Feb 7/ANOTHER RAID TODAY/GOLD DROPS $22.60 DOWN TO $1312.10/SILVER DROPS ANOTHER 32 CENTS TO $16.32/ COMEX GOLD ISSUES ANOTHER WHOPPING 14,039 EFP CONTRACTS TRANSFERRING THESE LONGS OVER TO LONDON/COMEX SILVER TRANSFERS 3408/ROYAL BANK OF SCOTLAND CAUGHT FORGING SIGNATURES: THEY WILL PROBABLY BE TOAST/CHINA’S NHA IN TECHNICAL DEFAULT THIS MORNING/USA 10 YR BOND YIELD BACK UP TO 2.84%/TROUBLE TOMORROW AS FUTURES ARE ALREADY DOWN BADLY/HUGE SWAMP STORIES/CHUCK GRASSLEY: DEMOCRATS IN TURMOIL/

 

 

GOLD: $1312.10 down $22.60

Silver: $16.30 down 32 cents

Closing access prices:

Gold $1318.50

silver: $16.38

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: $1338.47 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME: $1329.70

PREMIUM FIRST FIX: $8.77

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SECOND SHANGHAI GOLD FIX: $1339.02

NY GOLD PRICE AT THE EXACT SAME TIME: $1331.90

Premium of Shanghai 2nd fix/NY:$8.12

SHANGHAI REJECTS  NY /LONDON PRICING OF GOLD

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LONDON FIRST GOLD FIX: 5:30 am est $1328.50

NY PRICING AT THE EXACT SAME TIME: $1328.10

LONDON SECOND GOLD FIX 10 AM: $1324.65

NY PRICING AT THE EXACT SAME TIME. $1324.40

For comex gold:

FEBRUARY/

NUMBER OF NOTICES FILED TODAY FOR FEBRUARY CONTRACT: 113 NOTICE(S) FOR 11300 OZ.

TOTAL NOTICES SO FAR:1537 FOR 153700 OZ (4.780 TONNES),

For silver:

jANUARY

13 NOTICE(S) FILED TODAY FOR

65,000 OZ/

Total number of notices filed so far this month: 139 for 695,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Bitcoin: BID $8162/OFFER $8232: up $502(morning)

Bitcoin: BID/ $7802/offer $7822: UP $143  (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 A TINY 700 contracts from 206,171  FALLING TO 205,470 WITH YESTERDAY’S  8 CENT FALL IN SILVER PRICING.  WE  HAD TINY COMEX LIQUIDATION. HOWEVER, WE WERE AGAIN NOTIFIED THAT WE HAD ANOTHER HUGE SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP ROUTE:  3408 EFP’S FOR MARCH AND AND 0 EFP’S FOR MAY AND ZERO FOR ALL  OTHER MONTHS  AND THUS TOTAL ISSUANCE OF 3408 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 3408 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. THE 3408 CONTRACTS TRANSLATES INTO 17.04 MILLION OZ

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

17,482 CONTRACTS (FOR 6 TRADING DAYS TOTAL 17,482 CONTRACTS OR 87.410 MILLION OZ: AVERAGE PER DAY: 2913 CONTRACTS OR 14.565 MILLION OZ/DAY)

TO GIVE YOU AN IDEA AS TO THE HUGE SUPPLY THIS MONTH IN SILVER:  SO FAR THIS MONTH:  87.41 MILLION PAPER OZ HAVE MORPHED OVER TO LONDON. THIS REPRESENTS AROUND 12.42% OF ANNUAL GLOBAL PRODUCTION

ACCUMULATION IN YEAR 2018 TO DATE SILVER EFP’S:  322.34 MILLION OZ.

ACCUMULATION FOR JAN 2018: 236.879 MILLION OZ

RESULT: A TINY SIZED LOSS IN OI SILVER COMEX WITH THE SMALL 8 CENT FALL IN SILVER PRICE.  WE HOWEVER HAD A GOOD SIZED EFP ISSUANCE OF 3408 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 3408 EFP’S  FOR  MONTHS MARCH AND MAY WERE ISSUED FOR TODAY  FOR A DELIVERABLE FORWARD CONTRACT OVER IN LONDON WITH A FIAT BONUS. WE REALLY GAINED  2708 OI CONTRACTS i.e. 3408 open interest contracts headed for London (EFP’s) TOGETHER WITH A DECREASE OF 700  OI COMEX CONTRACTS. AND ALL OF THIS HAPPENED WITH THE FALL IN PRICE OF SILVER OF  8 CENTS AND A CLOSING PRICE OF $16.62 WITH RESPECT TO YESTERDAY’S TRADING. YET WE STILL HAVE A FAIR AMOUNT OF SILVER STANDING AT THE COMEX.

In ounces AT THE COMEX, the OI is still represented by just OVER 1 BILLION oz i.e. 1.028 BILLION TO BE EXACT or 148% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT FEBRUARY MONTH/ THEY FILED: 13 NOTICE(S) FOR 65,000 OZ OF SILVER

In gold, the open interest FELL  BY A CONSIDERABLE 10,572 CONTRACTS DOWN TO 535.321  WITH THE FAIR SIZED FALL IN PRICE OF GOLD WITH YESTERDAY’S TRADING ($8.50). IN ANOTHER DEVELOPMENT, WE RECEIVED THE TOTAL NUMBER OF GOLD EFP’S ISSUED FOR TUESDAY AND IT TOTALED A HUGE SIZED  14,039 CONTRACTS OF WHICH  APRIL SAW THE ISSUANCE OF 14039 CONTRACTS AND  JUNE SAW THE ISSUANCE OF 0 CONTRACTS AND THEN ALL OTHER MONTHS ZERO.    The new OI for the gold complex rests at 535,321. 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. 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 FEBRUARY 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 3467  CONTRACTS: 10,572 OI CONTRACTS DECREASED AT THE COMEX AND A STRONG SIZED  14,039 OI CONTRACTS WHICH NAVIGATED OVER TO LONDON.(3467 oi gain in CONTRACTS EQUATES TO 10.78 TONNES)

YESTERDAY, WE HAD 5581 EFP’S ISSUED.

ACCUMULATION OF EFP’S/ GOLD(EXCHANGE FOR PHYSICAL) FOR THE MONTH OF FEBRUARY STARTING WITH FIRST DAY NOTICE: 63,032 CONTRACTS OR 6,303,200  OZ OR 196.055 TONNES (6 TRADING DAYS AND THUS AVERAGING: 10,505 EFP CONTRACTS PER TRADING DAY OR 1,050,500 OZ/DAY)

TO GIVE YOU AN IDEA AS TO THE HUGE SIZE OF THESE EFP TRANSFERS :   SO FAR THIS MONTH IN 6 TRADING DAYS: IN  TONNES: 177.53 TONNES

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

THUS EFP TRANSFERS REPRESENTS 177.53/2200 x 100% TONNES =  8.04% OF GLOBAL ANNUAL PRODUCTION SO FAR IN FEBRUARY ALONE.

ACCUMULATION OF GOLD EFP’S YEAR 2018 TO DATE:  829.84 TONNES

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

Result: A  HUGE SIZED DECREASE IN OI AT THE COMEX WITH THE FALL IN PRICE IN GOLD TRADING YESTERDAY ($8.50). IT IS WITHOUT A DOUBT THAT MANY OF THE DEPARTED COMEX LONGS  RECEIVED THEIR PRIVATE EFP CONTRACT  FOR EITHER  APRIL OR JUNE. WE HAD ANOTHER GOOD SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 14,039 AS THESE HAVE ALREADY BEEN NEGOTIATED AND CONFIRMED.   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 14039 EFP CONTRACTS ISSUED, WE HAD A NET GAIN IN OPEN INTEREST OF 3467 contractON THE TWO EXCHANGES:

14039 CONTRACTS MOVE TO LONDON AND  10,572 CONTRACTS DECREASED AT THE COMEX. (in tonnes, the GAIN in total oi equates to 10.79 TONNES).

we had: 113 notice(s) filed upon for 11300 oz of gold.

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

GLD

WOW!!!, WITH ALL OF TODAY’S TURMOIL: A MASSIVE 12.08 TONNES OF GOLD WAS REMOVED FROM THE GLD AND NO DOUBT THAT THIS WILL TURN OUT TO BE CRIMINAL BEHAVIOUR

Inventory rests tonight: 829.27 tonnes.

SLV/

NO CHANGES IN SILVER INVENTORY AT THE SLV/ WITH ALL OF TODAY’S TURMOIL AND WHACKING OF SILVER

/INVENTORY RESTS AT 314.045 MILLION OZ/

 

can someone please explain why GLD behaves differently to SLV

end

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

1. Today, we had the open interest in silver FELL BY A TINY 700 contracts from 206,170 DOWN TO 205,470 (AND now A LITTLE FURTHER TO THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) WITH  THE SLIGHT FALL  IN PRICE OF SILVER  (8 CENTS WITH RESPECT TO  YESTERDAY’S TRADING).   OUR BANKERS USED THEIR EMERGENCY PROCEDURE TO ISSUE ANOTHER GOOD 3408 PRIVATE EFP’S FOR MARCH AND 0 EFP CONTRACTS OR MAY  (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 ZERO COMEX SILVER COMEX LIQUIDATION. IF WE TAKE THE  OI LOSS AT THE COMEX OF  700 CONTRACTS TO THE 3408 OI TRANSFERRED TO LONDON THROUGH EFP’S WE OBTAIN A GOOD GAIN OF 2708  OPEN INTEREST CONTRACTS.  WE STILL HAVE A GOOD AMOUNT OF SILVER OUNCES THAT ARE STANDING FOR METAL IN JANUARY (SEE BELOW). THE NET GAIN TODAY IN OZ ON THE TWO EXCHANGES:13.54 MILLION OZ!!!

RESULT: A TINY SIZED DECREASE IN SILVER OI AT THE COMEX WITH THE SMALL SIZED FALL OF 8 CENTS IN PRICE (WITH RESPECT TO YESTERDAY’S TRADING). BUT WE ALSO HAD ANOTHER GOOD 3408 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 61.39 points or 1.82% /Hang Sang CLOSED DOWN 272.22 or 0.89% / The Nikkei closed UP 35.13 POINTS OR 0.16%/Australia’s all ordinaires CLOSED UP 0.87%/Chinese yuan (ONSHORE) closed UP at 6.2700/Oil DOWN to 63.21 dollars per barrel for WTI and 66.84 for Brent. Stocks in Europe OPENED DEEPLY IN THE GREEN .   ONSHORE YUAN CLOSED DOWN AGAINST THE DOLLAR AT 6.2700. OFFSHORE YUAN CLOSED DOWN AGAINST  THE ONSHORE YUAN AT 6.2820//ONSHORE YUAN A LOT STRONGER AGAINST THE DOLLAR/OFF SHORE A LOT STRONGER TO THE DOLLAR/. THE DOLLAR (INDEX) IS  MUCH STRONGER AGAINST ALL MAJOR CURRENCIES EXCEPT THE YUAN. CHINA IS NOT  TOO  HAPPY TODAY.(STRONGER CURRENCY BUT WEAK MARKETS THROUGHOUT THE GLOBE )

 

 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

 i)North Korea

b) REPORT ON JAPAN

Nomura sincerely apologizes for blowing up investors with their ill fated VIX linked ETN

( zerohedge)

3 c CHINA

 

4. EUROPEAN AFFAIRS

i)Finally, the German parties have reached an agreement on a grand coalition

( zerohedge)

ii)Calais is a war zone and it is spiraling out of control

(courtesy Kern/Gatestone Institute)

iii)OH OH!!  We have been reporting for quite some time the troubles inside one of China’s biggest conglomerates;  NHA. Last night they went into technical default and this caused Deutsche bank to tumble as they have financed a huge number of Deutsche shares as they own almost 10%of the bank.

( zerohedge)

iv)The Euro/usa cross tumbles after the ECB accuses the USA of manipulating their dollar lower

that caused gold to fall

(courtesy zerohedge)

v)What!!!!  Royal Bank of Scotland has routinely forged customer signatures.  This no doubt will be another huge scandal

(courtesy Don Quijones/WolfStreet)
special thanks to Robert H for sending this to us!

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

6 .GLOBAL ISSUES

Luongo explains beautifully the concept of VIX and the damage it did to the markets yesterday

( Tom Lunongo)

7. OIL ISSUES

Oil and gasoline prices sink after announcement of a huge USA oil production record level even surpassing the Saudis

 

( zerohedge)

8. EMERGING MARKET

9. PHYSICAL MARKETS

i)Bitcoin gains as investors were heartened in the USA that regulators plan a balanced and not a dismissive approach.  Actually the regulators are planning to destroy bitcoin et al pricing.

( zerohedge)

ii)China is doing everything in its power to stamp out cryptocurrencies trading in its country as they are banning foreign platforms

( SCMP/Hong Kong)

iii)Bitcoin surges back above $8500.00 even though Goldman Sachs (and I) doubt about its survival

( zerohedge)
iv)As we have reporting to you for quite some time:  Chinese citizens are having a love affair with gold/silver as they purchase a huge amount of jewellry with their gains on property values
( Bloomberg/gata)

v)As I have been warning you for many years, Barrick will never get the Pascua Lama project off the ground.  He just took another 429 million charge against the  stalled mine

(courtesy zerohedge)

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

 

i) a Early morning trading

the Dow surges past its key 50 day moving average as the VIX is monkey hammered back down to 20.

The 10 yr Treasury bonds yield:2.794

 

i b)EARLY THIS AFTERNOON:

EITHER THEY ARE REACTING TO A SUPPOSED SENATE DEAL, OR A BAD AUCTION:
10 yr Bond yield 2.84%,  also VIX: 25

ic)An analyst who predicted Volmageddon states: don’t even think about buying the dip..where is why!!( zerohedge)

ii)Donald seemed upset with Monday’s big 1100 point drop on “good news”

( zerohedge)

iii)Supposedly a Senate two year budget spending deal is close to an agreement without immigration commitment.  That is annoying Pelosi.  Also the huge increase in spending/1/4 trillion dollars increase per year) is bothering the fiscal conservatives

( zerohedge)

iiib)the dollar rises on a Bipartisan budget deal to increase spending for the military and non military.  The interim bill funds an extra 400 billion in spending and suspends the debt ceiling.  However an omnibus bill must pass before March 23.  The bond yields rose due to the increased spending.

( zerohedge)

iv)Dudley reveals that the new Powell put is much lower in price on the Dow.  The Fed may be wishing to engineer a fall of considerable magnitude(courtesy zerohedge)

v)This was largely expected: S and P downgrades Wells Fargo due to their transgressions

( zerohedge)

vi)Revolving or credit card debt now at an all time record: 1.03 trillion dollars

Student loans and auto loans are also at record levels: 2.813 trillion dollars

total: 3.843 trillion dollars

(courtesy zerohedge)

vii)SWAMP STORIES

a)Chuck Grassley on the Senate Judiciary Committee released its criminal complaint against Steele and their shoddy FISA application to the FISA court. It contains lies by Steele as well as collaboration (and payment)  from the Clinton campaign.  It also outlines a second dossier started by the Obama administration and that filtered to Steele as well and he used that in his FISA application.

the democrats are dead in the water..

( zerohedge)

b)It seems that our two love birds, Strzok and Page kept Obama in the loop as he wanted to know everything that

was going on

( zerohedge)

 

Let us head over to the comex:

The total gold comex open interest  SURPRISINGLY FELL BY A CONSIDERABLE 10,572 CONTRACTS DOWN to an OI level 535,321  WITH THE FAIR SIZED FALL IN THE PRICE OF GOLD ($8.50 LOSS WITH RESPECT TO YESTERDAY’S TRADING).   WE HAD HUGE 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 HUGE SIZED 14,039 EFP’S ISSUED FOR APRIL  AND 0 EFP’s  FOR JUNE AND ZERO FOR ALL OTHER MONTHS:  TOTAL  14039 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: 3467 OI CONTRACTS IN THAT 14.039 LONGS WERE TRANSFERRED AS FORWARDS TO LONDON AND WE LOST 10,572 COMEX CONTRACTS.

NET GAIN ON THE TWO EXCHANGES: 3467 contracts OR 346700  OZ OR 10.78 TONNES,

Result: A  HUGE SIZED DECREASE IN COMEX OPEN INTEREST WITH THE  LOSS IN YESTERDAY’S GOLD TRADING ($8.50.) WE HAD SOME COMEX GOLD LIQUIDATION.  TOTAL OPEN INTEREST GAIN ON THE TWO EXCHANGES: 3047 OI CONTRACTS..

We have now entered the active contract month of FEBRUARY where we lost 161 contracts to 1628 contracts.  We had 122 notices filed upon yesterday, so we lost 44 contracts or 4400 oz will not stand in this active contract month of February AND THESE WERE MORPHED INTO LONDON BASED FORWARDS.

March saw a LOSS of 110 contracts DOWN to 1967.  April saw a LOSS of 13,086 contracts DOWN to 379,256. MARCH BECOMES THE FRONT MONTH FOR GOLD

We had 113 notice(s) filed upon today for 11300 oz

 PRELIMINARY COMEX VOLUME FOR TODAY: 325,530 contracts

CONFIRMED COMEX VOLUME FOR YESTERDAY: 488,251

comex gold volumes are RISING AGAIN

Here is a summary of the latest gold trading volumes at the Comex per year

certainly the introduction of EFP’s has certainly had an effect:

Trading Volumes on the COMEX

Meanwhile, gold-trading volumes on the COMEX have never been higher:

end

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And now for the wild silver comex results.

Total silver OI FELL  BY A TINY 700  CONTRACTS FROM 206,170 DOWN TO  205,470 WITH YESTERDAY’S TINY 8 CENT LOSS.  WE WERE ALSO INFORMED THAT WE HAD ANOTHER LARGE SIZED 3408 EMERGENCY EFP’S FOR MARCH ISSUED BY OUR BANKERS (WITH 0 EFP CONTRACTS FOR MAY AND ZERO FOR ALL OTHER MONTHS) TO COMEX LONGS WHO RECEIVED A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON: THE TOTAL EFP’S ISSUED: 3408.   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 OBVIOUSLY HAD MINIMAL LONG COMEX SILVER LIQUIDATION BUT A GOOD SIZED GAIN 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 GAINED 2708  SILVER OPEN INTEREST CONTRACTS:

700 CONTRACT LOSS AT THE COMEX COMBINING WITH THE ADDITION OF 3048 OI CONTRACTS NAVIGATING OVER TO LONDON.

NET GAIN TWO EXCHANGES: 2708 CONTRACTS

We are now in the poor non active delivery month of FEBRUARY and here the front month GAINED 202 contracts UP TO  214 contracts.  We had 2 notices filed upon yesterday so we GAINED 200 contracts or 1,000,000  ADDITIONAL oz will stand for delivery at the comex AS SOMEBODY BADLY NEEDED SOME PHYSICAL SILVER AT THE COMEX

The March contract lost 2961 contracts DOWN to 118,056

April gained 17 contracts up to 39.

.

We had 13 notice(s) filed for 65,000 for the FEBRUARY 2018 contract for silver

INITIAL standings for FEBRUARY

Feb7/2018.

Gold Ounces
Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz
 36,858.905 oz
JPMORGAN
Deposits to the Dealer Inventory in oz 2399.99 oz

 

DELAWARE

 

 

Deposits to the Customer Inventory, in oz
 nil
No of oz served (contracts) today
113 notice(s)
 11300 OZ
No of oz to be served (notices)
1515 contracts
(151,500 oz)
Total monthly oz gold served (contracts) so far this month
1537 notices
153700 oz
4.7807 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 1 inventory movement at the dealer accounts
i) Into Delaware/a deposit of 2399.99 oz
total inventory deposit into the dealer accounts:  2399.99 oz
we had 1 withdrawals out of the customer account:
i) out of JPMorgan
we had 36,858.905 oz of gold transferred out of HSBC
total withdrawal: 36,858.905  oz
we had 0 customer deposit
total customer deposits: nil oz
we had 1 adjustments
i) Out of HSBC:  4462.713 oz was adjusted out of the dealer and into the customer account of HSBC.  this usually leads to a settlement of gold at the comex
total registered or dealer gold:  385,633.101 oz or 11.99 tonnes
total registered and eligible (customer) gold;   9,294,660.408 oz 289.10 tones

For FEBRUARY:
Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 106 contract(s) of which 113 notices were stopped (received) by j.P. Morgan dealer and 3 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
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 (1537) x 100 oz or 153,700 oz, to which we add the difference between the open interest for the front month of FEB. (1628 contracts) minus the number of notices served upon today (113 x 100 oz per contract) equals 305,200 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 (1537 x 100 oz or ounces + {(1628)OI for the front month minus the number of notices served upon today (113 x 100 oz )which equals 305,200 oz standing in this active delivery month of February (9.4993 tonnes). THERE IS 11.99 TONNES OF REGISTERED GOLD AVAILABLE FOR DELIVERY SO FAR.

WE LOST 44 CONTRACTS OR AN ADDITIONAL 4400 OZ WILL NOT STAND BUT THEY WILL JOIN OTHER LONGS AS THEY HAVE BEEN TRANSFERRED TO A LONDON BASED FORWARD THROUGH THE EFP ROUTE.

THE COMEX IS NOW UNDER STRESS AS THE REGISTERED GOLD FALLS BELOW 13 TONNES.

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XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

IN THE LAST 17 MONTHS 65 NET TONNES HAS LEFT THE COMEX.

end

And now for silver

AND NOW THE DECEMBER DELIVERY MONTH

FEBRUARY FINAL standings

feb 7 2018
Silver Ounces
Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory
 nil oz
Deposits to the Dealer Inventory
nil
oz
Deposits to the Customer Inventory
 726,931.07 OZ
 JPM
Delaware
No of oz served today (contracts)
13
CONTRACT(S)
(65,000 OZ)
No of oz to be served (notices)
201 contracts
(1,005,000 oz)
Total monthly oz silver served (contracts) 139 contracts

(695,000 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 2 inventory deposits into the customer account

i) into J.P.MORGAN: 605,120,500 oz

ii) into  Delaware:  181,757.820 oz

total inventory deposits: 726,931.07 oz

we had 2 withdrawals from the customer account;

i) out of HSBC: 20,050.180 oz

ii) out of Scotia:  24,747.190 oz

total withdrawals;  726,931.07  oz

we had 0 adjustment

total dealer silver:  43.080 million

total dealer + customer silver:  249,515 million oz

The total number of notices filed today for the FEBRUARY. contract month is represented by 13 contract(s) FOR 65,000 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 139 x 5,000 oz = 695,000 oz to which we add the difference between the open interest for the front month of FEB. (214) and the number of notices served upon today (13 x 5000 oz) equals the number of ounces standing.

.

Thus the INITIAL standings for silver for the FEB contract month: 139(notices served so far)x 5000 oz + OI for front month of FEBRUARY(214) -number of notices served upon today (13)x 5000 oz equals 1,700,000 oz of silver standing for the FEBRUARY contract month. 

WE GAINED 200 CONTRACTS OR AN ADDITIONAL 1,000,000 OZ WILL  STAND AT THE COMEX

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

ESTIMATED VOLUME FOR TODAY: 129,663

CONFIRMED VOLUME FOR YESTERDAY: 109,181 CONTRACTS

YESTERDAY’S CONFIRMED VOLUME OF 109,181 CONTRACTS EQUATES TO  546 MILLION OZ OR 77.9% 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 RISES TO -2.15% (FEB 6/2018)
2. Sprott gold fund (PHYS): premium to NAV RISES TO -0.25% to NAV (FEB 6/2018 )
Note: Sprott silver trust back into NEGATIVE territory at -2.14%-/Sprott physical gold trust is back into NEGATIVE/ territory at -0.25%/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 -3.79%: NAV 13.72/TRADING 13.20//DISCOUNT 3.79%

END

And now the Gold inventory at the GLD/

 

FEB 7/AN UNBELIEVABLE 12.08 TONNES WAS REMOVED BY THE CROOKED BANKERS AND THIS GOLD WAS USED IN THE ASSAULT THESE PAST FEW DAYS/INVENTORY RESTS AT 829.27 TONNES

Feb 6/AGAIN VERY STRANGE: WITH TODAY’S TURMOIL, THE CROOKS DID NOT ADD ANY GOLD INVENTORY INTO THE GLD/INVENTORY REMAINS AT 841.35 TONNES

Feb 5  Strange,with all of today’s turmoil, the crooks at the GLD decided to add zero ounces into GLD inventory/inventory rests at 841.35 tonnes

Feb 2/no change in gold inventory at the GLD/Inventory rests at 841.35 tonnes

Feb 1/with gold up by $8.00/the crooks decided not to add any new physical gold metal into the GLD./inventory rests at 841.35 tonnes

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
Feb 7/2018/ Inventory rests tonight at 829.27 tonnes

*IN LAST 321 TRADING DAYS: 111.88 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 255 TRADING DAYS: A NET 45.43 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.

end

Now the SLV Inventory

FEB 7/no change in silver inventory at the SLV/Inventory rests at 314.045 million oz/

Feb 6/WITH ALL OF TODAY’S TURMOIL/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 314.045 MILLION OZ/

Feb 5/ we had HUGE change in silver inventory at the SLV/ A DEPOSIT OF 1.131 MILLION OZ INTO THE SLV/Inventory rests at 314.045 million oz/

Feb 2/we lost 982,000 oz from the SLV inventory /inventory rests at 312.914 million oz/

Feb 1/no change in silver inventory at the SLV/Inventory rests at 313.896 million oz/

Jan 31/ no 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/

.

Feb 7/2017:

Inventory 314.045 million oz

end

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

+ 1.71%
12 Month MM GOFO
+ 2.09%

end

Major gold/silver trading /commentaries for WEDNESDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Crypto Currency Backlash Sees Flight From Cryptos and Bitcoin

February 7

2018

– Bitcoin falls from $20,000 to below $6,000 and bounces back to $8000
– Top 50 crypto currencies lost over 50% of value in 24 hours
– Over $60 billion wiped off entire crypto currency market in 24 hours
– Markets concerned about increased regulation, manipulation & country-wide bans
– ‘Growing global unease about risks virtual currencies pose to investors and financial system’ – SEC
– Gold acting as store of value from “correcting” stock markets & crashing cryptos
– Gold is essentially flat in recent days and building on its 11% gain in 2017
– Offline physical gold is safer than online digital gold

Editor: Mark O’Byrne

Investors in the bitcoin and cryptomarkets are running scared as prices continued to plunge yesterday before a bounce today.

Top altcoins lost 50% of their value on Monday, bringing the total value wiped off the crypto market  in 24 hours to over $60 billion.

Monday’s performance is a further kick for a market that has rapidly lost favour since bitcoin touched $20,000 in December. Investors and market participants are being forced to question the stability and security of the crypto currency market which is currently under regulated and prone to be taken advantage of.

Meanwhile, the gold price rose Monday and is essentially flat in recent days – building on 11% gain in 2017.

Investors began to turn to gold last month, as they began to seek ways to protect their crypto profits. Now, the market is spooked by developments in both price and the wider ecosystem, prompting calls for investors to avoid cryptos altogether.

Government shutdown 

Tougher regulation has been a key factor overshadowing market action, in the last few weeks.

Yesterday Financial News, a service closely associated with the People’s Bank of China, reported that the central bank will block all cryptocurrency and ICO related platforms. Previously it announced the crackdown of domestic platforms, this has now been extended to foreign ones, as well.

“In the future, any related (platform) will be closed as soon as it is found. At the same time, further regulatory measures will be taken with the future development of the situation.”  Financial News

The PBOC news follows India’s Finance Minister Arun Jaitley announcement that the government was looking to ‘eliminate the use of digital currencies’. Whilst the country is not a major player in the crypto universe, it does put a spanner in the works for those who were hoping the likes of bitcoin would become adopted globally – either as a global currency or a store of value.

Jaitley stated that bitcoin was being used for ‘illegitimate’ activities and that the country would not recognise cryptocurrencies as legal tender.

“The government does not recognize cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system.” – Arun Jaitley

The severe swings in price combined with security issues have lead many regulators to push forward with deciding how they are going to deal with cryptocurrencies, regardless of how popular bitcoin is in the country. It is also seen a threat to their fiat currencies and existing banking and monetary systems.

South Korea has been particularly vocal of late, at the end of January the central bank introduced legislation to put more control on speculative cryptocurrency investing, restricting trading to real-name bank accounts.

The world was also watching yesterday as Christopher Giancarlo, chairman of the Commodity Futures Trading Commission (CFTC), and Jay Clayton, chairman of the Securities and Exchange Commission (SEC), gave testimony to the Senate Banking Committee ‘amid growing global unease about the risks virtual currencies pose to investors and the financial system’.

Both Chairs are expected to show how their respective agencies have been working to protect investors from extreme volatility, financial fraud and security threats from hackers. Statements are expected to say that cryptocurrencies demand increased oversight and may even require a new federal regulatory framework.

Crypto exchange Bitfinex and digital currency Tether have come under scrutiny by the SEC, since early December. The currency is thought to be inflating the price of bitcoin by billions of dollars, supported by the Bitfinex exchange.

The lack of regulatory oversight is prompting many to look into claims of manipulation in crypto currency markets. Along with price volatility banks are now becoming increasingly nervous at their exposure to digital currencies, through the risks their clients are taking.

No credit offered

Spooked by the $44bn drop in value of bitcoin during January, many banks and large organisations have rushed to put cryptocurrency controls in place, in recent weeks.

Lloyds Bank, Virgin Money and US investment banks including J.P. Morgan Chase, Bank of America and Citigroup have all come down hard on credit-card purchases of crypto currency.

The announcements by the US investment banks followed Facebook’s decision to ban crypto currency advertising as it is ‘frequently associated with misleading or deceptive promotional practices’.

Banks and companies are keen to separate themselves from bitcoin, its contemporaries and related activities before regulators begin to clamp down on the market. Currently banks are hugely exposed should customers by cryptos using credit cards, only for the price to then crash.

Bitcoin, cryptos and digital gold are not substitutes for real gold

“In our view, bitcoin and cryptocurrencies more generally are not a substitute for gold. Gold is a tried and tested effective investment tool in portfolios,” concluded the World Gold Council in a recent report.

This is a key statement from one of the leading research bodies for the physical gold market. Since the publication of Nakamoto’s white paper in 2008 it has been inevitable that bitcoin and other cryptocurrencies are compared to physical gold. As a result, the myth that the two are substitutes for one another has been a long-standing one.

Back in January we brought news to you that many early investors in bitcoin, Ripple and other digital currencies were hedging their gains with physical gold:

Unsurprisingly many cryptocurrency buyers or investors have been looking at how they can secure their gains. Since early December and continuing in recent days, we are seeing numerous existing and new clients who had seen massive gains in bitcoin, ripple etc diversifying into physical gold. They have been buying both gold coins and bars, for both delivery and storage.

Bitcoin and the various crypto currencies are digital assets. Most are no more secure in terms of value or pricing than any other form of digital gold, bullion vaulting platform or ETF. However, many of those who choose to hold cryptocurrencies do so for the same reason many choose precious metals – because they wish to diversify and own finite assets (in the case of bitcoin and some other cryptos) outside of the global monetary and financial system.

The problem with crypto currency and digital gold platforms are the regulatory, cyber and liquidity risk that is so prevalent in both markets. Whilst the extremely high returns from cryptos was good for investors in the short-term, the ecosystem is still in the early days.  Both digital gold products and  cryptos have quite a degree of unappreciated counter party risk. The platform or exchange in effect controls your assets and you are exposed to them, their servers, websites, staff and management – not too mention the antiquated electrical grids and an internet that is vulnerable to shutdowns.

In contrast, physical gold is a long established and highly liquid global market. The largest buyers of physical gold in the world today are central banks.

Those early adopters of crypto currency and spin-offs products such as Ripple and Ethereum should diversify and own a real safe haven – physical gold and offline physical gold is safer than online.

In order to avoid getting stung again, they need to ensure they rebalance and diversify into undervalued assets such as physical, segregated gold and extremely undervalued silver bullion.

-END-

END

Bitcoin gains as investors were heartened in the USA that regulators plan a balanced and not a dismissive approach.  Actually the regulators are planning to destroy bitcoin et al pricing.

 

(courtesy zerohedge)

 

Crypto-Hearing Post-Mortem: Bitcoin Gains On Regulators’ “Balanced, Not Dismissive” Approach

Cryptocurrencies surged this afternoon (after being dragged lower in the equity volatility chaos) as the much-fear regulatory-hearing today surprised many with a “thoughtful not dismissive” sentiment.

As Liberty Blitzkrieg’s Mike Krieger notes, it’s not often you’ll hear me say positive things about a U.S. government regulator, but I nearly fell out of my seat when I heard what the Chairman of the U.S. Commodity Futures Trading Commission (CFTC), Christopher Giancarlo, said at today’s hearing with the Congressional Committee on Banking, Housing, and Urban Affairs.

In case you missed it, here’s his opening statement:

With your permission, I’d like to begin briefly with a slightly different perspective, and that is, as a dad. I’m the father of three college age children, a senior, a junior and a freshman. During their high school years, we tried to interest them in financial markets. My wife and I set up small brokerage accounts with a few hundred dollars that they could use to buy stocks, yet other than my youngest son who owned shares in a video game company, we haven’t been able to pique their interest in the stock market. I guess they’re not much different than most kids their age.

Well something changed in the last year. Suddenly they were all talking about Bitcoin. They were asking me what I thought, and should they buy it. One of their older cousins, who owns Bitcoin, was telling them about it, and they got all excited, and I imagine that maybe members of this committee may have had similar experiences in your own families of late.

It strikes me that we owe it to this new generation to respect their enthusiasm about virtual currencies with a thoughtful and balanced response, not a dismissive one, and yet we must crack down hard on those who try to abuse their enthusiasm with fraud and manipulation.

That’s just about as good as you’re gonna get from a government regulator. Beyond the fact that he’s advocating an entirely reasonable approach, I was shocked to see how well he had his finger on the pulse of one of the most significant and often overlooked aspects fueling Bitcoin and crypto assets overall, the generational factor.

This is something I’ve touched on in the past, most specifically in the post, The Generational Wheels Are Turning:

The financial crisis of 2008/09 similarly shattered the worldview of tens, if not hundreds of millions of people across the globe. I believe that the old manner of doing things as far as organizing an economy and society died for good during that crisis and its aftermath. Sure it’s been shadily and undemocratically propped up ever since, and we haven’t yet transitioned to what’s next, but for all intents and purposes it’s dead. It’s dead because it has no credibility.

Increasing numbers of people accurately see the institutions that currently manage our lives as outdated and corrupt. More importantly, many of us don’t want to simply replace the current crop of unethical people in charge with a new bunch, we want to completely change the way things are done at a systemic level. This is precisely what lies at the heart of Bitcoin, as well as decentralized, trustless systems in general. If there’s any fundamental lesson from history it’s that human beings cannot be trusted to use power and authority altruistically and wisely. As such, it’s imperative that we distribute those things as much as possible.

If you aren’t observing what’s currently happening with regard to Bitcoin’s ascendance (and crypto assets more broadly) from a generational perspective, you’ll completely miss the big picture. The Baby Boomer generation, which has dominated so many aspects of our country for so many decades — including the overall narrative of everything — is finally heading off into the sunset.

The perspectives of an entire generation of young Americans were forged during the corruption and lawlessness of the financial crisis. They know the financial system is a rigged fraud, and they know they got ruthlessly swindled before even graduating high school. They inherently understand these things, which is why they’re attracted to Bitcoin and not equity and debt securities. This is the exact backdrop that Chairman Giancarlo described in his opening statement, and I doubt this outlook will change any time soon.

When I see old finance people sound off on Twitter, the level of condescension, arrogance and ignorance toward Bitcoin is striking. It’s as if they haven’t talked to a person under 30 in the past decade, or if they have, they just ignore everything they have to say. Who do you think is going to shape the future of this world? Dismiss younger generations and mock their worldview at your own peril.

As I noted in my prior post:

If you want to try to figure out where we’re headed, you need to get out of your own head and into the minds of younger generations. While it’s fun to mock millennials and avocado toast, this is one of the most systemically screwed over generations in a long time. Thrown into the job market in the midst of an economic collapse, they watched their parents lose their homes while Wall Street got bailed out. These are lessons and experiences that stick around for life and fundamentally shape how one sees the world. The younger generations aren’t going to be interested in tinkering around the edges of the current paradigm, they’re going to want to replace it entirely. They have no loyalty to a system they’ve witnessed do so much damage.

I didn’t expect a U.S. regulator to get this, and for that I am thankful. So thank you Mr. Giancarlo, for having an open mind and listening to your children. After all, they’re the ones who will have to live on this earth a lot longer than us.

*  *  *

If you liked this article and enjoy my work, consider becoming a monthly Patron, or visit our Support Page to show your appreciation for independent content creators.

 

 

end

China is doing everything in its power to stamp out cryptocurrencies trading in its country as they are banning foreign platforms

(courtesy SCMP/Hong Kong)

China to stamp out cryptocurrency trading completely with ban on foreign platforms

Offshore platforms targeted after recent efforts to shut down domestic exchanges failed to eradicate trading

PUBLISHED : Monday, 05 February, 2018, 11:53am
UPDATED : Tuesday, 06 February, 2018, 10:36p

China is to block all websites related to cryptocurrency trading and initial coin offerings (ICOs) – including foreign platforms – in a bid to finally quash the market completely.

“To prevent financial risks, China will step up measures to remove any onshore or offshore platforms related to virtual currency trading or ICOs,” said an article published on Sunday night by Financial News, a publication affiliated to the People’s Bank of China (PBOC).

The article acknowledged that recent attempts to stamp out digital currencies by shutting down domestic exchanges had failed to completely eradicate trading.

“ICOs and virtual currency trading did not completely withdraw from China following the official ban … after the closure of the domestic virtual currency exchanges, many people turned to overseas platforms to continue participating in virtual currency transactions.

“Overseas transactions and regulatory evasion have resumed … risks are still there, fuelled by illegal issuance, and even fraud and pyramid selling,” the article said.

China’s official Xinhua news agency quoted the PBOC on Monday afternoon as saying it would tighten regulations on domestic investors’ participation in overseas transactions of ICOs and virtual currencies, as risks are still high in the sector.

Beijing’s tougher stance – which effectively bans all forms of activity related to digital currencies – aims to put the breaks on the ICO and virtual-currency trading mania that has been sweeping China. The frenzy among retail investors led to huge price volatility and several reported incidents of fraud, causing a headache for regulators increasingly worried about social unrest.

In one incident on Saturday, reported by mainland Chinese media TMT Post, angry investors had forcibly taken Jiang Jie, founder of an ICO project called ARTS, to the Beijing municipal financial bureau, alleging fraud after the value of a virtual coin issued by ARTS tumbled to 0.13 yuan in two weeks from 0.66 yuan after its ICO and listing on an exchange in late January.

Following reports of the latest crackdown, advertisements for cryptocurrencies have stopped appearing on Baidu, China’s biggest search engine, and social media platform Weibo.

“It is common for people to use VPNs [virtual private networks] to trade cryptocurrencies, as many exchange platforms relocated to Japan or Singapore,” said Donald Zhao, an individual bitcoin trader who relocated to Tokyo from Beijing late last year, following the ban.

“I think the new move literally means it would be even harder to circumvent the ban in China … people promoting related business programmes may be arrested,” Zhao said.

The tighter regulation from the PBOC will “definitely weigh on the cryptocurrency universe,” said Wayne Cao, who runs a company that recently offered 10 billion tokens in an ICO.

“Most of the Chinese ICO projects are invested in by Chinese investors. So if they are blocked, the whole cryptocurrency market will be dragged down.”

Until now, offerings of new tokens have usually been pegged to more established cryptocurrencies like bitcoin,  and retail investors could buy into them via ICOs, as long as they had digital wallets ready. Trading of the coins has taken place on offshore exchange websites, with wider participation once ICOs are complete.

The bitcoin bubble seemed close to bursting after it dropped to below US$8,000 for the first time since November, then regained its standing, leaving some experts unnerved.

China banned both ICOs and cryptocurrency exchanges in September, but trading by individuals has remained a murky area with many businessmen relocating to Hong Kong or Japan while still raising funds from mainland investors.

Two weeks ago, the PBOC ordered financial institutions to stop providing funding to any activity related to cryptocurrencies, further tightening the noose.

“It’s positive news for Japan and Singapore, because demand for participating in trading is not diminishing and traders have got to go somewhere,” said Ace Yang, executive director of Cathay Capital, a private equity firm based in Beijing.

One commentator said authorities would always be concerned about problems that could arise from a lack of supervision over blockchain technologies.

“Regulators will for sure step in, if any kinds of financial innovations currently implemented, including blockchain finance, digital finance, smart finance and big data finance, infringe upon the interests of consumers and affect the stability of the entire financial market,” said Li Lihui, a former president of the Bank of China who now works as team leader of the blockchain research department under the semi-official National Internet Finance Association of China.

END
Bitcoin surges back above $8500.00 even though Goldman Sachs (and I) doubt about its survival
(courtesy zerohedge)

Bitcoin Surges Back Above $8500 As Goldman Doubts Cryptocurrency Survival

Following reassuring words from US securities regulators yesterday, Bitcoin has extended its rebound back above $8500 (from below $6000), shrugging off Goldman Sachs’ latest report questioning cryptocurrencies’ long-term existence.

Bitcoin is up over $2500 from its anxious lows ahead of yesterday’s US regulatory hearing

As Mike Krieger noted last night, the Chairman of the U.S. Commodity Futures Trading Commission (CFTC), Christopher Giancarlo, said at today’s hearing with the Congressional Committee on Banking, Housing, and Urban Affairs.

In case you missed it, here’s his opening statement:

With your permission, I’d like to begin briefly with a slightly different perspective, and that is, as a dad. I’m the father of three college age children, a senior, a junior and a freshman. During their high school years, we tried to interest them in financial markets. My wife and I set up small brokerage accounts with a few hundred dollars that they could use to buy stocks, yet other than my youngest son who owned shares in a video game company, we haven’t been able to pique their interest in the stock market. I guess they’re not much different than most kids their age.

Well something changed in the last year. Suddenly they were all talking about Bitcoin. They were asking me what I thought, and should they buy it. One of their older cousins, who owns Bitcoin, was telling them about it, and they got all excited, and I imagine that maybe members of this committee may have had similar experiences in your own families of late.

It strikes me that we owe it to this new generation to respect their enthusiasm about virtual currencies with a thoughtful and balanced response, not a dismissive one, and yet we must crack down hard on those who try to abuse their enthusiasm with fraud and manipulation.

That’s just about as good as you’re gonna get from a government regulator.

And the entire crypto universe is notably higher on the relief…

And the extended gains appear to be shrugging off a widely distributed report from Goldman Sachs questioning the existential viability of cryptocurrencies.

Steve Strongin, Head of Global Investment Research, argues that that the current generation of cryptocurrencies is unlikely to survive even if blockchain technology endures.

Whether any of today’s cryptocurrencies will survive over the long run seems unlikely to me, although parts of them may evolve and survive…. To my eye, they still seem too primitive to be the long-term answer.

Is the market accurately pricing the likelihood that several—if not most—of the current cryptocurrencies will ultimately fail?

I don’t believe it is. People seem to be trading cryptocurrencies as though they’re all going to survive, or at least maintain their value. The high correlation between the different cryptocurrencies worries me. Contrary to what one would expect in a rational market, new currencies don’t seem to reduce the value of old currencies; they all seem to move as a single asset class. But if you believe this is a “few-winnerstake-most” situation, then the potential for retirement depreciation should be taken into account. And because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.

Is there a useful role for cryptocurrencies in financial markets today?

As it relates to the underlying technology, there is clearly a role for improving the ledgers that underlie financial transactions. Substantial investment is being made in leveraging blockchain technology to more efficiently and quickly settle contracts, confirmations, and related transactions. But the current technology does not yet offer the speed that will be required for market transactions.  Now, if the question is whether there is a fundamental need for a currency that is not tied to a central bank, the answer in my opinion is “no” in most cases, at least within the regulated markets. Even if transaction times improved, the notion that people would prefer cryptocurrencies for everyday transactions seems like a stretch. There is perhaps a slightly more compelling case for their use as a store of a value.

Cryptocurrencies are well-suited in particular for the many documented use cases in dark markets. They are cheap to store, easy to conceal and hard to trace. So it is plausible that cryptocurrencies may have a long-term role to play in these markets, but even that is not assured. And the possibility of cryptocurrencies catching on in the dark markets has little to no implication for their applications elsewhere; it is very difficult to turn an asset that was optimized for dark markets into one suitable for lit markets. Is it possible? Yes. But in my view, it is unlikely.

However, Goldman does attempt some ‘fair and balanced’ reporting by interviewing Dan Morehead, founder and CEO of Pantera Capital, an investment firm focused exclusively on cryptocurrencies and one of the largest institutional investors in crypto to date.

Not surprisingly, Morehead is a diehard crypto aficionado who believes that cryptocurrencies have enormous disruptive potential across financial services and money transmission.

My passionate belief is that most of the largest blockchains today will survive. That doesn’t mean that 90% of the altcoins and ICOs being issued right now won’t go to zero; I believe they will. But blockchains like bitcoin and Ethereum and Ripple will almost certainly still be very important in 10 or 20 years.

He sees cryptos as competitors to correspondent banks, credit card companies, conventional stores of wealth like gold, and fiat currencies. Assuming bitcoin captures some market share from each of these incumbents, he estimates its fair value could be roughly $500,000.

If I had to take a really big-picture view of the terminal value of bitcoin, I think it’s roughly a half a million dollars per bitcoin. How do I calculate that? By taking into account some of the markets that bitcoin will disrupt.

In Morehead’s view, it is therefore difficult to call recent cryptocurrency price action a bubble. And the potential for new market entrants in the form of institutional investors – which are essentially non-existent in the space today – gives him confidence that the price of cryptos will be substantially higher a year from now.

 I do not believe this is a bubble. Cryptocurrencies are clearly very volatile. And anything that can go up 10 times in six months can easily go down 50% in a week. So I have no idea where it’s going to be in the short run.

But it’s very difficult for me to believe that we are in the midst of a bubble given that almost all institutional investors have zero exposure to it. That said, I do expect a substantial wave of institutional investor flows into the space over the next 18 months.

What could quash his enthusiasm? Adverse regulatory action.

 I think the main risk is that regulatory bodies around the world issue rulings that are excessively harsh in their treatment of cryptocurrencies. This risk is particularly high for ICOs, which are very speculative—like early-stage venture capital—but are also a very important way to fund new projects. That said, overall, US regulatory bodies have been reasonable in allowing the cryptocurrency market to develop while coming down on bad actors like the Silk Road. And it has been a long time now since I’ve worried about the long-term future of blockchain. I think that has to do with the general population really embracing this new technology, learning how it works, and getting used to it. I have no doubt that blockchain will be important 20 years from now.

And judging by yesterday’s hearings, that is less of a problem now (though definitely still a worry).

end
As we have reporting to you for quite some time:  Chinese citizens are having a love affair with gold/silver as they purchase a huge amount of jewellry with their gains on property values
(courtesy Bloomberg/gata)

China’s love affair with gold heats up on property boom riches

 Section: 

By Ranjeetha Pakiam and Daniela Wei
Bloomberg News
Tuesday, February 6, 2018

China’s growing throng of affluent consumers is driving a rebound in demand for gold rings, bracelets, and necklaces as a property boom and high stock market valuations boost wealth in the largest bullion market.

“Things are much more positive than they were this time last year,” and the jewelry market has bottomed out after three years of declines, said Nikos Kavalis, London-based director of research firm Metals Focus Ltd. Colleagues who visited the southern commercial hub of Shenzhen in early January told him showrooms were quite busy and wholesalers expected clients to return to replenish their stocks before Lunar New Year in the middle of February.

The nation’s demand for gold jewelry climbed 10 percent last year to almost 700 metric tons as the wealthy increased purchases and consumption improved in second- and third-tier cities, according to the China Gold Association. Buying of ornaments represented more than 60 percent of the 1,090 tons of gold consumed in China last year and made up a third of world jewelry demand. …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2018-02-06/china-s-love-affair-w..

END
As I have been warning you for many years, Barrick will never get the Pascua Lama project off the ground.  He just took another 429 million charge against the  stalled mine
(courtesy zerohedge)

Miner Barrick to take $429 million charge at stalled Chilean gold project

 Section: 

From Reuters
Tuesday, February 6, 2018

Barrick Gold Corp. expects to record a pre-tax charge of around $429 million at its stalled Pascua-Lama project in South America in the fourth quarter due to reclassifying its gold reserves.

Barrick, the world’s biggest gold miner by output, also said it had formed a working group with China’s Shandong Gold to study a potential partnership at Pascua-Lama, which straddles the border of Chile and Argentina in the Andes Mountains.

Barrick put the contentious gold and silver project on hold in 2013 due to environmental issues, political opposition, labor unrest, and development costs that had ballooned to $8.5 billion.

Last month Chilean environmental regulators ordered Barrick to close existing infrastructure on the Chilean side of the project, where Barrick had originally planned to develop an open pit mine. …

… For the remainder of the report:

https://www.reuters.com/article/barrick-gold-pascua-lama/barrick-gold-to…

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 6.2700 /shanghai bourse CLOSED DOWN AT 61.39 POINTS 1.82% / HANG SANG CLOSED DOWN 232.22 POINTS OR 0.89%
2. Nikkei closed UP 35.13 POINTS OR 0.16% /USA: YEN RISES TO 109.18

3. Europe stocks OPENED DEEPLY IN THE GREEN   /USA dollar index RISES TO 89.84/Euro FALLS TO 1.2352

3b Japan 10 year bond yield: FALLS TO . +.076/ (CENTRAL BANK INTERVENTION THIS MORNING) GOVERNMENT INTERVENTION !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 109.18/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

3d USA/Yen rate now well below the important 120 barrier this morning

3e WTI:: 63.21  and Brent: 66.84

3f Gold UP/Yen UP

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

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

3h Oil 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 RISES TO +.708%/Italian 10 yr bond yield DOWN to 1.930% /SPAIN 10 YR BOND YIELD DOWN TO 1.376%

3j Greek 10 year bond yield FALLS TO : 3.67?????????????????

3k Gold at $1328.10 silver at:16.69: 7 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50

3l USA vs Russian rouble; (Russian rouble DOWN 33/100 in roubles/dollar) 57.19

3m oil into the 63 dollar handle for WTI and 66 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 109.18 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 0.9396 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1607 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

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

3r the 10 Year German bund now POSITIVE territory with the 10 year RISING to +0.708%

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 2.769% early this morning (THIS IS DEADLY TO ALL MARKETS). Thirty year rate at 3.038% /

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

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

US Futures Resume Slide As VIX Rises: Dow Set To Open Down 200 As Dip Buying Fails In Asia

“To Buy, or not to buy the dip”, that is the question this morning across the world.

In the US, for now, the answer appears to be no, as yesterday’s dead cat bounce is hanging, with S&P futures retreating, even as European stocks rebound, and while Asia started off well higher, it faded almost all gains paring earlier gains, with Chinese shares dropping and Japan and South Korea fading gains of as much as 3%. Meanwhile, S&P 500 futures are down 0.6% after gaining 1.7% Tuesday, and the Dow is set to open around 200 points lower after adding 2.3%.

Understandably, attention is squarely focused on the VIX, which is elevated and remains glued to 30 where it was at the Tuesday close, not providing much clarity in terms of direction.

“The stock market has a way of “cleansing out” the emotion and rhetoric. While we never like to see clients lose money, investors need to remember that pullbacks, corrections, and pauses are vital components to any secular or cyclical bull market. Yes – the bull market is very much alive. This too shall pass,” Brian Belski, chief investment strategist at BMO Capital Markets, wrote in note. “As such, allow the market to do its job and focus on the fundamentals of investing relative to the noise, machines, and emotion.”

Asian markets were mixed, mostly higher as the region attempted to track Wall Street’s rebound where stocks found shelter from the 2-day violent market turmoil on dip buying, which saw S&P 500 briefly reclaim 2700 and the DJIA home in on the 25000 level. Australia (+0.8%) traded positive in which energy and resources names led the recovery as commodities rebounded, while Japan’s Nikkei 225 (+0.2%) was initially the best performer and gained over 3% in early-trade before it gradually pared most the advances amid a choppy currency and as momentum waned. China, meanwhile, saw surprising weakness, with Hang Seng (-0.9%) and the Shanghai Comp. (-1.8%) both lifted at the open by the early rising tide, although mainland stocks then retreated amid Shenzhen volatility and after the PBoC continued to drain liquidity from the banking system with its inaction.

The broad Asian weakness was especially evident in Korea, which saw the Kospi open at the highs, only to fade all day and close at session lows.

After yesterday’s sharp losses, Europe’s Stoxx 600 gains 0.8% in early trade, bouncing after a seven-session selloff which sent the index to its lowest level since August 2017. The benchmark still remains down 7% since peak on Jan. 23; and is below both the 50- DMA, 200-DMA. Euro Stoxx 50 up 0.7%, DAX up 0.7%, CAC up 0.5%, FTSE 100 up 1%, FTSE MIB up 0.9%, IBEX up 1.1%.

Over in FX, it has been another day of choppy price action for the major currencies, and yet the ranges remain tighter compared to other asset classes, as they remain buffered and – so far – immune to the stock turbulence. The dollar picked up as U.S. futures pointed to a lower open and Treasury yields fell, while VIX rebounded.

The yen led gains in G-10 even as European equities traded in the green and Asian counterparts were mixed. The EUR/USD reversed gains to trade as much as 0.3% lower, with the retreat coming amid a strong BBDXY rebound that reverses an early drop of 0.2%; the USD/JPY stayed near day low of 108.92 as Treasuries remain supported; Cable dropped by 50 pips within 10 minutes, heads below 1.39 after reaching a day-high of 1.3994 in European morning as algo trading in the pair continues to dominate. According to Bloomberg, sellers of FX volatility in the majors emerged across tenors.

WTI and Brent crude futures are trending lower this morning, with the latter breaking below USD 67.00/bbls despite the last nights API crude inventory data showing an unexpected drawdown. Some of the bearish sentiment could be attributed to the latest EIA forecasts, in which the agency upped their US oil production led by shale to 11.2mln bpd in 2019 from 10.85mln bpd. In metals markets, spot gold is modestly higher whilst copper was supported during Asia-Pac trade amid the improved risk appetite.

Several Fed representatives are due to speak. Economic data include mortgage applications, consumer credit. Scheduled earnings include Fox, Tesla, Suncor Energy

Market Snapshot

  • S&P 500 futures down 0.6% to 2,673.00
  • STOXX Europe 600 up 0.8% to 375.85
  • MSCI Asia Pacific up 0.2% to 173.46
  • MSCI Asia Pacific ex Japan down 0.1% to 567.73
  • Nikkei up 0.2% to 21,645.37
  • Topix up 0.4% to 1,749.91
  • Hang Seng Index down 0.9% to 30,323.20
  • Shanghai Composite down 1.8% to 3,309.26
  • Sensex unchanged at 34,196.75
  • Australia S&P/ASX 200 up 0.8% to 5,876.81
  • Kospi down 2.3% to 2,396.56
  • German 10Y yield rose 0.2 bps to 0.694%
  • Euro down 0.2% to $1.2359
  • Italian 10Y yield fell 3.7 bps to 1.72%
  • Spanish 10Y yield fell 5.2 bps to 1.374%
  • Brent Futures up 0.07% to $66.91/bbl
  • Gold spot up 0.4% to $1,329.84
  • U.S. Dollar Index up 0.2% to 89.73

Top Overnight News

  • House passes stopgap spending bill to fund U.S. govt until March 23
  • Prime Minister Theresa May is unlikely to provide the kind of clarity on her government’s Brexit blueprint that the European Union wants by the end of this week, according to a senior U.K. official; Banks must continue to prepare for any outcome, including a hard Brexit, ECB Executive Board member and Supervisory Board vice chair Sabine Lautenschlaeger says
  • German Chancellor Angela Merkel’s bloc and the Social Democratic Party have agreed on the ministries each will get in a coalition government, people familiar with the matter said; Hamburg Mayor Olaf Scholz will be Germany’s next finance minister, DPA reports without saying where it got the information
  • Nomura Holdings Inc. issued an apology after investors in a $300 million product betting on low volatility were all but wiped out during this week’s stock-market turmoil. Nomura said it will redeem the exchange-traded notes at 1,144 yen per unit, a 96 percent discount to the previous day’s close
  • Casino mogul Steve Wynn, caught amid a deluge of sexual harassment allegations, stepped down Tuesday night as chairman and chief executive officer of the company he founded
  • Fed’s Bostic sees slow gradual rate hikes pace if growth robust: CBS
  • China Jan. FX Reserves rise $21.5b from Dec. to $3.16t, 12th consecutive increase
  • India: holds rates unchanged at 6.00% as expected; policy stance stays neutral
  • API inventories according to people familiar w/data: Crude -1.1m; Cushing -0.6m; Gasoline -0.2m; Distillates +4.6m
  • Newfangled investments linked to volatility in the stock market — until a few years ago, obscure niche products — have exploded in spectacular fashion. The shock waves have only just begun
  • Goldman Sachs Group Inc. Co-President Harvey Schwartz said he believes investors are confident that stocks will bounce back from this month’s rout and welcomed efforts to bring interest rates back to normal
  • An Italian court rejected a 1.8 billion-euro ($2.2 billion) civil claim filed by Parmalat SpA against Citigroup Inc. related to the food company’s collapse in 2003
  • An elated Elon Musk pulled off another seemingly impossible feat Tuesday when SpaceX launched the world’s most powerful rocket in 45 years, then flew two of its spent boosters back to the Florida coast for a spectacular, simultaneous recovery on land

In Asia, equity markets were mostly higher as region attempted to track the rebound on Wall St. where stocks found reprieve from the 2-day market turmoil on dip buying, which saw S&P 500 briefly reclaim 2700 and the DJIA home in on the 25000 level. ASX 200 (+0.8%) traded positive in which energy and resources names led the recovery as commodities nursed losses, while Nikkei 225 (+0.2%) was initially the best performer and gained over 3% in early-trade before it gradually pared most the advances amid a choppy currency and as momentum waned. Elsewhere, Hang Seng (-0.9%) and Shanghai Comp. (-1.8%) were both lifted at the open by the early rising tide, although mainland stocks then retreated amid Shenzhen volatility and after the PBoC continued to drain liquidity from the banking system with its inaction. Finally, 10yr JGBs shrugged off the initial safe-haven outflows and returned flat, as price action proved to be as indecisive as the recovery in Japanese stocks. Furthermore, the BoJ’s Rinban  announcement failed to spur any market reaction as the bank kept its purchase amounts in line with the previous. PBoC skipped open market operations again today for a net daily drain of CNY 100bn.

Top Asian News

  • India Holds Rates Again to Balance Weak Growth, Strong Inflation
  • Masayoshi Son Plans Push to Cut Discount on SoftBank’s Stock
  • More Rich Chinese Forgo Hong Kong, Invest in Singapore Instead
  • Even Mainland Chinese Investors Are Abandoning Hong Kong Stocks
  • Yuan Nears Pre-Devaluation Level Despite China’s Policy Hints

European equities (Eurostoxx 50 +0.7%) are broadly higher this morning in a typical dead cat bounce. US equity futures are pointing to a negative open on Wall Street, which has capped the upside this morning. European bourses are also failing to be excited by the reports of an agreement between the CDU, CSU and the SPD to form a grand coalition. In terms of stock specific movers, earnings continue to dictate price action with earnings from Rio Tinto (flat), ABN Amro (-2.7%), Sanofi (-1.8%). The healthcare sector will come into focus when GSK report their latest financial reports at midday.

Top European News

  • Osram Sees Slowdown in Headlamps as China Car Sales Dip
  • ARM Embraces Tech Revolution Under SoftBank and Loses Money
  • Spain Nominates de Guindos as Candidate for ECB Post

In FX, the Dollar is broadly firmer against all G10 rivals apart from the Jpy, which has tested the resolve of bids at 109.00 again amidst more topside flow/heavy offers in Jpy crosses such as Eur/Jpy and Gbp/Jpy. However, the DXY has failed to sustain a rebound above near term resistance (89.600 treble top and then 89.700-750) or seriously challenge the next key tech levels above 90.000 (between 90.113-150). Hence, Wednesday could be key for the Buck in terms of whether its recent recovery continues or the end-2017 through January bear market resumes, and this also applies to Wall Street and equities in general after Monday’s rout and partial recovery yesterday. Looking at headline currency pairings, Eur/Usd is drifting lower having breached the 1.2400 level amidst conflicting headlines about a deal or no deal struck on a German grand coalition, but comfortably above the 20 DMA at 1.2303, while Cable has retreated further from 1.4000 and through a similar MA at 1.3958 to a 1.3920 low amidst reports that the EU will insist on harsh Brexit transition conditions if terms are violated. Usd/Cad remains anchored around 1.2500 after trade deficit misses on both side of the NA divide, while the Aud and Nzd are both hovering nearer recent lows around 0.7860 and 0.7300 respectively, with the Kiwi not getting much traction from better than expected NZ jobs data as attention quickly shifts to the RNBZ policy meeting later today.

In commodities, WTI and Brent crude futures are trending lower this morning, with the latter breaking below USD 67.00/bbls despite the last nights API crude inventory data showing an unexpected drawdown. Some of the bearish sentiment could be attributed to the latest EIA forecasts, in which the agency upped their US oil production led by shale to 11.2mln bpd in 2019 from 10.85mln bpd. In metals markets, spot gold is modestly higher whilst copper was supported during Asia-Pac trade amid the improved risk appetite.

Looking at the day ahead, the data calendar continues to remain fairly sparse with December consumer credit data in the US the only releases of note. However there is plenty of central bank speak due with the ECB’s Nouy and Lautenschlaeger speaking in Frankfurt in the morning, while the Fed’s Kaplan, Dudley, Evans and Williams are all due to speak throughout the day.

US Event Calendar

  • 7am: MBA Mortgage Applications, prior -2.6%
  • 3pm: Consumer Credit, est. $20.0b, prior $28.0b
  • 8:30am: Fed’s Dudley Speaks in Moderated Q&A
  • 10:15am: Fed’s Evans Speaks on Economic and Policy Outlook
  • 5:20pm: Fed’s Williams Speaks in Hawaii

DB’s Jim Reid concludes the overnight wrap

If you’ve only been working in markets for a handful of years then treat the last 36 hours as a mild dress rehearsal for what can happen when a bear market hits. Yesterday actually felt relatively orderly though in spite of a 1,000 point range on the DOW and a c28 point range in the VIX. Orderly unless you were at the epicentre of things and an equity volatility trader. I’m teaching 2 and a half year old Maisie how to count to five at the moment and the VIX yesterday felt like watching her do that as when I ask her to count for me she says something likes this “….four, two, three, one, five”. It closed at 37.32 the previous session before climbing to 50.30 around noon London time, then collapsing to 22.42 just after the US opened 2.5-3 hours later, a spike back to 46.34 occurred less than an hour later and then after oscillating between 30-40 for the rest of the day we closed at 29.98 (-19.7%). The 50.30 print was the highest since early March 2009 when equity markets hit rock bottom. Remarkable really.

Yesterday afternoon Craig and I put a note out showing what happens 1 week, 1 month and 3 months after the largest 10 VIX spikes in history. Basically the VIX usually rallies over all subsequent periods but equities tend to be strong the week after but on average fall 3 months later. The reverse is true for bonds. See the quick note here for more details.

What might make this VIX spike slightly different to previous ones is that although it had a macro catalyst (higher inflation and yields) the scale of the wounds are mostly self inflicted within the equity derivatives product as the scale of the moves have been caused by low volatility ETPs/ETFs being liquidated, suspended and/ or suffering major losses.

In other words all the other previous major spikes have been more to do with a big macro event or a crisis. The higher average earnings print could turn 2018 into a year of higher inflation and a big macro shift but we’re certainly not in crisis territory yet.

This morning in Asia, markets are broadly higher after the positive lead from the US, but the rebound has been fading as we type though. The Nikkei (+0.84%) and Hang Seng (+0.70%) are up but have pared earlier gains of around 3%. The Kospi (-1.44%) and China’s CSI 300 (-1.13%) are now lower. The UST 10y yield is down c3bp. In the US, the House has voted 245-182 to extend government funding until 23 March. The bill will now go to a Senate vote, but one of the prior obstacle is now largely mitigated as Senator McConnell noted he’ll allow the Senate to debate the immigration bill later on if the government is not shut down this week. Elsewhere, President Trump noted “if we don’t change it (immigration laws), let’s have a (government) shutdown”.

Now recapping market performance from yesterday. US bourses were volatile with trading volumes the highest since the November 2016 election. The S&P initially fell 2.1%, then quickly recovered to trade sideways before a late rally to close +1.74% higher. The Dow (+2.33%) and Nasdaq (+2.13%) also rebounded. Within the S&P, gains were led by tech, materials and consumer discretionary stocks, with only the real estate and utilities sectors in the red.

In Europe, markets were all lower following the prior day’s selloff in US equities. The Stoxx 600 fell for the seventh consecutive day and was down 2.41% (biggest fall since June 2016), while the Dax (-2.32%) and FTSE (-2.64%) also fell. Credit Suisse dropped 6%, in part following headlines that one of its short-term EFN will be liquidated after the spike in VIX futures (from c$2bn market cap in late Jan.). Notably, CS said it has not suffered any trading losses related to the exchange traded note. Elsewhere, the VSTOXX jumped 60% back to June 2016 levels (30.18).

European government bonds benefited from the flight to safety with core 10y bond yields down c4bp (Bunds -4.3bp; Gilts -3.7bp; OATs -3.9bp). The UST 10y jumped 9.6bp to 2.803%, largely reversing the prior day’s rally. US credit indices also rebounded, with the spreads on CDX IG and CDX HY 2.8bp and 11.8bp tighter respectively. Turning to currencies, the US dollar index rose for the third consecutive day (+0.15%), while the Euro (+0.08%) and Sterling (-0.07%) were little changed. In commodities, WTI oil retreated for the third straight day (-0.36%) to $63.92/bbl. Elsewhere, precious metals weakened c1% (Gold -1.16%; Silver -0.55%) and other base metals also fell modestly (Copper -0.51%; Zinc -0.81%; Aluminium -1.19%).

Away from the markets and onto Germany. The coalition talks between Ms Merkel and the SPD are still ongoing, but Ms Merkel seemed more conciliatory. She noted “all of us will have to make painful compromises…I’m willing to do this if we can ensure that the advantages outweigh the disadvantages”. Elsewhere, a wage increase settlement was reached between the labour union IG Metall and employers. Overall, the deal will lead to 3.9% annual pay increase in 2018 and c3.5% in 2019 for union workers, which is at the upper end of expectations. This in our view should add to the evidence that inflation is indeed firming at a global level.

Finally before we recap the data and look at the day ahead, based on documents sighted by Bloomberg, the EU plans to implement the leverage ratio surcharge for globally systemically important banks, broadly in line with global standards agreed back in December. This implies large EU banks will be subjected to an extra 50bp-100bp leverage ratio buffer. Elsewhere, a spokesman for the Bulgarian presidency of the EU said there is “overall support” amongst EU members for the measure.

Now to yesterday’s data. In the US, the December trade deficit was slightly higher than expected at -$53.1bln (vs. -$52.1bln) and was also the largest monthly deficit since the GFC. In the details, exports rose 1.8% mom while imports grew 2.5% mom, with particularly strong growth in imports of consumer goods. The December JOLTS job openings was below market at 5,811 (vs. 5,961), but the quits rate edged up a tenth to 2.2%, broadly in line to last year’s readings.

Germany’s December factory orders was above market at 3.8% mom (vs. 0.7% expected) and 7.2% yoy (vs 3.1% expected), with growth mainly boosted by big ticket items in the month. The UK’s January BRC like for like sales was slightly below expectations at 0.6% yoy (vs. 0.7%), with that growth owing to a price-driven 2.9% yoy lift in spending on food. Elsewhere, France’s December budget deficit was narrower than last month at -€67.8bln (vs. -€84.7bln).

Looking at the day ahead, the data calendar continues to remain fairly sparse with December industrial production in Germany, December trade data in France and December consumer credit data in the US the only releases of note.
However there is plenty of central bank speak due with the ECB’s Nouy andLautenschlaeger speaking in Frankfurt in the morning, while the Fed’s Kaplan, Dudley, Evans and Williams are all due to speak throughout the day.

3. ASIAN AFFAIRS

i)Late TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 61.39 points or 1.82% /Hang Sang CLOSED DOWN 272.22 or 0.89% / The Nikkei closed UP 35.13 POINTS OR 0.16%/Australia’s all ordinaires CLOSED UP 0.87%/Chinese yuan (ONSHORE) closed UP at 6.2700/Oil DOWN to 63.21 dollars per barrel for WTI and 66.84 for Brent. Stocks in Europe OPENED DEEPLY IN THE GREEN .   ONSHORE YUAN CLOSED DOWN AGAINST THE DOLLAR AT 6.2700. OFFSHORE YUAN CLOSED DOWN AGAINST  THE ONSHORE YUAN AT 6.2820//ONSHORE YUAN A LOT STRONGER AGAINST THE DOLLAR/OFF SHORE A LOT STRONGER TO THE DOLLAR/. THE DOLLAR (INDEX) IS  MUCH STRONGER AGAINST ALL MAJOR CURRENCIES EXCEPT THE YUAN. CHINA IS NOT  TOO  HAPPY TODAY.(STRONGER CURRENCY BUT WEAK MARKETS THROUGHOUT THE GLOBE )

3 a NORTH KOREA/USA

/NORTH KOREA

end
 

3 b JAPAN AFFAIRS

 

Nomura sincerely apologizes for blowing up investors with their ill fated VIX linked ETN

 

(courtesy zerohedge)

Nomura “Sincerely Apologizes” For Blowing Up Investors With Its VIX-Linked ETN

On Monday evening, well before Credit Suisse decided to pull the plug on its now infamous XIV ETN which lost 96% of its value in the blink of an eye after Monday’s Volmagedon, resulting in massive losses for ordinary retail investors

… Nomura became the first bank to announce the early redemption of its VIX-linked ETN, the aptly named “Next Notes S&P500 VIX Short-Term Futures Inverse Daily Excess Return Index ETN”, which would be redeemed at a 96% discount, i.e., a complete wipeout for investors.

Then, overnight, realizing it is facing an avalanche of lawsuits even though it explicitly laid out the possibility of the ETN getting “terminated” should VIX explode, Japan’s biggest brokerage issued an apology after investors in its $300 million vol-linked ETN were all but wiped out during this week’s stock-market turmoil.

In a statement, Nomura said that it has received inquiries from individual investors after its decision to redeem the exchange-traded notes at a 96% discount.

We sincerely apologize for causing significant difficulties to investors,” its Nomura Europe Finance unit said in a statement a day earlier.

“Forgiveness please for blowing you up”

“This is a listed product, and we believe it can be bought by both individual and institutional investors,” Nomura said in an emailed statement. It declined to comment on any positions it took in the product or any impact of its demise on earnings.

As we first reported on Monday evening, Nomura’s “Next Notes” was basically a short bet on the VIX, and its early redemption – the first of its kind in Japan – was triggered after the notes lost more than 80 percent of their value amid the global equity-market selloff.  The ETN would be redeemed at 1,144 yen per unit, Nomura said, a 96% loss to holders: it was valued at 1.3 billion yen in Tokyo Wednesday, down from 32 billion yen on Monday.

Miwa Aonuma, a spokeswoman at Japan Exchange Group said investors in the Nomura ETN include Japanese individuals, while declining to disclose the ratio. There are currently 24 ETNs traded on the Tokyo Stock Exchange, and the Nomura product was the first to trigger an automatic redemption since the first listing in 2013, according to Japan Exchange Group, which operates the bourse.

Nomura is not alone: the bank’s vol shorting product is among more than a dozen worldwide that will be liquidated or are halted as bets soured that the calm pervading stock markets would persist, Bloomberg notes.

The collapse is raising concerns over whether novice investors should pile into such complex trades. BlackRock Inc., the world’s biggest provider of exchange-traded funds, on Tuesday reiterated a call for regulation that would clearly spell out the risks associated with inverse and leveraged exchange-traded products.

“This is a very risky product,” Kiyoshi Kimura, an executive at the Japan Association for Individual Investors, an advocacy group, said of the Nomura ETN. “The question is whether brokerages fully explained it to retail investors or not.”

Well, thanks to the upcoming tsunami in class-action lawsuits, we will soon find out; as for Nomura’s apology, we only hope to hear the same from those truly responsible: Greenspan, Bernanke and Yellen.

END

c) REPORT ON CHINA

 

4. EUROPEAN AFFAIRS

 

Finally, the German parties have reached an agreement on a grand coalition

 

(courtesy zerohedge)

 

The Death Of The “Death Of Contagion” Central Bank Meme

Authored by Tom Luongo,

Last year now-former FOMC Chair Janet Yellen downplayed the possibility of another financial crisis.  In her hubris she believes the central banks have walled off the financial system from ‘contagion risks’ brought on by over-investment in synthetic derivative market products.

Like generals, however, central planners are always fighting the last war.

We’re experiencing a major correction in the equity markets brought on in a mean-reversion exercise thanks to central banks trying to shore up their defenses around the last battle they lost, namely off-exchange, unregulated CDOs — synthetic debt-based investment products.

Humans are clever and will always find a way around a problem. The problem is incentives.  The banks created CDO’s because there was a demand for investment returns far above what the central banks were allowing the market to pay, by setting interest rates well below the real risk profile of the investment community.

In other words, government bonds were over-priced and investors went looking for better returns.  Now that Yellen et.al. have stamped out most of that market investors still need yield.

And that’s where the equity markets and the VIX come in.

VIX-ing the Markets

The response to the 2008 financial crisis was zero-bound interest rates and trillions in liquidity created by the central banks sitting around looking for yield.  It found its way into the equity markets which over the past six plus years been on an historic rally off the October 2011 low.

During that time the VIX became more important.   What was once only discussed by the real pros was now in the hands of everyone.  Contagion risks jumped asset classes.

For the uninitiated the VIX — or volatilty index — is a bet about the behavior of the S&P 500, itself an index of stocks.  Higher VIX values equal higher implied future volatility in the S&P 500 and vice versa.

In mathematical terms the S&P 500 is the first derivative of any single stock.  Stocks in the index trade in sympathy with it regardless of their current business.  The VIX is then the 2nd derivative of any stock in your portfolio.

During a rally the VIX falls.  But, now with so many products out there, ETNs — Exchange Traded Notes — both leveraged and un-leveraged — to speculate in the VIX it became easier and more profitable to trade it than the S&P 500 or individual stocks.

Trading volumes in these products have soared.  The tail didn’t just wag the dog, it became the dog.

Now these ETN’s are another derivative of the equity markets. And if they are leveraged, i.e. the note trades with twice or three times the volatility of the VIX itself (volatility of volatility), then options on these ETNs is the fourth derivative of the underlying stock.

Volatilty of volatility of volatility.

Look, fourth derivatives are noise. These computers are trading the VIX and the hedge funds are trading the noise.   Who do you think is going to win?

And they tell me that the Bitcoin markets aren’t real.  All the complaining about Tether ain’t got nothing on the fourth-derivative VIX trades out there.

You Can’t VIX this

So, thanks to Janet Yellen, the VIX kept rising in importance.  Yield-chasing momentum monkeys kept the one-way trade buoyant because the central banks had their back, same as quantitative easing has the bond traders’ backs.

And because it was a one-way bet thanks to the central banks pushing trillions into the stock market it was easy for them to multiply gains by factors of five or ten over that of the S&P 500.

And they call Bitcoin a bubble?

Add in the dominance of computer algorithm-based high frequency trading and the story pretty much writes itself.

The markets broke over the past two days because of the VIX finally became so over-valued and so many people had piled on thinking it would continue to go down forever, that when it snapped higher on Friday they were all caught short and had to liquidate.

This is a crowded trade that is so much more important than any cryptocurrency.

animal house

This manifests then in the stock indexes selling off, which, in turn, moves the bond markets, which affects gold and currencies which saw liquidity drain out of the crypto-markets.

So much for there not being any contagion risk anymore.

Contagion, Contagion, Contagion

As I pointed out last week, the sovereign bond markets were reaching panic levels in yield for European safe-haven issues as well as U.S. treasuries.  This is expected when the stock market is galloping to all-time highs.

But, it’s deeper than that.  The dollar is beginning to firm, the euro is in danger of breaking down.  Bond yields have not been stuffed back into their long-term downtrends.

This VIX explosion is a simple short-covering rally that will take a few weeks to sort out.  It will lop a 10-15% off the Dow Jones and the S&P 500.  They needed it.  The markets also needed a reminder that the central banks will not be there to save the equity markets in the future.

Their primary focus is the currency and the bond markets.

But there is a lesson here for the central banks and the bond markets.  If they think they have everything under control now, just wait until the interest-rate swap and derivatives markets blow up like the VIX just did.

Powell isn’t going to stop raising rates.  The equity markets will absorb this correction and move higher as government stability is questioned in Europe and Trump’s opponents press on to try and take him down for not playing by their rules.

Europe is teetering on the verge of political insanity (see here and here) with Italy’s election in 26 days, Hungary’s right after and the potential for Germany’s Grand Coalition to fail muster with the Social Democrats.

This correction will make stocks look attractive, further putting pressure on sovereign bond yields suppressed by central bank policy.  And once this correction reverses without any technical damage to the indexes (possibly today), the Fed will raise rates sooner than later.

I wouldn’t be surprised if Powell raised rates in March if the data was good, the Dow was back above 25,000 and Merkel forms a government in Germany.

And then all the pressure will shift to the European Central Bank.  Oh, and the VIX will go back to the zero-bound, but for completely different reasons.

END

7. OIL ISSUES

 

Oil and gasoline prices sink after announcement of a huge USA oil production record level even surpassing the Saudis

 

(courtesy zerohedge)

8. EMERGING MARKET

 end
HUMOUR STORY OF THE DAY:  SUCH A PITY

Formula One Bans Sexy Grid Girls Over SJW Objections, Grid Girls Hit Back

Amid a brave new world of sexual consent forms and rage over the “patriarchy,” Formula 1 and its FAI ruling body has decided to ban the use of promotional models, known as “grid girls,” from its events because they don’t “resonate with [the] brand values [of F1] and clearly is at odds with modern day societal norms.”

Whose societal norms? Has anyone checked out a college campus lately?

 

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 1.2352 DOWN .0028/ 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 DEEPLY IN THE  RED 

USA/JAPAN YEN 109.18 DOWN  0.440 (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 1.3902 DOWN .0054 (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 1.2514 UP .0009 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS WEDNESDAY morning in Europe, the Euro FELL by 28 basis points, trading now ABOVE the important 1.08 level RISING to 1.2352; / Last night Shanghai composite CLOSED DOWN 61.39 POINTS OR 1.02 % / Hang Sang CLOSED DOWN 272.22 POINTS OR 0.89% /AUSTRALIA CLOSED up 0.76% / EUROPEAN BOURSES DEEPLY IN THE green  

The NIKKEI: this WEDNESDAY morning CLOSED UP 35.13 POINTS OR 0.16%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 272.22 POINTS OR 0.89% / SHANGHAI CLOSED DOWN 61.39 POINTS OR 1.82% /

Australia BOURSE CLOSED UP 0.87% /

Nikkei (Japan)CLOSED UP 35.13 POINTS OR 0.16%

INDIA’S SENSEX DEEPLY IN THE RED

Gold very early morning trading: 1328.10

silver:$16.68

Early WEDNESDAY morning USA 10 year bond yield: 2.769% !!! DOWN 4 IN POINTS from TUESDAY night in basis points and it is trading WELL ABOVE resistance at 2.27-2.32%. (POLICY FED ERROR)/

The 30 yr bond yield 30.038 DOWN 3 IN BASIS POINTS from TUESDAY night. (POLICY FED ERROR)

USA dollar index early TUESDAY morning: 89.84 UP 25  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: 2.014% DOWN 5  in basis point(s) yield from TUESDAY/

JAPANESE BOND YIELD: +.0.076% DOWN  1/5   in basis points yield from TUESDAY/JAPAN losing control of its yield curve/

SPANISH 10 YR BOND YIELD: 1.415% DOWN 1  IN basis point yield from TUESDAY/

ITALIAN 10 YR BOND YIELD: 1.950 DOWN 4  POINTS in basis point yield from TUESDAY/

the Italian 10 yr bond yield is trading 64 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.745%  UP 5 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 1.2274 DOWN.01060 (Euro DOWN 106 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 109.54 DOWN 0.075 Yen UP 8 basis points/

Great Britain/USA 1.3860 DOWN .0097( POUND DOWN 97 BASIS POINTS)

USA/Canada 1.2560 UP  .0046 Canadian dollar DOWN 46 Basis points AS OIL FELL TO $61.96

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This afternoon, the Euro was DOWN 106 to trade at 1.2274

The Yen FELL to 109.54 for a GAIN of 8 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 FELL BY 97 basis points, trading at 1.3860/

The Canadian dollar FELL by 46 basis points to 1.2550/ WITH WTI OIL FALLING TO : $61.96

The USA/Yuan closed AT 6.2778
the 10 yr Japanese bond yield closed at +.076% DOWN 1/5 BASIS POINTS / yield/
Your closing 10 yr USA bond yield UP 6 IN basis points from TUESDAY at 2.809% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 3.084  UP 4  in basis points on the day /

THE RISE IN BOTH THE 10 YR AND THE 30 YR ARE VERY PROBLEMATIC FOR VALUATIONS

Your closing USA dollar index, 90.22 UP 64 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 UP 138.02 POINTS OR 1.93%
German Dax :CLOSED UP 197.77 POINTS OR 1.60%
Paris Cac CLOSED UP 94.09 POINTS OR 1.82%
Spain IBEX CLOSED UP 166.90 POINTS OR 1.70%

Italian MIB: CLOSED UP 639.17 POINTS OR 2.86%

The Dow closed DOWN 19.42 POINTS OR 0.08%

NASDAQ WAS DOWN 63.90 Points OR 0.90% 4.00 PM EST

WTI Oil price; 61.96 1:00 pm;

Brent Oil: 65.67 1:00 EST

USA /RUSSIAN ROUBLE CROSS: 57.40 UP 44/100 ROUBLES/DOLLAR (ROUBLE LOWER BY 44 BASIS PTS)

TODAY THE GERMAN YIELD RISES TO +.745% FOR THE 10 YR BOND 1.00 PM EST EST

VOLATILITY INDEX:  27.73  CLOSE/down 2.25 BUT RISING THROUGHOUT THE DAY!!

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:$61.73

BRENT: $65/42

USA 10 YR BOND YIELD: 2.836%   THIS RAPID ASSENT IN YIELD IS VERY DANGEROUS/DERIVATIVES START TO BLOW UP/WE ARE BACK WHERE WE STARTED THESE PAST COUPLE OF DAY 

USA 30 YR BOND YIELD: 3.114%/BROKE GUNDLACH’S KEY 3.00% AGAIN WHERE ALL VALUATIONS ON STOCKS BLOW UP/DEADLY

EURO/USA DOLLAR CROSS: 1.2257 UP.0122  DOWN 122 BASIS POINTS

USA/JAPANESE YEN:109.29 DOWN 0.332/ YEN UP 33 BASIS POINTS

USA DOLLAR INDEX: 90.34 UP 76 cent(s)/

The British pound at 5 pm: Great Britain Pound/USA: 1.3869 : UP 0.0087  FROM LAST NIGHT (87 POINTS)

Canadian dollar: 1.2565 UP 61 BASIS pts

German 10 yr bond yield at 5 pm: +0.745%

END

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

TRADING IN GRAPH FORM FOR THE DAY

Yield-Spike Spooks Stocks, Commodities Clubbed As Dollar & Bitcoin Bounce

Seriously…

 

It was ugly in Asia overnight (and US futures were weak before the open)…

 

Just as we saw last Friday, it appears that today’s yield spike in Treasuries (driven by a weak auction and more fiscal largesse in the budget deal) spooked stock investors..

 

 

S&P, Dow, and Nasdaq ended the day red as the whole market slipped into the close (NOTE the idiotic swings in The Dow in the afternoon)…

 

Futures show the wild swings did not stop…

 

Once again, the inverse VIX (XIV) ETF was running the show for The Dow…

 

The Dow was well-managed in the last hour (just as we saw yesterday), critically clinging to its 50DMA this time…

 

 

VIX ended the day lower… but back above  25 into the weak close…

 

 

But for context, S&P’s VIX remains around 70-80% higher than Thursday’s close last week…

AAPL was weak again today as yesterday’s dead cat bounce fades…

 

FANGs also tumbled…

 

Treasury yields spiked notably today… 30Y is now higher on the week but the 5Y/7Y belly remains lower in yield on the week…

With 10Y yields back above 2.85% – where the carnage began on Friday…

 

The Dollar Index surged back to a key support/resistance level today – breaking back above Mnuchin Massacre highs…

 

Commodities were clubbed like a baby seal across the board as the dollar rallied…

 

But WTI/RBOB were really ugly after the surge in production and big build in inventories… back to one-month lows…

 

Cryptocurrencies had a good day (as VIX dropped)…

 

With Bitcoin bouncing back above $8,000…

 

Another down day for aggregate bond and stock holders… Risk Prirty is in trouble…

 

end

Early morning trading

the Dow surges past its key 50 day moving average as the VIX is monkey hammered back down to 20.

The 10 yr Treasury bonds yield:2.794

Dow Surges Above Key Technical Level, VIX Nears 20

Thanks to a short-squeezing XIV…

The Dow is up 300 points and has broken back above its 50-day moving-average.

 

Stocks remain lower on the week though…

 

At the same VIX is getting monkey-hammered lower, nearing 20 once again

end
EARLY THIS AFTERNOON:
EITHER THEY ARE REACTING TO A SUPPOSED SENATE DEAL, OR A BAD AUCTION:
10 yr Bond yield 2.84%,  also VIX: 25

Bonds, Stocks Slammed, Dollar Jumps After Budget Deal, Bad Auction

Take your pick – a dismal 10Y auction that spiked rates to where the carnage started last week, or a budget deal that suspends the debt ceiling and adds to the fiscal recklessness of America’s balance sheet?

Either way, stocks are tanking…

Pushing The Dow back below its 50DMA…

 

VIX is surging back above 25…

And of course XIV continues to run the show…

 

Bonds are tanking…

Remember, Friday’s 666-point selloff started due to yields spiking to 2.85%; they are now at 2.84%

 

Even as the Bill curve normalizes modestly…

 

And the dollar is bid as risk-funding unwinds…

 

 

 

end

 

An analyst who predicted Volmageddon states: don’t even think about buying the dip..where is why!!

(courtesy zerohedge)

Analyst Who Predicted Volmageddon: Don’t Even Think About Buying The Dip

Even though the threat of pervasive selling of volatility was generally ignored by the financial community and broader public, at least until Monday’s historic VIX surge when a cascading short squeeze amid the inverse VIX ETN community unleashed the biggest VIX buying order in history also called “volmageddon”, there were many who warned about the potential threat that the one-way VIX short pile up has created: among them were BarclaysGoldmanMorgan StanleyFasanara CapitalPeter TchirKevin Muir… as well as SocGen’s Roland Kalyoan.

Last November, Kaloyan warned about the risks of overcrowded short positions on volatility. In his Nov. 23 note, the SocGen strategist wrote that he was “less enthusiastic” about equities in 2018 and warned that the number of short positions on volatility could “potentially strongly deteriorate the risk reward profile of equity markets” to wit:

We are less enthusiastic about equities heading into 2018 – We do not see much upside on our major equity targets for the next 12 months. We expect stretched valuations and rising bond  yields to limit equity index performances in 2018 and the prospect of a US economic slowdown in 2020 to further cramp returns in 2019. We also raise some concerns about the quantity of shorts on volatility, which could potentially strongly deteriorate the risk reward profile of equity markets.

Two months later that’s precisely what happened.

Fast forward to today, when he has a similar downbeat message to investors: “don’t even think about buying the stock dip.” Why? Because it was never about vol: that’s just a symptom of all traders being on the same side of the trade, instead it’s all about the 10Y, something we showed earlier today when we observed the sharp adverse reaction to the 10Y yield spiking back over 2.50%.

“Equity investors have had an amazing time over the past four-five years,” Kaloyan told Bloomberg in an interview. “But now, the surge in bond yields is reaching the pain threshold for equities.”

As a reminder, it was the 10% hitting 2.85% last Friday that launched the 666 point Dow Jones dip (followed one day later by a crash nearly double the size). It was also the 10Y’s reaching 2.85% earlier today that halted the surge in the S&P.

Rising bond yields is set to put pressure on already-stretched stock valuations, he said. “With the 10-year Treasury yield reaching the zone of 2.5 percent to 3 percent, it means that fixed income becomes attractive again when compared with equity dividend yields.”

Kaloyan also said investors should “not be fooled by robust corporate earnings momentum as analysts rush to upgrade profit forecasts in part to reflect the tax reform, because the market has already priced in all the good news on that front.”

To be sure, one can counter that Kaloyan has merely become exceptionally bearish: after all this is how we introduced his 2018 outlook back in November: “Get Out Now: SocGen Predicts Market Crash, Bear Market For The S&P.”

But it’s not just Kaloyan: another warning comes from an analyst who until very recently was an unabashed permabull, Morgan Stanley’s chief equity strategist Mike Wilson, who last year had the highest price target for the S&P. Wilson has joined a growing chorus of warnings to get out and not buy the dip, and in a note released this week, wrote that he expects “further downside in the near term as markets continue to digest shocks… This should take several weeks however and we are in no rush to buy this dip as we wait for better technical signals.

end

 

Donald seemed upset with Monday’s big 1100 point drop on “good news”

(courtesy zerohedge)

“Big Mistake”: Trump Slams Market For Going Down On “Good News”

Seemingly furious with the inability to tweet about the market’s relentless meltup anymore after the biggest point drop in Dow Jones history, Trump decided to take a passive-aggressive approach this morning, and the president who less than two years ago called the market one big, fat ugly bubble”, tweeted the only thing he could in the current context, namely stating that the stock market is now dropping on good news, contrary to what it used to do in the past. Trump’s conclusion: this is a “big mistake.”

“In the “old days,” when good news was reported, the Stock Market would go up. Today, when good news is reported, the Stock Market goes down. Big mistake, and we have so much good (great) news about the economy!” Trump tweeted.

In the “old days,” when good news was reported, the Stock Market would go up. Today, when good news is reported, the Stock Market goes down. Big mistake, and we have so much good (great) news about the economy!

While it was not explicit just which “good news” Trump had in mind, the problem is that “good news” at this juncture means higher rates, something the soaring 10Y at 2.80% confirms.

The irony here is two-fold.

First, Trump’s fiscal stimulus plan will make the “good news” even better, further reducing slack, and forcing the Fed to remove even more accommodation by rising rates, which – of course – will send the market reeling, as the S&P is where it is not due to the state of the economy but thanks to $15+ trillion in central bank liquidity, something which Trump clearly was aware of in Sept. 2016 when he told Reuters that “The only thing that is strong is the artificial stock market.” Oh, and he also told the WaPo in April 2016 that  “I think we’re sitting on an economic bubble. A financial bubble.”

He was right.

Second, and more important, is that Trump is already aware of all this: in September 2016 it was Trump himself who said that “The only thing that looks good is the stock market, but if you raise interest rates even a little bit, that’s going to come crashing down”, once again adding for good measure that “we are in a big, fat, ugly bubble.”

And now that Trump finds himself trapped for having taking so much credit for the market’s surge since the election, one wonders if Trump will then admit that the inverse is true: that stocks surge on bad news – i.e. more QE and lower rates as deflation returns… and just how will Trump reconcile that particular non-sequitur in the coming weeks.

The biggest problem for Trump, however, is that he now “owns” the market: which was great for Trump on the way up, but any crash and it will be Trump’s fault, precisely as the real culprit behind the bubble, the Federal Reserve, wanted all along.

 

 

end

 

Dudley reveals that the new Powell put is much lower in price on the Dow.  The Fed may be wishing to engineer a fall of considerable magnitude

(courtesy zerohedge)

“This Wasn’t A Big Drop”: Dudley Reveals That The “Powell Put” Is Far Lower

For those hoping that the “Powell Put” is struck at least as high as Yellen’s, The New York Fed’s Bill Dudley may have just dashed those hopes a little…

As a reminder,on her way out, former Federal Reserve Chair Janet Yellen told CBS that the market’s valuations were highbut said she wasn’t sure if markets were currently in a bubble.

“Well, I don’t want to say too high. But I do want to say high. Price/earnings ratios are near the high end of their historical ranges,” Yellen said.

Now, is that a bubble or is too high? And there it’s very hard to tell. But it is a source of some concern that asset valuations are so high.”

Earlier today, Dallas Federal Reserve Bank President Robert Kaplan joined a chorus of central bank officials who have called the stock market overvalued at recent levels.

Kaplan said the recent selloff is “basically a market event and these things can be healthy.”

St. Louis Fed President James Bullard said that the recent market selloff was predictable because of the elevated valuation of tech stocks.

This is the most predicted selloff of all time because the markets have been up so much and they have had so many days in a row without meaningful down days,” Bullard said, according to the Financial Review.

“So it is probably not surprising that something that has gone up 40% like the S&P tech sector would at some point have a selloff. Before there was a selloff, people said repeatedly some day this will sell off.”

The fact that there was a selloff wasn’t concerning to Bullard, but he admitted that the speed of the decline was probably aided by the role algorithmic tradings plays in the market.

“What is more interesting is it has been very fast, it’s been possibly aided and abetted by technical trading — algorithmic trading. I’d be interested to see an analysis and see what role that played,” Bullard said.

And then, the New York Fed’s Bill Dudley says an equity rout like the one that occurred in recent days “has virtually no consequence for the economic outlook.”

Adding that, if it continued to go down sharply, “that would affect my view,” he says at event in New York, but “this wasn’t that big of a bump in the stock market” and ” is not a big story for central bankers yet.”

“It’s still up sharply from where it was a year ago”

In other words, it’s going to take more than a 13% plunge in 5 days to stir Jay Powell’s Plunge Protection Team into action…

end
Supposedly a Senate two year budget spending deal is close to an agreement without immigration commitment.  That is annoying Pelosi.  Also the huge increase in spending/1/4 trillion dollars increase per year) is bothering the fiscal conservatives
(courtesy zerohedge)

Nancy Pelosi Won’t Back Bipartisan Spending Plan Without Immigration Commitment From Ryan

While Senate leaders are reportedly close to a deal to pass a long-term budget and raise the country’s borrowing limit, House Democratic leader Nancy Pelosi has thrown a wrench in the works by demanding that Speaker Paul Ryan commit to bringing an immigration bill vote to the floor after the Feb. 8 deadline.

Pelosi said Democrats in the House would be “reluctant” to hand over their votes without a commitment from Ryan. During the brinksmanship to reopen the government after last month’s brief shutdown, McConnell promised to open a freewheeling immigration floor debate if no deal has been struck before then. But Ryan refused to make the same commitment, according to the Hill.

Pelosi

Still, Pelosi said the Senate agreement “includes many Democratic priorities,” including disaster aid, opioid funding and parity for defense and non-defense spending.

As part of the deal to end the three-day government shutdown last month, McConnell said that he would bring up immigration legislation after Feb. 8. But Ryan would not make any similar promise that whatever passed in the Senate would be considered by the House.

* * *

Have we finally seen the last continuing resolution?

While nothing is finished until it’s finished, Axios reports that Senate leaders are nearing an agreement on a two-year budget deal – what would be the first full budget of the Trump era – that would also include a provision to raise the debt ceiling.

According to Axios, Senate Democrats and Republicans are increasingly likely that a debt-ceiling increase will be attached to a budget deal that Senate negotiators from both sides hope to announce as soon as today.

Senate

The upshot of this is that DACA will now likely be dealt with on its own terms – and won’t be used as a bargaining chip in a government shutdown showdown.

However, such a deal could infuriate President Donald Trump, who has demanded that any deal on DACA include changes to legal immigration laws to limit chain migration, as well as funding for border security and his signature policy, the southern border wall.

Yesterday, Trump threatened Democratic Senate leader Chuck Schumer by telling a group of reporters “I’d love to see a shutdown” if Congress doesn’t meet his administration’s demands for curbs on legal and illegal immigration.

Here’s Axios:

The two-year deal I expect McConnell and Schumer to strike: busting the budget caps on defense and domestic spending, raising the debt limit, plus funding for disaster relief and funding for community health centers.

Why it matters: That would be a pretty good deal for President Trump. Sure, the fiscal conservatives will hate it, but Trump has never been one of them.

The deal would expose the gap between Schumer and House Democratic Leader Nancy Pelosi: She wanted to hitch the immigration deal to the spending fight, while Schumer appears OK with allowing it to be separate.

According to the Wall Street Journal, the agreement is expected to increase military spending by $80 billion a year and nondefense spending by $63 billion a year – though these numbers are subject to change.

“I’m optimistic that very soon we’ll be able to reach an agreement,” Mr. McConnell told WSJ.

And Schumer added that, while some issues were still being worked out, he and McConnell were “making real progress on a spending bill that would increase the caps for both the military and middle-class priorities on the domestic side.”

As WSJ explains, many Democrats have come around to the idea that they don’t have as much leverage as they once thought, and that holding federal spending hostage until their DACA demands are met simply isn’t practical. Many lawmakers said Tuesday that they were ready to advance a two-year budget deal that would allow lawmakers to write and pass a long-term spending bill, which they had initially hoped to pass in December. Instead, the interlocking fight over immigration tied up the negotiations, forcing lawmakers to pass a series of short-term spending measures.

The capitulation on immigration is particularly helpful for red-state Democrats who are seeking reelection later this year, who believe it will bolster their chances of victory in November. Though this has understandably angered immigration advocates.

Meanwhile in the House, lawmakers last night passed a short-term measure that would fund the government past a midnight Thursday deadline through March 23 – but that bill has little chance of passing the Senate because Democrats oppose it,as the Washington Post points out.

Per WaPo, $80 billion in disaster relief funding would also be included as part of the bill. That provision could help win support from lawmakers representing affected areas in California, Florida and Texas but further repel conservatives concerned about mounting federal spending.

Still, such a deal will likely face stiff opposition from conservatives.

“This is a bad, bad, bad, bad – you could say ‘bad’ a hundred times – deal,” said Rep. Jim Jordan (R-Ohio), a co-founder of the House Freedom Caucus.

“When you put it all together, a quarter-of-a-trillion-dollar increase in discretionary spending – not what we’re supposed to be doing.”

Mark Meadows, the leader of the Freedom Caucus, said such a deal would get “zero support.”

But with two days until the Friday-morning deadline, there isn’t another deal in the works that has the level of bipartisan support that this deal has.

The question now is whether the president will back  his allies in the Freedom caucus and work to kill the bill.

Following the deal reports, the debt-ceiling spread has notably compressed – a sign that T-bill traders are taking the optimistic reports seriously.

Debt

end
the dollar rises on a Bipartisan budget deal to increase spending for the military and non military.  The interim bill funds an extra 400 billion in spending and suspends the debt ceiling.  However an omnibus bill must pass before March 23.  The bond yields rose due to the increased spending.
(courtesy zerohedge)

McConnell, Schumer Announce Bipartisan Budget Deal To Avoid Shutdown

In a deal that will spare the American people the anxiety inducing last-minute political brinksmanship that precipitated last month’s government shutdown, the leaders of Senate Democrats and Republicans have announced a two-year budget deal that will include funding for opioid abuse treatment, badly needed disaster relief and funding for some of President Trump’s infrastructure plan.

According to Bloomberg, the plan will allocate nearly $300 billion more for defense and non-defense spending. While BBG said the deal will likely avert a shutdown and end months of squabbling over funding the federal government, to be sure, leaders in the House haven’t signed on yet.

As it stands, the agreement would raise defense spending by $80 billion over current law in this fiscal year and $85 billion in the one that begins Oct. 1, an unnamed “Congressional official” told Bloomberg. Non-defense spending would rise by $63 billion this year and $68 billion next year.

Of course, Congress must still finish the appropriations for this fiscal year, then complete the 2019 appropriations.

 

Is called a “two year budget deal” because it lifts defense/non-defense spending caps by nearly $400 billion for next 2 yrs. But Congress must still finish APPROPRIATIONS for this fiscal year & also tackle FY ’19 appropriations.

While the agreement provides a framework to lift spending caps, Fox reported that lawmakers will still need to pass an omnibus spending bill by March 23.

 

The Senate package means they still need to approve an omnibus spending package by March 23…to fund the government for the rest of this fiscal year. The interim spending bill would just be PART of the budget caps package.

The compromise also includes defense spending that is a top priority of conservative Republicans, while raising domestic spending by a commensurate amount.

McConnellSchumer

Notably, the deal would also suspend the US debt ceiling for two years.

To secure the agreement, Republican Senate leader Mitch McConnell reiterated his promise to allow a free-wheeling debate over an immigration compromise next week that he said will be “fair to all sides.”

Meanwhile, Senate Democratic Leader Chuck Schumer said the deal was “good for the American people” – a remark likely made with one eye on the polls ahead of November’s mid-term elections.

The leaders also touted the deal as a bipartisan triumph:

*MCCONNELL: BILL IS SIGNIFICANT BIPARTISAN STEP FORWARD

*MCCONNELL: IMMIGRATION DEBATE WILL BE FAIR TO ALL SIDES

*MCCONNELL SAYS DEAL INCLUDES DISASTER AID, INFRASTRUCTURE

*MCCONNELL SAYS NEGOTIATORS AGREE ON BUDGET DEAL*SENATE LEADERS ANNOUNCE BIPARTISAN TWO-YEAR BUDGET DEAL

*MCCONNELL SAYS DEAL ISN’T PERFECT BUT COMMON GROUND FOUND

*MCCONNELL SAYS DEAL ENDS BUDGET CAPS UNDER SEQUESTRATION

*MCCONNELL: DEAL INCLUDES FUNDING FOR OPIOID ABUSE

* * *

“The compromise we’ve reached will ensure that for the first time in years our armed forces will have more of the resources they need” and ensure funding for disaster relief, infrastructure and work to combat opioid abuse, McConnell said from the Senate floor.

* * *

Treasury yields shot higher after the deal thanks to spending increases embedded in the plan:

TRY

The dollar also moved higher…

Dollar

end
This was largely expected: S and P downgrades Wells Fargo due to their transgressions
(courtesy zerohedge)

“Risks Is More Severe Than We Previously Expected”: S&P Downgrades Wells Fargo, Full Report

Just days after the Fed slammed Wells Fargo  on Janet Yellen’s last day, by announcing an unprecedented enforcement action in which it prohibited the bank from “growing”, effectively making it into a quasi-utility until it fixes its lacking internal control system and replaces much of its board, moments ago S&P added insult to injury by downgrading the largest US mortgage lender from A to A-, due to “Prolonged Regulatory And Governance Issues” with a Stable Outlook.

The full S&P report is below:

Wells Fargo & Co. Downgraded To ‘A-/A-2’ From ‘A/A-1’ On Prolonged Regulatory And Governance Issues; Outlook Is Stable

  • On Feb. 2, Wells Fargo & Co. (“Wells”) became subject to a consent order from the Federal Reserve that caps the company’s asset growth until it further enhances its governance and compliance and risk management to the standards required by the regulator.
  • This unprecedented asset cap on a large bank underscores the continued elevated regulatory risks for Wells, and the ongoing ramifications of its retail sales practices issues, as well as the complexities of improving compliance and operational risk controls throughout its very large organization.
  • We are lowering our ratings on Wells by one notch to ‘A-/A-2’, recognizing that the duration and severity of these regulatory, governance, and reputational issues are not commensurate with the previously peer-leading ratings on Wells.
  • Our stable outlook assumes that the company will meet the requirements of the regulatory consent order while maintaining solid market shares in its major businesses as well as a strong financial profile.

NEW YORK (S&P Global Ratings) Feb. 7, 2018–, S&P Global Ratings today lowered its long-term issuer credit rating on Wells Fargo & Co. to ‘A-‘ from ‘A’ and its short-term issuer credit rating to ‘A-2’ from ‘A-1’. At the same time, we lowered our long-term issuer credit rating on Wells Fargo Bank N.A. to ‘A+’ from ‘AA-‘ and our short-term issuer credit rating to ‘A-1’ from ‘A-1+’. The outlooks on both entities are stable.

We also lowered the group credit profile to ‘a’ from ‘a+’.

The downgrade follows news that Wells has entered into a cease-and-desist consent order with the Federal Reserve that restricts the company’s asset growth to its total asset size at the end of 2017 until it sufficiently improves its governance and controls.

Following this punitive regulatory action, our downgrade reflects our view that regulatory risk for Wells is more severe than we previously expected and the process for improving its governance and operational risk policies may take longer than we previously expected.

At the same time, the company may be subject to prolonged reputational issues. The company also announced that it will replace four additional members of its Board of Directors, signaling that the Board continues to be in transition.

Our stable outlook reflects our expectations that Wells will continue to build on progress it has made in strengthening its management structure and controls and meet the provisions of the Fed consent order, including a third-party confirmation of the company’s implementation of its improvement plans by Sept. 30, 2018. We also expect that its competitive positions in key businesses will not be significantly hurt by the regulatory growth restrictions and that it will maintain its good earnings generation and stable asset quality over the next two years. We expect that capital ratios will remain substantially above the company’s longer-term target CET1 ratio of 10%, and that S&P Global’s risk-adjusted capital ratio will remain at the higher end of our 7-10% range that we consider adequate.

We could lower the ratings if Wells does not meet the requirements under the Fed’s regulatory consent order, if the asset cap is not lifted in a reasonable timeframe, or if Wells’ market shares erode significantly–developments we do not currently expect. We might also take negative rating actions if the retail sales practices issue (and other operational control issues) becomes even more material to the company’s overall credit profile. This could occur if we expect substantial additional fines that are large relative to earnings, or if sizable additional operational controls, compliance, or governance weaknesses surface. We could also lower the ratings if customer flows in key businesses show pronounced negative trends for a sustained period, if nonperforming assets or credit losses rise significantly, or if capital ratios decline materially as the result of more aggressive dividend or share-buyback policies.

We could raise the rating if Wells resolves the deficiencies that the Fed identified in its risk management, governance, and compliance practices. In addition, we would expect uncertainties about further regulatory and legal actions to be meaningfully reduced.  Additionally, Wells would need to regain its peer-leading business stability, and maintain above-peers’ risk-adjusted earnings generation, combined with solid capital ratios and good asset quality.

end

 

Revolving or credit card debt now at an all time record: 1.03 trillion dollars

Student loans and auto loans are also at record levels: 2.813 trillion dollars

total: 3.843 trillion dollars

(courtesy zerohedge)

 

Credit Card, Student And Auto Debt All Hit Record Highs In December

 

The US consumer closed out 2017 with a credit bang.

While we reported last month that in November US credit card debt had just surpassed the previous all time high hit in July 2008 just before all hell broke loose when Lehman filed for bankruptcy two months later, there was a slight chance that in December this number had declined after the record surge in November credit-funded spending (which was just revised from $28BN to $31BN).

Well, that did not happen, and while December total consumer credit increased by less than the expected $20BN, it was still an impressive $18.45BN, of which $5.1billion was credit card debt and $13.3 billion non-revolving – or student and auto – loans.

More importantly, with the latest $5.1 billion increase in revolving, or credit card, debt the total is now $1.027.9 trillion, the highest number on record.

Meanwhile, non-revolving credit which with the exception of one definition change month, has never gone down, also hit a new all time high of $2.813 trillion, a monthly increase of $13.34 billion.

What about its components? Well, with everything else going for record highs, we doubt it will be a surprise to anyone that both student debt and auto loans hit a new all time high in the quarter ending December 2017, with $1.491 trillion for the former, and $1.11 trillion for the latter.

So for anyone still wondering why the US economy closed 2017 with an upward GDP burst, here is your answer. The problem is that with the personal savings rate just shy of all time lows…

… and with US consumers deep in the red on their household debt, just what will keep the US economic expansion going from this point on is far less clear, especially if the stock market has now peaked, as recent events suggest.

SWAMP STORIES

Chuck Grassley on the Senate Judiciary Committee released its criminal complaint against Steele and their shoddy FISA application to the FISA court. It contains lies by Steele as well as collaboration (and payment)  from the Clinton campaign.  It also outlines a second dossier started by the Obama administration and that filtered to Steele as well and he used that in his FISA application.

the democrats are dead in the water..

(courtesy zerohedge-

Declassified Grassley Document Confirms FISA Memo’s Explosive Claims

  • declassified document from the Senate Judiciary Committee confirms that the FBI “relied heavily” on an unverified dossier in order to obtain FISA surveillance warrants on one-time Trump advisor Carter Page
  • Unredacted portions of the document reveal the FBI’s extensive involvement with the creator of the dossier, former UK spy Christopher Steele
  • Despite Steele lying to the FBI which led to the agency ending their relationship, they still used his unverified memo and vouched for his reputation to obtain the FISA warrants
  • The unredacted memo clarifies that the FBI notified the FISA court of the dossier’s political origins “to a vaguely limited extent”
  • The FBI has withheld the notes from their meetings with Steele
  • Steele received information for an unpublished second dossier from the Obama State Department led by John Kerry at the time
  • Much of the information in this “Grassley Memo” matches with the contents of the “Nunes Memo” released by the House Intelligence Committee last Friday.

largely unredacted version of a criminal referral made against Fusion GPS operative Christopher Steele reveals several new bombshells, and confirms that the FBI heavily relied on an unverified dossier created by the former UK spy – along with a Yahoo News article which used Steele’s information, to obtain a FISA surveillance warrant on one-time Trump advisor Carter Page. 

a
Christopher Steele

The previously redacted sections of the document notably covered up the FBI’s extensive working relationship with Steele – who was paid $168,000 to create the dossier used in the FISA applications. The fact that he was considered reliable was used as an argument to the FISA court to make up for the fact that the underlying dossier was unverified.

11) CONFIRMS that Comey and the FBI had an extended relationship with Steele and relied heavily on him and the “Mr. Steele himself was considered reliable due to his past work for the Bureau” (page 2)

15) demonstrates that the sole source for the FISA warrant was Christopher Steele. A source that was NEVER VERIFIED. Thus, an unverified source was used to spy on Americans. Grassley puts the FBI and DOJ firmly on the hook for not verifying and for omission. (p7-8)

Indeed, the documents we have reviewed show that the FBI took important investigative steps largely based on Mr. Steele’s information – and relying heavily on his credibility. Specifically, on October 21, 2016, the FBI filed its first warrant application under FISA for Carter Page. [redacted] The bulk of the application consists of allegations against Page that were disclosed to the FBI by Mr. Steele and are also outlined in the Steele dossier. The application appears to contain no additional information corroborating the dossier allegations agast Mr. Page, although it does cite to a news article that appears to be sourced to Mr. Steele’s dossier as well.

“Mr. Steele’s apparent deception seems to have posed significant, material consequences on the FBI’s investigative decisions and representations to the court,” wrote Grassley and Graham.

Moreover, the less-redacted document reveals that the FBI misled the FISA court:

13) FBI lied to the court by omission!
October 2016 FBI suspends relationship with Steele for leaking to the press yet repeatedly tells the court they do not believe it was intentional! reveals Steele leaked PRIOR to Oct 2016. FBI withheld this from the court (pg4)

3) The FBI was still claiming to the FISA Court Steele hadn’t talked to the media when they knew he had. They did this during EACH of the three renewals of the warrant.

Remember, the FBI had to *pretend* to the FISA Court they didn’t know Steele was reporter Michael Isikoff’s source for that Yahoo News article they proffered to the Court to corroborate the dossier allegations about Carter Page.

Or did they?

As I read para 2 of this page, the FISC was informed by the FBI (in the Jan 2017 FISA renewal) that Steele had been suspended because of unauthorised leaks to the media.

QS : how on earth did a FISC judge renew a Title 1 warrant knowing this?

The FISC is also in the frame. https://twitter.com/DaveNYviii/status/961077337382178816 

Political origins

The declassified Grassley Memo also clears up a dispute over the extent to which the FBI notified the FISA court that the Steele dossier was an opposition research document.

The “Nunes memo” released last Friday from the House Intelligence Committee states that “Neither the initial application in October 2016, nor any of the renewals, disclose or reference the role of the DNC, Clinton campaign, or any party/campaign in funding Steele’s efforts, even though the political origins of the Steele dossier were then known to senior and FBI officials.”

Ranking House Intel Committee Democrat Adam Schiff disputed that the FISA court wasn’t notified of the dossier’s political origins, calling it “inaccurate” and stating that the court was aware that there was a “likely political motivation” behind the Steele dossier.

From the Grassley Memo:

“FBI noted to a vaguely limited extent the political origins of the dossier. In footnote 8 the FBI stated that the dossier information was compiled pursuant to the direction of a law firm who had hired an “identified U.S. person” — now known as Glenn Simpson of Fusion GPS.”

The Grassley memo also notes that the FBI never told the FISC that Mr. Steele was “desperate” to see that Mr. Trump was not elected President – as told to the FBI by DOJ official Bruce Ohr, who was demoted for failing to disclose that he met with Fusion GPS and Steele. 

CONFIRMS that Comey and the FBI worked for the Hillary Clinton Campaign. Perkins Coie got paid. got paid. Steele got paid. Are we to believe that Comey did not get paid in some form? Why the slavish devotion? (page 3)

“In short, it appears the FBI relied on admittedly uncorroborated information, funded by and obtained for Secretary Clinton’s presidential campaign, in order to conduct surveillance of an associate of the opposing presidential candidate. It did so based on Mr. Steele’s personal credibility and presumably having faith in his process of obtaining the information.”

To sum up; anti-Trump FBI agents used an unverified dossier from an anti-Trump opposition research firm, Fusion GPS, which commissioned an anti-Trump former British spy to assemble anti-Trump memosusing high level Kremlin officials as sources. To top it off, Hillary Clinton and the DNC paid for it.

Previewing “Phase Two

In an interview following the release of the House Intelligence Committee “Nunes Memo” last Friday detailing the FBI’s FISA abuse, Chairman Devin Nunes (R-CA) said that the investigation leading up to the four-page FISA memo released on Friday was only “phase one,” and that the House Intelligence Committee is currently in the middle of investigating the State Department over their involvement in surveillance abuses.

“We are in the middle of what I call phase two of our investigation, which involves other departments, specifically the State Department and some of the involvement that they had in this,” said Nunes.

The Grassley memo also points to a second anti-Trump dossier which Steele and the Obama State Department involved in, along with Clinton “hatchet man” Cody Shearer.

According to the referral, Steele wrote the additional memo based on anti-Trump information that originated with a foreign source. In a convoluted scheme outlined in the referral, the foreign source gave the information to an unnamed associate of Hillary and Bill Clinton, who then gave the information to an unnamed official in the Obama State Department, who then gave the information to Steele. Steele wrote a report based on the information, but the redacted version of the referral does not say what Steele did with the report after that.

Published accounts in the Guardian and the Washington Post have indicated that Clinton associate Cody Shearer was in contact with Steele about anti-Trump research, and Obama State Department official Jonathan Winer was a connection between Steele and the State Department during the 2016 campaign. –Washington Examiner

Shearer’s late sister was married to Strobe Talbott, the chief authority on Russia in President Bill Clinton’s State Department, while his brother served as an ambassador during the Clinton administration, according to ProPublica.

Read the declassified criminal referral (“Grassley Memo”) below:

 

END

It seems that our two love birds, Strzok and Page kept Obama in the loop as he wanted to know everything that

was going on

(courtesy zerohedge)

FBI ‘Lovers’ New Texts Expose Obama Complicity: He “Wants To Know Everything We’re Doing”

New text messages between FBI lovers Peter Strzok and Lisa Page have now been made public, and, as The Duran’s Alex Christoforou notes, the big reveal is that then-POTUS Barack Obama appears to be in the loop, on the whole ‘destroy Trump’ insurance plan hatched by upper management at the FBI.

The messages include an exchange about preparing talking points for then-FBI Director James Comey to give to President Obama, who wanted “to know everything we’re doing.”

Fox News reports:

Page wrote to Strzok on Sept. 2, 2016 about prepping Comey because “potus wants to know everything we’re doing.”Senate investigators told Fox News this text raises questions about Obama’s personal involvement in the Clinton email investigation.

In texts previously revealed, Strzok and Page have shown their disdain for Republicans in general, as well as Trump, calling him a “f—ing idiot,” among other insults.

Among the newly disclosed texts, Strzok also calls Virginians who voted against then-FBI Deputy Director Andrew McCabe’s wife for a state Senate seat “ignorant hillbillys.” (sic)

That text came from Strzok to Page on Nov. 4, 2015, the day after Jill McCabe lost a hotly contested Virginia state Senate election. Strzok said of the result, “Disappointing, but look at the district map. Loudon is being gentrified, but it’s still largely ignorant hillbilliys. Good for her for running, but curious if she’s energized or never again.”

Sen. Ron Johnson, R-Wis., along with majority staff from the Senate Homeland Security and Governmental Affairs Committee, is releasing the texts, along with a report titled, “The Clinton Email Scandal and the FBI’s Investigation of it.”

The newly uncovered texts reveal a bit more about the timing of the discovery of “hundreds of thousands” of emails on former congressman Anthony Weiner’s laptop, ultimately leading to Comey’s infamous letter to Congress just days before the 2016 presidential election.

On Sept. 28, 2016 Strzok wrote to Page, “Got called up to Andy’s [McCabe] earlier.. hundreds of thousands of emails turned over by Weiner’s atty to sdny [Southern District of New York], includes a ton of material from spouse [Huma Abedin]. Sending team up tomorrow to review… this will never end.” Senate investigators told Fox News this text message raises questions about when FBI officials learned of emails relevant to the Hillary Clinton email investigation on the laptop belonging to Weiner, the husband to Clinton aide Huma Abedin.

It was a full month later, on Oct. 28, 2016 when Comey informed Congress that, “Due to recent developments,” the FBI was reopening its Clinton email investigation.

“In connection with an unrelated case, the FBI has learned of the existence of emails that appear to be pertinent to the investigation. I am writing to inform you that the investigative team briefed me on this yesterday…” Comey said at the time.

The question becomes why Comey was only informed by his investigative team on Oct.  27, if the Clinton emails on Weiner’s laptop were discovered by Sept. 28, at the latest.

The latest batch of text messages between Strzok and Page show more examples of the Deep State opposition to Donald Trump, including a text sent on Election Day 2016 where Page wrote…

“OMG THIS IS F***ING TERRIFYING.”

Strzok replied to Page with a text saying…“Omg, I am so depressed.” Later that month, on November 13, 2016 Page wrote…

“I bought all the president’s men. Figure I need to brush up on watergate.”  

The next day on November 14, 2016, Page wrote…

“God, being here makes me angry. Lots of high fallutin’ national security talk. Meanwhile we have OUR task ahead of us.”

According to Fox News, Page’s meaning here is unclear, but Senate investigators say, coupled with Strzok’s August 15 text about an “insurance policy,” further investigation is warranted to find out what actions the two may have taken.

The last text is from Page to Strzok, and comes on June 23, 2017 when she wrote, “Please don’t ever text me again.”

It’s unclear whether she was mad at her friend, or if she suddenly became aware that they, and their thousands of texts, had been discovered.

Of course, none of this is surprising, but we are sure the new Democrat memo will clear up any misunderstandings.

 

 

end

AFTER HOURS:

TROUBLE FOR TOMORROW AS DOW FUTURES ARE TUMBLING AND VIX IS RISING AGAIN

Futures Sliding After-Hours As Volatility Resumes Rise

Just when you thought it was over, the late-day tumble in stocks and surge in volatility has extended after-hours with Dow futures tumbling and XIV notably lower (VXX higher)…

As XIV drops, VXX is also rising notably..

 

All major US equity futures are down..

Let us close out today’s report with this good offering from Greg Hunter who is interviewing Peter Schiff

(courtesy Greg Hunter/USAWatchdog)

Biggest Ever Debt & Dollar Crisis Coming– Peter Schiff

By Greg Hunter On February 7, 2018 In Market Analysis

By Greg Hunter’s USAWatchdog.com

Money manager Peter Schiff says the wild swings in the market are because of massive central bank money printing and exploding debt. What in the heck is going on? Schiff explains, “The real question is what was going on when the markets were going up? That’s what made no sense. The fact that they are coming back down to earth makes a lot more sense. I think the catalyst for this move (in the stock market) is, ironically, the tax cuts we got because that put the bigger deficits in the spotlight. Now, the deficits are going to go off the charts because we have to replace the lost tax revenue with more debt.”

What about the economy improving under Trump? Schiff says, “Growth hasn’t really picked up, it’s actually slower. This is all nonsense. The economy is not improving. Nothing is happening other than we are going into huge debt. We got tax cuts, and we borrowed the money to pay for them.”

Schiff predicts in the next recession, the Fed will go back to printing even more money. Schiff contends, “There is no question in my mind because the alternative is politically unacceptable to anybody, which would be a worse financial crisis than 2008. When we go back into recession, when we are in a bear market, they are going to go back to the only formula that they think works. They can’t do rate cuts because rates are so low, they can really cut them very much. So, the only real stimulus they can reach for is QE (money printing), but it’s not going to work this time. We are going to overdose on QE. There are no more bubbles that they can blow. They have already blown the mother of all bubbles, and this is it. There is no more. So, I think when they launch QE4, they get a currency crisis. We get a sovereign debt crisis. That is where we are headed. It’s taken a long time to get there, and because of that, the problem has gotten so much bigger. The bubble got so much bigger, so it’s going to be much more disruptive.”

Schiff points out when countries get into financial trouble, they rev up the printing press to pay debts and expenses. Schiff contends, “We are going to do the same thing, and we are going to pay people off in money that has very little value. That is the real risk. That is why the dollar is already weakening. Last year, the dollar had the biggest drop in 14 years. This year, the dollar is off to its worst start since 1987. That tells you something.”

Don’t expect to hear Schiff’s cutting analysis on mainstream media (MSM). He says he’s basically been banned. Why? Schiff says, “Over at CNBC or FOX Business, they just don’t invite me on anymore. I haven’t been on in years. . . . I think that what they are trying to do is actually silence anybody who is not on board with this narrative. If you don’t believe this nonsense about this bull market and this great economy, you are not welcome on their air. They don’t want anybody that’s going to have a contrarian point of view. They used to have me on a long time ago, so, obviously, there has been a change of policy. . . . Everybody agrees that everything is great. They don’t have anybody on to tell the truth. They don’t have anybody on to tell their audience they are being fed a bunch of lies.”

Schiff predicts, “Now, the crash in the dollar that I envisioned (years ago) and the crash in the U.S. economy is going to be much bigger than 2008 and much more dramatic and devastating to the average American as a result of the delay. We haven’t dodged the bullet, we have ended up stepping on an even bigger landmine.”

Schiff contends it’s not a matter of “if” there is going to be a dollar crisis, it’s simply a matter of “when.” Schiff points out, “All measures of gold and silver show it is inexpensive. The reason it is inexpensive is many people have the wrong view of the state of the U.S. economy and where monetary policy is headed. That’s where the value is because so few understand. It’s just like the 2008 financial crisis, people didn’t understand what was coming. I did.”

Join Greg Hunter as he goes One-on-One with Peter Schiff, founder of Euro Pacific Capital and Schiff Gold.

Video Link

https://usawatchdog.com/biggest-ever-debt-dollar- crisis-coming-peter-schiff/

-END-

I will  see you THURSDAY night

HARVEY

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