostly lower, U.S. equity-index futures drop. Crude oil and cooper lower; gold rises
US Event Calendar
- 8:30am: Change in Non-farm Payrolls, July, est. 225k (prior 223k)
- Change in Private Payrolls, July, est. 212k (prior 223k)
- Change in Manufact. Payrolls, July, est. 5k (prior 4k)
- Unemployment Rate, July, est. 5.3% (prior 5.3%)
- Average Hourly Earnings m/m, July, est. 0.2% (prior 0%)
- Average Hourly Earnings y/y, July, est. 2.3% (prior 2%)
- Average Weekly Hours All Employees, July, est. 34.5 (prior 34.5)
- Underemployment Rate, July, est 10.5% (prior 10.5%)
- Change in Household Employment, July (prior -56k)
- Labor Force Participation Rate, July, est 62.6% (prior 62.6%)
- 3:00pm: Consumer Credit, June, est. $17b (prior $16.086b)
DB’s Jim Reid completes the overnight recap
The big day has come, the anticipation soon to be over, money staked and schedules rearranged. Yes it’s the start of the football season in England tomorrow and another season of disappointment for most of us. This is all occurring while the Ashes are perhaps heading home where they belong. I rarely mention cricket in this piece as a lot of readers come from countries that have no knowledge of this great game!! However it’s worth highlighting that in being bowled out for 60 yesterday, Australia batted for the least number of balls (111) in any first innings in the history of test cricket that stretches back 2174 matches over 138 years!! A truly remarkable day.
With thin summer liquidity, there will be a lot of hope that nothing remarkable occurs in today’s important payrolls number. DB expects 235k with consensus at 225k. The current trailing three-month moving average is 221k with a year-to-date average of 208k. Whether we think it’s a good idea or not if the Fed are consistent, two numbers above 200k before the next FOMC in mid-September would probably qualify as “some” improvement in the employment picture and provide justification for hiking. If we dip below (like that seen with the ADP report) then there would be enough ambiguity for them to remain on hold. So this is an important number.
Interestingly the Atlanta Fed’s GDPNow forecast for Q3 was at 1% yesterday with the model projecting that lower inventory investment is set to subtract 1.7 percentage points from growth so there is evidence that it’s still a fragile environment to tighten policy. The Fed have never raised rates with nominal GDP consistently this low so we will be in unchartered territory with a hike in September. Along with payrolls, we’ll be keeping a keen eye on both the unemployment rate and average hourly earnings readings. DB’s Joe Lavorgna notes that with the former in particular (which he expects to stay at 5.3% today), if the labour market continues to generate 200k+ jobs per month then the unemployment rate will break 5% by year end. This in turn is probably the primary reason that Fed policymakers want to act this year, but the argument against this is clearly the lack of any abnormal wage pressure. Average hourly earnings are expected to tick up to 2.3% yoy (based on the current market consensus), but still leaving it in the range (albeit nearer the top) of the last three years. Joe expects labour costs to eventually accelerate in response to a tightening in the labour market but this will likely only come after we gain a better understanding of where NAIRU is. So a big day of data ahead.
In terms of markets yesterday, a weak set of earnings reports out of media stocks in particular saw the S&P 500 (-0.78%) decline for the fourth time in the last five sessions while the Dow (-0.69%) followed suit and the NASDAQ (-1.62%) suffered its worst day in nearly a month having been led lower by biotech stocks. It was earnings reports from Viacom and Twenty-First Century Fox which weighed on sentiment and has resulted in the S&P 500 media index suffering its biggest two-day fall since November 2008. The latest reports have taken our tally of S&P 500 reporters now to 440 with earnings beats unchanged at 74% but sales beats ticking down again to 49% now (from 50% on Thursday). Energy stocks (+1.59%) actually outperformed yesterday despite another soft day for Oil markets with WTI (-1.09%) and Brent (-0.14%) both slumping further. Gold (+0.42%) and Copper (+0.14%) did have a slightly better session however.
Those moves in Oil probably helped support a stronger day for the Treasury market where we saw yields creep lower ahead of today’s data. The benchmark 10y closed 4.9bps lower at 2.222% and in the process completely wiped out Wednesday’s move higher. The USD had a slightly softer day meanwhile with the Dollar index finishing -0.13%. There wasn’t much in the way of surprises in the latest initial jobless claims data where we saw a 270k print (vs. 272k expected) which was enough to lower the four-week moving average to 268k, the second lowest since 2000. Challenger job cuts for July were eye-catching with a 125% yoy rise for the month to near a four-year high, although this was pinned largely on the announcement of job cuts by the US Army which were said to have accounted for more than half of the number.
Leading into today’s main event, it’s been a positive session for Chinese equity markets with the Shanghai Comp (+1.90%), Shenzhen (+2.29%) and CSI 300 (+1.83%) all up as we go to print. Those moves have helped support the Hang Seng (+0.94%) while the Nikkei (+0.12%) has reversed earlier losses. Elsewhere the Kospi (-0.17%) and ASX (-1.94%) are down. Treasury yields (+1.1bps) have moved a touch higher while the Dollar is more or less unchanged. The Aussie Dollar (+0.36%) meanwhile has received a slight boost after the RBA lifted its inflation forecast for the near term and sounded out a better outlook for employment. Elsewhere, the Yen is little moved after the BoJ left QE purchases unchanged as expected with the Central Bank reiterating that Japan’s economy has continued to recover moderately and that CPI will likely stay at 0% for the time being.
Over in Europe yesterday it was all eyes on the BoE and ‘Super Thursday’. The Bank left rates unchanged at 0.5%, as expected, but what did take the market by surprise were the minutes which signalled that just one of the MPC members (McCafferty) voted for a hike after suggestions that we might see more support for a rate rise. The minutes struck a slightly more dovish tone on the whole than many had been expected too, noting that ‘in light of the reduction in oil prices and appreciation of sterling over the past three months, it appeared that the increase in inflation over the following year would be more gradual than had previously been supposed’. McCafferty meanwhile did see that risks to the medium-term inflation outlook were on balance sufficient to the upside to justify a hike, however near term inflation forecasts were given a dent as the 2015 forecast was taken down to 0.3% from 0.6% although 2-year ahead inflation forecasts were given a slight boost. There was much focus on the role of Sterling. The minutes noted that ‘to the extent that the appreciation of Sterling could be expected to weigh on inflation for a persistent period, the corresponding pickup in domestic costs necessary to return inflation to the target within three years would be greater’. Governor Carney also touched upon this in his statement and although acknowledging the recent strength in the currency, said that even so ‘we see robust private sector growth here and consistent with that is a need to begin to increase interest rates’. Carney went on to say the exact timing will be data dependent but will come into ‘sharper relief’ around the turn of the year. DB’s George Buckley expects inflation to rise from the end of this year and head towards target by the end of next, with a May 2016 hike his preferred timing.
All told we saw Gilt yields move lower across the curve, with 10y yields down 5.2bps to 1.922%. Sterling also took a decent hit, closing 0.58% lower against the Dollar at $1.551 and tumbling 0.75% against the Euro. Elsewhere in Europe, there was a reasonable rebound in yields with 10y Bund closing 4.5bps lower at 0.707% and yields in the periphery seeing similar moves lower. It was weaker session across risk assets however as commodity names came under pressure. The Stoxx 600 closed down 0.80% while the DAX and CAC closed -0.44% and -0.09% respectively. In credit Crossover leaked 10bps wider meanwhile. That came despite a fairly robust German factory orders reading for June with the +2.0% mom (vs. +0.3% expected) print well ahead of consensus and helping to push the annualized rate up to +7.2% yoy. The detail suggested some weakness in core orders however, admittedly after two strong months. Finally, in case we didn’t get enough out of the UK yesterday we also saw industrial and manufacturing readings for June which were slightly mixed on the whole. The latter saw the headline reading come in well below expectations (-0.4% mom vs. +0.1% expected), pushing the annualized rate down to +1.5% yoy (from +2.2%) however the manufacturing reading came in a touch ahead of consensus (+0.2% mom vs. +0.1% expected) for the month.
Looking at today’s calendar now. It’s a fairly busy start to the day in the European timezone this morning where we’ll get German industrial production and trade data, French industrial and manufacturing production data along with trade data too and finally the UK trade balance. This is of course before the main event in the US this afternoon with the aforementioned July payrolls report and associated unemployment, average hourly earnings and labour force participation rate readings. Consumer credit for June will also be due later tonight. Over the weekend meanwhile we’ve got an important release of data out of China with trade data on Saturday and CPI/PPI on Sunday. Earnings season is wrapping up but Berkshire Hathaway is the notable reporter today.
One Third Of All Chinese ‘Gamblers’ Have Shut Their Equity Trading Accounts
It turns out making money trading stocks is not “easier than farmwork” and, as China Daily reports, a stunning 24 million Chinese ‘investors’ have shuttered their trading accounts since the end of June. Unlike in the U.S., where institutions dominate stock trading, retail investors are king in China, owning around 80% of listed stocks’ tradable shares, according to investment bank CICC. With the number of small investors holding stocks in their accounts sliding to 51 million at the end of July from 75 million at the end of June, it appears some grandmas and farmers have learned their lesson (for now).
A-Share accounts with transactions have plunmged over 20% in the last few weeks…

But, as The Wall Street Journal reports, China’s market selloff can safely be declared a rout.
Nearly a third of the country’s individual investors—more than 20 million people—fled the plunging stock markets last month.
The number of retail investors holding stocks in their accounts slid to 51 million at the end of July from 75 million at the end of June, according to China Securities Depository & Clearing Corp., the government agency that tracks accounts.
But bank deposit is still the favorite investment tool for Chinese families. As China Daily notes,
Up to 50 percent of disposable income will end up in families’ saving account,according to data from World Bank. Due to recent volatility, it is unlikely that many families will move their money from saving account to stock market.
As one newly minted stock trader explained…
“Now I realize I can lose a lot of money very quickly,” he said, noting that threats to stocks include China’s slowing growth and the eventual end of government rescue efforts.
But – there remains some who will never learn…
“Where else can I put my money?” said Helen Lu. “Real estate is so expensive and beyond our reach, and there are no other good investment channels.”
Sound familiar?
end
Oil related stories:
Today we see energy credit risk hit 1000 basis points as crude drops into the 43 dollar column:
(courtesy zero hedge)
Energy Credit Risk Hits 1000bps As WTI Crude Nears $43 Handle
As the USDollar surges post-payrolls, WTI Crude futures are re-tumbling (but but but energy stocks were up yesterday!!!). With a $43 handle, WTI does not have far to fall to new cycle lows… and that has spooked professionals in the credit markets (as opposed to the machines and amateurs in the momo stock markets) as Energy credit risk surges back to 1000bps once again…
Energy Credit risk is soaring once again…
As WTI tumbles near $43 handle…
Charts: Bloomberg
end
Late in the day, crude drops into the 43 dollar column after rig counts rise unexpectedly.
(courtesy zero hedge)
WTI Crude Breaks To $43 Handle After Another Rise In Oil Rig Count (To 3 Month Highs)
Having hovered around the $43/$44 level all morning, new from Baker Hughes that the oil rig count in the US rose 6 to 670 (its highest in over 3 months) has sent it back down to a $43 handle…
- *U.S. OIL RIG COUNT UP 6 TO 670, BAKER HUGHES SAYS
- *U.S. TOTAL RIG COUNT UP 10 TO 884 , BAKER HUGHES SAYS
The rig count has now risen for 5 of the last 6 weeks… with Texas, Louisiana, and Kansas seeing the biggest rises…
Pressing crude back below $44..
Charts: Bloomberg
Your early Friday morning currency, and interest rate moves
Euro/USA 1.0930 up .0008
USA/JAPAN YEN 124.67 down .076
GBP/USA 1.5518 up .0006
USA/CAN 1.3105 down .0011
Early this Friday morning in Europe, the Euro rose by 8 basis points, trading now just above the 1.09 level at 1.0930; 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, an imminent default of Greece and the Ukraine, rising peripheral bond yields, and flash crashes.
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 8 basis points and trading just above the 124 level to 124.67 yen to the dollar.
The pound was up this morning by 6 basis points as it now trades just above the 1.55 level at 1.5518, 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 stopped its descent as it rose slightly by 11 basis points at 1.3105 to the dollar. (Harper called an election for Oct 19)
We are seeing that the 3 major global carry trades are being unwound. The BIGGY is the first one;
1. the total dollar global short is 9 trillion USA and as such we are now witnessing a sea of red blood on the streets as derivatives blow up with the massive rise in the rise in the dollar against all paper currencies
2, the Nikkei average vs gold carry trade (still ongoing)
3. Short Swiss franc/long assets (European housing/Nikkei etc. This has partly blown up (see Hypo bank failure).
These massive carry trades are terribly offside as they are being unwound. It is causing global deflation ( we are at debt saturation already) as the world reacts to lack of demand and a scarcity of debt collateral. Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT>
The NIKKEI: this Friday morning: up by 60.12 or 0.29%
Trading from Europe and Asia:
1. Europe stocks mostly in the red
2/ Asian bourses mostly in the green … Chinese bourses: Hang Sang green (massive bubble forming) ,Shanghai in the green (massive bubble ready to burst), Australia in the red: /Nikkei (Japan) green/India’s Sensex in the red/
Gold very early morning trading: $1090.00
silver:$14.73
Early Friday morning USA 10 year bond yield: 2.23% !!! up 1 in basis points from Thursday night and it is trading below resistance at 2.27-2.32%
USA dollar index early Friday morning: 97.79 up 0 cents from Thursday’s close. (Resistance will be at a DXY of 100)
This ends the early morning numbers, Friday morning
And now for your closing numbers for Friday:
Closing Portuguese 10 year bond yield: 2.45% down 1 in basis points from Thursday
Closing Japanese 10 year bond yield: .42% !! down 1 in basis points from Thursday
Your closing Spanish 10 year government bond, Friday, down 3 in basis points
Spanish 10 year bond yield: 1.99% !!!!!!
Your Friday closing Italian 10 year bond yield: 1.83% down 4 in basis points from Thursday:
trading 16 basis point lower than Spain.
IMPORTANT CURRENCY CLOSES FOR Friday
Closing currency crosses for Friday night/USA dollar index/USA 10 yr bond: 4 pm
Euro/USA: 1.0968 up .0046 (Euro up 46 basis points)
USA/Japan: 124.16 down .584 (Yen up 58 basis points)
Great Britain/USA: 1.5493 down .0018 (Pound down 18 basis points
USA/Canada: 1.3132 up .0016 (Canadian dollar down 16 basis points)
This afternoon, the Euro rose by 46 basis points to trade at 1.0968. The Yen rose to 124.16 for a gain of 58 basis points. The pound fell 18 basis points, trading at 1.5493. The Canadian dollar resumed its toilet training by falling another 16 basis points to 1.3132.
Your closing 10 yr USA bond yield: 2.17% down 7 in basis point from Thursday// ( just below the resistance level of 2.27-2.32%)/
Your closing USA dollar index:
97.55 down 24 cents on the day
.
European and Dow Jones stock index closes:
England FTSE down 28.60 points or 0.42%
Paris CAC down 37.36 points or 0.72%
German Dax down 94.27 points or 0.81%
Spain’s Ibex down 75.40 points or 0.67%
Italian FTSE-MIB down 106.09 or 0.45%
The Dow down 46.37 or 0.27%
Nasdaq; down 12.90 or 0.26%
OIL: WTI 43.88 !!!!!!!
Brent:48.58!!!
Closing USA/Russian rouble cross: 63.86 up 1/5 roubles per dollar on the day
end
And now for your more important USA stories.
Your closing numbers from New York
“Markets In Turmoil” Dow Suffers Worst Streak Since 2011, Yield Curves Collapse
Nail-biter… or Cliff-hanger? (Stallone is The PPT, the girl is the market, the carabiner is The Fed, the guy in the other chopper is CNBC)
* * *
Post-Payrolls reaction…
Despite reassurances that a) rate-hikes are priced-in, 2) rate-hikes are bullisher for stocks than rate-cuts (why would The Fed raise rates if everything was not awesome?), and thirdly) buy the dip! It appears the rising rate-hike probability is ‘coincidental’ with markets turmoiling…
But don’t forget…
Equity markets in turmoil… Small Caps broke…
And Futures show the big drops…but Europe-based drift higher…
- Dow down 7 days in a row – first time since Aug 2011
- Dow down 800 points in 3 weeks – worst run since Aug 2011
Note – Death cross (50DMA crossing below 200DMA) looms…

The S&P was held above its 2014 close and the 200DMA (2073) was very aggressively defended…thanks to a VIX clubbing…VIX ended the day lower!!! bwuahahahah!!!
The ramp effort broke the markets…
- Biotechs down 9.2% – biggest weekly drop since Aug 2011
- Media down 8.4% – worst week since Aug 2011
- Energy down 2.7% – down 13 of last 14 weeks
- AAPL down 5.1% – worst week since Jan 2014; worst 3 weeks (-11%) since Jan 2013
Catching down to credit…
VIX up 19% – biggest weekly jump since Jan 2015 before the gapping effort down at the close to rescue stocks…
In Bond land…
- 2Y Yield rose 6bps – biggest jump since June 2015 (near 4 year highs)
- 30Y Yield down 5 of last 6 weeks (40bps biggest drop since Jan 2015)
- 2s30s Curve down 14bps – biggest weekly flattening since April 2013
- 5s30s Curve down over 9% – biggest weekly flattening since Sept 2011
The Corporate (IG and HY) Bond market is not happy…
- HYCDX +40bps in 3 weeks – worst run since Dec 2014, highest risk since Dec 2014
- HYG down 1.25% to lowest since Nov 2011 (worst 3 week run since Dec 2014)
Commodity Carnaged…
- Crude down 7.0% – down 6 weeks in a row (28% drop) to 5mo lows
- Copper down 11 of last 12 weeks – lowest since July 2009
- Silver Up 0.6% (before post-close slide) – best week in 3 months, breaks 5 week losing streak
- Gold could not hold green – extends losing streak to 7 weeks
But not everything was down…
Note that Oil and stocks have become highly correlated once again…
As Crude was clubbed back to a $43 handle close…
Ironically, FX markets were actually relatively quiet (at least in the majors)…
Although EM saw some pain (from Ruble to Real…)
Charts: Bloomberg
Bonus Chart: VIX under 14 and CNN Fear-and-Greed Index collapses to 10!!
Today we received the jobs report. (FOMC report)
First the official release:
the official release of the jobs report, a rise of 215,000 which was a little less than expected. Growth earnings also missed:
(official release, BLS/zero hedge)
July Payrolls Rise 215K, Less Than Expected; Annual Earnings Growth Miss, Unemployment Remains At 5.3%
In a somewhat anti climatic report, moments ago the BLS reported that July nonfarm payrolls came in at 215K, modestly below the expected 225K and down from the upward revised June print of 231K, and down from the 260K in May, with the unemployment rate flat at 5.3%, in line with expectations.
Overall, a number that was bad, but not bad enough to deter the Fed from hiking, if that is indeed what it plans on doing.
But while the headline jobs number was disappointing – if not enough to deter a rate hike – the one number that remains solidly in rate statis territory was the average hourly earnings growth: while AHE rose by 0.2% in July as expected, the annual increase of 2.1% was nothing to write home about, and 0.2% below the 2.3% expected, which may be the only reason the Fed would delay a rate hike following the endless jawboning of the past year.
Some more details from the report:
Total nonfarm payroll employment rose by 215,000 in July, compared with an average monthly gain of 246,000 over the prior 12 months. In July, job gains occurred in retail trade, health care, professional and technical services, and financial activities.
Employment in retail trade increased by 36,000 in July and has risen by 322,000 over the year. In July, motor vehicle and parts dealers added 13,000 jobs, and employment continued to trend up in general merchandise stores (+6,000).
Health care added 28,000 jobs in July and has added 436,000 jobs over the year. In July, employment rose in hospitals (+16,000).
Professional and technical services added 27,000 jobs in July, with gains in computer systems design and related services (+9,000) and architectural and engineering services (+6,000). Over the past 12 months, professional and technical services has added 301,000 jobs. Management of companies and enterprises added 14,000 jobs over the month.
Employment in financial activities rose by 17,000 in July and has risen by 156,000 over the past 12 months. Insurance carriers and related activities accounted for more than half of the gain in July (+10,000) and over the year (+85,000).
In July, manufacturing employment edged up (+15,000). Employment in nondurable goods rose by 23,000 over the month, including gains in food manufacturing (+9,000) and in plastics and rubber products (+6,000).
Employment in food services and drinking places continued to trend up in July (+29,000) and has increased by 376,000 over the year.
Employment in transportation and warehousing also continued to trend up in July (+14,000) and has risen by 146,000 over the year. Employment in couriers and messengers rose by 3,000 over the month.
Mining employment continued to trend down in July (-5,000). Since a recent high in December 2014, employment in the industry has declined by 78,000, with losses concentrated in support activities for mining.
Employment in other major industries, including construction, wholesale trade, information, and government, showed little change over the month.
Overall a report that was bad, but not bad enough, and as a result it is bad for stocks if only according to the initial kneejerk reaction.
end
The reaction was negative: bonds, stocks and gold were dumped and the USA skyrocketed.
(this was later in the day reversed)
“Good” Jobs Data Is Bad News – Bonds, Stocks, Gold Dumped; USD Pumped
The ‘good enough’ jobs report is not what investors had been hoping for (despite reassurances that a 25bps rise is ‘priced in’). Stocks, bonds, and PMs are down as the USD surges amid implied expectations that rate hikes are coming sooner…
Shortly after bonds have now started to rip back lower in yield…
The bond curve is collapsing..
Charts: Bloomberg
end
Americans not in the labour force rises to a record 93.8 million people and thus the participation rate drops to 62.6%, equal to that of 1977:
(courtesy zero hedge)
Americans Not In The Labor Force Rise To Record 93.8 Million, Participation Rate At 1977 Level
While the Fed is digesting what the X-13 Arima seasonally adjusted payrolls number means for the future of US interest rates, the devastation of the US labor force continues.
In what was an “modestly” unpleasant July payrolls report, yet somewhat better than June’s flagrant disappointment, the fact is that the number of Americans not in the labor force rose once again, this time by 144,000 to a record 93,770,000 million, with the result a participation rate of 62.6% which remains at a level more indicative of the September 1977 economy.
End result: with the civilian employment to population ratio flat from last month’s 59.3%, one can once again easily discren on the chart below why there will be no broad wage growth any time soon, which will merely allow the Fed to engage in its failed policies for a long, long time, or – at worst – hike by 25 bps just so it can, like BOJ in 2000 and the ECB in 2011, cut promptly thereafter and/or unleash QE4.
end
And they call this a recovery? the prime aged workers tumble in numbers, yet the Wal Mart senior greeters surge to an all time high.
It makes no sense!
(courtesy zero hedge)
Prime Aged Workers Tumble In July, Workers 55 And Over Surge To New All Time High
By now what we first, heretically, said back in 2010: that the US is becoming a part-time economy, is common knowledge only the politically correct way of phrasing it, one which supposedly gives it a bullish spin, is “the sharing economy“, as if that makes it better for millions of millennials that they will never again have any career security whatsoever.
But one other, even more damaging trend has yet to be noticed: the fact that elderly workers, still unable to retire due to ZIRP’s crushing of their trillions in savings which have a “high yield” of under 1% at best, remain in the workforce, and the result is that there is no opportunity for young workers to enter the labor pipeline on the other end.
July confirmed as much, when in a month in which the Establishment survey reported that 215K jobs were added, the Household survey was far less sanguine, estimating only 101K job gains in June after a drop of 56K in May. But the punchline emerged when looking at the age composition of the job winners… and losers.
As we expected, more than all job gains, or 211,000 of the total, came in the 55 and over job category. Workers 16-24 lost a total of 8,000 jobs. And the worst hit were, who else, those in their prime, as the number of workers aged 25-54 dropped by another 131K.
Putting this in perspective, while the elderly workers in the US have risen by a whopping 7.4 million since the start of the Depression in December 2007, workers aged 25-54 are down 4 million!
And an even clearer way of showing this dramatic convergence: young vs old workers. But don’t blame your father or grandfather for taking a job that you would like: they are simply unable to retire due to nearly a decade of idiotic Fed policies.
As a result: this.
Since 2007: 1.4 Million Manufacturing Jobs Lost; 1.4 Million Waiter/Bartender Jobs Gained
Who says America has a jobs problem? As the chart below shows, the “New Economy” may pay abysmally, but at least it promises a little to everyone (or to paraphrase a famous phrase “From each according to his ability, to each according to his need”). Nowhere is that more obvious than in the chart showing the monthly change in waiter and bartender jobs.
Here is the bottom line: in the past 65 months, or nearly five and a half years starting with March 2010, or when the jobs “recovery” really kicked in, jobs for waiters and bartenders (aka food service and drinking places) have declined just once.
This is a statistically abnormal hit rate of nearly 99%, and one which we assume has everything to do with the BLS’ charge of not so much reporting reality as finding loopholes in the goalseeked model to report that the US keeps adding over 200,000 jobs every month or bust.
Putting this number in context, the US has allegedly added 376K bartenders in the past year, and 3 million since March 2010.
And here is another, even more disturbing way of showing the “New Economy” – since December 2014, the US has lost 1.4 million manufacturing workers. These have been replaced almost one to one, with new waiters and bartenders. Win, win for everyone, especially the welfare state and of course, China.
There’s No BS Like The BLS
The employment report isn’t worth discussing, quite frankly. We already know ad nauseum that the report is completely fabricated and, perhaps, only reflects a modicum of what is really happening in the U.S. labor market. That is, the report shows that most of the employment “gains” are occurring in the part-time segment of the labor force, while full-time jobs continue to disappear.
The only purpose served by dissecting the report is to “legitimize” the number as ifthose are the numbers we should be discussing. The talking heads and economic “experts” in the financial media look like complete idiots when they engage in passionate discourse about a “tight labor market” and an “improving employment situation.” It’s beyond absurd.
Furthermore, we already know that the labor force participation rate continues to decline into oblivion. Again, it’s become obvious over the last several years that the U.S. economy is quickly approaching the point at which more than one-third of the population is not even considered to be part of the “workforce.” That fact is starting to put me to sleep – and perhaps that’s the goal of these Government manipulated economic reports.
But one area of the report did catch my eye. According to Government data-collectors and statisticians, the number of workers over the age of 55 surged to an all-time high, while the number of workers in the 25-54 age bucket plunged by 131k. Even if that latter number not the real number, it certainly reflects some sort of statistical reality. In fact, I would bet the real number is even bigger. This fact becomes obvious when you walk into any retail big box stores and grocery stores – not just Costco or Home Depot – and you see AARP members performing menial tasks like greeting and thanking customers, collecting grocery baskets and even bagging merchandise. The Social Security set is being forced back to work and its crowding out the prime segment of the workforce who might otherwise take those jobs or who don’t take them because they don’t pay enough.
The only reason I bring this up is because – for any of you who remember – Obama gave a speech about a year ago in which he asserted that the rapid decline in the labor force participation rate was caused by people over the age of 55 taking early retirement.
Either Obama is a psychopathic liar or he is a complete idiot who merely serves the purpose of reading the propaganda that scrolls in front of his eyeballs on the teleprompter. I suspect it’s a combination of the two factors.
I suspect I was not the only person at the time who pointed out this incongruity, because I have not heard that particular propaganda soundbyte coming from the Obama Government since Obama expelled that large brown piece of fecal matter from his mouth.
end
“It’s Nuts!” Hedgies Hammered Amid Media Massacre
“People are shooting first and asking questions later…this indiscriminate selling, to me, is just nuts,” exclaims on billion-dollar AUM hedge fund CIO as media stocks faced a bloodbath this week. Small (illiquid) doors and large crowds do not mix well as Bloomberg reports,hedge funds own an average 9.7% of the 15 companies in the S&P Media Index – which has tumbled over 8% in 2 days – its biggest loss since 2008. Exuberant return chasing on merger speculation has reversed into panic-selling as Disney, Time Warner Inc., Fox, CBS and Comcast Corp. erased almost $50 billion of value in two days.
The love affair between hedge funds and media stocks is being tested. As Bloomberg reports, hedge funds have been near-constant champions of the industry, drawn in by its high cash generation and buybacks, takeover speculation and the straight-up momentum of the stocks themselves. This week’s retreat represents the sharpest rebuke to that thesis — and one of its only setbacks in a bull market well into its seventh year.
“A lot of these funds are speculating on deals, they’re investors playing the spread and not fundamentals,” said Alpha Theory Advisors president Benjamin Dunn, who acts as adviser to hedge funds with about $6 billion in assets. “A few of these names are down big today and you got some pile-on effect with the smaller ones as well.”
Hedge funds own an average 9.7 percent of the 15 companies in the gauge, according to data compiled by Bloomberg. That’s a bigger stake than in any of the other 23 industry groups within the S&P 500. The positions largely reflect merger speculation, said Dunn, who is based in Crested Butte, Colorado.
…
Disappointing results from Walt Disney Co. after the close of trading Tuesday sparked the rout. Selling spread to other television and publishing companies as quarterly reports from CBS Corp. to 21st Century Fox Inc. and Viacom Inc. were marked by shrinking U.S. ad sales and profits propped up by stock buybacks. Viacom fell 14 percent Thursday, its biggest drop since October 2008, while Fox slid 6.4 percent.
Until Tuesday, media shares were the best-performing stocks of the bull market, rising 531 percent to eclipse automakers, retail stores and banks. The industry’s market capitalization was about $650 billion, compared with $135 billion in March 2009.
That value is evaporating. In just five stocks — Disney, Time Warner Inc., Fox, CBS and Comcast Corp. — almost $50 billion of value has been erased in two days.
“It’s been a rough few days,” said Walter Todd, who oversees about $1.1 billion as chief investment officer for Greenwood Capital Associates
Charts: Bloomberg
New York Hedge Fund Och-Ziff Under Investigation For Bribery In $100M “Loan” To Zimbabwe Dictator Mugabe
Submitted by Mike Krieger via Liberty Blitzkrieg blog,




One of the most interesting articles I published last year, but one that failed to receive the attention it deserved, was related to a $100 million “loan” to Zimbabwe’s brutal dictator Robert Mugabe, in which Wall Street firms played a key role. The post was titled, The Bailout of Robert Mugabe – How Wall Street Money Led to Intimidation, Torture and Death in Zimbabwe. Here are a few excerpts:
Four days later, Camec announced it was using the money it raised to purchase a joint venture with the Zimbabwe Mining Development Corp., or ZMDC, Mugabe’s state-owned mining company. The joint venture owned the platinum stakes on the Great Dyke that had been taken back just a few weeks earlier from Anglo American. The price included $5 million in cash; Camec issued shares to partners whose identities were shielded by a shell company based in the British Virgin Islands; and $100 million to Mugabe’s government.
Camec said the $100 million was a cash loan “to comply with its contractual obligations to the government of Zimbabwe” for the platinum claims. It said the money would be repaid out of ZMDC’s share of future platinum earnings. Camec’s balance sheets for the period make clear that funding for the platinum rights came from the private transactions involving Och-Ziff.
The $100 million figure mentioned above that flowed directly to Zimbabwe’s brutal dictator Robert Mugabe was more than just a cash infusion to a corrupt dictator. Rather, it was a veritable political lifeline to a desperate and vulnerable despot. Facing defeat in the initial round of elections to the opposition, and with the nation’s currency hyper-inflating, the only thing he had at his disposal were valuable platinum assets that were at the time held by Anglo American Platinum. So Mugabe did what any desperate tyrant would do. He expropriated the assets from Anglo-American and immediately put them on the market to raise money to crush his opposition. Enter Wall Street.
This is where the Central African Mining & Exploration Co., or Camec, sniffed opportunity. Seemingly set up specifically to buy assets on the cheap from desperate African dictators, Camec immediately set out to raise funding to provide Mugabe with much need cash in exchange for the recently stolen platinum assets. Camec had no trouble raising this money from a variety of Wall Street firms, with the core participant being the massive hedge fund Och-Ziff, which contributed 75%, but also included BlackRock, GLG Partners and Credit Suisse.
Mugabe immediately used the money to intimidate, torture and murder opposition leaders until his primary opponent pulled out of the race. The ninety year-old Mugabe remains in power, while many of the Wall Street titans have retired lavishly to multi-million dollar retreats in the English countryside.
The excellent Bloomberg article from which that post was based, mentioned that Och-Ziff was under investigation by the Justice Department. I noted at the time:
Let the Justice Department and SEC investigate. Nothing meaningful will come out of it. Too many rich and powerful people got paid, and as Larry Summers so crudely admitted in 2009 “insiders don’t criticize insiders.” Just like how Jaime Dimon got a 74% raise in 2013 despite “settling” for $13 billion despite “doing nothing wrong” (in case you missed it, you must read: Jamie Dimon’s Big $13 Billion Secret – The Truth Behind the JP Morgan Settlement).
Fast forward one year, and the Wall Street Journal is reporting that Och-Ziff is close to “settling.” From theWSJ:
U.S. authorities are investigating whether Och-Ziff Capital Management Group LLC knew that part of a $150 million investment in a small African miner would wind up in the hands of Zimbabwe President Robert Mugabe’s government, according to people familiar with the probe.
Och-Ziff last year disclosed that a broader Justice Department and Securities and Exchange Commission investigation is examining the $47 billion New York hedge fund’s business in Africa under the Foreign Corrupt Practices Act.The act bars firms doing business in the U.S. from giving money or items of value to foreign officials for business, either directly or through intermediaries.
The publicly traded hedge-fund firm is in talks to settle the probe into its ties to a network of investors and deal makers that it worked with on business from Libya to South Africa, according to people familiar with the investigation. Och-Ziff and others have poured hundreds of millions of dollars into mining operations in the past decade as commodities prices soared.
Och-Ziff has denied that it knew some of the money would end up with the Zimbabwe government. Human-rights groups said the funds were used to carry out a violent crackdown on the opposition during a tough election Mr. Mugabe ultimately won in 2008.
U.S. investigators are scrutinizing a March 2008 trip to Zimbabwe taken by Och-Ziff’s Africa director at the time, Vanja Baros,according to people familiar with the investigation. The people said Mr. Baros met several people involved in channeling the money to the Mugabe government, including Billy Rautenbach, a Zimbabwean businessman with close ties to the dictator.
Mr. Rautenbach at the time of Camec’s move faced an arrest warrant in South Africa for alleged fraud, corruption and theft. In 2009, he pleaded guilty on behalf of a company he controlled to fraud charges and paid a fine of about $5 million.
“Fraud, corruption and theft. Eh, just pay a fine, no biggie!
In late 2008, the U.S. Treasury Department put Mr. Rautenbach on a list of what it called Mr. Mugabe’s “cronies” and said he “provided logistical support for large-scale mining projects in Zimbabwe that benefit a small number of corrupt senior officials.” The Treasury removed Mr. Rautenbach from the list in 2014; the agency said that after a review, Mr. Rautenbach no longer warranted inclusion.
Mr. Rautenbach met the Och-Ziff Africa director, Mr. Baros, in a mid-March 2008 gathering in Zimbabwe, along with a Camec executive and others, people familiar with the visit said. The trip was organized by Credit Suisse Group AG analysts who were optimistic about the company, these people said. The group visited a trucking operation used to service Camec’s Congolese mining projects and had dinner, the people said. They also visited the Congo and Mozambique, the people said.
Och-Ziff’s connection to the loan—disclosed in 2012 in the South African press—has raised concerns from at least one big investor.
In a September 2013 letter to the California Public Employees’ Retirement System, the biggest pension fund in the U.S. by assets known as Calpers and a onetime Och-Ziff investor that had questioned it about the Zimbabwe loan, the hedge-fund firm said it was a “passive shareholder of Camec” and that it “does not believe that any employee knew that Camec intended to provide funds raised from the offering to the regime of Robert Mugabe.”
A spokesman for Calpers, which last year shed its investments in hedge funds, including Och-Ziff, declined to comment.
In this case, it’s not just about theft and destroying the world economy. Giant financial firms can apparently just “settle” even when grotesque human rights abuses occur. This is how “justice” works in America.
* * *
For related articles, see:
Bilderberg 2015 – Where Criminals Mingle with Politicians
The U.S. Department of Justice Handles Banker Criminals Like Juvenile Offenders…Literally
The Elevator Down…
Between SUNE (7.92% holding), MU, gold, and a litany of other recent Einhorn blowups, will Greenlight be the first fund of the New Normal to gate… or will it be Andy Hall?
The collapse in SunEdison (where Einhorn is the biggest holder) seems extremely ‘margin-call, liquidation-forced’ in style… especially the last 2 days…
Charts: Bloomberg
end
Let us close with this week’s wrap up courtesy of Greg Hunter
of USAWatchdog:
(courtesy Greg Hunter/USAWatchdog)
Desperate Push for Nuke Deal, Economic Warning Signs, GOP Debate, California on Fire
By Greg Hunter’s USAWatchdog.com (WNW 202 8.7.15)
Congress is in recess, but that is not stopping President Obama to continue to push Democrats in both houses in Congress to vote yes in the deal to curtail Iran’s nuclear program. The President surely knows it will be voted down by the Republicans and many Democrats in the House and Senate. The only question: Will the President have enough votes to sustain a veto? It is a foregone conclusion that the deal will be voted down and the President will veto it. If his veto is not overridden, then the deal will go through. One big problem with getting the votes are the secret side deals that Iran has with UN inspectors. The other problem is that even unclassified information about the deal is not being released by the White House to the public. If it were such a great deal, why so secret, which is the same thing I said about the Republican sponsored secret trade deal called the Trans Pacific Partnership (TPP). It will all come down to a veto or a veto override.
Plenty of economic warning signs out there such as this warning from ADP, the payroll company. The unemployment rate would be around 23% if it were calculated the way it was by the government in 1994 and earlier. The stock market has taken about a 900 point fall since its peak in May. Gregory Mannarino of TradersChoice.net said the market had peaked about that time. He is a regular guest on USAWatchdog.com. Also, in the stock decline are some big names such as Disney and Apple. Oil and commodities are also under extreme pressure right along with the Chinese stock market. Dr. Marc Faber said recently that the U.S. stock market could take a 40% plunge. Then there was this story in USA Today, and the headline said “JPMorgan Tops U.S., International Bank Risk List.” I thought, why they are printing a headline like this now? USA Today has been cramming the so-called recovery story down our throats for years. JPMorgan topping the list of risky banks does not sound like we are heading for a recovery.
California is on fire, and the drought conditions are not getting any better. There are reportedly two dozen wild fires burning in California. There are also reports of so-called “dry thunderstorms,” meaning lots of wind and lightning but very little rain. In March, NASA estimated that California has about a year’s worth of water left. I am not seeing many reports of rain there or in most places out west. It’s very ominous, and it is not getting better—at all.
The Presidential debates for the GOP were held, and to that I say great. We’re 14 months away from the November election. I thought FOX News was smart in creating two debates so all candidates could be seen and heard. I think the debates are as much about the Vice Presidential candidate as who is running for President. There is not going to be two Anglo white guys on the GOP ticket this fall. Not going to happen. The top picks for the VP position, if they do not get the nomination, are Cruz, Rubio, Carson, Jindal and Fiorina. I think the bigger story is the total lack of debates for the Democrats. There are several candidates that are and probably will run for the Democratic nomination. Hillary Clinton has many problems and baggage that is not getting resolved. One big problem is the FBI investigation into her emails and how classified documents were handled. I still say the Democrats should consider some other candidates. Hillary is not going to make it.
Join Greg Hunter as he looks at these stories and more in the Weekly News Wrap-Up.
end
Well that about does it for tonight
I will see you on Monday
Have a wonderful weekend and be ready for an extremely volatile 5 days of hectic trading
Harvey
















































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