Dec 29/Toshiba brings a bloodbath in Toyko as it has fallen 50% in 3 days and this time it has taken two banks with them/Italian government furious with the ECB for revealing a run on the Monte dei Paschi and other Italian banks/Michael Snyder comments on what to expect with the meeting on Jan 15/2017 where 70 nations may rubber stamp Kerry’s blueprint for a two state solution inside Israel: he expects utter chaos!/More chaos in India has the demonetization has failed: so he will try something new/The high USA dollar causes the trade deficit to soar to 65 billion USA/Obama unleashes sanctions against Russia and provides “proof”. Russia laughs/

Gold at (1:30 am est) $1156.40 UP $17.00

silver  at $16.16:  UP 17 cents

Access market prices:

Gold: $1158.40

Silver: $16.18

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

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

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

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

And now the fix recordings:

THURSDAY gold fix Shanghai

Shanghai morning fix Dec 29 (10:15 pm est last night): $  1161.18

NY ACCESS PRICE: $1141.90 (AT THE EXACT SAME TIME)/premium $14.93

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1160.85

NY ACCESS PRICE: $1148.85 (AT THE EXACT SAME TIME/2:15 am)

HUGE SPREAD 2ND FIX TODAY!!:  $12.00

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

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Fix: Dec 29: 5:30 am est:  $.1145.90   (NY: same time:  $1146.50    5:30AM)

London Second fix Dec 29: 10 am est:  $1145.80 (NY same time: $1138.60 ???    10 AM)

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

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

end

For comex gold: 

NOTICES FILINGS FOR DECEMBER CONTRACT MONTH:  413 NOTICE(S) FOR 41,300 OZ.  TOTAL NOTICES SO FAR: 9578 FOR 957,800 OZ    (29.791 TONNES)

For silver:

 NOTICES FOR DECEMBER CONTRACT MONTH FOR SILVER: 174 NOTICE(s) FOR 870,000  OZ. TOTAL NUMBER OF NOTICES FILED SO FAR; 3980 FOR 19,990,000 OZ

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE by 466 contracts UP to 163,543 with respect to YESTERDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .818 BILLION TO BE EXACT or 117% of annual global silver production (ex Russia & ex China).

FOR THE DECEMBER FRONT MONTH:  174 NOTICES FILED FOR 870,000  OZ.

In gold, the total comex gold ROSE BY 3,753 contracts WITH THE RISE IN  THE PRICE GOLD ($2.10 with YESTERDAY’S trading ).The total gold OI stands at 405,266 contracts.

we had 413 notice(s) filed upon for 41,300 oz of gold.

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

GLD:

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

Inventory rests tonight: 823.36 tonnes

.

SLV

we had n0 changes in silver into the SLV

THE SLV Inventory rests at: 341.348 million oz

.

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

1. Today, we had the open interest in silver ROSE by 466 contracts UP to 163,543 as the price of silver ROSE by  $0.06 with YESTERDAY’S trading. The gold open interest ROSE by 3,753 contracts UP to 405,266 as the price of gold ROSE BY $2.10 WITH YESTERDAY’S TRADING.

(report Harvey).

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 4.12 POINTS OR 0.12%/ /Hang Sang closed UP 36.17 OR .17%. The Nikkei closed DOWN 256.58 OR 1.32% /Australia’s all ordinaires  CLOSED UP 0.25%/Chinese yuan (ONSHORE) closed UP at 6.9555/Oil FELL to 53.98 dollars per barrel for WTI and 56.42 for Brent. Stocks in Europe: ALL IN THE RED .  Offshore yuan trades  6.9734 yuan to the dollar vs 6.9555  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS A BIT AS  MORE USA DOLLARS ARE ATTEMPTING TO  LEAVE CHINA’S SHORES /

REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

3a)THAILAND/SOUTH KOREA

none today

b) REPORT ON JAPAN

i)Bloodbath in Japan as Toshiba crashes again, and in 3 days it is down 50% However last night, they took some banks with them as contagion concerns slams the Japanese markets

( zero hedge)

c) REPORT ON CHINA

i)With China facing currency and illiquidity concerns, an ex POBC official urges that it is now time for the “nuclear option”  i.e. a full one stop devaluation of the yuan against the dollar. Remember of Jan 1, 2017, the 50,000 usa cash limit withdrawal begins again.  Also remember that the Chinese New Year begins next month and always that signals huge withdrawal of USA dollars.

( zero hedge)

ii)The following will have no real effect on China’s foreign exchange policy due to the fact that much of China’s debt is denominated in USA dollars.  However it is a desperate attempt to project an image of yuan stability:

( zero hedge)

 

4 EUROPEAN AFFAIRS

What a joke:  the Government of Italy slams the ECB for revealing that it has a bank run problem

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)Syria has its ceasefire deal as 62,000 opposition fighters sign for it and it is to take effect on Dec 30 at midnight.  The USA is not invited to the agreement except that once Donald takes office he may join.  What a slap in the face to the USA and the UN who couldn’t come close to a deal for the past several years.

( zero hedge)

ii)Michael Snyder lays out perfectly what may happen on Jan 15.2017 when 70 nations gather in Paris to see if they can create a framework for a two state system in Israel.

(courtesy Michael Snyder/EconomicCollapse Blog)

6.GLOBAL ISSUES

India

Chaos strikes India.  Of the 15.3 trillion rupees issued of our two demonitized notes, 14 trillion has already been handed in.  The government expected 5 trillion would remain outstanding and not to be returned for fear of tax evasion.  It seems that the government guessed wrong, but Modi, not to be undone, it contemplating more harsh measures which will further kill his country.  He is one complete moron

(courtesy zero hedge)

7. OIL ISSUES

Both API and DOE report bigger inventory builds but USA production dipped very modestly

( zero hedge)

8. EMERGING MARKETS

none today

9.   PHYSICAL MARKETS

i)The following is a must read although very long.  Basically Brodsky, an extremely talented economist is stating that the uSA is raising rates to strengthen the dollar which will cause a flow of those dollars into USA banks.  This will help maintain USA hegemony when the leverage breaks and a reset is called upon

a must read…

( Paul Brodsky/GATA)

ii)A comprehensive look at physical gold movements.  First China SGE withdrawals total 214 tonnes or averaging 53.5 tonnes per week which is huge demand.  Russia added 32 tonnes of gold to its official reserves and they will end the year adding 200 tonnes.  What is also noteworthy is that we now have a complete reversal where now England is the next exporter of gold to Switzerland. Switzerland supplies China with monetary and non monetary gold. Also note the good importation of gold into India in November despite Modi’s moves to stop the accumulation of gold by its citizens.

( Ronan Manly/Bullionstar)

iii)The Shanghai gold exchange limits the amount of gold to be purchased per day trying to curb manipulation:

( Reuters/GATA)

10.USA STORIES

i)Strange:  continuing jobless claims soar the most since 2009 right after the Trump election.
( zero hedge)

ii)Obama is set to announce retaliation against Russia for the “hacking” into the Democratic Party computers during the Presidential election

( zero hedge/two commentaries)

iib) As promised the USA announces sanctions against Russia.  They expel 35 diplomats for the election hacking plus sanctions against Russian entities

We now await Mr Putin’s turn to retaliate:

( zero hedge)

iic) That did not take long: Russia responds to the sanctions:

( zero hedge)

iid) The FBI provides no proof on the Russian hacking.  If this is all they have, then Putin will be laughing all night;

( zero hedge)_

iie)The Russian Embassy in the UK mock Obama:

“Lame Duck President”

(courtesy zero hedge)

iii)The soaring dollar hits the uSA trade deficit right in the nose as it rose from a huge 61.9 billion deficit to 65.3 billion in November.  This should automatically lower 4th quarter estimation down .2- .4%.  The Atlanta Fed’s last estimation of 4th quarter GDP was 2.5% growth

( zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY 3,753 CONTRACTS UP to an OI level of 405,266 AS THE  PRICE OF GOLD ROSE $2.10 with YESTERDAY’S trading. We are now in the contract month of December and it is the biggest of the year. Here the front month of December showed a DECREASE of 83 contracts DOWN to 413. We had 38 notice(s) served upon yesterday so we LOST 45 contracts 4500 oz will not stand for delivery and no doubt were bought out for cash plus a fiat bonus.

For the next delivery month of January we had a loss of 346 contracts down to 1284. For the next big active delivery month of February we had a GAIN of 1,921 contracts UP to 272,718.

 

We had 413 notice(s) filed upon today for 41300 oz

First day notice for the January gold contract is tomorrow, Dec 30.

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And now for the wild silver comex results.  Total silver OI ROSE by 466 contracts FROM  163,097 UP TO 163,543 AS the price of silver ROSE BY $0.06 with YESTERDAY’S trading. We are moving  further from the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540). We are now in the next major delivery month of December and here it FELL BY 41 contracts DOWN to 174 CONTRACTS . We had 19 notices served upon yesterday so we LOST 22 SILVER CONTRACTS OR AN ADDITIONAL 110,000 OZ THAT WILL NOT STAND FOR DELIVERY IN THIS ACTIVE MONTH OF DECEMBER.

The next non active delivery month is January and here the OI FELL by 205 contracts DOWN to 758.

The next big active delivery month is March and here the OI ROSE by 687 contracts UP to 133,387 contracts.

We had 174 notices filed for 870,000 oz for the December contract.

First day notice for the January silver contract is tomorrow Dec 30.2016.

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 68,991  contracts which is awful.

Yesterday’s confirmed volume was 118,841 contracts  which is awful

Initial standings for DECEMBER
 Dec 29.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 3,761.58 oz
Scotia
Brinks
(incl 92 kilobars Scotia)
Deposits to the Dealer Inventory in oz 1093.32 oz

Brinks

Deposits to the Customer Inventory, in oz 
  69,986.21 oz
International services of Delaware
No of oz served (contracts) today
 
413 notice(s)
41,300 oz
No of oz to be served (notices)
0 contracts
NIL oz
Total monthly oz gold served (contracts) so far this month
9578 notices
957,800 oz
29.791 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     4,475,021.1 oz
Today we HAD 1 kilobar transactions/
Today we had 1 deposit(s) into the dealer:
 i) Into Brinks:  1,093.32 oz
total dealer deposits:  1093.32  oz
We had nil dealer withdrawals:
total dealer withdrawals:  nil oz
we had 1 customer deposit(s):
 i)Into International Services of  Delaware;  69,986.21 oz
total customer deposits; 69,986.21 oz
We had 2 customer withdrawal(s)
i) out of Scotia: 2957.800 oz (92 kilobars)
ii) Out of Brinks: 803.78 oz
total customer withdrawal: 3,761.58 oz
We had 3  adjustment(s)
i) Out of Brinks:  12,345.98 oz was transferred from the dealer account into the customer account of Brinks
ii) Out of HSBC: 4147 oz was transferred out of the dealer account and this landed into the customer account of HSBC
iii) Out of Scotia; 59,847.756 oz was transferred out of the dealer and this landed into the customer account of Scotia
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

For December:

Today, 0 notice(s) were issued from JPMorgan dealer account and 401 notices were issued from their client or customer account. The total of all issuance by all participants equates to 413 contract(s)  of which 42 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

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To calculate the initial total number of gold ounces standing for the DECEMBER. contract month, we take the total number of notices filed so far for the month (9578) x 100 oz or 957,800 oz, to which we add the difference between the open interest for the front month of DEC (413 contracts) minus the number of notices served upon today (413) x 100 oz per contract equals 957,800 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 (9578) x 100 oz  or ounces + {OI for the front month (496) minus the number of  notices served upon today (413) x 100 oz which equals 962,900 oz standing in this non active delivery month of DEC  (29.931 tonnes)
WE LOST 45  CONTRACTS OR AN ADDITIONAL 4500 OZ OF GOLD WILL NOT STAND FOR DELIVERY.
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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.   29.931 tonnes
total for the 12 months;  222.358 tonnes
average 18.520 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: 198.157 tonnes per the 8 months or 24.769 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:  29.791 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.
Total dealer inventor 1,568,121.556 or 48.885 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 9,106,641.397 or 283.25 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 283.25 tonnes for a  loss of 20  tonnes over that period.  Since August 8/2016 we have lost 71 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!

The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
 
IN THE LAST 4 1/2 MONTHS  71 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE DECEMBER DELIVERY MONTH
DECEMBER INITIAL standings
 Dec 29. 2016
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
 60,173.02 0z
Scotia
Deposits to the Dealer Inventory
  nil OZ
Deposits to the Customer Inventory 
nil oz
No of oz served today (contracts)
174 CONTRACT(S)
(870,000 OZ)
No of oz to be served (notices)
0 contracts
(NIL  oz)
Total monthly oz silver served (contracts) 3980 contracts (19,900,000 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  3,750,168.4 oz
 END
today, we had 0 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 Scotia:  60,173.02 oz
TOTAL CUSTOMER WITHDRAWALS: 60,173.02 oz
 we had 0 customer deposit(s):
total customer deposits;  nil  oz
 
 
 we had 3 major adjustment(s)
i) Out of CNT: 3,292,373.5 oz was adjusted out of the dealer and this landed into the customer account of CNT
ii) Out of HSBC: 2,776,043.35 oz was adjusted out of the dealer account and this landed into the customer account of HSBC
iii) Out of Scotia; 1,752,487.171 oz was adjusted out of the dealer and this landed into the customer account of Scotia:
(total removal from dealer: 7,8290,899.022 oz)
The total number of notices filed today for the DEC. contract month is represented by 174 contracts for 870,000 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  3980 x 5,000 oz  = 19,900,000 oz to which we add the difference between the open interest for the front month of DEC (174) and the number of notices served upon today (174) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the DEC contract month:  3980(notices served so far)x 5000 oz +(174) OI for front month of DEC. ) -number of notices served upon today (174)x 5000 oz  equals  19,900,000 oz  of silver standing for the DEC contract month.
we LOST 22 contracts or an additional 110,000 oz will NOT stand for delivery in this active delivery month of December.
Volumes: for silver comex
Today the estimated volume was 231,306 which is AWFUL
YESTERDAY’S  confirmed volume was 34,983 contracts  which is fair.
 
Total dealer silver:  28.387 million (close to record low inventory  
Total number of dealer and customer silver:   183.465 million oz
The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.

end

And now the Gold inventory at the GLD
Dec 29/no changes in gold inventory at the GLD/Inventory rests at  823.36 tonnes
Dec 28/no change in gold tonnage at the GLD/inventory rests at 823.36 tonnes
Dec 27/a withdrawal of 1.18 tonnes from the GLD/Inventory rests at 823.36 tonnes
Dec 23/NO CHANGES IN GOLD INVENTORY AT THE GLD/RESTS TONIGHT AT 824.54 TONNES
Dec 22/no change in inventory at the GLD/Inventory rests at 824.54 tonnes
DEC 21/another massive 3.56 tonnes leaves the GLD/Inventory rests at 824.54 tonnes
Dec 20/no changes in gold inventory at the GLD/Inventory rests at 828.10 tonnes
Dec 19/A MASSIVE WITHDRAWAL OF 14.23 TONNES OF GOLD FROM THE GLD (WITH GOLD UP THESE PAST TWO TRADING SESSIONS)/INVENTORY RESTS TONIGHT AT 828.10 TONNES
Dec 16/no changes at the GLD/Inventory rests at 842.33 tonnes
Dec 15/ANOTHER HUGE WITHDRAWAL OF 7.11 TONNES OF GOLD/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 8/ANOTHER HUGE WITHDRAWAL OF 2.96 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 860.71 TONNES (THIS GOLD IS HEADING TO SHANGHAI)
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 30/A SMALL WITHDRAWAL OF 1.18 TONNES FROM THE GLD/INVENTORY RESTS AT 883.86 TONNES/MAYBE THEY ARE AT THE BOTTOM OF THE BARREL FOR PHYSICAL GOLD TO TRANSFER TO THE BANKERS.
Nov 29/no changes in gold inventory at the GLD/inventory rests at 885.04 tonnes
Nov 28/no change in gold inventory at the GLD/Inventory rests at 885.04 tonnes
Nov 25 We had a massive 19.87 tonnes of gold leave the GLD/this would be a paper loss not real gold (they only have paper gold in their inventory/total inventory: 885.04 tonnes
Nov 23/a huge withdrawal of paper gold from the GLD equal to 4.66 tonnes/inventory rests at 904.91 tonnes
NOV 22/no changes at the GLD/Inventory rests at 908.76 tonnes
Nov 21/A MASSIVE 11.87 TONNES OF PAPER GOLD WERE SUPPLIED BY THE CROOKS TO SUPPRESS THE PRICE OF GOLD/INVENTORY RESTS AT 908.76 TONNES/ AND GOLD RISES???
Nov 18/no changes at the GLD/Inventory rests at 920.63 tonnes
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Dec 29/ Inventory rests tonight at 823.36 tonnes
*IN LAST 60 TRADING DAYS: 126.45 TONNES REMOVED FROM THE GLD
*LAST 6 TRADING DAYS: 1.18 TONNES HAVE LEFT

end

Now the SLV Inventory
Dec 29/no changes in silver inventory at the SLV/Inventory rests at 341.348 million oz
Dec 28/no changes in silver inventory at the SLV/Inventory at 341.348 million oz/
Dec 27/a big deposit of 1.138 million oz/Inventory rests at 341.348 million oz
Dec 23/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 340.210 MILLION OZ/
Dec 22/WE HAD A SMALL DEPOSIT OF 948,000 OZ INTO THE SLV/INVENTORY RESTS AT 340.210 MILLION OZ/
DEC 21/no change in silver inventory at the SLV/Inventory rests at 339.262 million oz
Dec 20/a small withdrawal of 758,000 oz/inventory rests at 339.262 tonnes
Dec 19A HUGE DEPOSIT OF 1.327 MILLION OZ INTO THE SLV/INVENTORY RESTS AT 340.020 MILLION OZ
Dec 16/A HUGE WITHDRAWAL OF 2.37 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 338.693 MILLION OZ/
Dec 15/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 341.063 MILLION OZ/
Dec 14.no 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 30/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 346.150 MILLION OZ
Nov 29/no changes in silver inventory /inventory rests tonight at 346.150 million oz/
Nov 28/no change in silver inventory/inventory rests tonight at 346.150 million oz/
Nov 25/we had another withdrawal of 949,000 oz from the SLV/Inventory rests at 346.150 million oz
Nov 23/A HUGE WITHDRAWAL OF 3.083 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 347.099 MILLION OZ
NOV 22/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 350.182 MILLION OZ
Nov 21/a MASSIVE 6.071 MILLION OZ OF SILVER WITHDRAWN FROM THE SLV VAULTS/INVENTORY RESTS AT 350.182 MILLION OZ/AND SILVER HOLDS IN PRICE???
Nov 18/no changes in silver inventory at the SLV/Inventory rests at 356.253 million oz
.
Dec 29.2016: Inventory 341.348  million oz
 end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 7.1 percent to NAV usa funds and Negative 7.0% to NAV for Cdn funds!!!! 
Percentage of fund in gold 61.0%
Percentage of fund in silver:38.7%
cash .+0.3%( Dec 29/2016) 
.
2. Sprott silver fund (PSLV): Premium RISES to +.13%!!!! NAV (Dec 29/2016) 
3. Sprott gold fund (PHYS): premium to NAV FALLS TO – 0.85% to NAV  ( Dec 29/2016)
Note: Sprott silver trust back  into POSITIVE territory at +0.13% /Sprott physical gold trust is back into NEGATIVE territory at -0.85%/Central fund of Canada’s is still in jail.
 

end

Major gold/silver stories for THURSDAY

GOLDCORE/BLOG/MARK O’BYRNE

Holiday will be back tomorrow

end

 

The following is a must read although very long.  Basically Brodsky, an extremely talented economist is stating that the uSA is raising rates to strengthen the dollar which will cause a flow of those dollars into USA banks.  This will help maintain USA hegemony when the leverage breaks and a reset is called upon

 

a must read…

 

(courtesy Paul Brodsky/GATA)

Paul Brodsky: Fed gooses dollar to gain control over worldwide monetary reset

Section:

9:30p ET Wednesday, December 28, 2016

Dear Friend of GATA and Gold:

The economist Paul Brodsky of market analysis firm Macro-Allocation Inc. in Tampa, Florida, writes this week that the Federal Reserve is strengthening the dollar, despite its deflationary influence, so that the central bank can draw more capital to U.S. banks and asset markets in preparation for hyperinflation and a worldwide monetary reset, which the Fed will be more able to control if more wealth is held in dollars and assets denominated in dollars.

In a paper headlined “It’s the Dollar, Stupid!,” posted tonight at Zero Hedge, Brodsky writes:

“This is not the first time the Fed has had to actively increase the exchange value of the dollar. Paul Volcker’s Fed had to hike overnight rates to 20 percent in 1980-81 so the dollar would be reaffirmed as a store of global value for U.S. trading partners, including OPEC.

“We believe the Fed is doing the same today, in spite of its de-stimulative impact, because it wants to attract global capital to U.S. banks and asset markets. Doing so would ensure U.S. dollar hegemony, which would be necessary if and when global leverage leads to hyperinflation and multilateral trade and currency wars.

“Once substantial wealth is held in dollars and dollar-denominated assets, the U.S. political dimension and the Fed, through the Bank for International Settlements and International Monetary Fund, would be able to control the terms of a global monetary reset, which in turn would de-leverage balance sheets across currencies and economies in a controlled manner — in effect, a pre-packaged bankruptcy in real terms.”

Brodsky’s paper is posted at Zero Hedge here:

http://www.zerohedge.com/news/2016-12-28/its-dollar-stupid

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

END

 

A comprehensive look at physical gold movements.  First China SGE withdrawals total 214 tonnes or averaging 53.5 tonnes per week which is huge demand.  Russia added 32 tonnes of gold to its official reserves and they will end the year adding 200 tonnes.  What is also noteworthy is that we now have a complete reversal where now England is the next exporter of gold to Switzerland. Switzerland supplies China with monetary and non monetary gold. Also note the good importation of gold into India in November despite Modi’s moves to stop the accumulation of gold by its citizens.

(courtesy Ronan Manly/Bullionstar)

 

Bullion Star: Gold flow reverses, moving again from London to Asia via Switzerland

Section:

8:20p ET Wednesday, December 29, 2016

Dear Friend of GATA and Gold:

Bullion Star reports today that gold demand in China remains strong, that it is recovering in India, and that the flow of gold from Asia to London via Switzerland has reversed and gold now is flowing from London back to Asia. Bullion Star’s report is headlined “Gold Market Charts — December 2016” and it’s posted at Bullion Star here:

https://www.bullionstar.com/blogs/gold-market-charts/gold-market-charts-…

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

 

and the article in full:

 

Gold Market Charts – December 2016

This is the second in a new series of posts highlighting charts relating to some of the most important gold markets, gold exchanges and gold trends around the world. These include charts of the Chinese Gold Market, the flow of gold from West to East via the London and Swiss gold markets, and the holdings of gold-backed Exchange Traded Funds (ETFs). Please see the November 2016 chart post article for background on the charts chosen for this series.

All of the charts featured below originate from the GOLD CHARTS R US website. For BullionStar’s gold and silver price charts, go to BullionStar Charts where, for example, you can measure a wide variety of financial assets in terms of gold and other precious metals.

Shanghai Gold Exchange (SGE) – Gold Withdrawals

Total physical gold withdrawals from the SGE in November 2016 reached a substantial 214.7 tonnes, over 40% higher than gold withdrawals from the Exchange during October. November was also the second highest monthly withdrawal total of the year, only surpassed by January’s withdrawal numbers. Year-to-date to November, gold withdrawals from the SGE have reached 1,774 tonnes.

As a reminder, gold withdrawals from the Shanghai Gold Exchange are a suitable proxy for Chinese wholesale gold demand because all non-monetary gold imported into China has to be sold on the SGE, and most Chinese gold mining output as well as most Chinese scrap gold is also sold through the SGE as ‘standard’ gold.

November’s strong Chinese gold demand occurred in an environment of falling international gold prices, which is to be expected since Chinese gold buyers generally buy at lower prices (‘buy the dips’), and unlike Western buyers, the Chinese do not chase upward gold price momentum.

Shanghai Gold Exchange - Gold Withdrawals (tonnes), 2008 - 2016
Shanghai Gold Exchange – Gold Withdrawals (tonnes), 2008 – end November 2016

Chinese and Indian Gold Demand

A suitable proxy of Chinese and Indian gold demand can be constructed by adding Shanghai Gold Exchange withdrawals to Indian gold imports. Gold import figures into India are an acceptable proxy for Indian gold demand since Indian domestic gold mining is virtually non-existent.

On a combined basis, CHINDIA gold demand for October 2016 totalled 225 tonnes, which incredibly, pushed the cumulative gold demand from these two major gold markets above the 20,000 tonne mark for the nine-year period 2008 – 2016. Note that this latest version of the CHINDIA chart is to the end of October 2016.

chinaindiademandoct
Chinese and Indian gold demand combined (tonnes), 2008 – end October 2016

Russian Gold Reserves

The Bank of Russia, Russia’s central bank, is one of the most active buyers of gold on the planet, and has been pursuing a massive physical gold accumulation strategy since the early 2000s. In November 2016, the Bank of Russia added another 1 million ounces of gold (31.1 tonnes) to its gold reserve holdings. This follows a 40 tonne gold purchase by the Bank of Russia in October and makes November the second highest monthly addition of the year for the Russians.

With the October and November additions, the Bank of Russia is now well on target to realise its planned purchase of 200 tonnes of gold during 2016.

russiareserveststnov
Russian central bank gold reserves, cumulative (tonnes), 2006 – end November 2016

Transparent Gold Holdings – ETFs and Others

This chart features a large group of products and vehicles, such as ETFs, which hold physical gold and which regularly report their gold holdings, thereby providing a window into the cumulative position and changes in such gold holdings on a week to week basis. As a group, these vehicles continued to see a net outflow of gold during December, with the outflow trend that began in early November continuing.

As of 23 December, these tracked transparent products held a combined 2583.9 tonnes of gold, which was 134 tonnes less than their aggregated total holdings of 2717.9 tonnes on 23 November 2016. In a similar manner to November, the gold outflows in December occurred in an environment of a falling US dollar gold price.

transparentdec2016
Weekly Transparent Gold Holdings, 2 year rolling period to 23 December 2016

Swiss Gold Imports and Gold Exports

November was a notable month for Swiss gold trade flows and it actually recorded the highest monthly gold trade flows of the year. The Swiss refining and financial sector imported 187 tonnes of gold and exported 188.8 tonnes during November. November gold imports were the second highest of the year, and only a few tonnes short of the 194 tonnes imported in February 2016. Switzerland’s November gold exports were the highest monthly exports of the year.

swauexports2yearmonthly
Swiss Gold Imports / Exports, monthly data, 2 year rolling to November 2016

During November, the UK (London) re-emerged as the main provider of gold to Switzerland, with the Swiss importing 48 tonnes of gold from London. This is the highest monthly gold import flow from the UK to Switzerland since last January. The second largest source of gold flowing into Switzerland during November was Hong Kong which provided 35 tonnes, with the UAE (Dubai) a distant third providing 16 tonnes, and the US sending  just under 12 tonnes to the Swiss.

swaulatestimp12
Swiss Gold Imports, Month of November 2016

On the export side, Switzerland exported a sizeable 61.3 tonnes of gold to India during November as Indian demand improved on the back of the marriage season and jewellery industry restocking following the Diwali festival. Hong Kong received 44 tonnes from the Swiss, China was sent 30 tonnes, and remarkably France received over 10 tonnes of gold from Switzerland during November, nearly twice as much gold as was transported from Switzerland to the German market during the same period.

swaulatestexp12
Swiss Gold Exports, Month of November 2016

After exporting gold to the UK (London) for most of 2016, the tide reversed In November and Switzerland again became a substantial importer of gold from London receiving 48 tonnes. Although Switzerland also exported 5 tonnes of gold to the UK in November, Swiss net gold imports minus gold exports were still a sizeable 43 tonnes.

This reversal of trend was signaled in the October UK-Swiss gold trade data, when Swiss gold imports from the UK reappeared, and Swiss gold exports to the UK began ebbing. As stated in BullionStar’s November commentary about the October UK-Swiss gold flow data:

“Is the recent tide of UK imports from Switzerland about to turn back to UK exports to Switzerland? The October data may provide some clues, but additional month’s data is required before know whether a new trend is being established.”

Now that November’s data is in, it adds to the confirmation that the reversal of gold flows has indeed been established, so we should expect see continued exports of gold from London (UK) to Switzerland in December’s Swiss data, which is released on about 23rd of January. The continued outflow of gold from the large ETFs which store their gold in London, e.g. SPDR Gold Trust and iShares Gold Trust, also points to further flows of gold from London to Switzerland as bullion banks distribute 400 oz gold bars previously held within the ETFs.

swauexportsuk0512
Swiss Gold Import / Exports with UK, monthly data, 2012 – to November 2016  

COMEX – Vaulted gold in New York approved vaults

The amount of gold held in COMEX approved vaults for which warrants have been issued against COMEX gold futures contracts (Registered gold) totalled approximately 50 tonnes as of the end of December 2016. This was about 15 tonnes less than the 65 tonnes which was in the registered category at the end of November.

The amount of eligible gold stored in the reporting vaults in the form of gold kilobars and 100 oz gold bars – which is acceptable by the COMEX for delivery against its gold futures contracts but for which warrant have not been issued – stayed relatively flat at 269 tonnes compared to the previous month’s figure of 264 tonnes.

See the recent BullionStar blog “COMEX and ICE Gold Vault Reports both Overstate Eligible Gold Inventory” for more detail on Eligible vs Registered gold reported by COMEX.

COMEX vaulted gold in New York (Registered and Eligible), 2002 - 2016
COMEX vaulted gold in New York (Registered and Eligible), 2002 – late December 2016

BullionStar
E-mail BullionStar on: support@bullionstar.com

 

 

end

The Shanghai gold exchange limits the amount of gold to be purchased per day trying to curb manipulation:

(courtesy Reuters/GATA)

Shanghai Gold Exchange limits transaction size to curb manipulation

Section:

Shanghai Gold Exchange Cuts Transaction Size to Limit Price Moves

By Josephine Mason and Muyu Xu
Reuters
Wednesday, December 28, 2016

Shanghai Gold Exchange, the world’s biggest physical bullion exchange, said Wednesday it will curb the amount of gold investors can trade at one time, a move analysts said would limit institutional investors’ influence on prices.

The exchange said in a statement it will halve its limit on transactions to 500 kilograms on some spot gold contracts starting Jan. 1. It did not give a reason for the move and the exchange did not answer calls seeking comment.

The new limit, which would be worth more than $20 million based on current prices, suggests the move is targeted at institutional investors, such as banks and hedge funds.

The move does not affect the amount traders can sell or buy in any one day, but it would likely force traders to carry out big transactions in multiple moves, reducing the potential for “fat finger” erroneous trades or preventing big investors from carrying out rapid-fire buying or selling to influence prices.

It may also drive up the transactions costs. …

… For the remainder of the report:

http://www.reuters.com/article/china-gold-idUSL1N1EN060

END

 

Gold trading today from Europe and USA:

(courtesy zero hedge)

 

 

Gold Surges Above $1150 On $3.5 Billion Bid, Bitcoin Dips

Gold is up 5 days in a row and is surging above $1150 today as someone decided to buy $3.5 billion notional of the precious metal into the European close.

It appears the rotational year-end flows are rebalancing back into bullion as well as bonds… Over 30,000 contracts ripped through futures in the last few minutes before Europe’s close – around $3.5 billion notional. 

This is gold’s best day since 11/2.

Silver is bid too…

Bitcoin is leaking after breaking $1000 equivalent in Yuan…

end

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

 
 

1 Chinese yuan vs USA dollar/yuan DOWN to 6.9555(SMALL REVALUATION NORTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN NARROWS A BIT  TO 6.9734 / Shanghai bourse CLOSED DOWN 4.12 POINTS OR 0.12%   / HANG SANG CLOSED UP 36.17 OR .17% 

2. Nikkei closed DOWN 256.58 OR 1.32% /USA: YEN FALLS TO 116.59

3. Europe stocks opened ALL IN THE RED     ( /USA dollar index FALLS TO  102.82/Euro UP to 1.0458

3b Japan 10 year bond yield: FALLS TO    +.040%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 116.59/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  53.98  and Brent: 56.42

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 DOWN for WTI and DOWN for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS TO +190.%/Italian 10 yr bond yield FALLS 1 full basis points to .186%    

3j Greek 10 year bond yield RISES to  : 7.15%   

3k Gold at $1145.80/silver $16.08(8:45 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP   2/100 in  roubles/dollar) 60.46-

3m oil into the 53 dollar handle for WTI and 55 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT a SMALL   REVALUATION UPWARD from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 116.59 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0246 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0715 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  +.186%

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

The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”.  Next step for Greece will be the recapitalization of the banks and that will be difficult.

4. USA 10 year treasury bond at 2.49% early this morning. Thirty year rate  at 3.079% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

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

US Selloff Spooks Thinly Traded Global Markets Sending Stocks, Yields, Dollar Lower

One day after the biggest drop in US stocks in over two months, taking the Dow ever further from the “promised” Dow 20000, global stocks struggled as they tried to close out 2016 on a positive note. The dollar dropped the most in two weeks, sliding alongside bond yields, while oil retreated from its highest close in 17 months as investors prepared to close out a volatile year for financial markets. European stocks slid from a 2016 peak, and extended losses for 2016 after briefly going green for the year.

“Yesterday’s U.S. pending home sales number disappointed. Falling U.S. yields pushed the dollar generally lower,” said Marshall Gittler, head of investment research at FXPrimus.

The yield on 10-year U.S. Treasury notes slipped to a two-week low, pulling the dollar to a two-week low against the yen. “The dollar fall was mostly due to renewed doubts about the U.S. recovery after pending home sales dropped in November. This is where the risk-off reversal started,” said Ipek Ozkardeskaya, senior market analyst at London Capital Group.  “This pushed the exhausted U.S. bulls to the sidelines and triggered a sell-off in both the dollar and U.S. stocks. We’re seeing a bit of follow through in Europe today,” she said.

As a result of the dollar drop, which saw the Bloomberg dollar spot index slide for the first time in 4 days, the Japanese Yen strengthened to as much as 116.25, the lowest print in the pair since Dec. 14, sending Japan’s Topix to its biggest drop in more than a month, sliding 1.2%. The benchmark is heading toward a loss of 1.9% for the year, its first annual decline in five years. The Nikkei 225 Stock Average pared its gain for 2016 to 0.6%.  “Flow-driven move pushed USD/JPY lower after U.S. markets underwent a rebalancing on recent stock rally and bond sell- off before the year-end,” says Wako Ogawa, director of foreign-exchange sales at Deutsche Securities in Tokyo

Crude futures slipped for the first time in nine days, threatening to halt the longest winning streak since 2010. Gold extended gains. Oil was mixed after data showed a surprise build in U.S. crude inventories. U.S. crude fell 0.2 percent to $53.95 a barrel, while Brent was last up 0.2 percent at $56.32.

Despite the recent pick up in volatility, ostensibly the resut of a last minute pension fund reallocation, trading continues to be thin across the globe during the last week of the year, with volumes in crude oil, equities and currencies all below average. Investors sold U.S. equities at the fastest rate since before Donald Trump’s surprise election, trimming a post-election rally that took major indexes to all-time highs. The dollar is retreating after rising to the highest level in more than a decade on speculation the incoming president will boost inflation, paradoxically sending consumer confidence (measured by the University of Michigan) to decade highs, on expectations of record low inflation.

European stocks have so far failed to rebound from yesterday’s US rout, with the Stoxx Europe 600 Index losing 0.3%, after closing at the highest level in a year on Wednesday. The gauge is down 1.4% for 2016. Trading volume in Europe less than half the 30-day average. Cyclical shares including banks, carmakers and miners were among the best performers in the final quarter of the year amid bets for stronger economic growth fell the most.

While there was some strength in the MSCI Asia Pacific ex-Japan Index, which added 0.2% after breaking a string of six consecutive losses on Wednesday, Japan’s Topix dropped 1.2%, its biggest drop in a month, heading toward a loss of 1.9% for the year, its first annual decline in five years. The Nikkei 225 Stock Average pared its gain for 2016 to 0.6%.

Elsewhere in Asia, the Jakarta Composite Index jumped 1.8 percent, bringing its three-day rally to 5.5 percent and erasing a two-week selloff. Australia’s S&P/ASX 200 advanced 0.3 percent to the highest level in more than a year.

Futures on the S&P 500 were little changed. The benchmark index fell 0.8 percent on Wednesday. It’s up 10 percent in 2016 after adding 2.3 percent so far this month.

There was a global dip in longer-term interest rates, as U.K. gilts led European bonds higher. Yields fell 6 basis points to 1.23 percent. Euro zone yields were also falling on concerns about the strength of a rescue plan for Italian banks and normal year-end caution. The yield on German 10-year bunds fell two basis points to 0.17 percent, while those on Treasuries dropped four basis points to 2.46 percent, extending Wednesday’s decline of five basis points. Australia’s 10-year yield slid seven basis points to 2.78 percent.

Markets Snapshot

  • S&P 500 futures up less than 0.1% to 2246.5
  • Stoxx 600 down 0.3% to 361
  • FTSE 100 down less than 0.1% to 7101
  • DAX down 0.3% to 11438
  • German 10Yr yield down 2bps to 0.18%
  • Italian 10Yr yield up less than 1bp to 1.81%
  • Spanish 10Yr yield down less than 1bp to 1.33%
  • S&P GSCI Index up 0.1% to 399.7
  • MSCI Asia Pacific up 0.2% to 135
  • Nikkei 225 down 1.3% to 19145
  • Hang Seng up 0.2% to 21791
  • Shanghai Composite down 0.2% to 3096
  • S&P/ASX 200 up 0.2% to 5699
  • US 10-yr yield down 4bps to 2.47%
  • Dollar Index down 0.56% to 102.72
  • WTI Crude futures down 0.2% to $53.95
  • Brent Futures up 0.3% to $56.41
  • Gold spot up 0.6% to $1,148
  • Silver spot up 0.9% to $16.18

Top Global News

  • Petrobras Sells Petrochemical, Biofuel Assets for $587m: Alpec agrees to buy Suape petrochemical plant in Pernambuco
  • BMO’s Downe Has No Plans to Step Down Amid Executive Shuffle: Management moves part of bank’s succession plan to build depth
  • Alere Sues U.S. Saying Medicare Removal May Kill Arriva: Company wants billing revocation halted while it appeals
  • China Reduces Dollar Weighting in Currency Basket, Adds 11 More: Dollar will fall to 22.4% in trade-weighted basket
  • Oil Trades Near 18-Month High Before U.S. Inventory Data: Nationwide crude inventories rise by 4.2 million barrels: API
  • Dollar Drops to Two-Week Low Versus Yen as Treasury Yields Fall: USD declines against all of its G-10 peers, led by yen
  • Top Trader Citigroup Sees Risk of ‘More Rapid’ Dollar Gains: Fed tightening on fiscal thrust to support dollar: Elmer
  • San Francisco Software Startup AppDynamics Files for U.S. IPO: AppDynamics had $158.4m in rev. in 9 months ended Oct. 31
  • Political Upheavals May Herald Trouble for Megadeals in 2017: Cross-border M&A drove majority of deals announced this year

* * *

European stocks declined for first day in four sessions, with trading volumes remaining thin. 15 out of 19 Stoxx 600 sectors fall with autos, banks underperforming and real estate, food & beverage outperforming. 54% of Stoxx 600 members decline, 43% gain. “Momentum has been deteriorating the last couple of sessions and the daily momentum indicators suggest a toppish situation,” UBS technical analyst Marc Muller writes in note. “If we were to see another pullback campaign starting in the defensive camp together with the beginning of a correction phase in the overstretched cyclical/financial themes, the headline indices in Europe would be tactically very vulnerable.”

European Econ Data

  • Norway November Retail Sales Rise 0.2% M/M, In Line W/ Estimates
  • U.K. Dec. House Prices Rise 0.8% on Month, Nationwide Says
  • Sweden November Trade Deficit SEK1.1b; October Deficit SEK2b
  • Eurozone Nov. M3 Money Supply Rises 4.8% vs Year Ago
  • Austria Dec. Manufacturing PMI 56.3 vs 55.4 in Nov.

Top European News

  • Italy’s Padoan Criticizes ECB for Paschi Recapitalization Demand: Germany urged ECB to ensure Italy complies with rules
  • London House-Price Growth Lags Behind U.K. First Time Since 2008: Values rose annual 3.7% in capital and 4.5% nationally
  • Political Risks Leave Euro-Pound Analysts Most Divided on Record: Widest range of estimates in a decade

Asian stocks gain, erasing previous losses, while Japanese shares posted the biggest slide in seven weeks. 10 out of 11 sectors rise in the MSCI Asia Pacific Index with consumer staples, health care outperforming and industrials, consumer discretionary underperforming. “A market riding on expectations toward a Trump presidency is coming to a close, and we’re starting to focus on reality,” said Mitsushige Akino, an executive officer at Ichiyoshi Investment Management Co. in Tokyo. “I expect investors to take a more nervous stance toward U.S. economic indicators from here on.”

Asian Econ Data

  • Hong Kong Nov. Exports Rise 8.1% Y/y; Est. -1%
  • S. Korea Cuts 2017 GDP Forecast to 2.6%, Sees Inflation at 1.6%
  • S. Korea Nov. Industrial Output Rises 4.8% Y/y; Est. +1.5%
  • South Korean January Manufacturers’ Confidence Falls to 71
  • Macau Nov. Visitor Arrivals Unchanged Y/y; Macau Nov. Consumer Prices Rise 1.53% Y/y
  • One BOJ Member Sees Long Way to Go to Meet Price Goal: Summary

Top Asian News

  • Takata Gains on Report Up to $1 Billion U.S. Settlement Near: Settlement could include criminal guilty plea, WSJ reports
  • Dentsu CEO Quits Over Employee Suicide Blamed on Overwork: Japanese advertising agency under labor ministry investigation
  • Who’s Had the Worst Year? How Asian Leaders Fared in 2016: Asia felt like a relatively stable part of the world
  • Toyota Hybrid Bet Pays Off as Dieselgate Spurs Europe Demand: Carmaker’s hybdrid sales in Europe likely to jump 40% in 2016

In currencies, the Bloomberg Dollar Spot Index slipped 0.5 percent at 9:54 a.m. in London after trading Wednesday at the highest level in more than a decade. The euro was up 0.5 percent, while the yen rose 0.8 percent, the most since Dec. 19. The Australian dollar climbed 0.5 percent and the New Zealand dollar strengthened 0.4 percent.

In commodities, crude futures in New York slid 0.4 percent to $53.86 a barrel as an industry report was said to show U.S. stockpiles climbed last week. Crude settled at $54.06 on Wednesday, the highest close since July 2015. Gold rose for a fourth session, adding 0.6 percent to $1,148.16. The metal has been rebounding from an 11-month low.

US Event Calendar:

  • 8:30am: Advance Goods Trade Balance, Nov., est. -$61.6b (prior – $62.0b)
  • 8:30am: Wholesale Inventories MoM, Nov. P, est. 0.2% (prior -0.4%)
  • 8:30am: Initial Jobless Claims, Dec. 24, est. 265k (prior 275k)
  • 9:45am: Bloomberg Consumer Comfort, Dec. 25 (prior 46.7)
  • 10am: Freddie Mac mortgage rates
  • 10:30am: EIA natural-gas storage change
  • 11am: DOE Energy Inventories

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 4.12 POINTS OR 0.12%/ /Hang Sang closed UP 36.17 OR .17%. The Nikkei closed DOWN 256.58 OR 1.32% /Australia’s all ordinaires  CLOSED UP 0.25%/Chinese yuan (ONSHORE) closed UP at 6.9555/Oil FELL to 53.98 dollars per barrel for WTI and 56.42 for Brent. Stocks in Europe: ALL IN THE RED .  Offshore yuan trades  6.9734 yuan to the dollar vs 6.9555  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS A BIT AS  MORE USA DOLLARS ARE ATTEMPTING TO  LEAVE CHINA’S SHORES /

3a)THAILAND/SOUTH KOREA/:

none today

b) REPORT ON JAPAN

Bloodbath in Japan as Toshiba crashes again, and in 3 days it is down 50% However last night, they took some banks with them as contagion concerns slams the Japanese markets

(courtesy zero hedge)

Contagion Concerns Slam Japanese Financials As Toshiba Crashes 50% In 3 Days

After two days of total carnage in Toshiba stocks, bonds, and credit risk, the bloodbath continues with the once-massive Japanese company  collapsing once again in early trading – now down 50% in 3 days. Following the semiconductor and nuclear business catastrophes, the company had nothing to add regarding today’s crash but more worryingly the massive loss of market cap is spreading contagiously to Japanese financials with Sumi down 4%, and MUFG down almost 3%.

As we noted yesterday, Tsunukawa said that “I apologize to shareholders, business partners and all stakeholders for the trouble we have caused,” after Toshiba said cost overruns at U.S. nuclear reactors it is building were likely to force a write-down of as much as several billion dollars, clouding its turnaround plan after the 2015 accounting scandal. Specifically, the company said it may have to book several billion dollars in charges related to a U.S. nuclear power plant construction company acquisition, rekindling “concerns about its accounting acumen.”

The problem is that the nuclear business, together with the semiconductors, has been positioned as one of key pillars underpinning Toshiba’s growth which has been trying to shift away from its consumer electronics core. Alas, the latest gaffe now means that much of Toshiba’s growth is gone, and the stock price reflect that overnight, when Toshiba’s stock plunged by 20%, the most permitted, before it was halted for trading.

The derisking is weighing heavily on USDJPY…

And now, as Bloomberg reports, Japanese financials are tumbling on cross-default, contagion concerns…

Sumitomo Mitsui Trust Bank (SMBT) has highest capital exposure to Toshiba, with loans equaling 5.5% of the bank’s equity, analyst Shinichiro Nakamura writes in report.

SMTB would also suffer greatest earnings hit, with a Toshiba impairment charge of 100b-190b yen shaving ~9.9% off bank’s current profit for fiscal year to March 31: SMBC Nikko ests.

If Toshiba impairment charge reaches over 400b yen, banks may conduct debt/equity swap; would lower near-term earnings impact while carrying risk of preferred shares losing value

In 3rd scenario, Toshiba could undertake private placement with strategic partner; major banks would be limited to funding support but could be asked to waive claims

Sumitomo Mitsui Trust shares fall as much as 4%, MUFG -2.6%, Mizuho -2.4%, SMFG -2.4%

c) REPORT ON CHINA

With China facing currency and illiquidity concerns, an ex POBC official urges that it is now time for the “nuclear option”  i.e. a full one stop devaluation of the yuan against the dollar. Remember of Jan 1, 2017, the 50,000 usa cash limit withdrawal begins again.  Also remember that the Chinese New Year begins next month and always that signals huge withdrawal of USA dollars.

 

(courtesy zero hedge)

With China Facing Currency, Liquidity Crises, Ex-PBOC Official Urges Use Of “Nuclear Option”

With the PBOC fighting tooth and nail to slow outbound capital flight, which according to Goldman has reached $1.1 trillion since August 2015, and which these days mostly means keeping the Yuan from depreciating to new all time lows below 7 Yuan to the Dollar, the Chinese central bank may have its work cut out for it in the immediate future. The reason is that, as Bloomberg reminds us, the first day of 2017 is when an annual $50,000 quota to convert the yuan into foreign exchange resets, stoking concern there will be a rush to sell the local currency.

With tax payments and a regulatory assessment also tightening liquidity in the money market toward year-end, manifesting itself in soaring unsecured funding rates such as the overnight repo hitting 33% as noted yesterday, paralyzing both the overnight…

 

and longer-dated interbank lending markets…

…  January may bring scant relief as lenders prepare for stronger cash demand before Lunar New Year holidays, which are only a month away.

The narrative is familiar: China’s markets are seeing renewed pressure this month as the Federal Reserve projects a faster pace of rate increases for 2017 and its Chinese counterpart tightens monetary conditions to spur deleveraging and defend the exchange rate. The declines are capping off a tough year for investors during which bonds, shares and currency all slumped, with the last hitting all time lows, just as Kyle Bass had predicted roughly one year ago.

Much of the blame is on the unique calendar this year: “You have Chinese New Year quite early, and because of that one-month window, most of the banks will try to lock the money in a three-month cycle,” said Arthur Lau, Hong Kong-based head of Asia ex-Japan fixed income at PineBridge Investments. “The current situation in the bond market is partly because of year-end and because of Chinese New Year.”

But two far bigger culprits are the tightening Fed, and the rapidly deteriorating standoff between China’s housing bubble, which Beijing desperately wants to deflate into a soft landing by withdrawing liquidity, and China’s banking system which in turn is desperate for more liquidity, more easing, or at least a reduction in required reserves.

Meanwhile, the local debt market is flashing red warning lights, yet most market participants seem to be blissfully ignoring them: China’s 10-year government bond yield has surged 21 basis points in December, poised for its biggest monthly increase since August 2013, when the local banks nearly collapsed as a result of a failed deleveraging effort. The yuan’s 6.6 percent decline in 2016 puts it on course for its worst year since 1994, while the Shanghai Composite Index is headed for its largest drop in five years. The three-month interbank rate known as Shibor rose for a 50th day, its longest streak since 2010, to an 18-month high on Wednesday. The overnight repurchase rate on the Shanghai Stock Exchange jumped to as high as 33 percent the day before, the highest since Sept. 29. As banks become more reluctant to offer cash to other types of institutions, the latter have to turn to the exchange for money, said Xu Hanfei, an analyst at Guotai Junan Securities Co. in Shanghai.

But the worst news for China is that the local population is well-aware of the financial problems facing Beijing, and has been scrambling to transfer its cash offshore. As Bloomberg notes, the recent surge in onshore yuan trading volume suggests outflows are quickening, according to Harrison Hu, chief greater China economist at Royal Bank of Scotland. The daily average value of transactions in Shanghai climbed to $34 billion in December as of Wednesday, the highest since at least April 2014, according to data from China Foreign Exchange Trade System.

Which brings us to the January 1 clock reset, and the imminent surge in perfectly legal capital outflows.

“In the new year, the new foreign-exchange purchase quota starts, so we expect yuan positions in January to drop significantly,” Liu Dongliang, an analyst at China Merchants Bank Co., wrote in a note this month. “Within the foreseeable future, the market will be pessimistic about funding conditions. It happens to be near year-end now, where money markets are tight, and after New Year’s Day it’s almost Chinese New Year.”

Ultimately, trying to keep a lid on the Yuan is a game China will lose, and some are already preemptively admitting defeat. Among them is Yu Yongding, a former academic member of the PBOC’s monetary policy committee, who overnight urged his former PBOC colleagues to engage the “nuclear option”a sharp, one off devaluation similar to what China did in August of 2015. 

In emailed comments to Bloomberg, Yongding said that China has a window from now to President-elect Donald Trump’s inauguration to halt FX intervention and let yuan depreciate to its equilibrium level.

Yongding believes that once FX reserves fall below a certain psychological threshold, capital outflows will only accelerate, and while depreciation expectations may weaken occasionally, they will never disappear until the yuan free floats and finds its equilibrium.

He also warned that concerns over depreciation have severely affected the PBOC’s monetary-policy independence and said that while tightening capital controls is right move, this has massive side effects and can be evaded.

His conclusion: letting yuan fall won’t be as scary as some imagine because Chinese companies have been paying down their FX debt and a large drop isn’t supported by nation’s economic fundamentals.

Will the PBOC stun everyone and unveil a surprise devaluation in the next three weeks? We don’t know, but according to bitcoin, which has soared by 20% in just the past week, someone does appear to “know” something, and if they are right, a devaluation is precisely what the Chinese central bank has in store.

end
The following will have no real effect on China’s foreign exchange policy due to the fact that much of China’s debt is denominated in USA dollars.  However it is a desperate attempt to project an image of yuan stability:
(courtesy zero hedge)

China Cuts Dollar Weight In FX Basket In Desperate Attempt To “Project Image Of Yuan Stability”

With the topic of Yuan’s relentless plunge to all time lows clearly bothering China and threatening to breach the symbolic level of 7 Yuan for the dollar, overnight Beijing decided to do something about it. Only instead of actually implementing much needed, and long overdue economic reforms, banking sector deleveraging or financial liberalization, China once again took the easy way out, when it revised its recently introduced trade-weighted FX currency basket by diluting the role of the dollar and adding another 11 currencies as, in Bloomberg’s words, “officials seek to project an image of stability in the yuan.”

Alas, “projecting an image of stability” for the dollar may be problematic as explained most recently last night in “With China Facing Currency, Liquidity Crises, Ex-PBOC Official Urges Use Of “Nuclear Option.” Even more embarrassing for Beijing is that the Politburo believes it can fool the general public with such cheap dollar-store, no pun intended, gimmicks.

As a reminder, the basket was unveiled in December 2015 as a way of shifting focus away from the yuan’s moves against the dollar in the wake of China’s unexpected August 2015 devaluation. PBOC Deputy Governor Yi Gang said last month the yuan’s depreciation versus the dollar was largely driven by the strength of the greenback and the market should refer to its performance against the basket as the economy maintains stable growth.

Here are the specifics: starting January 1, the weighting of the dollar will fall to 22.4% from 26.4% in the basket, China Foreign Exchange Trade System said in a statement Thursday. Additions include the South Korean won, the South African rand, the United Arab Emirates’ dirham, Saudi Arabia’s riyal, Hungary’s forint, Poland’s zloty and Turkey’s lira.

The dollar and currencies that are pegged to the greenback, such as the riyal and the Hong Kong dollar, will take up 30.5 percent of the new basket, down from 33 percent currently. The won will have a 10.8 percent weighting when it’s added from next month.

Why is China cutting the weighing of the USD by as much as 15%? Simple: because while much of the rest of China’s FX basket has been flat, the USD has been soaring, driven by speculation about Trump’s fiscal stimulus and upcoming Fed hikes. This in turn has forced China to respond not so much to broad FX strength, but only to moves in the dollar by devaluing its currency in small increments.

It is seeking to avoid that for the future, and as a result, “the move is aimed to reduce the impact of dollar strength on the overall performance of the basket,” said Christy Tan, head of markets strategy in Hong Kong at National Australia Bank Ltd. “It will also make it easier for China to manage yuan stability versus the basket, since the yuan will need to appreciate less versus other non-dollar currencies amid dollar strength.”

The divergence between the Yuan’s value only relative to the dollar, which is plunging, and the value of the overall trade-weighted basket, which is rebounding, is shown in the Bloomberg chart below.

As Bloomberg adds, the weighting of the basket will be evaluated on an annual basis and updated at the “appropriate time”, according to CFETS. The new composition covers exchange rates of the nation’s main trading partners, it said, adding that the newcomers will take 21.1 percent of the overall weighting.

“The new basket is more comprehensive and a better reflection of China’s trade relations,” said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd. “In the near term, the PBOC’s target would still be to keep the yuan stable versus the basket.”

Meanwhile, no amount of superficial definition revisions can change the fact that the yuan is headed for its steepest yearly plunge against the dollar in more than two decades, and when the year turns, policy makers will be faced with a triple whammy of the renewal of citizens’ $50,000 quota of foreign-currency purchases, prospects of further Federal Reserve interest-rate increases, and concern that U.S. President-elect Donald Trump may slap punitive tariffs on China’s exports to the world’s largest economy, as observed last night.

Furthermore, the real question when determining the “risk” of Chinese exposure to the dollar is not what some arbitrary weighing in FX basket is, but what exposure to USD-denominated debt Chinese companies have as a percentage of total foreign-denominated paper. Here, we are confident that the number is far, far greater than just 22.4%.

Ironically, the move may end up backfiring, and lead to even greater basket weakness should the dollar strength continue in the new year:

“Adding a batch of emerging-market currencies into the basket will likely increase two-way volatility of the yuan’s fixing and the exchange rate,” said Ken Cheung, Hong Kong-based Asia currency strategist at Mizuho Bank Ltd. “If the dollar extends its rally next year, particularly against the emerging-market currencies under Donald Trump’s presidency, the onshore and offshore yuan will come under heavier pressures.”

Well, if that happens, CFETS will simply undo what it did overnight, and restore the dollar’s full weighing, while suggesting to the market it was only joking.

4 EUROPEAN AFFAIRS

What a joke:  the Government of Italy slams the ECB for revealing that it has a bank run problem

(courtesy zero hedge)

Italy Slams ECB For Revealing It Has A “Bank Run” Problem

With the world still napping in a post-Christmas daze, the ECB surprised Italian bank watchers on December 26 when it advised the insolvent, and nationalized, Monte dei Paschi that its capital shortfall had increased by 76% from €5 billion to €8.8 billion as a result of a deposit flight, aka “bank run”, that had accelerated and led to a deterioration in the bank’s liquidity.

The week before, Monte Paschi admitted, it had already suffered roughly €14 billion in deposit outflows, or 11%, in the first nine months of the year as shown in the chart below.

And then, out of nowhere, the ECB said on Monday that Monte Paschi “was solvent but signaled the bank’s liquidity position had rapidly deteriorated between the end of November and December 21.

Needless to say, Italy was furious at the ECB for unexpectedly admitting that the country’s banks are not only in a worse shape than presented at a time when the government requested the parliament’s approval to issue an additional €20 billion in new public debt to fund bank nationalizations, but that the bank run gripping at least one of Italy’s banks was substantially more aggressive than portrayed.

The anger culminated overnight when in unusually critical comments of the ECB, Italy’s economy minister Pier Carlo Padoan said in a newspaper interview the central bank’s new capital target was the result of a “very rigid stance” in its assessment of the bank’s risk profile. He bashed Draghi saying, that the European Central Bank “should have explained more clearly why it nearly doubled its estimated capital shortfall for the ailing Monte dei Paschi di Siena (BMPS.MI) bank, which is being bailed out by the state.

“It would have been useful, if not kind, to have a bit more information from the ECB about the criteria that led to this assessment,” Padoan told financial daily Il Sole 24 Ore.

The ECB told the Italian treasury of its decision in a letter, which Padoan said was just five lines long and which has not been made public.

Confusion spread quickly, and as Reuters writes, “it irked the Rome government and has quickly turned into a political issue. A group of lawmakers from the ruling Democratic Party asked Padoan and Italy’s foreign minister on Wednesday to explain in parliament what had happened.”

In retrospect, Padoan should be grateful the ECB did not provide “more information”, because the reason for the capital shortfall is simple: an accelerating bank jog, or perhaps an all out run, affecting at least Monte Paschi and perhaps other banks. And the only thing that makes bank runs worse is the realization that one is taking place. So by keeping its mouth shut, the ECB prevented what may have been a far worse panic.

And, ironically, by protesting, Padoan only makes articles such as this one – which are happy to answer his questions and resolve his confusion – possible, and in turn raises concerns and fears among the Italian population about what else its government isn’t telling it.

Ignoring the finer nuances of popular delusions, one side effect of the ECB’s unwelcome announcement is that the higher capital requirement substantially increases the cost of the bank’s rescue by the government after it failed to raise the €5 billion on the market. The treasury is now set to pump in around €6.5 billion to salvage the lender, “raising concerns that its newly created 20-billion-euro bank bailout fund may not have enough money for other weak banks.” The government says the fund is sufficient; others, such as this website, laughed violently when the tiny €20 billiion “bazooka” number was announced.

As Reuters notes, the rest of the money Monte dei Paschi needs will come from the forced conversion of its subordinated bonds into shares, in line with European rules on bank crises. The lender fared the worst in EU-wide banking stress tests published in July.

The ECB has declined to comment on its rationale for the larger capital shortfall.

According to a Reuters source close to the matter, the bank’s estimate of a 5 billion euros capital gap was based on the results of the stress test, conducted on end-2015 data, and included assumptions such as the sale of its whole portfolio of defaulting loans – a key plank of its plan to raise money privately.

Given that plan’s failure and the bank’s worsening balance sheet over the past year, the ECB wants to ensure Monte dei Paschi has enough capital to safely meet a Common Equity Tier 1 (CET 1) ratio of 8 percent in an adverse scenario, so it would be able to restore investor and customer confidence, the source said.

At 8% under the adverse scenario, Monte dei Paschi would still be below the average of the ECB’s stress test, in which banks would see their CET 1 ratio fall to 9.4 percent from 13.2 percent.

The 8 percent threshold in the adverse scenario was also a requirement the ECB set for ailing Greek banks in a 2015 review.

The new Prime Minister Gentiloni also chimed in, saying during a press conference he was “a bit surprised to receive the news, out of the blue and on Christmas day. It’s important that the reasons behind this assessment are shared and that there is a dialogue because we need to handle this issue together … We will stick to our guns.”

Which is odd, because also according to the Reuters source the ECB had offered to explain its stance to both the Italian treasury and Monte dei Paschi. In other words, while the prime minister and Padoan both complain about the ECB’s “mysterious ways”, the central bank is quite willing to explain to everyone just what is going on, yet Italy won’t allow it, for reasons unknown.

Meanwhile, the brand new Italian government did what all of its predecessors have done so well: it stuck its head in the sand and ignore the problem.

Padoan said the exact amount of capital Monte dei Paschi will have to raise will be determined once it presents a new business plan to the ECB and the European Commission, but he played down the bank’s problems.

“The bank is in optimal condition and will have great success,” he said.

Readers will be forgiven not to believe Padoan, the same person who less than three months ago, on September 2 at the Ambrosetti Forum said that “we are not talking about a bailout. Bailout is ruled out in the European context.”

Now we know that a bailout was not ruled out after all. As for the “optimal condition” of Monte Paschi, we will wait a few more weeks for the bank jog to yank another several billion from the insolvent lender, at which point the ECB will “surprise” everyone that the bank has an even greater capital shortfall

end

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

Syria has its ceasefire deal as 62,000 opposition fighters sign for it and it is to take effect on Dec 30 at midnight.  The USA is not invited to the agreement except that once Donald takes office he may join.  What a slap in the face to the USA and the UN who couldn’t come close to a deal for the past several years.

(courtesy zero hedge)

Putin Announces Syrian Ceasefire Deal, Ready To Start Peace Talks; Obama Snubbed Again

(courtesy Michael Snyder/EconomicCollapse Blog)

6.GLOBAL ISSUES

India

Chaos strikes India.  Of the 15.3 trillion rupees issued of our two demonitized notes, 14 trillion has already been handed in.  The government expected 5 trillion would remain outstanding and not to be returned for fear of tax evasion.  It seems that the government guessed wrong, but Modi, not to be undone, it contemplating more harsh measures which will further kill his country.  He is one complete moron

(courtesy zero hedge)

India Fears Run On Banks: Capital Controls And Withdrawal Limits To Continue

Submitted by Michael Shedlock via MishTalk.com,

Indian banks are fearful of running out of cash as lines queue up to withdraw money.

Bankers say they cannot cope with any sudden increase in demand, and warn against lifting cash withdrawal limits.

india-banks

A decision by New Delhi on November 8 to scrap all large-denomination banknotes overnight removed 86 per cent of India’s currency from circulation. In an effort to prevent banks running out of cash, the finance ministry then imposed strict limits on the amount of new notes that could be withdrawn. Customers can currently withdraw just Rs2,500 from an ATM per day — equivalent to $37 — or Rs24,000 over the counter per week.

“If the government lifts the limits on Friday and there is a sudden rush, banks will be totally dependent on the central bank to give them enough liquidity,” said Soumyajit Niyogi, associate director at India Ratings and Research. “The Reserve Bank of India has been giving assurances that it has enough cash but reports of how much currency there currently is in the system suggest this might not be the case.”

New Delhi claims that purging most of India’s old cash supply, and replacing it with a smaller quantity of new banknotes, will eliminate illicitly earned or unaccounted for income that has been beyond the reach of tax officials.

But as of December 19, banks had replaced just 38 per cent of the Rs15.3tn in demonetised notes that was sucked out of the system by November’s announcement, according to RBI data.

The figures have alarmed bankers, who are now urging the government not to lift the curbs immediately. One executive said: “The government and the RBI need to make sure there is enough cash in the system before they lift the withdrawal limits.” A private banker told the Indian Express newspaper: “If the limits are relaxed, people will ask for more cash and there is limited cash. This will only turn banks into villains.”

When the policy was first announced, the government estimated that Rs5tn would remain undeclared as it would be part of illicit money hoards. But R Gandhi, RBI deputy governor, said earlier this month that over Rs12tn had already been handed back, and a newspaper report on Wednesday said the figure had since climbed to Rs14tn, leaving just over Rs1tn remaining.

This suggests either that the amount of illicit money in the system was overestimated by the government – or that new ways to launder cash have been discovered despite the government’s efforts.

The RBI did not respond to a request to comment.

More Experiments Coming

Speculation is rife that further unorthodox measures are coming: Modi to Crank Up Campaign Against India’s Black Money.

Well before India’s surprise ban on using 86 per cent of its cash supply, rightwing circles were abuzz with speculation about prime minister Narendra Modi taking such a step to fight so-called black money.

Mainstream economists paid little heed to the chatter — deeming it “too preposterous” to take seriously, given the economic damage it would inflict.

But with India now reeling from the acute cash crunch triggered by the decision to cancel its old Rs500 and Rs1,000 notes, many economists and observers are debating what other unorthodox economic policy experiments may lie ahead.

Mr Modi is expected to intensify his campaign against black money, with his next target likely to be property purchased with illicit wealth and not registered in the true owners’ names. Speculation is rife that he is also seriously considering other dramatic and unusual reform measures — including possibly abolishing income tax and replacing it with a banking transaction tax.

Expect More Pain, Failures

The hit to India’s GDP will be much larger than expected.

Nonetheless, it appears that Modi is prepared to follow up with the popular economic philosophy: If it doesn’t work, do more of it.

end

7. OIL ISSUES

Both API and DOE report bigger inventory builds but USA production dipped very modestly

(courtesy zero hedge)

Oil Slides After Bigger Than Expected Inventory Build

Oil prices were back to unchanged ahead of DOE data, after falling on last night’s surprise API inventory build. Prices jumped higher however as DOE reported a much smaller build than API (+614k vs +4.2mm), though admittedly a build (expectations were for a draw). Cushing built for the 4th week of the last 5 but gasoline and distillates saw significant draws. Production dipped very modestly.

API

  • Crude +4.2mm (-1.5mm exp) – biggest in 6 weeks
  • Cushing +528k (+500k exp) – 4th build in last 5 weeks
  • Gasoline -2.8mm (+1mm exp)
  • Distillates -1.7mm (+1mm exp)

DOE

  • Crude  +614k (-1.5mm exp)
  • Cushing  +172k (+500k exp)
  • Gasoline  -1.593mm (+1mm exp)
  • Distillates -1.881mm (+1mm exp)

Product Inventory draws continue…

Notably, as Bloomberg details, total product inventory outside the Strategic Petroleum Reserve took a big drop for the second week in a row, falling 12.9 million barrels. The total of 1.32 billion is the lowest level since March.

The demand picture is mixed…

  • U.S. Fuel Demand Rose 0.51% in Past Four Weeks
  • Gasoline Demand Rose 0.56% in Past Four Weeks
  • Jet Fuel Demand Rose 2.41% in Past Four Weeks
  • Residual Fuel Demand Fell 25.70% in Past Four Weeks
  • U.S. Gasoline Demand Rose 9,000 B/D Last Week
  • U.S. Distillate Demand Fell 582,000 B/D Last Week

Gasoline exports also hit a fresh record as they rose 354,000 barrels a day to 1.149 million. This is the third week this year that exports have surpassed 1 million barrels a day.

US Crude production continues to follow the rising rig count trend, though has now dipped very modestly for 2 weeks in a row…

The reaction in crude was biased upwards initially but quickly reversed…

As a reminder oil closed yesterday with its 8th consecutive gain… the longest streak since Jan 2010.

8. EMERGING MARKETS

none today

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

Euro/USA   1.0458 UP .0044/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/USA RAISING RATES

USA/JAPAN YEN 116.59 DOWN 0.490(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2246 UP .0028 (Brexit by March 201/UK government loses case/parliament must vote)

USA/CAN 1.3525 DOWN .0027 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT FROM EU)

Early THIS THURSDAY morning in Europe, the Euro ROSE by 44 basis points, trading now WELL BELOW the important 1.08 level RISING to 1.0458; 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+ AND TODAY MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED DOWN 4.12 0r 0.12%     / Hang Sang  CLOSED UP 36.17 POINTS OR 0.17%  /AUSTRALIA  CLOSED UP 0.25%  / EUROPEAN BOURSES ALL IN THE RED

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

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

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

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

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

The NIKKEI: this THURSDAY morning CLOSED DOWN 256.58 OR 1.32% 

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 36.17 OR .17%  Shanghai CLOSED DOWN 4.12 POINTS OR 0.12%   / Australia BOURSE CLOSED UP 0.25% /Nikkei (Japan)CLOSED DOWN 256.58 OR 1.32% /  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1146.20

silver:$16.09

Early THURSDAY morning USA 10 year bond yield: 2.49% !!! DOWN 5 IN POINTS from WEDNESDAY 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  3.078, DOWN 4 IN BASIS POINTS  from WEDNESDAY night.

USA dollar index early THURSDAY morning: 102.82 DOWN 40 CENT(S) from WEDNESDAY’s close.

This ends early morning numbers THURSDAY MORNING

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And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield: 3.754% DOWN 2  in basis point yield from WEDNESDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.04% DOWN  2  in   basis point yield from WEDNESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.326%  DOWN 2  IN basis point yield from  WEDNESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.795  DOWN  2  in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 47 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.175% DOWN 2 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR THURSDAY

Closing currency crosses for THURSDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:00 PM 

Euro/USA 1.0473 UP .0060 (Euro UP 60 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 116.47 DOWN: 0.608(Yen UP 61 basis points/ 

Great Britain/USA 1.2224 UP 0.0007( POUND UP 7 basis points)

USA/Canada 1.3516 DOWN 0.0044(Canadian dollar UP 44 basis points AS OIL FELL TO $53.71

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This afternoon, the Euro was UP by 60 basis points to trade at 1.0473

The Yen ROSE to 116.47 for a GAIN of 61 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND ROSE 7  basis points, trading at 1.2224/

The Canadian dollar ROSE by 44 basis points to 1.3516,  WITH WTI OIL FALLING TO :  $53.71

The USA/Yuan closed at 6.9534
the 10 yr Japanese bond yield closed at +.04% DOWN 2 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 6 IN basis points from WEDNESDAY at 2.481% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.1082 DOWN 3  in basis points on the day /

Your closing USA dollar index, 102.72 DOWN 50 CENT(S)  ON THE DAY/1.00 PM 

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

London:  CLOSED UP 14.18 OR .20% 
German Dax :CLOSED DOWN 23.94 POINTS OR 0.21%
Paris Cac  CLOSED DOWN 9.54 OR 0.20%
Spain IBEX CLOSED DOWN 17.80 POINTS OR 0.19%
Italian MIB: CLOSED DOWN 35.45 POINTS OR 0.18%

The Dow was DOWN 13.90 POINTS OR .07% 4 PM EST

NASDAQ WAS DOWN 6.47 POINTS OR .12%  4.00 PM EST
WTI Oil price;  53.71 at 1:00 pm; 

Brent Oil: 56.01  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  60.43 (ROUBLE UP  5/100 roubles from YESTERDAY)

TODAY THE GERMAN YIELD FALLS  TO +0.175%  FOR THE 10 YR BOND  2:30 EST

END

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

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

WTI CRUDE OIL PRICE 5 PM:$53.85

BRENT: $56.83

USA 10 YR BOND YIELD: 2.477%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 3.079%

EURO/USA DOLLAR CROSS:  1.0486 up .0073

USA/JAPANESE YEN:116.54  down 0.542

USA DOLLAR INDEX: 102.63  down 59  cents (BREAKS HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2252 : up 35  BASIS POINTS.

German 10 yr bond yield at 5 pm: +.175%

END

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

TRADING IN GRAPH FORM

Bonds & Bullion Bounce But Banks Bruised As Dollar Dumps

 

Interesting day…

 

Bonds & Bullion now outpacing stocks post-Fed… (and bank stocks are down 1.6% post-fed)

 

Once again the opening ramp but it was lackluster as hopes for Dow 20,000 are dashed for now as pension rebalancing (and front-running tax-selling) accelerates…WTF was that idiotic panic buying atthe close in Small Caps!??

 

On the week, Trannies are worst…

 

VIX briefly tagged 13.5 today with The Dow now 200 points from Dow 20k…

 

Utilities are now the only sector green post-Xmas with financials underperforming… Financials biggest 2-day drop in 3 months

 

5Y yields dropped below 2.00% for the first time in 10 days, 10Y below 2.50%, and 3Y below 1.50% following the super strong 7Y auction…NOTE the 10Y yield briefly dipped lower post-Fed intraday but 30Y is -5bps…

This is the best 2 day drop in 5Y yields (-10bps) since June 27th.

As a reminder, despite the non-stop spewing on mainstream media, the yield curve is notably flatter post-Trump… not steeper!

 

The USD Index tumbled most since november 1st…

 

Led by JPY strength (on bank derisking following Toshiba contagion)

 

USD weakness sent PMs and copper higher but crude fell after inventory data…

 

WTI broke its 8-day win streak…

 

Gold is now up 5 days in a row…longest streak since before election

 

But we note that of all the precious metals, only Palladium is green post-Trump…

 

For the first time in the contracts’ history, the Jan/Feb Gasoline spread has moved into backwardation (Bloomberg reports that recent regional refinery outages at PES Philadelphia Energy Solutions Inc. and Irving Oil Lt.’s Saint John unit have limited supplies to New York Harbor, pushing front month contracts higher than the forward period).

Strange:  continuing jobless claims soar the most since 2009 right after the Trump election.
(courtesy zero hedge)

Narrative Breaks – Continuing Jobless Claims Soar Most Since 2009 Following Trump’s Election

This does not fit with the narrative. Continuing Jobless Claims are up over 6% in the weeks following Donald Trump’s election…

This is the biggest surge since May 2009…

Finally, while Jeffrey Gundlach’s “granddaddy of recession indicators” is based on the unemployment rate, we note that initial jobless claims are rapidly approaching their 2-year average – which in the past has probabilisticly been followed by a recession…

Still stocks are at record highs so what could possibly go wrong?

end

The soaring dollar hits the uSA trade deficit right in the nose as it rose from a huge 61.9 billion deficit to 65.3 billion in November.  This should automatically lower 4th quarter estimation down .2- .4%.  The Atlanta Fed’s last estimation of 4th quarter GDP was 2.5% growth

(courtesy zero hedge)

Soaring Dollar Hits US Trade, Sends Goods Trade Deficit To Highest Since March 2015

Who could have possibly thought that a soaring dollar would have an adverse impact on the US trade deficit, and thus, the US economy. Well, not the Fed, if only for now, because just as the Fed hiked rates only for the second time in a decade, the US advance goods trade deficit soared from $61.9 billion to $65.3 billion, far higher than the consensus print of $61.6 billion. This was the highest advance trade gap since March of 2015 when the dollar was likewise soaring.

The reason for the far greater than expected deficit: exports of goods fell 1.0%, while imports of goods rose 1.2%.

Exports of Goods were down 0.99% in November, according to the advance estimate. Most of this $1.2 billion decline came from a $1.8 billion drop in exports of capital goods, which was offset by a $1.2 billion rise in exports of industrial supplies.

Imports of Goods were up 1.19% in November, according to the advance estimate. This $2.2 billion rise was largely a result of a $2.0 billion rise in industrial supplies imports.

All else, equal, this means that Q4 GDP is about to be revised between 0.2% and 0.4% lower, from its current perch, which according to the Atlanta Fed is currently at 2.5%.

end

Obama is set to announce retaliation against Russia for the “hacking” into the Democratic Party computers during the Presidential election

(courtesy zero hedge/two commentaries)

Obama To Announce “Retaliation” Measures Against Russia As Early As Today

We now await Mr Putin’s turn to retaliate:

(courtesy zero hedge)

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