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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

SECOND SHANGHAI GOLD FIX: $1293.21

NY GOLD PRICE AT THE EXACT SAME TIME: $1285.30

Premium of Shanghai 2nd fix/NY:$7.91

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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 ????

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) 

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

end

Let us have a look at the data for today

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 . 

end

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)

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.

(courtesy zero hedge)

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-

(silveristhenews)

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

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

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

by Tyler Durden

Aug 21, 2017 3:21 PM

2

SHARES

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.

Catalan Police Shoot Man Suspected of Barcelona Attack Dead

By

Rodrigo Orihuela

and

Esteban Duarte

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

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

 end

(courtesy zero hedge)

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.

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”

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

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

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

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?

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

by Tyler Durden

Aug 21, 2017 1:21 PM

2

SHARES

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