June 29/Another huge rise of 2.67 tonnes of gold into the GLD/Into SLV: 760,000 oz/Silver the standout today as it rises 52 cents/Gold rises $9.00 to $1323.90/The 40 yr Japanese bond yield: .06%/The globe has over 11.7 trillion in bonds in negative territory/Germany throw cold water on Italy’s bank rescue/USA consumer spending falters/

Good evening Ladies and Gentlemen:

Gold:  $1,323.90 UP $9.00    (comex closing time)

Silver 18.36  UP 52 cents

In the access market 5:15 pm

Gold: 1319.40

Silver: 18.30


The June gold contract is an active contract. Last  night we had a fair sized 79 notices filed last night, for 7900 oz to be served upon today.  The total number of notices filed in the first 19 days is enormous at 15,600 for 1,560,000 oz.  (48.522 tonnes)

ii) in silver we had 0 notice filed for nil oz..  Total number of notices served  in the 19 days: 616 for 3,080,000 oz


We now have only one day left before first day notice tomorrow. Options expiry on the OTC and LBMA contracts expire around noon tomorrow. It is quite something that gold/silver have been holding up quite well in this last week of June which is options expiry week.  So expect a little weakness in the morning and then when options expiry is over, gold/silver will again rise northbound.  Silver will again try  its luck against the $18.50 barrier.



Let us have a look at the data for today


Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 288.78 tonnes for a loss of 14 tonnes over that period


In silver, the total open interest fell by a considerable 2099 contracts down to 211,396, BUT STILL CLOSE TO AN  ALL TIME RECORD. THE OI DECLINED DESPITE THE FACT THAT  THE  PRICE OF SILVER WAS UP BY 10 CENTS with respect to YESTERDAY’S trading.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.057 BILLION TO BE EXACT or 151% of annual global silver production (ex Russia &ex China)

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

In gold, the total comex gold OI FELL by a HUGE 5,736 contracts DOWN to 613,528 as the price of gold was DOWN $7.20 with YESTERDAY’S trading (at comex closing). 


With respect to our two criminal funds, the GLD and the SLV:


A big change in gold inventory. a huge deposit of 2.67 tonnes into the gold inventory/

Total gold inventory: 950.05 tonnes


a deposit of 760,000 oz into the SLV inventory

Inventory rests at 333.544 million oz.

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

1. Today, we had the open interest in silver fell by 2099 contracts down to 211,396  DESPITE THE FACT THAT THE price of silver was UP BY  10 CENTS with YESTERDAY’S trading. The gold open interest FELL by a HUGE 5,736  contracts DOWN to 613,528 as the price of gold FELL by $7.20 YESTERDAY.

(report Harvey).


2 a) Gold trading overnight Europe, Goldcore

(Mark OByrne/


i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed UP 19.63 POINTS OR 0.65% / /Hang Sang closed UP 263.66 OR 1.31%. The Nikkei closed UP 243.69 POINTS OR 1.59% Australia’s all ordinaires  CLOSED UP 0.80% Chinese yuan (ONSHORE) closed DOWN at 6.6461 /Oil ROSE to 48.27 dollars per barrel for WTI and 48.95 for Brent. Stocks in Europe ALL IN THE GREEN . Offshore yuan trades  6.6604yuan to the dollar vs 6.6461 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS



Last night the 40 yr bond yield in Japan is yielding .05%.  Now Kuroda has very little positive yielding debt to buy.  Not only that but he is running out of bonds to buy and probably by the middle of 2017, he will have zero to buy.

( zero hedge)



i)We pointed out to you yesterday that Italy wanted to use public funds to bail out the Italian banks problems.  As a reminder the Italian banks have 260 billion euros worth of bad loans on their books, a total close to 18% of total loans. The Italians were trying to use the BREXIT as an excuse for more public funds to bail out the banks.  The Germans just threw cold water on their plan

( zero hedge)


ii)The EU seems to be out of control. The EU now states that “Scotland won the right to be heard in Brussels”. This is before a vote on Scotland’s sovereignty?

Also Draghi remains mum on easing policy:
( zero hedge)
iii)Here is a list of the unknowns we are facing with the announced BREXIT
It signifies the great danger that we are in!
( zero hedge)

iv)If JPMorgan is right, Scotland is set it have its own currency and be independent.  Then it will be interesting if they still want to join the EU.  As far as I am concerned, Scotland is receiving far more benefit by being inside Gr. Britain and it would be extremely foolish for these guys to join the EU.  It would be a catastrophe if they then would decide to join their monetary union…( zero hedge)



There are about 30 trillion in total global bonds outstanding.  Of that 11.7 trillion or 39% are yielding negative rates

(courtesy zero hedge)


Oil jumps back above 49 dollars as crude production tumbles again and this time inventories drop considerably:

( zero hedge)



i) Silver advances as it begins its assault on $18.50

(zero hedge)


ii)Lawrie Williams discusses the BREXIT situation as to how it relates to gold

( Lawrie Williams/Sharp’s Pixley)


iii)Chinese investors flock into gold seeking safe haven after the BREXIT turmoil

( Bloomberg/GATA)

iv)Liechtenstein based asset management firm Incrementum AG has just filed a gold report. They comment on the huge demand for gold around the world as well as the on going manipulation

( Incrementum./GATA)

v)John Brimelow, a great analyst for gold believes the smuggled gold into India is north of 2.5 tonnes per week or 130 tonnes per year on top of the normal importation of gold of which they pay the excise tax.

( Dave Kranzler/IRD/John Brimelow)


i)A terrific paper on the huge problems facing the financial industry in the USA: namely the rise in delinquency rates with respect to business loans

a must read..

( Olav Dirkmaat/UFM Market Trends)


ii)The following goes to show how bad the economy real is:  Pending home sales crash the most in 6 years due to supply:

( zero hedge)

iv)One of the most important releases coming from the USA is consumer spending as the consumer is 70% of GDP.  Today May spending plunged back to earth from April’s small rise.  Income growth slows quite dramatically:

( zero hedge)
v)Puerto Rico will default on bonds coming due on July 1.  However both the senate and the house will pass a bill allowing Puerto Rico to restructure its 70 billion USA in debt( zero hedge)

(courtesy zero hedge)

Let us head over to the comex:

The total gold comex open interest FELL to an OI level of 613,528 for a GOOD SIZED LOSS of 5,736 contracts AS  THE PRICE OF GOLD FELL $7.20 with respect to YESTERDAY’S TRADING. JUNE IS THE SECOND BIGGEST DELIVERY MONTH OF THE YEAR AND IS A VERY ACTIVE MONTH FOR GOLD DELIVERIES. 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 progressesIN THE MONTH OF MAY THE LATER HAD STOPPED. DURING THE MAY WE DID WITNESS A GRADUAL RISE IN AMOUNT STANDING AND THE AMOUNT STANDING AT THE CONCLUSION OF THE MONTH FINISHED AT ITS ZENITH. IN JUNE, ON FIRST DAY NOTICE WE HAVE CERTAINLY WITNESSED THE FORMER, A HUGE LOSS OF TOTAL OPEN INTEREST CONTRACTS FOR THE ENTIRE GOLD COMEX COMPLEX . HOWEVER WE HAVE MORE THAN MADE UP FOR THE LOSS AS MORE INVESTORS ENTER THE ARENA TO TAKE ON THE CRIMINAL BANKERS. WE HAD A SMALL LOSE IN JUNE OI TODAY FOR GOLD OZ STANDING IN THIS ACTIVE JUNE CONTRACT.

The FRONT gold contract month of June is now off the board and we still have 79 contracts left to be served upon. They have until tomorrow night to serve upon our longs. Needless to say that the fact that they have taken the entire month to serve upon means that gold is scarce . The next active contract month is July and here we saw it’s OI FELL by a GOOD SIZED 338 contracts DOWN to 4772.This level is still very high and no doubt will be troublesome for our bankers as the front July contract month open interest is extremely high for a non active month and it also refuses to shrivel by much . In ounces, FOR THE FRONT MONTH OF JULY, we have 477,200 oz or 14.84 tonnes that will probably STAND FOR DELIVERY. Generally in a non active month the OI that stands prior to first day notice will eventually stand for gold for the entire month. The next big active contract month is August and here the OI FELL by 11,711 contracts DOWN to 429,664. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was FAIR at 178,514. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was very good at 227,802 contracts. The comex is not in backwardation.

Today we had 79 notices filed for 79000 oz in gold.


And now for the wild silver comex results. Silver OI FELL by A CONSIDERABLE 2099 contracts from  213,495 DOWN TO 211,396, BUT STILL CLOSE TO THE NEW ALL TIME RECORD HIGH FOR SILVER OPEN INTEREST.   The front month of June is now off the board.    The next big delivery month is July and here the OI fell BY 15,664 contracts down to 13,791. We have one reading to go before first day notice on June 30. It looks like 5,500 contracts will eventually stand or 27 million oz.  Let us see what tomorrow will bring.  The volume on the comex today (just comex) came in at 119,984 which IS huge. The confirmed volume YESTERDAY (comex + globex) was HUGE at  16,365. Silver is not in backwardation . London is in backwardation for several months.
We had 1 notice filed for 5,000 oz.

JUNE contract month:

INITIAL standings for JUNE

June 29.
Withdrawals from Dealers Inventory in oz   nil OZ
Withdrawals from Customer Inventory in oz  nil  196.52 OZ



Deposits to the Dealer Inventory in oz  


Deposits to the Customer Inventory, in oz   224,932.92 OZ



No of oz served (contracts) today off the board
No of oz to be served (notices) 267 contracts

26,700 oz

Total monthly oz gold served (contracts) so far this month 15,600 contracts (1,560,000 oz)

(48.522 TONNES SO FAR)

Total accumulative withdrawals  of gold from the Dealers inventory this month   1400.01 OZ
Total accumulative withdrawal of gold from the Customer inventory this month  259,318.2 OZ

Today we had 0 dealer DEPOSIT



total dealer deposit:  NIL   0z

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz


Today we had 1 customer deposits: AND IT WAS A WHOPPER/YET DID NOT SETTLE ON ANY GOLD

i)INTO HSBC:  224,932.970 OZ OR  6.996 TONNES

Total customer deposits; 224,932.970   OZ


Today we had 1 customer withdrawal:


196.52 OZ

total customer withdrawals:  196.52 oz

Today we had 2 adjustments:

i) Out of BRINKS:  789.32 oz were transferred out of the DEALER and into the CUSTOMER BRINKS.

ii) Out of Scotia:  388.32 oz were transferred out of the DEALER and into the CUSTOMER

the total weight is .036 tonnes and this is deemed a settlement.

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 79 contracts of which 25 notices was stopped (received) by JPMorgan dealer and 49notices was stopped (received)  by JPMorgan customer account. 
To calculate the initial total number of gold ounces standing for the JUNE contract month, we take the total number of notices filed so far for the month (15,600) x 100 oz  or 1,560,000 oz , to which we  add the difference between the open interest for the front month of JUNE (79 CONTRACTS) minus the number of notices served upon today (79) x 100 oz   x 100 oz per contract equals 1,560,000 oz, the number of ounces standing in this active month. 
Thus the INITIAL standings for gold for the JUNE. contract month:
No of notices served so far (15,600) x 100 oz  or ounces + {OI for the front month (79) minus the number of  notices served upon today (79) x 100 oz which equals 1,560,000 oz standing in this   active delivery month of JUNE (48.522 tonnes).
I now await for more notices to be served upon before midnight, June 30.
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 48.552 tonnes of gold standing for JUNE ( plus whatever they serve upon tonight or tomorrow) and 57.185 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 6.889 TONNES FOR MAY + 48.552 TONNES FOR JUNE + 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- May 18: 1.5635 tonnes-May 19/   2.535 tonnes-May 27 .0185 – .024 TONNES MAY 31 -jUNE 4: .5044 ; june 10 -.0008 / June 22:0.48 tonnes /June 23: 0489 tonnes, June 24..018; june 29 .036 tonnes = 64.599 tonnes still standing against 57.22 tonnes available.
 Total dealer inventor 1,838,513.23 tonnes or 57.185 tonnes
Total gold inventory (dealer and customer) =9,284,412.141 or 288.78 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 288.78 tonnes for a loss of 14 tonnes over that period. 
JPMorgan has only 25.70 tonnes of gold total (both dealer and customer)
JPMorgan now has only .900 tonnes left in its dealer account.



And now for silver

June probable final standings

 June 29.2016

Withdrawals from Dealers Inventory 602,11012 oz


Withdrawals from Customer Inventory  188,404.204oz



Deposits to the Dealer Inventory NIL
Deposits to the Customer Inventory  431,031.750  oz



No of oz served today (contracts) 0 CONTRACTS 


No of oz to be served (notices) off the board
Total monthly oz silver served (contracts) 616 contracts (3,080,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month 602,110.12 oz
Total accumulative withdrawal  of silver from the Customer inventory this month  25,023,766.7 oz

today we had 0 deposit into the dealer account

total dealer deposit:NIL oz

we had 0 dealer withdrawal:



total dealer withdrawals:  NIL oz

we had 1 customer deposits:

i) Into Brinks:431,031.750

Total customer deposits: 431,031.750 oz

We had 2 customer withdrawals

i) Out of CNT: 67,639.75 oz

ii) Out of SCOTIA: 120,764.450  OZ


total customer withdrawals:  188,404.204  oz



 we had 1 adjustment

i)  Out of CNT:

649,930.312 oz leaves the dealer and enters the customer of CNT and that would be a settlement:


The total number of notices filed today for the JUNE contract month is represented by 0 contract for NIL oz. To calculate the number of silver ounces that will stand for delivery in JUNE., we take the total number of notices filed for the month so far at (616) x 5,000 oz  = 3,080,000 oz to which we add the difference between the open interest for the front month of JUNE (0) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing 
Thus the probable final standings for silver for the JUNE contract month:  616 (notices served so far)x 5000 oz +{0 OI for front month of JUNE ) -number of notices served upon today (1)x 5000 oz  equals  3,080,000  of silver standing for the JUNE contract month. (TERRIFIC FOR A NON ACTIVE MONTH)
Total dealer silver:  22.709 million  (RECORD LOW INVENTORY)
Total number of dealer and customer silver:   151.502 million oz
The total open interest on silver is NOW NEAR its all time high with the record of 218,979 being set June 24.2016.  The registered silver (dealer silver) is NOW AT  multi year lows as silver is being drawn out at both dealer and customer levels 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
June 29/ a good sized deposit of 2.67 tonnes/inventory rests at 950.05 tonnes
June 28/ a huge deposit of 13.067 tonnes into inventory/new inventory rests so far at 947.38 tonnes.  This was a paper addition
June 27/a huge deposit of 18.415 tonnes into the GLD inventory/the new inventory rests at 934.313 tonnes.  The addition was a paper addition and not physical
june 24./strange!! no additions to gold with its huge 58 dollar advance??
june 23/no change in gold inventory tonight/rests at 915.90 tonnese
June 22/with gold down badly again, we had another huge deposit of 3.57 tonnes into the GLD/Inventory rests at 915.90 tonnes
June 21/ with gold down badly, we had a huge deposit of 3.56 tonnes into the GLD/Inventory rests at 912.33 tonnes
June 20/we had one deposit of .890 tonnes of gold into the GLD inventory/Inventory.
rests at 908.77 tonnes.
June 17./we had two huge deposits: last night: 1.782 tonnes and this afternoon: 5.3480 tonnes/Inventory rests at 907.88 tonnes
JUNE 16/no changes in GLD/Inventory rests at 900.75 tonnes.
June 15/the farce continues:  another paper deposit of 2.08 tonnes into the GLD/Inventory rests at 900.75 tonnes. Wait until you see tomorrow’s level!!
June 10/a huge “paper” deposit of 6.54 tonnes of gold into the GLD/Inventory rests at 893.92 tonnes
JUNE 9. a huge deposit of 6.23 tonnes of gold into the GLD/Inventory rests at 887.38 tones
June 8/no change in inventory at the GLD/Inventory rests at 881.15 tonnes
june 7/ a tiny withdrawal of .29 tonnes of inventory/probably to pay for fees/Inventory rests at 881.15 tonnes
June 29/ Inventory rests tonight at 950.05 tonnes


Now the SLV Inventory
June 29/ a small deposit of 760,000 oz/Inventory rests tonight at 333.544 million oz/
June 28/no change in silver inventory/rests tonight at 332.784 million oz
June 27/ a small deposit of 570,000 oz in the SLV inventory/Inventory rests at 332.784 million oz
June 24/This makes no sense!! 855,000 oz of silver leaves the SLV headed straight to Shanghai/Inventory rests at 332.214 million oz
June 23/ no change in silver inventory/rests tonight at 333.069 million oz
June 22.2016/no change in inventory at the SLV/Inventory rests at 333.069 million oz/
June 21/ we had another 2.67 million oz of silver withdrawn from the SLV.  This no doubt is real silver leaving and heading straight to China/Inventory at 333.069 million oz
June 20/we had another 2.852 million oz of silver withdrawn from the SLV. Again this is probably real silver leaving and heading straight to China. Inventory rests at 334.495
June 17/a monstrous 5.418 million oz of silver withdrawn from the SLV.  This may be some real silver and thus it is heading for China which is massively importing silver/inventory rests at 337.347 million oz
JUNE 16./no changes in silver inventory/rests tonight at 342.765 million oz
June 15and the dfarce continues for the SLV/we had a massive 2.376 million oz of a paper deposit into the SLV/Inventory rests at 342.765 million oz
June 10/no change in silver inventory at the SLV/Inventory rests at 338.725 million oz
JUNE 9/no change in silver inventory at the SLV/Inventory rests at 338.725 million oz.
June 8/no change in silver inventory at the SLV/Inventory rests at 338.725 million oz
June 29.2016: Inventory 333.544 million oz

NPV for Sprott and Central Fund of Canada

I will pick up Sprott’s NAV later tonight

1. Central Fund of Canada: traded at Negative 3.8 percent to NAV usa funds and Negative 4.2% to NAV for Cdn funds!!!!  (the discount is starting to disappear)
Percentage of fund in gold 60.8%
Percentage of fund in silver:37.9%
cash .+1.3%( June 29/2016). /
2. Sprott silver fund (PSLV): Premium FALLS  to +0.49%!!!! NAV (June 29/2016) 
3. Sprott gold fund (PHYS): premium to NAV  falls TO +0.04% to NAV  ( June 29/2016)
Note: Sprott silver trust back  into POSITIVE territory at +36% /Sprott physical gold trust is back into positive territory at +0.04%/Central fund of Canada’s is still in jail.


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

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

Greenspan Warns “Early Days Of A Crisis,” Inflation Coming and Urges Return To Gold Standard

Alan Greenspan, the former Chairman of the Federal Reserve has warned that Brexit was a “terrible outcome in all respects” and that we are in the “early days of a crisis.” U.K. policy makers miscalculated and made a “terrible mistake” in holding a referendum on whether to quit the European Union, Greenspan said.

That decision led to a “terrible outcome in all respects,” Greenspan, said in an interview with Bloomberg Surveillance yesterday in Washington.

“It didn’t have to happen,” Greenspan said. He warned that it is now likely that Scotland, whose majority of voters wanted to stay in the EU, will have another referendum on its own independence. He predicted such a vote would be successful, and Northern Ireland would “probably” go the same way.

He also warned about the massive entitlements and unfunded liabilities in the U.S. and western world. The U.S. national debt is heading rapidly towards $19 trillion but the U.S. also has unfunded liabilities estimated to be between $100 trillion and $200 trillion.

“The issue is essentially that entitlements are legal issues. They have nothing to do with economics. You reach a certain age or you are ill or something of that nature and you are entitled to certain expenditures out of the budget without any reference to how it’s going to be funded. Where the productivity levels are now, we are lucky to get something even close to two percent annual growth rate. That annual growth rate of two percent is not adequate to finance the existing needs.”

“I don’t know how it’s going to resolve, but there’s going to be a crisis.”

He warns that the crisis will likely lead to inflation:

“I know if you look at human history, there are times and times again where we thought that there was no inflation and everything was just going fine. And I just basically say, wait. This is not the way this thing ordinarily comes up. I don’t know. I cannot say I see it on the horizon. In fact, commodity prices are soggy. The oil prices has had a terrific impact on global inflation. It’s not about to emerge quickly, but I would not be surprised to see the next unexpected move to be on the inflation side. You don’t have inflation now. And you don’t have it until it happens.”

gold_GBP_270616Gold in GBP – 1 Year

Finally, Greenspan advocates a return to the gold standard as a way to create financial, economic and monetary stability:

“If we went back on the gold standard and we adhered to the actual structure of the gold standard as it exited prior to 1913, we’d be fine. Remember that the period 1870 to 1913 was one of the most aggressive periods economically that we’ve had in the United States, and that was a golden period of the gold standard. I’m known as a gold bug and everyone laughs at me, but why do central banks own gold now?”

Gold Prices (LBMA AM)
28 June: USD 1,312.00, EUR 1,185.79 & GBP 985.84 per ounce
27 June: USD 1,324.60, EUR 1,200.49 & GBP 996.36 per ounce
24 June: USD 1,313.85, EUR 1,181.28 & GBP 945.58 per ounce
23 June: USD 1,265.75, EUR 1,112.22 & GBP 850.96 per ounce
22 June: USD 1,265.00, EUR 1,122.31 & GBP 862.98 per ounce
21 June: USD 1,280.80, EUR 1,129.67 & GBP 866.72 per ounce
20 June: USD 1,283.25, EUR 1,132.08 & GBP 877.49 per ounce

Silver Prices (LBMA)
28 June: USD 17.57, EUR 15.84 & GBP 13.17 per ounce
27 June: USD 17.70, EUR 16.06 & GBP 13.40 per ounce
24 June: USD 18.04, EUR 16.32 & GBP 13.18 per ounce
23 June: USD 17.29, EUR 15.16 & GBP 11.61 per ounce
22 June: USD 17.20, EUR 15.23 & GBP 11.72 per ounce
21 June: USD 17.36, EUR 15.34 & GBP 11.78 per ounce
20 June: USD 17.34, EUR 15.30 & GBP 11.85 per ounce

Gold News and Commentary
Gold rose yesterday to €1,205/oz, Climbed 10% in 2 trading days (Irish Examiner)
UK stripped of final ‘AAA’ rating and FTSE 350 surrenders £140bn in Brexit aftermath (Telegraph)
Gold holds steady as global stocks weaken after Brexit vote (Reuters)
Retail gold buyers take profits in bullion after Brexit price surge (Reuters)
Gold Holdings in Biggest One-Day Surge Since ‘12 on Brexit Vote (Bloomberg)

Greenspan Warns A Crisis Is Imminent, Urges A Return To The Gold Standard (Zero Hedge)
Greenspan Calls Brexit a ‘Terrible Outcome’ (Bloomberg Video)
Gold Continues To Shine (FX Street)
Onward Toward Bullion Bank Collapse (Gold Seek)
Gold Veteran Says Brexit May Be Start of ‘Major Bull Market’ (Bloomberg Video)
Read More Here

Recent Market Updates
– BREXIT Day – Markets Becalmed – Gold Panic Prelude – Trading Hours
– Gold Lower Despite “Panic” Due To “Supply Issues” In Inter Bank Gold Market
– Gold Slips Despite UK Gold Demand Surging – Investors “Seek Stability”
– Gold Prices Surge to Highest in Nearly Two Years On FED and Brexit Haven Demand
– Gold Bullion Has Little Downside, Brexit Or Not, Says HSBC
– Central Bank of Ireland Warns Risks are Debt, Brexit, Geopolitical Tensions and Migration
– Gold In Euros Surges 6.5% In June and 17% YTD On BREXIT Concerns
– Soros Buying Gold On BREXIT, EU “Collapse” Risk
– UK Gold Demand Rises On BREXIT “Nerves”
– Pensions Timebomb in “Slow Motion Detonation” In UK, EU, U.S.
– Silver – Perfect Storm Brewing in the Market
– Martin Wolf: There Will Be Another “Huge” Financial Crisis

Mark O’Byrne
Executive Director



The assault on $18.50 silver begins today:

(courtesy zero hedge)

Silver Surges To Post-Brexit Highs

Despite the dead cat bounce in ‘some’ risk assets, bonds and bullion remain bid as Silver just broke back above the post-Brexit spike highs…

Silver surges above the post-Brexit highs…

Gold is steady for now…

But US equities are on a linear ramp back to utopia…



Chinese investors flock into gold seeking safe haven after the BREXIT turmoil

(courtesy Bloomberg/GATA)

Chinese investors join gold rush for haven after Brexit turmoil


From Bloomberg News
Tuesday, June 28, 2016

Chinese investors are rushing to gold as a haven after the U.K.’s vote to quit the European Union.

Turnover in Huaan Yifu Gold ETF, China’s top exchange-traded fund backed by bullion, jumped to a record 1.27 billion yuan ($191 million) Friday after Britain’s vote, said David Xu, managing director for indexing and quantitative investments division at the Huaan Asset Management Co., the manager of the fund. Outstanding shares of Huaan also reached a record 1.6 billion on June 20, jumping five-fold from the start of the year, he said.

“We saw a record trading of our fund immediately after the Brexit vote as it fueled bets that the global and local economies may suffer,” Xu said by phone from Shanghai Monday. Turnover rose as investors expect the U.S. may hold off raising interest rates and Japan, the EU and China may maintain accommodative monetary policy for longer, he added.

China, the biggest gold buyer, is joining a rush for the precious metal after the Brexit referendum disrupted global markets, boosting demand for haven assets. Holdings in bullion ETFs globally surged to the highest level since October 2013, according to data compiled by Bloomberg. Prices gained 25 percent this year. …

… For the remainder of the report:





Liechtenstein based asset management firm Incrementum AG has just filed a gold report. They comment on the huge demand for gold around the world as well as the ongoing manipulation

(courtesy Incrementum./GATA)

Incrementum’s ‘In Gold We Trust 2016’ report


10:13p ET Tuesday, June 28, 2016

Dear Friend of GATA and Gold:

Liechtenstein-based asset-management firm Incrementum AG this week published its “In Gold We Trust” report for 2016 and was quite bullish for both the monetary metal and gold mining equities.

The report, written by Ronald-Peter Stoeferle and Mark J. Valek, includes a chapter titled “The Fix Is In — Gold Price Manipulation Exposed,” which is prefaced by your secretary/treasurer’s remark at GATA’s Washington conference in 2008: “There are no markets anymore, just interventions.”

The report says: “What most market participants once considered a crude goldbug conspiracy theory, reflecting dissatisfaction with the precious metal’s price trend and sour grapes on account of missing the rally in the stock market, has now become a certainty.”

As for gold equities, the report adds: “Relative to the gold price, the gold stocks in the Gold Bugs Index are at the same level as in 2001, when the gold bull market began. This is by itself strong evidence that gold mining stocks are cheap relative to gold.

“However … mining stocks were able to outperform gold only between 2001 and 2004. We have discussed the reasons for the disappointing performance of the sector in the period after 2004 and its fundamental problems in detail in last year’s report under the heading ‘Why Have Gold Mining Stocks Performed So Badly?’ We also mentioned on that occasion that the gold mining industry had gone through a process of creative destruction and fundamental restructuring.

“As a result of this, we expect that in coming years, mining stocks will once again become the kind of leveraged bet on gold that investors crave.”

At 144 pages, complete with charts, Incrementum’s “In Gold We Trust 2016” report is serious stuff. It’s posted in PDF format here:


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





Lawrie Williams discusses the BREXIT situation as to how it relates to gold

(courtesy Lawrie Williams/Sharp’s Pixley)



Gold: Last man standing post Brexit vote

A perhaps controversial U.S. viewpoint  from Guy Christopher* on the fallout post-Brexit, who discusses calls for a similar break from the EU by a number of countries.  Gold (and silver) have been the major beneficiaries as markets dived and currencies collapsed against the dollar and the yen.  We have since seen something of a turn back towards the status quo, but geopolitics and geo-economics remain shell-shocked. Secession fever is even apparent in the U.S., although in our opinion this is a total non-starter – but, who knows…..


“Look at that screen,” exclaimed Fox Business Network’s Stuart Varney, referring to the television graphic showing markets crashing across the globe. “The only thing going up is the price of gold!”

“It’s always a dangerous thing when you leave democracy up to the people,” joked Varney’s guest – venture capitalist and author Peter Kiernan, as they watched Britain vote Thursday night to escape the European Union.

The dust is still settling after Britain’s seismic Brexit vote June 23rd. At issue: who should control British economic and immigration policies – Brits themselves, or unelected bankers and their bureaucracy stooges. A choice between the liberty of self-determination or the tyranny of faraway cronyism.

While the gritty election fallout spread through rattled markets and wafted into plush offices of banking’s money masters, the hard and fast implications were clear. The British Empire stood tall on what outspoken political leader Nigel Farage called Our Independence Day.


The Brit’s dramatic decision is the latest revolt of those fearing the loss of personal and national identities. Until Brexit, the populist revolution against powerful centralized world order was a series of smoldering brush fires.

The Brexit victory has now kindled a wildfire.

Tattered EU Flag

Spanish Catalonia was all set for independence from Spain in 2014, until stopped in its tracks by Spanish courts. Scotland the same year managed to muster 45% of three million votes in a losing bid to leave the UK. Quebec voted down independence from Canada in 1995, but has never stopped talking about it.

Strong political voices in Italy, France, Austria, and even Germany are shouting to preserve national identities or else to leave the EU. Italy’s Five Star separatists claim support of half that country, and have just elected Rome’s mayor.

Political leaders in the Netherlands and Poland, just hours after the June 23rd British Revolution, made it clear they will push for a Brexit replay. Scots lost no time in restating their intention to separate from Great Britain.

Switzerland decided just two weeks ago to drop all plans to join the EU. “Only lunatics,” said one Swiss official, “would consider EU membership.”

The big loser so far in the fight for economic self-determination is Greece. Up to their Parthenon in debt for the next hundred years, Greeks elected Alexis Tsipras as Prime Minister, who promised to stiff Greece’s banking creditors and give Greece a new start.

But Tsipras turned on his people, repudiated the cradle of democracy’s historic vote, and left Greece even deeper in debt. Tspiras was channeling an old political axiom – if voting mattered, we wouldn’t let them do it.


Here at home, the current and former governors of the always revolution-ready Texas have suggested secession from the United States. A move to include secession as a plank in the Texas Republican platform came up just two votes short last May. Secession efforts are now called “Texit.”


Some thirty states have circulated petitions recently to gauge interest in secession. Californians have discussed carving their Golden State into three states.

Which brings us to the main event in the United States. In twenty weeks, Americans will set a course for the world with their own historic choice – either sticking with what America has right now, or demanding monumental changes to government authority over lifestyles and pocketbooks.

The long list of financial crimes by over-bloated centralized governments include trillions in money printing to enrich banks; destructive interest rates to smother savings; punishing taxes; the war on cash to demolish private wealth; suffocating regulations on business owners; and the ongoing crime-in-progress of theft through planned inflation.

Unpopular open border policies toward immigration cannot be overemphasized as a driving factor in Britain’s vote, or in the coming U.S. presidential election.

You wouldn’t know it from watching or reading most lapdog media, but nowhere was the reaction to the Brexit earthquake more stunning than the immediate rush to gold.


In a matter of a few hours Thursday night, gold shot straight up almost one hundred bucks from low to high, stopping just shy of $1360 per ounce. The price perfectly tracked media reports of voting results.

As markets cratered worldwide, the message was clear. Gold was the only safe haven – the blue ribbon champ – the last man standing.

By dawn’s early light, London dealers were reporting record sales of coins and bars to store-front customers standing in line. Google searches for “buy gold” went soaring 500%. Online sellers had heavy traffic.

Brexit's Effects on GoldGold rose 22% overnight in the British pound, 7% in U.S. dollars.

Brexit has been all about wealth and liberty – who will have it, and who will protect it. Gold buyers knew the most enduring wealth for 5,000 years has been gold and silver you hold in your hand, unlike the trillions in digital wealth evaporating into cyberspace during Brexit’s aftermath.

Wealth is the stored and stockpiled accounting of our labor, time, energy, and talent. We depend on that store of wealth to ensure financial liberty for our families, to pass on to future generations, or just to enjoy a day at the beach without punching a clock. And without being told what to think.

Throughout history, gold and silver have been the sole survivors found in the smoking ruins of failed kingdoms, borders, flags, and currencies.

As markets began sinking like stones June 23rd, as bankers panicked, and as media pundits blathered, the price of liberty was paid, and the value of gold embraced.

Both gold, and liberty, were destined to shine that night, no matter what the cost.

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




2 Nikkei closed UP 243.69 OR 1.59% /USA: YEN FALLS TO 102.65

3. Europe stocks opened ALL IN THE GREEN  /USA dollar index DOWN to 95.89/Euro UP to 1.1076

3b Japan 10 year bond yield: FALLS  TO -.230%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 102.65

3c Nikkei now WELL BELOW 17,000

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

3e WTI::  48.21  and Brent: 48.94

3f Gold UP  /Yen UP

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 FALLS to -.131%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate FALL to 8.06%/: 

3j Greek 10 year bond yield FALL to  : 8.48%   (YIELD CURVE NOW COMPLETELY INVERTED)

3k Gold at $1319.00/silver $18.19(7:45 am est)   SILVER RESISTANCE AT $18.00 BROKEN 

3l USA vs Russian rouble; (Russian rouble UP 20/100 in  roubles/dollar) 64.16-

3m oil into the 48 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/GOT a TINY REvaluation UP  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 .9784 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0851 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 10 Year German bund now NEGATIVE territory with the 10 year FALLS to  -.131%

/German 10 year rate  negative%!!!


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 1.454% early this morning. Thirty year rate  at 2.252% /POLICY ERROR)

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

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

Global Stock Surge Continues As “Investors Look To Central Banks For Support”

Now that a second UK referendum appears to be out of the question and as a result there is no need to further punish UK risk assets in hopes of “changing people’s minds”, the risk on rally (especially with quarter end looming) can return, and so it has, with global stocks and US equity futures staging another surge overnight led by Japan (+1.6%) and China (+0.7%), and certainly Europe where moments ago the Stoxx 600 and Dax hit session highs, rising 2.6% and 1.9% respectively. The move has sent US futures higher by another 14 points, or +0.7%, to 2043, now up 44 points from Monday’s lows.

Best, however, is that the FTSE is now back to its post-Brexit highs, rising 2.5% so far today to just shy of 6,300. A few more hours of this ramp and UK stocks will recover all Brexit losses. At that point the scaremongering campaign can officially be called off.

This despite a warning from Credit Suisse thatthe U.K. domestic sectors do not look cheap enough yet, with the exception of retailing. The trade and legal picture is very murky. The real hit to European growth if  there is another referendum (unlikely). The key is to watch PMI new orders to gauge the impact on corporate confidence”

Why the ongoing rally? A squeeze, sure, and also month-end fund flows. But the fundamental driver remains one and the same, and we quote Bloomberg:“the relief rally endures as Asian and European stocks rally with crude oil amid speculation policy makers will use stimulus to blunt the impact of the U.K.’s decision to leave the European Union, including a pause in the Federal Reserve’s tightening cycle. Investors are looking to policy makers for support.”

And confirming that it is all a bet on more easing, even gold was up today, while Japanese bond yields hit fresh record lows on expectations of more BOJ intervention. So once again, back to the old same old: hope that central banks will step in and once again expand multiples now that global earnings are set to decline once more courtesy of Brexit.

Not everyone is buying it of course: “While central banks assuring investors they’re ready to support the markets helps sentiment, it may be too early to turn optimistic,” said James Woods, a strategist at Rivkin Securities in Sydney. “We’ll probably continue to see heavy volatility. We’ll have to see what unfolds in the U.K. with the political situation after Brexit,” but for now the path of least resistance, not to mention short covering, is up and may well continue until the monthly window dressing process is concluded.

What else: the MSCI All-Country World Index headed for its highest level since before the Brexit vote and U.S. equity-index futures advanced as odds indicated the Fed is more likely to cut rates than raise them over the rest of the year. Sterling erased earlier losses, having rebounded in the last session from near a 31-year low. Oil climbed above $48 a barrel and gold approached a two-year high, while the dollar retreated against most of its major peers. Emerging-market stocks and currencies climbed for a second day. Bond yields in Portugal and Italy slipped, while those on Japanese debt fell to a record low.

The Stoxx Europe 600 Index climbed 1.9 percent, with banks and miners among the best performers. The equity gauge has recovered 4.6 percent after tumbling 11 percent over two days following the shock result of the U.K. referendum. It is still heading for a second quarterly decline. The FTSE 100 Index added 2.1 percent on Wednesday and is within 1.1 percent of its pre-Brexit close. Futures on the S&P 500 Index rose 0.7 percent after the U.S. benchmark jumped 1.8 percent in the last session, its best performance in almost four months. Nike Inc. slid 3.6 percent in early New York trading after its future orders missed estimates, renewing concerns that the world’s largest sports brand has entered a period of slowing growth.

EU leaders gather in Brussels on Wednesday for the second day of a two-day European Council summit to discuss Britain’s withdrawal from the bloc. They have already said that there can be no turning back for the U.K. and warned Cameron that delaying the period before formally activating the EU exit mechanism will prevent the start of negotiations over any future relationship

Also on today’s docket, we get the May personal income and spending reports, as well as the PCE core and deflator readings (the latter two are both expected to have risen +0.2% mom). Also due out today in the US is the May pending home sales report. Elsewhere, a number of ECB speakers are due to speak at the ECB forum in Portugal again today, while the Fed is also due to release results from the second part of its bank stress tests this evening.

Market Snapshot

  • S&P 500 futures up 0.7% to 2043
  • Stoxx 600 up 2.6% to 324
  • FTSE 100 up 2.5% to 6296
  • DAX up 2.0% to 9635
  • S&P GSCI Index up 0.8% to 375
  • MSCI Asia Pacific up 1.7% to 128
  • Nikkei 225 up 1.6% to 15567
  • Hang Seng up 1.3% to 20436
  • Shanghai Composite up 0.7% to 2932
  • S&P/ASX 200 up 0.8% to 5142
  • US 10-yr yield down less than 1bp to 1.46%
  • German 10Yr yield down less than 1bp to -0.11%
  • Italian 10Yr yield down 2bps to 1.38%
  • Spanish 10Yr yield down less than 1bp to 1.31%
  • Dollar Index down 0.22% to 96.04
  • WTI Crude futures up 1.3% to $48.49
  • Brent Futures up 1.2% to $49.16
  • Gold spot up 0.6% to $1,320
  • Silver spot up 2.4% to $18.25

Top Global News

  • Islamic State Blamed for Turkey Airport Attacks, 40 Killed: suicide bombers blew themselves up after police spotted them
  • Cameron Makes Emotional Adieu as Sun Sets on U.K. EU Membership: British premier ‘genuinely sorry’ to bear Brexit news to EU
  • Merkel Says No Way Back From Brexit as Cameron Regrets Loss: France says U.K. will have to ‘face consequences’ of exit
  • Hollande Says Brexit to Hurt City of London in Clearing Warning: French Premier says City won’t be able to run euro clearing
  • Fed’s Powell Says Brexit Shifts Global Risks Further to Downside: Powell says it’s far too early to judge effects of U.K. vote
  • Victims of Brexit’s Real-Time Recession Already Feeling the Pain: hiring, expansion, investments all on hold after vote
  • Who’ll Inherit Brexit? Tory Leader Candidates Break Cover: nominations to replace Cameron as premier open Wednesday
  • Pound Records First Post-Brexit Gain as Historic Selloff Abates: sterling gets ‘brief reprieve,’ TD Bank’s McCormick says
  • Editorial: British Parties Need to Move Faster to Choose Leaders
  • Allergan Seeks Smaller M&A for Growth After Pfizer Breakup: CEO Brent Saunders spoke in Bloomberg TV interview

Looking at regional markets, Asia equity markets traded positive, following the US rebound in which the S&P 500 saw its largest intraday gain since March as energy was also bolstered. Nikkei 225 (+1.4%) shrugged off JPY strength and weak retail trade figures to outperform, while ASX 200 (+0.6%) was supported by gains in financials and after WTI climbed above USD 48/bbl. Elsewhere, Chinese markets complete the positive picture in Asia with the Hang Seng (+0.7%) conforming to the upbeat tone, while the Shanghai Comp (+0.3%) benefitted from another significant PBoC liquidity injection. Finally, 10yr JGBs traded relatively flat despite the heightened appetite for riskier assets in Japan, as the BoJ were in the market to acquire JPY 1.15trl in government debt.

Top Asian News

  • Nomura Joins Yen Capitulators as Forecast Raised 17% Post- Brexit: Japan’s biggest brokerage now sees 104 per dollar at year-end
  • Offshore Yuan Surges on Bets Central Bank Supporting Currency: Nation will take steps to ensure market stability, Premier Li says
  • Ex-Lehman Quant Wins Big on Bad China Loans That Scare Soros: Distressed debt investors buy as NPLs climb to 11- year high
  • Hong Kong’s ‘Superman’ Li: My Empire Will Be Fine Without Me: Billionaire Li Ka-shing talks about not slowing down
  • Wanda Property Deal Faces Hurdles as APG Balks Over Price: $460b Dutch fund manager says Wang’s offer is too low

European equities trade higher for a second day, with notable upside in material and financial names, allied with this, equities are likely to benefit from month-end rebalancing, according to Goldman Sachs . Additionally, peripheral banks continue to outperform in a similar fashion to yesterday relative to the heavy losses seen on Friday and Monday post the Brexit vote. Elsewhere, credit markets have been somewhat tame this morning as the German 10-yr benchmark trades in tight range with yields across the curve relatively unchanged, while peripheral yields continue to tighten amid the risk on sentiment.

Top European News:

  • Vodafone Weighs Post-Brexit Move as CEOs Seek Europe Access: ‘not yet possible to draw any firm conclusions’ on HQ location
  • Ikea Recalls 29 Million Dressers After Six Children’s Deaths: 82 incidents are also linked to tip-over risk with furniture
  • Homeserve Confirms it Continues to Trade in Line With Guidance: maintains long term expectation of achieving a 20% margin in U.S. business
  • McCarthy & Stone Says Brexit Vote Has Introduced Uncertainty: may hit timing, cost of conversion of orders into completions
  • Swiss Re Sees Life Premium Growth in ’16, Slowdown in Em. Mkts: sees continuing pressure on non-life

In FX, the Bloomberg Dollar Spot Index slid 0.1% following a 0.5 percent loss in the last session, amid speculation about the path of Fed interest rates. Sterling advanced for a second day against the dollar as investors await Britain’s plan for its extrication from the 28-nations bloc. “Markets have calmed down somewhat,” said Thu Lan Nguyen, a foreign-exchange strategist at Commerzbank AG in Frankfurt. “We may see some short term continuation of the recovery in the pound if there is an increased chance of a new prime minister who can secure the access of the U.K. to the single market. But uncertainty is still high and market participants are jittery.” The yen rose 0.1 percent following a 0.7 percent decline on Tuesday. Nomura Holdings Inc. became the latest brokerage to raise its year-end forecast for the currency and now expects a 17 percent increase after the U.K.’s decision to leave the EU spurred a rush for it as a haven. The MSCI Emerging Markets Currency Index added 0.5 percent. South Africa’s rand led the advance, rising 1.1 percent, followed by a 1 percent gain in South Korea’s won. Indonesia’s rupiah added 0.1 percent, extending this week’s increase to 1.6 percent and heading for the highest close in two months. The central bank said it will intervene in the foreign-exchange market to prevent the rupiah from gaining too much from a possible increase in inflows following a recently passed tax amnesty law. The offshore yuan strengthened for the first time in five days, gaining 0.3 percent in just over an hour. Chinese authorities intervened via banks to support the offshore yuan in morning trading, according to people with knowledge of the matter. The People’s Bank of China didn’t immediately respond to questions sent by fax from Bloomberg.

In commodities, the Bloomberg Commodity Index extended Tuesday’s 1.9 percent rally with a 0.3 percent advance. Gold recovered most of the previous session’s losses, adding 0.5 percent to $1,318.62 an ounce on speculation that the Fed’s interest rate policy will boost the precious metal’s allure. West Texas Intermediate crude climbed 1 percent to $48.35 a barrel, building on last session’s 3.3 percent jump. U.S. oil inventories fell by 3.86 million barrels last week, the American Petroleum Institute was said to have reported, ahead of government data due on Wednesday. Cotton futures for December delivery rose 0.4 percent to 66.1 cents a pound on ICE Futures U.S. in New York. Prices extended Tuesday’s 2.3 percent rally and are trading near the highest since August 2015. U.S. farmers probably planted fewer acres than previously expected, after rain disrupted fieldwork in some areas, according to a Bloomberg survey before the U.S. Department of Agriculture updates its estimate on Thursday.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European equities enter the North American crossover in positive territory with energy names leading the way higher following last night’s API draw
  • Following on from the calm seen on Tuesday, FX markets have again displayed a propensity towards steady risk sentiment, with the commodity currencies faring well in particular
  • Looking ahead, highlights include US Pending home sales, PCE’s and DOE’s, ECB’s Draghi (Dove)
  • Treasuries mixed in overnight trading with long-end outperforming as global equities and gold rally on potential for monetary stimulus.
  • European Union leaders said there could be no turning back for the U.K. after Prime Minister David Cameron used his last EU summit to express disappointment at his failure to win the referendum he called on Britain’s membership
  • Brexit has thrust Scotland’s independence back into play just two years after the nationalists suffered defeat in a referendum to leave the U.K.
  • The City of London is facing the first direct threat to its role as Europe’s dominant financial center as French President Francois Hollande takes aim at a key pillar of the U.K. industry
  • France’s 2017 presidential election may hinge on a debate about the European Union membership in the aftermath of the U.K. vote to leave the bloc, President Francois Hollande said
  • By voting to leave the European Union, Britons have delivered a potential windfall to tourists eager to snatch up Burberry trenchcoats, Harrods Stilton and Liberty scarves on the cheap
  • Gold’s investment case has been strengthened by the U.K.’s vote to quit the European Union as the fallout may spur the world’s central banks to step up easing, hurting currencies and favoring bullion, according to Marc Faber
  • Circle Jan. 31, 2018, on the calendar. That’s the soonest the Federal Reserve hikes next. At least if money market derivatives are to be believed.
  • The number of Chinese bond defaults so far this year already is triple the figure for all of 2015. The number of downgrades has also tripled
  • The PBOC intervened via banks to support the offshore yuan in morning trading as authorities wants to maintain stability in the currency, according to people with knowledge of the matter
  • Puerto Rico and its agencies are facing $2 billion of bond payments due Friday, and Governor Alejandro Garcia Padilla has said the U.S. territory simply doesn’t have the money

DB’s Jim Reid concludes the overnight wrap

Markets yesterday were certainly in a much improved mood as a tentative rally swept through risk assets following two days of heavy losses. Look no further than the Pound which closed up +0.90% versus the US Dollar at 1.3344, although it did actually tip above 1.340 in the early afternoon before paring gains again into the evening. Equity markets emerged from the abyss meanwhile. The FTSE 100 (+2.64%), Stoxx 600 (+2.57%), DAX (+1.93%), IBEX (+2.48%) and FTSE MIB (+3.30%) all closed up as beaten down banks staged a recovery. Indeed UK financials had a much better day although that was before Moody’s made the move to revise lower its outlook on 12 British banks and lenders, as well as cutting the outlook for the UK banking system to negative from stable.

Across the pond the S&P 500 closed up +1.78% which was actually the most since March 1st. Credit markets were in a similar vein of form with CDX IG rallying 6.5bps. Interestingly primary markets appeared to get the green light for the door to open again. Molson Coors was out with a four-tranche $5.3bn deal which is said to be the first US IG deal since the referendum last week. Notably the deal was said to be 6x oversubscribed so a good sign that appetite is still clearly strong for those with cash ready to be put to work.

The other news to report this morning is the tragic event which unfolded in Turkey last night where a suicide attack at Istanbul’s main international airport has resulted in the death of at least 32 people, with a further 60 people said to be injured according to the BBC. Details are still sketchy but we’d expect further information to be released in due course.
That news emerged towards the US close last night and markets wise we’ve not seen too much of a reaction in Asia this morning. The bulk of bourses are instead following the lead from the European and US sessions yesterday. Leading the way is the Nikkei which is currently up +1.44%, while the Kospi (+1.39%) is closely following. The Hang Seng (+0.69%), Shanghai Comp (+0.45%) and ASX (+0.92%) are also up while credit markets are generally 2-3bps tighter. FTSE 100 futures are currently up over 1% too while Sterling is -0.20% weaker as we type.

Yesterday’s economic dataflow didn’t add too much to the debate. In the US the third reading for Q1 GDP was revised up to +1.1 qoq from +0.8% which is a touch better than expected helped by stronger net exports, although consumption did disappoint a little. The upward revision to corporate profits caught our eye however, with profits revised up to +1.8% qoq from the previously reported +0.3% qoq gain. Meanwhile, also better than expected was the June consumer confidence index reading which printed at 98.0, a rise of 5.6pts from May after expectations had been for just a 1pt rise. That reading is actually the highest level since October last year although clearly it’s worth taking with a pinch of salt given the cut-off data for the survey was June 16th and a week prior to the UK referendum. Elsewhere, the Richmond Fed manufacturing PMI was disappointing at -7 (vs. +3 expected), a fall of 6pts. Lastly the S&P/Case-Shiller house price index in April rose slightly less than expected during the month at +0.45% mom (vs. +0.58% expected).

Looking at the day ahead, we’d imagine that much of the focus will again be at the EU Leaders summit in Brussels which continues for a second day. Datawise we’ve actually got a fair bit to get through. This morning in Europe we’ll get the latest consumer confidence report for Germany, as well as house price data in the UK. Later on we then get the money and credit aggregates numbers in the UK before the June confidence indicators for the Euro area are released. This afternoon we’ll firstly get the June CPI report in Germany, before attention turns across the pond where we will get the May personal income and spending reports, as well as the PCE core and deflator readings (the latter two are both expected to have risen +0.2% mom). Also due out today in the US is the May pending home sales report. Elsewhere, a number of ECB speakers are due to speak at the ECB forum in Portugal again today, while the Fed is also due to release results from the second part of its bank stress tests this evening.


i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed UP 19.63 POINTS OR 0.65% / /Hang Sang closed UP 263.66 OR 1.31%. The Nikkei closed UP 243.69 POINTS OR 1.59% Australia’s all ordinaires  CLOSED UP 0.80% Chinese yuan (ONSHORE) closed DOWN at 6.6461 /Oil ROSE to 48.27 dollars per barrel for WTI and 48.95 for Brent. Stocks in Europe ALL IN THE GREEN . Offshore yuan trades  6.6604yuan to the dollar vs 6.6461 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS



Last night the 40 yr bond yield in Japan is yielding .05%.  Now Kuroda has very little positive yielding debt to buy.  Not only that but he is running out of bonds to buy and probably by the middle of 2017, he will have zero to buy.

(courtesy zero hedge)

Kuroda Is Trapped As The BOJ Can’t Ease Any Further: Here’s Why

As noted early this morning, overnight Japanes bond yields tumbled to new all time record lows, with the move sending even the longest maturity, 40Y bond, to below 0.1% on its way to negative territory.

That move, sparked largely as a risk-off kneejerk reaction to the global post-Brexit volatility, coupled with expectations of more BOJ easing – one of the catalysts for the overnight spike in risk assets – has effectively put a lid on any further BOJ intervention and easing for the foreseeable future.

Below, Bloomberg’s Daniel Kruger explains why.

The Brexit vote has dumped extra unwanted deflationary drag on a country that has seen inflation well under 1% for more than a year and has pushed the yen toward 100 per dollar.

While the BOJ is reportedly meeting with the government today, it’s going to be addressing a situation that just got more difficult with a poor menu of policy options. It can purchase more assets and lower interest rates, but it can’t change a world economy that’s running out of inflationary gas.

Brexit now makes it almost impossible for BOJ policy to stand out. Not only did the U.K. referendum take a Fed rate increase off the table, it pulls the Bank of England to the table with its easing options.

The situation has been made worse by the country’s haven status. Treasuries have gained 5.8% this year, while JGBs are up 7% despite their microscopic interest payments. And the currency is up 18% this year versus the dollar.

The 40-year JGB yields less than 0.1% and at about 103 per dollar, the yen is securely above levels where Japan’s exporters suffer and analysts hyperventilate. It won’t take much more bad news, or monetary stimulus, to push the entire yield curve below zero. Barclays forecasts the yen could reach 83 in the next year.

Consider the potential havoc that Brexit may still cause: a U.K. recession, additional EU exit votes, and protracted trade negotiations adding to the confusion.

The market steamrolled Haruhiko Kuroda’s installation of negative rates in January. It’s difficult to imagine he could come up with a more effective tonic this time around.



We pointed out to you yesterday that Italy wanted to use public funds to bail out the Italian banks problems.  As a reminder the Italian banks have 260 billion euros worth of bad loans on their books, a total close to 18% of total loans. The Italians were trying to use the BREXIT as an excuse for more public funds to bail out the banks.  The Germans just threw cold water on their plan

(courtesy zero hedge)

Germany Just Blew Up Italy’s Bank Bailout Plan

“You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.”

Rahm Emanuel prophetic words were quickly put to use by Italy on Monday morning, which barely waited one full day before using Brexit as the scapegoat excuse to warn that a €40 billion bailout of Italian banks is coming.

As a reminder, on Monday morning the local media reported that Renzi’s
government was pursuing a six-month waiver of EU state-aid rules,
allowing it to shore up banks without forcing investors to share losses. Two days ago, when we first reported of Italy’s proposed bank rescue plan, we said that the chairman of Lower House’s Finance Commission, Maurizio Bernardo, confirmed that the government is studying options to support the banking sector, including a capital injection, and said a law decree “with measures going in that direction” could be approved by the end of this week.

We pointed out that how such an intervention would be implemented was unclear; it was is also unclear how such a direct state recapitalization of Italian banks using public funds would be permitted by current EU and ECB regulations, which prohibit state bailouts of insolvent banks, although Europe has a long and illustrious history of finding massive loopholes to that particular prohibition. “Last but not least it is unclear how existing stakeholders, shareholders, bondholders and uninsured depositors, would be impaired under such a bailout.”

Well, they wouldn’t, despite Europe’s recent implementation of bail-in rules. That was the whole point.

However, while Italy was hoping it would get a “pass” on using public funding, mostly Eurozone generated and thus courtesy of Germany, this appears to have hit a dead end moments ago, when Bloomberg reported that Germany opposes any attempt to shield private bank investors from losses if Italy pushes ahead with plans to recapitalize lenders. Chancellor Angela Merkel’s government says thatEuropean Union rules on handling struggling banks should apply in any rescue effort, including forcing losses on shareholders and some creditors before public money can be injected, the person said, declining to be identified because the deliberations are private.

And just like that Renzi’s entire recapitalization plan has gone up in smoke, because if there is one person in Europe who can veto an Italian bailout, it’s Merkel, which is precisely what she has done.

As Bloomberg adds, any waiver of the rules would be complicated, as Germany insists that the EU’s Bank Recovery and Resolution Directive be applied. That will mean Italy must first avoid triggering a wind-down procedure. The assumption in BRRD is that the need for “extraordinary public financial support” for a bank indicates that a bank is “failing or is likely to fail, and therefore triggers the need for resolution,” according to the European Banking Authority.

Also according to the source, Germany isn’t pushing for banks to be wound down, according to the person. The government does, however, want to ensure that private investors are tapped before any public money is put into the banks. EU state-aid rules normally require shareholders and junior creditors to share losses.

That, as we noted on Monday, is a dead end: currently, it is practically impossible for Italian banks to raise capital. “They are caught in a pincer as the ECB simultaneously demands compliance with tougher capital adequacy buffers, in some case demanding fresh infusions of capital three or four times.  The banking squeeze has become politically explosive in Italy after thousands of small depositors were wiped out at four regional banks late last year. They were classified as junior bondholders, even though most of them were just ordinary savers who did not realize what was being done with their money.”

But worst of all for Renzi, Merkel’s government in Berlin rejects the argument that the U.K. vote to leave the EU constitutes an “exceptional circumstance” which, under EU basic law, can allow a national government to grant aid to a company outside of the state-aid rules.

Which simply means that Europe will need a bigger crisis, something which can be easily arranged, because recall as we concluded last time that the biggest winner from an Italian bank bailout would be none other than the ECB’s Mario Draghi under whose tenure as governor at the Bank of Italy from 2005 until 2011 is when Italy’s banks loaded up on all those €360 billion in bad and non-performing loans which Italy is now desperate to eliminate or at least offset. The last thing Draghi would want is for his legacy to one remember for the collapse of the Eurozone’s most insolvent banking system.

The EU seems to be out of control. The EU now states that “Scotland won the right to be heard in Brussels”. This is before a vote on Scotland’s sovereignty?
Also Draghi remains mum on easing policy:
(courtesy zero hedge)

Scandal Erupts At Euro Summit Over Scotland, While Draghi Says In “No Rush” To Ease Policy

For all the expectation of an imminent central bank intervention over the past two days, something which according to Bloomberg was the main catalyst for the stock surge since Monday, so far the world’s money printers have been dead silent: not only is the BOJ trapped and unable to intervene with virtually its entire bond curve trading below 0% (and any further easing will only push it lower), but moments ago the ECB itself chimed in and shot down hopes of more stimulus from Frankfurt when Mario Draghi said moments ago that the ECB is in “no rush” to ease policy after the Brexit vote.

But even more notable, and confirming just how profound the chaos in Europe is in the post-Brexit world, was the mini scandal that just erupted at the EU summit, now sans Cameron, over the fate of Scotland. Here, in an attempt to anger the UK some more, EU commission president Jean-Claude Juncker, in comments to reporters, said that “Scotland won the right to be heard in Brussels.” This takes place just hours before Scottish First Minister Nicola Sturgeon is due to meet with Juncker later Wednesday

But while Juncker’s statement was meant to merely infuriate the UK even more, what he did instead is open a new Pandora’s box, one which invites all secessionist movements in Europe to demand a comparable treatment.

And, sure enough, just moments later, Spain’s PM Rajoy immediately said that he opposes any negotiation by Scotland with the EU adding that “If the UK leaves, Scotland leaves.”

Why the abrupt response? Because Rajoy knows that is Scotland will be heard – and allowed to become independent – then Catalonia and the Basque Country are next.

What happens next? Nobody has any idea. This is what we said moments ago:

Just remember: buy stocks because it is month end, and because central banks which now explained they will not be intervening (unless stocks drop much further) may intervene.


Here is a list of the unknowns we are facing with the announced BREXIT
It signifies the great danger that we are in!
(courtesy zero hedge)

Brexit: Here Are The Latest Known Unknowns

Stocks may have decided to put Brexit in the rear view mirror, but as Deutsche Bank’s Jim Reid lists, there are still numerous outstanding questions.

  • When will Article 50 be triggered?
  • Will it ever be triggered?
  • Will there ever actually be a Brexit?
  • Who is the next Conservative leader?
  • Will there be a snap general election?
  • Will Jeremy Corbyn cling on to the leadership of the Labour Party in spite of a stunning 172/212 MPs in his party supporting a no confidence vote in him? Will the UK have a 2nd referendum?
  • On any negotiations will Europe play hard ball or compromise?
  • Will the UK let down swathes of the ‘leave’ voters and strike a compromise deal (eg like Norway) that doesn’t address the immigration issue at the heart of many voters’ fears?
  • Elsewhere will Italy lose the senate reform referendum in October and could Italy have an EU referendum after a fresh election?
  • And will the French elections next year be another spoke in the wheel for Europe?

Keep in mind, these are only the known unknowns. As Jim Reid writes, these questions and many more will remain mostly unanswered for many months which is sure to keep risk premiums on the higher side. However yesterday was a day for thinking the glass as being 10% full rather than 90% empty as various theories were distributed about whether Brexit would actually ever happen or whether some market friendly outcome would eventually be seen.

There’s a possibility of such outcomes but we won’t know that for many many months and possibly much longer so expect lots of mood swings ahead as the prevailing mood changes but there was definitely an air that full Brexit wasn’t necessarily a done deal yesterday.

My favourite comment across the day though was from the Luxembourg PM Xavier Bettel who said “Married or divorced, but not something in between. We are not on Facebook with ‘it’s complicated’ as a status”. Those were the days!!

That came alongside a flurry of other chatter from various EU leaders, all of which appeared to turn up the pressure valve on Cameron and the UK. Late in the evening we heard German Chancellor Merkel come out and say that ‘as of this evening, I see no way back from the Brexit vote’ and that ‘this is no time for wishful thinking, but to rather grasp reality’. Leaders from Belgium, Sweden and Denmark all voiced their frustrations and urged the UK to move quickly towards exit so as to reduce the uncertainty. Meanwhile French President Francois Hollande also added that the ‘UK won’t be able to access the single market without applying the rules of freedom of movement’. Interestingly, yesterday French press Le Figaro released an opinion poll which showed 45% of French citizens would be in favour of remaining in the EU, versus 33% against. Given all of the events of the last week, polls like this will only take on more and more focus.

Or not. Judging by the market’s reaction, and assuming the current pace of low-volume levitation, the S&P may be back at pre-Brexit levels in just 2 more days, at which point the entire Brexit episode will be completely forgotten by the algos.


If JPMorgan is right, Scotland is set it have its own currency and be independent.  Then it will be interesting if they still want to join the EU.  As far as I am concerned, Scotland is receiving far more benefit by being inside Gr. Britain and it would be extremely foolish for these guys to join the EU.  It would be a catastrophe if they then would decide to join their monetary union…

(courtesy zero hedge)

Scotland Is About To Have Its Own Currency And Much More: How JPM Sees Brexit Playing Out



The uSA continues to confront the Russian bear:

(courtesy zero hedge)

Caught On Tape: US Destroyer Comes ‘Dangerously Close’ To Russian Patrol Boat In The Med

Another day, another report of a US encounter with Russia – it is certainly becoming a routine event. In a statement made on Tuesday, the USS Gravely approached the Yaroslav Mudry, a Russian frigate, on June 17, passing at a distance of 55 meters (180ft), the Defense Ministry said in a statement.

The US guided-missile destroyer Gravely breached international safety rules by coming withing dangerous proximity of the Yaroslav Mudry in the eastern Mediterranean, the Russian Defense Ministry said.

According to the statement, the warship’s captain and crew violated the international Regulations for Preventing Collisions at sea (COLREGS) which govern the conduct of two or more vessels when they meet at sea in order to prevent dangerous situations.

From RT

The US sailors, in particular, neglected Rule 13, which stipulates that an overtaking vessel must keep out of the way of the vessel being overtaken,” the Defense Ministry said. It added that the USS Gravely had also violated Rule 15, which says that a vessel that has another vessel on the starboard side must yield and avoid crossing ahead of her.

The ministry also said the Pentagon should take note of such incidents rather than accuse the Russian Air Force and Navy of unprofessional conduct. “US sailors allow themselves to neglect key foundations of navigation safety without thinking of the consequences that dangerous maneuvering in a heavily trafficked maritime area might involve.”

The USS Gravely is an Arleigh Burke-class guided missile destroyer capable of carrying an Aegis missile defense system. She was commissioned in 2010 and sent to her first overseas deployment in the eastern Mediterranean three years later.

Yaroslav Mudry, a Russian-made Neustrashimy-class frigate, has seen service with the Russian Navy’s Baltic Fleet. She was spotted near Malta Earlier in June, reportedly heading to the eastern part of the Mediterranean to join Russia’s maritime task force off Syrian shores.

Unlike many of the claims made recently by the US regarding unsafe incidents, Russia has what is allegedly a video of the event.



There are about 30 trillion in total global bonds outstanding.  Of that 11.7 trillion or 39% are yielding negative rates

(courtesy zero hedge)

There Is Now A Staggering $11.7 Trillion In Negative Yielding Debt


Oil jumps back above 49 dollars as crude production tumbles again and this time inventories drop considerably:

(courtesy zero hedge)

Oil Jumps Above $49 As Crude Production Tumbles, Inventories Drop


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

Euro/USA   1.1076 UP .0002 (STILL  REACTING TO BREXIT)



USA/CAN 1.2991 DOWN .0029

Early THIS WEDNESDAY morning in Europe, the Euro ROSE by 2 basis points, trading now JUST above the important 1.08 level FALLING to 1.1087; Europe is still reacting to BREXIT,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 UP 19.63 POINTS OR 0.65%   / Hang Sang CLOSED UP 263.66 POINTS  OR 1.31%   AUSTRALIA IS HIGHER BY .80%/ EUROPEAN BOURSES ARE ALL IN THE GREEN  as they start their morning/(RELIEF RALLY)

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 WEDNESDAY morning: closed UP 243.69 POINTS OR 1.59% 

Trading from Europe and Asia:

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 263.66 POINTS OR 1.31% . ,Shanghai CLOSED UP 19.03 POINTS OR 0.65% / Australia BOURSE IN THE GREEN: (RESOURCES UP)/Nikkei (Japan) CLOSED  IN THE GREEN/India’s Sensex IN THE GREEN

Gold very early morning trading: $1317.80


Early WEDNESDAY morning USA 10 year bond yield: 1.454% !!! DOWN 1/4 in basis points from TUESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield FALLS to 2.252 DOWN 2 in basis points from TUESDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early WEDNESDAY morning: 95.89 DOWN 35 CENTS from TUESDAY’s close.

This ends early morning numbers WEDNESDAY MORNING


And now your closing WEDNESDAY NUMBERS

Portuguese 10 year bond yield:  3.08% DOWN 7 in basis points from TUESDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.230% DOWN 1 1/2  in   basis points from TUESDAY

SPANISH 10 YR BOND YIELD: 1.26%  DOWN 5 IN basis points from TUESDAY (does not buy rally)

ITALIAN 10 YR BOND YIELD: 1.37  DOWN 3 IN basis points from TUESDAY(does not buy the rally)

the Italian 10 yr bond yield is trading 11 points HIGHER than Spain.





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


Euro/USA 1.1107 UP .0031 (Euro =UP 31 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/


USA/Japan: 102.60 DOWN .091 (Yen UP 10 basis points )


USA/Canada 1.2980- DOWN 0.042 (Canadian dollar UP 42 basis points  AS OIL ROSE  (WTI AT $49.56).


This afternoon, the Euro was UP by 31 basis points to trade at 1.1107

The Yen ROSE to 102.60 for a GAIN of 10 basis points as NIRP is STILL a big failure for the Japanese central bank/

The POUND was UP 79 basis points, trading at 1.3430

The Canadian dollar ROSE by 42 basis points to 1.2980, WITH WTI OIL AT:  $49.51

The USA/Yuan closed at 6.6340/

the 10 yr Japanese bond yield closed at -.230% DOWN 1 & 1/2  IN BASIS  points in yield/

Your closing 10 yr USA bond yield:UP 3 IN basis points from TUESDAY at 1.485% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.287 UP 1 in basis points on the day ( HUGE POLICY ERROR)


Your closing USA dollar index, 96.26 DOWN 27 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 WEDNESDAY

London:  CLOSED UP 219.67 OR 3.58%
German Dax :CLOSED UP 164.99 OR  1.75%
Paris Cac  CLOSED UP 106.47  OR 2.60%
Spain IBEX CLOSED UP 270.30 OR 3.45%
Italian MIB: CLOSED UP 345.31 OR 2.21%

The Dow was UP 284.96  points or 1.64%

NASDAQ UP 87.38 points or 1.86%
WTI Oil price; 49.52 at 4:30 pm;

Brent Oil: 50.23




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: 50.90

USA 10 YR BOND YIELD: 1.515% 

USA DOLLAR INDEX: 95.68 down 37 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.3424 up .0076 or 76 basis pts.

German 10 yr bond yield at 5 pm: -.126%


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


From Brexit Wounds To Buying Panic (In Bonds & Stocks)



A terrific paper on the huge problems facing the financial industry in the USA: namely the rise in delinquency rates with respect to business loans

a must read..

(courtesy Olav Dirkmaat/UFM Market Trends)

Is A New Banking Crisis Imminent? Recent Rise In Delinquency Rates Is Shocking

Submitted by Olav Dirkmaat via UFM Market Trends,

The delinquency rate on loans is key in understanding banking. It answers one question: what percentage of loans is overdue for payment? The delinquency rate is by far the most useful indicator for “credit stress.” It seems, however, as if delinquency no longer counts. Few are paying attention to the quick and sudden rise of the delinquency rate. What does it tell us and is a new banking crisis imminent?

This Is What Happened after Janet Yellen Hiked the Fed Funds Rate in December

I have said it many times over and I will repeat it here: the last time around, it took Fed-chairman Alan Greenspan over two years and seventeen rate hikes to bring the Fed funds rate from a then all-time-low of 1% to 5.25%, before the U.S. economy suffered the worst recession since the 1930s. We are not so lucky this time.

Greenspan’s rate hikes didn’t affect delinquency rates straight away. Credit stress was subdued until a year after Greenspan’s last hike. Only in the first quarter of 2007, delinquency rates began to move higher. The reason is as clear as the water surrounding the Bahamas: in the years preceding the Great Recession credit growth was mainly focused on the U.S. housing market.

Credit growth was mostly driven by mortgage lending. Mortgages were generously provided by banks, but increasingly to subprime borrowers (subprime referring to their poor credit). Yet these subprime borrowers didn’t pay higher interest rates on their mortgages the moment Alan Greenspan began hiking rates. But as soon as their (promotional) teaser rates resetted, they started “feeling the Alan.” Delinquency rates went through the roof and the U.S. economy into recession.

Teaser rates, the low initial interest rate a borrower pays for the first few years, were responsible for the lag between Greenspan’s rate hikes and the 2008 recession.

More Fragile

Today, the Federal Reserve is ignoring a very inconvenient truth: the global economy is much more fragile than the last time around. And we have no teaser rates in today’s subprime credit (unless we of course consider oil producers that hedged oil prices by buying futures as something akin to “teaser rates”).

This time around, we will certainly not need seventeen rate hikes or three years before pushing the economy into recession.

In fact, we now know what happened after Janet Yellen increased the Fed funds rate with a mere quarter-percentage point: the delinquency rate on commercial and industrial loans increased 50%. That is right. In a single quarter delinquency rates in the U.S. banking sector exploded from 1% to 1.5%. The cycle has turned.

This Is Why Nobody Is Paying Attention

Why is nobody paying attention to this seemingly undeniable shift in the credit cycle? Why does the Federal Open Market Committee (FOMC) not even mention it? Why are the alarm bells not ringing in both Fed board rooms and the financial press?

The only answer to these questions is that the Fed is committing a capital sin. The headline number, the delinquency rate on all loans, decreased in the first quarter of 2016 from 2.20% to 2.17%. That ignores, however, the underlying pressures building up inside banks’ balance sheets. Fed-officials seem to focus on the headline number, while ignoring the deteriorating fundamentals.

With rising home prices, a vibrant housing market, increasing employment and interest rates at the lowest levels in world history, defaults on mortgage and credit card debt are reaching all-time lows. Yet delinquency on mortgages and credit cards tend to lag the business cycle. Typically, they only rise when we already are in recession, just as unemployment tends to be a lagging indicator.

Delinquency Rate: Do Not Focus on the Headline Number

The headline number is fooling Fed-officials; delinquency rates are still declining. But the delinquency rate on all bank loans (the headline number) has no predictive power; it just follows a random pattern. Source: St Louis Fed

Even if we are on the verge of a new banking crisis, the headline number will never tell us so.

Which Loans Are Increasingly Overdue?

If delinquency rates on consumer credit (mortgages and credit card debt) will not help us in estimating how probable a new banking crisis is, then which delinquency rates do matter? And why did I call them “shocking”?

Let’s first break down a bank portfolio. Bank loans can we divided into three groups:

  • Consumers
  • Businesses
  • Real estate (both commercial and residential)

(Just for the sake of comparison, U.S. banks currently hold $1,300 billion in consumer debt, $1,810 billion in commercial and industrial debt, and over $3,000 billion in real estate debt.)

Banks lend money to consumers for buying homes (mortgages) or consumer goods (credit card debt). We concluded that delinquency rates on those loans tend to lag the business cycle.

What’s left?

Loans to businesses, in whatever form or shape they come. Most of these loans are pegged to an interest rate benchmark, for instance the LIBOR. After the Fed’s first rate hike in December, the U.S. dollar 12-month LIBOR went up from approximately 0.8% to 1.3%. Marginal borrowers are slowly getting pushed into bankruptcy.

December’s rate hike clearly resulted in a change of tides: delinquency rates have bottomed and are on their way up. And do not forget the following: the fact that delinquency rates no longer decrease but began to increase, has always been a clear warning signal for a recession — at least during the past twenty years. And over that same period, this indicator never gave a “false positive,” in contrast to many other (recession) indicators.

Delinquency rate on bank loans is skyrocketing in the US

A clear danger sign: delinquency rates on commercial and industrial loans are creeping up. Source: St Louis Fed

The dollar amount of delinquencies is already skyhigh

In dollar terms the shift is even more pronounced. This is of course the result of our staggering debt levels, which are not apparent in the relative numbers. Source: St Louis Fed

Charge-off rates on bank loans are starting to pick up as well

In line with increasing loan delinquencies, charge-off rates on commercial and industrial loans are picking up as well (charge-off rates tend to lag somewhat). Source: St Louis Fed

Delinquency Rates in Europe

The delinquency rate in Europe is also on the rise. Yet, we do have to single out the countries that skew this eurozone average. Italian banks in particular are suffering from an unbelievably high delinquency rate. The delinquency rate in Italy is at such extreme levels that the country might turn the euro crisis in front page news again (if for once Greece remains on the sidelines).

Delinquency rates in the Eurozone have been on the rise too

The delinquency rate on bank loans in Europe is also on the rise; here too, at least in the periphery countries, it appears the credit cycle has turned. Source: European Central Bank (CBD2, ‘gross non-performing debt instruments’)

Keep a Close Eye on Delinquency

What is next? We will have to wait and see to find out what delinquency rates have done in the second quarter. However, it is clear that the tide has turned. It is irrelevant whether the Federal Reserve will hike rates in July or September. Consensus currently says we should expect two more rate hikes this year. If that is true, we can expect delinquency rates to move up further in the coming quarters.

In 2006 it was exactly twelve months after delinquency rates bottomed that the recession began. If the same period applies, we are due for a recession. In the first quarter of the Great Recession in 2008, delinquency rates were only 1.45%. We are already above that level. On the flipside, however, we should not ignore that it took three years of rising delinquency rates before the economy entered into recession in 2001. Credit cycles are not an exact science. Yet the trend is clear and Fed chair Janet Yellen should be terrified about this disturbing development.

The fact that increasing loan delinquency coincides with mountains of debt maturing in 2016 and 2017 is a topic for next time.




The following goes to show how bad the economy real is:  Pending home sales crash the most in 6 years due to supply:

(courtesy zero hedge)

Pending Home Sales Crash Most In 6 Years – ‘Supply’ Blamed

Following April’s exuberant 6 year high bounce (revised lower from +5.1% to +3.9%), May saw pending home sales plunge 3.7% – the biggest drop since May 2010. Sales declined in all 4 regions (with a 4.2% plunge in Midwest to January lows). This is the first annual drop in home sales in 2 years (-0.2%) and realtors are blaming ‘supply’ on the slump… sure (and all that pent up demand).

Remember April…

Well May gave it all back…

And was revised drastically lower…

Lawrence Yun, NAR chief economist, says pending sales slumped in May across most of the country.

“With demand holding firm this spring and homes selling even faster than a year ago, the notable increase in closings in recent months took a dent out of what was available for sale in May and ultimately dragged down contract activity,” he said.

“Realtors® are acknowledging with increasing frequency lately that buyers continue to be frustrated by the tense competition and lack of affordable homes for sale in their market.”

Despite mortgage rates hovering around three-year lows for most of the year, Yun says scant supply and swiftly rising home prices – which surpassed their all-time high last month – are creating an availability and affordability crunch that’s preventing what should be a more robust pace of sales.

“Total housing inventory at the end of each month has remarkably decreased year-over-year now for an entire year,” adds Yun.

“There are simply not enough homes coming onto the market to catch up with demand and to keep prices more in line with inflation and wage growth.”


One of the most important releases coming from the USA is consumer spending as the consumer is 70% of GDP.  Today May spending plunged back to earth from April’s small rise.  Income growth slows quite dramatically:
(courtesy zero hedge)

April Spending Exuberance Plunges Back To Earth In May As Income Growth Slows

After an exuberant April, spiking hope that everything was awesome with a surge in spending, May has dragged US consumers back down to earth. The 1.1% (revised) jump in spending in April (highest since Aug 09) is over as May’s 0.4% gain is back in the land of ‘normal’ once again. Income rose just 0.2% MoM (less than expected) slowing dramatically from last month to near the weakest YoY growth since March 2014. The savings rate fell once again on the back of this (down 0.1%) to 5.3%.

With YoY Income growth almost the weakest since March 2014 and spending fading…

Pushing the savings rate further down..

As spending eats into income…

(courtesy zero hedge)


Leave a Reply

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

WordPress.com Logo

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

Google photo

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

Twitter picture

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

Facebook photo

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

Connecting to %s

%d bloggers like this: