DEC 16/Gold and silver rise/huge amounts of gold leaves the comex/ huge premium averages 40 dollars with respect to gold fix in Shanghai vs NY pricing at exact same time/China devalues/China has failed treasury bill auction/China seizes USA vessel in South China seas in international waters/Greece at war with its Eurozone counterparts/Obama “declares war” with respect to Putin involved in the hacking of Democratic parties emails/FBI does a U turn and now states that Russia was involved in the hacking of emails/

Gold at (1:30 am est) $1135.80 up $7.50

silver  at $16.15:  up 25 cents

Access market prices:

Gold: $1135.00

Silver: $16.10



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:

FRIDAY gold fix Shanghai

Shanghai morning fix Dec 16 (10:15 pm est last night): $  1172.60

NY ACCESS PRICE: $1131.10 (AT THE EXACT SAME TIME)/premium $41.50


Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1172.91



China rejects NY pricing of gold  as a fraud/arbitrage will now commence fully


London Fix: Dec 15: 5:30 am est:  $1134.85   (NY: same time:  $1134.40    5:30AM)

London Second fix Dec 16: 10 am est:  $1131.60 (NY same time: $1131.40    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.


For comex gold: 


For silver:


Let us have a look at the data for today



In silver, the total open interest FELL by 2909 contracts DOWN to 161,570 with respect to YESTERDAY’S drive by shoooooting.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .807 BILLION TO BE EXACT or 115% of annual global silver production (ex Russia & ex China).


In gold, the total comex gold FELL BY ONLY 313 contracts DESPITE THE FACT THAT WE HAD A FALL IN  THE PRICE GOLD ($33.50 with YESTERDAY’S trading ).The total gold OI stands at 401,798 contracts. We are very close to the bottom with respect to OI. Generally 390,000 should do it.

we had 448 notice(s) filed upon for 44,800 oz of gold.


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


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

Inventory rests tonight: 842.33 tonnes



we had A HUGE  change in silver, A WITHDRAWAL OF 2.37 MILLION OZ FROM THE SLV/

THE SLV Inventory rests at: 338.693 million oz


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

1. Today, we had the open interest in silver FELL by 2909 contracts DOWN to 161,570 AS THE the price of silver FELL by A HUGE $1.25 with YESTERDAY’S trading.  The gold open interest FELL by only 313 contracts DOWN to 401,798 despite the fact that the price of gold FELL BY A HUGE  $33.50 WITH YESTERDAY’S TRADING.

(report Harvey).

2.a) The Shanghai and London gold fix report



2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3c) COT report



i)Late  THURSDAY night/FRIDAY morning: Shanghai closed UP 5.30 POINTS OR 0.17%/ /Hang Sang closed DOWN 38.65  OR 0.18%. The Nikkei closed UP 127.36 OR 0.66%/Australia’s all ordinaires  CLOSED DOWN 0.10% /Chinese yuan (ONSHORE) closed DOWN at 6.9586/Oil ROSE to 51.21 dollars per barrel for WTI and 54.53 for Brent. Stocks in Europe: ALL IN THE GREEN.  Offshore yuan trades  6.9485 yuan to the dollar vs 6.9586  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS COMPLETELY AS  MORE USA DOLLARS ARE BLOCKED FROM LEAVING CHINA’S SHORES /



none today


( zero hedge)


i)As I promised you, China devalues the yuan to its weakest fix since May 2008, a touch greater than 6.95.  Very shortly it will be over 7 and deflation will circle the globe.

( zero hedge)

ii)This is a little scary! State Media in China urges that Mainland China should retake Taiwan by force:

( zero hedge)

iii)A failed Chinese treasury bill auction and that should cause short term rates to rise putting tremendous pressure on their economy:

( zerohedge)

iv)The above seize of the USA drone caused the yuan to sink to a record low:

offshore Chinese yuan: 6.9666 from 6.9475

( zero hedge)


This does not look good for Greece as Tsipras infuriated his bosses (eurozone leaders) by giving over 600 million euros to low income pensioners as well as lowered the VAT on the important holiday Greek islands

looks to me like a war has developed between the two

(courtesy zero hedge)


i)Obama vows to retaliate against the Russian hacking. They are holding apress conference today at 2:15

( zero hedge)

ii)Obama vows revenge.  What exactly does he propose as he is set to leave office next month:

( the Real Fly)

iii)The Saudis are upset at the fact that the families of 9;11 can sue.  They will threaten the IPO will not be done on the New York Stock Exchange but may move to London:

( zero hedge)

iv) NSA whistleblower Binney states that there is hard evidence which points to an inside leak and not hacking by the Russians

(c zerohedge)

v)This does not look good:  the FBI does a U turn and agrees with the CIA assesment that Russia intervened in the election.

will this move the electors?

(courtesy zero hedge)



i)USA shale gas companies made no money at all for the last 7 years.  Not only that but they have not paid any royalties to their landowners as the taxes collected does not come close to outgoing costs by the state:

(courtesy St Angelo/SRSRocco report)

U.S. SHALE GAS INDUSTRY: Countdown To Disaster

ii)We knew that this was going to happen:  USA oil rig count surges and thus production from shale reaches a 7 month high:

( zero hedge)


none today


i)Ted Butler correctly states that JPMorgan has been quietly accumulating over .550 billion oz of silver to which it stores in its major vaults in New York.The evidence is 100% as we get to see each and everyday how JPMorgan is the stopper in silver. We have two schools of thought with the ownership:  does it belong to JPMorgan outright or are they proxy to that silver with the ultimate owner a sovereign like China or the USA. The USA may be accumulating silver to return it to China from which it loaned silver back in 2003.  The uSA then granted China favoured nation status.  No doubt China would want that silver back.

However what is very disconcerting is the massive short positions engaged by JPMorgan since 2008 with respect to silver comex future positions.(see my testimony on jPM at the CFTC gold/silver hearings at the right side of my blog)  It is legal to hedge but that silver was leave.  It is illegal and antitrust to trade on both sides and control the market pocketing billions of dollars as well as accumulating metal at the lower price because of the manipulation.  JPMorgan is too smart a group to participate in these chat discussions but they certainly were the ring leaders in silver as they basically controlled the market.

The CFTC regulators could easily prove that the silver (.55 billion oz) is sitting in JPMorgan’s vaults.  They also have access to the real data that shows how much short JPMorgan has built up over the years.  This should easily prove anti trust behaviour  and show that they are the ultimate leaders in the silver price fixing scheme:

It makes no difference whether JPMorgan is the ultimate owner or any sovereign, the result is the same: anti trust misfeasance.

( Ted Butler)

ii)The Avery Goodman is a must read: is the reason for the raids on gold and silver due to the fact that Trump will be in power in January 20 and will not allow gold to leave the USA vaults:

( Avery Goodman/ChrisPowell/two commentaries)


iii)Nick Laird has annotated the gold rigging with documentation

( Nick Laird/GATA)


i)The average consumer is laden with debt and to be exact it averages 133,000 per household; the debt has been securitized by our crooked bankers and sold through the globe.  What happens when interest rates rise:  the consumer is cooked and so is the securitization of that debt:

( zero hedge)

ii)Yesterday we received data that the homebuilder confidence soared despite higher interest rates, etc.  Strange today housing permits collapsed..and the confidence is high?

(courtesy zero hedge)

Let us head over to the comex:

The total gold comex open interest FELL BY 313 CONTRACTS UP to an OI level of 401,798 DESPITE THE HUGE DROP IN THE PRICE OF GOLD AS IT FELL $33.50 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 121 contracts DOWN to 1319.We had 158 notice(s) served upon yesterday so we GAINED 37 contracts or 3700 oz will stand for delivery.

For the next delivery month of January we had a LOSS of 67 contracts DOWN to 2273. For the next big active delivery month of February we had a LOSS of 98 contracts DOWN to 278,036.

We had 448 notice(s) filed upon today for  44,800 oz


And now for the wild silver comex results.  Total silver OI FELL by 2909 contracts FROM 164,479 DOWN TO 161,570 as the price of silver FELL BY $1.25 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 ROSE BY 138 contracts UP to 693 CONTRACTS . We had 83 notices served upon yesterday so we GAINED 221 contracts or an additional 1,105,000 oz will stand for delivery. SOMEBODY IS VERY ANXIOUS TO ACCUMULATE SILVER AND IT SURE LOOKS LIKE JPM IS DOING THE DEED.

The next non active delivery month is January and here the OI fell by 149 contracts down to 1290.

The next big active delivery month is March and here the OI FELL by 3284 contracts DOWN to 132,650 contracts.

We had 354 notices filed for 1,770,000 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 172,104  contracts which is fair.

Yesterday’s confirmed volume was 308,161 contracts  which is excellent  (raid day)

Initial standings for DECEMBER
 Dec 16.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 116,904.680 oz
incl. 500 kilobars
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
 192.770 oz
No of oz served (contracts) today
448 notice(s)
44,800 oz
No of oz to be served (notices)
871 contracts
87,100 oz
Total monthly oz gold served (contracts) so far this month
9084 notices
908,400 oz
29.255 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     4,151,056.9 oz
Today we HAD 1 kilobar transactions/and again massive amounts of gold leaves the comex vaults. (116,904.68 oz)
Today we had 0 deposit(s) into the dealer:
total dealer deposits:  nil  oz
We had nil dealer withdrawals:
total dealer withdrawals:  nil oz
we had 1 customer deposit(s):
 i) Into Brinks:  192.770 oz
total customer deposits; 192.77 oz
We had 2 customer withdrawal(s)
 i) out of Scotia; 100.829.68 oz
ii) out of Brinks: 16,075.000 oz  500 kilobars
total customer withdrawal: 116,904.680 oz
We had 1  adjustment(s)
i) Out of HSBC:  2801.085 oz leaves the customer account at HSBC and arrives at the dealer account of HSBC
Total dealer inventor 1,662,872.779 or 51.72 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 9,215,232.433 or 286.63 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 290.262 tonnes for a  loss of 16  tonnes over that period.  Since August 8/2016 we have lost 67 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 notice(s) 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 448 contract(s)  of which 27 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

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 (9084) x 100 oz or 908,400 oz, to which we add the difference between the open interest for the front month of DEC (1319 contracts) minus the number of notices served upon today (448) x 100 oz per contract equals 995,500 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 (9084) x 100 oz  or ounces + {OI for the front month (1319) minus the number of  notices served upon today (448) x 100 oz which equals 995,500 oz standing in this non active delivery month of DEC  (30.964 tonnes)
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.   30.964 tonnes
total for the 12 months;  223.519 tonnes
average 18.625 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: 199.276 tonnes per the 8 months or 24.909 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:  30.964 tonnes are standing vs last year’s  24 tonnes on first day notice and 6.45 tonnes on the completion of it’s delivery month.

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.
And now for silver
 Dec 16. 2016
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
Deposits to the Dealer Inventory
nil  OZ
Deposits to the Customer Inventory 
594,734.420 oz
No of oz served today (contracts)
(1770,000 OZ)
No of oz to be served (notices)
339 contracts
(1,695,000  oz)
Total monthly oz silver served (contracts) 3476 contracts (17,380,000 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  2,935,479.0 oz
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 1 customer withdrawal(s):
i) out of HSBC: 965.10 oz
 we had 1 customer deposit(s):
i) into Brinks:  594,734.480 OZ
total customer deposits;  594,734.48  oz
 we had 1 adjustment(s)
from the CNT vault:  646,884.067 oz was adjusted out of the dealer account and this landed into the customer account of CNT
Volumes: for silver comex
Today the estimated volume was 56,800 which is excellent
YESTERDAY’S  confirmed volume was 111,019 contracts  which is huge.
The total number of notices filed today for the DEC. contract month is represented by 354 contracts for 1,770,000 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  3476 x 5,000 oz  = 17,380,000 oz to which we add the difference between the open interest for the front month of DEC (693) and the number of notices served upon today (354) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the DEC contract month:  3476(notices served so far)x 5000 oz +(693) OI for front month of DEC. ) -number of notices served upon today (354)x 5000 oz  equals  19,075,000 oz  of silver standing for the DEC contract month.
we GAINED 221 contracts or an additional 1,105,000 oz will stand for delivery in this active month of December..
Total dealer silver:  37.25 million (close to record low inventory  
Total number of dealer and customer silver:   182.099 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.


At 3:30 pm we receive the COT which gives up position levels of our major players:

First the gold COT

Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
229,755 100,444 35,044 86,143 236,029 350,942 371,517
Change from Prior Reporting Period
2,080 9,149 1,071 -94 -5,152 3,057 5,068
169 87 79 49 49 243 193
Small Speculators  
Long Short Open Interest  
46,092 25,517 397,034  
453 -1,558 3,510  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, December 13, 2016
Gold COT: compiled one day before the huge raid day)
Our large speculators:
those large speculators that have been long in gold added 2080 contracts and ere no doubt were probably wiped out on the raid
those large speculators that have been short in gold added 9149 contracts to their short side
Our commercials:
those commercials that have been long in gold pitched a tiny 94 contracts from their long side
those commercials that have been short in gold covered another 5152 contracts from their short side.
Our small specs:
those small specs that have been long in gold added 453 contracts to their long side
those small specs that have been short in gold covered 1558 contracts from their short side
the commercials continue to go net long by 5058 contracts and that is bullish.
and now for our silver COT:
Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
87,040 20,107 9,621 41,867 122,998
5,545 -2,023 1,018 -1,214 4,177
103 38 42 30 41
Small Speculators Open Interest Total
Long Short 163,556 Long Short
25,028 10,830 138,528 152,726
-1,130 1,047 4,219 5,349 3,172
non reportable positions Positions as of: 149 108
Tuesday, December 13, 2016   ©

Our large speculators:

those large specs that have been long in silver added a huge  2080 contracts to their long side.

those large specs that have been short in silver covered 2023 contracts from their short side.


Our commercials;

those commercials who have been long in silver pitched 1214 contracts from their long side.

those commercials that have been short in silver added another huge 4177 contracts to their short side.


Our small specs:

those small specs that have been long in silver pitched 1130 contracts from their long side.

those small specs that have been short in silver added 1047 contracts to their long side.



commercials go net short by 5391 contracts and probably the reason for the raid on Wednesday. The bankers are having trouble getting those stubborn longs to liquidate their positions.

And now the Gold inventory at the GLD
Dec 16/no changes at the GLD/Inventory rests at 842.33 tonnes
DEC 14/another huge withdrawal of 6.82 tonnes from the GLD/Inventory rests at 849.44 tonnes/
DEC 13/no changes in gold inventory at the GLD/Inventory rests at 856.26 tonnes
Dec 12/a withdrawal of 1.19 tonnes of gold from the GLD/Inventory rests at 856.26 tonnes
Dec 9/another huge withdrawal of 3.26 tonnes of gold leaves the GLD vaults on its way to Shanghai/Inventory rests this weekend at 857.45 tonnes
DEC 7/ a huge change in gold inventory/a withdrawal of 6.23 tonnesas this gold is heading towards Shanghai/inventory rests at 863.67 tonnes
Dec 6/no changes in gold inventory/inventory rests at 869.92 tonnes.
Dec 5./ a tiny withdrawal of .32 tonnes and this is probably to pay for fees/inventory rests tonight at 869.92 tonnes
Dec 2/a huge withdrawal of 13.64 tonnes of gold leaving the GLD vaults/no doubt this is heading to Shanghai taking advantage of the huge premium/inventory rests tonight at 870.22 tonnes
Dec 1/no change in gold inventory at the GLD/Inventory rests at 883.86 tonnes
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 18/no changes at the GLD/Inventory rests at 920.63 tonnes
Dec 16/ Inventory rests tonight at 842.33 tonnes


Now the SLV Inventory
Dec change in inventory at the SLV/Inventory rests at 341.063 million oz/
DEC 13/ a huge withdrawal of 1.802 million oz from the SLV/Inventory rests at 341.063 million oz
Dec 12/no change in silver inventory/inventory rests at 342.865 million oz/
Dec 9/no change in silver inventory/inventory rests at 342.865 million oz/
Dec 8/a huge withdrawal of 3.09 million oz from the SLV/Inventory rests at 342.865 million oz
DEC7/no changes in silver inventory at the SLV/Inventory rests at 345.995 million oz/
Dec 6/no changes in silver inventory at the SLV/inventory rests at 345.995 million oz
Dec 5/no changes in silver inventory at the SLV/inventory rests at 345.995 million oz/
Dec 2 a tiny withdrawal of 155,000 oz and this is probably to pay for fees/inventory rests at 345.995 million oz/
Dec 1/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 18/no changes in silver inventory at the SLV/Inventory rests at 356/253 million oz
Dec 16.2016: Inventory 338.693  million oz

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 7.7% to NAV for Cdn funds!!!! 
Percentage of fund in gold 60.8%
Percentage of fund in silver:39.0%
cash .+0.2%( Dec 16/2016)
2. Sprott silver fund (PSLV): Premium FALLS to -.02%!!!! NAV (Dec 16/2016) 
3. Sprott gold fund (PHYS): premium to NAV RISES TO – 0.78% to NAV  ( Dec 16/2016)
Note: Sprott silver trust back  into NEGATIVE territory at -0.02% /Sprott physical gold trust is back into NEGATIVE territory at -0.78%/Central fund of Canada’s is still in jail.


Major gold/silver stories for FRIDAY



Ted Butler correctly states that JPMorgan has been quietly accumulating over .550 billion oz of silver to which it stores in its major vaults in New York.The evidence is 100% as we get to see each and everyday how JPMorgan is the stopper in silver. We have two schools of thought with the ownership:  does it belong to JPMorgan outright or are they proxy to that silver with the ultimate owner a sovereign like China or the USA. The USA may be accumulating silver to return it to China from which it loaned silver back in 2003.  The uSA then granted China favoured nation status.  No doubt China would want that silver back.

However what is very disconcerting is the massive short positions engaged by JPMorgan since 2008 with respect to silver comex future positions.(see my testimony on jPM at the CFTC gold/silver hearings at the right side of my blog)  It is legal to hedge but that silver was leave.  It is illegal and antitrust to trade on both sides and control the market pocketing billions of dollars as well as accumulating metal at the lower price because of the manipulation.  JPMorgan is too smart a group to participate in these chat discussions but they certainly were the ring leaders in silver as they basically controlled the market.

The CFTC regulators could easily prove that the silver (.55 billion oz) is sitting in JPMorgan’s vaults.  They also have access to the real data that shows how much short JPMorgan has built up over the years.  This should easily prove anti trust behaviour  and show that they are the ultimate leaders in the silver price fixing scheme:

It makes no difference whether JPMorgan is the ultimate owner or any sovereign, the result is the same: anti trust misfeasance.

(courtesy Ted Butler)

The Royal Flush

Theodore Butler


December 15, 2016 – 1:15pm

In order to make a point, I’m going to address a very popular question, by giving the answer first and then providing the question. The answer does involve a bit of imagining on your part. I ask you to picture yourself at the highest stakes poker game imaginable, where quite literally many billions of dollars are at stake and in which you have just been dealt the indisputable best hand possible – a royal flush. Please accept that you are guaranteed to win.

It’s the last deal of the game with winner take all. The pot is enormous and all the other participants have been dealt very high and normally winnable hands and are flush with funds and every player is intent on raising and re-raising as each new bet is made. You have plenty of betting funds left and know that you must win in the end; so it is obvious that you will sit back and enjoy the circumstances and hope the raising and re-raising will continue for as long as possible, making the once-in-a-lifetime pot as large as possible – tens and hundreds of billions of dollars.

The most popular question in silver and the one I ask myself daily is when will JPMorgan finally decide it holds enough silver and let the price rise? The answer is only when it has to. By virtue of its massive physical holding of silver, which is more than 550 million oz (and growing), JPMorgan has as much incentive to rush the price resolution as you would have to end early the imaginary poker game. JPMorgan has been guaranteed to win the real silver game of a lifetime ever since its physical holdings came to exceed its COMEX paper short position, a threshold it crossed in late 2011 or early 2012. Ever since then, JPM has sat back, content to add to its physical silver holdings at decreasing prices, because it knew it must win in the end.

As much as a royal flush in poker, silver is guaranteed to be a huge winner for JPMorgan for the simple reason that the bank controls the market. Don’t believe me? Then try explaining how it is possible, since acquiring Bear Stearns in 2008, that JPMorgan has never taken a loss, only profits, on every COMEX short silver position it has ever taken, all while being the largest short holder? Not only does JPMorgan have a perfect record on the short side of COMEX silver futures for nearly nine years running; for the past nearly six years, making paper profits (in the billions of dollars) by shorting paper contracts was not even the bank’s greatest achievement. That honor must be reserved for JPMorgan’s accumulation of more than half a billion ounces of actual metal, all on price declines it rigged itself. Based upon those two circumstances, is it possible for any entity to demonstrate greater control over any market than JPMorgan has done in silver?

What‘s most remarkable about what JPMorgan has achieved in silver is that it occurred in full view. Certainly, a review of JPMorgan’s financial performance in shorting COMEX silver futures, based upon Commitments of Traders (COT) data, reveals the bank never took a loss or bought back short positions at prices higher than originally shorted. Normally, holding massive short positions on a volatile commodity like silver would be thought to be very risky and lead to losses at some point – at least once in a while. Except, of course, if the game was rigged. As the largest and most successful short seller in COMEX silver futures over the past nine years, JPMorgan was the unquestioned primary silver price rigger.

But JPMorgan is so smart and powerful (and crooked) that it figured out an even better means of enriching itself, apart from the billions of dollars it made in shorting COMEX silver futures cumulatively since March 2008. The successful and profitable short selling campaign that JPMorgan orchestrated in COMEX silver is predicated on declining prices. There’s no way massive short selling can be profitable if prices rise, instead of falling. Further, even if you succeed for years in successfully rigging prices lower (as I claim JPMorgan has done), sooner or later prices will fall to such ridiculously low levels that they then must rise, most likely in the same ridiculous manner in which they fell. At some point, the jig would be up on the downside rig job. This is so basic, that it would be foolish to think it would be lost on JPMorgan – the smartest player of all.

JPMorgan knew, when it started to acquire physical silver in April 2011, that this was the only way it could successfully conclude its wildly profitable long term shorting campaign in COMEX silver futures. The only thing it couldn’t know was how much physical silver it could acquire before the COMEX paper shorting scam ran its course. But there was no way the bank would ever pull the plug on its control of the COMEX price discovery process while there was physical silver still to be acquired. Not while it was holding the best Royal Flush ever. No one would end the game early in these circumstances and it is unreasonable to expect JPMorgan to do so.

Therefore, silver investors are better advised to focus on the “what” instead of the “when”, although I will admit this falls into the do as I say and not as I do category. Besides, since when can anyone ever know the “when”? The “what” is easy – silver is as cheap as dirt because it has been paper shorted into the ground and on top of that there is compelling evidence that the premier world financial institution has amassed more of it on a physical basis than any private entity in history.

Over the past few years, I’ve tried to outline from where JPMorgan has accumulated its historic hoard of physical silver. Conversions of shares to metal in the big silver ETF, SLV (of which JPM is the custodian), led the way, but there were important sources of supply from skimming the highly unusual COMEX silver warehouse movements and direct purchases of Silver Eagles from the US Mint. Interestingly, all these sources of actual physical supply to JPMorgan began around the same time – April 2011.

Not the largest, but clearly the most transparent source of physical silver supply for JPMorgan has been in deliveries against COMEX futures contracts. From zero ounces in April 2011 to 5 million oz in April 2012 and onto more than 80 million oz today, the COMEX silver warehouse of JPMorgan has become the largest in the COMEX system. This year, JPMorgan has taken delivery of more than 6000 net silver futures contracts (contracts stopped minus contracts issued), all in its own proprietary trading account. That’s more than 30 million oz of silver acquired by JPMorgan, most of which eventually found its way into the bank’s COMEX warehouse. What is truly remarkable when you study the data, is how glaringly dominate JPMorgan has been in stopping silver deliveries this year (last year too).

Shortly after the current COMEX December delivery commenced earlier this month, I estimated that JPMorgan may take (stop) the maximum number of silver contracts allowed in a single month, 1500 contracts or 7.5 million oz. As it turns out, through yesterday JPMorgan has already taken over 1400 silver contracts. JPM last stopped the full 1500 contracts allowed last May and took less than that amount in the four other traditional delivery months of the last year (excluding the current month). Previously, I had attributed JPMorgan stopping less than the full number of silver contracts allowed on those occasions to the bank not wishing to tighten the wholesale physical market to the point of sending prices higher.

Therefore, I was somewhat surprised when it became clear that JPMorgan intended to take so many silver deliveries this month. Then it dawned on me that the main reason JPMorgan stood for so many silver deliveries this month is because it knew that one of its customers would make a sizable silver delivery this month of nearly 700 contracts or half of what JPMorgan stopped in its own name. At the least, JPMorgan had to know before anyone else that its customer would make such a large delivery and also knew that the 700 contracts involved wouldn’t add to physical tightness, giving the bank a green light to take many more contracts than in more recent months.

Like so many other things, JPMorgan acquiring silver in its own name from a customer suggests a strong conflict of interest and, quite literally, stinks to high heaven. The big stinker, of course, is the bank being the dominant COMEX paper short, never taking a loss and driving silver prices lower for years on end, while being the largest stopper of COMEX silver deliveries and accumulator of physical silver at those same depressed prices. Remember, I am basing this on public data from the CFTC and COMEX and if you have any questions about this, please let me hear from you. I would also ask you to consider in what far away universe would JPMorgan’s actions be considered proper or legal?

The bottom line on all this is that silver will go when JPMorgan deems it so. There’s nothing we can do to affect the timetable, so it’s counterproductive to even think in those terms (although it sure is natural to think that way). There is only one way to handle an event that is certain to occur, but at a time that can’t be pinpointed – by preparing for the certainty beforehand. JPMorgan’s downward manipulation of the silver price in order to accumulate the largest hoard of silver in history further assures the outcome. The whole manipulation is somewhat complex (until fully vetted), but the preparation for it is as simple as it gets – buy and hold silver, about as hard as falling off a log.

For the better part of the year, up until the past month or so, the principle measurement I consider – the COMEX market structure in silver and gold – had been bearish. The record large commercial short position and corresponding managed money long position, which peaked in the summer, led to me calling the structure extremely bearish on numerous occasions. I didn’t claim to know how it would turn out, just that it must be resolved and if it turned out how it always had in the past, prices would move lower. That was then and this is now.

Now the market structure is no longer extremely bearish or bearish at all; it is bullish or extremely bullish, depending on how many more managed money traders can be persuaded to sell longs or add shorts. That doesn’t mean we can’t have selloffs, including sharp ones like today that make it seem like the selling will never end. But the reality is that there is a limit to the selling and that limit is reached quicker when trading volume swells, as is also the case today.

There were sharp rallies this summer in gold and silver, even though the COMEX market structure was bearish; but eventually prices turned lower and the structure was reversed. Likewise, even though the market structure is now bullish, sharp price declines can and do occur. However, the prospects for much higher prices is always best when the market structure is bullish, as I believe it is now. Add in the fact that JPMorgan is buying both physical metal and paper COMEX contracts and the best hand is to bet on silver moving much higher.

Ted Butler

December 15, 2016

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The Avery Goodman is a must read: is the reason for the raids on gold and silver due to the fact that Trump will be in power in January 20 and will not allow gold to leave the USA vaults:

(courtesy Avery Goodman/ChrisPowell/two commentaries)

Avery Goodman: The Trump administration looks friendly toward a gold standard


8:40p Thursday, December 15, 2016

Dear Friend of GATA and Gold:

In spite of all the selections from Goldman Sachs, securities lawyer and market analyst Avery Goodman writes today, the Trump administration under construction looks awfully friendly to the idea of restoring a gold standard, starting with Vice President-elect Mike Pence, head of the new administration’s transition team. Goodman’s commentary is headlined “The Most Influential People in the Trump Administration Turn Out to Be Gold Standard Fans” and it’s posted at Goodman’s internet site here:…

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


Vice President-elect Michael Pence is currently the most powerful single political influence on President-elect Trump. Among other things, he is in charge of the transition team. He will also be in charge, after the inauguration, with dealing with Congress. For leftists, hostile to gold, that is a problem. However, for those of us who believe that the only way to solve our long-term economic problems is by a return to honest money, it is a godsend.

The editor of the New York Sun realized this quite a while ago. He wrote, back in July, about the wise choice of then-Governor Mike Pence as a running mate:

“Donald Trump’s choice of Mike Pence for vice president would — if it is confirmed tomorrow — be a promising pick for those of us who see a restoration of sound money as the essential precondition for returning America’s economy to a trajectory of jobs and growth…

Why did the paper write this? Left-wing economists and politicians have a long standing case of aurophobia. They hate gold because it inhibits both corporatist and government control over the economy. Don’t bother telling them that the dishonest system of “debt money” enslaves the very people they claim to protect. Don’t bother pointing out that debt based money favors the accumulation of capital by a narrow portion of society who receive the money first. I am, of course, talking about the bankers on Wall Street. Don’t bother warning them that the constant inflation, inherent in debt money, will eventually destroy the hopes, dreams and savings of the middle class. They don’t want to listen.

In contrast, Vice President Elect Mike Pence views gold from the standpoint of a person who does not want the large corporations and government to have complete and detailed control over the economy. His view, therefore, is diametrically opposite. He believes that gold is important to the system because it provides a base against which other things can be measured. In a speech at the Detroit Economic Club in November 2010, he said, and I quote:

“…My dear friend, the late Jack Kemp, probably would have urged me to adopt the gold standard, right here and now in Detroit. Robert Zoellick, the president of the World Bank, encouraged that we rethink the international currency system including the role of gold, and I agree. I think the time has come to have a debate over gold, and the proper role it should play in our nations monetary affairs. A pro-growth agenda begins with sound monetary policy…”

President-Elect Trump, himself, can be said to be a bit of a gold bug. He bought the yellow metal in the 1970s at about $185 per ounce, and sold it at $780. After that experience, the taste for gold never left him. During the campaign, he stated:

“Bringing back the gold standard would be very hard to do, but boy would it be wonderful, because we’d have a standard on which to base our money.”

In contrast, starting with a not-so-secret executive order, signed on April 11, 2013, President Obama seems to have authorized a raid on American gold reserves to bolster his administration’s claims of economic success. The banksters’ scheme was designed to control the chirping “canary in the coal mine” (rising gold prices) because it was singing too loudly of failed economic policies. It was also designed to put a lot of private profits into banker’s pockets. Thankfully, things are going to be different.

The new administration is looking very gold-friendly. Neither Pence nor Trump have outright stated that they intend to restore the gold standard, although Pence did hint at it. Does that mean it’s going to happen? Probably not. The stupidity of the Obama  administration, in giving license to the banksters to drain away America’s gold reserves, has made it nearly impossible. The only way would be to institute an secret program to buy back the gold. Issuing new dollars in exchange for gold would increase the money supply, a form of economic stimulus, so it might fit into the new President’s plans.

It’s not only the President and Vice President who like the gold standard. Dr. Judy Shelton was one of the two economists named to Donald Trump’s economic advisory team in August. She is now a member of the President-Elect’s transition team, and is a very strong gold standard supporter. Shelton first rose to prominence among economists when she predicted the economic collapse of the Soviet Union in 1989, two years before it happened. She says that many of the same issues are now appearing in the American banking system.  Her answer: reestablish the gold standard!

In an article in Fortune magazine, Dr. Shelton stated, and I quote:

In terms of gold being involved, some people may think of that as a throwback, but I see it as a sophisticated, forward-looking approach because gold is neutral and it’s universal.

The pre-election statements of President and Vice President, as well as the opinions of their most loyal advisors, answer the question many worry about. Some worry that “too many” people associated with Goldman Sachs are being appointed to positions in the Trump administration. Perhaps. However, that does not mean that banksters will be given free reign to continue doing what banksters have done in the past. In this case, banksters will not be allowed to continue pissing away America’s precious gold reserves. Top Trump administration people will surely see the schemes for what they are — personal enrichment programs for the banksters that support them.

The “Gold Reserve Act”, passed by Congress in 1934, requires the consent of the President before the Secretary of the Treasury can authorize tapping into America’s gold reserve. That’s what the meeting with President Obama and the CEOs of the biggest gold dealing banks, on April 11, 2013, was all about. It took place one day before the biggest attack on gold prices ever undertaken. The fact that the meeting took place at all, however, indicates that even left-wing Barack Obama was questioning the wisdom of raiding America’s gold.

Donald Trump appreciated the money that Steven Mnuchin, his only well-connected Wall Street fund raiser, brought in during the Presidential campaign. It is natural to reward someone after something like that, and that is why Mnuchin is now going to be US Treasury Secretary. But, even if he wanted to, which is not at all clear, it is very unlikely that Mnuchin would be able to convince President Trump to leave Obama’s gold reserve blasting executive order intact. Remember, Mr. Trump took issue with the idea of spending $4 billion worth of easily printable paper dollars on several new “Air Force One” 747s. Do you think he’s going to be convinced by anyone to piss away gold reserves, which are very difficult to replace?

The decline in gold prices, during November and December has been designed to allow manipulators with large, long-standing short gold positions, to shell-shock markets, facilitating an orderly escape with minimal damage. The hyping of India’s tax law changes was part of that, and is part of the strategy used to demoralize long speculators. The truth, however, is that even if India stopped importing gold, entirely, given the current excess of demand over supply, demand would still far exceed mining and scrap refining supplies. With that gap unfilled, the price must rise substantially. For more information about the true supply/demand situation for gold, see this article.

Going forward, the unplugged gap between supply and demand will be closed by the real market, not from further donations from the American treasury. Prices will rise once the banksters see the prospective cutoff from access to America’s gold reserves come too close for comfort. At that point, which will probably come in late December to early January, they will spin off whatever small short position they still have left, at any price they must pay to do it, and the upward movement will begin in earnest.





Nick Laird has annotated the gold rigging with documentation

(courtesy Nick Laird/GATA)

Gold chart annotated with exchanges between market-manipulating traders


9:14p ET Thursday, December 15, 2016

Dear Friend of GATA and Gold:

Having already done it for the silver market rigging documentation —

— Nick Laird of Gold Charts R Us has annotated a gold price chart with excerpts from Deutsche Bank’s transcripts of electronic exchanges between its traders and traders for other banks who colluded to manipulate the gold market. The annotated gold price chart is posted at his internet site here:

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





From the silver institute:  just look at how much silver will be consumed (gone forever) in the production of photovoltaics and Ethylene Oxide by 2020:

(courtesy silver institute/GATA)


Six Hundred Million Ounces of Silver to be Consumed in Photovoltaics and Ethylene Oxide Production Through 2020

(Washington, D.C. – December 15, 2016) Two of the everyday industrial uses for silver are in photovoltaic cells (the main constituents of solar panels) and as a catalyst for the production of ethylene oxide (an important precursor in the production of plastics and chemicals). These two uses of silver will together account for 120 Moz per year of consumption on average from 2016 to 2020, an increase of 32% compared to 2015 levels, according to a new report issued today by the Silver Institute.

There are many reasons to be positive about demand for silver in photovoltaic (PV) cells. The number of solar panel installations is forecasted to rise steadily in the coming years as a result of a combination of carbon emissions legislation, government policies and a decrease in the cost per gigawatt of electricity generated using PV. This will bring about substantially increased silver consumption despite slow and steady declines in the amount of silver used per individual solar panel. The report projects that 2018 will be a bumper year for silver demand in PV due to the construction of a record number of solar arrays; silver use in PV in 2018 is expected to be some 75% greater than in 2015.

Ethylene Oxide (EO) is a vital raw material for a vast number of plastic and chemical products, the most important of which is ethylene glycol, used in the production of antifreeze coolants and polyethylene terephthalate (PET), a resin of the polyester family used in fibers for clothing as well as plastic bottles and food containers. EO requirements are also expected to increase as the market for antifreeze continues to grow: car usage is expected to increase through 2020, with China leading the way, and Europe and North America projected to maintain their current high vehicle usage rates.

The combined pull of PET packaging and automotive use will boost underlying growth in EO consumption, with a projected 30 Moz of silver demand targeted to EO through 2020.

The authors of the report – CRU Consulting, a global commodities consultancy – explain how these expanding industries will help drive demand for silver. Detailed analysis behind the projections are presented in the complimentary report, which can be downloaded at this link Prospects for silver demand in ethylene oxide and photovoltaics.

The Silver Institute is a non-profit international industry association headquartered in Washington, D.C. Established in 1971, the Institute’s members include leading silver producers, prominent silver refiners, manufacturers and dealers. The Institute serves as the industry’s voice in increasing public understanding of the value and the many uses of silver. For more information on the Silver Institute, silver’s important uses in industry, or silver in general, please visit: .


Bill Holter with his commentary concerning the comments from Martin Armstrong:

(courtesy Bill Holter/Holter-Sinclair collaboration)


Martin Armstrong, 2010-2011 (public article)

In an effort to put the Martin Armstrong saga to bed, I post below quotes and links to two articles he put out in 2010 and 2011 just before being released from prison.  Please read not just the quotes provided but his full articles as they are both excellent in content and logic.  His 2010 article sounds a lot like “Bill Holter” as I have done this math and logic several times for readers over the years.  Back then he said “$5,000 gold is “VERY CONSERVATIVE” …while he now says it will be as high as gold can go.  In the second article he takes on “manipulation” which he has since changed his tune on.
  I would simply ask “why”?  Why has he done a 180 degree turn in his thought process?  Why did his “change” of heart begin as soon as he was released from prison?  Why do people even follow him now as his logic and reporting of history is flawed?  I have no doubt he is a brilliant man as he was a pioneer of the derivatives industry, but how brilliant is it to claim that gold was devalued in 1934 …and then go on to explain “why” it happened?
“I have been conservative in what is possible for the years ahead.  I have given a number for gold of $5,000 that is VERY CONSERVATIVE.  If we take the US gold reserve 262 million ounces and we divide that into the national debt of $14 trillion ignoring the rest of the world, that yields a price of a staggering amount $53,639 per ounce.  Even taking the world official gold reserves dividing that into $14 trillion ignoring the rest of the world, we still end up with $15,873 per ounce.”  …Martin Armstrong, Nov. 21st 2010
“The sharp spike rally was in line with a Phase Transition in Silver – NOT gold. This has been distinguished by a virtual doubling in price since January. Anytime a market doubles like this in the last few months going into a high, it is the kiss of death. Silver, of course, has not broken out above its 1980 high as did gold. This is largely due to the fact that silver remains the most manipulated precious metal of the entire group. It is routinely played with by the NY crowd and anybody you says such things is immediately attacked with venom. Silver is the playground for the CLUB” …Martin Armstrong, May 2nd 2011
   It is clear to me with the above writings, Mr. Armstrong had a full grasp of logic.  I would love to hear from him now as to why his logic was wrong back then…before he saw the light of day as a free man?
Standing watch,
Bill Holter
Holter-Sinclair collaboration
Comments welcome,

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



2. Nikkei closed UP 127.36 POINTS OR 0.66% /USA: YEN FALLS TO 118.15

3. Europe stocks opened ALL IN THE GREEN     ( /USA dollar index FALLS TO  102.85/Euro UP to 1.0456


3c Nikkei now JUST BELOW 17,000

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

3e WTI::  51.21  and Brent: 54.53

3f Gold UP/Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS TO +321.%/Italian 10 yr bond yield FALS 1 full basis points to 1.859%    

3j Greek 10 year bond yield FALLS to  : 7.30%   

3k Gold at $1134.55/silver $16.08(7:45 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP  34/100 in  roubles/dollar) 61.56-

3m oil into the 51 dollar handle for WTI and 54 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 HUGE   DEVALUATION DOWNWARD from POBC.


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0277 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0748 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  +.321%


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 2.577% early this morning. Thirty year rate  at 3.125% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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


Quad Witching Arrives: Futures Steady, Stoxx 50 Erase 2016 Loss As Dollar Steadies

Quad-witching Friday has arrived, which means that alongside thin, pre-holiday liquidity and a jumpy market, we expect to see sharp, volatile moves for the rest of the day, the first of which was just noted in Europe, where stocks moved from session lows to highs in the span of minutes, in the process sending the Euro Stoxx 50 index 0.8% higher and turning it positive on the year as it reached its highest level since December 2015. The broader Stoxx 600 remains still down 1.8% on the year. Of Europe’s indices, the IBEX, FTSE MIB, SMI are still down; while the FTSE 100, CAC 40 are up on the year and the German DAX just hit 2016 highs.

The dollar’s post-Federal Reserve rally steadied on Friday and European shares traded near 11-month highs. Having soared yesterday to its highest level in 14 years, following the Fed’s hawkish announcement, the dollar’s advance stalled as the dust settled on a new financial-market landscape created by the Federal Reserve’s shift to a tighter policy path.  The greenback fell against the euro after touching the highest since 2003 on Thursday. The dollar index stood at 103.000 after hitting a 14-year high of 103.560 on Thursday, when it gained 1.2 percent to record its biggest daily percentage gain in nearly six months.

The yield on 10-year Treasuries dropped from the highest since 2014, snapping a six-day streak higher underpinned by the Fed’s more hawkish outlook for interest-rate increases next year. Gold trimmed its sixth weekly decline, and copper fell.

The relatively muted moves – so far – mark a step back after a dramatic week in which the U.S. central bank unveiled its outlook for an accelerated series of rate increases in 2017. That steeper path comes as Donald Trump prepares to unveil what the market expects will be a huge fiscal stimulus, that may fuel fast growth and inflation in the world’s biggest economy. Volumes are expected to thin in coming weeks as traders close positions before the December holiday season and end of the year.

“Today’s move is a minor correction,” said Lutz Karpowitz, a senior currency strategist at Commerzbank AG in Frankfurt. “We could easily head a bit lower until the end of the year, but all the arguments are on the dollar’s side. Interest rate expectations in the U.S. show the Fed has regained most of its credibility and the market is now convinced there will be an aggressive rate-hiking cycle.”

Asian stocks were tepid, with MSCI’s broadest index of Asia-Pacific shares outside Japan down 0.1 percent, after falling 1.8 percent on Thursday. Japanese shares rose 0.7% after scaling a one-year peak on the export prospects from a weaker yen. World stocks as measured by the MSCI world equity index, which tracks shares in 46 countries, were up 0.1 percent.

Cited by Reuters, analysts and traders said that the European stock market’s outlook remained broadly positive in the medium term, with major stock indexes seen setting fresh highs. “Stocks are continuing to get a boost from a weaker euro and the notion that the United States, the world’s largest economy, will experience an uptick in growth once President-elect (Donald) Trump has started implementing his new policies,” Markus Huber, trader at City of London Markets, said.

European infrastructure and commodities firms have been in demand on expectations that Trump’s pledge to heavily invest in infrastructure projects would boost the sectors. European shares steadied in morning dealings, but were heading for a second straight week of gains, with the prospect of more mergers and acquisitions underpinning sentiment.

Actelion Ltd. jumped 9.5 percent, after people with knowledge of the matter said Sanofi is in talks to acquire the Swiss drugmaker. Rentokil Initial Plc rose 6.9 percent after forming a joint venture with Franz Haniel & Cie. for its workwear and hygiene businesses in central and eastern Europe.

In rates, yields on 10-year Treasury notes fell four basis points at 2.56 percent. The yield was still set for its steepest weekly increase in a month, and touched the highest level since September 2014 on Thursday. German’s 10-year yield fell six basis points to 0.31 percent, while that on two-year notes dropped to a record low as the European collateral shortage continues.

As previewed before, the expiration of futures and options on stocks and indexes Friday, known as quad-witching, may add to stock volatility and trading volume in European markets.

* * *

Market Snapshot

  • S&P 500 futures up 0.1% to 2261
  • Dow futures up 0.1% to 19,836
  • Stoxx Europe 600 up 0.2% to 359.3
  • MSCI Asia Pacific up 0.3% to 136.01
  • MSCI Asia Pacific up 0.2% to 136
  • Nikkei 225 up 0.7% to 19401
  • Hang Seng down 0.2% to 22021
  • Shanghai Composite up 0.2% to 3123
  • S&P/ASX 200 down 0.1% to 5533
  • US 10Yr yield down 3 bps to 2.56%
  • Dollar index down 0.2% to 102.82
  • WTI oil futures down 0.6% to $50.58/bbl
  • Gold spot up 0.5% to $1134.4/oz

Top Global News

  • JPMorgan Draws IRS Whistle-Blower Complaint Over Pension Funds: Ex-employee says bank owes penalty for shirking fiduciary duty
  • Republican Tax Reform Seen Shrinking U.S. Corporate Bond Market: Loss of interest tax deduction may damp debt financing
  • Priceline Group Appoints 16-Year Company Veteran as New CEO: Glenn Fogel ran M&A, strategic planning for the travel giant
  • Best-Performing Commodity’s Slump Seen Stalled by Cyclones: Contract prices rose to record $330/ton in 2011 after floods
  • The Dow has recorded the biggest five- week jump to greet any new president since 1900
  • Sanofi said to be in advanced talks to acquire Actelion in a deal for the Swiss drugmaker that could be announced as soon as next week
  • Merck wins record $2.5b hepatitis C patent verdict against Gilead
  • Issuance of CLOs in Europe next year may exceed this year’s record post-crisis volumes
  • Oracle posted second-quarter sales that missed some analysts’ estimates following a steep decline in new software licenses
  • Actavis faces fines for raising the cost of hydrocortisone tablets by more than 12,000 percent
  • Paschi received regulatory approval to extend a debt-for- equity swap and avoid a state rescue
  • Allianz, Europe’s largest insurer, said in talks with Generali as it weighs a bid for its French operations

Looking at regional markets, Asian stocks were mixed as the region failed to take the impetus from a positive US close, where financials were supported in the wake of the FOMC. ASX 200 (-0.1%) was dampened by weakness across commodity-related sectors, while Nikkei 225 (+0.7%) outperformed as exporters cheered USD/JPY’s advance to 118.00. Hang Seng (-0.3%) and Shanghai Comp. (+0.2%) traded choppy as higher US rates and a weaker CNY fanned outflow concerns, although downside pressure was counterbalanced after the PBoC returned to a net weekly injection in its open market operations and conducted MLF operations. 10yr JGBs tracked losses in T-notes, with the 10yr Japanese yield rising closer towards 0.1% to print its highest since January. Furthermore, the amount of the BoJ’s bond buying operation for today was rather uninspiring and there were also source reports that suggested the BoJ’s focus next year may not be about whether to ease more, but on possibly raising its yield target.
PBoC injected CNY 105bIn 7-day reverse repos, CNY 35b1n in 14-day reverse repos and CNY 40bIn in 28-day reverse repos, for a net weekly injection of CNY 250b1n vs. previous drain of CNY 535b1n last week. The PBoC set the mid-point at 6.9508 (Prey. 6.9289). PBoC conducted its Medium-term Lending Facility with a value of CNY 207b1n for 6-months and CNY 187b1n for 12-months.

In Europe, it has been a quiet Friday trade very apparent this morning. Equities trade flat this morning, with perhaps a few traders still recovering from their Christmas parties in a so far subdued session. On a sector specific breakdown, energy is the only sector trading in the green albeit modestly so, while Actelion have soared this morning after source reports suggested Sanofi are said to be in advanced talks to buy the Co., with a price of USD 275/shr currently being discussed. Also of note for equity traders, today sees quadruple witching. Fixed income markets have seen a grinding higher throughout the session so far, with bunds seeing a more bullish rebound than their US counterparts after the significant fall seen over the past few weeks. Despite the quiet morning, volatility may pick up throughout the session, with speakers in the form of ECB’s Constancio and Fed’s Lacker, as well as quadruple witching in equity markets.

Top European Stories

  • Italy’s Monte Paschi Playbook Avoids EU Law’s Sick Bank Plan: Italy grappling with issues posed by individuals owning bonds
  • Allianz Said to Consider Bid for Generali’s French Business: Generali unit would add over 11 billion euros in premiums
  • Actavis Targeted by U.K. for Raising Drug Price by 12,000%: Company broke competition law by raising prices, CMA says

In currencies, the dollar slipped 0.4 percent to $1.0459 per euro as of 10:30 a.m. in London. It reached $1.0367 on Thursday, its strongest level since January 2003. The yen gained 0.2 percent to 117.99 per dollar, set for a slump in the week of 2.3 percent, its sixth straight weekly drop. The USD/JPY continue to reside at elevated levels, trading on a 118 handle at the moment, while despite all the talk of parity in EUFt/USD, the pair reside back above 1.0400 once again despite the brief break below seen yesterday. As is the case with other asset classes, price action has been particularly muted with traders beginning to wind down for the festive break.

Top Asian News

  • China Plans Prudent, Neutral Monetary Policy as Growth Steadies: Preventing and controlling financial risk to avoid asset bubbles will be a priority, according to Xinhua News Agency
  • Putin, Abe Agree to Develop Islands Disputed Since World War II: Officials to start detailed negotiations on the terms and format for economic cooperation on the islands
  • China Growth Estimates Up as Leaders Mull 2017 Economic Plan: Economists raised 1Q growth estimates to 6.6% percent from 6.5% percent a month earlier, according to a Bloomberg survey
  • China’s Finance Ministry Falls Short of Target at Bill Auction: First failure in 18 months comes amid bond market tumble
  • Ex-BSI Banker Seah Gets Jail for Forgery Tied to 1MDB Case: Yvonne Seah Yew Foong convicted of forgery offenses, not reporting suspicious acts

In commodities, West Texas Intermediate crude fell 0.5 percent to $50.63, and gold for immediate delivery gained 0.5 percent to $1,134.45 an ounce. Copper headed for the biggest weekly drop since August after stockpiles tracked by the London Metal Exchange jumped the most since 1970 in the period. Gold remains in focus, with the yellow metal higher today after the significant softness seen yesterday, while energy related newsflow remains modest — with price action similarly trading in a tight range, with WTI futures around USD 51/bbl and Brent futures at USD 54/bbl.

Looking at the day ahead, in what is otherwise a very quiet end to the week for data the highlight will likely be the final November CPI revisions for the Euro area this morning. Aside from that we’ve also got trade data for the Euro area due along with the latest confidence indicators in France and CBI trends orders data in the UK. In the US the November housing starts and building permits data will be out where starts in particular are expected to decline following the surge in October. Away from the data the Fed’s Lacker is scheduled to speak this evening while the ECB’s Weidmann and Constancio speak this morning.

* * *

US Event Calendar

  • 8:30am: Housing Starts, Nov., est. 1.230m (prior 1.323m)
  • 12:30pm: Fed’s Lacker speaks in Charlotte, N.C.
  • 1pm: Baker Hughes rig count

* * *

DB’s Jim Reid concludes the overnight wrap with his final note of 2016 before heading out to the French Alps.

The last 48 hours having given us more confidence in our core view for 2017 of higher rates volatility with some large spikes up in yield likely ahead. While risk assets to a large degree reversed the post-FOMC weakness (S&P 500 +0.39%), 10y Treasury yields traded in an intraday high to low range of nearly 8bps, touching a high of 2.639% and a low of 2.564% before closing more or less in the middle at 2.597% and +2.6bps higher on the day. That takes the post-FOMC move to nearly +17bps higher in yield while there was a similar level of volatility at the short-end of the curve before 2y yields eventually settled little changed by the end of play at 1.275%.

Meanwhile, some focus has also turned back to emerging markets after another huge surge for the Greenback which saw the USD index close up +1.33% yesterday (and +2.20% post FOMC now). The MSCI EM index closed -1.62% following a -0.51% decline on Wednesday while the MSCI EM Currencies index was down -0.89% in yesterday’s session. It’s one market certainly worth keeping an eye on into year end.

Aside from that the other focus yesterday was the BoE policy meeting and US inflation data. Both ended up being a fairly non-event though. The BoE left current policy measures on hold although the interesting take away from the statement was the acknowledgement from the MPC that ‘the sterling exchange rate had appreciated and this would by itself point to less of an overshoot in inflation relative to the target in the medium term, though month-to-month volatility was to be expected as market participants’ view on the UK’s future relationship with the EU continued to evolve’. Meanwhile, headline CPI in the US printed bang on the money at +0.2% mom which helped to nudge up the YoY rate to +1.7% from +1.6%. The core also came in at +0.2% mom although the 2.1% yoy rate was left unchanged.

This morning in Asia it’s been a fairly quiet end to the week for markets. Bourses are generally flat to slightly firmer. The Nikkei (+0.56%), Hang Seng (+0.09%) and Kospi (+0.24%) are amongst those higher while markets in China and Australia are relatively unchanged. Sovereign bond markets are also fairly flat although 10y JGB yields did at one stage touch 0.10% which is the highest since January. One of the other big themes for 2017 is whether the BoJ’s yield cap will be tested by the market. Meanwhile credit indices, at the margin, are slightly tighter in the region. As you might expect given these moves, it’s been a quiet morning for newsflow.

Moving on. With regards to the remainder of the data in the US yesterday, the latest manufacturing indicators were all generally supportive. The Philly Fed manufacturing index revealed a bumper 13.9pt rise to 21.5 (vs. 9.1 expected) in December which puts it at the highest level since 2014 while the Empire manufacturing reading rose 7.5pts to 9.0 (vs. 4.0 expected). The flash manufacturing PMI also printed at 54.2 which was a bit lower than expected but still up from the 54.1 reading last month. Elsewhere, initial jobless claims were reported as declining 4k to 254k last week while the latest NAHB housing market index print revealed a bumper 7pt rise to 70 (vs. 63 expected) which is the highest since July 2005. The prospect of the Trump presidency then clearly sending building sentiment through the roof.

Elsewhere we also got the December flash PMI’s in Europe. The composite reading for the Euro area came in unchanged at 53.9 for the month although the details were a bit more interesting with a decline in the services component (-0.7pts to 53.1) offset by an increase in the manufacturing reading (+1.2pts to 54.9). Regionally we saw a mild dip in Germany’s composite to 54.8 (from 55.0) although France did rise to 52.8 (from 51.4). Our European economists noted that the data implied an average decline of 0.6pts in the composite PMI’s of the periphery and that the data also point to GDP growth for the Euro area of just over +0.4% qoq in Q4.

Before we move onto today’s calendar, it’s worth noting that last night we got the announcement that Fed Chair Yellen will speak next Monday on the “state of the job market”. So that’s one final date for your diaries before the holiday season really rolls in.

Looking at the day ahead, in what is otherwise a very quiet end to the week for data the highlight will likely be the final November CPI revisions for the Euro area this morning. Aside from that we’ve also got trade data for the Euro area due along with the latest confidence indicators in France and CBI trends orders data in the UK. This afternoon in the US the November housing starts and building permits data will be out where starts in particular are expected to decline following the surge in October. Away from the data the Fed’s Lacker is scheduled to speak this evening while the ECB’s Weidmann and Constancio speak this morning.


i)Late  THURSDAY night/FRIDAY morning: Shanghai closed UP 5.30 POINTS OR 0.17%/ /Hang Sang closed DOWN 38.65  OR 0.18%. The Nikkei closed UP 127.36 OR 0.66%/Australia’s all ordinaires  CLOSED DOWN 0.10% /Chinese yuan (ONSHORE) closed DOWN at 6.9586/Oil ROSE to 51.21 dollars per barrel for WTI and 54.53 for Brent. Stocks in Europe: ALL IN THE GREEN.  Offshore yuan trades  6.9485 yuan to the dollar vs 6.9586  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS COMPLETELY AS  MORE USA DOLLARS ARE BLOCKED FROM LEAVING CHINA’S SHORES /


none today



As I promised you, China devalues the yuan to its weakest fix since May 2008, a touch greater than 6.95.  Very shortly it will be over 7 and deflation will circle the globe.

(courtesy zero hedge)

China Devalues Yuan To Weakest Fix Since May 2008

Following last night’s bond bloodbath, The Fed fallout continues in China as The PBOC has devalued the official Yuan fix the most since Brexit to its weakest level since May 2008, breaking above 6.95/USD. Since the “one-off” devaluation in Aug 2015, the Chinese currency has now weakened almost 14% against the dollar.

While the broad Renminbi basket has been “stable” against China’s global trading partners for 3 months…

It appears the devaluation pressure has been focused back against the US Dollar…

And bear in mind that the “stability” we described above came at the grand cost of a stunning quarter of a trillion in reserves ‘defending’ the outflow pressure in 2016

For now the China bond market has stabilized a little (by which we mean it is not collapsing).

At some point this butterfly’s wings of turmoil will ripple across the world’s liquidity markets and punch all those with a plan in US banking stocks in the face… the question is, when?




This is a little scary! State Media in China urges that Mainland China should retake Taiwan by force:

(courtesy zero hedge)

China Should Retake Taiwan By Force, State Media Urges

China issued its loudest semi-official response to Trump’s suggestion that he will use the “One China” policy as a bargainining chip.

The first, and more official one, came from China’s ambassador to the United States who said on Wednesday that Beijing would never bargain with Washington over issues involving its national sovereignty or territorial integrity. Ambassador Cui Tiankai, speaking to executives of top U.S. companies, said China and the United States needed to work to strengthen their relationship. “The political foundation of China-U.S. relations should not be undermined. It should be preserved,” Cui said. “And basic norms of international relations should be observed, not ignored, certainly not be seen as something you can trade off,” he said. “And indeed, national sovereignty and territorial integrity are not bargaining chips. Absolutely not. I hope everybody would understand that.”

While he did not specifically mention Taiwan, or Trump’s comments last weekend that the United States did not necessarily have to stick to its nearly four-decade policy of recognizing that Taiwan is part of “one China”, it was heard loud and clear.

The second, and more worrisome warning, came from China’s influential state-run tabloid, one which Beijing tends to use for populist “trial balloon” purposes, the Global Times according to which China should take the lead in deciding the island’s future. In the op-ed, the authors say “it might be time for the Chinese mainland to reformulate its Taiwan policy” and that Beijing should plan to take Taiwan by force and make swift preparations for a military incursion. The article urged China to rebalance its stance towards Taiwan to “make the use of force as a main option” and carefully prepare for possible moves toward independence.

It cautioned that the chance of peaceful unification “will only slip away” if the mainland doesn’t increase pressure and that “the military status quo across the Taiwan Straits needs to be reshaped” to punish the current Taiwanese administration’s “destruction of the political status quo in cross-Straits ties.”

The belligerent tone continued, urging that “once Taiwan independence forces violate the Anti-Secession Law, the Chinese mainland can in no time punish them militarily”

It warned that “the tacit understanding and hidden rules made between China and the U.S. over the Taiwan Straits can hardly be respected for long.”

Chinese officials have already used less drastic “punishments”, such as limiting the number of mainland tourists to Taiwan and hinting at curtailing investments.

As the Guardian adds, the threat of military action has loomed over Taiwan’s population since the 1950s. In the most dramatic confrontation, China fired missiles into the waters separating it from Taiwan in the run-up to the first free elections in 1996. In response, the US sailed an aircraft carrier through the strait in a show of solidarity.

In the Global Times op-ed, the authors warn that “if the Chinese mainland won’t pile on more pressure over realizing reunification by using force, the chance of peaceful unification will only slip away. Independent forces on the island publicly believe that time is on their side, because Taiwan people’s recognition of their Chinese identity is gradually decreasing and against such a backdrop, they can turn the tables with the help of international forces.”

It concludes as belligerently as it began: “The future of Taiwan must not be shaped by the DPP and Washington, but by the Chinese mainland. It is hoped that peace in the Taiwan Straits won’t be disrupted. But the Chinese mainland should display its resolution to recover Taiwan by force. Peace does not belong to cowards.

The problem is that Donald Trump most likely agrees with the final statement, which is why what until now has been only a war of words for decades, may soon heat up substantially.





A failed Chinese treasury bill auction and that should cause short term rates to rise putting tremendous pressure on their economy:

(courtesy zerohedge)

China Suffers Failed Treasury Bill Auction

One day after China’s regulator halted trading in bond futures for the first time ever, Beijing suffered another catalytic bond-market event overnight when it failed to sell all the Treasury Bills on auction Friday, for the first time in almost 18 months, as bids fell short of minimum requirements, according to traders required to bid at the auction.

As BBG reported overnight, the Ministry of Finance sold only 9.57 billion yuan ($1.38 billion) of 182-day bills in a planned 10 billion yuan sale, and 10.85 billion yuan of 91-day notes in a planned 12 billion yuan sale, according to a statement from the bond clearing house. What is notable, is that the Bills on offer paid a hefty yield: the 182-day bills sold for 2.9565%, while the 91-day bills sold for 2.8991%.

In other words mainland bond traders are concerned that short-term China rates could spike substantially in the next 3-6 months.

The failed auction comes despite the December 2014 adoption of a “primary dealer” system which includes 50 banks and which are required to bid at debt sales. On Friday, more than one of China’s dealers did not do as mandated, leading to the unexpected outcome.

In an amusing comment shared yesterday by the WSJ, Hao Hong, co-head of research at Bocom International said that “People woke up to the fact that the bond bubble is too large. The bond market in China is under severe pressure, across the board.”  Today’s event confirmed his observation.

The auction failure has come amid a debt selloff that has surprised investors, and which many dubbed as indicative of the bursting of the Chinese bond bubble after China’s 10-year sovereign yield plunged the most on record Thursday, leading to a brief freeze in futures trading in the $9 trillion bond market. The notes are pressured from a combination of factors, with hawkish Federal Reserve comments adding to the heat from the yuan’s decline and waning money-market liquidity. The People’s Bank of China has steered borrowing costs rates higher, forcing a correction in the highly leveraged market.

“No one has the time or demand to bid for short-end government bonds,” said Guotai Junan Securities Co. bond analyst Xu Hanfei. “Short-term funding is tight, money-market fund redemptions are ongoing, certificate of issuance rates are rising and short-term liquidity hasn’t eased markedly. In addition, sentiment in the bond market is poor. Even demand for short-end bonds is weak.”

Hopefully demand for longer-dated bonds will be stronger, although that may be bold assumption: “the Chinese bond bull market is over, as we have seen a turning point in money market rates this year,” said Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management, referring to a tightening of liquidity in China that began this autumn and has recently gathered pace. If that view becomes prevalent, failed auctions will be the least of Beijing’s worries.





Oh Oh  this will not be good for relations with China: China seizes an underwater uSA drone in international waters.

(courtesy zero hedge)

China Seizes Unmanned, Underwater US Drone Off South China Sea

The escalating, so far mostly verbal conflict with China may have just heated up following a Reuters reports that China has seized an unmanned, underwater US navy vehicle inside off international waters in the South China Sea, and that the US has issued a formal statement demanding the return of the vehicle.

According to CNN, which has a slightly different take on events, a US oceanographic vessel Thursday had its underwater drone stolen by a Chinese warship literally right in front of the eyes of the American crew.

In the latest encounter in international waters in the South China Sea region, the USNS Bowditch was sailing about 100 miles off the port at Subic Bay when the incident occurred, according to the official.
Bowditch had stopped in the water to pick up two underwater drones. At that point a Chinese naval ship that had been shadowing the Bowditch put a small boat into the water. That small boat came up alongside and the Chinese crew took one of the drones.

The US got no answer from the Chinese on the radio when it said the drone was American property, the official said cited by CNN. More details:

As they turned away, the Chinese did come up on the radio and indicated they were returning to their own operations.

US oceanographic research vessels are often followed in the water under the assumption they are spying. In this case, however, the drone was simply measuring ocean conditions, the official said.
The Pentagon has not officially commented on the incident.

Although it’s unclear what the motivation was for the Chinese, the seizing of the drone comes on the heels of other provocative incidents that have happened since President-elect Donald Trump received a congratulatory call with Taiwan’s President, a violation of the US’s agreement with China’s “One China policy”. China publicly voiced their disapproval of that incident and contacted the White House at the time.

This “seizure” takes place one day after China’s influential state-run tabloid, the Global Times, called for a plan to take Taiwan by force and make swift preparations for a military incursion. The article urged China to rebalance its stance towards Taiwan to “make the use of force as a main option” and carefully prepare for possible moves toward independence.

It also follows a series of warnings to the Trump administration by Chinese diplomats, in which they cautioned that China will not allow the “One China” policy to be used as a bargaining chip, something Trump hinted he was willing to do in a Fox News interview last Sunday.





The above seize of the USA drone caused the yuan to sink to a record low:

offshore Chinese yuan: 6.9666 from 6.9475

(courtesy zero hedge)

Offshore Yuan Crashes To Record Low

The derisking following headlines of China seizing a US underwater drone has sparked further weakness in the offshore Yuan, slamming USDCNH to record lows…

Following last night’s big Fix devaluation, and today’s headlines, offshore yuan just hit a fresh record low…


This does not look good for Greece as Tsipras infuriated his bosses (eurozone leaders) by giving over 600 million euros to low income pensioners as well as lowered the VAT on the important holiday Greek islands

looks to me like a war has developed between the two

(courtesy zero hedge)

Europe “Infuriated” By Greek Decision To Give Impoverished Pensioners A Christmas Bonus

On Wednesday, Greek yields surged when it emerged that diplomatic relations between Greece and the Eurogroup had broken down once again, after European finance ministers suspended negotiations over granting short-term debt relief to Greece as a result of pledges by embattled Greek PM Tsipras unexpectedly said he would grant low-income pensioners a pre-Christmas payoff by spending €600 million to the nation’s 1 million low-income pensioners, to replace a Christmas bonus scrapped by the Greek bailout supervisors.

Assuming that the threat of not granting Greece some theoretical debt concession (which would reduce Greek debt by 20% some time in 2060) would be sufficient, the bureaucrats gave the Greek government a few hours to come to their senses and to eliminate the promise to pensioners.

That did not happen and instead on Thursday, Greek lawmakers backed the decision to allocate €617 million – a surplus from savings – in a bonus to pensioners as Greece snubbed its international lenders and legislated plans to give pensioners a one-off Christmas bonus despite the clear warning from creditors in what has become the latest standoff over the country’s third bailout. 

“(Greek) people have to see that sacrifices of now six, seven years are at last starting to pay off,” said Greek Finance Minister Euclid Tsakalotos in a visit to Brussels.

But jaded by those sacrifices and almost a dozen pension cuts which has pushed almost half of the country’s elderly into poverty. About 5,000 pensioners marched peacefully through the streets of Athens on Thursday night. “We came here to send a message. No more!,” protesting pensioner Efstratios Bozos told Reuters.

“Our pensions have become restaurant tips.” Well, yes, and your economy remains in a depression. But at least you have your Euro, and following the summer of 2015 when Greece was this close to obtaining its independence from the clutches of Brussels, yet choked in the last minute, the international community no longer cares about the Greek plight any more.

Here’s the even worse news: as long as Greece remains part of the Eurozone, it will only keep getting worse. By now we would think that the Greeks would have gotten it; they haven’t, which is why the pain must go on.

Still, there was some good news.

As Reuters reports, the move by Tsipras “infuriated” officials in Germany and several other member states, but French President Francois Hollande and his finance minister came to Tsipras’s defense on Thursday in a sign of European divisions over how to handle Greece. Arriving at an EU summit in Brussels, Hollande said it was wrong to prevent Greece from taking “sovereign decisions” and suggested that euro zone ministers had not granted Athens sufficient debt relief. Other socialists chimed in: Finance minister Michel Sapin, speaking in Paris, expressed understanding for Tsipras’s decision to spend 617 million euros on pensioners because Greece had exceeded its 2016 primary surplus target.

How generous of the French president with the lowest approval rating in history: allowing Europe’s vassal state of Greece make its own “sovereign decisions.”

On the other hand, one can see why Europe’s unelected bureaucrats would be angry with Greece, which is now their property:  Greece unveiled the pensioner payout and a separate decision to keep lower value-added tax on some islands without consulting euro zone governments, which now own most of Greece’s public debt, (although the bailout agreement says it must consult with the eurozone. The consultation would have given lenders time to assess the fiscal and economic consequences of the two Greek decisions for the bailout reform program and targets. Germany has asked the institutions to check if the Greek decisions are in line with bailout obligations.

In short, the slave dared to think on its own, and now it must be punished.

The differences came amid a deep rift between Athens, its European partners and the International Monetary Fund (IMF) over the reforms needed to get the Greek economy, in recession since 2009, back on track. The IMF sees the euro zone’s economic targets for Greece as overly ambitious and the assumptions about reform implementation too optimistic. The IMF is also at odds with Germany and some other northern European countries over granting Greece more significant debt relief. Berlin wants to retain leverage over Athens and is reluctant to grant it favors that could anger conservative allies of Chancellor Angela Merkel before a federal election in the autumn.

The IMF, which participated in the first two bailouts for Greece, has so far refused to inject funds this time amid the standoff over economic assumptions and debt relief. Of course, as was made all too clear last summer, Germany will never agree to such a concession, which is why the third Greek bailout may sadly be its last.


Obama vows to retaliate against the Russian hacking. They are holding apress conference today at 2:15

(courtesy zero hedge)

Obama Vows Retaliation Against “Russia Hacking”, To Hold Press Conference On Friday

With last night’s top nationwide story, the NBC report that according to unnamed CIA sources, Vladimir Putin himself supervised the hacking of the US presidential election (it is still unclear precisely how Putin “hacked the election”, or for that matter, what if any proof exists ), making the rounds and as of this moment having been placed front and center on the front page of

… it was obvious that this story was not going away just four days before the Dec. 19, Electoral College vote.

And sure enough, on Thursday evening CNN reported that President Barack Obama vowed retaliatory action against Russia for its meddling in the US presidential election, in effect telling Russia he is about to declare cyberwar on it.

“I think there is no doubt that when any foreign government tries to impact the integrity of our elections that we need to take action and we will at a time and place of our own choosing,” Obama told National Public Radio. He is certainly right: the only doubt is that a foreign government did in fact try to “impact the integrity of our elections.”

Describing potential countermeasures by the US, the President, confirming he had learned something from Donald Trump, said “some of it may be explicit and publicized; some of it may not be.

Obama also said he directly confronted Russian President Vladimir Putin about a potential US response, and said his counterpart acknowledged his stance. “Mr. Putin is well aware of my feelings about this, because I spoke to him directly about it,” Obama said.

As CNN adds, Obama and Putin conferred on the sidelines of the G20 meeting in China in September. Afterwards, Obama told reporters he raised cybersecurity with the Russian leader. It was not clear if Obama had told Putin he was prepared to launch World Cyber War I against the Russian, just because Hillary won an election every “expert” in the country said Trump would lose.

Intelligence agencies in October pinned blame on Russia for election-related hacking. At the time, the White House vowed a “proportional response” to the cyberactivity, though declined to preview what that response might entail.

Russia has, of course, laughed off this escalating stupidity. Russian Foreign Minister Sergei Lavrov told state TV channel Rossiya-24 that he was “dumbstruck” by the NBC report of Putin’s alleged involvement.
“I think this is just silly, and the futility of the attempt to convince somebody of this is absolutely obvious,” he said.

Early on Thursday, Putin spokesman Dmitry Peskov told the AP the report was “laughable nonsense“, while Russian foreign ministry spox Maria Zakharova accused “Western media” of being a “shill” and a “mouthpiece of various power groups”, and added that “it’s not the general public who’s being manipulated,” Zakharova said. “the general public nowadays can distinguish the truth. It’s the mass media that is manipulating themselves.

That may be true, but Obama is set to give it one last try.

As CNN further adds, officials have said US actions against Russia may not be revealed publicly.

Speaking Thursday at the White House, Press Secretary Josh Earnest declined to say whether the US had already begun its response to Moscow’s actions. “The President determined once the intelligence community had reached this assessment that a proportional response was appropriate,” Earnest said. “At this point, I don’t have anything to say about whether or not that response has been carried out.”

Meanwhile, at Hillary Clinton’s “thank you” party for billionaire donors, the topic of both Donald Trump and Russian hacking came up, and Hillary told her supporters not to “lose heart.”

Spotted arriving at Hillary Clinton “thank you” donor party at The Plaza (former Trump property): Anna Wintour, Harvey Weinstein, Vera Wang

HRC talked Putin & Russian hacking tonight at NYC donor party, per source in the room — said she was proud to have stood up to Putin as SoS

HRC talked Putin & Russian hacking tonight at NYC donor party, per source in the room — said she was proud to have stood up to Putin as SoS

Per source, Hillary Clinton did not mention Donald Trump in her remarks tonight but told supporters not to “lose heart”

Then there were other, unsubstantiated if more concerning reports:

CNN is reporting that Trump’s refusal to acknowledge Russia interference has made White House decide orderly transition isn’t main priority

* * *

So what does it all mean? We’ll know the answer tomorrow early afternoon.

According to Reuters, President Barack Obama will hold an impromptu press conference at the White House on Friday at 2:15 p.m. ET before leaving for his annual family vacation in Hawaii, the White House said on Thursday. It would be fitting if Obama announced he would start a cyberwar with Russia, then jetted off to the safety of a far off, golf-friendly island.




Obama vows revenge.  What exactly does he propose as he is set to leave office next month:

(courtesy the Real Fly)

Obama Vows to Exact Revenge Against Russia for Unsubstantiated Russian Hacking Claims

The_Real_Fly's picture



NSA whistleblower Binney states that there is hard evidence which points to an inside leak and not hacking:

(courtesy zerohedge)

NSA Whistleblower Destroys Obama’s Russia Narrative – “Hard Evidence Points To An Inside Leak, Not Hacking”

A group of retired senior intelligence officials, including the NSA whistleblower William Binney (former Technical Director, World Geopolitical & Military Analysis, NSA), have posted an open letter on that destroys the Obama administration’s “Russian hacking” narrative.  Within the letter, Binney argues that, thanks to the NSA’s “extensive domestic data-collection network,” any data removed remotely from Hillary Clinton or DNC servers would have passed over fiber networks and therefore would have been captured by the NSA who could have then analyzed packet data to determine the origination point and destination address of those packets.  As Binney further notes, the only way the leaks could have avoided NSA detection is if they were never passed over fiber networks but rather downloaded to a thumb drive by someone with internal access to servers.

We have gone through the various claims about hacking. For us, it is child’s play to dismiss them. The email disclosures in question are the result of a leak, not a hack. Here’s the difference between leaking and hacking:

Leak: When someone physically takes data out of an organization and gives it to some other person or organization, as Edward Snowden and Chelsea Manning did.

Hack: When someone in a remote location electronically penetrates operating systems, firewalls or any other cyber-protection system and then extracts data.

All signs point to leaking, not hacking. If hacking were involved, the National Security Agency would know it – and know both sender and recipient.

In short, since leaking requires physically removing data – on a thumb drive, for example – the only way such data can be copied and removed, with no electronic trace of what has left the server, is via a physical storage device.

Again, NSA is able to identify both the sender and recipient when hacking is involved. Thanks largely to the material released by Edward Snowden, we can provide a full picture of NSA’s extensive domestic data-collection network including Upstream programs like Fairview, Stormbrew and Blarney. These include at least 30 companies in the U.S. operating the fiber networks that carry the Public Switched Telephone Network as well as the World Wide Web. This gives NSA unparalleled access to data flowing within the U.S. and data going out to the rest of the world, as well as data transiting the U.S.

In other words, any data that is passed from the servers of the Democratic National Committee (DNC) or of Hillary Rodham Clinton (HRC) – or any other server in the U.S. – is collected by the NSA.  These data transfers carry destination addresses in what are called packets, which enable the transfer to be traced and followed through the network.


Binney further notes that the manner in which the media’s “sources” are equivocating by using phrases like “our best guess” implies that the NSA has not been able to trace the Hillary or DNC “hacks” across fiber networks.  And, since the NSA tracks basically every packet that travels across U.S. networks, Binney concludes that it’s effectively impossible that the WikiLeaks data came from a “hack.”

The bottom line is that the NSA would know where and how any “hacked” emails from the DNC, HRC or any other servers were routed through the network. This process can sometimes require a closer look into the routing to sort out intermediate clients, but in the end sender and recipient can be traced across the network.

The various ways in which usually anonymous spokespeople for U.S. intelligence agencies are equivocating – saying things like “our best guess” or “our opinion” or “our estimate” etc. – shows that the emails alleged to have been “hacked” cannot be traced across the network. Given NSA’s extensive trace capability, we conclude that DNC and HRC servers alleged to have been hacked were, in fact, not hacked.

The evidence that should be there is absent; otherwise, it would surely be brought forward, since this could be done without any danger to sources and methods. Thus, we conclude that the emails were leaked by an insider – as was the case with Edward Snowden and Chelsea Manning. Such an insider could be anyone in a government department or agency with access to NSA databases, or perhaps someone within the DNC.

Asked why intelligence sources would be leaking such dangerous allegations without proof, Binney echoed our thoughts that they’re simply “concocting these things to support the existing administration and to also support the move toward a new Cold War.”  Per RT:

“Certainly, that’s behind some of it. Hillary Clinton and a number of people were going that way, and certainly the military intelligence complex fosters that because that means for a “new Cold War” trillions of dollars going into the coffers of those people, they would certainly be advocates for this thing. There is a lot of vested interest to keep this kind of thing going,” Binney added.

“If the CIA is alleging a different story, they need to produce the evidence like they did on the Chinese hack,” Binney said. “There is no reason to withhold this kind of information, especially if they can prove it and so far as I can see they won’t even brief the House Intelligence Committee on the evidence they are using to make this statement. That tells me that what they are saying is a pack of crap.”

“That are just concocting these things to support the existing administration and to also support the move toward a new Cold War.”

Alas, who needs “hard evidence” when baseless narratives are so much fun?





This does not look good:  the FBI does a U turn and agrees with the CIA assesment that Russia intervened in the election.

will this move the electors?

(courtesy zero hedge)


FBI Said To Back CIA Assessment That Russia Intervened To Help Trump Win

Either the WaPo has pulled off another “fake news” stunt, or Obama may be this close from declaring “cyber war” on Putin.

Moments ago, the Jeff Bezos newspaper, whose main mission over the past month has been to pin Clinton’s presidential failure first on Russia and then on Vladimir Putin, reported that FBI Director James B. Comey and Director of National Intelligence James R. Clapper Jr. have backed a CIA assessment that Russia intervened in the 2016 election in part to help Donald Trump win the presidency, “according to U.S. officials.

If accurate, this would represent a U-turn to the FBI’s official position, and would suggest that all three agencies are in agreement on Russian intentions, “contrary to suggestions by some lawmakers that the FBI disagreed with the CIA.” Actually, not just some lawmakers: as Reuters reported earlier this week, the Office of the Director of National Intelligence (ODNI), America’s top Spy Agency, sided with the FBI which is why today’s report is surprising.

Still, things may have changed. “Earlier this week, I met separately with (Director) FBI James Comey and DNI Jim Clapper, and there is strong consensus among us on the scope, nature, and intent of Russian interference in our presidential election,” CIA Director John Brennan said in a message to the agency’s workforce, according to U.S. officials who have seen the message.

“The three of us also agree that our organizations, along with others, need to focus on completing the thorough review of this issue that has been directed by President Obama and which is being led by the DNI,” Brennan’s message read. Trump has consistently dismissed the intelligence community’s findings about Russian hacking.

In addition to “helping Trump win”, the CIA and FBI officials believe Moscow’s other goal included undermining confidence in the U.S. electoral system.

If indeed the three agencies are in agreement, it is unclear what the next step may be. In his message to the CIA’s workforce, Brennan said the administration has provided detailed briefings to lawmakers and their aides since the summer.

“In recent days, I have had several conversations with members of Congress, providing an update on the status of the review as well as the considerations that need to be taken into account as we proceed,” Brennan wrote. “Many – but unfortunately not all – members understand and appreciate the importance and the gravity of the issue, and they are very supportive of the process that is underway.”

Perhaps Obama, who is speaking now, will provide some much needed information on what the US’ next steps are.




No wonder Putin envies Trump:


Obvious why Putin envies Trump, isn’t it?



The Saudis are upset at the fact that the families of 9;11 can sue.  They will threaten the IPO will not be done on the New York Stock Exchange but may move to London:

(courtesy zero hedge)

Saudis Threaten To Move Aramco IPO Elsewhere Due To “Concerns” Over Trump, Sept 11 Law

Aside from Hillary Clinton of course, the single biggest loser from the November 8 presidential election in terms of net sunk costs, was Saudi Arabia: having “donated” tens of millions to the Clinton Foundation, and sponsored her presidential campaign directly, Riyadh was hoping for many long and fruitful years of quid pro quo in exchange for its recycled petrodollar generosity. Instead, the Saudis got not only president Trump, who has made it public he wants a clean break with a US foreign policy which panders to such Mid-east “allies” as the Saudi, but also the recent passage of legislation that could – and already has – allowed U.S. terror victims to sue Saudi Arabia.

As a result, a suddenly snubbed Saudi Arabia, is reassessing its multibillion-dollar U.S. financial strategy because of shifts in the American political landscape, including whether to go elsewhere with the public stock debut of its state oil company the WSJ reports.

In monetary terms, this means that Saudi Arabia’s giant sovereign-wealth fund has paused its U.S. investments until they can figure out the implications of the bill and the new direction of the White House, the WSJ said citing a person familiar with the fund’s decision making.

And, in what is an attempt to engage in a negotiation with the Trump administration, Saudi Arabia has already unveiled what it will use as a bargaining chip to make Trump warm up to Suadi diplomatic overtures: the initial public offering of Saudi Arabian Oil Company, the world’s biggest oil producer better known as Aramco, which is tentatively set for next year or 2018, and could raise more than $100 billion in proceeds, ranking as the largest in IPO history. The prospect has set banks scrambling for a deal that could bring $1 billion in fees.

Aramco, the world’s biggest oil producer, tentatively set its IPO for next year or 2018

It is these fees that Saudi Arabia is now threatening with taking to some other global capital market.

While Saudi officials haven’t decided where to list the shares, bankers say the New York Stock Exchange is the best place to debut such a large offering. The government has been meeting with officials from numerous exchanges, including London, people familiar with the process said.

Furthermore, with its “investment” in the Clinton Campaign now lost, Saudi officials are looking at other avenue with which to grease Washington, and specifically how they will invest money from the kingdom’s massive Public Investment Fund. Danging the carrot, Saudi officials have indicated they are effectively turning the sovereign-wealth fund into a war chest for non-oil investments abroad—a coffer that would expand with proceeds from the Aramco IPO.

So what has gotten the Saudis so riled up?  It appears that the kingdom is particularly alarmed by the federal legislation approved in September to allow victims of the Sept. 11, 2001, terrorist attacks to sue Saudi Arabia to seek damages.  The prospect of being found liable for the attacks has made Saudi leaders worry that big transactions in the U.S. could expose their assets to legal judgments.

Which, traditionally, would have a simple solution: just give the Clinton Foundation an extra million and it 3will go away. This time however, with Trump in charge, the Saudis have no idea how to approach the US government when it comes to “purchasing” political favors.

And while it grapples to find the right approach, Saudi Arabia had beefed up its lobbying operation to wage a furious effort to defeat the terrorism legislation. After Congress overrode a veto of the bill by President Barack Obama , lobbyists for Saudi Arabia pressed lawmakers to amend it. Lobbyists have argued that the measure is too broad and could have the unintended result of prompting lawsuits against the U.S. by foreign individuals.

Those lobbyists also had raised the specter that the law could affect Saudi Arabia’s U.S. investment plans.

A shift in Saudi Arabia’s U.S. investing strategy now could become a negotiating point in the kingdom’s broader relationship with the U.S. Many in Washington expected legislators to soften the law after the November elections, something Senate Majority Leader Mitch McConnell (R., Ky) hinted at in September. At that time, former Secretary of State Hillary Clinton was forecast to win the election. The White House declined to comment. But congressional leaders haven’t revisited the law since Mr. Trump’s victory, and have now adjourned until next year, likely leaving the law to the next Congress and a president who has indicated no interest in changing it.

The biggest problem for the Saudis is that Trump has been a fervent supporter of the bill. He called Obama’s veto attempt shameful and said it would “go down as one of the low points of his presidency.”

In a statement before Congress voted to overturn the veto, Mr. Trump said: “If elected president, I would sign such legislation should it reach my desk.” Mr. Trump didn’t respond to requests for comment.

Also, there was the infamous spat between Trump and Saudi prince Bin Talal…

Then again, it may be just one of things Trump is preparing to flip-flop on. The President-elect has said he is a friend of Saudi Arabia, and picked Gen. James Mattis, a longtime supporter of Saudi Arabia, as his defense secretary.

Yet Trump has also questioned U.S. military support to the country. In another potential challenge to Saudi Arabia, Mr. Trump has been an advocate for increasing U.S. oil production, in part to limit imports.

Saudi companies have stakes in U.S. refineries and are trying to expand into petrochemicals. But Trump adviser Harold Hamm, the chief executive of oil producer Continental Resources Inc., said recently that Saudi Arabia shouldn’t be allowed to own petrochemical plants in the U.S., since it would collide with U.S. business interests by having the plants process Saudi oil, rather than buying from U.S. producers.

* * *

Bit the real carrot is the Aramco IPO. While a Saudi Aramco IPO in New York was never a certainty, many had assumed it would take place there. However, the changes in the U.S. have further delayed Saudi decisions on how to move ahead with their plans. The offering is part of a Saudi strategy to reduce its reliance on oil and diversify its economy. The IPO is also the primary impetus behind Saudi Arabia’s change of heart, where the kingdom is now pushing for higher prices and lower production, a U-turn from its November 2014 stance. After all the probability of finding $100 billion worth of investments is much higher with oil at $60 than $30.

In July, the Saudi fund said it would invest $45 billion in a fund run by Japanese internet and telecommunications giant SoftBank Group Corp.  The WSJ sources say the Saudi officials decided to make the huge investment in SoftBank after the terrorism legislation, and the money that went into SoftBank could have gone directly into U.S. investments or U.S. investment firms. There were concerns about their exposure if they invested directly, one person said. Naturally, one can counter that they would have nothing to be concerned about if they are – as they claim – fully innocent of anything to do with Sept 11.

The Saudi fund was also interested in SoftBank on its own merits, said a person familiar with the matter, including the ability to put a large amount of money to work with a single investment and the likelihood that the fund would have access to deals from some of the world’s top entrepreneurs.

Of course, the investment had an ulterior motive too: to get Trump on the same page as the Kingdom. Some of the money that went to SoftBank appears likely to end up in the U.S. via SoftBank investments. SoftBank Chief Executive Masayoshi Son met with Mr. Trump at Trump Tower in New York on Dec. 6 and told reporters afterward he would invest $50 billion—some of it from the fund the Saudis backed—in the U.S. and create 50,000 new jobs.

So yes, much of the money invested in the US via SoftBank will come from Saudi Arabia, just as the Saudis want it, as from that moment on they would have leverage… just like they did over Clinton.

It remains to be seen just what Trump’s policy toward Saudi Arabia will be, and if he will merely perpetuate the flawed foreign policy of his predecessor.



USA shale gas companies made no money at all for the last 7 years.  Not only that but they have not paid any royalties to their landowners as the taxes collected does not come close to outgoing costs by the state:

(courtesy St Angelo/SRSRocco report)

U.S. SHALE GAS INDUSTRY: Countdown To Disaster

by SRSrocco on December 15, 2016


The countdown has started as the demise of the great U.S. shale gas industry has begun.  This will have a disastrous impact on the U.S. economy as shale gas production declines in a big way.  Unfortunately, very few Americans understand how sickly the domestic shale gas industry truly is, because they have been brainwashed to believe the United States is heading towards energy independence.

For the U.S. to become energy independent, it would have to add at least another five million barrels per day of oil production.  At the peak in February 2015, the U.S. shale oil industry produced a little more than five million barrels of oil per day.  However, the real problem is not the doubling of U.S. shale oil production, rather it’s being able to make a profit in the process.

The U.S. shale oil and gas industry hasn’t made any real money since 2009.  This is especially true for one of the largest natural gas producers in the United States.  Chesapeake Energy, which is the second largest natural gas producer in the country, hasn’t made a lousy nickel for at least the past ten years:


This table comes from the website,  If you click on the Chesapeake Free Cash Flow link at, you will see the very same table by scrolling down the page.  According to gurufocus, their definition of Free Cash Flow is the following:

Free Cash Flow is considered one of the most important parameters to measure a company?s earnings power by value investors because it is not subject to estimates of Depreciation, Depletion and Amortization (DDA).  Over the long term, Free Cash Flow should give pretty good picture on the real earnings power of the company.

As we can see in the table above, Chesapeake Energy is completely in the RED as it pertains to free cash flow or real profits since 2006.  This is quite an amazing accomplishment from the second largest natural gas producer in the country.  You would think, being BIG would guarantee profits.  I gather someone forgot to tell Chesapeake’s management the important financial tidbit called, “Economies of scale.”

To get an idea of the top five natural gas producers in the United States, I listed them below.

Top 5 U.S. Natural Gas Producers (Data from Natural Gas Supply Association):

[Figures shown in billion cubic feet per day]

  1. ExxonMobil: 3.105 Bcf/day
  2. Chesapeake: 2.971 Bcf/day
  3. Southwestern: 2.208 Bcf/day
  4. Andarko: 2.164 Bcf/day
  5. EQT: 1.855 Bcf/day

I took the data for Chesapeake’s free cash flow and made the chart below:


While the table above is nice, this chart provides us a much clearer picture of the DISASTER taking place at Chesapeake Energy.  Not only do we see a lot of RED in the chart, we can also see the total cumulative negative free cash flow for the ten-year period.  Chesapeake Energy spent a whopping $60 billion more than they made from operating cash.

Basically, Chesapeake hoodwinked a lot of investors out of their hard-earned money to help make America, energy independent…. or at least they tried.  Unfortunately, many of these investors still don’t realize they have been bamboozled.  Why?  Because a lot of Chesapeake’s debt, as well as many other shale energy companies’ debt, are bonds purchased and held by many public and private pension and retirement funds.

And… it gets even worse.  I’ve read that insurance companies have invested in the Great U.S. Shale Energy Ponzi Scheme.  This is quite surprising as insurance companies are supposed to invest in very safe and conservative assets.  However, the ultra-low interest rates at the banks, thanks to the Clowns at the Fed, have forced investors and institutions to search for “Higher yielding” investments.  While the shale oil industry hasn’t really made any money, at least they pay their bond holders a higher rate than many other investments in the market.

Regrettably, when investors or institutions try to get their initial shale energy investments back in the future, they will be for a rude awakening.

More Nails In The Chesapeake Energy Coffin

Before I continue, we must remember that Chesapeake Energy is the second largest natural gas producer in the United States.  That being said, let’s look at few more troubling signs at Chesapeake.

One of the nifty ways to fund operations if cash flow isn’t adequate, is to perform STOCK DILUTION.  If the company can’t make a profit, well then by God, issue more stock to a new group of poor unworthy slobs.  As they say, there’s a sucker born every minute.

In order to do its part in making America energy independent, Chesapeake Energy diluted its shares by 319 million, or 70% over the past decade:


Okay, a 70% dilution of its outstanding shares over the decade wouldn’t be that bad if investors were rewarded with a decent stock price.  Sadly, Chesapeake’s stock performance is just as dismal as its percentage of share dilution.  Even though Chesapeake’s share price doubled since the beginning of the year, it is down 75% from its high in 2014.

Furthermore, the once mighty Chesapeake stock traded for a high of $62 in 2008, but today, trades for a mere 7 bucks a share.  WARNING…For those savvy investors who are swallowing the Mainstream media hype that a new bull market in energy stocks has begun, let me show you Chesapeake Energy’s EKG… its vitals:


This chart should be easy for anyone to follow.  The Green Dollars represent Chesapeake’s total assets and the Red Line displays its total liabilities.  For a company to get a CLEAN BILL OF HEALTH, its assets must outweigh its debts… and by a wide margin.

Well, that may have been true for Chesapeake in the past, but today we see a TERMINALLY ILL PATIENT.  In the third quarter of 2016, Chesapeake’s total liabilities were higher at $13.7 billion versus its total assets of $12.5 billion.  Gosh, I wonder who owns the $9 billion of Chesapeake’s long-term debt?

Okay, well maybe there’s a slight chance that Chesapeake can begin to work harder at producing profits by increasing its natural gas production.  To do this, they would have to spend more money.  If we look at the chart below, we see another disturbing trend:


According to the figures above, Chesapeake’s capital expenditures are down a stunning 90% at $1.6 billion, since its peak of $14.7 billion in 2012.  This is definitely heading in the wrong direction.

By looking at all the financial indicators, the future for Chesapeake Energy looks quite dim.  Unfortunately, these indicators only provide part of the DISASTER taking place in the Good ole U.S. of A.

Chesapeake Energy Survived By Slashing Royalties To Property Owners

While Chesapeake Energy had to resort to spending $60 billion more to fund its business than it made from operations, on top of massive share dilution… this just wasn’t enough.  According to several sources, Chesapeake Energy decided to slash its royalty payments to the land owners to help make America energy independent once again.

In the article, How The Fracking Industry Avoids Paying Royalties To Its Landowners, it stated:

Don Feusner ran dairy cattle on his 370-acre slice of northern Pennsylvania until he could no longer turn a profit by farming. Then, at age 60, he sold all but a few Angus and aimed for a comfortable retirement on money from drilling his land for natural gas instead.

It seemed promising. Two wells drilled on his lease hit as sweet a spot as the Marcellus shale could offer—tens of millions of cubic feet of natural gas gushed forth. Last December, he received a check for $8,506 for a month’s share of the gas.

Then one day in April, Feusner ripped open his royalty envelope to find that while his wells were still producing the same amount of gas, the gusher of cash had slowed. His eyes cascaded down the page to his monthly balance at the bottom: $1,690.

Chesapeake Energy, the company that drilled his wells, was withholding almost 90 percent of Feusner’s share of the income to cover unspecified “gathering” expenses and it wasn’t explaining why.

“They said you’re going to be a millionaire in a couple of years, but none of that has happened,” Feusner said. “I guess we’re expected to just take whatever they want to give us.”

In another article, I watched a short video on just how bad the farmers and landowners were getting screwed by Chesapeake.  One farmer received $1.10 royalty check one month, and then $0.10 the next.  What was really shocking was that one landowner received a bill for $30,000 from Chesapeake, instead of a royalty payment.  This was in the Pennsylvania Marcellus area.  You have to watch this video from PA Royalty Ripoff below:

In addition, there have been several large class action royalty payment lawsuits against Chesapeake in various states in which they are producing oil and gas.  Here is a map of Chesapeake’s operations:


Supposedly, the Marcellus is the largest and most profitable shale gas field in the United States.  Of the 43 billion cubic feet per day of U.S. shale gas production, the Marcellus is producing 18 billion cubic feet per day, or 42% of the total.

But, as several Americans in the video explain, they haven’t been receiving their royalty payments even though Chesapeake continues to extract gas.  While other companies are actually paying their landowners their fair share of royalties, the situation in the entire U.S. Shale Energy Industry isn’t much better than the financial catastrophe taking place at Chesapeake.

U.S. Shale Energy Industry Has Been In The Red Since 2009

I found this wonderful table in an article, Oil Industry Spending Too Much; Deficit Spending Is Unsustainable, on the free cash flow for the Large Cap E & P oil and gas companies in the United States.  If there is one chart you have to see, this is the one:


This chart gives us a true picture of the DISASTER taking place in the U.S. Shale Energy Industry.  While I have focused this article on the second largest shale gas producer in the U.S., we can clearly see that the entire group lost money in 2012/2014, and the industry as a whole has been in the RED since 2009.

What is even more amazing about the figures in this table is that the Large Cap Shale Producers suffered higher losses (negative free cash flow) when the price of oil was at its highest prices from 2011 to 2014.  Even though the price of oil began to fall in 2014, the average price for the year was $93.

Furthermore, the table also shows a forecast for continued negative free cash flow for the entire industry in 2015 and 2016.  Thus, the U.S. Shale Energy Industry will have been in the RED for eight consecutive years.

Today, the price of oil is trading half of what it was in 2014 at $49-$50.  While some analysts are pointing to “increased efficiency” and “lower production costs”, this won’t save the industry as it is still producing an INFERIOR and UNECONOMIC quality of oil and gas.

As I mentioned in my interview on the X22 Report, the amount of damage taking place on the U.S. roads and landscape by the Shale Fracking Industry is off the charts.  Here is a picture from the article linked above showing the huge FOOTPRINT that one shale gas well has on a farmer’s property:


Can you imagine looking at that everyday on your picturesque farmland?  What is even worse, you have to look at that when the company isn’t even paying your royalty payments.  Of course, when the well is finally producing shale gas, most of this equipment will be gone, but the size of the drilling pad is huge.

Moreover, the amount of damage done to local and state roads by the Shale Fracking Industry is huge.  According to the excellent research by the Energy Policy Forum,

Pennsylvania collected $204 million in impact fees in 2012 (they don’t have a severance tax), but road damage topped $3.5 billion! Since 2009, Arkansas received $182 million in gas severance taxes, but estimates road damage cost $450 million.

Well there you have it.  Fracking shale gas in the Pennsylvania Marcellus generated $204 million in impact fees, but the road damage topped $3.5 billion.  What a deal.  From the information I have read, it takes an estimated 1,600 truck trips for a single fracked well.

As we can see from all the information and data provided in this article, the Great U.S. Shale Energy Industry has been a complete failure.  Moreover, we are witnessing the U.S. Shale Gas Industry, COUNTDOWN to DISASTER.  When the industry finally implodes, who will pay to properly cap the tens of thousands of fracked wells??  Who will fix the roads?  What happens when the natural gas-electric generation supply drops considerably?

Yes, that is correct.  The United States will be in serious trouble.  However, Americans today have no clue that the U.S. Shale Energy Industry has made no real money, ripped off landowners of their royalty payments, polluted groundwater and destroyed countless roads across the country, all in the effort to make us “Energy Independent.”

Well done…



We knew that this was going to happen:  USA oil rig count surges and thus production from shale reaches a 7 month high:

(courtesy zero hedge)



US Oil Rig Count Surges As Crude Production Reaches 7-Month Highs

The last two weeks have seen dramatic rises in the US oil rig count (+21 and +12 respectively) pushing it to its highest in 11 months. US crude production is tracking the lagged rig count very closely and has surged to 7-month highs in the 2 weeks since OPEC agreed its production cut deal.

US Oil Rig Counts continue to rise in line with lagged oil prices.

And in turn the US crude production is resurging against lagged rig increases.


none today

Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings FRIDAY morning 10:00 am



GBP/USA 1.2458 UP .0058 (Brexit by March 201/UK government loses case/parliament must vote)


Early THIS FRIDAY morning in Europe, the Euro ROSE by 40 basis points, trading now WELL BELOW the important 1.08 level RISING to 1.0456; Europe is still reacting to Gr Britain BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ 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 5.30 0r 0.17%     / Hang Sang  CLOSED DOWN 38.65 POINTS OR 0.18%   /AUSTRALIA IS LOWER BY 0.10% / EUROPEAN BOURSES ALL IN THE GREEN 

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

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

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

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

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

The NIKKEI: this FRIDAY morning CLOSED UP 127.36 POINTS OR 0.66%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 38,65 OR 0.18%   Shanghai CLOSED UP 5.30 POINTS OR 0.17%   / Australia BOURSE IN THE RED /Nikkei (Japan)CLOSED UP 127.36 POINTS OR 0.66%INDIA’S SENSEX IN THE RED

Gold very early morning trading: $1133.80


Early FRIDAY morning USA 10 year bond yield: 2.577% !!! UP 0 IN POINTS from THURSDAY 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  3.125, UP 0 IN BASIS POINTS  from THURSDAY night.

USA dollar index early FRIDAY morning: 102.85 DOWN 25 CENT(S) from THURSDAY’s close.

This ends early morning numbers FRIDAY MORNING


And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield: 3.804% UP 3  in basis point yield from THURSDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.081% DOWN  1  in   basis point yield from  THURSDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.424%  UP  1/2  IN basis point yield from  THURSDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.876  UP 5  in basis point yield from THURSDAY 

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





Closing currency crosses for FRIDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:30 PM 

Euro/USA 1.0447 UP .0031 (Euro UP 31 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 117.72 DOWN: 0.529(Yen UP 53 basis points/ 

Great Britain/USA 1.2490 UP 0.0069( POUND UP 69 basis points)

USA/Canada 1.3343 UP 0.0011(Canadian dollar DOWN 11 basis points AS OIL ROSE TO $51.68


This afternoon, the Euro was UP by 31 basis points to trade at 1.0447


The POUND ROSE 69 basis points, trading at 1.2490/

The Canadian dollar FELL by 11 basis points to 1.3333,  AS WTI OIL ROSE TO :  $51.68

The USA/Yuan closed at 6.9569
the 10 yr Japanese bond yield closed at +.081% DOWN 1 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 1   IN basis points from THURSDAY at 2.568% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.156 UP 3  in basis points on the day /

Your closing USA dollar index, 102.81 DOWN 29 CENTS  ON THE DAY/1.30 PM 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for FRIDAY: 1:30 PM EST

London:  CLOSED UP 12.63 POINTS OR 0.18%
German Dax :CLOSED UP 37.61 POINTS OR 0.33%
Paris Cac  CLOSED UP 14.04 OR 0.29%
Spain IBEX CLOSED UP 72.00 POINTS OR 0.77%
Italian MIB: CLOSED UP 19.96 POINTS OR 0.11%

The Dow was DOWN  8.83 POINTS OR .04% 4 PM EST

WTI Oil price;  51.68 at 1:30 pm; 

Brent Oil: 55.073   1:30 EST

USA /RUSSIAN ROUBLE CROSS:  62.46 (ROUBLE UP  67/100 roubles from YESTERDAY)




This ends the stock indices, oil price, currency crosses and interest rate closes for today

Closing Price for Oil, 5 pm/and 10 year USA interest rate:


BRENT: $55.33


USA 30 YR BOND YIELD: 3.177%


USA/JAPANESE YEN:117.94  down 0.302

USA DOLLAR INDEX: 102.82 down 28  cents(BREAKS HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.24777 : up 57  BASIS POINTS.

German 10 yr bond yield at 5 pm: +.314%


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


Stocks Suffer Worst Week Since Election As Banks, Bullion, & Bonds Sink

The market’s message to Dow 20,000 (or China’s message to ‘Murica)?


Thanks to China stealing an underwater drone and quad witch shenanigans, US equities closed red post-Fed…


And while Gold spiked today on China, it remains the biggest laggard post-Fed (though even bank stocks are now red)…


And today’s China headlines realy spooked the market on edge anyway from OPEX


On the week only The Dow managed to hold onto gains…

  • Trannies Dropped 2.5% – worst week in 6 months
  • Financials dropped 1.6% – worst week in 3 months
  • NYSE Composite worst week since election

On the week, stocks were mixed but Trannies worst…


Dow 20,000 was lost – 2 lower highs in a row post Fed spike…


Quad Wicth saw more VIX chaos with a total collapse into the close (note the corrrelation between stocks and VIX was extremely high once again – as opposed to norm)


Financial stocks were the week’s worst performers (and healthcare best)…


Treasury yields ended the week higher across the curve BUT the long-end dramatically outperformed…


And the yield curve has tumbled in recent days…


The USD Index rose notably on the week to close at 14 year highs… (led by Yen and Aussie Dollar weakness)


The Dollar dump after China sparked some chaos in commodities and lifted crude oil into the green, silver was worst on the week…


Gold spiked today on China headlines but ended the week ugly – 6th weekly drop in a row (worst week since election week)




The average consumer is laden with debt and to be exact it averages 133,000 per household; the debt has been securitized by our crooked bankers and sold through the globe.  What happens when interest rates rise:  the consumer is cooked and so is the securitization of that debt:

(courtesy zero hedge)

Are Debt-Laden American Consumers About To Get Crushed By Higher Interest Rates?


Yesterday we received data that the homebuilder confidence soared despite higher interest rates, etc.  Strange today housing permits collapsed..and the confidence is high?

(courtesy zero hedge)

Housing Starts, Permits Crash In November (Despite Soaring Homebuilder Confidence)



  1. Two great cartoons: Dog with “The Russians did it,” and The fat lady encore. Both worth the read.


  2. Hi Harvey
    There is a sight that compares the Gold and Silver live price between LBMA and SGE
    I have it on my computer open all the time.
    Few month back the price difference was $5 for Gold . As of Des 16 is $50 or so
    Have a great day.


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