May 17/Comex May has 6.5 tonnes of gold standing which is extremely high and bodes well for June gold deliveries/GLD again has a huge deposit of 4.76 tonnes into inventory/SLV remains constant/Today we had a monstrous notice of 1021 contracts or 102,100 oz which is outstanding for May/Comex gold OI rises to 596,500 contracts/Silver rises to 206,214 contracts and at record levels/A German bank downgrades Deutsche bank stating that its problems are insurmountable!/Opposition leader will defy emergency decrees: country in utter chaos/

Good evening Ladies and Gentlemen:

Gold:  $1,276.20 UP $2.80    (comex closing time)

Silver 17.23  UP 9 cents


In the access market 5:15 pm

Gold $1279.40

silver:  17.24


You will probably note that gold is always much stronger in the physical time zones as opposed to the paper time zone.  The Chinese fix at around 12 midnight EST provides strength for gold and silver as actual metal is fixed in price instead of the complex and dubious London fix.  However the Chinese fix is certainly mustering strength for gold in the wee hours of the morning.  Then at 10 -12 noon we have the London afternoon fix and again we see gold/silver higher.  Once London is put to bed, the crooks whack OUR PRECIOUS METALS lowering the price until we start the cycle all over again.


The amount standing for gold in May is simply outstanding at 6.50 tonnes.  The previous May 2015, we had only .08 tonnes so you can certainly witness the difference as the demand for gold by investors/sovereigns is on a torrid pace.  This makes the excitement for June gold that much more intense as more players are refusing fiat and demanding only physical metal. I will be reporting daily as to how which is standing for delivery through the active month of June.  June is the second largest delivery month after December.


Let us have a look at the data for today


At the gold comex today we had a HUGE delivery day, registering 1012 notices for 101,200 ounces for gold,and for silver we had 1 notice for 5,000 oz for the non active May delivery month.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 236.257 tonnes for a loss of 67 tonnes over that period


In silver, the open interest rose by 1472 contracts down to 206,214 as the price was silver was UP  by 2 cents with respect to yesterday’s trading.  In ounces, the OI is still represented by just over 1 BILLION oz i.e. .1.031 BILLION TO BE EXACT or 147% of annual global silver production (ex Russia &ex China)

In silver we had 1 notice served upon for 5,000 oz.

In gold, the total comex gold OI rose by a considerable 16,767 contracts up to 596,513 as the price of gold was up $1.60 with yesterday’s trading(at comex closing).


As far as the GLD, we had a huge change, another 4.76 deposit into the GLD. The new inventory rests at 855.89 tonnes. We had no changes in silver inventory at the SLV. Inventory rests at 335.073 million oz.


First, here is an outline of what will be discussed tonight:

1. Today, we had the open interest in silver rise by 1,472 contracts UP to 206,214 as the price of silver was UP ONLY by 2 cents with yesterday’s trading. The gold open interest ROSE by 16,767 contracts as  gold was up $1.50 yesterday. Somebody big is standing FOR SILVER and surrounding the comex with paper longs ready to ponce once called upon to take out physical silver.I also believe that for the first time we are witnessing players wishing to stand for real physical in gold.  Gold investors, in the May contract month are refusing the tempting fiat offer as they want only physical.

(report Harvey).


2 a) Gold trading overnight, Goldcore

(Mark OByrne/off today

2b)  Gold trading earlier this morning;



.i)Late  MONDAY night/ TUESDAY morning: Shanghai closed DOWN  BY 7.17 PTS OR 0.25%  /  Hang Sang closed UP 234.85 OR 1.18%. The Nikkei closed UP 186.40 POINTS OR 1.13% . Australia’s all ordinaires  CLOSED UP 0.69% Chinese yuan (ONSHORE) closed DOWN at 6.5261.  Oil ROSE to 47.76 dollars per barrel for WTI and 48.80 for Brent. Stocks in Europe  MOSTLY IN THE GREEN . Offshore yuan trades  6.54620 yuan to the dollar vs 6.5261 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE REMAINS CONSTANT.



none today


none today


Amazing another German Bank’s analyst, Berenberg’s James Chappell states that Deutsche bank’s problems are basically insurmountable and he downgrades the stock to sell. Boy does he have guts:

(Berenberg Bank/Chappell/zero hedge)



i)It is now time to annoy Russia so more:  War games are initiated right in Russia’s back yard:

( zero hedge)


ii)The USA Senate passed the bill that would expose the Saudi’s role in the 9/11 terror attacks.  Obama states that he would veto the bill and as such he is putting the Saudis ahead of USA victims of the tragedy!

( zero hedge)



The Opposition leader has urged Venezuelans to defy the state of emergency. The country is in complete anarchy and now the government has the authority to confiscate businesses who are not producing goods because they cannot get their hands on uSA dollars to buy the raw materials they need:

(courtesy zero hedge)


i)Nigeria has always had problems with militants.  Now meet the newest member of militant to cause huge problems for this oil nation:  the Niger Delta Avengers:

They are certainly causing oil to rise in price as they keep millions of barrels of oil off market:

( zero hedge)


ii)Crude slides after API reports a lower than expected draw:

( zero hedge)


i)An excellent presentation showing where physical gold is stored in the USA:

( Ronan Manly/GATA)


ii)Geo. Soros buys $264 million dollars worth of Barrick gold and he also buys calls on the GLD.  He could do better on both fronts:  there are better miners and GLD is a fraud in that there is no gold behind it.

( Bloomberg/GATA)


iii)It now seems that everyone knows that the gold/silver futures market is toally rigged. Anybody playing this market is foolish!

(Clint Siegner/MoneyMetalsExchange)


iv)Although I generally cover silver and gold, the other two precious metals also deserve some attention.  Here is Lawrie Williams discussing Platinum and Palladium:

( Lawrie on Gold/Lawrence Williams)


v)Gold would certainly be a big winner on a BREXIT

( LawrieonGold)



i)Headline CPI rises .4% month/month and the biggest jump since Feb 2013.  Also hourly wages slid .1%.  Not a good report

( zero hedge)


ii)OBAMACARE losses mount but what is very troubling is many are refusing to take Obamacare:

( Mish Shedlock/Mishtalk)

iii)The clowns are at it again:  Lockhart and Williams say a rate hike in June is on the table

(courtesy zero hedge)
iv)For those of you who are playing the market (other than gold) this is the only chart that you should pay attention to:

(Bank of America/ zero hedge)


Let us head over to the comex:

The total gold comex open interest ROSE to an OI level of 596,513 for a HUGE GAIN of 16,767 contracts AS  THE PRICE OF GOLD WAS UP ONLY $1.50 with respect to YESTERDAY’S TRADING.  We are now entering the NON active delivery month of MAY. For the past two years, we have strangely witnessed two interesting developments and we have generally seen two phenomena happen respect to the gold open interest:  1) total gold comex collapses in OI as we enter any delivery month  and 2) a continual drop in the amount of gold standing in that month as that month progresses. IT SURE SEEMS THAT THE LATER HAS STOPPED.   The month of May saw its OI FALL 11 contracts DOWN to 1130. We had 28 notices filed  YESTERDAY so we gained 17 gold contracts or an additional 1700 gold ounces will stand for delivery. The next big active gold contract is June and here the OI rose by 8,783 contracts UP to 338,908 as those paper players that wished to stay in the game rolled to August AND THE REST STAYED PUT FOR NOW. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was VERY GOOD at 199,934. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was VERY GOOD at 226,757 contracts. The comex is not in backwardation. We are LESS THAN 2 weeks away from first day notice for the huge June contract.

Today we had 1012 notices filed for 101,200 oz in gold.


And now for the wild silver comex results. Silver OI ROSE by 1,472 contracts from 204,742 UP to 206,214 as the price of silver was UP BY ONLY 2 cents with YESTERDAY’S TRADING.We are within spitting distance of the all time high OI in silver of 206,748 For the first time in over 2 years, we have not witnessed a liquidation of open interest as we ENTERED first day notice .  The next active contract month is May and here the OI FELL by 28 contracts DOWN to 730. We had 8 notices filed ON FRIDAY so we LOST 20 contracts or AN ADDITIONAL  100,000 oz of silver will NOT stand for delivery in this active month of May. The next non active month of June saw its OI FALL by 4 contracts DOWN to 715 OI.The next big delivery month is July and here the OI ROSE by 1449 contracts UP to 40,196. The volume on the comex today (just comex) came in at 37,849 which is VERY GOOD. The confirmed volume YESTERDAY (comex + globex) was AGAIN EXCELLENT AT 52,960. Silver is not in backwardation. London is in backwardation for several months.
We had 1 notice filed for 5,000 oz.

MAY contract month:

INITIAL standings for MAY

May 17.
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil  58,643.338 OZ






Deposits to the Dealer Inventory in oz NIL
Deposits to the Customer Inventory, in oz    58,448.700 OZ




No of oz served (contracts) today 1012 contracts
(101,200 oz)
No of oz to be served (notices) 118 CONTRACTS

11,800 OZ

Total monthly oz gold served (contracts) so far this month 1972 contracts (197,200 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month  270,891.2 OZ

Today we had 0 dealer deposit

total dealer deposit: NIL oz


Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz


Today we had 1 customer deposit:

i)INTO JPMORGAN:  58,448.700 OZ OR 1818 KILOBARS

Total customer deposits;  58,448.7000z

Today we had 3 customer withdrawals:

i) Out of Manfra:  64.22 oz

ii) Out of Manfra: 128.60:   oz  4 kilobars

iii) Out of HSBC: 58,450.518 oz  (compare above deposit JPMorgan/the first is kilobars and the second is non kilobars???)


total customer withdrawals: 58,643.338 OZ


Today we had 0 adjustment:


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 1012 contracts of which 155 notices was stopped (received) by JPMorgan dealer and 22 notices were stopped (received)  by JPMorgan customer account. 
To calculate the initial total number of gold ounces standing for the MAY contract month, we take the total number of notices filed so far for the month (1972) x 100 oz  or 197,200 oz , to which we  add the difference between the open interest for the front month of MAY (1130 CONTRACTS) minus the number of notices served upon today (1012) x 100 oz   x 100 oz per contract equals 209,000 oz, the number of ounces standing in this non active month.  This number is huge for May. IT NOW SEEMS THAT THE AMOUNT STANDING FOR GOLD IN MAY WILL HOLD AND WITH THAT IT WILL BRING MUCH EXCITEMENT TO JUNE 
Thus the initial standings for gold for the MAY. contract month:
No of notices served so far (1972) x 100 oz  or ounces + {OI for the front month (1130) minus the number of  notices served upon today (1012) x 100 oz which equals 209,000 oz standing in this non  active delivery month of MAY(6.5007 tonnes).
Since the comex allows GLD shares to be used for settling, it may take quite a while for the physical gold to enter the comex vaults.  So far I have seen little evidence of any settling of contracts but I will continue to monitor it for you. 
We thus have 6.5007 tonnes of gold standing for MAY and 21.697 tonnes of registered gold for sale, waiting to serve upon those standing.  The bankers are still doing their best in cash settling as there is not enough registered gold to satisfy those that are standing.
We now have partial evidence of gold settling for last months deliveries We now have 6.5007 TONNES FOR MAY + 12.3917 tonnes (April) +2.2311 tonnes (March) + 7.99 (total Feb)- .940 (probable delivery on March 1) tonnes -.0434 tonnes (March 11,12,17,18) + March 31: 1.2470 and then  April 1,2: – .0006 tonnes  and last week April 16 .3203 and April 22 .(0009 tonnes) + april 29  .205 tonnes + May 5:  3.799 and May 6: 1.607 tonnes – MAY 12  .0003  = 20.9479 tonnes still standing against 21.697 tonnes available.
Total dealer inventor 697,565.649 tonnes or 21.697 tonnes
Total gold inventory (dealer and customer) =7,595,492.258 or 236.25 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 236.25 tonnes for a loss of 67 tonnes over that period. 
JPMorgan has only 22.79 tonnes of gold total (both dealer and customer)
May is not a very good delivery month and yet 6.5079 tonnes of gold is standing.  What is different from other months is that the bankers cannot offer any fiat to those standing. They want the real stuff. We are extremely close to the all time highs in both gold and silver OI.
And now for silver

MAY INITIAL standings

 May 17.2016

Withdrawals from Dealers Inventory nl oz
Withdrawals from Customer Inventory  1,088,672.080 oz



Deposits to the Dealer Inventory  NIL
Deposits to the Customer Inventory  1,090,541.200 OZ


No of oz served today (contracts) 1 CONTRACT 

5,000 OZ

No of oz to be served (notices) 719 contracts

3,595,000 oz

Total monthly oz silver served (contracts) 2050 contracts (10,250,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month nil oz
Total accumulative withdrawal  of silver from the Customer inventory this month  6,561,220.5 oz

today we had 0 deposit into the dealer account

total dealer deposit:NIL oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil

we had 1 customer deposits:

i) Into JPM: 1,090,541.200 oz


Total customer deposits: 1,090,541.200 oz.

We had 2 customer withdrawals

i) out of CNT: 603,346.610 oz

ii) Out of HSBC: 485,325.470 oz


total customer withdrawals:  1,088,672.08 oz



 we had 0 adjustment

The total number of notices filed today for the MAY contract month is represented by 1 contract for 5,000 oz. To calculate the number of silver ounces that will stand for delivery in May., we take the total number of notices filed for the month so far at (2050) x 5,000 oz  = 10,250,000 oz to which we add the difference between the open interest for the front month of MAY (730) and the number of notices served upon today (1) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the MAY contract month:  2050 (notices served so far)x 5000 oz +(730{ OI for front month of MAY ) -number of notices served upon today (1)x 5000 oz  equals 13,845,000 oz of silver standing for the MAY contract month.
Total dealer silver:  30.282 million
Total number of dealer and customer silver:   153.463 million oz
The open interest on silver is still close an all time high with the record of 206,748 being set in the last week of April. The registered silver (dealer silver) is close to multi year lows as silver is being drawn out and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver.
And now the Gold inventory at the GLD
May 17/ we had a huge deposit of 4.76 tonnes of gold into the GLD/Inventory rests tonight at 855.89 tonnes/in the last two and 1/2 weeks we have added 50 tonnes of gold and this most likely was all paper gold addition..
May 16./ today we had no changes in inventory at the GLD/Inventory rests at 851.13 tonnes
May 13./another addition of 5.94 tonnes of gold into the GLD/Inventory rests at 851.13 tonnes
May 12/another huge deposit of 3.27 tonnes in gold inventory at the GLD/inventory rests at 845.19 tonnes
May 11/another huge deposit of 2.67 tonnes in gold inventory at the GLD/Inventory rests at 841.92 tonnes
May 10/Another huge deposit of 2.38 tonnes in gold inventory at the GLD/Inventory rests at 839.25 tonnes
May 9/Surprisingly we had another deposit of 2.68 tonnes of gold into the GLD with gold down!! Inventory 836.87 tonnes
May 4/ we had a small deposit of .6 tonnes of gold into the GLD/inventory rests at 825.54 tonnes
May 3/no change in gold inventory at the GLD/Inventory  rests at 824.94 tonnes
May 2/a hugechange in gold inventory at the GLD a deposit of 20.80/Inventory rests at 824.94 tonnes
April 29/no change in gold inventory at the GLD/Inventory rests at 804.14 tonnes
April 28/we gained 1.49 tonnes of gold at the GLD/Inventory rests at 804.14

May 17.:  inventory rests tonight at 855.89 tonnes



Now the SLV Inventory
May 17/no change in silver inventory at the SLV/Inventory rests at 335.073 million oz/
May 16./no changes in silver inventory at the SLV/Inventory rests at 335.073 million oz
May 13./no change in silver inventory at the SLV/inventory rests at 335.073 million oz
May 12/no change in silver inventory/rests tonight at 335.073 million oz/
 May 11.2016/no change in silver inventory/rests tonight at 335.073 million oz/
May 10.2016/we had a huge withdrawal of 1.046 million oz in silver leaving the SLV,no doubt for Shanghai which lately has been gobbling up whatever inventory it could lay its hands on/Inventory rests at 335.073 million oz.
May 9. no change in silver inventory/rests at 336.119 million oz.
MAY 5.2016: NO CHANGE IN INVENTORY/rests tonight at 337.261 million oz
May 4/we had a good size withdrawal of 1.553 million oz from the SLV/Inventory rests at 337.261 million oz
May 3: we had another huge deposit of 1.807 million oz/inventory rests at 338.814 million oz
May 2/a huge in silver inventory at the SLV/a deposit of 1.49 million oz/Inventory rests at 337.007 million oz
April 29.2016/no change in silver inventory at the SLV/Inventory rests at 335.580
April 28/no change in silver inventory at the SLV/Inventory rests at 335.580 million oz
May 17.2016: Inventory 335.073 million oz
1. Central Fund of Canada: traded at Negative 2.8 percent to NAV usa funds and Negative 2,9% to NAV for Cdn funds!!!!
Percentage of fund in gold 61.5%
Percentage of fund in silver:37.2%
cash .+1.3%( May 16/2016).
2. Sprott silver fund (PSLV): Premium RISES   to +.44%!!!! NAV (MAY 17.2016) 
3. Sprott gold fund (PHYS): premium to NAV  FALLS 1.60% to NAV  ( MAY 17.2016)
Note: Sprott silver trust back  into POSITIVE territory at +44% /Sprott physical gold trust is back into positive territory at +1.60%/Central fund of Canada’s is still in jail.
It looks like Eric Sprott got on the nerves of our bankers as they lowered the premium in silver to +.44%.  Remember that Eric is to get 75 million dollars worth of silver in a new offering.



And now your overnight trading in gold,TUESDAY MORNING and also physical stories that may interest you:

Trading in gold and silver overnight in Asia and Europe
Mark O’Byrne (goldcore)/

Hedge Funds Buy Silver As Silver Bullion Deficit Surges

– Hedge funds have taken a record net-long silver position – CFTC data shows

– Precious metal surges 26% in 2016 on Fed, industrial & investment demand

– Cumulative global silver bullion deficit surges on revised data

Hedge Funds Keep Betting On Silver (Bloomberg)
Gold up for 2nd day on China data, weaker stock markets (Reuters)
North American appetite for platinum jewelry flourishes (Reuters)
China goes cold on platinum jewelry, crimping world demand (Reuters)
Gold Caps Weekly Loss as U.S. Sales Gain Curbs Haven Demand (Bloomberg)

Global Silver Supply Deficit Surges On Revised Data (Silver Seek)
Financial Repression and “The Age of Stagnation” – Satyajit Das (FRA)
There is a global war against gold: Prof. Antal Fekete (Barba)
Middle class takes financial hit in most US cities this century (Fintech News)
Zimbabwe’s trillion-dollar note: from worthless paper to hot investment (Guardian)
Read More Here

Gold Prices (LBMA)

16 May: USD 1,281.00, EUR 1,132.04 and GBP 892.87 per ounce
13 May: USD 1,275.15, EUR 1,123.51 and GBP 885.16 per ounce
12 May: USD 1,268.30, EUR 1,111.30 and GBP 878.28 per ounce
11 May: USD 1,271.80, EUR 1,116.19 and GBP 882.45 per ounce
10 May: USD 1,264.85, EUR 1,111.04 and GBP 875.90 per ounce

Silver Prices (LBMA)
16 May: USD 17.32, EUR 15.30 and GBP 12.07 per ounce
13 May: USD 17.09, EUR 15.06 and GBP 11.85 per ounce
12 May: USD 17.23, EUR 15.12 and GBP 11.91 per ounce
11 May: USD 17.51, EUR 15.36 and GBP 12.14 per ounce
10 May: USD 17.04, EUR 15.00 and GBP 11.82 per ounce

Protecting_Your_Savings_in_the_Coming_Bail_In_Era_-_Copy-3.jpg Storing_Gold_in_Switzerland 7_Key_Storage_Must_Haves.png

Read Our Most Popular Guides in Recent Months

Mark O’Byrne
Executive Director
A humour story:  Libya’s central bank has gold stashed in Eastern Libya but the combination is known only by folks in Western Libya.  And they cannot blow up the safe?
(courtesy Wall Street Journal/GATA)

Libya’s central bank needs gold stashed in safe but code is in dispute


By Hassan Morajea and Tamer El-Ghobashy
The Wall Street Journal
Friday, May 13, 2016

BEYDA, Libya — Underneath a bank in this eastern coastal city, a vault holds a trove of gold and silver coins worth $184 million. It belongs to the central bank, which could use the money to alleviate a crippling cash shortage.

The pile, however, presents some problems. The coins are locked away with a five-number code that central bankers in this part of the country don’t have. A rival government in Tripoli, which has effective control over the bank system, won’t hand over the digits and has expressed concern the money could fund armed militias opposed to its rule.

To make things worse, the metal pieces bear the face of Moammar Gadhafi, the reviled leader who was overthrown, captured, and killed in 2011. …

… For the remainder of the report:…






An excellent presentation showing where physical gold is stored in the USA:

(courtesy Ronan Manly/GATA)


Bullion Star makes a graphic of the Comex gold market


8:15p ET Monday, May 16, 2016

Dear Friend of GATA and Gold:

Bullion Star has created a graphic illustration of the Comex gold market, showing that, like the London gold market, the Comex is a fractional-reserve-based and largely unallocated market with little real metal ever being delivered. The graphic is posted at Bullion Star here:…

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




Geo. Soros buys $264 million dollars worth of Barrick gold and he also buys calls on the GLD.  He could do better on both fronts:  there are better miners and GLD is a fraud in that there is no gold behind it.


(courtesy Bloomberg/GATA)

Soros puts $264 million in Barrick Gold, buys calls on gold ETF


Billionaire Soros Cuts U.S. Stocks by 37%, Buys Gold Miner

By Jesse Riseborough and Saijel Kishan
Bloomberg News
Monday, May 16, 2016

Billionaire George Soros cut his firm’s investments in U.S. stocks by more than a third in the first quarter and bought a $264 million stake in the world’s biggest bullion producer, Barrick Gold Corp.

The value of Soros Fund Management’s publicly disclosed holdings dropped by 37 percent to $3.5 billion as of the end of the last quarter, according to a government filing today. Soros acquired 1.7 percent of Barrick, making it the firm’s biggest U.S.-listed holding. Soros also disclosed owning call options on 1.05 million shares in the SPDR Gold Trust, an exchange-traded fund that tracks the price of gold. …

… For


the remainder of the report:…




It now seems that everyone knows that the gold/silver futures market is toally rigged. Anybody playing this market is foolish!

(courtesy Clint Siegner/MoneyMetalsExchange)


Why The Gold And Silver Futures Market Is Like A Rigged Casino

Submitted by Clint Siegner via Money Metals Exchange,

A respectable number of Americans hold investments in gold and silver in one form or another. Some hold physical bullion, while others opt for indirect ownership via ETFs or other instruments. A very small minority speculate via the futures markets. But we frequently report on the futures markets – why exactly is that?

Because that is where prices are set. The mint certificates, the ETFs, and the coins in an investor’s safe – all of them – are valued, at least in large part, based on the most recent trade in the nearest delivery month on a futures exchange such as the COMEX. These “spot” prices are the ones scrolling across the bottom of your CNBC screen.

That makes the futures markets a tiny tail wagging a much larger dog.

Too bad. A more corruptible and lopsided mechanism for price discovery has never been devised. The price reported on TV has less to do with physical supply and demand fundamentals and more to do with lining the pockets of the bullion banks, including JPMorgan Chase.

Craig Hemke of explained in a recent post how the bullion banks fleece futures traders. He contrasted buying a futures contract with something more investors will be more familiar with – buying a stock. The number of shares is limited. When an investor buys shares in Coca-Cola company, they must be paired with another investor who owns actual shares and wants to sell at the prevailing price. That’s straight forward price discovery.

Not so in a futures market such as the COMEX. If an investor buys contracts for gold, they won’t be paired with anyone delivering the actual gold. They are paired with someone who wants to sell contracts, regardless of whether he has any physical gold. These paper contracts are tethered to physical gold in a bullion bank’s vault by the thinnest of threads. Recently the coverage ratio – the number of ounces represented on paper contracts relative to the actual stock of registered gold bars – rose above 500 to 1.

Comext Gold Cover Ratio

The party selling that paper might be another trader with an existing contract. Or, as has been happening more of late, it might be the bullion bank itself. They might just print up a brand new contract for you. Yes, they can actually do that! And as many as they like. All without putting a single additional ounce of actual metal aside to deliver.

Gold and silver are considered precious metals because they are scarce and beautiful. But those features are barely a factor in setting the COMEX “spot” price. In that market, and other futures exchanges, derivatives are traded instead. They neither glisten nor shine and their supply is virtually unlimited. Quite simply, that’s a problem.

But it gets worse. As said above, if you bet on the price of gold by either buying or selling a futures contract, the bookie might just be a bullion banker. He’s now betting against you with an institutional advantage; he completely controls the supply of your contract.

It’s remarkable so many traders are still willing to gamble despite all of the recent evidence that the fix is in. Open interest in silver futures just hit a new all-time record, and gold is not far behind. This despite a barrage of news about bankers rigging markets and cheating clients.

Someday we’ll have more honest price discovery in metals. It will happen when people figure out the game and either abandon the rigged casino altogether or insist on limited and reasonable coverage ratios. The new Shanghai Gold Exchange which deals in the physical metal itself may be a step in that direction. In the meantime, stick with physical bullion and understand “spot” prices for what they are.

Gold would certainly be a big winner on a BREXIT
(courtesy LawrieonGold)

Britain Facing Brexit Bombshell. What Would Happen to Gold?

May 17, 2016 lawrieongold

According to the opinion polls whether Britain will vote to leave the European Union on June 23rd, or to stay in, it is too close to call. And given there is a large section of the population still undecided, and that this may end up voting with hearts rather than minds there has to be a serious chance that the ‘leave’ vote will end triumphant, despite the vast array of key figures from within and without the UK establishment pushing the ‘remain’ agenda unmercifully.

The thing is, the general public no longer trusts mainstream politicians – and those key figures from outside the UK – like US President Obama, IMF Head Christine Lagarde are seen as just supporting the status quo – and their statements may even end up being counter-productive for the cause they are trying to help promote. Brits don’t like being told what they should do by foreigners – which is perhaps the whole basis of the Brexit argument in the first place. Even Labour leader, Jeremy Corbyn – officially on the ‘remain’ side – seems lukewarm in his views more intent on castigating the Conservative government than for calling for the country to stay in.

Charisma may well win the day and Brexit does have two of the more charismatic proponents on its side in Boris Johnson and Nigel Farage. Even though the Brexit camp tries to sideline Farage, presumably because of the roots of the UKIP political party which he has largely single-handedly brought into the political mainstream, he does have a charisma lacking in most of the mainstream politicos and will certainly have an impact on the vote.

The latest poll of polls conducted by the Financial Times, published two days ago, puts the balance at 46% to remain and 44% to leave BUT of the last ten polls taken into account Brexit was either in the majority, or even, for six of them. However there was huge volatility in the results in terms of percentage gaps. Does this suggest that the Brexit vote is gaining the momentum necessary to see it first past the post on the day? The final poll is still just over a month away and a lot can happen in that time. It might only take one significant event in the meantime seen as either positive or negative to the Brexit case to sway the final outcome – as may who is most successful in getting their supporters out to vote on the day.

Two polls out today, one by telephone and one online both conducted by The Guardian in conjunction with polling company ICM, show hugely different results. As Reuters reports, the contrast in the two surveys is particularly stark, because they were conducted concurrently and deployed as similar vote adjustment methodologies as possible. In ICM’s telephone poll, the remain camp was eight points clear of leave, at 47% compared with 39%, with 14% undecided. Once the “don’t knows” are excluded, remain looked set for a clear 10-point lead, by 55% to 45%.

But the results of the online survey were very different showing those in favour of Brexit having a definite edge – standing on 47% to remain’s 43%, with only 10% of respondents undecided. Once they are excluded, leave’s four- point advantage is maintained, in a projected final pro- Brexit result of 52% to 48%.

Telephone polls in general have tended to show principal support for the remain option while internet ones for a dead heat or Brexit so the results shouldn’t be seen as too surprising.

Also, because Brexit is largely presented by the media as being potentially disastrous, among the economic cognoscenti, many are loath to nail their colours to the Brexit cause – at least openly – but there is a distinct feeling from this commentator that many of these are more open to the idea of Britain leaving the EU than they are prepared to admit in public.

The presumed economic arguments against Brexit are legion and heavily promoted by the remain camp, with government backing – but the truth is nobody really knows what would happen in the case of a leave vote in terms of subsequent renegotiations of key trade deals and political alliances. Initial uncertainty would almost certainly cause some severe hiccups for sterling, the equities markets and the UK economy, but the leave proponents are of the opinion that this would be shortlived. As a nation which despite its small geographical footprint still has the world’s fifth largest GDP (after the US, China, Japan and Germany), and has historic trading links which far transcend the EU, the argument from the leave supporters is that it can easily stand on its own feet outside any artificial union.

The whole result may come down to sovereignty. There is a perception – only partially correct – that EU laws override long term UK ones and that a mostly unelected European Commission can impose all kinds of restrictions on what UK citizens can or can’t do or consume.

Freedom of movement between EU states is another area where one suspects UK citizenry, rightly or wrongly, is nervous about continuing membership. When the EU comprised just the major European economies this would not have been a problem, but now that there are 28 member nations, and the prospect of others being added to the list, mostly seen as being nations with poorer economies and less munificent social systems, prospective unchecked EU migration flows are viewed as being unmanageable if Britain remains in the EU and counter to the best interests of the British workforce.

These are emotive arguments. The general populace probably just doesn’t believe the plethora of adverse economic projections spun out by the government-backed remain camp in a campaign which seems wholly have been designed to project fear of consequences of a Brexit, rather than any advantages of staying in. This may well prove to have been counterproductive come the day. There’s little doubt that economic data will be manufactured in the days leading up to the referendum to support the government’s case for staying in the EU. Will this swing the result?

But don’t write off the possibility of a Brexit yet, whatever the polls may tell you. And if it happens it will certainly result in economic uncertainty, perhaps even for a few years. But this uncertainty won’t just apply to the UK – it could launch the whole of the EU into introspective turmoil. There are ‘leave’ movements in many countries and these will gain heart, and numbers, from a UK Brexit decision were it to happen.

This website is largely about gold and precious metals. What would be the effects of a Brexit on the yellow metal? We think the impact could be strongly positive for gold. The yellow metal tends to thrive on economic and political uncertainty and there are potentially far reaching consequences of a Brexit decision, particularly within the EU itself. For UK holders a mini collapse of sterling as a result of a Brexit decision should it happen, would probably make moving some of one’s wealth into gold a very wise decision indeed. Gold is in effect financial insurance and if the economists and politicians predicting disaster for the UK economy if Brexit happens are correct and sterling plunges – it probably would in a knee-jerk reaction anyway – then a global gold price rise coupled with a fall in the domestic currency looks to make holding some gold a no- brainer for the UK investor in particular. brexit-bombshell-what-would-happen-to-gold/



Although I generally cover silver and gold, the other two precious metals also deserve some attention.  Here is Lawrie Williams discussing Platinum and Palladium:

(courtesy Lawrie on Gold/Lawrence Williams)


Platinum and palladium outlook – Big deficits ahead but will they make any difference to prices?

We have seen three major reports out for London’s Platinum Week from Metals Focus, GFMS and the WPIC.  They all offer comprehensive analyses in text, tabular form and graphical content of various aspects of the markets and they are a hugely valuable resource for followers of the pgms sector.   There are definite differences of opinion on the relative supply and demand scenarios for platinum in particular in 2015, but all three analyses are predicting supply deficits ahead for the two major pgms, but on past performance such seemingly strong fundamentals may have little impact on prices.

The latest to report was Metals Focus with its inaugural Platinum & Palladium Focus 2016, a comprehensive 78 page long analysis of the platinum and palladium markets.  In many respects it appears to this observer to offer the most realistic appraisal of the markets and likely price performance for the two major platinum group metals (pgms).

A couple of articles I’ve published on on platinum group metals resulting from the release of these three very comprehensive reports on the sector  are linked here:

Platinum and palladium supply deficits ahead, but will this impact prices?

Is platinum in surplus or deficit? Reports contradict.




Your early TUESDAY morning currency, Asian stock market results,  important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight



1 Chinese yuan vs USA dollar/yuan DOWN to 6.5261 ( DEVALUATION ) / Shanghai bourse  CLOSED DOWN 7.71 OR 0.25%  / HANG SANG CLOSED UP 234.85 OR 1.18%

2 Nikkei closed UP 186.40 OR 1.13% /USA: YEN RISES TO 109.51

3. Europe stocks opened ALL IN THE GREEN  /USA dollar index DOWN to 94.55/Euro UP to 1.1318

3b Japan 10 year bond yield: FALLS   TO -.107%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 109.51

3c Nikkei now WELL BELOW 17,000

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

3e WTI::  47.76  and Brent: 48.80

3f Gold DOWN  /Yen DOWN

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

Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES to 0.159%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate FALL to 8.95%/: 

3j Greek 10 year bond yield FALL to  : 7.36%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1272.60/silver $17.07(7:45 am est) BROKE RESISTANCE AT 16.52 

3l USA vs Russian rouble; (Russian rouble UP 11 in  roubles/dollar) 64.83-

3m oil into the 47 dollar handle for WTI and 48 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/expect a huge devaluation imminently from POBC.


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9785 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1077 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.


3r the 8 Year German bund now  in negative territory with the 10 year RISES to  + .159%

/German 8 year rate negative%!!!

3s The Greece ELA NOW a 71.4 billion euros,

The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”.  Next step for Greece will be the recapitalization of the banks and that will be difficult.

4. USA 10 year treasury bond at 1.757% early this morning. Thirty year rate  at 2.59% /POLICY ERROR)

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

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

Futures Fizzle After Oil Fades Bounce Above $48

It has been more of the same overnight, as global stocks piggybacked on the strong US close and rose despite the lack of good (or bad) macro news, propelled higher by the two usual suspects: a higher USDJPY and a even higher oil, if mostly early on in the trading session.

Yes, the oil squeeze higher continues, and as the charts below courtesy of Andy Critchlow show, Brent is now 82% higher in the past 82 days

… while crude has had its strongest rally since 2010.

However, after rising above $48 for the first time since October, crude finally pulled back modestly and was unchanged at last check while Brent was modestly in the red. This led to equities paring much of their overnight advance. In FX, in addition to the abovementioned spike in the USDJPY now well in the mid-109.50s, the other prominent mover was Australia’s dollar which advanced after central bank officials suggested authorities will hold off on cutting interest rates.

The Stoxx Europe 600 Index was still set for its third day of gains also following the crude jump above $48 a barrel. The British pound climbed by the most in four weeks as a poll indicated support is growing in the U.K. for the country to remain in the European Union. Investors got a reminder of the challenges facing central banks as a report showed U.K. consumer-price growth unexpectedly slowed in April. U.S. data on Tuesday are forecast to show inflation quickened last month. West Texas Intermediate crude was unchanged at $47.74. The pound was 0.6 percent stronger at $1.4486 and the Aussie gained 0.5 percent to 73.25 U.S. cents. US equity futures were unchanged after rising 0.3% around the European open.

“Markets seem to be in a relatively sweet spot with a steadily stronger U.S. dollar and resilient commodities prices,” Angus Nicholson, a Melbourne-based market analyst at IG Ltd., told Bloomberg “Many investors have been predicting a pullback in markets, but despite all the negativity, markets have continued to grind higher.”

Spot on: which is why to all those who are itching to short the market here, our advise is to wait for Gartman to go long first.

This is where markets were at this moment

  • S&P 500 futures up less than 0.1% at 2063.5
  • Stoxx 600 up 0.5% to 337
  • FTSE 100 up 0.6% to 6191
  • DAX up 0.1% to 9963
  • German 10Yr yield up 1bp to 0.16%
  • Italian 10Yr yield down less than 1bp to 1.48%
  • Spanish 10Yr yield down less than 1bp to 1.6%
  • S&P GSCI Index down 0.1% to 367.2
  • MSCI Asia Pacific up 0.7% to 127
  • Nikkei 225 up 1.1% to 16653
  • Hang Seng up 1.2% to 20119
  • Shanghai Composite down 0.3% to 2844
  • S&P/ASX 200 up 0.7% to 5396
  • US 10-yr yield up less than 1bp to 1.76%
  • Dollar Index down 0.04% to 94.53
  • WTI Crude futures up less than 0.1% to $47.74
  • Brent Futures down 0.6% to $48.68
  • Gold spot down 0.2% to $1,271
  • Silver spot up less than 0.1% to $17.16

Top Global News

  • Oil Advances to Seven-Month High as U.S. Stockpiles Seen Falling
  • Saudi Arabia’s Treasuries Holdings Are Unveiled After 41 Years
  • Soros Cuts U.S. Stock Investments 37%, Buys Barrick Gold Stake
  • Hedge Funds Abandon Ex-Darling Valeant and Other 13F Highlights
  • LendingClub Subpoenaed by Justice Department After CEO Exit

Looking at regional m,arkets, Asian stocks traded mostly higher following a firm Wall Street close where tech and energy surged after Berkshire Hathaway took a USD 1bIn stake in Apple and WTI rose to fresh 6-month highs. This saw the energy sector underpin ASX 200 (+0.7%) and Nikkei 225 (+1.1%) as WTI extended its advances during Asia hours to above USD 48/bbl, while JPY weakness further bolstered Japanese stocks. Shanghai Comp (-0.3%) underperformed despite the PBoC injecting funds through its Medium-term Lending Facility, as debt concerns continued to linger after Evergreen Holding defaulted on bond repayments to become at least the 10th defaulter in China YTD. 10yr JGBs traded flat with a lack of demand seen amid a positive risk tone in Japan, while today’s 5yr auction saw mixed results with the b/c slightly declining from prior although the lowest accepted price was higher than expected. Japanese PM Abe said the sales tax will be increased as planned unless a serious event occurs. PM Abe also commented he will make a decision at an appropriate time which will be based on expert opinions.

Top Asian News

  • BlackRock’s Fink Says ‘All Have to’ Worry About China Debt
  • China to Restrict Trading Halts, Report Says, Boosting MSCI Odds
  • ANZ to Cut About 200 Jobs in Australia as Loan Growth Slows
  • As China Revamps Regulation, PBOC Gears Up for Central Role
  • Aircastle’s Japan Venture to Buy Up to 10 Boeing, Airbus Planes
  • Japan to Seek Cheaper Plans From Operators, Official Says

European equities have been climbing higher this morning with Germany and Switzerland returning from their elongated break. Risk on sentiment has been supported by the continuation of the upside in oil prices in which Brent crude futures had sustained a move above USD 49/bbl for a large part of the morning. However, in recent trade prices have tailed off with WTI crude retesting USD 48/bbl to the downside.
Additionally, the upbeat tone has also been supported by the gains in Apple yesterday following Berkshire Hathaway announcing a USD 1bIn stake in the Co. As such, gains in equities has seen Bunds on the back foot. Alongside this, a slew of EUR-denominated bond sales is set to continue this week after near record amount of sales last week. Furthermore, as energy markets continue to climb this could continue to hamper fixed income products as markets inflation expectations adjust to the uptick in prices.

Top European News

  • U.K. Inflation Rate Unexpectedly Declines to 0.3% on Air Fares: Economists had forecast a rate of 0.5 percent, based on the median estimate in a Bloomberg survey
  • Vodafone Beats Estimate With 2.5% Quarterly Network Revenue Gain: Analysts surveyed by Bloomberg expected 1.5 percent growth, on average
  • Iliad First-Quarter Sales Increase 6.6% on Wireless Promotions: Revenue rose to 1.15 billion euros ($1.3 billion)
  • Barclays’ Ramos Emerges as Best-Value South African Bank CEO: Barclays Africa earned 508 rand ($33) in net income for every rand the Johannesburg-based company paid Ramos in base salary, long-term incentives and bonuses in 2015, according to data compiled by Bloomberg
  • Deutsche Bank Names Ex-EDF CFO Thomas Piquemal to Lead M&A: Piquemal, 47, who quit as chief financial officer of French utility Electricite de France SA in March, will be based in Paris and report to corporate and investment banking chief Jeff Urwin

In FX, Asia and early London have been pretty active today, with the ongoing levitation in USDJPY one of the most prominent trades, where a 109 stop hunt unleashed short covering above 109 and pushed the pair as high as 109.60.  Cable has also been active with inflation data in both the UK and US today. The UK numbers saw some softness in the more focused-upon core read, with the y-o-y rate registering 1.2% vs median 1.4% expected. Ahead of this, the ORB/Telegraph poll saw the remains showing a significant lead to send the spot rate tearing through the 1.4400’s, trading through 1.4500 but holding resistance levels ahead of 1.4550 before the data response saw us lower again. EUR/GBP was testing .7800 early on, but has survived a potential breach of the figure level. Elsewhere, the post RBA (minutes) recovery in AUD looks to have been short-lived as the spot rate sinks back into the low .7300’s. US inflation now set to determine whether we test through the figure, with EUR/USD also mid-range ahead of the release. USD/JPY is higher on the positive risk tone, with the quest for 110.00 back on. USD/CAD has duly found anticipated support in the mid 1.2800’s to return through 1.2900, coinciding with a turn-back in WTI through $48.0 and Brent below $49.0.

In commodities, WTI and Brent have fallen off session highs after eyeing the USD 50.00/bbl level. Gold and silver have also been falling alongside the rest of the commodities complex as the USD has been strengthening in the EU session. Elsewhere, copper and iron prices were underpinned and were in minor positive territory amid the global risk sentiment.

On today’s US calendar, the big focus will be on the April inflation data. Market expectations are for a +0.3% mom headline print which should be boosted by higher oil prices and a +0.2% mom print at the core.  Elsewhere this afternoon we’ll also get April housing starts and building permits data – both of which are expected to rebound. Finally we’ll cap the day off with more important data in the form of industrial production (+0.3% mom expected), capacity utilization and manufacturing production. Fedspeak wise we’ll also hear from Williams and Lockhart at noon in a joint interview, as well as Kaplan (at 1.15pm EDT) later on while the ECB’s Praet and Nouy are scheduled to speak this morning.

Bulletin Headline Summary From RanSquawk and Bloomberg

  • European equities trade higher as European equities take the lead from their US and Asian counterparts with elevated energy prices also underpinning sentiment
  • GBP has been a key focus for FX markets as UK CPI fell short of expectations, while the latest polls develop a further bias for remaining in the EU
  • Looking ahead, highlights include US CPI, Housing Starts, Building Permits and API Inventories, ECB’s Praet, Fed’s Williams, Lockhart and Kaplan
  • Treasuries trade slightly lower overnight, led by belly, amid rise in global equities while crude oil is off session-highs; U.S. data includes CPI and housing starts.
  • Even as the VIX sits 25 percent below its bull market average, investors are using futures on the index to hedge against trouble in equities six months from now
  • After spending years fighting the European Union, Ryanair Holdings Plc CEO Michael O’Leary has turned into one of its biggest defenders, and he’s even decorating his airplanes to prove it
  • The pound rallied the most in two weeks after the ORB/Telegraph poll showed 55 percent of respondents were in favor of remaining in the European Union, while 40 percent wanted to leave
  • U.K. inflation unexpectedly slowed in April, highlighting the struggle Bank of England policy makers face to revive price growth
  • Chinese stocks traded in Hong Kong rose the most in a month, with commodity producers gaining as oil prices climbed and President Xi Jinping vowed to press ahead with plans to cut capacity at state-owned enterprises
  • As China’s leaders consider ways to improve market oversight and avoid the kind of boom and bust in equities that shook investors around the world last year, the PBOC is already extending its oversight to areas beyond its traditional focus
  • BlackRock Inc.’s Laurence D. Fink, who oversees the world’s largest money manager with $4.7 trillion of client assets, said “we all have to be worried” about China’s mounting debt amid slowing growth, even as he remains bullish on the economy in the long run
  • Ray Dalio’s $154 billion Bridgewater Associates became the first foreign hedge fund manager to win approval to set up a wholly owned investment-management business in China, according to Shanghai-based consulting firm Z-Ben Advisors
  • Sovereign 10Y yields mostly lower; Asian, European equities higher; U.S. equity-index futures higher; WTI crude oil rises while precious metals fall

DB’s Jim Reid concludes the overnight wrap

Yesterday was all about Apple and oil. Starting with the former, Apple’s share price gained close to 4% yesterday and the most in over two months following the news that Warren Buffet’s Berkshire Hathaway has bought a $1bn slice of the company. That comes as other high-profile money managers have recently cut or exited their positions in the tech giant (including Carl Icahn). That said, after trading just above $130 in the summer of 2015, shares have since collapsed into the low $90’s and while Buffet has for a while typically avoided investment in the tech sector, the move will been as a something of a vote of confidence that Apple can halt the recent slide in sales.

Meanwhile, the other big headline grabber yesterday was Oil. An upbeat broker report suggesting that the market has moved into a deficit quicker than expected following some of the recent supply disruptions (including Nigeria, Canada and Venezuela) helped fuel a +3.27% for WTI and so taking it to close to $48/bbl and the highest close since November 3rd. Brent was up a similar amount and is edging closer to the $50/bbl mark (hovering around $49.26/bbl this morning). With the moves this morning it means that the unrelenting rally for WTI since the February intraday lows has seen it surge an impressive 84% in that time.

Unsurprisingly then it was energy and tech names which led the S&P 500 to a +0.98% gain yesterday, while the Nasdaq finished up a slightly higher +1.22%. While Oil has been on a one-way track since February, it does appear that US equities have however hit a bit of a stumbling block this month even after considering yesterday’s strong performance. In fact in the nine sessions prior to yesterday, the S&P 500 had followed three days of consecutive losses, with three days of gains and then three more days of losses again with the index back to flat for the month of May (which compares to a 4% return for Oil). So while the old adage ‘sell in May and go away’ hasn’t quite been completely true, it’s proving to be a much more directionless month for US equities compared to the positive performance of March and April.

With the rebound in oil we thought we’d update our long-term chart of the average real price of oil back to 1861. When we last published back in January we remarked that for the first time in a decade oil was actually cheap relative to its long term value. 4 months on and with the large rally its back just above its 155 year long term real adjusted average (around $47). The chart is in the PDF today for those interested.

Switching our focus now to the latest in Asia this morning, bourses are largely following the US lead with the majority advancing. The Nikkei (+0.77%), Topix (+0.76%), Hang Seng (+0.31%), and ASX (+0.56%) are all up, while it’s China which is the standout underperformer with the Shanghai Comp currently – 0.37% although it’s not obvious what has triggered that. The poor weekend data was largely ignored yesterday but perhaps it’s causing a drag today. Credit markets are benefiting from the general better sentiment with indices in Asia and Australia a couple of basis points tighter. In FX markets the Aussie Dollar (+0.80%) is the big mover following the RBA minutes from the meeting earlier this month which indicated that the decision to cut rates was actually more balanced than maybe first thought.

Moving on. Aside from the Apple and oil focus there wasn’t a great deal else to drive markets yesterday although the US data did turn a few  heads. Specifically it was the May Empire manufacturing print which attracted attention after the data was reported as tumbling from its recent April high by nearly 19pts to -9.0 (vs. +6.5 expected). That monthly change was actually the most since October 2014 and of further concern was the weakness in the components with new orders, shipments and inventories all negative. Our US economists highlighted that this has resulted in their ISM-adjusted manufacturing survey index now falling below 50 after two successive monthly >50 readings. The ISM manufacturing print is due to be released on June 1st but for now yesterday’s reading will see much attention placed on Thursday’s Philly Fed manufacturing survey. Meanwhile the other data yesterday was the NAHB housing market index which also came in lower than expected at 58 for May, albeit unchanged relative to the prior month.

There was also some Fedspeak to mention yesterday and it came from Richmond Fed President Lacker. The Fed official said that while he would never completely make up his mind prior to a meeting, he noted that ‘at this point it looks to me as if the case for raising rates looks to be  pretty strong in June’. Lacker made mention of inflation moving ‘decidedly toward 2%’ as well as there being further evidence of tightening in  labour markets. He also said that the downside risks which dominated at the beginning of the year ‘have dissipated’. The US Dollar was little changed by the end of play yesterday although there was a reasonable move in the Treasury market with the benchmark 10y finishing up over 5bps higher in yield at 1.754% and wiping out Friday’s move lower.

Wrapping up the rest of the price action yesterday, with a number of public holidays it was an unsurprisingly quiet and low volume session in Europe reflected by just the +0.01% return for the Stoxx 600. Credit markets in the region were a touch wider (Crossover +4bps) although the stronger day for risk in the US saw CDX IG finish nearly 2bps tighter. It’s the new issue market which is still taking up much of the attention – particularly the mega deal from Dell. Bloomberg is reporting that the $16bn deal will be split across 8 tranches and is set to possibly price today but notably the same article suggests that the order book has already run past the $60bn mark, with the company suggesting that it is weighing up whether or not to upsize the deal.

Before we move on to the day ahead, the latest The House View titled “A challenging road” came out overnight. Despite rising concerns about global growth, the team expects only a modest deceleration into year-end from the US, China and the eurozone in aggregate. This, coupled with central banks taking a backseat in the coming months and geopolitical risk events approaching, leaves them holding a short-term neutral view on most markets.




i)Late  MONDAY night/ TUESDAY morning: Shanghai closed DOWN  BY 7.17 PTS OR 0.25%  /  Hang Sang closed UP 234.85 OR 1.18%. The Nikkei closed UP 186.40 POINTS OR 1.13% . Australia’s all ordinaires  CLOSED UP 0.69% Chinese yuan (ONSHORE) closed DOWN at 6.5261.  Oil ROSE to 47.76 dollars per barrel for WTI and 48.80 for Brent. Stocks in Europe  MOSTLY IN THE GREEN . Offshore yuan trades  6.54620 yuan to the dollar vs 6.5261 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE REMAINS CONSTANT.





none today


Amazing another German Bank’s analyst, Berenberg’s James Chappell states that Deutsche bank’s problems are basically insurmountable and he downgrades the stock to sell. Boy does he have guts:


(courtesy Berenberg Bank/Chappell/zero hedge)


Analyst Warns Deutsche Bank’s Problems May Now Be “Insurmountable”

Call it some no holds barred German bank on German bank action.

After a tumultous start to a year that Germany’s largest, and judging by the tens of billions in legal settlements and charges also its most criminal bank, Deutsche Bank, would love to forget, things got worse over the weekend when a note issued by another German bank said that either Deutsche will have to massively dilute its shareholders as a result of “insurmountable” debt, or a fate far worse could await the Frankfurt-based lender.

Berenberg analyst James Chappell pulled no punches and spoke in uncharacteristically frank terms, traditionally reserves for the fringe media, when he said that “facing an illiquid credit market limiting Deutsche Bank’s (DBK) ability to delever and with core profitability impaired, it is hard to see how DBK can escape this vicious circle without raising more capital. The CEO has eschewed this route for now, in the hope that self-help can break this loop, but with risk being re-priced again it is hard to see DBK succeeding.” Chappell then broke the cardinal rule of sellside analysts: never issue a Sell rating on a fellow bank. “We downgrade to Sell and cut our price target to EUR9.00.

According to Chappell, the biggest problem, of which DB has many, is that it simply has too much leverage, some 40x to be precise, something we have warned about since 2013. To wit:

Too many problems still: The biggest problem is that DBK has too much leverage. On our measures, we believe DBK is still over 40x levered. DBK can either reduce assets or increase capital to rectify this. On the first path, the markets do not exist in the size nor pricing to enable it to follow this route. Going down the second path also seems impossible at the moment, as the profitability of the core business is under pressure. Seeking outside capital is also likely to be difficult as management would likely find it hard to offer any type of return on new capital invested.

In other words, DB may be frash out of options. But wait, there’s more bad news because as Berenberg adds, the entire “industry is in structural decline

The difficulty in analysing investment banks from the outside is that it is hard to establish core profitability. In an industry in structural decline, investment bank management teams are also likely to face similar challenges. Each weak quarter is seemingly greeted with an excuse that it could have been better if not for the wrong type of volatility, client uncertainty or central bank intervention. Q1  2016 saw the absence of one-off profitable events that have protected revenues in the past. We have perhaps had the first glimpse of what core profitability in the investment banking industry really is (ROEs in the midsingle digits at best) and it could be even worse if the traditional seasonality occurs.

Which brings us to his price target and Sell rating:

Price target cut to EUR9.00: We look at DBK’s valuation in two ways. One is a sum-of-the-parts analysis on the basis of normal conditions returning. This would imply a price target of EUR15.00. The second is a leverage adjusted P/E using the sector average multiple of 10x. This implies a price target of EUR9.00, using tangible book value. Considering “normal” conditions are unlikely to return and risk is re-pricing, we use the latter.

We applaud Chappell and only wish more of his peers had the guts to tell the truth and call it like it is.



It is now time to annoy Russia so more:  War games are initiated right in Russia’s back yard:

(courtesy zero hedge)


Washington “Promotes Regional Stability” With War Games In Russia’s Back Yard

Around 350 troops from six countries (US, UK, Bulgaria, Moldova, Romania, and Serbia) are taking part in a military drill entitled ‘Platinum Eagle 16.1’, which is scheduled to conclude today according to RT.

The exercise comes less than a week after the US launched its European missile defense system in Romania, much to the ire of Russia.

“The 1st Battalion Marines is spread out over Eastern Europe, and the fact that we are able to come here, in Romania, and train with five other nations, that really promotes regional stability. Training together in peace time, those who train together will fight well together,” Lieutenant-Colonel Justin Ansel of the US Marine Corps told RT’s Ruptly video agency

Ah yes, nothing says regional stability like holding military exercises in Russia’s back yard just days after pushing Russia back to a cold war type of mentality.

We’re not going to be dragged into this race. We’ll go our own way. We’ll work very accurately without exceeding the plans to finance the re-equipment of our Army and Navy, which have already been laid out for the next several years,” Putin said on Friday

Recent developments indicate that the situation isn’t getting better. Unfortunately, it’s deteriorating. I’m talking about the launch of the radar station in Romania as one of the elements of the up-and-coming US anti-missile defense program,” the Russian president added.

* * *

It appears as though the US isn’t the slightest bit concerned about pushing Russia even further than it already has. As we said earlier, given how the market processes newsflow lately, perhaps Russia being forced to move more ICBMs to its border, increasing the likelihood of a catalyst for actual war, will be viewed as bullish for stocks.

The USA Senate passed the bill that would expose the Saudi’s role in the 9/11 terror attacks.  Obama states that he would veto the bill and as such he is putting the Saudis ahead of USA victims of the tragedy!
(courtesy zero hedge)

Senate Passes Bill That Would Expose Saudi Arabia’s Role In Sept. 11: Obama Veto Imminent

After a month-long scare campaign waged by Saudi Arabia, and in no small part the Obama administration, which went so far as to threaten it would dump its US Treasurys (which the NYT previously had quantified as $750 billion however which the Treasury just yesterday disclosed for the first time in 41 years as only $117 billion, suggesting the Saudis would likely also have to sell US stocks and various other US-denominated assets), if the US were to pass a bill that would hold it legally liable for the Sept 11 attacks, it will be up to Obama to veto the bill because moments ago the Senate unanimously passed said bill, bringing Congress closer to a showdown with the White House.

The Senate’s passage of the bill, which will now be taken up in the House, is another sign of escalating tensions in a relationship between the United States and Saudi Arabia that once received little scrutiny from lawmakers.

As reported a month ago, the Obama administration has urgently lobbied against the bill, and the Saudi government has warned that if the legislation passes it might begin liquidating its USD reserves. Adel al-Jubeir, the Saudi foreign minister, delivered the warning to lawmakers and administration officials while in Washington in March.

Many economists are skeptical that the Saudis would deliver on such a warning, saying that the sell-off would be hard to execute and would do more harm to the kingdom’s economy than to America’s.

As the NYT reports, questions about the role Saudi officials might have played in the terror plot have lingered for more than a decade, and families of the Sept. 11 victims have used various lawsuits to try to hold members of the Saudi royal family and charities liable for what they allege is financial support for terrorism. But these moves have been mostly blocked, in part because of a 1976 law that gives foreign nations some immunity from suits in American courts.

But the Senate bill carves out an exception to the law if foreign countries are found culpable for terrorist attacks that kill American citizens inside the United States. If the bill were to pass both houses of Congress and be signed by the president, it could clear a path for the role of the Saudi government to be examined in the Sept. 11 lawsuits.

The administration has warned that any weakening of the sovereign immunity law could put American troops, civilians and corporations at legal risk if other nations decide to retaliate with their own legislation. Josh Earnest, a White House spokesman, said last month that President Obama would veto the bill if it reached his desk in its current form.

Earnest repeated the same warning moments ago, which means that if the House endorses the Senate bill, Obama will be put in the unpleasant spot of having to veto a bill which to many Americans is a critical milestone in figuring out if Saudi Arabia was indeed behind the September 11 bombings, and further lead to questions why Obama is defending a Wahhabist regime which has been repeatedly implicated in the biggest terrorist attack on US soil, and flagrantly rejecting to follow the will of the US electorate.



The Opposition leader has urged Venezuelans to defy the state of emergency. The country is in complete anarchy and now the government has the authority to confiscate businesses who are not producing goods because they cannot get their hands on uSA dollars to buy the raw materials they need:

(courtesy zero hedge)


Caracas Showdown: Opposition Leader Urges Venezuelans To Defy State Of Emergency

As reported over the weekend, in what may well be one of Maduro’s last desperation steps, the Venezuela president announced the would implement a state of emergency, and also threatened to seize closed factories as well as arrest their owners.

During an impassioned rally, the embattled Venezuela ruler boomed: “Comrades, I am ready to hand over to communal power the factories that some conservative big wigs in this country have stopped. An idled factory is a factory handed over to the people. We are going to do it, fuck it!”

As expected, on Saturday the opposition decried the emergency measure.  “If you obstruct the democratic way, we do not know what could happen in this country. Venezuela is a bomb that could explode at any moment.” Said opposition leader Henrique Capriles.

Earlier today Venezuela may have neared its tipping point, when Capriles urged the country on Tuesday to defy a state of emergency decreed by the government as it grapples with an acute political and economic crisis. Henrique Capriles spoke as the opposition-controlled congress prepared to debate the sweeping measures ordered by President Nicolas Maduro.

He said lawmakers will probably reject it, and that if the government insists the decree remains in force “it is up to us … to ignore this decree.”

That stance is likely to pit the congress not only against the presidency, but also the Supreme Court, which has final say over the legality of the decree. It will also likely push the country to a full-blown confrontation between forces supporting the president, including the national guard, and the general population which has been crushed in recent months by Venezuela’s economic devstation.

Many of the Supreme Court judges were appointed during the reign of Maduro’s late predecessor, Hugo Chavez, and are seen as loyal to the government.

The decree establishing the state of emergency came into force for 60 days on Monday, after Maduro announced it last week. As AFP reports, Its first big test will come on Wednesday when opposition-led marches are to take place nationwide demanding electoral officials validate a referendum to oust Maduro. Similar marches last week were met by riot police and tear gas.

As regular readers know all too well, Venezuela is facing hyperinflation, food and electricity shortages that are sharpening public anger against the unpopular Maduro – seven in 10 Venezuelans want a change of government. But the president controls the levers of power.

And the measures in his decree give his government and security forces broad authorization to ignore most constitutional safeguards in a bid to keep order. Venezuela’s army is notably to be backed by civilians grouped into security units to tackle public unrest rising amid food shortages. As we reported over the weekend, Maduro warned that the military would hold “exercises” as soon as the coming weekend, seemingly to send a clear message to his critics that any popular move would be met with force.

The text also authorizes the state to do what is necessary to ensure supply of basic foods and services and to counter a crippling energy shortage that has resulted in electricity rationing.

The latest developments threaten to deepen the crisis in the oil-rich South American country, whose economy is tottering dangerously. Venezuela is in its third year of recession, brought low by global oil prices that are a third of where they were when Chavez was in charge and spending freely on welfare programs. Recently the country was rumored to have sold some (or all) of its gold reserves to procure much needed liquidity.

The climbing social and political tensions are ringing alarm bells beyond the nation’s frontiers. The United States has described reports of Venezuela’s spiral downwards as “breathtaking.” “The conditions for the Venezuelan population are terrible,” said a spokesman for the White House in Washington, Josh Earnest.

But with Maduro alleging the US is behind much of the volatility, in cahoots with rightwing Venezuelan tycoons, Washington is choosing its words carefully so as not to be seen as meddling. Maduro has ordered military exercises for Saturday to show Venezuela’s ability to see off foreign “armed intervention.”

As AFP adds, in his decree, Maduro said the security measures will counter “destabilizing actions that mean to disrupt life inside the country or its international relations.” Individuals, companies and non-governmental organizations in Venezuela with links to foreign groups are also to be put under scrutiny and risk having their finances frozen. The decree opens the way to businesses being expropriated if they are not seen to be doing enough to supply staple foodstuffs.

 Company seizures could notably affect the Polar group, Venezuela’s biggest food and beverage company, which halted beer production on April 30, saying it had run out of barley. Venezuelan businesses say they are currently operating at less than 45 percent capacity because the government will not allow them to buy increasingly scarce dollars to pay foreign suppliers.

The opposition says it has collected 1.8 million signatures to launch a recall referendum against Maduro. But the vote must be held before January 10, 2017 in order to trigger new elections, and the opposition accuses the electoral authorities of stalling. If held any later, a successful recall vote would simply transfer power to his hand-picked vice president, Aristobulo Isturiz.

Of course, Maduro will never allow a referendum and instead will cling to power at all costs, which likely means that a violent uprising against the regime now looks like a virtual certainty. The only question is when.



Nigeria has always had problems with militants.  Now meet the newest member of militant to cause huge problems for this oil nation:  the Niger Delta Avengers:

They are certainly causing oil to rise in price as they keep millions of barrels of oil off market:

(courtesy zero hedge)

Meet The “Niger Delta Avengers” – The Group Which Holds The Price Of Oil In Its Hands

As Goldman famously declared on Sunday night when it boosted its near-term oil prices targets (while cutting its 2017 estimates as a result of what it admits will be a delayed rebalancing of the oil market), the biggest upside risk to oil over the next months remains the threat from unexpected supply disruptions…

… such as the Canada wildfire which has mothballed up to 1.5 million barrels in daily production (and which took a turn for the worse earlier today, when new evacuations threatened the restart of oilsands facilities), but mostly the ongoing attacks shaking up, or rather down, Nigerian production, specifically affecting the region of the Niger River delta.

It is here where we meet a recently unknown group of militants, better known as the “Niger Delta Avengers” who are thought to be behind recent attacks on oil pipelines in the south.

As Bloomberg notes, “the Niger Delta Avengers have certainly been busy, forcing Shell’s Forcados terminal to shut in about 250,000 barrels of daily exports; and breaching an offshore Chevron facility in the 160,000 barrels per day Escravos system. In April, ENI had to declare force majeure, letting it stop shipments without breaching contracts — on exports of its Brass River grade after a pipeline fire.The country’s oil production has been severely disrupted by the attacks.”

To be sure, Nigeria has had a long history of dealing with militants who use attacks on oil to gain leverage. The previous wave of discontent, which hit a peak in 2009, only came to an end when President Yar’Adua offered amnesty, training programs and monthly cash payments to nearly 30,000 militants, at a yearly cost of about $500 million. Some leaders of the Movement for the Emancipation of the Niger Delta (MEND), the militant group, got lucrative security contracts. In other words, the “solution” was appeasement, and as Europe knows very well, appeasement never works, and instead invites increasingly greater problems.

As BBC adds, the amnesty program, which provides tens of thousands of former oil militants with a monthly stipend from the government, stemmed the level of violence in the region after its introduction in 2009. But in the latest budget, Nigerian President Muhammadu Buharireduced funding for the program by 70%, and has spoken of phasing it out entirely by 2018.

Yes, in Nigeria paying blackmail is part of the state budget.

It gets better: critics accuse Mr Buhari, a Muslim northerner, of unfairly targeting communities in the southern, mainly Christian oil-producing regions, as part of his anti-corruption drive. Mr Buhari’s predecessor Goodluck Jonathan, a Christian, comes from the Niger Delta region.

In other words, the indirect accusation is that the current president of a country whose primary source of revenue is oil exports, has unleashed the current Nigerian oil supply crisis on his own due to his reduced support for the same militant groups which he knew would promptly step in an hold the country’s oil production for ransom until they too got paid off.

And this is where the Niger Delta Avengers come into play: the group who, by keeping half a million barrels in oil from the market, have catalyzed not only the latest rally in oil, but now effectively hold the fate of the price of oil in their hands.


But who are the Niger Delta Avengers?

Luckily, the group has its own website called, not surprisingly, Niger Delta Avengers, which while somewhat unoptimized is very social-media friendly and even has a convenient section allowing outside parties to contact the millitants.


Some other notable oddities: the website was created on February 3, 2016 usinggodaddy as registrar.

The website has its own news blog, where it has posted such stories as “Niger Delta Avengers Zero Chevron Operations“, “STOP KILLING NIGER DELTANS IN THE GUISE OF ESCORTING OIL TANKERS“, and “KEEP YOUR THREAT TO YOURSELF MR. PRESIDENT; WE SHALL CONTINUE TO DO WHATEVER IS NECESSARY TO PROTECT THE NIGER DELTA INTEREST“, all authored by the same person, one Col. Madoch Agbinibo, NDA spokesman.

One interesting post which caught our attention explains Operation Red Economy from February 13, and which lays out the group’s genesis, agenda and demands.



We are a group of young Niger Deltans who have support from other parts of Nigeria, namely Northern, Western and Eastern part of the Country.


We have watched with keen interest, the way and manner in which the president Muhammadu Buhari Led APC government runs the affairs of this country, and we not pleased with the way things are going. For instance, the so-called anti-corruption fight is directed towards perceived enemies of the government, and those that are sympathetic to former President Goodluck Jonathan. We wonder why this persecution, despite the peaceful manner Jonathan hand over government to All Progressive Congress APC. When they did not even the win the 2015 election because he was after lives of Nigerians as he saw that the APC is blood tasty.


So far the only two governorship elections that were conducted under this government were and still remain the most controversial elections in the history of this nation.


The 2016 budget that was presented to the national assembly is full of fraud, yet nobody has owned up to the frauds spotted in the budget by Nigerians and the national assembly.


The president has not deem it fit to expose and prosecute those that are behind these frauds and punish them accordingly, because, because he is neck dip in these frauds. What kind of anti-corrupt fight is this?


This is the time Nigerians need to say the truth and stand by it. There must be a revolution to deliver this country from the hands of this wicked administration now. Imagine all the appointees to the president are all his relations eg DSS, Customs, INEC, and so on. We can no longer continue like this. There is a serious and biting hunger in the land. So many persons have lost their jobs under this Buhari led administration, while his wife and children are doing party everyday in Aso Rock Villa.


We cannot continue like this. Most APC leaders and other big men are pretending as if all is well but all is not well with them. Infact, they are dying in silent. Nigerians must speak up against this Military in Democracy government. Things must be done in the right way.


Therefore, we have chosen to start this revolution to free country from these vampires called APC government. We are hereby giving president Buhari two weeks ultimatum to do the following things urgently.

  1. Immediate implementation of the report of the 2014 National Conference. Otherwise, this country will break-up forcefully.
  2. President Buhari, the DS SSS and Timipre Sylva should apologize to the people of the Niger Delta region and family of Late Chief DSP Alamieyesegha for killing him with intimidation and harassment because of his party affiliation.
  3. The ownership of oil blocks must reflect 60% for the oil producing people and 40% for the non-oil producing people.
  4. The only Nigerian Maritime University sited in the most appropriate and befitting place Okerenkoko must start the 2015/2016 academic session immediately.
  5. The minister of transportation, Mr Rotimi Amechi should apologize to the Ijaws and the entire Niger Delta people for his careless and reckless statement about the siting of the University.
  6. The Ogoniland and indeed ll oil polluted lands in the Niger Delta must be cleaned up and compensation be paid to all oil producing communities.
  7. Mr Nnamdi Kanu, the Leader of IPOB must be released unconditionally as the court said.
  8. The Niger Delta Amnesty programme must be well funded and let it continue to run effectively.
  9. All APC members that are indicted in any corruption related cases should be made to face trial like the PDP members. Otherwise Buhari should shamefully forget about this nonsense anti-corruption fight.
  10. All oil multi-nationals and foreign investors should observe this ultimatum, as their business interest in the country must be first target.
  11. A word is enough for the wise.

In addition to tell the Nigeria government that we mean business at as 10:55pm on Saturday the Forcados terminal crude oil export pipeline was blown up by Niger Delta Avengers.

And then there is another follow up post on the site’s home page titled “CONGRATS TO ALL STRIKE TEAM OF THE NIGER DELTA AVENGERS” which goes on to list the group’s successful accomplishments to date (key excerpts ) and also touches on what the NDA supposedly wants.

From the high command of the Niger Delta Avengers we congratulating all strike teams of the Avengers without taking any innocent life or that of the Nigeria military we were able to shut down 50% of crude production.


We have been seeing a lot on the media about us. Some are asking, “Who are you avenging?” some calling us empty heads, ex-agitators have been condemning us on daily basis. Our criticizer from other part of the country, we don’t have any thing to tell you because you clearly don’t know how life is in the region.


To our criticizers from the region we want you to know you are all cowards and afraid to stand for your people.


Our agitation is more civilize than yours the Niger Delta Avengers is more concern with people of Niger Delta unlike you (ex-agitations) that were into kidnapping, killing of Nigeria soldiers, sea pirates, vessel and tanker hijacking. But we were able to carry out all our operations without killing a fly. We have sophisticated arms far better than what you use to have during your kidnapping days.


We are young, educated, well traveled and most of us were educated in east Europe but don’t worry when we achieved our goal (sovereign state of Niger Delta) then you people will be proud of us. In as much as we respect you as our elder brothers (ex-agitators) please don’t dare to stand on our way because if you do we will crash you.


To the Nigeria military the Niger Delta avengers is among you. And we know all your plans so we will always ten steps ahead of you. In our meeting comprising all heads of the strike teams, which was held in Bayelsa. The Niger Delta Avengers high Command comes to the conclusion that, if the military harass or invade any community in the region then you (Nigeria military) will get a feel of the Avengers.


If you smart or intelligent enough you will look inward not outside. We know when you are vulnerable but not take our calmness for granted.


From our analysis above, 90% oil blocs are allocated to individuals from northern Nigeria and some confused elements from the region are calling the Niger Delta Avengers names, some are calling us criminals….  To owners and operators of these oil blocs in our region the Niger Delta Avengers is giving you two weeks ultimatum to shut down your operations and evacuates your staff. If at the end of the ultimatum and you still operating. We will blow up all the locations. It will be bloody. So just shut down your operations and leave.


Once again on behalf of all the commanders of the avengers strike teams we congratulate our loyal and gallant soldiers who put human life before their targets. On behalf of the Niger Delta people we said congratulation as we have cripple the Nigeria economy by 50% by the grace of God we will make it 100% if our demands are not met soon.


By October 2016 we will display our Currency, Flag, Passport, our ruling Council and our Territory to the world.


To the United Nations, we are not asking for much but to free the people of the Niger Delta from environmental pollution, slavery, and oppression.  We want a country that will turn the creeks of the Niger delta to a tourism heaven, a country that will achieve its full potentials, a country that will make health care system accessible by everyone. With Niger delta still under the country Nigeria we can’t make it possible. So we are calling on the Ban Ki-Moon Secretary General United Nations and all Heads of the government of the five Permanent Security Council members to come to the aid of Niger delta people. We are calling on world leaders to come to the Niger delta to see the atrocities committed by the Nigeria government


Long Live the Niger delta Avengers.
Long Live the Niger Delta.


Col. Mudoch Agbinibo

So another group of “young, east-Europe educated idealists”, who have a “patriotic agenda” and are intent on achieving an independent state in southeast Nigeria. To do this they will blow up every piece of oil infrastructure in their way.

At least, unlike Hans Gruber, they don’t also demand the release of their ideological “revolutionary brothers and sisters” rotting away in some imperialist prison.

Meanwhile, the price of oil will remain high and keep rising as long as the NDA’s campaign continues oddly unopposed.

What is odd is how unexpectedly this group of African “freedom fighters” emerged, and created a website no less just as oil hit a 13 year low. One almost wonders if there was not certain western financial and military backing behind said group of “freedom fighters”, perhaps backing that has an interest in the price of oil going higher, and thus any sunk costs to fund and arm the NDA would be promptly recovered once oil jumped… as it has in the past week as a result of none other than Goldman highlighting Nigeria’s oil supply problems and making it the basis for their “bullish” (if only in the shorter-term) oil call.

Of course, that would never happen: after all, when in the history of the US has the country, either directly through the government or indirectly through the private sector, armed and funded offshore “rebel” groups to achieve specific national interest goals…

Crude slides after API reports a lower than expected draw:
(courtesy zero hedge)

Crude Slides After Oil Inventories Drawdown Less Than Expected

Following last week’s chaotic Genscape build (and warning), API build, but DOE draw, and subsequent face-ripping rally, tonight’s API data signaled a lower than expected draw and sparked further chaos in prices as they jerked higher (“it’s a draw”) only to slide on missed expectations. Having reached 7-month highs during the day session, the 1.1mm barrel drawdown missed expectations of a 3.5mm draw dramatically and sparked selling pressure. However, a smaller than expected build at Cushing stalled the weakness along with notably large drawdowns in Gasoline and Distillates.


  • Crude -1.1m (-3.5mm exp, last week -3.4mm)
  • Cushing +508k (+1.1m exp)
  • Gasoline -1.9mm (-1m exp)
  • Distillates -2m (-1m exp)

A Smaller overall drawdown than expected but smaller than expected build in Cushing and big draws ion Gasoline and Distillates sustained some price strength…


Which, after last week’s chaos…


Kneejerked crude higher before it dropped on the miss…


Charts: Bloomberg

Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings/TUESDAY morning 7:00 am




USA/CAN 1.2918 UP .0019

Early THIS TUESDAY morning in Europe, the Euro ROSE by 3 basis points, trading now WELL above the important 1.08 level FALLING to 1.1367; Europe is still reacting to deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite  CLOSED DOWN BY 7.17 PTS OR 0.25% / Hang Sang CLOSED UP 186.40 OR  1.13%   / AUSTRALIA IS HIGHER BY 0.69% / ALL EUROPEAN BOURSES ARE ALL IN THE GREEN   as they start their morning/

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

1. the total dollar global short is 9 trillion USA and as such we are now witnessing a sea of red blood on the streets as derivatives blow up with the massive rise in the rise in the dollar against all paper currencies and especially with the fall of the yuan carry trade. The emerging market which house close to 50% of the 9 trillion dollar short is feeling the massive pain as their debt is quite unmanageable.

2, the Nikkei average vs gold carry trade ( NIKKEI blowing up and the yen carry trade HAS BLOWN up/and now NIRP)

3. Short Swiss franc/long assets blew up ( Eastern European housing/Nikkei etc.

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 TUESDAY morning: closed UP 186.40 OR 0.33% 

Trading from Europe and Asia:

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 234.85 PTS OR 1.18% . ,Shanghai CLOSED  UP 23.75 OR 0.84%/ Australia BOURSE IN THE GREEN: /Nikkei (Japan) CLOSED IN THE GREEN/India’s Sensex IN THE GREEN

Gold very early morning trading: $1273.25


Early TUESDAY morning USA 10 year bond yield: 1.757% !!! UP 1 in basis points from MONDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield FALLS to 2.59 PAR in basis points from MONDAY night.

USA dollar index early TUESDAY morning: 94.55 DOWN 2 from MONDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers TUESDAY MORNING


And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield:  3.07% DOWN 7 in basis points from MONDAY

JAPANESE BOND YIELD: -.102% DOWN 1/4 in   basis points from MONDAY

SPANISH 10 YR BOND YIELD:1.57%  DOWN 3 IN basis points from MONDAY

ITALIAN 10 YR BOND YIELD: 1.45  DOWN 2 IN basis points from MONDAY

the Italian 10 yr bond yield is trading 12 points lower than Spain.





Closing currency crosses for TUESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/3:30 PM


Euro/USA 1.1315 UP .0002 (Euro =UP 2 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 109.11 UP 0.019 (Yen DOWN 2 basis points )

Great Britain/USA 1.4460 UP .0020 Pound UP 20 basis points/

USA/Canada 1.2909 UP 0.0009 (Canadian dollar DOWN 9 basis points with OIL RISING a bit(WTI AT $48.34).


This afternoon, the Euro was UP by 2 basis points to trade at 1.1315

The Yen FELL to 109.11 for a LOSS of 2 basis points as NIRP is STILL a big failure for the Japanese central bank/

The pound was UP 20 basis points, trading at 1.4460

The Canadian dollar FELL by 9 basis points to 1.2909, WITH WTI OIL AT:  $48.31

The USA/Yuan closed at 6.5170

the 10 yr Japanese bond yield closed at -.102% DOWN 1/4 IN BASIS  points in yield/

Your closing 10 yr USA bond yield: UP 1  IN basis points from MONDAY at 1.758% //trading well below the resistance level of 2.27-2.32%) HUGE policy error

USA 30 yr bond yield: 2.590 DOWN 1/3 in basis points on the day ( HUGE POLICY ERROR)

Your closing USA dollar index, 94.56 PAR IN CENTS ON THE DAY/4 PM

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for TUESDAY

London:  CLOSED UP 16.37 OR 0.27%
German Dax :CLOSED DOWN -62.71 OR .63%
Paris Cac  CLOSED DOWN 14.71  OR 0.34%
Spain IBEX CLOSED UP 16.60 OR 0.19%
Italian MIB: CLOSED DOWN 238.14 OR 1.34%

The Dow was DOWN 180.73  points or 1.02%

NASDAQ DOWN 59.72 points or 1.25%

WTI Oil price; 48.30 at 4:30 pm;

Brent Oil: 49.31






This ends the stock indices, oil price, currency crosses and interest rate closes for today

Closing Price for Oil, 5 pm/and 10 year USA interest rate:


BRENT: 49.43

USA 10 YR BOND YIELD: 1.774%

USA DOLLAR INDEX: 94.53 DOWN 3 cents



And now your more important USA stories which will influence the price of gold/silver


Stocks Give Up “Volumeless, No Good Reason” Gains On Hawkish FedSpeak

It’s over…Hotflation and Fedspeak – unless the S&P plunged 200 points, June is on like Donkey Kong.


Who could have seen that coming…


The S&P 500 tumbled back into negative territory for the year once again…



What goes up, comes back fast on heavy volume… Weak China data’s dip was a panic buying opportunty for the machines which quickly evaporated…


Trannies started off in a hurry on the day…


Once again VIX was pressured to keep the S&P 500 above unch year-to-date…


There is one odd outlier post payrolls…


Financials lagged as they begin to catch down to yield curve reality…


Stocks caught down to bonds…


Treasury yields extended their losses – despite the equity weakness – as Dell’s yuuge issuance dominated rotation and rate locks – though notably, like last week – thelong-end rallied as the short-end sold off on fed speak…


The USD Index trod water today after USDJPY pumped and dumped back to unch…


Crude continued its drift higher – no news – as PMs and Copper trod water despite the equity plunge…


Oil ETF longs and shorts continue to drift lower but appear balanced for now (lower pane)


With API data due after hours, the question is will last week’s exuberant draw stand up…


Charts: Bloomberg





Headline CPI rises .4% month/month and the biggest jump since Feb 2013.  Also hourly wages slid .1%.  Not a good report

(courtesy zero hedge)

Consumer Prices Jump Most In Over 3 Years Amid Rising Gasoline, Rent Inflation

Headline CPI rose 0.4% MoM (above +0.3% exp) for the biggest jump since Feb 2013 but sadly at the same time, price-adjusted hourly wages slid 0.1% in April.


Following a small drop in March, from 8 year highs, Core (ex food and energy) Consumer Prices rose 2.1% YoY (as expected) abesent the effect of Gasoline’s huge 8.1% MoM surge.


Of course this is probably transitory but we note that rent inflation remains at 3.7% YoY – its highest since 2008 and definitively not transitory.


And as the breakdown shows, energy and gasoline price soared in April – so are higher oil prices good or bad again?


The index for all items less food and energy increased 0.2 percent in April after increasing 0.1 percent in March. The shelter index rose 0.3 percent in April following a 0.2 percent rise the prior month. The indexes for rent and for owners’ equivalent rent both increased 0.3 percent, while the index for lodging away from home declined for the second straight month, falling 0.4 percent. The medical care index rose 0.3 percent in April, with the index for prescription drugs rising 0.7 percent and the hospital services index advancing 0.3 percent, but the physicians’ services index declining 0.1 percent. The motor vehicle insurance index rose 1.2 percent in April, and the index for airline fares advanced 1.1 percent after declining in March. The recreation index rose 0.3 percent in April, as did the index for education, and the indexes for alcoholic beverages, tobacco, and personal care all posted slight increases.

Gas prices according to CPI data, are up over 20% in the last 2 months – the biggest spike since June 2009…


In contrast, the index for household furnishings and operations declined 0.4 percent in April, its largest decline since April 2010. The indexes for apparel, for new vehicles, and for used cars and trucks also fell in April, each declining 0.3 percent. The index for communication declined as well, falling 0.2 percent.


Charts: Bloomberg

OBAMACARE losses mount but what is very troubling is many are refusing to take Obamacare:
(courtesy Mish Shedlock/Mishtalk)

As Insurance Losses Mount So Do Refusals: “Sorry, We Don’t Take Obamacare”

Submitted by Michael Shedlock via,

A McKinsey study shows Obamacare insurers lost money in 2014 and the losses doubled in 2015.

Amazingly, the study concludes there’s nothing to worry about because “30 percent of insurers nationwide were profitable.”

Meanwhile, outright refusals to accept Obamacare mount. “Sorry, We Don’t Take Obamacare” is now a frequent response.

Losses Pile Up

The Hill reports Study Shows ObamaCare Insurers’ Losses Grew in 2015.

The study from McKinsey & Company finds that in 2014, insurers had a margin of minus-4.8 percent, translating to an overall loss of $2.7 billion on the individual health insurance market, which includes ObamaCare’s marketplaces.


The study finds those losses roughly doubled in 2015 to between minus-9 and -11 percent margins, based on preliminary data.


Still, the study finds that not all insurers lost money. In 45 states, there was at least one profitable insurer in the market in 2014, and 30 percent of insurers nationwide were profitable.


“The individual market has little risk of entering a classic insurance ‘death spiral’ as long as the federal government continues to offer subsidies,” the study states, adding that “there will likely continue to be a large, viable individual market.”

Second Class Patients

The New York Times tells the sad tale of an increasing number of “Sorry, We Don’t Take Obamacare” responses to those seeking medical assistance.

AMY MOSES and her circle of self-employed small-business owners were supporters of President Obama and the Affordable Care Act. They bought policies on the newly created New York State exchange. But when they called doctors and hospitals in Manhattan to schedule appointments, they were dismayed to be turned away again and again with a common refrain:“We don’t take Obamacare,” the umbrella epithet for the hundreds of plans offered through the president’s signature health legislation.


Though their insurance cards look the same as everyone else’s — with names like Liberty and Freedom from insurers like Anthem or United Health — the plans are often very different from those provided to most Americans by their employers. Many say they feel as if they have become second-class patients.


Compared with the insurance that companies offer their employees, plans provide less coverage away from patients’ home states, require higher patient outlays for medicines and include a more limited number of doctors and hospitals, referred to as a narrow network policy. And while employers tend to offer their workers at least one plan that allows them coverage to visit doctors not in their network, patients buying insurance through A.C.A. exchanges in some states do not have that option, even if they’re willing to pay higher premiums.


Some of the problems may have been predictable. When designing the new plans, for-profit insurers naturally tended to exclude high-cost, high-end hospitals with whom they had little clout to negotiate discounts. That means, for example, that as of late last year none of the plans available in New York had Memorial Sloan Kettering Cancer Center in their network — an absence that would be unacceptable to many New York-based employers buying policies for their employees. Another issue is out-of-state coverage, which many A.C.A. plans don’t offer aside from emergencies, and which is routinely offered in policies from companies — especially large ones — with workers in more than one state.


As a result, many parents who were excited that they would be able to keep their children on their policies until age 26 have discovered that this promise has gone unfulfilled. When Sara Hamilton of New York was shopping on the exchange for a plan to cover her and her two young-adult children — who live in distant states — she discovered that none of the plans covered doctor visits in those places.


In 2013, Angie Purtell of Tega Cay, S.C., bought a gold plan offered by Coventry Health Care. When notified that the plan would double its monthly premium the following year, to nearly $1,000, she went shopping again on the state exchange and chose a Blue Cross silver plan for $500. It was branded “Choice.”


But when she tried to visit her longtime doctor using the new plan, she found she could not. The doctor’s practice, while in South Carolina, was not covered because it is affiliated with the Carolina Medical Center, a few miles over the border in Charlotte, N.C.

Service Refused


Hey! We don’t serve their kind here. They’ve got Obamacards.

The clowns are at it again:  Lockhart and Williams say a rate hike in June is on the table
(courtesy zero hedge)

Stocks Slide After Lockhart/Williams Say Rate-Hike In June On The Table

Once again the narrative spewing forth from today’s Fed speakers is that “the market is too pessimistic” presumably meaning the bond market because stocks are near record highs; and crucially, that despite collapsing industrial production, plunging GDP expectations, near-record inventories, and weakness in employment data that the US economy is “doing well” and that “June is a live meeting”for a rate hike… the equity market is not amused…


  • *LOCKHART SAYS HE WOULDN’T TAKE MOVE IN JUNE OFF TABLE (if the S&P remains above 2000)

Does this look like a market that is “too pessimistic” about the US economy?



Seems like bonds have been dead right all along?

For those of you who are playing the market (other than gold) this is the only chart that you should pay attention to:
(Bank of America/courtesy zero hedge)

“The Nightmarish Merry-Go-Round” – The Only Chart You Need To Trade This Market

Today’s steep selloff was launched by the latest jawboning by Lockhart and Williams who, now that the S&P 500 is back comfortably above 2000, once again hinted that a June rate hike is back on the table. Incidentally, the dynamic of the Fed responding to the market, and the market responding to the Fed, has been the only one worth paying attention to in recent months.

Confused? Don’t be. Here is an explanation from none other than Bank of America.

Not so merry-go-round: By some accounts the Fed is stuck in an adverse feedback loop. They want to raise interest rates so they can “reload” their policy ammunition, but the markets won’t let them. The chart of the day illustrates this nightmarish merry-go-round: the Fed threatens to hike, markets tank, the Fed delays the hike, the market recovers and the cycle repeats. The end result is repeated delays and very little actual policy tightening.



While we think there are elements of truth in this argument, we think it exaggerates the constraints on the Fed in two ways. First, if we are to believe the story, the timing of this feedback loop shifts from one episode to the next. In particular, in the first three episodes the market responded to the threat of tighter policy, but not to the actual implementation of policy; while in the December case the market was fine with the threat of hiking but only reacted weeks after the fact. So which is it: are markets forward looking or not? Second, the Fed merry-go-round story puts the entire onus on the Fed when a lot else is going on.

Of course, there is a very simple explanation for the above: as George Soros would certainly dub it if he were in a mood to write books, the term would be a “reflexivity trap.

As pertains to Bank of America’s question, regarding the second, the Fed chose to take on the “onus” in 2009 when it decided to centrally-plan the world’s most artificial market rally in history, so they will get no commiseration from us.

As for the first, “are markets forward looking or not”, the answer is simple: the markets can only look as far forward as the next Fed statement… and since the next Fed statement is in turned driven by what the market will do at any given moment, it explains why the only chart traders need is Bank of America’s “nightmarish merry-go-round.”




Well that about does it for tonight

I will see you tomorrow night


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