Dec 1/Huge spread between Shanghai gold fixing and NY prices maintains it’s 20 dollar plus premium/gold whacked again/comex gold open interest at 401,000 at one yr lows and probably signals the bottom/In a startling move, China is curbing outflows of yuan: are they out of “money”/Industrial metals collapse in price starting in China last night/Global loses on bonds for the past two months: 2.8 trillion dollars/

Gold at (1:30 am est) $1166.90 DOWN $3.00

silver  at $16.43:  up 2 cents

Access market prices:

Gold: 1171.50

Silver: 16.52

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

The Shanghai fix is at 10:15 pm est last night and 2:15 am est early this morning

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:

THURSDAY gold fix Shanghai

Shanghai morning fix Dec 1 (10:15 pm est last night): $  1188.46

NY ACCESS PRICE: $1169.20 (AT THE EXACT SAME TIME)/premium $19.26

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1199.35

NY ACCESS PRICE: 1175.35 (AT THE EXACT SAME TIME/2:15 am)

HUGE SPREAD 2ND FIX TODAY!!:  $24.00

China rejects NY pricing of gold  as a fraud  

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Fix: Dec 1: 5:30 am est:  $1168.75   (NY: same time:  $1168.15    5:30AM)

London Second fix Dec 1: 10 am est:  $1161.85 (NY same time: $1162.00    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

 

Lawrie Williams on the difference between Shanghai and London gold fixes

vs ny pricing/

(courtesy Lawrie Williams/Sharp’s Pixley)

LAWRIE WILLIAMS: Major gold price divergence between Shanghai and London

DEC
01

Few seem to have commented on what appears to be an increasing trend towards large anomalies appearing between the Shanghai and London gold benchmark prices. Up until the beginning of November prices were pretty much in sync give or take a few dollars – a variation based on trading activity during the day, and, in some cases due to a difference between the gold tenor quality required under the two systems. The SGE specification is 99.99% gold content or better, while London works to LBMA Good Delivery specifications where the requirement is only 99.5%. But on one ounce of gold this should only make for a maximum difference in price of around $5-6 at a $1200 gold price.

But recently – as the table below comparing SGE and LBMA (London) PM price benchmarks for the past month makes very obvious the price difference – virtually always in favour of the SGE benchmark since early in the month – has been consistently $10-20 or more (often $20-30) – even rising as high as $46 on November 23rd, although a significant part of this difference on that day was due to the sharp intra-day fall in the London gold price, as will have been the case on November 9th when there was a somewhat similar $45 difference.

SGE and London PM Gold ‘Fixes’ (US$)

Date SGE PM Gold Price London PM Gold Price Price diffce. SGE PM over London
Nov 1st 1283.95 1288.45 -4.50
Nov 2nd 1296.08 1303.75 -7.67
Nov 3rd 1306.66 1301.00 +5.66
Nov 4th 1300.75 1302.80 – 2.05
Nov 7th 1293.91 1283.05 +10.86
Nov 8th 1290.17 1282.35 +7.82
Nov 9th 1326.88 1281.40 +45.48
Nov 10th 1293.91 1267.50 +26.41
Nov 11th 1267.47 1236.45 +31.02
Nov 14th 1227.97 1213.60 +14.37
Nov 15th 1236.99 1226.95 +10.04
Nov 16th 1241.65 1229.20 +15.45
Nov 17th 1237.30 1226.75 +10.55
Nov 18th 1219.26 1211.00 +8.26
Nov 21st 1224.54 1214.25 +10.29
Nov 22nd 1235.43 1212.25 +23.18
Nov 23rd 1231.70 1185.35 +46.35
Nov 24th 1212.41 1186.10 +26.31
Nov 25th 1200.91 1187.70 +13.21
Nov 28th 1218.64 1187.00 +31.64
Nov 29th 1216.15 1186.55 +29.60
Nov 30th 1210.24 1178.10 +32.14
Dec 1st 1199.35 1161.85 +37.50

Source: www.Kitco.com

As we pointed out here yesterday a part of the reasoning behind the higher SGE benchmark price levels is something of a squeeze on Chinese gold supply which is local market specific – particularly now that gold traders and fabricators may be looking to build stocks ahead of anticipated additional demand from the Chinese New Year holiday, and a reported reduction in gold import quotas by the Chinese Government to curb capital outflows. But part may also be due to Shanghai looking to establish itself as the true gold price setting exchange and thus usurping the still dominant position of COMEX and the LBMA. As China is the world’s biggest physical gold market, while COMEX and London are largely paper markets, it is probably only a matter of time before this comes to pass but for the moment the Western markets look to still be calling the tune as far as the accepted global gold price is concerned despite some hugely anomalous movements from time to time which many observers put down to manipulation. The latest such was only today when a rise in U.S. jobless claims, which might normally be considered gold positive, saw the price marked down sharply after an initial small rise.

http://news.sharpspixley.com/article/lawrie-williams- major-gold-price-divergen
ce-between-shanghai-and- london/260055/

-END-

For comex gold: 

 NOTICES FILINGS FOR DECEMBER CONTRACT MONTH:  1569 NOTICE(S) FOR 156,900 OZ.  TOTAL NOTICES SO FAR: 6507 FOR 650,700 OZ    (17.576 TONNES)

For silver:

 NOTICES FOR DECEMBER CONTRACT MONTH FOR SILVER: 322 NOTICE(s) OR 1,610,000  OZ. TOTAL NUMBER OF NOTICES FILED SO FAR; 1039 FOR 5,195,000 OZ

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE by 2,620 contracts UP to 159,246 with YESTERDAY’S trading.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .795 BILLION TO BE EXACT or 113% of annual global silver production (ex Russia & ex China).

FOR THE DECEMBER FRONT MONTH:  322 NOTICES FILED FOR 1,610,000  OZ.

In gold, the total comex gold FELL by 4,561 contracts as we witnessed a huge FALL IN THE PRICE GOLD ($17.10 with YESTERDAY’S trading ).The total gold OI stands at 401,100 contracts. The bankers have done a good job of eviscerating gold (and silver) longs. We are very close to the bottom with respect to OI.  Generally 390,000 should do it.

we had a huge 1,569 notices filed upon for 156,900 oz of gold.

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

GLD:  

We had no changes in tonnes of gold at the GLD,

Inventory rests tonight: 883.86 tonnes

.

SLV 

we HAD NO  CHANGES at the SLV/

THE SLV Inventory rests at: 346.150 million oz

.

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

1. Today, we had the open interest in silver ROSE by 2,620 contracts UP to 159,246 despite the fact that the price of silver FELL by $.25 with YESTERDAY’S trading.  The gold open interest FELL by 4,561 contracts DOWN to 401,100 as the price of gold FELL BY  $17.10 WITH 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

2c) FRBNY foreign gold movement

(Harvey)

3. ASIAN AFFAIRS

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed UP 23.27 POINTS OR 0.72%/ /Hang Sang closed UP 88.46  OR 0.39%. The Nikkei closed UP 206.64 OR 1.12%/Australia’s all ordinaires  CLOSED UP 1.05% /Chinese yuan (ONSHORE) closed UP at 6.8872/Oil ROSE to 50.17 dollars per barrel for WTI and 52.69 for Brent. Stocks in Europe: ALL IN THE RED.  Offshore yuan trades  6.8890 yuan to the dollar vs 6.8872  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS HUGELY AS CHINA ATTEMPTS TO STOP MORE USA DOLLARS  LEAVING CHINA’S SHORES / CHINA SENDS A CLEAR MESSAGE TO THE USA AND JANET  TO NOT RAISE RATES IN DECEMBER.

REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

3a)THAILAND/SOUTH KOREA

none today

b) REPORT ON JAPAN

Another good one from Graham Summers:

Has the election of Trump caused Japan to ignite the huge 10 trillion of uSA  dollar carry trade that is short dollars?

( Graham Summers/Phoenix Capital)

c) REPORT ON CHINA

i)Both China and the USA experienced a huge rise in bond yield last night.  Thus the bond bloodbath is back!!

( zero hedge)

ii)In a stunning move, China has stopped the outflows of yuan!! remember this is what China wants;  the internationalization of the yuan throughout the globe! Horseman capital yesterday asked:  Is China running out of money? answer: it sure looks like it

( zero hedge)

4 EUROPEAN AFFAIRS

oH oh! The ECB just leaked that their QE program cannot go on for ever.  Thus the whisper is that they are preparing to taper their bund purchases of German bonds.  This caused the yield to rise 30 basis points in minutes. With the USA tightening, the world was expecting to ECB and Japan to carry the torch with additional QE.  Problems ahead

( zero hedge)

 

ii) Italy

Just what Italy needed:  a massive explosion rocks one of Italy’s largest oil refineries in Northern Italy:

(courtesy zero hedge)

iii)France

Hollande will not run in the next French election and will no doubt be replaced by Valls  (current Prime Minister).  They will run against Marine LePen and Republican Fillon

( zero hedge

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

Turkey

the relentless rise in the dollar has now caused the Turkish lira to collapse to 3.5 to the dollar, tumbling over 1.8% last night. Last week the Turkey raised rates but that could not stop the lira from tumbling.  Erdogan is demanding lower rates.

( zero hedge)

6.GLOBAL ISSUES

i)In November, global bond loses total 1.7 trillion USA dollars. This is on top of the 1.1 trillion USA dollar loss in October.  Higher rates are causing the worst monthly meltdown in history!

( zero hedge)

ii)Another good Bellwether for global growth Caterpillar:  stock halted after they state analysts forecasts are way too optimistic:

( Caterpillar/zerohedge)

7. OIL ISSUES

i)The very reliable OilPrice.com people gives reality to the OPEC deal announced yesterday. They are saying that we should downplay the deal.

( Paraskova/OilPrice.com)

ii)Crude Oil is now in backwardation in the belly of the curve.  Generally backwardation means scarcity but not with oil as there is plenty of the black gold around. The backwardation generally means that the spot price of oil will not hold

( zero hedge)

8. EMERGING MARKETS

Another view into Venezuela’s rapid ascent into the hyper inflationary world:

( zero hedge)

9.   PHYSICAL MARKETS

i)trouble overnight as the bubble in industrial base metals collapsed. We have had a bubble built up in these assets immediately after the Trump victory.  Hot money poured into these commodities due to Trump willing to jump start infrastructure spending in the uSA. The problem here is the huge excess storage of these metals and last night it burst

( zerohedge)

ii)China has seen huge amounts of dollars leave China as citizens realized that their currency was overvalued.  China announced tighter curbs on citizen gold imports trying to slow the relentless capital flight.  However banks with licenses to import will continue to buy gold as well as sovereign China.

( zero hedge)

iii)The following Bloomberg paper talked about the bubble forming in the base metals inside China:( Bloomberg/GATA)

iv)Michael Oliver, a technical analyst describes in detail gold market rigging

( Michael Oliver/GATA)

10.USA STORIES

i)Strange:  initial jobless claims rise by over 35,000 since the election of Trump. Manipulation of numbers?  no it can’t be!

(courtesy zero hedge)

ii)The following is short and sweet and to the point:

Is Janet trying to crash stocks to screw Trump?
( Graham Summers/Phoenix Capital)

iii) This is going to hurt:  The Government Accountability Office has released a report stating that the Obama plan to forgive student loans will cost taxpayers 137 billion dollars

( zero hedge)

iv) A good Bellwether in predicting global growth:  today Apple is reducing orders for iphone 7 stating the sales momentum is fading:( Digitimes/zero hedge)

 

v)Another set of strange data:  USA manufacturing surges to 20 month highs despite employment drop and export order drops.  The high dollar is not having an effect on manufacturing?

( zero hedge)

vi)Trump’s new proposal to lower taxes from 35 to 15% will cause billions of dollars of deferred tax asset write downs.  For example Citibank will have to take a write down of 12 billion dollars.  Banks have a huge amt of tax deferred assets on their books and a lower tax rate means much of this asset cannot be used

( zero hedge)
vii)You must pay attention to Jeff Gundlach, the bond king.  He states that the Trump rally is losing steam and that bond prices are still to fall, the dollar will fall and gold will rise

( Jeff Gundlach/zero hedge)

 

viii)Trump picks Mad Dog Mattis as Sec.of Defense:

( zero hedge)

Let us head over to the comex:

The total gold comex open interest FELL by 4,561 CONTRACTS to an OI level of 401,100 as GOLD FELL $17.10 with YESTERDAY’S trading. We are now in the contract month of December and it is the biggest of the year. here the front month of December showed a DECREASE of 5719 contracts DOWN to 6832.We had 4938 notices served upon yesterday so as I promised we lost 781  contracts or 78,100 oz will not stand for delivery and no doubt where paper settled.

For the next delivery month of January we had a loss of 115 contracts down to 2386.  For the next big active delivery month of February we had a gain of 2283 contracts up to 273,896

We had 1,569 notices filed upon today for 1,56900 oz

.

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And now for the wild silver comex results.  Total silver OI ROSE by 2620 contracts from 156,626 UP to 159,246  even though the price of silver FELL BY $0.25 with YESTERDAY’S trading. We are moving  further from the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540). We are now in the next major delivery month of December and here it FELL BY 303 contracts DOWN to 2753 CONTRACTS . Wow!! this is a surprise: we had 717 notices served upon yesterday so we gained 414 contracts or an additional 2,070,000 oz will stand for delivery. they must badly need some silver somewhere.

The next non active delivery month is January and here the OI fell by 12 contracts down to 3643.

The next big active delivery month is March and here the OI rose by 2783 contracts up to 129,242 contracts.

We had 322 notices filed for 1,610,000 oz for the December contract.

Eventually at the end of December 2015: 6.4512 tonnes of gold stood for delivery

Eventually at the end of December 2015: 18.84 million oz of silver stood for delivery.

VOLUMES: for the gold comex

Today the estimated volume was 112,477  contracts which is awful.

Friday’s confirmed volume was 271,646 contracts  which is good

Initial standings for DECEMBER
 Dec 1.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
  nil oz
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
nil oz
No of oz served (contracts) today
 
1,569 notices
156,900 oz
No of oz to be served (notices)
5263 contracts
526,300 oz
Total monthly oz gold served (contracts) so far this month
6507 notices
650,700 oz
17.576 tonnes
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil oz
Total accumulative withdrawal of gold from the Customer inventory this month     1,478.900 oz
Today we had 0 kilobar transaction as 0 kilobars left the comex vaults.
Today we had 0 deposits into the dealer:
total dealer deposits:  nil  oz
We had nil dealer withdrawals:
total dealer withdrawals:  nil oz
.
 we had 0 customer deposit(s):
total customer deposits; nil oz
We had 0 customer withdrawal(s)
total customer withdrawal: nil  oz
We had 0  adjustment(s)
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Total dealer inventor 2,218,385.986 or 69.00 tonnes
Total gold inventory (dealer and customer) =10,002,912.629 or 311.13 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 311.13 tonnes for a  gain of 8  tonnes over that period.  Since August 8 we have lost 43 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold!
For December:

Today, 0 notices were 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 1569 contract(s)  of which 176 notices were stopped (received) by jPMorgan dealer and 461 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
To calculate the initial total number of gold ounces standing for the DECEMBER. contract month, we take the total number of notices filed so far for the month (6507) x 100 oz or 650,700 oz, to which we add the difference between the open interest for the front month of DEC (6832 contracts) minus the number of notices served upon today (1569) x 100 oz per contract equals 1,177,000 oz, the number of ounces standing in this non  active month of DECEMBER.
 
Thus the INITIAL standings for gold for the DEC contract month:
No of notices served so far (6507) x 100 oz  or ounces + {OI for the front month (6832) minus the number of  notices served upon today (1569) x 100 oz which equals 1,177,000 oz standing in this non active delivery month of DEC  (36.609 tonnes).
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
I have now gone over all of the final deliveries for this year and it is startling.
First of all:  in 2015 for the 12 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month.
Here are the final deliveries for 2016:
Jan 2016:  .5349 tonnes  (Jan is a non delivery month)
Feb 2015:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2015: 2.311 tonnes (March is a non delivery month)
April:  12.3917 tonnes (April is a delivery month/levels on the low side
And then something happens and from May forward deliveries boom!
May; 6.889 tonnes (May is a non delivery month)
June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge)
July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!)
August: 44.358 tonnes (August is a good delivery month and it came to fruition)
Sept:  8.4167 tonnes (Sept is a non delivery month)
Oct; 30.407 tonnes complete.
Nov.    8.3950 tonnes.
DEC.   36.609 tonnes
total for the 12 months;  228.157 tonnes
average 19.013 tonnes per month vs last yr 51 tonnes total for 12 months or 4.25 tonnes average per month. From May 2016 until Dec 2016 we have had: 204.915 tonnes per the 8 months or 25.614 tonnes per month (which includes the non delivery months of May, June and Sept).  In essence the demand for gold is skyrocketing.
Something big is going on inside the gold comex.
Just take a look at Nov 2016 deliveries at 8.3950 tonnes compared to last yr 0.6656 tonnes
December so far:  36.609 tonnes vs last year’s 24 tonnes on first day notice and 6.45 tonnes on the completion of the December delivery month.
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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 at MF Global.
 
IN THE LAST THREE MONTHS  43 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE DECEMBER DELIVERY MONTH
DECEMBER INITIAL standings
 Dec 1. 2016
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
925,103.500 oz
Scotia,BRINKS, HSBC
Deposits to the Dealer Inventory
nil  OZ
Deposits to the Customer Inventory 
600,502.09 oz
CNT
No of oz served today (contracts)
322 CONTRACT(S)
(1610,000 OZ)
No of oz to be served (notices)
2431 contracts
(12,155,000  oz)
Total monthly oz silver served (contracts) 1039 contracts (5,195,000 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  96,558.16 oz
 END
today, we had nil deposit(s) into the dealer account:
total dealer deposit: nil oz
we had nil dealer withdrawals:
 total dealer withdrawals: nil oz
we had 3 customer withdrawal(s):
i) Out of Scotia: 120,958.400 oz
ii) Out of HSBC: 706,789.100 oz
iii) Out of Brinks: 97,356.000 oz  ??? exact weight
Total customer withdrawals: 925,103.500  oz
 we had 1 customer deposit(s):
i) Into CNT: 600,502.09 oz
total customer deposits; 600,502.09  oz
 
 
 we had 1 adjustment(s)
i) Out of Scotia:  897,587.851 oz was adjusted out of the customer and this landed into the dealer account of Scotia.
Volumes: for silver comex
Today the estimated volume was 30,844 which is poor
TUESDAY’S  confirmed volume was 63,014 contracts  which is  huge
The total number of notices filed today for the DEC. contract month is represented by 322 contracts for 1,610,000 oz. To calculate the number of silver ounces that will stand for delivery in DEC., we take the total number of notices filed for the month so far at  1039 x 5,000 oz  = 5,195,000 oz to which we add the difference between the open interest for the front month of DEC (2,753) and the number of notices served upon today (322) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the DEC contract month:  1039(notices served so far)x 5000 oz +(2753) OI for front month of DEC. ) -number of notices served upon today (322)x 5000 oz  equals  17,350,000 oz  of silver standing for the DEC contract month.
Strangely on second day notice we actually gained 2070,000 oz and that has not happened for years.!!
 
Total dealer silver:  33.249 million (close to record low inventory  
Total number of dealer and customer silver:   178.616 million oz
The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.

end

And now the Gold inventory at the GLD
Dec 1/no change in gold inventory at the GLD/Inventory rests at 883.86 tonnes
NOV 30/A SMALL WITHDRAWAL OF 1.18 TONNES FROM THE GLD/INVENTORY RESTS AT 883.86 TONNES/MAYBE THEY ARE AT THE BOTTOM OF THE BARREL FOR PHYSICAL GOLD TO TRANSFER TO THE BANKERS.
Nov 29/no changes in gold inventory at the GLD/inventory rests at 885.04 tonnes
Nov 28/no change in gold inventory at the GLD/Inventory rests at 885.04 tonnes
Nov 25 We had a massive 19.87 tonnes of gold leave the GLD/this would be a paper loss not real gold (they only have paper gold in their inventory/total inventory: 885.04 tonnes
Nov 23/a huge withdrawal of paper gold from the GLD equal to 4.66 tonnes/inventory rests at 904.91 tonnes
NOV 22/no changes at the GLD/Inventory rests at 908.76 tonnes
Nov 21/A MASSIVE 11.87 TONNES OF PAPER GOLD WERE SUPPLIED BY THE CROOKS TO SUPPRESS THE PRICE OF GOLD/INVENTORY RESTS AT 908.76 TONNES/ AND GOLD RISES???
Nov 18/no changes at the GLD/Inventory rests at 920.63 tonnes
Nov 17/ A HUGE WITHDRAWAL OF 5.63 TONNES FROM THE GLD/INVENTORY RESTS AT 920.643 TONNES
Nov 16/ changes in gold inventory at the GLD/Inventory rests at 927.45 tonnes
NOV 15/  we had 2 monstrous withdrawal of 5.63 tonnes of gold from the GLD in the morning and another 1.48 tonnes this afternoon/Inventory rests at 927.45 tonnes
Nov 14/another monstrous withdrawal of 7.12 tonnes of gold from the GLD/Inventory rests at 934.56 tonnes
Nov 11/A  MONSTROUS WITHDRAWAL OF 13.35 TONNES OF PAPER GOLD AND THIS GOLD WAS USED IN THE COMEX WHACKING TODAY.
Nov 10/ A HUGE ADDITION OF 5.34 TONNES OF GOLD  (WITH GOLD WHACKED??)/INVENTORY RESTS AT 955.03 TONES
Nov 9/no change in gold inventory at the GLD/Inventory rests tonight at 949.69 tonnes
Nov 8/no change in gold inventory at the GLD/Inventory rests tonight at 949.69 tonnes
Nov 7/no changes in the gold inventory at the GLD/Inventory rests  tonight at 949.69 tonnes.
Nov 4/NO CHANGES IN THE GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 949.69 TONNES/
NOV 3/ a huge deposit of 4.43 tonnes of gold into the GLD/Inventory rests at 949.69 tonnes
NOV 2/ A DEPOSIT OF 2.67 TONNES OF GOLD INTO GLD/INVENTORY RESTS AT 945.26 TONNES
Nov 1/no change in gold inventory at the GLD/inventory rests at 942.59 tonnes
Oct 31/no changes at the GLD/Inventory rests at 942.59 tonnes
Oct 28/no changes at the GLD/Inventory remains at 942.59 tonnes
OCT 27/NO CHANGES AT THE GLD/INVENTORY REMAINS AT 942.59 TONNES
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Dec 1/ Inventory rests tonight at 883.86 tonnes
*IN LAST 41 TRADING DAYS: 65.95 TONNES REMOVED FROM THE GLD

end

Now the SLV Inventory
Dec 1/no changes in silver inventory at the SLV/inventory rests at 346.150 million oz/
NOV 30/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 346.150 MILLION OZ
Nov 29/no changes in silver inventory /inventory rests tonight at 346.150 million oz/
Nov 28/no change in silver inventory/inventory rests tonight at 346.150 million oz/
Nov 25/we had another withdrawal of 949,000 oz from the SLV/Inventory rests at 346.150 million oz
Nov 23/A HUGE WITHDRAWAL OF 3.083 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 347.099 MILLION OZ
NOV 22/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 350.182 MILLION OZ
Nov 21/a MASSIVE 6.071 MILLION OZ OF SILVER WITHDRAWN FROM THE SLV VAULTS/INVENTORY RESTS AT 350.182 MILLION OZ/AND SILVER HOLDS IN PRICE???
Nov 18/no changes in silver inventory at the SLV/Inventory rests at 356/253 million oz
Nov 17/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 356.253 MILLION OZ/
Nov 16.no change in silver inventory at the SLV/Inventory rests at 356.253 million oz/
NOV 15/a withdrawal of 474,000 oz (.474 million oz) from the SLV inventory/inventory rests at 356.253
Nov 14/a withdrawal of 1.329 million oz from the SLV/Inventory rests at 356.727 million oz
Nov 11/a withdrawal of 1.379 million oz from the SLV/Inventory rests at 358.056 million oz
Nov 10/an addition of 949,000 oz added into the SLV/Inventory rests at 359.435 million oz
Nov 9/no change in silver inventory at the SLV/Inventory rests at 359.435 million oz/
Nov 8/no changes in silver inventory at the SLV/inventory rests at 358.435 million oz
Nov 7/no changes in silver inventory at the SLV/Inventory rests at 358.435 million oz
Nov 4/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 358.435 MILLION OZ
NOV 3/ a huge withdrawal of 2.807 million oz leaves the SLV: somebody was badly in need of silver/inventory rests at 358.435 million oz
NOV 2/ A DEPOSIT OF 569,000 OZ INTO THE SLV/INVENTORY RESTS AT 361.242
Nov 1/no change in silver inventory at the SLV/inventory rests at 360.673 million oz/
Oct 31/no change in silver inventory at the SLV/Inventory rests at 360.673 million oz/
Oct 28/NO CHANGE IN SILVER INVENTORY AT THE SLV/iNVENTORY RESTS AT 360.673 MILLION OZ
OCT 27/A MONSTROUS WITHDRAWAL OF 5.987 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 360.673 MILLION OZ  (AND YET NO CHANGE IN THE SILVER PRICE???)
.
Dec 1.2016: Inventory 346.150 million oz
 end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 7.4 percent to NAV usa funds and Negative 7.4% to NAV for Cdn funds!!!! 
Percentage of fund in gold 61.0%
Percentage of fund in silver:38.7%
cash .+0.3%( Dec 1/2016)
.
2. Sprott silver fund (PSLV): Premium RISES to +.08%!!!! NAV (Dec 1/2016) 
3. Sprott gold fund (PHYS): premium to NAV falls TO – 0.68% to NAV  ( Dec 1/2016)
Note: Sprott silver trust back  into POSITIVE territory at +0.08% /Sprott physical gold trust is back into NEGATIVE territory at -0.68%/Central fund of Canada’s is still in jail.
 

END

FEDERAL RESERVE BANK OF NEW YORK;  FOREIGN GOLD MOVEMENTS

Last month I reported to you that 5 tonnes of gold moved out of the FRBNY which was much smaller than before as Germany was not getting its required amount of gold.

Now this month:

FRBNY gold holdings Sept:  7841

FRBNY gold holdings Oct:  7841

all figures are million dollars worth of gold at the official rate of 42.22 dollars per oz

amount leaving: 0

Amount repatriated:  zero

Germany must be royally angry!

(HARVEY)

end

Major gold/silver stories for THURSDAY

GOLDCORE/BLOG/MARK O’BYRNE

Blockchain Technology – What Is It and How Will It Change Your Life?

  • Blockchain technology – What is it?
  • Latest developments – Royal Mint Gold & CME, Goldman Sachs and Santander
  • Why do we need it? It’s about value
  • Blockchain is an extension of economics
  • Blockchain allows us reduce uncertainty and risk
  • How will it change your life?

By @Skoylesy . Editor @MarkTOByrne

For those of you who follow anything to do with blockchain and blockchain technology,  you will know that the space has had its ups and downs in the last couple of weeks.

The exciting news is that two major players in the gold market, the Royal Mint and CME Group have announced a blockchain-backed gold project, and the surprising news is that the R3CEV consortium is apparently under threat.

Making a mint on the blockchain

The Royal Mint and CME Group have announced that they are working on a blockchain project together. The project will see the creation of Royal Mint Gold (RMG) digital tokens which will each be backed by 1g gold.

We will look at the Royal Mint’s announcement in more detail shortly, particularly at how they expect the implementation of a blockchain-backed platform to mean that they are able to remove storage fees.

But the focus of today’s research note is to look at why blockchain is grabbing everyone’s attention.

The use of blockchain technology in the gold space is nothing new, it is something we discussed recently in regard to changes in the gold market and the risks posed to the London gold market.

However, the move by the world’s oldest gold organisation is an illustration of just how complimentary the technology that was first known for backing ‘digital gold’ (bitcoin) and the longest surviving money, really are.

Goldman Sachs and Santander Drop Out of R3 Consortium

In recent weeks, both Goldman Sachs and Santander have dropped out of the R3CEV consortium, whilst a further five (including Morgan Stanley and National Australia Bank) are also rumoured to be about to leave.

R3 is a blockchain company formed of a consortium of near 70 banks and financial institutions (including those focused on insurance). It leads research and development in distributed ledger technology, and is currently raising $150m.

However the move by those mentioned above is a positive sign, and one that shows the blockchain (or distributed ledger technology) industry is maturing. Shake-outs are inevitable in new technology industries as institutions, governments and regulators negotiate their way through new developments and working out what it means for them.

Those companies that are set to leave the consortium are still committed to the ground-breaking technology. Goldman Sachs and Santander are both, for example, still shareholders in Blythe Masters’ Digital Asset Holdings. The former co-led a $60 million investment into the business alongside IBM.

Even CME Group, as mentioned earlier, are involved in multiple blockchain projects, as a member of the industry body Post Trade Distributed Ledger Group (PTDL) (fellow members include the London Stock Exchange, Euroclear and HSBC) and the Hyperledger project.

But what is it about this technology that is so groundbreaking and has the likes of Goldman Sachs investing millions and ex-senior JP Morgan banker, Blythe Masters breaking rank and joining a (well-funded) start-up?

Why are established gold-market participants deciding this is the technology they need to bring the space into the 21st century?

Uncertain about blockchain?

Bettina Warburg, presented a TED Talk over the summer in one of the best explanations we have seen for a long-time, that will help you to understand the power of blockchain technology.

https://embed.ted.com/talks/bettina_warburg_how_the_blockchain_will_radically_transform_the_economy

Ultimately blockchain’s genius comes down to its ability to reduce uncertainty in the transfer of value – whether that value is information, a digital asset, a contract note, an agreement or a deed – you name something that is effectively information and it has value.

The exchange of value is something we have sought for millennia to reduce the uncertainty of, and it has resulted in the formal and informal institutions and systems we have today.

Ranging from regulators, to oversized banks like Goldman Sachs, to lawyers, to barter systems.

What is blockchain?

“So what is the blockchain?” Warburg explains it well:

“Blockchain technology is a decentralized database that stores a registry of assets and transactions across a peer-to-peer network. It’s basically a public registry of who owns what and who transacts what. The transactions are secured through cryptography, and over time, that transaction history gets locked in blocks of data that are then cryptographically linked together and secured. This creates an immutable, unforgettable record of all of the transactions across this network. This record is replicated on every computer that uses the network.”

Never seen before

The concept of blockchain, something that can be decentralised, can operate autonomously, is auditable and apparently immutable is something that is difficult to get our heads around. The closest description Warburg can provide is Wikipedia.

“We can see everything on Wikipedia. It’s a composite view that’s constantly changing and being updated. We can also track those changes over time on Wikipedia, and we can create our own wikis, because at their core, they’re just a data infrastructure. On Wikipedia, it’s an open platform that stores words and images and the changes to that data over time.”

There are of course further technical details to blockchain, but at its core it is a very similar concept.

“On the blockchain, you can think of it as an open infrastructure that stores many kinds of assets. It stores the history of custodianship, ownership and location for assets like the digital currency Bitcoin, other digital assets like a title of ownership of IP. It could be a certificate, a contract, real world objects, even personal identifiable information….It’s this public registry that stores transactions in a network and is replicated so that it’s very secure and hard to tamper with.”

This is where much of the attraction comes for the gold market. In itself gold is an immutable form of money, it cannot be edited, multiplied and in many ways it is an autonomous currency.

However the market that drives the prices is none of these things. By placing gold on a blockchain, we may get the first steps to a truly autonomous gold market that is about price discovery rather than price creation.

Why do we need it? It’s about value

Bettina points out that much of human behaviour comes down to how we exchange value. This has lead to a huge number of industries developing that are, at their core, about value.

They are about how we attribute value to items, how we exchange value and how we maintain value.

Blockchain will “fundamentally change how we exchange value”.

Why is this? Because the blockchain has a capability that no human-managed organisation has yet managed to master – the removal of uncertainty through technology.

Blockchain is an extension of economics

It still surprises me the number of people who haven’t heard of bitcoin, and even those who have heard of bitcoin are unaware of blockchain. Blockchain is the technology that underpins bitcoin, but it is so much more than the ledger of a cryptocurrency.

Blockchain means that we may no longer have to use the layers of bureaucracy in order to reduce uncertainty. Warburg sees the potential of blockchain as an extension of Nobel Prize winning economist Douglass North’s ‘New Institutional Economics’.

Institutions, in this context, are just the rules (and organisations, whether informal or formal) that implement them e.g. the law or just bribery.

“As Douglass North saw it, institutions are a tool to lower uncertainty so that we can connect and exchange all kinds of value in society. And I believe we are now entering a further and radical evolution of how we interact and trade, because for the first time, we can lower uncertainty not just with political and economic institutions, like our banks, our corporations, our governments, but we can do it with technology alone.”

Knowing that these organisations exist form the rail on which we operate our lives, our businesses and our economies. In the future blockchain will act as the rails that reduce uncertainty, on top of which we will exchange value through digital assets.

The uncertainties of life

“Blockchains give us the technological capability of creating a record of human exchange, of exchange of currency, of all kinds of digital and physical assets, even of our own personal attributes, in a totally new way. So in some ways, they become a technological institution that has a lot of the benefits of the traditional institutions we’re used to using in society, but it does this in a decentralized way. It does this by converting a lot of our uncertainties into certainties.”

For Warburg there are three uncertainties when it comes to transferring value:

1) Not knowing who you are dealing with
2) Degrees of transparency in complex transactions and supply chains
3) Reneging on an agreement – no recourse if it goes wrong

The uncertainty of the unknown party

Today, with many of the transactions we are able to take part in, the uncertainty is reduced thanks to verification. Whether this be by receiving a bank transfer from someone who has been verified by their own (also verified bank) or if it is booking AirBnb which you trust thanks to social verification, GoldCore customer reviews on Ekomi, personal reviews and links to Facebook profiles.

Warburg points out this is a very fragmented system. I have bank accounts in the UK, but if I want to open an additional one in the same country I have to be verified all over again. One verification does not determine the next. “Think about how many profiles you have,” says Warburg.

“Blockchains allow for us to create an open, global platform on which to store any attestation about any individual from any source. This allows us to create a user-controlled portable identity. More than a profile, it means you can selectively reveal the different attributes about you that help facilitate trade or interaction, for instance that a government issued you an ID, or that you’re over 21, by revealing the cryptographic proof that these details exist and are signed off on. Having this kind of portable identity around the physical world and the digital world means we can do all kinds of human trade in a totally new way.”

In the project announced by the Royal Mint and CME Group there is expected to be transparency over the ownership records – to those who have access to the ‘permissioned’ ledger.

Degree of transparency

At the moment there is very little transparency and accountability when it comes to the London Gold Market and it’s over-the-counter (OTC) trading. This can be difficult to contend with given so much physical gold demand is, in its simplest from, based on transparency and trust. Yet as gold product providers such as ETFs and digital gold providers grow in power we appear to forget why we trust gold in the first place.

For many one of the key issues with the way gold products are traded is a lack of transparency over the underlying asset or currency – physical gold.

However, blockchain can potentially be used to bring some of the much-missed transparency to the gold market. This is when we start to use the phrase ‘trustless’ which is a bit of a mind-upset for those who are new to bitcoin and blockchain.

A trustless transaction is where the participants do not need to trust one another, as instead a blockchain (which is verified, immutable and decentralised) is used to monitor and validate the information in a supply chain. Imagine what this could mean in a network of goods and data that currently can be tampered with – medicines, technology, designer items.

This means that in theory it should not matter when you are dealing with a multi-party horizontal supply chain, which each have different infrastructures, about whether you can trust them or not as there is ‘one single truth’.

This is something we have not had before – we have an unbelievable lack of transparency, which currently we rely on layers of verification agents (lawyers, compliance, personal trust) to provide visibility.

“We can create a decentralized database that has the same efficiency of a monopoly without actually creating that central authority. So all of these vendors, all sorts of companies, can interact using the same database without trusting one another. It means for consumers, we can have a lot more transparency. As a real-world object travels along, we can see its digital certificate or token move on the blockchain, adding value as it goes. This is a whole new world in terms of our visibility.”

Reneging – no going back with blockchain

The ability to solve this uncertainty is the application of blockchain that really put it on the map. Smart-contracts are where we are seeing some serious innovation. Currently we rely on legal entities and processes to guarantee our transactions.

Supply finance is one particularly complicated area that is built on layers of organisations and timings in order to facilitate deals. A more familiar example is the process of buying a house – something that is inordinately lengthy, time-consuming and expensive for what is basically the exchange of a good (too often) financed with debt.

Both of these examples rely on third parties to create trust within a transaction, to enforce it because of the checks that are put in place. But blockchain now enables us to do away with the bureaucracy and red tape, as the code acts as the enforcer.

Warburg uses the example of purchasing a smart-phone online:

“Blockchains allow us to write code, binding contracts, between individuals and then guarantee that those contracts will bear out without a third party enforcer. So if we look at the smartphone example, you could think about escrow. You are financing that phone, but you don’t need to release the funds until you can verify that all the conditions have been met. You got the phone.”

And this, I agree with Warburg, is one of the most exciting things about blockchain’s ability to lower our uncertainties:

“…because it means to some degree we can collapse institutions and their enforcement. It means a lot of human economic activity can get collateralized and automated, and push a lot of human intervention to the edges, the places where information moves from the real world to the blockchain.”

Will it change my life?

The reason blockchain is so groundbreaking is because it is both a technological disruption and economic evolution. It has combined the human need to reduce uncertainty with mathematics and technology. Its end result is a system free of layers.

“…the very thing that keeps the blockchain secure and verified, is our mutual distrust. So rather than all of our uncertainties slowing us down and requiring institutions like banks, our governments, our corporations, we can actually harness all of that collective uncertainty and use it to collaborate and exchange more and faster and more open.”

It is difficult to see how it won’t change our lives.

The implications for a world that is affected from the top to the bottom by institutions that are required to manage our mutual distrust, is unfathomable.

But this is where many will take issue. Why would an institution be it government, bank, legal entity, regulator or compliance company decide to invest in and implement a system that is, at its core, designed to do their job?

Why embrace a blockchain that could expose unethical, illegal practices?

Why operate on a blockchain that removes the need for expensive lawyers, compliance officers etc.

In truth the concept of blockchain in practice is far more complex than it initially appears. There can be multiple blockchains. Some operate privately between a select network, some are public (such as the bitcoin blockchain) and others a hybrid of the two.

Blockchains can be implemented to do an inordinate number of processes that we are hardly aware of, the whole time keeping the current status-quo just more efficient. And this is why everyone is looking into using the technology.

That may seem depressing but it will lead to many, many positive developments in terms of ethical behaviours, regulated activities, efficiencies in deal-making and even reducing payment costs.

For many the discussion is beyond this, it’s not will or how but when?

The short-answer is not for a while. Unless you are an avid bitcoin user, trader or enjoy taking part in initial coin offerings. In the long-term it probably will affect your life, but the masses may barely know about it.

At the moment there are few applications (other than bitcoin) that are up and running in the real world. But the possibilities really do appear to be infinite and it is with this in mind that regulators are launching incubators, insurance companies are hosting hackathons, banks are investing in blockchain tech projects and venture capitalists (VCs) are snapping up anything that merely mentions the phrase ‘decentralised ledger’.

For Warburg, we will soon see a world where blockchain technology and distributed, autonomous organisations will “have quite a significant role.”

We concur.

Watch Warburg Blockchain Ted Talk
ReadBlockchain Promises To Be As Disruptive A Technology As Internet
ReadBitcoin and The Blockchain – Banks Must Embrace Or “Die”
Read Gold, Silver, Blockchain and Fintech – Solutions To Negative Rates, Bail-ins, Cash Confiscations and Cashless Society

 

Gold and Silver Bullion – News and Commentary

Gold sinks to lowest in 10 months; firm dollar, chance of U.S. rate hike weigh (Reuters.com)

Gold Slips As China Curbs Imports To Slow Capital Flight (ZeroHedge.com)

Tumbling Gold Prices Mean More Pain for Barrick & Newmont But… (Barrons.com)

Bank of England Sees Economic Risks From Trump and Brexit (WSJ.com)

Bucket of gold flakes valued at $1.6 million stolen from truck (Edition.com)

7RealRisksBlogBanner

World is feeling the might of China’s commodity traders (Bloomberg.com)

John Embry – Some Long Time Gold Holders Are Now Capitulating… (KingWorldNews.com)

Michael Oliver – Conspiracy Theorists Would Use This As Evidence Of Central Bank Manipulation Of The Gold Market (KingWorldNews.com)

Paul Craig Roberts Denounces Gold Market Rigging (USAWatchDog.com)

China’s ‘extraordinary leverage’ tops Bank of England’s growing list of concerns (CNBC.com)

Gold Prices (LBMA AM)

01 Dec: USD 1,168.75, GBP 930.09 & EUR 1,099.68 per ounce
30 Nov: USD 1,187.40, GBP 952.06 & EUR 1,115.44 per ounce
29 Nov: USD 1,187.30, GBP 952.45 & EUR 1,119.98 per ounce
28 Nov: USD 1,189.10, GBP 956.51 & EUR 1,117.99 per ounce
25 Nov: USD 1,187.50, GBP 953.30 & EUR 1,121.83 per ounce
24 Nov: USD 1,187.25, GBP 953.60 & EUR 1,125.04 per ounce
23 Nov: USD 1,213.25, GBP 980.00 & EUR 1,143.00 per ounce

Silver Prices (LBMA)

01 Dec: USD 16.30, GBP 12.91 & EUR 15.35 per ounce
30 Nov: USD 16.67, GBP 13.39 & EUR 15.66 per ounce
29 Nov: USD 16.54, GBP 13.26 & EUR 15.61 per ounce
28 Nov: USD 16.68, GBP 13.45 & EUR 15.73 per ounce
25 Nov: USD 16.47, GBP 13.21 & EUR 15.55 per ounce
24 Nov: USD 16.31, GBP 13.09 & EUR 15.43 per ounce
23 Nov: USD 16.56, GBP 13.36 & EUR 15.59 per ounce


Recent Market Updates

– RBS Fail Bank of England Stress Test
– Peak Silver – Supply Deficits Mean Higher Prices
– Bail In Risk – €4 Trillion Banking System In Italy Poses Contagion Risk as Referendum Looms
– Gold Down 13.5% In 13 Days – Trump Bearish For Gold?
– War On Cash Just Got Real – India and Citibank In Australia
– Russia Gold Buying In October Is Biggest Monthly Allocation Since 1998
– Stocks, Bonds, Pension Funds “Will Be Wiped Out…” – Rickards
– Physical Gold Is A “Long-Term Position” as “Hedge Against Governments”
– Gold Sell Off On Fed Noise – “Interesting Times” To “Support Gold”
– Islamic Gold – Vital New Dynamic In Physical Gold Market
– Peak Gold Globally – “Bullish For Gold”
– Gold Price Should Go Higher On Global Risks and Trump – Capital Economics
– President Trump – Why Market Loves Him and Experts Wrong

 

end

 

trouble overnight as the bubble in industrial base metals collapsed. We have had a bubble built up in these assets immediately after the Trump victory.  Hot money poured into these commodities due to Trump willing to jump start infrastructure spending in the uSA. The problem here is the huge excess storage of these metals and last night it burst

 

(courtesy zerohedge)

“Metals Traders On Red Alert” – Chinese Commodity Bubble 2.0 Just Imploded

Industrial metals commodity prices plunged by the most since March in the last 2 days as China’s exchanges (once again) clamped down on speculation by tightening trading rules. As Bloomberg reports,for the second time this year, trading has exploded on the nation’s exchanges, pushing prices of everything from zinc to coal to multi-year highs and sending authorities scrambling to deflate the bubble before it bursts.

Metals brokers described panic earlier this month as the frenzy spread to markets in London and New York, prompting wild swings in prices that show no signs of abating.

“I can recall only two other occasions in my career where there was such panic and devastating price action in copper but this market today is far less transparent,”

While billions of yuan have poured in from herd-like Chinese retail investors who show little regard for market fundamentals, brokers and traders say even more is coming from an expanding army of deep-pocketed hedge funds. They’re chasing better returns in commodities as stocks and real estate fade, often using algorithms and trading late into the night, when markets in London and New York are most active.

“There is no doubt that the price moves and the bigger volumes worldwide are being driven by the Chinese, and by professional speculators and financial players,”said Tiger Shi, managing partner at brokerage BANDS Financial Ltd., which counts several of those funds as clients. “The western hedge funds and institutional investors don’t really know what’s going on. Often they were used to trading macro factors or Fed policy, but now they find they have fewer advantages.”

And it was never going to end well…

Zinc Futures have plunged over 10% in the last 2 days (after surging over 27% since the start of November).

Steel Rebar is tumbling…

And Iron Ore futures have collapsed more… twice…

Think it’s the Trump-Trade? Think again. Fundamentally, as Bloomberg highlights, there is massive oversupply. Iron ore port inventories in China are near the highest since September 2014 and are up 19 percent this year, according to Shanghai Steelhome Information Technology Co. Top producer Vale SA reiterated its output guidance of 360 million to 380 million tons for 2017 on Tuesday and expects to produce 400 million to 420 million tons the year after.

So what is it? What had driven this panic-buying in industrial commodities? Simple – another Chinese speculative bubble…

Iron ore and steel futures trimmed their second monthly advance as bourses in Dalian and Shanghai moved to deflate a boom driven partly by speculative trading.

The Dalian Commodity Exchange raised margin requirements and the Shanghai Futures Exchange capped some positions. These measures have taken some speculative steam out of the market, according to Justin Smirk, a senior economist at Westpac Banking Corp.

As the Chinese commodity bubble of March/April is back and trading volumes explode relative to open interest…

NOTE: SHFE updated their Zinc “control measures” once again tonight, capping new positions at 1500 lots.

Thanks to hot money flows…

“Commodities market volatility is liquidity driven, as money from commercial bank wealth management products and private banking accounts flow into the market seeking higher return,”

And an increase in algos…

The use of algorithmic trading, in which computers execute multiple orders in milliseconds, is turbo-charging volume and volatility, according to Fu Peng, a portfolio manager at Lianzhan Global Macro Fund Management Co. About a third of activity on Chinese exchanges is executed by automated commands, which generates more volume and greater momentum on global markets, Shi estimates.

“The machine component in the market is now so much bigger as is the onshore retail and fund involvement on the Shanghai Futures Exchange and OTC options.”

Similar to the last frenzy in April, the government-owned exchanges have stepped in to cool trading by raising fees and margins, or cutting the number of new positions allowed daily. In the latest move, the Shanghai Futures volume and turnover have since come off their highs but prices are still swinging.

So with the China Commoditty Echo Bubble now bursting, the big question is, where does the hot money flow next? As Socgen shows, Chinese ‘gamblers’ have chased stocks (and lost), dumped capital (Yuan loss), piled into commodities (in March/April) and lost, rotated into housing (until the government choked that off), and then sent bond yields to record lows…

As Fu at Lianzhan Global Macro Fund noted:

“The nation’s supply-side reforms had a big impact on the market balance, and that’s the fundamentals behind the trading,”

But at the same time, we’ve got too much money there. There have been no returns from investment in industries. The stock market is neither dead nor alive. Investment in real estate also got curbed. So all the money is rushing into commodities.”

But now, Chinese housing is at record highs, Chinese stocks are falling, Chinese bonds are falling, and Chinese commodities are tumbling… the only thing with momentum for the hot money to chase in the currency… and we suspect (by recent liquidity withdrawals) that The PBOC has had enough of that.

“The massive and unprecedented surge in Chinese trading volume in base metals over the past month — but especially since the election — has put LME metals traders on red alert,” Tai Wong, director of commodity products trading at BMO Capital Markets in New York.

end
China has seen huge amounts of dollars leave China as citizens realized that their currency was overvalued.  China announced tighter curbs on citizen gold imports trying to slow the relentless capital flight.  However banks with licenses to import will continue to buy gold as well as sovereign China.
(courtesy zero hedge)

Gold Slips As China Curbs Imports To Slow Capital Flight

While all eyes were on India (as rumors swirled of an imminent gold import ban), The FT reports that China curbed gold imports in the wake of government attempts to clamp down on capital leaving the country, according to traders and bankers.

Some banks with licences have recently had difficulty obtaining approval to import gold, they said — a move tied to China’s attempts to stop a weakening renminbi by tightening outflows of dollars, the banks added.

The hit to gold imports comes as China tightens restrictions on overseas deals by state-owned companies in an effort to limit capital outflows that has seen the renminbi fall to its lowest against the dollar in eight years.

When the headline hit, gold futures legged lower, but are rebounding…

As The FT notes, quotas for importing gold have been cut during quarterly assessments this year. Banks also have dollar quotas, some of which must be used when buying gold.

The limits on imports bite as the weakening renminbi raises Chinese investors’ interest in gold. Lower gold prices have also triggered more buying.

The combination of tighter quotas and an uptick in demand caused the premium for gold in China over the international gold price to jump as high as $46 in the past few weeks, according to data from Wind Information. Normal levels are about $2 to $4.

In an effort to ease that premium, Chinese banks have been allowed to import gold under their quotas using the offshore renminbi, one banker said. Although still high, the premium for gold on the Shanghai Gold Exchange has since fallen to $26, according to Wind data.

If the restrictions on imports are sustained that could raise questions about China’s moves to open its gold market to international traders. The world’s largest consumer of the precious metal has moved to have a greater voice over the price of gold.

 

 

 

END

 

The following Bloomberg paper talked about the bubble forming in the base metals inside China:

(courtesy Bloomberg/GATA)

The world is feeling the might of China’s commodity traders

Section:

From Bloomberg News
Tuesday, November 29, 2016

The Chinese speculators shaking up global commodity markets are switched-on, flush with cash and probably not getting enough sleep.

For the second time this year, trading has exploded on the nation’s exchanges, pushing prices of everything from zinc to coal to multi-year highs and sending authorities scrambling to deflate the bubble before it bursts. Metals brokers described panic earlier this month as the frenzy spread to markets in London and New York, prompting wild swings in prices that show no signs of abating.

While billions of yuan have poured in from herd-like Chinese retail investors who show little regard for market fundamentals, brokers and traders say even more is coming from an expanding army of deep-pocketed hedge funds. They’re chasing better returns in commodities as stocks and real estate fade, often using algorithms and trading late into the night, when markets in London and New York are most active.

“There is no doubt that the price moves and the bigger volumes worldwide are being driven by the Chinese, and by professional speculators and financial players,” said Tiger Shi, managing partner at brokerage BANDS Financial Ltd., which counts several of those funds as clients. “The Western hedge funds and institutional investors don’t really know what’s going on. Often they were used to trading macro factors or Fed policy, but now they find they have fewer advantages.” …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2016-11-29/the-year-the-world-fe…

 

 

END

 

Michael Oliver, a technical analyst describes in detail gold market rigging

(courtesy Michael Oliver/GATA)

Michael Oliver suspects, Paul Roberts denounces gold market rigging

Section:

10:45p ET Wednesday, November 30, 2016

Dear Friend of GATA and Gold:

In commentary at King World News, Michael Oliver of Momentum Structural Analysis sees the recent lockdown of the gold price as evidence of market manipulation:

http://kingworldnews.com/michael-oliver-conspiracy-theorists-would-use-t…

Interviewed by USA Watchdog’s Greg Hunter, former Assistant Treasury Secretary Paul Craig Roberts couldn’t be more direct about it. “The markets are all rigged,” Roberts says. “So when you try to look at the markets in traditional ways such as price-earnings ratios, earnings growth, sales growth, or any things like this, they don’t know anything because the Federal Reserve has probably the largest trading desk in the world. They can trade anything, in fact, everything, and they have no limits on their pocketbook. …

“For the Fed to protect the dollar’s exchange value from the massive outpouring of dollars that the Fed created to buy all the bonds, they had to stop the dollar from falling in relation to gold. So they have to sell massive amounts of gold shorts in the futures markets. This is how they knock the gold price down. …”

Roberts’ interview is posted at USA Watchdog here:

http://usawatchdog.com/fake-news-list-death-knell-for-msm-paul-craig-rob…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

 

 

 

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 UP to 6.8872(SMALL DEVALUATION SOUTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN NARROWS COMPLETELY TO 6.8890 / Shanghai bourse CLOSED UP 23.27 POINTS OR 0.72%   / HANG SANG CLOSED UP 88.46 OR 0.39%

2. Nikkei closed UP 204.64 POINTS OR 1.12% /USA: YEN FALLS TO 114.36

3. Europe stocks opened ALL IN THE RED     ( /USA dollar index FALLS TO  101.24/Euro UP to 1.0616

3b Japan 10 year bond yield: RISES    +.031%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 113.01/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  50.17  and Brent: 52.69.

3f Gold DOWN /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 RISES TO +.309%   

3j Greek 10 year bond yield FALLS to  : 6.50%   

3k Gold at $1169.25/silver $16.44(7:45 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 25/100 in  roubles/dollar) 63.86-

3m oil into the 50 dollar handle for WTI and 52 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 114.36 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  1.0133 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0757 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 POSITIVE territory with the 10 year RISES to  +.225%

/German 9+ 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 2.41% early this morning. Thirty year rate  at 3.07% /POLICY ERROR) GETTING DANGEROUSLY HIGH

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

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

HELICOPTER MONEY STILL ON THE TABLE FOR THE FUTURE/JAPANESE STIMULUS PLAN DISAPPOINTS

S&P Futures, Europe, Dollar Drop; Yields Rise As WTI Advances Above $50

Following a November to remember, which saw tremendous market gains following the election of Donald Trump, December has started off on the back foot, with US equity futures lower, European stocks halting a two day advance ahead of the Italian referendum, US Treasury yields higher and the US dollar backing away from a 9 month high.

One place where recent euphoria has continued was oil, where following yesterday’s OPEC oil deal and 9% surge in crude, WTI continued its ascent and was trading above $50 in early trading, however skepticism about the rally is building with stories such as “Oil price rally likely short-lived as OPEC deal not enough to reduce glut” from Reuters and “Hangover Awaits as OPEC Celebrates Its Biggest Accord in Years” from Bloomberg.

Analyst were also skeptical: “Oil could go up to $60, but then the shale drillers come out and the price will likely come back down,” Keigo Matsubara, chief financial officer of the Japanese trading house said in an interview Thursday. “Oil can’t continue over $50.”

“The question is whether this (production cut) is going to put a floor under the oil price from here. The answer to that could well depend on what happens with the global economy in the coming year,” said Simon Smith, chief economist at FXPro.

All eyes are now on whether the OPEC deal will hold together. If the bounce in oil prices gathers pace after the OPEC deal it was expected to have a broad implication on the global economy. OPEC’s output cut is also seen as a boon for U.S. shale producers, rivals to the oil cartel. The S&P energy index .SPNY jumped nearly 5 percent on Wednesday.

While November may have been one of the most unforgettable months in markets in years, December is shaping up just as exciting: this is the month of the Italian referendum, the Austrian election (where Europe’s first far right leader since WWII could be elected), a probable Fed hike (only the second in 10 and a half years) and a big ECB decision on what next for QE.

Ahead of these events, the U.S. dollar declined against most of its 16 major peers before a payrolls report on Friday, while a measure of euro volatility jumped to the highest since before the Brexit vote as investors brace for Italy’s referendum and Austria’s presidential election on Dec. 4 and the European Central Bank’s policy decision in a week’s time.

The jump in oil prices added to inflation expectations in the United States, which were already rising on prospects that president-elect Donald Trump would adopt reflationary policies using a large fiscal stimulus. As a result the rout in U.S. Treasuries resumed, with yields pushing higher, especially on longer-dated bonds.

The overnight slump in Treasuries extended the biggest climb in 10-year yields since 2009. The 10Y Treasury yield increased three basis points to 2.41% after surging nine basis points Wednesday to their highest close since July last year. It jumped 56 basis points last month. The 30-year yield has climbed more than 40 basis points since the Nov. 8 presidential election, heading back towards a 14-month peak of 3.09 percent marked last week.

“Higher oil prices, talk of ultra-long issuance in the U.S. and strong U.S. data all helped push U.S. yields higher,” RBC Capital markets said in a note to clients on Thursday. “This remains our key theme for next year as well – we believe U.S. yields will keep leading the charge higher on improving macro backdrop and rising inflation expectations.”

10Y German bunds added 4 bps to 0.31%. Not surprisingly, according to Roger Bridges, the chief global strategist for interest rates and currencies in Sydney at Nikko Asset Management’s Australia unit, “a lot of people are beginning to think that it is the end of the bull rally.” The Bloomberg Barclays Global Aggregate Total Return Index of bonds fell 4 percent in November, biggest decline since index started in 1990.

The Stoxx Europe 600 Index lost 0.5% as all but three of the 19 industry groups retreated. S&P 500 Index futures slid 0.1 percent, signaling U.S. shares may continue their Wednesday decline. Glencore Plc gained 3 percent after saying its debt reduction plan is on track and it will reinstate its dividend next year. Banco Popular Espanol SA rose 3.5 percent after a report the lender is weighing a potential merger with another bank and has approached Banco Bilbao Vizcaya Argentaria SA, among others. Daily Mail and General Trust Plc rose 6.4 percent after it reported 2016 revenue that beat estimates.

“We are all waiting for the NFP tomorrow, the referendum in Italy this weekend and the ECB next week,” Athanasios Vamvakidis, head of G-10 currency strategy at Bank of America Merrill Lynch, said in an email. “It’s consolidation ahead of key events.”

Today, traders will be looking to non-farm payrolls data for more clues on the pace of interest-rate increases, after ADP Research Institute reported the biggest jump in private-sector workers since June.

Market Snapshot

  • S&P 500 futures down 0.1% to 2196
  • Stoxx 600 down 0.5% to 340
  • DAX down 0.7% to 10569
  • German 10Yr yield up 4bps to 0.31%
  • Italian 10Yr yield up 1bp to 2%
  • Spanish 10Yr yield up 1bp to 1.57%
  • S&P GSCI Index up 0.5% to 378.9
  • MSCI Asia Pacific up 0.6% to 137
  • Nikkei 225 up 1.1% to 18513
  • Hang Seng up 0.4% to 22878
  • Shanghai Composite up 0.7% to 3273
  • S&P/ASX 200 up 1.1% to 5500
  • US 10-yr yield up 3bps to 2.41%
  • Dollar Index down 0.27% to 101.23
  • WTI Crude futures up 0.5% to $49.70
  • Brent Futures up 0.7% to $52.21
  • Gold spot down 0.4% to $1,168
  • Silver spot down 0.8% to $16.38

Top Global News

  • Starboard Said to Push Rockwell Collins to Reassess B/E Deal: Activist said to take Rockwell Collins stake to push for sale
  • Destructive Hacks Strike Saudi Arabia, Posing Challenge to Trump: Multiple attacks eminated from Iran, digital evidence suggests
  • China Factory Gauge Jumps as Borrowing Boosts Old Drivers: Manufacturing PMI rises to 51.7, services advance to 54.7
  • Credit Suisse Said to Freeze Accounts in Search for U.S. Assets: U.S. prosecutors now asking why $200 million was hidden
  • Goldman Sees Oil Breaking $60 If OPEC Deal Done as Promised: Full OPEC compliance, Russia’s curb bullish for oil
  • United May Amend $12.4 Billion Airbus Deal to Take Smaller Jets: CFO Levy says A350-1000s may be swapped for smaller aircraft
  • SAC Capital to Pay $135 Million to End Last Insider Case: Steve Cohen’s old firm agrees to settle with Elan shareholders
  • Georgia Won’t Publish Chicken Price This Week on Lack of Data: Agriculture department says too few producers participating
  • Russia Weaponized Social Media in U.S. Election, FireEye Says: Senate Democrats want data on Russian hacking declassified

* * *

Looking at regional markets, Asia stocks shrugged off the weak close in the US and traded higher across the board amid encouraging Chinese PMIs and strength in energy following the OPEC output deal. Energy names led in the ASX 200 (+1.1%) on the back of an almost 10% surge in oil prices after OPEC reached an agreement to cut output by 1.2mln bpd to 32.5mln bpd starting in January. Nikkei 225 (+1.2%) initially soared to its best level this year on JPY weakness after USD/JPY broke above 114.00 in the prior session, although the index failed to maintain YTD highs on profit taking and a pull-back in USD/JPY. Shanghai Comp (+0.7%) and Hang Seng (+0.3%) were underpinned after Chinese Official Mfg PMI topped estimates to post its highest since July 2014 and although the Caixin Mfg PMI was at a slight miss, it still represented a 5th consecutive month of expansion. 10yr JGBs saw spill-over selling from USTs, with demand for JGBs also dampened amid gains in stocks. However, 10yr JGBs pared some losses despite a softer 10yr auction than the previous month, as the results were deemed roughly consistent with this year’s averages.

  • Chinese Manufacturing PMI (Nov) 51.7 vs. Exp. 51.0 (Prey. 51.2), highest level since July 2014.
  • Chinese Non-Manufacturing PMI (Nov) 54.7 (Prey. 54.0) highest level since June 2014.
  • Chinese Caixin Manufacturing PMI (Nov) 50.9 vs. Exp. 51.0 (Prey. 51.2).

Top Asian News

  • PBOC Seen Shifting Focus in Yuan Battle as Foreign Reserves Drop: China said to have set up new hurdles for yuan, M&A outflows
  • India Manufacturing PMI Slips From 22-Month High After Cash Ban: Nov. reading was 52.3, first indicator since cash decision
  • Rupee’s November Swoon Casts Shadow on India Unhedged Debts: India Inc. due to repay $10 billion of overseas debt by March
  • Alphadyne Said to Spin Off $2 Billion Singapore Hedge Fund Unit: Transition to new firm said to start in first half of 2017
  • DBS Eliminates a Dozen Jobs at Brokerage as Trading Slumps: Value of shares traded in city-state down 24% from 2013

European equities have spent the session in the red (Euro Stoxx: -0.4%) with underperformance seen in defensive names. This comes after the significant strength seen during yesterday’s session in tandem with the OPEC deal, with energy names continuing to outperform today. Financials are also higher this morning, with Deutsche Bank leading the way higher in the DAX, Italian Banks the best performers in the FTSE MIB and Banco Popular the best performer in Europe after dual reports of potential interest from BBVA and reports that the chairman may be replaced. Fixed income markets have seen yields rise, with the US 10Y breaking above 2.4% to reach its highest level since July 2015, while over in Europe outperformance has been seen in the periphery. Also of note, today sees supply from both Spain and France.

Top European News

  • Glencore’s Reversal of Fortune Marked by Return to Dividends: Investors weren’t expecting a dividend reinstatement, Goldman says
  • Maersk Line Teams Up With Oetker Group to Buy Hamburg Süd: World’s No. 1 shipping line will take over the industry’s seventh biggest container liner
  • Euro-Area Manufacturing Picks Up as Weaker Euro Bolsters Exports: Purchasing Managers’ Index for manufacturing rose to 53.7 from 53.5 in October

In currencies, the dollar slipped 0.2 percent to 114.27 yen at 10:15 a.m. in London. It weakened 0.3 percent versus the euro to $1.0616, while the pound was also up 0.3 percent to $1.2544. Bloomberg’s Dollar Spot Index slid 0.2 percent after advancing 0.5 percent Wednesday, leaving it up 3.9 percent in November, the most since September 2014.  Traders are paying the most since June’s peak to protect against price swings in the euro versus the dollar, according to one-week implied volatility in the currency pair. The yuan dropped 0.1 percent onshore, reflecting dollar strength, and gained 0.2 percent offshore amid strengthening factory gauges and a crackdown on capital flow.

In commodities, West Texas Intermediate crude added 0.9 percent to $49.87 a barrel after trading as high as $50.24 earlier. It surged 9.3 percent last session, the biggest one-day gain since Feb. 12. It ended November up 5.5 percent. The OPEC-led deal was broader than many people had expected, given that it extended beyond the bloc with Russia agreeing to unprecedented cuts to its own output. U.S. natural gas futures for January rose to highest for front-month contract since December 2014 as cold weather seen sweeping west. Gold slipped 0.3 percent to the lowest level since February. Zinc gained 0.6 percent, while copper fell 0.8 percent. Metals in London in November had their best month since 2010.

Looking at the day ahead, we’ll firstly get the latest weekly initial jobless claims reading, followed then by the final manufacturing PMI revision, construction spending and the ISM manufacturing print for November (market consensus is for 52.5 versus 51.9 in October). Later the November vehicle sales numbers will also be released (expected to decline modestly). Away from the data the Fed’s Mester and Kaplan are both due to speak again, while the ECB’s Coeure is also scheduled to speak.

US Event Calendar

  • 7:30am: Challenger Job Cuts y/y, Nov. (prior -39.1%)
  • 8:30am: Initial Jobless Claims, Nov. 26, est. 253k (prior 251k)
  • 8:30am: Fed’s Mester speaks in Washington
  • 9am: Fed’s Kaplan speaks in San Antonio
  • 9:45am: Bloomberg Consumer Comfort, Nov. 27 (prior 44.8)
  • 9:45am: Markit US Manufacturing PMI, Nov. F, est. 53.9 (prior 53.9)
  • 10am: ISM Manufacturing, Nov., est. 52.5 (prior 51.9)
  • 10am: Freddie Mac mortgage rates
  • 10:30am: EIA natural-gas storage change

* * *

DB’s Jim Reid concludes the overnight wrap

Welcome to December the month of the Italian referendum, the Austrian election (where Europe’s first far right leader since WWII could be elected), a probable Fed hike (only the second in 10 and a half years) and a big ECB decision on what next for QE. So it is unlikely to be quiet. Ahead of this today I find out whether my second knee operation in 18 months was a success or not as the 5-month MRI results will be reviewed by the consultant. Last night I spent an hour on YouTube learning to self diagnose the CD of the scan which was probably a very silly thing to do. All I know is there is a river of swelling still slushing around my knee and that my meniscus doesn’t look anything like the 25-year olds I saw on the YouTube clip.

One asset that made a very late run towards the top was Oil. OPEC yesterday announced their first oil production agreement in 8 years which will see production cut by 1.2 mmb/d to about 32.5 mmb/d for six months from the start of January 2017, with the option to extend the agreement to the end of 2017. Aggregate production has been stated in terms of the 14 OEPC members including Indonesia, although Indonesia is no longer a member as of this meeting. Non-OPEC members including Russia have also agreed to lower production by 600 kb/d. The heavy lifting though looks set to be done by Saudi Arabia who has agreed to reduce output by 486 kb/d. At the same time the Saudi’s appear to have softened their stance on Iran somewhat with the latter now freezing production at just shy of 3.8 mmb/d and marginally higher than current levels. Iraq, who had previously disputed cutting, agreed to a cut of 210 kb/d.

By the end of play WTI had closed up +9.31% at $49.44/bbl. It had been up a little more than 10% at one stage although just failed to break the $50/bbl mark. Brent had no such issue though and smashed through $50 to close +9.55% or $4.50 higher on the day at $51.84/bbl. The move for WTI in particular is the biggest one-day gain since February 12th. In fact we thought it would be interesting to see how many times WTI has risen more than yesterday on a single day. Bloomberg pricing data goes back to 1983 and in the 8435 trading days since then, yesterday ranks 33rd by largest one day moves in both percentage terms and also in Dollar terms.

Our commodity strategists pointed out in their note last night that the agreement is more bullish than market expectations in that first, the 33.0 mmb/d upper limit in the range has been omitted, leaving the 32.5 mmb/d as the sole target level. Second, the non-OPEC contributions of 600 kb/d have been described as nearly agreed, with Russia and Oman having been named as key contributors. That said while the agreement is clearly a big help for the demand-supply rebalancing, our colleagues still remain sceptical that the full non-OPEC reduction will be realised. They retain their pre-existing expectation of OPEC-14 production at 33.2 mmb/d in 2017 (32.46 mmb/d excluding Indonesia which has now left the organisation) and reaffirm their price forecasts for next year at $55/bbl for Brent and $53/bbl for WTI.

The biggest feed through to other asset classes from the Oil move was in sovereign bond markets where the reflationary effect had yields spiking higher. 10y Treasury yields surged 9bps to 2.382% after peaking a little above 2.400%, and in the process closed at the highest yield since July 2015. Yields are now over 100bps higher than where they were just 5 months ago. There was a similar move for EM sovereigns while in Europe 10y Bund yields edged up just over 5bps to 0.271%. BTP’s outperformed again with 10y yields ‘only’ 4bps higher. Aiding the bond-selloff though was some decent data in the US. In particular the ADP employment change reading which came in ahead of consensus at 216k (vs. 170k expected) ahead of tomorrow’s payrolls. More on the other data shortly.

Meanwhile it was a much more mixed performance across equity markets. Despite a near 5% rally for the energy sector and also a strong day for financials following a positive reaction to the appointment of Steven Mnuchin as US Treasury Secretary – who has since told CNBC to expect ‘the largest tax change since Reagan’ – and the move for rates, those gains were more than offset by weakness across utilities, telecoms and the consumer staples sectors resulting in the index closing down -0.27% by the final bell. It was a slightly better tone in Europe though with the Stoxx 600 edging up +0.31% while the Italian FTSE MIB (+2.23%) concluded its second consecutive >2% bounce ahead of this Sunday’s referendum.

This morning in Asia, with Oil largely consolidating gains, a surge for energy stocks has led bourses higher in the region. The standout is the Nikkei (+2.15%) which has also benefited from a much weaker Yen yesterday, while the Hang Seng (+0.69%), Shanghai Comp (+0.52%), Kospi (+0.08%) and ASX (+0.91%) have also edged higher. Helping sentiment too was the release of the November PMI’s in China this morning. The official manufacturing PMI has risen 0.5pts to 51.7 (vs. 51.0 expected) and to the highest since July 2014, while the non-official PMI rose 0.7pts to 54.7 which is the highest since June 2014. The independent Caixin survey did however paint a slightly different picture with the manufacturing reading edging down 0.3pts to 50.9 with most sub indices also softening.

Back to the remaining US data yesterday. There was a positive readthrough from the latest personal income print which rose +0.6% mom in October (vs. +0.4% expected), with data in the month prior also revised up. Personal income rose +0.3% mom during the month (vs. +0.5% expected) but September data was revised up two-tenths meaning the YoY rate rose to +4.2% and the most since January 2015. The PCE core rose +0.1% mom as expected while the deflator rose a little bit less than expected (+0.2% mom vs. +0.3% expected). Meanwhile, the Chicago PMI rose a bumper 7pts to 57.6 (vs. 52.5 expected) which is the highest since January 2015 and a positive read across for today’s ISM manufacturing. The final data to note was the October pending home sales data where sales were reported as rising +0.1% mom as expected in October.

Before we move to today’s diary, a quick wrap up of yesterday’s data in Europe. The highlight was perhaps the flash Euro area CPI report for November which revealed headline inflation of +0.6% yoy which is up one-tenth from October and in fact the highest reading since April 2014. The core was unchanged at +0.8% yoy. In Germany retail sales rose a bumper +2.4% mom in October (vs. +1.0% expected) while Germany’s unemployment was reported as holding steady last month at 6%. In France, CPI came in slightly ahead of consensus for last month in the flash reading (0.0% mom vs. -0.1% expected), helping to raise the YoY rate to +0.5% from +0.4%. The last thing to note is the BoE’s Financial Stability Report and the latest round of stress test results. According to the report the ‘the economy has entered a period of adjustment following the EU referendum’ and so ‘the likelihood that some UK specific risks to financial stability could materialize remains elevated’. Meanwhile the stress tests revealed that there are some ‘capital inadequacies’ at three institutions. It was noted however that ‘the banking system is in aggregate capitalised to support the real economy in a severe, broad and synchronised stress scenario’.

Looking at the day ahead, this morning in Europe we kick off with the November Nationwide House price index reading for the UK. After that it’s all about the manufacturing PMI’s where we’ll get final revisions for Germany, France and the Euro area as well as a first look at the data for the non-core and the UK. Also due out today is the latest unemployment rate print for the Euro area. This afternoon in the US we’ll firstly get the latest weekly initial jobless claims reading, followed then by the final manufacturing PMI revision, construction spending and the ISM manufacturing print for November (market consensus is for 52.5 versus 51.9 in October). Later this evening the November vehicle sales numbers will also be released (expected to decline modestly). Away from the data the Fed’s Mester (1.30pm GMT) and Kaplan (2pm GMT) are both due to speak again, while the ECB’s Coeure is also scheduled to speak.

3.REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed UP 23.27 POINTS OR 0.72%/ /Hang Sang closed UP 88.46  OR 0.39%. The Nikkei closed UP 206.64 OR 1.12%/Australia’s all ordinaires  CLOSED UP 1.05% /Chinese yuan (ONSHORE) closed UP at 6.8872/Oil ROSE to 50.17 dollars per barrel for WTI and 52.69 for Brent. Stocks in Europe: ALL IN THE RED.  Offshore yuan trades  6.8890 yuan to the dollar vs 6.8872  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS HUGELY AS CHINA ATTEMPTS TO STOP MORE USA DOLLARS  LEAVING CHINA’S SHORES / CHINA SENDS A CLEAR MESSAGE TO THE USA AND JANET  TO NOT RAISE RATES IN DECEMBER.

3a)THAILAND/SOUTH KOREA/:

b) REPORT ON JAPAN

Another good one from Graham Summers:

Has the election of Trump caused Japan to ignite the huge 10 trillion of uSA  dollar carry trade that is short dollars?

(courtesy Graham Summers/Phoenix Capital)

Is Japan About to Ignite the $10 Trillion $USD Carry Trade?

Phoenix Capital Research's picture

 

 

end

 

c) Report on CHINA

Both China and the USA experienced a huge rise in bond yield last night.  Thus the bond bloodbath is back!!

(courtesy zero hedge)

The Bond Bloodbath Is Back: US, Chinese Yields Soaring

Following the worst month for risk-parity funds since 2015, we suspect month-end redemptions are driving both stocks and bonds (4x levered on average) lower out of the gate in November. Extending yesterday’s losses, US Treasury yields are explding higher once again (long-end underperforming) following China’s bond market’s biggest yield spike in years overnight.

China bond yields hit 2016 highs overnight as the liquidity crisis grows…

But the long-end of the UST curve is now up 15bps from yesterday’s lows…

Notably, the 10Y Yield is now just 15bps away from Goldman Sachs’ “equity-worrying levels”

China Losing Control? PBOC Imposes New Yuan Outflow Limits For First Time In Two Decades

Late last week, we reported that in its latest push to limit and/or halt capital outflows, China unveiled new capital controls meant to stem further capital flight disguised as outbound M&A by clamping down with tighter controls on Chinese companies seeking to invest overseas, intensifying efforts to slow a surge in capital fleeing offshore amid tepid growth and an uncertain economic outlook. Beijing was said to focus on “extra-large” foreign acquisitions valued at $10 billion or more per deal, property investments by state-owned firms above $1 billion and investments of $1 billion or more by any Chinese company in an overseas entity unrelated to the investor’s core business. The new controls would apply to deals yet to receive approval from China’s top economic planning agency.

It did not end there.

One month after we noted a Bloomberg report that China was preparing to impose curbs on Bitcoin – which has in the recent past become a widely accepted mechanism to bypass capital controls – including policies restricting domestic bitcoin exchanges from moving the cryptocurrency to platforms outside the nation and imposing quotas on the amount of bitcoins that can be sent abroad, overnight we learned that China was taking a page out of the Indian demonetization playbook, and was curbing gold imports in another attempt to clamp down on capital leaving the country.

As the FT reported, some banks with licences have recently had difficulty obtaining approval to import gold, they said — a move tied to China’s attempts to stop a weakening renminbi by tightening outflows of dollars, the banks added.

To summarize, in just the past month, China has unveiled at least three distinct sets of “controls” aimed at curbing capital flight out of China, at a time when as Goldman calculated recently, the true extent of capital outflows if far greater than what is reported by the central bank.

 

Then, overnight, the PBOC added a fourth unique form of “capital control” when China’s central bank announced it would limit the amount of renminbi that Chinese companies and individuals can remit outside the country, “imposing a cap for the first time in more than two decades”, according to the SCMP, to stem the yuan’s outflow as the currency plumbs daily lows.

As the Hong Kong publication reports, companies domiciled in China will be limited to net currency outflows equivalent to 30 per cent of the owners’ equity, according to Order No. 306 issued Monday by the People’s Bank of China. Commercial banks should “utilise an integrated prudential management for cross-border payment in both foreign currency and yuan,” according to the central bank’s statement.

Among the other rules established by the PBOC in setting yuan-denominated loans to overseas entities, are the following, courtesy of Bloomberg and Reuters:

  • Onshore corporates can only make yuan loans within quota; banks should stop handling business if cos use up quota
  • Lender also has to have been registered for at least a year; borrower has to be a related entity
  • Lender can’t make personal loan to overseas borrower, and also can’t use debt financing for purpose of an overseas loan to a foreign entity
  • Party making a yuan loan to an overseas entity must first register the loan with SAFE; must keep loan within a certain limit which wasn’t specified
  • Lenders should have shareholding relationships with borrowers
  • Banks need to strictly examine whether use of yuan funds offshore is genuine and appropriate
  • Interest rates for loans need to be above 0%
  • Tenor should be 6 mos to 5 yrs; loans with maturities of 5 yrs or above need to be registered at local PBOC branches
  • If lenders can’t justify why borrowers don’t repay debt on time, banks need to stop handling new business and report it to local PBOC branches

This is a stunning reversal in government policy, which had previously encouraged the renminbi’s worldwide usage, part of a long-term strategy to internationalise the currency, culminating with the renminbi’s admission into the IMF’s SDR basket. Needless to say, the latest announcement will hardly impress the IMF which has been pushing for less government control of the currency.

As SCMP notes, among the other measures, not listed above to halt capital flight, the central bank has instituted a range of measures to plug gaps where the currency could be remitted amid its 7 per cent slump this year against the US dollar, from banning Chinese citizens from buying insurance policies offshore, to requiring credit card companies to seek currency licenses.

* * *

Two days ago, Horseman Global’s Russell Clark asked “Is China running out of money.” With every incremental “capital control” the answer is becoming increasingly obvious.

 

 

end

4 EUROPEAN AFFAIRS

oH oh! The ECB just leaked that their QE program cannot go on for ever.  Thus the whisper is that they are preparing to taper their bund purchases of German bonds.  This caused the yield to rise 30 basis points in minutes. With the USA tightening, the world was expecting to ECB and Japan to carry the torch with additional QE.  Problems ahead

(courtesy zero hedge)

Taper Tantrum 2.0: German Bunds Tumble On Report ECB Is Preparing To Taper Bond Purchases

Someone at Reuters must be really short Bunds.

One week ago, 2Y German Bunds tumbled after a Reuters report came out, according to which the ECB was looking for ways to lend out more of its huge pile of government debt to avert a freeze in the €5.5 trillion repo market that underpins the financial system, manifesting in the surge in short-term Bunds. The effect of that particular report lasted for all of one day as the market realized that no matter what the ECB does, the collateral shortage is likely to persist.

Fast forward to today, when the same thing happened, only this time, to the long end, when Reuters reported that, in advance of its March 2017 meeting, the ECB was considering sending a “formal signal after its policy meeting next Thursday that the program will eventually end.” As a result, Bund futures quickly slid to session low, dropping ~30 ticks in 10 minutes, on the back of the Reuters report.

In other words, tapering is coming. However, the ECB is not sure what form said tapering will take, especially since the primary message to be delivered is that QE will be extended beyond March, when it was originally scheduled to end, even if it is modestly (or not so modestly) reduced.

Reuters notes that even skeptics of more stimulus on the bank’s Governing Council “have accepted that an extension beyond the current expiry date of March is inevitable given weak underlying inflation and heightened political risk.

However, the question remains how to structure that extension.  According to Reuters, much of the preparatory staff work has focused on a six-month extension at a steady pace of 80 billion euros per month, an option favored by many as growth is sluggish, inflation lacks momentum and political risk from key elections keeps the chances of market volatility high, three sources said.

But some have indicated they would favor an extension at lower volumes, for example nine months at 60 billion euros a month, fearing that a straight extension could make the program appear open-ended, two of the sources said.

A compromise under discussion would be to signal the program’s eventual end, possibly in the bank’s forward guidance, indicating that the purchases cannot be extended indefinitely. Another option is not to specify monthly purchase volumes, essentially making them dependent on economic developments, the sources said, similar to what the BOJ has done with its curve control operation. That would allow the ECB to buy up to 80 billion euros without requiring it to spend the full amount.

“Coupled with the extension, there’s a sense that you need to send a signal, also for the hawks, that we will not be in the QE (quantitative easing) business forever,” one of the sources said. “We’re not talking about tapering. We’re talking about a signal.”

Actually, you are talking about tapering. However, the reason you don’t want to use that word is because when Bernanke uttered it in 2013, it unleashed the infamous Taper Tantrum in the US and globally, leading to a plunge in bond yields.

There is another problem: with the US tightening at a time when demand for US debt will have to stay constant or rise to fund Trump’s fiscal stimulus, it would be up to Japan and Europe to provide the “helicopter money” to fund US economic growth as DB explained. Even a small hint that this is going away, and suddenly the Trump stimulus is looking very shaky.

Sure enough, as Reuters admits, some proponents of the extension fear an ill-timed signal about reduced buying in future could heighten market volatility, potentially undoing some of the benefits of the scheme.

To be sure, it is not a done deal yet:

Extending the asset buys would require the ECB to ease some of its self-imposed restrictions, a sensitive debate as most options on the table raise legal or political concerns, facing varying degrees of opposition within the Governing Council.

Still, ECB President Mario Draghi seemed to dismiss those concerns this week, arguing that the program was sufficiently flexible, suggesting that parameter changes would not stand in the way if policymakers opted for the extension.

However, with a spate of economic and political events in the first two weeks of December, it just may be that a tapering announcement by the ECB is the catalyst that finally blows over the house of cards market that has soared since November 8 on nothing but hope and lack of concrete news.

 

 

END

 

Hollande will not run in the next French election and will no doubt be replaced by Valls  (current Prime Minister).  They will run against Marine LePen and Republican Fillon

(courtesy zero hedge)

 

Hollande Announces He Will Not Run For Re-election As French President

With almost 90% of the nation disapproving of him, it hardly a surprise that French President Hollande just told the nation that “for the good of his country” he will not run for Presidency in 2017 saying he was “conscious of the risks” a candidacy would have caused.

The unprecedented decision was driven by his historically low popularity ratings.

“Power and the exercise of power have not made lose my lucidity. And today, I am conscious of the risks that would create my candidacy for the majority,” he said in a solemn televised address on Thursday evening. “Therefore I have decided not to run for president for president”

He has had some of the worst approval ratings for a president in modern French history.

Polls so far indicated that Mr. Hollande, who has struggled to significantly reduce unemployment and whose term saw some of the worst terrorist attacks on French soil, would not make it past the first round of the elections, which will be held in April.

 

As Bloomberg reports,

French President Francois Hollande said he won’t run for re-election next year, stunning the country and potentially opening the way for Prime Minister Manuel Valls to run in his place.

 

Speaking in a televised address, Hollande acknowledged some mistakes, defended his record, and said he was putting the country’s needs ahead of his personal ambition.

 

He warned against the danger of protectionism and France turning in on itself.

His decision not to seek re-election means the Socialist Party will now go forward under a new candidate five years after Mr Hollande ended the centre-right’s 17-year stranglehold on the French presidency. The Socialist Party will select its candidate for the Elysee Palace in primaries in January.

While not unexpected it is imporant as it leaves the Republic likely to vote for the right wing Fillon or Right-er wing Le Pen.

Hollande’s prime minister Manuel Valls has hinted strongly that he will run instead in a bid to unite the fractured Socialist party against centre right candidate François Fillon and far right National Front leader Marine Le Pen

 

 

end

Just what Italy needed:  a massive explosion rocks one of Italy’s largest oil refineries in Northern Italy:

(courtesy zero hedge)

 

Massive Explosion Rocks One Of Italy’s Largest Oil Refineries

According to local press, a massive explosion has rocked one of Italy’s biggest oil refineries in Sannazzaro de’ Burgondi, near Pavia, about 40km south of Milan. Local authorities have ordered residents to stay indoors while an emergency plan is activated.

Explosion was reported at one of Italy’s biggest oil refineries some 40 km south of Milan, residents warned to stay indoors

The Department of Civil Protection in the Province of Alessandria says nearby emergency centers have been activated for monitoring and supervision, but people are advised to remain indoors in the meantime.

Local authorities are warning that the clouds of smoke are being pushed by winds towards Voghera, about 30km (19 miles) south of Sannazzaro, and are expected to remain over the site for the coming hours.

The fire at the Eni refinery broke out at around 3.40 p.m. generating a ball of fire tens of meters high, according to eyewitnesses cited by Il Giorno. Images and footage from the scene show an enormous column of black smoke rising overhead.

Eni has issued a statement saying efforts are underway to extinguish the fire and there have been no reports of any injuries. The company also said the cause of the blast is under investigation.

The fire, which broke out in the East Shipyard refinery area according to Il Fatto Quotidiano, comes after a similar incident in July where a worker suffered burns following an explosion at an older part of the plant.

 end

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

the relentless rise in the dollar has now caused the Turkish lira to collapse to 3.5 to the dollar, tumbling over 1.8% last night. Last week the Turkey raised rates but that could not stop the lira from tumbling.  Erdogan is demanding lower rates.

(courtesy zero hedge)

Turkish Lira Crashes To All Time Lows, Biggest Drop Since Failed Coup Attempt

6.GLOBAL ISSUES

In November, global bond loses total 1.7 trillion USA dollars. This is on top of the 1.1 trillion USA dollar loss in October.  Higher rates are causing the worst monthly meltdown in history!

(courtesy zero hedge)

Global Bonds Lose $1.7 Trillion In November, Worst Monthly Meltdown On Record

In early October, when speaking before the NY Fed, Bridgewater’s Ray Dalio made a prophetic warning: a 1% rise in yields from near-record low level would trigger “the worst decline in bonds since the 1981 bond market crash.” Less than two months later he has been proven right because while we have yet to see a move quite as large as the one Dalio envisioned, the November surge in global yields has already resulted in the worst monthly loss in the Bloomberg Barclays Global Aggregate Total Return Index, which lost 4% in November, the deepest slump since the gauge’s inception in 1990, and equivalent to $1.7 trillion in losses to $45.1 trillion.

Over the past two months, the cumulative loss in the index’s market value is now a massive $2.8 trillion leading leading Bloomberg to declare that “the 30-year-old bull market in bonds looks to be ending with a bang.

The conventional wisdom behind the move is by now familiar: hopes for U.S. economic momentum and Donald Trump’s election win,  with promises of tax cuts and $1 trillion in infrastructure spending, have spurred investors to dump debt that was offering near-record-low yields and pile into stocks.

Calling an end to the three-decade bond bull market is no longer looking like a fool’s errand: the Federal Reserve is expected to start raising interest rates — and do so more often than once a year, inflationary expectations are climbing and there are hints global central banks may be buying fewer sovereign securities going forward. Investors pulled $10.7 billion from U.S. bond funds in the two weeks after Trump’s victory, the biggest exodus since 2013’s “taper tantrum,” while American stock indexes jumped to record highs.

“A lot of people are beginning to think that it is the end of the bull rally,” said Roger Bridges, the chief global strategist for interest rates and currencies in Sydney at Nikko Asset Management’s Australia unit, which oversees $14 billion. U.S. 10-year yields may rise to 2.7 percent in January, Bridges said. “The trend is your friend.”

While the market’s fixation has been on recent equity market gains, the reality is that these have been more than offset by mark-to-market losses across the bond world. According to Bloomberg, the record rout which wiped our $1.7 trillion from the global index’s value in November, is nearly three times greater than the gain in world equity markets’ capitalization which rose by a more modest $635 billion.

And, as noted this morning, the pain continues: the yield on 10-year U.S. notes rose 56 basis points in November, the biggest jump since 2009, and was at 2.41% in early trading on Thursday. The average yield on the Bloomberg Barclays Global gauge climbed to 1.61 percent on Nov. 23, after touching a record low of 1.07 percent on July 5.

The rise in yields shows the limitations of the quantitative easing policies at the biggest central banks, Bridges said. Bonds will be especially vulnerable if the European Central Bank discusses reducing its debt-purchase program at its Dec. 8 meeting, he said.

With many investors having shifted out of risky assets and into duration in the past year, it remains to be seen how much of this loss will impact retail investor’s investing psychology once month-end P&L statements are sent out at the end of the month.

END

Another good Bellwether for global growth Caterpillar:  stock halted after they state analysts forecasts are way too optimistic:

(courtesy Caterpillar/zerohedge)

CAT Halted After 15% Post-Trump Spike: Warns Estimates “Too Optimistic”, Announces Cost Cuts, Layoffs

After soaring over 15% in the post-Trump period, Caterpillar shares are halted this morning ahead of a presentation at Credit Suisse Annual Industrial Conference. The presentation shows cost cuts, layoffs, and admits that 2017 consensus estimates are “too optimistic.”

Other highlights:

  • CATERPILLAR ON TRACK FOR OVER $2B COST REDUCTION FOR 2016
  • CAT: COST CUTS INCL COMBINED/REDUCED FUNCTIONS, FEWER PEOPLE
  • CAT: FIRST CALL 2017 CONSENSUS ESTIMATE $3.25 TOO OPTIMISTIC
  • CAT: FIRST CALL ’17 CONSENSUS EST. $38B SALES TOO OPTIMISTIC

CAT Halted…

Re-opened…Buy the dip…

Full Presentation… SEE ZERO HEDGE

END

7.OIL ISSUES

The very reliable OilPrice.com people gives reality to the OPEC deal announced yesterday. They are saying that we should downplay the deal.

(courtesy Paraskova/OilPrice.com)

$1 Trillion Money Manager Downplays The OPEC Deal

Submitted by Tsvetana Paraskova via OilPrice.com,

The market should not be overly enthusiastic over today’s oil price surge on reports that OPEC has managed to reach some kind of a deal to reduce supply, David Hunt, chief executive at asset manager PGIM, said in an interview with Bloomberg Televisionon Wednesday.

Hunt, CEO of the asset management group that manages US$1 trillion in assets, said theoil price surge today is “probably not” sustainable.

Earlier today, OPEC managed to reach the much-hyped agreement to cut output in a bid to boost oil prices. The ministerial meeting in Vienna is said to have clinched a deal to cut output by 1.2 million barrels per day to 32.5 million barrels per day, but the deal may come with a condition that non-OPEC producers also cut production, by some 600,000 bpd.

Oil prices are soaring on the OPEC deal news, and as of 10:50 AM (EST), WTI Crude was surging 7.21 percent at US$48.49, and Brent Crude was soaring by 7.65 percent at US$50.94, staying above the US$50 mark for a couple of hours now.

“For us who are long-term investors, we tend to look at the group of people who are gathering in Vienna and say ‘they’re fighting against history… The cost of producing crude, largely due to fracking technology, has dramatically changed the marginal economics of oil,”Hunt told Bloomberg Television.

According to Hunt, long-term investors like PGIM see the longer-run market fundamentals and sentiment as “much more important than whether we get a bounce of a couple of dollars on Brent today or not. Fundamentally the economics of oil have changed and we now need to work that through how different industries are pricing, and how commodities are priced on the basis of that”.

Hunt also cautioned against investors being too optimistic in the long run about equity indexes’ continued rally since Donald Trump was elected U.S. President.

end

Crude Oil is now in backwardation in the belly of the curve.  Generally backwardation means scarcity but not with oil as there is plenty of the black gold around. The backwardation generally means that the spot price of oil will not hold

(courtesy zero hedge)

OPEC Deal Sends Crude Curve Into Backwardation For First Time Since 2014

Following OPEC’s agreement to cut prodiction for the first time in 8 years, front-end prices have spiked (above $50) but perhaps more notable is the unusual ‘stability’ in the crude curve around $54 from July 2017 to Nov 2019.

For the first time since October 2014, the belly of the crude curve is in backwardation (far-months cheaper than near-months).

WTI Dec. 2017 contract was trading at -$1.35 discount to Dec. 2018 at market open yesterday; has now flipped to premium, or backwardation…

Perhaps of note is that the backwardation in Oct 2014 seemed to catalyze an acceleration in the plunge in crude prices but for now we note that hopeful bulls eying a return to old norms may be disappointed as so much of the medium-term appears hedged and wedged.

end

8.EMERGING MARKETS

Another view into Venezuela’s rapid ascent into the hyper inflationary world:

(courtesy zero hedge)

Venezuela Braces For Hyperinflation As Merchants Weigh “Mountains Of Cash” Instead Of Counting It

For anyone still curious what hyperinflation in real time looks like, here is the visual answer…

And as SHTFPlan.com’s Mac Slavo notes, Venezuela is deep into the death spiral, and things are likely to get worse before they get better.

 

As the South American nation’s paper currency continues to lose value with each passing day, the people of Venezuela are forced to carry piles of cash just to buy basic goods and services – with many merchants now literally weighing the next-to-worthless cash rather than wasting time to count it.

Clearly, this does not bode well.

Venezuela continues to repeat the mistakes of other failed states as its currency comes dangerously close to all-out hyperinflation, as has happened in Zimbabwe and Weimar Republic Germany.

via the UK Independent:

Inflation in Venezuela is expected to reach 720 per cent this year, with the largest bolívar bill now worth just five US cents on the black market.

Some shopkeepers have reportedly taken to weighing rather than counting the wads of cash customers hand them, and standard-size wallets have become all but useless in the socialist South American state. Instead, many people stuff huge volumes of cash into handbags, money belts, or backpacks, in scenes analysts have said aresuggestive of “runaway” inflation.

[…]

Humberto Gonzalez, who runs a delicatessen in the city, said he uses the same scales to weigh slices of salty white cheese and the stacks of bolívar notes handed over by his customers .

“It’s sad… at this point, I think the cheese is worth more.”

[…]

“When they start weighing cash, it’s a sign of runaway inflation,” he said. “But Venezuelans don’t know just how bad it is because the government refuses to publish figures.”

For several years now, President Maduro opted to continue printing more and more cash as a means of dealing with the oil crisis and the collapsing value of the bolívar, and as a result, the money just isn’t worth much at all.

The printing press simply cannot save the country from a death spiral, but it doesn’t mean Maduro is prepared to let go of power. He has maintained that Venezuela’s problems are due to economic warfare being waged by the United States to topple the oil-rich socialist regime.

Bremmer Rodrigues, who runs a bakery on the outskirts of Caracas, said his family are at a loss over what to do with their bags of bills. “It’s a mountain of cash, every day more and more.”

[…]

The shrinking value of the currency has meant that withdrawing the equivalent of £5 from an ATM produces a fistful of more than 100 bills. Some ATMs now need to be refilled every three hours, because the machines can only hold so much cash. This means there are often a limited number of functioning ATMs in Caracas, and long queues to withdraw money.

Venezuela is scheduled to reissue the currency at higher denominations, but it is unclear how much that will help the larger problems that the country faces.

Maduro has attempted to stave off collapse and avoid the inevitable by ruling with an iron fist.

As a result, the people have been forced to endure incredibly long lines to buy food rations; everyday life has been disrupted in every way possible, as crime and poverty have taken a toll on the population.

Food shortages and inflated black market prices for staples, meat and other necessities have driven many to poach stray animals for food and take other desperate measures. Malnutrition is becoming a rampant problem, and the health of the society in general is at a very stressed point.

As Shaun Bradley reported:

Life in Venezuela now consists of empty grocery stores, record rates of violent crime, and widespread shortages of just about everything. The economic and political conditions have been deteriorating for years, but recent stories coming from this once-rich nation are astonishing. Bars have run out of beer, McDonald’s can’t get buns for their Big Macs, and rolling blackouts are a regular occurrence. The average person spends over 35 hours a month waiting in line to buy their rationed goods, and even basics like toilet paper and toothpaste are strictly regulated.

Jason Marczak, director of the Latin America Economic Growth Initiative, spoke about the crisis:

“When people are literally going hungry and children are dying at birth because there aren’t the right medical supplies … when basic things like Tylenol aren’t even available … this causes a huge amount of angst in the population.”

screen-shot-2016-11-29-at-2-37-32-pm

The Bolivar drops to 4600 per one usa dollar, a drop of 15% in one day.

A great chart to see hyperinflation taking hold in  Venezuela

(courtesy zero hedge)

One Scary Chart: Venezuela’s Currency Disintegrates

It was just this past Monday when we were reported that the Venezuela currency, the Bolivar, had crashed below 3,000 for the first time ever, losing 15% of its value in just one day as the Venezuela hyperinflation had entered its terminal phase.

Today, the DolarToday.com website, maintained by a person the WSJ dubbed “Public Enemy No. 1 of Venezuela’s revolutionary government, Gustavo Díaz, a Home Depot Inc. employee in central Alabama” reports that having crossed the psychological 2,000 level ten days ago, and taking out the 3000 barrier earlier this week, the Bolivar has now plunged to a new all time low of 4,609.37 on the black market, dropping by 15% from its latest print of 2,972 reported on Friday of last week, and has lost 60% in its value just in the past month.

So for anyone still unsure what real-time hyperinflation looks like, here is the updated visual answer.

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

 

Euro/USA   1.0616 UP .0027/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/

USA/JAPAN YEN 114.36  DOWN 0.317(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 DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2641 UP.01280 (Brexit by March 201/UK government loses case/parliament must vote)

USA/CAN 1.3403 DOWN .0022 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION)

Early THIS THURSDAY morning in Europe, the Euro ROSE by 27 basis points, trading now WELL BELOW the important 1.08 level RISING to 1.0616; 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,  THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA / Last night the Shanghai composite CLOSED UP 23.27 0R 0.72%     / Hang Sang  CLOSED UP 88.46 POINTS OR 0.39%   /AUSTRALIA IS HIGHER BY 1.05% / 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 THURSDAY morning CLOSED UP 204.64 POINTS OR 1.12%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 88.46 OR 0.39%   Shanghai CLOSED UP 23.27 POINTS OR 0.72%   / Australia BOURSE IN THE GREEN /Nikkei (Japan)CLOSED UP 204.64 POINTS OR 1.12%/  INDIA’S SENSEX IN THE RED

Gold very early morning trading: $1168.70

silver:$16.41

Early THURSDAY morning USA 10 year bond yield: 2.41% !!! UP 4 IN POINTS from TUESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  3.07, UP 4 IN BASIS POINTS  from WEDNESDAY night.

USA dollar index early THURSDAY morning: 101.24 DOWN 29 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: 3.77% UP 6  in basis point yield from WEDNESDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.031% UP 1/2  in   basis point yield from  WEDNESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.615%  UP 6  IN basis point yield from  WEDNESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.05  UP 6  in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 46 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.369% up 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/2:15 PM

Euro/USA 1.0587 DOWN .0060 (Euro DOWN 60 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 114.21 UP: 1.754(Yen DOWN 176 basis points/ 

Great Britain/USA 1.2483 DOWN 0.0005( POUND DOWN 5 basis points

USA/Canada 1.3419 DOWN 0.0013(Canadian dollar UP 13 basis points AS OIL ROSE TO $49.49

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This afternoon, the Euro was UP by 63 basis points to trade at 1.0652

The Yen ROSE to 114.12 for a GAIN of 56 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 60 basis points, trading at 1.2573/

The Canadian dollar ROSE by 120 basis points to 1.3309, AS WTI OIL ROSE TO :  $51.51

The USA/Yuan closed at 6.8829
the 10 yr Japanese bond yield closed at +.031% UP 0 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 8   IN basis points from WEDNESDAY at 244% //trading well below the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.099 UP 6  in basis points on the day /

Your closing USA dollar index, 101.04 DOWN 49 CENTS  ON THE DAY/2.30 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 DOWN 30.86 POINTS OR 0.45%
German Dax :CLOSED DOWN 106.25 POINTS OR 1.00%
Paris Cac  CLOSED DOWN 17.93 OR .39%
Spain IBEX CLOSED DOWN 19.00 POINTS OR 0.22%
Italian MIB: CLOSED UP  167.92 POINTS OR 0.99%

The Dow was UP 69.35 points or 0.36%  4 PM EST

NASDAQ down  72.58  points or 1.36%  4.00 PM EST
WTI Oil price;  51.51 at 2:30 pm; 

Brent Oil: 54.22   2:30 EST

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  63.84 (UP  26/100 roubles from YESTERDAY)

TODAY THE GERMAN YIELD RISES  TO +0.369%  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:$50.91

BRENT: $53.65

USA 10 YR BOND YIELD: 2.454%

USA DOLLAR INDEX: 100.96 DOWN 57  cents(huge resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.25888./ UP 71  BASIS POINTS.

German 10 yr bond yield at 5 pm: +.369%

END

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

TRADING IN GRAPH FORM

Party’s Over? Bonds, Stocks, Dollar Dive As VIX Jumps Most In A Month

 

For Bondholders, Big Tech shareholders, and Mexicans, here’s the message…

 

Well if you thought November was turmoily, December is off to a turmoilier start…

  • Nasdaq worst 2 days in 3 months (below 50DMA)
  • VIX jumped most in a month (above 50DMA)
  • Treasuries worst since Trump election
  • Gold plunged to 10-month lows (but bounced)
  • WTI jumped to highest since July 2015

Following the worst 2 months for risk-parity funds since the taper tantrum…

 

Bonds and stocks were dumped today (as we suspect some RP deleveraging was hitting the market)…

 

A quick look at the day across asset classes shows the inflection point as Gundlach comments seemed to move markets…

 

For the second day in a row, Nasdaq was hammered at the US Open…

 

The Dow (blue) ended green  as Nasdaq (black) plunged along with Small Caps (red) and the S&P (green). NOTE: Dow closed at new record high up 68 points today (with Goldman Sachs and UNH accounting for 69 of those points)

 

VIX spiked (above 14.5) to its 50DMA and the S&P 500 fell to 8-day lows…

 

 

Another very ugly open for bonds ends on the bid… (again suggests RP deleveraging)

 

The USD Index slid lower once again once US markets woke up…

 

Gold was smacked again overnight (to 10-month lows)…

 

WTI Crude continued to rise to its highest since July 2015…

 

end

 

Trading highlights for today: uSA bond bloodbath:

(courtesy zero hedge)

Bond Blooodbath Leaves Entire Treasury Curve Underwater For 2016

The collapse of the US Treasury market in the last two days has sent the entire curve (from 2Y to 30Y) higher in yield on the year….

The belly is underperforming with 5Y and 7Y worst (+20 and 21bps respectively) with 2Y ‘best’ – yield up ‘only’ 11bps in 2016…

And US bond markets are drastically underperforming the rest of the developed world…

Strange:  initial jobless claims rise by over 35,000 since the election of Trump. Manipulation of numbers?  no it can’t be!

(courtesy zero hedge)

Initial Jobless Claims Soar Most In 2 Years Following Trump Election

In the two weeks since Donald Trump was elected, initial jobless claims have soared by over 35,000 (or over 15%) to 5-month highs. This is the biggest two-week rise since December 2014 and is entirely against the exuberant narrative being spun by US equity markets.

One can’t help but wonder what the sudden ‘odd’ collapse to 43 yeasr lows right into the election was all about…

end
The following is short and sweet and to the point:
Is Janet trying to crash stocks to screw Trump?
(courtesy Graham Summers/Phoenix Capital)

Is Janet Yellen Trying to Crash Stocks to Screw Trump?

 

 

end

 

You must pay attention to Jeff Gundlach, the bond king.  He states that the Trump rally is losing steam and that bond prices are still to fall, the dollar will fall and gold will rise

(courtesy Jeff Gundlach/zero hedge)

 

Jeff Gundlach Warns Yields And Stocks Have Peaked: “The Trump Rally Is Losing Steam”

Having predicted the Donald Trump victory, and nailing the upturn in US Treasury yields as well as the concurrent stork market rally, DoubleLine’s Jeffrey Gundlach appears to have once again taken the other side of the trade after riding it for the past 3 weeks, and is now considerably less exuberant on Trumponomics.

Speaking to Reuters, Gundlach said that markets could reverse the recent momentum in equities (something they appear to be doing this very moment), and at the very latest by U.S. President-elect Donald Trump’s Jan. 20, 2017 inauguration.

The new bond king said that the strong U.S. stock market rally, surge in Treasury yields and strength in the U.S. dollar since Trump’s surprising presidential victory more than three weeks ago look to be “losing steam,” Gundlach told Reuters in a telephone interview.

“The bar was so low on Trump to the point people were expecting markets will go down 80 percent and global depression – and now this guy is the Wizard of Oz and so expectations are high,” Gundlach said. “There’s no magic here.”

Putting money where his mouth is, Gundlach – who has been bearish on bonds for the past three months – said he had purchased Treasuries and Agency MBS as yields rose. 

In terms of specific forecasts, Gundlach said that the “dollar is going down”, bond yields and stocks have peaked, and gold will move up in the short term.

end
This is going to hurt:  The Government Accountability Office has released a report stating that the Obama plan to forgive student loans will cost taxpayers 137 billion dollars
(courtesy zero hedge)

Obama Student Loan Foregiveness Plan To Cost Taxpayers $137 Billion, GAO Finds

 

END

 

A good Bellwether in predicting global growth:  today Apple is reducing orders for iphone 7 stating the sales momentum is fading:

(courtesy Digitimes/zero hedge)

Trump’s Tax Cuts Imply Billions Worth Of Deferred Tax Asset Writedowns For Wall Street Banks

 

Trump picks Mad Dog Mattis as Sec.of Defense:

(courtesy zero hedge)

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