August 21/No raid today as gold rises by$5.05 TO $1291.20/SILVER remains flat/GLD ADDS ANOTHER 3.85 TONNES TO ITS INVENTORY/Russia adds another 12.44 tonnes to its official reserves/Mnuchin again affirms the USA will run of money by Sept 29.2017/TWO COMMENTARIES TONIGHT ESSENTIAL TO READ: 1. JOHN WILLIAMS WITH GREG HUNTER; 2 DAVID STOCKMAN ON CHINA/

GOLD: $1291.20  UP $5.05

Silver: $17.02  FLAT

Closing access prices:

Gold $1292.00

silver: $17.02

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: $1290.86 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  $1285.95

PREMIUM FIRST FIX:  $4.91

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SECOND SHANGHAI GOLD FIX: $1293.21

NY GOLD PRICE AT THE EXACT SAME TIME: $1285.30

Premium of Shanghai 2nd fix/NY:$7.91

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LONDON FIRST GOLD FIX:  5:30 am est  $1287.60

NY PRICING AT THE EXACT SAME TIME: $1287.60 

LONDON SECOND GOLD FIX  10 AM: $1292.90

NY PRICING AT THE EXACT SAME TIME. $1291.90 ????

For comex gold:

AUGUST/

NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH: 0 NOTICE(S) FOR  nil  OZ.

TOTAL NOTICES SO FAR: 4581 FOR 458,100 OZ  (14.248 TONNES) 

For silver:

AUGUST

 24 NOTICES FILED TODAY FOR

120,000  OZ/

Total number of notices filed so far this month: 1075 for 5,375,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

end

The open interest in gold rose to 506,000 contracts despite gold being down on Friday.  However silver’s OI continues to drop (tonight:188,000) as the bankers are looking over their shoulder at London and witnessing huge shortages of physical metal plus a severe backwardation. We are now entering options expiry week and you know that gold and silver will be whacked until August 31.2017 (a week this Thursday). The crooks will do anything to keep gold below $1300.00 and silver below $17.10

Let us have a look at the data for today

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In silver, the total open interest SURPRISINGLY FELL BY A LARGER THAN EXPECTED 981 contracts from 189,812 DOWN to 188,831 with THE TINY FALL IN THE PRICE THAT SILVER UNDERTOOK WITH  FRIDAY’S TRADING (DOWN 4 CENTS) . THE FALL IN OI IS TINY WHEN YOU COMPARE IT TO GOLD (SEE BELOW). THE BANKERS AGAIN PROVIDED THE SHORT PAPER TO INITIATE ANOTHER RAID ON FRIDAY NOON TIME (7TH CONSECUTIVE DAY OF TORMENT). THAT SUCCEEDED IN DRIVING DOWN THE SILVER PRICE TO BELOW $17.00 UPON WHICH THE HFT TRADERS TOOK OVER ACCENTUATING THE FALL. NEWBIE LONGS, REALIZING ANOTHER BARGAIN WAS AT HAND GOBBLED UP WHAT WAS OFFERED.  THE BANKERS ARE STILL LOATHE TO SUPPLY THE PAPER COMPARED TO GOLD. RESULT: A LOWER OI, COUPLED WITH AN OUTSIDE DAY REVERSAL TO THE DOWNSIDE, ENDING IN A TINY LOSS FOR SILVER.

 In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e.  0.944 BILLION TO BE EXACT or 135% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 24 NOTICE(S) FOR 120,000  OZ OF SILVER

In gold, the open interest ROSE by A MONSTROUS 13,528 DESPITE THE FALL  in price of gold ($0.35 LOSS ON FRIDAY .). The new OI for the gold complex rests at 506,655. A raid was called upon at noon time FRIDAY (once London was officially put to bed) and that drove gold down from its zenith of $1301.00 down to 1286.15 at comex closing. Firstly newbie longs piled into the comex gold complex driving it up to the 1300 dollar area.  Then the bankers initiated their raid upon which the HFT traders accentuated the downfall.  However newbie specs did not liquidate but actually added on to their positions with the lower price. THE BANKERS CONTINUED TO SUPPLY COMEX GOLD WITH RECKLESS ABANDON.

Result: extremely higher OI with no gain in price

we had: 0 notice(s) filed upon for nil oz of gold.

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

GLD:

Today, a big change in gold inventory: a deposit of 3.85 tonnes

Inventory rests tonight: 799.29 tonnes

IN THE LAST 26 TRADING DAYS: GLD SHEDS 37.68 TONNES YET GOLD IS HIGHER BY $58.20 . 

SLV

Today:  WE HAD NO CHANGES IN SILVER INVENTORY TONIGHT:

INVENTORY RESTS AT 334.407 MILLION OZ

end

.

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

1. Today, we had the open interest in silver FALL BY 981 contracts from 189,812 DOWN TO 188,831 (AND now A LITTLE FURTHER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) DESPITE THE TINY FALL IN SILVER PRICE (4 CENTS). SILVER ROSE TO OVER $17.25 BY FRIDAY NOON AND THEN THE BANKERS INITIATED A RAID, ACCENTUATED BY HFT TRADERS. NEWBIE LONGS DID NOT BUCKLE AND KEPT THEIR POSITIONS DESPITE THE RAID. SOME OLD SPEC LONGS SOLD TO NEWBIE SPEC LONGS..COMMERCIALS STILL LOATHE TO SUPPLY THE PAPER.   RESULT: SLIGHTER LOWER PRICE WITH A SLIGHT LOSS IN OI .(COMPARED TO GOLD)

(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 SUNDAY night/MONDAY morning: Shanghai closed UP 18.18 POINTS OR 0.56%   / /Hang Sang CLOSED UP 107.11 POINTS OR 0.40% The Nikkei closed DOWN 77.28 POINTS OR 0.40%/Australia’s all ordinaires CLOSED DOWN 0.32%/Chinese yuan (ONSHORE) closed UP at 6.6719/Oil UP to 48.59 dollars per barrel for WTI and 52.66 for Brent. Stocks in Europe OPENED MIXED , Offshore yuan trades  6.6803 yuan to the dollar vs 6.6722 for onshore yuan. NOW THE OFFSHORE IS WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS STRONG TO THE DOLLAR AND THIS IS COUPLED WITH THE WEAKER DOLLAR. CHINA IS HAPPY TODAY 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA//USA

b) REPORT ON JAPAN

c) REPORT ON CHINA

i)Not good:  huge clashes between Indian and Chinese soldiers of their respective border

(courtesy zero hedge)

ii)A terrific commentary on the huge debt problems inside China and how that is going to influence global trade. The key data points:  total debt 35 trillion USA of which 7.6 trillion usa is non performing.

 

( David Stockman/DailyReckoning)

iii)Do you wonder why the Chinese equity markets have been so stable these past 2 years:  Your answer:  China’s plunge protection team holds a huge 150 billion in stock

(silveristhenews)

iv)It seems that China wanted another final push in stimulus prior to its next Congress meeting later this year. That is why industrial metal prices like copper, zinc, and steel are rising.  Will China dump these metals as soon as this push is over

 

( zerohedge)

v)Now China threatens India with a trade war after India imposes anti dumping duties on 93 Chinese products.

 

( zerohedge)

4. EUROPEAN AFFAIRS

SPAIN
The Spanish driver in that Barcelona attack has been killed just after he hijacked a car killing its occupant.
( Bloomberg)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

It begins:  The USA in Moscow will halt issuance of non immigrant visas in retaliation for Moscow’s removal of huge number of diplomats (755). Also the only place where visas will be issued will be Moscow and not other places like St Petersburg.

( zero hedge)

6 .GLOBAL ISSUES

7. OIL ISSUES

8. EMERGING MARKET

Big oil is nervous that Trump will throw sanctions against Venezuela and  its oil industry which will effectively shut down huge refining done in the Gulf coastal cities.  This refining has been set up years ago to refine the heavy crude that Venezuela produces.  Sanctions will destroy Venezuela and hurt the uSA

 

( Paraskova/OilPrice.com)

9.   PHYSICAL MARKETS

With the world questioning the Federal Reserve Bank of New York’s handling of nations sovereign gold, Manly questions why the Wall Street Journal fails to ask the right questions

( zero hedge)

ii)The truth behind what the world has produced with respect to both gold and silver:

Gold: probably around 175,000 tonnes.  Silver: 48 billion oz.

( SRSRocco report/Steve St Angelo)

iii)Lawrie Williams..

 

Russia adds another 12.44 tonnes of physical gold to its official reserves.  Over the past three years, they have added around 576 tonnes or on average 192 tonnes. This represents around 70% of mined gold.

(courtesy Sharp’s Pixley)

10. USA Stories

i)Bannon is the last of the nationalists ( as opposed to globalists) left to advise Trump.  Bannon states that the presidency he fought for and what got Trump elected is over. However he will fight like crazy to get his agenda like the wall, stop migrant immigration,  and infrastructure spending through

 

( zerohedge)

ii)it looks like Bannon wishes to start another TV news network to the right of Fox News. Bannon want to go to war against the globalists

( zero hedge)

iii)Now we get a clear picture of what Bannon means by “war” at the White House.  If Trump turns left, then he will rally votes for impeachment:

 

(courtesy zero hedge)

 

iv)Today will be a big test for the energy grid as many states have increased the use of solar polar. With the eclipse solar energy will be off line for over 4 hours and this will be a test for the back up hydroelectric and gas generators.

( zero hedge)

v)Opening talks on NAFTA and already fissures are appearing.  Mish Shedlock explains what is the best and what is the worst thing that can happen on failure to agree on anything

 

( Mish Shedlock/Mishtalk)

vi)Mnuchin again warns that they will run out of money by Sept 29. They must increase their debt limit or else they will default

 

( zerohedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY A HUGE 13,528 CONTRACTS UP to an OI level of 506,655 DESPITE THE FALL IN THE PRICE OF GOLD ($0.35 with FRIDAY’S trading). NEWBIE LONGS ENTERED THE ARENA EARLY FRIDAY MORNING DRIVING THE PRICE HIGHER TO THE $1301.00 LEVEL.  THE BANKERS CONTINUED TO SUPPLY THE SHORT PAPER WITH RECKLESS ABANDON.  THE HIGH OPEN INTEREST IN THE GOLD COMPLEX WAS FODDER AGAIN FOR OUR CROOKS TO ACT AT AROUND 12 NOON AS ANOTHER RAID WAS CALLED UPON BY OUR CROOKED BANKERS AS THEY TRIED AGAIN  TO SHAKE MANY OF THE GOLD LEAVES FROM THE GOLD TREE, (AND AS YOU CAN SEE THEY FAILED). LONDON WAS ALREADY PUT TO BED SO THE CROOKS DID NOT HAVE TO WORRY ABOUT DELIVERIES UNTIL MONDAY (TODAY). HFT TRADERS ACCENTUATED THE FALL IN PRICE FOR GOLD AS IT ENDED THE COMEX SESSION AT $1286.15 FOR A TINY LOSS:

RESULT: HUGH OI GAIN AND A TINY LOSS IN PRICE. 

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 62 contract(s) to stand at 846 contracts. We had 0 notices filed on FRIDAY so we LOST 62 contracts or an additional 6200 oz will NOT stand at the comex and 62 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 LOSE 32 contracts DOWN to 1331.

The next active contract month is Oct and here we saw a GAIN of 1504 contracts UP to 52,133.

The very big active December contract month saw it’s OI GAIN 11,384 contracts UP to 397,305.

We had 0 notice(s) filed upon today for   NIL 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 SURPRISINGLY FELL BY A RATHER LARGE 981 CONTRACTS FROM 189,812 TO 188,831 DESPITE FRIDAY’S SMALL SIZED 4 CENT LOSS.  THERE IS NO QUESTION THAT WE ARE HAVING CONTINUAL BANKER CAPITULATION AS THEIR HUGE SHORTS IN SILVER ARE CHOKING THEM TO DEATH. THE BANKERS INITIATED ANOTHER RAID AT 12 NOON FRIDAY,  BY SUPPLYING GOOD SIZED PAPER SHORTS. THE DOWNFALL IN PRICE WAS ACCENTUATED BY OUR HFT TRADERS.  THE BANKERS STILL COULD NOT COVER ANY OF THEIR SHORTS WHICH WAS AGAIN THE OBJECT OF THE EXERCISE WHEN THE RAID WAS CALLED UPON. THE NET RESULT: A LARGER SIZED FALL IN OPEN INTEREST WHEN COMPARED TO GOLD ANY A TINY FALL IN PRICE.

We are now in the next big non active silver contract month of August and here the OI FELL 27 contracts DOWN TO 33. We had 51 notice(s) filed yesterday.  Thus we GAINED ANOTHER 24 contract(s) or an additional 120,000 oz will stand for delivery in this non active month of August and AGAIN zero EFP’s were issued for the August contract month. Please note that in gold we continually see EFP’s issued but not in silver!!

The next active contract month is September (and the last active month until December) saw it’s OI fall by 4272 contacts down to 89,745.  The next non active contract month for silver after September is October and here the OI gained 46 contacts up TO 451. After October, the big active contract month is December and here the OI GAINED by 3097 contracts UP to 86,627 contracts.

We had 24 notice(s) filed for  120,000 oz for the AUGUST 2017 contract

VOLUMES: for the gold comex

ESTIMATED VOLUME TODAY: 127,099 WHICH IS POOR

YESTERDAY’S confirmed volume was 414,312 which is HUGE

volumes on gold are STILL HIGHER THAN NORMAL!

Initial standings for AUGUST

 August 21/2017.

 inventory movements not available today because the crooks are having trouble cooking their cooks
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
not available today oz
Deposits to the Dealer Inventory in oz   oz
Deposits to the Customer Inventory, in oz 
not available today
 oz
Brinks
No of oz served (contracts) today
 
0 notice(s)
nil OZ
No of oz to be served (notices)
846 contracts
(84,600 oz)
Total monthly oz gold served (contracts) so far this month
4581 notices
458,100 oz
14.248 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   28,096.8  oz
Today we HAD  2 kilobar transaction(s)/ 
total dealer deposits: nil oz
We had nil dealer withdrawals:
total dealer withdrawals:  0 oz
we had n/a customer deposit(s):
total customer deposits; n/a  oz
We had n/a customer withdrawal(s)
total customer withdrawals; n/a oz
 we had 0 adjustment(s)
 
For AUGUST:

Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0  contract(s)  of which 0 notices were stopped (received) by j.P. Morgan dealer and 0 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 (4581) x 100 oz or 458,100 oz, to which we add the difference between the open interest for the front month of AUGUST (846 contracts) minus the number of notices served upon today (0) x 100 oz per contract equals 542,700  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 (4581) x 100 oz  or ounces + {(846)OI for the front month  minus the number of  notices served upon today (0) x 100 oz which equals 542,700 oz standing in this  active delivery month of AUGUST  (16.880 tonnes)
 we LOST 62 contracts or an additional 6200 oz will NOT stand for delivery and 62 EFP’s for August were issued.(FOR FIAT BONUS PLUS ANOTHER DELIVERABLE CONTRACT WHICH MOST LIKELY IS A LONDON BASED FORWARD)
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Total dealer inventory 758,311.027 or 23.58 tonnes  (dealer gold continues to disappear)
Total gold inventory (dealer and customer) = 8,707,110.590 or 270.82 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 270.82 tonnes for a  loss of 31  tonnes over that period.  Since August 8/2016 we have lost 82 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 12 MONTHS  82 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE AUGUST DELIVERY MONTH
 
August initial standings
 August 21  2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
n/a oz
Deposits to the Dealer Inventory
nil  oz
Deposits to the Customer Inventory 
n/a
oz
No of oz served today (contracts)
24 CONTRACT(S)
(120,000 OZ)
No of oz to be served (notices)
9 contracts
( 45,000 oz)
Total monthly oz silver served (contracts) 1075 contracts (5,375,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz
Total accumulative withdrawal  of silver from the Customer inventory this month 2,617,221.8 oz
today, we had  n/a deposit(s) into the dealer account:
total dealer deposit: n/a   oz
we had n/a dealer withdrawals:
total dealer withdrawals: n/a oz
we had n/a customer withdrawal(s):
TOTAL CUSTOMER WITHDRAWALS:  n/a oz
We had n/a Customer deposit(s):
***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: nil oz
 
 we had n/a adjustment(s)
The total number of notices filed today for the AUGUST. contract month is represented by 24 contract(s) for 120,000 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 1075 x 5,000 oz  = 5,375,000 oz to which we add the difference between the open interest for the front month of AUGUST (33) and the number of notices served upon today (24) x 5000 oz equals the number of ounces standing
 

 

.
 
Thus the INITIAL standings for silver for the AUGUST contract month:  1075 (notices served so far)x 5000 oz  + OI for front month of AUGUST(33 ) -number of notices served upon today (24)x 5000 oz  equals  5,420,000 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.
We GAINED ANOTHER 24 contracts or an additional 120,000 oz wishes to stand for delivery in this non active month of August and  0 EFP’s were issued for the silver August month.
At this point in the delivery cycle last year on August 22/2016 we had 82,277 contracts standing vs this yr at 89,745.
Last yr on the first day notice for the Sept silver contract we had 17.070 million oz stand for delivery.
By month end:  16.075 million oz/
 
 
 
 
Volumes: for silver comex
ESTIMATED VOLUME TODAY:  45,006 WHICH IS VERY GOOD
FRIDAY’s  confirmed volume was 129,487 contracts which is OUT OF THIS WORLD
FRIDAY’S CONFIRMED VOLUME OF 129,487 CONTRACTS WHICH EQUATES TO 647 MILLION OZ OF SILVER OR 93% 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:  38.323 million (close to record low inventory  
Total number of dealer and customer silver:   215.627 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 6.8 percent to NAV usa funds and Negative 6.9% to NAV for Cdn funds!!!! 
Percentage of fund in gold 62.7%
Percentage of fund in silver:37.3%
cash .+0.0%( August 21/2017) 
2. Sprott silver fund (PSLV): STOCK   NAV RISES TO -0.21% (August 21/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLS TO -0.64% to NAV  (August 21/2017 )
Note: Sprott silver trust back  into NEGATIVE territory at -0.21%/Sprott physical gold trust is back into NEGATIVE/ territory at -0.64%/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

AUGUST 21/this is good!! a huge deposit of gold into the GLD to the tune of 3.85 tonnes/Inventory rests at 799.29 tonnes

August 18/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 795.44 TONNES

August 17/late last night, a deposit of 4.43 tonnes of gold at the GLD/inventory rests at 795.44 tonnes/the bleeding of gold has stopped.

August 16/no change in gold inventory at the GLD. Inventory rests at 791.01 tonnes

August 15/no change in gold inventory at the GLD/inventory rests at 791.01 tonnes

August 14/this is good!!: a gain of 4.14 tonnes of gold into the GLD inventory/the removal of GLD gone to the east has now stopped probably because there is no physical to send/inventory rests at 791.01 tonnes

August 11/no change in gold inventory/Inventory rests at 786.87 tonnes

August 7/no changes in gold inventory at the GLD/Inventory rests at 787.14 tonnes

AUGUST 4/ANOTHER LOSS OF 4.48 TONNES OF GOLD FROM GLD INVENTORY/INVENTORY RESTS AT 787.14 TONNES.THIS IS A HUGE CRIME SCENE!!

August 3/no change in gold inventory at the GLD/Inventory rests at 791.88 tonnes

August 2/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

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

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August 21 /2017/ Inventory rests tonight at 799.29 tonnes
*IN LAST 216 TRADING DAYS: 150.59 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 155 TRADING DAYS: A NET  6.84 TONNES HAVE NOW BEEN ADDED INTO  GLD INVENTORY.
*FROM FEB 1/2017: A NET  9.97 TONNES HAVE BEEN WITHDRAWN.

end

Now the SLV Inventory

AUGUST 21/no change in silver inventory/inventory rests at 334.407 million oz/

August 18/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY REST AT 334.407 MILLION OZ

August 17/A WITHDRAWAL OF 1.418 MILLION OZ LEAVES THE VAULTS OF THE SLV (WITH SILVER UP 25 CENTS YESTERDAY?)/INVENTORY RESTS AT 334.407 MILLION OZ

August 16/no change in silver inventory at the SLV/Inventory rests at 335.825 million oz/

August 15/no change in silver inventory at the SLV/Inventory rests at 335.825 million oz.

August 14./no change in silver inventory/inventory rests at 335.825 million/

August 11/no change in silver inventory tonight.  However we lost 3,781 million oz from Tuesday through Thursday. Inventory rests at 335.825 million oz/

August 7/no change in silver inventory at the SLV/Inventory rests at 339.606 million oz

AUGUST 4/A WITHDRAWAL OF 945,000 OZ/INVENTORY RESTS AT 339.606 MILLION OZ

August 3/A WITHDRAWAL OF 1,181,000 OZ FROM THE SLV/INVENTOR RESTS AT 340.551 MILLION OZ/

August 2/NO CHANGES IN SILVER INVENTORY AT THE SLV

INVENTORY RESTS AT 341.732 MILLION OZ/

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

August 21.2017:

 Inventory 334.407  million oz
end
  • 6 Month MM GOFO

    Indicative gold forward offer rate for a 6 month duration

    + 1.41%
  • 12 Month MM GOFO
    + 1.52%
  • 30 day trend

end

 

 

Major gold/silver trading/commentaries for MONDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Buffett Sees Market Crash Coming? His Cash Speaks Louder Than Words

The Sage of Omaha’s adage is “it’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”


Editor: Mark O’Byrne

But for Warren Buffett the current environment doesn’t appear to be offering up any wonderful companies at fair valuations. The situation is so bad that the cash stockpile of Berkshire Hathaway has more than doubled in the last four years, from under $40 billion to $100bn.

The infamous investor is famed for his investment approach of pouncing on companies when they run in to problems and are seemingly undervalued. At the moment though, there aren’t many out there.

The large stockpile is a likely indicator of not only how Buffett negatively views the current market environment but also how he sees the near future and what opportunities it will bring.

Buffett hates cash, he wants to spend it

Buffett has previously stated how much he hates cash, telling investors at the Berkshire AGM that it was a poor way to keep their money.

During the Omaha-based meeting Buffett expressed his frustration with a cash pile that is approaching $100 billion, “We shouldn’t use your money that way for long periods…The question is, ‘Are we going to be able to deploy it?’”

It may well be the case that Buffett is prepared to pay a dividend, stating that dividends could be paid “reasonably soon, even while I am around.” But this is unlikely.

Buffett is known for his dislike of paying dividends. Since he took over Berkshire over half a century ago the company has paid a single $0.10 dividend in 1967. Instead, shareholders have been rewarded with value through investments that have increased the company’s earning power.

Given the company’s track record of generating more than twice the S&P 500’s annualized returns over the past half-century, it’s more likely that Buffet is looking for an attractive acquisition or investment opportunity rather than pay dividends.

Making investments is all very easy when there are good value ones to be picked up but right now there are none.

Buffett can see this and his lack of investment suggests he sees opportunities on the horizon. These can only come about in the event of a market crash or a sharp market correction.

Bargains are tough to find 

The last major acquisition by Berkshire Hathaway was the $32 billion purchase of Precision Castparts. For Berkshire Hathaway’s Vice Chairman Charlie Munger this wasn’t the kind of deal that they were used to stating, “this is no screaming bargain like the old days.”

Munger was referring to the growing issue that it is difficult for the company to find bargains worthy of investment, in the current environment.

Warren Buffett has previously shown patience when it comes to looking for the right deals. Right now he likely views the market as overvalued with a greater chance of an imminent downturn as opposed to continued growth in valuations.

This isn’t an isolated view. Other investors of note have expressed concern that the market is currently over-valued.

Lord Rothschild, Chairman of RIT Capital Partners, wrote in the latest report about his concerns regarding current equity valuations:

‘Share prices have in many cases risen to unprecedented levels at a time when economic growth is by no means assured. The S&P is selling at 25 times trailing 12 months’ earnings, compared to a long-term average of 15, while the adjusted Shiller price earnings ratio, which averages profits over 10 years, is approximately 30 times.’

This situation, states Rothschild, is unsustainable.

“The period of monetary accommodation may well be coming to an end. Geopolitical problems remain widespread and are proving increasingly difficult to resolve.”

Other investors have also issued warnings that frothy valuations are a sign of a worsening financial environment.

Howard Marks of Oaktree Capital recently warned investors of a ‘too bullish territory’ and wrote that investors are ‘engaging in willing risk-taking, funding risky deals and creating risky market conditions.’

Those risky market conditions will form an environment which Buffett thrives in when it comes to making investment decisions.

As Jim Rickards explained when covering Berkshire’s latest revelation regarding cash holdings for Strategic Intelligence:

“What this tells us is that Buffett believes stock market valuations are rich (otherwise he’d be using the cash to buy companies), and that he wants a deep pool of liquidity so he can play the white knight in a coming panic.”

Buffett, along with other notable investors, foresees a sharp correction or a stock market crash. He will not be rushed into a buying a company which is currently overvalued because he knows there will be plenty of opportunities once the bubble bursts.

Threat to security 

The problem Buffett has in the meantime is keeping his cash safe.

In recent years Buffett has become increasingly vocal about his concerns regarding cyber-terrorism.

Earlier this year he told shareholders, “I’m very pessimistic on weapons of mass destruction generally although I don’t think that nuclear probably is quite as likely as either primarily biological and maybe cyber…I don’t know that much about cyber, but I do think that’s the number one problem with mankind”

The problem with the ‘cash’ that Buffett is holding is that is literally numbers on a screen. It can be wiped out within a matter of seconds thanks to a cyber attack. The same goes for shares in a company.

Even if a cyber attack is unlikely, cash holdings pose further counterparty risks – namely ongoing devaluation thanks to currency creation and the threat of negative interest rates.

For every day that $100 billion sits on a screen waiting to be ‘deployed’ into a good value stock, the greater the rate of devaluation and exposure to banking risks.

No one, not even the Oracle of Omaha, can possibly predict the next downturn and certainly not the next cyberattack.

We would suggest that perhaps Warren Buffett deploys some of that excess cash into his father’s favourite form of money and his old foe: gold bullion.

Conclusion: Listen to your parents and buy gold

Warren Buffett’s own father, the Honourable Howard Buffett, wrote in 1948:

‘The owner of such gold redeemable currency has economic independence. He can move around either within or without his country because his money holdings have accepted value anywhere.’ 

Buffett Sr. believed in the importance of holding gold as it was ‘independent of the ruling politicians’ and gave money ‘a large degree of stability’

Warren Buffett and his followers would be wise to listen to these words.

When one considers the degree of market risk today and the over valuation in stock and bond markets, it is time to rebalance portfolios.

Never have deposits been so vulnerable to negative rates and counterparty risks in the form of bail-ins.

The world has changed since Buffett’s ill judged comments on gold. In an era of negative rates, bail-ins and global currency debasement, an allocation to physical gold suddenly doesn’t seem so daft after all.

Indeed, never has holding gold bullion in allocated and segregated storage in the safest vaults in the world been more important.

Buffett deserves the title ‘Sage of Omaha’ and is to be respected but his failure to appreciate gold’s importance as a diversification in a portfolio and his repeated negativity towards gold, in contrast to his father Howard Buffett, will not be judged kindly in financial history.

News and Commentary

Palladium has rallied to levels not seen in 16 years (MarketWatch.com)

Selloff was “unusual as there was no data or market news to account for the $15 drop” – GoldCore (MarketWatch.com)

Asia Stocks Mixed Before Korea Drill, Jackson Hole (Bloomberg.com)

Ten sailors missing after U.S. warship collides with tanker near Singapore (Reuters.com)

Dubai exchange, Saudi firm plan sharia-compliant spot gold contract (Reuters.com)

Gold mining output at its lowest level since the financial crisis, says ANZ (CNBC.com)

Today’s Gold prices are not much above production costs (ValueWalk.com)

You Are Being Lied To About “Low” Gold Demand (GoldSeek.com)

Hindenburg Omens Flashing Major Warning Signal for the Stock Market (FinancialSense.com)

How Eclipse Anxiety Helped Lay the Foundation For Modern Astronomy (SmithSonIanMag.com)

Gold Prices (LBMA AM)

21 Aug: USD 1,287.60, GBP 999.82 & EUR 1,096.52 per ounce
18 Aug: USD 1,295.25, GBP 1,004.34 & EUR 1,102.65 per ounce
17 Aug: USD 1,285.90, GBP 998.12 & EUR 1,096.74 per ounce
16 Aug: USD 1,270.15, GBP 985.13 & EUR 1,082.29 per ounce
15 Aug: USD 1,274.60, GBP 986.92 & EUR 1,084.05 per ounce
14 Aug: USD 1,281.10, GBP 987.34 & EUR 1,085.48 per ounce
11 Aug: USD 1,288.30, GBP 993.67 & EUR 1,096.47 per ounce

Silver Prices (LBMA)

21 Aug: USD 17.02, GBP 13.20 & EUR 14.48 per ounce
18 Aug: USD 17.15, GBP 13.30 & EUR 14.60 per ounce
17 Aug: USD 17.02, GBP 13.23 & EUR 14.55 per ounce
16 Aug: USD 16.68, GBP 12.96 & EUR 14.25 per ounce
15 Aug: USD 16.89, GBP 13.12 & EUR 14.38 per ounce
14 Aug: USD 16.97, GBP 13.09 & EUR 14.39 per ounce
11 Aug: USD 17.09, GBP 13.18 & EUR 14.53 per ounce


Recent Market Updates

– Gold, Silver Consolidate On Last Weeks Gains, Palladium Surges 36% YTD To 16 Year High
– Must See Charts – Gold Hedges USD Devaluation, Rise in Oil, Food and Cost of Living Since Nixon Ended Gold Standard
– World’s Largest Hedge Fund Bridgewater Buys $68 Million of Gold ETF In Q2
– Diversify Into Gold Urges Dalio on Linkedin – “Militaristic Leaders Playing Chicken Risks Hellacious War”
– Gold Has Yet Another Purpose – Help Fight Cancer
– Gold Up 2%, Silver 5% In Week – Gundlach, Gartman and Dalio Positive On Gold
– Great Disaster Looms as Technology Disrupts White Collar Workers
– Gold Sees Safe Haven Gains On Trump “Fire and Fury” Threat
– Silver Mining Production Plummets 27% At Top Four Silver Miners
– Gold Consolidates On 2.5% Gain In July After Dollar Has 5th Monthly Decline
– Gold Coins and Bars See Demand Rise of 11% in H2, 2017
– Greenspan Warns Stagflation Like 1970s “Not Good For Asset Prices”
– What Investors Can Learn From the Japanese Art of Kintsukuroi

end

 

With the world questioning the Federal Reserve Bank of New York’s handling of nations sovereign gold, Manly questions why the Wall Street Journal fails to ask the right questions

(courtesy zero hedge)

Ronan Manly: Wall Street Journal failed to ask the right questions

 Section: 

12:26p ET Friday, August 18, 2017

Dear Friend of GATA and Gold:

Bullion Star’s gold researcher Ronan Manly today comments on the deficiencies of The Wall Street Journal’s August 10 report acknowledging suspicions about the Federal Reserve Bank of New York’s custody of gold reserves. Foremost among those deficiencies, Manly writes, was the newspaper’s determined refusal to put any critical questions to Fed or Treasury Department officials. He specifies many such questions arising from his research. Manly’s commentary is headlined “Bullion Star Quoted in Wall Street Journal Article on New York Fed Gold” and it’s posted at Bullion Star here:

https://www.bullionstar.com/blogs/ronan-manly/bullionstar-quoted-wall-st…

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

 

END

 

The truth behind what the world has produced with respect to both gold and silver:

Gold: probably around 175,000 tonnes.  Silver: 48 billion oz.

(courtesy SRSRocco report/Steve St Angelo)

TOTAL WORLD GOLD & SILVER PRODUCTION: Fact vs Conspiracy

BY SRSROCCO ON AUGUST 19, 2017

Unfortunately for precious metals investors, there continues to be a great deal of misinformation about how much gold there is in the world.  The biggest culprit that confuses precious metals investors is what I call, LOUSY CONSPIRACIES.  Those who promote these unsound conspiracies aren’t able to differentiate between FACTS and FICTION.

This will be a short post, but it is important as it will lay some ground work for articles to come out over the next several weeks in comparing the new Bitcoin-Crypto currency market versus the Gold and silver.

While conspiracies do indeed take place, they are based upon sound reasoning and evidence that either proves a conspiracy has taken place, or proves the official story is bogus.  On the other hand, lousy conspiracies are easy to dismiss when facts and sound evidence are brought forward.  Unfortunately, even when the facts or the evidence is laid out step by step, those who either promote or believe these lousy conspiracies… continue to do so.

This has to be one of the most frustrating areas of my research, writing and analysis.  Why?  Because, I receive emails at least once a week bringing up one of my favorite LOUSY CONSPIRACIES once again.

One of the more insane conspiracies in the precious metals community is the notion that the world has 1-2 million tons of gold in the world hidden in secret vaults.  Some of these vaults are the infamous Yamashita’s Gold Treasure, Nazi Gold Vault, Massive Bank of Hawaii Gold Holding and etc.

You see, conspiracies, especially LOUSY CONSPIRACIES, are a great way to make a buck selling a newsletter or book.  Because people don’t take the time to do the research and fact check, it is easier and more fun to believe in the hype of a conspiracy.  This is quite a shame because lousy conspiracies give the few sound conspiracies a bad reputation.

Even though I wrote about this back in April, CONSPIRACY vs FACT: How Much Gold Is In The World??, it seems necessary to discuss this again as an introduction to why gold and silver will still be better quality stores of wealth over crypto currencies over the medium to long term period.  This goes against some of the recent analysis put out in the Alternative Community suggesting that gold will no longer have value in the future due to crypto currencies taking over the role as a new digital monetary system.

Anyhow… the production of silver and gold are extracted out of the ground at a certain ratio.  Recently, it is approximately 9 to 1, silver to gold.  Let’s take a look at the following two charts:

As we can see in these two charts, most of world gold and silver production has been extracted since 1900.  For gold, the world produced 91% of all gold since 1900, and 81% of all global silver production.  According to the best sources (shown on the bottom of the chart), there have been approximately 173,000 metric tons (5.5 billion oz) of gold produced since 1493 and 48.5 billion oz of silver.  This turns out to be a 9 to 1 ratio, which is the same as the ratio of silver to gold in the ground.

NOTE:  I did not convert the gold chart to million oz because world production figures are normally reported in metric tons.  Furthermore, the accounting of total gold holdings are also published in metric tons.

Yes, it is true that the world produced a great deal more silver in relation to gold from 1493-1600.  This was due to the huge new silver discoveries in South America by the Spanish during that time period.  There was 747 million oz of silver produced from 1493-1600 versus 714 metric tons (23 million oz) of gold.  Thus, there were 32 times more silver production than gold during that time period.

Furthermore, the silver to gold production ratio increased even higher in the 17th century (1600-1700).  World silver production jumped to 1,272 million oz versus 897 metric tons (29 million oz) of gold.  This pushed the silver to gold production ratio to a staggering 44 to 1.  This was due the huge ramp up of Mexican silver production during that century.

Okay…. some of you might think… well, what if some of the world gold production was missed during those earlier centuries because the silver-gold ratio was so high.  Even if we apply a 9 to 1 silver to gold ratio for each century, this would be the result:

Adjusting World Gold Production To 9-1 Silver To Gold Ratio Each Century

1493-1600 = 83 million oz Gold

1600-1700 = 141 million oz Gold

1700-1800 = 209 million oz Gold

1800-1900 = 566 million oz Gold

1900-2016 = 5,077 million oz Gold

Grand Total = 6,076 million oz Gold  (189,000 metric tons)

Even if we applied a 9 to 1 silver to gold production ratio for each century, it would still only amount to 189,000 metric tons versus the 173,000 metric tons of actual world gold production since 1493.  If we include all gold production prior to 1493, I doubt it would push that figure above 200,000 metric tons.

So, we can plainly see, it was physically impossible for the world to produce more than 200,000 metric ton (6.4 billion oz) of gold in the history of mankind.   Thus, the notion that the world holds 1-2 million tons of gold in the world, is completely ludicrous.

For the life of me… I am completely puzzled as to why people can’t comprehend the obvious when it comes to the true amount of gold in the world.

UPDATE:  Additional Information On Ancient Egyptian Gold Production

I have received some emails and tweets suggesting that a lot of ancient gold production has not been accounted for.  While this is true, it really doesn’t amount to much if we use logic and quantitative statistical modeling.  We must remember, the ancient peoples were using simple mining techniques to produce gold.  While Ancient Egyptians did produce a lot of gold, estimates show that it really doesn’t not amount to much compared to modern times.

Here is a excerpt from a study on Ancient Egyptian Gold Mining:

Archaeological and historical sources suggest that Egyptian metal-workers as early as 4,000 B.C. had developed remarkably sophisticated gold-smithing skills. In the millennia prior to the beginning of the Christian era, Egypt was in all likelihood both the largest consumer and producer of gold in the Eastern Hemisphere. During this period, estimates show that Egypt consumed four-fifths of the gold production of the ancient world. By 1,500 B.C. Egypt’s production of gold reached an estimated 1.4 million pounds.

Estimates of Ancient Egyptian gold production up until 1,500 B.C. was 1.4 million pounds, or 635 metric tons.  This was 635 metric tons over a 2,500 year period.  According to the 2017 GFMS Gold Survey, the world produced 3,222 metric tons of gold in 2016.  Thus, the world produced five times more gold last year than the Ancient Egyptians mined for approximately 2,500 years.  And as the excerpt above stated, Egypt was the largest producer and consumer of gold in the Ancient world.

If we consider gold production from other ancient regions such as the Roman Empire, Ancient Indian Empires and Asia, we still don’t come up with the sort of gold that was produced since 1900.  Again, I doubt the world has produced more than 200,000 metric tons in the history of mankind.  Hell, I would even go as far as say 225,000 metric tons.  But, this is still a great deal less than the 1-2 million tons suggested by those who seem to be unable to do simple math.

end

 

Lawrie Williams..

 

Russia adds another 12.44 tonnes of physical gold to its official reserves.  Over the past three years, they have added around 576 tonnes or on average 192 tonnes. This represents around 70% of mined gold.

(courtesy Sharp’s Pixley)

LAWRIE WILLIAMS: Russian CB adds 12.4 tonnes to its gold reserves in July

It remains obvious that Russia under President Putin sees longer term benefits in building its gold reserves to which it is adding at a rate of around 200 tonnes a year. The country’s central bank has just released is gold purchase figures for July and in the rounded off figures it reports these totaled 400,000 ounces – 12.44 tonnes – bringing the amount of gold purchased year to date to 113.3 tonnes, pretty much on track to meet the annual levels it has purchased for the past three years – around 173 tonnes in 2015, 206 tonnes in 2015, and 200 tonnes last year. These figures account for a little over 70% of the country’s domestic new mined gold output over the period. (Russia is the world’s third largest gold miner in terms of amount of gold produced – after China and Australia – but is one of the nations which appears to be growing its domestic gold production while the global total is reported as falling back a little). It has a perhaps over-optimistic target of raising its gold output to around 400 tonnes a year from the current 270 tonnes by 2030 according to the Russian Union of Gold Producers (see Is there a pattern to Russia’s central bank gold purchases?).

With China still reporting month on month zero increases in its gold reserves to the IMF, as we have noted here before, at the current rate of increase Russia’s reported gold reserve figure may surpass that of China by early next year. However, few believe that China is not, in reality, surreptitiously increasing the amount of gold held in its reserves. It’s just that a section of them is probably being held in a non-reported account. The country has a track record of doing this in the past – the anomaly has thus been its apparent monthly reporting of its increases in gold reserves from August 2015 to October 2016. We believe it is no coincidence that it ceased reporting gold reserve rises once the yuan (renminbi) had been confirmed as an official constituent of the IMF’s Special Drawing Rights (SDR) basket of currencies which effectively gives the yuan reserve currency status. While it is unlikely to replace the U.S. dollar as the world’s principal reserve currency in the short to medium term, it is already beginning to chip away at this through the implementation of some major trade deals in yuan, bypassing the dollar altogether.

Russia and China are also keen to set up an alternative to the effectively U.S.-controlled SWIFT (Society for Worldwide Interbank Financial Telecommunication) international payments transfer system. The worry here is that the U.S. and its allies might effectively be able to cut Russia and/or China out of the global funds transfer system should it wish to do so. It did this as a part of its sanctions imposition on Iran effectively cutting off Iranian banks from cross-border transactions with foreign banks for four years, up until sanctions were lifted last year and there were calls to do the same with Russia over Ukraine – but not implemented. Russia says it already has a system in place to match SWIFT, as does China.

Russia has been adding significantly to its gold reserves now for around 10 years – see chart of cumulative additions from Nick Laird’s www.goldchartsrus.com website below:

Its current reported holding of 55.6 million ounces (1,729.3 tonnes) is now only around 113 tonnes below China’s reported gold reserve of 1,842.6 tonnes – and if Russia carries on buying at the 200 tonne/year rate and China continues to report zero month-by-month rises, Russia will officially surpass China as the world’s 5th largest national gold holder, as tabulated by the IMF, in Q1 2018. Not that we really believe the China reported figure though!

20 Aug 2017

-END-

 


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

 
 

1 Chinese yuan vs USA dollar/yuan STRONGER 6.6719 (REVALUATION NORTHBOUND   /OFFSHORE YUAN MOVES WEAKER TO ONSHORE AT   6.6803/ Shanghai bourse CLOSED UP 18.18 POINTS OR 0.56%  / HANG SANG CLOSED UP 107.11 POINTS OR 0.40% 

2. Nikkei closed DOWN 77.28 POINTS OR 0.40%    /USA: YEN FALLS TO 109.03

3. Europe stocks OPENED MIXED     ( /USA dollar index FALLS TO  93.39/Euro UP to 1.1763

3b Japan 10 year bond yield: FALLS  TO  +.031%/ 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::  48.59 and Brent: 52.66

3f Gold UP/Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO  +.398%/Italian 10 yr bond yield DOWN  to 2.007%    

3j Greek 10 year bond yield RISES to  : 5.627???  

3k Gold at $1288.15  silver at:17.06 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 3/100 in  roubles/dollar) 58.99-

3m oil into the 48 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 SMALL SIZED REVALUATION NORTHBOUND 

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 109.03 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  0.9662 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1362 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  +0.398%

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 2.182% early this morning. Thirty year rate  at 2.763% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

Eclipse Day Begins With S&P Futures Flat While Industrial Metals Soar

As the US awaits its first full solar eclipse since 1918, S&P 500 futures, together with Asian and European stocks started off the week off fractionally in the red after the cash index fell to its lowest level in five weeks on Friday, with the “Bannon rally” fading on growing concerns about the US political situation, while tensions ratcheted up again as the US and South Korea began massive military drills and North Korea responded, threatening a “merciless strike” on the US. Markets are looking ahead to this week’s Jackson Hole symposium where Mario Draghi may or may not pre-announce the start of ECB balance sheet tapering.

With overnight markets doing little of note, a quick preview of today’s main event: the full solar eclipse which is the first such event to cross the contiguous United States since 1918. Of the main financial centres there will be a partial eclipse in New York (c70%), Boston (c63%), Chicago (c86%) and LA (c61%). To celebrate, Royal Caribbean’s week long “total-eclipse” cruise offers passengers get the best opportunity to see the event at sea, while Bonnie Tyler has been hired to perform her 1983 classic “Total Eclipse of the Heart” while the skies darken.

Meanwhile, as the US waits to fade to darkness, world stocks struggled at a five and a half week low on Monday, though metals surged in Chinese trading with zinc at its highest in a decade, copper hitting a nearly three-year high and iron ore’s gains in the last two sessions stretching to 5 percent.

The dollar was little changed after rising from a four-month low against the yen Friday, as speculation the currency will get a boost from the Steve Bannon’s exit from the White House was offset by concern about the joint military drill in South Korea. The USD/JPY dipped in European trade, holding above a four- month low reached on Friday. Trading was muted and bids for the dollar were limited amid concerns about a new North Korean escalation/provocation/retaliation and as traders await the start of Jackson Hole, which begins Thursday.

“Arguably Bannon’s departure was more about egos than policy change, but markets seem to have opted for the hopeful narrative that it is a step away from protectionist trade policies,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “If so, this would reduce trade tensions and limit safe haven flows into the yen.”

South Korea’s won led modest gains in Asian emerging-market currencies as the MSCI EM Asia Index of stocks resumed its advance. Government bonds were mixed after a rally in U.S. Treasury yields reversed. The Bloomberg Dollar Spot Index and the yen rose. Caution before the Jackson Hole symposium late in the week means that “gains in Asian emerging currencies may be opportunistic and shallow rather than driven by conviction,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore.

The Topix index slid 0.1% with volume was about 16 percent below the 30-day intraday average, while the Nikkei 225 lost 0.4% as banks and technology companies weighed on the gauges after yen’s three-day ascent against the dollar. Australia’s S&P/ASX 200 Index dropped 0.4 percent, with BlueScope Steel Ltd. tumbling as much as 23 percent after the company reported disappointing earnings. Hong Kong’s Hang Seng Index added 0.4 percent and the Shanghai Composite Index was up 0.6 percent. The MSCI Asia Pacific Index slid 0.1 percent.

European stocks fell for a third session, though M&A activity helped shipping giant Maersk jump and the rally in metals sent Rio Tinto, BHP Billiton and Anglo American higher. The Stoxx Europe 600 Index fell 0.1 percent in early European trading. The MSCI All-Country World Index declined 0.1 percent to the lowest in almost five weeks on a closing basis. Germany’s DAX Index tumbled 0.4 percent. The U.K.’s FTSE 100 Index dipped 0.2 percent. The MSCI Emerging Market Index jumped 0.2 percent.  Futures on the S&P 500 Index decreased 0.1 percent to the lowest in more than five weeks.

While global stocks started the week generally on the backfoot, the same can not be said for industrial metals with zinc surging to the highest level since October 2007 at $3,180.50 a tonne, “Dr. Copper” rallied to $6,593 a tonne, its highest since November 2014, and nickel, used in stainless steel, gained over 2 percent to a 2017 peak.

Iron ore futures soared 6.6% before Dalian Commidity Exchange imposed a daily purchases and sales limit for Jan & Feb delivery to 6000 lots.

“I’m looking at the prospect for the global economy and looking at the price of metals and there seems to be a significant disconnect between the two,” said CMC markets strategist Michael Hewson. “But it’s certainly helping the mining sector, which has been beleaguered for quite some time.”

In addition to (geo)political tensions, and worries about the looming debt ceiling negotiation, Fed Chair Janet Yellen and ECB President Mario Draghi will be among the officials addressing this year’s annual conference hosted by the Kansas City Fed. The Jackson Hole summit comes as central banks in advanced economies grapple with ending years of unprecedented monetary easing, even as stubbornly tepid inflation clouds the outlook.

“The key event this week is the Jackson Hole central bank policy forum which begins on Thursday,” Citigroup strategists including Peter Goves wrote in a note to clients. The market spotlight will likely focus on Yellen, given the generally low U.S. inflation environment and the likelihood of Fed balance sheet reduction occurring relatively soon.” As the following Bloomberg chart shows, traders are starting to hedge for potential Jackson Hole-induced volatility with one-week EURUSD implied-realized vol premium rising rapidly.

Comments last week from Fed officials suggested the stock market’s steady rise, still low long-term bond yields and a sagging dollar are strengthening the Fed’s intent to raise interest rates again this year despite caution about weak inflation.

“People focus on inflation but in the Fed’s minutes policymakers spend a lot of time discussing whether bond yields are too low or asset prices are too high. If Yellen questions market stability, markets will expect a tighter policy,” said Hiroko Iwaki, senior bond strategist at Mizuho Securities.

Oil markets steadied after big gains on Friday, which were triggered by a drop in crude inventories. WTI traded at $48.46 per barrel, down 0.1 percent, while Brent futures were down 0.2 percent at $52.63 per barrel.

In rates, the 10Y U.S. Treasuries yield stood at 2.19%, having slipped on Friday to 2.162% – its lowest since late June. German Bunds were steady at 0.4 percent. Greece’s government bond yields dipped early after Fitch became the second ratings agency to upgrade it to “Single B” status, marking another milestone in the debt-laden state’s slow journey away from default territory.

Market Snapshot

  • S&P 500 futures up 0.1% to 2,427
  • STOXX Europe 600 unchanged at 373.30
  • MXAP down 0.1% to 159.04
  • MXAPJ up 0.03% to 523.33
  • Nikkei down 0.4% to 19,393.13
  • Topix down 0.1% to 1,595.19
  • Hang Seng Index up 0.4% to 27,154.68
  • Shanghai Composite up 0.6% to 3,286.91
  • Sensex down 0.6% to 31,351.93
  • Australia S&P/ASX 200 down 0.4% to 5,725.85
  • Kospi down 0.1% to 2,355.00
  • Brent futures down 0.2% to $52.62/bbl
  • Gold spot up 0.3% to $1,288.47
  • U.S. Dollar Index up 0.1% to 93.51
  • German 10Y yield fell 1.2 bps to 0.402%
  • Euro down 0.1% to $1.1746
  • Italian 10Y yield rose 0.4 bps to 1.741%
  • Spanish 10Y yield fell 3.0 bps to 1.531%

Top Overnight News

  • Donald Trump returns to the Oval Office in danger of becoming increasingly isolated from the Republican establishment he needs to enact his agenda and the grassroots activists inspired by just-departed chief strategist Stephen Bannon
  • U.S. utility owner Sempra Energy has agreed to buy control of Texas power distributor Oncor Electric Delivery Co. for $9.45 billion, topping a bid by Warren Buffett’s Berkshire Hathaway Inc. just last month
  • As the world’s top central bankers gather in Wyoming this week, their relief about a stronger global economy will be tempered by a growing unease that inflation remains inexplicably low
  • ADP’s board voted unanimously not to nominate any of Pershing Square Capital Management’s three candidates for election to the board at ADP’s 2017 annual meeting of stockholders
  • Goldman Sachs, seeking a rebound in its commodities business after a bout of losing trades dented earnings, has a plan built around hiring fresh stars and luring new clients
  • Money managers pushed their net-bullish bets on gold to the highest since October, and investments through exchange-traded funds also jumped, as investors seek insurance amid concern political uncertainty will derail U.S. economic growth
  • Financial regulators should increase coordination and step up punishment for violators to crack down on regulatory arbitrage, PBOC Vice Governor Yin Yong said at a forum on Saturday
  • U.S. Trade Representative Robert Lighthizer officially starts a probe into China’s intellectual-property practices
  • China’s not running a trade surplus with every nation; South Korea’s $72.2 billion excess with Asia’s largest economy tops a list of more than 40 nations that export more to the country than they import from it, followed by Switzerland and Australia, data compiled by Bloomberg show
  • Total Chases Growth With $5 Billion Purchase of Maersk Oil
  • Sempra Bests Berkshire With $9.45 Billion Offer for Oncor
  • Unintended Consequences of MiFID: Job Losses, Trading Turmoil?
  • Yellen, Draghi Head to Jackson Hole With Prices Missing Goal
  • Ten Sailors Missing After U.S. Warship Crash Near Singapore
  • Trump Struggles to Move Past Bannon, Starting With Afghanistan
  • China Expresses ‘Strong Dissatisfaction’ With U.S. Trade Probe
  • Britain and EU Clash Over Brexit Timetable for Trade Deal

Asian equity markets traded mostly lower with the Nikkei 225 down by 0.4% amid geopolitical tensions on the Korean peninsula. Tensions ratcheted up again as the US and South Korea were set to begin military drills. North Korea responded, threatening a “merciless strike” on the US. Nevertheless, the Kospi was relatively resilient, trading lower by just 0.14%. The ASX 200 (-0.37%) had conformed to the downbeat tone in Asia however had been driven by some major earnings throughout the majority of the session with Fortescue Metals rising over 6% after doubling their dividend. Chinese markets were higher, lifted by the telecoms sector after China Unicom confirmed a share placement to tech titans Alibaba, Tencent and Baidu. JGBs traded marginally higher after the break, after initially trading sideways for much of the morning. Some were pinning the late uptick to JPY 3.13fin of T-bill redemptions on Monday, one of only two lots of redemptions at all in August. BoJ Governor Kuroda said the Balls commitment to achieving the price goal as early as possible remains unchanged.

Top Asian News

  • Qatar Is Said to Tell Banks to Seek Overseas Funding Amid Spat
  • Asian Central Banks Lean on Wide Mandates as Fed Eyes Tightening
  • China Overseas Land in Talks on Potential M&A Opportunities: CEO
  • Hermina Hospital Is Said to Pick Arrangers for $200 Million IPO
  • Missiles in Golf Course Hurt Lotte in China as It Plans Bonds
  • Marchionne’s Fiat Review Spurs Great Wall Interest in Jeep Brand
  • Iron Ore Will Hold in $70s, RBC Says in a Challenge to Bears
  • Fortescue Finds It Hard to Escape Junk Ratings Despite Debt Cuts

European bourses trading with minor losses this morning with the Euro Stoxx 50 slipping 0.3%. All sectors trading in the red with financials the notable laggard this morning, BNP shares trading lower by 1.6% amid reports that Belgium could place more shares in the bank. Elsewhere, Fiat Chrysler shares are outperforming after Great Wall Motor announced that they are engaged with talks over a possible offer. Investors paying a close eye on Greek bonds this morning with yields initially edging lower after Fitch upgraded Greece to B- from CCC; outlook positive. DBRS confirmed Ireland at A (high), stable trend and confirmed Belgium at AA (high) , stable trend. German finance ministry says monthly data suggests further economic expansion; emissions scandal is a medium term risk to the economy.

Top European News

  • Rosneft, Trafigura Seal $12.9 Billion Deal for India’s Essar Oil
  • Shell Is Said to Mull Buying Israel, Cyprus Gas for Egypt Plant
  • Goldman Warns Euro Gains May Be Russian Bonds’ Achilles Heel
  • Big Data Convert Channels Big Brother to Take Russia’s Pulse
  • Bunds Underpinned as Risk Assets Suffer; Demand in UST Futures
  • Global Ports Holding Plunges After 1H Loss on Turkish Ports
  • Pound Vulnerable as U.K. Prepares to Provide Brexit Plan Details

In currencies, it has been a calm start to the week given the quiet newsflow thus far, the greenback up marginally by 0.1% to remain within close proximity to 93.50. USD also unfazed by North Korean anger at South Korean and US forces beginning military exercises. EUR slightly offered this morning ahead of the main risk event in which Draghi is set to speak at the Jackson Hole Symposium later this week, as such positioning for this could see EUR longs reduced. As a reminder, source reports last week indicated that Draghi was set to stick to his dovish stance, which could weigh on EUR/USD. Influence of today’s option expiries could grow with 720m1n and 918mln set to roll off at 1.1700 and 1.1795-118.00. JPY firmer across the board with equities taking a slight dip this morning, USD/JPY now tripping below 109.00 to hover around intra-day lows. More US political concerns with regards Trump’s administration could continue to send USD/JPY lower with a possible move towards the YTD low at 108.11.

In commodities, oil prices are slightly softer this morning, however do remain at elevated levels following a fall in the Baker Hughes rig count on Friday. Focus will shift towards the joint OPEC-Non-OPEC technical committee which is set to convene today. Libya’s Sharara oil field (280K bpd) has been closed since Saturday because of a pipeline blockade, according to sources. Libya has declared a force majeure on loadings of Sharara crude from the Zawia terminal. Russian Energy Minister Novak said it is important that OPEC and non-OPEC members honor the oil production commitments they have made

US Event Calendar

  • 8:30am: Chicago Fed Nat Activity Index, est. 0.1, prior 0.1

DB’s Jim Reid concludes the overnight wrap

Good luck if you’re in the US today as a rare chance to see a total eclipse beckons. Apparently this is the first such event to cross the contiguous United States since 1918. Of the main financial centres there will be a partial eclipse in New York (c70%), Boston (c63%), Chicago (c86%) and LA (c61%). If it wasn’t for the fact that I’m on call to rush to the hospital at any point in the next week I’d be sorely tempted by the Royal Caribbean’s week long “total-eclipse” cruise where passengers get the best opportunity to see the event at sea. The coup de grâce though is that Bonnie Tyler has been hired to perform her 1983 classic “Total Eclipse of the Heart” while the skies darken. What could be more perfect?

In case my wife gives birth a few days early I googled what it means to be born under an eclipse and as usual the internet is a feast of information. Apparently Mr Trump was born under a South Node Lunar eclipse in Sagittarius. There was then a whole article about how this has impacted his personality and leadership skills. Anyway apparently babies born under solar eclipses are natural born leaders so if I get the call today I’ll be earmarking them to be the first joint Prime Ministers of the UK in say 40 years time! Be warned! My wife is now under strict observations every two days with a view that the consultant might want to pull the trigger at any moment. We have a hard long stop of next Tuesday as the consultant thinks there are risks of going further than 36 weeks given all the variables and her interpretations of our regular check-ups. Fingers crossed it’s a safe and successful week. My wife and I are both bags of nerves!!

There might be a few less nerves about the next few days in markets than many felt a few weeks ago. Back then, Thursday’s commencement of the annual Jackson Hole Symposium seemed to be a natural place for Mr Draghi to signal that exit from QE was soon to be accelerated. However a combination of still soft global inflation data and the Euro’s recent ascent has made it unlikely that the event will be a watershed moment. Expect him to be upbeat on the economy but the hawkish/dovishness indicator might be swayed one way or the other on how much attention the Euro gets in his remarks. Draghi is expected to speak in the afternoon on the 25th August, with remarks focusing on the themes of the conference. Before then, don’t relax until the summit opens as Mr Draghi is warming up for the trip by speaking at the Lindau  economics symposium in Germany on 23 August and as such he could front run himself! So two symposiums back to back! Impressive stuff.

Our Fixed Income Strategists now actually think that the Fed could be more important at Jackson Hole. The running theme of this year’s symposium is “Fostering a Dynamic Global Economy” and the full line up of speakers and presentations will be released at 4PM EST on Thursday. It seems that Mrs Yellen will be speaking Friday morning at 10AM EST on financial stability. Our strategists noted that in the US there is a  tension between softer inflation and easy financial conditions and given the topic of Yellen’s speech is ‘financial stability’ she may lean towards prioritising one side or the other. Overall the market will probably be most sensitive as to whether a December hike is more or less likely after her comments. The imminent halting of reinvestment seems to be considered a fine deal.

This morning in Asia, markets have broadly softened following leads from the US on Friday. Trading volumes are thin, with the Nikkei (-0.41%) and Kospi (-0.10%) slightly down, but Hang Seng (+0.52%) and the Chinese bourses were up c0.3% as we type. We have long planned joint South Korean-US military drills today but it’s remarkable how quickly the North Korean situation has calmed down but also quite interesting that markets still closed notably lower last week.

Indeed US equities were initially higher on Friday on reports that President Trump’s controversial Chief strategist, Steve Bannon had resigned, but ended the day slightly down, with the S&P (-0.18%), the Dow (-0.35%) and the Nasdaq (-0.09%). Within the S&P, the utilities and energy (+0.57%) sector posted modest gains, but was broadly offset by losses in real estate, telcos and discretionary consumers names. European markets were also lower, with the Stoxx 600 down 0.71% with all sectors in the red, led by the real estate (-1.25%) sector. Elsewhere, the Dax (-0.31%) and FTSE (-0.86%) declined modestly, but the Italian FTSE MIB bucked the trend, to be up +0.12%.

Over in government bonds, yields were mixed but little changed. The UST 10y increased 1bp across the curve (2Y: +1bp; 10Y: +1bps), but core European bond yields fell 1bp at the longer end of the curve, with  bunds (2Y: +0.3bp; 10Y: -1bps) and French OATs (2Y: -0.4bp; 10Y: -1bp), but Gilts (2Y: +1bp; 10Y: unch) were unchanged. Elsewhere, Italian BTPs (2Y: +1bp; 10Y: +1bp) were slightly higher in yields.

Turning to currencies, the USD dollar index weakened 0.2%. The Euro gained 0.3% against both the USD and Sterling, while Sterling/USD was broadly flat. In commodities, WTI oil was up 3%, with the OPEC’s full technical committee scheduled to meet today to discuss compliance with production targets. Iron ore continued to increase, up 3.4% following signs of stronger steel demand from China. Elsewhere, precious metals were slightly down on Friday (Gold -0.3%; Silver -0.4%). This morning, other metals were modestly up (Copper +0.6%, Aluminium +1.1%) and Zinc was up 2.7% following reports that LME stock had fallen to the lowest level since 2008.

Away from the markets, China’s State Council formalised its campaign against irrational acquisitions offshore last Friday, with new rules that will restrict domestic firms investing in offshore real estate, hotels, film, entertainment and sports clubs, while investments in gambling and pornography will be banned. Companies are encouraged to support domestic projects in the government’s “Belt and road” initiative. Elsewhere, Treasury secretary Steven Mnuchin has said he will stay in the Trump administration despite being urged to quit from a letter co-written by 300 of his fellow Yale graduates.

We’ll wrap up with other data releases from Friday. In the US, the University of Michigan’s consumer sentiment index was higher than expectations at 97.6 (vs. 94), the highest reading since January. The return in confidence should be supportive for consumer spending growth going forward. The Atlanta Fed’s GDPNow estimate of Q3 GDP growth currently stands at 3.8% saar, whilst the NY Fed’s estimate closed the week at a more restrained 2.1% saar. Sitting between those estimates but at the higher end, the St Louis Fed’s model has growth pegged at 3.5% saar. Elsewhere, Germany’s July PPI was higher than expected, at 0.2% mom (vs. 0% expected) and 2.3% yoy (vs. 2.2% expected) and Canada’s July inflation was in line at 0.0% mom and 1.2% yoy.

 END

3. ASIAN AFFAIRS

i)Late SUNDAY night/MONDAY morning: Shanghai closed UP 18.18 POINTS OR 0.56%   / /Hang Sang CLOSED UP 107.11 POINTS OR 0.40% The Nikkei closed DOWN 77.28 POINTS OR 0.40%/Australia’s all ordinaires CLOSED DOWN 0.32%/Chinese yuan (ONSHORE) closed UP at 6.6719/Oil UP to 48.59 dollars per barrel for WTI and 52.66 for Brent. Stocks in Europe OPENED MIXED , Offshore yuan trades  6.6803 yuan to the dollar vs 6.6722 for onshore yuan. NOW THE OFFSHORE IS WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS STRONG TO THE DOLLAR AND THIS IS COUPLED WITH THE WEAKER DOLLAR. CHINA IS HAPPY TODAY 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

NORTH KOREA/USA

b) REPORT ON JAPAN

end

c) REPORT ON CHINA

Not good:  huge clashes between Indian and Chinese soldiers of their respective border

(courtesy zero hedge)

Video Emerges Showing Clashes Between Indian, Chinese Soldiers

Late last week, we reported that in the first documented clash between Chinese and Indian soldiers who have been piling up across the border between the two nations over the latest territorial dispute, “Indian and Chinese soldiers were involved in an altercation” in the western Himalayas on Tuesday, “further raising tensions between the two countries which are already locked in a two-month standoff in another part of the disputed border.” A Reuters source in New Delhi who was briefed on the military situation on the border, said Indian soldiers “foiled a bid by a group of Chinese troops to enter Indian territory in Ladakh, near the Pangong lake.” He added that some of the Chinese soldiers carried iron rods and stones, and in the melee there were minor injuries on both sides.

“There was an altercation near the Pangong lake,” said a police officer in Srinagar, the capital of India’s Jammu and Kashmir state, under which the area falls. An army source in Srinagar, quoted by Reuters, spoke of an altercation following what he called a Chinese army “incursion in Pangong lake area”. This fresh standoff at Pangong Tso lake in Ladakh comes in the backdrop of tensions between Indian and Chinese troops over Doklam plateau in Sikkim sector with the PLA skipping the ceremonial border meetings on Independence Day.

What is notable about this concerning breakout of violence, is how silent both India and China have been, with neither side issuing an official statement confirming or denying last week’s events.

Overnight, thanks to India’s NDTV, five days after the “unconfirmed” scuffle in Ladakh, a video of the clash has surfaced. The video, which has been widely circulated on social media, shows many soldiers from the two countries punching and kicking each other and throwing stones.

 

end

 

A terrific commentary on the huge debt problems inside China and how that is going to influence global trade. The key data points:  total debt 35 trillion USA of which 7.6 trillion usa is non performing.

 

(courtesy David Stockman/DailyReckoning)

David Stockman Warns “Don’t Forget About The Red Swan”

Authored by David Stockman via The Daily Reckoning,

Given the anti-Trump feeding frenzy, we continue to believe that a Swan is on its way bearing Orange. But if that’s not enough to dissuade the dip buyers, perhaps the impending arrival of the Red Swan will at least give them pause.

The chart below comprises a picture worth thousands of words. It puts the lie to the latest Wall Street belief that the global economy is accelerating and that surging corporate profits justify the market’s latest manic rip.

What is actually going on is a short-lived global credit/growth impulse emanating from China. Beijing panicked early last year and opened up the capital expenditure (CapEx) spigots at the state-owned enterprises (SOEs) out of fear that China’s great machine was heading for stall speed at exactly the wrong time.

The 19th national communist party Congress scheduled for late fall of 2017. This every five year event is the single most important happening in the Red Ponzi. This time the event is slated to be the coronation of Xi Jinping as the second coming of Mao.

Beijing was not about to risk an economy fizzling toward a flat line before the Congress. Yet that threat was clearly on the horizon as evident from the dark green line in the chart below which represents total fixed asset investment.

The latter is the spring-wheel of China’s booming economy, but it had dropped from 22% per annum growth rate when Mr. Xi took the helm in 2012 to 10% by early 2016.

There was an eruption as dramatized in the chart. CapEx growth suddenly more than doubled in the one-third of China’s economy that is already saturated in excess capacity.  The state owned enterprises (SOE) in steel, aluminum, autos, shipbuilding, chemicals, building equipment and supplies, railway and highway construction etc boomed.

It was as if a switch had been flicked on by Mr. Xi himself, SOE CapEx soared back toward the 25% year-over-year rate by mid-2016, keeping total CapEx hugging the 10% growth line.

However, you cannot grow an economy indefinitely by building pyramids or any other kind of low-return/no return investment – even if the initial growth spurt lasts for years as China’s had.

Ultimately, the illusion of Keynesian spending gets exposed and the deadweight costs of malinvestments and excess capacity exact a heavy toll.

If the investment boom that was financed with reckless credit expansion is not enough, as was the case in China where debt grew from $1 trillion in 1995 to $35 trillion todaythe morning-after toll is especially severe and disruptive This used to be called a “depression.”

China Fixed Asset Investment

China’s propagated spurt in global trade and commodities was artificial and short-term. It was done to flatter China’s rulers at the 19th party congress.

Now that a favorable GDP glide path has been assured, China’s planners and bureaucracy are already back at it trying to find some way to reel in its runaway credit growth and bloated economy before it collapses.

Downside Surprises in China Are Virtually Baked In

The sell-by date has expired on this latest China credit impulse, as evident in the chart below. During the first quarter of this year, total social financing (bank credit plus shadow banking loans) reached the incredible rate of $4 trillion per annum. That’s nearly one-third of China’s entire GDP.

The figure scared the daylights out of leadership in Beijing, who have now moved forcefully to reel in China’s debt machine.

What is coming down the pike is the great China Debt Retrenchment.  Expect a global braking motion that will get underway once Mr. Xi dramatically consolidates his power at the 19th party congress.

China Total Social Financing

This has the potential to drastically weaken the global economy – and the impact on corporate profits should not be underestimated.

The Red Swan Has Now Gone Berserk

Half of the world’s GDP growth since the 2008 crisis has been in China, and that, in turn, was purchased by the greatest credit eruption in recorded history.

As China’s nominal GDP was more than doubling from $4.6 trillion in 2008 to $11.2 trillion in 2016, its national leverage ratio soared from 175% of GDP to 300% in less than a decade.

There’s reason to seriously doubt that Beijing can bring the Red Ponzi to a soft landing.  It cannot and will not permit the nation’s debt load to quadruple again during the next eight years, meaning that China’s days as the world’s ultimate stimulus machine are over.

China Red Ponzi Debt to GDP Ratio 2017

The fading of the most recent China growth impulse will soon reveal that most countries, to adapt Warren Buffet’s famous metaphor, have been swimming naked from a fiscal perspective. It has left the world vulnerable to a renewed wave of funding crises as the ECB and other central banks attempt to launch monetary normalization.

In sum, during the last 19 months the Red Ponzi propagated a false upturn in the global economy that is already decisively reversing. This comes at the same time that central banks of the major developed world economies are finally bringing their printing presses to a halt.

The major central bankers have finally recognized that at $22 trillion on central bank balance sheets have become egregiously extended.  China is the epicenter of the world’s two decade plunge into central bank monetary fraud and credit explosion.  They have deformed and destabilized the very warp and woof of the global economy.

So, yes, even as the Orange Swan stumbles toward the Donald’s White House, there is a Red Swan following closely behind.

 

 

END

 

Do you wonder why the Chinese equity markets have been so stable these past 2 years:  Your answer:  China’s plunge protection team holds a huge 150 billion in stock

(silveristhenews)

China’s Plunge Protection Team Holds $150 Billion In Stock, Claims “State Meddling” Stabilizes Markets

It was two years ago, in June of 2015, when just as the Shanghai Composite was flirting with 5,000 and when literally the local banana stand guy was trading stocks, that the Chinese stock bubble burst, unleashing an unprecedented selling spree, a 40% drop in just two months, and Beijing’s nationalization of the stock market, courtesy of the domestic plunge protection team, the China Securities Regulatory Commission also known as the “National Team”.

The decision by local authorities to effectively shut down price discovery had a huge confidence crushing impact on local investor confidence. As Gavekal Research put it overnight, “the lack of trust was crystallized by the decision in the summer of 2015 to “shut down” the equity markets for a while and stop trading in any stock that looked like it was heading south. That decision confirmed foreign investors’ apprehension about China and in their eyes set back renminbi internationalization by several years, if not decades.”

Understandably, with the realization that China (or any other nation for that matter), no longer has a an efficient, discounting stock market, but merely a policy tool meant to inspire confidence on the way up, and punish short sellers and “speculators” on the way down, the China Securities Regulatory Commission kept a low profile: after all why remind traders and investors that the local market only exists in the imaginations of several Beijing bureaucrats who sit down every day to decide the “fair value” of all market-traded equities.

That changed last week, when for the first time in years, the Chinese Plunge Protection Team broke its silence and said that “state meddling has successfully stabilized China’s US$7 trillion stock market by curbing volatility and steering valuations to rational levels.

For those stunned by the idiocy in the circular statement above, don’t worry it’s not just you: China indeed just said that the local market has become more efficient as a result of more manipulation. What is far more shocking, however, is that most central bankers around the world would agree with this statement.

As SCMP adds, in this rare move to comment on the market performance, the China Securities Regulatory Commission said in a statement on its website on Tuesday that the gauges tracking the nation’s big-cap blue-chip stocks beat the world’s other major benchmarks such as the Dow Jones Industrial Average and UK’s FTSE 100 Index in the first seven months of the year. In spite of the outperformance, the valuations were still lower than the global peers, it said.

It did not say that the “valuations” would be whatever the CSRC decided they should be, and not a penny less or more. That much was assumed.

Here are some striking facts showing what state intervention in quote-unquote markets looks like: within the 140 trading days in the period, the benchmark Shanghai Composite Index had not closed up or down by more than 2% and registered only eight days with daily movement exceeding 1 per cent, the CSRC said in the statement.

Clearly unaware of the Efficient Markets Hypothesis and what “price discovery” means, the Chinese regulator produly attributed the tame market performance to state-linked funds, which were created during the equity crash in 2015 to shore up stocks, and said maintaining market stability was the pre-condition for carrying out reforms. In other words, China’s stock market will never again be allowed to suffer a crash, and in the process, the whole concept of a fair and efficient market has been thrown out of the window.

“The CSRC has put the prevention against financial risks at a more important position and taken a series of strong measures to rid any potential risks in collaboration with relevant departments,’’ the regulator said in the statement.

To be sure, nothing about the above statement is a surprise: even after the 2015 market rout that almost erased $5 trillion in market value, the state funds, also known as the “national team”, continue to frequently interfere and meddle in the market, usually in the last hour of trading when an “inexplicable” force sends the stock from sharply lower to just barely in the green, in the process “restoring confidence” in the stock market, or so they think. The most prominent case this year was January 16, when the Shanghai Composite almost recouped an intraday loss of as much as 2.2 per cent in the last 30 minutes of trading to end the day only 0.3 per cent lower. The miraculous recovery happened shortly after Beijing ordered “no market selloffs during Xi Jinping’s Davos Trip, and sure enough…

… that’s precisely what happened.

Unlike the US, China is not ashamed to admit that there is no such thing as “price discovery” in its stock market, where everything is a function of daily government intervention. State-linked funds, mainly operated by China Securities Finance and Central Huijin investment, are estimated to hold stocks worth about 1 trillion yuan (US$150 billion) now, according to fund tracker Howbuy.

And if Beijing has to hold 1 trillion yuan in stocks when the “market” is stable, one wonder what will happen when things start turmoiling once again: will Beijing simply nationalize the entire stock market during the next market crash?

Meanwhile, it did not take long for the adverse consequence of China manipulating its market to emerge: while state intervention reduced price swings in what until recently was the world’s most volatile emerging stock market, it has come at a cost of waning trading activities among retail investors, who make up 80% of transactions. The number of new investors is growing at the slowest pace in almost two years, and turnovers remain down 80% from the all-time high, as nobody has any confidence or trust left in any displayed “price.”

Just like in the US, the 100-day volatility on the Shanghai Composite fell to a record low of 8.6 in May and it currently stands at 9.3, according to data compiled by Bloomberg. China’s CSI 300 Index of the nation’s 300 most valuable companies climbed 13 per cent in the January-to-July period, outpacing Dow Jones Industrial’s 11 per cent gain and FTSE 100 ’s 3.2 per cent advance.

As long as China, along with every other central bank, continues to supress volatility artificially, it is unlikely that any major market turmoils will emerge. The flipside is that the longer China, and other developed nations, kick to can on realizing fair market value, the more dire the collapse will be when (or maybe if) price discovery is once again permitted.

 

 

END

 

It seems that China wanted another final push in stimulus prior to its next Congress meeting later this year. That is why industrial metal prices like copper, zinc, and steel are rising.  Will China dump these metals as soon as this push is over

 

(courtesy zerohedge)

 

“Something Strange Is Going On”: Axiom Stumbles On The Reason Behind The Explosive Industrial Metals Surge

While overnight equity, bond and FX markets traded in a narrow range as a result of scarce mid-summer liquidity, mounting Trump administration and geopolitical concerns and uncertainties ahead of Friday’s Jackson Hole symposium, the same can not be said about the latest “berserker” action in the commodity space in general, and industrial metals in particular, where China’s hoarders of momentum-chasing speculators were unleashed overnight, sending Zinc to its highest since October 2007 at $3,180.50 a tonne, the bellwether industrial metal, and “doctor”, copper surged to to $6,593 a tonne, its highest since November 2014, while nickel, used in stainless steel production, gained over 2 percent as it reached a 2017 peak.

Additionally, iron ore futures traded in Dalian soared more than 4% fueled by concerns of shortages and before curbs on futures purchases which are touted to come into force in the next few months.

Some, such as CMC market strategist Michael Hewson, have expressed their amazement at what is taking place in the industrial metals sector, and pointing out that something strange is going on, Hewson said “I’m looking at the prospect for the global economy and looking at the price of metals and there seems to be a significant disconnect between the two.” He was referring to the disconnect between the global commodity index and surging industrial metals shown in the chart below, as well as tepid forecasts of global GDP growth.

Needless to say, industrial and mining companies have been delighted by the move, and as Hewson adds, “it’s certainly helping the mining sector, which has been beleaguered for quite some time.”

Still, the question on everyone’s mind is what is causing this move, and how long can it continue?

One possible explanation is that – like everything else in China – the metals surge is simply a function of Beijing’s credit impulse, which was unleashed in early 2016 and has been fading in recent months, and has resulted in yet another bubble, this time in industrial metals. The chart below, showing China’s credit impulse with a 12 month lead, suggests that the move in metals may be peaking.

Overnight, an analysis by Axiom’s Gordon Johnson who has been quite bearish on the metals space for some time, appears to have found confirmation that the ongoing move is indeed a function of Chinese credit dynamics. In a note alleging that “China’s 2017 Stimulus/Debt Binge Rivals its Record 2009 Spend” and asking “Will it Ever End?“, Johnson writes that “China is not deleveraging (contradicting the official narrative) & ‘17 May Have Seen the Largest Expansion in Stimulus-Targeted Debt Ever.” Here are some more striking details on what may have been the biggest driver of economic activity in recent years:

 Despite rhetoric to the contrary, we believe the data show that in 1H17 China embarked on quite possibly its most aggressive debt-fueled stimulus program yet (targeted primarily at infrastructure projects). That is, with cheaper credit leading to a lift in property sales (Ex. 1) as well as spiking infrastructure project investment, infrastructure FAI now comprises over half of China’s total FAI growth (Ex. 2) – as recently as 2/29/16, infrastructure FAI accounted for just 25% of China’s total FAI growth. And, as would be expected, construction vehicle sales (Ex. 3) – excavators + cranes + loaders – have virtually exploded higher, reaching record levels for two of three categories in 1Q17.

The Chinese numbers are so hot, in fact, that they have prompted the Axiom analyst to wave the white flag of surrender on his bearish bet, if only for the time being:

… with credit still growing at a very rapid pace (Ex. 4) & credit costs historically low (Ex. 5) – both in terms of short-term interbank lending rates & thus, by default, longer-term term corporate & government bond rates – fears from the “China Bears” (us included) that President Xi Jinping is actively managing economic numbers higher ahead of the 19th Party  Congress (in Oct./Nov.) appear apropos. As such, while we remain bearish, we acknowledge that near-term growth in China could surprise to the upside.

And yet, with the Chinese credit impulse having turned sharply lower, and with the latest batch of Chinese economic data missing across the board, one wonders if these are the last gasps of the latest Chinese mini-bubble. Here is Johnson’s take:

Some Data Points Have Begun to Turn. Chinese activity & spending data released for the month of July all came in below expectations (retail sales, urban FAI, & industrial production all missed expectations, reversing much of the gains seen in 2Q17).

 

Further, July Chinese home price growth slowed to +0.48% M/M (vs. +0.67% M/M in June) & 9.1% Y/Y (vs. +9.39% Y/Y in June & the lowest since 9/30/16) – Ex. 15.

 

Admittedly, while industrial production has held up better than expected, it appears confined to the bulk metals sector, with production of consumer related goods & other bulk commodities (i.e., cement) lagging (Ex. 7-8), Further, with the property market appearing to have cooled in recent months (Ex. 12), exacerbated by a slowing in investment growth (Ex. 11), we see strong 1H17 end-market demand in the steel sector as on “borrowed time”. To wit, as detailed in Ex. 10-11, while the slowdown in capital expenditures has been seen mainly in the private sector manufacturing space, there has been a notable softening recently in both infrastructure spending and property investment.

In other words, China’s latest asset bubble, that of industrial metals, may be running on borrowed time. But until then, the dramatic price moves are already having an impact on the rest of the world: overnight, Bloomberg reported that Tokyo Steel Manufacturing hiked its hot-rolled coil prices as Chinese domestic demand remains robust and nation cuts exports, The company pushed its HRC price for Sept. +2,000 yen to 64,000 yen/ton, the highest since 2014. In other words, a delayed inflationary wave may be set to hit the world just as China’s internal credit impulse ends.

More concerning, however, is what will China do with all the excess commodity inventory. For an indication of what may happen next, on Sunday the CEO of Australia’s Bluescope warned that it was seeing a “flood” of cheap steel entering into Australia. Specifically, CEO Paul O’Malley said in a media call that “Australia’s anti-dumping regime is inconsistent with other jurisdictions that have recently taken action, resulting in “a flood of very cheap product being offered in Australia.”  As a result of this dumping of mostly Chinese cheap steel, the company was forced to slash its 1H18 outlook by a whopping 40% sending the stock price crashing. “We have very smart and very capable competitors in this economy,” he said. “They take every advantage in short-term jumps in the Australian dollar to source product from offshore.”

Which begs the question: just how aggressive will China’s industrial metals dumping be in global markets, once the bubble is over and Chinese producers shift to destocking mode, and more importantly, what impact will such a destocking have on already simmering global trade wars, especially since the rest of the world will have no choice but to retaliate. The answer should present itself in a few months…

end

 

Now China threatens India with a trade war after India imposes anti dumping duties on 93 Chinese products.

 

(courtesy zerohedge)

 

China Warns Of “Looming Trade War” With India In Retaliation To Anti-Dumping Duties

Tyler Durden's picture

One of the more under-reported stories – at least among the Western press – are the growing tension between China and India. As reported over the weekend, in the latest escalation, Indian and Chinese soldiers, in addition to the ongoing tense military standoff over a contested road in Doklam, were involved in an altercation in the western Himalayas on Tuesday, further raising tensions between the two countries which are already locked in a two-month standoff in another part of the disputed border. A widely circulated clip on social media showed many soldiers from the two countries punching and kicking each other and throwing stones, a clash which luckily ended before it could devolve into something far more dangerous.

Meanwhile, in addition to a territorial dispute that has the potential to devolve into a shooting skirmish at any moment as thousands of troops have amassed on both sides of the border, a trade war also seems to be looming between India and China after New Delhi imposed anti-dumping duties on 93 Chinese products amidst a military standoff in Doklam area, India’s First Post reported last week.

The Indian publication cites an article in China’s state-owned Global Times, which urged Chinese firms to “reconsider the risks” of investing in India and warned New Delhi to be “prepared for the possible consequences for its ill-considered action.” The article said that China “could easily retaliate” with restrictions on Indian products, but added that it “doesn’t make much economic sense” for the country.

Making a less than subtle hint that a trade war would have damaging consequences on the Indian economy, the Global Times cited figures from the Indian embassy in China to show that Indian exports fell by 12.3% year-on-year to $11.75 billion while India’s imports from China rose by 2% to $59 billion, resulting in a trade deficit of $47 billion. Meanwhile, according to the Indian Commerce Ministry, the trade deficit with China last year mounted to over $52 billion when the bilateral trade stood at $70 billion.

Dispensing with diplomacy, the Chinese publication warned that “a trade war between China and India seems to be looming after the latter moved last Wednesday to impose anti-dumping duties on 93% from China,” and added that “if India really starts a trade war with China, of course China’s economic interests will be hurt, but there will also be consequences for India.

Meanwhile, the Global Times also took a swipe at the ongoing military standoff in Doklam in the Sikkim sector where India has protested the construction of a road by the Chinese military in the area claimed by its ally Bhutan, fearing it would allow Beijing to cut off India’s access to its northeastern states. The Global Times report strongly cautioned India that “given the tense bilateral trade ties, China may consider temporarily suspending investment or economic cooperation projects in India to ensure the security of these investments.

A separate article in China Daily likewise warned that boycotting Chinese goods would harm India’s economy.  Referring to the calls of boycott of Chinese products, it said the ongoing standoff in Doklam seems to have spilled over into bilateral exchanges.

“Suffice to say, calling for the boycotting of Chinese products and those related to Chinese investors is not just a fool’s errand but also risks backfiring,” it said and added that “it is the Indian economy that will suffer because of the boycott,” it said. The editorial concluded that any attempt to keep Chinese cellphone companies at bay or shut down Chinese-invested factories will hurt the Indian economy and cost Indian jobs.

Separately, on Monday China expressed “strong dissatisfaction” with the U.S. decision announced on Friday to probe its intellectual-property practices and pledged to respond if needed. China’s Commerce Ministry said that the U.S. “is irresponsible because it’s conducting the review under domestic laws and disregarding World Trade Organization rules.” It also said that “the accusations against China aren’t objective and the probe sends the wrong signal as the countries are already making progress on separate negotiations”, adding that the international community and U.S. industries will oppose the investigation.

The Commerce Ministry said the U.S. should work with China to press ahead on the one-year economic cooperation plan and keep bilateral economic ties on a healthy and stable track. It urged the U.S. to respect multilateral trade rules and act prudently, adding that the country will monitor the probe’s progress and take appropriate measures to defend China’s rights.

Going back to the latest spat between China and India, while it is still early to make a determination on how this latest trade escalation between the world’s two fastest growing economies will be resolved, the troubling reality that China may soon – in a worst case scenario – find itself engaged in trade war on two fronts, with both the US and India, would have significant adverse consequences not only for the Chinese economy but would lead to another negative shock for the entire world, something which we doubt that central bankers are even remotely contemplating as they finalize their Jackson Hole speeches this Friday.

 

4. EUROPEAN AFFAIRS

 SPAIN
The Spanish driver in that Barcelona attack has been killed just after he hijacked a car killing its occupant.
(courtesy Bloomberg)

Catalan Police Shoot Man Suspected of Barcelona Attack Dead

August 21, 2017, 11:59 AM EDT August 21, 2017, 12:55 PM EDT
  • ‘Suspicious man’ shot in town about 28 miles from Barcelona
  • Attacks in Barcelona, Cambrils last week left 15 dead
Explosive specialists at the site where Moroccan suspect Younes Abouyaaqoub was shot on Aug. 21, near Sant Sadurni d’Anoia, south of Barcelona. Photographer: Lluis Gene/AFP via Getty Images

Police shot dead the man suspected of driving the van that rammed into pedestrians in Barcelona last week, ending a five-day manhunt.

Younes Abouyaaqoub was shot in the town of Subirats, some 45 kilometers (28 miles) from Barcelona, Catalonia’s police said on its Twitter account. Abouyaaqoub was carrying a fake explosive belt, a spokeswoman for the police said by phone.

Catalan police have been on a hunt across the region since attacks on the afternoon of Aug. 17 and the early hours of Aug. 18, killed 15 people and left five suspected terrorists dead. The violence started when a van plowed into pedestrians in Barcelona’s iconic Las Ramblas area. Police believe the driver stabbed another victim to death when he hijacked a car to make his getaway.

Police suspect the terrorist cell was also behind the explosion at a house in a town some 200 kilometers from Barcelona on Aug. 16. The terrorists were probably preparing a more extensive attack with explosives and changed their plans after accidentally blowing up the building where they were making preparations, according to police.

The Catalan police, known as Mossos d’Esquadra, believe the terrorist cell was formed by 12 people, police chief Josep Lluis Trapero said in a press conference earlier Friday. Only one suspect remained at large, Trapero said.

— With assistance by Maria Tadeo

5. RUSSIA AND MIDDLE EASTERN AFFAIRS

It begins:  The USA in Moscow will halt issuance of non immigrant visas in retaliation for Moscow’s removal of huge number of diplomats (755). Also the only place where visas will be issued will be Moscow and not other places like St Petersburg.

(courtesy zero hedge)

 

US Embassy In Russia Halts Issuance Of Non-Immigrant Visas, Moscow Vows “Retaliation In Kind”

The latest escalation in the deteriorating diplomatic relations between the US and Russia was unveiled this morning, when the US embassy in Russia announced it was scaling back its visa services in Russia after Moscow ordered it to sharply cut its diplomatic staff in retaliation over new U.S. sanctions, and would suspend all non-immigrant visa operations in Russia starting August 23, although visa operations will be resumed on September 1, but only in the main embassy building in Moscow.

US embassy in Moscow

As disclosed in the US embassy statement, “as a result of the Russian government’s personnel cap imposed on the U.S. Mission, all nonimmigrant visa (NIV) operations across Russia will be suspended beginning August 23, 2017.  Visa operations will resume on a greatly reduced scale.  Beginning September 1, nonimmigrant visa interviews will be conducted only at the U.S. Embassy in Moscow…. As of 0900 Moscow time Monday, August 21, the U.S. Mission will begin canceling current nonimmigrant visa appointments countrywide.

The greatly reduced US mission in Russia also said that “the U.S. Embassy in Moscow and three consulates will continue to provide emergency and routine services to American citizens, although hours may change.”

“Capacity for interviews in the future will be greatly reduced because we have had to greatly reduce our staffing levels to comply with the Russian government’s requirement,” the embassy told applicants in a note on its web site.

While previously Russian citizens could apply for tourist visas in local US consulates in St. Petersburg, Yekaterinburg and Vladivostok, today’s announcement ends this practice, forcing applicants to go to the Russian capital: “NIV interviews at the U.S. Consulates in St. Petersburg, Yekaterinburg, and Vladivostok are suspended until further notice… The staffing changes will also affect the scheduling of some immigrant visa applicants.  Affected applicants will be contacted if there is a change as to the time and date of their interview.”

The move, which will further sour already battered U.S.-Russia relations, means Russian citizens wanting to visit the United States for tourism will no longer be able to apply via U.S. consulates outside Moscow and will have to travel to the Russian capital instead.

The action comes on the heels of Moscow’s order to cut the American diplomatic corps by 755 people and bring it to the numbers equivalent to Russian diplomatic staff in the US, which is 455 people. To meet the deadline of the Russia’s order, which expires on September 1, the US diplomatic mission has already begun “planning for departures and staff reductions.”

The US embassy in Moscow also condemned Moscow’s decision on the diplomatic staff reduction, saying that it casts doubt on the will to improve the bilateral relations. “Russia’s decision to reduce the United States’ diplomatic presence here calls into question Russia’s seriousness about pursuing better relations,” the embassy statement said.

Maria Zakharova, a spokeswoman for the Russian Foreign Ministry, said earlier this month that the United States had issued around 150,000 visas to Russian citizens last year. The U.S. embassy signaled its new scaled back visa regime could be in place for some time. “We will operate at reduced capacity for as long as our staffing levels are reduced,” it said.

* * *

Shortly after the announcement, A Russian senator quoted by RIA news agency said that Russia will respond in kind to U.S. visa changes: “New U.S. visa rules for Russians are a demarche”, RIA Novosti reported, citing member of Federation Council Andrey Klimov.

Separately, Russian Foreign Minister Sergei Lavrov said that the US decision to scale back visa services in Russia was an attempt to stir up ill-feeling among ordinary Russians against the authorities. Lavrov, speaking at a joint news conference in Moscow with Egyptian Foreign Minister Sameh Shoukry, said that “the American authors of these decisions have come up with another attempt to stir up discontent among Russian citizens about the actions of the Russian authorities. It’s a well known logic … and this it the logic of those who organize color revolutions,” Lavrov told reporters.

Lavrov, who said the decision suggested Washington didn’t think its reduced diplomatic staff could adapt to new circumstances, said Russia would carefully study the U.S. decision and promised that Moscow would not take out its anger on ordinary U.S. citizens.

6 .GLOBAL ISSUES

7. OIL ISSUES

8. EMERGING MARKET

VENEZUELA

Big oil is nervous that Trump will throw sanctions against Venezuela and  its oil industry which will effectively shut down huge refining done in the Gulf coastal cities.  This refining has been set up years ago to refine the heavy crude that Venezuela produces.  Sanctions will destroy Venezuela and hurt the uSA

 

(courtesy Paraskova/OilPrice.com)

Big Oil Nervous As Venezuela’s Maduro Seizes More Power

Authored by Tsvetana Paraskova via OilPrice.com,

The pro-government constitutional assembly loyal to Venezuelan President Nicolas Maduro seized the powers of the opposition-led congress today, in a move that necessarily has Big Oil nervous that Trump will make good on his economic sanctions threat.

Maduro’s bold political move on Friday means further intensifies the dramatic decline of democracy that led Trump last week to threaten economic sanctions that could remove Venezuelan oil from the U.S. refining market.

It also comes right after Trump indicated that a ‘military option’ was not off the table.

The government has accused opposition leaders of conspiring with Washington to overthrow Maduro. 

As Venezuela disintegrates politically and economically, big oil is stepping in to urge Washington to refrain from resorting to economic sanctions against the country, the third-largest supplier to the U.S.

U.S. energy giants rely heavily on trade with Venezuela – home to the world’s largest oil reserves – and the Trump administration’s move last week to sanction eight top Venezuelan officials coupled with talk of country-level economic sanctions could negatively affect U.S. refineries, and drive up gas prices.

Everyone from Chevron and Phillips 66 to Valero and Citgo – among others – process heavy crude oil from Venezuela along the U.S. Gulf Coast. It would be prohibitively expensive to replace Venezuela’s specific heavy crude with an alternative, as nearly two dozen major U.S. refineries are set up only to process this type of crude. Canada, Mexico and Colombia also provide heavy crude, but volumes are not considered to be high enough to replace Venezuelan. Saudi Arabia heavy crude would have to serve as a replacement, but a costly one.

Meanwhile, the letters of protest continue to find their way to the White House. Two letters pleading Trump to forego economic sanctions have been sent by the American Fuel & Petrochemicals Manufacturers advocacy group, of which Chevron is a member.

A third letter of appeal came from a group of lawmakers led by Texas Republican congressman Randy Weber.

The letter noted that while the group respected the efforts to deal with the “disturbing decline of democracy” in Venezuela, sanctions could end up losing Americans 525,000 refining-related jobs along the Gulf Coast.

International oil companies are said to be pulling staff out of Venezuela, especially after the end-July vote that Maduro orchestrated.

Repsol has recently pulled all of its foreign workers from Venezuela, Statoil has pulled out its expatriate staff, while Chevron and Total SA have withdrawn a small number of employees, according to Bloomberg.

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

Euro/USA   1.1763 UP .0005/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/ /USA FALLING INTEREST RATES AGAIN/EUROPE BOURSES mixed 

USA/JAPAN YEN 109.03 DOWN 0.117(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/   HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST/LABOUR PARTY LOSES IN LOCAL ELECTIONS

GBP/USA 1.2891 UP .0027 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS

USA/CAN 1.2585 UP .0009 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS MONDAY morning in Europe, the Euro ROSE by 5 basis points, trading now ABOVE the important 1.08 level  RISING to 1.1763; 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 18.18 POINTS OR 0.56%     / Hang Sang  CLOSED UP 107.11 POINTS OR 0.40% /AUSTRALIA  CLOSED DOWN 0.32% / EUROPEAN BOURSES OPENED MIXED  

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 MONDAY morning CLOSED DOWN 77,28 POINTS OR 0.40%

Trading from Europe and Asia:
1. Europe stocks  OPENED MIXED 

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 107.11 POINTS OR 0.40%  / SHANGHAI CLOSED UP 0.29 POINTS OR 0.01%   /Australia BOURSE CLOSED DOWN 0.32% /Nikkei (Japan)CLOSED DOWN 77.28  POINTS OR 0.40%   / INDIA’S SENSEX IN THE RED

Gold very early morning trading: 1288.20

silver:$17.03

Early MONDAY morning USA 10 year bond yield:  2.1882% !!! DOWN 2   IN POINTS from FRIDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

The 30 yr bond yield  2.763, DOWN 1  IN BASIS POINTS  from FRIDAY night.

USA dollar index early MONDAY morning: 93.39 DOWN 5  CENT(S) from FRIDAY’s close.

This ends early morning numbers  MONDAY MORNING

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And now your closing MONDAY NUMBERS

Portuguese 10 year bond yield: 2.747% DOWN 3 in basis point(s) yield from FRIDAY 

JAPANESE BOND YIELD: +.031%  DOWN 1/5   in   basis point yield from FRIDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.547% DOWN 1   IN basis point yield from FRIDAY 

ITALIAN 10 YR BOND YIELD: 2.033 UP 0  POINTS  in basis point yield from FRIDAY 

the Italian 10 yr bond yield is trading 48 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.400% DOWN 2  IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR MONDAY

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

Euro/USA 1.1813 UP .0056 (Euro UP  356 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 108.91 DOWN 0.232(Yen UP 23 basis points/ 

Great Britain/USA 1.2901 UP  0.0036( POUND UP 36 BASIS POINTS)

USA/Canada 1.2583 UP .0007 (Canadian dollar DOWN  7 basis points AS OIL FELL TO $47.56

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This afternoon, the Euro was UP  by 56 basis points to trade at 1.1813

The Yen ROSE to 108.91 for a GAIN of 23  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 36  basis points, trading at 1.2901/ 

The Canadian dollar FELL by 7 basis points to 1.2583,  WITH WTI OIL FALLING TO :  $47.56

The USA/Yuan closed at 6.6666/
the 10 yr Japanese bond yield closed at +.031%  DOWN 1/5 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 0  IN basis points from FRIDAY at 2.1900% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.775 DOWN 0 in basis points on the day /

Your closing USA dollar index, 93.10  DOWN 33 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 MONDAY: 1:00 PM EST

London:  CLOSED DOWN 63.89 POINTS OR 0.86%
German Dax :CLOSED DOWN 38.27 POINTS OR 0.31%
Paris Cac  CLOSED DOWN 32.70 POINTS OR 0.64% 
Spain IBEX CLOSED DOWN  58.10 POINTS OR 0.56%

Italian MIB: CLOSED UP 26.10 POINTS OR 0.12% 

The Dow closed UP 29.24 OR 0.13%

NASDAQ WAS closed DOWN 3.40  POINTS OR 0.05%  4.00 PM EST

WTI Oil price;  47.56 at 1:00 pm; 

Brent Oil: 51.73 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  59.06 UP 9/100 ROUBLES/DOLLAR (ROUBLE LOWER BY 9 BASIS PTS)

TODAY THE GERMAN YIELD FALLS TO  +0.400%  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:$47.38

BRENT: $51.67

USA 10 YR BOND YIELD: 2.180%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.7615%

EURO/USA DOLLAR CROSS:  1.1809 up .0053

USA/JAPANESE YEN:108.99  DOWN  0.160

USA DOLLAR INDEX: 93.12  down 31  cent(s) 

The British pound at 5 pm: Great Britain Pound/USA: 1.2896 : UP 31 POINTS FROM LAST NIGHT  

Canadian dollar: 1.2565 up 12 BASIS pts 

German 10 yr bond yield at 5 pm: +0.400%

END

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

TRADING IN GRAPH FORM FOR THE DAY

Darkness Falls On Small Caps As Gold Eclipses Stocks Year-To-Date

Seemed appropriate…

 

And ugly Chicago Fed National Activity Index print (-0.01 vs +0.10), indicating below-trend growth in the national economy, along with Dalio Derisking sparked safe haven bond and bullion bids while stocks sank…

 

But VIX was clubbed like a baby seal to get everything back to green…

 

But Nasdaq and Small Caps couldn’t hold on to it…

 

Trannies and Small Caps both closed below their 200DMA, S&P bounced off its 100DMA, Nasdaq tested towards its 100DMA, Dow tested and bounced off 50DMA.

Small Caps ended underwater for 2017…

 

 

If you don’t think these markets are technical, then explain this – S&P stops downward push at EXACTLY TO THE PENNY the 100-day moving average…

 

FANG Stocks dropped once again to six-week lows…

 

Small Cap relative outperformance post-election has gone as tax reform is now priced out domestically… (Russell 2000 is also now in the red year-to-date)

 

Treasury yields ended the day mostly lower, falling after an initial higher yield open… this is the lowest 30Y yield close since June 27th

 

Meanwhile, the T-Bill market is getting seriously dislocated as debt ceiling concerns rise…

 

With the curve around the end of September getting seriously strained…

 

The Dollar Index fell once again – closing near its cycle low close, back to May 2015 lows…

 

Overnight saw industrial metals – zinc, copper, iron ore – all surging…

 

Notably decoupled from economic reality…

CMC market strategist Michael Hewson, have expressed their amazement at what is taking place in the industrial metals sector, and pointing out that something strange is going on, Hewson said “I’m looking at the prospect for the global economy and looking at the price of metals and there seems to be a significant disconnect between the two.”

Gold futures tested $1300 once again intraday (and notably net futures and options positioning in th eprecious metal is now the longest since October 2016)…

 

Friday’s ridiculous spike in WTI Crude has been unwound as non-OPEC producers Libya and Nigeria add supply while output from major shale plays is set to climb to a record next month.

 

Bonus Chart: If you thought a ‘666’ crash low was spooky, then take a look at this chart. The S&P 500 just stalled at an exact 100% projection of the plunge in 08/09…

 

Bonus Bonus Chart: So now we rip?

end

 

Bannon is the last of the nationalists ( as opposed to globalists) left to advise Trump.  Bannon states that the presidency he fought for and what got Trump elected is over. However he will fight like crazy to get his agenda like the wall, stop migrant immigration,  and infrastructure spending through

 

(courtesy zerohedge)

 

 

Bannon: “The Trump Presidency That We Fought For Is Over”

In his first interview shortly after the White House announced that it was parting ways with Trump’s chief strategist, Steve Bannon told the Weekly Standard on Friday afternoon that “the Trump presidency that we fought for, and won, is over.” After confirming his departure Bannon said that “we still have a huge movement, and we will make something of this Trump presidency. But that presidency is over. It’ll be something else. And there’ll be all kinds of fights, and there’ll be good days and bad days, but that presidency is over.”

In his interview with the conservative publication, Bannon predicted that in the wake of his departure, Trump’s administration would “be much more conventional” as his absence from the White House would make it “much harder” for Trump to pave a way forward on issues like “economic nationalism and immigration.” He also predicted that republicans would “moderate” Trump:

“I think they’re going to try to moderate him,” he says. “I think he’ll sign a clean debt ceiling, I think you’ll see all this stuff. His natural tendency—and I think you saw it this week on Charlottesville—his actual default position is the position of his base, the position that got him elected. I think you’re going to see a lot of constraints on that. I think it’ll be much more conventional.”

In Bannon’s view, his departure is not a defeat for him personally but for the ideology he’d urged upon the president, as reflected in Trump’s provocative inaugural address in which he spoke of self-dealing Washington politicians, and their policies that led to the shuttered factories and broken lives of what he called “American carnage.” Bannon co-authored that speech (and privately complained that it had been toned down by West Wing moderates like Ivanka and Jared).

“Now, it’s gonna be Trump,” Bannon said. “The path forward on things like economic nationalism and immigration, and his ability to kind of move freely . . . I just think his ability to get anything done—particularly the bigger things, like the wall, the bigger, broader things that we fought for, it’s just gonna be that much harder.”

He also warned that things are about to get worse for Trump as even more people depart his side, warning of a ‘jailbreak’ of moderate Republicans.

“There’s about to be a jailbreak of these moderate guys on the Hill”—a stream of Republican dissent, which could become a flood. Bannon also said that he once confidently believed in the prospect of success for that version of the Trump presidency he now says is over.

Asked what the turning point was, he says, “It’s the Republican establishment. The Republican establishment has no interest in Trump’s success on this. They’re not populists, they’re not nationalists, they had no interest in his program. Zero. It was a half-hearted attempt at Obamacare reform, it was no interest really on the infrastructure, they’ll do a very standard Republican version of taxes.

“What Trump ran on- border wall, where is the funding for the border wall, one of his central tenets, where have they been? Have they rallied around the Perdue-Cotton immigration bill? On what element of Trump’s program, besides tax cuts-which is going to be the standard marginal tax cut-where have they rallied to Trump’s cause? They haven’t.”

As for what happens next, as reported late on Friday, Bannon said that he is eager to get back to Breitbart and lead the opposition from there.

“Now I’m free. I’ve got my hands back on my weapons,” he said. “Someone said, ‘it’s Bannon the Barbarian.’ I am definitely going to crush the opposition. There’s no doubt. I built a f-cking machine at Breitbart. And now I’m about to go back, knowing what I know, and we’re about to rev that machine up. And rev it up we will do.”

Specifically, the target of his attacks will be the ‘globalists’ and liberals he believes have taken over the White House. They include National Security Adviser H. R. McMaster, advisor Gary Cohn, Trump’s daughter Ivanka and son-in-law Jared Kushner.

* * *

With Bannon’s departure conceding control of Trump’s inner circle to the so-called “Goldman globalists”, the question is how Trump’s message will evolve in the coming days with the “nationalist” element purged. With Trump having been granted the option of sounding like a more centrist President, will he continue with his usual rhetoric. Bloomberg is convinced that the answer is “more of the same” especially since Trump’s won’t risk losing his core base, although that may no longer be in his control, especially if Bannon is about to unleash a stinging attack on Trump’s inner circle.

For the clearest sign of what Trump’s post-Bannon posture – and administration – will look like, look no further than the coming debt ceiling negotiation (and/or crisis): on Friday, Goldman raised its odds of a government shutdown to 50%, a fact which also spooked the market sending the S&P to session lows at the close. If Trump is unable to build some political goodwill in the coming days on the back of the Bannon departure, those odds will steadily grow to 100% over the next few weeks.

 

 

end

 

it looks like Bannon wishes to start another TV news network to the right of Fox News.

Bannon want to go to war against the globalists

 

(courtesy zero hedge)

Steve Bannon Plots Fox News Competitor As He “Goes To War” With Globalists, Report

Immediately upon announcing his exit from the White House last Friday, Steve Bannon hosted a number of interviews in which he made very clear that he was “going to war” with everyone from Congress to the mainstream media and even the globalists working in Trump’s White House.  Now, we learn via Axios that part of that war effort might include a brand new cable news network to the right of Fox News.

Axios’ Jonathan Swan hears Bannon has told friends he sees a massive opening to the right of Fox News, raising the possibility that he’s going to start a network.

 

Bannon’s friends are speculating about whether it will be a standalone TV network, or online streaming only.

 

Before his death in May, Roger Ailes had sent word to Bannon that he wanted to start a channel together. Bannon loved the idea: He believes Fox is heading in a squishy, globalist direction as the Murdoch sons assume more power.

 

Now he has the means, motive and opportunity: His chief financial backer, Long Island hedge fund billionaire Bob Mercer, is ready to invest big in what’s coming next, including a huge overseas expansion of Breitbart News.

Banon

 

Of course, this new speculation comes after Bannon declared last Friday that he was “going to war” for Trump

If there’s any confusion out there, let me clear it up.

 

I’m leaving the White House and going to war for Trump against his opponents… on Capitol Hill, in the media, and in corporate America,

Meanwhile, with regard his internal adversaries, at the departments of State and Defense, who think the United States can enlist Beijing’s aid on the North Korean standoff, and at Treasury and the National Economic Council who don’t want to mess with the trading system, Bannon was ever harsher…

“Oh, they’re wetting themselves,” he said, explaining that the Section 301 complaint, which was put on hold when the war of threats with North Korea broke out, was shelved only temporarily, and will be revived in three weeks. As for other cabinet departments, Bannon has big plans to marginalize their influence.

 

“That’s a fight I fight every day here,” he said. “We’re still fighting. There’s Treasury and [National Economic Council chair] Gary Cohn and Goldman Sachs lobbying.”

Finally, perhaps no one can summarize what Bannon has planned for the future than Bannon himself:

“The Trump presidency that we fought for, and won, is over … I feel jacked up … Now I’m free. I’ve got my hands back on my weapons. … I am definitely going to crush the opposition. There’s no doubt. I built a f***ing machine at Breitbart. And now … we’re about to rev that machine up.”

 

 

end

 

Now we get a clear picture of what Bannon means by “war” at the White House.  If Trump turns left, then he will rally votes for impeachment:

 

(courtesy zero hedge)

Bannon’s Revenge: Breitbart Threatens To “Rally Votes For Impeachment” If Trump Moves Left

Last Friday Bannon boldly declared: “I’m leaving the White House and going to war for Trump against his opponents… on Capitol Hill, in the media, and in corporate America.”

But, according to a new note from Vanity Fair, that “war” could end up ensnaring the President himself should he decide to succumb to what Bannon views as intense internal White House pressure, from the likes of Jared Kushner, Ivanka and Gary Cohn, among others, to move to the Left on key policy issues.

Quoting editor Matt Boyle, Vanity Fair reports that Breitbart views itself as the key reason that the Russia scandal hasn’t gained traction on the right but that they are “prepared to help Paul Ryan rally votes for impeachment” should future Trump policies deviate too far to the Left.

“We’re in a loud bar celebrating the return of our captain!” Breitbart’s Washington editor Matt Boyle told me on Friday night. Breitbart’s defense of Trump has so far helped keep the Russia scandal from gaining traction on the right. But that could swiftly change if Trump, under the influence of Kushner and Cohn, deviates too far from the positions he ran on. If that happens, said one high-level Breitbart staffer, “We’re prepared to help Paul Ryan rally votes for impeachment.”

 

Of course, as media reports have speculated for months now, the real targets of Bannon’s war are the “globalists” in the White House which, at least in Bannon’s mind, include Ivanka, Jared, Gary Cohn and National Security Advisor H.R. McMaster, among others.

Bannon’s main targets are the West Wing’s coterie of New York Democrat “globalists”—Ivanka Trump, Jared Kushner and former Goldman Sachs president Gary Cohn—as well as the “hawks,” comprised of National Security Adviser H.R McMaster and his deputy, Dina Powell. “He wants to beat their ideas into submission,” Breitbart News Editor-in-Chief Alex Marlow told me. “Steve has a lot of things up his sleeve.”

 

The chaotic, war-torn West Wing of the past six months will be prologue, but the coming struggles will be as personal as they are ideological, waged not with leaks but with slashing Breitbart banners. On Sunday, Breitbart took renewed aim at McMaster, with a headline claiming he advocated “Quran Kissing.”

But the biggest target of all is squarely on the back of Jared Kushner, Trump’s son-in-law who Bannon affectionately describes as a “dope” with “highly questionable political instincts.”

But most of all, there’s a deep animosity between Bannon and Kushner, amplified by a lack of respect.Bannon finds Kushner’s political instincts highly questionable. “He said Jared is a dope,” one Bannon ally recalled.

 

The two clashed fiercely on personnel decisions and policy debates, both domestic and international, many of which Bannon lost.

 

But Bannon, who was the only West Wing advisor to publicly support the president’s response to the violence in Charlottesville, is especially galled at being scapegoated as an anti-Semite in its wake. “It’s one of the attacks he takes most personally because it’s not true,” a Breitbart staffer told me. Bannon’s allies lay out a more complicated backstory. Bannon, they say, lobbied Trump aggressively to move America’s embassy in Israel from Tel Aviv to Jerusalem, but was blocked by Kushner. And, according to three Bannon allies, Bannon pushed a tougher line against the Palestinians than Kushner did. In May, when Palestinian President Mahmoud Abbas visited the White House, Bannon stayed home. “I’m not going to breathe the same air as that terrorist,” Bannon texted a friend.

Meanwhile, the next phase of Bannon’s revenge has already started with last night’s headline story:

bannon

end

Today will be a big test for the energy grid as many states have increased the use of solar polar. With the eclipse solar energy will be off line for over 4 hours and this will be a test for the back up hydroelectric and gas generators.

(courtesy zero hedge)

Eclipse Will Be “First Major Test” Of Solar Power’s Role In Energy Grid

The first total solar eclipse in 99 years will be an unprecedented test of an American power grid that has become rapidly reliant on solar energy, according to Bloomberg. Power grids, utilities and generators are bracing for more than 12,000 megawatts of solar power to go offline starting around 9 a.m. in Oregon as the moon blocks out the sun across a 70-mile-wide (113-kilometer) corridor.

The eclipse has arrived at a time when the American power grid is becoming increasingly reliant on solar, wind and hydroelectric power.

“This is the first major test of the power grid since America started bringing large amounts of intermittent solar and wind resources onto the system. It comes just as the grid is undergoing an unprecedented transformation whereby flexible resources such as battery storage will complement growing supplies of solar and wind. Solar installations have grown ninefold since 2012 and renewable sources are forecast to supply just as much of America’s electricity demand as natural gas by 2040.”

Renewable energy sources have increased dramatically, especially over the past five to ten years, said Nicholas Steckler, an analyst at Bloomberg.

“’The U.S. power grid “hasn’t seen this sort of natural phenomenon since solar became a thing,’ Nicholas Steckler, an analyst at Bloomberg New Energy Finance, said. ‘With so many renewables coming online, especially in the last five to ten years, there is more impact from an eclipse.’”

In most cases, regional power authorities already have back-up natural gas plants and hydroelectric power lined up to help compensate for the sudden loss of solar power. They’ve also promised to keep locals apprised of the situation.

“The eclipse is expected to reach the U.S. at 9:05 a.m. local time at Lincoln Beach, Oregon, and last for about four hours. Back-up, natural-gas plants and hydroelectric dams are at the ready to fill solar’s void along with new technologies to control demand.

 

Regional grid operators from California to Pennsylvania plan to provide real-time updates on how their networks are handling fluctuating power flows as millions of Americans head outside to gaze at the sky.”

Because it’s home to more solar power than any other state, experts will be closely watching California’s response to the eclipse. According to Bloombergthe state plans to briefly transitions to a backup network of hydropower generators and gas plants to help fill an expected 6,000-megawatt gap from the loss of solar power.

“California, home to more solar power than any other state, will tap into its network of hydropower generators and gas plants that can ramp up quickly to fill a 6,000-megawatt gap in solar energy. The state also embarked upon a public relations campaign to convince residents to conserve energy to minimize greenhouse-gas emissions while solar plants are down.”

North Carolina is expected to see the largest reduction in solar power on a percentage basis as part of the state, which lies in the eclipse’s “zone of totality” will be plunged into complete darkness. The state’s power grid is expected to lose about 2,000 megawatts, or 80 percent, of utility-scale solar farms. To prepare for this, the state is treating the eclipse like an early sunset.

“The utility will treat it like a “gradual sunset,” said Tammie McGee, a company spokeswoman, estimating that as many as 1,200 megawatts of gas generation will be called upon to pick up the slack.”

Wholesale energy prices could see a brief spike, particularly in California, where the typical midday jump in electricity costs might be longer and steeper than on a normal day.

“Wholesale electricity prices may rally on solar’s sudden slide. The eclipse will start curbing power supplies a little after 9 a.m. on the West Coast, just when the work week is starting and demand is taking off. According to energy data provider Genscape Inc., the event may extend the typical period of high power prices in California by about two hours.”

Anyone interested in watching the eclipse should use the proper precautions. Experts have warned that looking directly at the sun during the eclipse, while wearing sunglasses. Observers could suffer temporary or permanent loss of eyesight unless they use special eyeglasses designed to withstand the sun’s rays.

 

 

end

 

 

Opening talks on NAFTA and already fissures are appearing.  Mish Shedlock explains what is the best and what is the worst thing that can happen on failure to agree on anything

 

(courtesy Mish Shedlock/Mishtalk)

 

 

NAFTA Opening Round Fissures Over The Meaning Of “Substantial”: What’s The Best And Worst That Can Happen?

Authored by Mike Shedlock via MishTalk.com,

Trump is bound and determined to have his way in NAFTA negotiations whether or not anyone agrees with him. Ironically, not even the auto manufacturers do. The first round of negotiations, now underway, has hit a snag already. The meaning of “substantial” is in play.

The Wall Street Journal reports U.S., Canada and Mexico Wrap Up Nafta First Round.

Opening-round talks to remake the North American Free Trade Agreement revealed early fissures dividing the U.S. from Mexico and Canada, including a Trump administration proposal to require a “substantial” portion of autos and auto parts produced under the pact be made in the U.S.

 

The renegotiation of the trade deal, which was one of President Donald Trump’s main campaign promises and a key pillar of his “America First” agenda aiming to revive U.S. manufacturing and reduce the country’s trade deficit, is likely to face many hurdles. Auto makers in all three nations generally oppose the stricter rules floated by the U.S. negotiator, and pro-business lawmakers in Congress don’t want to see the pact significantly altered.

 

Early tensions over areas such as the so-called rules of origin—a major issue for the automotive industry—signaled the tough bargaining that lies ahead as the three nations try to wrap up a deal by early next year.

 

The chief U.S. negotiator, Robert Lighthizer, came into the talks Wednesday saying the U.S. would insist on tightening the rules of origin, and adding a provision covering U.S. production, an idea quickly dismissed as unworkable by Mexican and Canadian officials.

 

At this early stage of the talks, it is difficult to measure the depth of the disagreement. Opening rounds generally set the tone and schedule for negotiations. The U.S. has yet to release specifics on some of its most controversial positions, including measures to reduce the U.S. trade deficit, prevent currency manipulation, favor U.S. companies in government contracts, known colloquially as Buy America, and rework rules governing arbitration panels.

 

The U.S. feels that its most significant leverage in the talks is Mr. Trump’s threat to withdraw from Nafta if the U.S. doesn’t get the changes it wants. North American trade is far more significant to the Canadian and Mexican economies than it is for the U.S.

 

Mexican negotiators say they are prepared to scrap Nafta rather than accede to demands they consider harmful to their economy.

What’s the Best That Can Happen?

That’s a softball question. The best thing that can possibly happen is the trade talks collapse and Trump backs down on his promise to revoke the deal.

Nearly as good would be minor tweaks that don’t really do anything. One might even argue this is a better alternative as it would allow Trump to save face while bragging about nothing.

What’s the Worst That Can Happen?

The worst is the trade talks collapse, Trump abandons NAFTA and starts a global trade war.

What’s Likely?

I suspect there will be trivial to non-trivial but not devastating changes.

Given Trump’s propensity to back down, reverse course, or change his mind on a second’s notice, literally anything is possible.

Related Articles

  1. Disputing Trump’s NAFTA “Catastrophe” with Pictures: What’s the True Source of Trade Imbalances?
  2. Make China Great Again: Ford Bypasses NAFTA Dispute By Moving Focus Production to China
  3. Killing the Trade Golden Goose: Farmers Rattled by Trump’s NAFTA Rescinding Plans
  4. Lose Lose Lose Affair: Farm Lobby Turns Up Heat on Trump Over NAFTA

An ideal trade agreement can fit on a napkin: Effective immediately, all tariffs and all subsidies, on all goods and services ends today.

end

 

Mnuchin again warns that they will run out of money by Sept 29. They must increase their debt limit or else they will default

 

(courtesy zerohedge)

Are Markets Sleepwalking Into A Debt Ceiling Crisis: Mnuchin Issues Another Warning

Tyler Durden's picture

Over the weekend, Morgan Stanley reminded its clients that perhaps the biggest threat facing markets over the coming weeks is the “three-headed policy monster” inside Washington: raising the debt ceiling, passing a budget and embarking on tax reform. As MS cross-asset strategist Andrew Sheets noted, “none are easy, but we see the debt ceiling as the most immediate test.

He then cautioned that while the most likely outcome is that, after some tension, the debt ceiling gets raised “we don’t think it will be easy, or smooth, and it may require some form of market pressure to get different sides to fall in line. I’ve spoken to investors who are comforted by FOMC transcripts from 2011 that discussed prioritization of debt payments in order to avoid default. I am not. First, I worry that this reduces the urgency of what remains a serious issue. Second, this prioritization would require delaying payments to programmes like Social Security and Medicare, with real human and economic cost. And third, while the mechanics of this prioritisation may work, it is untested in a live environment.

Perhaps sensing that the market is getting increasingly concerned about the potential standoff over the debt ceiling debate, which could eventually lead to a technical default, moments ago Treasury Secretary Steven Mnuchin, speaking at an event in Louisville, said that “we need to raise the debt limit and it’s my strong preference is that there’s a clean raise of the debt limit.

While Mnuchin conceded that he is “all for spending controls” and Congress has the “absolute right and the absolute obligation” to oversee spending, the Treasury secretary issued another stark warning that “he’ll run out of authority by end-Sept. to stay under the debt ceiling.” Said otherwise, Congress will have just days to reach a compromise on the debt ceiling when it returns from recess.

Assuming that Mnuchin is correct, and that the D(ebt)-Day actually falls in September, that would mean that the T-Bill kink noted previously will shift forward, most likely to the last week of September.

Potentially complicating matters is that as Morgan Stanley observed, the fact that “debt prioritization” remains an explicit option laid out by the Fed in 2011, may be just the reason why Congress will take its time, assuming that there is a loophole to a last minute deal as neither side rushes to comrpomise, which in turn could lead to the dreaded outcome, however short it may be.

Mnuchin also added redundantly that “we can’t put the credit of the United States on the line” as reserve currency of world and major economy.” This is a continuation of what Morgan Stanley said: “the idea that America’s creditworthiness is beyond reproach is, without exaggeration, the cornerstone of the global fixed income market. We hope that politicians appreciate the seriousness of this issue and put politics aside to resolve it. History is watching.”

History may be watching, but most markets so far are not?

Recall that when it comes to discounting any potential complications over the coming debt ceiling showdown, US T-Bills have been well ahead of the broader “Wall of Worry”, as shown both above and in the charts below.

Indeed, the dislocation in front-end rates deemed “at risk” given the likely timing of any missed or delayed payment should persist right up until there is a resolution, with the pricing of risk becoming more pronounced the longer there is inaction. But when will remaining asset classes follow and start selling off on fears that an 11th hour solution won’t be reached?

Judging by historical examples, “it is not unusual for equity markets to be comparatively sanguine until it is within the month of the deadline”, according to Deutsche Bank.

In 2011, the VIX oscillated somewhat in the months ahead (with modest rises at a roughly similar lead to the debt ceiling deadline as the current rise in vol), but the meaningful move higher did not come until about a week prior to the eventual resolution. In 2013 (when the debt ceiling deadline coincided with a government shutdown), the larger pop in equity vol occurred about three weeks before, peaking about a week prior to the resolution. It has not been uncommon to see some degree of equity drawdown about two months ahead of the debt ceiling deadline, with another more muted sell-off arising alongside with the aforementioned rise in volatility, though through this lens the evidence is perhaps somewhat less conclusive.

In other words, while the market has shown remarkable complacency so far and stayed stoically sanguine about the late September debt ceiling fireworks, this may change very soon. Deutsche Bank’s conclusion:

September presents itself as a possibly pivotal month during which Congress must pass a new budget and raise the debt ceiling and the Fed may still yet press ahead and announce the start balance sheet normalization. It would seem that if the Fed declines to acknowledge the possibility that more pervasive inflation weakness may warrant a pause, and political gridlock persists, dragging negotiations to the brink, the type of self-reinforcing vol spike and risk-off may not be far off.

WELL THAT ABOUT DOES IT FOR TONIGHT

 

Let us close with this terrific interview of my favourite economist John Williams talking with Greg Hunter

(courtesy John  Williams/Greg Hunter)

Alert: Dollar & Markets at Risk to Plummet – John Williams

By Greg Hunter On August 20, 2017 In Market Analysis

(Early Sunday Release)

Economist John Williams is putting out a rare “Alert” on his popular ShadowStats.com newsletter. What does Williams see that scares him? Williams explains, “There are several factors. Number one, I think we are at risk of an extreme market reaction just tied to the economy slowing down unexpectedly against headline expectations. That is going to mess up the Fed’s planning for raising rates and liquidating their balance sheet. That is going to force them back to quantitative easing (money printing). That, in turn, will savage the dollar. As the dollar plummets, so will U.S. stock prices. They are heavily supported by the influx of capital from abroad. . . . Given the underlying fundamentals in the markets and in the economy, I think all the components are in place for one of the great financial panics of all time.”

Williams says this is why gold is poised to go up. Williams says, “Gold is the ultimate hedge against all the craziness in the world and very bad financial markets, dangerous currency markets and bad inflation. Physical gold is the ultimate hedge because it retains its value over time. . . . I have been looking for it to go higher, and it is going to go a lot higher as the circumstances deteriorate.”

At some point, Williams says, “You are going to see a plunge in the dollar. . . . All of a sudden, they are going to stop raising rates . . . and as the economy deteriorates and puts more financial stress on the banking system, they’ve got to go back to quantitative easing. They can’t let the banking system fail. They have propped up the dollar, but you are going to see a plunge in the dollar. The fed does not have to actually move to quantitative easing for the dollar to tank, you just have to have the markets shift in sentiment to that effect, and you will see the dollar tank.”

Williams says, “A big factor in the dollar’s value is political stability or the perceived political stability. Right now, you have a circumstance in Washington where there is tremendous political discord. I can’t remember seeing anything like this in the past. The President has effectively had his options shut off in terms of moving the economy. I was looking for him to get elected because of the weakness in the economy. . . . This intensifies the problems for the economy, but I can tell you right up front it’s a big negative for the dollar. . . . If you have a move for impeachment for the President, that will tank the dollar.”

What does John Williams’ gut tell him to do before this Fall? Williams says, “I would be out of the stock market, and I’d have my money in gold. I mean physical gold, physically owning the gold. . . .Suppose the things I am looking for begin to break. You may see rioting in the streets. You may see disruptions in the supply chains to grocery stores.”

Join Greg Hunter as he goes One-on-One with economist John Williams at ShadowStats.com.

Video Link

http://usawatchdog.com/alert-dollar-markets-at- risk-to-plummet-john-williams/#more-19360

 

I will see you Tuesday  night

Harvey.

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