August 5/GLD adds 10.69 tonnes of gold as gold falls by $22.40 today/No addition into the SLV/August gold standing so far: 40.2 tonnes !Phony jobs report causes investors to whack gold and silver southbound!

Gold:1336.40 down $22.40

Silver 19.78  down 63 cents

In the access market 5:15 pm

Gold: 1336.00

Silver: 19.71


For the August gold contract month,  we had a huge 1019 notices served upon for 101,900 ounces. The total number of notices filed so far for delivery:  10,881 for 1,088,100 oz or  tonnes or 33.844 tonnes

In silver we had 63 notices served upon for 315,000 oz. The total number of notices filed so far this month:  209 for 1,045,000 oz.

Yesterday I wrote the following:

“Tomorrow is the FOMC report on the job gains in the uSA for last month.  Even though the report has  fraudulent data in it, many hedge funds have their eyes glued ready to sell or buy within seconds of its release especially gold and silver.So you are warned: gold and silver will be quite volatile tomorrow. The last jobs report was awful and I do not think that they will have two consecutive bad reports. They love putting lipstick on this economic pig”

The boys did not disappoint me today.The raid was necessary due to the high OI in the total comex silver plus the OI for the coming September contract.  Also more gold is standing for the front month of August. To date: 40.2 tonnes of gold is standing.

Let us have a look at the data for today



In silver, the total open interest ROSE BY A SMALLISH 342 contracts UP to 223,484 AND CLOSE AN ALL TIME NEW ALL TIME RECORD EVEN THOUGH THE  PRICE OF SILVER FELL  BY 3 CENTS WITH YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.117 BILLION TO BE EXACT or 159% of annual global silver production (ex Russia &ex China).

In silver we had 63 notices served upon for 315,000 oz

In gold, the total comex gold ROSE BY A CONSIDERABLE 6,583 contracts as the price of gold ROSE by $4.80 yesterday. The total gold OI stands at 590,494 contracts.


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


we had a huge change to our gold inventory, a monstrous deposit of 10.69 tonnes of gold (with the price down $22.40) at the GLD . /

Total gold inventory rest tonight at: 980.34 tonnes


we had no changes in the SLV, the SILVER INVENTORY AT THE SLV

rests at 350.815 million oz.

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

1. Today, we had the open interest in silver ROSE by 342 contracts UP to 223,484 DESPITE THE FACT THAT the price of silver FELL BY 3 cents with YESTERDAY’S trading.The gold open interest ROSE by A large 6,583 contracts UP to 583,911 as the price of gold ROSE by $4.80 WITH YESTERDAY’S TRADING.

(report Harvey).


2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge


  i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 5.73 POINTS OR 0.19%/ /Hang Sang closed UP 313.86 points or 1.44%. The Nikkei closed UP 0.44 POINTS OR 0.01% Australia’s all ordinaires  CLOSED UP 0.39% Chinese yuan (ONSHORE) closed UP at 6.6412/Oil rose to 41.54 dollars per barrel for WTI and 43.92 for Brent. Stocks in Europe ALL IN THE GREEN . Offshore yuan trades  6.6502 yuan to the dollar vs 6.6412 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS SLIGHTLY AS CHINA TRIES TO STOP MORE USA DOLLARS LEAVING THEIR SHORES



none today


The Chinese “paper economy” was faltering to bits.  Just look at what the regulators told banks to do when they face non performing loans:

“looks the other way”

( zero hedge)


Merkel is losing support among German voters after last month’s terrible attacks Muslims.  The anti immigration parties are leading and they are euroskeptic

( zero hedge)


This ought to be great for European confidence:  a jailed Jihadist warns that ISIS is planning loads of concurrent attacks on England Germany and France

( zero hedge)


The Canadian dollar tanks as she loses the most jobs since November at 31,200.

The lower price of oil is certainly placing a toll on Canada

( Bloomberg)


Oil fades into the close after they announce the 6th weekly rig count rise

( zero hedge)


none today


i)The Bank of England has provided additional QE as well as lowering its interest rate to .25% with guidance heading for zero.  This is why you buy gold:

( SmartKnowledge.U)

ii)A good reason why Indians buy gold;

( Press India/GATA)

iii)Your weekly lecture on the global economy.

Today’s piece is entitled:

“Saving the System”


iv)Rob McEwan the originator of Goldcorp is one smart cookie.  Today he talks about gold mining and where we are heading.  He is one smart cookie

( Gord McEwan/GATA/Penner/Vancouver Sun)

v)China demand is down 25% from last yr but on par with 2014: SGE withdrawals = Chinese demand!( see Koos Jansen’s many papers on the subject)

( Lawrence Williams/Lawrie ongold)


i)The official FOMC report:  a gain of 255,000 jobs as it exceeded expectations.  Wages gain rise but the unemployment rate remains the same at 4.9%.  Also the gains do not match declining tax withholdings:

( zero hedge)

ii)Supposedly the July job gains were in Obamacare again and strangely in Education where all students are out of school and nobody hires anybody in July.

( zero hedge)

iib)Since 2014, the USA have added 1/2 million wiaters and bartenders and 0 manufacturing workers. And they call this a robust economy?

(courtesy zero hedge)

iii)Analysts looking at the data are quite angry as they see huge weakness in all the numbers.  The question is how did they record such a high increase in  jobs: answer our famous plug numbers:  seasonal adjustments and the B/D (Birth/Death Plug)

(zero hedge)

iv)The Administration has a major problem here as there is no doubt that ransom money was paid to release the sailors caught in Iranian waters:

( zerohedge)

v)This is interesting:  Trump retracts his statement that he saw a video of “Iran Cash” being sent in exchange for the hostages.  The earlier images were thought to be of the hostages arriving in Geneva.  Then strangely footage of cash arriving in Iran surfaces: maybe the Donald was a little too early to retract!

( zero hedge)


vi)This should help Hillary’s campaign for the Presidency:

“we will raise taxes on the middle class”


vii)Both student loans and auto loans hit record highs

( zero hedge)


viii)Citibank states that the bull market just will not die.  They see “red everywhere”

( Citibank/zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE TO AN OI level of 590,494 for a GAIN of 6,583 contracts as  THE PRICE OF GOLD ROSE BY $4.80 with YESTERDAY’S TRADING..   We are now in the active month of AUGUST. As I stated : “Somebody big is continually standing for the gold metal despite the fact that July is  generally a poor delivery month. We  again witnessed the same scenario as in May  June and July whereby the front delivery month increases in OI standing for metal or a slight contraction We will no doubt see the same modus operandi in August As of today, the OI standing will probably not contract any more as more gold oz will stand as the month proceeds to its conclusion .  The  big active contract month of August saw it’s OI FELL by 126 contracts down to 3142,  We had 205 notices filed upon yesterday so we GAINED 79 contracts or an additional 7900 oz will  stand for delivery in August. The next contract month of Sept saw it’s OI fall by 1423 contracts down to 7938.The September contract STILL remains extremely elevated and we may have another of those high deliveries rare for a non active month.The next active delivery month is October and here the OI ROSE by 1431 contracts up to 48,116 as these guys took the roll from September as they must have received a good fiat bonus. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was good at 243,398. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was FAIR at 193,848 contracts.The comex is not in backwardation.
Today, we had  1019 notices filed for 101,900 oz in gold
And now for the wild silver comex results. Total silver OI ROSE by 342 contracts from 223,142 UP TO 223,484.  We are now close to an all time record high for silver open interest set ON Wednesday AUGUST 3: (224,540). The  non active month of August saw it’s OI RISE by 7 contracts UP to 296. We had 6 notices served yesterday so we gained 13 contracts or an additional 65,000 oz will stand in this non active delivery month of August. The next big active month is September and here the OI fell by 1,195 contracts down to 147,349. The volume on the comex today (just comex) came in at 85,309 which is huge and small rollovers..The confirmed volume yesterday (comex + globex) was excellent at 66,245 with tiny rollovers.. Silver is not in backwardation. London is in backwardation for several months.
We had 63 notices filed for today for 315,000 oz
INITIAL standings for AUGUST
 August 5.
Withdrawals from Dealers Inventory in oz   nil OZ
Withdrawals from Customer Inventory in oz  nil
4822.500  oz
Deposits to the Dealer Inventory in oz /85,358.25 oz


2655 kilobars

Deposits to the Customer Inventory, in oz 
84,814.200 OZ
No of oz served (contracts) today
1019 notices 
101,900 oz
No of oz to be served (notices)
2123 contracts
212,300 oz
Total monthly oz gold served (contracts) so far this month
10,881 contracts (1,088,100 oz)
(33.844 tonnes)
Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL
Total accumulative withdrawal of gold from the Customer inventory this month    11,220.4 OZ
Today we had 1 dealer DEPOSIT
i) into Brinks: 85,358.25 oz
exactly 2655 kilobars
total dealer deposit: 85,358.25    0z
2655 kilobars
Today we had  0 dealer withdrawals:
total dealer withdrawals:  nil oz
We had 2 customer deposits:
i) Into HSBC:  80,377.500 oz  (2500.077 kilobars)..they meant 2500 kilobars but a little off!
ii) Into Scotia:  4436.7oo oz  138 kilobars
Total customer deposits:84,814.200 oz  (2638 kilobars)
Today we had 1 tiny customer withdrawals:????
 i) Out of HSBC:  4822.500 oz ( 150 kilobars)
Total customer withdrawals  4822.500 OZ ??
150 kilobars
Today we had 0 adjustments:
Note: If anybody is holding any gold at the comex, you must be out of your mind!!!
since comex gold storage is unallocated , rest assured any gold stored will be compromised!
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 1019 contracts of which 32 notices was stopped (received) by JPMorgan dealer and 460 notices was stopped (received)  by JPMorgan customer account. 
To calculate the initial total number of gold ounces standing for the AUGUST  contract month, we take the total number of notices filed so far for the month (10,881) x 100 oz  or 1,088,100 oz , to which we  add the difference between the open interest for the front month of AUGUST  (3142 CONTRACTS) minus the number of notices served upon today (1019) x 100 oz   x 100 oz per contract equals 1,300,400 oz, the number of ounces standing in this active month. 
Thus the INITIAL standings for gold for the AUGUST contract month:
No of notices served so far (10,881) x 100 oz  or ounces + {OI for the front month (3142) minus the number of  notices served upon today (1019) x 100 oz which equals 1,307,900 oz standing in this non  active delivery month of AUGUST  (40.447 tonnes).
We gained 79 contracts or additional 7900 oz will stand for metal in this active month of August.
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 now have partial evidence of gold settling for last months deliveries We now have  +  6.889 TONNES FOR MAY + 49.09 TONNES FOR JUNE +  21.452 TONNES FOR JULY + 12.3917 + 40.447 tonnes Aug +  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; JUNE 30 2.49 /july 1 1778 tonnes, JULY 28 .089 TONNES / JULY 29 .128 TONNES/ THEREFORE 91.831 tonnes still standing against 74.696 tonnes available.
 Total dealer inventor 2,401,488.463 oz or 74.696 tonnes
Total gold inventory (dealer and customer) =11,314,881.31 or 351.94 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 351.94 tonnes for a  gain of 49  tonnes over that period. 


To me, the only thing that makes sense is the fact that “kilobars” are entries or hypothecated gold sent to other jurisdictions so that they will not be short in their derivatives like in England.  This would be similar to the gold used by Jon Corzine. If this is the case, this would be the greatest fraud perpetrated on USA soil.


And now for silver
 august 5.2016
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
1.749.110.962 oz
Deposits to the Dealer Inventory
 314,343.300  oz
Deposits to the Customer Inventory
486,750.062 oz
No of oz served today (contracts)
(315,000 OZ)
No of oz to be served (notices)
233 contracts
1,165,000 oz)
Total monthly oz silver served (contracts) 209 contracts (1,045,000 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  5,321,260.8 oz
today we had 1 deposit into the dealer account:
 i) Int CNT:  314,343.300 oz
total dealer deposit 314,343.300  oz
we had 0 dealer withdrawal:
total dealer withdrawals:  NIL oz
we had 4 customer withdrawals:
i)OUT OF HSBC:  200,002.700 OZ
ii) Out of CNT:  608,279.452 oz
iii) Out of JPM: 600,026.700 oz
iv) Out of Scotia: 340,802.700 oz
Total customer withdrawals: 1,749,110.962 oz
We had 2 customer deposits:
i) Into CNT: 30,998.362 oz
ii) Into JPMorgan: 455,751.700 oz
total customer deposits:  486,750.062  oz
 we had 0 adjustments
The total number of notices filed today for the AUGUST contract month is represented by 63 contracts for 315,000  oz. To calculate the number of silver ounces that will stand for delivery in AUGUST., we take the total number of notices filed for the month so far at (209) x 5,000 oz  = 1,045,000 oz to which we add the difference between the open interest for the front month of AUGUST (296) and the number of notices served upon today (63) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the AUGUST contract month:  209(notices served so far)x 5000 oz +(296 OI for front month of AUGUST ) -number of notices served upon today (63)x 5000 oz  equals  2,210,000 oz  of silver standing for the AUGUST contract month.
we gained 13 contracts or an additional 65,000 oz will  stand for delivery in this non active month of August.
Total dealer silver:  27.290 million (close to record low inventory  
Total number of dealer and customer silver:   152.317 million oz (close to a record low)
The total open interest on silver is NOW close to its all time high with the record of 224,540 being set AUGUST 3.2016.  The registered silver (dealer silver) is NOW NEAR  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.
At 3:30 pm est we receive the COT report which gives us position levels of our major players
First let us head over to the gold COT
Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
365,801 71,618 48,048 113,911 437,938 527,760 557,604
Change from Prior Reporting Period
18,375 3,147 -7,602 -3,509 11,495 7,264 7,040
211 82 84 49 59 300 192
  Small Speculators      
  Long Short Open Interest    
  54,451 24,607 582,211    
  -1,378 -1,154 5,886    
  non reportable positions Change from the previous reporting period  
COT Gold Report – Positions as of Tuesday, August 02, 2016

Our large speculators:

Those large specs that have been long in gold added a whopping 18,375 contracts to their long side.
Those large specs that have been short in gold added 3147 contracts to their short side.
Those bankers who have been long in gold pitched 3509 contracts from their long side
Those commercial bankers who have been short in gold added another whopping 11,495 contracts to their short side.
Our small specs;
Those small specs that have been long in gold pitched 1378 contracts from their long side
Those small specs that have been short in gold covered 1154 contracts from their short side
Our commercials go net short by another 15004 contracts and thus very bearish
The boat is extremely loaded on one side with the long specs and on the other side the short commercials.  Something has got to give.
And now for silver COT
Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
122,676 29,242 24,491 49,123 158,244
-1,061 1,582 3,168 1,008 3,006
126 58 47 36 45
Small Speculators Open Interest Total
Long Short 224,540 Long Short
28,250 12,563 196,290 211,977
3,126 -1,515 6,241 3,115 7,756
non reportable positions Positions as of: 182 135
  Tuesday, August 02, 2016   ©
It sure looks like our bankers are trapped with respect to silver
Our large specs:
Those large specs that have been long in silver pitched 1061 contracts from their long side
Those large specs that have been short in silver added 1582 contracts to their short side
Our criminal commercials (bankers)
Those bankers who are long in silver added a tiny 1008 contracts to their long side
Those bankers who are short in silver added only 3006 contracts to their short side.
Our small specs;
those small specs that have been long in silver added 747 contracts to their long side
those small specs that have been short in silver added 2766 contracts to their short side.
Conclusion: commercials go net short by only 2000 contracts. They are very timid in providing short paper.
And now the Gold inventory at the GLD
August 5/ a huge deposit of 10.69 tonnes of gold (with gold down $22.40??)/GLD inventory rests at 980.34 tonnes
August 4/no change in inventory at the GLD/Inventory rests at 969.65 tonnes
August 3/a big deposit of 5.62 tonnes of paper gold/Inventory rests at 969.65 tonnes
August 2/no change in gold inventory at the GLD/Inventory rests at 964.03 tonnes
August 1/we had a huge paper deposit of 5.94 tonnes of gold into the GLD/Inventory rests at 964.03 tonnes
July 29/ we had a huge deposit of 3.86 tonnes into the GLD/inventory rests at 958.09 tonnes
July 28/no changes in gold inventory at the GLD/Inventory rests at 954.23 tonnes
July 22/ no change in gold inventory at the GLD/Inventory rests at 963.14 tonnes
July 21/ a large withdrawal of gold inventory to the tune of 2.08 tonnes/Inventory rests at 963.14 tonnes
July 20./no changes in gold inventory at the GLD/Inventory rests at 965.22 tonese
July 19/no change in gold inventory at the GLD/Inventory rests at 965.22 tonnes
July 18./ a good sized deposit of 2.37 tonnes of gld into GLD/this is a paper gold entry/inventory rests at 965.22 tonnese
August 5/ Inventory rests tonight at 980.34 tonnes


Now the SLV Inventory
August 5/no change in silver inventory at the SLV/Inventory rests at 350.815 million oz.
August 4/no change in silver inventory at the SLV/inventory rests at 350.815 million oz
August 3/no change in silver inventory/inventory rests at 350.815 million oz
August 2/ we had a tiny withdrawal of 40,000 oz of silver/Inventory rests at 350.815 million oz
August 1/we had a huge paper deposit of 1.235 million oz into the SLV/Inventory rests at 350.955 million oz
July 29/we had no change in silver inventory/inventory rests at 349.720 million oz
July 28/we had 1.14 million oz of additional silver added to the SLV/Inventory rests at 349.720 million oz
July 22/we had no change in silver inventory at the SLV.Inventory rests at 348.580 million oz/
July 21/no change in silver inventory at the SLV/Inventory rests at 348.580 million oz
July 20/no change in silver inventory at the SLV/Inventory rests at 348.580 million oz
July 19/no change in silver inventory at the SLV/Inventory rests at 348.580 million oz
July 18/no change in silver inventory at he SLV/inventory restss at 348.580 million oz
August 5.2016: Inventory 350.815 million oz

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 5.3 percent to NAV usa funds and Negative 5.3% to NAV for Cdn funds!!!!  (the discount is starting to disappear)
Percentage of fund in gold 58.8%
Percentage of fund in silver:40.1%
cash .+1.1%( August 5/2016).
2. Sprott silver fund (PSLV): Premium falls  to +1.33%!!!! NAV (august 5/2016) 
3. Sprott gold fund (PHYS): premium to NAV  falls TO  0.84% to NAV  ( august 45/2016)
Note: Sprott silver trust back  into POSITIVE territory at +1.33% /Sprott physical gold trust is back into positive territory at 0.84%/Central fund of Canada’s is still in jail.


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

Trading in gold and silver overnight in Asia and Europe
Mark O’Byrne/David Russell

Gold In Sterling 2.2% Higher After Bank Of England Cuts To 0.25% and Expands QE

GoldCore's picture

Gold in sterling was 2.2% higher yesterday and was marginally higher in dollar terms after the Bank of England cut interest rates to all time, 322 year record low at 0.25% and surprised markets by renewing and aggressively expanding quantitative easing or QE.

Sterling fell sharply on markets and gold rose from £1,014/oz to over £1,036/oz where it remains this morning. Ultra loose monetary policies are now even looser after the BOE cut interest rates for the first time in more than seven years and launched a bigger-than-expected package of monetary measures.

Gold_GBP_BOEGold in GBP (10 Years)

The Bank cut official interest rates to a new record low of 0.25% from 0.5% and signalled they would be reduced further in the coming months. The deepening of ultra loose monetary policies is bullish for gold, especially in sterling terms.

Sterling gold is 38.4% higher in 2016 year to date. This means that gold is now just 14% below the all time record nominal high of £1,179/oz reached on the 5th of September 2011. Gold remains one of the best performing assets in all currencies over a 10, 15 and 20 year period.

Governor Carney also aggressively renewed and expanded its QE and launched a new £100bn funding scheme for banks. The BoE also launched a new £70 billion a month bond-buying programme which was quickly termed a ‘sledgehammer stimulus’ by analysts. This will include £10 billion of sterling denominated investment grade corporate bonds, from companies the BOE judges make a “material contribution” to the UK economy.

BankofEnglandSource: Bank of England via BBC

The BOE clearly signalled that this as just the start and the minutes of the rate setting Monetary Policy Committee stressed there was even “scope for further action” in all elements of the package.

The declared reason for the aggressive easing was to protect jobs and prevent a post-Brexit recession. However, the recent stress tests showed how vulnerable UK banks and the UK banking system is with Barclays, Royal Bank of Scotland and HSBC all vulnerable.

Indeed, the concern is that many large European banks and the European banking system remains vulnerable. This has been seen in the sharp fall of Portuguese and Italian bank shares and indeed of European behemoth banks such as Credit Suisse and Deutsche Bank.

Protecting-Your-Savings-In-The-Coming-Bail-In-EraDownload Guide

Some have even questioned the recent “stress tests” and argue that they are seriously flawed as they fail to consider the real risk of contagion in the Eurozone banking and financial system.

A few analysts, including GoldCore, believe that the UK is heading for new financial crisis on a greater scale than 2008 and the Bank of England has been lulling consumer and investors into a false sense of security in recent years. This has meant that consumer, company and corporate balance sheets far from being repaired have actually deteriorated and total debt levels in the UK are now higher than they were in 2007. This vulnerability means that bail-ins remain a real risk to all UK depositors.

The BOE rate cut and renewed and expanded QE reminds participants that we remain in an ultra loose monetary policy environment and this is very supportive of gold. Ultra low and negative interest rates, concerns about the economic outlook and geopolitical risk are also supporting gold.

Stocks are mixed today and the dollar is essentially flat. Should risk aversion raise its head and stocks or the dollar move lower, we would expect a safe haven bid to come into the gold market.

All eyes will be on the non-farm jobs number today at 1330 BST. A poor jobs number will likely see gold eke out further gains on safe haven demand. A forecast-beating jobs number should lead to gold seeing selling pressure.

Gold and Silver Bullion – News and Commentary

“Ultra-low interest rate environment is very supportive for gold” (GoldCore)

Gold steady ahead of US non-farm payrolls report (Reuters)

Gold Heads for Second Weekly Gain as U.S. Jobs Data in Focus (Bloomberg)

Factory orders fall sharply for second straight month in June (Marketwatch)

Treasuries Rally, Pound Drops on BOE as Stocks Mixed Before Jobs (Bloomberg)


‘Perfect storm’ is making gold one of the hottest assets on the planet (Businessinsider)

Gold is glittering … and may soar if Trump wins (CNN)

Silver Trouncing Gold Signals Bull Market May Continue: Chart (Bloomberg)

China’s New Silk Road To Make A Big Move In Gold (Zerohedge)

Big Events Coming & 1 Oz Silver Buys 6 Months Of Food In Venezuela (Srsroccoreport)

Gold Prices (LBMA AM)

05Aug: USD 1,362.60, GBP 1,036.39 & EUR 1,222.52 per ounce
04Aug: USD 1,351.15, GBP 1,016.60 & EUR 1,213.87 per ounce
03Aug: USD 1,364.40, GBP 1,023.16 & EUR 1,218.96 per ounce
02Aug: USD 1,358.15, GBP 1,025.13 & EUR 1,213.10 per ounce
01Aug: USD 1,348.85, GBP 1,022.97 & EUR 1,207.76 per ounce
29July: USD 1,332.50, GBP 1,012.03 & EUR 1,200.18 per ounce
28July: USD 1,341.30, GBP 1,017.64 & EUR 1,208.78 per ounce

Silver Prices (LBMA)

05Aug: USD 20.22, GBP 15.36 & EUR 18.14 per ounce
04Aug: USD 20.16, GBP 15.24 & EUR 18.11 per ounce
03Aug: USD 20.59, GBP 15.43 & EUR 18.39 per ounce
02Aug: USD 20.71, GBP 15.65 & EUR 18.51 per ounce
01Aug: USD 20.51, GBP 15.56 & EUR 18.37 per ounce
29July: USD 20.40, GBP 15.20 & EUR 18.03 per ounce
28July: USD 20.41, GBP 15.51 & EUR 18.41 per ounce

Recent Market Updates

– Buy Gold and “Real Assets” Says the ‘Bond King’
– Gold Bullion – The Ultimate Monetary Solution
– Silver Kangaroo Coins – Sales Surge To Over 10 Million
– Trump, Clinton, “Ugliest” Election Coming – Gold’s “Summer Doldrums” Prior To Resumption of Bull Market
– Marc Faber: Invest 25% Of Investment Portfolios In Gold Bullion
– “Could Not Invent A More Bullish Story For Gold Bullion”
– Gold In Bull Market – “Every Reason For It To Continue” – Frisby In Money 
– Is Gold Set To Hit $1,500 Per Ounce?
– Why Italy’s bank crisis could be a ‘ticking time bomb’
– Gold Holds Near Two-Week Low as Risk Appetite Rises on U.S. Data
– IMF Scraps Forecast for Global-Growth Pickup on Brexit Fallout
– Gold, Trump and Rates: Bank That Foresaw Rally Flags $1,500
– Gold Lower After Central Bank’s Surprise Move


The Bank of England has provided additional QE as well as lowering its interest rate to .25% with guidance heading for zero.  This is why you buy gold:

(courtesy SmartKnowledge.U)

The Bank of England Just Provided Us With More Reasons to Own Gold and Silver

Yesterday the Bank of England cut its main interest rate from 0.5% to 0.25% for the first time, marking its first interest rate change since March 2009, and provided all of us with more reasons to keep converting fiat currencies into physical gold and physical silver. In addition the BOE announced an increase in its QE bond-buying program of £60bn to £435bn. And in response, the British pound immediately fell by 1% to the USD and traders added to their British pound longs, exceeding previous record net long positions in the pound recorded three years ago. I understand that traders are seeking a stronger rebound in the British pound after its plunge post-Brexit, and since the process for the UK to exit the EU has not even begun since the yes referendum vote, traders may be right to assume that the British pound will eventually rebound significantly in strength following this rate cut after people realize that a Brexit yes referendum vote may translate into an indefinite stay of limbo for the UK within the EU.

However, believing that any strengthening of any global fiat currency will be sustained over time is folly as all Central Bankers have aptly illustrated for years that they have already moved beyond the point of no return from their indefinitely low-interest rate, weak currency purchasing power policy years ago and can not raise interest rates to anything close to a free market interest rate. Thus, even if the British pound rebounds much more significantly from its post Brexit and post BOE interest rate cut, and it should, the spiraling weakening of its purchasing power will resume long-term without a doubt. The same knee-jerk trader reaction happened in response to the US Federal Reserve raising their Fed Funds interest rate by a paltry amount from a 0.00% to 0.25% range to a 0.25% to 0.50% range on 16 December 2015. The very next day, traders responding by dumping precious metals due to the silly Central Banker Janet Yellen’s talk of a strengthening economy spurring their interest rate raise. When she publicly announced this interest rate hike decision, Yellen stated that their decision was based upon“the committee’s confidence that the economy will continue to strengthen. The economic recovery has clearly come a long way, though it is not yet complete…but with the economy performing well and expected to do so, the committee judged that modest increase in the Federal Funds rate is now appropriate.”

In response, gold and silver both dumped in price, with silver suffering an especially hard fall of more than 3.5% the next trading day. This undeserved weakness in gold and silver prices persisted for a couple of weeks in gold and for an entire month in silver, even though this paltry raise in the Fed Funds interest rate was the first hike in over 9 ½ years since 29 June, 2006, simply because this interest rate“hike” (if one can call a measly ¼ of 1% increase a hike) was accompanied by silly claims of a strengthening, robust US economy made by Fed Reserve Chairman Janet Yellen. I, for one, have never understood why traders lose their minds over such policy announcements, instigating sharp asset price spikes and falls depending upon the announcement, that are often very sharply reversed in the near future. Certainly the gold and silver price dumps that occurred in reaction to Yellen’s announcement of a 0.25% raise in the Fed Funds rate has been sharply reversed through all of 2016. Of course, I understand that traders don’t care about fundamentals and only care about profiting from any strong movement in asset price, even if the price move is very short-lived and counterintuitive.

However, does a 0.25% Fed Funds rate increase really change the Central Banker fiat currency destruction policy adopted for decades, and provide an impetus to sell one’s gold and silver in exchange for devaluing paper and digital fiat currencies? We’ve all seen massive spikes and falls in crude oil spikes happen within a span of days in recent years. Is it really possible for a trader to be on the right side of every unexpected intraday spike higher and lower, especially when sharp movements higher are often reversed just days later and vice versa? Why not just understand the long-term picture, and position yourself to be on the right side of this equation? I guess that may be too much to ask of a trader, however, and it may be tantamount to asking a newborn duckling not to take to water. In other words, during that press conference, Yellen stated the same bunk that Federal Reserve bankers had stated in their minutes eight times a year, for 7 years in a row in which they implied an interest rate hike could be coming, only to never raise interest rates. And after 7 years of deception in which they finally made good on their threat to raise interest rates, the interest rate “hike” turned out to be a measly 0.25% raise, because that’s all they could afford to raise it without risking greater ripples and sell-offs in the financial markets. In other words, bankers released somewhere around 55 statements in a row about possibilities of raising interest rates without actually raising interest rates, before executing what amounted to the lowest possible “hike” they could possibly execute. And today, analysts incredibly still wait upon the public statements of Central Bankers with unbridled anticipation, and still incredibly use their statements to guide their investment strategies.

For example, I randomly pulled a FOMC minutes statement from January 2011, more than five years ago, and that statement contained Central Banker affirmations of “strong” consumer spending,“improvements in household and business confidence and in labor market conditions [that] “would likely reinforce the rise in domestic demand”, talk of “gains” in employment and anticipation of “stronger growth” in the US economy for FY2011, with “gradual acceleration” of US economic growth in 2012 and 2013. In fact, one can pull any Federal Reserve FOMC statement from their archives over the past 5-½ years and you will find the same bunk and nonsense that they used to further inflate the US stock market bubble and to control gold and silver prices time after time after time. As I review the content of these statements every year, if one could go back and review years prior to 2011, though the Feds do not keep statements archived prior to 2011, one would discover that the Feds were using this same deceitful language since 2009.  I, for one, at a complete loss for why big bank analysts still talk about “normalization” of interest rates and parrot Janet Yellen’s frequent press statements in regard to this topic as if this were even a remote, much less, a realistic possibility. If we stop and think about the definition of “normalized” interest rates, how high of a level should normalized rates be when Bank of Japan bankers adopted ZIRP (Zero Interest Rate Policy) for 16 years before deciding ZIRP was inadequate enough to stimulate their economy and plunged interest rates into negative territory this year, and US Federal Reserve bankers maintained ZIRP for 7 years before finally “raising” interest rates for the first time in nearly 10 years on 16 December 2015?

Thus, we’ve had 16 consecutive years of zero interest rate policy (and now negative interest rate policy) in Japan and 7 years of ZIRP (and now a paltry 0.25% to 0.50% Fed Funds rate) in the US to understand that normalization of interest rates is never happening, yet analysts from JP Morgan, Goldman Sachs, Citibank, etc. still frequently discuss the timeline for “normalized” interest rates in the mass media as if they will happen. That’s a whole lot of exhibited foolishness in not being able to read between the lines, especially when the lines are so clearly demarcated for all to see. Furthermore, my definition of “normalized” interest rates is the reinstatement of free market interest rates, which we all know will never happen during any of our lifetimes without Central Bankers being expelled out of nations. But what if we consider the Central Bankers’ definition of “normalized” interest rates, likely within a 0.50% to 1.00% interest rate range? Given the fact that the Fed Funds interest rates was as high as 20% in the early 1980s and consistently around 5% throughout most of the 1990s, a “normalized” 050% to 1.00% interest rate is not normal at all. Furthermore, if we understand how a rate hike today to 1.00% might cause a meltdown in the BIS last-reported figure of $493 trillion of global derivatives contracts and cause TPTB banks to fail, then we know that even an abnormally-low “normalized” interest rate is likely never to happen (furthermore, the amount of global derivatives contracts still outstanding in the world today, is in reality, still close to a quadrillion dollars and not the misleading figure reported by the BIS. Years ago, to arrive at their current figure of $493 trillion, the BIS cut the existing figure in half overnight by changing the metric to measure notional derivative contract valuations, which was tantamount to an Enron-like cooking of the books simply to significantly lessen the appearance of risk inherent in the global financial system.)

In the end, there is no end in sight to the fiat currency purchasing power devaluation objectives of Central Bankers, and for this reason, we should stop taking our cues from traders that try to profit on every single short-term move in asset prices. Rather, we need to understand that the global currency wars still firmly remains a race to the bottom in purchasing power, and that converting fiat currencies into wealth preserving physical gold and physical silver still makes a whole lot of sense.

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A good reason why Indians buy gold;

(courtesy Press India/GATA)

Maybe Indians buy so much gold because their currency is so crappy


Why Do Indians Spend So Much on Gold? RBI to Study

By the Press Trust of India
via The Times of India, Mumbai
Thursday, August 4, 2016…

MUMBAI — The Reserve Bank of India has set up a committee to study Indian household financing patterns and why Indians spend large sums on gold.

The panel will look at various facets of household finance in India and to benchmark India’s position vis-a-vis both peer and advanced countries, the RBI said in a statement on Thursday.

The panel, headed by Tarun Ramadorai, professor of financial economics at the University of Oxford, will have representation from financial sector regulators SEBI, IRDAI, and PFRDA apart from the RBI.

It will consider “whether, how, and why the financial allocations of Indian households deviate from desirable financial allocation and behaviour (for example, the large household allocation to gold).”

The committee has also been asked to benchmark the current depth of household financial markets in India vis-a-vis those in other major world markets and to identify areas of priority for growth and change.

To characterize and evaluate households’ demands in formal financial markets (for assets such as pensions as well as liabilities such as home loans) over the coming decade is another key term of reference given to it.

The RBI further said that the panel will evaluate the “design of new systems and the redesign of existing systems” of incentives and regulations to encourage and enable better participation by households in formal financial markets.

The terms of reference also include assessing the role of new financial technologies and products (robo-advising, automatically refinancing mortgages) in the cost-effective provision of high-quality and suitable financial products to Indian households while containing risks.

The committee is expected to submit its report by the end of July 2017.

The demand for formal financial market investment product like pensions as well as liability products like home loans from the Indian household was discussed during the meeting of the Subcommittee of Financial Stability and Development Council held in April.

It was decided that a committee should be set up to look at various facets of household finance in India and submit a report, the RBI said.




Your weekly lecture on the global economy.

Today’s piece is entitled:

“Saving the System”


Saving the system

Monetary policy, we are told, is all about staving off recession and stimulating economic growth.

However, not only is monetary debasement in any form counterproductive and destroys the personal wealth of the masses, but the economists who devised today’s monetarism have completely lost their way.

This article addresses the confusion surrounding this subject, and concludes the real reason for today’s global monetary policies is an ultimately futile attempt to prevent a systemic and economic crisis.

Wrong tools for wrong targets

Central banks set themselves targets, such as unemployment that is deemed to be “full”, in other words the optimal low rate that will not lead to a pick-up in price inflation. CPI is the second target, typically set at 2% per annum. The hope is that these targets will lead to sustainable growth in GDP.

Unfortunately, estimates of unemployment do not tell us whether or not people are being employed productively. The term productive conjures up questions as to whether or not a government employee who is not customer-driven is economically productive, or whether or not a temporary barman should be deemed properly employed. There is also considerable tension between low rates of official unemployment, and near-record levels of the labour force not in work.

Recorded price inflation is even more flaky, with large discrepancies between official CPI and independent estimates, such as those of and the Chapwood Index in America. Their independent statistics record a far higher rate of price inflation in the US than the official CPI, and there is little doubt people are experiencing the higher rate. Assuming the GDP deflator should approximate to the actual rate of price inflation, independent estimates tell us that the US economy has been in recession every year since the dot-com bubble burst.

The statistical tools are obviously useless, and so is the principal target. GDP is a money-total, no more, no less. Imagine an economy where the total quantities of money and credit never vary, and all credit is fully backed by money instead of conjured up out of thin air. Prices for individual goods and services are free to change, but the total money deployed cannot. Credit shifts from the failures to the successes. But because credit is wholly backed by sound money, if the credit is extinguished, the money lives on. Therefore, GDP does not increase or decrease.

Alternatively, imagine you construct a balance sheet of the economy, and you introduce some more money. The balance sheet totals will increase accordingly, but it does not tell you how productively the extra money is deployed. What we seek in GDP is not found there: what we really want to know is whether or not economic conditions for the vast majority of people are improving. The only evidence of this would be increasing average wealth for all employed classes, and we are not talking about measures of wealth denominated in unsound currencies, nor are we talking about the apparent wealth that results from credit inflation. It has to be real.

Equally, it cannot be measured, but framed that way, we can begin to get a better sense of perspective as to what economic policy should attempt to achieve.

Take the example of helicopter money, which is increasingly talked about. It would undoubtedly boost nominal GDP. But if we think in terms of economic progress, we quickly realise that helicopter money is actually economically destructive as can be easily demonstrated.

Let us assume that a central bank distributes money through the banking system to the bank accounts of consumers, who will undoubtedly spend most of this windfall. The immediate effect will be to increase the GDP total, as described above. But it creates a shortage of goods, so prices can be expected to quickly rise, nullifying any perceived benefit. And because the distribution is so well telegraphed, no sensible manufacturer is going to respond by increasing his production significantly for a one-off benefit. Therefore, as the money is spent its purchasing power will decline fairly rapidly, the costs of production will rise, and a slump will ensue. Unless, that is, there are continuing helicopter drops, but that, everyone can agree, is the path to wealth destruction through hyperinflation, and therefore the end of all economic progress.

Just by rephrasing the question, from fostering GDP growth to fostering economic progress, leads to some diametrically opposed answers, as the helicopter money example illustrates. In this vein, I shall now address four of the most destructive fallacies about the relationship between money, credit, and economic progress.

Fallacy 1: Monetary debasement benefits the economy

Modern economists mistakenly ignore the intertemporal effects of changes in the quantity of money. When money or credit is expanded, the first receivers of it get to spend it on existing products before anyone else. Therefore, they benefit from the extra money before prices have risen to reflect its addition into general circulation. The second receivers have a similar advantage, but incrementally less so. Therefore, after this new money has progressed through many hands with a tendency to drive up prices every time, the last receivers of the additional money find that prices for nearly all goods have already risen and the purchasing power of their wages and savings has effectively fallen.

This is known as the Cantillon effect. It amounts to a wealth transfer from the poorest in society, the unskilled workers, pensioners and small savers, to the government and its agents. Bankers, licensed to produce credit out of thin air at no cost, thrive. The second receivers, the businesses that benefit from bank credit and unfunded government contracts, do almost as well. The result is government, banks and their close supporters enjoy a wealth benefit at the expense of ordinary people.

It is therefore hardly surprising the establishment and its lobbyists strongly favour monetary expansion, but the Cantillon effect cannot be denied, in theory or empirically. It is the single most important reason why inflating money and credit will always be counterproductive. We see this effect today, with the gap between rich and poor widening dramatically. It is monetary policy that impoverishes the masses, more surely than anything else.

Fallacy 2: Low interest rates are beneficial

The emotional appeal of low interest rates has its origin in the old religious association of interest with usury. Keynes promoted this view, not expressed so blatantly in moral terms, but by conjuring up an image of work-shy capitalists profiting from the deployment of their money for interest. His term for these capitalists, rentiers, condemned them in his followers’ minds.

Keynes’s view is consistent with the idea that it is the rentiers who set the price for money, holding the entrepreneur to ransom, when in fact it is the other way round. In a free market where interest rates are set by consenting parties, it is the entrepreneur that sets the savings rate by bidding up the interest rate. It is this phenomenon that resulted in the long-held correlation between the price level and interest rates, demonstrated in Gibson’s paradox, which Keynes, Fischer and Friedman were all unable to explain.

The fact that this correlation demonstrably existed from 1730 up to the 1970s is clear evidence that entrepreneurs were prepared to pay a rate of interest that related to the one thing they knew better than anything else, and that was the price they expected to obtain for their product in the market. There can be no other credible explanation. Equally, it shows that central bank attempts to manage price inflation by varying the interest rate are doomed to fail, because there is no natural correlation between the two.

This was certainly the case until the late 1970s, when the Fed raised interest rates to the point where normal business activity could not be financed profitably. Since then, monetary policy has taken over control of interest rates to the point where they ignore market forces entirely. The idea that central banks can manage unemployment, price inflation and GDP by varying interest rates has also been disproved by experience, yet they still persist in this crazy quest.

The expansion of bank credit that accompanies suppressed interest rates will increase GDP, assuming the credit expansion is not aimed at non-GDP items, such as financial assets. But that is a very different matter from fostering economic progress, which requires an interest rate that correlates with the price level, and not the rate of price inflation.

Fallacy 3: Expanding money and bank credit stimulates business

In a sound-money environment, some businesses prosper and others fail. The ones that prosper do so through success, not subsidy, and there is no subsidy for the failures. The business environment is of necessity one of constant change, as mistakes are quickly rectified. Capital resources for profitable enterprises are released from those that are less so or even unprofitable. Assuming a steady savings rate, the release of inefficiently deployed capital is vital for successful enterprises to flourish. Importantly, there can be no credit-driven business cycle to disrupt economic progress.

This is not a happy environment for legacy industries, unwilling to face the change progress imposes, or no longer relevant to the future. Often these businesses dominate communities, and are costly and inefficient compared with their modern competitors operating in lower-cost conditions. They lobby hard and successfully for subsidies. And if there is free money and credit in the offing, all businesses well-connected to political circles want their share of the largesse.

This is why today’s monetary environment is of unsound money, the expansion of money and credit designed to increase GDP. The result is good businesses no longer have to attract capital resources from the less profitable and the failures. All businesses, the successful and the failures, draw on freely available credit, either for genuine production or to avoid failure. The consequence is a growing accumulation of unproductive debt, whose default is continually deferred.

As the bad businesses compete with the good for scarce labour and raw materials, which unlike unsound money cannot be conjured out of thin air, prices begin to rise. And as higher prices work through to final products, easy money encourages consumers to alter their money-preferences in favour of goods. After all, unemployment is low and things are booming, so why go without?

At this point, central banks are forced to interrupt their expansionary policies and raise interest rates to curb unforeseen price inflation, and to only stop raising rates when widespread bankruptcies are threatened.

For anyone interested in promoting economic progress as opposed to just growing the GDP numbers, inflating money and credit is obviously not the way to go about it. Those who do not grasp the difference between real economic progress and raising GDP are likely to persist in trying to grow GDP, putting the lessons of experience behind them. Welcome to the world of central banking.

Fallacy 4: Lower exchange rates benefit the economy

This is a policy of giving preference to exporters at the expense of everyone else, and in that sense is another variation of the Cantillon effect. It is a deliberate policy of reducing the value of the wages of exporters’ employees and other domestic costs, a wealth-transfer that eventually affects everyone. It destroys personal wealth, particularly for those who can least afford it.

Economic planners appear to be blind to the true origin of trade deficits. In a sound money environment, everyone is forced to pay their bills. If you buy something, whatever its origin, you will have earned or borrowed sound money from someone else to pay for the goods purchased. Therefore, trade deficits, other than those arising from self-correcting timing differences on settlements, cannot exist. Attempts to correct trade deficits by manipulating the exchange rate, while pursuing unsound monetary policies, are in consequence futile.

It is no accident that a trade deficit is often accompanied by a government budget deficit, because the latter is bound to lead to the first, assuming the savings rate remains unchanged. The reason has already been stated above: the private sector pays its bills, so trade deficits can only arise from unsound money and unfunded government deficits.

Empirical evidence and analysis of national accounts support this analysis, yet nearly everyone automatically subscribes to the fallacy that reducing the exchange rate is a good thing for the economy. Devaluing the currency does not correct trade deficits, and the policy amounts to an ongoing destruction of a currency’s purchasing power for no gain.

Devaluations, which go hand in glove with unsound monetary practices, can be expected to lead to an increase in the money-total of GDP, but they hinder economic progress by destroying the wealth central to the financing of market-driven industrial investment. The post-war experience of Germany with its strong mark, compared with that of Britain with its weak sterling, refers.

The real reason behind unsound money policies

The neo-classical economists that populate government and central banks are finding out the hard way that their fallacies and their dishonest use of the state’s seigniorage of money and credit have lead everyone into a dead-end debt trap. They show no understanding of how they got us all here, but are becoming acutely aware of the consequences.

Unsound monetary practices favour debt financing over financing from genuine savings, because of the wealth-transfer effect that benefits debtors. The result of decades of unsound monetary policies is that the major welfare economies have become overloaded with an accumulation of government debt, which can never be repaid, only devalued. Additionally, escalating welfare liabilities have to be financed, which means that the welfare-states’ need for low-cost financing through the expansion of bank credit and raw money has now become more or less infinite.

It is obvious that a government can only discharge its welfare liabilities by acquiring yet more of the private sector’s wealth. The wealth destruction suffered by the private sector simply detracts from its ability to fund future government spending. <b/p>

Not only are the private sectors in welfare states burdened with increasing state depredations on their wealth, they themselves have accumulated large amounts of unproductive debt as a result of decades of easy under-priced bank credit. The result is evident in very low rates of genuinely productive employment, and the impoverishment of the masses. While these problems are more evident in some nations than in others, all welfare states are affected.

Some countries like France conceal their unemployment problem by socialising large swathes of the economy, either directly or indirectly. Unemployment is officially recorded at about 10%, the state accounts for the majority of economic activity, and there is a large agricultural sector of predominantly subsistence-farming smallholders. The whole economic structure is inherently unproductive. In other welfare nations, the unemployment problem is more obvious.

Italy is a good example, with a youth unemployment rate of 37%. The state accounts for about 52% of GDP, and non-performing loans on the banking sector’s balance sheets are recorded at 18% of GDP. Stripping out the state, NPLs are 37.5% of private sector GDP. It is therefore clear that not only is the private sector collapsing under the weight of its own debt, but there must be a growing incentive for companies which can service their debt not to do so, because their banks might not be around in the future to reward them by extending more credit. Those that see the Italian crisis as a banking problem miss the point. It is the Italian economy that’s the problem, and the banks are merely the prosciutto in the sandwich.

Italy is in the vanguard of welfare state failures. Central banks formulating monetary policy are becoming increasingly aware of this fact and the similarities with their own position. Their priority now is to avoid a global debt-induced economic crises. They see this being staved off by increasingly desperate attempts to promote GDP growth. They will pursue this policy at accelerating speed right into the buffers at the end of the line.

The partying is over. The days of transferring wealth from the middle-classes and the poor through monetary debasement to benefit the welfare states, the banks and their preferred customers, are now numbered. The implications for future monetary policy are simple: the Fed, Bank of Japan, European Central Bank and Bank of England are working together to keep their respective GDPs from falling. The Bank of Japan is leading the way into deepening negative interest rates and more asset-supporting quantitative easing, and the others are all set to follow its example.


Rob McEwan the originator of Goldcorp is one smart cookie.  Today he talks about gold mining and where we are heading.  He is one smart cookie

(courtesy Gord McEwan/GATA/Penner/Vancouver Sun)

Legendary executive Rob McEwen talks about gold mining in golden times


By Derrick Penner
Vancouver Sun, Vancouver, British Columbia, Canada
Thursday, August 4, 2016

Legendary mining executive Rob McEwen knows a thing or two about gold-mining companies, having built Goldcorp Inc. into a powerhouse producer before stepping down as chairman and CEO in 2005.

Now he’s working on building up his next venture, McEwen Mining Inc., with mines in Mexico and Argentina, just as gold has hit a rebound. The Vancouver Sun caught up with him at the recent Sprott Natural Resources Symposium to talk about his views on where the rally is going:

Q: With your firm, you take the title chief owner. Why is it important for you to spell that out?

A: I think it’s very important that people running companies have skin in the game, they have something at risk. They don’t just get a big salary with lots of options and have no investment in the company. It makes you focus on what’s the most important thing a company should be doing, that is building the value for every other share owner of that company. …

… For the remainder of the interview:…




China demand is down 25% from last yr but on par with 2014: SGE withdrawals = Chinese demand!( see Koos Jansen’s many papers on the subject)

(courtesy Lawrence Williams/Lawrie ongold)


China’s SGE gold withdrawals YTD 25% down on 2015 but still in line with 2014

August 5, 2016 lawrieongold

The latest announcement of gold withdrawals out of the Shanghai Gold Exchange, show something of a declining pattern month on month this year – and in cumulative terms are sharply down (25%) on the record 2015 withdrawal figures, but pretty much still on par with 2014.

SGE withdrawals are one measure of total Chinese gold demand – but are seemingly discounted as such by the principal Western precious metals research consultancies which seem to categorise Chinese consumption using some quite rigorous parameters which some feel hugely understate actual gold flows into the Chinese mainland. The consultancies’ figures even come in comfortably below known Chinese gold imports from countries which report these, and certainly take no account of additional supply from Chinese domestic gold production – currently around 450 tonnes a year. It seems that flows into the Chinese commercial banking system for use as collateral and in other financial transactions, which are by all accounts quite considerable are ignored in the consultancies’ ‘consumption’ analysis.

Interestingly, the Chinese central bank, The People’s Bank of China (PBoC), equates SGE withdrawals with total Chinese gold demand, while the consultancies maintain there is a degree of double counting in the SGE figures. But, whatever the truth of the matter, movements out of the SGE, looked at month on month and year on year, are certainly an acceptable indicator as to how overall Chinese demand is faring.

Shanghai Gold Exchange Monthly Gold Withdrawals (Tonnes)

Month 2016 2015 2014
January 225.08 255.42 246.00
February* 107.60 156.36 171.67
March 183.24 213.35 146.56
April 171.40 195.45 129.59
May 147.28 162.15 129.34
June 138.51 195.67 128.03
July 117.58 285.50 137.53
August 265.27 161.95
September 259.98 202.43
October 176.29 201.11
November 202.71 212.49
December 228.21 235.66
Year to end July 1090.69 1,463.90 1,088.72
Full Year 2,596.37 2,102.36

Source: Shanghai Gold Exchange

*February withdrawals figures tend to be anomalously low due to SGE closure during the Chinese New Year holiday

As can be seen from the above table, last year’s record withdrawal figures were hugely boosted by some very high monthly figures between July and the end of the year. Past SGE withdrawals have tended to come in higher in the second half of the year, so subsequent monthly figures will be watched with interest to see if this kind of pattern continues in the current year, or whether Chinese demand remains depressed. But it’s hugely unlikely that this year’s total will come anywhere near that of last year’s record. sge-gold-withdrawals-ytd-25-down-on-2015-but-still-in-line- with-2014/


Your early FRIDAY 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 0.44  OR 0.01% /USA: YEN FALLS TO 101.04

3. Europe stocks opened ALL IN THE GREEN    /USA dollar index up to 95.58/Euro UP to 1.1148

3b Japan 10 year bond yield: FALLS TO  -.093%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 101.39

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  41.67  and Brent: 43.92

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./“HELICOPTER MONEY” ON THE TABLE 

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 -.083%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate RISE to 8.08%/: 

3j Greek 10 year bond yield FALL to  : 8.30%   (YIELD CURVE NOW  UPWARD SLOPING)

3k Gold at $1362.15/silver $20.29(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble DOWN 12/100 in  roubles/dollar) 66.35-

3m oil into the 41 dollar handle for WTI and 43 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 SMALL REVALUATION UPWARD 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 .9739 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0858 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  -0.083%

/German 10+ year rate BASICALLY  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 1.499% early this morning. Thirty year rate  at 2.245% /POLICY ERROR)

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

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


Futures, Global Stocks Rise As Oil, USDJPY Drops: All Eyes On The Jobs Report

 With all eyes on today’s jobs report, where consensus expects a 180K payrolls gain, European, Asian stocks and S&P futures all rise amid a surge in government debt as markets digest the BOE’s “kitchen sink” easing for a second day. But please don’t overthink it. In deja vu fashion, Bloomberg summarizes the action simply as “stocks rose around the world on speculation central bank stimulus measures will support the global economy.” We’ve heard that just a few times before.

We’ve also heard this: “There’s a lot of hope that central banks can counter any downside to growth, especially after the Bank of England shot a pretty big torpedo yesterday,” said Dirk Thiels, head of investment management at KBC Asset Management in Brussels. “But anxiety about the economy can just as easily come back as it went away. It’s important that the U.S. holds strong, as that also helped bring optimism back to markets.”

Futures are up 0.2%, despite a drop in both oil and USDJPY, with the dollar weaker ahead of what is supposed to be a relative strong jobs report forecast to show the increase in payrolls returned to the modest pace of growth, but not too good: analysts predict America’s employment market continued to improve at a pace that probably won’t trigger the Federal Reserve to push ahead with raising interest rates this year.

In other words, whatever happens stocks will end up higher as a stronger report will “confirm” the US economy is rebounding, while a weak report will suggest those central banks which are still easing, “have this.” As Heo Pil Seok of Midas International Management said, “the BOE’s move looked like an inevitable choice, but it was taken as a positive signal for investors in terms of boosting expectations for increased liquidity in the global market. While improved sentiment is reflected especially in the equities market today, the U.S. data is something to keenly watch as it may fuel concerns of a rate hike.”

It wasn’t all good news, however, as PIMCO parent Allianz SE slipped 3.6% after the insurer said second-quarter profit fell by almost half, missing analysts’ estimates. Elsewhere, bailed out UK banking giant, RBS declined 4.6% after the British lender posted a larger loss than projected and gave no update on the planned sale of its Williams & Glyn consumer bank. As Reuters’ Jamie McGeever summarized RBS since 2007:

  • Losses £50 bln
  • Share price -95%
  • Taxpayer bailout £45 bln
  • Jobs cut 44,200 (134,000 if incl. ABN Amro acquisition in 2007

That was not enough to put a damper on global risk on mood and the MSCI All Country World Index rose 0.2 percent in early trading, advancing for a second day. The Stoxx Europe 600 Index was up 0.3 percent, with trading volumes 33 percent below the 30-day average on the final day of the week. S&P 500 Index futures also increased 0.2%. BHP Billiton Ltd. and ArcelorMittal led a gauge of miners to the best performance of the Stoxx 600’s 19 industry groups as metals prices rebounded. LafargeHolcim Ltd. jumped 5 percent as second-quarter earnings improved more than analysts had expected. Hugo Boss AG added 5.7 percent after the German fashion label posted better-than-expected revenue.

The MSCI Emerging Markets Index climbed 1 percent, bringing this week’s gain to 1.3 percent. Shares are headed for the fourth weekly advance and longest winning streak since October.

Ironically, while some explained the move higher in Asian stocks as a result of yesterday’s rebound in oil, today oil is modestly lower, at least as of this moment, with WTI slipping 0.8% to $41.60 a barrel following a two-day, 6.1% rebound. Downward pressure returned as overproduction in crude and refined products has left onshore storage tanks brimming and triggered the chartering of tankers to store unsold fuel. There are also growing worries that China’s imports are weakening from records set in 2015 and this year.

“Signs of fatigue are already apparent and include a notable dip in Chinese crude oil imports,” PVM’s Stephen Brennock wrote, adding that spare capacity in the country’s strategic storage space is less than 100 million barrels. “A major pillar of oil demand is therefore on course to ease considerably over the coming months,” Brennock said.

Oil prices were still more than $2 per barrel above the week’s lows, which most analysts attributed to short-covering. Investors added the equivalent of 56 million barrels of short positions in the three main Brent and WTI futures and options contracts in the week to July 26. “Since there was no news yesterday that might have triggered the price rise, this points to short-covering,” Commerzbank analyst Carsten Fritsch said. “Clearly many market participants were caught on the hop by the increase in prices following the publication of U.S. inventory data on Wednesday.”

Yields on 10-year Treasuries were little changed at 1.50 percent, after declining five basis points over the past two sessions. U.S. debt climbed with European bonds in the last session as the BOE’s move reinforced the trend for monetary easing globally. Wagers on a 2016 increase by the Fed have been cut to 37 percent from 59 percent two months ago.

Market Snapshot

  • S&P 500 futures up 0.2% to 2164
  • Stoxx 600 up 0.3% to 339
  • FTSE 100 up 0.3% to 6759
  • DAX up less than 0.1% to 10237
  • German 10Yr yield up 1bp to -0.08%
  • Italian 10Yr yield unchanged at 1.15%
  • Spanish 10Yr yield up less than 1bp to 1.03%
  • S&P GSCI Index up 0.2% to 341.5
  • MSCI Asia Pacific up 0.7% to 136
  • Nikkei 225 down less than 0.1% to 16254
  • Hang Seng up 1.4% to 22146
  • Shanghai Composite down 0.2% to 2977
  • S&P/ASX 200 up 0.4% to 5497
  • US 10-yr yield down less than 1bp to 1.5%
  • Dollar Index down 0.16% to 95.6
  • WTI Crude futures down 0.4% to $41.77
  • Brent Futures down 0.5% to $44.07
  • Gold spot up less than 0.1% to $1,362
  • Silver spot down 0.2% to $20.31

Top Global News

  • U.S. Employment Seen Returning to Normal After Two Quirky Months
  • Pimco Sees Misunderstood U.S. Bank Bonds Offering Room for Gains: Head of credit research says U.S. lenders ‘radically improved’
  • Bayer Said to Review Monsanto’s Books as It Mulls Higher Bid: Monsanto said to allow due diligence in key step for deal
  • Mercedes to Challenge BMW, Tesla With 4-Car Electric Lineup: Move comes as Tesla struggles, BMW plans next e-car in 2021
  • LinkedIn Results Beat Expectations Ahead of Microsoft Deal: 2Q adj. EPS, revenue higher than analysts expected
  • Alibaba, Baidu Said to Prepare for Audit by U.S. PCAOB, WSJ Says
  • Kraft Earnings Top Estimates as Budget Cuts Fuel Profit Growth: 2Q adj. EPS beats analyst expectations
  • Priceline Beats Profit Estimates as Room Night Bookings Grow
  • Golfsmith Said to Consider Bankruptcy as It Seeks New Owner
  • Takata Air-Bag Report Clears Way for Cost Talks With Carmakers
  • Mercedes to Challenge BMW, Tesla With Four-Car Electric Lineup
  • Rackspace Said to Be in Talks to Be Sold to PE Firm, DJ Says
  • Yahoo Communications Chief Leaves Ahead of Verizon Takeover: Anne Espiritu leaves after 4 years at the co.
  • Disney Said to Develop ‘Star Wars’ Toys With AR Technology: WSJ: Co. is looking at using augmented reality technology for new “Star Wars” toys
  • Alibaba, Baidu Said to Prepare for Audit by U.S. Public Company Accounting Oversight Board, WSJ Says: Audit documents provided to the PCAOB may be heavily redacted

* * *

Looking at regional markets, we start as is custom in Asia, where markets trade mixed to mostly higher on the back of oil advances and after the BoE’s rate cut and easing announcement, although a looming NFP has kept gains in check. Nikkei 225 (flat) traded flat with fluctuations in JPY driving price-action, while ASX 200 (+0.4%) was boosted as commodities strength supported energy and mining names. Hang Seng (+1.4%) outperformed to break above 22,000, while the Shanghai Comp (-0.2%) lagged after a net weekly liquidity drain from the PBoC. 10yr JGBs traded with minor losses as demand for the paper was dampened amid gains across riskier assets, while the BoJ’s presence in the market for 1.25tr1 of government debt helped stem losses.

Top Asian News

  • India Said to Keep Rajan Inflation Target as Term Nears End: Rajan urges successor to continue war on price pressures
  • RBA Frets Over Currency, China; Sticks With GDP, CPI Outlook: Australia’s central bank says inflation likely to be below 2% most of forecast period
  • Indonesian Growth Beats Forecasts as Widodo Spending Surges: 2Q GDP increases 5.18% y/y vs est. 5.00%
  • Vanke Saga Takes New Twist With Surprise Entry of Evergrande Emergence of billionaire Hui Ka Yan injects new uncertainty
  • DBS’s Swiber Losses Put Spotlight on Provisions Before Earnings: Singapore banks’ energy provisions may be inadequate, Moody’s says
  • Goldman Summoned by New York Bank Regulator Over 1MDB Bond Sales: DFS letter seeks more information on bank’s 1MDB underwriting

European equities are trading in positive territory as the market continues to digest stimulus action from the BoE . FTSE 100 is up 0.3% despite heavy losses reported from Royal Bank of Scotland, who reported a record loss, this led to shares falling around 5% at the open. While other banking names across Europe continue to extend on gains due to BoE’s plethora of stimulus measures. In terms of fixed income in the wake of the BoE’s announcement, there has been a pick up in GBP denominated issuance with Barclays and Vodafone issuing GBP-denominated debt. This comes as yields plunge to record lows in gilts and GBP corporate bonds. While the decline also increases competition against the EUR and USD market. Elsewhere Bunds have slightly pulled off yesterday’s best levels amid light news flow ahead of the NFP report.

Top European News

  • RBS Posts Quarterly Loss on $1.7b Litigation Expense: Lender may not reach 2019 goals amid rate cut, drop in demand
  • LafargeHolcim Pledges More Asset Sales After Profit Rises: Cement maker keeps 2016 targets, lowers demand growth outlook
  • Allianz Quarterly Profit Falls 46% on Disasters, Unit Sale: Pimco outflows grow from 1Q to EU18b
  • Hugo Boss Rises on Signs of Recovery as Sales Beat Estimates: Co. sees full-year profit down as much as 23%
  • Novo Nordisk Plummets as U.S. Market Becomes More Challenging: Co. trims sales and profit forecasts for 2016
  • German Factory Orders Slide Amid Dwindling Euro-Region Demand: Orders declined 0.4% on month vs est. 0.5% gain
  • U.K. House Prices Slide by Most in 5 Months After Brexit Vote: Values slipped 1% in July, falling most since February

In FX, the Bloomberg Dollar Spot Index, which tracks the U.S. currency against a basket of its major peers, slipped 0.2%, erasing this week’s advance. The yen climbed 0.3 percent to 100.94 per dollar. In emerging markets, Malaysia’s ringgit and Russia’s ruble advanced at least 0.5 percent. Payrolls probably rose by 180,000 workers in July, following a 287,000-person increase in June, according to the median of economists’ estimates compiled by Bloomberg. The jobless rate is projected to fall to 4.8 percent, from 4.9 percent in the previous month. The Australian dollar climbed to a three-week high after the central bank gave no interest-rate guidance in its quarterly statement Friday and left its growth and inflation forecasts little changed. It reduced the benchmark rate to a record-low Tuesday. The pound rose 0.3 percent to $1.3140, following a 1.6 percent drop Thursday. While unveiling stimulus, BOE Governor Mark Carney said a negative rate path would be wrong.

In commodities, aluminum and zinc rallied in the wake of losses on Thursday, climbing at least 0.4 percent in London. Gold for immediate delivery was up 0.1 percent at $1,362.43 an ounce before the payrolls data, headed for a 0.8 percent climb in the week, the haven asset’s second straight weekly advance. Copper is headed for its first weekly decline in four as Goldman Sachs Group Inc. forecasts a “supply storm” is about to hit the market amid a pick-up in mine supply, lower production costs and softening demand growth. West Texas Intermediate crude slipped 0.8 percent to $41.60 a barrel following a two-day, 6.1 percent rebound. U.S. government data Wednesday showed gasoline inventories decreased, while crude stockpiles unexpectedly rose for a second weekly gain. Both are at the highest seasonal level in at least two decades. Corn for December delivery headed for a 2.8 percent decline this week. November-delivery soybeans rose 1.4 percent to trim this week’s drop to 3.3 percent.

Bulletin Headline Summary From RanSquawk and Bloomberg

  • European equities trade modestly higher in the wake of yesterday’s BoE stimulus despite RBS shares lagging in the wake of their pre-market update
  • FX markets have seen relatively muted trade thus far with EUR/USD pushing back to 1.1150 and USD/JPY dipping below 101.00 again
  • Looking ahead, highlights include US and Canadian jobs reports
  • Treasuries mostly steady in overnight trading ahead of today’s nonfarm payrolls (est. 180k) and unemployment (est. 4.8%) releases while global equities rally with gold on stimulus bets.
  • The European Central Bank is letting a pall of secrecy hang over the health of some of the continent’s banks as it’s decided against publicly disclosing the outcome of its test for 56 banks
  • ECB tapped Fed’s FX swap line for $800m for seven days at 0.87%, for week ended Aug. 3, most since July 6, Federal Reserve data show
  • New European rules are forcing junk-rated issuers to disclose more information to investors and some companies are considering whether to list their high-yield bonds overseas to avoid them
  • New York’s top banking regulator asked Goldman Sachs to supply more information about its work for a Malaysian investment fund amid investigations into whether any money laundering, sanctions violations or other misconduct occurred
  • German factory orders unexpectedly declined 0.4% m/m in June as demand for investment goods from within the euro area slumped in the run-up to Britain’s referendum on European Union membership
  • Italian industrial production unexpectedly fell 0.4% m/m in June in a setback for Prime Minister Matteo Renzi’s plans to put economic growth on a stable footing
  • While sterling tumbled versus the dollar as the Bank of England governor announced a suite of measures to support the U.K. economy, the currency only fell to levels seen last week
  • Mark Carney said his stimulus plans will help revive an economy reeling from the country’s decision to quit the European Union, rejecting criticism that monetary policy has reached its limits

DB’s Jim Reid concludes the overnight wrap

Today sees the market stop for the biggest show on earth where many of us from around the world will be glued to our screens. Yes it’s another payrolls Friday for us to enjoy before we see the small matter of the Olympic opening ceremony in Rio. In a moment of stupidity yesterday I wondered at what point in history my best 100m time would have put me as the fastest man in the world. Given that my best time at school was a slovenly 15 seconds and given the winning time was 10.6 seconds in 1912 (the first recorded time) then extrapolating back I figure that maybe I’d have to time-travel to early homo sapiens days to have had a sniff. And back then with my knees I probably would have been eaten by a lion first. Creative destruction at its finest.

The BoE reacted like a cornered lion yesterday as they loosened policy more than expected and in a fairly wide reaching manner. This was after the bank made its largest downgrade to its growth forecasts (including 2017 down from 2.3% to 0.8%) since the creation of the MPC back in 1997. As DB’s Mark Wall expressed, the 25bp rate cut was in line with expectations, but this came with a plethora of additional policy moves: a new GBP100bn four-year Term Funding Scheme (TFS) to aid the transmission of monetary policy at low interest rates through the banking system (an unexpected innovation); GBP60bn of gilt-based QE over the next 6 months (they had thought this would wait until September, but the pace of purchasing is about half the rate they were assuming); and a corporate QE programme of up to GBP10bn. The bank did signal that all the policies have room to be expanded if necessary with the caveat that Mark Carney reiterated that he is not a big fan of negative rates. So the UK may respect the zero bound if you take his consistent comments at face value.

The breadth of the policy response was impressive but as other central banks have found you can lead a horse to water (i.e. enhance the supply of bank credit) but you can’t make him drink (i.e. create aggregate demand) so these measures are unlikely to be a panacea but as Mark Wall suggests it gives the BoE some breathing space before there’s a fiscal response in the autumn. That’s going to be the main determinant in cushioning the growth shock in say 2017 in our opinion.

The level of fresh QE is still low as a percentage of outstanding relative to the BoJ and the ECB but given they said it could be increased then the relatively small size didn’t stop it having an impact. 2, 10 and 30 year gilts rallied 8.5bps, 16.0bps and 13.7bps respectively comfortably outperforming 10yr USTs (-4.1bps) and Bunds (-5.8bps). As for corporates sterling IG non-financials were 9bps tighter on the day. This doesn’t sound like a lot but a look at the records show that outside of a month end date straddling March/April 2009 – that includes an index rebalancing component – this is the largest daily move tighter since the iBoxx sterling index started in 1999.

Staying with the sterling credit purchases, this morning Michal Jezek in my team published a note entitled ‘Not Wasting Time: Bank of England to Start Corporate Bond Purchases’. In it Michal notes that while the Bank of England had clearly telegraphed it would ease policy in August, the Corporate Bond Purchase Scheme (CBPS) was a surprise at this stage. We look into the details of the scheme in the context of the other measures taken, with a particular focus on the bond eligibility criteria. We review the market reaction and current pricing, and provide our broader views. GBP non-financial corporate bonds have rallied sharply and we think this momentum has a bit more to go particularly for the CBPS-eligible bonds, similar to the ECB CSPP experience although we note that market expectations of the CBPS had been stronger prior to the announcement than was the CSPP’s case. Unlike the ECB, the BoE provided a numerical target for its purchases. We think the BoE’s option to scale up the CBPS if funding conditions deteriorate is likely to create a Carney put for the UK corporate bond market, reducing perceived risks and transforming the eligible bonds to lower-beta securities, similarly to what we have seen in the CSPP-eligible EUR space. Many market participants have taken enormous comfort in CSPP technical’s, showing limited care for the underlying credit risk since the programme was announced. This is likely to create positive spillover effects for the ineligible GBP corporate bonds, including lower down the rating spectrum.

Overall yesterday was a good day for our long standing view that global QE remains still in the early stages rather than coming to an end. That’s not to say it’s a good idea or that it will stay in its current form. We think it will eventually transition away from simply buying financial assets to being a partnership with governments with a view to try to increase aggregate demand. Helicopter money would be one way to describe this development. I’d be stunned if major central banks were not still buying government bonds for this purpose way into the 2020s. If they’re not it’s probably because they have suddenly decided to take the creative destruction/default way out. This is unlikely.

Anyway this story has slightly overshadowed an important Payrolls release given the huge range over the last two months. Indeed as it stands the market is expecting a 180k reading this afternoon which compares to 287k in July and a measly 11k in June. DB’s Joe Lavorgna is looking for a below market 150k print which is more or less in line with the 2month, 3month and 4month trailing average notwithstanding the big high to low range in that time. Wednesday’s ADP employment report (179k) validated the consensus forecast for today although there were signs of softness in the employment components of both ISM’s. It feels like we’ll need a big beat or miss to really get much of a reaction in markets particularly given that the Fed is likely sitting on its hands until we see a bounce in GDP related data too.

As always it’s also worth keeping an eye on the other important elements of the report including the unemployment rate (expected to decline one-tenth to 4.8%), average hourly earnings (+0.2% mom expected), the participation rate and average weekly hours.

In terms of rest of markets yesterday, a -1.64% decline for Sterling versus the Greenback to 1.311 (its sitting around that level this morning) helped the FTSE 100 (+1.59%) and FTSE 250 (+1.45%) outperform other European indices (Stoxx 600 +0.67%, DAX +0.57%). A boost from Oil (WTI +2.69%) helped push energy stocks up again but we did also see UK financials perform strongly with the likes of Aviva (+6.70%), Standard Chartered (+5.16%), Old Mutual (+3.37%) and Prudential (+3.13%) all outperforming while homebuilders (Taylor Wimpey +1.75%, Berkley Group +1.73%) also got a bit of a boost.

Markets in the US initially got off to a positive start too but that didn’t last long as the tone quickly turned more cautious ahead of today’s payrolls. The S&P 500 (+0.02%) was little changed by the close with some softer than expected results from MetLife (which saw shares tumble nearly 10%) offset by gains for Kellogg and Ball Corp following their latest quarterly numbers. Kraft Heinz shares were also up 3% in extended trading after Q2 earnings bettered consensus.

Refreshing our screens this morning, markets in Asia are generally slightly firmer ahead of the big event this afternoon. Indeed the Nikkei (+0.22%), Hang Seng (+1.45%), Kospi (+0.49%) and ASX (+0.42%) are all up, while bourses in China are flat. 10y JGB yields are 1.5bps lower while the Yen is little changed. US equity index futures are also modestly in the green.

Meanwhile, of the limited economic data that we did get yesterday it wasn’t really enough to move the dial. Initial jobless claims nudged up 3k last week to 269k (vs. 265k expected) with the four-week average now sitting at 260k. Claims have now been below the 300k number for 74 consecutive weeks. Factory orders (-1.5% mom vs. -1.9% expected) declined slightly less than expected in June while headline durable goods order were revised up one-tenth in June to -3.9% mom and core capex orders were revised up two-tenths to +0.4% mom. Interestingly the Atlanta Fed has pegged US Q3 GDP growth at +3.7% following its update yesterday.



i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 5.73 POINTS OR 0.19%/ /Hang Sang closed UP 313.86 points or 1.44%. The Nikkei closed UP 0.44 POINTS OR 0.01% Australia’s all ordinaires  CLOSED UP 0.39% Chinese yuan (ONSHORE) closed UP at 6.6412/Oil rose to 41.54 dollars per barrel for WTI and 43.92 for Brent. Stocks in Europe ALL IN THE GREEN . Offshore yuan trades  6.6502 yuan to the dollar vs 6.6412 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS SLIGHTLY AS CHINA TRIES TO STOP MORE USA DOLLARS LEAVING THEIR SHORES  




The Chinese “paper economy” was faltering to bits.  Just look at what the regulators told banks to do when they face non performing loans:

“looks the other way”

(courtesy zero hedge)

China Regulator Tells Banks To Evergreen Loans Of Troubled Companies

From yesterday:

And now the follow up by Valentin Schmid of Epoch Times

China Banking Regulator Tells Banks to Evergreen Loans of Troubled Companies

On the surface, China is talking the reform talk. But is it also walking the walk? There are many examples to demonstrate it isn’t. The most recent one is a directive from the China Banking Regulatory Commission (CBRC) to not cut off lending to troubled companies and evergreening bad loans. This first reported by The Chinese National Business Daily on Aug. 4.

“A Notice About How the Creditor Committees at Banks and Financial Institutes Should Do Their Jobs” tells banks to “act together and not ‘randomly stop giving or pulling loans.’ These institutes should either provide new loans after taking back the old ones or provide a loan extension, to ‘fully help companies to solve their problems,’” the National Business Daily writes. 

“It’s big news. A couple of weeks ago they were threatening Liaoning Province to cut off all lending to them if they didn’t tighten loan standards,” said Christopher Balding, a professor of economics at Peking University in Shenzen. “This is a pretty significant turn-around for them to do and it indicates how significant the problem is.”

The official reform narrative is espoused in this Xinhua piece which claims China has to reform becausethere is no Plan B. “Supply-side structural reform is also advancing as the country moves to address issues like industrial overcapacity, a large inventory of unsold homes and unprofitable ‘zombie companies.’” Clearly resolving the bad debt of zombie companies is not high on the priority list.

Goldman Sachs complained in a recent note to clients that companies can default on payments and often nothing happens. The investment bank notes that companies like Sichuan Coal default on payments of interest and principal for weeks or months and then maybe pay creditors later. The company in question defaulted on 1 billion yuan ($150 million) worth of commercial paper in June but made full payments later during the summer, a somewhat arbitrary process.

Another case is Dongbei Special Steel, which missed at least five payments on $6 billion of debt since the beginning of the year, but has done nothing to resolve the problem. This is why creditors wrote an angry letter to the local government to help resolve the issue.

According to Goldman Sachs, Dongbei was the reason Liaoning Province came under pressure:

“A bondholders meeting took place … with bondholders requesting that the [regulators] halt fundraising by the Liaoning provincial government and the enterprises in Liaoning province, and that institutional investors should stop purchasing bonds issued by the Liaoning government and the enterprises in Liaoning province. According to news reports, this demand stems from disappointment in progress by the provincial government in resolving Dongbei Special Steel’s debt problems, with a lack of information and no clear resolution plan.”

“Going forward, we do expect this trend to continue, with more defaults given our expectation of slower growth in the second half, and continued uncertainties on how these defaults are resolved.”

With the blessing of the regulator, Goldman’s prediction is probably correct. The investment bank notes that 11 out of 18 high-profile defaults have not been resolved since the first official default of a Chinese company by Chaori Solar in 2014.

(Goldman Sachs)

Christopher Balding thinks the directive shows how serious the debt situation has gotten. “This does indicate that there is a relatively significant pressure on the system and people aren’t making their payments. ‘Look, don’t rock the boat and push people into default.’ To say it so publicly or bluntly is amazing.”

The notice did include a modifier stating that the companies to be supported “must have a good outlook in terms of either their products or services and have restructuring values,” and that the “the development of the companies should be in line with the macro-economic policy, industrial policy and financial supporting policy of the country.” How serious banks will take this modifier is open to debate.

Overall bankruptcies in China have surged 52.5 percent in the first quarter of 2016 compared to a year earlier with 1028 cases being reported by the Supreme People’s Court. Most cases that are resolved involve small companies with few employees. The small firms are liquidated rather than restructured, according to the Financial Times. As we have seen there is another measure applied to larger companies, much to the dismay of Goldman Sachs:

“A clearer debt resolution process … would help to pave the way for more defaults, which in our view are needed if policymakers are to deliver on structural reforms.” If they want to deliver.



Merkel is losing support among German voters after last month’s terrible attacks Muslims.  The anti immigration parties are leading and they are euroskeptic

(courtesy zero hedge)

Support For Merkel Plunges After German Terrorist Attacks

After the recent surge in terrorist attacks on US soils conducted by ISIS-affiliated refugees following Chancellor Merkel’s “Open Door” policy, we expected that popular support for Merkel would once again drop in the polls, but not even we expected such a dramatic move.

According to a just released ARG polls, popular support for the Chancellor has plunged by a whopping 12 points, with her approval rating crashing to just47%, and almost two-thirds of Germans unhappy with her refugee policy. This marked her second-lowest score since she was re-elected in 2013. In April last year, before the migrant crisis erupted she enjoyed backing of 75 percent. Meanwhile, approval for her “ally”, who in recent weeks has voiced stark disagreement with the Chancellor over the future of German immigration policy, soared: support for Bavarian Prime Minister Horst Seehofer, rose 11 points to 44%.

Seehofer, who heads the Bavarian sister party to Merkel’s CDU, said he may break with party unity and run a separate campaign in next year’s German election. He’s demanding a cap on the number of refugees allowed into the country after last year’s number surpassed 1 million.

Merkel’s campaign was quick to engage in damage control.

“We won’t allow terrorists and violent criminals to change our European-western way of life,” Peter Altmaier, Merkel’s chief of staff, said in an interview with Berliner Zeitung published Friday. “This includes the protection of human dignity and help for people in need. We need to check security measures but the fact remains that Germany will also fulfill its humanitarian obligations in the future.” Curiously, that does not include rolling out the army during “extreme situations”, as many in Merkel’s cabinet have suggested for future terrorist attacks.

“The Chancellor’s policy has led to a dramatic decrease in the number of refugees and the course must therefore be maintained,” Elmar Brok, a lawmaker in the European Parliament from Merkel’s CDU, told Bild. “It is a pity that her success apparently has gone unnoticed by the public.”

Others disagreed: “Seehofer expresses exactly what the people feel,” Peter Ramsauer, a former government minister and senior lawmaker from the Christian Social Union, told Bild. “Many people see it as a provocation that the chancellor continues on her ‘we can do this’ path.”

The collapse in Merkel’s approval comes after Germany was hit last month by a terrorism blitz that included a shooting spree, an ax attack, a suicide bombing and a machete assault that left 13 people dead. Three of the four assaults involved refugees. Merkel said last week that she remains convinced of the motto she adopted in 2015 – “we will do this” – even as she, ironically, accused the attackers of mocking the country that took them in.

“More and more people are worried whether, given the large immigration numbers, we can actually manage,” Wolfgang Bosbach, a lawmaker from Merkel’s Christian Democratic Union and former chairman of parliament’s interior committee, told Bild Zeitung.

Bloomberg adds that support for Merkel’s CDU-led bloc held at 34 percent, while backing for her Social Democratic Party coalition partner at 22 percent, was also unchanged. The Greens had 13 percent support in the monthly poll, with 12 percent for the anti-immigration AfD party, 9 percent for the Left Party and 5 percent for the Free Democrats. Infratest polled 1,003 voting-age individuals on Aug. 1-2. The margin of error was 3.1 percentage points.

The good news for Merkel is that for now the refugee onslaught has trickled to a crawl, as a result of the March “cash for refugees” deal with Erdogan, which gives the Turkish dictator complete leverage over Merkel, and Europe.

Should the deal unwind, however, as Erdogan has threatened he will do unless Turkey is granted visa-free travel to Europe, watch as Merkel’s approval rating takes another big step lower.

The next test of support for Merkel will be state elections in Mecklenburg-Vorpommern on Sept. 4, where her Christian Democrats (CDU) are expected to face a strong challenge from the anti-immigrant Alternative for Germany (AfD) party. Paradoxically, a separate poll this week showed that most Germans do not blame the government’s liberal refugee policy for the two Islamist attacks last month.


This ought to be great for European confidence:  a jailed Jihadist warns that ISIS is planning loads of concurrent attacks on England Germany and France

(courtesy zero hedge)

In Rare Interview, Jailed Jihadist Warns ISIS Plans “Loads Of Concurrent Attacks In England, Germany, & France”


The Canadian dollar tanks as she loses the most jobs since November at 31,200.

The lower price of oil is certainly placing a toll on Canada

(courtesy Bloomberg)

Canada Dollar Tumbles as Nation Loses Most Jobs Since November

The Canadian dollar tumbled the most since June after a report showed the nation’s labor market unexpectedly contracted last month.

The currency fell as the number of employed people in Canada declined by 31,200 in July, the most since November, after posting an unexpected loss of 700 the month prior, according to data released by Statistics Canada. A Bloomberg survey of economists forecast 10,000 new hires for the month. Meanwhile, data out of the U.S. showed better-than-expected job creation, renewing expectations that the Fed may tighten monetary policy this year.

The loonie, as the Canadian dollar is nicknamed, fell 1.1 percent to $1.3169 against the greenback as of 8:53 a.m. in Toronto. The Canadian dollar is still the second-best performing currency behind the Japanese yen among its Group-of-10 peers this year.

In a separate report, Statistics Canada said the nation’s trade deficit hit records in the second quarter including a C$3.6 billion ($2.7 billion) gap in the month of June.

“The labor market took another hit and the trade deficit is probably one of the worst on record,” said Bipan Rai, senior foreign-exchange and macro strategist at Canadian Imperial Bank of Commerce in Toronto. “Combined with the positive jobs surprise out of the U.S., this will weigh heavily on the Canadian dollar.”

Hedge funds and other large speculators were caught wrong-footed after raising their net bullish position on the Canadian dollar to 23,180 contracts as of July 26, according to data from the Commodity Futures Trading Commission, near the highest since 2013.




Oil fades into the close after they announce the 6th weekly rig count rise

(courtesy zero hedge)

Oil Bounce Fades After 6th Weekly Rig Count Rise In A Row

Having ripped off the algo-run-seeking $39 handle lows after DOE data, WTI broke $42 this morning on payrolls before fading back into the rig count data. For the 9th week of the last 10, US Oil rig counts increased (+7 to 381).

Perfectly tracking the lagged crude price still…


Very modest reaction in crude prices but they are fading off the post-payrolls highs overall…

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




USA/CAN 1.3022 UP .0007

Early THIS FRIDAY morning in Europe, the Euro ROSE by 14 basis points, trading now JUST above the important 1.08 level FALLING to 1.1203; Europe is still reacting to Gr Britain 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 DOWN 5.73 POINTS OR .19%    / Hang Sang CLOSED UP 313.86 POINTS OR 1.44%     /AUSTRALIA IS HIGHER BY .39% / EUROPEAN BOURSES  ALL IN THE GREEN

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 FRIDAY morning CLOSED UP 0.44 POINTS OR 0.01%  

Trading from Europe and Asia:
1. Europe stocks ALL IN THE GREEN 

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 313.86 OR 1.44%  ,Shanghai CLOSED DOWN 5.73 OR .19%    / Australia BOURSE IN THE GREEN: /Nikkei (Japan)CLOSED UP 0.44 OR 0.01%  /INDIA’S SENSEX IN THE GREEN 

Gold very early morning trading: $1361.20


Early FRIDAY morning USA 10 year bond yield: 1.499% !!! DOWN 1  in basis points from THURSDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield FALLS to 2.470  DOWN 1 in basis points from THURSDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early FRIDAY morning: 95.58 DOWN 21 CENTS from THURSDAY’s close.

This ends early morning numbers FRIDAY MORNING


And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield:  2.87% PAR in basis points from THURSDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.093% DOWN 2 in   basis points from THURSDAY

SPANISH 10 YR BOND YIELD: 1.01% DOWN 1 IN basis points from THURSDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.14 PAR in basis points from THURSDAY (again totally nuts/)

the Italian 10 yr bond yield is trading 13 points HIGHER than Spain.





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


Euro/USA 1.1091 DOWN .0043 (Euro DOWN 43 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 101.74 UP 0.545(Yen DOWN 55 basis points/


USA/Canada 1.3159-UP 0.0059 (Canadian dollar DOWN 59 basis points AS OIL ROSE(WTI AT $41.85). Canada keeps rate at 0.5% and does not cut!


This afternoon, the Euro was DOWN by 43 basis points to trade at 1.1091

The Yen FELL to 101.74 for a LOSS of 55 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED 


The Canadian dollar FELL by 59 basis points to 1.3159, WITH WTI OIL AT:  $41.85


The USA/Yuan closed at 6.6530

the 10 yr Japanese bond yield closed at -.093% DOWN 2  IN BASIS  points in yield/

Your closing 10 yr USA bond yield: UP 8 IN basis points from THURSDAY at 1.579% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.307 UP 5 in basis points on the day /


Your closing USA dollar index, 96.19 UP 40 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 FRIDAY

London:  CLOSED UP 53.31 OR 0.14%
German Dax :CLOSED UP 139.35 OR  1.36%
Paris Cac  CLOSED  UP 64.92  OR 1.49%
Spain IBEX CLOSED UP 159.90 OR 1.84%
Italian MIB: CLOSED UP 389.87 OR 2.40%

The Dow was UP 191.48 points or 1.04%

NASDAQ  UP 54.87 points or 1.06%
WTI Oil price; 41.84 at 4:30 pm;

Brent Oil: 44.34




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: 44.45

USA 10 YR BOND YIELD: 1.588% 

USA DOLLAR INDEX: 96.26 UP 48 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.3060 DOWN .0065 or 65 basis pts.(ON NEWS OF A CUT IN INTEREST RATES TO .25% PLUS MORE qe)

German 10 yr bond yield at 5 pm: -.067%


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


Stocks Soar To Record Highs Thanks To Biggest Seasonal Jobs Adjustment In A Decade

Jobs beat yuuge, “proving” everything is awesome…


Thanks to the biggest positive TTM seasonal adjustment in over a decade…


But don’t let that spoil the party… It’s payrolls buying day…


Post-payrolls, Gold was the biggest loser followed by bonds as stocks surged happily…


Today’s surge pushed all major indices into the green for the week…


NASDAQ RECORD HIGH CLOSE (Nasdaq July 2015 highs 5218.86)


FANG stocks surged over 9% in the last 6 days


Mega short-squeeze at the open lifted the indices but after that buying ended…


S&P breaks out to new record highs...


VIX plunged to its lowest levels since July 2014 (barely holding above a 10 handle)…


Bristol-Myers’ crashed by the most in 16 years…


Banks were bid because rates rose BUT the curve actually flattened and rate-hike odds barely budged…


Treasury yields exploded higher today (with the curve steeper by 4-6bps on the week, despite a small flattening today)…


Just as we warned, today’s big pain was in the 2Y which exploded 8bps higher (its biggest absolute rise since Dec 2015 (which marked the cycle high)


The USD Index spiked today on the payrolls print (up 4 of the 5 days this week) – this is the 6th weekly rise of the last 7 weeks…Cable was the weakest of the majors on the week


USD strength sent commodities lower overall with silver worst on the day. Crude scrambled back to unch on the week as NYMEX closed…


It’s been another crazy week in oil markets…


Gold and Silver were clubbed like baby seals today…


Charts: Bloomberg




The official FOMC report:  a gain of 255,000 jobs as it exceeded expectations.  Wages gain rise but the unemployment rate remains the same at 4.9%.  Also the gains do not match declining tax withholdings:

(courtesy zero hedge)

July Payrolls Soar By 255K, Smashing Expectations As Wages Rise More Than Expected: Rate Hike Eyed

So much for payrolls tracking declining tax withholdings. With many expecting a payrolls whisper number to come below the consensus print of 180K, moments ago the BLS reported that July payrolls soared by 255K, above even the highest Wall Street forecast, and a number made even more impressive by the upward revision to the June print from 287K to 292K. The unemployment rate remained flat at 4.9%, on expectations of a modest drop to 4.8%.

Finally, making a strong case for a December (or even September, however, the Fed will never hike before the election) rate hike, were the average hourly earnigs which rose 0.3%, above the 0.2% expected, and well above last month’s 0.1%, and rising 2.7% compared to a year ago.

The change in total nonfarm payroll employment for May was revised from +11,000 to +24,000, and the change for June was revised from +287,000 to +292,000. With these revisions, employment gains in May and June combined were 18,000 more than previously reported. Over the past 3 months, job gains have averaged 190,000 per month.

After two months of wildly missing expectations, Wall Street has done it again, with the print coming above the highest forecast.

The household survey was also impressive, with 420 jobs added to 151.517 million, a 1.8% increase compared to a year ago.

The participation rate rose modestly to 62.8% from 62.7%, after the number of people not in the labor force declined by 184K. The number of unemployed people declined by 13K to 7,770 keeping the unemployment rate at 4.9%, above the 4.8% forecast.

More important, from Yellen’s standpoint, is that average hourly and weekly wages rose by 2.7% in July, the highest in over a year, as suddenly inflation appears to be running hot once more.

From the report:

Total nonfarm payroll employment rose by 255,000 in July. Job gains occurred in professional and business services, health care, and financial activities. Mining employment continued to trend down. (See table B-1.)

Professional and business services added 70,000 jobs in July and has added 550,000 jobs over the past 12 months. Within the industry, employment rose by 37,000 in professional and technical services in July, led by computer systems design and related services (+8,000) and architectural and engineering services (+7,000). Employment in management and technical consulting services continued to trend up (+6,000).

In July, health care employment increased by 43,000, with gains in ambulatory health care services (+19,000), hospitals (+17,000), and nursing and residential care facilities (+7,000). Over the past 12 months, health care has added 477,000 jobs.

Employment in financial activities rose by 18,000 in July and has risen by 162,000 over the year.

Employment in leisure and hospitality continued to trend up in July (+45,000). Employment in food services and drinking places changed little in July (+21,000); this industry has added an average of 18,000 jobs per month thus far this year, compared with an average monthly gain of 30,000 in 2015.

Government employment edged up in July (+38,000).

Employment in mining continued to trend down over the month (-6,000). Since reaching a peak in September 2014, employment in this industry has fallen by 220,000, or 26 percent.

Employment in other major industries, including construction, manufacturing, wholesale trade, retail trade, and information, showed little or no change over the month.

The average workweek for all employees on private nonfarm payrolls increased by 0.1 hour to 34.5 hours in July. In manufacturing, the workweek was unchanged at 40.7 hours, while overtime increased by 0.1 hour to 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls also increased by 0.1 hour to 33.7 hours.

In July, average hourly earnings for all employees on private nonfarm payrolls increased by 8 cents to $25.69. Over the year, average hourly earnings have risen by 2.6 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 7 cents to $21.59 in July.

The change in total nonfarm payroll employment for May was revised from +11,000 to +24,000, and the change for June was revised from +287,000 to +292,000. With these revisions, employment gains in May and June combined were 18,000 more than previously reported. Over the past 3 months, job gains have averaged 190,000 per month.

The kneejerk market reaction, as we previewed in the case of a substantial beat,
is one which suggest a rate hike may now come well sooner than later, if only based on the reaction in rates.




Supposedly the July job gains were in Obamacare again and strangely in Education where all students are out of school and nobody hires anybody in July.

(courtesy zero hedge)

Where The July Jobs Were: “Obamacare Again Offset Weak Industrial, Consumer Sector”

While last month’s outlier spike in Information-related jobs, which saw 42K tech sector created in June, has come and gone, the breakdown of the July job additions confirms that some recently well-known trends continue, namely that the bulk of new jobs added remain in low-paying industries. Not only that, but some frank question marks emerge, like for example how did the government add 27K education jobs in July (out of a toal 38K) at a time when shools don’t hire. The answer: seasonal adjustments and model quirks.

So where were the July jobs? As our friends at Southbay Research point out, “Obamacare jobs offset weak Industrial and Consumer payrolls

The breakdown:

  • Consumer demand is wobbly
    • Construction: Weak
    • Retail: Weak
  • Industrial Sector and related ecosystem remains weak but has bottomed
    • Mining (-7K)
    • Manufacturing (+9K)
    • Truck & Rail (+1k)
    • Temp (+17K)
  • Obamacare to the rescue: Healthcare +49K
    • Leisure & Hospitality (+45K) surges on extra convention-related hiring
  • Construction: Despite claims of a strong housing market, Construction payrolls are the weakest since 2012, consistent with SouthBay data which shows a sudden sharp decline in hiring at homebuilders. Reflecting the slowdown, Building Material Retail jobs were also weak (-1K).
  • Retail (+15K): Peak Auto sales is evident in Auto payrolls (+1K)
  • Temp (+17K)
  • Election Year Payrolls: Advertising (+3K)

And the full breakdown:



Analysts looking at the data are quite angry as they see huge weakness in all the numbers.  The question is how did they record such a high increase in  jobs: answer our famous plug numbers:  seasonal adjustments and the B/D (Birth/Death Plug)

“Jobs Data Nowhere As Strong As Headline” – Analysts Throw Up On Today’s Seasonal Adjustment

One week ago, the BEA admitted that it had “found a problem” when it comes to calculating GDP numbers. Specifically it blamed “residual seasonality” adjustments for giving historical GDP numbers a persistent optimistic bias. This came in the aftermath of last week’s shocking Q2 GDP report which printed at 1.2%, less than half of Wall Street’s consensus.

Today, seasonality made another appearance, this time however in the much anticipated July number, which unlike the woeful Q2 GDP number, was the opposite, coming in far higher than expected. In fact it was higher than the top Wall Street estimate.

And, just like in the case of GDP, it appears that seasonal adjustments were the culprit for today’s blowout headline print which excluding the Arima X 13 contribution to the headline number, would have been notably weaker.

As Mitsubishi UFJ strategist John Herrmann wrote in a note shortly after the report, the “jobs headline overstates” strength of payrolls. He adds that the unadjusted data show a “middling report” that’s “nowhere as strong as the headline” and adds that private payrolls unadjusted +85k in July vs seasonally adjusted +217k.

In Herrmann’s view, the government applied a “very benign seasonal adjustment factor upon private payrolls to transform a soft private payroll gain into a strong gain.”

He did not provide a reason why the government would do that.

Courtesy of Southbay Research, which also blasted today’s seasonal adjustment factor, this is how the seasonal adjustments look like relative to history.

We leave it up to readers to decide just why the government may want to represent what would otherwise have been a far weaker than expected report, into a blowout number, one which merely adds to the economic “recovery” narrative, which incidentally will come in very useful to Hillary’s presidential campaign.

Yet even assuming the market has no doubts about the seasonally adjusted headline number, as appears to be the case, the other problem that has emerged for the Fed is how to ignore this strong number. As Bank of Tokyo’s Chris Rupkey writes, “Let’s see Yellen get out of this one and find something in the data to once again not raise rates in September.” (We assume he did not see the unadujsted numbers.)

As he adds, slowing 2Q GDP growth of 1.2% took Sept. rate hike “off the table” and now “the million dollar question” is whether 255k payroll jobs in July, 292k in June put it back on.  As a reminder, Yellen speaks exactly in three weeks time at Jackson Hole on Aug. 26; “let’s see if she provides some guidance.” But while rate hike odds may have spiked after today’s report, it is almost certain that, as we said last night, the Fed will not dare to hike the rate in September and potentially unleash market turmoil in the most sensitive part of the presidential race.

As for a December rate hike, there are 4 months until then, and much can happen: who knows, maybe the BLS will even undo the significant seasonal adjustment boost that send July jobs soaring.






Since 2014, the USA have added 1/2 million wiaters and bartenders and 0 manufacturing workers. And they call this a robust economy?

(courtesy zero hedge)_

Since 2014 The US Has Added Half A Million Waiters & Bartenders And No Manufacturing Workers: Here’s Why

As part of our monthly tradition showing the gaping disparity in the quality of the US labor market, we present the breakdown between the lowest paid jobs available, those for workers in “food services and drinking places”, also known as waiters and bartenders, and compare them to the number of workers in the traditionally best paid sector, manufacturing.

Here is the bottom line: as the chart below shows, there have been half a million waiter and bartender jobs added since 2014, and no manufacturing jobs.

This explains why contrary to the BLS’s seasonally adjusted models optimistically showing a pick up in wage growth, the US economy has so far failed to observe any form of benign demand-pull inflation.

So what accounts for this troubling deteriorationg in the US labor market continue every single month? Here is one explanation.

Back in January, the ECRI’s Lakshman Achuthan’s made a troubling observation. The sustained decline in the official jobless rate – now near the Fed’s estimate of “full employment” – is a misleading indicator of labor market health, he said.

Indeed, the stagnation in nominal wage growth is consistent with the weakness in the employment/population (E/P) ratio. After dropping to three-decade lows in the wake of the Great Recession, the E/P ratio has barely improved since the fall of 2013, reversing only a quarter of its decline from its pre-recession highs. Furthermore – as a breakdown of the E/P ratio by education level shows – even this modest improvement is illusory.

Since 2011, when the E/P ratio for those with less than a high school diploma bottomed, that metric has now regained all of its recessionary losses (green line). But the E/P ratio for high school or college graduates – i.e., eight out of nine American adults – has not recovered any of its recessionary losses, and has barely budged in four years (red line).

We have updated the chart below and it looks as follows:

Unfortunately, this data underscores how the jobs recovery has been spearheaded by
cheap labor, with job gains going disproportionately to the least
educated — and lowest-paid — workers, many of whom have to work multiple
jobs to make ends meets.

It also means that while the BLS can liberally apply seasonal adjustment lipstick on the unadjusted payrolls report to make it more attractive, the truth for most Americans is that the so-called recovery continue to escape most working-age Americans. The only good news is that restaurant workers appear to still be hiring… at least until all new waiters are replaced by robots.



What!!!! The Atlanta Fed sees a rise in 3rd Q GDP to 3.8%!!!

The Fed now has no excuse but must raise rates!

(courtesy zero hedge)

Atlanta Fed Sees Dramatic Surge In Economy, Pegs Q3 GDP At 3.8%

Dear Janet, you have a problem! With jobs surging, stocks at record highs, volatility near record lows, China stable, and Brexit behind us, today’s shocking upgrade of the US economy by The Atlanta Fed (to +3.8% growth)leaves The Fed with little to no excuse for hiking rates at least once if not twice this year…

This is the highest forecast for US GDP growth since January 2015how did that guess work out? (Hint it collapsed to ZERO by quarter-end)

This is dramatically higher than the +2.2% consensus estimates, (and well above the NY Fed’s +2.6% estimate) as The Atlanta Fed explains:

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2016 is 3.8 percent on August 5, up from 3.7 percent on August 4.

After this morning’s employment situation release from the U.S. Bureau of Labor Statistics and this morning’s international trade report from the U.S. Census Bureau, the forecast for third-quarter real gross private domestic investment growth increased from 8.1 percent to 8.8 percent.

In addition Goldman increases their odds of a rate hike this year…

With payrolls, unemployment claims, consumer sentiment, vehicle sales, and a number of business surveys in hand, our preliminary read for the July Current Activity Indicator is +2.3%, up from +2.1% in June. The three-month moving average edged up to 1.8% from 1.7% in June.

In light of the stronger-than-expected jobs report, we revised up our subjective odds of a rate increase at the September FOMC meeting to 30% from 20% previously. We kept the probability of an increase in December at 45%–implying a roughly 75% chance of at least one rate increase this year.

So if hiking rates sends stocks higher and cutting rates is supposed to send stocks higher, what is the point of The Fed?



The Administration has a major problem here as there is no doubt that ransom money was paid to release the sailors caught in Iranian waters:

(courtesy zerohedge)

As Obama Slams Iran “Ransom” Allegations, He Refuses To Answer One Simple Question

Unable to keep the $400 million cash drop to Iran off the front pages, the Obama administration came out swinging today with denials, conspiracy-theory-accusations, and allegations of biased reportingas the mainstream media was forced by the striking actions of The White House to ask uncomfortable questions.

Bloomberg reports that critics of Obama’s nuclear deal with Iran say the payment was ransom, a contention the White House has strongly denied; that it will encourage Iran to take more Americans hostage; and that it’s likely the money will be funneled into terrorist groups.

“If true, this report confirms our longstanding suspicion that the administration paid a ransom in exchange for Americans unjustly detained in Iran,” House Speaker Paul Ryan, a Wisconsin Republican, said in a statement.

“It would also mark another chapter in the ongoing saga of misleading the American people to sell this dangerous nuclear deal.”

Obama administration officials have, of course, dismissed the controversy as old news, noting that the settlement was fully disclosed by the White House and State Department at the time the Iran nuclear deal was announced.

“The United States of America does not pay ransom and doesn’t negotiate ransoms with any country — we never have and we’re not doing that now,” Secretary of State John Kerry said Thursday in Buenos Aires.

As The Hill reports,President Obama chastised the press for their coverage of the payment, noting that the deal with Iran was announced months ago as part of a larger diplomatic settlement.

“This wasn’t some nefarious deal,” Obama said.

“It’s been interesting to watch this story surface,” the president said. “Some of you may recall, we announced these payments in January. Many months ago. There wasn’t a secret, we announced them to all of you.”

“What we have is the manufacturing of outrage on a story that we disclosed in January,” he added later.

“The notion that we would somehow start now in this high-profile way, and announce it to the world, even as we’re looking in the faces of other families whose loved ones are being held hostage and say to them, ‘we don’t pay ransom,’ defies logic,” Obama said.

Defies logic indeed, like the logic of “keeping your doctor if you like him” or the logic of “no boots on the ground in Syria”? But to summarize, today we got “look over there at Donald Trump”-distractions and “We do not negotiate ransoms with any country” jabbed Kerry; “We do not pay ransom for hostages” lambasted Obama; “it defies logic” snapped Earnest.

*  *  *

Still, one big question has yet to be answered, for the second day in fact. It’s a simple question: did the hostages’ plane leave before or after the plane arrived carrying pallets full of $400 million worth of non-USD-denominated cash?

Yesterday the question was asked by James Rosen… and not answered: “I might be able to you an answer on that…”

,,, and today, none other than The Associated Press’ Matt Lee asked again: “we’re still looking into it”

Still no answer: Odd for the “most transparent adminstration ever” not to have this kind of basic, flight information at their fingertips: tracking $400 million worth of US taxpayer money – in cash – and the lives of four members of the American military?

Of course, we suspect the explanation is simple and the two planes just happened to coincidentally arrive on the tarmac at the same time and the hostages and the money carriers merely discussed grandkids and golf games.

* * *

And then, later today, we may have stumbled what really happened.

As a reminder, the four hostages that were allegedly exchanged for the $400 million ransom are the following.

L to R: Matt Trevithick (Photo Credit Robin Wright) Amir Hekmati, Jason Rezaian
(Photo Credit AP), Saeed Abedini (News 4).

Today, one of the US Iranian hostage shown above, Saeed Abidini, spole to FOX Business and explained that the Iranian regime would not let his plane leave Tehran until the ransom plane arrived, Gateway Pundit reports.

They waited on the tarmac for hours.

Saeed Abidini: I just remember the night at the airport sitting for hours and hours there and I asked police— why you not letting us go — And he told me we are waiting for another plane and if that plane take off we gonna let you go.

Trish Regan: You slept there at the airport?

Abidini: Yes, for a night. They told us you going to be there for 20 minutes but it took hours and hours. And I ask them why you don’t let us go, because the — was there, pilot was there, everyone was there to leave the country. And he said we are waiting for another plane so if that plane doesn’t come we never let us go.

Hopefully, this can jog Mr. Toner’s memory if the hostage plane left before or after the “non-rasom”cash arrived.


This is interesting:  Trump retracts his statement that he saw a video of “Iran Cash” being sent in exchange for the hostages.  The earlier images were thought to be of the hostages arriving in Geneva.  Then strangely footage of cash arriving in Iran surfaces: maybe the Donald was a little too early to retract!

(courtesy zero hedge)

In Latest Scandal, Trump Retracts Statement He Saw Video Of “Iran Cash Exchange” Just As Clip Emerges

In what has emerged as the latest scandal involving Donald Trump, the presidential candidate on Friday retracted a statement that he had seen a video on TV of a plane carrying $400 million in cash to Iran, money which as the WSJ reported earlier this week was allegedly made as a ransom payment to free 4 US hostages held by Iran. The statement was a rare reversal of comments he made on the campaign trail earlier this week.

“The plane I saw on television was the hostage plane in Geneva, Switzerland, not the plane carrying $400 million in cash going to Iran!” Trump tweeted.

Earlier in the week Trump had gone into detail about seeing footage of the money in responding to the news that the U.S. had transferred $400 million to Iran in January at the same time that American hostages were being released from the country.  “I’ll never forget the scene this morning,” Mr. Trump said at a rally in Florida Wednesday. “And remember this. Iran — I don’t think you’ve heard this anywhere but here — Iran provided all of that footage, the tape, of taking that money off that airplane, right?

“Now here’s the amazing thing: over there, where that plane landed — top secret, they don’t have a lot of paparazzi. You know, the paparazzi doesn’t do so well over there, right?” he said. “And they have a perfect tape done by obviously a government camera and the tape is of the people taking the money of the plane, right? That means that in order to embarrass us further, Iran sends us the tapes, right? It’s a military tape. It was a tape that was a perfect angle — nice and steady. Nobody getting nervous because they’re going to be shot because they’re shooting a picture of money pouring off a plane,” he said.

However, as the Washington Examiner notes, after those comments, the Trump campaign told The Washington Post that the tape Mr. Trump had seen was b-roll footage that’s been labeled as American hostages landing in Geneva in January after being released from prison. But Mr. Trump said again Thursday in Maine that he guessed the footage was of the money transfer.

Trump was promptly lambasted for the remarks. Here is the recap from CNN’s Brian Stetler:

Clinton’s running mate, Virginia Senator Tim Kaine, said Thursday he had “no idea” what Trump was talking about with the Iran video. “He might be thinking about Iran Contra from, like, 35 years ago or something like this,” Kaine said in an interview with CBS News, noting Trump had recently misspoken and identified Kaine as the former governor of New Jersey, not Virginia. New Jersey had a governor by a similar name, Tom Kean, from 1982-1990.

The WaPo, predictably, unleashed on Trump:

So Trump did what he has rarely done before: he backed down.

* * *

And then, just as Trump was retracting his claims, something curious happened.

Overnight, the BBC reported that a video did indeed exist, referring to a documentary called “The Rules of the Game” which was broadcast on Iranian state TV in February. In the clip, one can see shots of an airport are accompanied by commentary which references 17 January in Tehran’s Mehrabad Airport.

Specifically, the video shows a loaded crate, partially blurred out, which allegedly shows the money in question.

And another version:

A translation of the commentary with the pictures, per BBC, reads as follows.

“Early hours of 17 January 2016, Mehrabad Airport (Tehran), $400m cash was transported to Iran by an airplane.

“A little bit later, part of the interest money was also paid to Iran, and the US government made a commitment to pay the rest of Iran’s money.”

While it is not clear if this is intended to be a literal description or whether the shots are just general views of the airport.

The video is shown below, and the pettets of cash appear at the 11:00 mark.

The video It can also be found on YouTube, and was also hosted and discussed by MEMRI tv at one point, and was also in a BBC Journalist twitter feed.  Here are the links to the short and the full version of the Iranian Documentary. Finally here is another version.

It is unclear where Donald Trump might have caught the clip of the video, and whether or not the cash disclosed is what Iran claims it is (in light of the WSJ revelations it is very likely that this is indeed the alleged payment in question) but the footage was widely discussed several months ago when the hostages were released.  The Iranian TV ran it with a title “The Rules of The Game.” It was released on BBC TV during a segment discussing the release of the prisoners.

In other words, it did exist.  Which is why it is quite ironic that following an onslaught of media pressure, Trump admitted weakness and was forced to deny his previous statement, even though this may have been the one case where no such admission was required.




This should help Hillary’s campaign for the Presidency:

“we will raise taxes on the middle class”



Caught On Tape: Hillary Exclaims “We Will Raise Taxes On The Middle-Class”

Flanked by sleepy billionaire-for-the-masses Warren Buffett, Hillary Clinton was cheered by a crowd of mooing followers in Omaha as she angrily exclaimed “…we are going to raise taxes on the middle class!”

Buffett seemed a little perplexed as she spoke

“Because while Warren is standing up for a fairer tax code, Trump wants to cut taxes for the super-rich,” said Clinton.

Well, we’re not going there, my friends. I’m telling you, right now – we’re going to write fairer rules for the middle class and we are going to raise taxes on the middle class!

As The Daily Wire notes, presumably a slip of the tongue, Clinton’s comment came amid broader Marxist-themed demagoguery about forcing “the wealthy” to “pay their fair share” of taxes.

Furthermore, as Fox reports, Hillary Clinton comes up $2.2 trillion short in paying for her policy agenda, despite hiking taxes by $1.3 trillion, according to a new analysis of the Democratic nominee’s campaign platform.

The American Action Forum, a center-right policy institute, released a report Thursday finding Clinton’s domestic agenda would “have a dramatic effect on the federal budget.”

Gordon Gray, American Action Forum’s director of fiscal policy, based the report on estimates of policy proposals from the Clinton campaign itself, as well as independent analyses from the Tax Policy Center and the Center for a Responsible Federal Budget.

Gray found Clinton’s policies for expanding government’s role in family leave and student loans would contribute significantly to the deficit, and in turn a growing national debt that stands at $19.358 trillion.

In fact, the amount of debt held by the public alone would reach $25.825 trillion in 2026 under Clinton’s plan. The amount of debt held by the public today is $13.968 trillion.




Both student loans and auto loans hit record highs

(courtesy zero hedge)

Student, Auto Loans Hit Record High As Credit Card Debt Surges

The Fed’s latest consumer credit report revealed that in the month of June, overall household credit rose a smaller than expected $12.3 billion, below the $17 billion expected, and below last month’s $17.9 billion increase.


The reason for the miss in credit growth was entirely due to the unexpected slowdown in non-revolving credit, which rose by only $4.6 bilion, the second lowest monthly increase since 2012 with just December 2015 posting a slower rate of increase. It is possible that the decline in new non-revolving, i.e., auto credit creation was the reason for the slowdown in auto sales over the past several months.


The flipside, however, was the jump in revolving credit, which rose by $7.7 billion in June, the second highest monthly increase since the financial crisis, and confirms what we observed previously, namely that as US personal savings are declining at a rapid pace, consumer have had no choice but to “charge it.”


In any case, with the Fed releasing its quarterly update on both auto and student loans, we have two new records: a new all time high in both car loans at $1.1 trillion, and a record for student loans, which just hit $1.4 trillion.


Finally, as @Not_Jim_Cramer points out, the dominant source of consumer credit remains one and the same.



Citibank states that the bull market just will not die.  They see “red everywhere”

(courtesy Citibank/zero hedge)


“The Bull Market Just Won’t Die”, Citi Laments As It Sees “Red” Everywhere


The USA trad deficit widened despite the slightly weaker dollar and lower oil prices:

(courtesy Josh Mitchell/Sparshott/


U.S. Trade Gap Widened in June Due to Import Surge


Josh Mitchell and

Jeffrey Sparshott

Aug. 5, 2016 8:33 a.m.

WASHINGTON—The U.S. trade deficit soared in June as Americans boosted purchases of foreign goods, though broader trends portray a sluggish economy.

The trade gap grew 8.7% from a month earlier to a seasonally adjusted $44.5 billion, the widest in 10 months, the Commerce Department said Friday. Imports increased 1.9% while exports rose 0.3%.

Economists surveyed by The Wall Street Journal expected a deficit of $43.2 billion in June.

The pickup in both exports and imports offered early signs that international trade, which has slumped over the past year due to broad economic malaise, could be improving. But it also reflected temporary factors—such as a surge in oil prices, which have since retreated—and came against a backdrop of slowing growth in the U.S.

A wider trade deficit translates into slower economic growth in the U.S. because it means Americans are spending more money on foreign products instead of American goods. But a surge in imports also points to underlying strength of U.S. households, since it means they have enough money and confidence to boost spending.

The export rise, while modest, suggests U.S. factories continue to stabilize after being undermined by troubles in the global economy late last year.

The dollar has weakened against other currencies since March after strengthening over the winter. But it remains substantially stronger compared with earlier in the recovery. That has driven up the price of American goods abroad, weighing on sales of U.S. goods and services to foreign countries, while lifting imports to the U.S.

Oil markets, meantime, have retreated over the past month after rebounding this spring. The latest decline reflects growing concerns of a stubborn supply glut, as oil-producing countries step up production despite weak demand.

Trade between nations is likely to remain sluggish as the global economy continues to lag. The International Monetary Fund projected last month that the global economy will grow 3.1% this year, matching last year as the weakest since the financial crisis.

Friday’s report illustrated the weak trade picture. Through the first half of this year, exports declined 4.7% compared with the same period a year earlier, and imports fell 4.3%. The deficit fell 2.3% over the period.

Still, Friday’s report offered tentative signs of improving trade.

Exports grew due to higher sales abroad of food, consumer goods such as antiques and artwork, and capital goods such as civilian aircraft.

Imports expanded due largely to higher oil prices, but also due to increased purchases of consumer goods like pharmaceuticals and cellphones. Capital goods purchases also grew.


Let’s close out the week with this wrap up courtesy of Greg Hunter of USAWatdhog
(courtesy Greg Hunter)

Dems and Media Panic Over Trump, Economy is Tanking, Iran No Deal, Deal Update

By Greg Hunter’s

The mainstream media (MSM) and the Democrat Party would like you to think it is the Republicans in full panic mode, but it is their party that’s freaking out. The first tip comes from the MSM that is “going to war against Trump” and acting like the true political hacks they are.  Journalism is dead at the MSM, and they are willing to destroy their businesses to stop the outsider.  Negative stories trashing Trump are not having an effect as Trump is packing rallies by the thousands while voter turnout for Clinton rallies is lackluster.  Meanwhile, major negative stories about Hillary Clinton are being ignored to try to combat her negative image as a liar.  Hillary even lies about what the FBI called lies about her private servers, and the MSM ignores developments such as the IRS opening an investigation into the Clinton Foundation.

The President says the economy is great, but recent statistics say otherwise. GDP, Durable Goods and Manufacturing are a few of the recent numbers that all showed a plunge.  This is yet another reason the Clinton Campaign and the DNC are panicking.  The economy sucks and they know it.  They do not have a good economy to campaign with, and there is no hope of turning things around before the November Presidential election.

Foreign policy is another area that Hillary Clinton cannot tout any success. Libya is a mess, and the U.S. has resumed bombing there.  This time because ISIS is threatening to take control.  Syria is a mess, and there is no end in sight to conflict there, and the so-called “Russian Reset” is building up so much tension that Russia is constantly warning of war.  On top of that, it was just disclosed the Obama Administration gave the Iranians $400 million in cash.  Republicans charge it was a ransom payment to get our four American Hostages back.  The President says the deal has been in the works, and the timing is a coincidence.  Obama says the Iran nuke deal has been a huge success since it was signed, but only one thing is wrong with that statement.  The Kerry State Department has admitted no documents were ever signed by Iran to Congressman Mike Pompeo last year.

Join Greg Hunter as he talks about these stories and more in the Weekly News Wrap-Up.



oin Greg Hunter as he talks about these stories and more in the Weekly News Wrap-Up.

After the Wrap-Up:


see you on Monday night




  1. Harvey, Again tonite your blog is mostly from about the 20% point til the end, just one big paragraph, with no indents, no caps, and no visible titles. You gotta get it fixed.


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