August 25/CARTEL THROW 2 MILLION OZ OF GOLD KNOCKING GOLD (AND SILVER) DOWN BUT LO AND BEHOLD BOTH METALS RECOVER AS THE DOLLAR TANKS/GOLD UP $6.00 ON THE DAY/SILVER UP 9 CENTS/HURRICANE HARVEY TO HIT TEXAS COAST TONIGHT AND LINGER THERE: NO DOUBT WILL CAUSE TERRIFIC DAMAGE/SEARS HOLDINGS IS ON DEATH WATCH/GOOGLE TO REFUND MONEY DUE TO FAKE ADVERTISING HITS/YELLEN AND DRAGHI SPEECHES: A NOTHING BURGER../

GOLD: $1292.85  UP $6.00

Silver: $17.07  UP 9 CENTS

Closing access prices:

Gold $1291.25

silver: $17.04

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: $1293.25 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  $1285.85

PREMIUM FIRST FIX:  $7.40

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SECOND SHANGHAI GOLD FIX: $1293.25

NY GOLD PRICE AT THE EXACT SAME TIME: $1286.70

Premium of Shanghai 2nd fix/NY:$6.55

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LONDON FIRST GOLD FIX:  5:30 am est  $1287.05

NY PRICING AT THE EXACT SAME TIME: $1287.65

LONDON SECOND GOLD FIX  10 AM: $1285.30

NY PRICING AT THE EXACT SAME TIME. $1281.00???????????????????????????

For comex gold:

AUGUST/

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

TOTAL NOTICES SO FAR: 4584 FOR 458,400 OZ  (14.258 TONNES)

For silver:

AUGUST

 46 NOTICES FILED TODAY FOR

230,000  OZ/

Total number of notices filed so far this month: 1178 for 5,890,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

end

TODAY THE BANKERS THREW 2 MILLION OZ OF PAPER SHORTS TRYING TO KNOCK GOLD OFF ITS PERCH.  IT SUCCEEDED FOR ONLY ONE HOUR AS GOLD REBOUNDED ON NEWS OF YELLEN’S DOVISH SPEECH AT JACKSON HOLE. GOLD FINISHED UP $6.00 AND SILVER WAS UP 9 CENTS. LATE IN THE AFTERNOON DRAGHI’S SPEECH WAS ALSO A NOTHING BURGER AND THAT PROPELLED THE EURO NORTHBOUND (AND THE SINKING OF THE USA DOLLAR INDEX BREAKING THE 93 BARRIER TO 92.56.

I JUST CANNOT WAIT UNTIL I SEE THE OPEN INTEREST FOR BOTH GOLD AND SILVER FOR TODAY.  THEY WILL BE RELEASED LATE IN THE EVENING OR IF THEY CONTINUE LIKE THEY DID LAST WEEK, IT WILL BE RELEASED AT 2 PM SATURDAY.

 

I WILL PLACE THEM  BETWEEN THE XXX’S AS SOON AS I OBTAIN IT: (AND A COMMENT ON IT)

 

 

XXXXXXXXXXXXXXXXXXXXXXXXX

PRELIMINARY OI FOR MONDAY, AUGUST 28

 

 

XXXXXXXXXXXXXXXXXXXXXXXXXXXX

 

Let us have a look at the data for today

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In silver, the total open interest FELL by A CONSIDERABLE 3703 contracts from 192,116 DOWN TO 188,413 DESPITE THE TINY FALL IN PRICE THAT SILVER UNDERTOOK WITH  YESTERDAY’S TRADING (DOWN 9 CENTS). IT SEEMS THAT WE HAD A TRANSFER FROM SILVER OI’S TO SILVER EFP’S AS WE ARE APPROACHING FIRST DAY NOTICE. IN GOLD THE OBLITERATION IS HUGE, BUT IN SILVER IT IS MINOR. THE ISSUANCE OF EFP’S DESTROYS THE PRICE DISCOVERY MECHANISM BECAUSE WE HAVE NO PHYSICAL PRICE ANYWHERE IN THE EQUATION. THE LONGS RECEIVE A FIAT BONUS PLUS A “DELIVERABLE” PRODUCT WHICH IS NO DOUBT A LONDON BASED FORWARD.

RESULT: A LOWER OI WITH A SLIGHT PRICE DECREASE AND TWO RAID FAILURES.

 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: 46 NOTICE(S) FOR 230,000  OZ OF SILVER

In gold, the open interest ROSE BY A CONSIDERABLE 2,984 CONTRACTS DESPITE THE FALL  in price of gold ($2.15 LOSS  YESTERDAY .). The new OI for the gold complex rests at 509,211.

AS IN SILVER, THE GEOPOLITICAL LANDSCAPE WITH TRUMP THREATENING TO CLOSE GOVERNMENT IF HE DID NOT GET HIS WALL CAUSED A HUGE NUMBER OF NEWBIE SPECS TO AGAIN ENTER THE GOLD ARENA WITH THE COMMERCIALS SUPPLYING THE NECESSARY PAPER. WE HAD TWO UNSUCCESSFUL RAIDS AGAINST GOLD YESTERDAY AND IT HAD NO REAL EFFECT ON THE PRICE. PLEASE NOTE THAT WE DO NOT GET AN OBLITERATION OF OI IN A NON ACTIVE MONTH. THE BANKERS CALLED UPON THEIR TROOPS TO ORCHESTRATE ANOTHER RAID ON OUR PRECIOUS METALS AND THAT ENDED IN FAILURE AS WELL.

Result: A GOOD SIZED GAIN IN OI with A SMALL FALL IN PRICE IN GOLD.

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, no changes in gold inventory:

Inventory rests tonight: 799.29 tonnes

IN THE LAST 30 TRADING DAYS: GLD SHEDS 37.68 TONNES YET GOLD IS HIGHER BY $60.35 .

SLV

Today:  WE HAD NO CHANGES IN SILVER INVENTORY TONIGHT:

INVENTORY RESTS AT 333.178 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 3,703 contracts from 192,116 DOWN TO 188,413 (AND now A LITTLE FURTHER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) WITH YESTERDAY’S 9 CENT LOSS IN TRADING. SILVER RESPONDED TO THE GEOPOLITICAL CLIMATE WHEREBY TRUMP THREATENED TO SHUT DOWN GOVERNMENT UNLESS HE GOT HIS WALL. NEWBIE SPECS ENTERED THE ARENA. SOME  OLD SPECS, THOSE STILL PLAYING THE HARLEM GLOBETROTTERS VS WASHINGTON GENERALS GAME, TENDERED FOR EFP’S. HOWEVER THE LOSS WAS TINY WHEN WE NORMALLY COMPARE  THE OBLITERATION WE GET IN GOLD. DEMAND FOR SILVER DID NOT DISSIPATE AT ALL, THEY JUST RECEIVED ANOTHER DELIVERABLE PRODUCT IN LONDON.(A FORWARD)

RESULT:  A MUCH LOWER OI AT THE COMEX, WITH A TINY LOWER PRICE. (AND A GAIN IN DELIVERABLE PRODUCT IN LONDON)

(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 THURSDAY night/FRIDAY morning: Shanghai closed UP 60.00 POINTS OR 1.83%   / /Hang Sang CLOSED UP 329.56 POINTS OR 1.20%/ The Nikkei closed UP 98.84 POINTS OR 0.51%/Australia’s all ordinaires CLOSED UP 0.03%/Chinese yuan (ONSHORE) closed UP at 6.6560/Oil UP to 47.73 dollars per barrel for WTI and 52.41 for Brent. Stocks in Europe OPENED GREEN. Offshore yuan trades  6.6560 yuan to the dollar vs 6.6560 for onshore yuan. NOW THE OFFSHORE MOVED STRONGER  TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS MUCH STRONGER 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

4. EUROPEAN AFFAIRS

i) Italy

 

We knew that this was going to happen: huge refugee problems in Rome

( StockBoardAsset.com/zerohedge)

ii)POLAND/FRANCE

After Poland asked Germany for reparations from World War ii, we know have another scuffle with this time Poland slamming the arrogant Macron who indulges in 10,000 euros worth of make up each month
(courtesy zero hedge)
BRUSSELS,BELGIUM

And then this happened late in the day in Brussels: ANOTHER MUSLIM ATTACK!

( zerohedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

A huge development and a knife in the back for dollar hegemony:  Qatar turns to Iran

( zero hedge)

6 .GLOBAL ISSUES

7. OIL ISSUES

i)Trump may have his hands full with this upcoming devastating and life threatening Hurricane Harvey.  We will see how Trump handles his first natural disaster:

( zerohedge)

ii)Significant inventory gains is over ruling the possible devastation of Hurricane Harvey

( zero hedge)

iii)As promised, USA crude production still rises despite a drop in rig count

( zerohedge)

8. EMERGING MARKET

VENEZUELA

 this should hasten the demise of Venezuela;  Trump just increased sanctions on Venezuela by banning anybody from buying or trading in Venezuelan debt including its state own petroleum company( zero hedge)

9.   PHYSICAL MARKETS

i)The following is without a doubt a very important read.  Alasdair lays out the gold scenario for you in detail.
This is one article that you must read..
and I laid it out for you in full due to its importance
( Alasdair Macleod/GATA)

ii)MarketSlant has suspicions about the actual amount of real physical that the FRBNY is holding for Germany;

(courtesy MarketSlant/Kitco/Gata)

10. USA Stories

i)Initial trading:
Gold initially spikes to 1291 as Kaplan states that a market correction will be healthy then undergoes another raid:
( zerohedge)

a dollar dump and gold reverses the raid attempt/gold reverses and rises to 1291

(courtesy zero hedge)

iii)In chronological order events this morning: ahead of Yellen’s Jackson Hole Speech

First: gold is whacked down to 1275 but recovers
(zerohedge)

iv)Prior to her speech:

true to form, as gold is whacked again as the Fed Chairman is about to speak. The dollar is beginning to lose its love affair with the globe
( zero hedge)

v)And now the speech:  it certainly highlights risks to the system. Remember she thought that it our lifetime we will not see any risks to markets..guess again/ Basically a nothing burger and gold returns to its previous 1291 height.( zerohedge)

vi)Let us see how this will play out:  Gary Cohn promises tax reform by year end. In earlier commentaries tax reform was going to centre around the removal of interest payments on mortgages like in Canada.  That has been ruled out. I personally cannot see how they can cut taxes dramatically and raise enough money to run the country without eliminating the mortgage deductibility:
( zero hedge)
vii)According to sources, Cohn has drafted his resignation letter when he met Trump last week
( zerohedge)
viii)Durable good order plunge. and the weakest recording in almost a year

( zerohedge)

ix)The death spiral on Sear intensifies as vendors halt shipments as they cannot get default insurance on goods shipped.  The cost is just too prohibitive
( zero hedge)

x)We highlighted this devastating story to you a few weeks ago: a sonar attack on diplomats inside Cuba.  As it turns out, one Canadian and 16 American have been hit resulting in traumatic brain injuries.  He wondered why the media refused to pick up this story.

 we now wonder what Trump will do to counter these deadly attacks
( zero hedge)

xi) This could be far reaching:  Google is set to refund Proctor and Gamble and other advertisers for  fake traffic

(courtesy zerohedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY CONSIDERABLE 3,793 CONTRACTS UP to an OI level of 509,211 DESPITE THE FAIR SIZED FALL IN THE PRICE OF GOLD + 2 UNSUCCESSFUL RAIDS ($2.15 with YESTERDAY’S trading). This time the bankers did supply the necessary gold short paper responding to the geopolitical climate in the states whereby Trump threatened to close government unless he got his wall. Newbie specs entered the arena with some older specs selling when a higher price was obtained for a profit as they realized that gold was going to be contained due to options expiry week. The bankers could not cover any of their shortfall. As we are not entering an active delivery month we had no obliteration of the gold comex complex.  Silver, so far has a minor loss.

Result: a  higher open interest despite a decrease in the price of gold.

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 18 contract(s) to stand at 686 contracts. We had 0 notices filed on YESTERDAY so we LOST 18 contracts or an additional 1800 oz will NOT stand at the comex and 18 EFP’s were issued in August 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 74 contracts DOWN to 1184.

The next active contract month is Oct and here we saw a LOSS of 118 contracts DOWN to 51,893.

The very big active December contract month saw it’s OI gain 3,459 contracts up to 398,523.

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 FELL BY  3,703 CONTRACTS FROM 192,116 DOWN TO 188,413 DESPITE YESTERDAY’S TINY 9 CENT LOSS IN PRICE (AND TWO UNSUCCESSFUL RAIDS). SINCE WE ARE NOW ENTERING AN ACTIVE DELIVERY MONTH WE AGAIN SEE SOME LOSS OF CONTRACTS AS THESE CONTRACTS ARE TRANSFERRED INTO EFP’S WHICH ENTITLES THE LONGS TO RECEIVE A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON. WE DO NOT GET TO SEE THE DETAILS OF THESE CONTRACTS BECAUSE THE DEAL IS PRIVATE.  DEMAND HAS NOT RETREATED WHATSOEVER. ACTUALLY YOU CAN WITNESS THAT YOURSELF WHEN YOU SEE TODAY HOW THE AMOUNT STANDING FOR SILVER INCREASED DRAMATICALLY AGAIN. THUS THE BANKS TECHNICALLY COVERED THEIR SHORTFALL ON THIS SIDE OF THE POND BUT THE OBLIGATION CONTINUES FOR THEM OVER IN LONDON. AT THE COMEX, NEWBIE SPECS STILL ENTERED THE ARENA WILLING TO TAKE ON THE CROOKED BANKERS WHO ARE GETTING DEEPER AND DEEPER INTO A MESS IN SILVER.
RESULT:  SMALL DROP IN OI WITH A TINY LOSS IN PRICE AND A SMALL TRANSFER OF LONGS TO ANOTHER PHYSICAL LOCATION IN LONDON.

We are now in the next big non active silver contract month of August and here the OI GAINED 11 contract UP TO 48. We had 28 notice(s) filed yesterday.  Thus we GAINED ANOTHER 39 contract(s) or an additional 195,000 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!! HOWEVER WE DID HAVE A SMALL NUMBER OF LONGS IN SEPTEMBER RECEIVE EFP’S (PROBABLY IN EXCESS OF 3200 EFP’S) IN EXCHANGE FOR THEIR DEPARTED LONG POSITIONS.

The next active contract month is September (and the last active month until December) saw it’s OI fall by 19,312 contacts down to 50,122.  The next non active contract month for silver after September is October and here the OI gained 140 contacts up TO 737. After October, the big active contract month is December and here the OI GAINED by 13,515 contracts UP to 122,205 contracts.

We had 42 notice(s) filed for  230,000 oz for the AUGUST 2017 contract

VOLUMES: for the gold comex

ESTIMATED VOLUME TODAY: 91,982 WHICH IS POOR

YESTERDAY’S confirmed volume was 243,241 which is VERY GOOD

volumes on gold are STILL HIGHER THAN NORMAL!

Initial standings for AUGUST

 August 25/2017.

Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
1028.8 oz
Scotia
32 kilobars
Deposits to the Dealer Inventory in oz    nil oz
Deposits to the Customer Inventory, in oz 
  803.75 oz
Manfra
25 kilobars
No of oz served (contracts) today
 
0 notice(s)
NIL OZ
No of oz to be served (notices)
686 contracts
(68,600 oz)
Total monthly oz gold served (contracts) so far this month
4584 notices
458,400 oz
14.258 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   35,491.3  oz
Today we HAD  3 kilobar transaction(s)/ 
total dealer deposits: nil oz
We had nil dealer withdrawals:
total dealer withdrawals:  0 oz
we had 1 customer deposit(s):
 i) Into Manfra: 803.75 oz (25 kilobars)
total customer deposits; 803.75  oz
We had 1 customer withdrawal(s)
i) Out of Scotia:  1028.80 oz  (32 kilobars)
total customer withdrawals;  1028.80 oz
 we had 3 adjustment(s)
i) Out of Delaware:
3,582.772 oz was adjusted out of dealer Delaware and into customer account of Delaware
ii) Out of International Delaware:  4533.15 oz was adjusted out of dealer  I.D and into the customer account of ID
iii) out of Manfra:  9066.300 oz (282 kilobars) was adjusted out of the dealer Manfra and into the customer account of Manfra.
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 (4584) x 100 oz or 458,400 oz, to which we add the difference between the open interest for the front month of AUGUST (686 contracts) minus the number of notices served upon today (0) x 100 oz per contract equals 527,000  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 (4584) x 100 oz  or ounces + {(686)OI for the front month  minus the number of  notices served upon today (0) x 100 oz which equals 527,000 oz standing in this  active delivery month of AUGUST  (16.391 tonnes)
 we LOST 18 contracts or an additional 1800 oz will NOT stand for delivery and 18 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 735,302.365 or 22.87 tonnes  (dealer gold continues to disappear)
Total gold inventory (dealer and customer) = 8,697,497.7 or 270.52 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 270.52 tonnes for a  loss of 32  tonnes over that period.  Since August 8/2016 we have lost 83 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  83 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE AUGUST DELIVERY MONTH
August initial standings
 August 25  2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
23,125.867 oz
CNT
Scotia
Deposits to the Dealer Inventory
nil  oz
Deposits to the Customer Inventory 
 nil oz
CNT
No of oz served today (contracts)
46 CONTRACT(S)
(230,000 OZ)
No of oz to be served (notices)
2 contracts
( 10,000 oz)
Total monthly oz silver served (contracts) 1178 contracts (5,890,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz
Total accumulative withdrawal  of silver from the Customer inventory this month 3,265,727.9 oz
today, we had  0 deposit(s) into the dealer account:
total dealer deposit: nil   oz
we had 0 dealer withdrawals:
total dealer withdrawals: nil oz
we had 2 customer withdrawal(s):
i) Out of CNT: 10,030.28 oz
ii) Out of Scotia: 13,095.587 oz
TOTAL CUSTOMER WITHDRAWALS: 23,125.867 oz
We had 0 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 0 adjustment(s)
The total number of notices filed today for the AUGUST. contract month is represented by 46 contract(s) for 230,000 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 1178 x 5,000 oz  = 5,890,000 oz to which we add the difference between the open interest for the front month of AUGUST (48) and the number of notices served upon today (46) x 5000 oz equals the number of ounces standing
 

 

.
 
Thus the INITIAL standings for silver for the AUGUST contract month:  1178 (notices served so far)x 5000 oz  + OI for front month of AUGUST(48 ) -number of notices served upon today (46)x 5000 oz  equals  5,900,000 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 39 contracts or an additional 195,000 oz wishes to stand for delivery in this non active month of August and 0 EFP’s were issued for the silver August month. HOWEVER IN EXCESS OF 3200 EFP’S WERE ISSUED IN SEPTEMBER FOR SILVER.
At this point in the delivery cycle last year on August 24/2016 we had 45,704 contracts standing vs this yr at 50,562. JUDGING FROM WHAT WE HAVE BEEN EXPERIENCING IN SILVER, NEXT WEEK’S FIRST DAY STANDING WILL BE A DILLY!!
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: 44,571 WHICH IS VERY GOOD
YESTERDAY’s  confirmed volume was 158,241 contracts which is OUT OF THIS WORLD
FRIDAY’S CONFIRMED VOLUME OF 158241 CONTRACTS WHICH EQUATES TO 791 MILLION OZ OF SILVER OR 113% 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:  38.318 million (close to record low inventory  
Total number of dealer and customer silver:   216.516 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 6.5 percent to NAV usa funds and Negative 6.5% to NAV for Cdn funds!!!! 
Percentage of fund in gold 62.5%
Percentage of fund in silver:37.5%
cash .+0.0%( August 25/2017) 
2. Sprott silver fund (PSLV): STOCK   NAV FALLS TO -0.60% (August 25/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLS TO -0.40% to NAV  (August 25/2017 )
Note: Sprott silver trust back  into NEGATIVE territory at -0.60%/Sprott physical gold trust is back into NEGATIVE/ territory at -0.40%/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 25/NO CHANGE IN GOLD INVENTORY/INVENTORY RESTS AT 799.29 TONNES

AUGUST 24/no change in gold inventory at the GLD/inventory rests at 799.29 tonnes

August 23/no change in gold inventory at the GLD/Inventory rests at 799.29 tonnes

August 22/no change in gold inventory at the GLD/Inventory rests at 799.29 tonnes/

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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
August 25 /2017/ Inventory rests tonight at 799.29 tonnes
*IN LAST 220 TRADING DAYS: 150.59 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 159 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 25/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 333.178 MILLION OZ

AUGUST 24/A HUGE WITHDRAWAL OF 1.229 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 333.178 MILLION OZ

August 23/no change in silver inventory at the SLV/Inventory rests at 334.407 million oz

August 22/no change in silver inventory at the SLV/inventory rests at 334.407 million oz.

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 25.2017:

Inventory 333.178  million oz
end
  • 6 Month MM GOFO

    Indicative gold forward offer rate for a 6 month duration

    + 1.32%
  • 12 Month MM GOFO
    + 1.47%
  • 30 day trend

end

COT Gold, Silver and US Dollar Index Report – August 25, 2017
 — Published: Friday, 25 August 2017 | Print  | Comment – New!

Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
295,711 87,272 xx 125,036 344,954
Change from Prior Reporting Period
17,985 -2,723 xxx 2898 26,185
 
Small Speculators  
Long Short Open Interest  
42,070 30,590 500,443  
-1710 -873 22,522  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, August 15, 2017

Our large speculators

wow!!

those large specs that have been long in gold added a whopping 17,985 contracts to their long side

those large specs that have been short in gold covered 2723 contracts from their short side.

specs go net long by 21,000 contracts.

Our commercials

those commercials that have been long in gold added 2898 contracts to their long side

those commercials that have been short in gold added 26,185 contracts to their short side.

commercials go net short by 29,000 contracts

Our small specs

those large specs that have been long in gold added 1710 contracts to their long side

those large specs that have been short in gold covered 873 contracts to their short side.

Conclusions:

commercials go hugely net short by supplying the short paper (21000 contracts) to which the longs gleefully accepted.

exactly as how I described it to you these past two weeks.

this is why we are experiencing mega raids every day

 

and now for our Silver COT

Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
91,305 46,759 XXX 55,060 110,109
-291 -5986 XXX -858 6103
Traders
39 39
Small Speculators Open Interest Total
Long Short 187,277 Long Short
23,930 13,427 XXX XXX
-415 -1681 -7,28 -XX -XX
non reportable positions Positions as of:
Tuesday, August 22, 2017   © SilverSee

Please note the difference between gold and silver.

the bankers are having a tough time supplying the short paper.

Our large speculators

those large specs that have been long in silver pitched a tiny  291 contracts from their long side

those large specs that have been short in silver covered 5986 contracts from their short side

large specs go net long by 6100 contracts.

 

 

Our commercials

those commercials that have been long in silver pitched 858 contracts from their long side

those commercials that have been short in silver were only able to add  6103 contracts to their short side

commercials go net short by only 6900 contracts.

Our small specs

those small specs that have been long in silver pitched 415 contracts from their long side

those small specs that have been short in silver covered 1681 contracts from their short side.

Conclusions:

As I have described to you throughout the past 17 days, our commercials are having extreme trouble trying to cover their shorts.

I would suggest that almost all of the large spec positions are in strong hands and they will not pitch on raids.

 

end

Major gold/silver trading/commentaries for FRIDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

The Truth About Bundesbank Repatriation of Gold From U.S.

– Bundesbank has completed a transfer of gold worth €24B from France and U.S.
– Germany has completed domestic gold storage plan 3 years ahead of schedule
– In the €7.7 million plan, 54,000 gold bars were shipped and audited
– In 2012 German court called for inspection of Germany’s foreign gold holdings
– Decision to repatriate from Paris and New York was ‘to build trust and confidence domestically’
– 1,236t or 37% of German holdings remain in New York Fed facility
– Bundesbank wants to hold gold bullion
– U.S. government declines to audit gold reserves … doesn’t want world to realise gold’s importance in the global monetary system

Editor: Mark O’Byrne

Last Monday, U.S. Treasury Secretary Mnuchin feigned to inspect the U.S. gold reserves in Fort Knox and joked flippantly that he assumed it was there.

A day later the Bundesbank, announced that they had repatriated much of their gold reserves from the U.S. and France. Coincidence or coordination?

In 2013 the Deutsche Bundesbank announced plans to store half of its gold reserves in Germany. At the time, only 31% was stored in the country. The Gold Storage Plan involved bringing gold home from both Paris and New York.

The plan was expected to take seven years. At the time many asked why it would take so long to return just 674t of gold. The Bundesbank has completed the plan three years ahead of schedule.

The German gold repatriation was in response to the critics and or in order to safeguard the German gold reserves and ensure they are owned in a safe, allocated and segregated manner by the Bundesbank.

In the last five years the German central bank has 374t and 300t from Paris and New York, respectively. The Bundesbank opted to keep 432t in the Bank of England vaults.


Whilst the tables above (from the Bundesbank) show the repatriation of gold was ultimately successful, it has promoted much discussion about the security of gold in central banks.

The decision to move the gold back to home soil has also vindicated many who have long argued about the murky gold reserve dealings of the United States.

Why was the gold abroad and why move it?

Many countries choose to hold proportions of their gold on foreign soil for both security and practical reasons.

Practical reasons as it makes sense to have reserves in diversified locations so you have access to markets should you need to trade the reserves.

In 2013 a Bundesbank spokesman said “we have no intention to sell gold” adding that the decision to relocate the foreign held gold “is in case of a currency crisis.”

This leads on to security reasons. During the Cold War the Bundesbank wanted to keep its gold in the West in case of an invasion from the Soviet Union. It was also a way of supporting the country’s currency knowing there were reserves held securely abroad, should the country need to use them.

Campaigns and concerns in the last decade have made the German population and central bank rethink what the modern security and practical threats are, prompting them to bring some of the gold home.

It was in the wake of the U.S. subprime crisis, the Lehman collapse and then the ensuing eurozone and global debt crisis in 2012, that prompted voices in Germany to call for an audit of the precious metal held abroad.

Campaigners also suspected the gold might have been tampered with or not be fully allocated and non leased. In response to the calls for greater transparency the Bundesbank agreed to hold 50% of the gold in Germany.

When the Bundesbank announced their plans to keep 50% of the gold at home it came just three months after they had defended their reasons for keeping the gold on foreign soil:

‘To function as reserve assets, it would have to be possible for the gold holdings to be exchanged, if necessary, into a commonly used reserve currency without any logistical constraints. That is the reason for storing parts of the gold reserves at partner central banks in other countries.’

Then, in early 2013 the central bank announced:

‘By 2020, the Bundesbank intends to store half of Germany’s gold reserves in its own vaults in Germany. The other half will remain in storage at its partner central banks in New York and London. With this new storage plan, the Bundesbank is focusing on the two primary functions of the gold reserves: to build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold trading centres abroad within a short space of time.’

It is also worth mentioning that in 2012 the German Court of Auditors ordered an audit of the gold reserves. The court clearly wanted to ensure that the nearly 3,400 tons of gold existed – because stocks have never been checked for authenticity and weight‘. 

Why were the Germans worried about the safety of their gold?

Few people have raised eyebrows about Germany’s decision to bring gold back from Paris. The Bundesbank gave the following reason for doing so:

‘Given that France, like Germany, also has the euro as its national currency, the Bundesbank is no longer dependent on Paris as a financial centre in which to exchange gold for an international reserve currency should the need arise. As capacity has now become available in the Bundesbank’s own vaults in Germany, the gold stocks can now be relocated from Paris to Frankfurt.’

However, no specific reason was given for the US, other than the need to ‘build trust and confidence domestically.’ 

The announcement by the Bundesbank to move 300t of gold from New York sent ripples through the gold community. Many wondered if the plan was expected to take seven years because New York did not have Germany’s gold. Was this where the need to build trust and confidence came from?

More recently, with the election of President Trump, there might have been more cause for concern when it comes to the safety of a country’s gold.

“We have a lot of discussions about (U.S. President Donald) Trump, regarding implications on monetary policy, macroeconomics, etc., but we trust the central bank of the U.S.,” Bundesbank board member Carl-Ludwig Thiele told a news conference in February of this year. But, “Trump has not triggered a discussion about the storage facility in New York.”

The Gold Anti-Trust Action Committee (GATA) and Germany’s homegrown ‘Repatriate our Gold’ movement have been the loudest voices when it comes to concerns over the existence of gold and the nature of that gold’s ownership in the US Treasury’s possession.

In 2017 Sputnik News reported on the successful repatriation of Germany’s gold from the US. In the report, a Russian commentator suggested Germany had received the wrong gold.

Russian economist Vladimir Katasonov, a professor at the International Finance Department at the Moscow State Institute of International Relations, told Sputnik that the U.S. had not been ready to give the bullion back. The professor suggested Germany’s gold bars had been disposed of at the United States’ own discretion.

“There are a lot of signs that the gold was not physically present in the New York vaults when Germany called it back. Of course, the U.S. began to return it to Germany but there is one interesting detail. When you leave your suitcase in the luggage storage, you expect to get back the same suitcase. But Germany took the wrong ‘suitcase,’” Katasonov told Radio Sputnik.

According to the economist, the gold bars that Bundesbank repatriated have different labels. He suggested that the U.S. might have replaced the German bullion with different gold bars bought from the market.

Katasonov explained that the U.S. managed to return the yellow metal thanks to favorable conditions in the precious metal market.

“I think there was a favorable environment in the market and the Americans managed to quickly buy the gold and give it back to Germany. They were not ready for this, but finally managed this replacement,” he concluded.

It is worth mentioning that Carl-Ludwig Thiele told journalists that there were no issues with the gold received, ”We’ve checked every ingot against authenticity, fineness, and weight. We have nothing to complain about.”

Why did it take so long?

The Banca d’Italia, the Bundesbank and the International Monetary Fund make up the three largest gold holders at the New York Federal Reserve. Together they account for over 4,000 tonnes.

However, there has not been (to our) knowledge an audit to confirm that this is the case. There is no evidence these holdings have changed or been audited since the 1970s.

When it came to the 374t to be repatriated from New York many asked ‘If you have the gold why would you not just return it all in one ago, straight away?’ Why was it expected to take seven years? Previously Germany had repatriated 940 tons of its gold from the Bank of England without delays.

Theories abound as to why this could not happen. But they all centre around the theory that the gold is not there or if it is it may have two or more owners in gold leasing arrangements.

This is something we briefly mentioned earlier in the week. The move to repatriate the gold to Germany was partly driven by rumours that much of the gold held offshore may have been “rehypothecated” as suggested by GATA.

In fact, the US has appeared to have repatriated all of the requested gold to Germany three years ahead of schedule.

If the gold not been in the vaults then the US would have had to buy the gold or unravel gold leasing contracts.

Was there reason to be concerned?

Earlier this week we reported on the US Treasury Secretary’s visit to Fort Knox. His jokes about the existence of the gold prompted much coverage about the debate surrounding this very issue.

In response, respected commentator Jim Rickards argued that ‘all the evidence tells me that the gold is in Fort Knox and at West Point.’

‘Let me say it right now: Yes, the gold is there. I actually have some evidence that the gold is there from military sources.’

Now, some people like billionaire precious metals trader Eric Sprott argue that the gold could very well be at Fort Knox, but it’s been leased out to commercial banks. And yes, it could very well be leased. But leasing is a paper transaction. It doesn’t mean the government surrenders possession of the gold.

And what about the lack of audit?

If you are the Fed or the Treasury and you want people to think that gold is unimportant — which they do — why would you audit it?

You audit things that are important. You do not audit things that are unimportant. If the Fed doesn’t want you to think that gold is important, it follows that they would not audit it. Auditing it pays gold too much respect.

I am in favor of an audit, just to be clear. But the fact that the government does not audit the gold does not tell you that the gold is not there. They just do not want you to pay any attention to it.

Audit or no audit, gold or no gold, the fact is the Germans felt the need to bring back some of their gold.

Conclusion: Protect your gold 

The move by the Bundesbank was a prudent one, whether there was ever any real cause for concern or not. The fact is the US may well have all the gold that was ever stored there, or they may not.

It is also true that the eurozone is near breaking point and the continent is increasingly under threat from various geopolitical forces. It makes sense to have the gold in a place where they can audit and access it.

When you own gold you should expect to have access to it whenever you so wish. You should not expect others to have access to it and you should certainly expect to receive regular reports on its existence, security and your outright ownership of individual coins and bars that can be taken delivery of with a phone call.

All reports suggest that this was not the case.

It suits the majority of countries to avoid pushing the debate on the existence of gold holdings. Should a country like the US be unable to meet requirements when Germany demands its gold back in one go then it could place the two major world currencies (USD and Euro) at risk. The whole world would wonder what farce had been going on all this time.

However, Germany clearly wanted their gold back because of concerns about both how the US were looking after it and the future of global stability both politically and financially.

Individual investors should take the same approach. The main lesson of note here is that central banks want to own gold. They see it as the ultimate safe haven. Because of this Germany want to hold it in a segregated and allocated manner. Luckily for savers, that secure bullion storage option is readily available.

Related Content

Germany to Review Bundesbank Gold Reserves in Frankfurt, Paris, London and Federal Reserve Bank of New York

Bundesbank Announces Repatriation of 120 Tonnes of Gold from Paris and New York Federal Reserve

Bundesbank “Reassures” Re. Gold Bullion Reserves as Deutsche Bank Shocks With €6 Billion Loss Warning

News and Commentary

Gold steady ahead of central bank speeches at Jackson Hole (Reuters.com)

Gold price remains dull on futures correction (DailyTimes.com.pk)

Gold settles lower as investors look to Jackson Hole (MarketWatch.com)

U.S. Stocks Fluctuate Before Yellen; Oil Declines (Bloomberg.com)

Dixons Carphone Plunges as Mobile Slowdown Leads to Warning (Bloomberg.com)

Gold’s out performance of S&P500 in 10 years – Bloomberg via Stansberrychurchouse.com

Gold outperforms US stocks in 10 years since financial crisis (Stansberrychurchouse.com)

U.S. stocks haven’t been this extreme since 1929 and 2000 (MarketWatch.com)

Did The Economy Just Stumble Off A Cliff? (ZeroHedge.com)

Epsilon Theory: Always Go To the Funeral (EpsilonTheory.com)

Jackson Hole: Yellen to play safe and not warn of asset bubbles (MoneyWeek.com)

Gold Prices (LBMA AM)

25 Aug: USD 1,287.05, GBP 1,003.90 & EUR 1,090.90 per ounce
24 Aug: USD 1,285.90, GBP 1,003.26 & EUR 1,090.44 per ounce
23 Aug: USD 1,286.45, GBP 1,004.33 & EUR 1,091.68 per ounce
22 Aug: USD 1,285.10, GBP 1,000.71 & EUR 1,091.95 per ounce
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

Silver Prices (LBMA)

25 Aug: USD 17.02, GBP 13.26 & EUR 14.40 per ounce
24 Aug: USD 16.93, GBP 13.20 & EUR 14.36 per ounce
23 Aug: USD 17.06, GBP 13.32 & EUR 14.48 per ounce
22 Aug: USD 17.02, GBP 13.27 & EUR 14.48 per ounce
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


Recent Market Updates

– Cyberwar Risk – Was U.S. Navy Victim Of Hacking?
– Global Financial Crisis 10 Years On: Gold Rises 100% from $650 to $1,300
– Mnuchin: I Assume Fort Knox Gold Is Still There
– Buffett Sees Market Crash Coming? His Cash Speaks Louder Than Words
– 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

end
The following is without a doubt a very important read.  Alasdair lays out the gold scenario for you in detail.
This is one article that you must read..
and I laid it out for you in full due to its importance
(courtesy Alasdair Macleod)

Alasdair Macleod: Gold — crossing the Rubicon

 Section: 

1:32p ET Thursday, August 24, 2017

Dear Friend of GATA and Gold:

GoldMoney research director Alasdair Macleod today explains why the United States and its allies long have considered it necessary to suppress the gold price to support the U.S. dollar and how China has begun to corner the gold market in anticipation of backing the yuan with gold and breaking American control over the world economy. Macleod’s analysis is headlined “Gold — Crossing the Rubicon” and it’s posted at GoldMoney here:

https://www.goldmoney.com/research/goldmoney-insights/gold-crossing-the-…

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

END

 

the complete article for you..

 

 

Gold – crossing the Rubicon

Gold is challenging the $1300 level for the third time this year. If it breaks upwards out of this consolidation phase convincingly, it could be an important event, signalling a dollar that will continue to weaken.

The factors driving the dollar lower are several and disparate. The US economy is sluggish relative to the rest of the world, the rise of Asia from which America is excluded is unstoppable, geopolitics are shifting away from US global dominance, and the end is in sight for monopolistic payment for oil in US dollars.

These subjects have been covered in some detail in my recent articles, which will be referred to for further clarification where appropriate. This article summarises these trends, and explains why the consequence appear certain to drive gold, priced in dollars, much higher.


The importance of gold and reasons for its suppression

The post-war Bretton Woods Agreement confirmed the US dollar to be fixed to gold at $35 per ounce. All other national currencies were linked to gold through the dollar at the central bank level. Ordinary civilians, businesses and commercial banks were not permitted to exchange their currencies for gold through central banks, so this was simply a high-level arrangement designed to maintain control of gold priced in dollars.

A few years after Bretton Woods, in 1949 and when the newly-fledged IMF began to collate statistics on national gold reserves, the US Treasury was recorded owning 21,828.25 tonnes of gold, 74.5% of all central bank reserves, and 43.6% of estimated above-ground gold stocks. However, over the years the proportions changed, and by 1960, US gold reserves had declined to 15,821.9 tonnes, 47% of central bank reserves, and 24.9% of above ground stocks.

Clearly, American control of gold had weakened considerably in the two decades following Bretton Woods. This weakening continued until the failure of the London gold pool, the arrangement dating from 1961 whereby the major American and European central banks collaborated to defend the $35 peg. The Americans had abused the gold discipline by financing foreign ventures, notably the Korean and Vietnam wars, not out of taxation, but by printing dollars for export, and it began to put pressure on the dollar. The London gold pool effectively spread the cost of maintaining the dollar peg among the Europeans. Unsurprisingly, France withdrew from the gold pool in June 1967, and the pool collapsed. By the end of that year, the US Treasury was down to 10,721.6 tonnes, 30% of total central bank gold reserves, and 15% of above-ground stocks.

Inevitably the decline continued, and by the time of the Nixon shock (August 1971 – the abandonment of the gold exchange commitment) it was clear the US Government had lost control of the market. She had only 9,069.7 tonnes left, representing 28.3% of central bank gold, and 11.9% of above ground stocks. Monetary policy switched from the fixed parity arrangements centred on gold through the medium of the dollar, to a propaganda effort aimed at removing gold from the monetary system altogether, replacing it with an unbacked dollar as the international reserve standard.

The result was the purchasing power of the dollar and the other major currencies measured in gold has all but collapsed, as shown in the chart below.

Currencies priced in gold

Between 1969 and today, the dollar’s purchasing power relative to gold declined by 97.3% (the blue line). By banning gold from having any monetary role, the US removed price stability from the dollar. More recently, since the great financial crisis the quantity of fiat money in the global currency system has expanded dramatically relative to the long-term average growth rate of money and bank credit. This is illustrated in our second chart, which records the growth in the total amount of fiat dollars in the US banking system.

Fiat money quantitiy

The fiat money quantity is the sum of true money supply and commercial bank reserves held at the central bank (the Fed). It is the measure of all deposits, including those of the commercial banks. Monetary inflation has expanded dramatically since the great financial crisis, illustrated by its acceleration above the long-term trend. The consequences for the dollar’s purchasing power in time will be to accelerate the dollar’s decline even more.

The monetary expansion of the dollar has been echoed in the other major currencies, with negative consequences for global price inflation in the coming years. Meanwhile, gold’s inflation, at roughly 3,200 tonnes annually, is about 1.9% of above-ground stocks. The different rates of increase between above-ground gold stocks and the fiat money quantities of unbacked state-issued currencies is what ultimately drives the price of gold measured in those unbacked currencies. It is easy to see why a higher gold price, reaffirming gold’s role as sound money at a time of excessive fiat currency inflation, is viewed by the major monetary authorities as a potential threat to their currencies’ credibility.

There can be little doubt that without the propaganda war against gold led by the US monetary authorities, without the expansion of unbacked paper gold constituting artificial gold supply in the futures and forwards markets, and without the secret interventions of the US’s Exchange Stabilisation Fund, the gold price would be considerably higher, expressed in dollars.i

However, gold remains centre-stage as a global hedge against the decline in purchasing power of fiat currencies. Besides rescuing the financial system from collapse nine years ago, the expansion of bank credit is inherently cyclical.ii The credit-cycle for China’s yuan appears to be moving into a new expansionary phase, reflected in a rising trend for nominal GDP. This will be put into context later in this article, but it is noticeable that on the back of China’s GDP growth, Japan, the EU and the UK are also enjoying export-led revivals.

The US does not share these benefits, partly because China and Russia, the founders of the Shanghai Cooperation Organisation (SCO), are deliberately freezing America and her money out, and partly because of America’s own tendency towards trade isolationism.iii It is therefore less certain that America is close to moving from the recovery stage of the dollar’s credit cycle into expansion. In the absence of other factors, the difference in interest rate outlooks this implies should be reflected in a declining dollar exchange rate against the other major currencies, a trend that has been under way since last January.

Despite the massive expansion of fiat money over the last nine years, it is possible for governments to stabilise the future purchasing power for their currencies. It will require their fiat currencies to be tied convincingly to the characteristics of gold. It depends on the government concerned accepting that gold is superior money to its own currency, owning sufficient physical gold reserves to convince the markets, and the gold price being at a level where the arrangement sticks. There is no doubt that China, Russia, as well as the other SCO member states and their populations regard gold as a superior money to fiat currencies, partly because their fiat currencies do not have well-established records of objective exchange value.

In the US, Japan, the UK and through much of Europe, the populations have experienced a longer, generally more stable objective exchange value for their currencies. Under pressure from their governments to use only state-issued currency, they have lost the habit of regarding gold as money. The monetary authorities of these countries, with a few exceptions, also do not regard gold as having any monetary role at all, beyond paying lip-service to a vague concept it has value as an asset which is no one else’s liability.

Therefore, understanding the role of gold and the protection it can offer fiat currencies is split into two geographic camps: the governments of Asia which are actively accumulating, or would like to accumulate additional reserves of monetary gold, and the governments of North America and Western Europe which see the gold price as irrelevant from the monetary point of view.


Gold reserves and gold secrets

We shall now briefly comment on the positions of the main monetary authorities on the global gold stage, their current gold policies, and how they are likely to change. These are the US, China, and the member nations of the SCO.

United States

The US monetary authorities were behind the push to remove gold from the monetary system, when they terminated the Bretton Woods Agreement in 1971. They are somewhat schizophrenic on the issue, the US Treasury claiming it still owns 8,133 tonnes of gold, reflected in the Fed’s balance sheet at the last official price of $42.22 per ounce. Interestingly, when the previous Fed Chairman, Ben Bernanke, was questioned on the subject by Senator Ron Paul in 2011, it was clear he did not regard it as money, only a legacy asset. If this is true, the Fed should substitute the reference to gold in its balance sheet with an unsecured loan to the US Treasury, which if Ben Bernanke is right, has a greater monetary credential than gold. It would also end the embarrassing calls to audit the Fed.

The resistance to leaving go of gold rather proves that gold is still money. However, the monetary policies of the Fed since the great financial crisis are predicated in the belief that gold is not money. This dichotomy is also shared with the Bank of England, the Bank of Japan, and the European Central Bank.

They all say that the world has moved on from the days when gold was part of the monetary system, so they are ill-prepared to discard the Keynesian beliefs upon which their current monetary policy is based. Their advanced, welfare-state economies are simply too far down the road of the state theory of money to turn back. However, this exposes their currencies, and particularly the US dollar as the world’s reserve currency, to a substantial loss of purchasing power as the rapid monetary expansion of the last nine years works its way through to consumer prices. The election of President Trump promising to make America great again is turning out to be a failure. The removal only last week of Steve Bannon, his chief strategist, clears the way for the pre-Trump establishment to reassert itself. Gone is Bannon’s talk of a financial war against China and Russia, and doubtless, with a trio of the Generals Kelly, Mattis and McMaster now in control of the White House, it will be back to military options.

General Kelly, who was appointed to bring some order into the White House is doing this by removing dissenters from the mainstream. This was why Bannon had to go, and why President Trump himself will have to knuckle under and become as anodyne as President Obama. The mainstream is back and little has changed.

Meanwhile, the US economy muddles along without clear signs of improving consumer demand. It seems increased trade tariffs against China remain on the agenda, in which case they will amount to a self-harming tax on American consumers. Furthermore, global economic growth and progress is being driven primarily by China, from which America is excluded. And as the interest rate differentials start to widen between a stagnating US economy and an expanding Asia that also benefits Japan, the EU and the UK, the dollar is likely to weaken considerably in the foreign exchanges, as well as in terms of the commodities a dollar will buy.

Some forecasters believe that the US economy is stalling and deflation beckons. This is a mistake. The conditions replicate an inflationary outlook, whereby prices start rising at an accelerating rate, driven by a falling purchasing power for the dollar. The dollar is likely to lose more purchasing power through the effects of the last nine years’ monetary expansion working through to consumer prices. Additionally, foreign nations and commodity suppliers doing business in Asia are likely to be sellers of dollars for other currencies as the world moves towards an Asia-centric global economy. For deflation to take hold, there must be a shortage of dollars, not the substantial excesses in existence today.

China

In partnership with Russia, China is ringmaster for all Asia. The Chinese economy is run with a beneficial mercantilist approach. The primary political objective is to plan an economic future for the benefit of its people. Instead of democratic responsibility, the leadership commands the economy strategically in the universal interest of its citizens, crushing all individual dissent.

The Chinese state, having embraced important concepts of free markets, operates rather like the East India Company of old. Through a series of five-year plans, hundreds of millions of workers are being moved from less productive employment, redirected and retrained to more productive, higher technology and service occupations. The whole economy is in a planned transition. Low-skill jobs are being mechanised. Already, China is expanding into the rest of Asia, promising to move whole communities and countries out of relative poverty. The trans-shipment of goods across the Eurasian continent is expanding rapidly. The Chinese have also taken economic control over much of sub-Saharan Africa to secure the natural resources for the Grand Plan.iv

Most of this expansion is financed through bank credit, issued through the large state-owned banks. Unlike economic policy in the West’s welfare states, which is aimed at preserving legacy businesses, the positive redeployment of capital resources limits the build-up of malinvestments in China. Furthermore, the expansion of nominal GDP, which is the direct consequence of the expansion of bank credit, is accompanied by genuine economic progress, which is decreasingly the case in the West.v

Consequently, China’s credit bubble is arguably less dangerous than those in the US, EU, UK, and even in Japan. However, credit bubble there is, and it is part of a global credit cycle that afflicts all fiat currencies. Undoubtedly, the Chinese authorities are aware of this danger, evidenced by their repeated actions to contain credit-fuelled speculation before it gets out of hand. [Crypto-currency enthusiasts, beware!]vi

So far, China has pursued a policy of managing the yuan’s exchange rate against the US dollar, and consequently records $3.08tr in foreign reserves, the vast bulk of it in dollars. At some point, China will need to abandon foreign exchange support of the dollar, because the dollar’s purchasing power measured in commodities is likely to continue its decline. This policy is making the raw materials China needs more expensive priced in yuan.

It is therefore becoming more sensible for China to dispose of her dollars and encourage the yuan to rise against it on the foreign exchanges. Admittedly, this will damage the profits of exporters to dollar-denominated markets, but should have the beneficial effect of redirecting capital and labour resources from these legacy businesses towards the new activities favoured by the five-year plan. Now that the process of refocusing the economy from manufacturing and exporting cheap goods towards a technology and service driven economy is well underway, China must be getting closer to ditching the dollar as the yuan’s reference currency. It is near the time for China to stop supporting the one currency she wants to do away with.

All the indications from China’s gold policy are that the end-plan is to tie the yuan to gold. In 1983, China introduced regulations appointing the Peoples Bank with the role of acquiring gold on behalf of the state. Analysis of contemporary prices, Western central bank sales and leasing into a prolonged bear market, shows China could accumulate significant quantities of gold bullion. In the 1980s, China had capital inflows she wished to neutralise, followed by the trade surpluses that began to accumulate in the 1990s. Adding to her programme of acquisition of gold from abroad, China beefed up her gold mining capacity and her gold refining state monopoly. Today, she is the largest mine producer by far, and takes in gold doré from other countries to refine and keep.

By 2002, she had accumulated enough bullion by then permit her own citizens to buy gold, and even advertised on television and other media to encourage them to do so. Deliveries into private ownership through the Shanghai Gold Exchange (controlled by the Peoples Bank) has totalled over 15,000 tonnes after 2002, though some of that will have been recycled as scrap. I have speculated that by 2002, the Chinese state could easily have accumulated over 20,000 tonnes before the Shanghai Gold Exchange was established, rather than the paltry figure of 1,843 tonnes in declared reserves today. Whatever the true figure, the Peoples Bank has purposefully been acquiring gold for thirty-four years, and by 2002 had built a strong and satisfactory position, clearing the way over the last fifteen years for her people to do the same.vii

China now has an iron grip on the physical gold market. The launch of the Hong Kong owned LME’s new gold contract is the latest move, building on China’s policy of using the Hong Kong and London connection for the development of her interests in international capital markets. The contract has been a success from day one. While the American banks push the price round on the Comex futures market, the real control over the market is now in Chinese hands.

China and her citizens are still accumulating gold. Basically, gold that goes into China does not come out. This contrasts with the US and the EU, where people are strongly discouraged from regarding gold as money or a store of value. For geopolitical purposes, it matters not who is right, but who has the power to be right. By ending the yuan’s exchange relationship with the dollar and transferring it to gold, global monetary hegemony would be transferred from America to China and her sphere of influence in one big step.

The Shanghai Cooperation Organisation

The SCO is driven by China in partnership with Russia. As well as a population of 3.3bn, it is the principal trade partner of Japan, the Koreas, and all the South-east Asian nations, adding a further 830 million people into the SCO’s sphere of influence. Dependents on the SCO for their exports of raw materials takes in nearly all sub-Saharan Africa, adding another billion. Europe, Australia and New Zealand are also drawn into the SCO’s circle of trade influence, a further 700 million. That totals over 5.8bn, leaving nations with a population total of about a billion either neutral or siding with America. Yet, it is the US dollar that settles the bulk of world trade.

There are strong indications that gold will be part of the settlement medium for the SCO’s future trade. Not only is China driving the SCO in partnership with Russia, which appears to be gold-friendly as well, but central bank demand for physical gold has mostly been from SCO member states and affiliates.

India, which lacks enough gold at the state level to support her membership, is using increasingly desperate measures to acquire gold from her own citizens. India’s economic renaissance, since the socialist Ghandi dynasty was ousted, has been on the back of Keynesian policies, so there is likely to be a strong intellectual resistance to gold in the monetary elite. Furthermore, senior appointees to the Reserve Bank have traditionally been on the advice of the Bank of England, which is anti-gold, and at the same time conscious that Indian gold demand on top of that of China is undermining control over the London bullion market. India’s gold policy as a member of the SCO is somewhat confused,

The imbalances between gold ownership of the various SCO member states rule out a new super-currency, so it is likely to be the yuan that is predominantly used for Eurasian trade settlement, with other members pursuing a currency board approach for their own currencies.


Control over the oil market

The most significant post-war financial agreement achieved by America was with Saudi Arabia, whereby the Saudis agreed to only accept dollars in payment for oil in return for American protection. The agreement was adopted by all OPEC members, in return for the ability to fix oil prices as they pleased. This put the American banks firmly in control of the expansion of global credit, as well as the recycling of the currency surpluses arising from sales of oil to oil consuming nations, particularly benefiting the friends of America. That one decision, negotiated by Nixon and Kissinger, set up the dollar as the world’s reserve and trade currency after the end of the Bretton Woods agreement, and remains so to this day.

Today, Saudi Arabia is no longer the stable theocracy it was, and at current oil prices is running into financial difficulties. It plans to sell a five per cent stake in the national oil monopoly, Aramco, to raise $200bn to plug the gap in state finances. It can only do this by way of a public listing and offering if it can verify its stated oil reserves, which may prove difficult. If one was to guess an outcome for this dilemma, it would be that Saudi’s largest customer, China, could come to the rescue. And it would be expected that China would gain some influence over the disposition of Saudi’s oil sales.

It would be a typical Chinese strategy, repeating in the case of energy what China has already achieved in gaining control over the global economy. Other than America, whose consumption exceeds its supply by a significant margin, Russia is the largest global supplier (just), followed by Saudi Arabia. Between them they account for 22.4% of global supply. Other Asian suppliers in the SCO or allied to it gives a further 12%, making 34.4%. Coordinating these supplies gives China and her partners more production leverage on the global oil market than Saudi Arabia had in the 1970s.

Already, China is showing a preference to settling trade and energy deals in yuan, but to take this much further, it will need to offer gold convertibility to compete with the dollar. This appears to be being pursued in two steps, the first being oil suppliers given the opportunity to sell their oil for yuan, and to sell their yuan on the Shanghai futures exchange for gold, before the second step, a formal yuan convertibility, is eventually offered.

The yuan-gold contract already exists, the oil-yuan contract will shortly be introduced. The Shanghai International Energy Exchange is currently training potential users and carrying out systems tests prior to launch later this year. Obviously, these futures contracts in gold and oil may need to be initially supported by the state banks to enable them to build liquidity. But importantly, it will allow Iran, Russia and other Asian producers to avoid Western banking sanctions by selling oil for gold.viii


Geopolitics could set the timing

The course of economic and monetary events in Asia was predetermined by the Chinese some time ago. We saw evidence of this in the UK, when China decided its international financial markets would be operated between Hong Kong and London, cutting out New York entirely and the dollar as much as possible. The Hong Kong Exchange bought the London Metal Exchange in 2012, and a year later London’s role was cemented when the then Chancellor of the Exchequer, George Osborne, visited China. This was followed by Britain becoming the first developed nation to join the Chinese-led Asia Infrastructure Investment Bank, much to the annoyance of the US.

The Obama administration had no effective response to China’s strategy, and continued to attack China’s partner, Russia, through proxy wars in Ukraine and Syria. The bid to take control of resource-rich Afghanistan failed. The election of President Trump brought with it uncertainly in US foreign policy, prompting a visit by President Xi to President Trump last April. There was no doubt that Xi decided he needed to assess Trump personally. He is likely to have come away with the view that Trump was unpredictable, and so it has proved.

We can only guess as to whether Xi’s visit has caused the Chinese to accelerate their planned move away from the dollar to their ultimate trade settlement and monetary plans. The threat of an American invasion of North Korea will be watched closely by Beijing in this context. The prospect of American troops on the Chinese border only 500 miles from Beijing will be prevented at all costs, so retaliation by an attack on the dollar would be the most effective response.

The removal of Steve Bannon last week and the control of the White House passing to three generals are important developments. In his last interview while still officially appointed, Bannon correctly analysed the geopolitics between China and the US. His analysis was very much on the lines presented in this article. However, his assessment was that the US needed to fight a trade and financial war against China, and forget anything military. In his words, “unless someone solves the part of the equation that shows me that 10 million people in Seoul don’t die in the first 30 minutes from conventional weapons, I don’t know what you are talking about, there’s no military solution here, they got us.”ix

Bannon’s mistake is to assume America still wields its traditional financial power, when it is clear to informed outsiders that this is no longer true. However, the generals now in charge of the White House are more likely to stoke up proxy wars, either because that is where their skills lie, or more cynically perhaps they are influenced by the arms manufacturers who are looking for defence contracts. They have taken no time in ratcheting up the American presence in Afghanistan and clearly have a desire to gain influence in Pakistan, both of which are on China’s eastern flank, where she is building commercial and infrastructural ties.

So, geopolitics are back on familiar ground. Trump is now neutralised and will increasingly look like a cowed Obama. Perhaps more troops will be sent to Syria. Perhaps more advisors will be sent to Ukraine. Perhaps more missiles will be installed in Poland, or the Baltic states. North Korea will rumble on, in a stalemate protected by its nuclear weapons. But increasingly, China’s interests are now served by taking the next step to disentangling herself from the dollar, and that will mean selling down her dollar reserves to stockpile the copper and the other industrial materials she needs. It will also mean lending dollars to trade counterparties, such as Saudi Arabia, to be repaid in yuan.


Conclusion

China and Russia’s geopolitical strategy has been evolving long enough for observers to understand it and the implications for the West. We can assume the strategic thinkers and intelligence agencies of all the major players have a reasonable grasp of the implications, including America, which is determined not to lose in this Great Game. That was the point behind Steve Bannon’s candid interview with Politico.

Bannon was deluded about the extent of America’s economic and financial power. He is now out. We are back to geopolitics being decided by the military. Meanwhile, China’s interests have almost certainly moved firmly towards dumping the dollar. This can only be done successfully by linking the yuan to the characteristics of physical gold, the market which China has effectively cornered.

If gold crosses the $1300 Rubicon, it may be taken as an early sign that China’s long-term plan of monetising her gold is progressing towards the next stage. The oil-for-yuan futures contract is due to be launched very shortly, allowing countries like Iran to buy gold freely, paid for by oil sales.

Alternatively, if China defers securing the yuan to gold, the dollar still looks like weakening against other currencies, reflecting a US economy isolated from the positive Asian story. The pace of the rise in the gold price might be slower, but the direction seems equally certain.

Eventually, gold will need to rise to a level where the Chinese are prepared to set a conversion rate. Expect China to use its control over physical gold markets to achieve it at a time of its own choosing. Leaving the $1300 price behind could well be the start of the move towards this objective.

end

 

MarketSlant has suspicions about the actual amount of real physical that the FRBNY is holding for Germany;

(courtesy MarketSlant/Kitco/gata)

 

MarketSlant’s Lanci remains suspicious about Fed’s still holding German gold

 Section: 

5:15p ET Thurday, August 24, 2017

Dear Friend of GATA and Gold:

MarketSlant editor Vince Lanci, founder of fund management company Echobay Partners, today tells Kitco News’ Daniel Cambone that he is not impressed that Germany’s Bundesbank repatriated some of its gold from other central banks ahead of schedule.

The schedule was far too long to begin with, Lanci said, and he notes that the Bundesbank has left far more gold with the U.S. Federal Reserve than with other central banks, raising suspicion that the Fed has not been able to repay the Bundesbank all the gold that was owed.

Lanci’s interview is seven minutes long and can be viewed at Kitco here:

http://www.kitco.com/news/video/show/Kitco-News/1687/2017-08-23/Why-Germ…

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

 END

Your early FRIDAY 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 6.6560 (REVALUATION NORTHBOUND   /OFFSHORE YUAN MOVES EQUAL TO ONSHORE AT   6.6560/ Shanghai bourse CLOSED UP 60.00 POINTS OR 1.83%  / HANG SANG CLOSED UP 329.56 POINTS OR 1.20% 

2. Nikkei closed UP 98.84 POINTS OR 0.51%    /USA: YEN RISES TO 109.66

3. Europe stocks OPENED IN THE GREEN     ( /USA dollar index FALLS TO  93.16/Euro UP to 1.1817

3b Japan 10 year bond yield: FALLS  TO  +.019%/ 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::  47.73 and Brent: 52.41

3f Gold UP/Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO  +.402%/Italian 10 yr bond yield UP  to 2.134%    

3j Greek 10 year bond yield FALLS to  : 5.567???  

3k Gold at $1287.40  silver at:17.04 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 2/100 in  roubles/dollar) 59.14-

3m oil into the 47 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 109.66 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  0.9638 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1391 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 RISING to  +0.402%

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 2.197% early this morning. Thirty year rate  at 2.771% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

Global Stocks Rise Ahead Of Much Anticipated Speeches By Yellen, Draghi

Global markets are stuck in a holding pattern with S&P futures up modestly after fluctuating overnight, as European and Asian shares rise with oil while the dollar has dipped lower ahead of the biggest central bank event of the year: the Fed’s Jackson Hole symposium where Janet Yellen and Mario Draghi will speak at 10am and 3pm ET, respectively. Meanwhile, world stocks drifted toward their best week in six on Friday, as a near three-year high in emerging markets shares and a roaring rally in industrial metals bolstered the year’s global bull run.

US futures got a marginal boost by comments from Gary Cohn before the FT shortly after 5am ET, pushing back against suggestions he will leave the White House and confirming another push for tax reform.

European Stocks were mixed for much of the morning session before edging higher, with gains for miners eclipsing retailer declines in the wake of Amazon’s announcement it would cut Whole Foods prices on Monday in the Stoxx Europe 600 Index.

As discussed over the past week, the only show in town over the next couple of days is the Yellen and Draghi show at the Jackson Hole symposium (today’s agenda here). They talk at 10am and then 3pm (EST/NY time). As for Yellen it seems the swing factor is whether the Fed is placing greater weight on very loose financial conditions and financial stability concerns over any supposed short term soft inflation numbers. Deutsche Bank yesterday published a piece re-visiting Yellen’s July 2014 speech on “Monetary Policy and Financial Stability” as a benchmark for assessing any changes in her views on the topic. The bank suggests that there is an interesting parallel between today and mid-2014 when Yellen delivered that speech. Then, as now, financial conditions were very loose. Yet despite easy financial conditions at the time, Yellen’s speech concluded that the nature and magnitude of financial stability considerations as of mid-2014 were insufficient to justify tighter monetary policy. The key question for markets is whether enough has changed since July 2014 for Yellen to reach a different conclusion and send a more hawkish signal about the future monetary policy path at Jackson Hole?

“Will financial-stability concerns prompt the Fed to hike, even when inflation is so low? This is what the market wants to know,” John Cairns, a strategist at Rand Merchant Bank in Johannesburg, wrote in a client note. “With little else to focus on, the market has morphed the symposium into a colossus. Risks are two-way: Yellen could take the hike off the table, or reaffirm it.”

In macro, the yen was heading for its worst week since July 7 as traders awaited clues on pace of monetary tightening from central bankers at Jackson Hole and as tensions ease on the Korean peninsula.

In Asia, Japan’s Topix index closed 0.3% higher with volume on the gauge about 20 percent below its 30-day intraday average. The S&P/ASX 200 Index in Sydney fluctuated before finishing little changed and South Korea’s Kospi index rose 0.1 percent. The Hang Seng Index in Hong Kong added 1 percent and the Shanghai Composite Index advanced 1.7 percent. The MSCI Asia Pacific Index rose 0.2 percent.

Curiously, 10Y JGB Yields slid back and were just above 0% even as the Bank of Japan cut back on purchases of five-to-10 year JGBs for a second time this month, this time from JPY440BN to 410BN, encouraged by a decline in the benchmark yield.

Offshore yuan trades near strongest in 11 months, while won halts 4-day gain. The pound headed for its fourth consecutive weekly decline against dollar, its longest losing streak since Jan. 2015, as concerns over Brexit negotiations and tepid economic data weighed on U.K. currency. Bund futures edge lower, small widening seen in semi-core EGBs, with a large bund block printed vs cash OATs catching some focus

In commodities, oil prices rose on expectations that U.S. production could be hit by what looks set to be one of the strongest hurricanes in more than a decade. Hurricane Harvey as it has been named, is packing winds of up to 125 miles per hour (200 km per hour), and is forecast to drive a surge in sea levels as high as 12 feet (3.7 meters) and dump up to 35 inches (97 cm) of rain over parts of Texas. .S. crude futures rose 0.7 percent to $47.75 a barrel, and global benchmark Brent advanced 0.7 percent to $52.41. They had fallen as much as 2 percent on Thursday as refiners in the path of Harvey shuttered production.

Industrial metals are headed for a dazzling week, with copper remaining near a three-year high hit on Thursday on signs of stronger demand in top consumer China while inventories in London warehouses fell. Nickel which is used in stainless steel was up more than 6 percent for the week and benchmark Chinese iron ore futures DCIOcv1 were up for an eighth straight week. Gold meanwhile was up slightly at $1,287.07 an ounce, heading for a 0.2 percent gain for the week.

As discussed over the past week, the only show in town over the next couple of days is the Yellen and Draghi show at the Jackson Hole symposium (today’s agenda here). They talk at 10am and then 3pm (EST/NY time). As for Yellen it seems the swing factor is whether the Fed is placing greater weight on very loose financial conditions and financial stability concerns over any supposed short term soft inflation numbers. Deutsche Bank yesterday published a piece re-visiting Yellen’s July 2014 speech on “Monetary Policy and Financial Stability” as a benchmark for assessing any changes in her views on the topic. The bank suggests that there is an interesting parallel between today and mid-2014 when Yellen delivered that speech. Then, as now, financial conditions were very loose. Yet despite easy financial conditions at the time, Yellen’s speech concluded that the nature and magnitude of financial stability considerations as of mid-2014 were insufficient to justify tighter monetary policy. The key question for markets is whether enough has changed since July 2014 for Yellen to reach a different conclusion and send a more hawkish signal about the future monetary policy path at Jackson Hole?

Economic data include durable goods orders. Big Lots is reporting earnings.

Bulletin headline summary from RanSquawk

  • European retailers underperform as Amazon plans to cut Whole Foods prices.
  • EUR slightly firmer after firm IFO data.
  • Looking ahead highlights include comments from Fed Chair Yellen and ECB President Draghi.

Market Snapshot

  • S&P 500 futures up 0.24% to 2,447
  • VIX down 2.13% to 11.93
  • STOXX Europe 600 up 0.3% to 375.51
  • Brent futures up 0.7% to $52.39/bbl
  • Gold spot up 0.2% to $1,288.43
  • U.S. Dollar Index little changed at 93.26
  • MSCI Asia up 0.2% to 160.35
  • MXAPJ up 0.3% to 532.06
  • Nikkei up 0.5% to 19,452.61
  • Topix up 0.3% to 1,596.99
  • Hang Seng Index up 1.2% to 27,848.16
  • Shanghai Composite up 1.8% to 3,331.52
  • Sensex up 0.09% to 31,596.06
  • Australia S&P/ASX 200 down 0.03% to 5,743.86
  • Kospi up 0.1% to 2,378.51
  • German 10Y yield rose 1.9 bps to 0.395%
  • Euro unchanged at $1.1799
  • US 10Y Yield unchanged at 2.19%
  • Italian 10Y yield fell 0.8 bps to 1.819%
  • Spanish 10Y yield rose 1.7 bps to 1.615%

Top Overnight News from BBG

  • Jackson Hole is one of the most anticipated central-bank events on the calendar, even though it’s been five years since it delivered anything resembling a policy prescription
  • While traders are keyed up for any policy signals in Mario Draghi’s speech, he is unlikely to declare mission accomplished just yet, as after more than 2 trillion euros of QE, inflation is still below the ECB’s goal and officials are nervous that bullish comments might spark unwarranted market tightening
  • Dollar bulls are defying the currency’s longest monthly-losing streak in six years by adding to wagers it will strengthen
  • The Bank of Japan may scale back its bond buying next week after the debt market rallied, undeterred by a second reduction this month in the central bank’s purchases of five-to-10 year securities
  • Harvey Strengthens as Gasoline Surges on Texas Refinery Threat
  • Executives Warn MiFID Has Firms Caught Like ‘Deer in Headlights’
  • JPMorgan’s Frenkel: More Risk in Fed Delaying Than Hiking Early
  • Smartphone Maker HTC Is Said to Explore Strategic Options
  • Draghi Has Reason to Temper the Drama in Jackson Hole Sequel
  • U.S. Is Said to Plan New Venezuela Sanctions Announcement Friday
  • Trump Battle for Wall Money Squeezed by Deadline for Debt Limit
  • Trump to Rally Public on Taxes as Republicans Hash Out Details
  • Amazon’s Price Cuts on Kale Leave Rivals Bracing for Impact
  • Higher Home Prices Risk Closing Door on U.S. Housing Momentum
  • German Business Confidence Weakens Even as Economy Forges Ahead
  • China’s 1st Bond Workout With 78% Haircut Ushers in New Era

Asian stocks shrugged off the negative lead from Wall Street and traded mostly higher, while full focus remained on the key central bank speakers at Jackson Hole. ASX 200 (Unch.) underperformed amid weakness in financials and property names, while Nikkei 225 (+0.5%) coat-tailed on the recent USD/JPY advance after Japan reported inflation in line with expectations. The KOSPI (+0.1%) was cautious as South Korea awaited the fate of Samsung Electronics’ Vice Chairman Jay Y Lee, who as reported earlier received a 5 year prison sentence which weighted modestly on the index’s largest weighted company. Elsewhere, Shanghai Comp. (+1.83%) and Hang Seng (+1.2%) gained despite the PBoC refraining from operations for a 2nd consecutive day and draining a net CNY 330b1n for the week, with outperformance observed in Li & Fung, PetroChina and CNOOC after strong earnings results. Finally, 10yr JGBs ignored the positive risk sentiment and reduced buying operation by the BoJ, with prices mildly supported amid the backdrop of falling yields. PBoC skipped open market operations, for a net weekly drain of CNY 330BN vs. last week’s CNY 110BN net injection.

Top Asian News

  • HNA Is Raising Billions From Shadow Banks That Worry Beijing
  • Last Independent Azeri News Service to Stop Work Amid Crackdown
  • Shanghai Steel Coil on Record Run as Investors Shrug Off Curbs
  • Philippines’ Espenilla Says Hard to Say If Worst Over For Peso
  • Someone Just Made a Giant Bet on Korean Sovereign Bonds
  • Japan CPI Sends BOJ Clear Message While U.S. Data Raises Doubts
  • Japan Stuck in Inflation Doldrums as Core CPI Inches Up to 0.5%
  • Japan Shares Rise as Autos, Banks Climb Ahead of Jackson Hole
  • Best Run in 11 Years Beckons for Metals as China Drives Rally

European equities made marginal gains amid an air of caution ahead of Yellen and Draghi’s speeches at the Jackson Hole Symposium. However, retailers are coming under pressure after Amazon announced its plan to cut prices at Whole Foods, subsequently shares in Ahold Delhaize, Carrefour, Tesco and Sainsbury’s are among the worst performers. Bunds pressured following the aforementioned better than expected IFO data, in turn, 10Y yields are ticking higher by over 2bps. The German curve also bear steepening this morning, while peripheral spreads are slightly outperforming core debt.

Top European News

  • German Spending Puts Economy on Track for Best Year Since 2011
  • Merkel Faces Volatile Coalition Options If Election Goes Her Way
  • Opposition Leader Resigns in Sweden One Year Ahead of Election
  • Eurocash Turns to Unexpected Loss on VAT Fraud Payout
  • World’s Cheapest Currency Lira Has Goldman, BlueBay on Its Side

In currencies, the USD/JPY traded in a narrow range as Japanese CPI traded in line with expectations but still far below the Bank of Japan’s target. Comments from the Japanese economy minister also failed to give any firm direction ahead of the Jackson Hole Symposium, where ECB President Draghi and Fed Chair Yellen are scheduled to speak. Some suggestion of Gotobi¬weekend demand was said to be supporting USD/JPY at the Tokyo fix, while there is also large-sized options expiring at 110.00 (1.93BN) today. EUR/USD also traded in a tight range throughout the Asia-Pac session ahead of the central bank speakers. Some suggestion in the Asia-Pac session that the ECB could vote to end QE on October 26th but that stemmed from RND News, a little known news service and so maybe didn’t get as much focus as if it had come from a more reputable source. The range in GBP/USD was just 20 pips in the Asia-Pac session with little interest in the pair amid a lack of UK news and data. Into the weekend there is bound to be comments on Brexit in the Sunday papers which could again catch focus on Monday as is often the case. AUD/USD hovered around 0.7900 in Asia-Pacific treading hours, again in a narrow range. In terms of commodity markets, copper traded on the LME reached a near 3-year high amid hopes for improving global growth.

In commodities, crude prices up 0.8% as large US refiners shut units in the Gulf of Mexico as they brace themselves for Hurricane Harvey, which is reported to be the strongest storm in 12 years.

Looking at the day ahead, we have the durable goods orders (-5.8% expected) and capital goods orders (0.3% expected) for July. Onto other events, Yellen and then Draghi will speak at Jackson Hole.

US Event Calendar

  • 8:30am: Durable Goods Orders, est. -6.0%, prior 6.4%; Durables Ex Transportation, est. 0.4%, prior 0.1%
    • Cap Goods Orders Nondef Ex Air, est. 0.35%, prior 0.0%; Cap Goods Ship Nondef Ex Air, est. 0.15%, prior 0.1%

DB’s Jim Reid concludes the overnight wrap

It’s all come round incredibly fast for me (less so for long suffering Trudi) but today is my last day before paternity leave. It’s a bank holiday in the U.K on Monday so we’re booked in to go to hospital on Tuesday to have the twins at just over 36 weeks. I’ll be off for a couple of weeks unless I’m successful in my last minute negotiations with HR that twins surely merit a doubling of paternity leave to 4 weeks. Anyway you’ll be in the safe hands of Craig and Jeff over the next couple of weeks. Although I’m hoping Craig is still prepared to help out after Liverpool beat his beloved Arsenal on Sunday.

Talking of double acts, the only show in town over the next couple of days is the Yellen and Draghi show at the Jackson Hole symposium. They talk at 10am and then 3pm (EST/NY time). As for Mrs Yellen it seems the swing factor is whether the Fed is placing greater weight on very loose financial conditions and financial stability concerns over any supposed short term soft inflation numbers. DB’s Matt Luzzetti yesterday published a piece re-visiting Yellen’s July 2014 speech on “Monetary Policy and Financial Stability” as a benchmark for assessing any changes in her views on the topic. Matt suggests that there is an interesting parallel between today and mid-2014 when Yellen delivered that speech. Then, as now, financial conditions were very loose. Yet despite easy financial conditions at the time, Yellen’s speech concluded that the nature and magnitude of financial stability considerations as of mid-2014 were insufficient to justify tighter monetary policy. The key question for markets is whether enough has changed since July 2014 for Yellen to reach a different conclusion and send a more hawkish signal about the future monetary policy path at Jackson Hole?

As for Mr Draghi, today is a mystery as to what he’ll say but the odds have fallen sharply over the last few weeks that he’ll say something new. DB’s Mark Wall concluded last week that his references to the Euro’s climb might be the swing factor as to how dovish/hawkish he is. They conclude that a benign comment on the exchange rate — for example, accepting it as the outcome of market forces — would be hawkish relative to their baseline expectations. A more dovish tilt would be signalled if Draghi describes the exchange rate as “very important” or “significant”. Overall they think the need to avoid a EUR overshoot suggests the risks are tilted towards the dovish side.

Now onto the US debt ceiling which is now increasingly on the radar for markets. House speaker Paul Ryan is confident that the ceiling will be lifted saying “I’m not really worried about getting it done” and that “we pay our debts in this country”. For those that watch Game of Thrones you’ll know that sounds familiar. Elsewhere, Trump’s relationship with Senate majority leader Mitch McConnell continue to be tense, with the President noting that raising the debt ceiling could have been much easier if Mitch followed his advice and lumped the debt proposal into the veteran affairs bill that was just passed. Instead, the process for raising the debt ceiling is “now a mess!” Post his tweet, the short dated Treasury bill maturing October 12 (around the time the Treasury is expected to run out of money unless there is a debt limit increase) increased by as much as 5bp.

Over in markets, US bourses softened yesterday on thin volumes. The S&P fell 0.21% while the Dow and the Nasdaq both dipped 0.1%. Within the S&P, most sectors were in the red, particularly the consumer staples sector (-1.34%) after Amazon said it will cut prices on “a selection of best-selling grocery staples” at Whole Foods stores from next Monday. European markets were slightly stronger, with the Stoxx 600 up 0.16% driven by gains in the utilities and materials sector. Across the region, the FTSE 100 (+0.33%), the Dax (+0.05%), CAC (-0.04%) and the Italian FTSE MIB rose +0.51% after three consecutive days of losses.

Bond yields increased in the US but were little changed in Europe. US bond yields were up c3bp (2Y: +2.5bp; 10Y: +3bp) across maturities. On the other side of the pond, core European bond yields were mixed but little changed, with bunds (2Y: -1bp; 10Y: unch), Gilts (2Y: -1bpbp; 10Y: -0.5bp) and French OATs (2Y: -1bp; 10Y: +0.4bp) mixed. Notably, Portugal’s 10Y yields continued to increase from its CY17 lows and was up 6bp to 2.819% yesterday.

Turning to currencies, changes were fairly minimal, with the US dollar index up 0.1% and Sterling/USD flat, while the Euro dipped 0.1% against the USD and Sterling. In commodities, WTI oil fell 2% yesterday as Hurricane Harvey approaches the oil refining hub at Texas, but prices have recovered c0.6% this morning. Precious metals were slightly lower (Gold -0.4%; Silver -0.7%) while base metals were little changed this morning (Zinc -0.04%, Aluminium -0.03%; Copper +1.3%).

This morning in Asia, markets have broadly strengthened, with the Nikkei up +0.60%, the Kospi +0.12%, the Hang Seng +0.68% and Chinese bourses up c +0.9%. Elsewhere, the Japanese July national core inflation reading was in line at 0.5% yoy, but remains well below BOJ’s 2% target.

In a prelude to Jackson Hole, Kansas City Fed chief George said another rate hike is possible this year, saying “based on what I see today, I think there’s still opportunity to do that (rate hike)’’. Conversely, Dallas Fed chief Kaplan reiterated his views that officials should be more patient and wait for signs of renewed inflation before raising rates. He noted that “I’m not saying we won’t act by the end of the year, but we have the ability to be patient”. Kaplan also noted that it would be hazardous to loosen banking regulations at a time of soaring asset prices. However, both were in favour of making an announcement in September on starting the balance sheet unwind.

Elsewhere, there were more mixed signals as to the momentum on Trump’s tax reform plans. Earlier this week, Bloomberg reported there was more agreements between both sides on how to fund the tax cuts, while reports overnight now suggest Republican leaders don’t expect to release a joint tax plan with the White house next month, and instead will rely on House and Senate committees to solve residual unanswered questions. We continue to wait and see.

Finally, for those interested in economic debate, Philadelphia’s Fed economists have published a paper suggesting forecasting models based on the Phillips curve, which asserts a link between unemployment and inflation, don’t actually help predict inflation.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, existing home sales fell 1.3% mom in July, but remained up 2.1% yoy. The decline in sales in recent months has moved the level closer to that suggested by the usually accurate pending home sales indicator. The MBA reported that both the rate of mortgage delinquency and foreclosure fell to new cyclical lows of 4.24% and 1.29% respectively in 3Q. Elsewhere, the Kansas City Fed’s August manufacturing index was higher than expected at 16 (vs. 11), the strongest reading since March. Finally, employment claims were broadly in line, with initial jobless claims at 234k (vs. 238k expected) and continuing claims at 1,954k (vs. 1,950k expected).

Across the pond, the UK’s preliminary 2Q GDP stats were in line, at 0.3% qoq and 1.7% yoy. Private consumption rose 0.1% qoq (vs. 0.3% expected), the least since 4Q 2014, but capex rose 0.7% qoq, which was a better outcome than the market had expected. Back to the consumer side, the UK’s CBI Distributive Trades Survey painted a bleak picture in August with a net 10% of respondents reporting a decline in sales yoy. In France, the August manufacturing confidence was higher than expected at 111 (vs. 108), the highest reading since 2011.

Looking at the day ahead, Germany’s final 2Q GDP data (0.6% qoq and 2.1% yoy expected) will be out as this note is published, as well as 2Q data on private consumption, capital investment, export / import and domestic demand. Further, the IFO business climate and expectations for August will be out later on. In France, there is the consumer confidence data. Over in the US, we have the durable goods orders (-5.8% expected) and capital goods orders (0.3% expected) for July. Onto other events, Yellen and then Draghi will speak at Jackson Hole

 END

3. ASIAN AFFAIRS

i)Late THURSDAY night/FRIDAY morning: Shanghai closed UP 60.00 POINTS OR 1.83%   / /Hang Sang CLOSED UP 329.56 POINTS OR 1.20%/ The Nikkei closed UP 98.84 POINTS OR 0.51%/Australia’s all ordinaires CLOSED UP 0.03%/Chinese yuan (ONSHORE) closed UP at 6.6560/Oil UP to 47.73 dollars per barrel for WTI and 52.41 for Brent. Stocks in Europe OPENED GREEN. Offshore yuan trades  6.6560 yuan to the dollar vs 6.6560 for onshore yuan. NOW THE OFFSHORE MOVED STRONGER  TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS MUCH STRONGER 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

 

4. EUROPEAN AFFAIRS

We knew that this was going to happen: huge refugee problems in Rome

(courtesy StockBoardAsset.com/zerohedge)

Rome Is Burning… This Time It’s By Refugees

Via StockBoardAsset.com,

Police in Rome evicted 100s of refugees that had occupied Piazza Independenza just one block from the country’s main train station.

The squatters were defiant so local police used water cannons and batons in the forceful eviction. As Reuters reports,

Some 100 refugees had occupied Piazza Independenza since Saturday, when most of about 800 squatters were evicted from an adjacent office building they had occupied for about five years.

 

Hung on the building was a sheet with writing reading “We are refugees, not terrorists” in Italian.

 

A small fire burned on the pavement and a sheet hanging from a first-floor window was set alight by squatters inside. Most of the squatters were Eritreans who had been granted asylum. Police said they had refused to accept lodging offered by the city.

Per Reuters,

More than 600,000 boat migrants have arrived in Italy from North Africa since 2014. Some 200,000 asylum seekers now stay in state-run shelters.

Conclusion

Voice of Europe said it the best, “This is Rome, Italy. Once the most civilised place on earth”

POLAND/FRANCE
After Poland asked Germany for reparations from World War ii, we know have another scuffle with this time Poland slamming the arrogant Macron who indulges in 10,000 euros worth of make up each month
(courtesy zero hedge)

In Furious Attack, Poland Slams “Arrogant” Macron, Says “You Won’t Rule Europe”

Even as recent European outcast Poland is demanding World War II reparations from Germany, causing a rift between Warsaw and Berlin, it has engaged in another diplomatic feud, this time with French president Macron, who as we learned overnight spends $10,000 each month on make up.

The latest spat started on Friday when French President Emmanuel Macron said that Poland was isolating itself within the European Union and Polish citizens “deserve better” than a government at odds with “the bloc’s democratic values and economic reform plans.” Macron said Warsaw, where a eurosceptic government took office in 2015, was moving in the opposite direction to Europe on numerous issues and “would not be able to dictate the path of Europe’s future.”

“Europe is a region created on the basis of values, a relationship with democracy and public freedoms which Poland is today in conflict with,” Macron said in Bulgaria on the third leg of a trip to central and eastern Europe to generate support for his vision of a Europe that better protects its citizens, according to Reuters.

In a vicious attack that is certain to drag relations between western EU powers and the European Commission in Brussels on one side and Poland’s Law and Justice Party (PiS) government on the other to a new low, he said the Polish people deserved better: “Poland is not defining Europe’s future today and nor will it define the Europe of tomorrow,” Macron slammed at a joint press conference with Bulgarian President Rumen Radev in the Black Sea resort city of Varna.

Poland, which is at loggerheads with the European Commission over issues ranging from its refusal to accept EU migrant relocation quotas to the ruling conservatives’ tightening grip on the judiciary and media, promptly responded: shortly after Macron’s statement, in a scathing interview Polish Prime Minister Beata Syzdlo lashed out at the French president with the plunging approval rating, saying Macron “would not be deciding the future of Europe.”

Syzdlo attacked Macron’s lack of experience and told him to focus on his own country rather than meddling in Polish affairs: “I advise the president that he should be more conciliatory… Perhaps his arrogant comments are a result of a lack of (political) experience.”

I advise the president that he should focus on the affairs of his own country, perhaps he may be able to achieve the same economic results and the same level of security for (French) citizens as those guaranteed by Poland” she added.

Her comments were an indirect reference to her government’s insistence that it will not accept migrants from the Middle East, despite pressure from Brussels, because it believes they pose a threat to national security, as confirmed by “ultra liberal” France which has been hit hard by deadly Islamist militant attacks in recent years.

Following the president’s statement, the Polish Foreign Ministry said in a statement it had urgently summoned the French chargé d’affaires to express “the Polish government’s indignation about the arrogant words” of Macron.


French president Macron and Poland PM Syzdlo

Poland’s foreign minister Witold Waszczykowski also chimed in saying his country “is not being isolated” and urged Macron to follow developments in central Europe more closely.

“We are hosting an important meeting today so President Macron is not following carefully the news, doesn’t know what is happening in this part of Europe. But this happens sometimes. The French economy is not at the moment able to compete with the vibrant economies of many European countries, including Poland” he said. “This is because French workers have enormous social benefits. The working week for many French workers is four, five working days.

Bulgaria also waded into the row, urging France to end its controversial calls for labour regulations across the bloc to be overhauled.  Prime minister Boyko Borissov today said “open confrontation” between EU member states is “damaging.” Borissov added that rather than threaten Poland, France should “listen to all sides and find a solution”.

As The Express adds, Macron risks falling out with his European allies after sensationally claiming the EU risks collapse unless the bloc’s cheap labour rule is overhauled. Under current legislation, firms are able to send temporary workers from low-wage countries to richer nations without having to pay their local social charges. But the French president is calling for changes and is using fears about the possible collapse of the Brussels bloc to scare EU members into backing his proposals.

Poland and the EU have clashed repeatedly in recent months after the Brussels bloc took issue with Polish government plans to overhaul the Surpeme court. Last month Jaros?aw Kaczy?ski, the chairman of the ruling Law and Justice party (PiS), declared the reforms will go ahead despite the president’s veto on local television.

President Andrzej Duda’s surprise announcement to veto the plans saw him bow down to EU pressure amid huge protests across Poland’s major cities. Last month Jaroslaw Kaczynski, the chairman of the ruling Law and Justice party (PiS), declared the reforms will go ahead despite the president’s veto on local television. The previously reported surprise announcement by President Andrzej Duda to veto the plans saw him bow down to EU pressure amid huge protests across Poland’s major cities.

* * *

Separately, expanding the recent Polish demands that Germany pay for World War II reparations, Szydlo asked that Germany “take responsibility” for World War Two, as Poland is still recovering from the damage done by Nazi occupation, which left millions dead and biuildings damaged on their soil.

She said: “In fact, it could be said that Poland is demanding justice. We are a victim of World War Two and the damage was not reimbursed in any way – just the opposite.” Syzdlo added that “talking about reparations today is a claim for justice and for what belongs to Poland. Whoever has a different view … should first look at history and thoroughly learn what was happening on Polish soil during the war.”

The leader of the Conservative Law and Justice Party joined a chorus of Polish politicians who are demanding reparations from Germany for the massive losses inflicted on Poland during World War Two. Back in July, Szydlo said Poland needed a payout from Germany for the widespread damage done. She told Polish radio: “We are talking here about huge sums, and also about the fact that Germany for many years refused to take responsibility for World War II.”

As we reported earlier this month, Arakadiusz Mularczyk, an MP from with the ruling Law and Justice party said the Polish parliament began researching whether it could make a claim against Germany earlier this year. The move came after Jaroslaw Kaczynski, Poland’s most powerful politician, said in a recent interview the “Polish government is preparing itself for a historical counteroffensive.” Kaczynski also called for reparations from Germany when he was prime minister more than a decade ago, creating some tensions between Poland and Germany, which are important trade partners and allies in NATO and the European Union.

The massive suffering inflicted on Poland by Germany has been a topic of public discussion recently as Poland marked the anniversary of the start of the Warsaw Uprising of 1944 on August 1. Defense Minister Antoni Macierewicz said Germans need to “pay back the terrible debt they owe to the Polish people”, according to Reuters.

Germany has dismissed these claims saying it has dealt with reparations in the past and will not pay out any more. Ulrike Demmer, a German deputy government spokeswoman said Berlin will not make any changes to its stance on the matter. Demmer added this was Germany’s “fundamental position.”

Germany has paid billions of euros over the years in compensation for Nazi crimes, primarily to Jewish survivors, and acknowledges the country’s responsibility for keeping alive the memory of Nazi atrocities and atoning for them. However, while the calls grow louder for compensation, Poland’s former communist government said it would not make claims on Germany. Macierewicz said the communist-era Poland was a “Soviet puppet state” whose decision is not legally valid today.

END

And then this happened late in the day in Brussels:

(courtesy zerohedge)

Man Shot In Brussels After Attacking Soldiers With A Machete While Shouting “Allahu Akbar”

In what appears to be the latest weekly terrorist attack in Europe, 7 days after the deadly events in Barcelona, Sky News and Reuters report that a man was shot in the center of Brussels on Friday evening after attacking two soldiers with a knife, according to state broadcaster RTBF reported.

The incident took place about 20:15 local time. Belgian prosecutors refuted initial reports that the assailant had been killed by the police and said that the attacker is alive but in critical condition.

View image on TwitterView image on TwitterView image on TwitterView image on Twitter

A man attacked soldiers in Brussels with a machete tonight. Pics I took in the street. 

Police confirmed to the Belgian media that the suspect – who brought a knife to a gun fight – was shot, the VRT broadcaster reports. According to RTBF, the attacker was a Somali man about 30 years old, who shouted “Allahu Akbar” during his assault. The soldiers suffered slight injuries to the hand and face

: des militaires attaqués au couteau ont abattu un homme –

View image on Twitter

 Soldiers shot a man who attacked them with machete in Brussels: Belgium media

The attacker was not known to have links to terrorism, according to Belgian prosecutors cited by Reuters. He was known to police for his earlier involvement in “minor offenses,” according to the VRT.

“With the identity that we currently have it is a 30-year-old man who is not known for terrorist activities,” a spokeswoman for the prosecution service said.

Belgian Police covering the scene after a machete attack ended by retaliating soldiers firing. 

A large numbers of police officers were deployed to the scene. The mayor of Brussels and the federal prosecutor also arrived at the scene according to Sky News. The Belgian Prime Minister, Charles Michel, expressed “all our support to our soldiers” in a Twitter post. “Our security services stay vigilant and we monitor the situation closely,” he said.

end

5. RUSSIA AND MIDDLE EASTERN AFFAIRS

A huge development and a knife in the back for dollar hegemony:  Qatar turns to Iran

(courtesy zero hedge)

In Historic Move, Qatar Restores Diplomatic Relations With Iran

Qatar has remained defiant throughout its unprecedented summer diplomatic crisis with Saudi Arabia and other Gulf Cooperation Council (GCC) states which have brought immense pressure to bear on the tiny gas and oil rich monarchy through a complete economic and diplomatic blockade imposed by its neighbors. However, on Thursday it unveiled a stunning geopolitical realignment when it announced the restoration of diplomatic relations with Iran in a move that is arguably its greatest act of defiance yet. The Qatari foreign ministry announced early Thursday that “the state of Qatar expressed its aspiration to strengthen bilateral relations with the Islamic Republic of Iran in all fields” and reportedly informed Iran by phone of plans to return the Qatari ambassador to Tehran for the first time since it broke relations in 2016.

The move is significant because the chief accusation leveled against Qatar by its former GCC allies, especially Saudi Arabia, is of growing too close to Iran while sponsoring and funding terrorism. For the Sunni gulf states “funding terrorism” is more often a euphemism meaning links to Iran and Shia movements in the gulf. Ironically, there is ample evidence demonstrating that both sides of the current gulf schism have in truth funded terror groups like al-Qaeda and ISIS, especially in Syria. But Qatar’s announcement sends an audacious and daring message essentially signalling that the country remains unbowed by Saudi pressure, and that the severe economic sanctions designed to bring Qatar to its knees may result in a geopolitical backfiring and new regional order as Iran stands to benefit.

Image source: Iran’s Payvand News Service

On June 5 Saudi Arabia, UAE, Bahrain, and Egypt cut ties with Qatar in a dramatic move that resulted in a near total blockade of the small country which encompassed air, land, and sea. Even commercial airline flight paths were diverted mid-air at the time, causing multiple major regional carriers to cancel future flights to Doha’s Hamad International Airport. Aggressive economic sanctions followed, including food blockages – most of which had previously been supplied by land via Saudi Arabia. While energy-rich Qatar has the highest per capita income in the world, its residents have faced a summer of empty supermarketsand long lines to get basic staples. Reports of extreme and creative ways Qataris have attempted to get around the blockade include an ongoing plan to fly thousands of dairy cows on Qatar Airways jets into the country.

Qatari companies were expelled from Saudi Arabia, as well as individuals from diplomats (who were give 48 hours to leave) to farmers. While stock prices immediately slumped and imports plunged (by 37.9 percent in June compared with May), the government’s making up the difference in rising costs through subsidies has made life bearable – and Qatar actually appears to be resilient and weathering the storm. The nation’s oil and gas sector, which accounts for more than half of the country’s GDP, is what is carrying the country through. Analysts have consistently characterized Qatar’s oil and gas as vulnerable yet largely “unaffected” throughout the crisis – this partly because exports to Japan, China, India, and South Korea account for nearly three quarters of its total exports and have remained untouched by the boycott. The UAE, though firmly on the Saudi side of the spat, relies on sourcing 30% of its energy needs from Qatar to keep the lights on, and a major gas pipeline connecting the two countries has kept pumping all summer.

Fresh financial data out today confirms that Qatar is set to at least in the near term persist through the crisis while avoiding collapse, with some sectors remaining surprisingly strong. No doubt its leaders are keenly aware of this and emboldened in their shots fired across the Saudi bow as they restore diplomatic relations with Iran. Qatar’s former adversary across the Persian Gulf has throughout the summer shipped food supplies into the blockaded country, as well as allowed Qatari flights increased use of Iranian airspace in largely symbolic acts aimed at poking the Saudis. But it’s Qatar’s shared massive natural gas field with Iran – with the South Pars Field owned by Tehran and the North Field owned by Doha – that has been the biggest stabilizing lifeline of the crisis. Though Thursday’s figures show that:

Qatar is still far from restoring its imports to normal. Imports recovered by only 6.3 percent month-on-month to 6.24 billion riyals ($1.71 billion) in July; they were 35.0 percent below their level in July 2016.

Much of the disruption appears to be to big-ticket items. Imports of aircraft parts were down 40.5 percent from a year ago at 292 million riyals in July. The diplomatic crisis has deprived Qatar Airways of two of its biggest markets, Saudi Arabia and the UAE.

But as analysts have consistently predicted:

Thursday’s trade figures suggested the sanctions are not affecting Qatar’s natural gas exports – July exports of petroleum gases and other gaseous hydrocarbons rose 7.8 percent from a year ago – and are no longer slowing other exports much.

As a result, Qatar’s trade surplus expanded 78.1 percent from a year earlier to 11.91 billion riyals in July, although it edged down 4.8 percent from the previous month.

And though prices on basic staples continue to rise (for example food and drink prices rose 4.2 percent in July from June), even this may stabilize:

Analysts think the sanctions damage should ease in coming months as new shipping routes develop. Qatar Navigation launched a direct Qatar-Turkey service this week after starting a container service to Kuwait last week; construction of a food processing and storage facility at Qatar’s Hamad Port received $440 million of bank financing this week.

The so-called “13 demands” presented by the quartet of Arab countries sanctioning Qatar on June 23 have unsurprisingly remained unfulfilled while today’s announcement further signals Qatar’s willingness to forge alternate permanent ties away from the GCC alliance which has defined much of short history as a young nation-state. The announced willingness to form fresh ties with Iran comes just days after Saudi Arabia began somewhat bizarrely and aggressively promoting an exiled Qatari royal family member and prominent businessman, Sheikh Abdullah Bin Ali Al-Thani, whose family was forced out in 1972. The Saudis would like nothing more than be in a position to hand pick their choice for the Qatari throne and reduce Qatar to a vassal state.

From the Saudi and GCC perspective, the list of pre-conditions for lifting the embargo remain in effect, and include (according to India’s English news site The Wire):

  • Close down Al Jazeera television network and all its affiliates, plus other Qatar-funded news outlets
  • Close a military base operated by Turkey
  • Expel all citizens of Saudi Arabia, Egypt, UAE and Bahrain currently in Qatar
  • Hand over all individuals wanted by those four countries for terrorism
  • Stop funding any extremist entities that are designated as terrorist groups by the US
  • Provide detailed information about opposition figures Qatar has funded
  • Shut down diplomatic posts in Iran
  • Expel members of Iran’s elite Revolutionary Guard
  • Conduct trade and commerce with Iran only in conformity with US sanctions

And yet surprisingly it appears Qatar is increasingly in the geopolitical driver’s seathaving called the bluff of the more powerful GCC states led by Saudi Arabia and backed by Saudi allies like the US and even Israel. For now it appears tiny Qatar is defying the odds, and its potential to successfully navigate the current economic and diplomatic full frontal assault has huge repercussions for the entire region. As accurately predicted by a comprehensive report by Middle East scholar Mouin Rabbani produced earlier this summer:

The big winners so far are Iran, Syria, and their Lebanese ally Hizballah, who cannot but be delighted by the audible cracks in the alliance ranged against Damascus and Tehran and that may well spell the end of the GCC. Iran and Hizballah will additionally hope that Hamas has finally learned the lesson that no ally of the United States can be a true friend of the Palestinians. Turkey has also, yet again, demonstrated that in today’s Middle East it has a role to play in every crisis and that others ignore Ankara’s interests– whether in the Gulf, Syria, or Iraq–at their peril. On the flip side, there are growing noises within Riyadh and Abu Dhabi that the campaign should expand to include Turkey–which has recently been claiming that the UAE is implicated in the 2016 coup attempt against Erdogan.

Will we all look back on this moment when future historians trace the end of the GCC? Did the Saudis finally overreach in their anti-Iran fanaticism to become the authors of their own demise? The surprising emergent Iran-Qatar alliance is sure to at least be the start of a new regional order where the Saudis can no longer dictate terms no matter how many Western powers stand at their side.

END

6 .GLOBAL ISSUES

7. OIL ISSUES

Trump may have his hands full with this upcoming devastating and life threatening Hurricane Harvey.  We will see how Trump handles his first natural disaster:

(courtesy zerohedge)

“Devastating And Life-Threatening” Harvey Expected To Bring 120MPH Winds And Up To 12-Foot Storm Surge

Hurricane Harvey, the first hurricane to make landfall in Texas since 2008, is strengthening and expected to strike the Texas coast later tonight as a Cat-3 storm with maximum sustained winds near 120 mph according to the National Hurricane Center(NHC).  But perhaps worse than wind speeds, Harvey encapsulates the ‘perfect storm’ as it’s moving slowly at 10mph and is expected to hover over the Texas shoreline after making landfall, bringing up to a 12 foot storm surge and dropping up to 35 inches of rain in certain areas.

Here’s a summary of the latest from the NHC:

1. Harvey is expected to be a major hurricane at landfall, bringing life-threatening storm surge, rainfall, and wind hazards to portions of the Texas coast. Preparations to protect life and property should be completed this morning, as tropical-storm-force winds will first arrive in the hurricane and storm surge warning areas later today.

 

2. A Storm Surge Warning is in effect for much of the Texas coast. Life-threatening storm surge flooding could reach heights of 6 to 12 feet above ground level at the coast between the north entrance of the Padre Island National Seashore and Sargent. For a depiction of areas at risk, see the Storm Surge Watch/Warning Graphic at hurricanes.gov.

 

3. Devastating and life-threatening flooding is expected across the middle and upper Texas coast from heavy rainfall of 15 to 25 inches, with isolated amounts as high as 35 inches, from today through next Wednesday. Please refer to products from your local National Weather Service office and the NOAA Weather Prediction Center for more information on the flooding hazard.

 

4. The Potential Storm Surge Flooding Map is available on the NHC website. This product depicts a reasonable worst-case scenario – the amount of inundation that has a 10 percent chance of being exceeded at each individual location. This map best represents the flooding potential in those locations within the watch and warning areas.

 

Harvey is expected to bring with it a storm surge of up to 12 feet at Padre Island and 4-8 feet along much of the Texas coast.

STORM SURGE:  The combination of a dangerous storm surge and the tide will cause normally dry areas near the coast to be flooded by rising waters moving inland from the shoreline.  The water is expected to reach the following heights above ground if the peak surge occurs at the time of high tide…

 

N Entrance Padre Island Natl Seashore to Sargent…6 to 12 ft

Sargent to Jamaica Beach…5 to 8 ft

Port Mansfield to N Entrance Padre Island Natl Seashore…5 to 7 ft

Jamaica Beach to High Island…2 to 4 ft

Mouth of the Rio Grande to Port Mansfield…2 to 4 ft

High Island to Morgan City…1 to 3 ft

 

The deepest water will occur along the immediate coast near and to the northeast of the landfall location, where the surge will be accompanied by large and destructive waves.  Surge-related flooding depends on the relative timing of the surge and the tidal cycle, and can vary greatly over short distances.  For information specific to your area, please see products issued by your local National Weather Service forecast office.

Meanwhile, landfall is expected to occur sometime late tonight or early Saturday morning.

 

Rain accumulation is expected to reach up to 35 inches in certain areas with all of the Texas, Louisiana, Mississippi and Alabama shorelines impacted.

RAINFALL:  Harvey is expected to produce total rain accumulations of 15 to 25 inches and isolated maximum amounts of 35 inches over the middle and upper Texas coast through next Wednesday.  During the same time period Harvey is expected to produce total rain accumulations of 7 to 15 inches in far south Texas and the Texas Hill Country eastward through central and southwest Louisiana, with accumulations of up to 7 inches extending into other parts of Texas and the lower Mississippi Valley. Rainfall from Harvey will cause devastating and life-threatening flooding.

 

Forecasts are currently predicting sustained winds of up to 120mph when Harvey reaches the coastline later tonight.

WIND:  Hurricane conditions are likely within the hurricane warning area later today and tonight, with tropical storm conditions expected to first reach the coast in the hurricane warning area later this morning.  These conditions are likely to persist into Saturday in portions of the hurricane and tropical storm warning area.

 

Meanwhile, Texas Governor Greg Abbott has already requested the activation of 700 National Guard members and FEMA Director Brock Long is warning residents to evacuate ahead of what he describes as a “significant disaster.”

“Texas is about to have a very significant disaster,” Long, the FEMA chief, said, stressing that people need to heed evacuation warnings.

 

Those who stay should “elevate and get into a structure that can withstand potentially Category 3 winds from a hurricane,” he said.

 

“The bottom line message is, right now, if people have not heeded the warning, again, their window to do so is closing,” Long said. “If they refuse to heed the warning, that’s on them.”

 

Long said he is “very worried” about storm surge, or “wind-driven water,” slamming coastal areas, saying it has the “highest potential to kill the most amount of people and cause the most amount of damage.”

 

A “significant inland flood event over many counties” is expected, he warned.

 

“Over the next five days, we’re going to see copious amounts of rainfall, up to 25 inches, possibly, in some areas, with isolated higher amounts,” he said. “This is going to be a slow-developing major disaster event for the state of Texas.”

Spoke with Pres. Trump & heads of Homeland Security & FEMA. They’re helping Texas respond to .

 

Of course, Harvey poses a huge threat for oil/gas prices as the Gulf coast region of Louisiana, Mississippi, Alabama and Texas accounts for over 50% of the country’s refining capacity and federal waters in the Gulf of Mexico account for  about 18% of the oil and 5% of total natural gas production.

 going to be rising.  going to disrupt Gulf oil production, transport & refining. 

 

The outer bands of Harvey are just starting to reach Padre Island.

 

Meanwhile, for those who need a closer look from inside the storm, you can follow there pilots as they fly into the eye of Hurricane Harvey.

 

 

end

 

Significant inventory gains is over ruling the possible devastation of Hurricane Harvey

(courtesy zero hedge)

RBOB Prices Tumble, Erase Harvey-Induced Gains

Following WTI crude’s drop yesterday – apparently on reduced refinery demand due to Hurricane Harvey – RBOB gasoline is now tumbling, erasing yesterday’s Harvey-related gains, as traders realize the short-term supply disruptions are offset by significant inventories.

As Bloomberg’s Poonam Goyal noted previously, a spike in gasoline prices due to Hurricane Harvey, should be short-lived with well supported inventories across the petroleum value chain and the market past peak summer demand. Refiners plan seasonal maintenance in September and October with lower anticipated demand for crude oil and products. While severe facility damage would challenge winter blend prices, gasoline stockpiles in the Gulf Coast are at their highest August levels since 2007 and are almost 11% above the five-year norm.

 

Goldman also points out that the initial decline in demand will likely be greater than the decline in production. Beyond the declining share of US offshore production, there is little oil and gas output in the Western Gulf of Mexico. Further, the Eagle Ford shale play is further inland than the expected path.

The most significant impact is likely to be on refining, with 1.2 mb/d of US refinery capacity immediately threatened, representing 6.6 % of US available capacity. Should the hurricane turn East towards Houston after making landfall, threatened refining capacity would increase by another 2.5 mb/d.

Additionally, Goldman notes more broadly that beyond the initial hit, activity set to rebound to or above pre-disaster levels:

As our US economists have previously shown, natural disasters typically have two important—but generally offsetting—effects on economic activity: (1) sharp declines in demand and output in the short term followed by a rebound to the pre-disaster baseline or above, and (2) a boost to output from the rebuilding of damaged and lost property.

 

 

Specifically, the immediate impact on economic activity is negative but in the following months the impact is likely to be positive because workers make up for lost output, capital equipment is brought back online, consumers make purchases that did not take place during the disruptions, and the rebuilding of damaged property begins. The positive longer-term effects have typically been large enough to push the level of activity above the path that would have materialized without the disaster. Such an outcome would ultimately be supportive of US demand.

 

END

As promised, USA crude production still rises despite a drop in rig count

(courtesy zerohedge)

US Crude Production Hits 25-Month Highs Despite Stabilization In Rig Count

While the US oil rig count has gone nowhere for the last 9 weeks (down 4 to 759 this week and with last week’s drop the largest in 7 months), US crude production continues to rise, now at its highest since July 2015.

  • *U.S. OIL RIG COUNT DOWN 4 TO 759 , BAKER HUGHES SAYS :BHGE US

The US oil rig count continues to track the lagged WTI almost perfectly.This is the biggest 2-week rig count drop since May 2016.

 

Despite stabilization in rig counts, US crude production continues to trend higher, jumping to its highest since July 2015 last week…

 

 

Of course, price action has been dominated by Hurricane Harvey headlines…

 

 

8. EMERGING MARKET

VENEZUELA/USA

this should hasten the demise of Venezuela;  Trump just increased sanctions on Venezuela by banning anybody from buying or trading in Venezuelan debt including its state own petroleum company

(courtesy zero hedge)

US Sanctions Venezuela – Bans Dealing In Government, State-Owned Oil Company Debt & Equity

President Trump just signed an executive order deepening the sanctions on Venezuela, confirming the rumors of a ban on trading in Venezuelan debt that sent VENZ/PDVSA bonds tumbling.

As we noted previously, on Tuesday evening, the WSJ reported that the U.S. government is
considering “restricting trades in Venezuelan debt as it seeks to punish
President Nicolás Maduro for undermining the country’s democracy” and
that “the unprecedented move would temporarily ban
U.S.-regulated financial institutions from buying and selling
dollar-denominated bonds issued by the Republic of Venezuela and state
oil company Petróleos de Venezuela SA
, according to a person who was briefed on the proposal.”

One option being considered is banning the trading in just
some papers issued by the state oil company to limit its access to
external funds, said a third person.

 

The ban would be the first
step against the Venezuelan financial system since Mr. Trump promised
“swift economic action” against Mr. Maduro for installing a parallel
parliament staffed with loyalists earlier this month.

And now it is confirmed

  • *U.S. BANS DEALINGS IN NEW VENEZUELA GOVT-ISSUED DEBT AND EQUITY
  • *U.S. BANS DEALINGS IN NEW DEBT, EQUITY FROM STATE-RUN OIL CO.

Of course this will just add fuel to Maduro’s fire talk about America waging economic war against the Latin American nation (as opposed to the utter collapse of the country being due to decades of Bernie Sanders-style socialism).

end

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

Euro/USA   1.1817 UP .0020/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 GREEN

USA/JAPAN YEN 109.66 UP 0.146(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/   

GBP/USA 1.2834 UP .0035 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS

USA/CAN 1.2509 DOWN .0006 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS FRIDAY morning in Europe, the Euro ROSE by 20 basis points, trading now ABOVE the important 1.08 level  RISING to 1.1817; / Last night the Shanghai composite CLOSED  UP 60.00 POINTS OR 1.83%     / Hang Sang  CLOSED  UP 329.56 POINTS OR 1.20% /AUSTRALIA  CLOSED UP 0.03% / EUROPEAN BOURSES OPENED IN THE GREEN  

The NIKKEI: this FRIDAY morning CLOSED UP 98.84 POINTS OR 0.51%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 329.56 POINTS OR 1.20%  / SHANGHAI CLOSED UP 60.00 POINTS OR 1.83%   /Australia BOURSE CLOSED UP 0.03% /Nikkei (Japan)CLOSED UP 98.84  POINTS OR 0.51%   / INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: 1287.40

silver:$17.03

Early FRIDAY morning USA 10 year bond yield:  2.197% !!! UP 0   IN POINTS from THURSDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

The 30 yr bond yield  2.771, UP 0  IN BASIS POINTS  from THURSDAY night.

USA dollar index early FRIDAY morning: 93.16 DOWN 12  CENT(S) fromTHURSDAY’s close.

This ends early morning numbers  FRIDAY MORNING

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And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield: 2.8670% UP 1 in basis point(s) yield from THURSDAY 

JAPANESE BOND YIELD: +.019%  DOWN 1   in   basis point yield from THURSDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.609% UP 1   IN basis point yield from THURSDAY 

ITALIAN 10 YR BOND YIELD: 2.102 DOWN 1  POINTS  in basis point yield from THURSDAY 

the Italian 10 yr bond yield is trading 50 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.380% UP 2/5  IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR FRIDAY

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

Euro/USA 1.1882 UP .0084 (Euro UP 84 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 109.23 DOWN 0.281(Yen UP 28 basis points/ 

Great Britain/USA 1.2881 UP  0.0082( POUND UP 82 BASIS POINTS)

USA/Canada 1.2490 DOWN .0022 (Canadian dollar UP 22 basis points AS OIL ROSE TO $47.64

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This afternoon, the Euro was UP  by 84 basis points to trade at 1.1882

The Yen ROSE to 109.23 for a GAIN of 28  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 82  basis points, trading at 1.2881/ 

The Canadian dollar ROSE by 22 basis points to 1.2492,  WITH WTI OIL RISING TO :  $47.64

The USA/Yuan closed at 6.6470/
the 10 yr Japanese bond yield closed at +.019%  DOWN 1 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 2  IN basis points from THURSDAY at 2.169% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.7520 DOWN 1 in basis points on the day /

Your closing USA dollar index, 92.75  DOWN 52 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 FRIDAY: 1:00 PM EST

London:  CLOSED DOWN 5.60 POINTS OR 0.08%
German Dax :CLOSED DOWN 12.89 POINTS OR 0.11%
Paris Cac  CLOSED DOWN 8.80 POINTS OR 0.17% 
Spain IBEX CLOSED DOWN  12.10 POINTS OR 0.12%

Italian MIB: CLOSED UP 16.63 POINTS OR 0.08% 

The Dow closed UP 30.27 OR 0.14%

NASDAQ WAS closed DOWN 5.68  POINTS OR 0.09%  4.00 PM EST

WTI Oil price;  47.64 at 1:00 pm; 

Brent Oil: 52.16 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  58.63 DOWN 52/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 52 BASIS PTS)

TODAY THE GERMAN YIELD FALLS TO  +0.380%  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:$47.80

BRENT: $52.34

USA 10 YR BOND YIELD: 2.168%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.7477%

EURO/USA DOLLAR CROSS:  1.1923 UP .0126

USA/JAPANESE YEN:109.29  DOWN  0.221

USA DOLLAR INDEX: 92.56  DOWN 72  cent(s) ** BREAKS THROUGH RESISTANCE

The British pound at 5 pm: Great Britain Pound/USA: 1.2871 : UP 72 POINTS FROM LAST NIGHT  

Canadian dollar: 1.2479 UP 33 BASIS pts 

German 10 yr bond yield at 5 pm: +0.380%

END

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

TRADING IN GRAPH FORM FOR THE DAY

Jackson Hole’d – Dollar Dumps To 2-Year Lows After 2 Million Ounce Gold Flush

 

The dollar today…

 

Summarizing the week’s moves: Dollar dump sparks buying binge in bonds, bullion, and stocks (but sinks FANG Stocks)

Early gains – once again thanks to Gary Cohn confirming he is not resigning – topped out as Yellen’s speech was released. Once Europe closed, stocks went bid as usual, with some noise around Draghi’s speech, but the close was ugly…

Nasdaq ended red...

 

A big rip in Trannies sees all the major stock indices green on the week…

 

S&P 500 remains below its 50DMA…

 

NOTE that after Yellen and Draghi, stocks slid…

 

FANG Stocks fell on the week…(NOTE no afternoon bounce today)

 

Treasury yields tumbled after Yellen’s unhawkish speech, pushing all but 2Y lower on the week…

 

30Y Yield ended back near June 26 lows, dropping on Yellen’s speech (NOTE the pop and drop in yield as Draghi’s speech dropped)…

 

The Bill curve remains seriously inflected BUT the spread across the end of September did drop very modestly today...

 

The Dollar Index was the most obvious vehicle to react to J-Hole chatter today, tumbling to its lowest level since July 2015 after Yellen offered nothing ‘hawkish’…

 

Intraday, the moves are clear as Yellen and Draghi spoke…Biggest down day for the dollar since March 15 rate hike…

 

EUR was the week’s biggest gainer…

 

EURUSD spiking above 1.19 to the highest since Jan 2015…

 

Dollar’s drop helped support commmodities with copper outperforming, gold and silver both up (but crude down on Harvey hammering)…

 

Quite a volatile week in the energy patch with inventory data, production, and Hurrican Harvey confusing machines everywhere…

 

Gold traders were a little shocked at the farcical manpulation that happened in the minutes leading up to Yellen’s speech… In a span of just one minute, 21,256 gold future contracts, equal to more than 2 million ounces of the precious metal, were traded before her speech was released after gold futures tagged $1300 on Kaplan comments

 

Gold leads the way in 2017 – outperforming the S&P and bonds so far…

 

Finally, it was an ugly week for “hard data” economic surprises – which dropped back near their weakest since March 2015…

 END
Initial trading:
Gold initially spikes to 1291 as Kaplan states that a market correction will be healthy and then a raid is initiated
(courtesy zerohedge)

Gold Spikes After Fed’s Kaplan Says “Market Correction Could Be Healthy”

Gold is spiking, USDJPY dropping, and stocks leaking lower after Dallas Fed’s Kaplan dropped some serious tapebombs ahead of Yellen’s speech

Speakingon Bloomberg TV, Kaplan headlines wwre as follows…

  • FED’S KAPLAN: WE CLEARLY ARE ACCOMMODATIVE RIGHT NOW
  • KAPLAN: INVESTORS USED TO IDEA RATES WILL BE LOWER FOR LONGER
  • FED’S KAPLAN: MARKET OR REAL-ESTATE CORRECTION COULD BE HEALTHY
  • KAPLAN SAYS MARKET CORRECTION WOULDN’T NECESSARILY HURT THE ECONOMY, AND MAY HELP IT
  • KAPLAN: WE SHOULD BE MOVING ON B/SHEET AS SOON AS POSSIBLE
  • KAPLAN: FED CAN SHRINK B/SHEET WITH MINIMAL IMPACT ON MARKETS

And the reaction was swift…

Gold spiked and USDJPY tumbled…

 

Bonds were also bid… but stocks barely budged?

a dollar dump and gold reverses the raid attempt/gold reverses and rises to 1291

(courtesy zero hedge)

“Un-Hawkish” Yellen Sparks Dollar Dump To 2017 Lows; Stocks, Bonds, & Bullion Bounce

A lack of hawkishness was good enough for traders to pile into the dovish – sell dollars, buy everything else trade.

 

 

The Dollar Index plunged though to cycle lows, near May 2016 1150 lows…

 

As many predicted, Yellen’s speech – while containing some cautions – was a nothing burger.

end

 

In chronological order events this morning: ahead of Yellen’s Jackson Hole Speech

First:

 gold is whacked down to 1275 but recovers:

FX, Bonds, & Gold Chaotic Ahead Of Yellen Speech

While stocks are shrugging off any and everything, FX, bonds, and gold markets are swinging around wildly ahead of Yellen’s speech at 10ET.

The initial move appears driven by Fed’s Kaplan’s comments on “correction in stocks may be healthy.”

The reversal is being attributed to a note from Citi suggesting “No US Default Or Shutdown Coming, Congress Wants A Quiet Life.”

We suspect thin liquidity is not helping…

end
Prior to her speech:
true to form, as gold is whacked again as the Fed Chairman is about to speak. The dollar is beginning to lose its love affair with the globe
(courtesy zero hedge)

Will Trump’s Debt Dance Cap Jackson Hole’s Dollar Love

With Janet Yellen due to speak in under 3 hours, here are some observations from how the day may proceed courtesy of David Finnerty, an FX strategist who writes for Bloomberg.

* * *

Macro View: Trump Debt Dance to Cap Dollar Love at Jackson Hole

 

The dollar needs some love, but politics are going to keep it starved of affection, even as Federal Reserve Chair Janet Yellen’s appearance Friday at Jackson Hole and the looming September Fed meeting have made some of my colleagues anticipate that central banks will reassert their preeminence.

 

All investor eyes will initially be on Yellen’s speech for clues on monetary policy normalization, a key question for policy hawks and dollar bulls. However, the topic of her speech is financial stability, so there’s a good chance market participants will be disappointed, leaving the dollar to languish at present levels.

 

Even if she continues to signal another rate hike this year, investors know that will be data dependent: inflation and wages need to rise before investors attach much credibility to talk of another rate increase.

 

With September around the corner, attention will quickly shift to the U.S. debt ceiling and though some investors may argue this is a non-event as the ceiling always seems to get raised eventually, President Trump’s comments this week on the matter indicate negotiations may be contentious.

 

Uncertainty is the last thing the dollar needs right now if it’s to stage a comeback.

 

USD/JPY dropped Tuesday as Trump threatened to bring the government to the brink of a shutdown as a way of pressuring Congress into funding the border wall; that, and the jump in T-bill rates show how nervous markets are.

 

And it’s not all about Trump, Democrats are unlikely to just roll over and sign a new ceiling bill without some concessions — and what they will demand is as yet unknown.

 

Given Republican infighting this year over replacing Obamacare, who knows what other agendas may surface to derail discussions, and then there’s the question of the impact the wrangling may have on tax reform plans.

 

And let’s not forget the ongoing Mueller investigation, which could resurface at any time to add to the turmoil in Washington and the greenback bear case.

 

Given this year’s political failures on Obamacare you can’t blame investors if they are in no hurry to embrace the dollar until the debt ceiling is actually raised: Seeing is believing after all .

 

 

end

 

And now the speech:  it certainly highlights risks to the system. Remember she thought that it our lifetime we will not see any risks to markets..guess again/ Basically a nothing burger and gold returns to its previous 1291 height.

(courtesy zerohedge)

 

Yellen Warns Of “Algo Presence” In Markets, Fears “Risks Of Excessive Optimism”

While we will not see her speech or Q&A, the much anticipated speech on financial stability from Janet Yellen has just dropped. While expectations were for a ‘snoozefest’ speech, market volatility heading in suggested more than a little anxiety. While the core of her speech pushed back against easing financial reforms, she fears “risks of excessive optimism returning sooner or later” in financial markets and warns of the “larger presence of algorithmic traders in markets.”

Headlines include:

  • *YELLEN: ALGORITHMIC TRADERS A LARGER PRESENCE IN MARKETS
  • *YELLEN: ANY CHANGES TO FINANCIAL REGULATIONS SHOULD BE `MODEST’
  • *YELLEN: RISKS OF EXCESSIVE OPTIMISM TO RETURN ‘SOONER OR LATER’
  • *YELLEN: CORE REFORMS BOOSTED FINANCIAL SYSTEM’S RESILIENCE

Here are key highlights from Yellen’s prepared remarks, via Bloomberg:

  • Fed’s Janet Yellen said more resilient, post-crisis U.S. financial system “is better prepared to absorb, rather than amplify, adverse shocks,” yet “there is more work to do” and “we can never be sure that new crises will not occur.”
  • Policy makers, investors should continue to monitor indicators of financial-system resilience, Yellen said Friday in text of speech at Kansas City Fed’s annual symposium in Jackson Hole, Wyoming.
    • “All-too-familiar risks of excessive optimism, leverage, and maturity transformation” will re-emerge “sooner or later” in new ways that require policy responses, given technology, regulation and evolution of financial system
    • Market-based measures may not reflect true risks; supervisory metrics “are not perfect, either”
  • Evidence shows that post-crisis reforms have made the financial system “substantially safer”
    • Credit default swaps for large banks suggest market participants are assigning low odds to distress of a large U.S. bank
    • Market-based assessments of the loss-absorbing capacity of big U.S. banks have moved up, and measures of equity now in range of book estimates
  • Market liquidity for corporate bonds remains “robust overall”
    • Healthy condition of the market is apparent in low bid-ask spreads, large volume of corporate-bond issuance
    • Even so, “liquidity conditions are clearly evolving”; some regulations “may be affecting market liquidity somewhat”; may be benefits to simplifying parts of Volcker rule
  • New regulatory framework has made dealers more resilient to shocks; any adjustments to framework should be “modest”
  • Broader set of changes may deserve consideration, such as simplifying regulatory changes for small/medium-sized banks
  • “Not altogether surprising” to see conflicting research results on effects of capital regulation on credit availability
    • Credit may be less available to some borrowers, even if it’s “not readily apparent” that there are material adverse effects of regulation on broad lending measures
    • Credit appears broadly available to small businesses with solid histories

Which is odd as she said there would be no more financial crises in her lifetime? Below are some of her most interesting comments, verbatim:

“I expect that the evolution of the financial system in response to global economic forces, technology, and, yes, regulation will result sooner or later in the all-too-familiar risks of excessive optimism, leverage, and maturity transformation reemerging in new ways that require policy responses.”

 

“We relearned this lesson through the pain inflicted by the crisis.”

 

“We can never be sure that new crises will not occur, but if we keep this lesson fresh in our memories–along with the painful cost that was exacted by the recent crisis–and act accordingly, we have reason to hope that the financial system and economy will experience fewer crises and recover from any future crisis more quickly, sparing households and businesses some of the pain they endured during the crisis that struck a decade ago.”

 

“…algorithmic traders and institutional investors are a larger presence in various markets than previously, and the willingness of these institutions to support liquidity in stressful conditions is uncertain.”

 

“There may be benefits to simplifying aspects of the Volcker rule, which limits proprietary trading by banking firms, and to reviewing the interaction of the enhanced supplementary leverage ratio with risk-based capital requirements.”

Additionally, as The FT notes, the regulatory reforms pushed through after the great financial crisis have made the system “substantially safer” and are not weighing on growth or lending, Janet Yellen said as she warned against forgetting the devastation wrought by the meltdown of 2007-09. The Federal Reserve chair said in a speech at Jackson Hole, Wyoming, that there were ways of adjusting regulations to ensure they did not overburden institutions such as smaller banks, but she warned that memories of the last crisis “may be fading” and did not call for radical changes. Her remarks come in the face of mounting calls for a loosening of financial regulation from Republicans concerned that the regime is stifling growth.

Full speech below… see zerohedge for speech.

end

Let us see how this will play out:  Gary Cohn promises tax reform by year end. In earlier commentaries tax reform was going to centre around the removal of interest payments on mortgages like in Canada.  That has been ruled out. I personally cannot see how they can cut taxes dramatically and raise enough money to run the country without eliminating the mortgage deductibility:
(courtesy zero hedge)

US Futures Spike After Gary Cohn Promises Tax Reform By Year End

Having hugged the flatline for much of the overnight session, S&P futures have spiked after the FT released an exclusive interview with Gary Cohn shortly after 5am ET this morning, in which Trump’s chief economic advisor (and most likely future Fed chair) said that Trump’s agenda and calendar “is going to revolve around tax reform” starting next week, assuring passage by year’s end. Cohn explained that in the next three or four weeks, the tax bill will be written in the ways and means committee and Congress is “going to own” the writing of legislation. As a result, reform “can pass both of the tax committees and both chambers in 2017.”

“Starting next week, the president’s agenda and calendar is going to revolve around tax reform,” Cohn said “He will start being on the road making major addresses justifying the reasoning for tax reform and why we need it in the US.”

Cohn also laid out the coming calendar, with kick-off set for next Wednesday, August 30, in Missouri when Trump will deliver a speech which will be “the first in a series of addresses designed to convince the US public about the need to revamp a tax system that has remained largely unchanged for three decades.” Confirming the recent Axios report which sent stocks surging earlier this week, Cohn said that the tentative framework has been already agreed upon with  “key Republicans on Capitol Hill — House Speaker Paul Ryan, Senate majority leader Mitch McConnell, and Kevin Brady and Orrin Hatch, the heads of the congressional tax-writing committees — had agreed a framework that would serve as the basis for a bill that will be hammered out over coming weeks.

More importantly, Cohn once again reset timing expectations, and said “he hoped that the ways and means committee, the House panel that initiates tax legislation, would draft a bill over the next three to four weeks, and that he believed Congress would pass legislation this year.

Cohn also provided some further details on what Trump’s tax plan would entail: “the plan would preserve three of the biggest deductions for individuals: on charitable donations, mortgage interest payments and retirement savings. It would raise the standard deduction cap that applies to most tax filers, but would eradicate many other personal deductions, he said, adding that the White House also wanted to get rid of “death taxes”, Republican terminology for estate taxes, which will face resistance from Democrats”.

Cohn also said the White House would be “excited” if “Democrats worked with Republicans on a bipartisan bill. But he said the administration would use a process called reconciliation — which prevents a filibuster in the Senate where the Republicans have a thin 52-48 majority — that would allow tax reform to pass with a simple majority, but only if the legislation is revenue-neutral within 10 years.”

In a separate discussion on the latest social events that clouded the Trump administration, Cohn said Says Trump administration “must do better” in “consistently and unequivocally condemning” neo-Nazis and white supremacists following the violent protests in Charlottesville this month.

Cohn said he faced “enormous pressure” both to resign and to remain after Trump’s reaction to clashes, and said he feels “compelled to voice my distress over the events of the last two weeks.” Cohn also said that “citizens standing up for equality and freedom can never be equated with white supremacists, neo-Nazis, and the KKK.”

“As a Jewish American, I will not allow neo-Nazis ranting ‘Jews will not replace us’ to cause this Jew to leave his job. I feel deep empathy for all who have been targeted by these hate groups. We must all unite together against them.

END
According to sources, Cohn has drafted his resignation letter when he met Trump last week
(courtesy zerohedge)

Cohn Had Drafted His Resignation Letter When He Met Trump Last Week: NYT

As discussed earlier, in an unexpectedly harsh response to Trump’s Charlottesville comments, Trump’s top economic adviser Gary Cohn said in an FT interview published this morning that the administration needs to be more unequivocal in condemning hate groups, but added he was “reluctant” to quit over its response to a recent protest. ‘

“I believe this administration can and must do better in consistently and unequivocally condemning these groups and do everything we can to heal the deep divisions that exist in our communities,” Cohn told the FT in his first public comments since the controversy.

Cohn said that as a “patriotic American” he did not want to leave his job as the director of the national economic council. “But I also feel compelled to voice my distress over the events of the last two weeks.” He added that “Citizens standing up for equality and freedom can never be equated with white supremacists, neo-Nazis, and the K.K.K.,” Mr. Cohn said. “I believe this administration can and must do better in consistently and unequivocally condemning these groups and do everything we can to heal the deep divisions that exist in our communities.”

Cohn added, “As a Jewish American, I will not allow neo-Nazis ranting ‘Jews will not replace us’ to cause this Jew to leave his job” and said that Trump’s administration said that the White House “can and must do better” in consistently condemning hate groups. Cohn’s remarks were in stark contrast to a statement from the Treasury secretary, Steven Mnuchin, who defended the president. Mnuchin is also Jewish, and is also a former Goldman employee.

The interview followed press reports that Cohn was on the verge of resigning, although as eventually turned out it wasn’t Cohn but rather Steve Bannon who would be pushed out of the White House in a surprise announcement one week ago.

Now, the NYT provides some additional information, reporting that “the sharp critique from Mr. Trump’s top economic adviser, Gary D. Cohn, came nearly two weeks after deadly violence in Charlottesville, Va., in response to a rally led by white nationalist groups. Mr. Cohn, who is Jewish, seriously considered resigning and even drafted a letter of resignation, according to two people familiar with the draft.”

As for the the punchline: “Cohn is known to be interested in becoming chairman of the Federal Reserve, and still sees that as a possibility. ”

Ultimately Cohn decided against quitting for one simple reason: he knows that come next January, he will replace Yellen as the next Fed chair, handing control over the world’s three most important central banks, the Fed, the ECB and the BOE, to Goldman alumni.

end

 

Durable good order plunge. and the weakest recording in almost a year

(courtesy zerohedge)

 end
The death spiral on Sear intensifies as vendors halt shipments as they cannot get default insurance on goods shipped.  The cost is just too prohibitive
(courtesy zero hedge)

Sears Death Spiral Accelerates: Vendors Halt Shipments As Cost Of Default Insurance Soars

When we commented back in March on the unexpected “going concern” notice in Sears’ 10-K which sent the stock crashing, we pointed out the immediate spin provided by Eddie Lampert’s distressed retailer which promised that its comeback plan may help alleviate the concerns, “satisfying our estimated liquidity needs 12 months from the issuance of the financial statements”, to which however we added the footnote that “the question is what happens when vendors start demanding cash on delivery as concerns about SHLD.’s liquidity concerns continue to grow.”

Shortly after, we wrote “Sears Enters Death Spiral: Vendors Halt Shipments, Insurers Bail” in which we described that as Sears financial condition deteriorated, vendors were boosting their “defensive measures”, such as reducing shipments and asking for better payment terms, to protect against the risk of nonpayment as the company warned about its finances.

The managing director of a Bangladesh-based textile firm said his company is using only a handful of its production lines to manufacture products for Sears’ 2017 holiday sales. Last year, nearly half of the company’s lines in its four factories were producing for Sears. “We have to protect ourselves from the risk of nonpayment,” said the managing director, who declined to be identified for fear of disrupting his company’s relationship with Sears.

 

Furthermore, precisely as we predicted, Mark Cohen, the former CEO of Sears Canada and director of retail studies at Columbia Business School said vendors will keep a close eye on Sears’ finances. “Whatever vendors continue to support them are now going to put them on even more of a short string. That means they’ll ship them smaller quantities and demand payment either in advance or immediately upon delivery.”

 

He added: “Sears stores are pathetically badly inventoried today and they will become worse.”

Fast forward five month when just after Sears reported another quarter of painfully bad results including an unexpected double-digit drop in same store sales, Reuters writes that the “worst case” scenario we envisioned for Sears is now accelerating, and that Sears is having trouble stocking shelves, “as some vendors have fled while others are demanding stricter payment terms because of difficulties hedging against default risk.

One reason why Sears’ supply chain is in greater turmoil than ever – in addition to Sears’ woeful financials of course – is due to the scarcity and high cost of a type of vendor insurance known as accounts receivable puts, which ensure a supplier will be paid even if the retailer files for bankruptcy. Think of them as CDS contracts vendors can buy on a counterparty, in this case their (increasingly insolvent) client, and just like CDS, the puts become prohibitively expensive the closer the underlying entity is to bankruptcy.

“It’s too expensive,” Michael Fellner, owner of Montreal-based women’s wear company Lori Michaels Apparel & Manufacturing Inc, told Reuters about the specialized vendor insurance. He also said he stopped shipping to Sears in March, when his insurer stopped providing coverage.

Two other small vendors told Reuters they stopped supplying Sears this year because they could not afford the insurance, whose cost spiked after Sears warned in March of “substantial doubt” over its ability to continue as a going concern. They asked not to be identified discussing confidential commercial arrangements.

Most concerning, however, is the discovery that Eddie Lampert himself appears to be throwing in the towel on the supply chain: as Reuters explains, Sears’ vendors had previously benefited from support from Sears CEO, billionaire Eddie Lampert, who owns almost half of the company’s shares and is also its largest lender.

Through his hedge fund, ESL InvestmentsLampert invested in vendor insurance contracts worth $93.3 million in 2012, $234 million in 2013 and $80 million in 2014, according to SEC filings. Lampert’s implicit support of vendors however ended one year ago: filings show no investment by Lampert in vendor insurance contracts since 2015.

A Sears spokesman said the 55-year-old billionaire is not currently investing in these contracts and declined to say why.

In addition to Sears’ top stakeholder dropping support, for whatever reason, other hedge funds such as Avenue Capital Group, and traditional credit insurance firms such as Euler Hermes Group, have also exited the insurance market, brokers and investors said. They did not specify the timing of their withdrawal.

Predictably, as the number of market participants in the receivables puts market collapse, the cost of insurance contracts surged as they became harder to come by, putting pressure on Sears’ ability to maintain a robust inventory of goods. As a result, merchandise inventory at Sears fell to $3.4 billion as of July 29 from $4.7 billion a year ago, the company disclosed on Thursday. Sears has attributed the inventory decline to its transformation to an online-oriented business from bricks-and-mortar stores.

“We continue to work to manage our vendor relationships in a constructive manner… we will continue to ensure that our vendors deliver on their obligations to Sears,” Sears said in its second-quarter earnings statement on Thursday. The reality is that it simply does not have as many suppliers as it once did.

Meanwhile, those who can find puts to buy are simply unable to afford them: brokers and investors said that Sears insurance contracts for vendors are currently quoted at more than 4 percent of the value of the vendor’s shipment per month, making them uneconomical for many suppliers whose profit margins are in the single digits. Three years ago, the contracts were being quoted at about 3 percent per month.

LG Electronics Inc, which makes Kenmore-branded washing machines and refrigerators as well as LG-branded appliances, told Reuters it has not bought vendor insurance in the past year because of the cost.

 

Instead, LG said it negotiated shorter payment schedules to minimize the risk of not being paid by Sears. It declined to say how short the payment period was. The typical payment schedule in the industry is close to 90 days, though it can vary by item.

Of course, the shorter the payment terms, the bigger the hit to Sears’ working capital and, thus, liquidity, with the most dire option being cash on delivery in which vendors simply will not provide the much needed inventory unless they are paid on the spot. Here’s Reuters:

Sears has promised to pay some suppliers within 15 days, according to a source familiar with the matter who requested anonymity to discuss confidential commercial arrangements. Sears declined to comment.

 

A 15-day payment schedule gives a vendor priority for repayment in the event of a bankruptcy. This is because claims received within 20 days of a bankruptcy filing are typically repaid in full.

 

Some vendors are so keen for this protection, that they have offered Sears a small discount of around 5 percent on their merchandise, the source said.

As noted above, the increasingly shorter terms means a sharp erosion in working capital: William Danner, president of CreditRiskMonitor.com told Reuters that at the end of the second quarter, Sears would likely have used $587 million to boost working capital – mostly from asset sales – due to the decision by some vendors to not extend as much credit. Sears’ available liquidity at the end of July was $810 million.

“Even for a huge company like Sears, finding this much more capital is a burden. This apparent loss of confidence in Sears by its vendors is greater now than it was at the end of 2016,” he said. Should more vendors demand the same payment terms, there is a risk that Sears entire liquidity cushion could disappear.

Eddie Lampert, who has valiantly fought for years to delay Sears’ inevitable bankruptcy, has complained on several occasions that vendors are trying to exploit Sears’ woes to negotiate better terms. He said last month that some of its vendors reduced their support, “thereby placing additional pressure” on Sears.

Sears took the issue to court in June, when it sued Ideal Industries Inc after the maker of Craftsman-branded tools declined to fulfill purchase orders because of Sears’ “known fragile financial condition,” according to court documents. Ideal Industries declined to comment.

And while Lampert may no longer be funding vendor insurance, he is still supporting Sears in more “brute force.” He held about $1.7 billion in debt mainly backed by the company’s real estate and inventory as of April 29, according to regulatory filings.  The reason for this shift is that unlike secured debt, vendor insurance contracts are not backed by any collateral. Underscoring his “support”, last month, Lampert extended a $200 million 151-day credit line to Sears at an annual interest rate of 9.75 percent.

To be sure, not everyone has thrown in the towel on Sears: at least one investment firm, Blackstone Group LP’s distressed credit arm GSO Capital Partners is backing Sears contracts through December although they did not disclose their value to Reuters.

However, it’s only a matter of time – in this case a few more quarters of declining same store sales – before virtually everyone gives up on Sears, forcing Lampert to decide between directly funding the company’s inventory or finally admitting defeat to the Jeff Bezos juggernaut, and pulling the plug.

end
We highlighted this devastating story to you a few weeks ago: a sonar attack on diplomats inside Cuba.  As it turns out, one Canadian and 16 American have been hit resulting in traumatic brain injuries.  He wondered why the media refused to pick up this story.
we now wonder what Trump will do to counter these deadly attacks
(courtesy zero hedge)

Mystery Deepens After US Confirms 16 Diplomats Suffered “Traumatic Brain Injury” In Cuban ‘Sonic Attack’

One of the most bizarre stories this week took a more sinister turn yesterday as the US State Department officially confirmed 16 US Government employees were affected by health attacks in Cuba.

State Department spokesperson Heather Nuarte calmly explained the details, which are quite frankly stunning…

And yet most of the mainstream media seems loathed to cover this!? Happy to focus on nazis?

CBS News, however, did some digging, discovering from a review of medical records that the American and Canadian diplomats in Cuba have been diagnosed with mild traumatic brain injury – and central nervous damage – after an apparent attack with a sonic weapon targeted their homes.

The diplomats complained about symptoms ranging from hearing loss and nausea to headaches and balance disorders after the State Department said “incidents” began affecting them beginning in late 2016.

 

A number of diplomats have cut short their assignments in Cuba because of the attacks.

 

The source says American diplomats have also been subjected other types of harassment including vehicle vandalization, constant surveillance, and home break-ins.

As Axios reports, The State Department hasn’t explicitly identified the source of the attack or what person or entity might have carried it out.

We hold the Cuban authorities responsible for finding out who is carrying out these health attacks on not just our diplomats but, as you’ve seen now, there are other cases with other diplomats involved,” Secretary of State Rex Tillerson told reporters earlier this month.

The Cuban government has denied any involvement with the incident.

Of course, while we wish these diplomats well (if recovery is possible), the big question is – what will the repurcussions be for US-Cuba relations and what response will the Trump administration unleash?As Axios notesthe severity of the apparent injuries goes far beyond what was originally reported, so it stands to reason that President Trump’s administration might choose to respond strongly given his prior rhetoric on Cuba, especially given that the report notes that the attacks on Americans are continuing.

This could be far reaching:  Google is set to refund Proctor and Gamble and other advertisers for  fake traffic
(courtesy zerohedge)

Google To Refund “Fake Traffic” Advertising Revenue

One month ago, consumer products giant Procter & Gamble – one of the largest and most sophisticated advertisers in the world – launched a mini crisis in the online advertising space, when the company announced that it was scaling back its online advertising spend, stating that “digital ad spending was lower versus a high base period and due to current period choices to temporarily restrict spending in digital forums where our ads were not being placed according to our standards and specifications.” The implications to this admission that online advertising was either being gamed by bots, or generally underperforming were significant, as it jeopardized the future revenue streams of two of the biggest companies in the world, Alphabet (aka Google) and Facebook, both almost entirely reliant on online advertising. How long before other anchor names decided to similarly cut back on their online ad spending?

So, one month later, in its first tacit admission that its ad network has few protections against “fake traffic” such as ever more sophisticated ad bots – and that P&G’s criticism was spot on – the WSJ reports that Google will issue refunds to advertisers for ads bought through its platform that ran on sites with fake traffic “as the company develops a tool to give buyers more transparency about their purchases.”

Hoping to avoid further spending cuts and outright contract losses – especially to arch rival Facebook, which has similarly admitted to having ad exposure problems on numerous occasions – in the past few weeks Google has informed hundreds of marketers and ad agency partners about the issue with invalid traffic, also known “ad fraud.” According to the WSJ, the ads were bought using the company’s DoubleClick Bid Manager.

Typically, advertisers use DoubleClick Bid Manager to target audiences across vast numbers of websites in seconds by connecting to dozens of online ad exchanges, marketplaces that connect buyers and publishers through real-time auctions.

 

The ad spending flows through to the exchanges. The problems arise when ads run on publisher sites with fraudulent traffic, such as those where clicks are generated by software programs known as “bots” instead of humans. This is an issue of growing to concern to marketers. It is difficult to recoup the money paid to those sites when the issue is discovered too late.

While in the past advertisers have received small credits from Google when they detect discrepancies, in this case, for some buyers, the fraud was larger than usual. However, since Google’s “increased” refund still amounts to only a small fraction of the total ad spending served to invalid traffic, some advertisers remain unsatisfied: “Google has offered to repay its “platform fee,” which ad buyers said typically ranges from about 7% to 10% of the total ad buy.”

Scott Spencer, director of product management for Google, acknowledged that refunds have been paid, but he declined to provide a dollar figure for the amount being returned. Some ad buyers said the refund amounts range from “less money than you would spend on a sandwich” to hundreds of thousands of dollars.

 

“Today, we can’t disclose the information about third parties,” Mr. Spencer said. “So when we aren’t able to catch invalid traffic before it impacts our advertisers and we’re unable to refund their media spend, it hurts us, even if we’re not responsible.”

Google added the affected ad buyers in this instance were impacted by invalid traffic over the course of a few months this year, primarily in the second quarter. Part of that traffic affected video ads, which carry higher ad rates than typical display ads and are therefore an attractive target for fraudsters.

Of the billions of dollars flowing into online advertising each year, a percentage is inadvertently shown to sites with fake traffic, with fraudsters siphoning off advertisers’ money for themselves. And while the individual instances of ad fraud tend to be modest in amount, combined they add up quickly: some $6.5 billion in ad spending will be wasted this year to fraud, according to a report released in May by the Association of National Advertisers.

Unlike infamous clickfarms, typically found in some shady warehouse in India or Bangladesh, the methods used by fraudsters are highly sophisticated. Some infect unsuspecting consumers’ computers with malware to form a “botnet” that clicks on ads in the background.

And while ad fraud has long been a well-known, if unresolved, problem associated with online advertising, what makes Google’s admission unique is that for years the company had claimed to have it largely under control.

The search giant has had teams dedicated to filtering out fraud before an advertiser makes a bid on an ad. Those teams can also prevent exchanges from being paid if an ad has already been bid on, but invalid traffic is quickly detected. The teams also work to discover historical instances of fraud, which is what happened in this particular case.

In other words, Google confirms that a substantial chunk of revenue that it, and others like it, pocketed over the years was never actually earned. It also may explain the recent shift in the mood of online advertisers, such as P&G, which failing to generate the desired IRR, decided to cut back on advertising altogether.

Needless to say, any blowback against online advertising which is rapidly eclipsing conventional advertising media such as print and TV, would have a staggering impact on the valuations and stock prices of some of the most valuable companies in the world, among which Google and Facebook to name a few. As such while Google’s admission is commendable, the question is not just how endemic “ad fraud” has become but also how credible any new anti-bot initiatives could be. If, as Google admits, as much as 10% of recurring revenue is “fake”, if only applies a generous forward multiple to this, the impact to shareholders would be dramatic. Of course, if the real “ad fraud” number is notably higher, then it could eventually lead to a crash among the ad-driven tech giant space, which as disclosed in the latest 13F reporting period, is where the bulk of the hedge fund money is invested. Which is also why preserving credibility is suddenly so critical to the like of Google, because if and when doubts emerge among investors about the company’s otherwise opaque revenue practice, then what until recently has been Wall Street’s darling sector will be abandoned in a hurry.

For more on this topic, please read: “It’s the Biggest Scandal in Tech (and no one’s talking about it)”

 end
Let us wrap up the week with Greg Hunter’s commentary
(courtesy Greg hunter/USAWatchdog)

Crazy MSM Calls Trump Crazy, Antifa Repugnant Like KKK, Economic UpdateBy Greg Hunter On August 25, 2017 In Weekly News Wrap-Ups

USA Today publishes this headline that reads “Talk of Trump’s Mental Health Spreads.” The reason why it is “spreading” is the fake news of the propaganda media is trying to destroy Trump by fabricating a completely false narrative of Trump’s mental health. Any medical doctor practicing psychiatry that can make a diagnosis by watching someone on TV is either a quack, a total partisan tool of the left or both. It’s more fake news and false narrative from an increasingly desperate left and Deep State. They know nothing is working to remove a duly elected Donald Trump from office. They are desperate to find some scandal to take him out before he destroys them and their evil plans for America. Don’t believe the hype and BS by the lying MSM.

The propaganda media refuses to dwell on the radical left wing paid protesters of Antifa. They are the so-called Anti- Fascists, but they are also steeped in communism. This movement is nothing new and started in Germany by communist Russia. The Communists are equally evil to the Nazis and KKK. Communist Joseph Stalin of Russia is estimated to have killed nearly 50 million under his reign of terror in the old U.S.S.R. Chairman Mao Tse-tung, Father of the Chinese Revolution, murdered 20 million of his fellow citizens in one year. Yes, the Nazis are evil murderers, but so are the communists, and that is what is trying to overthrow the government of the United States. People like George Soros are paying for the chaos.

According to new figures, nearly 78% of all Americans live paycheck to paycheck. That means, when the economy turns down again, many will be in danger in a very short amount of time. Now, the Commerce Department is signaling a new downturn may not be far away. New home sales just plunged by a whopping 9.4% in July. That is a 7 month low.

Join Greg Hunter as he talks about these stories and more in the Weekly News Wrap-Up.

Video Link

https://usawatchdog.com/crazy-msm-calls-trump-crazy- antifa-repugnant-like-kkk-economic-update/

(To Donate to USAWatchdog.com Click Here)

end

I will see you Monday  night

Harvey.

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2 comments

  1. You’ve done an outstanding reporting job for almost 2 decades. It’s a shame you’ll never be able to visit Texas!

    Liked by 1 person

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