Jan 11/GOLD UP $4.15 TO $1322.80 BUT SILVER FALTERS: DOWN 6 CENTS TO $16.95/GOLD EFP’S ISSUANCE: 7571 CONTRACTS/SILVER EFP ISSUANCE: A HUGE 2020 CONTACTS/

 

 

GOLD: $1322.80 UP $4.15

Silver: $16.95 DOWN 6 cents

Closing access prices:

Gold $1323.00

silver: $16.99

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: $1321.74 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME: $1320.20

PREMIUM FIRST FIX: $1.54

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SECOND SHANGHAI GOLD FIX: $1327.77

NY GOLD PRICE AT THE EXACT SAME TIME: $1318.00

Premium of Shanghai 2nd fix/NY:$9.77

SHANGHAI REJECTS NY /LONDON PRICING OF GOLD

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LONDON FIRST GOLD FIX: 5:30 am est $1319.85

NY PRICING AT THE EXACT SAME TIME: $1319.20

LONDON SECOND GOLD FIX 10 AM: $1323.25

NY PRICING AT THE EXACT SAME TIME. $1322.80

For comex gold:

JANUARY/

NUMBER OF NOTICES FILED TODAY FOR JANUARY CONTRACT: 0 NOTICE(S) FOR nil OZ.

TOTAL NOTICES SO FAR: 256 FOR 25600 OZ (0.7962 TONNES),

For silver:

jANUARY

0 NOTICE(S) FILED TODAY FOR

nil OZ/

Total number of notices filed so far this month: 537 for 2,685,000 oz

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Bitcoin: BID $13,444/OFFER $13,545 DOWN $1408 (morning)

 Bitcoin: BID   13,248/OFFER  $13,365 DOWN  $1590(CLOSING)

end

Let us have a look at the data for today

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In silver, the total open interest ROSE BY A CONSIDERABLE 1651 contracts from 195,009 RISING TO 196,660 DESPITE YESTERDAY’S TINY 3 CENT RISE IN SILVER PRICING.  WE HAD NO COMEX LIQUIDATION BUT WITHOUT A DOUBT WE WITNESSED ANOTHER FAILED MAJOR BANK SHORT- COVERING OPERATION. NOT ONLY THAT , WE WERE AGAIN NOTIFIED THAT WE HAD ANOTHER GOOD SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP ROUTE: A HUGE 2020 EFP’S FOR MARCH (AND ZERO FOR OTHER MONTHS) AND THUS TOTAL ISSUANCE OF 2020 CONTRACTS. HOWEVER THE MOVEMENT ACROSS TO LONDON IS NOT AS SEVERE AS IN GOLD AS THERE SEEMS TO BE A MAJOR PLAYER TAKING ON THE BANKS AT THE COMEX. STILL, WITH THE TRANSFER OF 2020 CONTRACTS, WHAT THE CME IS STATING IS THAT THERE IS NO SILVER (OR GOLD) TO BE DELIVERED UPON AT THE COMEX AS THEY MUST EXPORT THEIR OBLIGATION TO LONDON. YESTERDAY WITNESSED  EFP’S FOR SILVER ISSUED. ALSO KEEP IN MIND THAT THERE CAN BE A DELAY OF 24 HRS IN THE ISSUING OF EFP’S. I BELIEVE THAT WE MUST HAVE HAD SOME MAJOR BANKER SHORT COVERING AGAIN TODAY.

ACCUMULATION FOR EFP’S/SILVER/ STARTING FROM FIRST DAY NOTICE/FOR MONTH OF JANUARY:

22,727 CONTRACTS (FOR 9 TRADING DAYS TOTAL 22,727 CONTRACTS OR 113.630 MILLION OZ: AVERAGE PER DAY: 2525 CONTRACTS OR 12.625 MILLION OZ/DAY)

RESULT: A HUGE SIZED GAIN IN OI COMEX DESPITE THE TINY 3 CENT RISE IN SILVER PRICE WHICH USUALLY INDICATES ANOTHER FAILED BANKER SHORT-COVERING. WE ALSO HAD A FAIR SIZED  EFP ISSUANCE OF 2020 CONTRACTS WHICH EXITED OUT OF THE SILVER COMEX AND TRANSFERRED THEIR OI TO LONDON AS FORWARDS.  FROM THE CME DATA 2020 EFP’S WERE ISSUED FOR TODAY (FOR MARCH EFP’S AND NONE FOR ALL OTHER MONTHS) FOR A DELIVERABLE FORWARD CONTRACT OVER IN LONDON WITH A FIAT BONUS. WE REALLY GAINED 3,671 OI CONTRACTS i.e. 2020 open interest contracts headed for London (EFP’s) TOGETHER WITH A INCREASE OF 1651  OI COMEX CONTRACTS. AND ALL OF THIS HAPPENED WITH THE TINY RISE IN PRICE OF SILVER OF 3 CENTS AND A CLOSING PRICE OF $17.01 WITH RESPECT TO YESTERDAY’S TRADING. YET WE STILL HAVE A GOOD AMOUNT OF SILVER STANDING AT THE COMEX.

In ounces AT THE COMEX, the OI is still represented by just UNDER 1 BILLION oz i.e. 0.9830 BILLION TO BE EXACT or 140% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT JANUARY MONTH/ THEY FILED: 0 NOTICE(S) FOR NIL OZ OF SILVER

In gold, the open interest ROSE BY A HUMONGOUS SIZED 11,980 CONTRACTS UP TO 567,435 WITH THE  RISE IN PRICE OF GOLD WITH YESTERDAY’S TRADING ($6.05). IN ANOTHER HUGE DEVELOPMENT, WE RECEIVED THE TOTAL NUMBER OF GOLD EFP’S ISSUED YESTERDAY FOR TODAY AND IT TOTALED A GOOD SIZED  7571 CONTRACTS OF WHICH THE MONTH OF FEBRUARY SAW 7581 CONTRACTS AND APRIL SAW THE ISSUANCE OF 0 CONTRACTS.  The new OI for the gold complex rests at 567,435. DEMAND FOR GOLD INTENSIFIES GREATLY AS WE CONTINUE TO WITNESS A HUGE NUMBER OF EFP TRANSFERS TOGETHER WITH THE MASSIVE INCREASE IN GOLD COMEX OI  TOGETHER WITH  THE TOTAL AMOUNT OF GOLD OUNCES STANDING FOR JANUARY. EVEN THOUGH THE BANKERS ISSUED THESE MONSTROUS EFPS, THE OBLIGATION STILL RESTS WITH THE BANKERS TO SUPPLY METAL BUT IT TRANSFERS THE RISK TO A LONDON BANKER OBLIGATION AND NOT A NEW YORK COMEX OBLIGATION. LONGS RECEIVE A FIAT BONUS TOGETHER WITH A LONG LONDON FORWARD. THUS, BY THESE ACTIONS, THE BANKERS AT THE COMEX HAVE JUST STATED THAT THEY HAVE NO APPRECIABLE METAL!! THIS IS A MASSIVE FRAUD: THEY CANNOT SUPPLY ANY METAL TO OUR COMEX LONGS BUT THEY ARE QUITE WILLING TO SUPPLY MASSIVE NON BACKED GOLD (AND SILVER) PAPER KNOWING THAT THEY HAVE NO METAL TO SATISFY OUR LONGS. LONDON IS NOW SEVERELY BACKWARD IN BOTH GOLD AND SILVER (BIG RISE IN BOTH GOFO AND SIFO) AND WE ARE WITNESSING DELAYS IN ACTUAL DELIVERIES. IN ESSENCE WE HAVE ANOTHER GOOD GAIN OF 19,551 OI CONTRACTS: 11,980 OI CONTRACTS INCREASED AT THE COMEX AND A GOOD SIZED 7571 OI CONTRACTS WHICH NAVIGATED OVER TO LONDON.

YESTERDAY, WE HAD 9593 EFP’S ISSUED.

ACCUMULATION OF EFP’S/ GOLD(EXCHANGE FOR PHYSICAL) FOR THE MONTH OF JANUARY STARTING WITH FIRST DAY NOTICE: 80,432 CONTRACTS OR 8.0432 MILLION OZ OR 250.17 TONNES (9 TRADING DAYS AND THUS AVERAGING: 8,936 EFP CONTRACTS PER TRADING DAY OR 893,600 OZ/DAY)

Result: A HUMONGOUS SIZED INCREASE IN OI AT THE COMEX WITH THE  RISE IN PRICE IN GOLD TRADING ON YESTERDAY ($6.05). WE HAD ANOTHER FAIR SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 7571. THERE OBVIOUSLY DOES NOT SEEM TO BE MUCH PHYSICAL GOLD AT THE COMEX AND YET WE ALSO OBSERVED A HUGE DELIVERY MONTH FOR THE MONTH OF DECEMBER. I GUESS IT EXPLAINS THE HUGE ISSUANCE OF EFP’S…THERE IS HARDLY ANY GOLD PRESENT AT THE GOLD COMEX FOR DELIVERY PURPOSES. IF YOU TAKE INTO ACCOUNT THE 7571 EFP CONTRACTS ISSUED, WE HAD A NET GAIN IN OPEN INTEREST OF 19,551 contracts:

7571 CONTRACTS MOVE TO LONDON AND  11,980 CONTRACTS INCREASED AT THE COMEX. (in tonnes, the gain in total oi equates to 60.81 TONNES)

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

With gold up again, we had another strange withdrawal today from the GLD:  ANOTHER IDENTICAL 2.95 tonnes

Inventory rests tonight: 828.96 tonnes.

SLV/ 

NO CHANGES IN SILVER INVENTORY AT THE SLV/

INVENTORY RESTS AT 316.348 MILLION OZ/

end

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

1. Today, we had the open interest in silver ROSE BY A CONSIDERABLE 1652 contracts from 195,009 UP TO 196,660 (AND now A LITTLE FURTHER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) DESPITE  THE TINY RISE IN PRICE OF SILVER TO THE TUNE OF 3 CENTS   YESTERDAY.  WE HAD WITHOUT A DOUBT ANOTHER FAILED  SHORT COVERING FROM OUR BANKERS AS THEY HAVE CAPITULATED. NOT ONLY THAT BUT OUR BANKERS USED THEIR EMERGENCY PROCEDURE TO ISSUE ANOTHER 2020 PRIVATE EFP’S FOR MARCH (WE DO NOT GET A LOOK AT THESE CONTRACTS AS IT IS PRIVATE BUT THE CFTC DOES AUDIT THEM).  EFP’S GIVE OUR COMEX LONGS A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON. WE HAD NO COMEX SILVER COMEX LIQUIDATION. BUT, IF WE TAKE THE STRONG OI GAIN AT THE COMEX OF 1651 CONTRACTS TO THE 2020 OI TRANSFERRED TO LONDON THROUGH EFP’S WE OBTAIN A GAIN OF 3671 OPEN INTEREST CONTRACTS IN CONJUNCTION WITH THE FAILED  BANKER SHORT COVERING. WE STILL HAVE A GOOD AMOUNT OF SILVER OUNCES THAT ARE STANDING FOR METAL IN JANUARY (SEE BELOW). THE NET GAIN TODAY IN OZ: 18.36 MILLION OZ!!!

RESULT: A STRONG SIZED INCREASE IN SILVER OI AT THE COMEX DESPITE THE TINY RISE OF 3 CENTS IN PRICE (WITH RESPECT TO YESTERDAY’S TRADING). BUT WE ALSO HAD ANOTHER 2020 EFP’S ISSUED TRANSFERRING COMEX LONGS OVER TO LONDON. TOGETHER WITH THE GOOD  SIZED AMOUNT OF SILVER OUNCES STANDING FOR JANUARY, DEMAND FOR PHYSICAL SILVER INTENSIFIES AS WE WITNESS MAJOR BANK SHORT COVERING ACCOMPANIED BY INCREASES IN GOFO AND SIFO RATES INDICATING SCARCITY.

(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 WEDNESDAY night/THURSDAY morning: Shanghai closed UP 3.51 points or 0.10% /Hang Sang CLOSED UP 46.67 pts or 0.15% / The Nikkei closed DOWN 77.77 POINTS OR 0.33%/Australia’s all ordinaires CLOSED DOWN 0.48%/Chinese yuan (ONSHORE) closed DOWN at 6.5080/Oil UP to 63.97 dollars per barrel for WTI and 69.42 for Brent. Stocks in Europe OPENED MOSTLY MIXED LEANING TO RED.   ONSHORE YUAN CLOSED DOWN AGAINST THE DOLLAR AT 6.5080. OFFSHORE YUAN CLOSED DOWN AGAINST  THE ONSHORE YUAN AT 6.5130 //ONSHORE YUAN  WEAKER AGAINST THE DOLLAR/OFF SHORE STRONGER TO THE DOLLAR/. THE DOLLAR (INDEX) IS  STRONGER AGAINST ALL MAJOR CURRENCIES. CHINA IS STILL  HAPPY TODAY.(GOOD MARKETS )

 

i

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)/South Korea

There is considerable confusion in South Korea as the Ministry of Justice has reaffirmed that it is continuing to draw up laws to ban cryptocurrency trading. However the Ministry of Finance does not agree with the Ministry of Justice. South Korea is the largest trader of cryptocurrencies in the world

( zerohedge)_

b) REPORT ON JAPAN

3 c CHINA

4. EUROPEAN AFFAIRS

Hawkish minutes  (maybe an early taper of QE) sends the Euro spiking and German bund prices rising (yields falling)

 

( zerohedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

A good summary as to what is going on in the middle east right now.  Israel confirms that it has agents in Iran spying on that country

( zerohedge)

6 .GLOBAL ISSUES

7. OIL ISSUES

Brent crude rises above 70 dollars

 

( zerohedge)

8. EMERGING MARKET

 

9. PHYSICAL MARKETS

i)Craig Hemke comments on the three major themes for gold in 2018

( Craig Hemke/Sprott)

ii)The parties are close to a settlement in a lung disease class action suit

( Reuters)

 

iii)THE FOLLOWING IS A MUST READ…THE FALL OF THE USA DOLLAR WITH THE RISE OF THE PETROYUAN!!!

 

( ALASDAIR MACLEOD/MISES INSTITUTE)

10. USA stories which will influence the price of gold/silver

i)Deflation is starting to appear as producer prices plunge in December.  Deflation begins when the economy falters

( zerohedge)

ii)Initial jobless claims unexpectedly surges despite continuing claims being the lowest in 45 years.

( zerohedge)

 

iii)SWAMP STORIES

a)Feinstein makes a startling admission that she got pressured into releasing the Fusion transcripts.  She then backtracks and said that she was not pressured.

( zerohedge)

 

b)House Judiciary Committee member Louie Gohmert, a Republican from Texas wrote in an op-ed Wednesday that if Trump betrays his base and passes a DACA amnesty bill without first securing the border and building the wall, then the Republicans will be blown out of the water in the 2018 elections

( zerohedge)

c)Trump blasts the FISA act which is responsible for the spying on individuals in the USA and is especially responsible for their assistance in the discredited and phony GPS dossier
( zerohedge)

d)Early this afternoon, supposedly we had a bipartisan deal on DACA and on partial funding for the wall.  That ended late this afternoon after Trump changed his mind

( zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY HUMONGOUS SIZED 11,980 CONTRACTS UP to an OI level of 567,435 WITH THE RISE IN THE PRICE OF GOLD ($6.05 GAIN WITH RESPECT TO YESTERDAY’S TRADING).  OBVIOUSLY WE HAD ZERO COMEX GOLD LIQUIDATION WITH ANOTHER STRONG GAIN IN TOTAL OPEN INTEREST AS WE WITNESSED ANOTHER HUMONGOUS COMEX TRANSFER THROUGH THE EFP ROUTE. THESE LONGS RECEIVED A DELIVERABLE LONDON FORWARD TOGETHER WITH A FIAT BONUS. THE CME REPORTS THAT 7571 EFP’S WERE ISSUED FOR FEBRUARY AND 0 EFP’s  FOR APRIL:  TOTAL  7571 CONTRACTS. THE OBLIGATION STILL RESTS WITH THE BANKERS ON THESE TRANSFERS.

ON A NET BASIS IN OPEN INTEREST WE GAINED TODAY: 19,551 OI CONTRACTS IN THAT 7571 LONGS WERE TRANSFERRED AS FORWARDS TO LONDON AND WE GAINED 11,980 COMEX CONTRACTS. NET GAIN: 19,551 contracts OR 1,955,100 OZ OR 60.80 TONNES

Result: A STRONG SIZED INCREASE IN COMEX OPEN INTEREST DESPITE THE SMALL FALL IN THE PRICE YESTERDAY’S GOLD TRADING ($6.30.) WE HAD NO GOLD LIQUIDATION ANYWHERE. TOTAL OPEN INTEREST GAIN ON THE TWO EXCHANGES: 19,551 OI CONTRACTS…

We have now entered the active contract month of JANUARY. The open interest for the front month of JANUARY saw it’s open interest RISE by 36 contracts UP to 217.  We had 1 notice served upon yesterday so we GAINED 37 contracts or 3700 additional oz of gold will stand in this non active month AND QUEUE JUMPING RETURNS.

FEBRUARY saw a LOSS of 3258 contacts DOWN to 340,918.  March saw a gain of 95 contracts up to 567.  April saw a GAIN of 13,458 contracts UP to 121,954.

We had 0 notice(s) filed upon today for nil oz

PRELIMINARY VOLUME TODAY ESTIMATED; 157,435

FINAL NUMBERS CONFIRMED FOR YESTERDAY: 445,012

comex gold volumes are RISING AGAIN

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And now for the wild silver comex results.

Total silver OI ROSE BY A CONSIDERABLE 1651  CONTRACTS FROM 195,009 UP TO 196,660 DESPITE YESTERDAY’S  TINY 3 CENT RISE.  AGAIN WE MUST HAVE HAD SOME FAILED BANKER SHORT COVERING.   NOT ONLY THAT, WE HAD ANOTHER GOOD SIZED 2020 EMERGENCY EFP’S FOR MARCH ISSUED BY OUR BANKERS (ZERO FOR ALL OTHER MONTHS) TO COMEX LONGS WHO RECEIVED A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON: THE TOTAL EFP’S ISSUED: 2020. IT SURE LOOKS LIKE THE SILVER BOYS HAVE STARTED TO MIGRATE TO LONDON FROM THE START OF DELIVERY MONTH AND CONTINUING RIGHT THROUGH UNTIL FIRST DAY NOTICE JUST LIKE WE ARE WITNESSING TODAY. USUALLY WE NOTED THAT CONTRACTION IN OI OCCURRED ONLY DURING THE LAST WEEK OF AN UPCOMING ACTIVE DELIVERY MONTH. THIS PROCESS HAS JUST BEGUN IN EARNEST IN SILVER STARTING IN SEPTEMBER. HOWEVER, IN GOLD, WE HAVE BEEN WITNESSING THIS FOR THE PAST 2 YEARS. WE HAD NO LONG COMEX SILVER LIQUIDATION BUT A RISE IN TOTAL SILVER OI AS IT SEEMS THAT WE ARE WITNESSING SOME MAJOR FAILED BANKER SHORT-COVERING. WE ARE ALSO WITNESSING A FAIR AMOUNT OF SILVER OUNCES STANDING FOR COMEX METAL IN THIS NON ACTIVE JANUARY AS WELL AS THAT CONTINUAL MIGRATION OF EFPS OVER TO LONDON. ON A PERCENTAGE BASIS THERE ARE MORE EFP’S ISSUED FOR GOLD THAN SILVER AS IT SEEMS THAT A MAJOR PLAYER WISHES TO TAKE ON THE CROOKED COMEX SHORTS. ON A NET BASIS WE GAINED 3671 OPEN INTEREST CONTRACTS:

1651 CONTRACT GAIN AT THE COMEX COMBINING WITH THE ADDITION OF 2020 OI CONTRACTS NAVIGATING OVER TO LONDON.

NET GAIN: 3671 CONTRACTS

We are now in the poor non active delivery month of January and here the OI LOST  5 contracts FALLING TO 43.  We had 30 notices served upon yesterday, so we GAINED 25 contracts or an additional 125,000 oz will stand for delivery AT THE COMEX AT QUEUE JUMPING INTENSIFIES

February saw a LOSS OF 1 OI contracts FALLING TO 181. The March contract LOST 383 contracts DOWN to 148,176.

We had 0 notice(s) filed for NIL NIL for the January 2018 contract for silver

INITIAL standings for JANUARY

Jan 11/2018.

Gold Ounces
Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz
1060.95 oz
Delaware
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz
2762.416 oz
JPMorgan
No of oz served (contracts) today
0 notice(s)
NIL OZ
No of oz to be served (notices)
217 contracts
(21,700 oz)
Total monthly oz gold served (contracts) so far this month
256 notices
25600 oz
0.7962 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 xxx oz
we had zero kilobar transaction/
We had 0 inventory movement at the dealer accounts
total inventory movement at the dealer accounts:  nil
we had one withdrawal into the customer account:
Out of Delaware:  1060.95 oz
total withdrawal: 1060.95 oz
we had 1 customer deposit
i) Into jPMorgan:  2,762.416 oz
total deposits:  2,762.416 oz
we had 0 adjustments
total registered or dealer gold:  568,449.373 oz or 17.681 tonnes
total registered and eligible (customer) gold;   9,207,445.226 oz 286.39 tones

For JANUARY:
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 1 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 JANUARY. contract month, we take the total number of notices filed so far for the month (256) x 100 oz or 25600 oz, to which we add the difference between the open interest for the front month of JAN. (217 contracts) minus the number of notices served upon today (0x 100 oz per contract) equals 47,300 oz, the number of ounces standing in this active month of JANUARY

Thus the INITIAL standings for gold for the JANUARY contract month:

No of notices served (256 x 100 oz or ounces + {(217)OI for the front month minus the number of notices served upon today (0 x 100 oz which equals 47,300 oz standing in this active delivery month of JANUARY (1.4712 tonnes). THERE IS 17.68 TONNES OF REGISTERED GOLD AVAILABLE FOR DELIVERY SO FAR.

WE GAINED 36 CONTRACTS OR AN ADDITIONAL 3600 OZ WILL STAND IN THIS NON ACTIVE DELIVERY MONTH OF JANUARY

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ON FIRST DAY NOTICE FOR JANUARY 2017, THE INITIAL GOLD STANDING: 3.904 TONNES STANDING

BY THE END OF THE MONTH: FINAL: 3.555 TONNES STOOD FOR COMEX DELIVERY AS THE REMAINDER HAD TRANSFERRED OVER TO LONDON FORWARDS.

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

 

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 14 MONTHS 68 NET TONNES HAS LEFT THE COMEX.

end

And now for silver

AND NOW THE DECEMBER DELIVERY MONTH

DECEMBER FINAL standings

Jan 11 2018
Silver Ounces
Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory
 176,537.470  oz
Brinks
HSBC
Malca
Deposits to the Dealer Inventory
nil
oz
Deposits to the Customer Inventory
 653,512.26 oz
JPMorgan
Scotia
No of oz served today (contracts)
0
CONTRACT(S)
(NIL OZ)
No of oz to be served (notices)
43 contract
(215,000 oz)
Total monthly oz silver served (contracts) 537 contracts

(2,685,000 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

we had no inventory movement at the dealer side of things

total inventory movement dealer: nil oz

we had two inventory deposits into the customer account

i) Into JPMorgan  (deposits of silver resume): 9916.16 oz

ii) Into Scotia: 643.596.100 oz

total inventory deposits: 653,512.26 oz

we had 3 withdrawals from the customer account;

i) out of Brinks; 140,753.28  oz

ii) Out of HSBC: ; 9856.500 oz

iii) Out of Malca: 29,972.79 oz

total withdrawals; 176,537.470 oz

we had 1 adjustments”

i) out of CNT:

we had 4958.900 oz adjusted out of the dealer and landed into the customer account of CNT

total dealer silver:  45.456 million

total dealer + customer silver:  246.072 million oz

The total number of notices filed today for the JANUARY. contract month is represented by 0 contract(s) FOR NIL oz. To calculate the number of silver ounces that will stand for delivery in JANUARY., we take the total number of notices filed for the month so far at 537 x 5,000 oz = 2,685,000 oz to which we add the difference between the open interest for the front month of JAN. (43) and the number of notices served upon today (0 x 5000 oz) equals the number of ounces standing.

.

Thus the INITIAL standings for silver for the JANUARY contract month: 537(notices served so far)x 5000 oz + OI for front month of JANUARY(43) -number of notices served upon today (0)x 5000 oz equals 2,900,000 oz of silver standing for the JANUARY contract month. This is VERY GOOD for this NONACTIVE delivery month of JANUARY.  WE GAINED 25 CONTRACTS OR AN ADDITIONAL 125,000  OZ WILL  STAND FOR DELIVERY IN THIS NON ACTIVE DELIVERY MONTH OF JANUARY AND QUEUE JUMPING INTENSIFIES. 

ON FIRST DAY NOTICE FOR THE JANUARY 2017 CONTRACT WE HAD 3,790 MILLION OZ STAND.

THE FINAL STANDING: 3,730 MILLION OZ

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ESTIMATED VOLUME FOR TODAY: 115,828

CONFIRMED VOLUME FOR FRIDAY: 119,031 CONTRACTS

YESTERDAY’S CONFIRMED VOLUME OF 119,031 CONTRACTS EQUATES TO 595 MILLION OZ OR 85.00% OF ANNUAL GLOBAL PRODUCTION OF SILVER

COMMODITY LAW SUGGESTS THAT OPEN INTEREST SHOULD NOT BE MORE THAN 3% OF ANNUAL GLOBAL PRODUCTION. THE CROOKS ARE SUPPLYING MASSIVE PAPER TRYING TO KEEP SILVER IN CHECK.

Total dealer silver: 59.182 million
Total number of dealer and customer silver: 240.232 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 2.7percent to NAV usa funds and Negative 2.7% to NAV for Cdn funds!!!!
Percentage of fund in gold 63.1%
Percentage of fund in silver:36.7%
cash .+.2%( Jan 11/2018)

2. Sprott silver fund (PSLV): NAV FALLS TO -1.07% (Jan 11/2018)
3. Sprott gold fund (PHYS): premium to NAV FALLS TO -0.53% to NAV (Jan 11/2018 )
Note: Sprott silver trust back into NEGATIVE territory at -1.07%-/Sprott physical gold trust is back into NEGATIVE/ territory at -0.53%/Central fund of Canada’s is still in jail but being rescued by Sprott.
Sprott WINS hostile 3.1 billion bid to take over Central Fund of Canada

(courtesy Sprott/GATA)

END

And now the Gold inventory at the GLD

Jan 11/ANOTHER IDENTICAL WITHDRAWAL OF 2.95 TONNES FROM THE GLD INVENTORY/INVENTORY RESTS AT 828.96 TONNES

Jan 10/with gold up today, a strange withdrawal of 2.95 tonnes/inventory rests at 831.91 tonnes

Jan 9/no changes in gold inventory at the GLD/Inventory rests at 834.88 tonnes

Jan 8/with gold falling by a tiny $1.40 and this being after 12 consecutive gains, today they announce another 1.44 tonnes of gold withdrawal from the GLD/

Jan 5/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 836.32 TONNES

Jan 4/2018/no change in gold inventory at the GLD/Inventory rests at 836.32 tonnes

Jan 3/a huge withdrawal of 1.18 tonnes of gold from the GLD/Inventory rests at 836.32 tonnes

Jan 2/2018/no changes in gold inventory at the GLD/inventory rests at 837.50 tonnes

Dec 29/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 837.50 TONNES

Dec 28/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 837.50 TONNES

Dec 27/NO CHANGES IN GOLD INVENTORY AT THE GLD/ INVENTORY RESTS AT 837.50 TONNES

Dec 26/no change in gold inventory at the GLD

Dec 22/ A DEPOSIT OF 1.48 TONNES OF GOLD INTO GLD INVENTORY/INVENTORY RESTS AT 837.50 TONNES

Dec 21′ NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 836.02 TONNES

Dec 20/DESPITE THE GOOD ADVANCE IN PRICE TODAY/THE CROOKS RAIDED THE COOKIE JAR TO THE TUNE OF 1.18 TONNES/INVENTORY RESTS AT 836.02 TONNES

Dec 19/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 837.20 TONNES

Dec 18 SHOCKINGLY AFTER TWO GOOD GOLD TRADING DAYS, THE CROOKS RAID THE COOKIE JAR BY THE SUM OF 7.09 TONNES/INVENTORY RESTS AT 837.20 TONNES

Dec 15/NO CHANGES IN GOLD INVENTORY/RESTS AT 844.29 TONNES.

Dec 14/a good sized gain of 1.48 tonnes of gold into the GLD/inventory rests at 844.29 tones

Dec 13/no changes in gold inventory at the GLD/inventory rests at 842.81 tonnes

Dec 12/SURPRISINGLY NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 842.81 TONNES

Dec 11/SURPRISINGLY NO CHANGES IN GOLD INVENTORY AT THE GLD DESPITE THE CONSTANT RAIDS ON GOLD/INVENTORY RESTS AT 842.81 TONNES

Dec 8/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 842.81 TONNES

Dec 7/A BIG WITHDRAWAL OF 2.66 TONNES FROM THE GLD/INVENTORY RESTS AT 842.81 TONNES

Dec 6/No changes in GOLD inventory at the GLD/Inventory rests at 845.47 tonnes

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Jan 10/2018/ Inventory rests tonight at 828.96 tonnes

*IN LAST 307 TRADING DAYS: 111.99NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 242 TRADING DAYS: A NET 45.32 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.

end

Now the SLV Inventory

Jan 11/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 316.348 MILLION OZ/

Jan 10/with silver up again, we had a huge withdrawal of 1.227 million oz from the SLV/inventory rests at 316.348 million oz

Jan 9/a withdrawal of 848,000 oz from the SLV/Inventory rests at 317.575 million oz/

jan 8/no change in silver inventory at the SLV/Inventory rests at 318.423 million oz/

Jan 5/DESPITE NO CHANGE IN SILVER PRICING, WE HAD A HUGE WITHDRAWAL OF 2.026 MILLION OZ/INVENTORY RESTS AT 318.423 MILLION OZ.

Jan 4.2018/a slight withdrawal of 180,000 oz and this would be to pay for fees/inventory rests at 320.449 million oz/

Jan 3/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 320.629 MILLION OZ.

Jan 2/WITH SILVER UP DRAMATICALLY THESE PAST 4 TRADING DAYS, THE FOLLOWING MAKES NO SENSE: WE HAD A WITHDRAWAL OF 2.83 MILLION OZ FROM THE SLV

INVENTORY RESTS AT 320.629 MILLION OZ/

Dec 29/no changes in silver inventory at the SLV/inventory rests at 323.459 million oz/

Dec 28/DESPITE THE RISE IN SILVER AGAIN BY 13 CENTS, WE LOST ANOTHER 1,251,000 OZ OF SILVER FROM THE SILVER.

Dec 27/WITH SILVER UP AGAIN BY 17 CENTS, WE LOST ANOTHER 802,000 OZ OF SILVER INVENTORY/WHAT CROOKS/INVENTORY RESTS AT 324.780 MILLION OZ/

Dec 26/no change in silver inventory at the SLV./Inventory rests at 325.582

Dec 21/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 326.227 MILLION OZ/

Dec 20/INVENTORY REMAINS CONSTANT AT 326.337 MILLION OZ (COMPARE WITH GLD)

Dec 19/SILVER INVENTORY REMAINS CONSTANT AT 326.337 MILLION OZ

Dec 18.2017//SILVER INVENTORY CONTINUES TO REMAIN PAT./INVENTORY REMAINS AT 326.337 MILLION OZ/

INVENTORY RESTS AT 326.337 TONNES

Dec 15/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 326.337 MILLION OZ/

Dec 14/a small withdrawal of 377,000 oz and that usually means to pay for fees./inventory rests at 326.337 million oz/

Dec 13/no change in silver inventory at the SLV/Inventory rests at 326.714 million oz/

Dec 12/WOW!ANOTHER STRANGE ONE: SILVER HAS BEEN DOWN FOR 10 CONSECUTIVE DAYS, YET THE SLV ADDS ANOTHER 1.415 MILLION OZ TO ITS INVENTORY. IN THAT 10 DAY PERIOD, SLV ADDS 9.584 MILLION OZ/

INVENTORY RESTS AT 326.714 MILLION OZ

Dec 11/WOW!! ANOTHER STRANGE ONE: SILVER DESPITE BEING DOWN FOR 9 CONSECUTIVE TRADING DAYS ADDS ANOTHER 944,000 OZ TO ITS INVENTORY. FROM NOV 30 UNTIL TODAY SILVER HAS BEEN DOWN EVERY DAY. HOWEVER THE INVENTORY OF SILVER HAS RISEN 8.169 MILLION OZ.

Dec 8/A HUGE DEPOSIT OF 2.642 MILLION OZ/INVENTORY RESTS AT 324.355 MILLION OZ/

Dec 7/strange!! with the continual whacking of silver, no change in silver inventory at the SLV/Inventory rests at 321.713

Dec 6/no change in silver inventory at the SLV/Inventory remains at 21.713 million oz.

Jan 11/2017:

Inventory 316.348 million oz

end

6 Month MM GOFO
Indicative gold forward offer rate for a 6 month duration

+ 1.73%
12 Month MM GOFO
+ 1.98%
30 day trend

end

Major gold/silver trading /commentaries for THURSDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Gold Prices Rise To $1,326/oz as China U.S. Treasury Buying Report Creates Volatility

– Gold prices rise to $1,326/oz on concerns China may slow U.S. Treasury buying
– Equities fell sharply on the report as did Treasurys and the U.S. dollar
– Chinese officials think U.S. debt is becoming less attractive compared to other assets
– Trade tensions could provide a reason to slow down or halt U.S. debt purchases
– U.S. dollar vulnerable as China remains biggest buyer of U.S. sovereign debt
– Currency wars to return as China rejects U.S. hegemony in Asia


Gold prices in US dollar (GoldCore)

Gold prices rose yesterday, reaching their highest level in four months as the dollar fell just after a report that Chinese officials had encouraged slowing or halting purchases of U.S. Treasury securities.

The greenback fell against all major currencies and especially gold after the report.

Spot gold prices rose 1.2% from session lows of $1,310/oz to session highs of $1,326.56/oz prior to falling back and closing in New York at $1,317.40/oz where it remains in late morning trading in London.

U.S. Treasury yields jumped to 10-month highs following a Bloomberg  report that Chinese officials have recommended China gradually sell or halt their buying of U.S. debt.

China is likely to stop buying U.S. Treasurys, the question is when, and when it happens it will have major repercussions for U.S. monetary policy. It will greatly hamper the Federal Reserve in reducing its bloated balance sheet and may force the Fed to begin QE again which would be very positive for gold.

Chinese relations with the U.S. remain frayed and Trump’s aggressive economic and military policies are likely to see a monetary response from China.  As China-U.S. relations deteriorate, so too will currency wars return as China rejects U.S. hegemony in Asia.

The dollar and financial and monetary dominance of the U.S. is increasingly at risk. And as monetary and economic tensions between the struggling superpower and the emerging superpower deepen –  a gold-backed yuan becomes more likely.

If China were to partially back its yuan with gold it would require a gold price of $64,000 per ounce, 50 times gold bullion’s price today, according to research from respected Bloomberg Intelligence (see below).

Recommended Reading

China Sets Up Gold Investment Fund For Central Banks

China Catalyst To Send Gold Over $10,000 Per Ounce?

Gold At $64000 – Bloomberg’s ‘China Gold Price’

News and Commentary

Gold inches up on weaker dollar, equities (Reuters.com)

Gold May Have More Room to Run in 2018 – Bank of China (Bloomberg.com)

Dollar dented by report China may halt bond buys (Reuters.com)

Buffett on cryptocurrencies: ‘I can say almost with certainty that they will come to a bad ending’ (CNBC.com)

Cryptocurrencies may succeed as money in some backward places – Goldman (Bloomberg.com)


Source: U.S Treasury Department

Asian central banks push back, sending dollar bears a warning (Bloomberg.com)

This is how China’s global ambitions are just getting started (StansBerryChurcHouse.com)

Pimco, Citigroup Sound Complacency Alarm for Global Economy (BloombergQuint.com)

Palladium May Continue To Outperform Platinum (Bloomberg.com)

‘Recovery!?’… But At What Cost? (ZeroHedge.com)

Gold Prices (LBMA AM)

10 Jan: USD 1,321.65, GBP 976.96 & EUR 1,103.31 per ounce
08 Jan: USD 1,314.95, GBP 972.01 & EUR 1,102.19 per ounce
08 Jan: USD 1,318.80, GBP 974.33 & EUR 1,099.09 per ounce
05 Jan: USD 1,317.90, GBP 973.40 & EUR 1,094.25 per ounce
04 Jan: USD 1,313.70, GBP 969.77 & EUR 1,090.24 per ounce
03 Jan: USD 1,314.60, GBP 968.20 & EUR 1,092.96 per ounce
02 Jan: USD 1,312.80, GBP 968.85 & EUR 1,087.52 per ounce

Silver Prices (LBMA)

10 Jan: USD 17.13, GBP 12.64 & EUR 14.27 per ounce
09 Jan: USD 17.05, GBP 12.60 & EUR 14.30 per ounce
08 Jan: USD 17.17, GBP 12.68 & EUR 14.33 per ounce
05 Jan: USD 17.15, GBP 12.66 & EUR 14.24 per ounce
04 Jan: USD 17.13, GBP 12.64 & EUR 14.20 per ounce
03 Jan: USD 17.12, GBP 12.63 & EUR 14.25 per ounce
02 Jan: USD 17.06, GBP 12.59 & EUR 14.15 per ounce

Recent Market Updates

– Gold Hits All-Time Highs Priced In Emerging Market Currencies
– World is $233 Trillion In Debt: UK Personal Debt At New Record
– 10 Reasons Why You Should Add To Your Gold Holdings
– Spectre, Meltdown Highlight Online Banking and Digital Gold Risks
– Palladium Prices Surge To New Record High Over $1,100 On Supply Crunch Concerns
– Gold Has Best Year Since 2010 With Near 14% Gain In 2017
– Happy 2nd Birthday Bail-in Tool! We Suggest Gold As The Perfect Gift
– 98,750,067,000,000 Reasons to Buy Gold in 2018
– Gold, Bitcoin and the Blockchain Replaces the Banks – Realists Guide To The Future
– It’s A Wonderful Life Is A Wonderful Lesson To Hold Gold Outside of The Banking System
– Goldnomics Podcast – Gold, Stocks, Bitcoin in 2018. Everything Bubble Bursts?
– What Peak Gold, Interest Rates And Current Geopolitical Tensions Mean For Gold in 2018
– New Rules For Cross-Border Cash and Gold Bullion Movements

Mark O’Byrne
Executive Director

END

 

The parties are close to a settlement in a lung disease class action suit

 

(courtesy Reuters)

South African gold miners near silicosis lawsuit settlement

 Section: 

From Reuters
Wednesday, January 10, 2018

JOHANNESBURG, South Africa — The class action brought by thousands of mineworkers who contracted lung diseases while working for South African gold miners has been postponed because the parties are close to a settlement, lawyers for the companies said today.

A high court in 2016 set the stage for protracted proceedings on cases dating back decades in the largest class-action suit yet in Africa’s most industrialized country.

Many of the nearly half a million miners who contracted silicosis and tuberculosis are from nearby countries that supplied labor to South African mines. …

… For the remainder of the report:

https://www.reuters.com/article/safrica-mining-silicosis/south-african-g…

END

Craig Hemke comments on the three major themes for gold in 2018

(courtesy Craig Hemke/Sprott)

Craig Hemke: The three major themes for gold in 2018

 Section: 

12:07p ET Wednesday, January 10, 2018

Dear Friend of GATA and Gold:

Writing for Sprott Money, the TF Metals Report’s Craig Hemke offers predictions for the new year, perhaps foremost among them being a quickening of the pace of retreat from the U.S. dollar around the world. Hemke’s commentary is headlined “The Three Major Themes for Gold in 2018” and it’s posted at Sprott Money here:

https://www.sprottmoney.com/Blog/the-three-major-themes-for-gold-in-2018…

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

END

 

THE FOLLOWING IS A MUST READ…THE FALL OF THE USA DOLLAR WITH THE RISE OF THE PETROYUAN!!!

 

(COURTESY ALASDAIR MACLEOD/MISES INSTITUTE)

Will The Dollar Survive The Rise Of The Yuan And The End Of The Petrodollar?

Authored by Alasdair Macleod via The Mises Institute,

This might seem a frivolous question, while the dollar still retains its might, and is universally accepted in preference to other, less stable fiat currencies. However, it is becoming clear, at least to independent monetary observers, that in 2018 the dollar’s primacy will be challenged by the yuan as the pricing medium for energy and other key industrial commodities. After all, the dollar’s role as the legacy trade medium is no longer appropriate, given that China’s trade is now driving the global economy, not America’s.

 

https://www.zerohedge.com/sites/default/files/inline-images/20180108_yuan_0.png

At the very least, if the dollar’s future role diminishes, then there will be surplus dollars, which unless they are withdrawn from circulation entirely, will result in a lower dollar on the foreign exchanges. While it is possible for the Fed to contract the quantity of base money (indeed this is the implication of its desire to reduce its balance sheet anyway), it would also have to discourage and even reverse the expansion of bank credit, which would be judged by central bankers to be economic suicide. For that to occur, the US Government itself would also have to move firmly and rapidly towards eliminating its budget deficit. But that is being deliberately increased by the Trump administration instead.

Explaining the consequences of these monetary dynamics was the purpose of an essay written by Ludwig von Mises almost a century ago. At that time, the German hyperinflation was entering its final phase ahead of the mark’s eventual collapse in November 1923. Von Mises had already helped to stabilize the Austrian crown, whose own collapse was stabilized at about the time he wrote his essay, so he wrote with both practical knowledge and authority.

The dollar, of course, is nowhere near the circumstances faced by the German mark at that time. However, the conditions that led to the mark’s collapse are beginning to resonate with a familiarity that should serve as an early warning. The situation, was of course, different. Germany had lost the First World War and financed herself by printing money. In fact, she started down that route before the war, seizing upon the new Chartalist doctrine that money should rightfully be issued by the state, in preference to the established knowledge that money’s validity was determined by markets. Without abandoning gold for her own state-issued currency, Germany would never have managed to build and finance her war machine, which she did by printing currency. The ultimate collapse of the mark was not mainly due to the Allies’ reparations set at the treaty of Versailles, as commonly thought today, because the inflation had started long before.

The dollar has enjoyed a considerably longer life as an unbacked state-issued currency than the mark did, but do not think the monetary factors have been much different. The Bretton Woods agreement, designed to make the dollar appear “as good as gold”, was cover for the US Government to fund Korea, Vietnam and other foreign ventures by monetary inflation, which it did without restraint. That deceit ended in 1971, and today the ratio of an ounce of gold to the dollar has moved to about 1:1310 from the post-war rate of 1:35, giving a loss of the dollar’s purchasing power, measured in the money of the market, of 97.3%.

True, this is not on the hyperinflationary scale of the mark — yet. Since the Nixon shock in 1971, the Americans have been adept at perpetuating the myth of King Dollar, insisting gold now has no monetary role at all. By cutting a deal with the Saudis in 1974, Nixon and Kissinger ensured that all energy, and in consequence all other commodities, would continue to be priced in dollars. Global demand for dollars was assured, and the banking system of correspondent nostro accounts meant that all the world’s trade was settled in New York through the mighty American banks. And having printed dollars to ensure higher energy prices would be paid, they would then be recycled as loan capital to America and her friends. The world had been bought, and anyone not prepared to accept US monetary and military domination would pay the price.

That was until now. The dollar’s hegemony is being directly challenged by China, which is not shy about promoting her own currency as her preferred settlement medium. Later this month an oil futures contract priced in yuan is expected to start trading in Shanghai.1 Only last week, the Governor of China’s central bank met the Saudi finance minister, presumably to agree, amongst other topics, the date when Saudi Arabia will start to accept yuan for oil sales to China. The proximity of these two developments certainly suggest they are closely related, and that the end of the Nixon/Saudi deal of 1974, which created the petrodollar, is in sight.

Do not underestimate the importance of this development, because it marks the beginning of a new monetary era, which will be increasingly understood to be post-dollar. The commencement of the new yuan for oil futures contract may seem a small crack in the dollar’s edifice, but it is almost certainly the beginning of its shattering.

America’s response to China’s monetary maneuvring has always been that of a nation on the back foot. For the last year, the yuan has been rising against the dollar, following President Trump’s inauguration. Instead of responding to China’s hegemonic threat by increasing America’s role in foreign trade, President Trump has threatened all and sundry with trade restrictions and punitive tariffs. It is a policy which could not be more designed to undermine America’s global economic status, and with it the role of the dollar.

In monetary terms, this leads us to a further important parallel with Germany nearly a century ago, and that is the contraction of the territory and population over which the mark was legal tender then, and the acceptance of the dollar today. The loss of Germany’s colonies in Asia and Africa, Alsace-Lorraine to France, and large parts of Prussia to Poland, reduced the population that used the mark without a compensating reduction of the quantity of marks in circulation. Until very recently, most of the world was America’s monetary colony, and in that context, she is losing Asia, the Middle East and some countries in Africa as well. The territory that offers fealty to the dollar is definitely contracting, just as it did for the German mark after 1918, and as it did for the Austro-Hungarians, whose Austrian crown suffered a similar fate.

The relative slowness of the dollar’s decline so far should not fool us. The factors that led to the collapse of the German mark in 1923 are with us in our fiat currencies today. As Mises put it,

If the practice persists of covering government deficits with the issue of notes, then the day will come without fail, sooner or later, when the monetary systems of those nations pursuing this course will break down completely.

Updated for today’s monetary system, this is precisely how the American government finances itself. Instead of printing notes, it is the expansion of bank credit, issued by banks licensed by the government with this purpose in mind, that ends up being subscribed for government bonds. The same methods are employed by all advanced nations, giving us a worrying global dimension to the ultimate failure of fiat currencies, whose only backing is confidence in the issuers.

Now that America is being forced back from the post-war, post-Nixon-shock strategy of making the dollar indispensable for global trade, the underlying monetary inflation of decades will almost certainly begin to be reflected in the foreign and commodity exchanges. There is little to stand in the way of the global fiat monetary system, led by the dollar, to begin a breakdown in its purchasing power, as prophesied by Mises nearly a century ago. Whether other currencies follow the dollar down the rabbit hole of diminishing purchasing power will to a large extent depend on the management of the currencies concerned

How a Fiat Currency Dies

The last thing anyone owning units of a state-issued currency will admit to is that they may be valueless. Only long after it has become clear to an educated impartial monetary observer that this is the case, will they abandon the currency and get rid of it for anything while someone else will still take it in exchange for goods. In the case of the German hyperinflation, it was probably only in the last six months or so that the general public finally abandoned the mark, despite its legal status as money.

Mises reported that throughout the monetary collapse, until only the final months, there persists a general belief that the collapse in the currency would soon end, there always being a shortage of it. The change in this attitude was marked by the moment people no longer just bought what they needed ahead of actually needing it. Instead, they began to buy anything, just to get rid of the currency. This final phase is what Mises called the crack-up boom, though some far-sighted individuals had already acted well ahead of the crowd. Both these phases are still ahead for the American citizen. However, we can now anticipate how the first is likely to start, and that will be through dollars in foreign hands being replaced for trade purposes with the yuan, and then sold into the foreign exchanges.

Once the process starts, triggered perhaps by the petrodollar’s loss of its trade settlement monopoly, it is not beyond the bounds of possibility for the dollar to initially lose between a third and a half of its purchasing power against a basket of commodities, and a similar amount against the yuan, which is likely to be managed by the Chinese to retain its purchasing power. It will be in the interests of the Chinese authorities to promote the yuan as a sounder currency than the dollar to further encourage foreign traders to abandon the dollar. From China’s point of view, a stronger yuan would also help ensure price stability in her domestic markets, at a time when countries choosing to remain on a dollar-linked monetary policy will be struggling with rising price inflation.

There then emerges a secondary problem for the dollar. A fiat currency depends in large measure for its value on the credibility of the issuer. A weakening dollar, and the bear market in bonds that accompanies it, will undermine the US Government’s finances, in turn further eroding the government’s financial credibility. This will be happening after an extended period of the US Government being able to finance its deficits at artificially low interest rates, and is therefore unprepared for this radical change in circumstances.

As the dollar’s purchasing power comes under attack, lenders, whether they be those with surplus funds, or their banks acting as their agents, will increasingly take into account the declining purchasing power of the dollar in setting a loan rate. In other words, time-preference will again begin to dominate forward rates, and not central bank interest rate policy. This will be reflected in a significantly steeper yield curve in the bond market, forcing borrowers into very short-term financing or using other, more stable monetary media to obtain capital for longer-term projects. This, again, plays into the yuan becoming the preferred currency, possibly with a rapidity that will be unexpected.

The US Government is obviously ill-equipped for this drastic change in its circumstances. The correct response is to eliminate its budget deficit entirely, and refuse to bail out failing banks and businesses. Bankruptcies will be required to send surplus dollars to money heaven and therefore stabilise the dollar’s purchasing power. A change in the Fed’s attitude towards its banks and currency is, however, as unlikely as that of the Reichsbank subsequent to the Versailles Treaty.

Therefore, it follows that capital markets in dollars will inevitably be severely disrupted, and market participants will seek alternatives. Remember that the dollar’s strength has been based on its function in trade settlement and its subsequent deployment as the international monetary capital of choice. Both these functions can be expected to go into reverse as the trade settlement function is undermined.

Whether China will be tempted to employ the same methods in future to support the yuan as the Americans have during the last forty-three years for the dollar, remains to be seen. It may not be a trick that can be repeated. There is a great danger that a significant fall in the dollar will lead to global economic stagnation, coupled with escalating price inflation, affecting many of China’s trading partners. China will want to insulate herself from these dangers without adding to them by going for full-blown hegemony.

We are beginning, perhaps, to see this reflected in rising prices for gold and silver.

China has effectively cornered the market for physical gold, the only sound money of the market that over millennia has survived all attempts by governments to replace it. Her central planners appear to have long been aware of the West’s Achilles’ heel in its monetary affairs, and have merely been playing along to China’s own advantage. As the dollar weakens in the coming years, her wisdom in securing for herself and her citizens the one form of money that’s no one else’s liability will ensure her survival in increasingly turbulent times.

Now that’s strategic thinking.

END



Your early THURSDAY morning currency, Asian stock market results,  important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight/9 AM EST

 

i) Chinese yuan vs USA dollar/CLOSED DOWN AT 6.5080 /shanghai bourse CLOSED UP AT 3.51 POINTS 0.10% / HANG SANG CLOSED UP 46.67 POINTS OR 0.15%
2. Nikkei closed DOWN 77.77 POINTS OR 0.33% /USA: YEN RISES TO 111.62

3. Europe stocks OPENED MIXED LEANING TO RED   /USA dollar index RISES TO 92.47/Euro FALLS TO 1.1943

3b Japan 10 year bond yield: FALLS TO . +.072/ GOVERNMENT INTERVENTION !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 111.35/ 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:: 63.97  and Brent: 69.42

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 FALLS TO +.524%/Italian 10 yr bond yield DOWN to 1.986% /SPAIN 10 YR BOND YIELD DOWN TO 1.511%

3j Greek 10 year bond yield RISES TO : 3.755?????????????????

3k Gold at $1318.70 silver at:16.99: 6 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50

3l USA vs Russian rouble; (Russian rouble UP 7/100 in roubles/dollar) 56.98

3m oil into the 63 dollar handle for WTI and 69 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation. 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/

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 111.62 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 0.9791 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1694 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT/ARTICLE 50 COMMENCES MARCH 29/2017

3r the 10 Year German bund now POSITIVE territory with the 10 year FALLING to +0.524%

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 2.540% early this morning. Thirty year rate at 2.883% /

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

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

Bonds Bounce After China Denies “Fake News” Report; Oil Tags $64

U.S. equity futures are back in the green, while Asian and European stocks are mixed after worries about a U.S.-led trade war put world stocks at risk of their first two day loss of the year on Thursday, while bond markets bounced as China poured cold water  on reports that it might stop buying U.S. debt.

As discussed last night, the current market challenge is to assess whether the slew of reports we’re getting are ‘fake news’ – Bloomberg’s report on Wednesday about China Treasury holdings triggered a fixed income sell off. However, China’s FX authority SAFE overnight condemned those reports as ‘false news’, which nonetheless may have been a simple “trial balloon” to gauge the market’s reaction to when the real announcement comes. Amid the confusion, Treasuries have unwound much of yesterday’s move.

What’s clear, as some trading desks note, is that whether it’s fake news or not, the market mindset right now is ‘react first, check later’. This has resulted in choppy markets and a welcome pick up in volatility – although the subsequent backtracking is less welcome, these market dynamics may become a frequent feature of 2018.

Then, another Reuters report late Wednesday said Canada was “increasingly convinced” Trump will announce the US is pulling out of Nafta. Following the news there was a report that Mexico will leave NAFTA negotiation if President Trump triggers 6-month process to withdraw from the deal. Both the CAD and MXN immediately sold off and remain on edge, awaiting official confirmation.

“The denial of the China story puts the dollar back where it was though the yen is still strong, so to me that is the interesting move and whether that is going to stick,” said Saxo Bank’s head of FX strategy John Hardy. “The 2.5 percent level on the Treasury is a line in the sand so U.S. CPI (inflation) data tomorrow is going to be absolutely critical,” he added, talking about the view that higher inflation will encourage more U.S. interest rate hikes.

U.S. 10Y TSY yields  pulled back to 2.544 percent from Wednesday’s ten-month high of 2.597 percent. Euro zone bond yields eased 1-3 basis points (bps) too, with Germany’s 10-year Bund yield 3 bps off a two-month high at 0.46 percent. China’s denial also helped the dollar to its fourth gain in the last five days against a basket of top world currencies, having suffered one of its worst years on record in 2017. Against the yen, it added 0.3 percent to 111.63, after hitting a six-week low of 111.27 yen in the previous session when it skidded 1.1 percent, its largest decline in almost eight months.

There was also some relief from Japan, another source of pain for bond markets this week. The Bank of Japan maintained the amount of its bond purchases on Thursday. A cut in its buying of longer-dated debt earlier this week had fanned worries the BOJ may be moving to turn off its stimulus. Specifically, as RanSquawk explains, “10yr JGBs found some reprieve from this week’s selling on mild short-covering and after the BoJ’s Rinban announcement in which purchases in 1yr-10yr maturities were maintained at a respectable amount of nearly JPY 1tln.”

Still, as Bloomberg – which started this whole mess notes – while traders have shaken off some of the concerns that led to Wednesday’s declines, they’re still struggling to find fresh reasons to extend a rally that took global stocks to or near record highs earlier this week. A string of earnings releases starting with JPMorgan Chase & Co. and Wells Fargo & Co. on Friday might offer them more direction.

asd

Looking at world equity markets, Europe’s main bourses are modestly in and out of the red and MSCI’s world index was down 0.2% after Asian and emerging market indexes had been pulled lower by the abovementioned warnings from Canada and Mexico that NAFTA’s days could be numbered. Asian equities were mixed – rallying in China while the Nikkei was down.

European stocks are little changed amid a slew of corporate results as investors continue to assess the new year’s equity rally. The Stoxx Europe 600 Index rises less than 0.1% following Wednesday’s 0.4% drop, which snapped a five-day winning streak. Miners are the best performers among industry groups, advancing for a sixth straight session, while retail shares drop with Tesco Plc after its Christmas sales missed estimates. Hexagon AB is the best performer among technology shares after its Chief Executive Officer Ola Rollen was acquitted by a Norwegian court of insider-trading charges.

The euro traded at $1.1945, nearly flat on the day, and holding above Tuesday’s low of $1.1916. There was more upbeat data for the shared currency though. German economy grew at the strongest rate in six years last year a preliminary estimate from the country’s statistics office showed, although it was slightly under some peoples’ forecasts.

Bitcoin also took a major beating, falling as much as 11% as South Korea – one of the crytocurrency’s biggest markets – said it was drawing up laws to ban trading in it.

European stocks edged lower, extending Wednesday’s retreat as retailers declined, while bonds gained as investors sought to put the turbulence of midweek behind them.

After Treasuries slid on Wednesday, with the 10Y yield rising as high as 2.59%, the Treasury complex found support on the back of a statement by China’s State Administration of Foreign Exchange in response to media reports that it may reduce or halt its purchases of US Treasuries. The statement stipulated that the report may have cited wrong sources or may be fake news (using translation from Bloomberg). The USD found support versus the JPY, although the move corrected less than half of yesterday’s USDJPY selloff. Equities were mixed – rallying in China while the Nikkei was down.

Commodity markets meanwhile were taking something of a breather after a flying start to the year.

Both Brent and West Texas Intermediate oil price futures were hovering just off three-year highs at just under $70 and $64 a barrel, with WTI briefly rising above $64 overnight, triggering stops, while industrial metals dipped and gold ticked to $1,317.76 after spiking to nearly four-month highs in the previous session.

“In Q1, the balance of risk to Brent lies to the downside, with prices overheating, record net-length built into the futures market and fundamentals set to weaken seasonally,” BMI Research said in a note.

Expected data include PPIs and jobless claims. Delta Air Lines and Shaw Communications are among companies reporting earnings. The ECB’s account of the December meeting due Thursday may shed light on the use of forward guidance. The U.S Treasury will auction $12 billion of 30-year bonds on Thursday.

Bulletin Headline Summary from RanSquawk

  • European equities trade relatively directionless with UK retail names underperforming following week trading updates
  • The Dollar Index is back within striking distance of the 92.500 level and firmer vs all G10 rivals bar its antipodean
  • counterparts

Market Snapshot

  • S&P 500 futures little changed at 2,751.30
  • STOXX Europe 600 down 0.09% to 398.25
  • MSCI Asia Pacific down 0.3% to 180.28
  • MSCI Asia Pacific ex Japan down 0.2% to 585.71
  • Nikkei down 0.3% to 23,710.43
  • Topix down 0.2% to 1,888.09
  • Hang Seng Index up 0.2% to 31,120.39
  • Shanghai Composite up 0.1% to 3,425.35
  • Sensex up 0.2% to 34,497.16
  • Australia S&P/ASX 200 down 0.5% to 6,067.62
  • Kospi down 0.5% to 2,487.91
  • German 10Y yield fell 2.4 bps to 0.519%
  • Euro down 0.07% to $1.1940
  • Italian 10Y yield rose 0.3 bps to 1.769%
  • Spanish 10Y yield fell 4.9 bps to 1.502%
  • Brent futures up 0.2% to $69.36/bbl
  • Gold spot up 0.1% to $1,318.22
  • U.S. Dollar Index up 0.2% to 92.47

Top Overnight News

  • China’s State Administration of Foreign Exchange said in a statement Thursday that a report on Wednesday which said China may slow or halt purchases of U.S. Treasuries “might have cited wrong sources or may be fake news.” It said investments in Treasuries are decided by market conditions
  • Premier Li Keqiang said China’s economy expanded by about 6.9 percent in 2017, according to a report by the official Xinhua News Agency; Li said the economy performed better than expected and the urban surveyed unemployment rate was the lowest in many years
  • Dollar rises against most Group-of-10 peers; EUR/USD little changed, sliding from a day high in Asia following the statement from China’s State Administration of Foreign Exchange on report about China’s purchases of U.S. Treasuries
  • Sterling trimmed losses in early London hours after earlier touching a two-week low versus the greenback; recruitment firm Morgan McKinley said an annual 37% decline in job openings in December underscored the looming “Brexodus” from the City
  • The yen fell against the dollar for the first time in three days as a flow of short- dollar unwind saw turnover pick up on China statement, only to cap at macro and small exporter selling; BOJ maintained debt- purchases plan at operation, after cutting buying of super-long debt on Tuesday
  • London Finance Jobs Post ‘Seismic’ Drop in Sign of Brexit Impact
  • Morgan Stanley Counters Bill Gross Over Bond Bear Market Call
  • Apple Seen Getting Possible $4 Billion Boost From Tax-Law Quirk;
  • Quant Copycats Tested as Yield Rise Imperils Hottest Trade
  • Rio Is Said to Drop Chase for $5 Billion Lithium Miner Stake
  • Cryptocurrencies Retreat Amid South Korea Clampdown Concerns

Asian equity markets were mostly lower amid a dampened global risk tone, which was triggered by China concerns after officials were said to see US Treasuries as less attractive and recommended either cutting back or halting purchases altogether. This was viewed by some as an implicit threat by the world’s largest foreign holder of USTs against trade measures by the US, although China’s SAFE later suggested that the report may have cited a wrong source or could be fake news. Nonetheless, ASX 200 (-0.5%) and Nikkei 225 (-0.3%) were both subdued with broad-based weakness across nearly all sectors in Australia, while Japanese stocks remained at the whim of the recent JPY strength. Chinese markets also conformed to the sombre picture with both Shanghai Comp. (+0.1%) and Hang Seng (+0.1%) initially cautious as the PBoC’s liquidity efforts continued to be on the light-side. Finally, 10yr JGBs found some reprieve from this week’s selling on mild short-covering and after the BoJ’s Rinban announcement in which purchases in 1yr-10yr maturities were maintained at a respectable amount of nearly JPY 1tln. China SAFE said that report on China mulling reduction in US Treasury purchases may cite a wrong source or be fake news.

Top Asian News

  • PBOC Adds Funds First Time in 3 Weeks After Money Rates Jump
  • Saudi Bourse ‘Taking All Measures’ for Successful Aramco IPO
  • One Thing Missing From Copper Boom Is Buyers of Actual Metal
  • Japan Bond Risk Hits 10-Month Low as Tension Over N. Korea Eases

European stock markets trade relatively directionless (Eurostoxx 50 -0.2%) once again as European-specific newsflow remains on the light side. In terms of sector specifics, telecom and consumer discretionary names underperform, whislt stock specific movers include Tesco (-4.4%) and Marks & Spencers (-5%) who are at the foot of the FSTE 100 following disappointing trading updates. Elsewhere, Fiat Chrysler shares are underperforming in the FTSE MIB on NAFTA concerns. Meanwhile in fixed income, the turnaround from bear market territory to debt friendly if not bullish sentiment appears to have been confirmed by decent investor demand for sovereign issuance, and of course China’s apparent rejection of anti-US Treasury holdings headlines yesterday. Considerable concessions in advance of the auctions must be taken into consideration, but Italian BTPs have nudged new intraday peaks in wake of the results, not to mention the scramble for Wednesday’s 20 year syndication. Bunds, Gilts and USTs all holding the bulk of their recovery gains, but the last leg of this week’s US refunding still to come and the long bond perhaps not as attractive below 2.90% as it was when heading towards 2.95%. On the data front, US weekly jobless claims and PPI also on the agenda, as crude prices continue to rally and keep bond vigilantes on their toes.

Top European News

  • No Deal Brexit Could Cost 482,000 Jobs as City Recruitment Slows
  • German Economic Growth Accelerates Less Than Forecast in 2017
  • Chemicals Slump as BofAML Downgrades BASF, Clariant, Evonik
  • Hungary Calls April Election as Orban Seeks to Extend His Rule

In FX, the Dollar Index is back within striking distance of the 92.500 level and firmer vs all G10 rivals bar its antipodean counterparts, as Chinese reports about curtailing US debt purchases are dismissed as false by SAFE and the Foreign Ministry. However, fresh NAFTA jitters are also underpinning the Greenback to the detriment of the Cad and Mxn. Usd/Cad has bounced further from last Friday’s divergent US/Canadian jobs data lows (1.2355) towards the 1.2593 100 DMA and offers around the 1.2600 level. BoC rate hike odds have lengthened dramatically in response to concerns that the trade talks could break down, while Usd/Mxn has spiked to 19.3000+ for the same reasons. Usd/Chf is back up near 0.9800 vs yesterday’s lows below 0.9750, and Usd/Jpy over 111.50 and through the 200 DMA at 111.72 and 111.85 supply to a high just shy of 111.90 at one stage, eyeing 112.00 offers/psychological resistance, before a 112.08 Fib and the 112.26 100 DMA. 111.40-35 provides support on the downside. Cable has retreated below 1.3500 and through 1.3480 stops (just), but could be drawn towards a 600+ mn option expiry at the figure, with bids seen at 1.3425. Eur/Usd has reversed towards recent low 1.1900 area lows vs Wednesday’s 1.2000+ high and may also be influenced by expiry interest given a big (2 bn) 1.1950 strike that runs off tomorrow. On that note, a Eur/Sek 9.8000 option in the same size could entice given that the strike is close to the current 9.7800 spot price. As noted, the Aud and Nzd are bucking the weaker vs Greenback trend, with Aud/Usd through 0.7860-65 stops and 0.7870 macro offers on the way to a 0.7885 overnight high in wake of much stronger than expected Aussie retail sales data. 0.7900+ stops lie ahead, as the Aud/Nzd cross reclaims 1.0900 and the Kiwi stalls just above 0.7200 vs the Usd.

In commodities, price action in WTI and Brent crude had been somewhat uneventful overnight, however prices broke above yesterday’s highs during European trade amid no fresh fundamental catalysts before extending gains after WTI tripped stops above USD 64.00bbl. In metals markets, precious metals have seen very little in the way of price action. Elsewhere, nickel hit a 2-month high in Chinese trade following tight stocks whilst copper saw mild gains as prices tested USD 2.50/lb to the upside. UAE Energy Minister says there is a commitment to continue OPEC deal for a full year and that oil market is still rebalancing, expects to achieve full balanced oil market this year

Looking at the day ahead, the December PPI (core 0.2% mom and 2.5% yoy expected) as well as the weekly initial jobless and continuing claims are also due. Onto other events, the minutes for the ECB December meeting will be out and the Fed’s Dudley will speak on US economic outlook. Elsewhere, the BOE will publish its 4Q credit conditions survey and China begins a three-day annual meeting to set the agenda for its anti-corruption work in 2018.

US Event Calendar

  • 8:30am: PPI Final Demand MoM, est. 0.2%, prior 0.4%; PPI Ex Food and Energy MoM, est. 0.2%, prior 0.3%
  • PPI Final Demand YoY, est. 3.0%, prior 3.1%; Ex Food and Energy YoY, est. 2.5%, prior 2.4%
  • 8:30am: Initial Jobless Claims, est. 245,000, prior 250,000; Continuing Claims, est. 1.92m, prior 1.91m
  • 9:45am: Bloomberg Consumer Comfort, prior 51.8
  • 2pm: Monthly Budget Statement, est. $26.0b deficit, prior $138.5b deficit

DB’s Jim Reid concludes the overnight wrap

We’re only just through the seventh working day of 2018 but this year already feels like it’s going to be more interesting than 2017! Feel free to define “interesting” yourselves but it would be remarkable to us if higher inflation, less QE support and higher yields didn’t periodically give us more bouts of volatility and increased activity like that seen over the last 48 hours.

Treasuries were again in the crossfire yesterday with what I’m calling the Twitter vs Bloomberg phoney war. Twitter because Mr Trump loves to cite US equity performance via that medium and also use it to hit out against things like China’s trade policy. It may be overthinking to suggest the following but yesterday’s sell-off originated from an uncited Bloomberg story that could have been China’s way of warning Mr Trump that being too aggressive on trade might have consequences for his country’s bond market (China being the largest holder – see below) and with it equity markets.

The Bloomberg report in question suggested that senior government officials in China were in the process of reviewing China’s FX holdings and had supposedly recommended either slowing the pace of Treasuries purchases or halting them altogether. This led to 10yr US yields touching 2.5954% intra-day (up 5.3bps from day’s lows) and taking it to within 3bps of the calendar year high made back on March 13th last year. 10 year yields have already seen a 19bp range in the 7 days of the year so far and to put that in perspective, we’ve already seen about 30% of the high-to-low range of 2017. Later in the US session, a strong 10yr auction (highest bid to cover since June 2016) led to a strong rally back, with the close at 2.558%, some 3.7bps off the highs for the session and only 0.4bps higher on the day.

To add further intrigue to the story, this morning China’s State Administration of Foreign Exchange suggested that the story may have quoted a “wrong source” or be “fake news”. The release on their website went onto say that  China has always invested and managed its reserves in a diversified manner, to ensure the safety and value of its foreign exchange assets. Investment in U.S. Treasuries are decided by market conditions. Treasuries have rallied around 2.5bps on the report and are trading around 2.531% as we type.

As a bit of general context, China currently holds about $1.2tn of US Treasuries (as of the latest data to the end of October 2017), although that’s up from just over $1.0tn at the start of last year. Japan is in second place with $1.1tn and Ireland third but with a relatively much smaller $312bn of holdings. There was plenty of scepticism about the validity of the story at the time yesterday but even with this morning’s response from China the market will still debate as to whether there’s actually no smoke without fire.

The possible political angle shouldn’t be underestimated and the timing is apt given that the Politico article from last week suggesting that President Trump was preparing to unveil an “aggressive” trade crackdown over the coming   week including tariffs “aimed at countering China’s and other economic competitors’ alleged unfair trade practices”.

DB’s FX strategist Alan Ruskin wrote an interesting note yesterday in response to the story. In his view given possible US protectionist measures, it makes sense for China to pre-emptively flag that it holds some important cards, which  could then restrain the US’s actions. It depends on how disruptive Trump’s measures are on trade, as to how much incentive there will be for China to show it can also hurt the US. What is pretty clear is that in hurting each other, China and the US will hurt themselves. That is the glue that supports the status quo, with China the global manufacturer in chief, and the US a recipient of China capital to cheaply finance the trade deficit. There are limits to how much either the US or China will be willing to disrupt this synergistic relationship and thus Alan thinks China’s bark is bigger than its bite. You’ll find the link to Alan’s report here.

Elsewhere on a day of unnamed officials being quoted, over in Canada, another unnamed government official told Bloomberg there is increasing likelihood that the US could withdrawal from the NAFTA (North American Free Trade Agreement) and a withdrawal notice could come at any time. Conversely, another unnamed White House official said there has been no change in President’s Trump’s position on NAFTA. Nonetheless, the Bloomberg implied odds of a Canadian rate hike for this month has dropped 14ppt to c73% and the CADUSD weakened 0.67%.

This morning in Asia equities are modestly lower. The Nikkei (-0.44%), Kospi (-0.26%), China’s CSI 300 (-0.30%) and Hang Seng (-0.20%) are down as we type. In China, Premier Li said the country’s economy expanded by about 6.9% in 2017 (vs. 6.8% for 4Q expected). If confirmed later on 18 January, this would mark the first full year acceleration since 2010. Back in the US, during a Q&A sessions with reporters, President Trump noted the US has “some problems” with North Korea, but he does not expect a war and “hopefully, a lot of good things are going to work out” from the recent talks.

Now recapping other markets performance from yesterday. US equities softened even as the S&P pared back losses and closed marginally lower for the first time in seven days (-0.11%). Within the S&P, only the financials and industrials sectors were in the green while utilities and real estate stocks led the losses. European markets were mixed, with the Stoxx 600 (-0.38%) and DAX (-0.78%) modestly lower while the FTSE rose 0.23%, led by the financials.

Turning to currencies, the US dollar index initially fell c0.6% on the aforementioned China story but subsequent weakness in the Canadian dollar helped the Greenback to partly recover into the close (-0.18%). The Euro gained 0.09% and Sterling fell 0.24%. In commodities, WTI oil rose 0.97% after EIA data confirmed US crude stockpiles fell for the eighth consecutive week.

Elsewhere, precious metals strengthened slightly (Gold +0.31%; Silver +0.02%) while other base metals were mixed but little changed (Zinc -0.21%; Copper +0.11%; Aluminium +0.43%).

Away from markets and onto central bankers’ speak. The Fed’s Bullard said the Fed should consider targeting inflation above 2% for a period to make up for past misses on the low side. Elsewhere, he is a little bit sympathetic to the idea of price level targeting. The Fed’s Evans reiterated his dovish view, noting that “I don’t see any evidence of inflation moving up really fast or even moving up enough” and that “it would be good to sort of put off the (rate) increases until the middle of this year” to ensure the inflation concerns resolve themselves.

Conversely, the Fed’s Kaplan supports three rate hikes in 2018, in part as “… we want to avoid a situation where we have such an (economic) overheating that we’re playing catch-up”. Notably, none of the three Fed speakers are FOMC policy voters this year.

In Sweden, Riksbank governor Ingves said the central bank is “a little closer” in terms of changing its policy decision, but “is not there yet”. He also noted that it is possible that the bank could raise rates before the ECB does. The Swedish 10y yields rose 5.3bp back to November highs. Elsewhere, the leader of Japan’s opposition Democratic party Mr Ohtsuka noted that existing BOJ governor Kuroda should stay on for a second term. A potential reappointment is in line with our Japanese team’s expectation.

Back onto Brexit, unnamed (again!!!) Germany officials noted to Bloomberg that the UK may have to contribute more to the EU budget in return for a bespoke trade deal, particularly in regards to allowing UK based financial companies the ability to operate freely across the EU post Brexit,

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the final reading of the November wholesale inventories was slightly above market at 0.8% mom (vs. 0.7%), while wholesale trade sales also beat at 1.5% mom (vs. 0.6% expected). The ratio of wholesale inventory to sales fell to a three-year low. Following the above, the latest Atlanta Fed’s GDPNow estimate of 4Q GDP growth has nudged up to 2.8% saar.

In France, the November IP was in line at -0.5% mom, but prior revisions meant the annual growth was slightly below market at 2.5% yoy (vs 2.6% expected), while manufacturing production was higher than expected at 3% yoy (vs 2.9%). In the UK, November IP was also in line at 0.4% mom but annual growth was higher at 2.5% yoy (vs 1.8% expected). Elsewhere, manufacturing production expanded for the seventh consecutive month, with annual growth above expectations at 3.5% yoy (vs 2.8%). Finally, its November trade deficit widened to -£2.8bln (vs. -£1.5bln), mainly driven by a jump in the deficit on goods to £12.2bn. In real terms, imports of goods rose 0.7% mom and exports fell 0.1% mom.

Looking at the day ahead, the Eurozone’s November IP and Italy’s retail sales are due, along with the December reading for the Bank of France industrial sentiment index. Over in the US, the December PPI (core 0.2% mom and 2.5% yoy expected) as well as the weekly initial jobless and continuing claims are also due. Onto other events, the minutes for the ECB December meeting will be out and the Fed’s Dudley will speak on US economic outlook. Elsewhere, the BOE will publish its 4Q credit conditions survey and China begins a three-day annual meeting to set the agenda for its anti-corruption work in 2018.

3. ASIAN AFFAIRS

i)Late WEDNESDAY night/THURSDAY morning: Shanghai closed UP 3.51 points or 0.10% /Hang Sang CLOSED UP 46.67 pts or 0.15% / The Nikkei closed DOWN 77.77 POINTS OR 0.33%/Australia’s all ordinaires CLOSED DOWN 0.48%/Chinese yuan (ONSHORE) closed DOWN at 6.5080/Oil UP to 63.97 dollars per barrel for WTI and 69.42 for Brent. Stocks in Europe OPENED MOSTLY MIXED LEANING TO RED.   ONSHORE YUAN CLOSED DOWN AGAINST THE DOLLAR AT 6.5080. OFFSHORE YUAN CLOSED DOWN AGAINST  THE ONSHORE YUAN AT 6.5130 //ONSHORE YUAN  WEAKER AGAINST THE DOLLAR/OFF SHORE STRONGER TO THE DOLLAR/. THE DOLLAR (INDEX) IS  STRONGER AGAINST ALL MAJOR CURRENCIES. CHINA IS STILL  HAPPY TODAY.(GOOD MARKETS )

3 a NORTH KOREA/USA

 

 

/SOUTH KOREA

 

There is considerable confusion in South Korea as the Ministry of Justice has reaffirmed that it is continuing to draw up laws to ban cryptocurrency trading. However the Ministry of Finance does not agree with the Ministry of Justice. South Korea is the largest trader of cryptocurrencies in the world

 

(courtesy zerohedge)_

Confusion In Korea: Ministry Of Finance Refuses To Support Cryptocurrency Trading Ban

Overnight, Bitcoin and the entire crypto sector took a major beating, falling as much as 11% after South Korea – one of the crytocurrency’s biggest markets – said it was drawing up laws to ban cryptocurrency trading. Specifically, South Korea’s Ministry of Justice reaffirmed that it is continuing to draft its cryptocurrency trading closure bill, which has been in the works since December 13. In a statement, South Korea Attorney General Park Sang-ki said:

“The South Korean Ministry of Justice is considering the closure of cryptocurrency trading to bring cryptocurrency mania and speculation under control for investor protection.”

This was in line with previous reports out of the country according to which the South Korean government formed a task force composed of representatives from the South Korean Ministry of Strategy and Finance, Financial Services Commission, Ministry of Justice, Fair Trade Commission, and Financial Supervisory Commission, has been preparing a comprehensive bill that will effectively prohibit underaged investors and foreigners from trading cryptocurrencies within the South Korean market, and will force all traders to trade under their real names to avoid money laundering.

However, where things get interesting is that in the hours after the surprise announcement by the Justice Ministry, South Korea’s Ministry of Strategy and Finance, a key member of the crypto task force, said that it does not agree with the “premature statement of the Ministry of Justice about a potential cryptocurrency trading ban.”

In a press conference, the South Korean Ministry of Strategy and Finance told local reporters  that it had first heard of the Ministry of Justice’s cryptocurrency trading ban through media reports. The cryptocurrency task force participated by the central bank, MInistry of Finance, Ministry of Justice, and other agencies have not agreed upon the proposal.

We do not share the same views as the Ministry of Justice on a potential cryptocurrency exchange ban,” MSF said according to the local Naver website.

asd

Kim Dong-yeon, Minister of Finance and Economy of the Ministry of Economy and Finance

South Korea Ministry of Strategy & Finance only found out the Ministry of Justice’s trading ban proposal through media reports.

MSF is upset because central bank, MSF, MoJ are in the same crypto task force. “Other members don’t share the same viewpoint,” MSF said

More from Naver, Google translated:

Many executives are embarrassed. It was not until I saw the news that I had encountered the policy of closing. An official at the Ministry of Finance said, “I did not know the announcement of the Justice Department to close the virtual money exchange after the advance notice,” he said. Another official said, “The field of virtual money such as bit coin should be deregulated into an area where Korea has advantages, like online games, and the government should directly raise the industry.”

Which is understandable for a nation in which millions of “bitcoin zombies” have made bitcoin trading their primary source of income.

There appears to also be a political element to the decision, and as Hani reported  this morning, opposition parties such as the right-wing people’s party and the people’s opposition parties, have voiced criticism saying “there should be a detailed review and coordination” and “we should prepare measures instead of crackdowns” in response to the statement by the Justice minister. Additionally, a spokesman for the Dongbang Party criticized the government’s decision saying “the announcement of the government’s closing of the virtual currency exchange is, in a word, hurting the nation… alot of people’s property has evaporated.” He also said that president Moon Jae-in “should apologize to the people and take appropriate measures.”

Evidently, the cryptocurrency trading ban proposal has not been finalized or even agreed upon by the South Korea Ministry of Strategy and Finance.

Finally, CCN reporter Joseph Young reports that in an official announcement, “South Korean government reaffirms there will be NO TRADING BAN for #cryptocurrency market in the short term and NOTHING IS FINALIZED.”

In an official announcement, South Korean government reaffirms there will be NO TRADING BAN for market in the short term and NOTHING IS FINALIZED.

A petition to fire the head of the Ministry of Justice over the trading fiasco filed.

Furthermore, a petition to fire the head of the Ministry of Justice over the #cryptocurrency trading fiasco filed.

In summary, it appears that the local Ministry of Justice may have jumped the shark with the cryptocurrency ban announcement, and it remains to be seen if this decision receives the government support it would need in order to pass even as a potential crypto-ban is increasingly becoming a highly politicized issue for a nation where cryptotrading has become one of the population’s favorite pastimes.

end

 

3 b JAPAN AFFAIRS

c) REPORT ON CHINA

 

Late last night, China states that news of a treasury purchase slowdown is fake and this caused yields to slide

 

(courtesy zero hedge)

China Calls Slowing Treasury Purchases Report “Fake News”, Yields Slide

Less than 24 hours after Bloomberg headlines rang around the world proclaiming China would “slow purchases” of US Treasuries, China’s State Administration of Foreign Exchange, SAFE, pushes back on the report, saying it is “fake news.”

As Blooomberg reports, SAFE says its investment in Treasuries is based on market conditions and its needs, and adds that it always diversifies investment of FX reverses.

Additionally, SAFE says the earlier report may have quoted a wrong source.

Reuters headlines provide a little more color:

  • CHINA’S FX RESERVES MANAGEMENT DEPARTMENTS ARE RESPONSIBLE INVESTORS -FX REGUATOR: RTRS
  • CHINA HAS BEEN DIVERSIFYING ITS FX RESERVES INVESTMENTS: RTRS
  • CHINA FX REGULATOR SAYS INVESTMENTS IN U.S. TREASURIES MARKET DRIVEN. CHINA HAS BEEN DIVERSIFYING ITS FX RESERVES INVESTMENTS: RTRS
  • REPORT ON CHINA CONSIDERING REDUCING OR STOPPING PURCHASES OF U.S. TREASURIES COULD BE BASED ON WRONG INFORMATION -CHINA GOVT SOURCE: RTRS

Following is a translation of a statement from China’s State Administration of Foreign Exchange in response to a report that said China may slow or halt purchases of U.S. treasuries.

“We are also aware of the news through some media reports. We think the report might have cited wrong sources or may be fake news.

China has always managed its forex reserves investments in accordance with the principle of diversification, to ensure the overall safety of FX assets, to maintain and increase their value. Like other investments, FX reserves investments in U.S. treasuries is managed in a professional way according to market conditions and investment needs. China’s FX reserves management department is a responsible investor both for the FX reserves and for the market in which it participates. China’s investments have promoted the stability of international financial markets and the preservation and appreciation of China’s foreign exchange reserves.”

US 10Y Yields immediately tumbled 2bps, well below the pre-China-headlines levels from this morning…

https://www.zerohedge.com/sites/default/files/inline-images/20180110_10Y_0.png

 

And Treasury futures volume surged…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180110_10Y1.png

Presumably, Beijing’s message was heard loud and clear (and acknowledged) in Washington.

 end

4. EUROPEAN AFFAIRS

Hawkish minutes  (maybe an early taper of QE) sends the Euro spiking and German bund prices rising (yields falling)

 

(courtesy zerohedge)

 

6. GLOBAL ISSUES

 

Ecuador grants citizenship to Assange

 

(courtesy zerohedge)

Ecuador Grants Citizenship To Julian Assange Amid “Threats To His Life”

Yesterday we reported that based on circumstantial evidence, Ecuador appeared to have granted a passport to Julian Assange just a day after he received a veiled eviction threat.

Then moments ago, in a press conference, the Ecuadorian Ministry of Foreign Affairs (MFA) announced that Ecuador had indeed granted naturalization to Julian Assange on December 12. The reaction of the MFA comes one day after Quito reportedly granted an ID card to Assange.

As a reminder, presaging the announcement, on Wednesday the WikiLeaks founder tweeted a picture of himself wearing an Ecuador football shirt, fueling speculation over his possible citizenship.

This was followed by Ecuador’s largest newspaper, El Universo, reported the news, citing “reliable sources”. And now, it is confirmed. More from Reuters:

  • ECUADOR FOREIGN MINISTER SAYS JULIAN ASSANGE SOUGHT ECUADOR NATURALIZATION
  • ECUADOR FOREIGN MINISTER SAYS FEARS THREATS TO JULIAN ASSANGE’S LIFE FROM THIRD PARTY STATES
  • ECUADOR GRANTED NATURALIZATION TO JULIAN ASSANGE ON DEC. 12
  • ECUADOR SEEKING “DIGNIFIED AND JUST” SOLUTION WITH BRITISH GOVT IN JULIAN ASSANGE CASE

The nation’s foreign minister announced Thursday that officials had decided to permit Assange’s naturalization while they look for ways to resolve his situation.

Ecuador gave Assange political asylum after he sought refuge in the embassy in 2012 to avoid extradition to Sweden for investigation of sex-related claims.

Sweden dropped the case, though Assange has remained in the embassy because he is still subject to arrest in Britain for jumping bail.

The Ecuadorian passport could obtain his first step to obtaining diplomatic immunity, as Ecuador wants to resolve Assange’s indefinite embassy stay. The WikiLeaks founder has been holed up in the Ecuadorian embassy for five years.

Ecuador usually issues such ID cards for people claiming residency status, which are called cedulas. The Vienna convention on diplomatic relations states that someone who holds a diplomatic passport is immune from prosecution. It is still no guarantee, however.

However, as VoA reports, the UK Foreign Office rejected a request from Quito to grant the whistleblower diplomatic status. The passport was reportedly granted to him on December 12.

denies request to grant @JulianAssange diplomatic status.

Ecuador’s foreign minister says the country is seeking a “dignified and just” solution with the UK government over Assange’s case. For now however, Assange isn’t going anywhere:

  • ASSANGE WILL NOT LEAVE ECUADOR EMBASSY IN LONDON WHILE THERE ARE NO SECURITY GUARANTEES – ECUADOR FOREIGN MINISTER

Developing

end

7. OIL ISSUES

 

Brent crude rises above 70 dollars

 

(courtesy zerohedge)

8. EMERGING MARKET

 end

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

Euro/USA 1.1943 DOWN .0012/ REACTING TO MERKEL’S FAILED COALITION/ SPAIN VS CATALONIA/REACTING TO +GERMAN ELECTION WHERE ALT RIGHT PARTY ENTERS THE BUNDESTAG/ huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/JAPAN TAPERING BOND PURCHASES /USA FALLING INTEREST RATES AGAIN/HOUSTON FLOODING/EUROPE BOURSES MOSTLY RED

USA/JAPAN YEN 111.62 UP 0.4159(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 1.3461 DOWN .0051 (Brexit March 29/ 2017/ARTICLE 50 SIGNED

THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS/MAY IN TROUBLE WITH HER OWN PARTY/

USA/CAN 1.2577 UP .0045 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS THURSDAY morning in Europe, the Euro FELL by 12 basis points, trading now ABOVE the important 1.08 level RISING to 1.1929; / Last night the Shanghai composite CLOSED UP 3.51 POINTS OR 0.10% / Hang Sang CLOSED UP 46.67 POINTS OR 0.15% /AUSTRALIA CLOSED DOWN 0.48% / EUROPEAN BOURSES MIXED LEANING TO RED 

The NIKKEI: this THURSDAY morning CLOSED DOWN 77.77 POINTS OR 0.33%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 46.67 POINTS OR 0.15% / SHANGHAI CLOSED UP 3.51 POINTS OR 0.10% /Australia BOURSE CLOSED DOWN 0.48`% /Nikkei (Japan)CLOSED DOWN 77.77 POINTS OR 0.33%

INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: 1319.20

silver:$17.01

Early THURSDAY morning USA 10 year bond yield: 2.540% !!! DOWN 1 IN POINTS from WEDNESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. (POLICY FED ERROR)

The 30 yr bond yield 2.883 DOWN 1 IN BASIS POINTS from WEDNESDAY night. (POLICY FED ERROR)

USA dollar index early THURSDAY morning: 92.47 UP 13 CENT(S) from YESTERDAY’s close.

This ends early morning numbers THURSDAY MORNING

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And now your closing THURSDAY NUMBERS \1 PM

Portuguese 10 year bond yield: 1.825% DOWN 2  in basis point(s) yield from WEDNESDAY/

JAPANESE BOND YIELD: +.072% DOWN 1   in basis points yield from WEDNESDAY/JAPAN losing control of its yield curve/

SPANISH 10 YR BOND YIELD: 1.538% UP 2  IN basis point yield from WEDNESDAY/

ITALIAN 10 YR BOND YIELD: 2.051 UP 2  POINTS in basis point yield from WEDNESDAY/

the Italian 10 yr bond yield is trading 51 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.581%  UP 8 IN BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR THURSDAY

Closing currency crosses for THURSDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/4:00 PM

Euro/USA 1.2037 UP.0081 (Euro UP 81 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 111.34 DOWN 0.115 Yen UP 12 basis points/

Great Britain/USA 1.3542 UP .0032( POUND UP 32 BASIS POINTS)

USA/Canada 1.2527 DOWN  .0007 Canadian dollar UP 7 Basis points AS OIL ROSE TO $64.46

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This afternoon, the Euro was UP 81 to trade at 1.2037

The Yen ROSE to 111.35 for a GAIN of 12 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

The POUND ROSE BY 32 basis points, trading at 1.3542/

The Canadian dollar ROSE by 7 basis points to 1.2527/ WITH WTI OIL RISING TO : $64.46

The USA/Yuan closed AT 6.5063
the 10 yr Japanese bond yield closed at +.072% DOWN 1 FULL  BASIS POINTS / yield/
Your closing 10 yr USA bond yield DOWN 2   IN basis points from WEDNESDAY at 2.559% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 2.903 DOWN  0  in basis points on the day /

Your closing USA dollar index, 91.90 DOWN 43 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 THURSDAY: 1:00 PM EST

London: CLOSED UP 14.43 POINTS OR 0.19%
German Dax :CLOSED DOWN 78.44 POINTS OR 0.59%
Paris Cac CLOSED DOWN 16.13 POINTS OR 0.29%
Spain IBEX CLOSED UP 6.90 POINTS OR 0.07%

Italian MIB: CLOSED UP 147.84 POINTS OR 0.64%

The Dow closed DOWN 12,87 POINTS OR 0.05%

NASDAQ WAS  UP 20.83 Points OR 0.29% 4.00 PM EST

WTI Oil price; 64.46 1:00 pm;

Brent Oil: 69.78 1:00 EST

USA /RUSSIAN ROUBLE CROSS: 56.67 DOWN 38/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 38 BASIS PTS)

TODAY THE GERMAN YIELD RISES TO +.581% FOR THE 10 YR BOND 1.00 PM EST EST

END

This ends the stock indices, oil price, currency crosses and interest rate closes for today 4:30 PM

Closing Price for Oil, 4:30 pm/and 10 year USA interest rate:

WTI CRUDE OIL PRICE 4:30 PM:$63.56

BRENT: $69.09

USA 10 YR BOND YIELD: 2.535%   THE RAPID ASSENT IN YIELD IS VERY DANGEROUS/ANYTHING OVER 2.70% AND THE ENTIRE DERIVATIVES BLOW UP

USA 30 YR BOND YIELD: 2.865%

EURO/USA DOLLAR CROSS: 1.2031 UP .0075

USA/JAPANESE YEN:111.23 down 0.227

USA DOLLAR INDEX: 91.94 DOWN 46 cent(s)/

The British pound at 5 pm: Great Britain Pound/USA: 1.3536 : UP 25 POINTS FROM LAST NIGHT

Canadian dollar: 1.2534 down 2 BASIS pts

German 10 yr bond yield at 5 pm: +0.581%

END

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

TRADING IN GRAPH FORM FOR THE DAY

Trannies Soar Most Since 2001, Treasury Yields Tumble, Dollar Dumped

After a brief pause, everything is awesome again…

 

Trannies exploded higher today (2nd best day since Trump election)… S&P record high, Dow above 25,500 for first time… and on and on…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_Eod15.png

 

Despite equity market exuberance, VIX rose on the day, testing back above 10…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_Eod14.png

Today was among the biggest short squeezes in recent years…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_Eod16.png

 

YTD, Trannies are up 6.5% (up 8 days in a row – no down days in 2018 yet)… and Nasdaq is still soaring too…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_Eod2.png

This is the best start to a year for Trannies since 2001.

 

The gains in Trannies were driven by upgrades across the board for airlines…this is the biggest 2-day gain since July 2016, busting out to new record highs…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_Eod1.png

 

Credit markets collapsed to their lowest risk since Feb 2007…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_ig.png

Which is fascinating as debt soars…

https://www.zerohedge.com/sites/default/files/inline-images/20180111_ig1.png

Treasury yields tumbled on the day as China denials and a super strong 30Y auction put rest to any ‘end of bond bull is imminent’ arguments for the day…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_Eod6.png

 

Yields do remain higher on the week though…

https://www.zerohedge.com/sites/default/files/inline-images/20180111_Eod7.png

But saw another notable flattening in the yield curve…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_Eod8.png

 

 

 

The dollar plunged again (biggest drop since Jan 2) to the lowest close snce 9/22/17…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_Eod4.png

Most notably volatility is picking up in FX land – Something is happening in China…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_Eod5.png

As Bloomberg notes, offshore yuan strengthened past 6.50 level, on track to erase week’s loss as the U.S. dollar weakened on weaker-than-expected economic data and stronger oil prices. CNH traders downplay impact from removal of counter-cyclical factor in fixing; offshore yuan now at strongest in three weeks on a closing basis.

 

Gold inched higher on the day as the dollar tumbled, oil gained…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_Eod10.png

 

And while airlines soared so energy prices also soared (makes sense), with Brent testing above $70 and WTI above $64.50… then fell back to close unchanged…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_Eod11.png

Cryptos had a noisy day after tumbling on a number of South Korea headlines with negative connotations, but Ripple ramped on news of a deal with Moneygram…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_Eod3.png

 

Notably the Bitcoin-Trust-to-Bitcoin-Futs arb is coming back in…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_Eod12.png

 

Finally, you are here…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_Eod9.png

 

Bonus Chart: US Macro Surprise data is starting to roll over quite notably (i.e. from an extreme high in optimism, data is disappointing). The last time we were this over-optimistic and data rolled over, the S&P fell 10%…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_Eod13.png

 

end

Deflation is starting to appear as producer prices plunge in December.  Deflation begins when the economy falters

(courtesy zerohedge)

Deflation Re-Emerges – Producer Prices Plunge In December

Following the deflationary core import price index print, producer prices dropped 0.1% in December, missing expectations dramatically and ‘deflating’ the most since Aug 2016.

  • Final demand ex food, energy fell 0.1% m/m vs est. up 0.2%
  • Final demand rose 2.6% y/y vs est. up 3%
  • Final demand ex food, energy rose 2.3% y/y vs est. up 2.5%
  • Final demand ex food, energy and trade services rose 0.1% m/m
  • Final demand personal consumption fell 0.2% m/m
  • Final demand personal consumption rose 2.6% y/y

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_PPI1.png

Under the headlines:

https://www.zerohedge.com/sites/default/files/inline-images/20180111_PPI.png

The index for final demand services moved down 0.2 percent in December following nine consecutive increases.

Most of the decrease can be traced to a 0.6-percent decline in margins for final demand trade services. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services fell 0.4 percent.

Conversely, the index for final demand services less trade, transportation, and warehousing inched up 0.1 percent.

Product detail: A major factor in the December decline in prices for final demand services was the index for automotive fuels and lubricants retailing, which fell 10.7 percent.

The indexes for loan services (partial); airline passenger services; apparel, footwear, and accessories retailing; legal services; and health, beauty, and optical goods retailing also moved lower.

In contrast, prices for inpatient care advanced 0.7 percent. The indexes for truck transportation of freight and apparel wholesaling also increased.

In December prices for beef and veal fell 6.3 percent. The indexes for gasoline, fresh and dry vegetables, liquefied petroleum gas, and turbines and turbine generator sets also moved lower.

end

 

Initial jobless claims unexpectedly surges despite continuing claims being the lowest in 45 years.

(courtesy zerohedge)

Initial Jobless Claims Unexpectedly Surge, Continuing Claims Lowest In 45 Years

2016 ended with a 13% YoY decline in initial jobless claims. However, thanks to a late-year surge (which we are sure will be excused away with ‘weather’ of some sort), 2017 saw initial claims rise 6.5% YoY.

Initial claims rose 11k to 260k (against expectations of a decline to 245k)…

https://www.zerohedge.com/sites/default/files/inline-images/20180111_claims.png

However, continuing claims continue to fall, breaking down this week to the lowest level since 1973…

Continuing claims fell 35k to 1.867mm (beating expectations of 1.92mm)…

https://www.zerohedge.com/sites/default/files/inline-images/20180111_claims1.png

As good as it gets?

end

SWAMP STORIES

Feinstein makes a startling admission that she got pressured into releasing the Fusion transcripts.  She then backtracks and said that she was not pressured.

(courtesy zerohedge)

Feinstein Makes Startling Admission: “I Got Pressured” To Release Fusion Transcripts

Sen. Dianne Feinstein made a startling admission when asked why she released the Fusion GPS transcripts on Tuesday without first informing Judiciary Committee Chairman Chuck Grassley (R-IA) ahead of time.

 

sd

“I meant to tell him, and I didn’t have a chance to tell him, and that concerns me,” Feinstein told CNN Congressional correspondent Manu Raju, adding “I just got pressured, and I didn’t do it.

Which begs the question:

When asked to elaborate, Feinstein walked back her statement, saying “I wasn’t pressured,” without any further comment. Her office later said she misspoke and that she wasn’t pressured to release the transcript.

Senator Feinstein released transcripts of Fusion GPS co-founder Glenn Simpson’s closed door testimony to the Senate Judiciary committee on Tuesday, infuriating Chairman Grassley. Simpson and fellow Fusion GPS co-founder Peter Fritsch penned an op-ed in the New York Times last week calling on congress to release the “full transcripts” of Simpson’s testimony.

 

asd

On Wednesday morning, President Trump tweeted “The fact that Sneaky Dianne Feinstein, who has on numerous occasions stated that collusion between Trump/Russia has not been found, would release testimony in such an underhanded and possibly illegal way, totally without authorization, is a disgrace.” 

Feinstein hit back, saying “I didn’t do anything illegal,” adding “That transcript has become so abused that time has come for people to take a look at it.”

Feinstein said in a statement, “The American people deserve the opportunity to see what he said and judge for themselves. The innuendo and misinformation circulating about the transcript are part of a deeply troubling effort to undermine the investigation into potential collusion and obstruction of justice.”

Trump later tweeted “The single greatest Witch Hunt in American history continues. There was no collusion, everybody including the Dems knows there was no collusion.”

If in fact Senator Feinstein was pressured to release the transcripts, it begs several questions; who pressured her, why now – less than a week after Fusion’s NYT op-ed calling for the release, and why couldn’t she pick up the phone and let Grassley know?

 

end

House Judiciary Committee member Louie Gohmert, a Republican from Texas wrote in an op-ed Wednesday that if Trump betrays his base and passes a DACA amnesty bill without first securing the border and building the wall, then the Republicans will be blown out of the water in the 2018 elections

(courtesy zerohedge)

Gohmert Rages: If Trump Passes DACA With No Wall, GOP Will Lose Congress And Trump Will Be Impeached

House Judiciary Committee member Louie Gohmert (R-TX) wrote a scorching op-ed on  Wednesday warning that if Trump betrays his base and works with Republicans to pass a “DACA amnesty” bill without first “securing the border and building a wall where it is needed,” Republicans will get slaughtered in the 2018 midterm elections less than ten months away – with Nancy Pelosi reclaiming her seat as Speaker of the House.

Once that happens, Gohmert writes, Trump would most certainly face an impeachment attempt:

Following that devastating loss, the first order of business for new House Speaker Nancy Pelosi in January 2019 in the 116th Congress will be an impeachment vote regarding President Donald J. Trump. The great hope for a return to the rule of law that was created when President Trump was elected will be gone.

Gohmert goes on to assert that Trump is working too hard to impress members of Congress – most of whom were not supportive of him even just weeks before the election – and would gladly “stab him in the back” at their first opportunity. The mere fact that Trump broke a campaign promise to compromise on DACA amnesty “no matter what legalistic or deceptive name it is given,” will be used as ammunition against the President, says Gohmert.

asd

No wall has been built nor is it being constructed right now on our southern border despite President Trump’s constant pushing and urging Congress to get it done, wrote Gohmert, adding “These House and Senate “leaders” have not found the time or ability to provide much more than token startup costs as they continue to talk of a coming non-amnesty amnesty.”

Read Gohmert’s op-ed HERE

Trump, meanwhile, says no DACA without a wall. “It’s gotta include the wall,” said the US President at a press conference with Norway’s prime minister. “Any solution has to include the wall, adding “We need the wall for security, we need the wall for safety, we need the wall for stopping the drugs from pouring in.”

Perhaps related – to his comment on the wall and drugs pouring in, Trump made a cryptic off-the-cuff remark to members of Congress and healthcare practitioners Wednesday night. “I think I know the answer” to America’s opioid crisis, said the President – adding that he’s “not sure the country is ready for it yet.” 

Does anybody know what I mean?” Trump asked the group gathered around his desk. “I think so.”

Rep. Gohmert went on Fox Business yesterday, where he reiterated that congress should not pass DACA without funds for a wall:

Gohmert’s Wednesday op-ed may have been insipred by an exchange during a Tuesday bipartisan negotiation session on immigration, in which Senator Dianne Feinstein (D-CA) pressed Trump to include a “clean” bill to restore the Obama-era DACA program – referring to a bill “clean” of earmarks for a border wall or other measures.

“Yeah, I would like to do it,” Trump replied. Perhaps sensing the President didn’t hear or understand what Feinstein meant, a Republican congressman clarified what Feinstein meant.

Curiously, the line “Yeah, I would like to do it,” was edited out of both the official White House treanscript as well as the MSNBC closed captioning system. The White House later corrected the mistake.

asd

In all likelihood, Trump misunderstood Feinstein – as he made clear later that there would be no DACA renewal without a wall, however Gohmert is joined by pundit Ann Coulter, who said that Trump “proceeded to completely sell out the base and actually added to his problems by appearing senile.”

In a half-dozen exchanges — which, again, he wanted televised — Trump responded to remarks as if he had no clue what the person was saying. One senator would talk — he’d agree. Someone else would say the exact opposite — he’d agree with that, too. –Ann Coulter

Coulter broke down Tuesday’s DACA “Negotiations” and the impression Trump left as follows…

sdf

Trump was more than willing to sell out the base to solve a personal problem of his — the Michael Wolff book— but managed to not convince a single American that he’s articulate, bright or a good leader.

On MSNBC, the hosts didn’t say, “You know, we saw a new side of Trump today …” Instead, they could barely suppress their giggles over the great negotiator being rolled.

The Democrats’ opening bid is: Not only does every poor person in the world get to come live here, but all their relatives get to come, too!

They don’t control any branch of government, and they’re not budging from that.

Trump’s counter-offer is: OK! My immigration policy is whatever you send me!

The end result was: On the left, they’re happy, but still think Trump’s a moron. On the right, they’re unhappy, and also think Trump’s a moron.

The people who do not realize Tuesday was the lowest moment of the Trump presidency have no idea what they’re talking about. The headline on Trump’s sit-down could have been:

“TRUMP ANNOUNCES SAME FAILED AMNESTY DEAL WE HAD 30 YEARS AGO”

The media have done such a fantastic job lying to the public that no one knows that.

If Gohmert and Coulter are correct, Trump’s compromise on DACA and apparent eagerness to appease his recent enemies is indeed not going to go over well with his base, and the GOP can kiss their majority goodbye.

 

end
Early this afternoon, supposedly we had a bipartisan deal on DACA and on partial funding for the wall.  That ended late this afternoon after Trump changed his mind
(courtesy zero hedge)

Trump: “Why Do We Want People From These Shithole Countries Come Here?”

While a bipartisan senate group had reportedly reached an “agreement in principle” on DACA, as well as packaging immigration reform in order to avoid a government shutdown next Friday, things took another turn for the bizarre, when the WaPo reported that Trump “grew frustrated with lawmakers Thursday in the Oval Office when they floated restoring protections for immigrants from Haiti, El Salvador and African countries” as part of the proposed deal.

“Why are we having all these people from shithole countries come here?” Trump burst out, referring to African countries and Haiti. Instead, he suggested that the United States should instead bring more people from countries like Norway.

The comments left lawmakers “taken aback.”

Sens. Lindsey O. Graham (R-S.C.) and Richard J. Durbin (D-Ill.) proposed cutting the visa lottery program by 50 percent and prioritizing countries already in the system, a White House official said.

As reported earlier, the administration announced this week that it was removing the protection for over 200,000 citizens from El Salvador; meanwhile, as part of a potential bipartisan deal, lawmakers discussed restoring protections for countries that have been removed from the temporary protected status program while adding $1.5 billion for a border wall and making changes to the visa lottery system.

And, as so often happens, what was until noon a tentative deal, exploded in the afternoon when Trump changed his mind:

Trump had seemed amenable to a deal earlier in the day during phone calls, aides said, but shifted his position in the meeting and did not seem interested.

As a result, what was until just hours ago a done deal, is now in tatters.

Graham and Durbin thought they would be meeting with Trump alone and were surprised to find immigration hard-liners such as Rep. Bob Goodlatte (R-Va.) and Sen. Tom Cotton (R-Ark.) at the meeting. The meeting was impromptu and came after phone calls Thursday morning, Capitol Hill aides said.

After the meeting, Marc Short, Trump’s legislative aide, said the White House was nowhere near a bipartisan deal on immigration.

“We still think we can get there,” White House press secretary Sarah Huckabee Sanders said at the daily White House news briefing.

Or maybe not, in which case a government shutdown may be inevitable.

Oh, and as for the White House, it refused to deny that Trump said it.

And yes, for those wondering, “shithole” is now trending

Trump blasts the FISA act which is responsible for the spying on individuals in the USA and is especially responsible for their assistance in the discredited and phony GPS dossier
(courtesy zerohedge)

Trump Blasts FISA Act Ahead Of House Vote On Reauthorization

As the House prepares to vote Thursday on a measure to extend a package of controversial FISA protections that have been opposed by a bipartisan group of lawmakers, President Donald Trump ripped the law in a tweet early Thursday: “‘House votes on controversial FISA ACT today.” This is the act that may have been used, with the help of the discredited and phony Dossier, to so badly surveil and abuse the Trump Campaign by the previous administration and others?”

 

“House votes on controversial FISA ACT today.” This is the act that may have been used, with the help of the discredited and phony Dossier, to so badly surveil and abuse the Trump Campaign by the previous administration and others?

 

…Though he quickly clarified that he was taking steps to reform the unmasking process and that the provision coming to a vote on Thursday  pertained primarily to foreign surveillance.

 

“House votes on controversial FISA ACT today.” This is the act that may have been used, with the help of the discredited and phony Dossier, to so badly surveil and abuse the Trump Campaign by the previous administration and others?

With that being said, I have personally directed the fix to the unmasking process since taking office and today’s vote is about foreign surveillance of foreign bad guys on foreign land. We need it! Get smart!

 

The final vote on the provision is expected around 11:45 am, according to Majority Leader Kevin McCarthy.

As the Hill explains, the House is set to vote Thursday on renewing what’s known as Section 702 of FISA – a law that allows the National Security Agency to collect texts and emails of foreigners abroad without an individualized warrant, even when they communicate with Americans in the US.

Trump’s suspicion of the law stems from Obama-era National Security Adviser Susan Rice’s decision to “unmask” several Trump campaign associates, a decision that may have played a role in the FBI’s decision to launch the Russia investigation.

Some Republicans have speculated that the Obama administration learned of former national security advisor Michael Flynn’s calls with Russia’s ambassador to the US through Section 702.

The legislation to be considered by the House includes some small changes meant to appeal to critics of the law. It would require the FBI to obtain a court order before reviewing the content of queries for Americans’ information in the database – though an order would not be required to search the database in the first place – and allow such an order only when investigators want to use the information in a criminal case.

A number of lawmakers do not think that goes far enough, however, an a bipartisan amendment, backed by Rep. Justin Amash, imposing restrictions designed to protect Americans who are swept up in government spying on foreigners overseas will also get a vote.

Amash’s language would require investigators to obtain a warrant in order to search the 702 database for Americans’ information in criminal cases.

Officially, the White House rejected proposed amendments that would roll back some of the intelligence-sharing provisions of the FISA Act, and instead asked lawmakers to extend and preserve the provision as is.

end

My goodness, on the same day as the minimum wage rises, Sam’s closes 260 stores:

 

Walmart Abruptly Closing 260 Sam’s Club Stores, Firing Thousands On Same Day It Raised Minimum Wages

Wal-Mart was quick to make a media splash with the news that it was raising the starting hourly wages to $11/hour, expanding employee benefits and offering worker bonuses of up to $1000 in response to the Trump tax cuts; it was far more covert, however, with the news that on the very same day it was also closing hundreds of Sam’s Club stores nationwide and laying off thousands of workers according to numerous media reports.

Jessica Buckner, an audit team lead at a Sam’s Club location in Anchorage, told local TV station KTVA that all Alaska stores are closing as part of a larger downsizing across the U.S. “From what I heard, there’s over 260 stores that have been closed down,” she said according to CBS News.

The wholesale clubs’ official closure date is Jan. 26, Buckner said.

The closures also affect stores in New Jersey, upstate New York, Georgia, IllinoisIndiana, Ohio, Louisiana, North Carolina, Tennessee and Texas. In some locations, per social media, people showed up to work only to be told that their location was closing, with nearly no advance notice.

The chain, which competes with Costco , has more than 650 locations employing more than 100,000 people, with an average of 175 employees per store, according to the company. 

No formal announcement was posted Thursday morning by Sam’s Club, but the company acknowledged the closures on Twitter with a general statement.

The company drew criticism from people on Twitter who objected to the lack of notice about the closings.

And yes, we will repeat it because it bears repeating: the closures come on the same day that Walmart announced it was raising its minimum wage to $11 per hour.

 

Meanwhile, Gordon Haskett analyst Chuck Grom calculated that Wal-Mart’s wage investment is just 15% of the tax gain. According to Haskett, “Wal-Mart may see tax rate of ~23% in FY19 (year ended Jan. 2019) vs current 32%, which would provide $2b windfall”. As such, he adds, the “labor investment of ~$300m represents just 15% of total; assumes a similar amount will go toward investments in price.”

What will the company use the rest of the money on: why higher dividend payments and accelerated buybacks of course.

Oh, and free advertising: “with WMT being first retailer “out of the gate,” it should get some “free media.

end

 

I will  see you FRIDAY night

HARVEY

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