FEB 27/Raid on gold and silver in the access market/gold and silver equity shares clobbered/Strangely GLD and SLV inventories remain constant/Silver OI remains quite high with one day to go ( 17,360 contracts)/the EU now worried about their burgeoning target 2 imbalances/Trump seeks a monstrous 54 billion increase in spending on the military/FINAL DRAFT

Gold at (1:30 am est) $1257.40 down $.20

silver was : $18.35:  UP 1 CENT

Access market prices:

Gold: $1253.00

Silver: $18,29

For comex gold:

FEBRUARY/ 

NOTICES FILINGS FOR FEBRUARY CONTRACT MONTH:  65 NOTICE(S) FOR 6500 OZ.  TOTAL NOTICES SO FAR: 6023 FOR 602300 OZ    (18.7340 TONNES)

For silver:

 

For silver: FEBRUARY

13 NOTICES FILED FOR 65,000 OZ/

TOTAL NO OF NOTICES FILED: 614 FOR 3,070,000 OZ

This is options expiry week for both the silver and gold contracts.  First day notice is this Tuesday, Feb 28.2017.  Options  expired on the comex yesterday and on the OTC market in London they will expire early Tuesday morning.  For the first time comex has silver in backwardation February/March by 2 cents.  The open interest on the silver comex is now over 1 billion oz and no doubt that the London OTC is multiples of that.

The gold/silver equity shares again performed terribly  today.  We have seen gold/silver metal rise in the past 8 weeks but the silver/gold equity shares have been trampled upon by our crooks. Tomorrow, options expiry in the UK and OTC generally end in the morning so we should see some recovery in the price of the metals and hopefully the equity shares rise from their constant whacking.

Tomorrow is also first day notice for the active silver, and non active gold comex contract.

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest FELL by 2,797 contracts DOWN to 209,299 with respect to FRIDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e.  1.046 BILLION TO BE EXACT or 150% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT FEBRUARY MONTH: THEY FILED: 13 NOTICE(S) FOR 65,000 OZ OF SILVER

In gold, the total comex gold ROSE BY ONLY 325 contracts WITH THE RISE IN  THE PRICE GOLD ($10.60 with FRIDAY’S trading ).The total gold OI stands at 452,365 contracts.

we had 65 notice(s) filed upon for 6500 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

We had no change in tonnes of gold at the GLD:

Inventory rests tonight: 841.17 tonnes

.

SLV

we had no changes in silver into the SLV:

THE SLV Inventory rests at: 335.281 million oz

end

.

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

1. Today, we had the open interest in silver FELL by 2,797 contracts DOWN to 209,299 DESPITE THE FACT THAT SILVER WAS UP 20 CENTS with FRIDAY’S trading.WE MUST HAVE HAD CONSIDERABLE SHORT COVERING AGAIN AS THE BANKERS MUST BE FRIGHTENED THAT WE CANNOT OBTAIN PHYSICAL SUPPLIES. The gold open interest ROSE by ONLY 325 contracts UP to 452,365 WITH THE RISE IN THE PRICE OF GOLD OF $10.60  (FRIDAY’S TRADING) AND AGAIN WE MUST HAVE HAD COSIDERABLE GOLD SHORT COVERING.

(report Harvey

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

2c) COT report

(Harvey)

3. ASIAN AFFAIRS

i)Late  SUNDAY night/MONDAY morning: Shanghai closed DOWN 24.77 POINTS OR .76%/ /Hang Sang CLOSED DOWN 40.65 POINTS OR 0.17% . The Nikkei closed DOWN 176.09 POINTS OR 0.91% /Australia’s all ordinaires  CLOSED DOWN 0.76%/Chinese yuan (ONSHORE) closed UP at 6.8695/Oil ROSE to 54.36 dollars per barrel for WTI and 56.48 for Brent. Stocks in Europe MOSTLY IN THE RED. Offshore yuan trades  6.8612 yuan to the dollar vs 6.8695  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  NARROWS A BIT AS POBC ATTEMPTS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN WEAKER AS IS OFFSHORE YUAN COUPLED WITH THE WEAKER DOLLAR

3a)THAILAND/SOUTH KOREA/NORTH KOREA

North Korea executes 5 military officers for telling false news

(courtesy zero hedge)

b) REPORT ON JAPAN

none today

c) REPORT ON CHINA

4. EUROPEAN AFFAIRS

i)EU/Target 2 imbalances

 

The following is a must read.  I have been highlighting to you over the past several years, the problems in Europe with the huge target 2 imbalances.  Because we have various countries using the same currency, it would bound to happen that one country would get surplus balances of euros and the poorer countries would accumulate deficits.  And that is what is happening:  Germany and Luxembourg have huge positive balances, with Germany at 795 billion euros and Luxembourg at 175 billion. Italy has the worse deficit at 357 billion euros followed by Spain’s 328/  Deficits occur when two things happen:

  1. trade goes one way i.e. Germany exports to Italy but Italy does not export to Germany.
  2. Citizens realize that their country’s finances’s are awful and they sell their Italian accounts and move them over to Germany etc.

ladies and gentlemen;  the European debt bomb (target 2) has been lit

( Mish Shedlock/Mishtalk)

ii)The Netherlands

The Netherlands are getting scared:  The Dutch Parliament is debating leaving the Eurozone:

( Mish Shedlock/Mishtalk)

iii)Germany/Greece
Sunday;  German deputy finance minister Jens Spahn in an interview claims that Greece must be not be granted a “bail in”.  In other words creditors must not take a haircut.  This would put Germany at odds with the iMF who wants all creditors to take a haircut on their debt.  The reason of course that Germany et al  cannot take a haircut as this would blow up Deutsche bank’s derivative mess:
( zero hedge)

 

iv)France

Fears of a French European exit mounts

( zero hedge)

v))IMF/Spain

More corruption prosecutions as former IMF head Rato sent to prison in the Bankia scandal

( Matt Agorust./ActivistPost.com)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)Iran

This ought to get gold higher: Iran holds a massive naval drill:

( zero hedge)

ii)Russia

Strange!! six Russian diplomats have died in the last 60 days:

(courtesy zerohedge)

6.GLOBAL ISSUES

If Trump proposes tariffs especially on importing cars from Mexico, then the Mexicans will walk away from NAFTA

( zero hedge)

7. OIL ISSUES

none today

8. EMERGING MARKETS

none today

9.   PHYSICAL MARKETS

i)SUPER COMMENTARY TONIGHT FROM CHRIS POWELL, ON WHY CENTRAL BANKS LEASED GOLD AND HOW THEY ORCHESTRATED THAT POWER OVER VALUATIONS OF ALL CAPITAL, GOODS AND LABOUR

a must read.

( Chris Powell/GATA)

ii)Ralph Benko advocates a gold standard instead of using the USA dollar as the reserve currency

( Ralph Benko/ Forbes/GATA)

iii)How could this be possible?  The Royal Canadian Mint actually lost money last year despite the huge profit margins on the coins they make

( CBC/Toronto/GATA)

iv)Jan (Koos Jansen) has received his Freedom of information on the USA gold audit at the 4 sites including Fort Knox.  There is not doubt that the audit was handled by flunkees and there are serious holes in their report to him

( Koos Jansed/Bullionstar)

v)Bill Holter tackles how the gold reset might occur.  I believe he is correct

a must read..

(courtesy zero hedge)

vi)China is fearing another surge in inflation and as such they are launching another probe into commodity futures

( zero hedge)

10.USA STORIES

i)Durable goods orders tumbled last month, the most since June.

( zero hedge)

ii)Pending home sales falter to its lowest levels in a year and it is getting worse!

( zero hedge)

iii)Soft data, Dallas Fed soars for its 6th straight month and it is now at 11 year highs

( zero hedge)

iv)More confusion from the Trump administration:  Mnuchin states that tax reform will not be ready until August and what is good for gold/silver, he states that entitlements like social security and medicare will not be touched

( zero hedge)

v)More confusion from the Trump camp:  He is advocating huge increase in military spending but a drastic cut to domestic state department spending like the EPA

( zerohedge)

vi)This is big:  Trump seeks a monstrous 54 billion USA INCREASE in defense spending

( zero hedge)

vii)A terrific commentary from Wolf Richter on the USA restaurant business.  Flat sales are now a huge welcome as  USA citizens feel the bite of lower after tax wages coupled with higher inflation.  Restaurants have had to increase prices and this has caused their industry to tank

( Wolf Richter/WolfStreet)

viii)The following is a must view and read.  March 15 is coming and that is when the bloodbath begins as the debt ceiling well be frozen as of that debt.

a must read….

( Greg Hunter/USAWatchdog)

Let us head over to the comex:

The total gold comex open interest ROSE BY ONLY 325 CONTRACTS UP to an OI level of 452,365 DESPITE THE HUGE RISE IN THE  PRICE OF GOLD ( $10.60 with FRIDAY’S trading). We are now in the contract month of FEBRUARY and it is one of the better delivery months  of the year. In this next big active delivery month of February we had a LOSS of 637 contracts DOWN to 65.   We had 638 notice(s) served upon yesterday and therefore we GAINED 1 contracts or an additional 100 oz will NOT stand for delivery and  IT LOOKS LIKE THE CASH SETTLEMENTS HAVE NOW STOPPED AS WE ARE AT THE END OF THE DELIVERY CYCLE MONTH . The next non active contract month of March saw it’s OI FALL by 224 contracts DOWN TO 825. The next big active month is April and here the OI FELL by 1674 contracts DOWN to 292,321.

We had 65 notice(s) filed upon today for 6500 oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
 And now for the wild silver comex results.  Total silver OI FELL by 2797 contracts FROM 212,096 DOWN TO 209,299   DESPITE THE FACT THAT THE PRICE OF SILVER ROSE TO THE TUNE OF 20 CENTS AND BROKE THROUGH CLEARLY THE 18 DOLLAR BARRIER with respect to FRIDAY’S trading. WE HAD CONSIDERABLE SHORT COVERING IN THE SILVER ARENA ON FRIDAY. We are moving CLOSER TO the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540). The closing price of silver that day: $20.44

The  active month of February saw the OI FALL BY 54  contract(s) DOWN TO 13.  We had 16 notice(s) served YESTERDAY so we LOST 41 CONTRACTS OR AN ADDITIONAL 205,000 WILL NOT STAND FOR DELIVERY AND THESE WERE CASH SETTLED FOR A FIAT BONUS.

The next big active delivery month is March and here the OI decrease by 15,164 contracts down to 17,360 contracts WITH 1 TRADING DAY LEFT BEFORE FIRST DAY NOTICE, TOMORROW. For comparison purposes last year on the same date only 11,876 contracts were standing.(WITH 1 TRADING DAY TO GO BEFORE FIRST DAY NOTICE)

For historical reference: on the first day notice for the March/2016 silver contract:  19,020,000 oz.

However the final amount standing at the end of March 2016:  6,755,000 oz as the banker boys were busy convincing holders of many silver contracts to cash settle.

We had 13 notice(s) filed for 65,0000 oz for the FEBRUARY contract.

VOLUMES: for the gold comex

Today the estimated volume was 182,945  contracts which is  fair.

Yesterday’s confirmed volume was 234,505 contracts  which is good

volumes on gold are getting higher!

FINAL standings for FEBRUARY
 Feb 27/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
201.25 OZ
Scotia
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
32,150.000 oz
JPMorgan
No of oz served (contracts) today
 
65 notice(s)
6500 oz
No of oz to be served (notices)
0 contracts
NIL oz
Total monthly oz gold served (contracts) so far this month
6023 notices
602300 oz
18.7340 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  319,409.1   oz
Today we HAD 0 kilobar transaction(s)/
Today we had 0 deposit(s) into the dealer:
total dealer deposits:  nil oz
We had nil dealer withdrawals:
total dealer withdrawals:  nil oz
we had 0  customer deposit(s):
total customer deposits; nil oz
We had 1 customer withdrawal(s)
 i) Out of Scotia:  201.25 oz
total customer withdrawal: 201.25 oz
We had 0  adjustment(s)
For FEBRUARY:

Today, 0 notice(s) were issued from JPMorgan dealer account and 580 notices were issued from their client or customer account. The total of all issuance by all participants equates to 65 contract(s)  of which 18 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
To calculate the initial total number of gold ounces standing for the FEBRUARY. contract month, we take the total number of notices filed so far for the month (6023) x 100 oz or 602,300 oz, to which we add the difference between the open interest for the front month of FEBRUARY (65 contracts) minus the number of notices served upon today (65) x 100 oz per contract equals 602,300 oz, the number of ounces standing in this  active month of FEBRUARY.
 
Thus the INITIAL standings for gold for the FEBRUARY contract month:
No of notices served so far (6023) x 100 oz  or ounces + {(65)OI for the front month  minus the number of  notices served upon today (65) x 100 oz which equals 602,300 oz standing in this non active delivery month of FEBRUARY  (18.734 tonnes)
 
 we GAINED 1 contracts or an additional 100 oz will  stand in this active delivery month. 
 
 
 
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On first day notice for FEB 2016, we had 20.124 tonnes of gold standing. At the conclusion of the month we had only 7.9876 tonnes standing. The data suggests that we had almost identical amounts standing in Feb ’16 and Feb 2017; however today’s totals already surpassed the final amt which eventually stood  in 2016.(already 18.7340 tonnes vs 7.9876 at the end of Feb/2016).
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
I have now gone over all of the final deliveries for this year and it is startling.
First of all:  in 2015 for the 13 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month.
Here are the final deliveries for all of 2016 and the first month of January 2017
Jan 2016:  .5349 tonnes  (Jan is a non delivery month)
Feb 2016:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2016: 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
JAN/     3.9004 tonnes
FEB/ 18.734 tonnes
total for the 14 months;  244.729 tonnes
average 17.480 tonnes per month vs last yr  59.51 tonnes total for 14 months or 4.250 tonnes average per month (last yr).
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Total dealer inventory 1,418,640.029 or 44.125 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,942,235.978 or 278.140 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 278.140 tonnes for a  loss of 25  tonnes over that period.  Since August 8/2016 we have lost 76 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 6 MONTHS  76 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE FEBRUARY DELIVERY MONTH
FEBRUARY FINAL standings
 feb 27. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
647.644.07 0z
 Brinks
CNT
Scotia
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory 
 1,838,578.860 oz
Scotia
CNT
No of oz served today (contracts)
13 CONTRACT(S)
(65,000 OZ)
No of oz to be served (notices)
0 contracts
(NIL  oz)
Total monthly oz silver served (contracts) 614 contracts (3,070,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz
Total accumulative withdrawal  of silver from the Customer inventory this month   7,889,816.3 oz
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 3 customer withdrawal(s):
i) Out of Brinks:  22,974.57 oz
ii) Out of CNT: 619,885.400 oz
iii) Out of Scotia; 4,784.100 oz
TOTAL CUSTOMER WITHDRAWALS: 647.644.07 oz
 we had 2 customer deposit(s):
i) Into Scotia: 1,238,770.560  oz
ii) Into CNT: 599,808.300 oz
***deposits into JPMorgan have now stopped.
total customer deposits;  1,838,578.860  oz
 
 we had 1  adjustment(s)
i) out of CNT:  619,168.330 oz leaves the dealer and enters the customer account of CNT
The total number of notices filed today for the FEBRUARY. contract month is represented by 13 contract(s) for 65,000 oz. To calculate the number of silver ounces that will stand for delivery in FEBRUARY., we take the total number of notices filed for the month so far at 614 x 5,000 oz  = 3,070,000 oz to which we add the difference between the open interest for the front month of feb (13) and the number of notices served upon today (13) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the FEBRUARY contract month:  614(notices served so far)x 5000 oz  + OI for front month of FEB.( 13 ) -number of notices served upon today (13)x 5000 oz  equals  3,070,000 oz  of silver standing for the Feb contract month. This is  huge for a non active delivery month in silver. 
We lost 41 contracts or an additional 205,000 oz will not stand for delivery as the banker boys used a fiat cash settlement because they could not find physical supplies. It is totally unheard of for longs waiting the entire month for physical and then they roll??
At first day notice for the FEB/2016 silver contract month we initially had 515,000 oz standing for delivery.  By the conclusion of the delivery month we had 835,000 oz stand as some of the bankers required immediate silver inventory.
END
Volumes: for silver comex
Today the estimated volume was 92,045 which is huge!!!
FRIDAY’S  confirmed volume was 138,817 contracts  which is totally unbelievable.
To give you an idea of volume today’s confirmed volume::  138,817 contracts equates to 694 million oz or 99.14% of ANNUAL GLOBAL PRODUCTION EX CHINA EX RUSSIA
 
Total dealer silver:  30.619 million (close to record low inventory  
Total number of dealer and customer silver:   185.276 million oz
The total open interest on silver is NOW CLOSER TO   its all time high with the record of 224,540 being set AUGUST 3.2016.

end

And now the Gold inventory at the GLD

feb 27/no change in gold inventory at the GLD/Inventory rests at 841.17 tonnes

Feb 24/no changes in gold inventory at the GLD/Inventory rests at 841.17 tonnes

FEB 23/no changes in gold inventory at the GLD/Inventory rests at 841.17 tonnes

FEB 22/no changes in gold inventory at the GLD/Inventory rests at 841.17 tonnes

FEB 21/no changes in gold inventory at the GLD/Inventory rests at 841.17 tonnes

feb 17/a withdrawal of 2.37 tonnes of gold from the GLD/Inventory rests at 841.17 tonnes

FEB 16/we had no changes in the GLD inventory today/Inventory rests at 843.54 tonnes

Feb 15./another deposit of 2.67 tonnes of gold into the GLD inventory despite another attempted whacking of gold/inventory rests at 843.54 tonnes

FEB 14/another deposit of 4.14 tonnes of gold into the GLD inventory/rests at  840.87 tonnes

FEB 13/another deposit of 4.15 tonnes of gold into the GLD/Inventory rests at 836.73 tonnes

Feb 10/no changes at the GLD/Inventory rests at 832.58 tonnes

feb 9/no changes at the GLD/Inventory rests at 832.58 tonnes

Feb 8/another “deposit” of 5.63 tonnes of gold into the GLD/The addition is a paper addition/total inventory: 832.58 tonnes

Feb 7/another huge fake deposit of 8.30 tonnes of gold into the GLD/the addition is a paper addition and no doubt not physical/ total inventory: 826.95 tonnes

FEB 6/a huge deposit of 7.43 tonnes of gold into the GLD/Inventory rests at 818.65 tonnes

FEB 3/no change in gold inventory at the GLD/Inventory rests at 811.22 tonnes

Feb 2/another huge deposit of 1.48 tonnes/inventory rests at 811.22 tonnes

Feb 1/a huge “deposit” of 10.67 tonnes of gold into the GLD/Inventory rests at 809.74 tonnes.  this should stop GLD from sending gold to Shanghai.

JAN 31/no change in gold inventory at the GLD/Inventory rests at 799.07 tonnes

jan 30/no change in gold inventory at the GLD/Inventory rests at 799.07 tonnes

Jan 27/no changes at the GLD/Inventory rests at 799.07 tonnes

Jan 26/no changes at the GLD/Inventory rests at 799.07 tonnes/

jan 25/another exactly the same withdrawal as yesterday: 5.04 tonnes and again this was used in the whacking of gold today/inventory rests at 799.07 tonnes

jan 24/a huge withdrawal of 5.04 tonnes and probably this was used today in the whacking of gold/inventory rests at 804.11 tonnes

Jan 23/a big change/this time a deposit of 1.19 tonnes of gold into the GLD/inventory rests at 809.15 tonnes.  The drainage of gold from the GLD to Shanghai has now stopped!

Jan 20/no changes in gold inventory a the GLD/Inventory rests at 807.96 tonnes

Jan 19/no changes in gold inventory at the GLD/Inventory rests at 807.96 tonnes

Jan 18/no changes in gold inventory at the GLD/Inventory rests at 807.96 tonnes

Jan 17/17/a deposit of 2.96 tonnes of gold/inventory at the GLD rests at 807.96 tonnes.  I guess there is no more gold inventory to sent to C+Shanghai

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Feb 24/2017/ Inventory rests tonight at 841.17 tonnes
*IN LAST 98 TRADING DAYS: 108.64 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 45 TRADING DAYS: A NET  16.57 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
*FROM FEB 1/2017:    42.10 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory
FEB 27/no change in inventory at the SLV/Inventory rests at 335.281 million oz/
FEB 24/no changes in inventory at the SLV/Inventory rests at 335.281 million oz.
FEB 23/no changes in inventory at the SLV/Inventory rests at 335.281 million oz
FEB 22/no changes in inventory at SLV/inventory rests at 335.281 million oz
FEB 21/a deposit of 568,000 oz into the SLV/Inventory rests at 335.281 million oz
feb 17/2017/again no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz/
FEB 16/we had no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz/
Feb 15./no changes in silver inventory at the SLV/inventory rests at 334.713 million oz
FEB 14/no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz
FEB 13/no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz
Feb 10/no change in silver inventory at the SLV/Inventory rests at 334.713 million oz
Feb 9/no changes in silver Inventory rests at 334.713 million oz
feb 8/No changes in inventory at the SLV/Inventory rests at 334.713 million oz
Feb 7/no change in inventory at the SLV/Inventory rests at 334.713 million oz
Feb 6/a we had no changes at the SLV/Inventory rests at 334.713 million oz
FEB3/ a tiny withdrawal of 136,000 oz to pay for fees etc/inventory rests at 334.713 million oz
Feb 2/no changes in silver inventory at the SLV/Inventory rests at 334.849 million oz
Feb 1/a withdrawal of 948,000 oz from the SLV/Inventory rests at 334.849 million oz
Jan 31.no change in inventory at the SLV/Inventory rests at 335.797 million oz
jan 30/no change in inventory at the SLV/Inventory rests at 335.797 million oz
Jan 27/we had a deposit of 758,000 oz into the SLV/Inventory rests at  335.797 million oz
Jan 26./ a huge withdrawal of 2.369 million oz from the SLV/Inventory rests at 335.039 million oz
Jan 25./another changes at the SLV/Inventory rests at 337.408 million oz
jan 24/ a withdrawal of 948,000 oz at the SLV/Inventory rests at 337.408 million oz
Jan 23/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz
Jan 20/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz
jan 19/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz
Jan 18/no changes in silver inventory/inventory rests at 338.356 million oz/
Jan 17/no change in silver inventory at the SLV/Inventory rests at 338.356 million oz/
.
Feb 27.2017: Inventory 335.281  million oz
 end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 9.0 percent to NAV usa funds and Negative 8.5% to NAV for Cdn funds!!!! 
Percentage of fund in gold 60.1%
Percentage of fund in silver:39.7%
cash .+0.2%( feb 27/2017) 
.
2. Sprott silver fund (PSLV): Premium falls  to -.77%!!!! NAV (Feb 27/2017) 
3. Sprott gold fund (PHYS): premium to NAV falls to  – 0.30% to NAV  ( feb 27/2017)
Note: Sprott silver trust back  into NEGATIVE territory at -0.77% /Sprott physical gold trust is back into NEGATIVE territory at -0.30%/Central fund of Canada’s is still in jail.
 

end

Major gold/silver trading/commentaries for MONDAY

GOLDCORE/BLOG/MARK O’BYRNE

Oscars Debacle – Movies More Costly As Dollar Devalued

  • Cost of Best Picture winners show very significant devaluation of the dollar
  • Average cost to make an Oscar winning film is over $43 million – in gold terms, this is over 106,000 ounces
  • Four $15 million films show nearly 100% difference when priced in gold ounces
  • Oscar fiasco was courtesy of error by accountants PWC
  • Whilst the price of the films remained the same, the cost in gold ounces fell from 11.53% of the cost to make the Departed, in 2009 to just 6.4% in 2012
  • In an error prone, irrational and volatile world, gold retains value over time …

snip20170227_4

The Oscars – the drama of the dollar

Oscars night seemingly sent Warren Beatty and Faye Dunaway a bit La La as they declared the wrong film the winner of the Best Picture Award at the Oscars, last night.

Instead of announcing ‘Moonlight’ as the winner of the industry’s highest accolade, they read out ‘La La Land’. Cue a few awkward moments, no doubt some heads rolling behind the scenes of the Dolby Theatre and a Daily Mail headline of ‘FAKE OSCARS FIASCO.’

Which it wasn’t really, just a bit odd after a very slick night.

Moonlight was the story of a man who grows up unsure and occasionally uncomfortable about who he is. La La Land is a musical love story about a couple trying to make it in LA – a city known for destroying hopes and throwing many hopefuls to the wayside. Both narratives are not unfamiliar to the world in which we find ourselves. Unfortunately our world is not a fantasy and will certainly not be done with our attentions in just over two hours.

When we wrote about the Oscars last week, we asked if they were Worth Their Weight in Gold and concluded that whilst we might dream in gold just like the glitterati, perhaps gold bullion would be a better investment for most of us. We showed that the price of gold has climbed 60 times ever since the first ceremony in 1929, a sobering example of the devaluation of fiat currencies in the last 88 years.

Whilst we think the devaluation of the dollar, and the maintained value of gold is the lesson to take away, there are a number of different lessons actors, directors and studios would like the critics and viewers to believe they can draw from their masterpieces. For some this is about the big bucks and box office numbers, and how they can make or break a film.

We agree, today there a few examples around that really show how little value the dollar carries.

Now that we are on the other side of the most 89th Academy Awards we take a look at what we can learn from last night’s behemoth that was the Oscars and the films that they work to honour.

Cost of making Best Picture

 In the last twenty years, the average cost to make an Oscar winning film is over $43 million. In gold terms it is over 106,000 ounces.

The above graph doesn’t mean very much though, just that the cost of films go up and down, no matter what currency you decide to price it in.

In the decade of the financial crisis, this has come down somewhat and the average is more like $27 million, or 29,600 ounces. This statistic alone shows you how the dollar is falling in real value. Whilst the average cost in US Dollars to make a winning film is 60% in the last decade, compared to the average in the last 20 years, it is just 27% of the 20 year average when priced in gold ounces.

When you rebase to 100, using 2007 as the base year, then you begin to see some interesting results. Conveniently, Martin Scorcese’s 2007 The Departed is the most expensive Best Picture film in the last decade, cost ing $90 million. This was equal to just over 150,000 ounces of gold. No film since then has cost as much. Lincoln was close, costing just 72% of the price of Scorcese’s epic gangster film, but interestingly when priced in gold it cost just 26% percent of the Departed’s gold budget, with 39,000 ounces needed to fund the biopic.

snip20170227_3

The $15 million question

Perhaps as a sign of the times, Best Picture winners have been getting cheaper in recent years. Moonlight cost just $5 million to make, the lowest price for a winning film in at least two decades. It was also the cheapest in terms of gold ounces, costing just 3,997 ounces.

It is when we look at years when films are significantly cheaper that we see real evidence of gold’s purchasing power in the land of stars. Between 2009 and 2012 each Best Picture winner cost $15 million. This is 17% of the cost to make The Departed. One unfamiliar with gold’s ability to hold value would probably think that it costs a similar amount in gold ounces, but unsurprisingly this is not the case.

Whilst the price of the films remained the same, the cost in gold ounces fell from 11.53% of the cost to make the Departed, in 2009 to to just 6.4% in 2012.

snip20170227_2

One can easily conclude that had film financiers bought gold at the start of the financial crisis then there films would have cost far less to make.

Does more money mean more gold?

One would assume that when we hear phrases such as ‘the highest grossing film of all time’, then it’s something Donald Trump would say and you would wonder if it was true or not…or in this day and age maybe you would believe that it is actually the highest grossing film of all time. But when you look at the box office takings in terms of real money, gold, then it tells a different story and this is a case of FAKE NEWS!

Really? Hollywood lied? Yes, we can prove it.

The King’s Speech made the most fiat money at the Box Office in the last ten years, nearly 29% more than the Departed (which comes in second). But it only made 63% of the Departed’s takings, when priced in gold. This means it made less in gold ounces, than the Departed, and yet fiat currencies would have us believe that it was nearly 30% more successful.

This year’s winner, Moonlight, was not only the cheapest film to win in the last decade, but also the lowest in terms of takings. This is true for both dollars and gold ounces. However the percentage difference is drastically different – by over 100%.

Moonlight made 7.4% of the amount the Departed made in 2007 when priced in USD. But when it comes to gold it made just 3.6% of the Departed’s takings.
snip20170227_1


Conclusion – Never trust the favourite…or an accountant … or fiat currencies …

For all of Reagan’s and now, Donald Trump’s talk about ‘draining the swamp’ it seems that maybe Hollywood needs to perhaps consider doing the same. The fault of the Oscar mishap was courtesy of big accountancy firm Price Waterhouse Coopers.

Just a few days ago Martha Ruiz and Brian Cullina, the two PWC bods responsible for handing the correct envelopes to the presenters were interviewed about their roles as the only individuals who know the results before the winners do.

Cullina told the Art and Science blog, “The producers decide what the order of the awards will be. We each have a full set. I have all 24 envelopes in my briefcase; Martha has all 24 in hers. We stand on opposite sides of the stage, right off-screen, for the entire evening, and we each hand the respective envelope to the presenter. It doesn’t sound very complicated, but you have to make sure you’re giving the presenter the right envelope.”

Turns out that it wasn’t as simple as they were hoping to be, hence three producers thanking wives and families for supporting them in making a film that it turned out didn’t win the most coveted Oscar.

The speeches of the losing side were all about how this shows that dreams really can come true. How ironic. It seems a good analogy for what we see today, false investment hopes and false monetary rewards that can ultimately be ripped away on a moments’ notice thanks to some silly administration error by a firm or bank who isn’t held accountable.

The difference with physical gold bullion bars and coins is that it can’t just be made to disappear. You don’t have to worry about a counter party making a mistake and vanishing your hard earned rewards and wealth into thin air.

But, this can be tough to believe when gold is consistently downplayed by the mainstream.

For the last three years the bookies’ favourite has failed to spark the interest of Academy voters when it comes to the Best Picture Award. Boyhood in 2015, The Revenant in 2016, and now La La Land have each been touted as winners but have been left disappointed on the night.

This is very much reflective of the mainstream’s approach to gold. It is consistently dismissed as something that is a bit too kooky to do well and one shouldn’t focus on it in the long-term, instead we should look at stock markets and big tech companies and definitely save in fiat currencies like the dollar, the pound and the euro.

But, as our analysis shows, gold has been the consistent winner alongside all of those Big Picture winners, underdogs or not.

Billion of dollars are ploughed into these films, whether they are huge A-list casts or made up of Indie newbies. While the dollar cost of movies has been falling in recent years – in real terms – in gold terms the cost is rising.

Movie producers, companies and investors should consider owning physical gold in order to hedge the declining value of the dollar and other fiat currencies.

Whilst the price of gold, like any tradeable asset or currency does fluctuate, analyses such as ours above shows that gold retains value over the long term.

end

 

SUPER COMMENTARY TONIGHT FROM CHRIS POWELL, ON WHY CENTRAL BANKS LEASED GOLD AND HOW THEY ORCHESTRATED THAT POWER OVER VALUATIONS OF ALL CAPITAL, GOODS AND LABOUR

 

a must read.

 

(courtesy Chris Powell/GATA)

Central banks may have been evil with gold but not stupid

Section:

10:27a ET Saturday, February 25, 2017

Dear Friend of GATA and Gold:

In commentary yesterday headlined “Will the Fed Tell Every American to Buy Gold Before It Destroys the Dollar?,” Swiss gold fund manager Egon von Greyerz mocked Western central banks for selling so much of their gold at market lows between 1999 and 2004:

https://goldswitzerland.com/will-the-fed-tell-every-american-to-buy-gold…

Von Greyerz suggests that this was errant stupidity by the central banks. But there is a more plausible scenario, a scenario in which the gold sales by Western central banks made perfect sense from their perspective.

..

That is, at the turn of the century Western central banks long had been leasing their gold to financial houses that also operated as bullion banks, purportedly to earn a little interest on a supposedly dead asset. But as Federal Reserve Chairman Alan Greenspan disclosed, perhaps inadvertently, in testimony to Congress in July 1998, the purpose of gold leasing was actually to suppress the price of the monetary metal, which is a competitor to government currencies and a determinant of government bond prices:

https://www.federalreserve.gov/boarddocs/testimony/1998/19980724.htm

Greenspan meant his testimony to discourage Congress from trying to regulate derivatives in the commodity markets — probably because central banks were already manipulating those markets surreptitiously using derivatives and intermediaries, as was indicated years later by reports filed by commodity-exchange operator CME Group with the U.S. Commodity Futures Trading Commission and Securities and Exchange Commission:

http://www.gata.org/node/14385

http://www.gata.org/node/14411

Any serious regulation of commodity derivatives as contemplated by Congress would have risked exposing this market intervention by central banks.

In regard to gold, Greenspan testified: “Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise.”

That is, Greenspan was telling Congress not to worry about the market-manipulating potential of derivatives, and especially not to worry about manipulation of the gold market, because central banks themselves already were using derivatives to keep the commodity markets under control.

The British economist Peter Warburton picked up on this three years later in his essay “The Debasement of World Currency — It Is Inflation, But Not as We Know It”:

http://www.gata.org/node/8303

Warburton wrote that central banks easily could use big financial houses as intermediaries to control the commodity markets with derivatives and thereby prevent monetary inflation from showing up in consumer prices. For an effective hedge against inflation, Warburton wrote, investors would have to find commodities free of futures markets and thus free of the price-suppressive influence of the derivatives trading inspired and underwritten by central banks.

As it turned out, by the year 2000 gold leasing by central banks and the gold carry trade it supported had gone a little too far.

Financial houses had borrowed central bank gold at negligible interest rates, sold it for cash, and invested the cash in government bonds, collecting a handsome spread while helping Western governments support their currencies and bonds. This trade was risk-free trade as long as the financial houses had assurance that central banks would always inject more gold into the market as necessary. But the dishoarding of gold by central banks through the gold carry trade eventually drove the monetary metal’s price so far below the cost of production that production declined, shortages developed, and the market started to reverse upward.

At that point central banks could not recover their leased gold from the financial houses without worsening the shortage, exploding the gold price, and ruining the financial houses. So the central banks began selling gold — or, rather, every few weeks they announced that they were selling gold.

But actually the central banks were only arranging cash settlement of their gold leases and not requiring the gold’s return. This rescued the financial houses the central banks had used as cover for their interventions in the gold market.

Why is this a better explanation of the central bank gold sales that von Greyerz mocks as simple stupidity?

Because during the years in question, even as every few weeks brought another announcement of a central bank gold sale, the gold price nevertheless rose steadily by 60 percent, from roughly $250 to $400:

http://www.infomine.com/investment/metal-prices/gold/all/

The price would not have risen steadily if the gold whose sales were being announced was actually hitting the market.

But the price would have risen steadily if the gold in the purported sales had been leased and sold into the market long before and if the sales being announced were actually just the cancellation of leases on terms favorable to the financial houses.

Yes, Western central banks must have lost a lot of gold in this operation. But they bought themselves and their allied financial houses a couple of decades of supreme power over international politics and markets. And since the central banks retain the power to create infinite money, if they ever run out of the real metal necessary for market rigging, they can create as much money as necessary to repurchase it, run its price up, devalue their currencies to erase the immense and unpayable public debts that have been created by Western governments, and thereby avert a catastrophic debt deflation, as the Scottish economist Peter Millar noted a decade ago they have to do periodically:

http://www.gata.org/node/4843

Then they can renew their gold price suppression scheme for another half century at a more sustainable level and maintain their control over markets.

Western central banks may be the corrupt and even evil instruments of the financial class, and to preserve their power they may be prepared to do any amount of damage to the world, particularly by destroying markets, the engines of humanity’s economic progress.

But stupid? Not when central banks have gained and kept control of the world’s money and thus control of the valuation of all capital, labor, goods, and services in the world. What’s stupid is any society that doesn’t rise up against them or at least demand disclosure of their surreptitious operations.

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

 

END

 

Ralph Benko advocates a gold standard instead of using the USA dollar as the reserve currency

(courtesy Ralph Benko/ Forbes/GATA)

Ralph Benko: Trump should make a beachhead for gold at the Fed

Section:

2:10p ET Saturday, February 25, 2017

Dear Friend of GATA and Gold:

Ralph Benko of the Committee to Unleash Prosperity today describes how President Trump should create a “beachhead” of gold standard advocates on the Federal Reserve Board in pursuit of making America great again. Benko’s commentary is headlined “President Trump: Replace the Dollar with Gold as the Global Currency to Make America Great Again” and it’s posted at Forbes.com here:

https://www.forbes.com/sites/ralphbenko/2017/02/25/president-trump-repla…

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

 

END

How could this be possible?  The Royal Canadian Mint actually lost money last year despite the huge profit margins on the coins they make

(courtesy CBC/Toronto/GATA)

Royal Canadian Mint struggles to make money, documents show

Section:

By Dean Beeby
Canadian Broadcasting Corp. News, Toronto
Saturday, February 25, 2017

The Royal Canadian Mint just isn’t making the money it used to.

Revenue is down sharply, jobs have been chopped, morale is in the tank, and formerly successful lines of business are being shut down — even as the mint spends millions of dollars on new executive offices.

Once a cash cow, the mint — which actually lost money in 2015 — is struggling financially.

Latest figures for the third-quarter of 2016 show that revenues were down by $208 million, or about 27 percent, and profits were down by $6.5 million, or 61 percent.

The weak financials mean the mint’s 1,200 employees likely won’t get their general annual bonus, which is based on meeting corporate profit targets. In April 2016 each worker took home an average of $8,204 in bonuses. …

… For the remainder of the report:

http://www.cbc.ca/news/politics/royal-canadian-mint-coins-silver-bullion…

 

END

 

Art Cashin correctly states that he is worried about central bank interference in the USA markets:

(courtesy Kingworldnews/Art Cashin)

 

Cashin tells KWN he’s worried about central bank interference in the markets

Section:

6:15p ET Sunday, February 26, 2017

Dear Friend of GATA and Gold:

Art Cashin, director of floor operations for UBS at the New York Stock Exchange and a commentator for CNBC, tells King World News today that he is concerned about interference in the markets by central banks. Cashin’s interview is excerpted at KWN here:

http://kingworldnews.com/alert-legend-art-cashin-just-issued-a-dire-warn…

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

 

END

 

Jan (Koos Jansen) has received his Freedom of information on the USA gold audit at the 4 sites including Fort Knox.  There is not doubt that the audit was handled by flunkees and there are serious holes in their report to him

(courtesy Koos Jansed/Bullionstar)

U.S. Mint flunks Koos Jansen’s gold audit document request, refunds his fee

Section:

6:54p ET Sunday, February 26, 2017

Dear Friend of GATA and Gold:

Gold researcher Koos Jansen reports tonight that the U.S. Mint has provided him with some documents in response to his freedom-of-information request for documents related to audits of the U.S. gold reserve but the documents provided are incomplete, redacted, and hundreds of pages short of the number of pages he was told were involved for which he was charged, and so the Mint has refunded his payment.

As the money for his payment was raised by crowdfunding from his readers, Jansen is refunding their contributions.

This is more proof that something dishonest has been going on with the U.S. gold reserve.

Jansen’s report is headlined “U.S. Mint Releases New Fort Knox ‘Audit Documentation’ — the First Critical Observations” and it’s posted at Bullion Star here:

https://www.bullionstar.com/blogs/koos-jansen/us-mint-releases-new-fort-…

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

 

END

 

China is fearing another surge in inflation and as such they are launching another probe into commodity futures

(courtesy zero hedge)

 

Fearing A Surge In Inflation, China Launches Probe Into Commodity Futures, “Distorted” Prices

One and a half years after the Chinese government violently burst the stock market bubble, leading the massive losses among retail investors, and months after China’s third housing bubble since the financial crisis appeared to have peaked, also China has found itself with yet another hot-money funded bubble: commodities. And perhaps in hopes of intercepting this latest mania before it gets too big, overnight China’s top economic planner, the National Development & Reform Commission – not a market regulator, but the core agency behind China’s goalseeked economic data – announced it is investigating whether speculation has “distorted” commodity futures prices, due to concerns that the recent rally will drive inflation higher, according to Bloomberg.

In recent weeks, the NDRC has questioned futures brokers whether “price distortion” had occurred, which is a polite way of saying the buying mania has gone too far. The agency is worried over the potential impact on producer and consumer prices. China’s worries are understandable: with commodity prices surging, whether due to speculators or simply tight supply and rising demand, China’s producer prices soared in January by 6.9%, the highest level since the inflationary scare of 2011.

This is the second time China has intervened in the commodity market in the past year: Beijing tightened rules and raised fees on commodities trading last spring, as it sought to clamp down on a speculative frenzy that spurred a rapid run-up in prices and unprecedented volumes. As shown below, when it comes to commodities in China, traders periodically swarm any given asset class, sending it through the roof, only to pull back once the price starts to drop or when the government hints at an imminent crackdown on buyer euphoria.

Despite the government’s best efforts however, due to an overabundance of hot money, steel and iron ore futures have continued to rise on government stimulus, capacity cuts and a steadying in the economy of the world’s biggest metals consumer. Despite the occasional wipe out, most recently in December…

… the levitation in China’s commodity sector has continued. Steel reinforcement bar on the Shanghai Futures Exchange rose to its best level since Dec. 2013 on Monday, while iron ore on the Dalian Commodity Exchange was close to its May 2014 peak. However, trading in the contracts remains well below last year’s heady heights.

On Sunday, Fang Xinhai, vice chairman of market regulator, the China Securities Regulatory Commission, said that China doesn’t want inflated trading volumes, according to an online transcript.

Suggesting that yet another government intervention in the commodity market may be imminent, he said last year’s crackdown on speculation was “satisfactory” and that regulators will “stick to last year’s philosophy” when it comes to supervising futures. He added that the government will look at new measures to enhance pricing, such as attracting more industrial users to participate in the market.

The NDRC has also consulted with institutions including equity brokers on the outlook for commodity prices, according to Bloomberg’s sources. That’s about as close as Beijing gets to warning the country’s brokers that the Politburo is displeased with how high prices have risen. All else equal, the near-term price path for Chinese commodities is likely lower.

 

Bill Holter tackles how the gold reset might occur.  I believe he is correct

a must read..

(courtesy zero hedge)

“In The Name Of Fairness”, A Very Touchy Subject…

Posted February 25th, 2017 at 9:57 PM (CST) by & filed under Bill Holter.

When it comes to the latest US stance vis-a-vis China’s currency manipulation, the jury is out, and based on two recent statements it is more confused than ever.

Religion and politics, are both hot button issues no matter how you slice it, touchy subjects, if you will. Speaking, or writing about them, usually elicits rage, or anger …especially when they are mentioned together, or connected. Un-noticed by most is a ground shaking occurrence, whereby these two highly explosive issues are being joined at the hip. I do not want to anger anyone over their beliefs, so what I write below is entirely my observations of what is seemingly non-apparent to the financial community and to the public at large.

The issue at hand is a potential game changer; negotiations between the two largest holders of gold in the world; “a deal between china and the vatican”.

It was reported yesterday… the Pope has been in talks with China to advance, or bring into the open the Catholic Church’s presence in China; aka Christianity within the nation.

First, I highly doubt these talks are still in the preliminary stages. Rather, the reported negotiations are probably more of a “trial balloon” to a done deal, substantially already made. As you can see here, there is dissent and fear regarding any deal made. I deeply believe, that on the surface, the “public” side of the argument has far more meaning than meets the eye, maybe I am being too cynical, but I have given what I present here with considerable thought. I have a potential theory, if it is incorrect so be it, but the topic is certainly worth exploring in depth.

Some background; you may remember, that in the middle of last year we had a number of world leaders (including President Xi, Obama and the Pope) publicly mention a common refrain, about a “more equal and fair world, as well as a more equal distribution of wealth in the world”? BINGO!…I took these statements to be a veiled warning, of an upcoming “reset” among nations and peoples, whereby the rich, those country’s on the Dollar Standard, would lose wealth and purchasing power to those countries who’s standard of living suffered under Dollar Inflation (the poor). The most obvious way to accomplish this is seemingly a strategic move to reorganize the world trading standard, or even abolishing the dollar as the world’s reserve currency. This makes sense, as I view it, because the U.S. (West) has advantages when it comes to standard of living via borrowing or outright printing money to consume other countries productivity and natural resources. Please keep this thought in mind while reading further.

No matter what you hear or read about China being a “capitalistic” nation, their roots are Marxist, Socialist, or whatever term you would like to use. “Free market capitalists” they are not,

THESE ARE COMMAND ECONOMIES.

Judging from many statements by the Pope, he is also a socialist and as mentioned,…has also spoken of a “more equal and fair distribution of wealth in the world”. From a political ideology standpoint, the Vatican’s influence under a Jesuit Pope and China ruled by an appointed leader are in many ways very close in their world views, in my opinion.

So, what to make of all this? Is the Pope trying to spread Catholicism and China openly embracing it, or is this happening tied to something much, much deeper in fact? Let’s take a step back and look at a couple of commonalities they each hold. First, they each have, or reach, a huge population of over 1 billion people in some form or another. Combined, Catholics and Chinese represent roughly two of every seven people on the planet, or close to 30%. Let’s call this a huge base, for lack of a better term.

Secondly, and much more important, though not “official”, China is THE largest holder of gold on the planet …followed by none other than; The Vatican! Yes, you may tell me the U.S. is “THE” largest holder of gold, with 8,100 tons and you would be “officially” correct …but wrong in reality, as explained many times prior, as the Fed and Treasury continue to resist an audit of same. On the back of a napkin I can show China accumulating 20,000 tons or more. (You might also not agree the Vatican is a large holder of gold, I would ask, and how exactly were they paid during WWII to aid the travels and passports of refugees?) By the way, Franz Pick said before he died, The Vatican held more gold than anyone could imagine. I can “imagine”.

Do you see the dots connecting here, between China and The Vatican? My assumption is, there is now a joining of the world’s two economic giants, both in size and wealth, which the last I knew equals “power”! Seemingly this coming together by these powerful forces gives rise to the old axiom;

“He Who Has the Gold Makes the Rules.”

Now I have to venture, is this rapprochement between the Vatican and China part and parcel

of a New World Currency Order, whereby the yuan becomes the concentric world reserve currency, in some fashion, tied to the International Monetary funds Special Drawing Right (SDR)? Maybe, but who really wants that albatross around their neck? History has seen nation after nation assume world currency status only to be hollowed out financially and economically after years of abusing the privilege.

I theorize that China and The Vatican will revalue gold to levels unattainable by individuals and making it very difficult for sovereign treasuries and/or central banks to catch up. As the largest holders, they can effectively “make the price” … the higher they make it, the greater their wealth (and thus power)! I have to ask… What if China marks up gold but does not assume reserve currency responsibilities? What if they mark up gold and let the markets decide what each “currency” is worth …versus gold …based on how much gold held?

Please understand this…China has been financially abused by the West for centuries. Silver was devalued at the turn of the 20th century as a way to impoverish China as they were a Silver Nation. If the above is correct, or even close, and gold is revalued, then what will happen to the exchange ratio of silver to gold? Will the current 70-1 ratio hold or will silver be priced closer to God’s ratio of closer to 10-1?

As a side note, do you still wonder why President Trump has called China the “Grand master of currency manipulation”? Does he have a head’s up, or inkling, that a reset is in the works? I suspect he does.

If this theory is correct, at least we will have a true American as president and working on our behalf as opposed to a leader giving up the keys to the kingdom and throwing its people under the bus in the name of “fairness”? The “One World Government,” or “New World Order Types” as they identify themselves, are strongly opposed to the individual liberty movement rearing it’s head here there and everywhere. Seemingly, the “people” have thrown a monkey wrench into their plans for a One World Order; here and there and everywhere. Populism to them is like a rapidly spreading cancer, that must be stopped dead in it’s tracks. My assumption is; THE WORLD IS ABOUT TO BE HUNG ON A CROSS OF GOLD.

(aka, Wm. Jennings Bryan).

Standing watch,

Bill Holter

Holter-Sinclair collaboration

Comments welcome bholter@hotmail.com

 

END

Your early MONDAY 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 WEAKER AT  6.8695(SMALL DEVALUATION SOUTHBOUND   /OFFSHORE YUAN WIDENS   TO 6.8612 / Shanghai bourse DOWN 24.77 POINTS OR .76%   / HANG SANG CLOSED DOWN 40.65 POINTS OR 0.12% 

2. Nikkei closed DOWN 176.07 POINTS OR 0.91%   /USA: YEN FALLS TO 112.08

3. Europe stocks opened MOSTLY IN THE RED     ( /USA dollar index FALLS TO  101.09/Euro UP to 1.0586

3b Japan 10 year bond yield: FALLS TO    +.054%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 112.27/ 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::  54.36  and Brent: 56.48

3f Gold DOWN/Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO  +.197%/Italian 10 yr bond yield DOWN  to 2.146%    

3j Greek 10 year bond yield FALLS to  : 7.11%   

3k Gold at $1255.20/silver $18.36(8:15 am est)   SILVER CLOSE TO RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 69/100 in  roubles/dollar) 57.71-

3m oil into the 54 dollar handle for WTI and 56 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 SMALL   DEVALUATION SOUTHBOUND   from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 112.27 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  1.0072 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0662 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/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT

3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  +.197%

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 2.328% early this morning. Thirty year rate  at 2.955% /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

Global Stocks Drop, Futures Flat; French Yields Slide As Political Jitters Subside

 In a quiet night for markets, in which the top highlight was the Oscar’s historic peddling of best picture “fake news” and where “millions” of Academy members seemingly voted illegally, European stocks were little changed after a selloff that pushed them to a two-week low, while the MSCI Asia index fells as Japan’s Topix dropped for third day. S&P futures were unchanged after hitting a a fresh all time high on Friday. Oil futures gained, with the dollar little changed against a basket of major currencies. Priceline, Albemarle and AES are among companies reporting earnings. Dallas Fed manufacturing activity, durable goods sales data due.

European politics once again drove sentiment, this time higher after French electoral polls boosted the country’s bonds and reports of a potential Scottish independence referendum sank the British pound. The dollar was little changed before a key speech from U.S. President Donald Trump.

French bonds gained for a fourth day, with the 10-year OAT yields hitting a one-month low on Monday, pushing other euro zone sovereign yields lower, while a more cautious mood hung over world stock markets and the dollar, both of which struggled for clear direction.

The fall in French bond yields came as polls (everyone knows how accurate those can be) showed centrist Emmanuel Macron would easily beat far-right candidate Marine Le Pen in May’s presidential election runoff, relieving some fears that have built up in recent weeks among investors. “Macron gained further support in the polls,” said DZ Bank rates strategist Rene Albrecht. “Another important point is that it looks like Hamon and Melenchon won’t merge, so there is less of a chance that we will have a left-wing candidate that could outpace Macron or Fillon.

Over the weekend, French press reported that Socialist lawmaker Christophe Caresche has announced that he will now back Macron, calling him the “only solution to counter effectively Marine Le Pen in the second round of the presidential election”. That follows the news of Francois Bayrou publicly announcing his backing of Macron last week and the latest polls from the weekend suggest a boost to Macron following that. An Odoxa Dentsu poll published yesterday showed Macron as gaining 25% in the first round compared to 19% for Fillon and 27% for Le Pen. The pollster highlighted that this is the first time Macron has taken a 6% lead over Fillon in the first round. In a second round runoff the poll showed Macron as defeating Le Pen by 61% to 39%. The other weekend poll is the Kantar Sofres poll for Le Figaro. It showed a similar trend with Le Pen at 27% in the first round ahead of Macron with 25% and Fillon with 20%. A second round between Le Pen and Macron has the latter coming out on top at 58% to 42%.

Following the latest polls, Oddschecker saw Macron gaining, with his victory odds rising above 42%, while Le Pen remained flat at just over a third.

As a result, France’s 10-year bond yield fell 2.5 basis points to a one-month low of 0.90%, outperforming euro zone peers. Safe-haven German bond yields DE10YT=TWEB edged higher, narrowing the gap between French peers to around 70 basis points, its tightest level in just over a week.

Furthermore, as discussed last night, sterling weakened against all its major peers after The Times reported Prime Minister Theresa May’s team is preparing for Scotland to potentially call for an independence referendum in March. European stocks fell, tracking a negative day across Asian equities.

It will be another week in which Trump can make or break the recent market euphoria. With elections taking place this year in France, the Netherlands and Germany against a backdrop of rising populism, and uncertainties around Trump’s policies, investors have been hanging on every word from central bank officials and politicians. The next focus is set to be the U.S. president’s speech to Congress on Tuesday, which will be parsed for details on spending and tax plans.

“We are concerned that the markets could be heading for a harsh reality check if the Trump administration fails to meet high expectations as reflected in strong equity gains, including risky assets,” Piotr Matys, currency strategist at Rabobank in London, wrote in a note to clients. “It seems to us that the markets are too optimistic, looking from the glass half full perspective and not pricing enough of the negatives.”

In Europe, the French-led fall in bond yields and tightening of spreads over Germany were the most notable moves at the start of a week in which U.S. President Donald Trump’s State of the Union address on Tuesday will loom large. Trump is expected to unveil some elements of his plans to cut taxes in his joint address to Congress.

It was also a mixed bag in stocks. Benchmark European markets were flat, Asian bourses fell and U.S. futures pointed to a slightly higher open on Wall Street. “This morning’s moves follow what was a fairly cautious end to the week on Friday for markets,” said Jim Reid, markets strategist at Deutsche Bank (see full note below). MSCI’s benchmark world stock index slipped 0.1 percent to 444.53 points on course for its first consecutive daily fall for three weeks. On Thursday, it hit a record high of 447.67 points.

The index of the leading 300 European stocks was flat on the day at 1,457 points. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3 percent, near the day’s lows and following Friday’s 0.7 percent fall. The Euro zone’s STOXX 600 index was down -0.3% at last check, at 369. Japan’s Nikkei closed 0.9 percent lower, hitting a 2-1/2 week low on concerns that a stronger yen would crimp corporate earnings.

Though U.S. stocks clawed their way to a higher close on Friday, major indices spent much of that day’s session in negative territory, suggesting increased caution. Yet it was the Dow’s 11th consecutive record high on Friday, which is the longest such run since 1987.

In currencies, the dollar was flat on an index basis. The euro was up 0.2 percent at $1.0580 EUR=, but the dollar was 0.1 percent higher against the yen at 112.30 yen and sterling was down 0.3 percent at $1.2430. In addition to Trump’s address to Congress, rates and the dollar will take their cue this week from Federal Reserve Chair Janet Yellen’s speech on Friday. “In order for the Fed to really have the option of hiking next month, Yellen will have to make a much stronger case relative to what’s been said recently,” Deutsche’s Reid said.

The 10-year U.S. Treasury yield rose 2 basis points to 2.335 percent. On Friday it hit a five-week low of 2.31 percent, and last week’s fall of nearly 11 basis points was the steepest weekly decline since July last year.

In commodities, Brent crude rose 1.15% to $56.62 per barrel while WTI was up 0.8% at $54.42 per barrel as a global supply glut appeared to ease.

Market Snapshot

  • S&P 500 futures down less than 0.1% to 2,364.5
  • STOXX Europe 600 down 0.28% to 368.96
  • MXAP down 0.6% to 144.98
  • MXAPJ down 0.3% to 466.49
  • Nikkei down 0.9% to 19,107.47
  • Topix down 1% to 1,534.00
  • Hang Seng Index down 0.2% to 23,925.05
  • Shanghai Composite down 0.8% to 3,228.66
  • Sensex down 0.2% to 28,824.19
  • Australia S&P/ASX 200 down 0.3% to 5,724.18
  • Kospi down 0.4% to 2,085.52
  • German 10Y yield rose 1.5 bps to 0.201%
  • Euro up 0.2% to 1.0587 per US$
  • Brent Futures up 1.2% to $56.65/bbl
  • Italian 10Y yield fell 3.0 bps to 2.195%
  • Spanish 10Y yield fell 2.2 bps to 1.676%
  • Brent Futures up 1.2% to $56.65/bbl
  • Gold spot down 0.13% to $1,256
  • U.S. Dollar Index down 0.07% to 101.02

Top Overnight News from Bloomberg

  • Last-Minute ‘Moonlight’ Oscar Win Marks Black Film Milestone
  • Buffett Stings Hedge Funds Anew Over Their ‘Misbegotten’ Rewards
  • AbbVie Gets EMA Panel Nod for Shorter Chronic Hep C Combo Course
  • Chevron Says Gorgon Train 2 Resumed LNG Production on Sunday
  • Berkshire Hathaway 4Q Oper EPS $2,665, Est. $2,717
  • Blackstone, Prudential Said to Win in $16 Billion Loan Sale
  • Sasol First-Half Net Income Up 19% to 8.7 Billion Rand Y/Y
  • IMI’s Selway Tells FT U.K. Co. Seeking Acquisition Opportunities
  • Samsung SDI Supplies Batteries for Energy Storage System in U.S.
  • Fortescue, Apollo Said to Bid for $1.5 Billion Wesfarmers Mines
  • Proposed Trump Budget Said to Hike Defense Spending, Cut EPA

Asia equities shrugged off last week’s positive sentiment and traded with a negative tone despite Friday’s last minute record rally on Wall Street as most major bourses in the region traded lower. ASX 200 (-0.3%) was down following weakness in the commodity sector after energy shares were dampened by an initial decline in oil and declines from Friday in which WTI crude futures briefly dropped below USD 54/bbl, while Nikkei 225 (-0.9%) underperformed alongside a firmer JPY. Shanghai Comp. (-0.4%) and Hang Seng (-0.4%) were subdued with participants cautious following another weak PBoC liquidity injection and amid regulatory concerns after the CIRC banned Evergrande Life from stock trading for 1 year, while CSRC Chairman Liu also stated that China is ready for a greater number of IPOs and vowed stricter regulations. 10yr JGBs were higher as the risk averse tone and BoJ presence in the market supported demand for Japanese paper. Furthermore, 5yr yields fell to a 3-month low and the curve flattened amid outperformance in the super long-end.

Top Asian News

  • Hedge Fund Joins Tactical Crowd as Trump Clouds Dollar View
  • China Will Allow More IPOs to Lure Capital, Regulator Says
  • Japan Stocks to Watch: Toshiba, Panasonic, Sumitomo, Mitsubishi
  • GLP Committee in Talks With Shortlisted Parties on Proposals
  • Noble Group FY Net $8.7m Vs $1.7b Loss Y/y

The European Indices trade in the green this morning with the FTSE outperforming currently up 0.4%, being lent a helping hand by the softer GBP. The main headline grabber has been reports that the potential tie up between LSE and Deutsche Boerse could be off the cards. Insurance names have taken a hit in the UK after the UK chancellor changed the discount rate. Elsewhere in Europe, Intesa (+5%) and Generali (-4%) cancelled a possible merger between the two Co.’s which benefitted Intesa shares. Finally, Unilever trade higher amid shareholder pressure to break the company up. The German French spread has traded below 69bps for the first time in ten days after Macron increases his lead in the first round polls for the French election. Italian paper saw underperformance against that of Spain ahead of this morning’s auction and failed to regain any ground in the wake of the results.

Top European News

  • Euro-Area Economic Confidence Climbs to Highest Level Since 2011
  • LSE Says Deutsche Boerse Deal Unlikely After Year-Long Try
  • Deutsche Bank Cuts 2016 Bonus Pool by Almost 80%, FAS Reports
  • Macron Extends Lead Over Fillon, Nears Le Pen in French Race
  • VimpelCom Boosts Dividend After Italy Deal; to Become Veon
  • Agrokor’s Senior Notes Fall to Record Low After Serbian Dispute
  • GAM Shares Gain as Investor RBR Seeks Seats on Company’s Board
  • UniCredit Unexercised Rights Sold for About EU15.1m
  • Anglo Profit Surge Has Little to Do With Commodities Rally
  • BTPs Rally, Following OATs, as Italian Bank Stocks Gain Off Open
  • U.K. Insurers Fall After Government Cuts Ogden Discount Rate

In currencies, the British pound lost 0.3 percent to $1.2422 as of 10:58 a.m. in London after an overnight report from the Times of London that Theresa May was considering a second Scottish referendum. The euro gained 0.2 percent to $1.0582. The Bloomberg Dollar Spot Index was little changed. The gauge fell 0.4 percent last week, its first drop in three weeks. Thin market conditions as FX trading confined to relatively tight ranges. The early focus has been on GBP where talk of another Scottish referendum on independence — perhaps announced in tandem with the triggering of Article 50 – has once again reminded the market of the destabilising effect of Brexit. Cable has tested down through 1.2400 — both in London and Tokyo — but the selling has been well absorbed as yet. Month end flow pushing EUR/GBP higher has also played its part as the cross rate has pierced through 0.8500, but highs set around 0.8534/5 contain for now. In Europe, French election candidate Macron has made some modest gains in the polls (for the first round), and along with the EUR/GBP flow mentioned above has given EUR/USD as modest bid this morning (edging towards 1.0600). USD/JPY continues to hover above the 112.00 level, with the initial test below the figure finding some support. President Trump’s address to Congress tomorrow will put the USD trade ‘on hold’ for now, with UST yields also basing out for now at some key levels to further prop.

In commodities, WTI crude futures rose 0.7 percent to $54.37 a barrel, near the Feb. 23 closing price, which was the highest since July 2015. Gold was little changed at 1,256.21 an ounce. The metal jumped 1.8 percent last week for its fourth straight weekly advance. Gold continues to hold better levels as the USD remains pressured on the dip in yields. However, the flight to safety has also played its part, with the French (and Dutch) elections having also provide a catalyst for demand for the yellow metal. Elsewhere, hedge funds are said to be positioning for a break higher in Crude prices closer in on the curve. This has helped maintain WTI towards the upper end of the recent USD50-55 range, but the recent test through here was met with strong supply. In base metals, Copper prices stay comfortably below the USD2.70 mark, but finding some support on the session, but Nickel and Tin are showing the stronger gains on the day.

Looking at today’s key events, in the US we’ll get a first look at the January durable and capital goods orders data as well as pending home sales and the Dallas Fed manufacturing survey index.

US Event Calendar

  • 8:30am: U.S. durable goods orders, est. 1.7% (pr. -0.5%)
  • 10am: U.S. pending home sales m/m, est. 1%, (pr. 1.6%)
  • 10:30am: Dallas Fed manf. activity, est. 19.4 (pr. 22.1)

* * *

DB’s Jim Reid concludes the overnight wrap

Before we kick off properly this morning, tomorrow marks the 10 year anniversary of the EMR. To mark the occasion we’ll be doing a performance review of the whole period which hopefully will be interesting as the start of the publication coincided with what we think was the start of the global financial crisis given this was when the US subprime bond market was just starting to disintegrate. We’ll also republish the first ever edition from February 28th 2007 if for no other reason than to prevent the touts from trying to sell the first edition on eBay at an exorbitant price.

So 10 years from the origins of the crisis and the truth is that the ramifications are still front and centre in financial markets. Bunds capped a remarkable week by rallying -4.6bps to 0.181bps on Friday (10 years) and -11.7bps on the week. At the short end 2y Bund yields also rallied another -3.3bps to -0.965% on Friday (and a new record low) and so taking the weekly move to -13.4bps and the biggest rally since 2012. A combination of pricing in of political and redenomination risk and a collateral shortage seem to be growing themes. Our European FI strategists think the market is pricing in around a 5% risk of Bunds being redenominated back into DEM. It’s a strange market though as French OATs also rallied on Friday and more or less matched Bunds on the week (10yr -11.1bps) and European equities were fairly flat last week (notwithstanding a weak Friday session which we’ll touch on below) with inflows the highest in over a year in the week to Wednesday. So Bunds seem to be the magnet to any systemic fears at the moment with other markets barely recognising much additional risk.

The main news concerning the French election from the weekend is of another endorsement for Emmanuel Macron. French press are reporting that Socialist lawmaker Christophe Caresche has announced that he will now back Macron, calling him the “only solution to counter effectively Marine Le Pen in the second round of the presidential election”. That follows the news of Francois Bayrou publicly announcing his backing of Macron last week and the latest polls from the weekend suggest a boost to Macron following that. An Odoxa Dentsu poll published yesterday showed Macron as gaining 25% in the first round compared to 19% for Fillon and 27% for Le Pen. The pollster highlighted that this is the first time Macron has taken a 6% lead over Fillon in the first round. In a second round runoff the poll showed Macron as defeating Le Pen by 61% to 39%. The other weekend poll is the Kantar Sofres poll for Le Figaro. It showed a similar trend with Le Pen at 27% in the first round ahead of Macron with 25% and Fillon with 20%. A second round between Le Pen and Macron has the latter coming out on top at 58% to 42%.

The other notable weekend news concerns comments from Treasury Secretary Steven Mnuchin. Speaking on Fox News TV, Mnuchin said that at the much anticipated Trump speech this week to a joint session of Congress on Tuesday night the President will be using it to preview some of his sweeping plans to cut taxes and also simplify the tax system. Mnuchin hinted that the President’s budget will not touch social welfare programs such as Social Security and Medicare or cuts to any other big entitlement programs. The Treasury Secretary didn’t give much away on the proposed border tax, saying that he was “still studying very carefully” the proposal. Mnuchin added that “there are certain aspects that the president likes about the concept of a border adjusted tax” and that “there are certain aspects that he’s very concerned about”.

Trump’s speech is almost certainly the main event for markets this week although there’s still a relatively packed data docket to get through with the final PMI’s in Europe to be confirmed on Friday, a second reading of Q4 GDP in the US tomorrow and also an economic outlook speech by Fed Chair Yellen on Friday in Chicago. On that it’s worth noting that the March hike probability did steadily climb last week to 40% on Friday from 34% the week prior based on Bloomberg’s calculator but you’d imagine that in order for the Fed to really have the option of hiking next month, Yellen will have to make a much stronger case relative to what’s been said recently.

Ahead of that, this morning in Asia it’s been a relatively soft start to the week for markets. The Nikkei (-0.94%), Kospi (-0.36%) and ASX (-0.31%) in particular are all in the red while the Hang Seng and Shanghai Comp have also just turned negative after a more resilient start perhaps reflecting the news from China’s securities regulator that it is looking to allow for more IPO’s in China, suggesting increased confidence in the market’s recovery from the 2015 rout. Meanwhile the focus in FX this morning has been on Sterling which has fallen -0.32% after the UK Times reported that PM May is preparing for the Scottish government to call another independence referendum to coincide with the triggering of Article 50 next month. Elsewhere it’s been a fairly quiet start for commodities while Asia bond markets have generally echoed the strength from Friday.

This morning’s moves in Asia follow what was a fairly cautious end to the week on Friday for markets. With an uncertain political environment bubbling away the European session in particular was weak and that was evident through a -0.76% decline for the Stoxx 600 which was the sharpest fall since the end of January. The DAX also tumbled -1.20% while France’s CAC retreated -0.94%. Perhaps also reflecting some disappointment at the lack of details from Mnuchin’s interview on Thursday it had looked like US equity markets might follow a similar route before a late surge into the close helped both the S&P 500 (+0.15%) and Dow (+0.05%)  just about hold onto gains. Notably that is now the 11th consecutive record high for the Dow which is the longest such run since 1987. The fairly cautious mood though was still reflected in the strong rally for Gold (+0.61%) while base metals also generally rebounded from losses on Thursday. Like their European counterparts, US Treasuries also had a strong day with 10y yields finishing the day -6.0bps lower at 2.313% and the lowest closing yield since November.

Friday’s economic data didn’t really add much to proceedings. In the US we learned that new home sales in January rebounded a slightly less than expected +3.7% mom (vs. +6.4% expected). The University of Michigan’s consumer sentiment reading was meanwhile revised up 0.6pts to 96.3 in February albeit still a couple of points below its January reading. In France we learned that consumer confidence was stable in February while in the UK the BBA recorded a modest rise in home loans in January.

Before we wrap up, in a report published this morning Wolf von Rotberg on our European equity strategy team highlights the likely winners and losers among European corporates from a US tax reform that would see the introduction of a border tax adjustment in exchange for a lower corporate statutory rate. He finds that such a reform would reduce net profits for the 70 European companies most exposed to the US by an average of 5%, implying a net negative impact of around 1% on Stoxx 600 earnings overall. At the European sector level, he identifies that autos are the biggest losers, while earnings for health care equipment, construction materials and food retail could see a minor uplift.

On to this week’s calendar now. It’s a quiet start to the week in Europe this morning with just February confidence indicators for the Euro area due out. In the US this afternoon we’ll get a first look at the January durable and capital goods orders data as well as pending home sales and the Dallas Fed manufacturing survey index. Tuesday kicks off in Japan where the latest retail sales, housing starts and industrial production data are due. In the European session we’ll get France CPI, PPI and Q4 GDP and the February CPI estimate for the Euro area. Over in the US it’s all eyes on the second reading of Q4 GDP, while core PCE, wholesale inventories, advance goods trade balance, S&P/Case Shiller house price index, Chicago PMI and Richmond Fed manufacturing survey round out a busy day of releases. In Asia on Wednesday the early focus is on the official manufacturing and services PMI’s in China. Over in Europe we’ll then get the final February manufacturing PMI’s followed by CPI in Germany and UK credit and money aggregates data. In the US there is more important data in the form of the January core and deflator PCE readings, ISM manufacturing, construction spending, vehicles sales and the final manufacturing PMI. Thursday looks set to be quieter with just Euro area PPI due in the morning and initial jobless claims in the US. We end the week on Friday in Japan with CPI and the latest employment numbers. China will also release the Caixin services and composite prints. In Europe we get the remaining services and composite PMI revisions for February as well as Euro area retail sales. The final services and composites are  then due in the US alongside the ISM non-manufacturing print.

Away from the data the Fedspeak during the week consists of Kaplan today, Williams and Bullard on Tuesday, Kaplan and Brainard on Wednesday and then a bumper day on Friday headlined by Fed Chair Yellen when she gives an economic outlook speech in Chicago. Fischer, Powell, Evans, Lacker and Mester will also speak. Away from that, arguably the biggest event of the week is President Trump’s address to a joint session of Congress at 9pm ET in the US on Tuesday (early Wednesday morning in the UK). Also worth noting is the House of Lords debate on Brexit where talks are due to start about a more detail examination of the proposed bill.

3. ASIAN AFFAIRS

i)Late  SUNDAY night/MONDAY morning: Shanghai closed DOWN 24.77 POINTS OR .76%/ /Hang Sang CLOSED DOWN 40.65 POINTS OR 0.17% . The Nikkei closed DOWN 176.09 POINTS OR 0.91% /Australia’s all ordinaires  CLOSED DOWN 0.76%/Chinese yuan (ONSHORE) closed UP at 6.8695/Oil ROSE to 54.36 dollars per barrel for WTI and 56.48 for Brent. Stocks in Europe MOSTLY IN THE RED. Offshore yuan trades  6.8612 yuan to the dollar vs 6.8695  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  NARROWS A BIT AS POBC ATTEMPTS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN WEAKER AS IS OFFSHORE YUAN COUPLED WITH THE WEAKER DOLLAR

3a)THAILAND/SOUTH KOREA/NORTH KOREA

The sooner he is removed, the better;

(courtesy zero hedge)

North Korea Executes Five Officials With Anti-Aircraft Guns

One week ago, following news that China had banned coal imports from North Korea in retaliation to Kim Jong Un’s latest ballistic missile test, we mused that North Korea’s regime appears to be in jeopardy, even though we had no explicit knowledge of tensions inside the top echelons of the country’s political system. It now appears that those concerns may have been justified.

According to AP, North Korea executed five senior security officials with anti-aircraft guns because they made false reports that “enraged” leader Kim Jong Un, South Korea’s spy agency said Monday.  The spy agency told lawmakers that five North Korean officials in the department of recently purged state security chief Kim Won Hong were executed by anti-aircraft guns because of the false reports to Kim, South Korean lawmaker Lee Cheol Woo said. It’s not clear what false reports they allegedly made, and the NIS didn’t say how it got its information as South Korean spies have a spotty record when reporting about high-level events in its authoritarian neighbor to the north.

North Korea fired Kim Won Hong in January, presumably over corruption, abuse of power and torture committed by his agency, Seoul said earlier this month. The fallen minister had been seen as close to Kim Jong Un. North Korea has not publicly said anything about Kim Won Hong or about the alleged executions in his department. Lee also cited the NIS as saying that Kim Won Hong’s dismissal was linked to those false reports, which “enraged” Kim Jong Un when they were discovered.

The comments by South Korea’s National Intelligence Service in a private briefing to lawmakers come as Malaysia investigates the poisoning death of Kim’s estranged elder half brother, Kim Jong Nam. That investigation is still going on, but South Korea says it believes Kim Jong Un ordered the assassination, which took place Feb. 13 at Kuala Lumpur’s airport. According to an earlier report by CNN, Kim Jong-un ordered two North Korean ministries to orchestrate the plot.

“The assassination of Kim Jong Nam was an act of systematic terror ordered by Kim Jong Un,” South Korean lawmaker Kim Byung-kee said in a televised address. “The operation was conducted with two assassination groups and one supporting group.” Kim Jong-nam was killed earlier this month in a Malaysian airport. Two women were seen on video smearing a substance, identified as VX nerve agent, on his face in the airport.

North Korea has said it was not involved in the murder of Kim Jong-nam and claimed South Korean media is putting out “fake news.” That said, since taking power in late 2011, Kim Jong Un has reportedly executed or purged a large number of high-level government officials in what rival Seoul has called a “reign of terror.”

Furthermore, this isn’t the first time Kim has resorted to such a dramatic form of execution: in May 2015, the country used an anti-aircraft gun to execute its defense minister who had been caught napping. That particular execution was witnessed by hundreds of people, and was meant to send a clear signal by the country’s ruler. It has been speculated that Kim Jong Un brings out the “heavy artillery”, so to speak any time he feels particularly threatened and uses this dramatic method of termination to subdue any perceived growing opposition. Which in light of recent events, would be understandable, and would suggest that the risk of a North Korean coup is substantially higher than some may think.

end

b) REPORT ON JAPAN

none today

c) REPORT ON CHINA

none today

4. EUROPEAN AFFAIRS

EU/Target 2 imbalances

 

The following is a must read.  I have been highlighting to you over the past several years, the problems in Europe with the huge target 2 imbalances.  Because we have various countries using the same currency, it would bound to happen that one country would get surplus balances of euros and the poorer countries would accumulate deficits.  And that is what is happening:  Germany and Luxembourg have huge positive balances, with Germany at 795 billion euros and Luxembourg at 175 billion. Italy has the worse deficit at 357 billion euros followed by Spain’s 328/  Deficits occur when two things happen:

  1. trade goes one way i.e. Germany exports to Italy but Italy does not export to Germany.
  2. Citizens realize that their country’s finances’s are awful and they sell their Italian accounts and move them over to Germany etc.

ladies and gentlemen;  the European debt bomb (target 2) has been lit

(courtesy Mish Shedlock/Mishtalk)

 

The European Debt Bomb Fuse Is Lit! Target2 Imbalances Hit Crisis Levels

Submitted by Mike Shedlock via MishTalk.com,

Eurozone Target2 imbalances have touched or exceeded the crisis levels hit in 2012 when Greece was on the verge of leaving the Eurozone. Others have noted the growing imbalances as well.

I had a couple of questions for the ECB regarding Target2, which they have answered, I believe disingenuously.

First, we will explain Target2, then we will take a look at various charts, viewpoints, and the email exchange with the ECB.

Target2 Background

Target2 stands for Trans-European Automated Real-time Gross Settlement System. It is a reflection of capital flight from the “Club-Med” countries in Southern Europe (Greece, Spain, and Italy) to banks in Northern Europe.

Pater Tenebrarum at the Acting Man blog provides this easy to understand example: “Spain imports German goods, but no Spanish goods or capital have been acquired by any private party in Germany in return. The only thing that has been ‘acquired’ is an IOU issued by the Spanish commercial bank to the Bank of Spain in return for funding the payment.

This is not the same as an auto loan from a dealer or a bank. In the case of Target2, central banks are guaranteeing the IOU.

Target2 also encompasses people yanking deposits from a bank in their country and parking them in a bank in another country. Greece is a nice example, and the result was capital controls.

If Italy or Greece (any country) were to leave the Eurozone and default on the target2 balance, the rest of the countries would have to make up the default according to their percentage weight in the Eurozone.

Target2 Imbalances

target2-2017-02-23

Those numbers are as of December 2016. A check of the Bundesbank Target2 Balance as of January 31, 2017 shows a new record high of €797 billion.

As of December 2016, if Italy were to exit the Eurozone, Italy would owe €356.6 billion to Germany, Luxembourg, and a couple other small creditors.

What’s the likelihood Italy could ever pay back €356.6 billion?

Unpayable debts

Ambrose Evans-Pritchard at the Telegraph notes the unpayable debts then asks Are Eurozone Central Banks Still Solvent?

Vast liabilities are being switched quietly from private banks and investment funds onto the shoulders of taxpayers across southern Europe. It is a variant of the tragic episode in Greece, but this time on a far larger scale, and with systemic global implications.

There has been no democratic decision by any parliament to take on these fiscal debts, rapidly approaching €1 trillion. They are the unintended side-effect of quantitative easing by the European Central Bank, which has degenerated into a conduit for capital flight from the Club Med bloc to Germany, Luxembourg, and The Netherlands.

This ‘socialization of risk’ is happening by stealth, a mechanical effect of the ECB’s Target2 payments system. If a political upset in France or Italy triggers an existential euro crisis over coming months, citizens from both the eurozone’s debtor and creditor countries will discover to their horror what has been done to them.

As always, the debt markets are the barometer of stress. Yields on two-year German debt fell to an all-time low of minus 0.92pc on Wednesday, a sign that something very strange is happening. “Alarm bells are starting to ring again. Our flow data is picking up serious capital flight into German safe-haven assets. It feels like the build-up to the eurozone crisis in 2011,” said Simon Derrick from BNY Mellon.

german-2-year-yield

The Target2 system is designed to adjust accounts automatically between the branches of the ECB’s family of central banks, self-correcting with each ebb and flow. In reality, it has become a cloak for chronic one-way capital outflows.

Private investors sell their holdings of Italian or Portuguese sovereign debt to the ECB at a profit, and rotate the proceeds into mutual funds Germany or Luxembourg. “What it basically shows is that monetary union is slowly disintegrating despite the best efforts of Mario Draghi,” said a former ECB governor.

The Banca d’Italia alone now owes a record €364bn to the ECB – 22pc of GDP – and the figure keeps rising.

Spain’s Target2 liabilities are €328bn, almost 30pc of GDP.  Portugal and Greece are both at €72bn. All are either insolvent or dangerously close if these debts are crystallized.

On the other side of the ledger, the German Bundesbank has built up Target2 credits of €796bn. Luxembourg has credits of €187bn, reflecting its role as a financial hub. This is roughly 350pc of the tiny Duchy’s GDP, and fourteen times the annual budget.

Mish Questions for the ECB – January 27, 2017

Many media reports suggest the growing target2 imbalance in Italy is a sign of capital flight. ECB president Mario Draghi