Jan 31 A/USA 10 YR YIELD HITS 2.74% AND THEN CRASHES BACK TO 2.71% ON HAWKISH FOMC/GOLD AND SILVER RISE ON INFLATION EXPECTATIONS: GOLD UP $3.10 TO $1336.9 AT COMEX CLOSING TIME AND THEN SHOOTS UP ANOTHER 9.00 DOLLARS TO $1346.00/SILVER IS UP 17 CENTS TO $17.27 AT COMEX CLOSING TIME THEN SHOOTS UP TO $17.34/BANKERS ISSUE 14,404 EFP CONTRACTS TO LONGS AS A LONDON FORWARD/BANKERS ISSUE 2467 CONTRACTS TRANSFERRING LONGS OVER FOR A LONDON BASED FORWARD/HUGE SWAMP STORIES FOR YOU TONIGHT!!

 

 

GOLD: $1336.90 UP $3.10

Silver: $17.27 UP 17 cents

Closing access prices:

Gold $1344.20

silver: $17.34

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: $1347.22 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME: $1339.70

PREMIUM FIRST FIX: $8.52

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SECOND SHANGHAI GOLD FIX: $1353.55

NY GOLD PRICE AT THE EXACT SAME TIME: $1342.85

Premium of Shanghai 2nd fix/NY:$10.70

SHANGHAI REJECTS  NY /LONDON PRICING OF GOLD

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LONDON FIRST GOLD FIX: 5:30 am est $1343.35

NY PRICING AT THE EXACT SAME TIME: $1343.10

LONDON SECOND GOLD FIX 10 AM: $1345.35

NY PRICING AT THE EXACT SAME TIME. $1344.40???

For comex gold:

FEBRUARY/

NUMBER OF NOTICES FILED TODAY FOR FEBRUARY CONTRACT: 452 NOTICE(S) FOR 45200 OZ.

TOTAL NOTICES SO FAR: 452 FOR 45200 OZ (1.4059 TONNES),

For silver:

jANUARY

116 NOTICE(S) FILED TODAY FOR

580,000 OZ/

Total number of notices filed so far this month: 116 for 580,000 oz

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Bitcoin: BID $10,203/OFFER $10,080 UP $176 (morning)

Bitcoin: BID/   $9984/ $10,200 offer down 51  (CLOSING/5 PM)

end

Let us have a look at the data for today

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In silver, the total open interest FELL BY CONSIDERABLE 2830 contracts from 201,188 FALLING TO 198,358 DESPITE YESTERDAY’S TINY  6 CENT FALL IN SILVER PRICING.  WE HAD CONSIDERABLE COMEX LIQUIDATION. HOWEVER, WE WERE AGAIN NOTIFIED THAT WE HAD ANOTHER GOOD SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP ROUTE:  2467 EFP’S FOR MARCH AND AND ZERO FOR ALL  OTHER MONTHS  AND THUS TOTAL ISSUANCE OF 2467 CONTRACTS. HOWEVER THE MOVEMENT ACROSS TO LONDON IS NOT AS SEVERE AS IN GOLD AS THERE SEEMS TO BE  MAJOR PLAYERS WILLING TO TAKE ON THE BANKS AT THE COMEX. STILL, WITH THE TRANSFER OF 2467 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. ALSO KEEP IN MIND THAT THERE CAN BE A DELAY OF 24 HRS IN THE ISSUING OF EFP’S.

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

2467 CONTRACTS (FOR 1 TRADING DAYS TOTAL 2467 CONTRACTS OR 12.335 MILLION OZ: AVERAGE PER DAY: 2467 CONTRACTS OR 12.335 MILLION OZ/DAY)

TO GIVE YOU AN IDEA AS TO THE HUGE SUPPLY THIS MONTH IN SILVER:  SO FAR THIS MONTH:  12.335 MILLION PAPER OZ HAVE MORPHED OVER TO LONDON. THIS REPRESENTS AROUND 0.17% OF ANNUAL GLOBAL PRODUCTION

 

ACCUMULATION IN YEAR 2018 TO DATE SILVER EFP’S:  248.205 MILLION OZ.

ACCUMULATION FOR JAN 2018: 236,879 MILLION OZ

 

RESULT: A CONSIDERABLE SIZED LOSS IN OI COMEX DESPITE THE  6 CENT FALL IN SILVER PRICE.  WE HOWEVER HAD A GOOD SIZED EFP ISSUANCE OF 2467 CONTRACTS WHICH EXITED OUT OF THE SILVER COMEX AND TRANSFERRED THEIR OI TO LONDON AS FORWARDS. SPECULATORS CONTINUED THEIR INTEREST IN ATTACKING THE SILVER COMEX FOR PHYSICAL SILVER . FROM THE CME DATA 2467 EFP’S WERE ISSUED FOR TODAY  FOR A DELIVERABLE FORWARD CONTRACT OVER IN LONDON WITH A FIAT BONUS. WE REALLY LOST 363 OI CONTRACTS i.e. 2467 open interest contracts headed for London (EFP’s) TOGETHER WITH A DECREASE OF 2830  OI COMEX CONTRACTS. AND ALL OF THIS HAPPENED WITH THE FALL IN PRICE OF SILVER OF 6 CENTS AND A CLOSING PRICE OF $17.10 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. 0.9915 BILLION TO BE EXACT or 142% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT JANUARY MONTH/ THEY FILED: 116 NOTICE(S) FOR 580,000 OZ OF SILVER

In gold, the open interest ROSE  BY A LARGE 2891 CONTRACTS UP TO 559,332 DESPITE THE GOOD SIZED FALL IN PRICE OF GOLD WITH YESTERDAY’S TRADING ($4.85). IN ANOTHER DEVELOPMENT, WE RECEIVED THE TOTAL NUMBER OF GOLD EFP’S ISSUED FOR TODAY AND IT TOTALED A GOOD SIZED  14,404 CONTRACTS OF WHICH FEBRUARY SAW 14,404 CONTRACTS ISSUED AND  APRIL SAW THE ISSUANCE OF 0 CONTRACTS.    The new OI for the gold complex rests at 561,437. ALSO REMEMBER THAT THERE WILL BE A DELAY IN THE ISSUANCE OF EFP’S.  THE BANKERS REMOVE LONG POSITIONS OF COMEX GOLD IMMEDIATELY.  THEN THEY ORCHESTRATE THEIR PRIVATE EFP DEAL WITH THE LONGS AND THAT COULD TAKE AN ADDITIONAL 48 HRS SO WE GENERALLY DO NOT GET A MATCH WITH RESPECT TO DEPARTING COMEX LONGS AND NEW EFP LONG TRANSFERS. DUE TO THE DELAY IN THE RELEASE OF YESTERDAY’S DATA YOU CAN BET THE FARM THAT THEY HAVE DELAYED THE RELEASE OF MANY EFPS. 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 COMEX. 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 TODAY WE HAVE A GAIN OF 17,295  CONTRACTS: 2891 OI CONTRACTS INCREASED AT THE COMEX AND A STRONG SIZED  14,404 OI CONTRACTS WHICH NAVIGATED OVER TO LONDON.

YESTERDAY, WE HAD 11909 EFP’S ISSUED.

ACCUMULATION OF EFP’S/ GOLD(EXCHANGE FOR PHYSICAL) FOR THE MONTH OF FEBRUARY STARTING WITH FIRST DAY NOTICE: 14,404 CONTRACTS OR 1,440,400  OZ OR 44.803 TONNES (1 TRADING DAYS AND THUS AVERAGING: 14,404 EFP CONTRACTS PER TRADING DAY OR 1,440,400 OZ/DAY)

TO GIVE YOU AN IDEA AS TO THE HUGE SIZE OF THESE EFP TRANSFERS :   SO FAR THIS MONTH IN 1 TRADING DAYS: IN  TONNES: 44.8 TONNES

TOTAL ANNUAL GOLD PRODUCTION, 2017, THROUGHOUT THE WORLD EX CHINA EX RUSSIA: 2200 TONNES

THUS EFP TRANSFERS REPRESENTS 44.8/2200 TONNES =  2.03% OF GLOBAL ANNUAL PRODUCTION SO FAR IN JANUARY ALONE.

 

ACCUMULATION OF GOLD EFP’S YEAR 2018 TO DATE:  697.02 TONNES

ACCUMULATION OF GOLD EFP’S FOR JANUARY 2018: 653.22  TONNES

Result: A  GOOD SIZED INCREASE IN OI AT THE COMEX WITH THE LARGE SIZED FALL IN PRICE IN GOLD TRADING YESTERDAY ($4.85). IT IS WITHOUT A DOUBT THAT MANY OF THE DEPARTED COMEX LONGS ARE WAITING TO RECEIVE A PRIVATE EFP CONTRACT FOR EITHER FEBRUARY OR APRIL AND THESE GUYS ARE STILL NEGOTIATING THEIR DEAL. WE HAD ANOTHER GOOD SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 14,404 AS THESE HAVE ALREADY BEEN NEGOTIATED.   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 14,404 EFP CONTRACTS ISSUED, WE HAD A NET GAIN IN OPEN INTEREST OF 17,295 contractON THE TWO EXCHANGES:

14,404 CONTRACTS MOVE TO LONDON AND  2891 CONTRACTS INCREASED AT THE COMEX. (in tonnes, the GAIN in total oi equates to 53.79 TONNES).

we had: 452 notice(s) filed upon for 452,200 oz of gold.

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

GLD

With gold UP  $3.10, the crooks orchestrated another big change in gold inventory at the GLD/a withdrawal of 5.32 tonnes of gold/

Inventory rests tonight: 841.35 tonnes.

SLV/ 

A NO CHANGES IN SILVER INVENTORY AT THE SLV/ INVENTORY RESTS AT 313.896 MILLION OZ/

end

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

1. Today, we had the open interest in silver FELL BY A CONSIDERABLE 2830 contracts from 201,188 DOWN TO 198,358 (AND now A LITTLE FURTHER FROM  THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) DESPITE  THE SMALL SIZED LOSS  IN PRICE OF SILVER  (6 CENTS WITH RESPECT TO  YESTERDAY’S TRADING).   OUR BANKERS USED THEIR EMERGENCY PROCEDURE TO ISSUE ANOTHER GOOD 2467 PRIVATE EFP’S FOR MARCH  (WE DO NOT GET A LOOK AT THESE CONTRACTS AS IT IS PRIVATE BUT THE CFTC DOES AUDIT THEM) AND 0 EFP’S FOR ALL OTHER MONTHS .  EFP’S GIVE OUR COMEX LONGS A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON. WE HAD MINIMAL COMEX SILVER COMEX LIQUIDATION. IF WE TAKE THE  OI LOSS AT THE COMEX OF  2830 CONTRACTS TO THE 2467 OI TRANSFERRED TO LONDON THROUGH EFP’S WE OBTAIN A LOSS OF 363 OPEN INTEREST CONTRACTS.  WE STILL HAVE A GOOD AMOUNT OF SILVER OUNCES THAT ARE STANDING FOR METAL IN JANUARY (SEE BELOW). THE NET LOSS TODAY IN OZ ON THE TWO EXCHANGES: 1.815 MILLION OZ!!!

RESULT: A CONSIDERABLE SIZED DECREASE IN SILVER OI AT THE COMEX DESPITE THE SMALL SIZED LOSS  OF 6 CENTS IN PRICE (WITH RESPECT TO YESTERDAY’S TRADING). BUT WE ALSO HAD ANOTHER GOOD 2467 EFP’S ISSUED TRANSFERRING COMEX LONGS OVER TO LONDON. TOGETHER WITH THE GOOD  SIZED AMOUNT OF SILVER OUNCES STANDING FOR FEBRUARY, 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 TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 7.17 points or 0.21% /Hang Sang CLOSED UP 193.68 pts or 0.86% / The Nikkei closed DOWN 193.68 POINTS OR 0.83%/Australia’s all ordinaires CLOSED UP 0.18%/Chinese yuan (ONSHORE) closed UP at 6.28897/Oil DOWN to 64.09 dollars per barrel for WTI and 68.03 for Brent. Stocks in Europe OPENED IN THE GREEN .   ONSHORE YUAN CLOSED UP AGAINST THE DOLLAR AT 6.2887. OFFSHORE YUAN CLOSED DOWN AGAINST  THE ONSHORE YUAN AT 6.2887//ONSHORE YUAN MUCH STRONGER AGAINST THE DOLLAR/OFF SHORE MUCH STRONGER TO THE DOLLAR/. THE DOLLAR (INDEX) IS  MUCH WEAKER AGAINST ALL MAJOR CURRENCIES. CHINA IS HAPPY TODAY.(STRONGER CURRENCY BUT STILL  WEAK MARKETS )

 

 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

b) REPORT ON JAPAN

The Bank of Japan intervenes by boosting bond buying to halt the rise in Japanese bond yields as it hit 0.10%

 

( zerohedge)

3 c CHINA

We have been reporting to you on the financial difficulty of NHA,  Today it was revealed that they have a shortfall of almost 15 billion yuan that is owed by June. It seems that they are on the verge of bankruptcy and that will probably start the house of cards collapsing.

 

(courtesy zerohedge)

4. EUROPEAN AFFAIRS

i)An excellent commentary from Tom Luongo as he outlines the problems facing the EU now.  Bond yields are rising because of perceived lack of confidence in Europe’s economy.  Investors are cashing out of European bonds which causes the the Euro to rise.  The higher Euro value will completely destroy the economies of the southern periphery.

a great commentary

(COURTESY TOM LUONGO)

ii)GERMANY

Germany stops taking migrants from Italy and Greece

( zerohedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

ISRAEL/GAZA STRIPThe second in command of HAMAS as mysteriously died after an ‘accidental’ gunshot wound to the head

( zerohedge)

6 .GLOBAL ISSUES

7. OIL ISSUES

The algos got totally confused with morning. Oil rose this morning despite API’s surprise crude build but when the DOE reported a massive crude build, oil prices began to drop.  However gasoline rose as inventories drew down.

 

( zerohedge)

8. EMERGING MARKET

9. PHYSICAL MARKETS

i)The use of digital gold from the Perth Mint may threaten the 122 billion in gold ETF’s

( Tony Boyd/Australian Financial Review/GATA)

ii)Mnuchin states that his dollar policy is not aimed at jawboning it lower.  He still affirms his strong dollar policy.  The question is what does a strong dollar policy mean especially with respect to gold/silver

( Bloomberg/GATA)

iii)South Korea now states that it has no intention to ban Bitcoin or other cryptocurrencies

( zerohedge)

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

i)Trading this morning:

we have brought this to your attention on many occasions:  once the 10 yr bond yield rises above 2.70%, the stock market will tank.  Yields rose above 2.70% this morning to 2.74% and that spooked stocks again

( zerohedge

ii)The private ADP report shows big job gains in January and in a “tight labour market”I would not put any weight into this report

( ADP/zerohedge)

iii)Yellen’s final FOMC:  the hawkish fed sees “solid” inflation spending and investment signals

so gold falls on inflation expectations???..

( zerohedge)

iv) reaction to the Fed

(courtesy zerohedge)

v)To which Greenspan warns that we have a stock market bubble

( zerohedge)

vi)THEN 20 MINUTES LATER, THE YIELD CURVE STARTED TO CRASH WITH THE 10 YR YIELD FALLING FORM 2.75% DOWN TO 2.71%/ WITH THE TWO YR/OVER 30 YR COLLAPSING TO ONLY 79 BASIS POINTS DIFFERENCE…SIGNIFIES RECESSION APPROACHING

(ZEROHEDGE)

 

iii))SWAMP STORIES

a)Trump tells Republicans that he will release the 4 page memo  ” 100 percent”( zerohedge)

b)The Dept. of Justice has now given documents pertaining to Jeff Sessions’ near resignation

( zerohedge)

c)Andrew McCabe is now under active Dept of Justice Investigation for sitting on Weiner”s laptop emails for over 3 weeks.  McCabe found out about the emails late in September but did not act upon them for at least 3 weeks.  The inspector General Horowitz wants to find out why.
( zerohedge)

d)Now the Wall Street Journal has given an editorial demanding the release of the 4 page FISA memo( zero hedge)

e)Reuters is reporting (and not yet collaborated) that the FISA warrant could lead to the firing of both Mueller and Rosenstein or just Rosenstein

( zerohedge)

Let us head over to the comex:

The total gold comex open interest  SURPRISINGLY ROSE BY A CONSIDERABLE 2891 CONTRACTS UP to an OI level 559,332 DESPITE THE GOOD SIZED DROP IN THE PRICE OF GOLD ($4.85 FALL WITH RESPECT TO YESTERDAY’S TRADING).   WE HAD ZERO COMEX GOLD LIQUIDATION. HOWEVER THE CME REPORTS THAT  THE BANKERS ISSUED ANOTHER STRONG COMEX TRANSFER THROUGH THE EFP ROUTE AS THESE LONGS RECEIVED A DELIVERABLE LONDON FORWARD TOGETHER WITH A FIAT BONUS. WE HAD A GOOD SIZED 14,404 EFP’S ISSUED FOR FEBRUARY  AND 0 EFP’s  FOR APRIL:  TOTAL  14,404 CONTRACTS. THE OBLIGATION STILL RESTS WITH THE BANKERS ON THESE TRANSFERS. ALSO REMEMBER THAT THERE IS NO DOUBT A HUGE DELAY IN THE ISSUANCE OF EFP’S AND IT PROBABLY TAKES AT LEAST  48 HRS AFTER LONGS GIVE UP THEIR COMEX CONTRACTS FOR THEM TO RECEIVE THEIR EFP’S AS THEY ARE NEGOTIATING THIS CONTRACT WITH THE BANKS FOR A FIAT BONUS PLUS THEIR TRANSFER TO A LONDON FORWARD… THE COMEX IS NOW AN ABSOLUTE FRAUD!!

ON A NET BASIS IN OPEN INTEREST WE GAINED TODAY: 17,295 OI CONTRACTS IN THAT 14,404 LONGS WERE TRANSFERRED AS FORWARDS TO LONDON AND WE GAINED 2891 COMEX CONTRACTS.

NET GAIN ON THE TWO EXCHANGES: 17295 contracts OR 1,729,500  OZ OR 53.794 TONNES,

Result: A  STRONG INCREASE IN COMEX OPEN INTEREST DESPITE THE FAIR SIZED LOSS IN YESTERDAY’S GOLD TRADING ($4.85.) WE HAD ZERO COMEX GOLD LIQUIDATION.  TOTAL OPEN INTEREST GAIN ON THE TWO EXCHANGES: 17,295 OI CONTRACTS..

We have now entered the active contract month of FEBRUARY where we lost 25,822 contracts and thus 6455 contracts are standing and by definition the amount of gold initially standing in this active contract month of February is as follows:

 

6455 CONTRACTS  x 100 oz per contract  =  645500 oz  or 20.07 tonnes.  Many transferred over to London February EFP’s and will try and obtain metal through London forwards.

March saw a loss of 148 contracts DOWN to 2049.  April saw a GAIN of 25,240 contracts UP to 403,213.

We had 452 notice(s) filed upon today for 452200 oz

PRELIMINARY VOLUME TODAY ESTIMATED;  305,005

FINAL NUMBERS CONFIRMED FOR YESTERDAY:   479,889

comex gold volumes are RISING AGAIN

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And now for the wild silver comex results.

Total silver OI FELL  BY A CONSIDERABLE 2830  CONTRACTS FROM 201,188 DOWN TO 198,358 DESPITE YESTERDAY’S SMALL SIZED 6 CENT LOSS.  WE WERE ALSO INFORMED THAT WE HAD ANOTHER FAIR SIZED 2467 EMERGENCY EFP’S FOR MARCH ISSUED BY OUR BANKERS (WITH 0 EFP CONTRACTS FOR FEBRUARY TO COMEX LONGS WHO RECEIVED A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON: THE TOTAL EFP’S ISSUED: 2467.   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 AS WE HAVE JUST SEEN IN GOLD TODAY. THIS PROCESS HAS JUST BEGUN IN EARNEST IN SILVER STARTING IN SEPTEMBER 2017. HOWEVER, IN GOLD, WE HAVE BEEN WITNESSING THIS FOR THE PAST 2 YEARS. NICK LAIRD WAS KIND ENOUGH TO SUPPLY US THE TOTAL FOR 2017 GOLD EFP’S AND IT WAS 6600 TONNES FOR THE ENTIRE YEAR.  WE HAD  CONSIDERABLE LONG COMEX SILVER LIQUIDATION AND A SMALL SIZED LOSS IN TOTAL SILVER OI. 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.  ON A NET BASIS WE LOST 363 SILVER OPEN INTEREST CONTRACTS:

2830 CONTRACT LOSS AT THE COMEX COMBINING WITH THE ADDITION OF 2467 OI CONTRACTS NAVIGATING OVER TO LONDON.

NET LOSS TWO EXCHANGES: 363 CONTRACTS

We are now in the poor non active delivery month of FEBRUARY and here the front month lost only 2 contracts to stand at 134 contracts.  Therefore by definition the amount of silver standing in this non active month of February is as follows:

 

134 contracts x 5000 oz per contract  =  670,000 oz

which is not bad for a relatively poor delivery month.

 

The March contract LOST 4151 contracts DOWN to 128,809.

We had 116 notice(s) filed for NIL 580,000 for the FEBRUARY 2018 contract for silver

INITIAL standings for FEBRUARY

Jan 31/2018.

Gold Ounces
Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz
 nil oz
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz
 14,518.608
oz
Scotia
No of oz served (contracts) today
452 notice(s)
 45200 OZ
No of oz to be served (notices)
6003 contracts
(600,300 oz)
Total monthly oz gold served (contracts) so far this month
452 notices
45200 oz
1.4059 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 0 kilobar transaction/
We had 0 inventory movement at the dealer accounts
total inventory movement into the dealer accounts:  nil oz
we had 0 withdrawals out of the customer account:
total withdrawal:nil  oz
we had 1 customer deposit
i) Into Scotia: 14,518.608 oz
total deposits: 14,518.608 oz
we had 3 adjustments
i) Out of Brinks:  11,009.838 oz was adjusted out of the dealer and into the customer account of Brinks.  this usually leads to a settlement of gold at the comex
ii) Out of Delaware;  1,065.35 oz was adjusted out of the customer and this landed into the dealer account of Delaware
iii) Out of HSBC: 32,426.833 oz was adjusted out of the dealer and this landed into the customer account of HSBC..this also generally leads to a settlement of gold at the comex
total registered or dealer gold:  488,627.941 oz or 15.198 tonnes
total registered and eligible (customer) gold;   9,237,855.482 oz 287.33 tones

For FEBRUARY:
Today, 0 notice(s) were issued from JPMorgan dealer account and 326 notices were issued from their client or customer account. The total of all issuance by all participants equates to 452 contract(s) of which 182 notices were stopped (received) by j.P. Morgan dealer and 41 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 FEBRUARY. contract month, we take the total number of notices filed so far for the month (452) x 100 oz or 45200 oz, to which we add the difference between the open interest for the front month of FEB. (6455 contracts) minus the number of notices served upon today (452 x 100 oz per contract) equals 645,500 oz, the number of ounces standing in this active month of FEBRUARY

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

No of notices served (452 x 100 oz or ounces + {(6455)OI for the front month minus the number of notices served upon today (452 x 100 oz which equals 645,500 oz standing in this active delivery month of February (20.07 tonnes). THERE IS 15.198 TONNES OF REGISTERED GOLD AVAILABLE FOR DELIVERY SO FAR. THIS MAY TURN OUT TO BE VERY PROBLEMATIC FOR OUR BANKERS.

 

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XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

 

IN THE LAST 17 MONTHS 67 NET TONNES HAS LEFT THE COMEX.

end

And now for silver

AND NOW THE DECEMBER DELIVERY MONTH

FEBRUARY FINAL standings

Jan 31 2018
Silver Ounces
Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory
 384,530.572 oz
HSBC
Deposits to the Dealer Inventory
nil
oz
Deposits to the Customer Inventory
 5925.000 OZ
???
 DELAWARE
No of oz served today (contracts)
116
CONTRACT(S)
(580,000 OZ)
No of oz to be served (notices)
18 contracts
(90,000 oz)
Total monthly oz silver served (contracts) 116 contracts

(580,000 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 1 inventory deposits into the customer account

i) into Delaware: 5925.000 oz???

total inventory deposits: 5925.000 oz

we had 1 withdrawals from the customer account;

 

i) Out of HSBC: 384,530.572 oz

 

total withdrawals;  384,530.572 oz

we had 1 adjustment

i) Out of CNT: 420,015.734 oz was adjusted out of the dealer and this landed into the customer account of CNT

total dealer silver:  45.041 million

total dealer + customer silver:  246.976 million oz

The total number of notices filed today for the FEBRUARY. contract month is represented by 116 contract(s) FOR 580,000 oz. To calculate the number of silver ounces that will stand for delivery in FEBRUARY., we take the total number of notices filed for the month so far at 116 x 5,000 oz = 580,000 oz to which we add the difference between the open interest for the front month of FEB. (134) and the number of notices served upon today (116 x 5000 oz) equals the number of ounces standing.

.

Thus the INITIAL standings for silver for the FEB contract month: 116(notices served so far)x 5000 oz + OI for front month of FEBRUARY(134) -number of notices served upon today (116)x 5000 oz equals 670,000 oz of silver standing for the FEBRUARY contract month. 

 

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ESTIMATED VOLUME FOR TODAY: 92,361

CONFIRMED VOLUME FOR YESTERDAY: 88,179 CONTRACTS

YESTERDAY’S CONFIRMED VOLUME OF 88,179 CONTRACTS EQUATES TO  440 MILLION OZ OR 70% 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.

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 

1. Sprott silver fund (PSLV): NAV FALLS TO -2.33% (Jan 30/2018)
2. Sprott gold fund (PHYS): premium to NAV FALLS TO -0.46% to NAV (Jan 30/2018 )
Note: Sprott silver trust back into NEGATIVE territory at -1.71%-/Sprott physical gold trust is back into NEGATIVE/ territory at -0.20%/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)

3.SPROTT CEF.A FUND (FORMERLY CENTRAL FUND OF CANADA): NAV FALLS TO 4.04%: NAV 13.96/TRADING 13.38//DISCOUNT 4.04%

END

And now the Gold inventory at the GLD/

Jan 31/with gold up $3.15 today, GLD shed another 5.32 tonnes of gold from its inventory/inventory rests at 841.35 tonnes

jan 30/with gold down by $4.85/GLD shed another 1.47 tonnes of gold from its inventory/inventory rests at 846.67 tonnes

JAN 29/with gold down $11.25, the GLD shed 1.18 tonnes of gold/inventory rests at 848.14 tonnes

jan 26/2018/no changes in gold inventory at the GLD/inventory rests at 849.32 tonnes

jan 25/no changes in gold inventory at the GLD/inventory rests at 849.32 tonnes

Jan 24/A HUGE DEPOSIT OF 2.65 TONNES OF GOLD INTO GLD/INVENTORY RESTS AT 849.32 TONNES

Jan 23/NO CHANGE IN GOLD INVENTORY DESPITE GOLD’S RISE/INVENTORY RESTS AT 846.67 TONNES

Jan 22/a huge deposit of 5.71 tonnes of gold despite a drop in price/inventory rests at 846.67 tonnes. In 3 trading days, the GLD has added 17.71 tonnes/the bankers are now in trouble!!

Jan 19/no change in gold inventory at the GLD/Inventory rests at 840.76 tonnes

Jan 18/SHOCKINGLY A HUGE DEPOSIT OF 11.80 TONNES WITH GOLD DOWN ALMOST $12.00/INVENTORY RESTS AT 840.76

Jan 17/no changes in gold inventory at the GLD/inventory rests at 828.96 tonnes

Jan 16/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 828.96 TONNES

Jan 12/no changes in inventory at the GLD despite the rise in gold price/inventory rests at 828.96 tonnes

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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Jan 31/2018/ Inventory rests tonight at 841.35 tonnes

*IN LAST 316 TRADING DAYS: 99.80 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 250 TRADING DAYS: A NET 57.51 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.

end

Now the SLV Inventory

Jan 31no change in inventory at the slv in total contrast to gold/inventory rests at 313.896 million oz/

Jan 30/no change in inventory/SLV inventory rests at 313.896 million oz/

Jan 29/no change in inventory/SLV inventory rests at 313.896 million oz/

Jan 26.2018/inventory rests at 313.896  million oz

Jan 25/with silver up today and yesterday, the SLV could only muster a gain of 848,000 oz

Inventory rests at 313.896 oz

jan 24/NO CHANGE IN SILVER INVENTORY DESPITE THE GOOD ADVANCE IN PRICE/INVENTORY RESTS AT 313.048 MILLION OZ/

Jan 23/ANOTHER HUGE WITHDRAWAL OF 1.131 MILLION OZ OF SILVER DESPITE THE TINY LOSS/THE CROOKS ARE USING THE INVENTORY TO RAID ON SILVER.

JAN 22.2018/with silver down by 5 cents/ the crooks at the SLV liquidate 1.321 million oz of silver/inventory rests at 314.179 million oz/

Jan 19/ no changes in silver inventory at the SLV/inventory rests at 315.500 million oz/

jan 18/A WITHDRAWAL OF 848,000 OZ OF SILVER FROM THE SLV/INVENTORY RESTS AT 315.500 MILLION OZ/

Jan 17/no changes in silver inventory at the SLV/inventory rests at 316.348 million oz/

Jan 16/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 316.348  MILLION OZ

Jan 12/no changes in silver inventory at the SLV/inventory rests at 316.348 million oz/

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/

.

Jan 31/2017:

Inventory 313.896 million oz

end

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

+ 1.71%
12 Month MM GOFO
+ 2.11%

end

Major gold/silver trading /commentaries for WEDNESDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

ATMs Hit By Malware “Jackpotting” Attacks That Dispense All Cash In Minutes

– ATMs in US hit by “jackpotting” attacks that empty ATMs in minutes
– FBI warns of attacks in US after similar crimes in Taiwan, Thailand and Europe

– Hackers have stolen c.$1 million from ATMs across the US warns U.S. Secret Service
– Target Diebold Nixdorf machines – #1 global ATM provider, 35% of ATMs worldwide
– Digital deposits increasingly vulnerable – Time to save in physical gold

Editor: Mark O’Byrne

Source: TechViral.net

$1 million has been stolen from ATMs across the United States by hackers in a new hacking approach known as ‘jackpotting’. Using malware and an endoscope hackers are able to force cash machines to spew out their entire holding of cash.

Once the machine has been emptied the malware, known as Plotus. D, has handed over complete control to the hackers and displays an ‘Out of Service’ message.

This week a memo was leaked from the US Secret Service regarding this discovery. It stated that it was only a matter of time that the US became a target for this type of hacking, given it has already been seen in both Europe and Asia.

According to Russian cybersecurity firm Group IB, dozens of remote attacks were reported in 2016 within Europe.

Plotus.D is not a new discovery for security services, background reading suggests that they have been aware of it for a while now. An alert issued by the US Secret Service, states:

“In previous Ploutus.D attacks, the ATM continuously dispensed at a rate of 40 bills every 23 seconds…Once the dispense cycle starts, the only way to stop it is to press cancel on the keypad. Otherwise, the machine is completely emptied of cash.”

In fact, it was first seen in Mexico in 2013, as described by security firm FireEye in 2017. They concluded that it was “one of the most advanced ATM malware families we’ve seen in the last few years

“Once deployed to an ATM, Ploutus-D makes it possible for a money mule to obtain thousands of dollars in minutes,” They believe the malware can be modified to use against 40 different ATM vendors in 80 countries.

No longer need to ‘blow the bl**dy doors off’ 

As Wired magazine pointed out last year, it used to be that robbers needed to either blow up or physically steal an entire ATM in order to steal its contents. Now there are two, far more subtle routes. A simple physical hack or one which goes through the bank’s own software system.

Due to the nature of cybersecurity threats these days, it is getting harder for hackers to access a bank’s back-end network as it requires a far more sophisticated network intrusion skills. Conversely, hacking physically through the front of a machine does not trigger any alarms and can be done relatively cheaply and easily.

Even more convenient for the hackers, physical attacks on machines means the banks or ATM issuers cannot do a remote fix across all machines, each one has to be repaired individually. Giving the hackers more time to access as many ATMs as they can.

How can this be managed? Wired magazine believe this may be an unsolvable problem:

Physical attacks on ATMs are, in some sense, an unsolvable problem. Computer security experts have long warned that no computer should be considered secure if an attacker takes physical control of it. But weak encryption and a lack of authentication between components leaves ATMs particularly vulnerable to physical attacks—access to any part of the insecure machine Kaspersky describes means access to its most sensitive core. And for computers that are left standing unprotected on a dark street in the middle of the night, stuffed full of money, a little more thought to digital security might be a worthwhile investment.

ATMs are not alone

As we discussed last week, anything is hackable today. Very little with an internet connection is safe from the malicious intent of hackers.

Sadly we’re exposed on all sides to hacking. From the security of our cash machines to the heating in our homes right down to our iphones and the many sensitive apps and data on them.

Hackers are no longer just individuals who have progressed from gaming in their mothers’ basements to hacking for jokes. Nowadays many of the hacks that we see are backed by international crime syndicates who themselves are supported by foreign governments.

Whilst companies are distracted with laying down the best security money can buy, individuals are left somewhat in the dark wondering how best to protect themselves. The idea of ATM attacks is particularly concerning when one realises the ultimate impact on consumer and citizens.

ATM attacks are another excuse to go cashless

Ultimately we will end up paying, either for the privilege of withdrawing our own money or (worse) being forced to go to a bank (of which there are fewer physical branches).

The attack on ATMs will likely be used as an excuse to further outlaw cash in the ongoing war on cash, by both governments and banks.

We have written previously of both governments’ and banks’ missions to prevent us from using cash. Very often reasons for banning large bills or preventing the carrying of certain amounts across borders has been justified under money laundering prevention, terrorism and even for the efficiencies and profitability for banks.

In truth, we know that cash is disliked by less liberal governments. They can’t track it and it’s certainly of no use to them when bail-ins and negative interest rates are on the table. What is the incentive, therefore, for ATM hacking to be resolved?

As we wrote in a previous piece on the cashless society:

Going cashless will not rid us of people and organisations who wish to commit horrific and illegal acts. Instead it will encourage them to find additional ways to run their gangs and terrorist cells. For the rest of us it will remind us of the importance of liberty, safe-havens, security and the need to protect our wealth from negative interest rates, bail-ins and currency devaluations.

We can protect our wealth from hackers, cyber fraud and cyber war by investing in physical gold and silver. When allocated and segregated they cannot be hacked by cyber criminals or terrorists, they cannot be confiscated by bankrupt and desperate governments or banks.

Deposits today are no longer the safe conservative savings option they once were. This further underlines the importance of owning physical gold and indeed saving in physical gold as many of our clients have been doing since 2010.

Related reading

The Alternative Fact of the Cashless Society

Cashless Society – Risks Posed By The War On Cash

Cyber War Coming In 2018?

News and Commentary

Gold inches up as dollar eases ahead of Fed decision (Reuters.com)

Global stocks tumble anew amid bond yield pressure (Reuters.com)

Gold gives up early gains to end lower as dollar pares decline (MarketWatch.com)

Perth Mint Gold and Silver Bullion Sales Slow in 2017 (CoinNews.net)

London is officially a buyers’ market (CityAM.com)

‘Largest ever’ gold surge if Nuclear war breaks out between North Korea and US – Economist (Express.co.uk)

Gold could smash $10,000 on crashing dollar & other factors – Rickards (RT.com)

The end of the Clinton-Bush era (CapitalAndConflict.com)

Prevent “buyer’s remorse” like this (StansBerryChurcHouse.com)

Vested Interests Pushing House Prices Higher Again (DavidMCWilliams.ie)

Gold Prices (LBMA AM)

31 Jan: USD 1,343.35, GBP 950.29 & EUR 1,078.98 per ounce
30 Jan: USD 1,345.70, GBP 954.37 & EUR 1,083.56 per ounce
29 Jan: USD 1,348.40, GBP 955.07 & EUR 1,085.46 per ounce
26 Jan: USD 1,354.35, GBP 950.21 & EUR 1,087.41 per ounce
25 Jan: USD 1,360.25, GBP 954.35 & EUR 1,095.27 per ounce
24 Jan: USD 1,350.50, GBP 957.50 & EUR 1,093.77 per ounce
23 Jan: USD 1,337.10, GBP 959.10 & EUR 1,091.74 per ounce

Silver Prices (LBMA)

31 Jan: USD 17.23, GBP 12.17 & EUR 13.84 per ounce
30 Jan: USD 17.30, GBP 12.24 & EUR 13.91 per ounce
29 Jan: USD 17.34, GBP 12.33 & EUR 13.99 per ounce
26 Jan: USD 17.40, GBP 12.21 & EUR 13.99 per ounce
25 Jan: USD 17.52, GBP 12.29 & EUR 14.12 per ounce
24 Jan: USD 17.19, GBP 12.16 & EUR 13.93 per ounce
23 Jan: USD 16.98, GBP 12.19 & EUR 13.87 per ounce


Recent Market Updates

– London Property Market Tumbles As Glut of Luxury Apartments Grows To 3,000
– Silver Bullion: Once and Future Money
– Greatest Stock Bubble In History? GoldNomics Podcast Transcript
– Davos – My Personal Experience of the $100,000 Event, $60 Burgers, Massive Inequality and the Blockchain Revolution
– Is This The Greatest Stock Market Bubble In History? Goldnomics Podcast
– Cyber War Coming In 2018?
– Government Shutdown Ends – Markets Ignore Looming Debt and Bond Market Threat
– Global Pension Ponzi – Carillion Collapse One Of Many To Come
– The Next Great Bull Market in Gold Has Begun – Rickards
– Gold Bullion May Have Room to Run As Chinese New Year Looms
– Digital Gold Flight To Physical Gold Coins and Bars
– Gold and Silver Bullion Are Only “Safe Investments Left” – Stockman
– Silver Prices To Surge – JP Morgan Has Acquired A “Massive Quantity of Physical Silver”

janskoyles

END

 

The use of digital gold from the Perth Mint may threaten the 122 billion in gold ETF’s

(courtesy Tony Boyd/Australian Financial Review/GATA)

 

Digital gold from Perth Mint threatens $122 billion in gold-backed ETFs

 Section: 

By Tony Boyd
Australian Financial Review, Sydney
Tuesday, January 30, 2018

The Perth Mint’s release of digital gold certificates for trading, holding, and transferring physical gold could have profound consequences for the $US98 billion ($122.5 billion) in gold-backed exchange traded funds.

The technology underpinning the digital gold certificates could have other uses such as the clearing and settlement of equities.

At this stage the digitisation of gold ownership by the Perth Mint is available only to institutional investors, such as banks, which can then offer it to retail customers.

But it is likely that the Perth Mint will overcome the difficult regulatory obstacles to direct retail ownership such as the know-your-customer rules and anti-money laundering regulations.

When that occurs the Perth Mint’s digital certificates could become a genuine challenger to gold-backed ETFs, which now own about 2,362 tonnes of gold, according to the World Gold Council.

Perth Mint is using technology supplied by digi.cash, a Sydney-based company backed by the Capital Markets Research Centre, to create gold certificates that can be traded on a smart phone.

The supplier of the certificates is a company called InfiniGold, a joint venture between digi.cash and Digital Access Australia. Steve Belloti, the former head of global markets at ANZ Banking Group controls Digital Access Australia.

Andreas Furche, who is chief executive of digi.cash, says the Perth Mint’s digital gold certificates will have at least two advantages over gold-backed ETFs.

The first is that they will be cheaper to own.

He said the cost of holding a digital gold certificate issued by Perth Mint will be less than the 30 to 40 basis points charged by ETFs. The world’s largest ETF, the SPDR Gold Shares, charges 40 basis points of the net asset value each year. The fund has a market capitalisation of $US36 billion.

The second advantage is that the digital gold certificates provide direct ownership of the gold held in the vaults at the Perth Mint. While ETFs are backed by physical gold held in vaults and warehouses, they interpose a third party between the investor and the bullion.

This creates the risk that the counterparty, such as a fund manager, will not be able to meet their obligations to supply the physical gold. Another way of looking at a gold-backed ETF is to think of it as a promissory note for the delivery of gold. …

… For the remainder of the report:

http://www.afr.com/brand/chanticleer/perth-mints-digital-gold-threatens-…

END

 

Mnuchin states that his dollar policy is not aimed at jawboning it lower.  He still affirms his strong dollar policy.  The question is what does a strong dollar policy mean especially with respect to gold/silver

 

 

(courtesy Bloomberg/GATA)

 

Mnunchin says his dollar policy isn’t aimed at jawboning it lower

 Section: 

By Brendan Murray and Randy Woods
Bloomberg News
Tuesday, January 30, 2018

The U.S. currency policy used to be just a few words: A strong dollar is in the country’s best interest. It’s become more of a mouthful under Treasury Secretary Steven Mnuchin, who wonders why he’s misunderstood.

“Let me be very clear: I absolutely support a strong dollar as being in the long-term best interest of the country, and I strongly support — we have a free currency market that we don’t intervene in and have relied upon the most liquid market in the world,” he said in testimony today to the Senate Banking Committee. “So the short term is not a concern of us.”

With that comment Mnuchin tried to resolve an issue that has roiled currency markets in recent days. Today Mnuchin recounted to lawmakers how in Davos, Switzerland, last week he gave a press briefing and delivered a three-part comment “that was extremely balanced and very specific,” adding that it was “not anything new.” …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2018-01-30/mnuchin-says-his-doll…

END

 

South Korea now states that it has no intention to ban Bitcoin or other cryptocurrencies

 

(courtesy zerohedge)

South Korea Has No Intention To Ban Bitcoin, Finance Minister Confirms

The months-long will-they-won’t-they back-and-forth between South Korea’s various regulatory bodies and the cryptocurrency market is finally nearing its final moment of clarity.

Today, in one of the more concrete indications that South Korean regulators aren’t planning a China-style stampout of the cryptocurrency market, the country’s finance minister assured jittery traders that the country is not planning to ban cryptocurrency trading – a possibility that has been raised several times in recent months, sending bitcoin plunging on every occasion.

According to CoinDesk, Kim Dong-yeon said, “there is no intention to ban or suppress cryptocurrency [market],” in response to a question from a lawmaker about the government’s plans to regulate the industry.

Bitcoin

Instead of taking the dramatic step of shutting down all local exchanges – like China did – the minister assured his audience that, just as we reported last month, “regulating exchanges is [the government’s] immediate task.”

Reports that South Korea was considering a cryptocurrency ban hammered the market in December. Officials reportedly believed the market was overheating and required more scrutiny. However, officials quickly backtracked, and South Korea’s presidential office clarified on Jan. 11 that a plan to ban trading cryptocurrencies “is one of the measures prepared by the Ministry of Justice, but it’s not a measure that has been finalized.”

That plan has reportedly now been thrown out.

Instead, yesterday saw the introduction of new rules banning the use of anonymous virtual accounts for trading – from now on, South Koreans will need to use their real names on bank and exchange accounts. Furthermore, authorities said traders who don’t comply will face penalties.

South Korea

As the above chart shows, South Korea is one of the world’s biggest markets for trading bitcoin and other digital currencies. But as China’s crackdown demonstrated, an outright ban in South Korea probably wouldn’t have a lasting impact on the market; many of the businesses would simply migrate to more open economies, and domestic traders would take their business to foreign exchanges.

Despite the reassurances, bitcoin and the other large cryptocurrencies were extending this week’s weakness Wednesday morning following President Donald Trump’s first State of the Union address.

Crypto

end
A must view:  Chris Powell talks about the manipulation with Rory Hall
(courtesy GATA)

Chris Powell: Golden Rays and Silver Linings

January 31

By Rory Hall

We firmly believe, and have stated a number of times, that gold and silver are the only assets that have the fortitude to stand up to governments and banks. These two assets, throughout history, have over and over and over again helped the people to gain wealth, to prosper and to truly innovate new technologies. What has happened over the past 100+ years is our wealth, innovation and sovereignty have been slowly stripped away.

Central banks are secretly trading all futures markets to control prices, this simply can not be reported. We would have to give up the pretense of free markets people would have to acknowledge – “No, we don’t have free markets!” we basically have a totalitarian system that is very carefully disguised. ~Chris Powell, The Daily Coin

The good news is it seems to be changing.

Liberty and truth made an appearance over this past week in two different ways. First, we had people arrested for rigging the precious metals markets and then we had the President stand up to a bunch of bullies in Congress attempting to keep the truth hidden from the American people. Truth that some members of Congress insisted did not exist in the first place. Some of what has been hidden is beginning to be revealed.

We have a very long way to go to overturn and correct the damage of more than 100 years of Federal Reserve manipulation, but this past week, those of us fighting the good fight received a much needed ray of sunshine that illuminated a silver lining surrounding the dark cloud that has been hanging over our nation for far too long.

I sat down with Chris Powell, Secretary Treasurer, GATA, to follow up on the arrest of 6 bank employees convicted of rigging the precious metals markets, how GATA see gold and silver returning to the monetary system and what all these new gold backed cryptocurrencies mean for the monetary system. The market rigging criminals were employed by three of the worlds biggest banks, HSBC, Deutsche Bank and UBS. In order for government to get out of market rigging we need not return to a traditional gold standard, but allow gold and silver to return to the monetary system of their own free will. Chris, along with Bill Still, believe this would naturally happen if governments were to get out of the way. The development of new fintech like gold backed cryptocurrencies may help to foster such an environment. Time will tell and we shall see if governments are willing to hand over their true source of power – control of the currency.

Video link to Chris Powell: Golden Rays and Silver Linings

http://news.goldseek.com/GoldSeek/1517409510.php

another good one to watch:
Bill Holter interviewed by Greg Hunter

Tsunami of Truth Coming in 2018 – Bill Holter

By Greg Hunter’s USAWatchdog.com 

Financial writer Bill Holter thinks revelations from the so-called Washington D.C. swamp are going to intensify in 2018. Holter explains, “I would call what’s coming a tsunami of truth. . . . I think it’s going to affect the mood of the country.  It is going to enrage some people.  I think it will scare some people.  It will definitely affect capital flows.  There is a debate about arresting people and perp walks, whether that would be good or bad for confidence.  It’s my opinion it would initially be bad for confidence because there are so many people (that would be criminally charged) it would blow their minds.  It’s beyond anything that they even thought of.  So, I think confidence would initially break, but longer term, it is good for confidence because it will be a sign that the rule of law is coming back to the United States.”

Holter contends the politics of crooked Washington D.C. have a negative effect on the U.S. dollar. Holter says, “One reason I think the dollars has been weak since the beginning of 2017 is there were an awful lot of truth bombs that hit last year.  There is more truth with this four page memo from Congress that was just voted to be released.  Foreigners are looking at the dollar with high skepticism because all of this ‘truth’ points to a very crooked, fraudulent and corrupt nation.  Do you really want your assets in that system and denominated in that currency?  I think the answer is no, and that’s one of the reasons you are seeing the huge devaluation of the dollar. . . . In 2017, my theme was that was the year of the truth bomb, and in 2018, I believe the theme will end up being the year that truth finally mattered.”

Holter goes on to say, “This country has lost the rule of law. It’s clear, looking at the DOJ and looking at the FBI, and what will come out on that, the rule of law needs to be restored.  There needs to be a confidence restoration, if you will, in those agencies.  It’s a complete travesty.  What has really happened is they got so dirty that they tried a coup attempt.  They tried to take over the government.  They tried to negate an election. . . . A lot of people are speculating on Hillary going to jail, and I would put out that with all this illegal surveillance, there is absolutely no way that could have been done without Obama’s knowledge.”

Holter, who is also a precious metals broker, says big money is piling into metal, especially silver. Holter says, “Gold should do extremely well, and silver should do four or five times as well as gold if it gets back to the 15 to 1 historical ratio. . . . The lows were put in with gold and silver back in late 2015.”     

What could go wrong with all-time high debt levels facing rising interest rates around the world? Holter points out, “There is all kinds of stuff that can go wrong.  Cash levels for investors are at all-time lows.  Margin debt is at all-time highs.  That, in and of itself, is a recipe for disaster.  Also, if you look at valuation levels . . . we are at record levels never seen before. . . . There is record risk/reward.”

Join Greg Hunter as he goes One-on-One with financial expert Bill Holter of JSMineset.com.

(To Donate to USAWatchdog.com Click Here 

 

end



Your early WEDNESDAY 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 UP AT 6.2887 /shanghai bourse CLOSED DOWN AT 7.17 POINTS 0.21% / HANG SANG CLOSED UP 279.98 POINTS OR 0.86%
2. Nikkei closed DOWN 193.68 POINTS OR 0.83% /USA: YEN RISES TO 108.77

3. Europe stocks OPENED  GREEN   /USA dollar index FALLS TO 88.93/Euro RISES TO 1.2453

3b Japan 10 year bond yield: FALLS TO . +.085/ (TROUBLE THIS MORNING) GOVERNMENT INTERVENTION !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 108.77/ 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:: 64.09  and Brent: 68.03

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 DOWN for WTI and DOWN FOR Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO +.671%/Italian 10 yr bond yield DOWN to 2.002`% /SPAIN 10 YR BOND YIELD DOWN TO 1.403%

3j Greek 10 year bond yield RISES TO : 3.716?????????????????

3k Gold at $1343.20 silver at:17.25: 7 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50

3l USA vs Russian rouble; (Russian rouble UP 17/100 in roubles/dollar) 56.21

3m oil into the 64 dollar handle for WTI and 68 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/

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 108.77 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 0.9333 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1620 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 +0.671%

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 2.701% early this morning (THIS IS DEADLY TO ALL MARKETS). Thirty year rate at 2.9480% /

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

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

US Futures Rebound After Trump’s SOTU Speech; Dollar Slide Resumes Ahead Of Fed

S&P futures rebounded 0.3% from the worst two-day selloff since Sept. 2016, and European and Asian stocks rose modestly from early weakness after Trump’s SOTU address did not deliver any major surprises, while traders were cautious ahead of the Fed’s last rate decision under Janet Yellen’s leadership expected to lean on the hawkish side.

On Tuesday, U.S. stocks tumbled amid concerns about a recent sharp rally in bond yields. Health-care shares slumped after Amazon.com, Berkshire Hathaway and JPMorgan agreed to collaborate on ways to offer health-care services to their employees; drugmakers will be in the spotlight again as Trump says prescription drug prices will come down “substantially.”

Despite the recent drop, it’s been a stellar month for stock markets, with major gains across most major gauges that were followed this week by the MSCI All-Country World Index’s biggest two-day slide since September 2016. Investors will now focus on Wednesday’s Federal Reserve rate decision, the ongoing earnings season and more big economic data points to see if the uptrend can resume.

On Tuesday night, Donald Trump sought to connect his presidency to the nation’s prosperity in his first State of the Union address, arguing the U.S. has arrived at a “new American moment” of wealth and opportunity. Trump vowed the “era of economic surrender is over,” but stopped short of naming the targets of his efforts to narrow the U.S.’s ballooning trade deficit, which prevented a major market reaction.

Trump also stated the US is finally seeing rising wages and that unemployment claims have hit a 45-year low. Trump also called on Congress to produce a bill that generates at least USD 1.5tln for new infrastructure investment and said that they will work to fix bad trade deals.

Overnight, the Dollar weakened again as Trump’s State of the Union speech offers few new details, while EMs rose as Trump failed to emphasize tariffs and trade.

“There was a moment where the dollar was bought on Trump’s infrastructure remarks, but that’s because the topic was in focus and markets reacted to that,” said Koichi Takamatsu, head of G-10 currency trading for Japan at Nomura Securities Co. in Tokyo. “On the other hand, after concerns about protectionism receded at Davos, Trump made clear his stance on ‘America First.’ Overall, the reaction to his speech was limited.”

The yen weakened as the BOJ unexpectedly boosted 3-to-5 year bond purchases in today’s open market operation and Kuroda affirmed stimulus policy, before erasing declines. Aussie grinds lower after inflation data misses, while the Aussie curve bull steepened as 3-year yield drops as much as seven basis points to 2.14% following a benign Australian inflation report. The British pound erased a gain as Prime Minister Theresa May headed to China to talk trade.

U.S. Treasuries were marginally firmer with 10-year yield just above 2.70%, despite Trump unveiling his plan for a $1.5 trillion debt-busting infrastructure plan.

European stocks erased gains of as much as 0.3%, with health-care shares (-0.5%) contributing the most to declines higher, after a two-day selloff as traders assess earnings and eye Federal Reserve Chair Janet Yellen’s final meeting on interest rates before her term ends. The Stoxx Europe 600 Index was flat heading for its best January in three years. Media shares lead gains, while Ericsson drags the tech sector lower after posting sales that missed analysts’ estimates. Capita is the biggest single-stock drag on the index after suspending its dividend and saying it plans to raise more equity, sending the stock for a record slump.

Asian stocks were mostly higher after Trump refrained from any comments that would have unnerved markets. As such, Australia’s ASX 200 (+0.2%) pared early losses and finished positive, although the commodity-related sectors continued their underperformance, while Nikkei 225 (-0.4%) swung between gains and losses with Japanese stock news dominated by earnings. Japan’s Topix index (-1.2%) slid to its lowest this year.

The region also mulled mixed Chinese Official PMI data in which Non-Manufacturing PMI topped estimates but Manufacturing PMI disappointed, which in turn disappointed local markets. The Shanghai Composite fell for a 3rd straight day, down 0.2% to 3480, while the Chinext index, tracking mid and small caps plunged near 2.7%, its biggest drop since January 15, and is now down 1% for year after rising as much as 3.7%. Big-cap blue chips outperformed with the SSE50 index tracking the 50 biggest stocks on Shanghai Stock Exchange climbed over 1.2%. The Koran Kospi index was boosted by Samsung’s stock split announcement, while the won strengthens in line with other Asian currencies. PBOC skips liquidity injections for fifth day; CSI 300 index 0.7% higher.

Of note: China’s onshore yuan climbed for its best month in at least a decade as the greenback drubbing continued. The Onshore yuan jumped 0.62% to 6.2855 per dollar in Shanghai; CNY has gained 3.5% so far in January, biggest monthly advance in CFETS data going back to April 2007 according to Bloomberg. Overnight, the PBOC weakened daily reference rate by 0.04% to 6.3339, matching average estimate in a Bloomberg survey of 25 traders and analysts; the predictions ranged from 6.3250 to 6.3414

Elsewhere, UK PM May said that there was a long-term job to do in Brexit and that she will publish Brexit impact studies during February speech in Munich. Furthermore, PM May said the UK is seeking a free trade deal with China and wants more access in the interim before trade deal.  EU officials are to reject the City of London’s intention to strike a post-Brexit free trade deal for financial services, according to financial executives.

In commodities, oil retreated and industrial metals reversed losses. A measure of China’s manufacturing sector came in below expectations, while the services gauge topped estimates. WTI and Brent crude futures trade lower in the wake of last night’s larger than expected build in headline API crude oil inventories with energy newsflow otherwise relatively light ahead of today’s official EIA release. WTI crude slides below $64. In metals markets, gold prices are seen higher amid a lacklustre greenback while copper was marginally supported overnight by the improvement in risk tone. Finally, Chinese steel futures were seen lower overnight as adverse weather conditions capped demand in China. Dalian iron falls two percent.

Expected data include MBA mortgage applications. Anthem, AT&T, Boeing, Facebook, Lilly and Microsoft are among companies reporting earnings.

Bulletin Headline Summary from RanSquawk

  • European equities trade broadly higher albeit modestly so, as earnings dictate the state of play for Europe.
  • The DXY remains vulnerable under the 89.000 handle as January draws to a close and month end portfolio hedging indices continue to flag sell signals
  • Looking ahead, highlights include US ADP, Quarterly Refunding Announcement and FOMC rate decision.

Market Snapshot

  • S&P 500 futures up 0.3% to 2,833.00
  • STOXX Europe 600 up 0.2% to 396.98
  • MSCI Asia Pacific down 0.2% to 184.23
  • MSCI Asia Pacific ex Japan up 0.4% to 607.33
  • Nikkei down 0.8% to 23,098.29
  • Topix down 1.2% to 1,836.71
  • Hang Seng Index up 0.9% to 32,887.27
  • Shanghai Composite down 0.2% to 3,480.83
  • Sensex down 0.1% to 35,993.63
  • Australia S&P/ASX 200 up 0.3% to 6,037.68
  • Kospi down 0.05% to 2,566.46
  • German 10Y yield fell 1.3 bps to 0.67%
  • Euro up 0.3% to $1.2444
  • Italian 10Y yield rose 0.2 bps to 1.76%
  • Spanish 10Y yield rose 1.3 bps to 1.422%
  • Brent futures down 0.6% to $68.60/bbl
  • Gold spot up 0.3% to $1,343.12
  • U.S. Dollar Index down 0.2% to 88.95

Top Overnight News

  • Donald Trump sought to connect his presidency to the nation’s prosperity in his first State of the Union address, arguing the U.S. has arrived at a “new American moment” of wealth and opportunity. Trump vowed the “era of economic surrender is over,” but stopped short of naming the targets of his efforts to narrow the U.S.’s ballooning trade deficit
  • U.K. Prime Minister May landed in China with a message to rebels back home who want to oust her: she won’t quit. May said she would raise the sensitive topics of China’s human rights record and Hong Kong democracy
  • Bank of Japan offered to buy more bonds at a regular operation for the first time since July, helping to bring down yields and weaken the yen as Governor Kuroda reaffirmed a commitment to his ultra-loose monetary policy
  • Mark Carney said he can fully focus on tackling inflation as the drag from Brexit on investment and the economy starts to recede
  • U.K. banks will have limited access to the European Union’s single market after Brexit if the government refuses to weaken its red lines, the European Commission told diplomats, according to two people familiar with private discussions in Brussels
  • The BOJ isn’t at the point where it can change interest rates soon, says Bank of Japan Deputy Governor Kikuo Iwata, in his final press conference before leaving the board
  • German jobless rate dropped to a record low of 5.4 percent in January, extending its decline as companies stepped up hiring to meet buoyant demand
  • Siemens Reports Strengthening Orders Amid Global Economic Upturn
  • H&M’s Biggest Profit Drop in Six Years Puts CEO Under Pressure
  • Volvo Sees Rising Global Truck Demand Straining Supply Chain

A mixed tone was gradually seen in Asia, as equity markets somewhat recovered from the initial spill-over selling from Wall St. where the S&P 500 posted its worst 2-day performance since May last year. The overnight rebound in sentiment was alongside President Trump’s first State of the Union Address, which Trump was viewed to have delivered a composed and conventional speech, while he also refrained from any comments that would have unnerved markets. As such, ASX 200 (+0.2%) pared early losses and finished positive, although the commodity-related sectors continued their underperformance, while Nikkei 225 (-0.4%) swung between gains and losses with Japanese stock news dominated by earnings. Furthermore, the region also mulled over mixed Chinese Official PMI data in which Non-Manufacturing PMI topped estimates but Manufacturing PMI disappointed, which in turn clouded over the Shanghai Comp. (-0.6%) and Hang Seng (+0.1%), despite a brief turnaround which momentarily saw most stocks lifted with the tide. Finally, 10yr JGBs are higher, with prices supported from today’s Rinban operation in which the BoJ were in the market for JPY 850bln of JGBs across the curve and upped its purchases of 3yr-5yr maturities.

  • Chinese Manufacturing PMI (Jan) 51.3 vs. Exp. 51.6 (Prev. 51.6).
  • Non-Manufacturing PMI (Jan) 55.3 vs. Exp. 54.9 (Prev. 55.0)

BoJ Summary of Opinions from January meeting said must continue with powerful easing policy as inflation remains weak. There summary noted the opinion that BoJ must look at effects and costs of BoJ’s ETF and risky asset purchases given stock prices and corporate profits improving sharply, while there also may be a chance for the BoJ to consider adjusting level of yield targets if economy and prices continue improving. BoJ says it plans to keep the current pace of bond purchases in Feb for all maturities.

Top Asian News

  • BOJ Lifts Bond Purchases as Kuroda Affirms Loose Policy Path
  • Dealmakers Jump Ship as China Tycoon’s $5 Billion M&A Push Ends
  • Japan Factory Output Surges in December on Strong Exports
  • Sumitomo Mitsui Profit Rises on Fee Income, Share Sale Gains
  • Vakrangee Tumbles by 20% Limit Amid Stock-Price Rigging Report

European equities trade broadly higher (Eurostoxx 50 +0.2%) albeit modestly so, as earnings dictate the state of play for Europe. In terms of sector specifics, utility names have seen some support with SSE (+1.6%) sitting near the top of the FTSE after lifting their guidance, while IT names are seen softer with Ericsson (-8%) lower following earnings and Infineon (-0.7%) at the bottom of the DAX after cutting guidance alongside earnings. Elsewhere, stock specifics have been dominated by earnings with reports from the likes of Electrolux (+6.3%), Volvo (+3.4%), H&M (-4.8%), Lonza (-3.6%), Julius Baer (-3.2%) and focus once again on Capita (-35%) with shares slammed following their latest profit warning.

Top European News

  • Italy’s Jobless Rate Falls Before Election to Lowest Since 2012
  • German Workers Begin Day-Long Strikes as Wage Talks Hit Snag
  • EU Softens Push to Keep Clients From Exiting Failing Banks
  • European Union’s Biggest Rate Hawks Are Poised to Hike Again
  • European Pharma Stocks Drop After Trump Comments, Lonza Results
  • VW, Continental Best Placed in Break-Up Scenarios, BofAML Says

In FX, the DXY remains vulnerable under the 89.000 handle as January draws to a close and month end portfolio hedging indices continue to flag sell signals, and strong for several USD/G10 pairs. The Dollar did derive some support from a buoyant from US President Trump’s buoyant SOTU address and clarification by Treasury Secretary Mnuchin that a strong Greenback is in the country’s best interest (long term at least). However, EUR/USD looks solid above 1.2400 and around the 1.2433 level (200 MMA), with decent option expiries between 1.2400-40 (1.5 bn) and 1.2450-55 (1.7 bn) perhaps adding to the aforementioned rebalancing bid tone. Cable briefly reclaimed 1.4200+ status before easing back again amid EUR/GBP month-end demand and news that EU officials are to reject the City of London’s intention to strike a post-Brexit free trade deal for financial services. USD/JPY is back below 109.00, but still within a broad 108.50-109.50 range.

In commodities, WTI and Brent crude futures trade lower in the wake of last night’s larger than expected build in headline API crude oil inventories with energy newsflow otherwise relatively light ahead of today’s official EIA release. In metals markets, gold prices are seen higher amid a lacklustre greenback while copper was marginally supported overnight by the improvement in risk tone. Finally, Chinese steel futures were seen lower overnight as adverse weather conditions capped demand in China.

US Event Calendar

  • 7am: U.S. MBA Mortgage Applications, Jan. 26, no est., prior 4.5%
  • 8:15am: U.S. ADP Employment Change, Jan., est. 185k, prior 250k
  • 8:30am: U.S. Employment Cost Index, 4Q, est. 0.6%, prior 0.7%
  • 8:30am: U.S. Treasury’s Quarterly Refunding
  • 9:45am: U.S. Chicago Purchasing Manager, Jan., est. 64, prior 67.6, revised prior 67.8
  • 10am: U.S. Pending Home Sales MoM, Dec., est. 0.5%, prior 0.2%; NSA YoY, Dec., est. 1.7%, prior 0.6%
  • 10:30am: DOE U.S. Crude Oil Inventories, Jan. 26, est. 900k, prior -1.07m
  • 2pm: FOMC Rate Decision (Upper Bound), est. 1.5%, prior 1.5%

Looking at the day ahead, the Fed monetary policy meeting outcome will be the highlight today. Flash January CPI reports for the Euro area will be closely watched, as will the January ADP employment print change for the US. The latter will also release the Q4 employment cost index, January Chicago PMI and December pending home sales. Microsoft, Facebook, eBay, AT&T, Boeing and Paypal highlight a busy day for high profile earnings releases. The ECB’s Coeure will also speak.

DB’s Jim Reid Concludes the overnight wrap

If you’re reading this in the Western Hemisphere, stand by today for an event we haven’t seen since 1866. No, not equity markets going down two days in a row but instead a “Super Blue Blood Moon”. To break this down, a blue moon is where there are two new moons in a month. A supermoon is where our satellite’s perigee (its closest approach in its orbit and appearing c.14% larger and is c.30% brighter) coincides with a full moon. A blood moon is a lunar eclipse when the moon passes into the earth’s shadow. The reddish tint that this will bring as the sun’s light is cut off and it’s visible through the filter of our atmosphere provides the blood reference.

As discussed above this astrological event coincides with a bad month end for markets with confidence suddenly sucked into a black hole. Indeed the last couple of days are perhaps a taster of what might actually happen when yields properly normalise rather than simply selling off a bit. However unless something extraordinary happens today, January will still go down as an exceptional month for risk although bond returns will see a lot of negatives in front of the numbers. We’ll do the full review of the month tomorrow.

One of the most impressive parts of the equity sell-off yesterday was that there wasn’t really a flight to quality into bonds. 10yr USTs rose a further 2.6bps and 10yr Bunds only fell 1.1bps even with a weaker than expected German inflation print.

Now reviewing the equity moves. The S&P 500 (-1.09%) saw its worse day since mid-August and worst 2-day fall (-1.76%) since May, while the Dow (-1.37%) and Nasdaq (-0.86%) also retreated. The mini-selloff in the S&P seemed to have a few contributing factors, including ongoing concerns over valuation, rising yields, a lower oil price and weakness in health care stocks (-2.13%). The latter partly reflects potentially higher competitive tensions in view of Amazon, JP Morgan and Berkshire’s plans to launch a new joint company to provide their US staff with tech solutions for simplified healthcare at lower costs. The risk off tone was also evident in Europe with key bourses down 0.9%-1.1% and the Stoxx 600 down the most for c2.5 months (-0.92%). The VIX jumped to an intra-day high of 15.42, before closing 6.9% higher to 14.79 – the highest since mid-August.

Focusing on Apple, Bloomberg reported that according to unnamed sources, the US DOJ and SEC are investigating whether Apple violated securities laws regarding its disclosures about a software update that slowed older iPhones. Notably, the inquiry is in early stages and Apple’s share price fell c1.5% intraday and closed -0.59% lower.

Staying with US equities, since tax reform was signed, banks have written off billions of dollars of deferred tax assets. Yet the effects extend far beyond finance firms. In fact, one in ten companies in the S&P 500 has net deferred tax assets.

Also in the US, President Trump’s first State of the Union address touched on many issues but was short on details on his policy proposals. He highlighted his administration’s progress to building a “safe, strong and proud America” and
noted that “c3m workers have gotten tax cuts…this in fact is our new American moment…there has never been a better time to start living the American dream”. Then he spoke of unity in politics, such as “extending an open hand to work with members of both parties” and “…call upon all of us to set aside our differences… to deliver for the people we were elected to serve”. On trade, he touched on “America has finally turned the page on…unfair trade deals…” Then on the big infrastructure plans, he proposed to allocate $200bn federal funds over the next 10 years on roads and transit projects. Then the expectation is the investments would encourage further spending from the state, local governments and private sector – as least $1.5trn.

Elsewhere the Treasury Secretary Mnuchin sought to clarify his comments last week on the USD. He noted his comments were “not anything new” and “it was no way intended to talk down the dollar whatsoever”. Further he reiterated that “I absolutely support a strong dollar as being in the long term best interest of the country and….we have a free currency market that we don’t intervene in…”. As a reminder, today’s FOMC meeting will serve in part as a farewell to Chair Yellen, but is unlikely to result in any significant new signals for the market. Our US economists expect that the FOMC will want to see some more data and go through another round of forecasts before signalling a more aggressive tightening stance of four hikes this year (DB’s forecast).

This morning in Asia, markets are mixed but UST 10y yields is down c1.5bp. The Nikkei is down 0.47% while the Hang Seng (+0.06%), China’s CSI 300 (+0.14%) and Kospi (+0.44%) are all up, with the latter supported by Samsung, which is up c5% post its 4Q results and announcing a 50 to 1 stock split. Datawise, China’s January manufacturing PMI was a tad softer at 51.3 (vs. 51.6 expected) although the services number was a bit higher. Japan’s December IP was above market at 4.2% yoy (vs. 3.3%). Elsewhere, outgoing deputy BOJ governor Iwata warned against an early turn towards fiscal austerity, in part as “…achievement of the price stability target of 2% will become difficult” Now recapping other markets performance from yesterday. The US dollar index was marginally lower (-0.14%), while the Euro and Sterling gained 0.15% and 0.52%, respectively. Core 10y bond yields traded within a c3bp range intraday and closed little changed (Bunds -1.1bp; OATs -0.7bp; Gilts +0.7bp). In commodities, WTI oil fell 1.62% ahead of the API data, which later showed that US crude inventories rose for the first time since November. Elsewhere, precious metals softened c0.1% (Gold -0.13%; Silver -0.15%) and other base metals also weakened (Copper -0.34%; Zinc -1.06%; Aluminium -0.58%).

Away from markets, the BOE Governor Carney spoke on a range of topics in front of the House of Lords. On inflation, he noted the pass through from Sterling into inflation still has a way to go, but he is happy with the BOE’s inflation target. On Brexit, he denies that the BOE has a bias against it and that a “disorderly Brexit” is not a likely scenario. Elsewhere, he noted business investments is likely 4ppt lower than it would have been if the UK voted to stay in the EU bloc but also noted that investments could also pick up next year when uncertainty from Brexit reduces. On rates, he noted “as slack in the economy has been taken out…. (the focus for monetary policy) is increasingly on returning inflation sustainably to target over an appropriate horizon”. The implied Bloomberg odds of a rate hike in June was little changed, up 2ppt to 49%.

Returning to the UK, BuzzFeed has leaked the UK government’s forecasts of the potential economic impacts from Brexit. The worse scenario suggests the UK economy will be 8% smaller than otherwise in 15 years time and the  softest scenario would slow economic growth by 2%. Brexit minister Baker noted the documents “require significant further work” and “its’ not yet anywhere near being approved by the ministers”. DB’s Oliver Harvey has published an update on the state of play with Brexit. He argues that the newsflow in recent days suggests rising risks of a political crisis before agreement can be reached on transitional arrangements in March. Refer to his note for more details.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the January CB consumer confidence index was above market at 125.4 (vs. 123) and slightly lower than November’s 17 year high, with the mom increase mainly driven by a rebound in the expectations index. The November S&P corelogic house price index also beat at 6.41% yoy (vs. 6.3% expected).

The Euro area’s 4Q GDP was in line at 0.6% qoq and 2.7% yoy, while France’s 4Q GDP was also in line at 0.6% qoq. The Euro area’s January economic confidence (114.7 vs. 116.2) and business climate index (1.54 vs. 1.68 expected) were both softer than expected, but the final reading of consumer confidence was confirmed at 1.3 – a 17 year high. In Germany, the January CPI was lower than expected at -1% mom (vs. -0.7%) and 1.4% yoy (vs. 1.6%) – the lowest annual print since May. Elsewhere, Italy’s January consumer confidence was also slightly softer at 115.5 (vs. 116.7 expected). In the UK, the December mortgage approvals fell to the lowest level since January 2015 (61k vs. 63.5k expected) while net consumer credit was a tad higher at £1.5bn (vs. £1.4bn expected).

Looking at the day ahead, the Fed monetary policy meeting outcome will be the highlight today. Flash January CPI reports for the Euro area will be closely watched, as will the January ADP employment print change for the US. The latter will also release the Q4 employment cost index, January Chicago PMI and December pending home sales. Microsoft, Facebook, eBay, AT&T, Boeing and Paypal highlight a busy day for high profile earnings releases. The ECB’s Coeure will also speak.

3. ASIAN AFFAIRS

i)Late TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 7.17 points or 0.21% /Hang Sang CLOSED UP 193.68 pts or 0.86% / The Nikkei closed DOWN 193.68 POINTS OR 0.83%/Australia’s all ordinaires CLOSED UP 0.18%/Chinese yuan (ONSHORE) closed UP at 6.28897/Oil DOWN to 64.09 dollars per barrel for WTI and 68.03 for Brent. Stocks in Europe OPENED IN THE GREEN .   ONSHORE YUAN CLOSED UP AGAINST THE DOLLAR AT 6.2887. OFFSHORE YUAN CLOSED DOWN AGAINST  THE ONSHORE YUAN AT 6.2887//ONSHORE YUAN MUCH STRONGER AGAINST THE DOLLAR/OFF SHORE MUCH STRONGER TO THE DOLLAR/. THE DOLLAR (INDEX) IS  MUCH WEAKER AGAINST ALL MAJOR CURRENCIES. CHINA IS HAPPY TODAY.(STRONGER CURRENCY BUT STILL  WEAK MARKETS )

3 a NORTH KOREA/USA

/SOUTH KOREA

 

3 b JAPAN AFFAIRS

 

The Bank of Japan intervenes by boosting bond buying to halt the rise in Japanese bond yields as it hit 0.10%

 

(courtesy zerohedge)

BOJ Unexpectedly Boosts Bond Buying Operation To Halt Rise In Yields

First thing this morning we reported that as part of the global bond selloff, overnight Japan’s 10-year bond yield briefly rose by more than 2bps above 0.10%, the highest since July 11, with traders commenting that any sustained increase in the 10-year yield to 0.1% would test speculation that the BOJ will offer to buy unlimited amount of bonds for fixed rates.

Well, the BOJ did not do that, but in a clear indication that the BOJ will not tolerate further upside pressure on JGB yields, as part of today’s “rinban” or BOJ equivalent of POMO, the BOJ boosted bond purchases in the 3-5 year bucket from 300BN yen to 330BN yenThis was the first increase in this bucket since July, and follows a 10BN yen reduction in bond repurchases  in the 10-25Y bucket on January 9, which spooked traders that the BOJ was sending its latest tapering signal.

While the move led to an immediate move higher in the USDJPY, all the gains have since faded.

More to the point, the yield on the 10Y JGB dipped modestly, and after trading a little over 0.09% it was last trading at 0.087%, well below the BOJ’s 0.1% redline.

Commenting on the BOJ’s POMO “intervention” Barclay’s rates strategist Naoya Oshikubo said that the Bank of Japan’s operation “clearly shows its intent to rein in domestic government bond yields” adding that the “BOJ was clearly mindful of the 10-year yield approaching 0.1%”

But why the 3-to-5 zone? Because according to Oshikubo, since today’s regular operations didn’t include 5-10 year sector, the BOJ probably used the 3-5 year sector to show its stance, as the 5-year yield is close to the 10-year one and can have impact.

Finally, the Barclays rates strategist predicted that similar operations are likely in future if yields rise. Still, he warned that while the BOJ’s action can offer some relief to markets but the real cause of yield rise is higher U.S. yields, where prospects are unclear.

He is right, because the USDJPY is already back to unchanged. If and when the 10Y resumes blowing out, the BOJ will be forced to get even more aggressively involved as the spillover effects from rising US yields are finally appreciated by the rest of the world.

c) REPORT ON CHINA

 

We have been reporting to you on the financial difficulty of NHA,  Today it was revealed that they have a shortfall of almost 15 billion yuan that is owed by June. It seems that they are on the verge of bankruptcy and that will probably start the house of cards collapsing.

 

(courtesy zerohedge)

China’s Largest Conglomerate Is On The Verge Of Bankruptcy

On December 8, we lamented how every few days we return to the subject of systemic risk in China related to its big four highly-indebted conglomerates, HNA, Anbang, Evergrande and Dalian Wanda. We also noted how our chief source of concern had become HNA, after it issued a bond with less than one year to maturity with the extortionately high coupon of 9%, not longer after S&P downgraded HNA’s credit rating from B+ to B, five levels below investment grade. The reason for our continuing focus on HNA is its $28bn of short-term debt which matures before the end of next June, much of it accumulated during a $40 billion binge of acquisition-driven growth which saw it become a major shareholder in Deutsche Bank, Hilton Worldwide and others.

We have repeatedly discussed  how despite being one of China’s largest conglomerates, HNA has been shut out of stock and bond markets as lenders worry about its outsized debt load, forcing the company to pledge some of its core holdings as collateral for short-term loans, as the Wall Street Journal  reported last month. And yet, even as the company resorted to loaning out shares and entering into arcane derivative financing agreements to finance its debt-service payments, it quickly found out that traditional avenues of financing are disappearing or becoming too costly

We also noted how HNA business units had suffered further credit downgrades and been forced into cancelling bond issues. For example, Hainan Airlines cancelled a 1 billion yuan ($151.2 billion) issue of perpetual bonds to repay maturing debt, HNA Investment Group (hotels and real estate) cancelled a 5.22 billion yuan ($790 million) issue and S&P cut the long-term credit rating of HNA’s Swissport Group Sarl to b-, six levels below investment grade, citing concerns about its parent.

Two weeks later  we followed up with another piece on this giant Chinese conglomerate, noting that while almost everything we read about HNA is “shady”, one thing is certain, HNA’s financial position is far from being “stable”, as the company asserts. Indeed, all the evidence points to it becoming more unstable, although its extremely opaque “private” ownership structure, which prompted Bloomberg to call it “The Mysterious Chinese Company Worrying The World”, makes it even harder to analyze.

This was confirmed by China’s Citic Bank which said a unit of HNA Group is having difficulty repaying certain short-term debts, just over a week after the Chinese conglomerate said it won’t default in the coming year. HNA Aviation Group has had trouble paying bankers’ acceptances – debt instruments that mature in the short term – and Citic Bank is working with HNA Group to try to resolve the situation, the Chinese lender said in a statement sent exclusively to Bloomberg News. The group has several bonds and loans from multiple banks maturing at similar times, causing a “temporary liquidity” issue, Citic Bank said.

All this followed earlier reports that first Bank of America  and then HSBC had advised their banks to stop transactions with HNA and pitching new business due to the conglomerate’s “debt levels and ownership structure.”

As we concluded one month ago, “We see it as a major “red flag” when fee-hunting banks – Bank of America in July and HSBC earlier this month – warn their bankers not to pitch for new business with a company that’s been on a $40 billion acquisition spree since 2016.”

Just a few days later, and with memories of 2016’s dramatic plunge in Deutsche Bank shares still fresh, its fellow shareholders that it is a “long-term investor” in Germany’s largest bank.  The comment was, of course, self-serving: Though it has purchased downside protection to protect against a large drop in DB’s shares, a substantial decline in the company’s valuation could be the straw that pushes the conglomerate into bankruptcy, and potentially triggers China’s “Minsky moment.” It could also unleash another liquidation panic in Deutsche Bank shares if other shareholders become convinced that HNA is looking to sell its $4 billion worth of DB shares (roughly a 10% stake) and try to frontrun it.

* * *

With all this in mind (and there is muchmuch,  much  more), fast forward to today when the crisis surrounding HNA Group deepened after it emerged in the latest twist, that the giant Chinese company’s ability to repay its debt will face a potential shortfall of at least 15 billion yuan ($2.4 billion) in the first quarter, according  to Bloomberg.

In a continuation of the financial warnings passed around quietly behind the scenes by HNA, the sprawling conglomerate warned major creditors about its financial status in a meeting in Hainan last week, though it also said that the pressure will probably ease in the second quarter as the group steps up asset disposals, according to Bloomberg sources.

While this latest news illustrates the extent of HNA’s liquidity challenges – none of which will come as a surprise to readers who have been following this long-running fiasco – as well as the urgency behind it after the conglomerate spent tens of billions of dollars on debt-fueled investments to transform a little known airline into one of China’s biggest business behemoths, the scale of the funding gap will likely deepen concerns about the viability of the group, which owns stakes in everything from Deutsche Bank AG to Hilton Worldwide Holdings, as it faces scrutiny worldwide from regulators and investors.

As for HNA’s assurance that its asset sales will accelerate, the desperation behind that statement is by now obvious to all: “It’s not going to be easy to sell assets in such a short time to cover the shortfall so the decisions made by banks will be crucial in the coming weeks,” said Linus Yip, Hong Kong-based strategist with First Shanghai Securities Ltd. “HNA can only hope that banks will grant it new funds.

The private warnings come at a time when the company has repeatedly said that it’s in good financial condition and that its debts are manageable. Just last month we reported that board director Zhao Quan said that any tightness in funds would be temporary and that the group wouldn’t default on any borrowings in the coming year.

Meanwhile, fears of a systemic crisis are growing: as Bloomberg cautions, HNA has become massive. The company had $190 billion of assets – more than at American Express – as of June, held nearly $30 billion of shareholdings and owned an estimated $14 billion in real estate properties worldwide.

But recently, the company has mostly stood out for its debts as concerns about its ability to repay loans and bonds have driven up its borrowing costs.

And the punchline: HNA is now effectively insolvent as its earnings can’t even cover its interest expenses, which according to data compiled by Bloomberg, have soared to levels topping those of any non-financial Chinese company. This is why the company is now a systemic threat to the entire Chinese economy. Meanwhile, its cash and earnings also fall short of the $29 billion in short-term debt that the company faces.

Which brings us to the bottom line: HNA has about 65 billion yuan in debt coming due during the first quarter, and it is facing a 15 billion yuan shortfall to cover just this quarter’s obligations.

In other words, if HNA fails – and the government does not bail it out – the Chinese dominos will start falling. HNA’s overall debt totals about 1 trillion yuan, with China Development Bank being the group’s biggest creditor, according to the people. That’s 56% higher than the 637.5 billion yuan in short- and long-term debt the company disclosed as having as of November.

And the biggest surprise in the Bloomberg report: HNA’s creditors are already starting to organize ahead of what may be one of the world’s messiest bankruptcies.

HNA’s mounting liquidity woes have prompted some major lenders to consider banding together to form a committee that could exert more pressure on HNA, the people said. HNA creditors have yet to decide whether to form a creditor committee, the people said. Forming a committee is a popular strategy that creditors in China use when dealing with a borrower facing substantial difficulties. Such an arrangement may give creditors more influence in the group’s strategic decisions, including asset sales.

It also would mean that, for all intents and purposes, China’s largest conglomerate is effectively bankrupt, which is bad news for the company’s dozens of creditors, which include China Development Bank, Export-Import Bank of China, Bank of China Ltd., Agricultural Bank of China Ltd., Industrial & Commercial Bank of China Ltd., China Construction Bank Corp., Bank of Communications Co. and Shanghai Pudong Development Bank Co.

HNA met with those eight banks in Hainan last month to discuss ways of providing credit support in 2018.

There is still hope that the local Chinese government will bail the company out: the Hainan provincial government, which called the meeting, expressed its support for HNA, Bloomberg’s sources said, although should China proceed with a bailout of this magnitude it would demonstrate to the world that Xi Jinping’s reform agenda which includes deleveraging and allowing insolvent corporations to fail, has been nothing but smoke and mirrors.

end

4. EUROPEAN AFFAIRS

 

 

EU

 

An excellent commentary from Tom Luongo as he outlines the problems facing the EU now.  Bond yields are rising because of perceived lack of confidence in Europe’s economy.  Investors are cashing out of European bonds which causes the the Euro to rise.  The higher Euro value will completely destroy the economies of the southern periphery.

 

a great commentary

 

 

 

(COURTESY TOM LUONGO)

Forget Stocks, Look At EU Bonds – They Are The Real Problem

Authored by Tom Luongo,

I’ve been banging on for months along with Martin Armstrong that the real problem overhanging these markets is not an over-priced U.S. equity market.  That’s a sympton of a much bigger problem.

The real problem is an over-valued European sovereign bond market.

Looking at today’s bond market we see technical breakouts on yields to the upside across the continent.  And we’re not talking the usual suspects here, like Italy, Portugal or Greece.

No, we’re talking about Germany.

bunds

Note the cluster of resistance at 0.5%.  The market rejected taking yields on German 10 year debt above that level no less than six times in the past fifteen months.

Today, yields are at 0.685% and tomorrow is the end of the month.  Looks like we’re going to get a major bearish signal in German debt tomorrow.

While all the headlines are agog with stories about the Dow Jones dropping a couple hundreds points off an all-time high, German bunds are getting killed right before our eyes.

The Dow is simply a market overdue for a meaningful correction in a primary bull market.  And it’s a primary bull market brought on by a slow-moving sovereign debt crisis that will engulf Europe.

It’s not the end of the story.  Hell, the Dow isn’t even a major character in the story.

In fact, similar stories are being written in French 10 year debtDutch 10 year debt, and Swiss 10 year debt. These are the safe-havens in the European sovereign debt markets.

Meanwhile, Italian 10 year debt?  Still range-bound.  Portuguese 10 year debt?  Near all-time high prices.  The same this is there with Spain’s debt.  All volatility stamped out.

Why?

Simple.  The ECB.

For Euro Eyes Only

The ECB’s quantitative easing program and negative interest rate policy (NIRP) drove bond yields across the board profoundly negative for more than a year.

And despite ECB President Mario Draghi’s jaw-boning and assurances, he can no more exit this program than Bitcoin billionaires can exit the crypto-market and get back into dollars without the kind of pain that would stagger, if not break, the industry.

But, the ECB is trapped and cannot allow rates to rise in the vulnerable sovereign debt markets — Italy, Portugal, Spain — lest they face bank failures and a real crisis.

The problem with that is, the market is scared and so they are selling the stuff the ECB isn’t buying – German, French, Dutch, Swiss debt.  In simple terms, we are seeing the flight into the euro intensify here as investors are raising cash.

The euro and gold are up.  The USDX continues to be weak even though capital is pouring into the U.S. thanks to fundamental changes to tax and regulatory policy under President Trump.

In the short term Dow Jones and S&P500 prices are overbought.  Fine.  Whatever.  But, the real problem is not that.  The real problem is the growing realization in the market that governments and central banks do not have an answer to the debt problem.

Trump is being fought every step of the way to keep the dream alive of a U.S. economy brought to the same low state of the EU’s democratic-socialist ‘shitholes.’  He’s winning, by the way, because, for the most part, he is on the side of rational, incentive-based economic theory.

He’s hopeless on some issues, but the core of his tax-cut plan supersedes those failings.

The Real Savings Story

However, the real story is the end of the current monetary system and the repudiation of neoliberal/neoclassical economics. Despite Armstrong’s wailings against the Austrian School of Economics and the Quantity Theory of Money, this is Mises’ revenge.

He actually makes the Austrian case in a recent blog, but refuses to admit that what he’s describing are the effects of money printing rather rooting out the underlying cause of the deflation he’s rightly seeing.

It’s too bad, actually.  Because a mixture of his cycles work and a deeper understanding of Austrian Business Cycle Theory, which is NOT synonymous with the Quantity Theory of Money, would be a a synthetically more powerful combination than either of them on their own.

Printing money undermines the confidence in the value of it.  There is no way around that.  In fact it is the entire point of printing money.  At most points in the inflationary boom/bust cycle increasing the money supply will create price inflation.

Again, that’s the point.

This price inflation comes from the confidence that people have in the issuers of the money that they have things under control, that they are printing the right amount of money to offset price deflation and spark a boom.

And as long as that confidence holds, then expansionary monetary policy will create a new economic boom that can be measured in increasing nominal output.

However, in doing so the money issuers, in this case the central banks, distort the structure of production by mis-pricing the cost of money, the interest rate.  They artificially drive interest rates below the real rate of the market’s risk tolerance.

This signals to producers to engage in projects that there isn’t enough capital in the pool of real savings to cover.  I covered this in a post at length last year.

But, there will always come a point where the creation of more money units will not inspire enough confidence in the system to maintain asset prices being artificially propped up by more money.

And when that happens it will be the boom to end all booms, where printing of more money will not create more confidence but less.  And even a core economy like the U.S. will be bound by this fact.  If Trump is allowed to do his job he will postpone that day for a while, but the structural problems of the U.S.’s economy are too deep to avoid some damage.

Trapped, Trapped I Say!

That’s where the ECB is now.  There is no political will in Europe to change its taxing and regulatory environment.  In fact, Germany wants more punitive Austerity not less.  It demands the worst possible combination of conditions on its confederates, lower government spending (good), higher taxes to pay for the debt servicing (awful).

It’s nothing but a capital destructive scheme meant to punish and destroy the prospect of future growth.

The ECB is flirting with losing the confidence of bond traders and institutional investors who rightly see all European sovereign debt as over-valued, especially as rates in the U.S. begin to rise.

We have been in a deflationary cycle since 2008.  The Fed printed money to save the banks. The money never circulated because it paid the banks to park the money on reserve with the Fed, interest on excess reserves.

However, that interest did, along with government deficit spending,  keeping prices for those things with inelastic demand curves — food, electricity, health care, housing — continually rising while real wages contracted.

The U.S. economy is about to be unleashed by Trump’s tax cut law.  It will be able to absorb higher interest rates for a while.  Yield-starved pension funds, as Armstrong rightly points out, will be bailed out slightly forestalling their day of reckoning.

And in doing so, higher rates in the U.S. are driving core-rates higher in Europe.  An overly-strong euro is crushing any hope of further economic recovery in the periphery, like Italy.  The debt load on Italy et.al. has increased relative to their national output by around 20% since the end of 2016.

This will put the ECB at risk of a massive loss of confidence when Italian banks start failing, Italy’s budget deficit starts expanding again and hard-line euroskeptics win the election in March.

As capital is drained out of Europe into U.S. equities, the dollar, gold and cryptocurrencies, things should begin to spiral upwards rapidly.

This is the story the bond markets are telling us today.

END

GERMANY

Germany stops taking migrants from Italy and Greece

(courtesy zerohedge)

Germany To Stop Taking Migrants From Italy And Greece

Germany will no longer be accepting relocated asylum seekers from Italy and Greece, reports Die Welt citing the German Interior Ministry.

The decision, announced Monday, ends Germany’s participation in an EU relocation agreement launched in the wake of the 2015 migrant crisis. The agreement officially expired on September 26, 2017, and saw Germany take in over one-third of the total refugees distributed under the plan.

“There are now virtually no more asylum seekers in Greece who could be considered for resettlement,” according to the Ministry. To qualify, applicants had to be from a country where the chances of asylum are at least 75 percent.

Last month, some 500 migrants were still waiting to be relocated from Italy to Germany, while in Greece the number less than 40.

The relocation scheme ended in September 2017, meaning all applicants arriving after that date will no longer be eligible for resettlement,” Annegret Korff, a speaker for the Interior Ministry, said.

“Germany largely completed all outstanding relocations by the end of 2017. In the coming weeks, Germany will only carry out the odd resettlement case that was left outstanding from last year.” –DW.com

Based on the massive number immigrants arriving in Germany alone during the height of the migrant crisis – some 1.3 million in 2015 with 890,000 entering Germany, EU member states initially agreed to collectively take in some 160,000 refugees from Greece and Italy.

That number, however, was revised down to 100,000 after officials realized that fewer people were eligible than originally thought. In total, only 33,000 migrants actually took part in the transfer program – with Germany taking in 10,265.

Migration also fell sharply following the 2015 peak, with just 280,000 migrants arriving in Germany in 2016, and 186,644 asylum seekers last year.

Last October, Angela Merkel’s CDU and Bavarian CSU sister party agreed to cap Germany’s intake of asylum seekers at 200,000 per year.

“We want to achieve a total number of people taken in for humanitarian reasons (refugees and asylum seekers, those entitled to subsidiary protection, family members, relocation and resettlement minus deportations and voluntary departures of future refugees) that does not exceed 200,000 people a year”.

And in December, 2017Germany offered rejected asylum-seekers a one-time payment of $3,500 to go home, valid through the end of February.

“If you decide by the end of February for a voluntary return, you will get in addition to first aid, a housing aid for the first twelve months in your country of origin,” Interior Minister Thomas de Maiziere told newspaper Bild am Sonntag.

That said, relocation schemes or not – refugees will continue to pour into Europe from Africa this summer. It is unclear how the EU intends on dealing with future waves of migrants, while a standout coalition of EU members refuse to take in migrants whatsoever.

Bulgarian Prime Minister Boyko Borisov – whose country currently heads the EU as part of a six-month rotating EU presidency, said that the current asylum rules “literally split Europe.”

German Interior Minister Thomas de Maiziere hinted Berlin was willing to drop its insistence on quotas in order to make progress on asylum policy reform, saying “We will decide on this at the end of the negotiations.”

After meeting in Sofia, Bulgaria last Thursday to discuss asylum policy, EU Interior Ministers set a deadline of June to develop a solution.

What is the current situation? (via DW.com)

  • Current EU migration rules state that asylum requests must be processed in the country where asylum was first requested.
  • This has put a heavy burden on Greece and Italy, the two major entry points to Europe.
  • Proposed changes to the rules would create a permanent mechanism for all EU member states to admit refugees in the event of a new emergency.
  • The June deadline has been put in place because warm weather during this time tends to increase migrant flows across the Mediterranean.
  • Hungary and its eastern European neighbors, including Poland, have refused to take in refugees since the European Commission pushed through temporary refugee quotas in 2015.
  • Slovakia and the Czech Republic have also been reluctant to accept migrants from other EU countries, citing security concerns.

As the Greek and Italian relocation program draws to a close, and migrant-heavy EU nations such as Sweden, Germany, France suffering from increased crime rates vs. their non-refugee accepting EU counterparts, one has to wonder how much worse this crisis borne of regime change and perpetual war is actually going to become before the financial and civil consequences of a “borderless” Europe result in all out civil war.

 

END

7. OIL ISSUES

 

The algos got totally confused with morning. Oil rose this morning despite API’s surprise crude build but when the DOE reported a massive crude build, oil prices began to drop.  However gasoline rose as inventories drew down.

 

(courtesy zerohedge)

8. EMERGING MARKET

 end

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

Euro/USA 1.2449 UP .0041/ 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 GREEN 

USA/JAPAN YEN 108.77 UP  0.037 (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 1.4153 UP .0081 (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 1.2286 DOWN .0050 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS WEDNESDAY morning in Europe, the Euro ROSE by 41 basis points, trading now ABOVE the important 1.08 level RISING to 1.2449; / Last night the Shanghai composite CLOSED DOWN 7.17 POINTS OR 0.21% / Hang Sang CLOSED DOWN 359.60 POINTS OR 1.09% /AUSTRALIA CLOSED UP 0.18% / EUROPEAN BOURSES MOSTLY GREEN  

The NIKKEI: this WEDNESDAY morning CLOSED DOWN 193.68 POINTS OR 0.83%

Trading from Europe and Asia:
1. Europe stocks OPENED  MOSTLY GREEN EXCEPT LONDON

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 279.98 POINTS OR 0.86% / SHANGHAI CLOSED DOWN 7.17 POINTS OR 0.21% /

Australia BOURSE CLOSED UP 0.18% /

Nikkei (Japan)CLOSED DOWN 193.68 POINTS OR 0.83%

INDIA’S SENSEX IN THE RED

Gold very early morning trading: 1343.35

silver:$17.25

Early WEDNESDAY morning USA 10 year bond yield: 2.701% !!! UP 0 IN POINTS from TUESDAY night in basis points and it is trading WELL ABOVE resistance at 2.27-2.32%. (POLICY FED ERROR)/ALSO GETTING DANGEROUSLY CLOSE TO 2.70%

The 30 yr bond yield 2.948 UP 0 IN BASIS POINTS from TUESDAY night. (POLICY FED ERROR)

USA dollar index early WEDNESDAY morning: 88.93 DOWN 23  CENT(S) from TUESDAY’s close.

This ends early morning numbers WEDNESDAY MORNING

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And now your closing WEDNESDAY NUMBERS \1 PM

Portuguese 10 year bond yield: 1.965% UP 1  in basis point(s) yield from TUESDAY/

JAPANESE BOND YIELD: +.085% DOWN 1   in basis points yield from TUESDAY/JAPAN losing control of its yield curve/

SPANISH 10 YR BOND YIELD: 1.427% UP 2  IN basis point yield from TUESDAY/

ITALIAN 10 YR BOND YIELD: 2.029 UP 0  POINTS in basis point yield from TUESDAY/

the Italian 10 yr bond yield is trading 60 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.697%  UP 2 IN BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR WEDNESDAY

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

Euro/USA 1.2424 UP.0017 (Euro UP 17 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 109.32 UP .576 Yen DOWN 58 basis points/

Great Britain/USA 1.4186 UP .001142( POUND UP 114 BASIS POINTS)

USA/Canada 1.2300 DOWN  .0033 Canadian dollar UP 33 Basis points AS OIL FELL TO $64.53

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP 17 to trade at 1.2424

The Yen FELL to 109.32 for a LOSS of 58 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 114 basis points, trading at 1.4186/

The Canadian dollar ROSE by 33 basis points to 1.2331/ WITH WTI OIL RISING TO : $64.53

The USA/Yuan closed AT 6.2888
the 10 yr Japanese bond yield closed at +.085% DOWN 1  BASIS POINTS / yield/
Your closing 10 yr USA bond yield UP 3 IN basis points from TUESDAY at 2.733% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 2.972  UP 0  in basis points on the day /

Your closing USA dollar index, 89.03 DOWN 13 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 WEDNESDAY: 1:00 PM EST

London: CLOSED DOWN 54.43 POINTS OR 0.72%
German Dax :CLOSED DOWN 8.23 POINTS OR 0.06%
Paris Cac CLOSED UP 8.15 POINTS OR 0.15%
Spain IBEX CLOSED UP 22.30.40 POINTS OR 0.22%

Italian MIB: CLOSED UP 26.14 POINTS OR 0.11%

The Dow closed UP 72.50 POINTS OR 0.28%

NASDAQ WAS UP 9.00 Points OR 0.12% 4.00 PM EST

WTI Oil price; 64.53 1:00 pm;

Brent Oil: 68.63 1:00 EST

USA /RUSSIAN ROUBLE CROSS: 56.23 DOWN 15/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 15 BASIS PTS)

TODAY THE GERMAN YIELD RISES TO +.697% 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:$64.85

BRENT: $68.94

USA 10 YR BOND YIELD: 2.7140%   THE RAPID ASSENT IN YIELD IS VERY DANGEROUS/ANYTHING OVER 2.70% AND  DERIVATIVES BLOW UP

USA 30 YR BOND YIELD: 2.939%

EURO/USA DOLLAR CROSS: 1.2413 UP.0005  OR 5 BASIS POINTS

USA/JAPANESE YEN:109.20 UP 0.467/ YEN DOWN 47 BASIS POINTS

USA DOLLAR INDEX: 89.13 DOWN 13 cent(s)/

The British pound at 5 pm: Great Britain Pound/USA: 1.4187 : UP 115 POINTS FROM LAST NIGHT

Canadian dollar: 1.2310 DOWN 25 BASIS pts

German 10 yr bond yield at 5 pm: +0.697%

END

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

TRADING IN GRAPH FORM FOR THE DAY

Dow Soars To Best January Since 1997, Bonds’ Worst Start In 25 Years

January summed up… Bonds worst January since 1992… Dow’s best January since 1997… Dollar’s worst January since 1987…

Phew… that was quite a month…

Records busted everywhere…

And the S&P is now on a 15-month win-streak (never happened before) and is up for 22 of the last 23 months – since The Shanghai Accord in Feb 2016!!

But the month ended ugly with the last few days setting up for the S&P’s worst weekly loss since 11/4/16 (the week before the election)…

Greenspan spooked stocks this afternoon…but they were rescued into the green…

The S&P 500 has had two consecutive 50bp+ selloffs this week for the first time since 2016

Notably, The Dow has dramatically outperformed Trannies in January back to a historical resistance level…

Gold outperformed post-FOMC…

 

Boeing rescued The Dow by adding around 100 points of gains today…

 

China continues to suffer with Shenzhen and CSI-300 now down YTD…

 

And Volatility’s biggest monthly jump since Aug 2015’s China Devaluation Crash…

 

And vols across all assets spiked in Jan…

 

Bonds are now the most oversold since the election in Nov 2016…

 

Which is understandable after the worst start to a year since 1992 (based on Lehman Agg)…

 

 

 

Today saw the long-end rally and short-end dump as the curve flattened dramatically…

 

2s30s is at its flattest since Oct 2007… January is the 6th monthly flattening in a row (9 of 10 and 12 of 13)

 

 

The Dollar Index was monkey-hammered in January – its worst January since 1987

Cable is up 5% in January and the best performing major against the dollar…

 

Despite the dollar weakness, Copper ended the month lower (worst since Sept) as gold, silver and crude jumped…

 

As Gold notably outperformed Bitcoin…

 

Finally, it’s been an ugly month for many cryptocurrencies, but Ethereum managed to gain 45% YTD…

 

 

Bitcoin ends back below $10,000 – suffering the worst monthly loss since Dec 2013…

 

 

 

end

Trading this morning:

we have brought this to your attention on many occasions:  once the 10 yr bond yield rises above 2.70%, the stock market will tank.  Yields rose above 2.70% this morning to 2.74% and that spooked stocks again

(courtesy zerohedge)

Stocks Spooked Again As 10Y Yield Spikes To New Cycle High

The 10Y Treasury yield just spiked to 2.7387% – its highest since April 2014…

 

And as it did stocks legged lower…

 

As it appears the surging cost of funding is starting to spoil the equity market party.

 

 

 

But but but rates are rising for the ‘right’ reason?!

end

 

The private ADP report shows big job gains in January and in a “tight labour market”I would not put any weight into this report

(courtesy ADP/zerohedge)

 

ADP Shows Big Job Gains In January In “Excruciatingly Tight Labor Market”

Having dramatically beaten expectations last month (and printed way ahead of NFP), ADP has done it again in January, printing a 234k job gain in January (185k exp). The bulk of the gains were in Services (+212k vs +22k in Goods which are seeing slower growth).

Notably growth in the manufacturing job additions is slowing…

 

As a reminder, ADP saw 250k jobs added in Dec versus just 148k for Non-Farm Payrolls.

Since Trump’s election, ADP’s print has been systemically higher than the BLS’ data? Makes one wonder if Zandi’s firm is helping The Fed with excuses to tighten?

Only inflation jobs sector declined…

 

Mark Zandi proclaimed on CNBC that this to be an “excruciatingly tight labor market.”

“The job market juggernaut marches on. Given the strong January job gain, 2018 is on track to be the eighth consecutive year in which the economy creates over 2 million jobs. If it falls short, it is likely because businesses can’t find workers to fill all the open job positions.”

END

Yellen’s final FOMC:  the hawkish fed sees “solid” inflation spending and investment signals

so gold falls on inflation expectations???..

(courtesy zerohedge)

 

Yellen’s Final FOMC: Hawkish Fed Sees “Solid” Inflation, Spending, Investment Signals

Yellen’s last FOMC meeting has come and gone and Morgan Stanley suggested “where’s the snooze button?” in their preview post.

Perhaps the most notable development since the December meeting has been the sharp re-pricing of yields, notably inflation breakevens. The year breakeven is 20 bps higher, and the 5y/5y breakeven is nearly 30 bps higher. As such, an acknowledgement that “market-based measures of inflation compensation have risen” seems likely.

The Fed was hawkish:

  • *FED LEAVES RATES UNCHANGED IN UNANIMOUS VOTE
  • *FED: ECONOMY TO `WARRANT FURTHER GRADUAL INCREASES’ IN RATES
  • *FED: INFLATION TO RISE THIS YR, STABILIZE AROUND 2% MEDIUM-TERM
  • *FED: MKT-BASED INFLATION COMPENSATION GAUGES ROSE RECENT MONTHS
  • *FED: GAINS IN EMPLOYMENT, SPENDING, INVESTMENT HAVE BEEN SOLID

The Fed changed the language of its inflation outlook quite notably with the key language as follows:

“Inflation on a 12‑month basis is expected to move up this year”

… no longer:

“…remain somewhat below 2 percent in the near term

Even Goldman, in its hawkish version expected this line to remain:

Inflation on a 12‑month basis is expected to remain somewhat below 2 percent in the near term

Additionally, The Fed noted the market’s inflation outlook has come their way…

Market-based measures of inflation compensation “have increased in recent months.”

Notably, Wells Fargo’s Chris Harvey and Anna Han pointed out that:

“While many market participants don’t expect a major change in Fed policy with the handoff, we think the improving growth environment and anyone not named Janet Yellen [a policy dove] means more hawkishness, at the margin,” said

The committee could be slightly more hawkish, or inclined to raise rates, with this year’s changes in the voting rotation. The heads of the Cleveland, Richmond, Atlanta and San Francisco Feds rotate on, replacing Chicago, Dallas, Minneapolis and Philadelphia Fed leaders. The Chicago and Minneapolis leaders, Charles Evans and Neel Kashkari, dissented from higher rates in December.

Changes in Fed governors could do the same. Randal Quarles, vice chairman for regulation, joined the committee in October. Nominee Marvin Goodfriend is awaiting confirmation.

*  *  *

Ahead of today’s FOMC statement, the market was pricing in 2.75 rate hikes (of 25bps each)… and a 93% probability of a March rate-hike.

The March rate-hike odds are now at 99.1% after The FOMC.

Since The Fed hiked rates in December, Gold is up 7.6% outperforming The Dow (+6.8%) and The Dollar and Treasury Bond prices have tumbled…

“Mission Accomplished Janet” – Since Yellen took the reins of The Fed – Feb 3rd 2014 – the S&P is up 61%, gold and the dollar are up around 7%, and bonds down 4%…

However, Janet is leaving The Fed with a big problem… Financial Conditions are collapsing easier and easier despite The Fed’s tightening…

 

And so, what to expect for the rest of the day? Tough to say – with no press conference…

*  *  *

This was Goldman’s “Hawkish” Version of the expected Fed Statement:

Expected Changes to January FOMC Statement

Information received since the Federal Open Market Committee met in November December indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate. Averaging through hurricane-related fluctuations, job Job gains have been solid, and the unemployment rate declined further remained low. Household spending has been expanding at a moderate rate strengthened, and growth in business fixed investment has picked up in recent quarters. On a 12-month basis, both overall inflation and inflation for items other than food and energy have declined this year and are running below 2 percent. Market-based measures of inflation compensation have risen recently but remain somewhat low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Hurricane-related disruptions and rebuilding have affected economic activity, employment, and inflation in recent months but have not materially altered the outlook for the national economy. Consequently, the Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will remain strong. Inflation on a 12‑month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee’s 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

In view of realized and expected labor market conditions and inflation, the Committee decided to raise maintain the target range for the federal funds rate to at 1-1/4 to 1‑1/2 percent. The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

Voting for the FOMC monetary policy action were Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Thomas I. Barkin; Raphael W. Bostic; Lael Brainard; Patrick Harker; Robert S. Kaplan; Loretta J. Mester; Jerome H. Powell; and Randal K. Quarles; and John C. WilliamsVoting against the action were Charles L. Evans and Neel Kashkari, who preferred at this meeting to maintain the existing target range for the federal funds rate.

And here is the real thing: let’s see how close it comes : Full FOMC Statement Redline below

Considerably more hawkish than Goldman’s take.

*  *  *

And finally, in a humorous nod to her dress-code, The NY Fed’s trading room – otherwise known as The (Millennial) Plunge Protection Team -had their own way of bidding Yellen farewell…

end
And the INITIAL reaction:

Stocks, Bonds, Gold Sink As Hawkish Fed Sparks Dollar Bid

10Y Treasury yields just topped 2.75% for the first time since April 2014, gold is sinking, and stocks are lower as the hawkish Fed statement sparked some modest dollar bids…

Moves are modest for now (aside from in Gold)…

All major equity indices are lower post-FOMC…

 

10Y Treasury yields back above 2.75%

And the dollar is bouncing…but is still red on the day.

end
To which Greenspan warns that we have a stock market bubble
(courtesy zerohedge)

Greenspan Warns: “We Have A Stock Market Bubble”

US equity markets stumbled notably as former Fed Chair Alan Greenspan told Bloomberg TV that “we have a stock market bubble.”

Greenspan stuck to his usual discussion topics of low productivity and fiscal doomsday inevitability…

Productivity has been dead in the water for the past 10 years

I’ve never believed in the Phillips Curve…

Adding that “we’ve got to confront the budget deficit,” concluding “we’re dealing with a fiscally unstable long-term outlook.”

Something we have heard before (in 2016) when Greenspan warned

Entitlements are crowding out savings, and hence capital investment. Capital investment is the critical issue in productivity growth, and productivity growth in turn is the crucial issue in economic growth. We’re running to a state of disaster unless we turn this around.

 

This should be the central issue of the presidential debate. Unless and until we can rein in entitlements, which have been rising at a nine percent annual rate in the United States and comparable levels throughout the world, we are going to find that productivity is going to maintain a very low rate of increase”

Greenspan also doesn’t really view recession as the biggest problem right now, he is concerned (rightfully so) about the longer term problem of low economic growth and soaring entitlement growth.

“I don’t think that’s our problem. Our problem is not recession which is a short-term economic problem, I think youhave a very profound long-term problem of economic growth at the time when in the Western world there is a very large migration from being a worker to being a recipient of social benefits

But when Greenspan said the following…

“There are two bubbles. We have a stock market bubble and a bond market bubble. At the end of the day, the bond bubble will be the big issue.

Stocks began to stumble…

As a reminder, back in August 2017, Greenspan said this…

We are experiencing a bubble, not in stock prices but in bond prices. This is not discounted in the marketplace.”

It seems some market participants still listen to him?

An even better question is why is anyone taking Greenspan’s opinion seriously? https://twitter.com/edwardnh/status/958780985612603393 

end
THEN 20 MINUTES LATER, THE YIELD CURVE STARTED TO CRASH WITH THE 10 YR YIELD FALLING FORM 2.75% DOWN TO 2.71%/ WITH THE TWO YR/OVER 30 YR COLLAPSING TO ONLY 79 BASIS POINTS DIFFERENCE…SIGNIFIES RECESSION APPROACHING
(ZEROHEDGE)

The Yield Curve Is Crashing

Since the hawkish Fed statement, things have escalated quickly…

The dollar has rolled over from kneejerk gains.

Stocks have tanked (not helped by Green’s “bubble” comments).

And the yield curve has collapsed…

2s30s is down over 5bps now, back below the critical 80bps level and set for its flattest close since Oct 2007.

As 30Y Yields are now down 3.5bps on the day and 2Y yields are up 1.5bps…

END

SWAMP STORIES

Trump tells Republicans that he will release the 4 page memo  ” 100 percent”

(courtesy zerohedge)

“Oh Yeah, 100 Percent” – Trump Tells Republican He’ll Release The Memo

After what even the mainstream-est of mainstream media admitted under duress was a solid SOTU address…

Nearly half of those who watched President Trump’s State of the Union address on Tuesday reacted “very” positively to the speech, according to a snap CNN/SSRS poll.

According to that survey, the results of which were announced on-air on CNN, 48 percent of respondents said they had a “very positive” reaction to the speech — Trump’s first since taking office. Only 22 percent said they had a “somewhat positive” reaction to the speech, while 29 percent reacted negatively.

Sixty-two percent of respondents said that the policies outlined by the president on Tuesday would move the country in the right direction, according to the CNN/SSRS poll. By comparison, 35 percent said they would move it in the wrong direction.

Which was followed by the exact opposite from The Democratic Party’s official response…

It appears President Trump has managed to set another narrative as he left the House Chamber.

As Trump shook hands up the aisle after his SOTU address, Rep. Jeff Duncan called out to Trump, asking him “Let’s release the memo,” referring to the House Intelligence Committee’s FISA memo.

As the following clip shows, Trump responded instantly: “Oh yeah, don’t worry, 100%.

CLIP: As President Trump exits the House Chamber, @RepJeffDuncan asks him to .

So that seems pretty clear.

As The Hill notes, Republican members of the committee said on Tuesday that they are working on a transcript of the closed-door vote and will release it when its finished.

CBS News reported on Tuesday that representatives from the FBI, DOJ, National Security Agency and Office of the Director of National Intelligence are reviewing it.

Rep. Trey Gowdy said this week on Fox that the memo is “embarrassing” to Democrats. Gowdy said:

My Democratic colleagues didn’t want us to find this information. They did everything they could to keep us from finding this information. I think it will be embarrassing to Adam Schiff once people realize the extent to which he went to keep them from learning any of this. That would be the embarrassment…. if it were up to Adam Schiff, you wouldn’t know about Hillary Clinton’s email. You wouldn’t know about the server. You wouldn’t know about the dossier. I do find it ironic that he has his own memo right now because if it were up to him, we wouldn’t know any of it.

Is it any wonder Nancy Pelosi was making faces…

Nancy Pelosi is playing with her dentures again and not applauding when Trump calls for unity between the two parties. pic.twitter.com/GkLyrIOIKK

 

END

The Dept. of Justice has now given documents pertaining to Jeff Sessions’ near resignation

(courtesy zerohedge)

DOJ Gives Mueller Documents On Sessions’ Near-Resignation

Two weeks after Attorney General Jeff Sessions sat for an interview with Special Counsel Robert Mueller, ABC News reported that Sessions’ office turned over a cache of internal correspondence, including documents related to Sessions’ proposed resignation and emails about the firing of National Security Adviser Michael Flynn.

The report is the latest sign that Mueller’s investigation has pivoted away from financial improprieties and actual links between Trump campaign officials and the Russian government and is now focusing on whether Trump is guilty of obstruction of justice for the firing of former FBI Director James Comey. Before the firing, Trump reportedly asked Sessions and Steve Bannon to leave the room before reportedly asking Comey to go easy on Flynn.

According to ABC, details of what the Justice Department provided to Mueller reflect how widely investigators are casting their net.

Citing sources familiar with the matter, ABC News reported in November that Mueller’s office was interested in obtaining internal emails related to the firing of FBI Director James Comey and the earlier decision of Sessions to recuse himself from the entire matter, but at the time it was unclear what other type of information Mueller’s office might have been seeking.

In an Oval Office meeting following Mueller’s appointment, Trump reportedly told Sessions that he should resign, prompting the attorney general to submit a letter of resignation that was ultimately rejected when advisers warned Trump against it. One month later, Trump demanded that White House aides fire Mueller, but he backed off after White House counsel Don McGahn and others made clear that they were opposed to such a move, according to a source familiar with the deliberations told ABC.

Emails and other documents produced during that time have been turned over to Mueller.

Mueller

As ABC reminds us, Sessions and Rosenstein both played key roles in Comey’s high-profile removal. To publicly bolster the controversial move at the time, the White House released two memos written separately by Sessions and Rosenstein, with both faulting Comey for his handling of the FBI’s probe into Hillary Clinton’s use of a private email server when she was secretary of state. During a House hearing last year, Rosenstein refused to say whether he consulted with the White House before Comey’s firing or whether anyone asked him to write his memo, insisting such questions “may well be within the scope of the special counsel’s investigation.”

Mueller has already secured charges – and two guilty pleas – against four Trump associates, including Flynn. Flynn was fired only weeks into the Trump administration after then–Acting Attorney General Sally Yates informed White House officials that Flynn had lied to them about his contacts with Russian officials. Yates famously told Congress last year that the DOJ believed Flynn was “compromised” – meaning that he was vulnerable to blackmail from Russia. The DOJ has provided Mueller with documents related to this issue as well. Mueller has also asked former senior staff for information from their time at the department.

Sessions has taken the brunt of Trump’s wrath for recusing himself and allowing Rod Rosenstein to appoint Mueller after Comey was unceremoniously fired.

In announcing his recusal, Sessions said he and “senior career department officials” spent “several weeks” discussing whether his role as top foreign policy adviser to Trump’s presidential campaign last year meant his “impartiality might reasonably be questioned.”

In addition to Flynn, former Trump campaign adviser George Papadopoulos has also pleaded guilty to lying to the FBI and is now cooperating in the investigation.

While the Mueller probe drags on, we pointed out yesterday the existence of a second “Trump dossier” that was turned over to the FBI in October 2016 by Christopher Steele, the former UK spy who assembled the original “Trump dossier” at the behest of Fusion GPS and their Democratic Party backers.

The “second dossier” was authored by Cody Shearer, a former journalist who is considered a Clinton “hatchet-man.”

 end
Andrew McCabe is now under active Dept of Justice Investigation for sitting on Weiner”s laptop emails for over 3 weeks.  MCabe found out about the emails late in September but did not act upon them for at least 3 weeks.  The inspector General Horowitz wants to find out why.
(courtesy zerohedge)

Andrew McCabe Under Active DOJ Investigation For Sitting On Weiner Laptop Emails

The Justice Department’s internal watchdog has been investigating former FBI Deputy Director Andrew McCabe for apparently sitting on emails obtained from Anthony Weiner’s laptop, the Washington Post‘s Devlin Barrett and Karoun Demirjian reported Tuesday (of note, Barrett was recently outed as a potential source of FBI leaks, according to text messages between FBI employees accused of political bias)

a

The DOJ Inspector General, Michael Horowitz, wants to know why McCabe allegedly took little to no action for approximately three weeks on the trove of emails sent by Hillary’s top aide, Huma Abedin – Weiner’s wife, which were discovered during an unrelated investigation into Weiner “sexting” with an underage girl.

The inspector general, Michael E. Horowitz, has been asking witnesses why FBI leadership seemed unwilling to move forward on the examination of emails found on the laptop of former congressman Anthony Weiner (D-N.Y.) until late October about three weeks after first being alerted to the issue, according to these people, who spoke on the condition of anonymity to discuss the sensitive matter.

A key question of the internal investigation is whether McCabe or anyone else at the FBI wanted to avoid taking action on the laptop findings until after the Nov. 8 election, these people said. It is unclear whether the inspector general has reached any conclusions on that point. –WaPo

In late September 2016, approximately five weeks before the US election, thousands of Huma Abedin’s work-related emails were found on Weiner’s laptop. According to WaPo, the New York FBI office alerted FBI headquarters within days – though accounts as to the exact date vary.

Either way, McCabe was made aware of the matter by late September or early October, as the NY field office agents wanted to discuss the issue with DC Clinton email investigators to compare notes. According to people familiar with the matter, officials at FBI headquarters requested the emails’ metadata – which include the sender, recipient and timestamp.

While McCabe is said to have been involved in those discussions, accounts vary as to how much then-FBI Director James Comey knew of the situation.

Some people involved at the time said Comey learned of the issue around the same time as McCabe. Others contend Comey did not know about it until weeks later. Senior Justice Department officials, according to several people familiar with the issue, were not notified until mid-October.

But for a period of at least three weeks, according to people involved at the time, nothing much happened a lag that has sparked the inspector generals questions. –WaPo

McCabe announced his departure from the FBI on Monday following a meeting with FBI Director Christopher Wray, in which they reportedly discussed the Inspector General’s investigation.

McCabe had previously announced a March retirement. Several media outlets reported that McCabe is using his remaining vacation days to go on “terminal leave” and that his official retirement from the agency won’t happen until March, allowing him to collect the full pension.

Also notable is that Wray was reportedly “shocked to his core” Sunday night after viewing a four-page confidential FISA memo said to detail egregious surveillance abuses by McCabe’s team. The next day, McCabe was forced to step down.

Hannity sat down once again with journalist Sara Carter this week, whose sources say McCabe may have also instructed FBI agents to alter their “302” forms – the paperwork an agent files after interviewing someone:

Shocked him to his core, and not only that, the Inspector General’s report – I have been told tonight by a number of sources, there’s indicators right now that McCabe may have asked FBI agents to actually change their 302’s – those are their interviews with witnesses. So basically every time an FBI agent interviews a witness, they have to go back and file a report.

If the reports from Sara Carter and the Washington Post’s ever-connected Devlin Barrett are true, McCabe not only sat on the Weiner laptop emails related to the Hillary Clinton email investigation – but also asked FBI agents to commit crimes by altering paperwork.

Or, as Sarah Westwood summarizes, this report suggests:

  1. McCabe tried to stall probe of Weiner laptop emails til after the election
  2. McCabe’s colleagues got suspicious about the delay
  3. Comey sent 11th-hour letter that reopened the probe in order to correct for McCabe’s perceived bias

Further pointing towards evidence of political bias is an October, 2016 Wall St. Journal article which reported that McCabe’s wife received hundreds of thousands of dollars in campaign contributions from close Clinton ally, then-Virginia Governor Terry McAuliffe for her failed run at VA state legislature.

How can FBI Deputy Director Andrew McCabe, the man in charge, along with leakin’ James Comey, of the Phony Hillary Clinton investigation (including her 33,000 illegally deleted emails) be given $700,000 for wife’s campaign by Clinton Puppets during investigation?

President Trump allegedly chided McCabe over his wife’s loss during a phone call following the May 9th dismissal of ex-FBI Director Comey. According to three people who recounted the alleged incident to NBC News, Trump was so enraged by footage of Comey boarding a government airplane following his dismissal that he brought up McCabe’s wife during the conversation:

The president was silent for a moment and then turned on McCabe, suggesting he ask his wife how it feels to be a loser

McCabe replied, “OK, Sir.”

Trump then hung up the phone

An anonymous White House official disputed the account off the record, telling NBC, “this simply never happened. Any suggestion otherwise is pure fiction.”

Whether or not Trump said mean things to McCabe (a conveniently timed story from the MSM), the fact remains that he is now out of a job – and purportedly the focus of Inspector General Horowitz for a variety of politically motivated crimes.

end

 

Now the Wall Street Journal has given an editorial demanding the release of the 4 page FISA memo

(courtesy zero hedge)

WSJ Editorial Board Calls On Trump To Release The Memo

In an editorial that appeared in today’s paper, the Wall Street Journal editorial board officially called on the Trump White House to release the infamous “FISA memo” – something that conservatives have been demanding for weeks now, with little luck.

Fortunately, shortly after the editorial was posted online last night, Trump promised that the memo was “100%”going to be released – despite pleas from Rod Rosenstein, the deputy AG who appointed Mueller and is purportedly named in the four page memo – that its release could compromise existing investigations. This morning, Chief of Staff John Kelly revealed in a Fox radio interview that he had seen the memo, and that it will be released “pretty quick.”

It’s unsurprising that Democrats have opposed the memo’s release at every turn – accusing Republicans of distorting the truth for political ends. The hypocrisy here is glaring because, of course, Democrats have an enormous political stake in whether this memo sees the light of day, or not.

But tellingly, in their criticisms, Dems have chosen to ignore the central question: Is the FBI guilty of “egregious abuses”, like the Nunes has claimed?

Nunes

Suddenly, it seems, progressives who went into hysterics following Snowden’s decision to expose the NSA’s shockingly pervasive – and legally dubious – domestic surveillance programs – are no longer concerned with abuses of power by federal law enforcement or intelligence agencies, and apparently no longer believe that FISA decisions should be subject to more oversight. Many also vociferously opposed the ratification of Section 702 of the FISA Act, which Congress voted to renew earlier this month.

As anybody who can remember when the FBI was run by J Edgar Hoover, the agency’s history is littered with examples of these types of abuses.

But progressive Democrats like Intel Committee ranking member Adam Schiff apparently have selective amnesia when it comes to abuses perpetrated by their one-time leader, former President Barack Obama.

House Democrats: Please – tell us again about your commitment to social justice?

Read the editorial below:

* * *

The House Intelligence Committee voted Monday night to release a Republican memo that by most accounts reveals how the FBI handled, or mishandled, federal wiretap requests during the 2016 presidential campaign. The White House should now approve its public disclosure as the first of several to help the country understand what really happened.

Democrats are objecting to the release, claiming partisanship and violations of national security. None of this is persuasive. Republican Intelligence Chairman Devin Nunes has followed a long and deliberative process that follows House protocol.

When the FBI finally agreed after months of resisting to answer a committee subpoena for documents, Mr. Nunes deputized former prosecutor and South Carolina Rep. Trey Gowdy to investigate. The subsequent memo was vetted for security concerns, provided to the entire House committee, then made available to the entire House, then shown to the director of the FBI, and is now undergoing White House review. This is hardly a Chelsea Manning-to-WikiLeaks-to-New York Times leak.

Another false claim is that Republicans are “censoring” a rival Democratic memo. The same Democrats howling about national security wanted the committee on Monday instantly to approve the public disclosure of their counter-memo that hasn’t gone through the equivalent reviews that the majority memo has. Committee Republicans voted to start that process by making the Democratic memo available to the full House, and by all means let’s see that memo too.

The House memo is not about “attacking the FBI” or “our law enforcement professionals,” as Democrat Adam Schiff insists. This is about restoring confidence in a law enforcement agency that played an unprecedented role in a U.S. presidential election regarding both the Trump and Clinton campaigns.

Americans deserve to know whether accusations that the Kremlin infiltrated the Trump campaign have any basis, and prosecutors and Congressional committees are investigating. The FBI might well have had cause to believe Russians were targeting the Trump campaign when they sought a Foreign Intelligence Surveillance Court warrant. But Washington also should be able to investigate if and how law enforcement agencies exceeded their remit in seeking wiretaps.

The memo also concerns the integrity of the FISA process. Democrats created FISA in the 1970s to protect against wiretap abuses during the Cold War. We opposed it on grounds that it would dilute political accountability, and what do you know here we are. FISA is supposed to provide a measure of legal assurance against abuse, and FBI and Justice officials appear ex parte before the FISA judges with no competing claimants.

The public should know if as part of its warrant application the FBI used the Christopher Steele dossier that we now know was financed by the Hillary Clinton campaign. The House intelligence memo may answer that question, as well as whether the FBI made other misrepresentations or omissions in its FISA application. In June 2017 former FBI director Jim Comey referred in Senate testimony to the dossier as containing “salacious and unverified” material. Is that what the FBI told the FISA court in 2016?

If the FISA judges weren’t told about the partisan provenance and doubts about the veracity of the memo in the middle of a presidential election campaign, then what is FISA for? To serve as a potted plant so the FBI can get whatever warrants it wants? Are they genuine Article III judges with an independent writ or merely another arm of the executive branch that can be rolled like some deputy assistant secretary of State?

The same progressives who demanded accountability for FISA courts after Edward Snowden exposed federal snooping now want President Trump to shut down the House’s limited attempt at transparency.Don’t buy it, Mr. President. Let it all out—the two House Intelligence memos, Senator Chuck Grassley’s referral letter for a criminal investigation of Mr. Steele, and all other relevant FBI or Justice documents that won’t undermine U.S. security. Our democracy can take the transparency, and after the 2016 fiasco it deserves it.

end

 

Reuters is reporting (and not yet collaborated) that the FISA warrant could lead to the firing of both Mueller and Rosenstein or just Rosenstein

(courtesy zerohedge)

Adam Schiff: FISA Memo Could Lead To Firings Of Mueller, Rosenstein

Stocks are red. Trey Gowdy is abruptly retiring from Congress. Everybody is laughing at what looks like drool dribbling from the edge of Joe Kennedy’s mouth during his rebuttal to last night’s State of the Union.

And along comes Reuters, dropping a bombshell headline that, if accurate, could shift the narrative of the multiple investigations involving Russia and obstruction of justice.

Reuters quoted Adam Schiff, the top Democrat on the House Intel Committee, who believes the contents of the four-page memo about allegedly egregious FBI abuses of FISA set for public release in the next several days, could lead to the firing of Special Counsel Bob Mueller, or more likely Deputy AG Rod Rosenstein.

  • TOP DEMOCRAT ON U.S. HOUSE INTELLIGENCE COMMITTEE SAYS REPUBLICAN MEMO SETS STAGE FOR POSSIBLE FIRING OF SPECIAL COUNSEL MUELLER OR MORE LIKELY DEPUTY ATTORNEY GENERAL ROSENSTEIN

And:

  • U.S. HOUSE INTELLIGENCE COMMITTEE CHAIRMAN NUNES SAYS “NO SURPRISE” TO SEE THE FBI AND JUSTICE DEPARTMENT ISSUE “SPURIOUS OBJECTIONS” TO REPUBLICAN MEMO -STATEMENT

Now the question of course is whether this is a statement of fact – in other words the FISA memo contains cause for termination – or a smoke screen to claim that Mueller’s firing is only made possible by the “political act” that is the imminent release of the FISA memo.

* * *

In an amusing coincidence, Gowdy’s remarks from a Tuesday morning appearance on Fox & Friends now seem eerily prophetic…

 

REP. TREY GOWDY (R-SC): My Democratic colleagues didn’t want us to find this information. They did everything they could to keep us from finding this information. I think it will be embarrassing to Adam Schiff once people realize the extent to which he went to keep them from learning any of this. That would be the embarrassment…

I mean, going to court to help Fusion GPS so we can’t find out they paid for the dossier, and that they were working for the DNC. That’s a pretty big step to go to court to try to keep the American people from learning something. So, if it were up to Adam Schiff, you wouldn’t know about Hillary Clinton’s email. You wouldn’t know about the server. You wouldn’t know about the dossier. I do find it ironic that he has his own memo right now because if it were up to him, we wouldn’t know any of it.

 

* * *

In response to the FBI’s “rare public statement” claiming the contents of the memo distort the truth, House Intel Chairman Devin Nunes, Schiff’s Republican counterpart and primary antagonist on the committee, has responded with his own statement dismissing the FBI’s “spurious objections.”

 

Devin Nunes goes after the FBI and DOJ, dismisses what he calls their “spurious objections” to releasing his memo.

END
I will  see you THURSDAY night

HARVEY

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One comment

  1. What about all these EFPS transfers do they just Dissappear in FUCKING LALA LAND…..dont they ever have to buy actual physical gold or is just a fucking Merry go round of USELESS paper and Created out of thin air Gold contracts

    Like

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