August 1/2017/Senator Lindsay Graham: “USA IS PREPARED TO STRIKE NORTH KOREA”/GOLD UP $4.95 BUT SILVER FLAT/GOLD AND SILVER EQUITY SHARES FALL AGAIN/CHAOS RUNS SUPREME IN VENEZUELA/USA SANCTIONS ONLY MADURO SO FAR/GENERAL MOTORS REPORTS HUGE DROP IN AUTOS/ALSO USA REPORTS BIG DROP IN CONSTRUCTION SPENDING/

GOLD: $1272.95  UP $4.95

Silver: $16.79  UP 0 cent(s)

Closing access prices:

Gold $1269.00

silver: $16.74

SHANGHAI GOLD FIX:  FIRST FIX  10 15 PM EST  (2:15 SHANGHAI LOCAL TIME)

SECOND FIX:  2:15 AM EST  (6:15 SHANGHAI LOCAL TIME)

SHANGHAI FIRST GOLD FIX: $1275.01 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  $1270.25

PREMIUM FIRST FIX:  $4.76

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SECOND SHANGHAI GOLD FIX: $1274,31

NY GOLD PRICE AT THE EXACT SAME TIME: $1269.35

Premium of Shanghai 2nd fix/NY:$5.01

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LONDON FIRST GOLD FIX:  5:30 am est  $1267.05

NY PRICING AT THE EXACT SAME TIME: $1267.70 

LONDON SECOND GOLD FIX  10 AM: $1270.95

NY PRICING AT THE EXACT SAME TIME. $1273.00 

For comex gold:

AUGUST/

NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH: 1309 NOTICE(S) FOR 130,900  OZ.

TOTAL NOTICES SO FAR: 2946 FOR 294600 OZ (9.1632 TONNES) 

For silver:

AUGUST

 71 NOTICES FILED TODAY FOR

355,000  OZ/

Total number of notices filed so far this month: 304 for 1,520,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Yesterday I wrote the following:

“On yesterday’s (Friday’s) commentary I thought we were going to have a raid today. I noticed that the gold/silver equity shares sold off badly yesterday and that is a sure sign that an attack will occur. Probably our crooks were blindsided today with the failure of the Republicans to pass the healthcare bill as well as lousy GDP report, the all important wage inflation is non existent and the passing of new sanctions against Russia. And then we can couple all of this with the new launching of a ICBM that could hit New York and Boston…and yet with all of that news, the gain in gold was less than 10 dollars and silver, 11 cents. However today again, the gold/silver equity shares fell off badly on closing and we have only Monday morning for options expiry. There has never been any time during any options expiry that the crooks have not generated a raid. So if they fail to raid on Monday, they are losing control as demand is far outstripping supply in our precious metals.

it now looks like the boys have lost control of the gold/silver market/for sure silver with today’s attempted raid and failure. The bankers have decided to take their anger by hitting on the gold/silver equity shares.

end

Let us have a look at the data for today

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In silver, the total open interest surprisingly  ROSE BY 862 contracts from 206,781 up to 207,643 WITH THE GOOD RISE IN PRICE THAT SILVER TOOK WITH RESPECT TO YESTERDAY’S TRADING (UP 9 CENT(S). IT SURE LOOKS LIKE BOTH THE SPECULATOR SHORTS AND THE BANKER SHORTS ARE HAVING SEVERE PROBLEMS TRYING TO COVER THEIR SHORTFALL BUT IT IS TO NO AVAIL. THE LONGS REMAIN STOIC AND NOTHING WILL BUDGE OUR SILVER LEAVES FROM DEPARTING OUR SILVER TREE. TODAY’S TRADING IS EVIDENCE OF THAT

 In ounces, the OI is still represented by just OVER 1 BILLION oz i.e.  1.038 BILLION TO BE EXACT or 148% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 71 NOTICE(S) FOR 355,000  OZ OF SILVER

In gold, the open interest fell by 2,686 with the fall in price of gold to the tune of $1.60 yesterday.  The new OI for the gold complex rests at 436,962. Yesterday we had some banker short covering but it was minimal and this was accompanied by some longs entering the arena sensing danger due to the firing of that ICBM missile by North Korea. The shorts tried their best on the last day of options expiry to nullify any gains from option traders. The result a small open interest fall with that fall in price.

we had, ON second DAY NOTICE: 1309 notice(s) filed upon for 130,900 oz of gold.

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

GLD:

Today, no changes in gold inventory

Inventory rests tonight: 791.88 tonnes

IN THE LAST 13 DAYS: GLD SHEDS 45.62 TONNES YET GOLD IS HIGHER BY $49.50 . GO FIGURE!!

SLV

Today: : WE HAD A BIG CHANGES IN SILVER INVENTORY TONIGHT: ANOTHER WITHDRAWAL OF 945,000 OZ

INVENTORY RESTS AT 341.732 MILLION OZ

end

.

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

1. Today, we had the open interest in silver ROSE BY 862 contracts from 206,781 up to 207,643 (AND now A LITTLE CLOSER TO THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787). THE RISE IN OPEN INTEREST WAS ACCOMPANIED BY  THE RISE IN SILVER PRICE  WITH RESPECT TO YESTERDAY’S TRADING  (UP 9 CENTS ). NO DOUBT WE WITNESSED MORE SPEC LONGS ENTER THE ARENA (with political unrest) WITH THE MAJORITY OF THE  SPEC LONGS AGAIN BASICALLY REMAINING STOIC. THE SPEC LONGS SEEM TO BE TAKING ON THE BANKERS. THE SPEC SHORTS ARE DESPERATE TO COVER THEIR SHORTFALL BUT THEY ARE COMING IN CONTACT WITH  HUGE NEW SPEC LONGS AND THAT DROVE THE PRICE HIGHER . THE BANKERS HAD NO CHOICE BUT TO COVER SOME OF THEIR MASSIVE  SHORT PAPER DESPITE THE HIGHER PRICE OF SILVER. THE NET RESULT A COMEX SILVER OPEN INTEREST RISE

(report Harvey)

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS

i)Late MONDAY night/TUESDAY morning: Shanghai closed UP 19.61 POINTS OR 0.60%   / /Hang Sang CLOSED UP 216.24 POINTS OR 0.79% The Nikkei closed UP 60.61 POINTS OR .30%/Australia’s all ordinaires CLOSED UP 0.81%/Chinese yuan (ONSHORE) closed UP at 6.7203/Oil UP to 50.14 dollars per barrel for WTI and 52.48 for Brent. Stocks in Europe OPENED IN THE GREEN , Offshore yuan trades  6.7234 yuan to the dollar vs 6.7203 for onshore yuan. NOW THE OFFSHORE IS WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN  STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS  STRONGER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY STRONGER DOLLAR. CHINA IS HAPPY TODAY   

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA/CHINA/USA

NORTH KOREA/USA

Senator Lindsay Graham stated on TV this morning that Trump is prepared to strike North Korea and the military option is to destroy North Korea

 

( zero hedge)

b) REPORT ON JAPAN

c) REPORT ON CHINA

Very important:  It seems China is in need of dollars as it is asking large Anbang Insurance to sell its overseas assets and repatriate dollars.  They can do this slowly as there is ample buyers for its overseas holdings.  However if forced on a quick sale, it may become systemic

 

( zero hedge)

4. EUROPEAN AFFAIRS

i)EU/GERMANY/RUSSIA/USA

Berlin and the EU call for countermeasures against the uSA sanctions against Russia.  This is the first time that sanctions against Russia has been initiated without the counsel of Europe. Of course, as we have stated many times the real reason for the sanctions is to stop the Nord Stream 2 gas pipeline into Europe which will solidify Russia’s business in the west.

( zero hedge)

ii)UK Banks

UK banks may need at least $50 billion in new capital to fund projects after Brexit.  The extra capital will be needed because the banks will lose their privilege  in Europe’s single market/

(courtesy Jones/Morris/Bloomberg)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

6 .GLOBAL ISSUES

7. OIL ISSUES

i)Goldman Sachs states that an oil embargo against Venezuela will have little impact on the west but it will certainly hurt Venezuela’s bottom line

( zero hedge)

ii)At 5 pm WTI tumbles after a good sized crude inventory build

( zero hedge)

8. EMERGING MARKET

VENEZUELA

The country now is in total chaos with the arrest of the two opposition leaders Leopoldo Lopez and Antonio Ledezma.  Their economy has now crashed by 32% this year. It looks like Venezuela will now turn to Russia and China.  As we have stated to you in the past the state oil company has considerable downstream oil assets in the USA (CITGO)  of which 49% of the assets as have pledged to Russia’s Rosneft

(courtesy zero hedge)

9.   PHYSICAL MARKETS

i)Avery Goodman believes that we are range bound for the next two weeks.  He believes that the bankers have stopped the panic so far.

 

(COURTESY AVERYGOODMANBLOG)

ii)A super commentary by Koos Jansen.  He estimates that total Chinese gold reserves (citizens and sovereign surpasses 20,000 tonnes

 

( Koos Jansen/GATA)

iii)A huge commentary from Ronan Manly who has documented what we have been telling you:  that roughly 4200 tonnes of good delivery bars have left to west for the East, mainly Shanghai, Hong Kong and Russia

 

( Bullion Star/Ronan Manly)

iv)The LBMA states that their vaults contain 7500 tonnes.  The big question is how much of this gold is encumbered
( London’s Telegraph/GATA)

10. USA Stories

i)An extremely important data point for the uSA and this is a hard data entry.  Personal income slumps to its weakest level in over a year
( zerohedge)

ii)General Motors announces a huge drop of 15% in sales.  On top of that dealer inventory rises to an all time high.  Not good for the economy;( zero hedge)

ii b) Both Ford and GM sales falter badly despite record July incentive spending

 

(courtesy zero hedge)

iii)Soft Data Manufacturing ISM data disappoints

( zero hedge)

iiib)Hard data USA construction spending has just collapsed as it rose by a tiny 1.6% year over year

( zerohedge)

( zero hedge)

Let us head over to the comex:

The total gold comex open interest FELL BY 2,686 CONTRACTS DOWN to an OI level of 436,962 WITH THE FALL IN THE PRICE OF GOLD ($1.60 with YESTERDAY’S trading).

We are now in the contract month of August and it is the 3rd best of the delivery months after December and June.

The active August contract LOST 4049 contract(s) to stand at 4262 contracts. We had 1,637 notices filed upon yesterday so we lost 2412 contracts or an additional 241,100 oz will not stand at the comex but 2412 EFP’s were issued which entitles the long holder to a fiat bonus plus a futures contract and most probably that would be a London based forward.

The non active September contract month saw it’s OI rise by 328 contracts up to 1889.

The next active contract month is Oct and here we saw a rise of 486 contracts up to 43,097.

The very big active December contract month saw it’s OI rise by 46 contracts up to 336,682.

We had 1309 notice(s) filed upon today for   130,900 oz

For those keeping score: in the upcoming front delivery month of August:

LAST YEAR WE HAD A MONSTROUS 44.7 TONNES OF GOLD INITIALLY.  BY THE CONCLUSION OF THE AUGUST CONTRACT MONTH 44.358 TONNES STOOD FOR DELIVERY.

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And now for the wild silver comex results.  Total silver OI ROSE BY  862 contracts FROM 206,781 up to 207,643 WITH YESTERDAY’S 9 CENT GAIN (AND DESPITE CONSTANT TORMENT THESE PAST FEW WEEKS). OUR BANKER FRIENDS ARE DESPERATELY TRYING TO COVER THEIR SHORTS IN SILVER BUT AS YOU CAN SEE FROM THE COT REPORT THAT  THEY HAVE NOT BEEN AS SUCCESSFUL AS THEY WOULD HAVE LIKED. THE SHORT SPECULATORS WERE ALSO TRYING TO COVER THEIR SHORTS ALONG WITH THE BANKERS BUT TO NO AVAIL. THE BANKERS WERE FORCED TO COVER A TINY AMOUNT OF THEIR MASSIVE SHORTFALL DESPITE THE HIGHER PRICE OF SILVER. HOWEVER THAT DID NOT STOP A HUGE DELIVERY FOR SILVER IN THE UPCOMING NON ACTIVE MONTH OF AUGUST (SEE BELOW)

We are now in the next big non active silver contract month of August and here the OI SURPRISINGLY FELL BY ONLY 24 contracts. We had 233 notices filed yesterday.  Thus we gained a huge 205 contracts or an additional 1,025,000 oz will stand.  We are proceeding again where we left off last month (July) and the month before that (June), and finally the month before that(May), where the amount standing increases as the month proceeds and it begins right on day 2.

The next active contract month is September (and the last active month until December) saw it’s OI fall by 2193 contacts down to 139,907.  The next non active contract month for silver after September is October and here the OI picked up its first 20 contacts. After October, the big active contract month is December and here the OI rose by 2925 contracts up to 58,221 contracts.

We had 71 notice(s) filed for 355,000 oz for the AUGUST 2017 contract

VOLUMES: for the gold comex

Today the estimated volume was 211,284 contracts which is GOOD/

Yesterday’s confirmed volume was 183,656 contracts  which is FAIR

volumes on gold are STILL HIGHER THAN NORMAL!

Initial standings for AUGUST

 August 1/2017.

Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
nil oz
Deposits to the Dealer Inventory in oz   oz
Deposits to the Customer Inventory, in oz 
nil
No of oz served (contracts) today
 
1,309 notice(s)
130,900 OZ
No of oz to be served (notices)
2953 contracts
(295,300 oz)
Total monthly oz gold served (contracts) so far this month
2946 notices
294,600 oz
9.1632 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   185,392.5 oz
Today we HAD  0 kilobar transaction(s)/ 
s
total dealer deposits: nil oz
We had nil dealer withdrawals:
total dealer withdrawals:  0 oz
we had 0  customer deposit(s):
total customer deposits; nil  oz
We had 0 customer withdrawal(s)
total customer withdrawals;  nil oz
 we had 1 adjustment(s)
Out of International Depository of Delaware:  57,897,810 oz is transferred from the customer side to the dealer of IDD
 
For AUGUST:

Today, 0 notice(s) were issued from JPMorgan dealer account and 1074 notices were issued from their client or customer account. The total of all issuance by all participants equates to 1309  contract(s)  of which 0 notices were stopped (received) by j.P. Morgan dealer and 64 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.

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To calculate the initial total number of gold ounces standing for the AUGUST. contract month, we take the total number of notices filed so far for the month (2946) x 100 oz or 294,600 oz, to which we add the difference between the open interest for the front month of AUGUST (4262 contracts) minus the number of notices served upon today (1309) x 100 oz per contract equals 589,900  oz, the number of ounces standing in this active month of AUGUST.
 
Thus the INITIAL standings for gold for the AUGUST contract month:
No of notices served so far (2946) x 100 oz  or ounces + {(4262)OI for the front month  minus the number of  notices served upon today (1309) x 100 oz which equals 589,900 oz standing in this  active delivery month of AUGUST  (18.348 tonnes)
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Total dealer inventory 758,510.492 or 23.59 tonnes  (dealer gold continues to disappear)
Total gold inventory (dealer and customer) = 8,660,614.684 or 269.38 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 269.38 tonnes for a  loss of 34  tonnes over that period.  Since August 8/2016 we have lost 85 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 11 MONTHS  85 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE AUGUST DELIVERY MONTH
 
August initial standings
 August 1 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
138,351.110 oz
Brinks
CNT
Deposits to the Dealer Inventory
nil  oz
Deposits to the Customer Inventory 
 1,986.43
oz
HSBC
No of oz served today (contracts)
71 CONTRACT(S)
(355,000 OZ)
No of oz to be served (notices)
298 contracts
( 1,490,000 oz)
Total monthly oz silver served (contracts) 304 contracts (1,520,000 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 4,139,916.7 oz
today, we had  0 deposit(s) into the dealer account:
total dealer deposit: nil   oz
we had 0 dealer withdrawals:
total dealer withdrawals: NIL oz
we had 1 customer withdrawal(s):
i) Out of Brinks:  3979.200 oz
ii) out of CNT: 135,361,910 oz
TOTAL CUSTOMER WITHDRAWALS:  138,351.11 oz
We had 1 Customer deposit(s):
 i) Into HSBC :1986.43 oz
***deposits into JPMorgan have stopped  again
In the month of March and February, JPMorgan stopped (received) almost all of the comex silver contracts.
why is JPMorgan bringing in so much silver??? why is this not criminal in that they are also the massive short in silver
total customer deposits: 1,986.43 oz
 
 we had 0 adjustment(s)
The total number of notices filed today for the AUGUST. contract month is represented by 71 contract(s) for 355,000 oz. To calculate the number of silver ounces that will stand for delivery in AUGUST., we take the total number of notices filed for the month so far at 304 x 5,000 oz  = 1,520,000 oz to which we add the difference between the open interest for the front month of AUGUST (369) and the number of notices served upon today (71) x 5000 oz equals the number of ounces standing
 

 

.
 
Thus the INITIAL standings for silver for the AUGUST contract month:  304 (notices served so far)x 5000 oz  + OI for front month of AUGUST(369 ) -number of notices served upon today (71)x 5000 oz  equals  3,010,000 oz  of silver standing for the AUGUST contract month. This is extremely high for a non active delivery month. Silver is being constantly demanded at the silver comex and we witness again the amount of silver increases daily right from the get go.
 
 
 
 
Volumes: for silver comex
Today the estimated volume was 65,154 which is HUGE
YESTERDAY’s  confirmed volume was 66,649 contracts which is EHUGE
YESTERDAY’S CONFIRMED VOLUME OF 66,649 CONTRACTS WHICH EQUATES TO 271 MILLION OZ OF SILVER OR 47% OF ANNUAL GLOBAL PRODUCTION OF SILVER EX CHINA EX RUSSIA). IN OUR HEARINGS THE COMMISSIONERS STRESSED THAT THE OPEN INTEREST SHOULD BE AROUND 3% OF THE MARKET.
 
Total dealer silver:  38.624 million (close to record low inventory  
Total number of dealer and customer silver:   215.375 million oz
The record level of silver open interest is 234,787 contracts set on April 21./2017  with the price at that day at  $18.42
The previous record was 224,540 contracts with the price at that time of $20.44
end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 7.1 percent to NAV usa funds and Negative 7.1% to NAV for Cdn funds!!!! 
Percentage of fund in gold 62.7%
Percentage of fund in silver:37.3%
cash .+0.0%( August 1/2017) 
2. Sprott silver fund (PSLV): STOCK   NAV RISES TO +0.39% (August 1/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLS TO -0.69% to NAV  (August 1/2017 )
Note: Sprott silver trust back  into POSITIVE territory at +0.39/Sprott physical gold trust is back into NEGATIVE/ territory at -0.69%/Central fund of Canada’s is still in jail  but being rescued by Sprott.

Sprott’s hostile 3.1 billion bid to take over Central Fund of Canada

(courtesy Sprott/GATA)

Sprott makes hostile $3.1 billion bid for Central Fund of Canada

 Section: Daily Dispatches

From the Canadian Press
via Canadian Broadcasting Corp. News, Toronto
Wednesday, March 8, 2017

http://www.cbc.ca/news/canada/calgary/sprott-takeover-bid-central-fund-c…

Toronto-based Sprott Inc. said Wednesday it’s making an all-share hostile takeover bid worth $3.1 billion US for rival bullion holder Central Fund of Canada Ltd.

The money-management firm has filed an application with the Court of Queen’s Bench of Alberta seeking to allow shareholders of Calgary-based Central Fund to swap their shares for ones in a newly-formed trust that would be substantially similar to Sprott’s existing precious metal holding entities.

The company is going through the courts after its efforts to strike a friendly deal were rebuffed by the Spicer family that controls Central Fund, said Sprott spokesman Glen Williams.

“They weren’t interested in having those discussions,” Williams said.

 Sprott is using the courts to try to give holders of the 252 million non-voting class A shares a say in takeover bids, which Central Fund explicitly states they have no right to participate in. That voting right is reserved for the 40,000 common shares outstanding, which the family of J.C. Stefan Spicer, chairman and CEO of Central Fund, control.

If successful through the courts, Sprott would then need the support of two-thirds of shareholder votes to close the takeover deal, but there’s no guarantee they will make it that far.

“It is unusual to go this route,” said Williams. “There’s no specific precedent where this has worked.”

Sprott did have success last year in taking over Central GoldTrust, a similar fund that was controlled by the Spicer family, after securing support from more than 96 percent of shareholder votes cast.

The firm says Central Fund’s shares are trading at a discount to net asset value and a takeover by Sprott could unlock US$304 million in shareholder value.

Central Fund did not have any immediate comment on the unsolicited offer. Williams said Sprott had not yet heard from Central Fund on the proposal but that some shareholders had already contacted them to voice their support.

Sprott’s existing precious metal holding companies are designed to allow investors to own gold and other metals without having to worry about taking care of the physical bullion.

end

And now the Gold inventory at the GLD

Aug 1/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

July 31/NO CHANGES AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

July 28/ANOTHER MASSIVE WITHDRAWAL OF 3.54 TONNES OF GOLD WITH GOLD UP $9.15/INVENTORY RESTS AT 791.88 TONNES

July 27/LATE LAST NIGHT, A HUGE WITHDRAWAL OF 5.03 TONNES WITH GOLD UP $10.45 ON THE DAY/INVENTORY RESTS AT 795.42 TONNES

July 26/NO CHANGE IN GLD INVENTORY WITH GOLD DOWN $2.55/INVENTORY RESTS AT 800.45 TONNES

July 25/A MASSIVE 9.17 TONNES OF GOLD WITHDRAWN FROM THE GLD/INVENTORY RESTS AT 800.45 TONNES

July 24/A massive 9.62 tonnes withdrawal and yet the price remains constant (down only 25 cents)..inventory drops to 809.62 tonnes

July 21/with gold up $8.75 again, we had no changes in gold inventory at the GLD/inventory rests at 816.13 tonnes

July 20/WITH GOLD UP AGAIN TODAY ($3.50) WE HAD NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 816.13 TONNES

jULY 19/STRANGE!! AGAIN WITH GOLD UP $0.50 WE HAD ANOTHER HUGE 5.32 TONNES WITHDRAWAL FROM THE GLD/INVENTORY RESTS AT 816.13 TONNES  THIS GOLD IS HEADING TO SHANGHAI

July 18/STRANGE AGAIN/WITH GOLD UP $7.50 WE HAD ANOTHER HUGE 5.62 TONNES WITHDRAWAL FROM THE GLD/INVENTORY RESTS AT 821.45 TONNES

July 17/strange again! with gold up $4.20 we had another huge withdrawal of 1.77 tonnes/inventory rests at 827.07 tonnes

July 14/strange@!!with gold up $12.00 today, we had a huge withdrawal of 3.55 tonnes/inventory rests at 828.84 tonnes

July 13/no change in gold inventory at the GLD/inventory rests at 832.39 tonnes

JULY 12/no change in gold inventory at the GLD/inventory rests at 832.39 tonnes

July 11/strange!@! we had a big withdrawal of 2.96 tonnes despite gold’s advance today/inventory rests tonight at 832.39 tonnes

July 10/no changes in gold inventory at the GLD/inventory rests at 835.35 tonnes

July 7/a massive withdrawal of 5.32 tonnes of paper gold were removed and this was used in the attack today/inventory rests at 835.35 tonnes

July 6/no changes in tonnage at the GLD/Inventory rests at 840.67 tonnes

July 5/A MASSIVE 5.62 TONNES OF GOLD LEFT THE GLD AND NO DOUBT WAS USED IN THE RAID THIS MORNING/INVENTORY REST

July 3/ A MASSIVE 7.37 TONNES OF GOLD LEAVE THE GLD/INVENTORY RESTS AT 846.29 TONNES

 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
August 1 /2017/ Inventory rests tonight at 791.88 tonnes
*IN LAST 201 TRADING DAYS: 158.36 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 142 TRADING DAYS: A NET  30.93 TONNES HAVE NOW BEEN WITHDRAWN FROM  GLD INVENTORY.
*FROM FEB 1/2017: A NET  17.74 TONNES HAVE BEEN WITHDRAWN.

end

Now the SLV Inventory

August 1/A HUGE WITHDRAWAL OF 945,000 OZ/INVENTORY RESTS AT 341.732 MILLION OZ/

July 31/no change in silver inventory at the SLV/inventory rests at 342.677 million oz

July 28/ A HUGE WITHDRAWAL OF 1.15 MILLION OZ OF SILVER LEAVES THE SLV DESPITE SILVER BEING UP 11 CENTS TODAY/INVENTORY RESTS AT  342.677 MILLION OZ

July 27/NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 343.812 MILLION OZ WITH SILVER UP 13 CENTS TODAY.

July 26/NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 343.812 MILLION OZ

July 25/A MASSIVE 3.309 MILLION OZ OF INVENTORY WITHDRAWN FROM THE SLV DESPITE SILVER’S 10 CENT RISE TODAY.

July 24/no change in silver inventory despite its 4 cent drop/inventory remains at 347.121 million oz

July 21/STRANGE! WITH SILVER UP AGAIN TODAY (11 CENTS), NO CHANGE IN SILVER INVENTORY AT THE SLV/inventory 347.121 million oz/

July 20/STRANGE! WITH SILVER UP AGAIN TODAY, THE SLV INVENTORY LOWERS BY 945,000 OZ/INVENTORY RESTS AT 347.121 MILLION OZ/

July 19/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 348.066 MILLION OZ

July 18/a huge 946,000 oz withdrawal from the SLV despite silver’s 16 cent gain!

Inventory rests at 348.066 million oz

July 17/no change in silver inventory at the SLV/Inventory rests at 349.012 million oz

July 14/no change in silver inventory/inventory rests at 349.012 million oz/

July 13/no change in silver inventory/inventory at the SLV rests at 349.012 million oz/

JULY 12/another massive 1.986 million oz of silver added into the SLV/inventory rests at 349.012 million oz/the last 3 days saw 7.281 million oz added into the SV

July 11/ANOTHER MASSIVE INCREASE OF 2.364 MILLION OZ into the SLV inventory/inventory rests at 347.026 million oz

July 10/ A HUGE INCREASE OF 2.931 MILLION OZ OF SILVER DESPITE THE EARLY HIT ON SILVER THIS MORNING/INVENTORY RESTS AT 344.662 MILLION OZ.

July 7/Strange: no change in inventory (compare that with gold) Inventory rests at 341.731 million oz

July 6/ANOTHER MASSIVE DEPOSIT OF 2.126 MILLION OZ INTO THE SLV INVENTORY/INVENTORY RESTS AT 341.731 MILLION OZ.

July 5/STRANGE! NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 339.605 MILLION OZ

July 3/strange! with the huge whacking of silver we got an increase of 379,000 oz into inventory.

August 1.2017:

 Inventory 341.732  million oz
end
  • 6 Month MM GOFO

    Indicative gold forward offer rate for a 6 month duration

    + 1.25%
  • 12 Month MM GOFO
    + 1.45%
  • 30 day trend

end

 

Here is a review of the 3 latest comex waterfall (whacks) on gold and silver not including the current one we are undergoing.  I have taken the nadir of the gold price before it started to rise again and compared it to OI in both gold and silver with the OPEN INTEREST.  The OI readings are the following day but we are always one day behind so this compares exactly to the nadir price.
First waterfall ended Oct 6 2016/ Nadir price of gold at that date Oct 6 2016 : $1254.70 / OI for gold Oct 7/2016: 511,340//OI for silver/Oct 7.2016: 194,811
Second waterfall ended Dec 15.2016:Nadir Price of gold Dec 15.2016:      $1128.20              //OI for gold Dec 16/2016 401,798// OI for silver: Dec 16/16 161,570
Third waterfall ended May 10/2017: Nadir Price of gold May 10 2016:   $1220.95              //  OI for gold May 11: 425,252//  OI for silver May 11/17: 199,826
and for comparison while we are undergoing another waterfall these past several weeks
 Today’s price of gold $1268.00                                                                                                    OI for gold today: 436,962//Oi for silver  207,643
The first waterfall corresponds to a silver price of $17.30 on Oct 6
The second waterfall corresponds to a silver price of $15.90 on Dec 15
The third waterfall corresponds to a silver price of $17.37 on May 10
and today:  silver price of $16.79
Since the bottom of the second waterfall the price of gold at its nadir is about the same ($1220 and $1226), but the OI for gold is much higher along with silver OI also much higher. (425,252 and 436,962 OI for gold) accompanying  199,826 and 207,643 for silver)
It seems the data suggests power manipulation to control the price through paper!

END

 

Major gold/silver trading/commentaries for TUESDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

What Investors Can Learn From the Japanese Art of Kintsukuroi

– What investors can learn from the Japanese art of Kintsukuroi or Kintsugi – art of repairing broken pottery with gold
– Investors and savers can protect their savings with gold

– Savers and investors are being punished by negative to low interest rates
– Global debt levels, stock bubbles and reduced liquidity will lead to crisis
– Reinforce cracks with gold prior to money pot shatters


Source: Wikimedia

Editor: Mark O’Byrne

Kintsukuroi or Kintsugi is the Japanese art of repairing broken pottery with gold and silver.

The Japanese like to consider it a way of not only repairing the item but also transforming it into something new which is pristine and has a new potential.

For the philosphers in the art world they like to ask how can something of such beauty be created from a shattered vase or bowl?

Our politics, markets and economy are broken. With each passing day we see more evidence of a globalised, interconnected world that is also increasingly politically and financially fragmented.

In turn this is raising tensions between and within countries. Especially between the ‘haves’ and ‘have nots.’

We have seen this before, many times in history, when the greed of mankind and his belief in infallibility leads us to believe we can perform unprecedented financial experiments. The more we push on with the experiments, rather than learning from history, the bigger the cracks and damage.

Jim Rogers recently expressed his disgust at banks’s claims that had they not acted as they had in response to the financial crisis then things would be worse.

Rogers disagrees, all they have done is papered over and widened the cracks… “propping up zombie banks and dead companies is not the way the world is supposed to work. … It’s been nine years and we have nothing to show for it [economically] except staggering amounts of debt.”

In order for Kintsugi to transpire the artist must ‘see’ a cracked pot differently. A new perspective has to be taken. The pot is not broken, it is not useless instead it is something which has potential to become stronger and better.

We must begin to look at our economy in a similar light. Our savings are not useless, in the same way our economic system is not useless.

But they are weak in their current state, they should be made stronger rather than forced to take on more pressure.

The art of seeing differently

Last week, came the news that global debt levels were 327% of world gross domestic product (GDP), at $217 trillion in the first quarter of 2017. We have added over $120 trillion since the financial crisis.

In the weeks before the world’s top money managers had rung the warning bell that this pot was ready to crumble. Marc Faber told CNBC that ‘everything’ is in a bubble with the risk that:

“One day this bubble will end,”  and as a result people will lose 50% of their wealth.

Mohammed El Erian, part of the global financial elite but someone who we should all listen to, has also expressed similar concerns to Faber.

He wrote on Bloomberg that because of reduced liquidity resulting from simultaneous policy tightening by central banks, he has some serious doubts about the sustainability of the current overextended bull market in stocks.

Meanwhile Bill Gross believes markets in the US are at their highest risk levels post-2008 as investors are paying a high price for taking chances.

The low (and negative) interest rates of  central banks are artificially driving up asset prices. This is creating little growth in the real economy and as a result is punishing individual savers and businesses.

Even those who are generally more concerned with individual wellbeing rather than the health of the global economy are now getting involved in firing warning shots.

Life guru Tony Robbins has warned that ‘the crash is coming’ both in a book and on a regular podcast.

He recently pointed to the falsehoods that we are all being told about the system, “We are in a really artificial situation. There is a new high, on average, every month. Feds around the world have been printing money.”

But, this is the world we live in. Should we wait and see how it plays out? Bury our heads in the sand?

Or, should we instead think about what we can do differently. How we can look at his situation and take a new perspective, give it some potential and extended future?

Like the art of kintsukuroi we may be able to give it a second chance, with gold.

Gold is for everyone: Some are already filling the cracks with gold

“The world breaks everyone, then some become strong at the broken places.” Ernest Hemingway

Countries around the world (including large nations such as Russia and China) are acquiring gold at an accelerated rate in order to diversify their reserve positions. When you consider the already substantial reserves in the US, Germany and the IMF, we may already be moving quietly towards a default gold standard.

There is a reason these countries and organisations are accumulating and/or holding onto gold. They know that when things take the inevitable turn for the worst, gold will alleviate the financial and monetary damage.

They know this because whilst their economic policies might not reflect any knowledge of history, history including the recent crisis shows them that gold has survived history because of it’s ability to hold value and act as a safe haven.

Unfortunately the chances of the majority of the world’s leaders realising how they can fix the cracks before they become breaks, are low.

But that doesn’t mean investors can’t embrace gold to fix the cracks that their finances and investments are exposed to.

As with the broken pots, gold just needs to be a small part of your portfolio.

A small allocation confers stability and insurance. Jim Rickards argues that the solution to the risks we are all exposed to is to allocate 10% of your portfolio to physical gold or silver:
‘That will be your insurance when the time comes.’

Whether it is 5%, 10% or 50%, gold should play a part in your portfolio to give it strength in the tough times that are no doubt ahead. Just one look at the table below (from guru Tony Robbins) and you can see how little an amount needs to go in, in order to fill the cracks and reduce volatility and enhance returns in a portfolio.

All Seasons strategy via Ray Dalio via Tony Robbins

You might ask why isn’t there a rush to gold if it’s the way to secure our portfolios? Only the smart money is diversifying into gold now – as was the case before the first financial crisis. Martin Armstrong of Armstrong Economics recently said:

‘Gold and the stock market will take off when people realize that government is in trouble. When they lose confidence, that is when they will start to pour into tangible assets.’

Conclusion – Reinforce the financial cracks with gold

Really kintsukuroi is about highlighting imperfections. Many reading this might ask why on earth one would want to highlight the imperfections in the banking system and the global financial system rather than just starting from scratch.

We don’t need to go so far as to lose our wealth in order to realise how we can protect ourselves.

There is no changing the damage that has been done. We cannot erase the past, only learn from it.

How do you learn from things? By remembering what has happened and by incorporating those lessons into every day life.

We can do that with gold. We can learn from the past mistakes and bring gold into our portfolios to protect and grow our wealth.

Gold has consistently proven itself in times of economic distress. Those who have benefited the most from this are the ones who bought their insurance and reinforced the cracks prior to the shattering crash.

 

END

 

A super commentary by Koos Jansen.  He estimates that total Chinese gold reserves (citizens and sovereign surpasses 20,000 tonnes

 

(courtesy Koos Jansen/GATA)

Koos Jansen: Estimated Chinese gold reserves surpass 20,000 tonnes

 Section: 

8:37p ET Saturday, July 29, 2017

Dear Friend of GATA and Gold:

Gold researcher Koos Jansen today explains his estimate of China’s gold reserves — 4,000 tonnes with the central bank and 16,000 with the country’s population. Jansen adds that the central bank does not purchase gold through the Shanghai Gold Exchange but through Chinese banks, whose purchases don’t show up in international gold trade figures, as the central bank aims not to excite the market with its purchases. Jansen’s analysis is headlined “Estimated Chinese Gold Reserves Surpass 20,000 Tonnes” and it’s posted at Bullion Star here:

https://www.bullionstar.com/blogs/koos-jansen/estimated-chinese-gold-res…

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

END

A huge commentary from Ronan Manly who has documented what we have been telling you:  that roughly 4200 tonnes of good delivery bars have left to west for the East, mainly Shanghai, Hong Kong and Russia

 

(courtesy Bullion Star/Ronan Manly)

Ronan Manly: West sent at least 4,200 tonnes of gold to Asia in 2013-15

 Section: 

2:10p ET Monday, July 31, 2017

Dear Friend of GATA and Gold:

Gold researcher Ronan Manly today documents the flow of 400-ounce London good- delivery bars to Asia via refineries in Switzerland that convert them to kilogram bars. Manly concludes:

“Overall, within the 2013–15 period, that is about 4,200–4,600 tonnes of gold being converted into kilogram and other smaller-denomination high-purity gold bars and sent to markets in China, India, Hong Kong, and elsewhere in Asia. This is gold above and beyond mine supply and scrap supply.

“Where has all of this gold come from? Some of it is proven to be from gold-backed exchange-traded funds. Some is most probably from central bank vaults, in which case the central banks do not have the gold they claim to have — which everybody knows anyway, as much central bank gold has been lent out and is merely a fiction on the central bank balance sheets.

“But there may also be other stockpiles of good-delivery gold bars that are feeding this huge trend. Until the London Bullion Market Association begins to publish its vault statistics, any gray-area unreported gold vault inventories in London are still being kept in the dark.”

Manly’s analysis is headlined “The West Lost At Least Another 1,000 Tonnes of Large Gold Bars in 2015” and it’s posted at Bullion Star here:

https://www.bullionstar.com/blogs/ronan-manly/west-lost-least-another-10…

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

END

Avery Goodman believes that we are range bound for the next two weeks.  He believes that the bankers have stopped the panic so far.

 

(COURTESY AVERYGOODMANBLOG)

 

Avery Goodman…

BANKERS STOP THE PANIC – DIG IN FOR RANGE-BOUND PLAY

People sometimes ask why I’m so interested in gold? I am not a gold dealer, mining executive or financial advisor and I’m not even trying to make money by selling a subscription newsletter. The answer is that I believe the world needs to return to the gold standard for a number of reasons too numerous to cite here. Also, from a legal standpoint, gold is the most obvious example of a corrupted market and that is inherently interesting to me.

Most rational people now know that gold is heavily manipulated but no one ever does anything about it. Unlike manipulators in stocks, bonds and most commodities, gold and silver manipulators no longer try hard to hide. Their activities are blatant, open and obvious. That makes the metal an excellent example of what’s wrong with markets in general.

It is, perhaps, not entirely fair of me to say that “no one ever does anything about it.” For example, there has been some effort to clean up peripheral aspects like the so-called “London Fix”. As inherently corrupt as its name implies, the “Fix” is the smallest part of the swamp. Ninety nine percent of manipulation is carried out via collusive trading on futures markets. Nothing has been done about that. So-called “regulators” actually enhanced the price-setting role of futures markets by  “reforming” the Fix!

One could go on and on about the inadequate response to corrupted markets. Careful analysis and understanding is a first step toward pushing for real reform. I reported, for example, a few weeks ago, in a prior article, that bullion banks were in full-blown panic mode. They were frantically closing massive numbers of legacy short positions, covering them into a series of convenient “flash crashes.” The sudden crashes happened for no apparent reason, but shell-shocked market participants, allowing positions to be closed “on the cheap.” I predicted that prices were about to rise significantly and they did.

I won’t quadruple the size of this article for the purpose of discussing the gold swaps, or how stocks, bonds, commodities and gold prices can be easily catalyzed up and down. To gain an understanding of the process, I suggest you read the prior article (and other previous articles) as well as the novel, “The Synod” (eBook) (paperback). Suffice it to say that a careful look at this week’s CFTC Commitments of Traders Report shows that the situation has now reversed itself. Various speculators have dramatically changed their positioning, yet again, and so have the banks, as compared with the last three weeks. Why?  What does it mean?

At the close of business on Tuesday, July 25th (when the Commitments of Traders Report data is compiled), the so-called “managed money” (a/k/a the hedge funds that are not closely connected with a major bank) returned to betting that gold prices will rise (a/k/a “going long”) and began closing short positions in both gold and silver. So-called “commercials” (a/k/a bullion bankers and their controlled fund entities) were taking on new short positions. There are two possibilities as to why this is now happening.

First, whatever event might have been panicking the bankers could be resolved at least in the short run. That is not very likely because if they could easily control that situation, they wouldn’t have been panicking in the first place. The second possibility, which I consider to be much more likely, is that the banks simply opened a large number of highly transient short positions for the sole purpose of temporarily holding down gold prices during the crucial options’ expiration week (last week). Sharply higher prices would have resulted in massive losses on call options that they’ve written. If too many calls ended “in the money” the banks would have to pay out a lot of money.

Let’s assume they took on the new short positions to avoid huge losses on call options. Since they must eventually jettison them, doesn’t that mean prices must go up dramatically, very soon? No, it doesn’t. Not in the short run. So long as we have clueless fools, in the form of “managed money hedge funds”, using extreme leverage in the hope of getting rich quick, everything can be managed. A day or two of deep price declines, catalyzed by means of attacking over-leveraged long speculators, will do the trick. If done right, stop-loss orders will be triggered, prices will decline, margin call based forced selling will occur, prices will decline more, and finally panic will allowing shedding short positions cheaply.

The long run is a different story. The type of price decline catalysis that the manipulators engage in cannot be sustained over very long periods of time. Such tactics do depress prices in the long term, of course, by convincing ultra-conservative investors to stay away from the artificial volatility of gold, but that is already baked into the cake. There are still enough physical gold buyers, and the demand is still so much higher than the supply, that prices will rise slowly over a period of months, in spite of the short, but sharp “crashes” that are likely in early to mid-August.

Still, it is currently impossible to determine the exact motivation behind the change in positioning. I would advise caution because the manipulators seem to be doubling down on their game. It is likely that they will continue to engage in highly coordinated actions. The current coordinated strategy appears designed to keep gold prices inside a $50 to $100 trading range for a while. They’ll be able to make a considerable amount of money trading the ups and downs within that range. How long the range can be maintained will depend on whether and when large physical buyers raise their bids in order to get the metal they want.

The situation in silver and gold are very similar. The bullion bankers have reopened a lot of short positions in both metals. Conversely, clueless hedge funds have reopened a lot of long positions. Oddly, and there is no obvious explanation, the hedge funds have not opened enough long positions in platinum to offset the new shorts opened by the banks. The only explanation I can think of is that some of the new platinum shorts represent bullion bankers trading with each other. That implies wash trading designed to control prices.

Wash trading consists of trades between two or more closely coordinating entities, designed to create the false appearance of price movement or stability. It is designed to influence others to accept fake prices as real. If that is what is happening, it implies a continuing sense of desperation on the part of the manipulators. They usually stay within the letter of the law even while violating its spirit. Wash trading is overtly illegal and that is why so much effort is put into the more expensive process of catalyzing price movement by targeting stop-loss orders. Still, with the traders nominally employed by different entities, proving wash trading is very difficult.

To prosecute, you would first have to prove that there is a cartel that coordinates trading in order to influence prices. But, remember, the same cartel that trades platinum is also trading gold, a government sponsored activity. Second, even if you managed to prove collusion, you’d also have to prove the trades have no legitimate purpose. Meeting this dual burden is extraordinarily difficult. It is made even harder because such a prosecution would necessarily disclose the scheme behind controlling gold prices. A number of government officials would be implicated in that, and the scheme to control gold prices would collapse. The government officials are, for the most part, acting within the letter of the law. The US Gold Reserve Act allows them to issue gold swaps to help manipulate the gold market. However, disclosure would mean political and/or career suicide.

Regardless of what the banks and hedge funds are doing in the short term, it is still clear that US government-owned gold, and specifically gold swaps, are the key to the continuance of the current scheme of price manipulation. Without that gold flowing into the world market, there would be widespread shortages and defaults in delivery. When the “gold supplier of last resort” finally pulls the plug, the game will be over, at least until prices rise above supply and demand equilibrium. I estimate that equilibrium exists at somewhere between $1,500 – $1,600 per ounce right now.

If and when prices rise above equilibrium, it will be more profitable to manipulate prices upward rather than downward, assuming most legacy short positions have been closed. Until the huge legacy short positioning is reduced much further, however, you can expect periodic flash crashes and intense efforts at price control. In short, on the surface of things, the manipulators seem to be in control again. Except for what looks like a need to use wash trading to suppress platinum prices in line with the other precious metals complex, they look rather confident again.

I believe that gold prices will be managed within a range of $1,200 and $1,300 per troy ounce for at least a few weeks. The key players will rid themselves of the current increase in transient short positions, and continue the process of unloading legacy short positions. Because all three major precious metals are tied to each other through cross-trading, their prices will move along with the price of gold. Prices will be slowly pressured upward in spite of the fact that we should expect more transient downward hammering episodes.

I suspect some readers will object to this analysis. They will ask about the recent reports that suggest China’s demand for gold bars is up by 50%? Shouldn’t that propel gold to the moon over the next few weeks?  The answer is “no”. For one thing, the reports are fundamentally wrong. They are based on an assumption that China’s gold demand was in the 1,000 ton range in 2016, when the real demand was closer to 2,000 tons. And, the demand for gold bars, in particular, is just one element of overall demand. More importantly, however, real world supply and demand has very little effect on highly manipulated markets in the short run. It will profoundly affect long term prices, but not the prices that will be created over the next few weeks to months.

Frankly, I would be very surprised if we didn’t see a few flash crashes and similar “shock & awe” hammer-down events in early to mid-August. Bankers will want to unload the new shorts, and they are also going to want to get back into the important business of reducing their long term liability exposure to legacy short positioning in the form of futures, forwards and so-called “non-allocated storage”. The easiest way to accomplish their goals right now, with maximum profitability and the lowest losses, is to catalyze shock & awe declines to shell-shock the market. Excellent buying opportunities, therefore, may be in store for August for those who are smart enough to see through the facade. But, you’d better act on them the moment you see them, because they will fade away very quickly.

___

 end
The LBMA states that their vaults contain 7500 tonnes.  The big question is how much of this gold is encumbered
(courtesy London’s Telegraph/GATA)

The LBMA says London vaults hold 7,500 tonnes of gold

 Section: 

Revealed: Just How Much Gold Is in London’s Vaults

By Jon Yeomans
The Telegraph, London
Monday, July 31, 2017

London has long been acknowledged as the biggest gold trading centre in the world, but no one has ever been able to say for sure how much gold is stored in the capital — until now.

New data has revealed that around 7,500 tonnes of gold was held in London in March of this year — the equivalent of 596,000 gold bars, or L227 billion worth of gold.

The data was published by the London Bullion Market Association (LBMA) as part of a new drive to provide greater transparency around the gold market and encourage investors to buy into the precious metal.

Around 68 percent of London’s physical store of gold is held at the Bank of England, which has around 5,100 tonnes in its vaults. The bank looks after the UK’s gold reserves and holds the metal for other central banks.

The rest of the gold, or around 2,500 tonnes, is held for use by investors and traded through banks and other clearing houses that are members of the LBMA. …

… For the remainder of the report:

http://www.telegraph.co.uk/business/2017/07/31/revealed-first-time-just-.

end


Your early TUESDAY 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 STRONGER 6.7203(REVALUATION NORTHBOUND   /OFFSHORE YUAN MOVES WEAKER TO ONSHORE AT   6.7234/ Shanghai bourse CLOSED UP 19.61 POINTS OR 0.60%  / HANG SANG CLOSED UP 216.24 POINTS OR 0.79% 

2. Nikkei closed UP 60.61 POINTS OR .30%    /USA: YEN RISES TO 110.43

3. Europe stocks OPENED IN THE  GREEN      ( /USA dollar index RISES TO  92.97/Euro DOWN to 1.1816

3b Japan 10 year bond yield: FALLS  TO  +.078%/ GOVERNMENT INTERVENTION    !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 114.34/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  50.14 and Brent: 52.48

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  +.518%/Italian 10 yr bond yield DOWN  to 2.070%    

3j Greek 10 year bond yield RISES to  : 5.423???  

3k Gold at $1266.25  silver at:16.72 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 40/100 in  roubles/dollar) 60.18-

3m oil into the 50 dollar handle for WTI and 52 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 110.43 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  0.9657 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1409 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/ARTICLE 50 COMMENCES MARCH 29/2017 

3r the 10 Year German bund now POSITIVE territory with the 10 year FALLING to  +0.518%

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 2.294% early this morning. Thirty year rate  at 2.8976% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

Dow Set To Open Above 22,000 As Global Stocks Levitate Higher

Welcome to August: you may be surprised to learn that S&P 500 futures are once again levitating, higher by 0.3%, and tracking European and Asian markets. Asian equities traded higher across the board after China’s Caixin Manufacturing PMI beat expectations and printed its highest since March, refuting the decline in the official PMI data reported a day earlier, while firmer commodity prices boost both sentiment and commodity stocks across Asia and Europe. Notably, with DJIA futures higher by over 100 points this morning, the Dow Jones is set to open above 22,000, a new all time high.

World stocks are on their longest streak of monthly gains in more than a decade, with the MSCI All-Country index rising again on Tuesday, up 0.3%, amid further signs that the global economy remains solid, while the beaten-down dollar edged up slightly from 14-month lows. The dollar again failed to stage a rebound after Monday’s drop, as investors were transfixed by the chaotic developments in Washington, pushing the greenback lower overnight and sending it down for the fifth consecutive month.

“I think the short dollar trade is still the broad consensus trade in the financial markets,,” said Esther Maria Reichelt, an FX analyst at Commerzbank in Frankfurt. “But we are approaching important levels against other currencies, such as 1.20 on the euro, which may prompt some concerns from other central banks.”

Softening U.S. inflation and incessant political turmoil has hit prospects of another Federal Reserve rate hike in coming months and sent the dollar down 10 percent from its January peaks. The dollar’s decline, low inflation and stable global growth has stoked appetite for stocks, with the MSCI extending its run after the index logged its longest streak of monthly gains since 2003-04 in July.

“Data and market behaviour are consistent with our global reflation theme,” strategists at Morgan Stanley, led by Hans Redeker, said in a note, pointing to strong Chinese factory data, corporate earnings and surging South Korean exports. “The combination of USD weakness with decent, but not too strong, US economic growth works in favour of risk appetite, pushing financial conditions globally, and especially in the US, higher.”

In Europe, the Stoxx Europe 600 gained 0.6%, hitting session’s high after data showing euro-area July manufacturing kept in line with the flash reading (PMI 56.6 vs flash reading 56.8). European manufacturing sentiment pointed to “broad-based economic growth” as national surveys signaled economic expansion across the region, with Austria, the Netherlands and Germany being the best performers. French manufacturing accelerated to one of the fastest rates in six years. The Stoxx Europe 600 Index was poised to end its losing streak, heading for the first gain in four days after companies including BP reported, beating estimates, and was the biggest contributor to the advance. Crude itself also rose, as traders awaited the latest government inventory data. Recent commodity strength continued to feed into Asian equities, which were also bolstered by earnings in Japan, South Korean export numbers and Chinese manufacturing data. The U.K.’s FTSE 100 Index advanced 0.8 percent, the largest gain in a week. Germany’s DAX Index advanced 0.4 percent, the biggest gain in a week.

In Asia, the MSCI Asia-Pacific Index rose to the highest since 2007 as equity indexes from Tokyo to Sydney advanced. Japan’s Topix index added 0.6 percent. Banks rallied after Sumitomo Mitsui Financial Group Inc. reported a 31 percent increase in net income for the June quarter.  Australia’s S&P/ASX 200 Index closed 0.9 percent higher, while South Korea’s Kospi index ended up 0.8 percent. The Hang Seng Index in Hong Kong rose 0.8 percent, while the Shanghai Composite Index climbed 0.6 percent. As expected, the surge in the overnight Hong Kong dollar interbank proved fleeting, as the rate tumbled 43 bps to 0.28286%  after climbing to a more than eight-year high of 0.71407% on Monday, according to Bloomberg citing the latest fixing published on the Treasury Markets Association website. The one-week HKD Hibor dropped 2 bps to 0.28836%, after rising to 0.30643% on Monday, highest since July.

For European equity markets, continued improvement in euro-area economy has fueled rally in euro and raised concerns over potential impact on corporate earnings, with the 1.20 area in the EURUSD often cited as a hard stop beyond which profitability will be materially impacted. European government bonds also edged higher as PMI data highlight ECB’s conundrum of robust growth without price pressure.

Meanwhile, as reported earlier, the Reserve Bank of Australia held the benchmark at 1.5% while warning that a rising currency is expected to subdue inflation and weigh on the outlook for growth and employment. The Aussie fluctuated, but has since sunk to session lows, below 0.80.

In commodities, oil prices made further gains as falling U.S. inventories eased some concerns about oversupply. Futures on Brent crude LCOc1 and U.S. crude oil CLc1 rose 0.2 percent and held comfortably above $50 a barrel for the first time since May.

In rates, Britain’s 10-year yield declined one basis point to 1.223 percent. Germany’s 10-year yield fell two basis points to 0.52 percent, the lowest in more than a week.

ISM manufacturing and construction spending are among key data points later on Tuesday, while Apple, Pfizer, Emerson Electric are due to report earnings, together with a number of other companies. Crude oil trades above $50/bbl.

Bulletin Headline Summary from RanSquawk

  • European equities trade higher in a move predominantly led by the energy sector with indices also supported by domestic earnings
  • FX markets continue to be guided by USD-softness as political upheaval in Washington grips summer trading conditions
  • Looking ahead, highlights include US PCE, ISM Mfg. and APIs

Market Snapshot

  • S&P 500 futures up 0.3% to 2,474.75
  • STOXX Europe 600 up 0.6% to 379.92
  • MSCI Asia Pacific up 0.6% to 161.32
  • MSCI Asia Pacific ex-Japan up 0.4% to 531.46
  • Nikkei up 0.3% to 19,985.79
  • Topix up 0.6% to 1,628.50
  • Hang Seng Index up 0.8% to 27,540.23
  • Shanghai Composite up 0.6% to 3,292.64
  • Sensex up 0.09% to 32,542.84
  • Australia S&P/ASX 200 up 0.9% to 5,772.37
  • Kospi up 0.8% to 2,422.96
  • German 10Y yield fell 0.8 bps to 0.535%
  • Euro down 0.2% to 1.1818 per US$
  • Brent Futures up 0.3% to $52.85/bbl
  • Italian 10Y yield fell 2.8 bps to 1.801%
  • Spanish 10Y yield fell 1.1 bps to 1.489%
  • Gold spot down 0.02% to $1,269.17
  • U.S. Dollar Index up 0.05% to 92.91

Top Overnight News

  • Venezuela’s most high-profile opposition figures were seized from their homes by security forces, according to people close to them, in what appeared to be a crackdown on officials challenging the government of President Nicolas Maduro
  • The euro- area economy expanded apace in the second quarter, a sign the bloc’s upswing is becoming increasingly robust and self- sustaining. While a Purchasing Managers’ Index pointed to broad- based growth, price pressures showed further signs of easing in July
  • U.K. manufacturing growth accelerated for the first time in three months in July, bolstered by the strongest jump in export orders in seven years
  • Trump personally dictated son’s statement on Russia meeting: Wash. Post
  • U.S. detected unusual levels of North Korean submarine activity: CNN
  • Pence Says U.S. Backs Georgia in NATO Against Russian Objections
  • No Bubble in Stocks But Look Out When Bonds Pop, Greenspan Says
  • Banks May Be Hit With $50 Billion Capital Needs After Brexit
  • Japan PM Abe to reshuffle cabinet on August 3: Suga
  • China July Caixin manufacturing PMI 51.1 vs 50.4 estimate
  • It’s time for China to increase yuan flexibility: Sec. Journal
  • BP Says It’s Breaking Even After Debt Soared to a Record
  • Ferrari Said to Plot ‘Utility Vehicle’ in Plan to Double Profit
  • Tesla Batteries May Back Up Wind Farm Off Massachusetts Coast
  • Scripps Affirmed by Moody’s on Acquisition by Discovery
  • Lexicon to Opt-In for Co-Promotion of Sotagliflozin With Sanofi
  • Brighthouse Financial to Replace AutoNation in S&P 500
  • New Anthem Data Breach Affected More Than 18,000 Enrollees: CNBC

Asian equities traded higher across the board as Chinese data took focus once again after Caixin Manufacturing PMI beat expectations and printed its highest since March. ASX 200 (+0.9%) was led higher by commodity-related stocks after iron ore extended on yesterday’s over 7% gains and WTI settled above USD 50/bbl for the first time since May. Nikkei 225 (+0.3%) was kept afloat after the prior session’s JPY weakness, while Shanghai Comp (+0.6%) and Hang Seng (+0.8%) conformed to the positive tone after the aforementioned Chinese PMI data coupled with the PBoC’s CNY 170b1n injection into the interbank market. Finally, lOy JGBs were flat with a lack of demand seen amid broad positive risk sentiment and following the uninspiring 10yr JGB auction in which the results were mixed and relatively similar to the prior month.
Chinese Caixin Manufacturing PMI (Jul) 51.1 vs. Exp. 50.4 (Prey. 50.4).

Top Asian News

  • India Manufacturing PMI Hits 8-Year Low on Sales Tax Disruption
  • Caixin China July Manufacturing PMI 51.1; Est. 50.4
  • Iron Ore Investors Zero In on 2018 as China Futures Roll Over
  • Singapore’s Chevron House Owner Seeks More Than S$700M in Sale
  • MUFG Profit Jumps 53% on Trading Income, Gains From Share Sales
  • Macau Casinos’ July Gains Cap Year of Recovery as VIPs Flock
  • Honda Sees New Accord, Weaker Yen Easing U.S. Pressure

European bourses are firmer this morning led by the energy sector. BP shares higher by over 2% after reporting earnings were ahead of analyst estimates. Crude prices higher with WTI crude futures making a firm break above USD 50.00/bbl. German curve was initially bull flattening this morning, providing modest concession for the Schatz ahead of today’s EUR 4bln Jun’19 tap with little reaction seen in German paper after a relatively well-digested Schatz auction. Gilts ebbed lower slightly following better than expected UK Mfg. PMI data with paper also unreactive to this morning’s Gilt auction which saw a healthy uptake by the market.

Top European News

  • German Labor Market Strengthens as Robust Economy Fuels Hiring
  • Female CEOs Hold Key to Returns for $42 Billion Stock Manager
  • France July Manufacturing PMI 54.9 vs Flash Reading 55.4
  • BOE Rate Excitement Fizzles as Increase Appears Further Away
  • U.K. Manufacturing Grows as Export Orders Climb to Near Record
  • Euro-Area Economy Steams Ahead as ECB Awaits Inflation to Follow

In currencies, the Greenback continued to suffer yesterday amid the political uncertainty in the USA. President Trump removed Scaramucci from his White House Communications Director post just ten days after the appointment. This news was followed by reports stating that US Senate Finance Committee Chairman Hatch said that senators are too divided to keep working on healthcare overhaul legislation now. The difficulties in the States have led to all its major currencies pairs gaining against the US dollar, as the DXY now trades through 93.00, looking close and close toward the 92.00 support level. USD/JPY saw a bounce on the physiological 110.00 level, however remains to look bearish, with a test of June’s low at 108.80 possible. GBP: Brexit fears have once again resurfaced; with UK Chancellor Hammond yesterday stating future
relationship with European Union remains under discussion, Brexit will not be postponed or delayed. GBP/USD has gained however, amid the aforementioned falling dollar, continuing to print 2017 highs, now through 1.32. With a weakening greenback, GBP/USD bulls could see this opportunity to attack 1.35. AUD: The highlight of the Asian session was the RBA interest rate decision, where as expected, the RBA kept their cash rate on hold at 1.50%. Despite a spike lower on the decision, we did see a bounce in AUD/N ZD,largely likely to the minimal concern of the higher AUD. The statement stated that a higher AUD is weighing on price pressures and would slow economy. However, the tone of the RBA was slightly more optimistic than many anticipated, stating that growth is expected to pick up, alongside the previously mentioned lack of fears toward the AUD.

In commodities, WTI crude futures breached the psychological USD 50/bbl level. Europe’s largest refinery (Pernis) reported further issues with a leak during maintenance work yesterday. Potential supply disruptions in Nigeria, as Niger Delta leaders threaten to dump peace talks. Gold fell 0.1 percent to $1,267.59 an ounce, the largest fall in a week. Iron ore advanced 3.4 percent to 574 yuan per metric ton, the highest in more than four months.

Looking at the day ahead, we will see the June personal income (+0.4% mom expected) and spending data (+0.1% mom expected), followed by the ISM manufacturing PMI for July (56.5 expected; 57.8 previous).  Onto other events, the trade ministers from the BRICS countries will meet in Shanghai. Notable US companies reporting include: Apple, Pfizer, CME, Assurant and Illumina.

US Event Calendar

  • 8:30am: Personal Income, est. 0.4%, prior 0.4%; Personal Spending, est. 0.1%, prior 0.1%
    • Real Personal Spending, est. 0.1%, prior 0.1%
    • PCE Deflator MoM, est. 0.0%, prior -0.1%; PCE Deflator YoY, est. 1.3%, prior 1.4%
    • PCE Core MoM, est. 0.1%, prior 0.1%; PCE Core YoY, est. 1.4%, prior 1.4%
  • 9:45am: Markit US Manufacturing PMI, est. 53.2, prior 53.2
  • 10am: ISM Manufacturing, est. 56.5, prior 57.8; ISM Prices Paid, est. 55.8, prior 55; ISM New Orders, prior 63.5; ISM Employment, prior 57.2
  • 10am: Construction Spending MoM, est. 0.4%, prior 0.0%
  • Wards Total Vehicle Sales, est. 16.8m, prior 16.4m
  • Wards Domestic Vehicle Sales, est. 13.1m, prior 12.8m

DB’s Jim Reid concludes the overnight wrap

As is the norm, the first day of the month also brings the global PMIs and ISM manufacturing data. Europe’s flash numbers 9 days ago were a touch on the weaker side after many months of beats so it’ll be interesting to see the final numbers for the core and the first glance at the peripherals. This morning, China’s Caixin manufacturing PMI for July was slightly above expectation at 51.1 (vs. 50.4 expected, 50.4 previous). Asian markets are stronger as we type. The Nikkei is up 0.2%, the Kospi +1.0%, the Hang Seng (+0.7%) and the three Chinese bourses up between 0.1% to 0.6%.

Staying with China It’s fair to say that consensus expects China’s economic growth to slow slightly in 2H, which is DB’s base case too. However, our China economists now see the risk to the H2 growth outlook shifting to the upside, in part driven by high frequency data that suggests land supply and auctions remained hot in July. With the land market this strong, the fiscal revenue in H2 will strengthen and support infrastructure spending.

As July put the shutters down for the final time, global equity markets were broadly flat to slightly lower yesterday. US equities fluctuated between gains and losses but dipped down again into the close (S&P500 -0.1%), with financials (+0.6%) and telecoms (+0.4%) leading the way while materials (-0.8%) and information technology (-0.5%) dragged it lower. The Dow again bucked the trend (+0.3%) to close at a record for the 4th day in a row.

Over in Europe the STOXX 600 (-0.1%) traded slightly lower on the day, while regional markets were mixed with the DAX (-0.4%) and CAC (-0.7%) lower while the FTSE MIB (+0.3%) and FTSE 100 (+0.1%) posted some gains. Overnight, our European strategists did a stock take of earnings downgrades over the past month, noting that European EPS have been revised down by -0.6%, more than any other major region.

Over in government bond markets, we saw German Bunds and US treasuries largely unchanged, except for Bund yields at the very long end (20Y -1bps; 30Y: -2bps). Gilt yields were higher across nearly all maturities in a somewhat parallel shift of the curve (2Y +3bp; 10Y +2bp). 10 year peripheral yields were 3-4bps lower.

Turning to FX markets, we saw the US dollar index drop further yesterday by -0.4% while the Euro and Sterling gained by +0.7% and +0.5% respectively against the Greenback. In commodity markets the energy segment saw oil prices spike back up into positive territory by the close (+0.8%) with WTI trading above $50 for the first time since May. Iron ore was up 7%, with China’s July steel industry purchasing managers’ index showing the highest reading in 15 months. Away from the markets, White House communications director Scaramucci has left the role after 10 days in the job. The cause of his departure is unclear, whether it was at the hands of Mr Trump or the new Chief of Staff John Kelly, who also started on the same day. Press secretary Sanders noted that Scaramucci left in “mutual agreement” with Kelly. It’s certainly not been a great couple of weeks for the administration.

Taking a look now at some of the data out yesterday. In Europe we got German retail sales data that unexpectedly saw momentum pick up on the month (+1.1% mom vs. +0.2% mom expected; +0.5% previous). We also got UK consumer credit data where net consumer credit supplied in June was in line with expectations at GBP 1.5bn although there were signs of credit growth slowing as mortgage approvals ticked down to 64.7k (vs. 65.0k expected; 65.2k previous) and unsecured borrowing rose at its slowest rate in over a year (10% YoY). Thereafter we got some aggregate Eurozone data in the form of the June unemployment rate that came in just below expectations (9.1% vs. 9.2% expected) and the July CPI estimate that was in line with expectations (+1.3% YoY), but the core CPI was a tad above expectations at 1.2% yoy (vs. 1.1% expected; 1.1% previous).

Over in the US the data was a bit mixed as we saw the Chicago PMI reading for July dip further than expected to 58.9 (vs. 60 expected; 65.7 previous) while the Dallas Fed manufacturing activity reading for July unexpectedly increased to 16.8 (vs. 13 expected; 15 previous) and pending home sales data for June beat expectations at 1.5% mom (vs. 1.0% expected;-0.8% previous). The ECB are clearly enjoying the breather that holiday season offers as CSPP purchases last week implied a lowly average daily run rate of €157mn (slightly higher than last week) against the average of €357mn since the program started . The CSPP/PSPP ratio was 8.1%, up from 6% a week earlier but still significantly below the long-run average. It’s becoming clearer that recent large scale corporate purchases were likely a front loading exercise ahead of the summer lull. Overall CSPP has almost certainty been tapered less than PSPP but the summer months may restore the balance a little between the two as the ECB probably believe that government bonds are going to be easier to purchase in thin markets than corporates.

Turning now to the day ahead. In Europe we will see July data for the UK Nationwide House Price index (-0.1% mom expected; +1.1% previous). Following that we get at the final revisions to the manufacturing PMIs for France, Germany and the Eurozone along with a first look at the data for the UK and periphery. We will also get the advance estimate for Q2 Eurozone GDP (+2.1% YoY expected; +1.9% YoY previous). Across the pond we will see the June personal income (+0.4% mom expected) and spending data (+0.1% mom expected), followed by the ISM manufacturing PMI for July (56.5 expected; 57.8 previous). Onto other events, the trade ministers from the BRICS countries will meet in Shanghai. Notable US companies reporting include: Apple, Pfizer, CME, Assurant and Illumina.

 END

3. ASIAN AFFAIRS

i)Late MONDAY night/TUESDAY morning: Shanghai closed UP 19.61 POINTS OR 0.60%   / /Hang Sang CLOSED UP 216.24 POINTS OR 0.79% The Nikkei closed UP 60.61 POINTS OR .30%/Australia’s all ordinaires CLOSED UP 0.81%/Chinese yuan (ONSHORE) closed UP at 6.7203/Oil UP to 50.14 dollars per barrel for WTI and 52.48 for Brent. Stocks in Europe OPENED IN THE GREEN , Offshore yuan trades  6.7234 yuan to the dollar vs 6.7203 for onshore yuan. NOW THE OFFSHORE IS WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN  STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS  STRONGER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY STRONGER DOLLAR. CHINA IS HAPPY TODAY 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

NORTH KOREA/USA

Senator Lindsay Graham stated on TV this morning that Trump is prepared to strike North Korea and the military option is to destroy North Korea

(courtesy zerohedge)

b) REPORT ON JAPAN

end

c) REPORT ON CHINA

Very important:  It seems China is in need of dollars as it is asking large Anbang Insurance to sell its overseas assets and repatriate dollars.  They can do this slowly as there is ample buyers for its overseas holdings.  However if forced on a quick sale, it may become systemic

(courtesy zero hedge)

Beijing Blowback Begins: China Orders Anbang To Sell Its Overseas Assets

Two weeks ago, when discussing the troubles plaguing one of China’s conglomerates and “boldest dealmaker”, HNA Group – recently best known for acquiring Anthony Scaramucci’s SkyBridge capital in a transaction that has yet to close – we said that what until recently was one of the world’s most aggressive roll-ups of varied companies from around the globe, including stakes in Hilton Companies and Deutsche Bank, as well as countless Chinese acquisitions, could very soon become the “reverse roll-up from hell”, as the stock price of HNA tumbled, putting the roughly $24 billion in loans that had been taken against HNA stock in jeopardy of breachin their LTV limits, forcing a massive margin call, and potential firesale liquidation of the company’s assets as shown in the chart below...

… which have been hit with the double whammy of various rating agency downgrades in recent months, further eroding the collateral value of HNA’s various assets.

Yet while the fate of HNA’s conglomerate future still remains largely in the hands of the market, which could easily prompt a firesale if it were to push HNA stock low enough, another Chinese conglomerate may not have the benefit of the market’s potential generosity, because according to Bloomberg, Chinese authorities have asked HNA’s peer, Anbang Insurance Group, the insurer whose chairman was recently detained in June and was classified as a potential “systemic risk” to China’s economy, to sell its overseas assets.

In addition to demand a liquidation of many if not all assets acquired by Anbang over the past three years, the government also asked the company – whose Chairman will surely comply following his brief “detention” – to bring the proceeds back to China after disposing of holdings abroad, suggesting not only growing concerns about Chinese capital outflows, but Beijing’s apparent intention to undo the massive Chinese M&A wave that swept the globe from 2014  through most of 2016, and led to the infamous “Chinese acquisition premium.”

Bloomberg notes that it is not clear yet how Anbang will respond, and in a WeChat message, the insurer said that “Anbang at present has no plans to sell its overseas assets,” although that is sure to change once Beijing asks again, less politely this time. “Currently, Anbang’s various businesses and operations are all normal, and the company has ample cash and sufficient solvency capabilities.”

Anbang, together with HNA, Wanda and Fosun, were the four most prominent Chinese conglomerates which unleashed a buying binge across the globe, fueled by soaring sales of investment-type insurance policies. Since 2015, the four companies completed a combined $55 billion in overseas acquisitions, 18% of Chinese companies’ total, and according to some, were instrumental in accelerating China’s capital outflows over the same period.

Anbang first emerged in the public arena with its high profile 2014 acquisition of New York’s Waldorf Astoria hotel. Subsequently, Anbang and its peers acquired such trophy assets as AC Milan, Legendary film studios and Hilton Worldwide.

Anbang alone made billions in acquisitions in such businesses as the Westin St. Francis, InterContinental Miami, Rabobank’s mortgage portfolio and various other M&A targets around the globe.

However, it all ended with a thud in mid-June, when Anbang Chairman Wu Xiaohui was detained for questioning, while the policies fueling the company’s growth have been all but banned by regulators. At this moment Anbang is merely a shell corporation, with virtually no new business creation, one whose massive debt load threatens to careen the company soon if it does not find sources of cheap liquidity and fast.

At a twice-a-decade conference on financial regulation convened by President Xi Jinping this month, policy makers pledged to rein in corporate borrowing and said that preventing systemic risk was an “eternal theme.”

Making matters worse is that Anbang’s rise in recent years was fueled by sales of lucrative wealth-management products that offered among the highest yields compared with peers, a key spoke of China’s $9 trillion shadow banking universe. China’s insurance regulator this year started clamping down on what it termed “improper innovation” and tightened rules on high-yield, short-term investment policies. Anbang and other aggressive insurers such as Foresea Life got caught up in the crackdown.

Where Anbang’s death spiral could turn especially aggressive, is if Anbang customers start surrendering their policies and stop buying new ones, a feedback loop that would accelerate a continuing cash drain at the company, while forcing its existing product suite of wealth products to default, leading to the biggest risk facing China’s economy: a shadow bank run.

One Anbang product, called Anbang Longevity Sure Win No. 1, boosted the firm’s life insurance premiums almost 40-fold in 2014 by offering yields as high as 5.8 percent. That helped provide fuel for the firm’s more than $10 billion of overseas acquisitions since 2014 and equally ambitious investing in the domestic stock market.

If investors realize that not only China’s M&A party is over, but that the shadow banking sector is facing a potential default cliff, the scramble to recover invested capital will be unprecedented.

For now, Anbang can delay the inevitable cash call by following Beijing’s demands, and slowly – at first- begin liquidating its trophy offshore assets, and repatriating the proceeds, effectively inverting the outbound M&A surge that marked the past three years. The good news is that at least at this moment, there are plenty of willing buyers for the upcoming Anbang firesale..

end

4. EUROPEAN AFFAIRS

EU/GERMANY/RUSSIA/USA

Berlin and the EU call for countermeasures against the uSA sanctions against Russia.  This is the first time that sanctions against Russia has been initiated without the counsel of Europe. Of course, as we have stated many times the real reason for the sanctions is to stop the Nord Stream 2 gas pipeline into Europe which will solidify Russia’s business in the west.

(courtesy zerohedge)

Berlin Calls For “Countermeasures” To US Sanctions Against Russia, Hints At Trade War

While the Pentagon may be already contemplating its next steps in the escalating conflict with Russia, which as the WSJ reported will likely involve supplying Ukraine with antitank missiles and other weaponry – a red line for the Kremlin not even the Obama administration dared to cross – there is minor matter of what to do with a suddenly furious Europe, which as we discussed  previously, has vowed it would retaliate promptly after Trump signed the anti-Russia legislation into law, due to allegations it was just a veiled attempt at favoritism for US-based energy companies.

And, sure enough, on Monday, the Germany economy minister said that the penalties against Moscow proposed by US lawmakers violate international law and officials in Brussels should consider countermeasures.

Speaking to Funke Mediengruppe newspaper, Brigitte Zypries said that “we consider this as being against international law, plain and simple.” She added that “of course we don’t want a trade war. But it is important the European Commission now looks into countermeasures.

She also said that the Americans can not punish German companies because they operate economically in another country.”

Well, that’s not what the US Congress thinks.

What makes the latest anti-Russia sanctions unique, is that the bill, which passed both the House and Senate but has yet to be signed by Trump, marked the first time Washington has made a move against Moscow without European consent.

Furthermore, the reason for Europe’s anger is that contrary to its stated intention of punishing Russia for “meddling in the presidential elections”, the bill appears – according to Brussels – to target Russia’s Nord Stream-2 pipeline that will deliver natural gas from Russia to Germany. The proposed expansion would double the existing pipeline’s capacity and make Germany EU’s main energy hub, and even more reliant on Russia.

In addition to targeting major sectors of Russia’s economy, including defense, railway, and banking industries the bill seeks to introduce individual sanctions for contributing in Russian energy projects, which will likely adversely impact numerous European companies.

Previously, the latest round of sanctions has been criticized by various officials in Europe, including Austrian Chancellor Christian Kern and German Foreign Minister Sigmar Gabriel. Critics of the US government argue the sanctions could affect European energy security and serve Washington’s economic interests – in line with the “America First” policy of President Trump.

Just what shape the European retaliation could take has yet to be determined, although last week Politico reported that options on the table include triggering the ‘Blocking Statute,’ an EU regulation that limits the enforcement of extraterritorial US laws in Europe. A number of “WTO-compliant retaliatory measures” are also being considered.

end

UK Banks

UK banks may need at least $50 billion in new capital to fund projects after Brexit.  The extra capital will be needed because the banks will lose their privilege  in Europe’s single market/

(courtesy Jones/Morris/Bloomberg)

Banks May Need $50 Billion New Capital After Brexit

July 31, 2017, 7:01 PM EDT August 1, 2017, 5:38 AM EDT
  • Oliver Wyman sees costs rising $1 billion across the industry
  • As returns fall, some firms may opt to abandon Euro operations

Follow @Brexit for all the latest news, and sign up to our daily Brexit Bulletin newsletter.

Banks may need to find $30 billion to $50 billion of additional capital to support new European units in the aftermath of a hard Brexit, and some smaller firms may abandon their operations on the continent altogether as profitability plunges, according to Oliver Wyman Inc.

The extra money is equivalent to 15 percent to 30 percent of the capital wholesale banks commit to the region, the management consultant said in a report Tuesday. In addition, operating costs could rise by $1 billion as functions currently handled in London are duplicated on the continent as banks scramble to establish new hubs to ensure prized access to the European Union’s markets.

A hard Brexit, where banks lose privileges access to the European Union’s single market, would “fragment European wholesale banking,” Oliver Wyman partners including Matt Austen and Lindsey Naylor said in the report. “It will also make it significantly less profitable. Banks could see two percentage points knocked off their returns on equity.”

The report is the latest warning about the ramifications of Brexit for the region’s financial system since the U.K. voted to leave the EU last June. HSBC Holdings Plc was the first bank to spell out the cost of Brexit, forecasting Monday it will have to pay as much as $300 million in relocation and legal costs as it moves 1,000 investment bankers to Paris, about a fifth of its London workforce. Chairman Douglas Flint also warned fragmentation of the industry could mean financing for countries and corporations is will be harder to find and more expensive.

Read more: Will Brexit trigger an exodus of banks from London?

With returns already depressed after the financial crisis, “these new challenges from Brexit will raise difficult questions about the viability of some activities,” the consultants said in the report. “Some banks may even choose to withdraw capacity from the European market as a whole and redeploy to other regions, such as Asia or the U.S.”

Banks, concerned by the lack of progress in talks and the potential for London to be shut out of the single market, have started activating their worst-case contingency plans and are establishing hubs on the continent. While Frankfurt and Dublin are getting the lion’s share of banking jobs relocated from London, some have predicted the ultimate beneficiary will be New York as banks strive to recapture the efficiency of having operations in a single city.

Oliver Wyman estimates lost links to the EU could drive as many as 35,000 financial-services jobs from Britain, including up to 17,000 from wholesale banking. There’s also the question of whether London can continue to provide clearing services for the rest of Europe, Oliver Wyman said.

“HSBC’s initial estimate of for Brexit-related costs will likely be followed by many more detailed plans from peers as the need to prepare for a worst-case scenario grows,” said Bloomberg Intelligence analyst Jonathan Tyce. “Oliver Wyman’s estimate will be proven appropriate should a hard Brexit necessitate significant duplication of functions currently located in London, as well as staff hiring and relocation.”

The pressure for banks to boost their operations on the continent will likely build as the European Central Bank’s desire for tougher banking supervision across the euro zone forces lenders to show they’re self-sufficient and have strong governance, according to the report.

end

5. RUSSIA AND MIDDLE EASTERN AFFAIRS

end

6 .GLOBAL ISSUES

7. OIL ISSUES

Goldman Sachs states that an oil embargo against Venezuela will have little impact on the west but it will certainly hurt Venezuela’s bottom line

(courtesy zero hedge)

Oil Slumps Below $50 After Goldman Shrugs At Venezuela Sanctions Impact

As US equity markets push higher this morning, because that’s what they do, WTI Crude prices are sliding back below $50 as Goldman poured cold water on the idea that sanctions of Venezuela will impact prices.

Goldman says U.S. oil sanctions on Venezuela would have little impact on prices.

  • A U.S. ban on Venezuelan exports, or imports, would lead to reshuffling of oil trade flows with likely limited impact on prices
  • Should ban on U.S. crude imports from Venezuela be implemented, South American country would see further declines in oil revenues by $1.5/bbl given higher freight costs to India and China
  • Assuming both import, export bans are implemented and Venezuela further discounts its crude by $1/bbl to incentivize substitution, Brent would need to fall below $34/bbl to make Venezuela’s highest cost blended heavy oil production uneconomical

And traders seem to be listening.

Of course, stocks don’t care…

Furthermore, Bloomberg’s tanker tracking shows rising exports in Libya and Iran, while Venezuelan shipments decline.

We will see what tonight’s API print says about the ‘rebalancing’.

end

Oil Just Plunged To A $48 Handle After Survey Suggests OPEC Output Jumped In July

Extending losses from Goldman’s overnight report noting the minimal impact of Venezuelan sanctions, WTI crude just crashed below $49 on heavy volume after Bloomberg reports that a survey suggests that OPEC’s July oil output rose by 210K to 32.87mmb/d, led by growth in Libya who upped production by 180Kb/d to the highest since June 2013.

The recovery of crude production from Libya is undermining OPEC’s efforts to curb its output as the African nation pumps unabated.

 

Total crude production from the Organization of Petroleum Exporting Countries in July rose 210,000 barrels a day from June to reach 32.87 million barrels a day, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data.

 

Libya — which along with Nigeria is exempt from making cuts as it seeks to restore output lost to internal strife — led those gains, adding 180,000 barrels a day. Production rose to 1.02 million barrels a day, the highest level since June 2013, according to data compiled by Bloomberg.

Not exactly confirming the “market is rebalancing” narrative…

The S&P 500 desperately tried to ignore crude’s early weakness but this recent move is dragging stocks lower…

The $50-level is “a psychological level. People are really beginning to realize that the market probably needs a steady beat of bullish information to continue to rally,” Gene McGillian, market research manager at Tradition Energy, says to Bloomberg.“If we don’t get a really positive inventory report this week, the market is vulnerable to a nice little turnaround” after rallying the last couple of weeks

end

At 5 pm WTI tumbles after a good sized crude inventory build

(courtesy zero hedge)

WTI Tumbles After Surprise Crude Inventory Build

Tyler Durden's picture

Following the ugliest day in a month for WTI (on OPEC production increase survey), bulls hopes rest on tonight’s API data confirming the recent trend of inventory draws but that was not to be. Against expectations of a 3.1mm draw, API reported crude inventories built by 1.78mm barrels last week. The kneejerk reaction was clear – down hard.

 

API

  • Crude +1.78mm (-3.1mm exp)
  • Cushing +2.562mm (-700k exp)
  • Gasoline -4.827mm (-1mm exp)
  • Distillates -1.225mm

The recent trend in draws (for crude, gasoline, and distillates) was stymied last week with the biggest crude draw in 2 months, and a huge build at Cushing…

 

Following the Oil ETF’s largest monthly withdrawal since 2009, WTI was hovering just above $49 as API printed but tumbled on the surprise build…

“This race to rebalance supply and demand–it’s a marathon and lot of people are entering it thinking it’s just a quick sprint,” Mark Watkins, a regional investment manager at U.S. Bank Wealth Management, which oversees $142 billion in assets, told Bloomberg. “But, this rebalancing is going to take a lot longer than a month, or six months or even a year.”

8. EMERGING MARKET

VENEZUELA

The country now is in total chaos with the arrest of the two opposition leaders Leopoldo Lopez and Antonio Ledezma.  Their economy has now crashed by 32% this year. It looks like Venezuela will now turn to Russia and China.  As we have stated to you in the past the state oil company has considerable downstream oil assets in the USA (CITGO)  of which 49% of the assets as have pledged to Russia’s Rosneft

 

(courtesy zero hedge)

“They’ve Just Taken Leopoldo”: Maduro Detains Opposition Leaders At Gunpoint

The crackdown by Venezuela President Nicolas Maduro – now officially branded a dictator by the U.S. – on political opposition intensified Tuesday when intelligence agents detained opposition leaders Leopoldo Lopez and Antonio Ledezma at gunpoint in their homes and took them into custody.

The two politicians have been under house arrest for their involvement in anti-government protests and organizing, according to the BBC. Videos published online by family members of both men show them being led away in the middle of the night by agents from Sebin, the Venezuelan intelligence agency. Lopez’s wife Lilian Tintori said in a tweet: “They’ve just taken Leopoldo from the house. We don’t know where he is.” She published grainy footage from the home’s security cameras showing her handcuffed husband being placed in the back of a car.

Momentos en que @leopoldolopez es llevado por funcionarios del SEBIN. ( Sigue sin conocerse su pradero)

“If something happens to him, Maduro will be held responsible,” Tintori said, according to Bloomberg.

Vanessa Ledezma, the daughter of the former Caracas mayor, posted video of her father being taken away by the Sebin, the Venezuelan intelligence agency, in his pajamas. In the video, a woman can be heard shouting: “They’re taking Ledezma, they’re taking Ledezma, dictatorship!”

Video apparently show arrest of Caracas, Venezuela Mayor Antonio Ledezma overnight @nbc6 https://twitter.com/albertort51/status/892257324739571712 

According to the BBC, both men were key figures in protests that that led to 43 deaths, including anti- and pro-government demonstrators. Though their role in the opposition movement has been diminished by house arrest, video messages by both men are still shared widely on opposition websites. Ledezma published a video on Monday where he called the constituent assembly a “fraud” and denounced the “tyranny” of the Maduro regime.

In a Sunday vote that was boycotted by the opposition, Maduro’s government claimed overwhelming victory, saying their candidates had won all 545 seats in the assembly, which will replace the opposition dominated National Assembly, which was disbanded by the Maduro-aligned Supreme Court in March. At least 10 demonstrators died during the vote as protesters tried to disrupt the vote, erecting barricades around polling stations. The US, UK, European Union, Australia and Argentina have refused to recognize the vote.

According to Bloomberg, Lopez has become a symbol for human-rights groups and foreign governments, who’ve said his detention, including stints in solitary confinement, was clear evidence that Maduro was willing to trample basic rights to safeguard his power. Opposition leaders and family members of both say their whereabouts are unknown.

Maduro is seeking to rewrite the constitution after a referendum on Sunday that the opposition and many foreign governments refused to recognize. Opponents regard the push to overhaul the charter as a power grab by an increasingly autocratic leader.

On Monday, the Treasury’s Office of Foreign Assets Control (OFAC) personally sanctioned Maduro, adding him to a list of 13 other senior government officials who have been shut out of the US financial system. There’s speculation that the US could press sanctions against the state-controlled energy industry, something that RBC’s top commodity analyst has speculated that Venezuela, which has the largest oil reserves of any country on Earth, could be the first major oil producer to see an all-out economic collapse. Government officials have said energy-industry sanctions would worsen the country’s economic crisis in a way that would disproportionately harm the country’s most vulnerable citizens.

Maduro’s regime has remained defiant, according to Al Jazeera.

“They don’t intimidate me. The threats and sanctions of the empire don’t intimidate me for a moment,” Maduro told a cheering audience. “I don’t listen to orders from the empire, not now or ever. Bring on more sanctions,” he told US President Donald Trump.

The country’s economy has been declining since shortly after Maduro, the hand-picked successor to deceased socialist icon Hugo Chavez, took office in 2013, as years of economic mismanagement and collapsing oil prices squeezed the government’s access to foreign currency, sparking a vicious cycle of hyperinflation. Presently, the country’s currency, the Venezuelan bolivar, is trading at more than 11,000 to the dollar in Caracas’s black markets, according to dolartoday.com. Meanwhile, the country’s foreign reserves have tumbled below $10 billion, sending yields on its dollar-denominated debt north of 36%, according to Bloomberg.

“The nation’s $3 billion bonds due 2022 plummeted, sending the yield soaring 86 basis points as of 9:43 a.m. in London to close to 40 percent, the highest level on a closing basis since February 2016. Bets on a Venezuelan default are climbing and the implied probability of a missed payment over the next year has risen to 64 percent, according to data compiled by Bloomberg on credit-default swaps.”

 

The country’s economic outlook looks increasingly dire by the day: by the end of this year, it’s expected that its economy will have shrunk by 32% compared to where it was at the end of 2013, according to the IMF. Of course, as at least one analyst has noted, the US’s attempts to pressure Maduro with sanctions will likely only push his regime further into “unfriendly” orbit, either that of China or Russia. In exchange for a loan from Russian oil giant Rosneft in December, Venezuela’s state-owned oil company, Petroleos de Venezuela, put up a 49.9% in Citgo, its US arm, which could leave Russia in control of what Congress has labeled critical infrastructure.  Also, as reported previously, China has repeatedly provided loans to Venezuela in the past in exchange for oil, although its eagerness to do so in recent months has waned substantially.

 END

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

Euro/USA   1.1733 DOWN .00105/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/ /USA RISING INTEREST RATES AGAIN/EUROPE BOURSES ALL IN THE GREEN 

USA/JAPAN YEN 110.43 UP 0.083(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST/LABOUR PARTY LOSES IN LOCAL ELECTIONS

GBP/USA 1.3213 UP .0017 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS

USA/CAN 1.2479 DOWN .0028 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS TUESDAY morning in Europe, the Euro FELL by 5 basis points, trading now ABOVE the important 1.08 level  FALLING to 1.1816; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ TRUMP HEALTH CARE BILL DEFEAT AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED  UP 19.61 POINTS OR .60%     / Hang Sang  CLOSED UP 216.24 POINTS OR 0.79% /AUSTRALIA  CLOSED UP 0.81% / EUROPEAN BOURSES OPENED  IN THE GREEN 

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

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

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

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

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

The NIKKEI: this TUESDAY morning CLOSED UP 60.61 POINTS OR .30%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 216.24 POINTS OR 0.79%  / SHANGHAI CLOSED UP 19.61 POINTS OR 0.60%   /Australia BOURSE CLOSED UP 0.81% /Nikkei (Japan)CLOSED UP 60.61  POINTS OR .30%   / INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: 1267.00

silver:$16.74

Early TUESDAY morning USA 10 year bond yield: 2.294% !!!  UP 0  IN POINTS from MONDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

 The 30 yr bond yield  2.8976, UP 0  IN BASIS POINTS  from MONDAY night.

USA dollar index early TUESDAY morning: 92.97 UP 11  CENT(S) from MONDAY’s close.

This ends early morning numbers  TUESDAY MORNING

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And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield: 2.849% DOWN 3 in basis point(s) yield from MONDAY 

JAPANESE BOND YIELD: +.078%  DOWN  1/2   in   basis point yield from MONDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.438% DOWN 6   IN basis point yield from MONDAY 

ITALIAN 10 YR BOND YIELD: 2.016 DOWN 8 POINTS  in basis point yield from MONDAY 

the Italian 10 yr bond yield is trading 61 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.491% DOWN 5  IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR TUESDAY

Closing currency crosses for TUESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/12:30 PM 

Euro/USA 1.1799 DOWN .0021 (Euro DOWN 21 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 110.35 DOWN  0.008(Yen DOWN 1 basis points/ 

Great Britain/USA 1.3205 UP  0.0008( POUND UP 8

basis points) 

USA/Canada 1.2538 UP .0031 (Canadian dollar DOWN 31 basis points AS OIL FELL TO $48.59

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This afternoon, the Euro was DOWN  by 21 basis points to trade at 1.1799

The Yen FELL to 110.35 for a LOSS of 1  Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND ROSE BY 1  basis points, trading at 1.3205/ 

The Canadian dollar FELL by 31 basis points to 1.2538,  WITH WTI OIL FALLING TO :  $48.59

The USA/Yuan closed at 6.7178/
the 10 yr Japanese bond yield closed at +.078%  DOWN  1/2 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN  3  IN basis points from MONDAY at 2.262% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.864 DOWN 4 in basis points on the day /

Your closing USA dollar index, 93.06  UP 20 CENT(S)  ON THE DAY/1.00 PM 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for TUESDAY: 1:00 PM EST

London:  CLOSED UP 51.66 POINTS OR 0.70%
German Dax :CLOSED UP 133.04 POINTS OR 1.10%
Paris Cac  CLOSED UP 33.26 POINTS OR 0.65% 
Spain IBEX CLOSED UP 84.50 POINTS OR 0.80%

Italian MIB: CLOSED UP 125.90 POINTS/OR 0.59%

The Dow closed UP 72.80 OR 0.33%

NASDAQ WAS closed UP 14.82  POINTS OR 0.23%  4.00 PM EST
WTI Oil price;  48.59 at 1:00 pm; 

Brent Oil: 51.16 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  60.28 UP 51/100 ROUBLES/DOLLAR (ROUBLE LOWER BY 51 BASIS PTS)

TODAY THE GERMAN YIELD RISES TO  +0.491%  FOR THE 10 YR BOND  4.PM EST EST

END

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

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

WTI CRUDE OIL PRICE 5:00 PM:$49.17

BRENT: $51.71

USA 10 YR BOND YIELD: 2.249%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.8544%

EURO/USA DOLLAR CROSS:  1.1801 DOWN .0019

USA/JAPANESE YEN:110.34  DOWN  0.013

USA DOLLAR INDEX: 93.08  UP 21  cent(s) 

The British pound at 5 pm: Great Britain Pound/USA: 1.3204 : UP 8 POINTS FROM LAST NIGHT  

Canadian dollar: 1.2543 down 36 BASIS pts 

German 10 yr bond yield at 5 pm: +0.491%

END

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

TRADING IN GRAPH FORM FOR THE DAY

Crude Crashes, Bonds Bid, & Trannies Turmoil But VIX Vanquished To 9 Handle Again

 

With oil crashing, ‘hard’ economic data slumping, political chaos ahead of the debt ceiling debacle, and The Fed about to embark on something no central bank has ever done (let alone done successfully), it should be no surprise that earnings expectations are being ramped exponentially higher and The Dow (thanks in large part to Boeing recently) has exploded near 22,000 today for the first time ever making yet another new record high…

 

Despite a mixed picture in soft survey data about the US manufacturing sector this morning, ‘hard’ economic data continues to collapse – even against severely downgraded expectations – this is the weakest for US Hard Data since March 2015

 

The Dow outperformed (again) as Trannies got trounced… (Small Caps and Nasdaq remain red on the week)…

 

Every effort was made early on to ramp The Dow to 22,000 – crushing VIX to a 9 handle once again… but it failed…

 

Trannies tumbled once again – to the lowest levels since May 27th – this time on crashing crude… (rails hit on lower auto sales)

 

Despite the plunge in the yield curve and Goldman’s warning, Financials outperformed as Energy ended red…

 

Early gains in FANG stocks rolled over quickly in the afternoon…

 

Under Armor Under Water…

 

Carmakers continued their carnage

  • *AUTODATA: JULY LIGHT VEHICLE SAAR 16.73M UNITS, EST.  17.0M

 

APRN tumbled again…

 

And SNAP crashed to new record lows… (this time blamed on the S&P index decision not include multiple share class companies)

 

Treasury yields tumbled today after dismal car sales and poor economic data…

 

30Y Yields have erased all the post-Fed move…

 

Amid a notably volatile day in FX markets, the dollar index ended marginally higher…

 

WTI Crude had quite a day – everything was awesome early on – WTI above $50… and then Bloomberg reported a survey suggesting OPEC output actualy rose in July and WTI tumbled…

 

Gold continued its push higher – back above $1280 and back to Fed hike levels…

An extremely important data point for the uSA and this is a hard data entry.  Personal income slumps to its weakest level in over a year
(courtesy zero hedge)

Americans’ Income Growth Slumps To Weakest Since November

After last week’s revised BLS data showed desperate Americans saving the least since the recession

 

It is perhaps no surprise that personal income growth ended in June (0.0% MoM) missing expectations and falling to its lowest level since November. Spending growth also slumped (has not been weaker since August).

Income was disappointingly unchanged in June, weaker than expected, while nominal spending was up 0.1%, as expected. Adjusted for inflation, spending was unchanged in June. Consumer spending was up 2.8% in Q2, as reported in the advance GDP report last Friday. Looking ahead, we expect Q3 real PCE to be up around 2.4% and estimate a 2.6% gain in Q3 GDP. PCE Price indexes continue to be below the Fed’s 2% target.

Overall, real personal spending growth stalled…

 

All this weakness probably explains why stocks are soaring to record highs and why The Fed wants to keep hiking rates?

 

 

end

 

General Motors announces a huge drop of 15% in sales.  On top of that dealer inventory rises to an all time high.  Not good for the economy;

(courtesy zero hedge)

 

GM Auto Sales Crash, Dealer Inventory Near All Time High

It was expected to be a bad quarter for General Motors. It ended up being abysmal.

GM reported that July auto sales crashed by a whopping 15%, nearly double Wall Street’s already depressed expectations of a 8% drop, and with GM mothballing production across the country to catch up with lagging demand, it still sold only 226,107 vehicles as a result of double digits drops in Chevy, Build and Cadillac Sales of 15.3%, -30.5% and -21.7%, respectively. The only “good” performer was GMC, which dropped by “only” 7.3% Y/Y.

The company also reported that while the average transaction price was $36,000, or roughly $1,000 higher than a year ago, the incentive spending as a percentage of average transaction prices was 11.5%, near an all time high.

This is how the company explained this dramatic decline in production:

“We have strategically decided to reduce car production rather than increase incentive spending or dump vehicles into daily rental fleets, like some of our competitors,” Kurt McNeil, U.S. vice president of Sales Operations, says in a statement.

Which would be great, however judging by the almost negligible drop in dealer inventory, which saw the number of cars parked at dealer lots decline by just 40K to 939,831, resulting in a near record 104 days of sales, it appears that GM needs to shutter production for months on end to normalize GM’s unprecedented channel stuffing.

Abysmal sales aside, however, the company remains quite optimistic: “Under the current economic conditions, we anticipate the second half of 2017 will be much stronger than the first half,” Mustafa Mohatarem, GM chief economist says. Good luck with that anticipation chief GM economist.

And speaking of GM’s “competitors”, it wasn’t any better there, with Chrysler reporting a July auto sales drop of -10.5%, also far below the 6.1% expected.

  • Fiat brand -18%
  • Chrysler brand -30%
  • Jeep brand -12%
  • Dodge brand -12%
  • Ram brand sales were flat y/y
  • Fleet sales -35%

At this rate, the US auto sector could become the catalyst that finally tips the US economy over into recession.

 

 

end

Both Ford and GM sales falter badly despite record July incentive spending

 

(courtesy zero hedge)

Carmageddon: Ford & GM Sales Tank Despite Record July Incentive Spending

It was hard to find a bright spot for auto investors in July’s auto sales figures released earlier today with GM down 15% YoY, Ford off 7% and Chrysler down 11%.

The companies blamed the drops on lower fleet sales but GM’s retail sales also fell 14.4% from July 2016.  Meanwhile, Ford and Fiat Chrysler retail sales had single-digit declines, and their fleet sales fell 26% and 35%, respectively.

 

Here’s a recap of how each of the largest OEM’s made out in July:

GM:

Three of GM’s four brands posted double-digit sales declines in July with Chevrolet down 15%, Cadillac down 22% and Buick plunging 31%.

 

While GM blamed weak fleet sales for their abysmal month, their retail sales declined 14% as well.

 

The Chevy Spark minicar withered, falling 81.9% to 764 units for the month, while the Chevy Sonic subcompact car declined 47.3% to 2,552.

 

Ford:

Ford retail sales fell 1% while fleet sales declined 26%.

 

Ford’s flagship brand fell 8%, while the luxury Lincoln brand declined 2.5%.

 

Car sales were off 19%, including a 13% decline for the Ford Fiesta subcompact and a 42% decline for the Fusion mid-size car.

 

Fiat Chrysler:

All of Chrysler’s major brands, except Ram, were down double digits. Jeep was down 12%, Chrysler 30%, Dodge 12% and Fiat 18%. Ram sales were flat.

 

Retail sales were down 6%, while fleet sales were down 35%.

 

Toyota:

The Japanese automaker soared past expectations for a surprise sales gain. The company’s flagship Toyota brand and luxury Lexus brand were each up 3.6%.

 

With the strong sales performance, Toyota surpassed Ford in July as the nation’s second-largest automaker for the month, behind only GM.

 

Toyota’s passenger cars were weak, down 12% for the month, while sales of crossovers, pickups and SUVs rose 17%.

Despite the extreme declines at the domestic OEM’s, the overall SAAR continued to hover around 17mm units, reaffirming, at least for now, Ford’s assertion that sales will ‘plateau’ at current levels.

 

That said, overall inventory levels remain elevated despite the fact that incentive spending set a new record  of $3,876 per unit in the month of July.  Per J.D. Power:

Average incentive spending per unit to date in July is $3,876 per unit, a record for July, and surpassing the previous high for the month of $3,597, set in July 2016. Spending on trucks and SUVs is $3,700, up $194 from last year. Spending on cars is $4,174, up $436.

 

Incentives as a percentage of MSRP are at 10.8% so far in July, exceeding the 10% level for 12th time in the past 13 months

 

Meanwhile, GM’s inventory continues to be the most bloated of all the OEMs with 939,831 cars still parked in dealer lots all across the country…equal to 104 days of supply.

 

Of course, as silly as it may seem, some analysts still found a way to be upbeat about the industry.  Per Detroit News:

“The fundamentals in the industry are still very, very strong,” said Kelley Blue Book analyst Alec Gutierrez. Big-picture indicators like fuel prices, employment levels within the industry and customer satisfaction are all at healthy leavels.

 

At a gathering of auto officials in Traverse City on Tuesday, several analysts delivered a similar message on the state of the industry: “The sky is not falling.”

 

Jeff Schuster, senior vice president of global forecasting for LMC Automotive, said despite sales numbers out of North America, there are reasons for optimism overall.

 

“Transaction prices are up, that’s a very positive thing…,” he said. “We’re looking at over $31,000 on average – up over a percent.”

But Ford and GM shareholders are starting to lose faith…

 

…as are investors in the suppliers.

 

Oh well, we’re sure this is just a temporary pause…the second half is sure to be better.

 

Soft Data Manufacturing ISM data disappoints

(courtesy zero hedge)

 

Manufacturing Surveys Signal Economy “Still Stuck In Low Gear” Amid Collapse In ‘Hard’ Data

After hitting a 9-month low in June, Markit’s US Manufacturing PMI bounced to 53.3 in July with new orders, output, and employment rebounding. In a China-esque moment, ISM disappointed, modestly dropping to 56.3 with prices paid surging and new orders tumbling. All of this uncertainty is happening as ‘hard’ data in the American economy is collapsing.

After six straight months lower, PMI bounced in July (very slightly beating the 53.2 expectation) but ISM dipped and missed expectations.

 

ISM breakdown shows most sub-indices declined but a surge in prices paid!!

New Orders are slumping

Despite the drop in new orders and the overall index, every ISM respondent was bullish…

Commenting on the final PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

“The second half of the year got off to a good start for US manufacturers, with the health of the sector improving at the fastest rate for four months. Output, new orders, employment and buying activity all grew at increased rates. The only real blot on the copybook was a decline in exports for the first time since last September.

 

“However, IHS Markit expects GDP growth to accelerate to a near 3% annualised rate in the third quarter, fueled by gains in consumer spending and business investment, which should benefit manufacturing.

However, before we get all carried away with this modest rebound, Williamson notes…

…although rising, the survey indices remain consistent with only very modest increases in comparable official data such as manufacturing output, durable goods orders and payroll numbers.

 

Clearly the manufacturing sector remains stuck in a low gear, though is at least gaining momentum and will hopefully shift up a gear as we move through the second half of the year if demand continues to improve.

US Construction Spending Just Collapsed

Headline growth in US construction spending collapsed in July to just 1.6% YoY – the weakest since 2011.

As Reuters reports, U.S. construction spending unexpectedly fell in June as investment in public projects recorded its biggest drop since March 2002. The Commerce Department said on Tuesday that construction spending tumbled 1.3 percent to $1.21 trillion – the lowest level since September 2016 – drastically missing economists’ estimates of a 0.4% increase.

This downside surprise suggests notable downside revisions to Q2 GDP (from its 2.6% annualized level).

However, most ironic in the government’s report was, amid The White House constant chatter of the need for infrastructure spending in America, Federal government construction spending crashed 9.5% – the largest drop since December 2010.

Public construction spending has hovered in negative territory for the most part of the past year and requires a strong infrastructure spending for its revival. The latest data suggest state and local investment was weaker-than-previously estimated and imply a further modest downward revision to 2Q GDP.

In June, investment in public construction projects plunged 5.4 percent, the biggest drop since March 2002. The decline pushed public construction spending to its lowest level since February 2014. Outlays on state and local government construction projects fell 5.1 percent in June, also the largest fall since March 2002.

As Bloomberg Intelligence notes, the trends in the underlying components of construction spending of late are disconcerting, though the private sector slowdown could prove temporary as housing supply needs to increase. The public sector’s bleak performance is unlikely to see a significant change without a significant fiscal boost in the form of a well-thought-out infrastructure spending program.

Looking at taxpayer-funded spending on America’s highways, schools and water systems, the White House’s infrastructure plan appears long overdue. Government projects’ share of total construction outlays was less than 22 percent in June, the smallest since 2006.

Does this look ‘transitory’ to you?

A Quarter Trillion Dollars In US Savings Was Just “Wiped Away”

As part of its historical revision to GDP, the BEA also had to adjust personal income and spending, with the full results released in today’s July report. What it revealed was striking: over the revised period, disposable personal income for US household was slashed cumulatively by over $120 billion to just under $14.4 trillion, while spending was revised higher by $105 billion, to just above $13.8 trillion. There were two immediate consequences of this result.

First, as the following table shows, while government pay has remained roughly flat over the past 3 years, growing in the mid-2% to mid 3% range, wages and salaries for private workers have been steadily declining as the blue line below shows, and after hitting a 4% Y/Y growth in February, wage growth has slumped to just 2.5% in June, the lowest since January 2014 when excluding the one-time sharp swoon observed at the end of 2016.

 

But a more troubling aspect of today’s revision is what the drop in income and burst in spending means for the average household’s bank account: following the latest annual revision, what until last month was a 5.5% personal saving rate was revised sharply lower as a result of the ongoing downward historical adjustment to personal income and upward adjustment to spending, to only 3.8%.

In dollar terms, this revision means that a quarter trillion dollars, or $226.3 billion, in savings was just “wiped away” from US households – if only in some computer deep in the bowels of the BEA buildings –  who as a result have that much less purchasing power, and following the revision the total personal saving in the US as calculated by the BEA is now down to only $546 billion, down from $791 billion before the revision.

This means that either households will have to incur this much debt to continue on the previous spending “trendline”, or a quarter trillion in potential growth from the future economy (recall 70% of US GDP is the result of consumer spending), has just been chopped off.

A tremendous commentary from David Stockman explaining to us the history of how the wars in the middle east came to be and that it all started with the folly of USA policy

(courtesy David Stockman)

Stockman: The Tweet That Is Shaking The War Party

Authored by David Stockman via AntiWar.com,

Most of the Donald’s tweets amount to street brawling with his political enemies, but occasionally one of them slices through Imperial Washington’s sanctimonious cant. Indeed, Monday evening’s 140 characters of solid cut right to the bone:

The Amazon Washington Post fabricated the facts on my ending massive, dangerous, and wasteful payments to Syrian rebels fighting Assad…..

Needless to say, we are referencing not the dig at the empire of Bezos, but the characterization of Washington’s anti-Assad policy as “massive, dangerous and wasteful”.

No stouter blow to the neocon/Deep State “regime change” folly has ever been issued by an elected public official. Yet there it is – the self-composed words of the man in the Oval Office. It makes you even want to buy some Twitter stock!

Predictably, the chief proponent of illegal, covert, cowardly attacks on foreign governments via proxies, mercenaries, drones and special forces, Senator McWar of Arizona, fairly leapt out of his hospital bed to denounce the President’s action:

“If these reports are true, the administration is playing right into the hands of Vladimir Putin.”

That’s just plain pathetic because the issue is the gross stupidity and massive harm that has been done by McCain’s personally inspired and directed war on Assad – not Putin and not Russia’s historic role as an ally of the Syrian regime.

Since 2011, Senator McCain has been to the region countless times. There he has made it his business to strut about in the manner of an imperial proconsul – advising, organizing and directing a CIA recruited, trained and supplied army of rebels dedicated to the overthrow of Syria’s constitutionally legitimate government.

At length, several billions were spent on training and arms, thereby turning a fleeting popular uprising against the despotic Assad regime during the 2011 “Arab spring” into the most vicious, destructive civil war of modern times, if ever. That is, without the massive outside assistance of Washington, Saudi Arabia and the emirates, the Syrian uprising would have been snuffed out as fast as it was in Egypt and Bahrain by dictators which had Washington’s approval and arms.

As it has happened, however, Syria’s great historic cities of Aleppo and Damascus have been virtually destroyed – along with its lesser towns and villages and nearly the entirety of its economy. There are 400,000 dead and 11 million internal and external refugees from an original population of hardly 18 million. The human toll of death, displacement, disease and disorder which has been inflicted on this hapless land staggers the imagination.

Yet at bottom this crime against humanity – there is no other word for it – is not mainly Assad’s or Putin’s doing. It can be properly described as “McCain’s War” in the manner in which (Congressman) Charlie Wilson’s War in Afghanistan during the 1980’s created the monster which became Osama bin Laden’s al-Qaeda.

Even the fact that the butchers of ISIS were able to establish a temporary foothold in the Sunni villages and towns of the Upper Euphrates portion of Syria is the direct doing of McCain, Lindsay Graham and their War Party confederates in the Congress and the national security apparatus. That’s because Syria’s air force and army would have stopped ISIS cold when it invaded in 2014 if it had not been weakened and beleaguered by Washington’s oppositions armies.

But why did Washington launch McCain’s War in the first place?

The government of Syria has never, ever done harm to the American homeland. It has no military capacity to attack anything much beyond its own borders – including Israel, which could dispatch Assad’s aging air force without breaking a sweat.

Moreover, even if a purely sectarian civil war in this strategically irrelevant land was any of Imperial Washington’s business, which it isn’t, Senator McCain and his War Party confederates have been on the wrong side from the get-go. The Assad regime going back to the 1970 was Arab Baathist – a form of nationalistic and anti-colonial socialism that was secular and inclusive in its religious orientation.

Indeed, as representatives of the minority Alawite tribes (15% of the population, at best), the Assad regime was based on Syria’s non-Sunni Arab minorities – including Christians, Druze, Kurds, Jews, Yazidis, Turkomans, and sundry others. Never once did the Assad’s seek to impose religious conformity – to say nothing of the harsh regime of Sharia Law and medieval religious observance demanded by the Sunni jihadists.

The point is, the Syrian opposition recruited by Washington for McCain’s War exploited the grievances of ordinary Sunni citizens, but it was led by radical jihadist military commanders. Washington’s endless charade of “vetting” these opposition fighters to ensure that aid only went to “moderates” was a sick joke.

Such moderates as existed were mainly opportunistic politicians who operated far from the battle in Turkish safe havens – or even from temporary residences in the beltway. It is a proven fact that most of the weapons supplied by the CIA and the gulf states were either sold to the Nusra Front and other jihadist factions or ended up in their hands when the CIA’s “moderate” trainees defected to the radicals.

So the question recurs. Why did Washington embark on this tremendous, pointless folly?

The answer is straight forward. Washington has become an Imperial City populated by a permanent class of sunshine patriots and self-appointed global field marshals like Senator McCain, who do the bidding of the military/industrial complex and its far-flung Warfare State apparatus.

That is, they identify and demonize the enemies and villains that are needed to keep the money flowing into the Empire’s $700 billion budget. In this case, Assad drew the short straw because as a member of the greater Shiite confession in the Islamic world he was naturally allied with the Shiite regime of Iran.

In part 2 we will take up the real reason for McCain’s War in Syria. It was a proxy war and a provocation designed to prosecute the real neocon target – the endlessly vilified Shiite regime in Tehran.

Part 2

Syria was never meant to be a real country. Its borders were scratched on a map in 1916 by Messrs. Picot and Sykes of the French and British foreign office, respectively, and was an old-fashioned exercise in dividing the spoils of war amidst the collapse of the Ottoman Empire. It was most definitely not a product of what in the present era Imperial Washington is pleased to call “nation-building”.

The short history of the next hundred years is that Syria never worked as a nation because the straight lines traced to the map by the Sykes-Picot ruler encompassed an immense gaggle of ethnic and sectarian peoples, tribes and regions that could not get along and had no common bonds of nationality. The polyglot of Sunni and Alawite (Shiite) Arabs, Sunni Kurds, Druse, Christians, Jews, Yazidis, Turkmen, and sundry more were kept intact under the unitary state in Damascus only due to a succession of strongmen and generals who took turns ruling the gaggle by bribe and sword.

At length, Syria became a pawn in the cold war when the anti-communism obsessed Dulles brothers decided to stiff Colonel Nasser of Egypt for not sharing their Christian zeal against the godless rulers of the Kremlin. The latter then offered to build the Aswan Dam when Washington canned the funding.

That led, in turn, to the short-lived Egypt-Syria merger, a failed CIA coup in Damascus and the eventual permanent alliance of Hafez Assad (Bashar’s father) with the Soviets after he consolidated power in the early 1970s.

Whether Washington’s animosity to the Syrian regime owing to its choice of cold-war patrons ever made any difference to the security and safety of the American people is surely debatable, but when the cold war ended so should have the debate. Whatever happened in the polyglot of Syria thereafter had absolutely no bearing on the security of the American homeland – including indirectly via its nearby ally in Israel.

That is, once the cold war was over and the Soviet Union descended into economic and military senescence after 1991, the Israelis had overwhelming military superiority over Damascus, and needed no help from Washington. But that pregnant opportunity for Washington to put Syria out of sight and out of mind entirely was killed in the cradle at nearly the moment it arose.

In a word, the Washington War Party desperately needed an enemy once the Soviet Union was no more – in order to justify the massive girth of its global empire and the vastly elevated spending levels for conventional war-making (600 ship Navy, new tanks and fighters, airlift and cruise missiles etc.) that Ronald Reagan had unfortunately set in place. So the neocons in the administration of Bush the Elder seized on the Iranians.

Needless to say, with memories of the prolonged hostage crisis in Tehran of a decade earlier still fresh in the memories of the American public, it was easy for Dick Cheney, Paul Wolfowitz, et al. to vilify Tehran as the seat of an America-hating Islamist theocracy. But so doing, they put America on the wrong side of the 1300-year old Sunni/Shiite divide.

That’s because the minor sliver of Islam motivated by fanatical jihadism and the duty to eradicate nonbelievers and apostates is rooted in the Wahhabi branch of the Sunni confession and is domiciled in Arabia, not the Shiite communities on its periphery. The latter are spread in a crescent arcing from Iran through lower Iraq and extending to the Alawite and Shiite communities of Syria and southern Lebanon – including the territories dominated by Lebanon’s largest political party (Hezbollah).

The 40 years prior to 1991 had given the Iranians plenty of cause to despise Washington, beginning with the CIA-sponsored coup against the democratically elected Mosaddeq in 1953. That move, in turn, paved the way for the rapacious and brutal regime of the Shah until 1978 when he was overthrown by a massive uprising of the Iranian people led by Shiite clerics.

But to add insult to injury, the Reagan White House effected a “tilt” to Saddam Hussein after he invaded Iran in September 1980, and provided the satellite based tracking services that enabled Saddam’s horrific chemical attacks on Iranian troops in the field, many of them barely armed teenagers.

So Tehran had valid reasons for its rhetorical assaults on Washington, but there was no symmetry to it. That is, Washington had no honest beef against Tehran, and no dog in the Sunni-Shiite fight.

The only fig leaf of justification we’ve ever heard is that the bombing of the Marine barracks in Beirut in 1983 by local Shiite militants was allegedly aided by the Iranians. But your editor sat on the national security council at the time and recalls vividly that Ronald Reagan’s decision was not to take the fight to Tehran, but to question why the Marines needed to be in harms’ way in the first place and to “reposition” them quickly to the safety of a Naval aircraft carrier deep in the Mediterranean

In any event, the Iranians elected a moderate President in 1988, and Rafsanjani did seek rapprochement with Washington – even helping to free some American hostages in Lebanon as a good will gesture to the incoming George HW Bush Administration.

But it was for naught once Cheney and his neocon henchman piled into the equation. The military-industrial complex needed an enemy and Cheney & Co. saw to it that the Shiite regime in Tehran became just that.

And that get’s us to our Part 1 thesis about McCain’s War in Syria and its prototype in Charlie Wilson’s War in Afghanistan during the 1980s. In fact, the latter wasn’t just a model; it was the proximate cause.

That is, Wilson’s War via the covert CIA training and arming of the Mujahedeen and the recruitment of Sunni Arab fighters from Saudi Arabia and other Sunni tribes ultimately gifted the world with al-Qaeda, but even then it took the feckless Imperial arm of Washington to complete the nightmare.

Bin-Laden was actually celebrated as a hero in the West until 1991. Thereupon history flowed around a hinge point marked by the demise of the Soviet Union on one side and George HW Bush’s utterly pointless war against Saddam Hussein in February 1991 on the other.

In this case Washington’s pretext for intervention was a petty squabble over directional drilling in the Rumaila oil field which straddled the border of Kuwait and Iraq. But there wasn’t an iota of homeland security at issue in that tiff between opulent Emir of Kuwait and the bombastic dictator from Baghdad.

In fact, Kuwait wasn’t even a real country; it was (and still is) essentially a large bank account with its own oilfield that had been scratched on a map by the British in 1913 as part of its maneuvering for hegemony in the Persian Gulf region.

Likewise, Iraq was also the product of the infamous Sykes-Picot straight-edged ruler of 1916, but the world price of oil would not have changed in the longer run by a single cent – whether Kuwait remained independent or was incorporated as the 19th province of the arbitrary but serviceable state of Baathist Iraq.

Beyond the false case of oil economics was the even more ridiculous underlying proposition that the oilfield boundary in dispute – which had been haggled out in an Arab League meeting in 1960 – implicated the safety and security of American citizens in Lincoln NE and Springfield MA.

No it didn’t – not in the slightest. But what did dramatically implicate their security was George HW Bush’s peevish insistence that Saddam be given a good, hard spanking, which resulted in 500,000 pairs of “crusader” boots on the sacred soil of Arabia.

Right there bin-Laden swiveled on a dime and launched his demented crusade to rid the “land of the holy shrines” of the American occupation.Right there the mujahedeen became al-Qaeda, modern jihadi terrorism was born and the catastrophe of 9/11 and all that followed was set in motion.

Yes, it took the even greater folly of Bush the Younger to actually light the fuse with his insensible and idiotic “shock and awe” demolition of Iraq after March 2003. But that did open the gates of Hell – even if the actual agents were the mujahedeen fighters and their followers and assigns who assembled in (Sunni) Anbar province after it was laid to waste by the Pentagon.

In a word, Bush and his neocon warriors destroyed the serviceable state of Iraq and the tenuous Sunni/Shiite/Kurd modus vivendi that Saddam had enforced with the spoils of the oilfields and the superiority of his arms. In that context the idea that the government in Baghdad represented a nation and fielded an Iraqi national army was a sheer fairy tale.

What Bush and Obama left behind was a vengeful, incompetent, corrupt sectarian government backed by sundry Shiite militia. To spend $25 billion – as Washington did – training and arming a ghost nation was an act of incomparable folly.

It guaranteed a hot war between the Sunni and Shiite, and that the billions of state of the art weapons Washington left behind for the self-defense of the nation it hadn’t built would fall into the hands of the Sunni terrorists.

At length, they did. The crucible of Anbar gave rise to ISIS and the tens of thousands of Humvees, tanks, heavy artillery pieces and millions of light weapons bivouacked in Mosul fell into its hands when the Shiite militias fled from Iraq’s second city and predominately Sunni enclave in June 2014.

And then McCain’s proxy War in Syria against the Iranians did its part. That is, the Sunni villages and towns of the Euphrates Valley had always been the most tenuous components of the Assads’ system of rule.

But when the McCain/CIA rebel armies badly impaired Assad’s military and economic capacity to pacify his country in the normal middle eastern manner of repression, a giant power vacuum was created into which ISIS rushed and from which the Islamic caliphate was born.

In a word, Wilson’s War begat Sunni jihadism; HW Bush’s war turned it against America; Dubya’s War opened the gates of Hell in Anbar province; and McCain’s War enabled the destruction of the Syrian state and the rise of a medievalist chamber of butchery and demented Sharia extremism in Raqqa, Mosul and the hapless Sunni lands in between.

At last, however, this chain of imperial pretense and insanity has been broken with a 140 character Tweet.

Bravo, Donald!

By sending the War Party into a paroxysm of denunciation and self-righteous indignation Trump actually provoked the Deep State into spilling the beans.

To wit, its neocon megaphone at the Washington Post, David Ignatius, penned an unhinged column immediately after Trump’s tweet about ending “massive, dangerous, and wasteful payments to Syrian rebels fighting Assad”, lamenting that the US hadn’t given jihadist “rebels” antiaircraft missiles!

But in a full bore eruption of outrage, Ignatius also revealed new information based on a quote from an official with initimate knowledge of the CIA program:

Run from secret operations centers in Turkey and Jordan, the program pumped many hundreds of millions of dollars to many dozens of militia groups. One knowledgeable official estimates that the CIA-backed fighters may have killed or wounded 100,000 Syrian soldiers and their allies over the past four years.

Whether that was an exaggeration or proximate expression of the truth doesn’t really matter. It means Imperial Washington has been carrying on a world-scale war in Syria with not even the pretense of a Gulf of Tonkin Resolution or authorization for the use of force as in Iraq in 2003.

So that’s McCain’s War. Eleven million refugees, a destroyed country, 400,000 civilians dead and a decimated army of a nation that poses a zero threat to the American homeland. And all for the purpose of hazing the rulers of Tehran who never did have a program to get a nuke, according to Washington’s own 17-agency NIEs (national intelligence estimates); and gave it up anyway with ironclad mechanisms for international enforcement.

We have no idea where this will lead, but by the day it increasingly looks as if McCain’s War is indeed being shutdown.

We can only hope for a respite to the folly, and that the Donald keeps on tweeting exactly this sort of madman’s stab at rationality.

WELL THAT ABOUT DOES IT FOR TONIGHT

Harvey.

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