August 12/Another of our criminal bankers patented gold/silver raid at the comex/Poor economic results from China namely faltering industrial production, and faltering investment demand/Italy’s new debt rises by over 700 billion euros: new debt /GDP 141%/ Both Russia and the Ukraine prepare for war: good reason to whack gold today/Poor USA economic numbers today: retail sales and wholesale prices/


Gold:1335.80 DOWN $6.70

Silver 19.67  DOWN 31  cents

In the access market 5:15 pm

Gold: 1336.25

Silver: 19.71


For the August gold contract month,  we had a small sized 1101 notices served upon for 110,100 ounces. The total number of notices filed so far for delivery:  12,780 for 1,278,000 oz or  tonnes or 39.7511 tonnes.  The total amount of gold standing for August is 43.9 tonnes.

In silver we had 0 notices served upon for nil oz. The total number of notices filed so far this month:  274 for 1,370,000 oz.

Let us have a look at the data for today



In silver, the total open interest FELL BY A LARGE 3,864 contracts DOWN to 208,328 YET  STILL CLOSE AN ALL TIME NEW ALL TIME RECORD AS  THE  PRICE OF SILVER FELL  BY 15 CENTS WITH YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.041 BILLION TO BE EXACT or 149% of annual global silver production (ex Russia &ex China).

In silver we had 0 notices served upon for nil oz

In gold, the total comex gold FELL 2,355 contracts as the price of gold FELL by $1.80 YESTERDAY. The total gold OI stands at 571,993 contracts.


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


we had no changes in GLD/

Total gold inventory rest tonight at: 972.62 tonnes


we had no changes in the SLV, /   THE SLV/Inventory rests at: 351.765 million oz.

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

1. Today, we had the open interest in silver FELL by 3,864 contracts DOWN to 208,328 as price of silver FELL BY 15 cents with YESTERDAY’S trading.The gold open interest FELL 2,355 contracts DOWN to 571,993 as the price of gold FELL by $1.80 WITH YESTERDAY’S TRADING.

(report Harvey).


2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge

2c) COT report



i)Late  THURSDAY night/FRIDAY morning: Shanghai closed UP 48.03 POINTS OR 1.60%/ /Hang Sang closed UP 186.36 points or 0.83%. The Nikkei closed UP 184.80 POINTS OR 1.10% Australia’s all ordinaires  CLOSED UP 0.42% Chinese yuan (ONSHORE) closed DOWN at 6.6466/Oil rose to 43.35 dollars per barrel for WTI and 45.88 for Brent. Stocks in Europe:  in the red . Offshore yuan trades  6.6557 yuan to the dollar vs 6.6466 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS AS  MORE USA DOLLARS LEAVING THEIR SHORES



none today


All 3 areas of growth in China faltered last night:

Industrial Production, Retail sales and Fixed Asset Investment.  Bond yields in China tumbled: to 2.65% on the 10 yr Chinese bond

(courtesy zero hedge)



This is big news.  Italy has increased its public national debt by 77 billion euros. The new public debt is 2.50 trillion euros.  Its new Debt/GDP: 141%

(courtesy zerohedge)

(courtesy Sputnik)


Saudi Arabia

Saudi Arabia is in a real mess as dollars are a scarcity inside the kingdom due to the low price of oil.  They cannot pay any of the construction workers for months:

(courtesy Upadhyay/


Russia et al
Tensions escalate to the highest degree in the Crimea:
Two important developments:
1. War games initiated in the Black Sea
2. Russia to deploy the big S 400 defense missile system to the Crimea.
looks like we will be heading to Defcon 1 in no time;
( zerohedge)


Poroshenko is preparing to attack the Donbass and Crimea. Great reason for our banker friends to whack gold/silver at 12:00 noon once London was put to bed.

(Alexander Mercouris/the Duran)


 none today


i)Crude spikes to 3 week high after a monstrous increase in open interest

Funny, it does not work for silver like it does for oil:

( zero hedge)


ii)Then late in the day, oil slides as rig counts continue to rise


none today


i)A history lesson on the Bretton Woods format where the dollar was convertible into gold.  It could not last: the USA was losing too much gold as countries turned in their dollars for this ancient relic.

( Ben Steil/MarketWatch)

ii)Interesting:  investment demand for gold even surpasses jewelry demand

( Boyle/CNBC/GATA./

iii)Turd Ferguson (Craig Hemkie) comments on the hughe higher TED spread. The Ted spread is a measure of the 3 month interest rate that banks loan to each other vs government 3 month rates.  The higher rate means stress to the system.  Hemke states also that the higher TED spreads cause markets to falter but also paper gold will be well bid

( Craig Hemke/TFMetals)
iv)Julian Phillips correctly comments on the paper gold market on this side of the pond and the physical gold market in Shanghai.  For the past few days, the world has ignored the Shanghai gold fix which was much higher than the fraudulent manipulation in the paper comex.

China wishes to become dominant and they will force their way,even if they have to destroy the comex while doing so

( Julian Phillips/Bullionvault)


i)Three reports both indicating that the economy is faltering:

1. Producer Prices unexpectedly slide -0.4% as prices for clothing jewelry and beef tumble

2. Core Retail sales tumble to -.4%

both of these poor economic reports will cause the Fed to slow down its thinking to raise rates:

First PPI

( zero hedge)

ii)Second: Retail sales

Core retail sales fall dramatically to -.1%  (see graph below).  The entire retail sector shows a small gain year over year of only 2.3% and this usually signals a deep recession:

( zero hedge)

iii) Third: Business inventories to sales ratio:

The all important Business inventories to sales ratio falls slightly to 1.39 but still mired deep in recession mode:

(courtesy zero hedge)


two stories

iv)Par for the course;  the Justice department has prevented a FBI probe of the Clinton foundation as reporters report on stonewalling

( zerohedge)

v) Do we have an FBI mutiny with respect to Hillary? The Attorney General’s office in NY is formally investigating the Clinton Foundation who has their offices in New York.

( zero hedge)

Let us head over to the comex:

The total gold comex open interest FELL TO AN OI level of 571,993 for a LOSS of 2355 contracts AS THE PRICE OF GOLD FELL BY $1.80 with YESTERDAY’S TRADING..   We are now in the active month of AUGUST. As I stated this month : “Somebody big is continually standing for the gold metal and continues to do so in August in the same manner as we witnessed 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 increases in amount standing in August and probably we will surpass the amount standing on first day notice.  The  big active contract month of August saw it’s OI FALL by 87 contracts DOWN to 2383,  We had 34 notices filed upon yesterday so we LOST A TINY 53 contracts or an additional 5300 oz will not stand for delivery in August. The next contract month of Sept saw it’s OI fall by 106 contracts down to 5,213.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 fell by 311 contracts down to 46,990. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was good at 252,031.  The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was FAIR at 174,256 contracts.The comex is not in backwardation.
Today, we had  1101 notices filed for 110,100 oz in gold
And now for the wild silver comex results. Total silver OI FELL by 3,864 contracts from  212,192 DOWN TO 208.328 with the FALL in price of silver to the tune of 15 cents.  We are moving away from the 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 remain constant at 190 for a loss of zero contracts. We had 0 notices served yesterday so we gained 0 contracts or an additional nil oz will stand in this non active delivery month of August. The next big active month is September and here the OI fell by 8,194 contracts down to 111,282. The volume on the comex today (just comex) came in at 84,319 which is huge and small rollovers..The confirmed volume yesterday (comex + globex) was HUGE at 90,921 with tiny rollovers.. Silver is not in backwardation. London is in backwardation for several months.
We had 0 notices filed for today for nil oz
INITIAL standings for AUGUST
 August 12.
Withdrawals from Dealers Inventory in oz   nil OZ
Withdrawals from Customer Inventory in oz  nil
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz 
No of oz served (contracts) today
1101 notices 
110,100 oz
No of oz to be served (notices)
1282 contracts
(128,200 oz)
Total monthly oz gold served (contracts) so far this month
12,780 contracts (1,278,000 oz)
(39.7511 tonnes)
Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL
Total accumulative withdrawal of gold from the Customer inventory this month    198,941.7 OZ
Today:  TINY activity at the gold comex AND 1 KILOBAR ENTRY
Today we had 0 dealer DEPOSIT
total dealer deposit: NIL    0z
Today we had  0 dealer withdrawals:
total dealer withdrawals:  nil oz
We had 1 customer deposit:
 i) Out of SCOTIA:771.600 OZ (24 KILOBARS)
Total customer deposits: 771.600 oz
Today we had 1 CUSTOMER withdrawals
 i) Out of SCOTIA: 15,305.82 OZ
Total customer withdrawals  15,305.82 OZ
Today we had 1 adjustment:
i) out of SCOTIA: 1890.27 oz was adjusted out of the dealer and this landed into the customer account of Scotia. (deemed a settlement)
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 1101 contracts of which 6 notices was stopped (received) by JPMorgan dealer and 834 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 (12780) x 100 oz  or 1,278,000 oz , to which we  add the difference between the open interest for the front month of AUGUST  (2383 CONTRACTS) minus the number of notices served upon today (1101) x 100 oz   x 100 oz per contract equals 1,406,200 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 (12780) x 100 oz  or ounces + {OI for the front month (2383) minus the number of  notices served upon today (1101) x 100 oz which equals 1,406,200 oz standing in this non  active delivery month of AUGUST  (43.738 tonnes).
We lost 9 contracts or additional 900 oz will not 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 + 43.738 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/ aUG 10// 0.219 TONNES/August 11: .3619 TONNES/ AUG 12/.05878/THEREFORE 93.516 tonnes still standing against 73.425 tonnes available.
 Total dealer inventor 2,360,613.931 oz or 73.425 tonnes
Total gold inventory (dealer and customer) =11,235,231.907 or 349.462 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 349.462 tonnes for a  gain of 47  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 12.2016
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
382,939.100 oz
Deposits to the Dealer Inventory
Deposits to the Customer Inventory
1,821,976.471 oz
No of oz served today (contracts)
(nil OZ)
No of oz to be served (notices)
190 contracts
950,000 oz)
Total monthly oz silver served (contracts) 274 contracts (1,370,000 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  7,651,354.1 oz
today we had 0 deposit into the dealer account:
 Total dealer deposits;  NIL oz
we had 0 dealer withdrawal:
total dealer withdrawals:  NIL oz
we had 3 customer withdrawals:
i) Out of SCOTIA:  60,165.820 oz
ii) Out of Brinks: 21,201.900 oz
iii) Out of CNT: 301,571.400 oz
Total customer withdrawals: 382,939.100 oz
We had 3 customer deposits:
i) Into Brinks: 600,181.970 oz
ii) Into Scotia:  643,350.700 oz
iii) Into HSBC: 578,443.801 oz
total customer deposits:  1,779,717.500  oz
 we had 0 adjustments
The total number of notices filed today for the AUGUST contract month is represented by 0 contract for nil  oz. To calculate the number of silver ounces that will stand for delivery in AUGUST., we take the total number of notices filed for the month so far at (274) x 5,000 oz  = 1,370,000 oz to which we add the difference between the open interest for the front month of AUGUST (190) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the AUGUST contract month:  274(notices served so far)x 5000 oz +(190 OI for front month of AUGUST ) -number of notices served upon today (0)x 5000 oz  equals  2,320,000 oz  of silver standing for the AUGUST contract month.
we gained 0 contracts or an additional nil oz will  stand for delivery in this non active month of August.
Total dealer silver:  27.485 million (close to record low inventory  
Total number of dealer and customer silver:   156.033 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 we receive the COT report which gives us position levels of our major players
Let us head over to the gold COT as see what we can glean from it:

Gold COT


Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
356,471 70,024 50,020 116,251 429,192 522,742 549,236
Change from Prior Reporting Period
-9,330 -1,594 1,972 2,340 -8,746 -5,018 -8,368
199 90 87 54 59 297 197
  Small Speculators      
  Long Short Open Interest    
  52,657 26,163 575,399    
  -1,794 1,556 -6,812    
  non reportable positions Change from the previous reporting period  
COT Gold Report – Positions as of Tuesday, August 09, 2016
Our large specs:
Those large specs that have been long in gold pitched a huge 9330 contracts from their long side  (as of this past Tuesday)
Those large specs that have been short in gold covered 1594 contracts from their short side.  (large specs were fleeced again)
Our commercials:
Those commercials that have been long in gold added 2340 contracts to their long side
Those commercials that have been short in gold covered a large 8746 contracts.
the crooks did their deed again
Our small specs
those small specs that have been long in gold pitched 1794 contracts from their long side
those small specs that have been short in gold added 1556 contracts to their short side
Remember that we had a huge whacking of gold last Friday after the jobs report and the crooked bankers caused the landslide from which they covered hugely
they should go to jail along with Hillary.
Conclusions; commercials go net long by 10,000 contracts and thus bullish for gold

And now for our silver COT:


Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
122,165 31,101 14,537 47,020 150,331
-511 1,859 -9,954 -2,103 -7,913
113 56 51 34 41
Small Speculators Open Interest Total
Long Short 210,647 Long Short
26,925 14,678 183,722 195,969
-1,325 2,115 -13,893 -12,568 -16,008
non reportable positions Positions as of: 174 128
  Tuesday, August 09, 2016   ©
Our large specs:
Those large specs that have been long in silver did not want to part with their contracts as they lost only 511 contracts.
Those large specs that have been short in silver strangely added 1859 contracts to their short side.
Our commercials;
Those commercials that have been long in silver pitched 2103 contracts from their long side
those commercials that have been short in silver covered 7913 contracts from their short side
Our small specs:
those small specs that have been long in silver pitched 1325 contracts from their long side.
those small specs that have been short in silver added 2115 contracts to their short side.
our banker commercials go net long by 5700 contracts. and that is bullish
And now the Gold inventory at the GLD
August 12/no change in gold inventory at the GLD/Inventory rests at 972.62 tonnes
August 11/no changes in gold inventory at the GLD/Inventory rests at 972.62 tonnes
August 10/no changes in GLD/Inventory rests at 972.62 tonnes
August 9/we had a withdrawal of 1.18 tonnes of gold from the GLD inventory/inventory rests at 972.62 tonnes
August 8/a huge changes in the GLD/Inventory, a withdrawal of 6.54 tonnes of paper gold/ rests at 973.80 tonnes of gold/
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 12/ Inventory rests tonight at 972.62 tonnes


Now the SLV Inventory
August 12/no change in silver inventory at the SLV/Inventory rests at 351.765 oz
August 11/no change in silver inventory at the SLV/Inventory rests at 351.765 oz
August 10/no changes in silver inventory at the SLV/Inventory rests at 351.765 oz
August 9/a deposit of 950,000 oz into the SLV/Inventory rests at 351.765 oz
August 8/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 12.2016: Inventory 351.765 million oz

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 5.6 percent to NAV usa funds and Negative 5.4% to NAV for Cdn funds!!!!  (the discount is starting to disappear)
Percentage of fund in gold 59.4%
Percentage of fund in silver:39.4%
cash .+1.2%( August 12/2016).
2. Sprott silver fund (PSLV): Premium falls  to +1.31%!!!! NAV (august 12/2016) 
3. Sprott gold fund (PHYS): premium to NAV  falls TO  0.65% to NAV  ( august 12/2016)
Note: Sprott silver trust back  into POSITIVE territory at +1.31% /Sprott physical gold trust is back into positive territory at 0.65%/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

Money “Madness” Negative Interest Rates Sees Gold Buying Surge

Gold buying surged to record levels in H1, 2016 due to increasing concerns about the political, economic and monetary outlook. In particular, deepening concerns about the negative interest rate money “madness” of central banks today.

buy_gold_GermanyHeike Hofmann sells fruit and vegetables in Germany. She reacted to negative rates by cutting spending & buying gold bars. Photo: Georgi Kantchev/ Wall Street Journal

Yesterday we covered this surge in gold buying in western markets as detailed by the World Gold Council and what is driving this increased demand.  Monetary policies and their impact on savers, along with political risks, contributed to record H1 gold investment demand, surpassing even that of the 2009 financial crisis.

One of the key causes of the surge in demand in western markets and especially in older wealth economies like Switzerland and Germany and indeed in Japan is the unprecedented monetary experiment of ultra loose monetary policies, QE and more recently negative interest rates.

Contrary to the beliefs of ideologues like Paul Krugman, assorted policy wonks, bankers and central bankers, negative interest rates are not leading to increased consumer and business spending which it was hoped would stimulate economic growth.

Quite the opposite is happening, with consumers and businesses realising that negative interest rates are a result of very significant macroeconomic risk and they are prudently deciding to save more, not less.

Many of them are buying gold and opting to save in gold due to the risks of negative rates, bail-ins of deposits or currency debasement.

Krugman – Uber Keynesian & Darling of the Monetary Illiterate

The Wall Street Journal covered this phenomenon this week and the article is well worth a read. In it they cite the example of a small business owner in Germany, Heike Hofmann who correctly views the central banks monetary policies as “madness”. Thus she is spending less, saving more and diversifying into physical gold bars:

“Two years ago, the European Central Bank cut interest rates below zero to encourage people such as Heike Hofmann, who sells fruits and vegetables in this small city, to spend more.

Policy makers in Europe and Japan have turned to negative rates for the same reason—to stimulate their lackluster economies. Yet the results have left some economists scratching their heads. Instead of opening their wallets, many consumers and businesses are squirreling away more money.

When Ms. Hofmann heard the ECB was knocking rates below zero in June 2014, she considered it “madness” and promptly cut her spending, set aside more money and bought gold. “I now need to save more than before to have enough to retire,” says Ms. Hofmann, 54 years old.”

Many Germans worry that negative rates pose a threat to their rainy-day funds. Four in 10 Germans cite the ECB’s monetary policy and low interest rates as their biggest concern when it comes to savings, according to a survey by the German Savings Banks Association last October.

In December, Ms. Hofmann, the Korschenbroich fruit vendor, used her Christmas bonus to buy two 10-gram bars of gold. She has since bought more and has put it, and every euro she can set aside, into a safe at home, saying she doesn’t trust banks. “Every time I check my savings account, it makes me want to cry,” she says.   See full WSJ article here

Some will sniff and dismiss Ms. Hofmann as an “unsophisticated” small fruit and vegetable seller in provincial Germany. However, her concerns are shared by some of the biggest institutions in the world including the world’s largest asset manager Blackrock and one of the largest companies in Germany and the largest insurer in the world – Munich Re who are allocating funds to gold.

Concerns about negative interest rates, currency devaluations and bank bail-ins are also shared by many companies and this is where we are seeing a very significant increase in account openings and bullion sales. Last year and in recent years, we used to open a few company accounts every month. Now we are opening a few every week.

Smart money investors, savers, companies and institutions are concerned and are taking measures to protect themselves from this radical monetary experiment and deepening financial repression. They are rightly concerned that ongoing currency debasement and this radical experiment with our methods of payments and savings will not end well … as has been the case throughout history.

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

Gold and Silver Bullion – News and Commentary

Gold holds steady after recovering from 1-wk low (Reuters)

Pound Sliding on Expanded QE Spurs Dollar Strength on Divergence (Bloomberg)

Gold Hits 1-Week Low as U.S. Resilience Boosts Equities, Dollar (Reuters)

Gold Back to Futures on London Metal Exchange After Thirty Years (Bloomberg)

London Metal Exchange to launch gold spot, futures contracts (Reuters)


BARCLAYS: Nothing left to fight the coming economic storm (Business Insider)

“World Class Crash Coming No Matter What” – John Williams (John Williams)

Now The Markets Themselves Are Too Big To Fail (DollarCollapse)

One Reason Why Silver Could Hit $50.00 By 2017  (ProfitConfidential)

Bullish on gold for years: Gartman (CNBC)

Gold Prices (LBMA AM)

12Aug: USD 1,336.70, GBP 1,032.60 & EUR 1,199.02 per ounce
11Aug: USD 1,344.55, GBP 1,037.05 & EUR 1,206.06 per ounce
10Aug: USD 1,351.85, GBP 1,035.11 & EUR 1,209.23 per ounce
09Aug: USD 1,332.90, GBP 1,025.80 & EUR 1,201.74 per ounce
08Aug: USD 1,330.00, GBP 1,019.84 & EUR 1,198.86 per ounce
05Aug: USD 1,362.60, GBP 1,036.39 & EUR 1,222.53 per ounce
04Aug: USD 1,351.15, GBP 1,016.61 & EUR 1,213.87 per ounce

Silver Prices (LBMA)

12Aug: USD 19.87, GBP 15.33 & EUR 17.81 per ounce
11Aug: USD 20.21, GBP 15.56 & EUR 18.13 per ounce
10Aug: USD 20.34, GBP 15.55 & EUR 18.19 per ounce
09Aug: USD 19.70, GBP 15.18 & EUR 17.77 per ounce
08Aug: USD 19.66, GBP 15.04 & EUR 17.74 per ounce
05Aug: USD 20.22, GBP 15.36 & EUR 18.14 per ounce
04Aug: USD 20.16, GBP 15.25 & EUR 18.11 per ounce

Recent Market Updates

– Gold Investment Demand Reaches Record In First Half 2016 On “Perfect Storm”
– Peak Gold – Did Gold Production Peak in 2015?
– Financial Times: “Victory For Gold Bulls Is Only Just Beginning”
– Irish Banks Most Vulnerable In Stress Tests – Banking Contagion In EU Cometh
– Gold In Sterling 2.2% Higher After Bank Of England Cuts To 0.25% and Expands QE
– 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




Julian Phillips correctly comments on the paper gold market on this side of the pond and the physical gold market in Shanghai.  For the past few days, the world has ignored the Shanghai gold fix which was much higher than the fraudulent manipulation in the paper comex.


China wishes to become dominant and they will force their way, if they have to destroy the comex while doing so

(courtesy Julian Phillips/Bullionvault)




Gold and Silver Market Morning: Aug-12-2016 — Gold and silver prices consolidating!


bu Julian Phillips

Gold Today –Gold closed in New York at $1,337.90 on Thursday after Wednesday’s close at $1,346.70.  London opened at $1,337.

–         The $: € was slightly weaker at $1.1156 from $1.1144.

–         The dollar index rose slightly to 95.83 from 95.82 Thursday.

–         The Yen was slightly stronger at 101.04 from Thursday’s 101.28 against the dollar.

–         The Yuan was weaker at 6.6440 from 6.6406 Thursday.

–         The Pound Sterling was slightly weaker at $1.2956 down from Wednesday’s$1.2958.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  12

2016  08  11







Dollar equivalent @ $1: 6.6440

$1: 6.6406






Shanghai took the gold price closing in New York higher more in line with the higher Shanghai price the day before. London then ignored Shanghai prices and opened at New York’s close. At the moment we are seeing a small battle between the developed world centers and Shanghai the physical market.  This battle can be resolved provided the arbitrageurs in the market do their job. They can’t move gold but can adjust their positions with currency plays.


We will be discussing the state of the gold market in China in particular the Commercial Bank gold market there, in our coming newsletters.


We are rapidly approaching the days when the Yuan becomes an integral part of the I.M.F.’ Special Depository Rights. What will this unleash? Because the I.M.F. will not be able to dismiss it from this role thereafter, we do see more flexibility in the exchange rates of the Yuan. It is logical then that the People’s Bank of China then allow markets to establish the market exchange rate. We see that as continuing to fall to 7.00 to the dollar. No doubt this will produce howls of outrage from the U.S. if it happens brutally. But the PB o C. will make their adjustments behind the scenes so it happens gently.


What it does do for the Yuan is to establish it as one of the world’s main ‘hard’ currencies. The PB o C will then expand their program of Yuan globalization. [More in our newsletters – subscribe below].


LBMA price setting:  $1,336.70 after Thursday 12th August’s $1,344.55.

The gold price in the euro was set at €1,198.40 down €7.80 from Thursday’s€1,206.20.

Ahead of the opening in New York the gold price stood at $1,338.85 and in the euro at€1,200.76.


Silver Today –The silver price closed in New York at $19.95 on Thursday down from$20.17 on Wednesday.  Ahead of New York’s opening the price was trading at $19.87.

Gold (very short-term)

The gold price will soon make as strong move either way, in New York.


Silver (very short-term)

The silver price will make as strong move either way, in New York.


Price Drivers

Over the last day we have seen COMEX dominate London prices, ignoring those of Shanghai. The day before, saw Shanghai taking prices higher than New York and London following Shanghai. While the price differences are not that large and are influenced by exchange rates between the Yuan and the dollar, there is an ongoing pricing play between the two markets. With the Shanghai Gold Exchange/PB o C. Being the last resort counter party we believe it does dominate prices. However, its prime objective in the exercise is not only to build a stable, orderly physical gold market and to have its prices dominate the world’s gold markets, it is to assist in the establishment of the Yuan as a leading ‘gold’ currency.


This is the way forward for the gold price. It makes little sense to have the world’s largest physical gold markets with 10,000 institutional participants and 8.3 million individuals so far bow to a mini-physical paper market in New York.

The most positive news today for gold and silver is the rapid approach of the “Gold Season” in September.

–         At this point the summer holidays for the developed world are coming to an end and the focus in the gold market is for jewelry producers to buy for the festive season at the end of the year.

–         In India, after falling to the lowest in seven years in the first half, demand for gold is certain to rise because of the excellent monsoon rains achieved this year since May continuing into September. This will boost rural demand during the festive season, starting in September.

–         In China, the expectation of a lower Yuan is broadcast in the Chinese media, encouraging growing demand in line with internal trends we mentioned in earlier newsletters from the Gold Forecaster.

–         In the last quarter of the year we expect U.S. demand for physical gold from investors in the shares of their Exchange Traded Funds to continue steadily.   So far in 2016 investment demand for gold has overtaken the previous-ever high of 917 tonnes in 2009 [First half]  to reach 1,064 tonnes.


Gold ETFs – In New York on Wednesday there were no sales or purchases to or from the SPDR gold ETF or the Gold Trust. This left their respective holdings at 972.618 tonnes and 221.24 tonnes.

Since January 4th this year, the holdings of these two gold ETFs have risen by 396.243 tonnes.

 Silver –Silver prices jumped over $20 in the last day and will hold and move strongly when we see the strong move, either way, which we now expect from gold prices.




Julian D.W. Phillips





A history lesson on the Bretton Woods format where the dollar was convertible into gold.  It could not last: the USA was losing too much gold as countries turned in their dollars for this ancient relic.

(courtesy Ben Steil/MarketWatch)


Benn Steil: Adopt a gold-backed dollar? This is what happened the last time we tried


By Benn Steil, New York
Thursday, August 11, 2016

“The dollar and gold are synonymous,” Harry Dexter White, the architect of the Bretton Woods international monetary system, told Congress in 1945. “There is no likelihood that … the United States will, at any time, be faced with the difficulty of buying and selling gold at a fixed price freely.”

Under the Bretton Woods system, currencies were tied to the U.S. dollar at a fixed rate, and the dollar was in turn tied to gold GCZ6, -0.04% at $35 an ounce. Today there is much nostalgia about Bretton Woods — a belief that the quarter-century from 1946 to Aug. 15, 1971 (when the system collapsed) was a golden era of monetary stability. But the reality was very different

Although the International Monetary Fund was inaugurated in 1946, the first nine European countries to meet the requirements of its Article VIII — that their currencies be freely convertible into dollars at a fixed rate — didn’t do so until 1961. And by then, the system was already coming under enormous strain, as the U.S. — contrary to White’s assurances — was losing gold reserves.

The fundamental problem was that the United States couldn’t simultaneously keep the world adequately supplied with dollars and sustain the large gold reserves required by its gold-convertibility commitment. The logic was laid bare by economist Robert Triffin in his now-famous 1960 congressional testimony. There were, he explained, “absurdities associated with the use of national currencies as international reserves.” It constituted a “‘built-in destabilizer’ in the world monetary system.” The European dollar-convertibility pledges, far from representing the final critical step into a new monetary era, “merely return[ed] the world to the unorganized and nationalistic gold exchange standard of the late 1920s.” …

… For the remainder of the commentary:…




Interesting:  investment demand for gold even surpasses jewelry demand

(courtesy Boyle/CNBC/GATA./

Investment surpasses jewelry as source of most demand for gold


By Catherine Boyle
CNBC, New York
Thursday, August 11, 2016

Investors’ rabid appetite for gold is showing no signs of abating, as figures from the World Gold Council show record investment in the first half of 2016.

The trend for exchange-traded funds to pile in to the precious metal, a classic safe haven amid uncertainty in the global economy and the search for yield, sent the price of gold soaring by 25 percent in the first half of the year, the biggest price rise since 1980.

For the first time ever, investment, rather than jewelry, was the largest component of gold demand for two consecutive quarters.

Demand by investors set a record of 1,064 tons during the first six months of 2016. For comparison, this was 16 percent higher than in the first half of 2009, when the financial crisis raged. …

… For the remainder of the report:…

Turd Ferguson (Craig Hemkie) comments on the hughe higher TED spread. The Ted spread is a measure of the 3 month interest rate that banks loan to each other vs government 3 month rates.  The higher rate means stress to the system.  Hemke states also that the higher TED spreads cause markets to falter but also paper gold will be well bid
(courtesy craig Hemke/TFMetals)

An Interesting Development For Gold and All Other Markets

Over the past two weeks, ZeroHedge has chronicled another dramatic rise in the TED Spread. What does this mean and what might this portend for gold? Hmmm…those are excellent questions.

The latest post from ZH on this issue was published this morning and I strongly encourage you to review it before you go any further:

And what is the TED Spread? Here’s a very simple and straightforward explanation from Wikipedia:

To simplify it even further…a higher TED Spread has, in the past, often been an indicator of short-term funding stress or credit risk. Again, from Wikipedia, this:

Here’s a long-term chart of the TED Spread which shows the highs listed in the information above:

Obviously, spreads at present pale in comparison to historical extremes. However, note that we are currently seeing the highest spreads since early 2012 and, when you look at the three-year chart, the trend becomes a little more interesting:

So now the point of this post…

Have a look at this one-year chart of the TED Spread and be sure to note the dates we’ve placed upon it, December 31, March 30 and June 8:

Now have a look at a one-year chart of the S&P 500 with the same dates noted:

On balance, the two charts above make some sense when taken together. If the TED Spread is a measure of funding stress or credit risk, then it would follow that peaks in the spread would coincide with short-term peaks in the stock market. Historically we’ve seen this, too, with stock market drops in 1987, 2000, and 2008 that coincided with TED Spread peaks. As this situation resolves itself, a “flight to safety” during equity corrections leads to bond buying, which leads to lower interest rates, which ultimately leads to a return to tighter and smaller TED Spreads. So, could the current spike in the TED Spread be a precursor to another stock market drop. Yes, it certainly could. In fact, the chances range from possible to likely.

However, I’d like to point out something else that, for us, is far more important. Remember, the most likely way for the TED Spread to come “back into whack” is through falling interest rates. And, as we all know, falling interest rates prompt investors and HFT trading machines to bid up paper gold. So, when we look at the one-year chart of gold with the same December 31, March 30 and June 8 dates placed upon it, what do we see?

Look, this is not meant as some sort of forecast for higher gold prices over the next few days and, from a historical perspective, TED Spreads are still not all that high. However, there should be no discounting of the fact that the most recent TED Spread peaks led to temporary but stout equity market declines and sharp run-ups in the price of gold. For what it’s worth, I’d be sure to keep an eye on the TED Spread as we go through August. If it and the stock market peak and begin to roll over, don’t be surprised if gold (and silver) suddenly surge to new 2016 highs.


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 /USA: YEN RISES TO 102.08

3. Europe stocks opened  IN THE RED,     /USA dollar index up to 95.85/Euro UP to 1.1154

3b Japan 10 year bond yield: FALLS TO  -.102%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 102.08

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  43.35  and Brent: 45.88

3f Gold DOWN  /Yen DOWN

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“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 DOWN for WTI and DOWN for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES to -.083%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate RISE to 7.24%/: 

3j Greek 10 year bond yield FALL to  : 8.15%   (YIELD CURVE NOW  UPWARD SLOPING)

3k Gold at $1339.30/silver $19.87(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble DOWN 36/100 in  roubles/dollar) 64.71-

3m oil into the 43 dollar handle for WTI and 45 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 BIG DEVALUATION 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 .9760 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0882 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 RISES 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 1.544% early this morning. Thirty year rate  at 2.2586% /POLICY ERROR)

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

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


Futures Rise, Global Stocks Flat After Ugly Chinese Economic Data

 One day after all three US indexes hit record highs for the first time since December 31, 1999, and global stocks headed for the biggest weekly gain in a month as gains in oil prices bolstered investor confidence, US equity index futures, European stocks and Asian equities are little changed after the Nikkei jumped on the back of a Yen weakness, while China reported disappointing economic data and the PBOC suggested that the flood of new debt is slowing which pushed Chinese stocks higher by 1.6% on hopes of more stimulus.

Ahead of today’s main economic event, the US July retail sales report due out at 8:30 ET, China reported key economic data on retail sales, industrial production and fixed investment, all of which missed expectations. The summary:

  • Industrial production (IP): +6.0% yoy in July, missing consensus of +6.2%; ; June +6.2%
  • Retail sales: +10.2% yoy in July, missing consensus: +10.5%; June: +10.6% yoy.
  • Fixed asset investment (FAI): +8.1% ytd yoy in July, missing consensus: +8.9%); June yoy: +7.7%.

As Goldman noted, July activity data were all below expectations, with the NBS blaming both flooding and warmer weather for the disappointing data. Fewer working days this July compared with last July may also contributed to the weaker activity growth. Sequential IP growth slowed significantly from the high level in June. Export delivery, which was a main support of headline IP growth in recent months, decelerated in July (mom ann export delivery was -0.1% in July, vs +18.7% in June). Domestic demand was weak as well. FAI growth was a major disappointment. Except for the manufacturing sector, FAI growth in almost all sub-sectors moderated: Infrastructure FAI growth was 11.5% yoy in July, vs 21.6% yoy in June, and real estate FAI was 1.2% yoy, vs 3.6% yoy in June.

IP growth decelerated in July

FAI growth was very weak in July, especially in the private sector

Investment in the doldrums

Less aggressive policy support and the persistent floods impacting both southern and northern China made negative contributions to growth. There was also a small scale production and construction restriction around Chengdu for the ministerial level G20 Summit. High temperatures had mixed contributions to growth – on one hand, high temperatures supported utilities output (see EM Macro Daily – China: Cool weather likely contributed to weak August activity growth, Oct 9, 2014) on the other hand, it may discourage outdoor activities such as construction.  Going forward, Goldman said it expected August and September growth to be sluggish, partially affected by the factories and construction site shutdowns around the G20 meeting in Hangzhou. Renewed policy easing to keep GDP growth in the target range is a strong possibility once this slowdown becomes more obvious.

Also overnight China reported weaker than expected new loan and Total Social Financing data,with the former rising CNY 463.6BN, below the 860BN expected, and the latter barely higher at CNY487.9BN, also well below the CNY1 trillion expected.  As a result M2 rose 10.2%, below the 11.1% expected, if still roughly double the growth rate of M1, as China’s liquidity trap continues to grow. Also as a result, Chinese bond yields dropped to the lowest since at least 2006. “China credit data will likely remain at a low level in coming months due to sluggish investment and stricter shadow banking regulation,” said Le Xia, chief Asia economist at Banco Bilbao Vizcaya Argentaria in Hong Kong. “The central bank will take action if it slips further.”

It wasn’t just China reported weaker data: earlier today Italy’s economy stagnated in the second quarter in a major blow to prime minister Matteo Renzi’s government, which has been struggling to revive the country’s faltering economic recovery. Q2 GDP was unchanged on expectations of a 0.2% bounce.  As the FT’s James Politi reported yesterday, Mr Renzi, who took office in 2014, is considering fresh stimulus to try and boost Italy’s economic recovery and to win over voters ahead of the November poll, including pension increases and additional funds for the poor.

The flipside was Germany, where Q2 GDP rose 0.4% Q/Q, double the expected 0.2%.  This takes the year-on-year growth for Europe’s largest economy to 1.8% on a seasonally adjusted basis, again beating expectations for 1.4% growth.

The full breakdown of today’s European GDP figures is shown below, via the FT.

Then again, in recent years economic data has been all but useless, and so the momentum continues, with the MSCI All Country World Index holding near a one-year high on Friday, while U.S. equity index futures were slightly higher changed after all three key American indexes rallied to records on Thursday. Shanghai shares climbed the most in a month, buoyed by speculation of takeovers in the property industry and hopes for more stimulus. Crude headed for its biggest weekly advance since April, trading near $44 a barrel, amid speculation major producers will work together to stabilize prices.

The schizophrenic narrative continues with equities and bonds both higher on the week, buoyed by what Bloomberg calls “optimism central banks will retain or enhance supportive policies as the economy expands, but at a subdued pace” even as stronger US data hints at an upcoming rate hike, also interpreted as bullish by the market. Data Friday showed a 0.3 percent increase in euro-area gross domestic product, with growth in Italy grinding to a halt. Monetary authorities in Australia, New Zealand and the U.K. cut benchmark interest rates to records this month, while the Bank of Japan and European Central Bank are using unprecedented stimulus to spur expansion. In oil, speculation that informal OPEC talks next month will stabilize the market buoyed prices.

“The pessimism that had overwhelmed us at the start of the year and immediately post-Brexit is lifting,” said Nicolas Lopez, head of research at MG Valores in Madrid. “We should continue to see gains.”

MSCI’s global stocks gauge was little changed as of 10:40 a.m. London time, heading for a weekly advance of 1.2 percent.

In Europe, A.P. Moeller Maersk A/S rose 3.5 percent after Denmark’s biggest company said it increased efficiencies in the second quarter, reporting earnings before interest and tax of $656 million, beating an estimate of $551 million. The Stoxx Europe 600 Index was little changed overall, after Thursday recouping its pre-Brexit level. The volume of shares changing hands was 41 percent lower than the 30-day average at this time of day. Nordstrom Inc., the largest U.S. luxury department-store chain, surged in late trading after posting second-quarter profit that topped analysts’ estimates, helped by higher sales at its off-price Rack chain and its Anniversary promotional event.

The MSCI Emerging Markets Index climbed 0.1 percent, extending the advance since Aug. 5 to 2.6 percent in the fifth week of gains and the longest run since March 2014. Chinese stocks led the advance on Friday, with the Shanghai Composite Index climbing 1.6 percent as stake purchases by China Evergrande Group fueled optimism that the pace of merger activity in the property industry will accelerate.

In rates, U.K. gilts held a fourth weekly gain, as the Bank of England’s first week of its expanded bond buying plan drew to a close. The central bank has left its quantitative-easing shopping list broadly unchanged for next week, even after it failed to attract enough sellers of gilts due in more than 15 years to hit its purchase target at an operation on Tuesday. The yield on 10-year gilts touched a record-low 0.51 percent on Thursday, and has fallen 12 basis points since Aug. 5. Spanish and Italian government bonds also headed for their fourth weekly advance. The yield on Spain’s 10-year security was at 0.95 percent, after touching a record-low 0.913 percent on Thursday.

Market Snapshot

  • S&P 500 futures up less than 0.1% to 2184
  • Stoxx 600 down less than 0.1% to 347
  • FTSE 100 up 0.1% to 6923
  • DAX down 0.3% to 10707
  • German 10Yr yield down less than 1bp to -0.1%
  • Italian 10Yr yield up less than 1bp to 1.06%
  • Spanish 10Yr yield up 2bps to 0.94%
  • S&P GSCI Index down 0.2% to 348.9
  • MSCI Asia Pacific up less than 0.1% to 139
  • Nikkei 225 up 1.1% to 16920
  • Hang Seng up 0.8% to 22767
  • Shanghai Composite up 1.6% to 3051
  • S&P/ASX 200 up 0.4% to 5531
  • US 10-yr yield down 2bps to 1.54%
  • Dollar Index up less than 0.01% to 95.86
  • WTI Crude futures up less than 0.1% to $43.50
  • Brent Futures down 0.2% to $45.94
  • Gold spot down 0.1% to $1,337
  • Silver spot down 0.8% to $19.81

Top Global News

  • S&P 500, Dow, Nasdaq Hit Records Together First Time Since 1999: All 3 U.S. stock benchmarks rose together to record highs for the first time in 16 years amid surprising earnings.
  • HPE Buying Silicon Graphics in Deal Valued at $275m: HPE expects deal to be earnings neutral in first full year, will add to profit thereafter.
  • U.S. Banks Said to Ask Fed for 5 Yrs for Volcker Compliance: Reuters: Period would start next year, run through 2022; banks incl. Goldman, Morgan Stanley, JPMorgan requested.
  • Viacom CEO Dauman, Redstones Restart Talks on Co. Control: NYP: Several Viacom board members have moved closer to supporting move to name new CEO.
  • Russian Hackers of DNC Said to Nab Secrets From NATO, Soros: Security experts now say shows marks of same Russian intelligence outfit that targeted Democratic political organizations.
  • Wall Street Can’t Agree on When to Halt U.S. Stock Market: Major sticking point remains, according to official who spoke at an event hours after NYSE, Nasdaq, Bats Global Markets announced changes.
  • Russia Warns of Consequences From Deaths as Ukraine on Alert: Putin said Ukrainian intelligence officers killed 2 Russian servicemen during covert operations in Crimea.

* * *

Looking at regional markets, we find Asia traded higher following the record high closes across US indices as gains in energy underpinned risk-appetite. Nikkei 225 (+1.1%) returned from holiday to spearhead the advances as a weaker JPY lifted exporter sentiment. ASX 200 (+0.4%) was led by the energy sector after WTI prices rose above USD 43/bbl on yesterday’s comments from Saudi’s Energy Minister. Chinese markets are positive with the H ang Seng (+0.8%) and Shanghai Comp (+1.6%) conforming to the upbeat tone despite a slight miss on July Retail Sales and Industrial Profits, as the disappointing figures adds to calls for supportive measures while the PBoC also switched to a net weekly injection in its liquidity operations. Finally, 10yr JGBs were marginally lower amid increased demand for riskier assets, while the BoJ was also absent in regards to its bond buying operations.

Top Asian News

  • China Stability Falters as Factory Output, Investment Slow: Retail, investment, factory output all miss analyst forecasts
  • Yuan Free Float Seen a Decade Away as China Keeps Strict Control: True reserve currency needs free cross-border flows, JPMorgan says
  • Malaysia’s Growth Slows as Pressure to Add Stimulus Increases: Govt expects economy to grow between 4% and 4.5% in 2016
  • Cheung Kong’s Victor Li Says Open to Sale of City Buildings: CK Property will keep Cheung Kong Center, deputy chairman says
  • JPMorgan to Liquidate Japan Fund After ‘Significant’ Redemptions: Assets in Japan Market Neutral Fund fell to $17m
  • Lurking Credit Risks Make Babson Wary of Surging Indian Bonds: Little differentiation between strong and weak issuers, Posch says
  • SBI Profits Drop for Third Quarter as Bad-Loan Provisions Surge: Quarterly net income 25.2b rupees vs est. 25b

The final European session of the week has kicked off in a subdued manor, with equities trading without direction (Euro Stoxx: -0.1%) amid particularly light newsflow. Moller Maersk are the outperformer so far this morning in the wake of their pre-market earnings report, with little else of note happening on a stock specific basis. Fixed income markets have also traded in a relatively tight range, with Bunds hovering above 167.50 by mid-morning, paring early modest losses to trade relatively flat while the font end lags.

Top European News

  • Italian Economy Unexpectedly Stagnates in Threat to Renzi: 3Q GDP stalled unexpectedly in 3Q.
  • German Economy Slows Less Than Forecast as Exports Pick Up: GDP rose seasonally-adjusted 0.4% in 3Q.
  • Negative Rates for People Arrive as German Bank Gives In: From Sept., for savings >EU100k, a Raiffeisen bank will take back 0.4%.
  • Datwyler Says Still Reviewing Options for Pursuit of Premier: Datwyler said it’s still considering whether to pursue a takeover of Premier Farnell after U.K. co. agreed to GBP691m counter bid from Avnet Inc.
  • Maersk Gains as Company Meets Tough Market With Cost Cuts: Co. met punishing market conditions with cost cuts in order to create a leaner business.
  • Restaurant Group Soars After Ousting CEO for Ex-Paddy Power Head: Replaces CEO Danny Breithaupt with ex-Paddy Power head Andy McCue.
  • AstraZeneca Rides High, Fueled by Brexit, Bristol-Myers Failure: Drugmaker, once deemed a laggard, has rallied 37% since its June 14 low.
  • U.K. Stocks More Alluring Than Ever as BOE Sinks Gilt Yields: Cos. in FTSE All-Share Index return 3.8% in divs., near all-time high vs 10-year gilts.
  • Eurostar Scraps Eight Train Services as RMT Union Talks Kick Off: Service canceling 8 trains from Fri.-Mon. as talks continue with U.K. labor union RMT in protest about working hours.

In Commodities, crude added 0.8 percent to $43.83 a barrel in New York, headed for a 4.9 percent weekly jump. Informal discussions being held next month between members of the Organization of Petroleum Exporting Countries and non-OPEC producers may include possible action to stabilize the market, Saudi Arabia’s Energy Minister Khalid Al-Falih said in a statement, according to media reports, including Reuters. Global markets will continue to rebalance this year, the International Energy Agency said.“The Saudi comments gave the market some life,” said Jonathan Barratt, chief investment officer at Ayers Alliance Securities in Sydney. “The talk is all about pushing the price higher and the market will speculate on whether they can actually pull a deal together. Calls from the IEA that the glut will start to shrink and consumption will pick up are also supportive.” Copper fell 0.7 percent in London, trimming its weekly gain to 0.5 percent. Nickel lost 1.8 percent and aluminum was little changed.

In FX, after yesterday’s USDJPY jump it has been a quieter, if choppy session in FX, with some familiar drivers early on that saw GBP under pressure again as the EUR cross rate returns through 0.8600 again while Cable is getting sold off ahead of the 1.3000 mark. UK construction output was a little mixed, though net in line with forecasts, so traders continue to trade off the longer term theme of uncertainty and bearish post Brexit sentiment. JPY weakness over the last 24 hours has been risk driven, but above the 102.00 mark we are running into resistance, with the lack of momentum down to the pre US retail sales caution — little else. A key driver of this positivity is the revival of Oil prices, with WTI back in the mid $43.00’s to bolster CAD and MXN — the latter posting strong gains against the USD in recent weeks. USD/CAD is still holding off support in the low 1.2900’s, but look heavy. Brent is now through $46.0 and along with the stronger inflation data in Norway has given the NOK a much firmer tone of late, with the EUR cross rate now eyeing the mid April lows just under 9.1500, while USD/NOK is sub 8.1000. SEK is also firmer these days but underperforms the NOK. AUD and NZD are out of the limelight for now, but the pullbacks look corrective for now — certainly in the case of AUD.

On today’s calendar we will sees the first real potential market moving US data since last Friday’s payroll. The main releases are July retail sales (+0.4% mom expected; +0.6% previous) and last month’s PPI number (+0.1% mom expected; +0.5% previous).

* * *

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European equities enter the North American crossover relatively mixed as participants await tier 1 US data releases
  • Elsewhere, newsflow remains light with Eurozone GDP releases doing little to inspire price action
  • Looking ahead, highlights include US PPI, retail sales and U. of Michigan Sentiment
  • Treasuries rise in overnight trading, commodities slide and global equities head for biggest weekly gain in a month with MSCI All Country World Index near a one-year high.
  • China’s recent economic stabilization faltered in July as factory output, retail sales and investment all slowed, while the broadest measure of new credit rose the least in two years
  • Hong Kong’s economy grew at the fastest pace since March 2011 as a pick up in exports helped offset sluggish retail sales in the city. GDP expanded 1.6% in 2Q, the government said
  • Negative rates have arrived for German depositors. This week, a German cooperative savings bank in the Bavarian village of Gmund am Tegernsee — population 5,767 — said it’ll start charging retail customers to hold their cash
  • JPMorgan Chase’s investment unit said it will liquidate a Japan-focused fund after a surge of investor withdrawals following poor performance
  • Euro-area growth slowed in line with economists’ forecasts in the second quarter, leaving the currency bloc vulnerable to any fallout from Britain’s vote to leave the European Union
  • As the Bank of England seeks to ease Brexit angst by injecting money into the U.K. economy, pension managers and insurers are finding themselves caught up in a vicious circle as the bank’s QE program is crushing yields
  • Italy’s GDP unexpectedly stalled in the second quarter, which will further weigh on Prime Minister Matteo Renzi as he prepares for a referendum on which he has staked his political future
  • U.S. profit forecasts have turned negative for 2016 as the latest earnings season has failed to stem downgrades from analysts

DB’s Jim Reid concludes the overnight wrap

Hope has been dashed a touch in China overnight with generally a soft monthly data dump. Industrial production rose 6% YoY (6.2% expected), Retail sales climbed 10.2% YoY (10.5% expected) with fixed-asset investment increasing 8.1% YTD YoY (8.9% expected) although property development investment seemed to firm. The positive tone from yesterday is having the most influence on Asian markets though even if China is underperforming a touch. The Nikkei (+0.97%), Hang Seng (+0.77%) and the Shanghai Comp (+0.24%) are all higher as we type. Oil is another +0.6% higher this morning after a bumper day yesterday

Before moving on here’s a question for a quiet August Friday morning. What AAA investment at the start of 2016 that has been downgraded over the course of the year has returned over 54% YTD? The answer is of course the 50 year Gilt which remarkably has returned nearly 32% alone since the Brexit referendum. 2016 has provided the sort of return you’d normally expect from reinvesting 13 years of coupons. So if you were lucky enough to just invest in 50 year Gilts at the start of January you might as well sell and do nothing until the market catches up with you in 2029!!

Having said that you may be missing out on even more returns in the short-term as the long-end Gilt rally continues even with global Government bonds ending their 3 day rally yesterday. German and US 10Y yields ticked up by +2bps and +7bps respectively. Fed expectations repriced a bit more hawkishly after an up and down week post San Francisco Fed’s Williams’ reiteration of support for a rate hike this year. Higher import prices (see below) and higher Oil both contributed.

The UK yield curve flattened with yields rising up to the 10Y point (2Y: +5bps; 10Y: +1bps) while longer dated yields (15+ years) fell to new lows (15Y: -2bps; 30Y: -3bps). The 30 year Gilt has now returned 34% this year. Even 30 year Bunds are up 29%.

Before we look at the rest of markets it’s worth pointing out that after a quiet data week, today sees the first real potential market moving US data since last Friday’s payroll. The main releases are July retail sales (+0.4% mom expected; +0.6% previous) and last month’s PPI number (+0.1% mom expected; +0.5% previous). DB’s Chief US Economist Joe LaVorgna expects an above consensus headline retail sales number with growth at +0.9% mom, noting that the 6%+ increase in July motor vehicles sales (17.77M vs. 16.69M) bodes well for headline retail sales. He also notes that, while the retail sales number will likely overshadow the PPI number, the healthcare component of the latter is a key input into the core PCE deflator and should be watched.

Global equities rallied yesterday to rebound from Wednesday’s dip. European markets were broadly in positive territory with the STOXX (+0.78%), FTSE (+0.70%) and DAX (+0.86%) all hitting new post-Brexit highs. Over in the US the S&P500 (+0.47%) jumped to a fresh new all-time high. In fact the S&P500, Dow and Nasdaq all hit record closing highs on the same day for the first time since 1999! What could possibly go wrong? Oil was one of the main stories with WTI up nearly +4.5% as the optimism from earlier in the week about an Oil producers side meeting at next month’s energy meeting in Algiers resurfaced. Saudi Arabia’s energy minister suggested that the Kingdom could be part of some kind of stabilsation accord. Although we’ve been here before, investors were obviously less keen to be short with these comments backing up speculation from earlier in the week.

Elsewhere European credit markets were a bit more subdued, with iTraxx Main flat on the day while Crossover (+1bps) edged marginally wider. US markets however performed better with CDX IG and HY tightening by -1bps and -5bps respectively on the day.

Taking a look now at yesterday’s data, over in Europe we saw the final July inflation numbers for France print in line (-0.4% mom vs. -0.4% expected) while Italy slipped further into deflationary territory (-0.2% YoY vs. -0.1% expected; -0.1% previous).

Over in the US we saw the initial jobless claims data for the first week of August come in pretty much in line with expectations (266k vs. 265k expected; 267k previous) but still around the multi-decade lows that highlight the tightness in the job market. Import price inflation for July did not fall into negative territory as expected (+0.1% mom; -0.4% mom expected) but did slide from a month ago (+0.6% previous). The low import price inflation can primarily be attributed to a stronger dollar and dropping oil prices, and will likely contribute to keeping consumer price inflation low in the near term as well.


i)Late  THURSDAY night/FRIDAY morning: Shanghai closed UP 48.03 POINTS OR 1.60%/ /Hang Sang closed UP 186.36 points or 0.83%. The Nikkei closed UP 184.80 POINTS OR 1.10% Australia’s all ordinaires  CLOSED UP 0.42% Chinese yuan (ONSHORE) closed DOWN at 6.6466/Oil rose to 43.35 dollars per barrel for WTI and 45.88 for Brent. Stocks in Europe:  in the red . Offshore yuan trades  6.6557 yuan to the dollar vs 6.6466 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS AS  MORE USA DOLLARS LEAVING THEIR SHORES  



none today


All 3 areas of growth in China faltered last night:

Industrial Production, Retail sales and Fixed Asset Investment.  Bond yields in China tumbled: to 2.65% on the 10 yr Chinese bond

(courtesy zero hedge)

China Bond Yields Drop To Decade Lows As Economy Sinks After New Loan Creation Tumbles

Following an unprecedented credit expansion by China, which in the first few months of 2016 injected well over a trillion dollars in total credit, the payback – as previewed here – is coming. As reported earlier, overnight China reported that a swath economic activity, from factory output to investment and retail sales, slowed last month, reflecting renewed weakness in China’s economy.

All three growth numbers announced by the National Bureau of Statistics Friday morning came in weaker than expectations and also slowed from June’s level. The Industrial Production rose 6.0%, compared to the median forecast of 6.2%. Fixed asset investment slowed to another 16-year low of 8.1% during the first seven months, missing the median forecast of 8.8%. Retail sales growth also decelerated to 10.2% in July, lower than the median forecast of 10.5%.

Quoted by the WSJ, HSBC economist Ma Xiaopin said that “the Chinese economy is definitely on the downward trend. That hasn’t changed.” Ma said demand from both home and abroad is still weak and investors are downbeat about China’s economic outlook.

In an unexpected decline, even the government-injected SOE fixed investment showed a substantial drop in its growth rate.

As the WSJ adds, July’s snapshot of China’s economy shows how broad the slowdown is becoming and how vexing that is becoming for the government. Growth of private investment, which accounts for around 60% of total fixed-asset investment, slipped to a record low of 2.1% in the first seven months, shrugging off recent official efforts to slash red tape and reduce market barriers to encourage more spending.  As companies hold off spending, government officials and economists have warned that China is falling into a liquidity trap—when investors hoard cash rather than invest despite government moves to put more money into the economy.

A key cause of the slowdown was the dramatic drop in the growth of China’s comprehensive Total Social Financial funding, which rose just CNY478 billion, less than half the expected CNY1 trillion growth, and the lowest in over two years.

As the chart below shows, while new loans posted a modest increase, other shadow debt categories such as bankers acceptances and FX loans continued to contract.

As a result, while Chinese stocks rebounded to close higher, China’s 10-yr yield dropped to the lowest since 2006 as weaker-than-expected economic data weigh on growth outlook and stoke speculation of, what else, further stimulus.  Yield on bond due Aug. 2026 down 3 bps to 2.66%, lowest for the benchmark since Bloomberg started compiling ChinaBond data in 2006, dropping even below the financial crisis lows lows.

As MarketNews adds, the sharp decline in yields comes as investors brace for slower economic growth and expect monetary easing to be stepped up. “The Chinese economy will slow further in the third quarter and CPI growth will decelerate,” said Huang Wentao, a Beijing based bond analyst with China Securities. “The drop in yields is far from over and 2.5% is just around the corner.”

The People’s Bank of China has been standing firm against growing calls for monetary easing. In its second-quarter monetary policy report issued last week, the central bank repeated comments made at the beginning of the year that frequent cuts in banks’ deposit reserve requirement ratio will fuel depreciation pressure on the yuan.

“The PBOC’s attitude is quite clear, but in China it is not the central bank that makes the final call on monetary policy,” said a Beijing-based official with an asset management company under a major state-owned power producer. “It is a collective decision made by the State Council and we all know other government agencies want further easing.”

 The National Development and Reform Commission, the powerful economic planning agency, called for cuts in both interest rates and deposit reserve ratios in a statement last week about the outlook for investment. The comments were later removed from the document, raising suspicions that there are disagreements among policymakers about monetary easing.

In spite of the central bank’s stand, many analysts and investors say the government will have to cave in sooner or later as economic growth continues to slow and inflation moderates.

“We believe pressure from the economy and inflation will force the PBOC to change its attitude,” said Huang of China Securities.

“There is a limit to the PBOC’s resistance,” Huang said, pointing out that recent rate cuts in the UK, Australia and New Zealand illustrate that policy easing is a global phenomenon.

As economists at ANZ Banking Group and Commerzbank have pointed out, China is facing a liquidity trap, a state where monetary policy easing through lower interest rates and injections of funds fails to stimulate spending and investment and manifests itself in companies hoarding cash rather than investing.

Huang said that even though this is the case in China, the monetary authority and the government will have to act just to show it’s doing something in the face of slowing growth and disinflation.

The National Bureau of Statistics announced this week that the CPI rose 1.8% y/y in July, moderating from June’s 1.9% despite massive flooding and the start of the summer holiday season which temporarily boosted fresh vegetable prices and travelling costs. China International Capital Corp, a leading domestic investment bank, forecasts CPI will ease further to around 1.6% y/y in August.

China’s economic growth was 6.7% y/y in the second quarter, the same pace as in the first quarter, but many analysts expect the momentum to wane toward the end of the year as the impact of earlier fiscal and monetary stimulus fades.

Liquidity conditions are also helping to send yields lower.

Insurance companies have entered into about CNY1.4 trillion of five-year certificates of deposit back in 2011-2012. These CDs will mature in 2016 and 2017 and the funds released will need to find a new home, Guotai Junan Securities said in a research note.

“Interest rates back in 2011 and 2012 were quite high so that money will need to find new assets with good returns to invest in,” Guotai analysts said.

The hunt for yield has become so desperate that investors have been forced into corporate bonds sold by steel companies and coal miners, shrugging off concerns about the high-risk nature of the products after a series of defaults by Dongbei Special Steel Group.

“They offer higher returns than other bonds do in the market,” said a trader with a bank based in southeastern China. “You just have to be selective and avoid the obvious minefields.”

The spread between five-year medium-term notes and Chinese government bonds of the same maturity has narrowed by 11 basis points since August to 123.92 basis points on Monday, its lowest level on record.

With yields falling to multi-year lows, the market is becoming increasingly divided on the outlook for bond yields. Both Guotai Junan and Huang Wentao of China Securities expect the 10-year government bond yield to drop to around 2.5% but others warn that current yields level are too low and will have to rebound.

“The market has priced in too much of easing expectations and should those expectations fail to materialize, we will see a big correction in the bond market,” warned a Shanghai-based bond trader with a city commercial bank.

The yuan edged up against the U.S. dollar this week, on the first anniversary of the central bank’s shock change in the way it set the yuan’s daily fixing against the greenback. The move led to a one-off 1.9% devaluation in the Chinese currency and triggered turmoil in global financial markets.

Since then, the yuan has dropped 5.07% against the dollar although most analysts expect the currency to stabilize or even appreciate in the runup to the Group of 20 summit in the Chinese city of Hangzhou in September and ahead of the yuan’s inclusion in the basket of currencies the International Monetary Fund uses to value its Special Drawing Rights.

China remains stuck between a rock and a hard place: it needs to ease, but any material rate cut or RRR reduction will be promptly met with even more FX outflows, and even more forced selling of reserves to defend the currency. Ultimately it will have no choice but to decide which is more important: growth, albeit artificial and credit driven, or reserves and the level of the Yuan. In the meantime, expect Chinese yields to continues sliding lower as the global dash for “safety” has fully crossed into the Chinese border.




This is big news.  Italy has increased its public national debt by 77 billion euros. The new public debt is 2.50 trillion euros.  Its new Debt/GDP: 141%

(courtesy zerohedge)

(courtesy Sputnik)

Italy’s National Debt Hits Record High, Reaches Some $2.5 Trillion

Italian government debt has increased by more than 77 billion euros in the first six months of 2016, according to the country’s central bank.

ROME (Sputnik) — Italy’s public debt reached a historic high in June, exceeding 2.249 trillion euros ($2.518 trillion), the country’s central bank said Friday.

According to the Banca d’Italia bulletin, the country’s government debt has increased by more than 77 billion euros in the first six months of 2016.

A man takes out Euro banknotes from an automated teller machine (ATM)

In April, the European Union’s statistical agency Eurostat reported that the national debt of Italy in the end of 2015 stood at 132.7 percent of the country’s GDP.According to the Italian government data, Italian debt now stands at some 141 percent of GDP, meaning that each of the country’s 60.7 million citizens is over $40,000 in debt.

In July, the International Monetary Fund (IMF) lowered the 2016-2017 growth forecast for Italy.


Saudi Arabia

Saudi Arabia is in a real mess as dollars are a scarcity inside the kingdom due to the low price of oil.  They cannot pay any of the construction workers for months:

(courtesy Upadhyay/

Is Saudi Arabia About To Cry Uncle In The Oil Price War?

Russia et al
Tensions escalate to the highest degree in the Crimea:
Two important developments:
1. War games initiated in the Black Sea
2. Russia to deploy the big S 400 defense missile system to the Crimea.
looks like we will be heading to Defcon 1 in no time;
(courtesy zerohedge)

Russia Deploys S-400 Missile System To Crimea, As Tensions With Ukraine Soar

In the latest escalation between the Kremlin and Kiev, yesterday we reported that Ukraine had put its troops near the Russia border on combat alert, following an incident that according to Russia was an attempted terrorist attack. Recall that Russia’s secret service, the Federal Security Service, said on Wednesday that it had foiled “terrorist acts” prepared by Ukrainian military intelligence against infrastructure in the territory, with the aim of disrupting Russia’s parliamentary elections due on 18 September. Kiev denied the allegations. In response to the alleged operation, Putin said he was pulling out of international peace talks on the conflict in eastern Ukraine. He said he was no longer ready to meet his Ukrainian counterpart, Petro Poroshenko, and German and French leaders in the so-called Normandy format, which has been used for negotiations.

As such the Minsk peace process, which one can argue neither side had wanted, has been effectively put on hold (for more on the speculation behind the peace process fallout, read here).

Ukraine promptly denied all accusations, when president Petro Poroshenko and Ministry of Foreign Affairs sternly rejected Putin’s accusations that Kiev is committing terrorist acts in the disputed peninsula. “Accusations against Ukraine of terrorism in occupied Crimea sound as preposterous and cynical as the statements of the Russian leadership about the absence of Russian troops in [eastern Ukraine’s rebel-controlled] Donbass [region],” Poroshenko said.

“Ukraine condemns in the strongest terms yet another Kremlin-manufactured provocation and rejects all accusations, which are completely groundless,” the Foreign Affairs Ministry said in a statement. “Under a made up pretext, the Kremlin is undertaking another hybrid special operation with the aim to justify its future aggressive actions against Ukraine.”

President Poroshenko then promptly escalated when he announced yesterday morning that he has put all forces forces on the border with Crimea and eastern Ukraine at the highest combat readiness, at which point we said that“we expect Russia to respond in kind very shortly, at which point we will update this story.”

Overnight, Russia responded not once but twice.

First, Vladimir Putin summoned his security council and the Russian Navy announced war games in the Black Sea a day after the Russian president accused Ukraine of trying to provoke a conflict over Crimea, which Moscow seized and annexed in 2014.  The Russian Defence Ministry said its navy – whose Black Sea Fleet is based in Crimea – would start to hold exercises in the area to practice repelling underwater attacks by saboteurs. As Reuters adds, there were reports on Thursday evening that the authorities had cut off Internet access in northern Crimea close to Ukraine.

Ukraine has called the accusations false and says they look like a pretext for Russia to escalate hostilities. Such an escalation could be used by Putin to demand better terms in the Ukraine peace process, or to inflame nationalist passions at home ahead of Russian parliamentary elections next month.

The Russian leader met his top military and intelligence service brass on Thursday and reviewed “scenarios for counter-terrorism security measures along the land border, offshore and in Crimean air space,” the Kremlin said.

And then, as part of its retaliatory re-escalation, moments ago Russia announced it had deployed its advanced S-400 air defense missile system to Crimea, Russian news agencies reported on Friday, citing a statement from the Russian Defence Ministry. The announcement comes two days after President Vladimir Putin promised to take counter-measures after what he said were clashes between Russian forces and Ukrainian saboteurs in northern Crimea.

At this point we expect the next escalation to involve not just Ukraine, which will protest vocally against what it will call an unprovoked aggression by Russia, but also NATO, which as reported in late May, launched the long delayed US missile shield called Aegis Offshore in the Romanian town of Deveslu, located a few hundred kilometers from Crimea, and hence, in defensive range of the new Russian rockets.

* * *

Also, in what may be an unrelated matter, a major power move took place at the Kremlin on Friday, when Putin appointed a low-profile former diplomat his new Kremlin chief of staff, one of the most powerful jobs in Russia, saying his long-time ally, Sergei Ivanov, had asked to step down. The switch comes just over a month before nationwide parliamentary elections and follows a reshuffle of regional leaders last month.

Putin named Anton Vaino, 44, to the important post which involves drafting laws for the president to submit to parliament, monitoring their enforcement, and conducting analysis of domestic and foreign affairs for the president. Vaino used to work in the Russian Embassy in Japan and had worked as deputy head of the Kremlin administration since 2012. He is not a household name in Russia unlike Ivanov, who was once spoken of as a possible presidential contender.

Ivanov, 63, said he had asked Putin to move him on from the important post after four years. He said he had done the job for four years and eight months. Ivanov also worked as Putin’s deputy when Putin ran the FSB security service. He has also served as defense minister and first deputy prime minister.

It is unclear as of this moment if this major move at the Kremlin (where few things happen without a reason) is a harbinger of more political fallout behind the scenes in Putin’s closest circle.





Poroshenko is preparing to attack the Donbass and Crimea. Great reason for our banker friends to whack gold/silver at 12:00 noon once London was put to bed.


(Alexander Mercouris/the Duran)


Ukrainian President Petro Poroshenko preparing to attack Donbass and Crimea

Despite angry rhetoric, private calls for restraint from the West likely to prevent war, though situation remains extremely dangerous.

In the aftermath of the shoot outs in Crimea the Russian and Ukrainian Presidents, Vladimir Putin and Petro Poroshenko, have met with their higher political and military leaderships. 

Putin’s meeting took the form of a plenary meeting of Russia’s Security Council, the body which was partially and hurriedly convened on Monday. Poroshenko’s meeting was with the Ukraine’s National and Security Council, a body that has a similar name to Russia’s Security Council but which does not have the same all-encompassing powers, and whose remit is far more narrowly restricted to defence and security questions.

Poroshenko has also put the Ukrainian military in Donbass and along the border with Crimea on alert. He is also trying to contact the US and European leaderships to gain their support.  It is a certainty that over the next few hours ritual statements of support for Ukraine and criticisms and warnings to Russia will indeed come from the US and European leaderships.

Putting aside all the rhetoric, will these latest moves result in war between Russia and Ukraine in Crimea, and between Ukraine and the Donetsk and Lugansk People’s Republics in the Donbass? 

Two things first need to be said.  Firstly the idea that there is peace in the Donbass is a myth.  Fighting goes on there every day on the contact line with the Ukrainian military regularly shelling militia positions and the militia shelling the Ukrainian military in return.  Firefights happen continuously  At the beginning of July Ukraine admitted losing 80 of its soldiers in fighting in the Donbass in the course of just one week, whilst towards the end of July Ukraine admitted losing 6 of its soldiers in a single clash on just one day.  Secondly the political situation in Ukraine is so unstable and the anti-Russian atmosphere there is so strong that it would be foolish to count on Ukraine showing any sort of restraint.  War is therefore unfortunately a very real possibility.

On balance however I doubt it will happen. The Kremlin’s brief summary of Putin’s meeting with the Security Council speaks only of discussions for “additional security measures and critical infrastructure protection in Crimea” and of a detailed review of “scenarios of counter-terrorism security measures along the land border, offshore and in Crimea’s air space.”  That suggests that the Russians are only looking at tighter security measures within Crimea itself, and that they at least have no plans to start a wider war.  That would of course be consistent with the whole approach the Russians have been taking ever since the Ukrainian conflict began in 2014.

As for Ukraine, though there are undoubtedly individuals there who are fully capable of starting a war and who show every indication of wanting to do so, I personally doubt that in the end Ukraine will take the plunge and go to war. Behind the ritual statements of support I expect both the US and the Europeans in private to be urging Ukraine to show restraint for two reasons:  firstly, because whatever they may pretend in public I am sure they have guessed the truth that it is the Russian account of the Crimean incident which is true; and secondly and far more importantly because they know that in any war between Ukraine and Russia – or even between Ukraine and the two People’s Republics of the Donbass – Ukraine would lose.

Obama certainly does not want another defeat in Ukraine in the middle of a US Presidential election campaign on his hands, especially since this would probably play into the hands of Donald Trump, though unfortunately the same cannot be said of some of the more psychopathic individuals who support Hillary Clinton, who seem to be yearning for confrontation with Russia on just about any pretext.  More to the point I just cannot imagine that Angela Merkel, facing criticism in Germany for her open-door refugee policy and with her anti-Russian policy coming under growing criticism from the SPD, the CSU and the German business community, wants another debacle in Ukraine on her hands.

In fact I suspect that some people both in the US and Europe are privately furious with the Ukrainians for landing them in this mess, whatever they may feel obliged to say in public.  Whether or ot that is so I expect that the telephone lines between Western capitals and Kiev are currently burning with urgent calls for restraint.  Despite the strength of the war party in Kiev I doubt that the Ukrainian authorities in the end feel strong enough to disregard these calls.

There will be dismay in Europe over something else.  The Europeans have stupidly linked the lifting of sanctions against Russia to the full implementation of the Minsk II Accords notwithstanding that they know perfectly well that it is Kiev not Moscow which is not honouring them.  The whole premise of this foolish step was that it would pressure Moscow to make concessions.  In the event not only has Moscow failed to make any concessions but Putin has now called off the next Normandy Four meeting, which was supposed to review progress in implementing the Minsk II Accords.  With growing public anger in Europe over the sanctions there must now be panic on the part of some European leaders that the Russians may be prepared to walk away from the whole Minsk II process – which the Europeans have foolishly linked the sanctions to – leaving these same European leaders high and dry.

Just as I suspect that the telephone lines between Kiev and Western capitals are currently burning with calls for restraint, so therefore I suspect that the telephone lines between Moscow and Western capitals are also burning with urgent calls to the Russians asking them to modify and explain their new hard line and to recommit to the Normandy Four format.  I would not be surprised if in return the Russians are being given private assurances that the Western powers will act to prevent Kiev from doing what it has just tried to do in Crimea ever again.  Whether of course the Russians would believe those assurances is another matter.

Having said all this I want to repeat again that the situation remains extremely dangerous.  Ultimately any decision for war or peace lies with Kiev.  No one in their senses would place any firm reliance on Kiev doing the sane thing. The next few days or hours will decide the issue.



Crude spikes to 3 week high after a monstrous increase in open interest

Funny, it does not work for silver like it does for oil:

(courtesy zero hedge)

Crude Spikes To 3-Week Highs After Biggest Surge In Open Interest In 10 Years

WTI is now up 14% from its lows last week, with Sept 2016 trading back above $44.50 at 3-week highs.

Oil’s rapid OPEC-headline-driven recovery continues…

Despite rising inventories (and record production levels in OPEC), the Saudi statement hope remains and prompted the biggest spike in WTI Open Interest since August 2006 yesterday!

As Bloomberg notes this is the highest level of aggregate open interest since 2013 with volumes above 1mm for the 7th session in a row.

This was a signal of the addition of length and more than just short covering, according to Petromatrix analyst Olivier Jakob.

Increases driven by reported comments yday from Saudi Arabian oil minister Al Falih about balancing mkt, says Eugen Weinberg, head of commodities research at Commerzbank

This “is a big increase,” Petromatrix analyst Olivier Jakob says by phone. “Based on that, it’s difficult to say that the rally of yesterday was just short covering, it points to the opposite, fresh longs and shorts coming into the market”

Bloomberg also points out that WTI front month 25-delta skew jumped to iutsmost ‘bullish’ biased since November…

WTI Call vol is highest relative to put vol (demand) since Nov 2015…

Of course, that is “probably nothing” but we suspect the last few days sudden spike in prices and aggregate positioning are a little excessive relative to any fundamentals…

“The contracts have recovered well but be careful,” PVM Oil Associates director Robin Bieber writes in a note.

“The speed and size of the reaction up should make one very cautious at the 34-day MAs. They’ve spoilt plenty of bullish parties before”

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




USA/CAN 1.2976 DOWN .0010

Early THIS FRIDAY morning in Europe, the Euro ROSE by 16 basis points, trading now JUST above the important 1.08 level RISING to 1.1185; 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 CLOSED UP 48.03 POINTS OR 1.60%    / Hang Sang CLOSED UP 186.36 POINTS OR 0.83%     /AUSTRALIA IS HIGHER BY .42% / EUROPEAN BOURSES ALL  IN THE RED

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 184.80 POINTS OR 1.10%  

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 186.36 POINTS OR 0.83%  ,Shanghai CLOSED UP 48.03  POINTS OR 1.60%    / Australia BOURSE IN THE GREEN: /Nikkei (Japan)CLOSED IN THE GREEN   /INDIA’S SENSEX IN THE GREEN 

Gold very early morning trading: $1339.30


Early FRIDAY morning USA 10 year bond yield: 1.544% !!! DOWN 2  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 2.258 DOWN  2 in basis points from THURSDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early FRIDAY morning: 95.85 DOWN 7 CENTS from THURSDAY’s close.

This ends early morning numbers FRIDAY MORNING


And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield:  2.70% DOWN 4 in basis points from THURSDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.102% UP 1 in   basis points from THURSDAY

SPANISH 10 YR BOND YIELD:0.928% par IN basis points from THURSDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.04 DOWN 2 in basis points from THURSDAY (again totally nuts/)

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




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

Euro/USA 1.1164 DOWN .0026 (Euro DOWN 26 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 101.28 DOWN 0542(Yen DOWN 84 basis points/


USA/Canada 1.2962-DOWN 0.0024 (Canadian dollar UP 24 basis points AS OIL FELL(WTI AT $43.43). Canada keeps rate at 0.5% and does not cut!


This afternoon, the Euro was UP by 26 basis points to trade at 1.1141

The Yen ROSE to 101.28 for a GAIN of 54 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED 


The Canadian dollar ROSE by 24 basis points to 1.2962, WITH WTI OIL AT:  $44/43


The USA/Yuan closed at 6.6324

the 10 yr Japanese bond yield closed at -.102% DOWN 1/ 2  IN BASIS  points in yield/

Your closing 10 yr USA bond yield:DOWN 5 IN basis points from THURSDAY at 1.515% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.235 DOWN 5 in basis points on the day /


Your closing USA dollar index, 95.71  DOWN 20 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 1.31 OR 0.02%
German Dax :CLOSED DOWN 29.41 OR  0.27%
Paris Cac  CLOSED DOWN 3,76  OR 0.08%
Spain IBEX CLOSED DOWN 3.10 OR 0.04%
Italian MIB: CLOSED UP 28.14 OR 0.17%

The Dow was UP 117.86 points or 0.64%

NASDAQ UP 23.81 points or 0.46%
WTI Oil price; 44.46 at 4:30 pm;

Brent Oil: 46.95




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: 47.20

USA 10 YR BOND YIELD: 1.510% 

USA DOLLAR INDEX: 95.68 down 23 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.29057 DOWN .0047 or 47 basis pts.

German 10 yr bond yield at 5 pm: -.108%


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


Stocks Extend Winning Streak To Longest In 4 Years Despite Deluge Of Dismal Data

Productivity plunges… Retail Sales disappoints… Consumer’s Confidence in their finances lowest since 2014… Weak China data… global bond yields at record lows… US yield curve back near cycle flats… US and Global GDP expectations at cycle lows… BUT best week in oil in 4 months… simultaneous record highs in S&P, Dow, Nasdaq for first time since Dec 31 1999…

“You’re welcome”

Before we start any of this “market” stuff… there is this – US 2016 GDP growth expectations crashed to cycle lows today…


Despite global economic surprises reaching a 30 month high… global GDP expectations tumbled to cycle lows…


This week was among the worst in 18 months for US economic data…


The Dow and S&P machines worked hard to make sure they closed green…


With VIX shoved back down into the close…


Nasdaq is now up 7 weeks in a row – the longest streak since March 2012 – after which it tumbled 13%…


Financials continued to catch down to the flattening yield curve…


While the short-end underperformed on the week, Treasuries were bid across the entire complex on the week…


2s30s flattened over 6bps on the week – the most since Brexit, back near cycle lows…


Cable was the week’s biggest loser in FX land with Yen surging higher today whan Retail Sales hit… USD Index scrambled back to unchanged on the week…


While the USD ended the week unch, crude soared, gold and silver tumbled to unch, and copper slid on weak China data…


Gold and Silver had quite a ride since Payrolls…


This was oil’s best week in 4 months… on the back of a Saudi statement of hope…


Charts: Bloomberg

Bonus Chart: Italy… bwuahahahaha



Two reports both indicating that the economy is faltering:

1. Producer Prices unexpectedly slide -0.4% as prices for clothing jewelry and beef tumble

2. Core Retail sales tumble to -.4%

both of these poor economic reports will cause the Fed to slow down its thinking to raise rates:

First PPI

(courtesy zero hedge)

Producer Prices Unexpectedly Slide -0.4%, Missing Expectations, As Prices For Clothing, Jewelry, Beef Tumble

Core retail sales fall dramatically to -.1%  (see graph below).  The entire retail sector shows a small gain year over year of only 2.3% and this usually signals a deep recession:

(courtesy zero hedge)

Core Retail Sales Tumble Most Since January

Despite this week’s Macy’s-driven retail sales exuberance – following BofA’s suggestion that all was not well the official retail sales print shows July was ugly… Retail Sales (ex Autos/Gas) fell 0.1% MoM (missing expectations of +0.3%) to the weakest since January. The headline data was flat MoM (dramatically missing the +0.4% expectations). The drop was driven by weakness in gas station and sporting goods sales (along with department stores… apart from Macy’s?). Perhaps most worrying however is the mere 2.3% YoY growth in headline retail sales – a level that has signaled recessionary conditions in the past.

Core Retail Sales monthly changes are volatile to say the least…

YoY growth in retail sales slowed to just 2.3% – indicative of recessionary levels…

Breaking the data down shows weaknes in gas stations, sporting goods, and department stores…

BofA was right after all

Looking at the full year, BofA finds that retail sales ex-autos are only up 0.7% yoy, and points out that Census Bureau data have closely followed the trend in the BAC data, suggesting that the market should prepare for either a downward revision to the June data and/or disappointing July figures: “In our view, this sets up for a softer Census Bureau retail sales report on  Friday – we would not be surprised to see either disappointing July sales and/or a downward revision to June.

Given that BofA’s internal credit card data appears indicative of overall spending trends, judging by a very disappointing retail spending report. It’s difficult to square such disappointment with the recent GDP data which shows that only the “strong” consumer is keeping the US economy out of recession 


The all important Business inventories to sales ratio falls slightly to 1.39 but still mired deep in recession mode:

(courtesy zero hedge)

Auto Inventories-Sales Ratio Pushes Back To Recession Cycle Highs

With ugly retail sales and wholesale inventories data rising, the business inventories data rose more than expected (+0.2% vs +0.1%) leaving the inventories-to-sales ratio still deep in recessionary territory. Notably while the overall ratio decline, autos increased to cylce highs at 2.28x. For the 18th month in a row, annual changes in sales declined and inventories rose.

Since the start of 2015, sales have declined YoY while inventories have risen…

And while the inventories-to-sales ratio dropped very modestly, it remains deep in recession territory…

But it is autos that are most worrying given their ‘backbone’ nature of the economy…

Charts: Bloomberg


Univ. of Michigan Consumer Comfort index falls to 106.1 from 109 indicating that the consumer is not happy and not spending;

(courtesy zero hedge/Univ. Michigan Consumer Comfort Index)

Don’t Show President Obama (Or Hillary Clinton) This Chart

Confirming the Bloomberg Comfort indications, University of Michigan Consumer Sentiment data shows Americans’ view of “current conditions” have crashed to 2016 lows as stocks soar to record highs. Worse still, year-ahead financial prospects for the consumer are at their lowest since 2014. Perhaps the retail sales and productivity reality is a better reflection of reality than seasonally-adjusted jobs or manipulated stocks… but saying that would be cynical


“Probably nothing”

UMich headline data missed expectations but there are worse signals:


And inflation expectations are back at record lows..


So to summarize – if “everything is awesome” as Hillbama proclaim (though there is more work to be done…) and stocks are backed by the “strength of the economy,” then why are Americans’ views of their financial prospects crashing to their lowest since 2014…?


Par for the course;  the Justice department has prevented a FBI probe of the Clinton foundation as reporters report on stonewalling

(courtesy zerohedge)

Justice Department Prevented FBI Probe Of Clinton Foundation; Reporters Slam State Department Stonewalling


Do we have an FBI mutiny with respect to Hillary? The Attorney General’s office in NY is formally investigating the Clinton Foundation who has their offices in New York.

(courtesy zero hedge)

FBI Mutiny? Feds Reportedly Launch Clinton Foundation Corruption Probe Despite DoJ Objections




Let us wrap up the week with this offering from greg Hunter

(courtesy Greg Hunter/USAWatchdog)


Weekly News Wrap-Up by Greg Hunter 8.12.16

The mainstream media (MSM) is totally against Donald Trump, and they are proud of it. Now, the New York Times (NYT) is explaining why it is their duty of keep Trump out of the White House.  An Op-Ed piece this past week basically said it was Trump’s fault that the MSM had to turn into political attack dogs for the DNC because Trump was “abnormal and potentially dangerous.”  Of course, there is nothing about the lies upon lies of Hillary Clinton or the “extremely careless” nature of her unprotected servers and use of private email system or her “Foundation” that some call a “Huge, huge criminal conspiracy.”  Trump is the “reckless” one who has to be stopped with lies and false stories according to the MSM, while they have to totally cover up and ignore Hillary’s many lies and potential criminal activity.  I predict this will backfire in the face of the old time legacy media—big time.

Meanwhile, yet another batch of emails have been released that, once again, point to the fact that Hillary Clinton’s State Department was arranging deals and favors in return for Clinton Foundation “donations.” Donald Trump said this week, “These people are crooked.  They have been crooked from the beginning. . . . You look at that foundation, it’s pure theft and pure crookedness.”

Finally, talks between the Russians and Ukrainians have broken down. Vladimir Putin said he was walking away from international peace talks to try to end the conflict in Eastern Ukraine.  Putin called the talks “meaningless.”  On top or that, both Russia and Ukraine beef up military operations on the Ukrainian border with Russia.  Ukraine reportedly has put its troops on combat alert as tensions mount between the two countries.

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

After the Wrap-Up:

Bill Murphy, Founder of GATA (Gold Antitrust Action Committee), will be the guest for the Early Sunday Release. Murphy says the metal to watch is silver, and that is the precious metal that will ultimately break the cartel.  Murphy expects a dramatic breakout in price to the upside in weeks or months to come.




well that is all for today

I will see you late, Monday night




  1. Andy Szokolay · · Reply

    Your GLD closing tonnages do not appear to line up with the GLD’s website. This seems to happen quite often. GLD closed with 960 tons Friday 12.


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