Sept 22/Gold and silver rally but we are coming into options expiry week and the crooks always whack/Riots in Charlotte NC/Poor USA economic reports: Chicago Fed National mfg index falters;Existing home sales fall; Poor confidence report: consumer comfort index falters/

Gold $1340.40 up $13.50

Silver 20.02  up 33 cents

In the access market 5:15 pm

Gold: 1337.50

Silver: 20.00

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

The Shanghai fix is at 10:15 pm est and 2:15 am est

The fix for London is at 5:30  am est (first fix) and 10 am est (second fix)

Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.

And now the fix recordings:

Shanghai morning fix Sept 22 (10:15 pm est last night): $  1335.27

NY ACCESS PRICE: $1333.40 (AT THE EXACT SAME TIME)

Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1337.76

NY ACCESS PRICE: 1333.60 (AT THE EXACT SAME TIME)

HUGE SPREAD TODAY!!

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Fix: Sept 22: 5:30 am est:  $1332.45   (NY: same time:  $1332.90:    5:30AM)

London Second fix Sept 16: 10 am est:  $1339.10  (NY same time: $1338.85 ,    10 AM)

It seems that Shanghai pricing is higher than the other  two , (NY and London). The spread has been occurring on a regular basis and thus I expect to see arbitrage happening as investors buy the lower priced NY gold and sell to China at the higher price. This should drain the comex.

Also why would mining companies hand in their gold to the comex and receive constantly lower prices.  They would be open to lawsuits if they knowingly continue to supply the comex despite the fact that they could be receiving higher prices in Shanghai.

end

For comex gold:The front September contract month we had 66 notices filed for 6600 oz

For silver:  the front month of September we have a total of 27 notices filed for 135,000 oz

 

The way the gold/silver equity shares traded today  (down) despite the rise in gold/silver metal, it seems that the bankers will try and raid tomorrow.

 

You may see a little hit tomorrow but a major whack on Friday.  The boys love to raid on Friday’s because the physical markets are already closed for the weekend as we approach NY time zone.

 

 

Let us have a look at the data for today

.

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In silver, the total open interest ROSE by 4890 contracts UP to 198,391. The open interest FELL as the silver price was UP 49 cents in yesterday’s trading .In ounces, the OI is still represented by just LESS THAN 1 BILLION oz i.e. .991 BILLION TO BE EXACT or 142% of annual global silver production (ex Russia &ex China).

In silver we had 27 notices served upon for 135,000 oz

In gold, the total comex gold fell by A MONSTROUS 17,955 contracts as  the price of gold rose BY $13.20 yesterday . The total gold OI stands at 576,746 contracts.  The level of OI  is still good for us as it will support a rise in gold price and it will be hard for the boys to raid.

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

GLD

LAST NIGHT WE HAD A HUGE CHANGE  out of the GLD/ A MONSTROUS DEPOSIT OF 6.53 TONNES FROM THE GLD/ this no doubt is not physical gold but a paper entry.

Total gold inventory rest tonight at: 950.92 tonnes of gold

SLV

we had NO change with respect to inventory at the SLV

THE SLV Inventory rests at: 363.479 million oz

.

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

1. Today, we had the open interest in silver rose by 4890 contracts up to 198,391 as the price of silver ROSE by 49 cents with yesterday’s trading.The gold open interest rose by 17,955 contracts up to 576,746 as the price of gold rose $13.20 IN YESTERDAY’S TRADING.

(report Harvey).

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

end

3. ASIAN AFFAIRS

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed UP 16.44 POINTS OR .54%/ /Hang Sang closed UP 89.90 PONTS OR .38%. The Nikkei closed FOR HOLIDAY Australia’s all ordinaires  CLOSED UP 0.65% /Chinese yuan (ONSHORE) closed  UP at 6.6690/Oil rose to 45.82 dollars per barrel for WTI and 47.25 for Brent. Stocks in Europe: ALL IN THE GREEN   Offshore yuan trades  6.6776 yuan to the dollar vs 6.6690 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS AGAIN AS MORE USA DOLLARS ATTEMPT TO  LEAVE CHINA’S SHORES

REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

3a)Korea:

none

b) REPORT ON JAPAN

The guys at Horseman Capital, the perennial short operation are extremely smart cookies. They have always done better than the average guy.

They have now come out and stated that the best short in the world right now are the Japanese banks as they cannot live in a NIRP world.

(courtesy zero hedge)

c) REPORT ON CHINA

none today

4 EUROPEAN AFFAIRS

GREECE

It is so bad in Greece that an increasing number of por Greeks cannot even afford a price of bread

( KeepTalking Greece/zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

none today

6.GLOBAL ISSUES

none today

7.OIL ISSUES

none today

8.EMERGING MARKETS

none today

9.PHYSICAL STORIES

i)goldcore

ii)Lawrie further comments on that huge increase in Russian gold reserves announced yesterday at 21.77 tonnes. we reported on this yesterday but it is worth repeating
( Lawrie Williams/Sharp’s Pixley)
iii)Russia’s VTB bank announced that it will initially supply sovereign Russia with 12 to 15 tonnes and this will eventually rise to 80 to 100 tonnes.  The ultimate buyer: China:

Kranzler believes that conditions in the gold market are tight and China has called upon Russia to help her achieve her gold goals.

(courtesy Dave Kranzler/IRD)

10.USA STORIES WHICH MAY INFLUENCE THE PRICE OF GOLD/SILVER

i)We now have riots in Charlotte North Carolina:

( zero hedge)

ii)jobless claims hit 43 year lows and yet the sales outlook is extremely week.

GDP expectations also very weak…
( zero hedge)

iii)The all important Chicago Fed’s National Mfg activity Index contracted fro the 19th straight month.(Chicago Fed National Activity/zero hedge)

iv)Homes are just not moving as existing home sales slide again.  They blame lack of household income:

( NAR/zero hedge)

v)The House oversight Committee under Chairman Jason Chaffetz has issued a preservation order to Reddit relating to all of those threads posted by Combetta (Platte River Networks). The fun is just beginning..

( zero hedge)

vi)The following is a good indicator of how things are going in the USA: USA freight index drops to worst level in over 6 yrs.( Wolf Richter/WolfStreet)

vii)Texas Governor threatens to exit the Federal refugee program as he sees the light: ( zero hedge)

viii)Obama set to veto the 9/11 bill. The fun will then begin as both houses will no doubt re vote and since they have over 60%, Obama will be defeated.  Then the Saudis will tender all of their treasuries which should sink the dollar

xi)My goodness! This can only occur in the USA.   Wells Fargo retaliates and fires whistleblowers who exposed the bank’s illegal practices.  what crooks..

( zero hedge)

xii)Lawrie comments on two huge figures from John Williams:

  1. the real inflation rate at a touch above 4%
  2.  the real unemployment/under employment rate of 23%

( Lawrie Williams/Sharp’s Pixley)

Let us head over to the comex:

The total gold comex open interest ROSE BY AN ASTRONOMICAL 17,955 CONTRACTS to an OI level of 576,746 as the price of gold ROSE by $13.20 with YESTERDAY’S trading. We are now in the NON active month of SEPTEMBER/

The contract month of Sept saw it’s OI FELL by 1 contract DOWN to 241. We had 72 notices filed yesterday so we gained 71 gold contracts or an additional 7100 gold ounces  will stand for delivery. SOMEBODY AGAIN WAS IN GREAT NEED OF PHYSICAL GOLD. The next delivery month is October and here the OI lost 1072 contracts DOWN to 27,249. The next contract month of December showed an increase of 17,732 contracts up to 435,254 .The estimated volume today at the comex: 386,748 which is huge.  Confirmed volume on yesterday: 121,600 which is poor.

Today we had  66 notices filed for  6600 oz of gold.
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And now for the wild silver comex results.  Total silver OI ROSE BY A HUGE 4,890 contracts from 193,501 UP TO 198,391 with the RISE in price of silver to the tune of 49 cents  yesterday.  We are moving NOW CLOSER TO the all time record high for silver open interest set on Wednesday August 3:  (224,540).  We are now into the next active month of September and here the OI fell by 9 contracts down to 583. We had 8 notices filed upon yesterday so we LOST 1 contract or 5,000 additional oz will stand NOT for delivery in this active month of September. The next non active delivery movement of October gained 81 CONTRACTS TO 433 contracts.  The next big delivery month is December and here it ROSE by 4762 contracts UP to 172,933. The volume on the comex today (just comex) came in at 70,820 which is huge.  The confirmed volume yesterday (comex and globex) was fair at 36,510 . Silver is not in backwardation.  London is in backwardation for several months.

today we had 27notices filed for silver: 135,000 oz

INITIAL standings for SEPTEMBER
 SEPT 22.
Gold
Ounces
Withdrawals from Dealers Inventory in oz  

NIL

Withdrawals from Customer Inventory in oz  nil
144,941.169 oz
incl 3000 kilobars
Scotia
jpm
Deposits to the Dealer Inventory in oz 5500.01 oz

Brinks

??

Deposits to the Customer Inventory, in oz 
nil
No of oz served (contracts) today
66 notices 
6600 oz
No of oz to be served (notices)
175 contracts
(17,500 oz)
Total monthly oz gold served (contracts) so far this month
2565 contracts
256,500 oz
7.9782 tonnes
Total accumulative withdrawals  of gold from the Dealers inventory this month   192.90 oz
Total accumulative withdrawal of gold from the Customer inventory this month   321,682.1 oz
 Today; huge activity at the gold comex and 1 kilobar entry and another large amount of gold leaving the comex plus another of those strange deposits with respect to Brinks
We had 1 dealer deposit:
i) Into Brinks; 5500.01 oz
(this is the third this month from brinks with xxx.01 oz
Total dealer deposits; 5500.01 oz
We had 0 dealer withdrawals:
total dealer withdrawals; NIL oz
we had 0 customer deposits:
Total customer deposits: nil oz.
 We had 2 customer withdrawals:
i) Out of JPM; 48,491.169 oz
ii) Out of Scotia: 96,450.000 oz   (3000 kilobars)
total customer withdrawals: 144,941.169 oz
Today we had 1 dilly adjustment: and no doubt that these will be settlements and probably leave the comex:
i) Out of HSBC: 72,363.846 oz leaves the dealer account of HSBC and enters the customer account.
 
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 at the comex will be compromised!
I also urge all of you do not place any option trades at the comex as these gangsters will gun you down.
If you are taking delivery of gold/silver please remove it from comex banks and place it in private vaults
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Today, 0 notices were issued from JPMorgan dealer account and 0 notices were issued form their client or customer account. The total of all issuance by all participants equates to 66 contract  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped (received) by jPMorgan customer account.

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To calculate the initial total number of gold ounces standing for the SEPT contract month, we take the total number of notices filed so far for the month (2565) x 100 oz or 256,500 oz, to which we add the difference between the open interest for the front month of SEPT (241 contracts) minus the number of notices served upon today (66) x 100 oz per contract equals 274,000 oz, the number of ounces standing in this  NON active month of September.
 
Thus the INITIAL standings for gold for the SEPT contract month:
No of notices served so far (2565) x 100 oz  or ounces + {OI for the front month (241) minus the number of  notices served upon today (66) x 100 oz which equals 266,900 oz standing in this non  active delivery month of SEPT  (8.5225 tonnes).
We gained an additional 7100 oz that will stand.  We have surpassed  our original standings on first day notice. (ON FIRST DAY NOTICE 7.5561 TONNES STOOD FOR DELIVERY) as well as surpassing the 8 tonne mark.  This is without a doubt a record level of gold ounces standing for September.
 Total dealer inventor 2,165,480.34 or 67.355 tonnes
Total gold inventory (dealer and customer) =10,705,125.851 or 332.97 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 337.31 tonnes for a  gain of 30  tonnes over that period. However since August 8 we have lost 20 tonnes leaving the comex.
Ladies and Gentlemen:  the comex is beginning to lose some of its gold as no doubt the Shanghai fix is having its effect.
The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine.
 
IN THE LAST MONTH 20 NET TONNES HAS LEFT THE COMEX.
Ladies and Gentlemen:  We are now having our old fashioned run on the bank: the comex as gold is leaving by the buckets.

end
And now for silver
 
SEPT INITIAL standings
 SEPT22. 2016
Silver
Ounces
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
260,462.960 oz
Brinks, Scotia
Deposits to the Dealer Inventory
 nil  OZ
Deposits to the Customer Inventory 
578,734.400 oz
HSBC
No of oz served today (contracts)
27 CONTRACTS
(135,000 OZ)
No of oz to be served (notices)
556 contracts
(2,780,000 oz)
Total monthly oz silver served (contracts) 2626 contracts (13,130,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz
Total accumulative withdrawal  of silver from the Customer inventory this month  6,273,262.6 oz
today, we had 0 deposit into the dealer account:
total dealer deposit: nil oz
we had 0 dealer withdrawals:
 total dealer withdrawals: NIL oz
 we had 2 customer withdrawals:
i) Out of Brinks: 200,033.580
ii) Out of Scotia: 60,429.380 oz
Total customer withdrawals: 260,462.96  oz
We had 1 customer deposit:
 i) Into HSBC: 578,634.400 oz
total customer deposits:  578,634.400  oz
 
 
 
 we had 3 adjustment
i)from the Brinks vault: 14,762.700 oz was adjusted from the dealer account into the customer account of Brinks
ii) from Scotia:  39,395.500 oz was adjusted from the dealer account into the customer account of Scotia
iii) Out of CNT 113,312,239 oz was adjusted from the customer account into the dealer account of CNT
The total number of notices filed today for the SEPT contract month is represented by 27 contracts for 135,000 oz. To calculate the number of silver ounces that will stand for delivery in SEPT., we take the total number of notices filed for the month so far at (2626) x 5,000 oz  = 13,130,000 oz to which we add the difference between the open interest for the front month of SEPT (583) and the number of notices served upon today (27) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the SEPT contract month:  2626(notices served so far)x 5000 oz +(583 OI for front month of SEPT ) -number of notices served upon today (27)x 5000 oz  equals  15,910,000 oz  of silver standing for the SEPT contract month.
we LOST 1  contract or an additional 5,000 oz will NOT stand FOR DELIVERY IN THIS  ACTIVE MONTH OF SEPTEMBER. 
 
Total dealer silver:  31.105 million (close to record low inventory  
Total number of dealer and customer silver:   171.011 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.
end
And now the Gold inventory at the GLD
Sept 22/a huge deposit of 6.53 tonnes of gold into the GLD/Inventory rests at 950.92 tonnes/this would be a paper deposit entry/
SEPT 21/ A HUGE DEPOSIT OF 5.69 TONNES INTO THE GLD/INVENTORY RESTS AT 944.39 TONNES
SEPT 20/A HUGE CHANGES IN INVENTORY AT THE GLD/: A WITHDRAWAL OF 3.86 TONNES/INVENTORY RESTS AT 938.75 TONNES
SEPT 19/2016: 10.39 TONNES WERE ADDED INTO THE GLD/THIS WOULD BE A “PAPER DEPOSIT”/INVENTORY RESTS AT 942.61 TONNES
Sept 16./no change in gold inventory at the GLD/Inventory rests at 932.22 tonnes
SEPT 15/another paper withdrawal of 3.27 tonnes of “gold” inentory leaves the GLD/Inventory rests at 932.22 tonnes
SEPT 14./A  withdrawal of 4.45 tonnes of gold inventory from the GLD/Inventory rests at 935.49 tonnes
SEPT 13/no changes in gold inventory at the GLD/Inventory rests at 939.94 tonnes
Sept 12/no changes in gold inventory at the GLD/inventory rests at 939.94 tonnes
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
SEPT 22/ Inventory rests tonight at 950.92 tonnes

end

Now the SLV Inventory
Sept 22/no change in inventory at the SLV/Inventory rests at 363.479  million oz/
SEPT 21/NO CHANGES IN INVENTORY AT THE SLV/INVENTORY RESTS AT 363.479 MILLION OZ/
SEPT 20/NO CHANGES IN INVENTORY AT THE SLV/INVENTORY RESTS AT 363.479 MILLION OZ
SEPT 19/A HUGE ADDITION OF 1.045 MILLION OZ WAS ADDED INTO THE SLV/INVENTORY RESTS AT 363.479 MILLION OZ/
Sept 16/no changes in silver inventory/inventory rests at 362.434 million oz/
SEPT 15/no change in silver inventory/inventory rests at 362.434 million oz.
SEPT 14/no change in silver inventory at the SLV/Inventory rests at 362.434 million oz
sept 13/2016: a huge deposit of 1.329 million oz into the SLV/Inventory rests at 362.434 million oz/
Sept 12/a huge withdrawal of 1.614 million oz from the SLV/Inventory rests at 361.105 million oz
.
SEPT 22.2016: Inventory 363.479 million oz
 end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 5.0 percent to NAV usa funds and Negative 5.0% to NAV for Cdn funds!!!!  (the discount is starting to disappear)
Percentage of fund in gold 59.2%
Percentage of fund in silver:39.7%
cash .+1.1%( SEPT 22/2016).
2. Sprott silver fund (PSLV): Premium rises to +1.07%!!!! NAV (SEPT 22/2016) 
3. Sprott gold fund (PHYS): premium to NAV  FALLS TO  0.61% to NAV  ( SEPT 22/2016)
Note: Sprott silver trust back  into POSITIVE territory at 1.07% /Sprott physical gold trust is back into positive territory at 0.61%/Central fund of Canada’s is still in jail.
 
 
 

end

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

Trading in gold and silver overnight in Asia and Europe

Gold Up 1.5%, Silver Surges 3% – Yellen Stays Ultra Loose At 0.25%

Gold was up 1.5% and silver surged 3.1% yesterday after Janet Yellen again failed to raise rates from record lows at 0.25%. The Fed maintained ultra loose monetary policies which are again creating stock and bond market bubbles in the U.S. and other countries.

yellen_goldFed’s Yellen To Engage In QE Again?

Global stocks and commodities also rose on continuing relief that the Fed continues ZIRP and remains ultra loose along with the BoJ, BOE and ECB whose policies are even looser. The BoJ also maintained ultra loose monetary policies at negative 0.1 percent rate and said it would continue buying government bonds at the current pace for the time being.

Spot gold prices hit a two-week high of $1,336.8 an ounce after the Fed said that it would keep rates at record lows. Silver rose to as high as $19.86 and both precious metals have consolidated on those gains in Asian and European trading.

Euro gold rose to €1,194/oz and sterling gold to £1,024/oz.

The Federal Reserve signaled once again that zero interest rate policies (ZIRP) will continue.  It suggested once again that it might raise rates by 0.25% to 0.5% by the end of this year – but only if the labour market improved.

Yellen found herself forced to defend the Fed against Donald Trump’s claims that political pressure and bias is influencing monetary policy – possibly favouring the Democratic incumbents.

The BoJ dropped its explicit target of increasing base money, the amount of money it prints, by an annual whopping 80 trillion yen ($788 billion). Analysts said was a tacit admission its aggressive asset-buying was becoming unsustainable and was not having the desired effect.

Years of massive money printing have completely failed to jolt the economy out of decades-long stagnation. Indeed, it can now be argued that the massive QE programmes of the Fed, BOE and indeed the ECB have failed to ignite robust and sustainable growth in the major economies.

Employment in the euro zone is rising faster than expected but research released by the European Central Bank yesterday suggests that this may continue, but at a cost to productivity and potentially to long-term economic growth.

Since the 2008 crash, the Federal Reserve has created more than $4.3 trillion to bailout banks and in an attempt to stimulate growth in the economy. While the Fed finished its bond buying programme in 2014, its balance sheet is now very poor and it may be unable to sell the bonds bought for fear of interest rates moving higher again.

The U.S. economic recovery is weak and there is the strong possibility of a recession. The massive levels of debt at all levels of U.S. and indeed western society make any meaningful recovery highly unlikely.

The U.S., and much of the western world, is now dangerously addicted to cheap money and the attendant debasement of the dollar and all fiat currencies. Yellen will continue pushing the drug of cheap money, much of which ends up on Wall Street and in increasingly bubble like global stock and bond markets.

gold_USDGold in USD – 10 Years

We continue to disagree with the consensus that the U.S. will increase interest rates in any meaningful way. Indeed, we think it quite possible that the very poorly state of the U.S. economy will be acknowledged in the coming weeks. Likely soon after the U.S. election.

Then the narrative regarding rising interest rates will quickly change. Rather than raising interest rates, there is the real possibility that they actually go lower. Renewed QE is quite likely and negative interest rates are quite possible.

This type of monetary backdrop, in conjunction with the very real global macroeconomic, geo-political and systemic risks of today, means that the outlook for gold and silver has arguably never been better.

Gold and Silver Bullion – News and Commentary

Gold Holds Biggest Gain in Two Weeks as Fed Damps Rate Outlook (Bloomberg)

Gold slips as equities rally after Fed decision (Reuters)

Gold at 1-1/2-week high after Fed holds rates steady (Reuters)

Fed keeps rates steady, signals one hike by end of year (Reuters)

Gold stays supported after US FOMC holds rates (Bulliondesk)

Federal Reserve gives gold a reason to rise (Marketwatch)

“We Haven’t Seen This Since The Great Depression” – Gallup CEO Destroys The “Recovery” Lie (Gallup)

Could Germany Ever Allow Deutsche Bank To Go Under? (Gole MXIV)

Bill Blain: What The BOJ Just Did Is “Recipe For Disaster” (Zerohedge)

Outside the Box – The BIS Warns on China (Goldseek)

7RealRisksBlogBanner

Gold Prices (LBMA AM)

22 Sep: USD 1,332.45, GBP 1,019.59 & EUR 1,186.68 per ounce
21 Sep: USD 1,319.60, GBP 1,015.96 & EUR 1,183.81 per ounce
20 Sep: USD 1,315.40, GBP 1,011.02 & EUR 1,175.84 per ounce
19 Sep: USD 1,315.05, GBP 1,007.99 & EUR 1,177.36 per ounce
16 Sep: USD 1,314.25, GBP 995.68 & EUR 1,170.08 per ounce
15 Sep: USD 1,320.10, GBP 998.26 & EUR 1,174.23 per ounce
14 Sep: USD 1,323.20, GBP 1,001.40 & EUR 1,177.91 per ounce

Silver Prices (LBMA)

22 Sep: USD 19.88, GBP 15.22 & EUR 17.69 per ounce
21 Sep: USD 19.43, GBP 14.95 & EUR 17.43 per ounce
20 Sep: USD 19.17, GBP 14.78 & EUR 17.15 per ounce
19 Sep: USD 19.12, GBP 14.65 & EUR 17.13 per ounce
16 Sep: USD 18.91, GBP 14.36 & EUR 16.85 per ounce
15 Sep: USD 18.96, GBP 14.32 & EUR 16.87 per ounce
14 Sep: USD 19.04, GBP 14.42 & EUR 16.96 per ounce


Recent Market Updates

– Trump and Clinton Are “Positive For Gold” – $1,900/oz by End of Year
– Gold Bugs Rejoice – Central Banks Think You’re On To Something
– ‘Hard’ Brexit Looms For Ireland
– EU Bail In Rules Ignored By Italy – Mother Of All Systemic Threats and World 
– War?– Buy Gold – Bonds Are ‘Biggest Bubble In World’ – Billionaire Singer Warns
– Silver Bullion Market – “Most Bullish Story Ever Told?”
– “Sorry, You Can’t Have Your Gold Bullion”
– Global Stocks, Bonds Fall Sharply – Gold Consolidates After Two Weeks Of Gains
– Gold, Silver, Blockchain and Fintech – Solutions To Negative Rates, Bail-ins, Cash Confiscations and Cashless Society
– Jan Skoyles Appointed Research Executive At GoldCore
– Silver Bullion Surges 3.5% To Over $20/oz
– Ireland “Especially Exposed” To “International Shocks” Warns Central Bank
– Deutsche Bank Tries To Explain Failure To Deliver Physical Gold

Mark O’Byrne
Executive Director
end
Lawrie further comments on that huge increase in Russian gold reserves announced yesterday at 21.77 tonnes
(courtesy Lawrie Williams/Sharp’s Pixley)

Strong Russian gold reserve increases back

In its latest announcement, the Russian Central Bank has stated that its gold reserves rose from 48.4 million ounces to 49.1 million ounces during August. This increase of 700,000 ounces – 21.77 tonnes – is the largest monthly increase this year and brings Russia’s total gold reserve increase so far this year to end August to 113 tonnes according to this latest announcement and World Gold council figures for the prior seven months.  Over the same period of 2015 the Russian central bank added 109.15 tonnes, after a hiatus at the start of the year, so it has been adding to its reserves at a broadly similar overall rate in 2016 so far.  Last year it should be noted that it upped its gold reserve additions quite substantially in the final four months of the year to an average of 24.2 tonnes a month, compared with an average of 13.64 tonnes a month over the first eight months of the year.

We had been suggesting in previous articles that the pace of central bank gold buying might be slowing down, given the low purchase levels by Russia in May and July, and a big reduction in announced Chinese purchases too, given that these two nations are about the only two whose central banks have been adding to their gold reserves in a significant manner.  Relative to its own gold reserves, Kazakhstan has also been increasing its gold holdings at an important rate, but at only around 3 tonnes a month.  But the latest Russian figure suggests we may have been premature in this assessment, at least as far as that country is concerned.  We shall have to wait another week or two to find out whether China too is reverting to earlier gold reserve increase levels, or is continuing at the slower pace seen in recent months.

On the other side of the equation – central bank gold sales – the principal seller has been Venezuela which has seen its gold reserves reduce by around 100 tonnes since the beginning of December last year.  However it does not appear to have sold any gold in July and August this year according to Swiss gold import statistics given the country’s gold sales so far appear to have been routed through the BIS in Basel, although one cannot rule out further sales during the remainder of the year.

Depending on China’s announced official purchases in the final few months of the year, perhaps our estimate of net central bank gold purchases for the full year of around 350 tonnes could prove to be an underestimate, but only if Russia continues to add at the higher rate, Chinese purchases start to pick up again and Venezuela manages to hold on to most of its gold despite its dire economic situation and global debt position.

Article first published by me on sharpspixley.com website

 

end

 

Russia’s VTB bank announced that it will initially supply sovereign Russia with 12 to 15 tonnes and this will eventually rise to 80 to 100 tonnes.  The ultimate buyer: China:

Kranzler believes that conditions in the gold market are tight and China has called upon Russia to help her achieve her gold goals.

(courtesy Dave Kranzler/IRD)

 

Russia To Supply China With Up To 100 tonnes Of Gold Annually

Russia’s second largest bank, VTB Bank, announced a deal to supply Russia with 12-15 tonnes of gold in the next 12 months.  The amount supplied will increase over time and eventually reach 80-100 tonnes annually:  Reuters Link.

Perhaps the most interesting aspect of this will be to see if the World Gold Council acknowledges this gold as “Chinese imports.”   The WGC and other entities which purport to track global gold “consumption” have been reporting declining demand for gold in China, based on declining imports from Hong Kong.   Of course, these “official” sources completely ignore the fact that China imports an unknown amount of gold through the ports of Beijing and Shanghai…move along, nothing to see there…

The unarguable scheme by western Central Banks to suppress the price of gold with paper gold is contingent on the ability to deliver actual physical gold into China and India.   In this blog’s educated opinion, the supply of gold available to make this happen is running low:  Central Bank gold stock plus investor custodial gold that has been hypothecated.

This report out of Russia supports the thesis that China’s Central Bank is accumulating, and has accumulated, significantly more gold than it is willing to disclose.  As reported in the South China Morning Post when China announced opening Beijing, after also opening Shanghai,  for gold imports:

Opening the capital as the third shipment point will help the PBOC keep purchases discreet as it is believed to be adding to its bullion reserves…The mainland has begun allowing gold imports through the capital, sources familiar with the matter said, in a move that would help keep purchases by the world’s top bullion buyer discreet at a time when it might be boosting official reserves.  South China Morning News

This is likely why the Fed/ECB/BOE are collectively having a difficult time pushing the price of gold lower after its big move starting in mid-December.   At some point, gold is going launch out its current lateral consolidation and move much higher by the end of the year. Especially once the market fully understands that the ONLY policy choice left for the Fed is to keep printing money at an accelerating rate or risk complete financial collapse.

 

end

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

 
 

:

1 Chinese yuan vs USA dollar/yuan  DOWN to 6.6690( REVALUATION NORTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.6776 / Shanghai bourse CLOSED UP 16.44 POINTS OR .54%   / HANG SANG CLOSED UP 89.90 POINTS OR 0.38%

2 Nikkei closed   /USA: YEN FALLS TO 100.37

3. Europe stocks opened ALL IN THE GREEN (     /USA dollar index DOWN to 95.26/Euro UP to 1.1224

3b Japan 10 year bond yield: REMAINS AT     -.027%/HOLIDAY     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 101.91/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY.

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  45.82  and Brent: 47.25

3f Gold UP /Yen UP

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS  AND SELLING THE SHORT END

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS to -.057%   

3j Greek 10 year bond yield FALLS to  : 8.43%   

3k Gold at $1334.75/silver $19.95(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 WILL BE DEFENDED 

3l USA vs Russian rouble; (Russian rouble UP 23/100 in  roubles/dollar) 63.69-

3m oil into the 45 dollar handle for WTI and 47 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  REVALUATION UPWARD from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 100.77 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9708 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0898 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now NEGATIVE territory with the 10 year FALLS to  -.057%

/German 10+ year rate BASICALLY  negative%!!!

3s The Greece ELA NOW a 71.4 billion euros,AND NOW THE ECB WILL ACCEPT GREEK BONDS (WHAT A DISASTER)

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 1.642% early this morning. Thirty year rate  at 2.360% /POLICY ERROR)

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

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

HELICOPTER MONEY STILL ON THE TABLE/JAPANESE STIMULUS PLAN DISAPPOINTS

Soothing Fed Sends Global Stocks, US Futures, Commodities Higher

Optimism has returned to markets post the BOJ and FOMC.

Following the Fed’s “hawkish hold” and the BOJ’s “confused contradiction”, global risk (and non-risk) assets got the green light, and as a result stocks and bonds rallied in Asia and Europe, with US equity futures rising another 0.4%, advancing with oil and industrial metals, as iron surged in Chinese trading.

“The looser for longer message from the Fed and the lowering of the median point of rate rise projections is seen as a plus for risk assets as can been seen in global equities,” said fund managerGAM’s head of multi-asset portfolios, Larry Hatheway.

Looking back at the Fed’s decision, Yellen signaled she could hike rates by year-end as the labor market improved further, but cut the number of rate increases expected in 2017 and 2018. Yellen also reduced its longer-run interest rate forecast to 2.9 percent from 3 percent. Richard Franulovich, an analyst at Westpac, noted that back in June the median ‘dot plot’ showed five hikes to end-2017. Now it is down to just three.

“We do not feel that the dollar has the wherewithal to make a more concerted run higher in the next few weeks,” he added. “The FOMC is unlikely to deliver anything more than a very ‘dovish’ December hike.

DB’s Jim Reid summarizes it as follows: “Tough talking, no hiking”, and says that while this sounds like an odd Kanye West track, instead it seems to be the perennial mantra of the Fed at the moment. If you think you’ve heard this before then you’d be correct as the Fed again basically told the market that they are very close to a hike but couldn’t get comfortable enough to pull the trigger. One wonders how many more times we’ll get a similar outcome. The hawkish elements were that there were 3 dissenters, the most since December 2014, and that most member’s dots still suggest (at least) one hike this year. The dovish side was perhaps that the dots were lowered beyond this year with two hikes priced in for 2017 (median) rather than the three expected back in June. So here we go again, it’s all about the data and market stability but probably not in a heightened state for a few more weeks until December appears slowly over the horizon.

Others shared his sentiment, and have turned bullish not only on DM but EM as a result too: “As the Fed continues to confirm a shallow tightening cycle, we still see virtues in an emerging market exposure,” Societe Generale strategists, including Alain Bokobza, write in note. “EM currencies seem to have stabilized while economic growth is also improving. Another positive factor in the EM backdrop is the stabilization of the economic situation in China. In the context of a search for yield, all this will support EM assets”

The period “of having very low developed market rates for a very long time, and investors needing yields, that is still there,” Peter Kinsella, head of EM economic and FX research at Commerzbank AG, told Bloomberg TV in Hong Kong. “We had previously thought it was going to be an aggressive Fed rate-hiking cycle and it’s clearly not going to be that.”

Clearly not, and as a result this morning Europe’s Stoxx 600 Index climbed for the second day, rising to its highest in almost two weeks, while gauges tracking Asian shares and raw-materials prices climbed for a sixth day. The dollar weakened versus most of its peers after the Fed on Wednesday left interest rates unchanged and scaled back its projections for hikes in 2017 and beyond.

Just as importantly, Germany’s 10-year yield slid to a two-week low as fears of a runaway curve steepening fall to the backburner. The rate on 10Y U.S. TSYs also fell by one basis point to 1.64%, after decreasing four basis points on Wednesday. Jeffrey Gundlach, the chief investment officer at DoubleLine Capital LP, said on CNBC that the yield will rise above 2 percent in 2016 and a Fed interest-rate increase in December isn’t a given. Bill Irving, co-manager of Fidelity Government Income Fund, said yields will remain low and there’s a 60 percent chance of a Fed hike by year-end.

Loose monetary policies in the U.S., Europe and Asia have helped drive gains in stocks, bonds and commodities this year and the latest signals from central bankers suggest the era of cheap money has further to run. While the Fed still sees a rate hike this year, its projection for increases in 2017 was trimmed to two from three. Japan’s central bank on Wednesday pledged to overshoot its 2 percent inflation goal and took steps to limit the negative side effects of its record stimulus.

Speeches are due Thursday from the heads of the European Central Bank and the Bank of England, while at least seven central banks have policy reviews. Indonesia is forecast to lower interest rates and about a third of economists surveyed by Bloomberg are predicting a cut in Norway, while monetary authorities in South Africa and Turkey are seen leaving borrowing costs unchanged. Gauges of business confidence in France increased ahead of the release of a measure of consumer sentiment for the euro area.

Raw-materials producers and energy shares led gains in Asia and Europe. The Stoxx Europe 600 Index was up 0.6 percent in early trading, while the MSCI Asia Pacific excluding Japan Index climbed 1.1 percent. Japanese markets were shut for a holiday. Hanjin Shipping Co., the South Korean container line that has sought bankruptcy protection, surged 30 percent after securing new loans. from top shareholder Korean Air Lines Co., which rallied 5.4 percent. Newcrest Mining Ltd., Australia’s biggest gold producer, rose 6.9 percent.

Futures on the S&P 500 were little changed for most of the session but jumped 0.4% in recent trading, after the cash index climbed 1.1% in the last session.

Market Snapshot

  • S&P 500 futures up less than 0.4% to 2164
  • Stoxx 600 up 0.8% to 345
  • FTSE 100 up 0.7% to 6880
  • DAX up 1.2% to 10565
  • German 10Yr yield down 5bps to -0.05%
  • Italian 10Yr yield down 6bps to 1.22%
  • Spanish 10Yr yield down 6bps to 0.94%
  • S&P GSCI Index up 0.8% to 357.6
  • MSCI Asia Pacific up 0.6% to 142
  • Nikkei 225 – closed
  • Hang Seng up 0.4% to 23760
  • Shanghai Composite up 0.5% to 3042
  • S&P/ASX 200 up 0.7% to 5374
  • US 10-yr yield down 1bp to 1.64%
  • Dollar Index down 0.49% to 95.2
  • WTI Crude futures up 1% to $45.79
  • Brent Futures up 0.9% to $47.25
  • Gold spot down less than 0.1% to $1,333
  • Silver spot down 0.5% to $19.75

Global Headline News

  • Yellen Rebuffs
    Pressure to Hike as Fed Gives Economy Room to Run: Fed Chair “generally
    pleased” with how U.S. economy is doing
  • ECB Says Ready to Act to Achieve Price Stability If Needed: ECB comments in Economic Bulletin published on Thursday
  • Global Banks Said to Plan for Loss of Euro Clearing After Brexit: Executives see $570b of swaps being stripped from U.K.
  • EU Banks May Need Rescue Funds Equaling Twice Their ECB Capital: Single
    Resolution Board takes SREP capital as starting point
  • Euronext CEO Sees Diminished Role for London Following Brexit: Boujnah says investors are looking for new European gateway
  • Apple Said Seeking McLaren Stake, in Talks to Buy Lit Motors: McLaren
    deal would give Apple access to technology and patents
  • Hartford Said to Enlist JPMorgan to Sell Annuity Runoff Business: Talcott unit said to draw interest from Apollo, Berkshire
  • Yahoo Will Soon Reveal ‘Massive’ Loss of User Data, Recode Says: The
    break-in was “widespread and serious” and is expected to be disclosed
    this week, the tech news website said
  • Zuckerberg, Chan Start $3b Initiative to Cure Disease: Facebook co-founder, wife to fund $600m research center

Looking at regional markets, we start as usual in Asia, where stocks took the impetus from the firm close on Wall Street where sentiment was supported after the FOMC kept rates unchangedand the Fed’s dot plots suggested a more gradual path of rate increases. This supported all major bourses in the region, with ASX 200 (+0.9%) also lifted by gains in commodity names after WTI crude futures rose 3% on an unexpected drawdown in DoE crude inventories and gold gained over USD 13/oz on the less hawkish than expected Fed. Elsewhere, Hanjin Shipping outperformed in the KOSPI (+1.1%) with its shares higher by nearly 30% after reports of financial support for the troubled carrier, while Shanghai Comp (+0.8%) and Hang Seng (+1.2%) conformed to the upbeat tone as the PBoC maintained firm liquidity injections. As a reminder, Japanese markets were shut for Autumnal Equinox.

Top Asian News

  • RBA’s Lowe Says Australia Likely to Avoid Unorthodox Policy: Governor Lowe says lower Aussie dollar “would be helpful”
  • RBNZ Keeps Rates on Hold, Says Further Easing Will Be Needed: Economists expect central bank to cut OCR to 1.75% in Nov.
  • Carlyle Sues China ATM Firm Seeking $369m Over Missed IPO: Winding-up petition filed in Caymans by two Carlyle funds
  • Cohen’s Point72 Goes on Biggest Ever Hiring Spree in Asia: Firm recruited 31 people in region, 21 on investment side
  • Hanjin Gets Korean Air Funds as Court Says Revival at Risk: Court criticizes slow resolution of shipping disruptions
  • Top China Hedge Fund Bucks Losses With Bets on Consumer Stocks: Lygh China fund up 12.6% this year as Shanghai Comp drops 15%
  • Tencent’s WeChat Social Media Posts Count as Criminal Evidence: All social content can be secretly gained and used in court

In Europe, stocks trade firmly in positive territory (EuroStoxx 50 +1.1%), following on from the gains seen in both US and Asian Indices. This comes very much in the wake of yesterday’s FOMC release with Europe also digesting it as a less hawkish than anticipated event with the dot plot now predicting a slower pace of hikes through to 2018. The USD weakened across the board in the wake of the decision – which has since offered some reprieve to the commodities complex — and as such the materials and energy sectors outperform in Europe. The possibility of lower rates for longer has also had an effect on the financial sector, which is a notable laggard of the mornings trade. Notable upside has been observed in Fl products — again as a product of the FOMC rate decision — as yields fall with the periphery tighter to its core counterparts. Of note, no auctions are expected to take place in Europe today, although we a lOy TIPS is due for release shortly after 1800BST in the US.

Top European News

  • Maersk to Split Group Into Separate Transport, Energy Companies: Sees several options for oil business, including IPO
  • Delivery Hero CEO on Amazon, Uber Food Incursion: Let Them Come: Rocket Internet-backed startup says learning curve is steep
  • Ericsson Says Sweden Won’t Be Excluded From Further Job Cuts: Company reported to end network manufacturing in Sweden
  • Rolls-Royce Names Daily Mail’s Daintith CFO as Smith Leaves: Daintith join plane-engine maker at beginning of 2017
  • EDF Shrinks Profit Range as Safety Checks Prolong Outages: State utility reduces target for nuclear-power production
  • Julius Baer CEO Says Asia Revenue May Top Europe in 5 Years: Swiss wealth manager steps up hiring in Singapore, Hong Kong
  • M&C Saatchi Reports Strong 1H, Says 2H Started Well, in Line: co. reported 1H revenue up 15% to GBP100.2m

In FX, the Bloomberg Dollar Spot Index fell 0.3 percent, after sliding 0.7 percent on Wednesday.The won jumped 1.6 percent, leading gains among major currencies. The yen weakened 0.2 percent, after volatile trading on Wednesday that saw swings of more than 1 percent in both directions following the BOJ meeting. The Japanese central bank’s policy tweaks give it scope to keep easing to revive the economy and inflation, while limiting the negative impact on bank earnings. The currencies of resource-exporting nations were among the best performers, with the Australian and Canadian dollars appreciating 0.5 percent versus the greenback. South Africa’s rand rose 1.2 percent and Malaysia’s ringgit strengthened 0.7 percent.New Zealand’s weakened 0.1 percent after the Reserve Bank of New Zealand kept its key interest rate at a record low on Thursday and said further reductions will be needed in order to move inflation toward its 2 percent target. Investors increased bets on a November rate cut, with the probability of a move by then rising by 19 percentage points to 70 percent in the swaps market.  “The RBNZ Statement, although little changed from August, was slightly more dovish than the market anticipated,” said Jason Wong, a currency strategist in Wellington at Bank of New Zealand Ltd. “This was probably a tactical move by the central bank to avoid any undesired appreciation in the kiwi.”

In commodities, the Bloomberg Commodity Index rose 0.5 percent, set for its highest close in almost a month. Crude oil for delivery in November climbed 0.9 percent to $45.74 a barrel in New York, after rallying 2.9 percent in the last session. U.S. inventories fell by 6.2 million barrels last week, official data showed Wednesday, spurring optimism a glut will ease. OPEC members Saudi Arabia and Iran, whose rivalry derailed an oil supply accord earlier this year, held talks in Vienna a week before the organization and Russia meet Sept. 28 in Algeria to discuss measures to stabilize prices.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European stocks trade firmly in positive territory (EuroStoxx 50 +1.1%), following on from the gains seen in both US and Asian Indices
  • USD remains broadly weaker against its major counterparts with the exception of JPY while commodity currencies continue to be supported by yesterday’s gains in energy prices
  • Looking ahead, highlights include US weekly jobs and existing home sales, ECB President Draghi and BoE Governor Carney

* * *

DB’s Jim Reid concludes the overnight wrap

“Tough talking, no hiking”. Sounds like an odd Kanye West track but instead it seems to be the perennial mantra of the Fed at the moment. If you think you’ve heard this before then you’d be correct as the Fed again basically told the market that they are very close to a hike but couldn’t get comfortable enough to pull the trigger. One wonders how many more times we’ll get a similar outcome. The hawkish elements were that there were 3 dissenters, the most since December 2014, and that most member’s dots still suggest (at least) one hike this year. The dovish side was perhaps that the dots were lowered beyond this year with two hikes priced in for 2017 (median) rather than the three expected back in June. So here we go again, it’s all about the data and market stability but probably not in a heightened state for a few more weeks until December appears slowly over the horizon.

The fact that we’ve got nearly 3 months until the Fed ‘might’ pull the trigger (assuming you rule out November for now) seemed to help markets move on with the S&P 500 climbing +1.09% with most of that being after the FOMC decision. We were flat when Europe went home despite a strong day elsewhere post the BoJ. 10 year Treasuries fell 4bps having also been flat as Europe closed. Indeed core global bond yields didn’t react massively to the earlier BoJ news. Before the Fed, French and German 10Y yields ticked up by +2bps, with the latter back around zero after yesterday’s dip below, while Gilts were flat. 10 year JGBs eventually closed at -0.037, around halfway between where they were before the meeting and a brief moment after where they popped their head above the zero parapet. Japanese markets are closed this morning but elsewhere Asian equities are higher led by the Hang Seng (+1.55%) with most other markets up just under a percent. The dollar is flat after a 0.7% fall yesterday and oil has risen another 1% after a 3% rally yesterday which we’ll touch on below.

As a postscript to yesterday’s BoJ announcement, our FX strategy guys see a slight contradiction in the policy. They believe the BoJ has sent a strong signal by explicitly targeting nominal yields and prioritising financial stability and bank profitability over lower real rates which arguably are more supportive for the economy all other things being equal. Their concern is that policy could become pro-cyclical. For example if growth/inflation weakens and demand for JGBs increase but the BoJ compensates by buying less to prevent 10 years deviating too far from current levels, then real yields will rise. Another potential scenario is that it invites the government to try a huge fiscal stimulus as the BoJ is likely to be needed to buy more if debt increases to support their 10 year JGB target. So the invite to launch the helicopters is there. However until the Government steps-up, this policy will likely have limited real economy impact and perhaps by shuffling chairs rather than conducting fresh easing it shows the diminishing returns of monetary policy alone. So perhaps this policy was an indirect way of passing the baton over the PM Abe. At the moment our FX guys remain JPY bulls and continue to target a break below 100 in USD/JPY to 94 by the end of the year (current 100.40).

In the European session, markets did trade yesterday with a bias that this policy adjustment may form a blueprint for other central banks, with yesterday’s gains in European stocks (STOXX 600 +0.4%) also led by banks (+1.96%). Insurers (+1.66%) and financial services (+0.88%) were also among the best performing sectors yesterday. Oil (WTI +3%) extended gains on news that US crude inventories dropped by 6.2mn barrels last week (vs. 3.25mn increase expected).

Credit markets in Europe also benefited from a general risk on sentiment with main tightening by -1bp, although crossover was basically flat on the day. Mirroring moves in equity markets, senior financials led the way by tightening by nearly -3bps on the day. The US also felt the same risk on sentiment as CDX IG and HY tightened by roughly -2bps and -18bps respectively.

In terms of data, yesterday was a very quiet day. We saw UK public sector net borrowing data (ex banking groups) decline at a slower pace than expected in August with the deficit standing at GBP 10.5bn (vs. 10.2bn expected). It seems unlikely that the UK government will meet the OBR’s 2016-17 deficit forecast if this reduced pace continues, which is likely given the pressure on public finances expected post-Brexit. Over in China the Conference Board leading and coincident economic indices for August clocked in at 152.7 and 154.0 respectively, with both indicators up +0.9% mom.

3.REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed UP 16.44 POINTS OR .54%/ /Hang Sang closed UP 89.90 PONTS OR .38%. The Nikkei closed FOR HOLIDAY Australia’s all ordinaires  CLOSED UP 0.65% /Chinese yuan (ONSHORE) closed  UP at 6.6690/Oil rose to 45.82 dollars per barrel for WTI and 47.25 for Brent. Stocks in Europe: ALL IN THE GREEN   Offshore yuan trades  6.6776 yuan to the dollar vs 6.6690 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS AGAIN AS MORE USA DOLLARS ATTEMPT TO  LEAVE CHINA’S SHORES

3a)NORTH KOREA:

none today

b) REPORT ON JAPAN

The guys at Horseman Capital, the perennial short operation are extremely smart cookies. They have always done better than the average guy.

They have now come out and stated that the best short in the world right now are the Japanese banks as they cannot live in a NIRP world.

(courtesy zero hedge)

Horseman Capital Reveals The “Best Short In The World At The Moment”

c) Report on CHINA

none today

4 EUROPEAN AFFAIRS

ITALY

Yesterday, we brought you the story of Renzi taking the gloves off in an attack against Germany and its major bank, Deutsche bank.  Renzi was trying to deflect attention to his ailing banks by suggesting DB with huge derivatives is far worse than his.  It seems the Merkel did not like the attack and they may throw Paschi and Renzi under the bus

a most important article…

(courtesy zero hedge)

Monte Paschi Rescue On The Rocks: Regulators Now “Expect Bank To Ask Italy For Bailout”

Ever since two months ago, when Italy’s third largest bank – and the world’s oldest – Sienna’s Monte dei Paschi, failed Europe’s latest stress test, it had scrambled, and assured markets, that it would obtain a private sector cash injection, aka bailout, amounting to roughly €5 billion in fresh capital, there was significant speculation in the Italian press that the capital raise was not going well as third party investors were uncomfortable to allocate funds to a bank whose history of failure and unprecedented bad NPL book remained a daunting obstacle. The reason why Monte Paschi was forced to seek a private sector bailout is that Germany had repeatedly shut down Italian PM Matteo Renzi’s attempts to pursue a public sector bailout. Instead, the Germans demanded that instead of a public sector bailout the bank should implement a bail-in, and impair various liabilities, which however could result in another bout of public anger, due to the substantial retail investment in the bank’s unsecured bonds, perhaps culminating with a run on the bank.

In any case, there was little news about BMPS’ ongoing bailout plan, and now we know why: according to Reuters, European regulators expect Italian bank Monte dei Paschi di Siena will have to turn to the government for support, although Rome – as expected – would strongly resist such a move if bondholders suffered losses. Making matters worse, in the first half of 2016 much of the public’s attention had focused on the infamously unstable Italian banks, of which Monte Paschi was the weakest link, and as such the reemergence of solvency concerns involving the Italian lender could potentially reignite fears about the broader banking sector even as the Italian referendum due sometime in late October or November, gets closer.

Which brings us back to the latest Reuters update on the BMPS’ bailout progress, or lack thereof: according to the news service, “while the bank is determined to see through the capital raising, if it were to disappoint, it would be left with a capital hole. Now euro zone authorities are considering whether state support would have to be tapped after what bankers have described as slack interest in the bank’s share offer.

“There is clearly an execution risk to the capital raising,” said one official with knowledge of the rescue attempt, adding that the bank’s value, about one ninth the size of the planned 5 billion euro cash call, would be a turn-off for investors. That person said a “precautionary recapitalization by the Italian state” could be used to make up any shortfall once attempts to raise fresh cash from investors had concluded in the coming months.

Of course, that takes us back to square one, where the debate of bail-in over bail-out remerges, and puts the spotlight not only on Monte Paschi, but all of its allegedly more stable peers.

Reuters sayd that Monte dei Paschi declined to comment. The Italian treasury did not want to comment for this story. A spokesman for Prime Minister Matteo Renzi said he was not aware of any expectations among European regulators that Monte dei Paschi may turn to the state for help.

Some more background on this story from Reuters for those who are new to the story of Europe’s longest running bank rescue:

Monte dei Paschi faces a considerable challenge in convincing investors to back its third recapitalisation in as many years. Further complicating the picture, a constitutional referendum, expected to be held by early December that could decide the future of Renzi, is likely to push the bank’s fund-raising into next year, the officials say.

The bank’s fragile state poses a threat to confidence in other Italian lenders and even to heavily-indebted Italy, the euro zone’s third-largest economy.

Renzi and his economy minister, Pier Carlo Padoan, have said in recent days Monte dei Paschi’s capital raising will be successful. Sources close to the consortium of banks that have made a

preliminary commitment to underwrite the 5 billion euro privately-backed cash call dismissed suggestions it may fall short as “nonsense.”

Reopening the question of state support, which had already been explored and dropped because of the losses it requires for bondholders under European bank crisis rules, is politically charged, and would reignite a dispute between Italy and Germany.

Berlin had objected to Rome’s efforts to back the struggling bank without imposing a loss on its bondholders, according to another senior official. But while some in the German government argue that Italian savers are wealthy enough to shoulder the bank’s problems, Rome wants to spare both institutional investors and ordinary Italians who have tied up their money in its bonds at all costs.

Renzi’s government fears that hitting bondholders would be extremely unpopular and could trigger a wider confidence crisis in the Italian banking system.

So what may have exacerbated the tension? A quick answer is… Renzi himself: recall that earlier this week Renzi took a public swipe at Germany, telling its central bank chief Jens Weidmann to fix the problems of its own banks which he said had “hundreds and hundreds and hundreds of billions of euros of derivatives”. He was, of course, referring to Deutsche Bank.

This latest, and very public attempt to redirect attention from Italy’s banking woes to those of Germany may have been sufficient for Merkel and more importantly, Schauble, to pull some strings in the background, resulting in today’s Reuters report.

Further, recall that it was none other than Renzi’s predecessor Sylvio Berlusconi who in 2011, when as punishment for his non-compliance with European “principles”, was forcibly “removed” by the European establishment. Perhaps it’s time for round two, and if it takes the sacrifice of one more bank, together with billions in depositors’ funds and investments, so be it.

end

GERMANY/DEUTSCHE BANK

Reggie strongly believes that Deutsche bank is cooking the books with respect to derivatives.  He has determined the counterparty to DB which has booked a profit and DB a loss.  This was before DB created a new methodology for reporting of derivatives and that same loss turned into a profit.  Amazing: both sides of the transaction record a profit.

Reggie concludes that the German taxpayer will need to give DB a bailout.  There is not enough money in the system to do a depositor bail in. Actually there is not enough German taxpayer money to bailout DB!!

(courtesy Reggie Middleton)

An Analysis of Deutsche Bank’s Likely Recapitalization – German Tax Payer Bailout or German Bank Depositor Bail-in?

Deutsche Bank is going to need some money, and it’s going to need some quite soon. The next two or three articles that I write will focus on why there is such a need. In a concerted effort to reduce or potentially eliminated the risk of taxpayer-funded bail-outs of European banks, the EU implemented a new “bail-in” regime beginning on January 1, 2016. As such, rules which require banks and certain systemically significant market participants in EU member states will have to write-down, cancel, convert into equity or otherwise modify certain unsecured liabilities if such steps are required to recapitalize the institution. What is the most bountiful unsecured liabilities of a bank?

More than 50% of the total derivative contracts are going to be matured within 1 year and more than 80% within 5 years. So, in the current sluggish economic environment it is quite possible that Deutsche Bank will experience some losses in their derivative exposure as most of their counterparties having higher degree of exposure are in Europe and The USA. And this will impact the financial conditions of their counterparties also. 

Even without market losses (and there’s plenty of reason to believe those are coming), DB will have a hell of a time with added credit expenses due to its lower credit rating (use both rating agencies and bank’s internal scoring models). Reference Deutsche Bank as Ground Zero?:

There will be some losses and conflict upon resolution of some of these. How do we know? We believe WE have identified the counterparty of DB and it has booked a profit for the derivatives that DB booked a loss for. Of course, that loss was booked before DB changed their valuation methodology, which now makes it a profit. Hat tip to Mish’s Blog

Almost 50 % of Deutsche bank’s risk profile (both risk weighted assets & Economic Capital) is dominated by their Corporate Banking & Securities Division, mostly because of the trading activities related with this division.

Noticeably, in first quarter of 2015 Deutsche Bank adopted a new methodology to determine “Diversification benefit”, resulted in an overall reduction of risk by 2.3 billion euros from 2014 to 2015. Though because of this new methodology Deutsche Bank’s total risk reduced significantly but, the methodology for the calculation of diversification benefit is not mentioned in their Annual Report. Without that it cannot be clearly substantiated whether Deutsche Bank is shuffling bad loans to a different unit and classification in order to make their NPAs look better. One thing is for sure, it definitely does look fishy!

Do you know what smells even fishier? The high probability that DB uses this “new found risk calculation metric” to determine the cost of capital for their level 2 and level 3 assets. Voila! Instant profits, Mr. and Mrs. Investor! Yeah, right? You see, DB counterparties are not going to want a hyped up model input as payment, they’re probably thinking more along the lines of cash. Add to this, the 50+% drop in share price, .25x BV multiple, and the multiple lawsuits, including the DOJ’s request of $14B dollars (from a $17B market cap), and you have a pretty stringent need for a recap. I will supply even more (actually, much more) fodder for capital contemplation of the nest week. Of course, no one is bringing this point up except for us. I could very well be wrong, I just wish for someone to show me where…

END

 

GREECE

 

It is so bad in Greece that an increasing number of por Greeks cannot even afford a price of bread

(courtesy KeepTalking Greece/zeor hedge)

Bakers Unite As Increasing Number Of Poor Greeks Can’t Even Afford A Loaf Of Bread

Almost a year after Greece surrendered into the arms of the international lenders and the International Monetary Fund and the austerity cuts started to affect people’s lives. One Greek explains the dismal reality of everyday life for many…

Did you know that there are people in Greece who cannot afford to buy even a loaf of bread at a cost of €0.60 – €0.70?

A bakery in our neighborhood was offering a bread at a special price for pensioners and unemployed. The special price was just half a euro.

At one point, I remember that more and more people were going to this bakery and asking for bread from the previous day for a couple of cents or even free of charge.

Two days ago, the grim Greek reality hit me again. I was at the bakery sometime at noon. All different kinds of bread loafs were waiting for customers, nicely set in order, one by one, next to each other.

Yet, somewhere, in a corner at one of the lower shelves there was a group of breads: several loaves, long and round, white and wholewheat,  a couple of baguettes.

“What are these?” I asked the baker and he answered “This is bread from yesterday, for the poor. We give it free of charge.”

He told me further, that he had 6-7 returning customers who come every second day for the bread from yesterday. Mostly elderly, pensioners. And “maybe 2-3 people per day,” people he does not know who just step in and ask for “old bread for free.”

The problem of poverty is not widespread only in Athens, where the cost of living is much higher than in the countryside.

Today, I read about the action of the Bakers’ Association in Kozani, in Northern Greece. Customers can buy extra bread for those in need, while the bakers will keep records of the “Bread on the waiting” – as they call their action – and give it to those who cannot afford it.

???? ??? ???

Action Slogan: “Buy a loaf of bread or a bagel and let it wait for someone in real need”

“All 26 bakeries have joined the action,” the chairman of the Association, Dimitris Leoudis told the press.

Bravo to all bakers in Kozani

Source: KeepTalkingGreece.com

end

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

none today

6. GLOBAL ISSUES

none today

7. OIL ISSUES

none today

 

end

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

 

Euro/USA   1.1235 UP .0047/REACTING TO NO DECISION IN JAPAN AND USA) 

USA/JAPAN YEN 100.77  UP 0.388(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND YESTERDAY DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.3071 UP .0041 

USA/CAN 1.3014 DOWN .0068

Early THIS THURSDAY morning in Europe, the Euro ROSE by 47 basis points, trading now well above the important 1.08 level RISING to 1.1179; 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 16.44 OR   0.54%   / Hang Sang  CLOSED UP 89.99 POINTS OR .38%     /AUSTRALIA IS HIGHER BY 0.65% / EUROPEAN BOURSES ALL IN THE GREEN

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

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

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

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

These massive carry trades are terribly offside as they are being unwound. It is causing global deflation ( we are at debt saturation already) as the world reacts to lack of demand and a scarcity of debt collateral. Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT>

The NIKKEI: this THURSDAY morning CLOSED FOR HOLIDAY

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 89.90 OR .38%  ,Shanghai CLOSED  UP 16.44 POINTS OR .54%   / Australia BOURSE IN THE GREEN: /Nikkei (Japan)CLOSED IN THE GREEN   INDIA’S SENSEX IN THE GREEN 

Gold very early morning trading: $1333.50

silver:$19.74

Early THURSDAY morning USA 10 year bond yield: 1.642% !!! DOWN 4 in basis points from WEDNESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield  2.36, DOWN 7 IN BASIS POINTS  from YESTERDAY night.

USA dollar index early THURSDAY morning: 95.26 DOWN 25 CENTS from WEDNESDAY’s close.

This ends early morning numbers THURSDAY MORNING

END

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And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield: 3.37% DOWN 4   in basis point yield from WEDNESDAY  (does not buy the rally)

JAPANESE BOND YIELD: -.027% PAR in   basis point yield from WEDNESDAY

SPANISH 10 YR BOND YIELD:0.919% DOWN 9 IN basis point yield from WEDNESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.189 DOWN 10 in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 27 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: -0.096% DOWN 10  IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR THURSDAY

Closing currency crosses for THURSDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/2:30 PM

Euro/USA 1.1207 UP .0020 (Euro UP 20 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 100.88 up: 0.480 (Yen DOWN 48 basis points/POLICY ERROR ON BANK OF JAPAN

Great Britain/USA 1 .2075 UP 0.0043 ( PoOUND UP 43 basis points

USA/Canada 1.3068 DOWN 0.0014 (Canadian dollar UP 14 basis points AS OIL ROSE (WTI AT $46.25). Canada keeps rate at 0.5% and does not cut!

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 20 basis points to trade at 1.1207

The Yen FELL to 100.88 for a LOSS of 48 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND ROSE 43 basis points, trading at 1.3075/

The Canadian dollar ROSE by 14 basis points to 1.3068, WITH WTI OIL AT:  $46.25

The USA/Yuan closed at 6.6630

the 10 yr Japanese bond yield closed at -.027%  PAR  IN BASIS POINTS / yield/ AND THIS IS BECOMING BOTHERSOME TO THE BANK OF JAPAN

Your closing 10 yr USA bond yield: DOWN 5 IN basis points from WEDNESDAY at 1.636% //trading well below the resistance level of 2.27-2.32%) very problematic

USA 30 yr bond yield: 2.355  DOWN 7 in basis points on the day /*very problematic as all bonds globally rose in yield (lowered in price)

BANKS NEED THE LONGER BOND HIGHER IN YIELD: INSTEAD THE SPREAD LESSENS.

Your closing USA dollar index, 95.39 DOWN 6 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 THURSDAY: 2:30 PM EST

London:  CLOSED UP 76.63 POINTS OR 1.12%
German Dax :CLOSED UP 237.69 OR  2.28%
Paris Cac  CLOSED UP 100.27 OR 2.27%
Spain IBEX CLOSED UP 176.60 OR 2.01%
Italian MIB: CLOSED DOWN  287.87 POINTS OR 1.76%

The Dow was UP 98.76 points or 0.64%  4 PM EST

NASDAQ  UP 44.34 points or 0.84%  4 PM EST
WTI Oil price; 46.25 at 4:00 pm; 

Brent Oil: 47.35   4:00 EST

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  63.61(ROUBLE UP  32/100 ROUBLES PER DOLLAR FROM FRIDAY)  2:30 EST

TODAY THE GERMAN YIELD FALLS TO -0.096%  FOR THE 10 YR BOND  2:30 EST

END

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:

WTI CRUDE OIL PRICE 5 PM:$46.08

BRENT: $47.50

USA 10 YR BOND YIELD: 1.622%

USA DOLLAR INDEX: 95.38 DOWN 12 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.3078 UP 0.0047 or 47 basis pts.

German 10 yr bond yield at 5 pm: -0.096%

END

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

TRADING IN GRAPH FORM

Fed Inaction Sparks Biggest Stock-Buying-Spree Since Brexit Bounce

“It doesn’t learn…”

Post-Fed = everything is up…

 

Small Caps are the biggest post-Fed winners…

 

On the back of a huge short squeeze…

 

For a brief moment, VIX surged back up to credit’s reality… but no longer…

 

But VIX was crushed back to an 11 handle…

 

On the back of no volume whatsoever…

 

Nasdaq new record highs…

As Credit Suisse notes “The Nasdaq 100 is again attempting to break above its key tech bubble high from 2000 at 4816, and has now managed to extend strength above trendline resistance at 4871. Follow through above the latter level would confirm an important bullish continuation pattern and signal that the medium-term trend has turned bullish again for 5000 initially. Extension above here can look on to trendline resistance projected from the October 2007 peak and Fibonacci projection targets at 5250/89. We would allow for an initial cap here, but if overcome can then see further strength to measured pattern targets at 5335/95.”

as AMZN broke above $800 for the first time on record…

 

Bonds were bid… with the long-end massively outperforming…

 

The yield curve has collapsed 13bps since The Fed along with the USD Index…

 

As yields and stocks decouple completely…

 

While the USD Index continued to weaken, once US equity markets opened, the USD rallied…

 

Commodities continue to blast higher, led by Silver’s surge…

 

Oil trading was ridiculous around the NYMEX close…

 

But since The BoJ, precious metals have been on fire…

 

So to summarize: Growth Down, Hope Down; Bonds Up, Gold Up, Stocks Up, VIX Down,… Fed Up?

Charts: Bloomberg

Bonus Chart: Bond/Stock Correlation has only been this high once before… Oct 2007

 

end

 

Trading in early morning: Markets are being described as Zimbabwe-isation…all asset prices are rising..

(this morning/zero hedge)

“They’re Buying Everything, Again” – Stocks, Bonds, Gold Extend Gains As VIX Crushed To 11 Handle

The Fed’s complete failure and decision to lower its forecast for US long term growth to record lows has sparked buying across every asset class as the USD Index slides. VIX has been monkey-hammered back to an 11 handle as the looming US election appears to be entirely irrelevant…

VIX collapsing again…

As ‘investors’ buy everything else…

As The USD Index and the yield plunge…

Sigh.

 

end

 

We now have riots in Charlotte North Carolina:

(courtesy zero hedge)

Charlotte Riots Night 2: Police Unleash Tear-Gas, NC Governor Calls National Guard As Protests Turn Deadly – Live Feed

 

end

Another poor confidence report; consumer comfort index crashes to its lowest levels in one year:

(courtesy zero hedge)

(courtesy zero hedge)
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