JUNE 8/UNBELIEVABLE RISE IN SILVER OPEN INTEREST TO THE TUNE OF 9800 CONTRACTS ON TOP OF A HUGE 4800 EFP ISSUANCE AS DEMAND FOR SILVER GOES THROUGH THE ROOF/GOLD DOWN 10 CENTS TO $1298.60/SILVER DOWN 5 CENTS TO $16.73/ALASDAIR MACLEOD: A MUST READ THIS WEEKEND/MICHAEL HOROWITZ IG REPORT WILL BE OUT JUNE 14/TOP SENATE STAFFER ARRESTED FOR LEAKING PLUS DOCUMENTS REMOVED FROM A NEW YORK TIMES REPORTER/THE CROOK MUELLER CHARGES MANAFORT WITH ANOTHER 7 CHARGES OF WITNESSING TAMPERING ETC/..

GOLD: $1298.60 DOWN  $0.10 (COMEX TO COMEX CLOSINGS)

Silver: $16.73 DOWN  5 CENTS (COMEX TO COMEX CLOSINGS)

Closing access prices:

Gold $1298.90

silver: $16.78

For comex gold:

JUNE/

NUMBER OF NOTICES FILED TODAY FOR JUNE CONTRACT:4049 NOTICE(S) FOR 404900 OZ.

TOTAL NOTICES SO FAR 5853 FOR 585300 OZ (18.205 tonnes)

For silver:

JUNE

14 NOTICE(S) FILED TODAY FOR

70,000 OZ/

Total number of notices filed so far this month: 894 for 4,470,000 oz

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Bitcoin: BID $7579/OFFER $7679: down $51(morning)

Bitcoin: BID/ $7593/offer $7693: DOWN $37  (CLOSING/5 PM)

end

First Shanghai gold fix comes at 10 pm est

The second Shanghai gold fix:  2:15 pm

First Shanghai gold fix gold: 10 pm est: 1302.88

NY price  at the same time: 1297.50

PREMIUM TO NY SPOT: $5.48

Second gold fix early this morning: 1301.30

USA gold at the exact same time:1295.85

PREMIUM TO NY SPOT:  $5.45

AGAIN, SHANGHAI REJECTS NEW YORK PRICING.

WE WILL NOT PROVIDE LONDON FIXES AS THEY ARE NOT ACCURATE AS TO WHAT IS GOING ON AT THE SAME TIME FRAME.

Let us have a look at the data for today

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In silver, the total OPEN INTEREST ROSE BY AN ATMOSPHERIC 9773 CONTRACTS FROM  220,693  UP TO 230,525 ACCOMPANYING YESTERDAY’S SMALL 12 CENT RISE IN SILVER PRICING.    WE ARE NOW WITNESSING OUR USUAL AND CUSTOMARY COMEX LONG LIQUIDATION AS WE ENTERED INTO THE NON ACTIVE DELIVERY MONTH OF JUNE AS LONGS PACK THEIR BAGS AND MIGRATE OVER TO LONDON.  WE WERE  NOTIFIED THAT WE HAD A GIGANTIC SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP 4696 EFP’S FOR JULY 85 EFP’S FOR SEPT. AND ZERO FOR ALL  OTHER MONTHS  AND THEREFORE TOTAL ISSUANCE: OF 4781 CONTRACTS. WITH THE TRANSFER OF 4781 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 24-48 HRS IN THE ISSUING OF EFP’S. THE 4781 EFP CONTRACTS TRANSLATES INTO 23.91 MILLION OZ  ACCOMPANYING:

1.THE 12 CENT RISE IN  SILVER PRICE  AT THE COMEX AND

2. THE STRONG AMOUNT OF SILVER OUNCES STANDING FOR JUNE COMEX DELIVERY. (4.480 MILLION OZ) DESPITE IT BEING A NON ACTIVE DELIVERY MONTH.

ACCUMULATION FOR EFP’S/SILVER/J.P.MORGAN’S HOUSE OF BRIBES, / STARTING FROM FIRST DAY NOTICE/FOR MONTH OF JUNE: 

15,718 CONTRACTS (FOR 6 TRADING DAYS TOTAL 15,718 CONTRACTS) OR 78.59 MILLION OZ: (AVERAGE PER DAY: 2619 CONTRACTS OR 13.098 MILLION OZ/DAY)

TO GIVE YOU AN IDEA AS TO THE HUGE SUPPLY THIS MONTH IN SILVER:  SO FAR THIS MONTH:  78.59 MILLION PAPER OZ HAVE MORPHED OVER TO LONDON. THIS REPRESENTS AROUND 11.22% OF ANNUAL GLOBAL PRODUCTION (EX CHINA EX RUSSIA)

ACCUMULATION IN YEAR 2018 TO DATE SILVER EFP’S:            1,392.94      MILLION OZ.

ACCUMULATION FOR JAN 2018:                                               236.879     MILLION OZ

ACCUMULATION FOR FEB 2018:                                               244.95         MILLION OZ

ACCUMULATION FOR MARCH 2018:                                       236.67         MILLION OZ

ACCUMULATION FOR APRIL 2018:                                          385.75         MILLION OZ

ACCUMULATION FOR MAY 2018:                                            210.05       MILLION OZ

RESULT: WE HAD AN ATMOSPHERIC SIZED INCREASE IN COMEX OI SILVER COMEX OF 9852 DESPITE THE TINY 12 CENT RISE IN SILVER PRICE.  WE HAVE NOW ENTERED THE NEW NON ACTIVE MONTH OF JUNE.   THE CME NOTIFIED US THAT IN FACT WE HAD AN HUMONGOUS SIZED EFP ISSUANCE OF 4781 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 (SEE COMEX DATA) . FROM THE CME DATA:  4696 EFP CONTRACTS FOR JULY,  85 EFP’S FOR SEPT. AND ZERO FOR ALL OVER MONTHS   FOR  A DELIVERABLE FORWARD CONTRACT OVER IN LONDON WITH A FIAT BONUS (TOTAL: 4781). TODAY WE GAINED AN OUT OF THIS WORLD: 14,613 TOTAL OI CONTRACTS  ON THE TWO EXCHANGES: i.e.4781 OPEN INTEREST CONTRACTS HEADED FOR LONDON  (EFP’s) TOGETHER WITH AN INCREASE OF 9832  OI COMEX CONTRACTS. AND ALL OF THIS HAPPENED WITH THE SMALL 12 CENT RISE IN PRICE OF SILVER  AND A CLOSING PRICE OF $16.78 WITH RESPECT TO FRIDAY’S TRADING. YET WE STILL HAVE A GIGANTIC AMOUNT OF SILVER STANDING AT THE COMEX FOR DELIVERY IN THIS NON  ACTIVE JUNE DELIVERY MONTH. IT SURE LOOKS LIKE A FAILED BANKER SHORT COVERING EXERCISE!!

In ounces AT THE COMEX, the OI is still represented by OVER 1 BILLION oz i.e. 1.153 MILLION OZ TO BE EXACT or 164% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT JUNE MONTH/ THEY FILED AT THE COMEX: 14 NOTICE(S) FOR 70,000 OZ OF SILVER

IN SILVER, WE HAVE NOW SET THE NEW RECORD OF OPEN INTEREST AT 243,411 AND AGAIN THIS HAS BEEN SET WITH A LOW PRICE OF $16.51  ON APRIL 9.2018. (AND IN LOOKS LIKE WE ARE GOING TO SEE ANOTHER RECORD HIT THIS MONTH)

ON THE DEMAND SIDE WE HAVE THE FOLLOWING:

  1. HUGE AMOUNTS OF SILVER STANDING FOR DELIVERY  (MARCH: 27 MILLION OZ , APRIL: 2.485 MILLION OZ AND MAY: 36.285 MILLION OZ /AND JUNE  (4.480 MILLION OZ SO FAR)
  2. HUGE RECORD OPEN INTEREST IN SILVER 243,411 CONTRACTS (OR 1.217 BILLION OZ/ SET APRIL 9/2018
  3. HUGE ANNUAL EFP’S ISSUANCE EQUAL TO 2.9 BILLION OZ OR 400% OF SILVER ANNUAL PRODUCTION/2017
  4. RECORD SETTING EFP ISSUANCE FOR ANY MONTH IN SILVER; APRIL/2018/ 385.75 MILLION OZ/ (FINAL)

AND YET, WITH THE EXTREMELY HIGH EFP ISSUANCE, WE HAVE A CONTINUAL LOW PRICE OF SILVER DESPITE THE ABOVE HUGE DEMAND.  TO ME THE ONLY ANSWER IS THAT WE HAVE SOVEREIGN  (CHINA) WHO IS ENDEAVOURING TO GOBBLE UP ALL AVAILABLE PHYSICAL SILVER NO MATTER WHERE, EXACTLY WHAT J.P.MORGAN IS DOING. AND IT IS MY BELIEF THAT J.P.MORGAN IS HOLDING ITS SILVER FOR ITS BENEFICIAL OWNER..THE USA GOVERNMENT WHO IN TURN IS HOLDING THAT SILVER FOR CHINA.(FOR A SILVER LOAN REPAYMENT). IT ALSO LOOKS LIKE BANKER CAPITULATION IN SILVER AS THEY STRUGGLE TO REMOVE SOME OF THEIR HUGE OBLIGATIONS.

In gold, the open interest ROSE BY A CONSIDERABLE 5805 CONTRACTS UP TO 450,367 DESPITE THE GAIN IN THE GOLD PRICE/YESTERDAY’S TRADING (RISE OF $1.45).  WE ARE NOW IN THE  ACTIVE DELIVERY MONTH OF JUNE. NO DOUBT THE BOYS ARE CASHING IN THEIR COMEX LONGS TO BEGIN THE PROCESS TO MOVE INTO LONDON FORWARDS.  THE CME RELEASED THE DATA FOR EFP ISSUANCAND IT TOTALED AN ATMOSPHERIC SIZED 19,617 CONTRACTS :   JUNE SAW THE ISSUANCE OF 0 CONTRACTS , AND AUGUST SAW THE ISSUANCE OF:  19,617 CONTRACTS WITH ALL OTHER MONTHS ZERO.  The new OI for the gold complex rests at 450,367. 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. . 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  AND WE ARE WITNESSING DELAYS IN ACTUAL DELIVERIES.

IN ESSENCE WE HAVE AN OUT OF THIS WORLD SIZED OI GAIN IN TOTAL CONTRACTS ON THE TWO EXCHANGES: 4653 OI CONTRACTS INCREASED AT THE COMEX AND AN ATMOSPHERIC SIZED 19,617 EFP OI CONTRACTS WHICH NAVIGATED OVER TO LONDON. THUS  TOTAL OI GAIN: 24,270 CONTRACTS OR 2,427,000 OZ = 75.49 TONNES. AND ALL OF THIS DEMAND OCCURRED WITH A SMALL GAIN OF $1.45 (GO FIGURE!!)

YESTERDAY, WE HAD 11,908  EFP’S ISSUED.

ACCUMULATION OF EFP’S GOLD AT J.P. MORGAN’S HOUSE OF BRIBES: (EXCHANGE FOR PHYSICAL) FOR THE MONTH OF MAY : 66,313 CONTRACTS OR 6,631,300  OZ OR 206.26 TONNES (6 TRADING DAYS AND THUS AVERAGING: 11,052 EFP CONTRACTS PER TRADING DAY OR 1,105,200 OZ/ TRADING DAY),,

TO GIVE YOU AN IDEA AS TO THE HUGE SIZE OF THESE EFP TRANSFERS :  THIS MONTH IN 6 TRADING DAYS IN  TONNES: 206.26 TONNES

TOTAL ANNUAL GOLD PRODUCTION, 2017, THROUGHOUT THE WORLD EX CHINA EX RUSSIA: 2555 TONNES

THUS EFP TRANSFERS REPRESENTS 206.26/2550 x 100% TONNES =  7.93% OF GLOBAL ANNUAL PRODUCTION SO FAR IN APRIL ALONE.***

ACCUMULATION OF GOLD EFP’S YEAR 2018 TO DATE:  3,658.09*  TONNES   *SURPASSED ANNUAL PROD’N

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

ACCUMULATION OF GOLD EFP’S FOR FEBRUARY 2018:         649.45 TONNES

ACCUMULATION OF GOLD EFP’S FOR MARCH 2018:                741.89 TONNES  (22 TRADING DAYS)

ACCUMULATION OF GOLD EFP’S FOR APRIL 2018:                   713.84 TONNES  (21 TRADING DAYS)

ACCUMULATION OF GOLD EFP’S FOR MAY 2018:                     693.80 TONNES ( 22 TRADING DAYS)

WHAT IS ALARMING TO ME, ACCORDING TO OUR LONDON EXPERT ANDREW MAGUIRE IS THAT THESE EFP’S ARE BEING TRANSFERRED TO WHAT ARE CALLED SERIAL FORWARD CONTRACT OBLIGATIONS AND THESE CONTRACTS ARE LESS THAN 14 DAYS.  ANYTHING GREATER THAN 14 DAYS, THESE MUST BE RECORDED AND SENT TO THE COMPTROLLER, GREAT BRITAIN TO MONITOR RISK TO THE BANKING SYSTEM.  IF THIS IS INDEED TRUE, THEN THIS IS A MASSIVE CONSPIRACY TO DEFRAUD AS WE NOW WITNESS A MONSTROUS TOTAL EFP’S ISSUANCE AS IT HEADS INTO THE STRATOSPHERE

Result: A CONSIDERABLE SIZED INCREASE IN OI AT THE COMEX OF 4653 DESPITE THE SMALL $1.45 GAIN  IN PRICE // GOLD TRADING YESTERDAY ($1.45 RISE).  WE ALSO HAD AN ATMOSPHERIC SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 19,617 CONTRACTS AS THESE HAVE ALREADY BEEN NEGOTIATED AND CONFIRMED.   THERE OBVIOUSLY DOES NOT SEEM TO BE MUCH PHYSICAL GOLD AT THE COMEX.  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 19,617 EFP CONTRACTS ISSUED, WE HAD AN  NET RECORD BREAKING GAIN OF 24,270 CONTRACTS IN TOTAL OPEN INTEREST  ON THE TWO EXCHANGES:

19,617 CONTRACTS MOVE TO LONDON AND 4653 CONTRACTS INCREASED AT THE COMEX. (in tonnes, the GAIN in total oi equates to 75.49 TONNES). ..AND BELIEVE IT OR NOT BUT ALL OF THIS DEMAND OCCURRED AT THE COMEX WITH A TINY GAIN OF $1.45 IN TRADING!!!.

we had: 4049 notice(s) filed upon for 404,900 oz of gold at the comex.(12.59 tonnes)

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

GLD...

WITH GOLD  DOWN$0.10  TODAY: / NO CHANGES IN GOLD INVENTORY AT THE GLD/ A

Inventory rests tonight: 832.59 tonnes.

SLV/

WITH SILVER DOWN 5 CENTS TODAY / A BIG CHANGE IN THE SILVER INVENTORY AT  THE SLV /A WITHDRAWAL OF 1.412 MILLION OZ OF SILVER INVENTORY FROM THE SLV/ DESPITE  ALL OF THAT DEMAND!! GO FIGURE

/INVENTORY RESTS AT 319.266 MILLION OZ/

 

end

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

1. Today, we had the open interest in SILVER ROSE BY AN ATMOSPHERIC SIZED 9773 CONTRACTS from  220,693 UP TO 230,466 (AND, CLOSER TO THE  NEW COMEX RECORD SET /APRIL 9/2017 AT 243,411/SILVER PRICE AT THAT DAY: $16.53). THE PREVIOUS RECORD OTHER THAN WAS ESTABLISHED AT: 234,787, SET ON APRIL 21.2017 OVER ONE YEAR AGO.  THE PRICE OF SILVER ON THAT DAY: $17.89.OUR CUSTOMARY MIGRATION OF COMEX LONGS MORPH INTO LONDON FORWARDS CONTINUES AS OUR BANKERS USED THEIR EMERGENCY PROCEDURE TO ISSUE:   (WE DO NOT GET A LOOK AT THESE CONTRACTS AS IT IS PRIVATE BUT THE CFTC DOES AUDIT THEM), 4696 EFP’S FOR JULY, 85 EFP CONTRACTS FOR SEPT. AND ALL OTHER MONTHS: ZERO. TOTAL EFP ISSUANCE: 4781 CONTRACTS . EFP’S GIVE OUR COMEX LONGS A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON.  IF WE TAKE THE  OI GAIN AT THE COMEX OF 9773 CONTRACTS TO THE 4781 OI TRANSFERRED TO LONDON THROUGH EFP’S,  WE OBTAIN AN OUT OF THIS WORLD  GAIN OF 14,554 OPEN INTEREST CONTRACTS.  THUS IN OUNCES, THE GAIN ON THE TWO EXCHANGES:  72.77 MILLION OZ!!! AND THIS GIGANTIC SIZED DEMAND OCCURRED DESPITE JUST A TINY 12 CENT RISE IN PRICE .  THE BANKERS ORCHESTRATED THEIR RAID THROUGHOUT LAST WEEK  DESPERATELY TRYING TO PARE THEIR GIGANTIC OPEN INTEREST SHORT ON BOTH EXCHANGES BUT TO NO AVAIL. JUDGING BY THE RECORD NUMBER OF EFP ISSUANCE DURING APRIL AT 385.75 MILLION OZ AND THE CONTINUAL OI GAIN ON THE TWO EXCHANGES, THE CONSTANT RAIDS, (THAT ARE NOW BEING CALLED UPON BY OUR BANKER FRIENDS  IN AN ATTEMPT TO SHAKE AS MANY SILVER LEAVES FROM THE SILVER TREE AS POSSIBLE) AND JUDGING BY THE RESULTS FROM YESTERDAYS ACTION, THEY HAVE NOT BEEN AT ALL SUCCESSFUL.

RESULT: A STRONG SIZED INCREASE IN SILVER OI AT THE COMEX WITH THE 12 CENT GAIN  IN SILVER PRICING YESTERDAY. BUT WE ALSO HAD ANOTHER STRONG SIZED 4781 EFP’S ISSUED TRANSFERRING COMEX LONGS OVER TO LONDON. TOGETHER WITH THE STRONG  SIZED AMOUNT OF SILVER OUNCES STANDING FOR JUNE, DEMAND FOR PHYSICAL SILVER CONTINUES TO INTENSIFY AS WE WITNESS SEVERE BACKWARDATION IN SILVER IN LONDON.

(report Harvey)

.

2.a) The Shanghai and London gold fix report

(Harvey)

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY: Bloomberg

3. ASIAN AFFAIRS

i)FRIDAY MORNING/THURSDAY NIGHT: Shanghai closed DOWN 42.35 points or 1.36%   /Hang Sang CLOSED UP 554.42 points or 1.76%    / The Nikkei closed DOWN 128.76 POINTS OR 0.56% /Australia’s all ordinaires CLOSED DOWN .21%  /Chinese yuan (ONSHORE) closed DOWN at 6.4120/Oil UP to 65.67 dollars per barrel for WTI and 76.64 for Brent. Stocks in Europe OPENED ALL RED//.  ONSHORE YUAN CLOSED DOWN AT 6.4120 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED DOWN ON THE DOLLAR AT 6.4032/ONSHORE YUAN TRADING WEAKER AGAINST OFFSHORE YUAN/ONSHORE YUAN TRADING MUCH WEAKER AGAINST USA DOLLAR/OFFSHORE YUAN TRADING MUCH WEAKER AGAINST THE DOLLAR /CHINA RETALIATES WITH TARIFFS/ TRUMP RESPONDS TO NEW TARIFFS AND IT NOW LOOKS LIKE A FULL TRADE WAR IS BEGINNING/

 

/NORTH KOREA/SOUTH KOREA

i)North Korea/South Korea/USA

b) REPORT ON JAPAN

3 c CHINA

i

4. EUROPEAN AFFAIRS

Are conditions similar to what happened prior to World War I

a great commentary

 

(courtesy Mish Shedlock/Mishtalk)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

 

6 .GLOBAL ISSUES

Italy/Russia/G7

Italy backs Trump that Russia should be back into the G7

( zerohedge)

7. OIL ISSUES

8. EMERGING MARKET

i

9. PHYSICAL MARKETS

i)A good money.  The Yukon company is minting Yukon themed gold coins because they want to keep the gold within their territory

( Janet Lee Sheriff/CBC news/GATA)

ii)Putin tells Europe that he was right about the USA trade threat( Reuters/GATA)

iii)Another must read from Alasdair Macleod has he talks about the huge debt that envelops the European Union.  He describes that the new government in Italy will have little chance of leaving the EU

courtesy Alasdair Macleod/GoldMoney/GATA)

iv)With the USA undergoing protectionism, the world seeks an alternative to the dollar. No doubt that gold will play a big role in the new norm

( Bloomberg/GATA)

v)A good reason why you should own physical silver
(courtesy Maria Smirnova/Sprott)

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

i)USA DATA

)MARKET DATA

i)Market trading this morning:

the reason for stock markets crashing today:  Trump lashes out at Micron of France and Trudeau of Canada

( zerohedge)

ii)Democrats and socialists will not like this;  Trump moves 1600 detainees to Federal prisons as ICE scrambles to find space
(courtesy zero hedge)

iii)an excellent commentary explaining that the USA Medicare Trust will run out of money in 8 years and social security in 2034

(courtesy zerohedge)

iv)SWAMP STORIES

a)Michael Horowitz will release his report on June 14
( zerohedge)

b)This is a big story!! A top intelligence senate staffer has been arrested in a leak probe.  New York times also had their records seized along with a reporter

( zerohedge)
c)This is getting out of hand:  Mueller charges Manafort with witness tampering and still leaves Hillary scot free
( zerohedge

Let us head over to the comex:

The total gold comex open interest ROSE BY A CONSIDERABLE SIZED 4653 CONTRACTS DOWN to an OI level 450,367 DESPITE THE  TINY RISE IN THE PRICE OF GOLD ($1.45 GAIN/ YESTERDAY’S TRADING).   FOR TWO YEARS STRAIGHT WE HAVE NOTICED THAT ONE WEEK PRIOR TO FIRST DAY NOTICE OF AN ACTIVE DELIVERY MONTH THE COMEX OPEN INTEREST CONTRACTS AND EFP’S NOTICES EXPONENTIALLY INCREASE.   THE CME REPORTS THAT THE BANKERS ISSUED A HUMONGOUS/ATMSPHERIC SIZED  COMEX TRANSFER THROUGH THE EFP ROUTE AS THESE LONGS RECEIVED A DELIVERABLE LONDON FORWARD TOGETHER WITH A FIAT BONUS., THAT IS 19,617 CONTRACTS WERE ISSUED: FOR  JUNE, 0 CONTRACTS ISSUED,  FOR AUGUST 19,617 CONTRACTS AND ZERO FOR ALL OTHER MONTHS:

TOTAL  19.617 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 BASED FORWARD.

ON A NET BASIS IN OPEN INTEREST WE GAINED THE FOLLOWING TODAY ON OUR TWO EXCHANGES: 24,270 OI CONTRACTS IN THAT 19,617 LONGS WERE TRANSFERRED AS FORWARDS TO LONDON AND WE GAINED 4653 COMEX CONTRACTS.

NET GAIN ON THE TWO EXCHANGES: 24,270 contracts OR 2,470,000  OZ OR 75.49 TONNES.

Result: A CONSIDERABLE SIZED INCREASE IN COMEX OPEN INTEREST DESPITE THE TINY GAIN IN PRICE /YESTERDAY  (ENDING UP WITH AN GAIN IN PRICE OF $1.45).  THE  TOTAL OPEN INTEREST GAIN ON THE TWO EXCHANGES: AT AN ATMOSPHERIC 24,270 OI CONTRACTS..

We have now entered the active contract month of JUNE where we LOST 42 contracts and that leaves us with 5216 contracts  We had 10 notices filed upon yesterday so we lost a tiny 32 contracts or 3200 oz will not stand for delivery at the comex as these guys received a sweetened offer to morph into London based forwards.

.JULY saw a GAIN of 26 contracts to stand at 1361.  The next big delivery month after June is August and here the OI ROSE BY 3773 contracts UP to 323,673.

AFTER AUGUST, THE NEXT ACTIVE DELIVERY MONTH IS OCTOBER AND HERE THE OI FELL BY 405 CONTRACTS DOWN TO 11,595 CONTRACTS.

We had 4049 notice (s) filed upon today for 4049 oz at the comex

FOR COMPARISON:

FOR THE JUNE/2017 CONTRACT INITIALLY 19.95 TONNES STOOD FOR DELIVERY.  AT THE END OF JUNE/2017:  9.176 TONNES STOOD AND THE REST MORPHED INTO LONDON BASED FORWARDS.

 

Trading Volumes on the COMEX

PRELIMINARY COMEX VOLUME FOR TODAY: 216,398  contracts

CONFIRMED COMEX VOL. FOR YESTERDAY:  275,519   contracts

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And now for the wild silver comex results.

Total silver OI ROSE BY A HUMONGOUS SIZED 9773 CONTRACTS FROM 220,693 UP TO 230,466 (AND CLOSER TO THE NEW RECORD OI FOR SILVER SET APRIL 9.2018/ 243,411 CONTRACTS)  DESPITE THE TINY 12 CENT GAIN IN SILVER PRICING/ YESTERDAY. SINCE WE ARE NOW INTO THE NON  ACTIVE DELIVERY MONTH OF JUNE, WE WERE  INFORMED THAT WE HAD A GIGANTIC SIZED 4696 EFP CONTRACT ISSUANCE FOR JULY, 85 EFP CONTRACTS FOR SEPT. AND ZERO FOR ALL OTHER MONTHS.  THESE EFPS WERE ISSUED TO COMEX LONGS WHO RECEIVED A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON.  THE TOTAL EFP’S ISSUED: 4781.  ON A NET BASIS WE GAINED 14,554 SILVER OPEN INTEREST CONTRACTS AS WE OBTAINED A 9773 CONTRACT GAIN AT THE COMEX COMBINING WITH THE ADDITION OF 4781 OI CONTRACTS NAVIGATING OVER TO LONDON.

NET GAIN  ON THE TWO EXCHANGES:  14,554 CONTRACTS

AMOUNT STANDING FOR SILVER AT THE COMEX

We are now in the NON active delivery month of JUNE and here the front month FELL BY 73 contracts FALLING TO 16 contracts. We had 93 notices filed upon yesterday so we gained 20 contracts or an additional 100,000 oz will stand in this non active delivery month of June AS SOMEBODY IS IN URGENT NEED OF PHYSICAL ON THIS SIDE OF THE POND AND QUEUE JUMPING CONTINUES IN EARNEST

The next big active delivery month for silver is July and here the OI GAINED 3171 contracts UP to 136,830.  The next delivery month is August and here we GAINED 25 contracts  to stand at 42. The next active delivery month after August for silver is September and here the OI ROSE by 6956 contracts UP to 59,364

We had 14 notice(s) filed for 70,000 OZ for the JUNE 2018 COMEX contract for silver

PLEASE NOTE THE FOLLOWING FOR COMPARISON PURPOSES:

ON MAY 31.2017 WE INITIALLY HAD 396 OPEN INTEREST STAND OR A LARGE 1.98 MILLION OZ 

STOOD FOR METAL.

AT THE CONCLUSION OF JUNE 2017:  4.92 MILLION OZ FINALLY STOOD AS QUEUE JUMPING STARTED IN EARNEST AND IN THE ENSUING YEAR, IT CONTINUED WITH RECKLESS ABANDON INCLUDING WHAT YOU ARE WITNESSING TODAY

INITIAL standings for JUNE/GOLD

JUNE 7/2018.

Gold Ounces
Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz
nil OZ
Deposits to the Dealer Inventory in oz NIL oz
Deposits to the Customer Inventory, in oz nil

oz

No of oz served (contracts) today
4049 notice(s)
 404,900 OZ
No of oz to be served (notices)
1167 contracts
(116,700 oz)
Total monthly oz gold served (contracts) so far this month
5853 notices
585300 OZ
18.205 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
VERY UNUSUAL: gold comex comatose despite June being a huge delivery month.
 TODAY, WE HAVE  NO PULSE AT THE GOLD COMEX
we had 0 kilobar transaction/
We had 0 inventory movement at the dealer accounts
total inventory deposit into the dealer accounts:  NIL  oz
total inventory withdrawals out of dealer accounts; nil oz
we had 0 withdrawal out of the customer account:
total customer withdrawals:  nil oz
to which this landed as a deposit in JPMorgan:
we had 0 customer deposit
total customer deposits: nil oz
we had 0 adjustment(s)

For JUNE:

Today, 0 notice(s) were issued from JPMorgan dealer account and 4049 notices were issued from their client or customer account. The total of all issuance by all participants equates to 4049 contract(s) of which 0 notices were stopped (received) by j.P. Morgan dealer and 1709 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 JUNE. contract month, we take the total number of notices filed so far for the month (5853) x 100 oz or 585,300 oz, to which we add the difference between the open interest for the front month of JUNE. (5216 contracts) minus the number of notices served upon today (4049 x 100 oz per contract) equals 702,000 oz, the number of ounces standing in this active month of JUNE (21.835 tonnes)

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

No of notices served (5853 x 100 oz)  + {(5216)OI for the front month minus the number of notices served upon today (4049 x 100 oz )which equals 702,000 oz standing in this  active delivery month of JUNE .

WE LOST 32 CONTRACTS OR AN ADDITIONAL 3200 OZ WILL NOT STANDING FOR DELIVERY AS THESE GUYS MORPHED INTO LONDON BASED FORWARDS.

“THERE ARE ONLY 20.409 TONNES OF REGISTERED GOLD AVAILABLE FOR DELIVERY AGAINST 21.835 TONNES STANDING  WHICH WILL MAKE THIS JUNE CONTRACT MONTH AN EXTREMELY INTERESTING ONE 

total registered or dealer gold:  656.179/390 oz or 20.409 tonnes
total registered and eligible (customer) gold;   9,014,904.206 oz 280.401 tones

IN THE LAST 18 MONTHS 74 NET TONNES HAS LEFT THE COMEX.

end

And now for silver

AND NOW THE APRIL DELIVERY MONTH

JUNE INITIAL standings/SILVER

JUNE 7/ 2018
Silver Ounces
Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory
 607,703.800 oz
CNT
Scotia
Deposits to the Dealer Inventory
nil;
oz
Deposits to the Customer Inventory
5030.828
Delawarel
oz
No of oz served today (contracts)
14
CONTRACT(S)
(70,000 OZ)
No of oz to be served (notices)
2 contracts
(10,000 oz)
Total monthly oz silver served (contracts) 894 contracts

(4,470,000 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 0 inventory movement at the dealer side of things

total dealer deposits: nil oz

we had 1 deposits into the customer account

i) Into JPMorgan: nil oz

*** JPMorgan for most of 2017 and in 2018 has adding to its inventory almost every single day.

JPMorgan now has 140 million oz of  total silver inventory or 52.3% of all official comex silver. (140 million/268 million)

ii) into Delaware: 5030.828 oz

 

total customer deposits today: 5030.828 oz

we had 2 withdrawals from the customer account;

i) Out of CNT: 407,625.720 oz

ii) Out of Scotia:  200,078.080 oz

total withdrawals;  607,703.800 oz

we had 1  adjustment/

i) Out of HSBC:  5137.80 oz was adjusted out of the dealer and this landed into the customer account of HSBC

total dealer silver:  66.073 million

total dealer + customer silver:  270.322 million oz

The total number of notices filed today for the JUNE. contract month is represented by 14 contract(s) FOR 70,000 oz. To calculate the number of silver ounces that will stand for delivery in JUNE., we take the total number of notices filed for the month so far at 894 x 5,000 oz = 4,470,000 oz to which we add the difference between the open interest for the front month of JUNE. (16) and the number of notices served upon today (14 x 5000 oz) equals the number of ounces standing.

.

Thus the INITIAL standings for silver for the JUNE contract month: 880(notices served so far)x 5000 oz + OI for front month of JUNE(16) -number of notices served upon today (14)x 5000 oz equals 4,480,000 oz of silver standing for the JUNE contract month

We gained 14 contracts or an additional 70,000 oz will stand in this non active delivery month of June as somebody was in urgent need of silver.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

ESTIMATED VOLUME FOR TODAY: 79,859 CONTRACTS

CONFIRMED VOLUME FOR YESTERDAY:144,302 CONTRACTS

YESTERDAY’S CONFIRMED VOLUME OF  144,302 CONTRACTS EQUATES TO 721 MILLION OZ  OR 103% OF ANNUAL GLOBAL PRODUCTION OF SILVER

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

The record level of silver open interest is 234,787 contracts set on April 21./2017 with the price at that day at $18.42
The previous record was 224,540 contracts with the price at that time of $20.44

end

NPV for Sprott 

1. Sprott silver fund (PSLV): NAV FALLS TO -2.83% (JUNE 7/2018)
2. Sprott gold fund (PHYS): premium to NAV RISES TO -0.46% to NAV (JUNE 7/2018 )
Note: Sprott silver trust back into NEGATIVE territory at -2.83%-/Sprott physical gold trust is back into NEGATIVE/ territory at -0.46%/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 -2.44%: NAV 13.54/TRADING 13.20//DISCOUNT 2.47.

END

And now the Gold inventory at the GLD/

JUNE 8/WITH GOLD DOWN 10 CENTS/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY REMAINS AT 832.59 TONNES./

JUNE 7/WITH GOLD UP $1.45, THE CROOKS DECIDED TO RAID AGAIN THE GLD GOLD COOKIE JAR TO THE TUNE OF 3.54 TONNES/GOLD INVENTORY LOWERS TO 832.59 TONNES

JUNE 6/WITH GOLD UP $1.30 TODAY, WE HAD NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 836.13 TONNES

JUNE 5/WITH GOLD UP $5.30 TODAY, WE HAD A TINY WITHDRAWAL OF .29 TONNES AND THAT NO DOUBT WAS TO PAY FOR FEES/836.13 TONNES

JUNE 4/WITH GOLD DOWN ONLY $2.50, THE CROOKS UNLEASHED A MASSIVE WITHDRAWAL OF 10.61 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 836.42 TONNES

JUNE 1/WITH GOLD DOWN $5.10 TODAY, A HUGE 4.42 TONNES OF GOLD WAS WITHDRAWN FROM THE GLD AND THIS WAS USED IN THE RAID TODAY/INVENTORY RESTS AT 847.03 TONNES

MAY 31/WITH GOLD DOWN 1.60/NO CHANGE IN GOLD INVENTORY/INVENTORY REMAINS AT 851.45 TONNES

MAY 30/WITH GOLD UP $2.70: A HUGE DEPOSIT OF 2.95 TONNES INTO THE GLD/INVENTORY REMAINS AT 851.45 TONNES

MAY 29/2018/WITH GOLD DOWN $4.50/ NO CHANGES IN GLD INVENTORY/INVENTORY REMAINS AT 848.50 TONNES

May 25/WITH GOLD UP ON THE WEEK BUT DOWN 80 CENTS TODAY: WE HAD A HUGE 3.54 TONNES OF GOLD WITHDRAWAL FROM THE CROOKED GLD/

MAY 24/WITH GOLD UP $12.40/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 852.04

MAY 22/WITH GOLD UP $1.05/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 852.04 TONNES

MAY 21/WITH GOLD DOWN 50 CENTS/A HUGE CHANGE IN GOLD INVENTORY/A WITHDRAWAL OF 3.24 TONNES FORM GLD INVENTORY/INVENTORY RESTS AT 852.04 TONNES

MAY 18/WITH GOLD UP $1.80/A HUGE CHANGE IN GOLD INVENTORY AT THE GLD/ A DEPOSIT OF 9.11 TONNES INTO GLD INVENTORY/INVENTORY RESTS AT 865.28 TONNES/

GLD WAS ONE MASSIVE FRAUD

May 17/WITH GOLD DOWN $1.75/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 856.17 TONNES

MAY 16./WITH GOLD UP $1.05: NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 856.17 TONNES

MAY 15/WITH GOLD DOWN $27.35, THE CROOKS WITHDREW 10 TONNES OF GOLD FROM THE GLD WHICH WAS USED IN THE RAID TODAY/INVENTORY RESTS AT 856.17 TONNES

MAY 14/ WITH GOLD DOWN $2.35: A HUGE DEPOSIT OF 4.68 TONNES OF GOLD INTO THE GLD and then a withdrawal of 1.48 tonnes /INVENTORY RESTS AT 866.17

A net gain of 3.2 tonnes of gold.

MAY 11/WITH GOLD DOWN $1.75/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 862.96 TONNES/

MAY 10/WITH GOLD UP $9.60/A WITHDRAWAL OF 1.17 TONNES FROM THE GLD/INVENTORY RESTS AT 862.96 TONNES/SUCH CROOKS

MAY 9/WITH GOLD DOWN $0.55/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 864.13 TONNES

MAY 8/WITH GOLD DOWN $0.10/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 864.13 TONNES

MAY 7/WITH GOLD DOWN $0.55/ANOTHER WITHDRAWAL OF 1.47 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 864.13 TONNES

MAY 4/WITH GOLD UP $2.05/A WITHDRAWAL OF 1.13 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 865.60 TONNES

MAY 3/WITH GOLD UP $7.05/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 866.77 TONNES

MAY 2/WITH GOLD DOWN $1.15/ A HUGE WITHDRAWAL OF 4.43 TONNES FROM THE GLD/INVENTORY RESTS AT 866.77 TONNES

MAY 1/WITH GOLD DOWN $12.15/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 871.20 TONNES

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

JUNE 8/2018/ Inventory rests tonight at 832.59 tonnes

*IN LAST 393 TRADING DAYS: 94.00 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 343 TRADING DAYS: A NET 62.30 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.

end

Now the SLV Inventory/

JUNE 8/WITH SILVER DOWN 5 CENTS/A HUGE CHANGE IN SILVER INVENTORY AT THE SLV: A WITHDRAWAL OF 1.412 MILLION OZ//INVENTORY LOWERS TO 319.266 MILLION OZ/

JUNE 7/WITH SILVER UP ANOTHER 12 CENTS/A HUGE CHANGE IN SILVER INVENTORY AT THE SL: A WITHDRAWAL OF 1.883 MILLION OZ WITH ALL OF THAT SILVER DEMAND//INVENTORY RESTS AT 320.678 MILLION OZ/

JUNE 6/WITH SILVER UP 14 CENTS TODAY/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 322.561 MILLION OZ/

JUNE 5/WITH SILVER UP 10 CENTS NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 322.561 MILLION OZ

JUNE 4/WITH SILVER DOWN 1 CENTA SMALL CHANGE IN SILVER INVENTORY AT THE SLV: A DEPOSIT OF 522,000 OZ INTO THE SLV/.INVENTORY RISES AT 322.561 MILLION OZ/

JUNE 1/WITH SILVER DOWN 3 CENTS/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY REMAINS AT 322.039 MILLION OZ/

MAY 31/WITH SILVER DOWN 7 CENTS/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY REMAINS AT 322.039 MILLION OZ/

MAY 30/WITH SILVER UP 16 CENTS: A HUGE CHANGE IN SILVER INVENTORY AT THE SLV/ A DEPOSIT OF 2.071 MILLION OZ/INVENTORY RESTS AT 322.039 MILLION OZ/

MAY 29.2018/ NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 319.968 OZ

May 25/INVENTORY LOWERS TO 319.968 AS WE HAD A WITHDRAWAL OF 1.035 MILLION OZ

MAY 24/WITH SILVER UP 27 CENTS/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 321.003 MILLION OZ/

MAY 22/WITH SILVER UP 6 CENTS/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 321.003 MILLION OZ/

MAY 21/ WITH SILVER UP 5 CENTS/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 321.003 MILLION OZ/

MAY 18/WITH SILVER DOWN 5 CENTS  A SMALL CHANGE IN SILVER INVENTORY AT THE SLV/ A WITHDRAWAL OF 942,000 OZ/INVENTORY RESTS AT 321.003 MILLION OZ/

May 17/WITH GOLD UP 6 CENTS/A SMALL CHANGES IN SILVER INVENTORY AT THE SLV: A DEPOSIT OF 471,000 OZ//INVENTORY RESTS AT 321.945 MILLION OZ/

MAY 16./WITH SILVER UP 10 CENTS/A HUGE DEPOSIT OF 1.883 MILLION OZ OF SILVER INTO THE SLV/INVENTORY RESTS AT 321.474 MILLION OZ

MAY 15/WITH SILVER DOWN 33 CENTS, NO CHANGES AT THE SLV; THE CROOKS COULD NOT BORROW ANY SILVER BECAUSE THERE IS NONE: INVENTORY RESTS AT 319.591 MILLION OZ

MAY 14/WITH SILVER DOWN 10 CENTS/A SMALL CHANGES IN SILVER INVENTORY AT THE SLV/ A WITHDRAWAL OF 858,000 FROM THE SLV/INVENTORY RESTS AT 319.591 MILLION OZ/

MAY 11/WITH SILVER DOWN 2 CENTS/THE CROOKS WITHDREW A MONSTROUS 2.824 MILLION OZ FROM THE SLV INVENTORY/INVENTORY RESTS AT 320.439 MILLION OZ/

MAY 10/WITH SILVER UP 22 CENTS/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 323.263 MILLION OZ/

MAY 9/WITH SILVER UP 6 CENTS/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 323.263 MILLION OZ/

MAY 8/WITH SILVER DOWN 2 CENTS:NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 323.263 MILLION OZ.

MAY 7/WITH SILVER FLAT: A BIG CHANGE IN SILVER INVENTORY AT THE SLV// A WITHDRAWAL OF 942,000 OZ OF SILVER FROM THE SLV INVENTORY/INVENTORY RESTS AT 323.263 MILLION OZ/

MAY4/WITH SILVER UP 5 CENTS/A BIG CHANGES IN SILVER INVENTORY AT THE SLV/ A DEPOSIT OF 1.224 MILLION OZ/INVENTORY RESTS AT 324.205 MILLION OZ/

MAY 2/WITH SILVER UP 24 CENTS/A HUGE CHANGE IN SILVER INVENTORY AT THE SLV// A DEPOSIT OF 6.082 MILLION OZ INTO THE SLV/INVENTORY RESTS AT 322.981 MILLION OZ/

MAY 1/WITH SILVER DOWN 24 CENTS/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 316.899 MILLION OZ/

JUNE 7/2018:

Inventory 319.266 million oz

end

6 Month MM GOFO 2.16/ and libor 6 month duration 2.49

Indicative gold forward offer rate for a 6 month duration/calculation:

G0FO+ 2.16%

libor 2.49 FOR 6 MONTHS/

GOLD LENDING RATE: .33%

XXXXXXXX

12 Month MM GOFO
+ 2.75%

LIBOR FOR 12 MONTH DURATION: 2.60

GOFO = LIBOR – GOLD LENDING RATE

GOLD LENDING RATE  = +.15

end

 

The Commitment of Traders Report

Please do me a favour:  ignore the following COT report as it has no beneficial value

Silver

The large specs increased their long positions by 2,004 contracts and increased(transferred) their shorts by 23 contracts.

*The commercials increased their longs by 1,684 contracts and increased(transferred) their shorts by 566 contracts.

*The small specs reduced(transferred) their longs by 113 contracts and reduced (transferred) their shorts by 382 contracts.

Gold

*The large specs reduced (transferred) their long positions by 8,331 contracts and decreased (transferred) their shorts by 4,617 contracts.

*The commercials reduced (transferred) their longs by 7,337 contracts and decreased (transferred) their shorts by 9,679 contracts.

*The small specs reduced (transferred) their longs by 843 contracts and reduced (transferred) their shorts by 2,215 contracts.

end

Major gold/silver trading /commentaries for FRIDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Without Gold I Would Have Starved To Death” – ECB Governor

– “Without gold I would have starved to death” – Ewald Nowotny, governor of Austrian central bank and member of ECB’s governing council
– “I was born in 1944. When I was a baby, my mother could only buy food because she still had some gold coins…”
– “When the going gets tough, gold becomes the ultimate money” reports Die Presse

In the vault: Austrian Central Bank director Kurt Pribil, ECB Governor Nowotny and “Press” editor Nikolaus Jilch. – The Press (Clemens Fabry)

by Die Presse Editor Nikolaus Jilch

Under central bank governor Ewald Nowotny, Austria has brought back half of its gold reserves into the country. But why? What is the fascination of gold today? Why does a central bank store tons of shiny metal in their cellars? And what makes Nowotny himself gold? “Die Presse” visited the gold reserves below the central bank with the governor – and discussed their importance in an interview.

The press: Almost every person has a personal relationship with the gold. How is yours?

Ewald Nowotny: I grew up in a purely urban family. We had no relatives in the country. I’m born in 1944. When I was a baby, my mother could only buy food because she still had some gold coins. Without gold I would have starved. She always told me that. Therefore, this generation already has a certain gold affinity. In extreme times of crisis, this is one of the few things left to be accepted. Gold was the only thing left to the people of the city at that time. Before the silver cutlery was also traded at the farmer.

Are you yourself invested in gold?

Full article for subscribers of Die Presse

 

News and Commentary

Chinese gold demand continues to rise yoy (Sharps Pixley)

Asian Stocks Slide; Treasury Yields Pare Decline (Bloomberg)

Gold steady as investors wait for next week’s Fed meeting  (Reuters)

Gold futures mark highest finish about a week (Marketwatch)

U.S. weekly jobless claims drop as labor market picks up steam (Reuters)


Source: Bloomberg

Central banks should consider offering accounts to everyone (Economist.com)

These 6 charts show why gold prices may soon see a big rally(Economic Times)

Gold Market Dreams of Blockchain Supply Chain by Next Year (Bloomberg)

Putin tells Europe ‘I told you so’ about U.S. trade threat (Reuters)

U.S. unilateralism invites world to seek alternative to dollar – Lazard CEO (Bloomberg)

Gold Prices (LBMA AM)

07 Jun: USD 1,298.30, GBP 963.86 & EUR 1,097.97 per ounce
06 Jun: USD 1,295.25, GBP 964.57 & EUR 1,101.48 per ounce
05 Jun: USD 1,292.25, GBP 966.73 & EUR 1,105.13 per ounce
04 Jun: USD 1,294.65, GBP 966.46 & EUR 1,103.82 per ounce
01 Jun: USD 1,299.15, GBP 976.83 & EUR 1,111.42 per ounce
31 May: USD 1,303.50, GBP 978.54 & EUR 1,113.58 per ounce
30 May: USD 1,298.60, GBP 979.27 & EUR 1,119.26 per ounce

Silver Prices (LBMA)

07 Jun: USD 16.74, GBP 12.44 & EUR 14.15 per ounce
06 Jun: USD 16.55, GBP 12.33 & EUR 14.06 per ounce
05 Jun: USD 16.39, GBP 12.26 & EUR 14.03 per ounce
04 Jun: USD 16.44, GBP 12.29 & EUR 14.03 per ounce
01 Jun: USD 16.42, GBP 12.32 & EUR 14.02 per ounce
31 May: USD 16.55, GBP 12.42 & EUR 14.17 per ounce
30 May: USD 16.37, GBP 12.33 & EUR 14.08 per ounce


Recent Market Updates

– Swiss Government Pension Fund To Buy Gold Bars Worth Some €600 Million
– Turkey Uses Gold Bullion To Stabilise Its Currency And Economy
– Case for Gold in a Diversified Investment Portfolio
– Get “Positioned In Gold” Now As “You Will Not Have Time To Get Positioned” Later
– Consequences of Ignoring Economic Reality Are Dangerous
– Are Gold And Silver Bullion Obsolete In The Crypto Age?
– In Gold we Trust: 3 Important Factors Leading to the “Turning of the Monetary Tides”
– Silver Trading in Tight $1 Range As Pressure Builds For A Breakout
– Gold Back Above $1300 – Trump Cancels Historic Summit – Silver “Ready To Breakout”
– Gold Price Surges To Record In Turkey and Other Emerging Markets as Currencies Collapse
– Gold Rarity and Value Shown In Stunning Gold Visualisations
– Gold Looks A Better Investment Than UK Property
– Gold 2048: The Next 30 Years For Gold

 

Mark O’Byrne

end

ANDREW MAGUIRE’S KINESIS WHICH IS A”BITCOIN’ BACKED 100% BY ALLOCATED GOLD AND SILVER

 

Andrew Maguire’s Kinesis money which is a “bitcoin” but backed 100% by allocated gold and silver is set to go.

it think it would be a great idea to look at this!

please read at:  https://kinesis.money/#/

(Andrew Maguire)

 END
A good money.  The Yukon company is minting Yukon themed gold coins because they want to keep the gold within their teritory
(courtesy Janet Lee Sheriff/CBC news/GATA)

Exploration company Golden Predator mints

Yukon- themed gold coins

 Section: 

Janet Lee-Sheriff, cited below, organized GATA’s Yukon conference in 2005 and its London conference in 2011.

* * *

It’s Not Pocket Change — It’s a Pure Yukon Gold Coin

Exploration Company Golden Predator Has Minted Some Coins of Yukon Gold, with Kaska Artwork

From the Canadian Broadcasting Co., Toronto
Wednesday, June 6, 2018

http://www.cbc.ca/news/canada/north/yukon-gold-coin-golden-predator-1.46…

An exploration company is hoping to keep more Yukon gold in the territory — so it’s started minting some new coins, to sell.

“The Royal Canadian Mint started this way. After the Klondike gold rush, a lot of the gold was leaving Canada — and the miners and everybody else were complaining that their money was leaving,” said Janet Lee-Sheriff, CEO of B.C.-based exploration company Golden Predator, which owns the 3 Aces Project near Watson Lake.

So we’re just taking the same concept and bringing it into the Yukon and trying to keep the money locally.”

The company has produced two coins, and they’re not likely to turn up in your pocket change. A 1-ounce gold coin — about the size of a toonie — will sell for about $1,800, while a half-ounce coin will go for about $970.

Those prices may fluctuate along with the price of gold.

One side of the coins depicts a famous Klondike scene — a line of stampeders ascending the “golden staircase” of the Chilkoot Pass — while the other side has original Kaska artwork from Miranda Lane.

Lane, a member of the Kaska Nation, won Golden Predator’s My Kaska Nation art contest last year, to design the coins. She called her piece True North Moose.

Lee-Sheriff says Golden Predator hopes to have similar contests annually “to highlight Kaska art.”

The coins also say “Yukon Mint,” although Lee-Sheriff says the coins are actually produced outside the territory.

The first batch of Yukon gold coins will be for sale in Yukon starting on June 21 — National Indigenous Peoples Day. Some of the profits from coin sales will be shared with the Kaska Nation, Lee-Sheriff said.

END

Putin tells Europe that he was right about the USA trade threat

(courtesy Reuters/GATA)

Putin tells Europe ‘I told you so’ about U.S. trade threat

 Section: 

By Christian Lowe and Gabrielle Tétrault-Farber
Reuters
Thursday, June 7, 2018

MOSCOW — Russian President Vladimir Putin said today that he had warned European countries years ago about the risk of the United States imposing its rules on others, and that they were now paying the price for ignoring him.

Speaking during an annual live television phone-in with the Russian people, Putin likened the tariffs that Washington imposed last week on steel and aluminum imports from Canada, Mexico and the European Union to economic sanctions.

… 

“It appears our partners thought that this would never affect them, this counterproductive politics of restrictions and sanctions. But now we are seeing that this is happening.”

The president said he had warned in a speech in Munich in 2007 about a growing U.S. sense of exceptionalism and the risk of it imposing its own rules on other countries.

“That is exactly what is happening now. Nobody wanted to listen, and nobody did anything to stop this from developing. Well, there you go. You’ve been hit. Dinner is served … please sit down and eat.”

… For the remainder of the report:

https://www.reuters.com/article/us-russia-putin/putin-tells-europe-on-u-…

END

Another must read from Alasdair Macleod has he talks about the huge debt that envelops the European Union.  He describes that the new government in Italy will have little chance of leaving the EU

courtesy Alasdair Macleod/GoldMoney/GATA)

Alasdair Macleod: The gently-rotting, debt-ridden European Union

 Section: 

By Alasdair Macleod
GoldMoney, St. Helier, Jersey, Channel Islands
Thursday, June 7, 2018

The Euroepan Union as a political construction is in a state of terminal decay. We know this for one reason and one reason alone: Its core principle is the state is superior to its people. A system of government can only work over the longer term if it recognizes that it is the servant of the people, not its master. It matters not what electoral system is in place, so long as this principle is adhered to.

The EU executive in Brussels does not accept electoral primacy. It shares with Marxist communism a belief in statist primacy instead. The only difference between the two creeds is Marx planned to rule the world, while Brussels is on the way to ruling Europe.

The methods of satisfying their objectives differ. Marx advocated civil war on a global scale to destroy capitalism and the bourgeoisie, while Brussels has progressively taken on powers that marginalise national parliaments. Both creeds share a belief in an all-powerful executive. The comparison with Marxism does not flatter the EU, and suggests it has a limited life and that we may be on the verge of seeing the EU beginning to disintegrate. Despite economic evolution in the rest of the world, like Marxian communists Brussels is stuck with a failing economic and political creed. …

… For the remainder of the commentary:

https://www.goldmoney.com/research/goldmoney-insights/the-gently-rotting

end

Alasdair Macleod…

 

The Gently Rotting Debt-Ridden EU

The EU as a political construction is in a state of terminal decay. We know this for one reason and one reason alone: its core principal is the state is superior to its people. A system of government can only work over the longer term if it recognises that it is the servant of the people, not its master. It matters not what electoral system is in place, so long as this principal is adhered to.

The EU executive in Brussels does not accept electoral primacy. It shares with Marxist communism a belief in statist primacy instead. The only difference between the two creeds is Marx planned to rule the world, while Brussels is on the way to ruling Europe.

The methods of satisfying their objectives differ. Marx advocated civil war on a global scale to destroy capitalism and the bourgeoisie, while Brussels has progressively taken on powers that marginalise national parliaments. Both creeds share a belief in an all-powerful executive. The comparison with Marxism does not flatter the EU, and suggests it has a limited life and that we may be on the verge of seeing the EU beginning to disintegrate. Despite economic evolution in the rest of the world, like Marxian communists Brussels is stuck with a failing economic and political creed.

It has no mechanism for compromise or adaptation. A rebellion from Greece was put down, the British voted for Brexit, which is proving impossible to negotiate, and now Italy thinks it can partially escape from this statist version of Hotel California. The Italians are making huge mistakes. The rebel parties forming a coalition government want to stay in the EU but are looking to exit from the euro. Putting aside the impossibility of change for a moment, they have it the wrong way around. If they are to achieve anything, they should be exiting the EU and staying in the euro. Let me explain, starting with the politics, before considering the economics.

As stated above, the EU is quasi-Marxist, placing the state above the people. The Italian government has collaborated with Brussels to enslave its own people as vassals of the EU super-state. If there is a revolt in Italy, this is what the electorate is rebelling against. Faceless eurocrats tell the Italian people what to do and what to think. The people are discontent with both the super-state and their own weak governments.

The two parties forming the latest coalition are too frightened to blame the EU, and instead propose to beg for debt forgiveness and say they are considering leaving the euro. But without a clear vision, and understanding why the Italian electorate is discontent, this coalition will turn out, in one of Boris Johnson’s memorable phrases, to be comprised of little more than supine protoplasmic invertebrate jellies. Greece is the precedent. This makes it easy for the EU to deal with the Italians. They will get nothing.

The economic argument, that Italy would be better with her own currency, is insane. With a history of weak irresponsible governments, it is far better for the currency to be beyond Italy’s control. However, Keynesian commentators are sympathetic to the weak currency argument, believing that the euro was constructed for the benefit of Germany. Italy, along with the other Mediterranean members, is said to be paying the price. This, they allege, is the fatal flaw in the one-size-fits-all euro. This interpretation of the monetary situation is baloney. It ignores the fact that Italy’s debt rocketed after the formation of the euro, because the cost of borrowing for Italy fell towards Germany’s borrowing rates, thanks to the guarantee of eventual unification. The difference was Germany borrowed to invest in production, while the Italian government borrowed to spend. The problem today is the profligacy of the past has caught up with Italy, and its government must stop borrowing.

Setting up a lira alternative, or the mooted mini-BOTs, is an ill thought out concept that only makes matters worse. The mini-BOT proposal appears to be for an issue of certificates backed by future tax revenues to be used to pay the government’s creditors. They would then circulate like bills drawn on the state, but at a discount to reflect both their time value and the fact they are not euros. It seems to not occur to the promoters of schemes like this that the state’s creditors will insist on payment in euros.

Promoters of schemes like mini-BOTs are monetary cranks, incentivised by a desire to avoid reality. The Italian government has been using this sort of hocus-pocus for years, mostly with securitisation of future income streams, such as the national lottery. Mini-BOTs appear to be a proposal for just one more throw of the dice.

It’s hardly surprising that the Italian people are fed up with their establishment and feel they can only collectively undermine it by voting against it at election time. But it is too late, because the state, and therefore the banks, are already irretrievably bust, a fact barely concealed by the ECB’s funding of the Italian government at near-zero interest rates through the purchase of government bonds. Not only is the ECB in denial over Italy’s financial situation, but also Italy is firmly imprisoned.

EU banks are insolvent as well

The disruption of an Italian withdrawal from the euro would be fatal for the EU’s banking system on at least four levels.

  • The support from the ECB for the Italian banks would be withdrawn, which would have the potential to allow a cascade of bank failures in Italy to develop, either as a result of bad debts crystallising within the system, or due to balance sheet deterioration from falling Italian government bond prices.
  • Problems for banks will arise when past loans remain denominated in euros, while their balance sheets are transitioned into a new, weakening currency. The Italian banks lack the margins to weather lop-sided balance sheets, whose assets are denominated in a declining currency relative to the currency of their liabilities.
  • There will be a rush for residents in other Eurozone countries to reduce and eliminate their Italian commitments, amounting to a banking run against the whole country. The only political solution would be to impose draconian capital controls between Italy and the rest of the world, including other EU member states.
  • Lastly, there is the threat to the ECB and the euro-system itself.

These require little elaboration, expect perhaps for the threat to the ECB and the euro-system. The ECB has been buying large quantities of Italian bonds, effectively financing the Italian government’s excess spending, at yields that are ridiculously low. In effect, the ECB has put itself in an impossible position, and as the Italian situation worsens, the debate over the fate of TARGET2 imbalances is bound to intensify. These are shown in the chart below, which is of balances at end-March.

Graph numero uno

So long as the euro-system holds together, we are reassured that these imbalances do not matter. However, with the Italian central bank in debt to the system to the tune of a net €447bn, how these imbalances would be dealt with on an Italian exit from the euro without a collapse of the system is an interesting question. And it is worth noting that Spain’s central bank is also in the hole for €390bn, just in case the Spanish electorate, or even the Catalans or Basques get ideas of leaving as well.

The Bundesbank is owed a net €896bn and will be extremely nervous about Italy. The ECB itself also owes a net €235bn to all the national central banks. When the ECB buys Italian government debt, the Banca d’Italia acts on its behalf. The Italian bonds are held at the Banca d’Italia, and the money is owed to it. To the extent the ECB has bought Italian bonds, the overall negative balance at the Banca d’Italia is reduced, so its deficits with the other national banks in the system are actually greater than the €447bn shown, by the amount owed to it by the ECB.

In short, it is hard to see how Italy can leave the euro without the ECB having to formally guarantee all TARGET2 deficits. It is not impossible and the guarantee is already implied, but the ECB won’t want anyone questioning its own solvency, so we can safely assume an exit will not be permitted, for one simple reason: the system and the banks in it are only solvent so long as the system is unchallenged.

The question over Italy’s euro membership may not arise anyway, because the new coalition does not yet know what it wants. The Italians must also be dissuaded from their desire for debt forgiveness, for the same reasons the Greeks were similarly deterred. And as the Greeks found, trying to negotiate with the EU and the ECB was like talking to a brick wall. The Italians will experience the same difficulties. We can dismiss any idea that because Italy is a far bigger problem, they have negotiating clout. A brick wall remains a brick wall.

So far as Brussels and Frankfurt (the home of the ECB) are concerned, they are always in the right. The European project and the euro are more important than the individual member nations, and their electorates have no say in the matter. We often take this to be arrogance, which is a mistake. It is worse: like Marxists, the eurocrats have unarguable conviction on their side. Across the table will sit the Italians, with no political beliefs worth mentioning, and all too readily frightened by the consequences of their own actions.

This is the way the EU works. Inevitably, in a faceless statist system such as this there are always problems at the national level to deal with. Then there are localised difficulties, such as Deutsche Bank, whose share price tells us it is failing. But in that event, it will doubtless be rescued because of its enormous derivative exposure, the containment of eurozone systemic risk, and German pride. The ECB has shown great skill at bluffing its way through these ands other problems and is likely to continue to succeed in doing so, except for one particular circumstance, which is the crisis stage of the credit cycle.

The credit cycle will be the EU’s undoing

It is a common misconception that the world has a business cycle: that merely puts the blame on the private sector for periodic booms and busts. The truth is every boom and bust has its origins in central bank monetary policy and fractional reserve banking. A central bank first attempts to stimulate the economy with low interest rates, having injected base money into the economy to rescue the banks from the previous crisis. The central bank continues to suppress interest rates, inflating assets and facilitating the financing of government deficits.

This is followed by the expansion of bank credit as banks recognise that trading conditions in the non-financial economy have improved. Price inflation unexpectedly but inevitably increases, and interest rates have to rise. They rise to the point where earlier malinvestments begin to be liquidated and a loan repayment crisis develops in financial markets.

It is fundamentally a credit cycle, not a business one. Central bankers do not, with very few exceptions, understand they are the cause. And the few central bankers who do understand are unable to influence monetary policy by enough to change it. By not understanding that they create the crisis themselves, central bankers believe they can control all financial risks through regulation and intervention, which is why they are always taken by surprise when a credit crisis hits them.

For these reasons we know it is only a matter of time before the world faces another credit crisis. The next one is likely to be unprecedented in its violence, even exceeding that of the last one in 2008/09, because of the scale of additional monetary reflation that has taken place over the last ten years. The further accumulation of debt in the intervening period also means that a smaller increase in price inflation, and therefore a lower height for interest rates will trigger it.

My current expectation is that a global debt liquidation and credit crisis is not far away and will occur by the end of Q1 in 2019, perhaps even by the end of this year. The problem is a global one and we know not where it will break. But once it does, the ECB and the euro will possibly face the most violent deflation in modern history, even exceeding the global slump of the 1930s. We know in advance what the supposed solution will be: monetary hyperinflation to bail out the banks, governments and the indebted.

The effects on prices in the Eurozone are unlikely to be as delayed as they have been in the current cycle, partly because of the sheer scale of the issuance of new money and credit required to stabilise the financial system, partly because the euro is subordinate to the dollar as a safe-haven currency, and partly because of its limited history as a medium of exchange.

Brexit

If I am only half right over the timing of the next credit crisis, it will be at the same approximate time as Britain is due to exit the EU in March 2019. Logically, Brexit should not be deflected by the credit crisis and the Eurozone catastrophe, but the statist instincts of the British government could be to put the whole Brexit process on hold in the interests of global government unity, at least while the management of the larger credit crisis is addressed. The coordination of policy at the G20 level seems bound to take precedence over potentially disruptive political issues such as Brexit.

So, despite the referendum commitment, even Britain may continue to be trapped in the rotting EU super-state for a while longer, defying the wishes of the electorate. As foreshadowed in Hayek’s The Road to Serfdom, the EU and the British government will take the opportunity from crisis to increase their control over their individual peoples, eroding further the limited freedoms left to them.

Meanwhile, the British find themselves in a similar position to the Italians. The EU simply refuses to accept the British electoral mandate, because so far as it is concerned, it is not a matter for British voters. Brussels is reassured that there are powerful forces in the British establishment that will undermine Britain’s negotiating position. They are confident that Britain will never leave the EU, because it won’t be allowed. Consequently the British Brexit team finds it is trying to negotiate with that uncompromising brick wall.

The Marxist-like certainty in the EU’s position compares with the British lack of commitment to any sound position. The Conservative government only pays lip service to free markets, unwilling to argue the case for them. Nor can it stand up for the principal of democratic supremacy of the British electorate, which, despite the mantra of acting on the instructions from the referendum, it appears willing to compromise. It turns out that despite the efforts of Brexiteers such as Boris Johnson, the British government, like the Italians government, turns out to be a supine protoplasmic invertebrate jelly, which places its short-term survival instincts above its electoral responsibilities.

At this point, we can only surmise that, like the old Soviet Union, the EU’s political grip remains as firm as ever. The problem is that the denial of free markets and the supremacy of the super-state are gently rotting the EU from within. The Euro-sceptic instinct to abandon it for a more progressive world outside the EU is surely right. But the EU’s precariousness will only be fully exposed by the next credit crisis and the ECB’s monetary response to it, which will end up collapsing the euro.

END

With the USA undergoing protectionism, the world seeks an alternative to the dollar. No doubt that gold will play a big role in the new norm

(courtesy Bloomberg/GATA)

U.S. unilateralism invites world to seek alternative to dollar, Lazard CEO says

 Section: 

Lazard CEO Says Crypto Shows Reserve Status Isn’t Assured for the U.S. Dollar

By Sonali Basak
Bloomberg News
Thursday, June 7, 2018

U.S. isolationism could undermine the dollar’s status as the world’s reserve currency, Lazard Ltd. Chief Executive Officer Ken Jacobs said.

“To the extent that we have a unilateral foreign policy and a unilateral trade policy, we’re sort of tempting the world to find an alternative,” Jacobs said in a Bloomberg Television interview aired today. “Probably the greatest demonstration of soft power is the fact that the U.S. has the reserve currency of the world.”

The U.S. dollar has been the international currency of choice for more than half a century because of its stability in global markets. That keeps a lid on borrowing costs in America and helps fund the U.S. budget deficit as trading partners place their dollars in Treasuries. Threats to that status are still far off, Jacobs said, because the main currencies in Europe and China are unlikely replacements.

Still, “there’s enough technology out in the world today with cryptocurrency and changes going on that you can imagine, if you let your mind wander a little bit, that something becomes an alternative in the future,” he said. …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2018-06-07/u-s-tempts-dollar-s-f…

END

A good reason why you should own physical silver

(courtesy Maria Smirnova/Sprott)

Sprott Silver Report: Silver’s Critical Role In Electrification May Fuel Its Rise

Jun 07, 2018 09:48 am
By Maria Smirnova

SILVER IS AN ATTRACTIVE INVESTMENT OPPORTUNITY

At Sprott, we remain bullish on silver’s investment merits. Like gold, silver is a tangible store of value that acts as an effective portfolio hedge. Despite lackluster performance during the past two years, silver fundamentals remain compelling. We believe silver can play a role distinct from gold in a diversified investment portfolio.

By historical standards, both silver bullion and silver equities appear significantly undervalued. From a contrarian point of view, silver represents an attractive investment opportunity. Sprott’s bullish outlook is supported by three key factors, which we explore below:

The current 80x gold/silver ratio is elevated compared with an average of 56x over the past 50 years.
Silver’s fundamental supply/demand outlook has never been more supportive of a strong price: While supply is constrained, demand is underpinned by synchronized global economic growth and an uptick in industrial demand (fueled by the trends of electrification and automation).
Silver short positions have reached near all-time highs.
SILVER’S RECENT LACKLUSTER PERFORMANCE

We acknowledge that investing in silver has not provided much bling to portfolios recently. For the past 18 months, the silver price has hovered between $16 and $18 per oz.  As shown in the chart below, silver reached a 31-year high near $50 per oz. in April 2011, on U.S. dollar weakness and fears of inflation (silver’s all-time high was reached on January 18, 1980, at $49.45 per troy ounce). This safety play fizzled and silver fell below $14 per oz. by January 2015.

Silver Prices (2000 – 2018), Source: Thomson Reuters Eikon, GFMS, Thomson Reuters, Date: May 31, 2018.

Although silver climbed nearly 15% in 2016 and gained 6.4% in 2017, it underperformed gold, which rose 8.6% in 2016 and 13.1% in 2017. Both metals fell short compared with U.S. equities, which climbed 12.0% (2016) and 21.8% (2017) as measured by the S&P 500 Index.

 

1) THE GOLD/SILVER PRICE RATIO IS STEEP AT 80

As a precious metal, like gold, silver has always attracted investors looking for a store of value beyond fiat currencies and government control. Silver and gold complement and often move in tandem with each other, where gold historically sells at 56x the price of silver (based on prices from 1970 to 2017). Currently, gold trades at about 80x silver’s price, which means that silver is significantly cheaper, relative to gold, than historical averages.

At the end of 2017, the gold/silver ratio was at 77, a high level that perhaps suggests that the market may be expecting another major financial crisis, or at the least that it is time for an equities correction.

On the flip side, to the extent investor anxieties decline — and the gold/silver ratio reverts toward mean — silver inflows and prices will benefit.

The Gold/Silver Ratio Has Averaged 56.5 (1970- 2017), Source: Thomson Reuters Eikon, Date: December 31, 2017.

2) THE UPTICK IN INDUSTRIAL DEMAND

While silver supply stagnates, we believe demand is underpinned by synchronized global economic growth and an uptick in industrial demand.

Silver benefits from three strong sources for demand: 1) industrial (electronics, batteries, biocides, solar panels, etc.); 2) investment (coins and bars); and 3) consumer (jewelry, silverware and religious objects). Of these sources, industrial demand represents the most significant use.

Silver’s Biggest Use Is Industrial, Source: CPM Group.

 

In 2017, coin and bar demand dropped by more than 27%, as investors chased robust equity performance. But this decline was mitigated by increased demand for silver in industrial fabrication, jewelry and silverware (up 4%, 2% and 12%, respectively). At the same time, the world’s total silver supply fell by 2% to just under one billion ounces, given declines in both mine and scrap supplies.

 

Source: World Silver Survey 2018. Produced for The Silver Institute by the GFMS team at Thomson Reuters.

THE REASON FOR THE INDUSTRIAL UPTICK

In part, silver can thank the high-tech auto industry, which both reflects and drives a global shift toward electrification powered by solar technology. Lithium and cobalt, two key battery metals, are currently in the spotlight, but investors should also understand that silver has a critical role to play in the shift to electric vehicles (EVs) and the growing demand for fossil-free forms of energy generation to support electrification. A new report out [last week] from the International Energy Agency, “Global EV Outlook 2018,” estimated that over 3 million EVs were on global roads at the end of 2017, potentially growing to 125 million by 2030.2 As countries make this transition from internal combustion engines to electric and hybrid vehicles, combined with the desire of many countries to move away from coal-fired and nuclear- generated energy, solar energy will continue to grow in importance. As the technology boom fuels a dramatic shift in the vehicles we drive, the trends could give silver a turbocharge. In fact, last year the auto sector’s demand for silver grew 5%, while silver demand in photovoltaics increased 19%.

A ROAD LINED IN SILVER

To understand how countries are adjusting to electric and self-driving vehicles, look to Asia as an example: A new solar-powered road is being constructed in Jinan, a city in eastern China. What’s unique about this 1,080-meter-long (3,540 feet) road is that it’s paved with solar panels, according to Bloomberg.3 Transparent concrete covers the panels, which will power the highway’s lights and nearby homes.

Solar panels, known as photovoltaics (PV), have become a growing source of demand for silver. These panels use silver paste, which contains about 90% silver powder. As the use of these solar panels increase, the need for more silver should follow. The tonnage of silver paste used within PVs is expected to grow 10% by 2020, according to PV silver paste developer Heraeus Photovoltaics. Looking further out, BMO Capital Markets4 estimates that silver demand for PVs will double by 2025, accounting for 15% of silver consumption and improving industrial demand.

ELECTRIC VEHICLES WILL BECOME THE NORM

The architects of the Jinan road have a grand vision. They have planned the road so that wireless charging technology, once it becomes practical, will charge the batteries of EVs riding along the stretch of highway.

That’s not the only opportunity coming from EVs. While China’s road is unique, other countries are increasing the number of electric charging ports to keep up with stricter carbon-reducing policies. Volkswagen5 has embraced this trend, announcing in April that it would add EV charging stations to over 100 Walmarts across the United States. Porsche (a subsidiary of VW) has committed to building 500 such stations as well. Where will the electricity for these ports come from? Solar panels.

SELF-DRIVING VEHICLES ADD ANOTHER LAYER OF GROWTH

China estimates that self-driving vehicles will account for about 10% of all cars on the road by 2030. No doubt, the solar-paneled road will provide fine-grained geolocation and traffic data, supplying autonomous vehicles with additional information to cruise without a human driver.

Silver also benefits from this trend, because it’s a key component in technology within vehicles. With more technology, the more silver you’ll see in the cars, particularly in the tools that protect riders. For example, silver is a component in operating collision avoidance systems, like cameras and sensors. A sudden mass-market need for these automated features means automakers will likely require more silver.

3) THE SHORT-TERM SHORT OPPORTUNITY

Despite the positive factors impacting the growth of silver demand, silver shorts have reached near all-time highs, according to UBS.6 We blame speculators for this imbalance. ETF investors, on the other hand, have embraced the bull scenario, as ETF holdings in silver reached an 8- month high in April. This is where the short-term opportunity lies because when short interests are high, there’s the possibility of short covering – short investors forced by a rising price to buy silver to cover their positions and cut their losses. And short covering further drives up the price.

Silver Short Positions Have Reached a High: CMX0SNCS Index (CFTC CEI Silver Non-Commercial Short Contract/Combined), Source: Bloomberg. Date: May 30, 2018.

THE SILVER LINING

In summary, we are optimistic that based on these three factors — a historically high gold/silver ratio, a favorable supply/demand outlook and near all-time high short-interest levels — silver can return near to its multi-year base of $21, and that some luster will return to the bling.

There are others who are even more optimistic. Incrementum AG, publishers of the industry bible on gold research, wrote this in its latest report: “The technical picture of silver looks particularly exciting from a contrarian position. The ‘smart money’ hedgers currently hold their lowest short exposure as compared to short interest in recorded history … If our basic assumption of turning inflationary tendencies were to prove accurate, silver would probably be one of the best investments to benefit from rising inflation in the coming years. At a gold price of USD2,300 and a gold/silver ratio of 40x (which we regard as absolutely realistic amid rising prices), we expect a silver price of USD57.50.”

-END-



___________________________________________________________________

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

i) Chinese yuan vs USA dollar/CLOSED DOWN TO 6.4120  /shanghai bourse CLOSED DOWN 42,35 POINTS OR 1.36%     HANG SANG CLOSED DOWN 554.42  POINTS OR 1.76%
2. Nikkei closed DOWN 128.76 POINTS OR 0.56% /  /USA: YEN FALLS TO 109.25/

3. Europe stocks OPENED RED  /     /USA dollar index FALLS TO 93.65/Euro RISES TO 1.1767

3b Japan 10 year bond yield: FALLS TO . +.05/ !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 109.25/ 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:: 65.67  and Brent: 76.64

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 UP for WTI and UP FOR Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO +.43%/Italian 10 yr bond yield UP to 3.07% /SPAIN 10 YR BOND YIELD DOWN TO 1.45%

3j Greek 10 year bond yield RISES TO : 4.73

3k Gold at $1298.70 silver at:16.73   7 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50

3l USA vs Russian rouble; (Russian rouble DOWN 46/100 in roubles/dollar) 62.86

3m oil into the 65 dollar handle for WTI and 76 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 109.25 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 0.9849 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1559 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

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

3r the 10 Year German bund now POSITIVE territory with the 10 year FALLING to +0.43%

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 2.91% early this morning (THIS IS DEADLY TO ALL MARKETS). Thirty year rate at 3.07%

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

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

Markets Slide As G7, EMs, Italy And Apple All Hit

In Perfect “Risk Off” Storm

It’s “strange” that the exact same set of concerns that we noted 24 hours ago in our Thursday morning wrap and which sent global stocks and futures higher yesterday as we described in “Stock Euphoria Prevails Despite Gathering G-7, EM Clouds; Dollar Slides“, today those same Emerging Market and G-7 (or rather G-6+1) clouds have led to a sea of red in this morning market and futures monitor.

We close what until today was a mostly euphoric, if for no real reason, week with U.S. stock index futures sliding with Nasdaq 100 minis leading the declines, following Asian and European equities lower.

Of course, trade tensions are front and center on investors’ minds ahead of the Group of Seven leaders summit in Quebec, where President Donald Trump is set to meet with trading partners, or rather “insult” them (see “Trump Lashes Out At Macron, Trudeau Ahead Of “G6+1” Summit“) After Trump’s overnight Twitter tirade vs. Canada and France soured the risk tone further. Furthermore, as Bloomberg reports this morning, Trump will only stay as long as necessary in Toronto, and not a moment longer: the US president will leave the G-7 gathering at 10:30 a.m. on Saturday and put Everett Eissenstat, his deputy assistant for international economic affairs, in charge for the remaining sessions.

Adding to the overnight pain, Apple tumbled as much as 2.3% in German ADR trading after the Nikkei reported that the company warned its supply chain of a drop of around 20 percent in new iPhone component orders.

Meanwhile, the EM rout in the past 48 hours has accelerated, dragging both Brazil and India – which unexpectedly hiked rates yesterday – sending the MSCI EM futures index lower by 3% over the past 2 days.

And as EMs tumbled just hours after Argentina got a $50 billion bailout “standby” loan, the largest in IMF history, capital scrambled out of risk assets and into safe havens, sending the dollar higher, while 10-year Treasury yields dropped as low as 2.89%.

 

The selloff hit all global stocks, with the Stoxx Europe 600 Index declining as almost all sectors were the red after more underwhelming data releases from France and Germany continued a run of poor economic news in the euro area, following a sharp drop in Chinese and Hong Kong shares earlier.  The FTSE MIB is currently the European underperformer, with this risk-off tone exacerbated by internal political tensions hitting Italian assets, currently down 1.7%.

The materials sector (+1.1%) is the current underperformer on softer base metals. Significant stock specific news comes from BT Group (+0.3%), with CEO Gavin Patterson announcing his resignation, with Severn Trent’s (-1.1%) Garfield touted as the successor.

Meanwhile in Asia, the Nikkei 225 (-0.5%) was downbeat as participants digested weaker than expected GDP data which printed at a contraction and in-line with the preliminary reading. Elsewhere, China’s Shanghai Comp. (-1.3%) and HK’s Hang Seng (-1.8%) were the laggards after PBoC operations resulted to a weekly net liquidity drain of CNY 300bln and with participants cautious in anticipation of the Chinese trade data which turned out to be mostly better than expected, although by then the selling had already taken its toll.

  • Chinese Trade Balance 24.9B vs. Exp. 33.8B (Prev. 28.8B)
  • Chinese Imports Y/Y 26.0% vs. Exp. 18.8% (Prev. 21.5%)
  • Chinese Exports Y/Y 12.6% vs. Exp. 11.3% (Prev. 12.9%)

With risk off dominating early trading, the dollar jumped, advancing versus all major peers in early European trade, while 10-year Treasury yields edged lower to 2.91%; Treasury futures surged to day’s high around the time of very large block trade.

At the same time, the euro weakened for the first time in five days following worse-than-expected German industrial production data and as early London flows saw good- sized clips by yen buyers.

In emerging market FX, South Africa’s rand tumbled and bond yields soared as disappointing economic data this week persuaded traders that there’s no chance of a rate increase any time soon.

On Thursday, Brazil’s central bank’s swap sale Thursday wasn’t enough to boost the real, and the country’s stock index slid 3%; for now the Brazilian real is poised at 3.90, just shy of the 4.00 level which BofA predicted is where full blown EM contagion would emerge.

In commodities, oil erased some of the gains seen on Thursday trade, with both WTI and Brent down 0.5%. The fossil fuel is seeing some pressure from a rising USD, as well as a general risk off mood ahead of the G7 summit. In the metals scope, Gold is up on the day as a result of this risk-off tone, with the yellow metal up 0.15%. Copper has retreated for the first time in 6 sessions after hitting 4 ½ year highs following supply disruptions, with profit taking
pressuring the metal down 1% on the day. Steel has slipped from 6 month highs, but these losses are being capped by ongoing supply concerns in China, the metal is currently down 1%

 

Next up on the docket will be a potentially rocky summit of the G-7, where trade disputes are set to showcase a divide between the U.S. and longtime allies. Data include final wholesale inventories for April. No major companies are scheduled to report earnings

Bulletin Headline Summary From RanSquawk

  • US President Trump’s Twitter tirade overnight vs. Canada and France has soured the risk tone
  • Equity bourses all negative and safe-havens bid across the board
  • Looking ahead, highlights include, Canadian jobs report and the beginning of the G7 summit

Market Snapshot

  • S&P 500 futures down 0.6% to 2,759.50
  • STOXX Europe 600 down 0.7% to 383.29
  • MXAP down 0.9% to 174.67
  • MXAPJ down 1.4% to 570.78
  • Nikkei down 0.6% to 22,694.50
  • Topix down 0.4% to 1,781.44
  • Hang Seng Index down 1.8% to 30,958.21
  • Shanghai Composite down 1.4% to 3,067.15
  • Sensex down 0.3% to 35,347.21
  • Australia S&P/ASX 200 down 0.2% to 6,045.18
  • Kospi down 0.8% to 2,451.58
  • German 10Y yield fell 7.2 bps to 0.412%
  • Euro down 0.3% to $1.1761
  • Italian 10Y yield rose 12.1 bps to 2.79%
  • Spanish 10Y yield fell 3.2 bps to 1.439%
  • Brent futures down 0.6% to $77.32/bbl
  • Gold spot up 0.1% to $1,298.97
  • U.S. Dollar Index up 0.2% to 93.64

Top Overnight News

  • Trump tells EU, Canada to take down tariffs or U.S. ‘will more than match’
  • Apple told its supply chain to prepare ~20% fewer components for iPhones debuting in the latter half of this year, compared with last year’s orders, according to people familiar: Nikkei
  • Dollar gains against most Asian currencies as investor worries over EM currencies continue. INR, IDR and PHP lead the weakness — countries with current account deficits. USD/JPY steady as it holds under 110.00. Bloomberg Dollar Spot Index is heading for its first weekly decline since mid-April
  • U.S. 10-yr yield rises 1bp to 2.93% in Asia after ending Thursday 5bps lower. In the U.S. session, Treasury 10-year futures spiked higher in a frenzied period of trading in the New York afternoon, with more than 100,000 contracts changing hands in about three minutes
  • The risk-off mood led the dollar to briefly erase its decline, while buoying havens such as the Swiss franc and Japanese yen. Commodity-linked currencies suffered, including the Australian, New Zealand and Canadian dollars, as risk appetites soured
  • Russian President Vladimir Putin will meet Chinese counterpart Xi Jinping for the first time this year, with the looming U.S.-North Korea summit and the Iran nuclear deal expected to dominate their agenda
  • Indonesia is trying to sell more sovereign bonds to domestic investors as it attempts to wean itself off foreign funding that’s made it one of the more vulnerable emerging markets
  • European Industrial Production m/m: Germany -1.0% vs +0.3% est; France -0.5% vs +0.3% est.
  • Italy to ask for more funds from EU budget: Industry Minister Di Maio
  • China May Trade Balance: $24.9b vs $33.3b est; Exports 12.6% vs 11.1% est; Imports 26.0% vs 18.0% est.
  • Japan 1Q F GDP q/q: -0.6% vs -0.4% est.

Asian stocks traded in the red following a lacklustre performance on Wall St, where the major indices finished mixed as tech underperformed and the Nasdaq pulled back from record levels, although the energy sector was underpinned on oil gains. In addition, lingering tensions concerning US tariffs which threatens to isolate US President Trump at the G7, as well as a Trump tweet tirade against EU and Canada, added to the gloom. ASX 200 (-0.2%) traded indecisive as upside in energy and financials were counterbalanced by weakness in miners, while Nikkei 225 (-0.5%) was downbeat as participants digested weaker than expected GDP data which printed at a contraction and in-line with the preliminary reading. Elsewhere, Shanghai Comp. (-1.3%) and Hang Seng (-1.8%) were the laggards after PBoC operations resulted to a weekly net liquidity drain of CNY 300bln and with participants cautious in anticipation of the Chinese trade data which turned out to be mostly better than expected, although by then the selling had already taken its toll. Finally, 10yr JGBs were flat despite the cautiousness in Japan, while the BoJ’s Rinban operation was also largely ignored with the total amount at a relatively reserved JPY 360bln. PBoC skipped open market operations for a weekly net drain of CNY 300bln vs. last week’s CNY 410bln net injection.

Top Asian news

  • Japan’s Economy Snaps Growth Streak as Consumption Drags
  • Ant Financial Raises $14 Billion as Funding Round Closes
  • Terry Gou’s FII Soars in China Debut After $4.3 Billion IPO
  • Hong Kong Shares Fall Most in Two Weeks as Tencent Fervor Fades

European bourses are all in the red (Euro stoxx 50 -0.86%) as markets exude a risk off tone before the G7 summit later today. This comes after US President Trump struck a confrontational tone vs. Canada and France overnight on Twitter. The FTSE MIB is currently the underperformer, with this risk-off tone exacerbated by internal political tensions hitting Italian assets, currently down 1.7%. The materials sector (+1.1%) is the current underperformer on softer base metals. Significant stock specific news comes from BT Group (+0.3%), with CEO Gavin Patterson announcing his resignation, with Severn Trent’s (-1.1%) Garfield touted as the successor. A Commerzbank and Deutsche Bank merger was rebuked by Deutsche Bank shareholders.

Top European news

  • Germany Working to Prevent ‘Hard Brexit,’ Finance Minister Says
  • BT Chief Gavin Patterson to Depart After Strategy Reset Flop
  • Bulgarian Lawmakers Back $2 Billion Spending on Defense Deals

In currencies, the USD has staged a sharp recovery in early European trade with the DXY back above 93.50 ahead of the G7 summit. Markets are operating with a degree of caution thus far as lingering tensions concerning US tariffs threatens to isolate US President Trump at  the G7. This also comes amid Trump’s latest tweet-tirade against the EU and Canada in which the President accused EU & Canada of using massive trade tariffs and trade barriers against US, and warned both nations to remove them or they will be matched. Subsequently, the broad flight to quality has seen some support for USD and out-muscling of it’s major counterparts with the exception of JPY. USD/JPY is back below 109.50 and its 10DMA at 109.45 with the Japanese currency being guided more by the broader risk-tone rather than weaker than expected GDP data which printed at a contraction and in-line with the preliminary reading. EUR/USD has given back some of its recent gains and is back below 1.1800 as part of a broader USD move with the ECB now in their blackout period. In terms of market expectations, consensus looks for around a 33% chance of Draghi  announcing an enddate for the Bank’s purchases next week with almost 50% seeing July as a more opportune time. Note, this morning saw yet further disappointing data from the Eurozone with German industrial output falling short of expectations. AUD has also fallen victim to the firmer USD with overnight trade data from China unable to prop up the currency. As a reminder, Chinese trade data saw a smaller than anticipated surplus but firm export/import components suggests that recent trade rhetoric from the US has been unable to make a noteworthy impact on data thusfar. From a technical perspective, the next key level to the downside for AUD/USD is at 0.7576 which marks the 38.2% fib of the move from 0.7413 (May 11th low) to 0.7677 (6-week high printed this Wednesday).

In commodities, oil is erasing some of the gains seen on Thursday trade, with both WTI and Brent down 0.5%. The fossil fuel is seeing some pressure from a rising USD, as well as a general risk off mood ahead of the G7 summit. In the metals scope, Gold is up on the day as a result of this risk-off tone, with the yellow metal up 0.15%. Copper has retreated for the first time in 6 sessions after hitting 4 ½ year highs following supply disruptions, with profit taking pressuring the metal down 1% on the day. Steel has slipped from 6 month highs, but these losses are being capped by ongoing supply concerns in China, the metal is currently down 1%.

Looking at the day ahead, the April wholesale trade sales and inventories data are also due. Meanwhile the ECB’s Mersch and Visco will speak throughout the day. Finally the G7 Leaders’ Summit in Quebec is due to begin, ending on Saturday.

US Event Calendar

  • 8:45am: Bloomberg June United States Economic Survey
  • 10am: Wholesale Trade Sales MoM, prior 0.3%
  • 10am: Wholesale Inventories MoM, est. 0.0%, prior 0.0%

DB’s Jim Reid concludes the overnight wrap

I have a friend who works as a pilot and every flight I get on for that airline I always listen out to hear whether he is captaining my plane. Around 99.5% of the time he is not which makes sense given how many pilots they have. However yesterday I heard his dulcet tones as I was squeezed between two people somewhere near the back of a busy flight from Vienna. Unfortunately he was telling the passengers that we were 30 minutes delayed taking off and we could roam about the plane. I went up to the cockpit and said hello. For the next 30 minutes I took over as Captain, wore the cap and chatted in the cockpit. Pictures are available on request. He then made sure I had an upgrade into business. Moral of the story is to know more pilots.

On that basis I better hope that pilots don’t get taken over by robots one day. On that note yesterday, my team published the latest edition of Konzept, Deutsche Bank Research’s flagship magazine. The title of this latest edition is “Will I take your job…or work with you?” and works best with the visual of the menacing stare on the front cover. Robots and rapid automation is the big theme running through this edition. In the opening piece I reiterate my view that a 35 year cycle of depressed global wages is coming to an end due to the levelling off (and an eventual decline) in the size of the global labour force after a multi-decade surge. However a common pushback is that automation or robotics is on the brink of adding to the woes of the worker. History tells us otherwise though, as it’s now 250 years since the first industrial revolution and constant labour saving improvements has had no structural long-term impact on the unemployment rate. So we say, learn to love your robot colleague rather than feel threatened.

I’m pretty confident that a robot would end up scratching their head as much as me doing my job at the moment as there is no way an algorithm can predict a lot of things that are going on in the world today. Whether it be the tweets of Donald Trump, the reaction of Kim Jong-un or Chinese President Xi Jinping, the actions of populists in Italy or perhaps the most unpredictable of the lot where Brexit will end up. More on Brexit later but perhaps something more predictable in recent times was that as global central bank liquidity was withdrawn you would expose weak spots in a world previously cushioned by ultra loose monetary policy for so long. In particular as we’ve discussed before a Fed tightening cycle alone always historically brings some kind of financial crisis. EM seems to have been at the epicentre of this over the last couple of months without the contagion necessarily spilling over into wider markets.

Argentina and Turkey have been heavily in the spotlight of late and now its Brazil’s turn to join in to some degree. The Ibovespa tumbled as much as -6.3% intra-day yesterday before paring losses to close -2.98%, dragged down by uncertainties from the upcoming October election and concerns for a slowing economy. The yields on the 5y and 10y bonds (USD based) jumped 24bp and 16bp respectively.

Meanwhile the Brazilian Real weakened to the lowest since March 16 (-1.4%; -18% CYTD), although losses were slightly pared back as the central bank sold more FX swap contracts yesterday to reduce pressure on the local currency, marking the second time this week where it has gone above the usual daily offer. Later in an unscheduled press meeting, the Central bank chief Mr Goldfajn noted the bank will use all tools available to provide liquidity to FX markets, such as dipping into the country’s $380b FX reserves if necessary, but added the bank will not use monetary policy to control FX rates.

Meanwhile Turkey went against all expectations to hike the one-week repo rate by 125bps. Indeed not a single economist in the Bloomberg survey expected a hike of that magnitude and in fact the consensus was for no change at all. That willingness to be proactive was taken kindly by markets with the Turkish Lira rallying over 2% at one stage, before closing +1.57%. Turkey’s main equity market also finished +2.03% while hard and local currency 10y bonds rallied 15.4bps and 37.0bps respectively.

Whilst clearly not an EM country, Italy’s bond market continues to show some similarities to it in terms of trading patterns. Since the intraday lows seen earlier this week, 2yr yields are now 95.8bps higher (+25.8bp yesterday), with 10yrs 55.5bps higher (+12.3bp yesterday). It’s been a relatively quiet week politically but there’s been some chatter about big supply next week and also fallout from the ECB comments earlier this week, that next week could see the announcement that QE is ending. This was a hawkish surprise given recent events (although only leaves us back to where expectations were a few weeks ago) and Italy has felt the brunt of this in Europe.

Staying in the world of sovereigns, let’s move to the U.K. and Brexit. Although not an immediate market moving event, one of the most significant stories of the last 24 hours has been the release from the UK Government of the Irish backstop proposal. After what sounded like a heated debate between UK PM Theresa May and Brexit Secretary David Davis – with the latter at one stage supposedly threatening to resign – a fudge in the wording of the backstop proposal was incorporated to avert a crisis. The critical reference was “the UK expects the future arrangement to be in place by the end of December 2021 at the latest”. That appeased both Davis and May by committing to a date but not in the legal sense, hence the fudge. Legally though this backstop could commit the U.K. to remain in the Customs Union and other areas of the Single Market indefinitely unless an alternative solution to the Northern Irish border has been found. The text will now be put before the EU government heads later this month where there’s already been some mixed feedback. It’s getting increasingly possible that we’ll get well into the next decade without knowing what type of Brexit we’re going to get by which time anything could happen to politics and/or public opinion or indeed the EU. Food for thought. Sterling chopped around with the various headlines but ultimately retraced losses to finish +0.07%. Gilt yields also rose 2.5bps although the FTSE 100 faded to finish slightly lower (-0.10%).

In the meantime the rest of the world is likely to turn its focus over to Quebec today with the G7 meeting set to get underway. To be fair it’s looking more and more like a G6+1 given the constant stream of comments from world leaders in recent days with President Trump seemingly isolating himself from the rest of the world order. Expect posturing and headlines aplenty but a big question mark at this stage is whether or not there will be a joint communique, with that looking very much up in the air still. The meeting kicks on into tomorrow so we’ll have to see what the weekend brings. Indeed it’s been reported this morning by Bloomberg that Mr Trump will leave early from the summit which is bound to raise eyebrows.

Markets will also have on eye on next week’s packed calendar which includes central bank meetings from the Fed, ECB and BoJ as well as inflation data from around the world. All the action in markets over the last two days has been in bond markets following that coordinated signalling from ECB officials that next week’s meeting is very much a live one for the QE endpoint debate. Yesterday was more of the same with European bond yields, which was higher across the board with the exception of Spain (-2.9bp). Across the region, core 10y bond yields rose c2bp (Bunds +1.9bp; Gilts +2.5bp; OATs +2.4bp) while BTPs (+12.3bps) and Bonos (+7.9bps) underperformed. The two-day move for Bunds now is +11.5bps which is the biggest two-day move since June 2017. Treasuries were boosted by a flight to quality, partly due to concerns over EM and trade tensions with the 10y yields down as much as c9bp intraday before closing at 2.921% (-5.1bp), which more than reversed Wednesday’s sell off. Meanwhile, the Euro (+0.22%) rose for fourth consecutive day and closed at $1.180 for the first time in 3 weeks.

Moving along, equity markets were largely muted which probably reflects the fact that they didn’t have much to work with yesterday. The Stoxx 600 closed -0.24% although did fade from early gains. The same was true for the DAX  (-0.15%) with some suggesting the much softer than expected German factory orders weighed on sentiment (more on that below). In the US the most notable mover was the Nasdaq which retreated from its record high (-0.70%) and finally caved in to some profit taking after rising +3.32% in the four sessions prior to that. The S&P 500 edged -0.07% lower, weighed down by tech and materials stocks. It’s worth noting that Brent oil was a big mover yesterday too, up 2.6% following a drop in Venezuela oil exports and Reuters reporting that OPEC may not discuss an oil supply boost at its upcoming meeting on 22 June.

This morning in Asia, markets are trading modestly lower with the Nikkei (-0.40%), Kospi (-0.58%), Hang Seng (-1.23%) and Shanghai Comp. (-1.25%) all down. Elsewhere, Argentina has secured the largest stand-by arrangement from the IMF ($50bn) to support its economy. As part of the deal, Argentina will now target a new 2019 fiscal deficit of 1.3% of GDP (vs. 2.2% previous) and an inflation of 17%. Over in the US as mentioned above, President Trump noted he will leave the G7 Summit one day earlier, to head off to Singapore where he may sign an accord with Kim to formally end the 1950’s Korean War at their 12th June meeting. Datawise, China’s May trade surplus was less than consensus at $24.9bn (vs. $33.3bn), mainly due to a stronger than expected growth in imports (26% vs. 18% expected).

Now turning to central bankers speak, the dovish BOE Deputy Governor Ramsden who voted against a rate hike in November seemed more upbeat and signalled a shift towards the MPC’s majority view, where further rate hikes “over the forecast period” will be necessary, although he added this was contingent on the incoming data. Elsewhere, he said that while its ‘early days”, data so far suggests the slowdown in 1Q was “temporary” with a period of “unusually subdued” wage growth coming to an end. Further, he is now “more comfortable with the balance of risks around the MPC’s central assumptions than he had been previously”.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the April consumer credit increased at the slowest pace in seven months and was below expectations at $9.3bln (vs. $14bln expected), mainly due to a slowdown in non-revolving credit. The weekly initial jobless claims (222k vs. 220k expected) and continuing claims (1,741k vs. 1,735k expected) prints were slightly higher than consensus. In Europe, Germany’s April factory orders fell for the fourth consecutive month and was much weaker than expected (-2.5% mom vs. 0.8% expected), weighed down by domestic orders (-4.8% mom) and big ticket items in the capex sector. DB’s

Marc Schattenberg noted that while the hard data from the retail and  industrial production sectors point to a sustained German growth cycle, he sees only limited catch-up potential for GDP in the second quarter. Elsewhere, the  final reading for the Euro area’s 1Q GDP was confirmed at 0.4% qoq and 2.5% yoy. Meanwhile, the UK’s May Halifax house price index was up 1.5% mom (vs. 1% expected), leading to an annual growth of 1.9% yoy. Finally, Italy’s April retail sales was below market at -0.7% mom (vs. 0.1% expected) while France’s trade deficit was narrower than expectations at -$4.95bln (vs. -$5.1bln).

Looking at the day ahead, the April trade and industrial production in Germany along with Q1 labour costs data are due, while in France April industrial and manufacturing production is due out. In the US the April wholesale trade sales and inventories data are also due. Meanwhile the ECB’s Mersch and Visco will speak throughout the day. Finally the G7 Leaders’ Summit in Quebec is due to begin, ending on Saturday.

3. ASIAN AFFAIRS

i)FRIDAY MORNING/THURSDAY NIGHT: Shanghai closed DOWN 42.35 points or 1.36%   /Hang Sang CLOSED UP 554.42 points or 1.76%    / The Nikkei closed DOWN 128.76 POINTS OR 0.56% /Australia’s all ordinaires CLOSED DOWN .21%  /Chinese yuan (ONSHORE) closed DOWN at 6.4120/Oil UP to 65.67 dollars per barrel for WTI and 76.64 for Brent. Stocks in Europe OPENED ALL RED//.  ONSHORE YUAN CLOSED DOWN AT 6.4120 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED DOWN ON THE DOLLAR AT 6.4032/ONSHORE YUAN TRADING WEAKER AGAINST OFFSHORE YUAN/ONSHORE YUAN TRADING MUCH WEAKER AGAINST USA DOLLAR/OFFSHORE YUAN TRADING MUCH WEAKER AGAINST THE DOLLAR /CHINA RETALIATES WITH TARIFFS/ TRUMP RESPONDS TO NEW TARIFFS AND IT NOW LOOKS LIKE A FULL TRADE WAR IS BEGINNING/

3 a NORTH KOREA/USA

North Korea/South Korea/usa

3 b JAPAN AFFAIRS

end

c) REPORT ON CHINA/HONG KONG

 

4. EUROPEAN AFFAIRS

Are conditions similar to what happened prior to World War I

a great commentary

 

(courtesy Mish Shedlock/Mishtalk)

Europe’s Nationalism And Trump’s Trade Policies

Look Like WWI Prelude

Authored by Mike Shedlock via MishTalk,

In conversations with friends, one thought the current political scene was like the prelude to WWII. Another said WWI.

Tuesday evening I struck up a conversation with “Max”, a friend that I frequently see at a Tuesday karaoke bar.

Max is not a reader of my website, so it stuck me when he stated events today remind him of the prelude to WWII. Max is aware of Trump’s trade policies and disputes with Canada and Mexico, but he was not aware of immigration problems in Italy.

Wednesday afternoon, I mentioned that conversation in a podcast with Peak Prosperity’s Chris Martenson. Chris said Max’s comment was quite appropriate but the setup was more like WWI.

Chris is correct. The parallels to WWI are quite amazing.

Seven Causes for WWI

After the podcast with Chris, a bit of digging led me to 7 Causes of the First World War.

It was point number 7 that caught my attention.

7. People Being People

Canadian historian Margaret Macmillan has published a major book, The War That Ended Peace (2013), which presents a synthesis of many different factors: alliances and power politicsreckless diplomacy; ethnic nationalism; and, most of all, the personal character and relationships of the almost uncountable number of historical figures who had a hand in the coming of war.

War That Ended Peace

The above snip led me to the PDF synopsis on The War That Ended Peace.

So you would have thought that increased trade between Britain and Germany would have fostered that sense of having something in common. In fact, it didn’t. What common trade did sometimes was to create fears in both countries that the other was jealous, or that the other was cutting into natural markets.

Nationalism increasingly became a way in which people identified themselves. It was helped by the spread of communications – it was much easier to feel you were part of something called the British nation or the French nation if in your morning newspaper you could read news from all over that nation.

The growth of public opinion was of course fuelled by the spread of communications and literacy, and by the growth of the mass media that made available cheap books and newspapers.

When Italy invaded Libya in 1911, Italians socialists rejected criticism of their government’s “civilising mission”.

We should be warned that with all the best will in the world, clever people, people in positions of power, can make really stupid mistakes. We shouldn’t think we are cleverer than people then, and we shouldn’t think that we can avoid catastrophes. One hundred years later, we should be reminded that people in 1914 thought they’d have a nice short war and could settle things – and didn’t.

​Ethnic Nationalism

​​

  1. Pack Your Bags: Italy Threatens to Deport 500,000 Immigrants
  2. ​Germany Points Finger at “Moochers of Rome”

Power Politics

  1. Constitutional Crisis in Italy as President Rejects Eurosceptic Minister
  2. Spain’s Corrupt Government Falls in Vote of No Confidence
  3. Trump Considers 25% Tariffs on All Auto Imports as Matter of “National Security”
  4. NAFTA is Dead: Trump Seeks Separate Agreements With Mexico and Canada
  5. ​National Security or Insecurity? Trump Tariffs Will Cost 195K to 624K Jobs

Feuds with Allies

Trump Started a Global Trade War Today: Canada, Mexico Responded, So Will Europe

Germany Accuses Italy of “Debt Blackmail”: Hello EU, Time for Reform Expired

History Lesson

Please consider Trump invokes War of 1812 in testy call with Trudeau over tariffs

​President Donald Trump and Canadian Prime Minister Justin Trudeau had a testy phone call on May 25 over new tariffs imposed by the Trump administration targeting steel and aluminum imports coming from Canada, including one moment during the conversation in which Trump made an erroneous historical reference, sources familiar with the discussion told CNN.

According to the sources, Trudeau pressed Trump on how he could justify the tariffs as a “national security” issue. In response, Trump quipped to Trudeau, “Didn’t you guys burn down the White House?” referring to the War of 1812.

The problem with Trump’s comments to Trudeau is that British troops burned down the White House during the War of 1812. Historians note the British attack on Washington was in retaliation for the American attack on York, Ontario, in territory that eventually became Canada, which was then a British colony.

War Preparations

In the prelude to WWI every European nation thought war could be prevented if every nation was prepared for it.They were all prepared.

On March 8, in a direct reference to Germany, US President Donald Trump says NATO members that do not meet defense-spending targets will be “dealt with.”

European Commission president Jean-Claude Juncker expressed his desire for a European Army in a State of the Union address.

Conflicting Allies

I have watched with dismay the circular nature of Mideast allies.

The US has friendly relations with Israel, Saudi Arabia, Turkey, and the Iraqi Kurds, most of which are fighting with each other or are in tense relationships at best.

To top it off, Russia has a friendly relationship with Turkey but the EU relationship with Turkey is fading fast.

Note that Turkey is a NATO ally and US missiles are based in Turkey. Meanwhile the EU and Turkey are in a huge feud over immigration and judicial rights.

How is this supposed to work?

Communication

It’s ironic that Margaret Macmillan noted the role of increased communication as a factor in WWI.

Look at all the allegations regarding Russia, Facebook, False News, Google, CNN etc., currently circulating.

Personal Character Hardball

On May 17 2018, I reported Trump Hardball: Europe Pressured to Cancel Russia Pipeline to Avoid Trade War

Flashback July 23, 1914: Austria-Hungary Issues Ultimatum to Serbia.

At six o’clock in the evening on July 23, 1914, nearly one month after the assassination of Austrian Archduke Franz Ferdinand and his wife by a young Serbian nationalist in Sarajevo, Bosnia, Baron Giesl von Gieslingen, ambassador of the Austro-Hungarian Empire to Serbia, delivers an ultimatum to the Serbian foreign ministry.

According to the terms of the ultimatum delivered on July 23, the Serbian government would have to accept an Austro-Hungarian inquiry into the assassination, notwithstanding its claim that it was already conducting its own internal investigation. Serbia was also to suppress all anti-Austrian propaganda and to take steps to root out and eliminate terrorist organizations within its borders—one such organization, the Black Hand, was believed to have aided and abetted the archduke’s killer, Gavrilo Princip, and his cohorts, providing weapons and safe passage from Belgrade to Sarajevo.

Three days later, on July 28, 1914, Austria-Hungary declared war on Serbia, beginning the First World War.

The allies were set. Russia intervened on behalf of Serbia, Germany on behalf of Austria-Hungary, France was an ally of Russia, etc.

You get the picture.

The US, which had no business in the fight at all, actually prolonged the war by entering it. It is unclear if the US and UK even entered on the right side.

Actually, there was no right side, it was none of our business. By medling, we created the ideal backdrop for WWII.

IF Only

David Stockman laments If only the U.S. had stayed out of WWI.

Had President Woodrow Wilson not misled the U.S. on a messianic crusade, Europe’s Great War would have ended in mutual exhaustion in 1917.

Both sides would have gone home battered and bankrupt — but would not have presented any danger to the rest of mankind.

Indeed, absent Wilson’s crusade, there would have been no allied victory, no punitive peace — and no war reparations. Nor would there have been a Leninist coup in Petrograd — or later on, the emergence of Stalin’s barbaric regime.

Likewise, there would have been no Hitler, no Nazi dystopia, no Munich, no Sudetenland and Danzig corridor crises, no need for a British war to save Poland, no final solution and Holocaust, no global war against Germany and Japan — and, finally, no incineration of 200,000 civilians at Hiroshima and Nagasaki.

Nothing Good Comes From War

We do not know what would have happened. But nothing good ever happens from ridiculous wars.

How many times do we have to prove this?

One might have thought that WWI, Korea, Vietnam, Iraq, Libya, Afghanistan, and Syria would be proof enough.

But no!

Trump is itching for a war with Iran and a trade war with the whole world.

Déjà Vu

Trade wars and nationalism are a prelude to real wars. Historically speaking, this is 1913 déjà vu.

That is only an observation, not a prediction. But as with 1914, we better take a different path than the one we are on.

8. EMERGING MARKET

ARGENTINA

Argentina was just bailed out by the IMF with the largest loan ever in its history

(courtesy zerohedge)

Argentina Bailed Out With Biggest Ever Loan In IMF History

Just a few weeks after Argentina became ground zero for the coming Emerging Market crisis, when its currency suddenly collapsed at the end of April amid soaring inflation, exploding capital outflows and a central bank that was far behind the curve (as in “13% of rate hikes in a week” behind)...

… the IMF has officially bailed out the country – again – this time with a $50 billion, 36-month stand-by loan, and coming in about $10 billion more than rumored earlier in the week, it was the largest ever bailout loan in IMF history, meant to help restore investor confidence in a nation that, between its soaring external debt and current account deficit, prompted JPMorgan to suggest that along with Turkey, Argentina is in effect, doomed.

As the JPM chart below shows, the country’s total budget deficit, which includes interest payments on debt, was 6.5% of GDP last year, much of reflecting a debt binge of about $100 billion over the last two and a half years. The primary fiscal deficit in 2017 was 3.9%.

The loan will have a minimum interest rate of 1.96% rising as high as 4.96%.

“We are convinced that we’re on the right path, that we’ve avoided a crisis,” Finance Minister Nicolás Dujovne said at a press conference in Buenos Aires. “This is aimed at building a normal economy.”

Dujovne said that about $15 billion from the credit line would be immediately available to Argentina after the package is approved by the IMF’s board, which is expected on June 20. The rest would be dispersed as needed as Argentina meets its targets.

Shortly after the news the loan was finalized, Dujovne made some additional, more bizarre comments, saying that “the amount we received is 11 times Argentina’s quota, which reflects the international community´s support of Argentina,” almost as if he was proud at just how insolvent his country “suddenly” become. He was certainly delighted that, in his view, Argentina is now “too big to fail”, and received not only this loan as a result…

“It’s very good news that the integration with the world allows us to receive this support.”

… but also hinted that the international community would also foot the bill for all other upcoming Argentinian bailouts. And if the country’s history is any indication, there will be plenty more, as well as the occasional military coup for good measure.

According to Bloomberg, Argentina will see 30% of the funds a day or two after the Fund’s June 20 board meeting, and in typical IMF-bailout fashion, a form of austerity will be imposed on what was once Latin America’s richest nation: as part of the agreement, the country will now target a fiscal deficit of 1.3% of GDP in 2019 and 2.7% this year, with a fiscal balance targeted for 2020 (good luck). And since the previous targets of 2.2% and 3.2%, were almost as laughable, this latest IMFian austerity package not only has zero chance of ever being achieved, but if Greece is any indication, it will make the Argentina crisis far worse. The government has also set a new inflation target of 17% in 2019 – It’s considered low – declining to 13% in 2020 and 9% in 2021.

And the biggest joke, as part of the program, Argentina will agree to accelerate the pace at which it reduces the government deficit. The nation spends more than it collects in revenue and imports more than it exports, creating fiscal and current-account shortfalls that leave Argentina vulnerable to fluctuations in its currency. But, thanks to the even more idiotic policies of central banks, Argentina managed to sell a 100 year bond last year, demonstrating just how stupid some managers of “other people’s money” really are.

“This is a plan owned and designed by the Argentine government, one aimed at strengthening the economy for the benefit of all Argentines,” IMF Managing Director Christine Lagarde says in the statement which can be found on the IMF’s website.

To take effect, the deal reached between the IMF’s staff and Argentine authorities still requires the approval of the IMF’s executive board.

Oh, and thank you American taxpayers: the IMF’s largest shareholder, the U.S., said in a statement Thursday from Treasury Secretary Steven Mnuchin that it supported the program,according to the WSJ.

“The size of the package should provide relief, but implementing the program entails significant challenges and will require skillful political leadership,” said Martin Castellano, the head of Latin America research at the Institute of International Finance.

Argentina was bailed out by the IMF for the second time in 2 decades after three rate hikes pushed borrowing costs above 40% but failed to halt a plunge in the currency. The peso fell 25% against the dollar this year to trade at 24.9850 on Thursday, while capital outflows soared.

Central Bank President, Federico Sturzenegger, said the bank will continue to intervene in currency markets in times of “disruptive movement” although the central bank will not target inflation this year, he said. Meanwhile, the government has agreed to send a bill that gives the central bank more autonomy, and as a result it wil no longer transfer funds to the Treasury.

“We’re convinced that we’re on the right track, that we managed to avoid a crisis, gather support for the program we already had and that has been in place since Dec. 2015, which looks to build a normal economy, reduce poverty and protect the vulnerable,” Dujovne said, echoing what Greece said after its first bailout 8 years… and its second… and its third.

Gerry Rice, an IMF spokesman, speaking Thursday before the details of the bailout were announced, told reporters that the IMF is “not seeing negative spillovers to other countries at this point.”

Well, he may want to take a look at Brazil.

* * *

As for what happened the last time the IMF bailed out Argentina in the early 2000, the following 2004 article from the Telegraph tells you all you need to know why when a nation is desperately in need of deleveraging, giving it another $50 billion in debt is generally a bad idea.

IMF admits mistakes in Argentina crisis

By Edmund Conway12:01AM BST 30 Jul 2004

The International Monetary Fund yesterday admitted that its mistakes helped plunge Argentina deeper into the red during the currency crisis that crippled the country’s economy three years ago.

In a report published yesterday by its independent evaluation office, the IMF said it ought to have prevented the Argentine government from following poor economic policies.

“IMF surveillance failed to highlight the growing vulnerabilities in the authorities’ choice of policies and the IMF erred by supporting inadequate policies too long,” it said.

The financial meltdown that reached a climax in 2001, causing the country to default on $132 billion of foreign debt, was worsened by the government’s vain attempts to maintain the Argentine peso’s peg against the dollar. The IMF ploughed money into the country to help it sustain the peg, pledging an extra $22 billion as late as the end of 2000.

“In retrospect, the resources used in an attempt to preserve the peg could have been better used to mitigate some of the inevitable costs of exit,” the report said.

Although it became clear to some IMF staff that the country’s currency plan was flawed in the 1990s, they did not report their doubts to their board for fear of triggering a speculative attack on the peso. The executive board, for its part, ignored staff complaints that Argentina was not reforming its economy satisfactorily.

Both the IMF and the US touted the country as Latin America’s economic success story but the fund maintained its support despite the fact that Argentina missed its fiscal targets every year since 1994. Analysts have also claimed that the IMF’s demands that Argentina raise taxes in 2002 worsened the crisis. The conclusions will come as a blow to the institution, whose role has come under increased scrutiny in recent years.

Yesterday the Argentine finance minister, Roberto Lavagna, argued that the country should not be pressed too hard for repayments of its current three-year $13 billion loan. He said the IMF was now insisting it reformed its economy “in a way absent throughout the 90s” and “under a schedule that is oblivious to the political realities of the country”.

Good luck, and some advice to Argentina: this time try to prevent Elliott Management from buying up your debt at distressed prices.

 

 

END

That did not last long;  The Argentinian Peso plummets to a new record low of 25.55 to one USA dollar having pierced the barrier of 25 to one

(courtesy zerohedge)

Argentina Peso Plunges To New Record Low

Last night, Argentina got 50 billion pieces of good news, when the IMF agreed to provide the troubled Latin American nation with a $50BN standby loan, the largest even in IMF history. It also got some bad news, when the central bank announced it would remove the 25/USD barrier it had imposed in early May to prevent an escalating currency crisis.

Well, this morning, contrary to expectations that the Argentina Peso would rise on the IMF loan, ARS resumed its selloff, and promptly breached the central bank’s 25/USD barrier, and plunging 2.3% to 25.55 .

 

The breach of the barrier shows that confused traders are seeking to find the “fair value” of the ARS after almost a month of living with a virtual cap. The move is also surprising as it contrasts with the positive impact from the IMF deal seen in sovereign bonds market, with Argentina’s century bond’s due 2117 dropping modestly by 18bps, to 8.02%

Meanwhile, there is the political blowback to consider: as Bloomberg notes, after the kneejerk reaction and market stabilization at a new level – assuming there is one – traders will start watching the steps govt will make to achieve the new fiscal targets as Argentina is well known for protests, and the latest round of IMF austerity in the form of cuts in jobs and government spending is unlikely to be achieved peacefully.

Meanwhile, as Bloomberg’s Sebastian Boyd writes, “given the pace of inflation, the peso needs to weaken just to maintain the real exchange rate, and arguably it should fall more than that. But today is going to be interesting. It looks as if the market wants to test the bank’s resolve again.”

As we reported yesterday, Argentina will seek a fiscal deficit/GDP of 2.7% this year and 1.3% in 2019; below the previous targets were 3.2% and 2.2%, respectively; the country is expected to balance its budget in 2020.

Ironically, even as the Brazilian real is stabilizing, for now, after last night’s central bank intervention, the EM selloff in Latin America for now has merely jumped borders across to Argentina. The question is whether the central bank will be forced to intervene again.

* * *

Finally, keep the following chart from JPM in mind,: it shows why of all EMs, Argentina and Turkey are by far the two nations most likely to collapse first:

Putting Argentina in context, JPMorgan’s cluster model illustrates how risky the Latin American country has been for investors. In the chart below, the closer countries are to each other, the more similar they are with respect to competitiveness, regulation, investor protections, labor markets and ease of doing business. Like Bangladesh and Zimbabwe, Argentina lies at the outer edge of this known universe, far from other EM countries like China, Peru, Indonesia and Mexico and Vietnam, and lightyears away from the developed world. Only in a world of financial repression by central banks could a country like this issue an oversubscribed 100-year bond.

end

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

Euro/USA 1.1732 DOWN .0060/ 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:///ITALIAN CHAOS /AND NOW ECB TAPERING BOND PURCHASES/JAPAN TAPERING BOND PURCHASES /USA RISING INTEREST RATES /FLOODING/EUROPE BOURSES RED /

USA/JAPAN YEN 109.25   DOWN 0.473  (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 1.3384 DOWN  0.0032  (Brexit March 29/ 2017/ARTICLE 50 SIGNED/BREXIT FEES WILL BE CAPPED

USA/CAN 1.3016  UP .0034 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA/CANADA HAS A HUGE HOUSEHOLD DEBT/GDP PROBLEM)

Early THIS FRIDAY morning in Europe, the Euro FELL by 60 basis points, trading now ABOVE the important 1.08 level FALLING to 1.1732; / Last night Shanghai composite CLOSED DOWN 42.35 POINTS OR 1.36%  /Hang Sang CLOSED DOWN 554.42 POINTS OR 1.76% /AUSTRALIA CLOSED DOWN .21% / EUROPEAN BOURSES  ALL GREEN /

The NIKKEI: this FRIDAY morning CLOSED DOWN 128.76 OR 0.56%

Trading from Europe and Asia

1/EUROPE OPENED ALL RED 

2/ CHINESE BOURSES / :Hang Sang CLOSED DOWN 554.42 POINTS OR 1.76%  / SHANGHAI CLOSED DOWN 42,35 POINTS OR 1.36%  /

Australia BOURSE CLOSED DOWN .21%

Nikkei (Japan) CLOSED DOWN 128.76 POINTS OR 0.56%

INDIA’S SENSEX  IN THE RED

Gold very early morning trading: 1298.80

silver:$16.71

Early FRIDAY morning USA 10 year bond yield: 2.91% !!! DOWN 2 IN POINTS from THURSDAY night in basis points and it is trading WELL ABOVE resistance at 2.27-2.32%. (POLICY FED ERROR)/

The 30 yr bond yield 3.07 DOWN 1  IN BASIS POINTS from THURSDAY night. (POLICY FED ERROR)/

USA dollar index early  THURSDAY morning: 93.75 UP 32  CENT(S) from THURSDAY’s close.

This ends early morning numbers FRIDAY MORNING

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And now your closing FRIDAY NUMBERS \1: 00 PM

Portuguese 10 year bond yield: 2.056% UP 3  in basis point(s) yield from THURSDAY/

JAPANESE BOND YIELD: +.047%  DOWN 8/10   in basis points yield from THURSDAY/JAPAN losing control of its yield curve/

SPANISH 10 YR BOND YIELD: 1.47% DOWN 6  IN basis point yield from THURSDAY/

ITALIAN 10 YR BOND YIELD: 3.1310  UP 11  POINTS in basis point yield from THURSDAY/

the Italian 10 yr bond yield is trading 166 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: FALLS TO +.4490%   IN BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR FRIDAY

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

Euro/USA 1.1772 DOWN .0021(Euro DOWN 21 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 109.46 DOWN 0.263 Yen UP 26 basis points/

Great Britain/USA 1.3403 UP .0013( POUND DOWN 13 BASIS POINTS)

USA/Canada 1.2957 DOWN  .0025 Canadian dollar UP 25 Basis points AS OIL FELL TO $65.64

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This afternoon, the Euro was DOWN 21 to trade at 1.1772

The Yen ROSE to 109.46 for a GAIN of 26 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 LOST 13 basis points, trading at 1.3403/

The Canadian dollar GAINED 25 basis points to 1.2957/ WITH WTI OIL FALLING TO : $65.64

The USA/Yuan closed AT 6.4067
the 10 yr Japanese bond yield closed at +.047%  DOWN 8/10  IN BASIS POINTS / yield/
Your closing 10 yr USA bond yield DOWN 0   IN basis points from THURSDAY at 2.924 % //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 3.131  UP 3  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, 93.62  UP 8 CENT(S) ON THE DAY/1.00 PM/

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for FRIDAY: 1:00 PM PM

London: CLOSED DOWN 23.33 POINTS OR 0.30%
German Dax :CLOSED DOWN 44.50 OR 0.35%
Paris Cac CLOSED UP 1.86 POINTS OR 0.03%
Spain IBEX CLOSED UP 82.70 POINTS OR 0.84%

Italian MIB: CLOSED DOWN 411.62 POINTS OR 1,89%

The Dow closed UP 75.12 POINTS OR 0.38%

NASDAQ closed down  54.17 OR .70 % 4.00 PM EST

WTI Oil price; 65.79  1:00 pm;

Brent Oil: 76.78 1:00 EST

USA /RUSSIAN ROUBLE CROSS: 62.32 UP 51/100 ROUBLES/DOLLAR (ROUBLE LOWER BY 22 BASIS PTS)

TODAY THE GERMAN YIELD RISES TO +.4490% FOR THE 10 YR BOND 1.00 PM EST EST

END

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

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

WTI CRUDE OIL PRICE 4:30 PM:$65.64

BRENT: $76.36

USA 10 YR BOND YIELD: 2.94% the dropping yields signify markets are in turmoil

USA 30 YR BOND YIELD: 3.09%/

EURO/USA DOLLAR CROSS: 1.1769 DOWN .0023  (DOWN 23 BASIS POINTS)

USA/JAPANESE YEN:109.41 DOWN 0.301 (YEN UP 30 BASIS POINTS/ .

USA DOLLAR INDEX: 93.54 UP 11 cent(s)/dangerous as the HIGHER dollar IS DESTROYING THE EMERGING MARKETS.

The British pound at 5 pm: Great Britain Pound/USA: 1.3406 DOWN 0.0010  (FROM YESTERDAY NIGHT DOWN 10  POINTS)

Canadian dollar: 1.2924 DOWN 53 BASIS pts

German 10 yr bond yield at 5 pm: +4490%


VOLATILITY INDEX:  12.18  CLOSED  UP 0.05

LIBOR 3 MONTH DURATION: 2.327%  .

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

TRADING IN GRAPH FORM FOR THE DAY

 

Thanks To Biggest Short Squeeze In 4 Months,

US Stocks Shrug Off EM, EU Entropy

Markets move robotically higher, US creates fasteresterest super-computer ever-ever, Tudor’s AI fund outperforms humans dramatically, Durant shows cyborgian features… It’s here…

It’s all green, all the way baby…

 

VIX tried its best to get back below 12…

 

Growth dominated value to start the week then factors reversed rapidly on Thursday morning as value dominated growth to end marginally higher on the week…

 

 

Wondering why stocks soared seemingly unstoppably this week, no matter what was thrown at them? Simple – it was the biggest short squeeze week in four months…

In fact, since the start of April, “Most Shorted” stocks have dramatically outperformed the S&P…

 

FANG stocks outperformed financials on the week but the last 3 days financials were the big winners…

But as US bank soared, Italian banks… did not…

 

Massive divergence occurring between US equity risk, IG risk, and HY risk…

 

And while US debt markets’ saw a yield flash-crash which left them marginally higher on the week…

 

The biggest story of the week – which CNBC et al. barely even mentioned – was the huge liquidity suck out in US Treasuries on Thursday…

 

10Y Yields remained below 3.00% …

 

The yield curve ended practically flat on the week…

 

Emerging Market debt tumbled back near its lowest since Feb 2016… after a brief dead cat bounce last week…

 

But US HY credit markets rebounded notably, even as Emerging Markets plunged…

 

The Dollar Index fell on the week for the first time in two months – though the trend is undeniably flat for the last 17 days…(1168, 1170, 1169, 1168, 1169, 1168, 1171, 1173, 1177, 1170, 1171, 1172, 1171, 1172, 1170, 1170, 1170…)

 

EM FX was ugly broadly speaking but as the Argentine Peso plunged today so the Brazilian Real resurged miraculously…

And in case you wondered – *BRAZIL TREASURY ACTS TO CURB VOLATILITY, NOT FIX PRICES:ALMEIDA

Cryptos ended the week in the green with Bitcoin Cash outperforming and Litecoin the laggard…

 

Even with the dollar marginally lower, oil still underperformed, as copper soared on supply scares…

 

Silver notably outperformed gold on the week…back to almost unchanged on the year…

 

But $1300 remains bid for the yellow metal…

 

Once again, just as reality was about to dawn, soft data surveys took off again this week (as hard data faded)…

 

Finally – today was all about the G6+1…ish

Rudolf E. Havenstein, Gathering Assets@RudyHavenstein

OMG NOW THERE’S NINE https://twitter.com/AlgoSlayer/status/1005153995420250112 

BuckTweet@Bucktweet_Say

I miss the costumes. I want costumes. pic.twitter.com/dTNWuiLucu

View image on Twitter
END

 

 

 

 

 

the reason for stock markets crashing today:  Trump lashes out at Micron of France and Trudeau of Canada

(courtesy zerohedge)

Trump Lashes Out At Macron, Trudeau Ahead Of

“G6+1” Summit

Tomorrow’s G7, or rather G6+1 meeting, is shaping up to be one for the ages.

As we reported previously, chancellor Merkel already was setting the ground for the Toronto showdown among the world’s top political leaders, vowing to challenge Donald Trump on virtually every issue, from trade to climate, and warning that the lack of room for compromise means leaders may fail to agree on a final statement, an unprecedented event at a summit of the world’s 7 most advanced nations.

Then, earlier today, in comments made alongside Canada PM Justin Trudeau in Ottawa, French President Emmanuel Macron said that no head of state is “eternal” and that he stands ready to work with the six other Group of Seven members if U.S. wants to stand alone.

You say President Trump doesn’t care. Maybe. But none of us are eternal and our countries, the commitments taken, go beyond us. None of us who have been elected by the people can say ‘all prior commitments disappear.’ It’s just not true, there is a continuity in state affairs at the heart of international laws. Sometimes we’ve inherited some commitments that weren’t core to our beliefs, but we stuck to them, because that is how it works for nations. And that will be the case for the United States – like for every great democracy”, Macron said quoted by Bloomberg.

The common theme: the rest of the world is desperate to show just how united it is against Trump, perhaps in hopes of subduing him and quashing his opposition.

Good luck with that.

Shortly after the constant barrage of anti-Trump rhetoric out of the G6, Trump on Thursday was quick to take even more jabs at Canada and France on the eve of the G-7 summit.

In a tweet, Trump accused the U.S. allies of levying “massive tariffs” and creating “non-monetary barriers.”

Donald J. Trump

@realDonaldTrump

Please tell Prime Minister Trudeau and President Macron that they are charging the U.S. massive tariffs and create non-monetary barriers. The EU trade surplus with the U.S. is $151 Billion, and Canada keeps our farmers and others out. Look forward to seeing them tomorrow.

Trump’s comment was in response to French President Emmanuel Macron’s tweet in which he echoed Merkel’s threat to exclude U.S. from a joint statement issued every year at the G-7 summit.

“The American President may not mind being isolated, but neither do we mind signing a 6 country agreement if need be. Because these 6 countries represent values, they represent an economic market which has the weight of history behind it and which is now a true international force,” Macron tweeted.

Later on Thursday, Trump attacked Trudeau over Canada’s dairy industry, claiming that Canada is “killing” U.S. agriculture.

Donald J. Trump

@realDonaldTrump

Prime Minister Trudeau is being so indignant, bringing up the relationship that the U.S. and Canada had over the many years and all sorts of other things…but he doesn’t bring up the fact that they charge us up to 300% on dairy — hurting our Farmers, killing our Agriculture!

As CNBC notes, Canada bought 31% of U.S. milk exports and 5.3% of its cheese exports in 2016, according to data from MIT’s Observatory of Economic Complexity.

Trump then pivoted back the EU, asking its progressive, liberal leaders “Why isn’t the European Union and Canada informing the public that for years they have used massive Trade Tariffs and non-monetary Trade Barriers against the U.S. Totally unfair to our farmers, workers & companies. Take down your tariffs & barriers or we will more than match you!”

Donald J. Trump

@realDonaldTrump

Why isn’t the European Union and Canada informing the public that for years they have used massive Trade Tariffs and non-monetary Trade Barriers against the U.S. Totally unfair to our farmers, workers & companies. Take down your tariffs & barriers or we will more than match you!

Tensions between the U.S. and many of its allies were already high after the Trump administration decided late last month to impose tariffs on imports from Canada, Mexico and the European Union, citing national security concerns. Trudeau responded that it’s offensive for the Trump administration to claim that Canada poses a security threat to the United States, given the “the thousands of Canadians who have fought and died alongside their American brothers in arms.”

Later it emerged that in a phone conversation, Trump blamed Canada for burning down the White House in 1812, an escalation which Larry Kudlow said was nothing more than a “family quarrel.”

Over the weekend, in the G7 meeting for finance ministers, the world’s top economic leaders asked Treasury Secretary Steven Mnuchin to relay their “unanimous concern and disappointment” over the tariffs on steel and aluminum imports.

It appears the relaying had no impact, and what’s more there is no desire on either side to spend more time in Toronto than is absolutely required. According to Bloomberg’s Jennifer Epstein, Trump is getting to the G-7 summit late (11:15 tomorrow morning, while other leaders are already in Charlevoix) and leaving early (roughly 23 hours after his arrival, ahead of an afternoon of meetings).

Jennifer Epstein

@jeneps

Trump is getting to the G-7 summit late (11:15 tomorrow morning, while other leaders are already in Charlevoix) and leaving early (roughly 23 hours after his arrival, ahead of an afternoon of meetings).

Commenting on what to expect tomorrow, Eurasia’s Ian Bremmer said “the meeting this week will be by far the most dysfunctional G-7. The old order is over. What we are fighting over now, as the new order emerges, is whether the U.S. wants to have the most important seat at the table or not. Right now the answer is no.”

Perhaps: for the full answer tune in tomorrow for what promises to be the most exciting G6+1 meeting ever.

end
Democrats and socialists will not like this;  Trump moves 1600 detainees to Federal prisons as ICE scrambles to find space
(courtesy zero hedge)

Trump Moves 1,600 Immigrant Detainees To Federal Prisons As ICE Scrambles To Find Space

President Trump is again demonstrating he doesn’t need the cooperation of Congress to implement some of his core campaign promises, like securing America’s borders. Case in point: Reuters reports today that US authorities are transferring roughly 1,600 ICE detainees to federal prisons over the objections of immigration advocates and human-rights groups. The move is the first large-scale use of federal prisons to crack down on people entering the country illegally. Meanwhile, immigrants rights advocates are furious because these same facilities typically house some of the justice system’s most hardened criminals.

Victorvile

 

US Penitentiary in Victorville, Calif.

Five prisons will temporarily take in detainees who are awaiting civil immigration hearings – a group that could include asylum seekers – as ICE works on securing additional housing space. A prison in Victorville, Calif. will house 1,000 immigrants – the bulk of people being moved under the program. Other prisons include ones in Washington, Oregon, Arizona and Texas. The news comes after the Department of Homeland Security announced its contractors have started building the first section of Trump’s planned border wall (among other features that make it superior to the rickety “fence” that had previously marked the border are special “anti-climbing plates” that make it difficult to scale).

Trump, of course, has promised to lock up people pending deportation, canceling President Obama’s “catch and release” policy that allowed illegal immigrants without serious criminal records to roam free in the US. Others were housed in local jails, or other facilities.

Immigration advocates like Kevin Landy, a former ICE assistant director who helped run the agency under Obama, blasted the plan to “temporarily” use federal prisons as “highly unusual” adding that it raises “oversight concerns” – even though the immigrants are only expected to stay for about four months until ICE makes more space available.

“A large percent of ICE detainees have no criminal record and are more vulnerable in a prison setting – security staff and administrators at BOP facilities have spent their careers dealing with hardened criminals serving long sentences for serious felonies, and the procedures and staff training reflect that,” he said. “This sudden mass transfer could result in some serious problems.”

[…]

“Our federal prisons are set up to detain the worst of the worst. They should not be used for immigration purposes,” said Ali Noorani, the executive director of the National Immigration Forum.

“Federal prisons are for hardened criminals. They are not physically set up for immigrant landscapers looking for a job or fleeing violence,” Noorani said.

Meanwhile, representatives of prison workers unions complained that they’d been given little time to prepare for the influx of new detainees. ICE data shows the average daily population of detainees in its facilities as of May 26 was 41,134, up from 38,106 in March 2017.

Officials of a prison employees’ union said the influx of ICE detainees, who were arrested at the border or elsewhere in the United States by immigration officials, raises questions about prison staffing and safety.

Union leaders at prisons in California, Texas and Washington state who spoke to Reuters said they had little time to prepare for the large intake of detainees.

At Victorville, the prison getting the largest number of people, workers are moving about 500 inmates in a medium-security facility to make space, said John Kostelnik, local president for the American Federation of Government Employees Council of Prison Locals union.

“There is so much movement going on,” said Kostelnik. “Everyone is running around like a chicken without their head.”

After an initial “Trump lull” after the president defeated Hillary Clinton in an upset victory in November 2016, border crossings have surged again – presumably because immigrants are scrambling to get across before Trump builds the wall. ICE says it’s “working to meet the demand for additional immigration detention space” as the surge overwhelms its current capacity.

“To meet this need, ICE is collaborating with the US Marshals Service, the Bureau of Prisons, private detention facilities operators and local government agencies,” she said. Nearly 51,000 people were arrested crossing the southern border in April 2018 – up from just 16,000 in April 2017. Also, as is often the case, if these detainees end up staying in these federal prisons for more than four months, it’ll likely be the fault of Democrats – not Republicans – for holding up funding that would provide ICE with the resources it needs to house all of its detainees.

end

an excellent commentary explaining that the USA Medicare Trust will run out of money in 8 years and social security in 2034

(courtesy zerohedge)

It’s Official: Medicare Trust Fund Will Run Out Of Money In 8 Years

Authored by Simon Black via SovereignMan.com,

Two days ago the respective Boards of Trustees for Medicare and Social Security released their annual reports for 2018.

As usual, the numbers are pretty gruesome… and the reports plainly stated what we’ve been talking about for years: the trust funds for both Social Security and Medicare are going to run out of money.

Soon.

In the case of Medicare, the Trustees project that its largest trust fund will be fully depleted in 2026, just eight years away. In the context of retirement, that’s right around the corner.

For Social Security, the Trustee report stated that the program will spend more money on benefits in 2018 than it will generate in income and tax revenue.

So this year will be the first time Social Security has run a deficit since 1982.

But it gets worse.

Because according to the Trustees’ projections, the program will continue running larger and larger deficits until it too becomes fully depleted in 2034.

After that, recipients can expect at least a 25% cut in the benefits that they were promised and worked their entire lives to receive.

Again, these numbers come directly from the Trustees of Social Security and Medicare (which includes the US Treasury Secretary).

The reports were so dire that mainstream publications picked them up almost immediately.

Curiously, though, a number of newspapers tried to play down the bad news, dismissively telling their readers that Social Security and Medicare are just fine, and that those sobering projections don’t matter.

These are common refrains. They’ll state, for example, that there’s nothing to worry about because the government will step in and bail out the programs.

Is that so? Well, who is going to bail out the government?

According to the Treasury Department’s annual financial report, Uncle Sam is already insolvent to the tune of $20.4 trillion.

And those numbers are only getting worse too. Treasury’s own projections show annual budget deficits in excess of $1 trillion starting in 2020.

Simply put, a short-term fix of Social Security and Medicare would cost trillions of dollars. And that would just be a down payment on the long-term costs of fixing the programs.

The federal government simply doesn’t have that kind of money. Not even close.

So the expectation that some politician is going to come riding in on a white horse with checkbook in hand is ludicrous.

A second commonly held myth is that these Social Security and Medicare projections are irrelevant because they “have a history of being wrong.”

That’s completely untrue.

35 years ago, the Social Security annual report from 1983 projected that the program’s cost would exceed its income and tax revenue in… 2020.

The current report states that this is going to happen in 2018.

That’s only a two year difference from what they projected over three decades ago. So they pretty much nailed it.

More importantly, though, we’re not even talking about long-range projections, which typically look 50-75 years into the future. We’re talking about EIGHT years from now.

But even if you take a longer-term view, the data is still grim.

Social Security and Medicare provide benefits to people based primarily on tax revenue generated by those who are currently in the work force.

Essentially the programs require a certain number of workers paying into the system for every single retiree drawing benefits. They call this the worker-to-retiree ratio.

In order for this delicate balance to work, population growth has to remain fairly stable. Major swings in population growth throw everything out of whack.

The critical problem is that both fertility rates and population growth (which takes into consideration immigration and mortality) have been declining.

The US fertility rate has been on a general downward trend since 1990, and in steep decline since 2007.

And overall population growth rates for the past several years have been the lowest in more than five decades.

This contrasts with the years immediately following World War II, in which there was an explosion in population growth.

Those are the folks who are currently receiving Social Security and Medicare benefits.

But due to the declines in population growth, there are no longer enough workers paying into the system (even with unemployment at multi-decade lows) to support the programs’ current recipients.

The end result is what we’re talking about today: Social Security and Medicare can’t generate enough revenue to support their costs and will thus soon deplete their cash reserves.

The government is trying to put a brave face on this, telling us that the alarming drop in the national fertility rate is only temporary, even though it’s been falling steadily for three decades.

But they insist it will reverse soon.

Frankly, it doesn’t seem sensible to plan one’s retirement based the ability of these bureaucrats to accurately predict how much sex people are going to be having in the coming years.

Instead, let’s look at the big picture: Social Security and Medicare are both perennially mismanaged with a history of gridlock and inaction.

And the people who are responsible for overseeing these trust funds have clearly stated that the programs will run out of money and be unable to pay the benefits that have been promised.

What sane person would possibly put all of his/her retirement eggs in that basket?

There are clearly better ways.

One approach is to establish more robust retirement plans (like a solo 401(k) or self-directed IRA) and start maximizing your contributions.

These types of structures allow you to direct your capital to potentially more lucrative investments that go beyond mainstream stocks and bonds. Plus, in many respects, they can be cheaper to maintain.

This is important, because if you can squeeze out an extra 1% per year between cost savings and better investment returns, it can add up to hundreds of thousands of dollars in additional retirement savings when compounded over several decades.

Regardless of what happens (or doesn’t happen) with Social Security in the future, it’s hard to imagine you’ll be worse off for doing this.

And to continue learning how to ensure you thrive no matter what happens next in the world, I encourage you to download our free Perfect Plan B Guide.

SWAMP STORIES

Michael Horowitz will release his report on June 14
(courtesy zerohedge)

DOJ To Release Report On Clinton Email Probe

On June 14 With Explosive Hearing To Follow

Less than three weeks after we learned that the IG report on the Clinton email probe was in its final review, and which has found among other things that James Comey not only “defied authority” but was “insubordinate“, we finally have the long awaited drop date: June 14.

DOJ Inspector General Michael Horowitz told Senate Judiciary Committee Chairman Charles Grassley in a letter on Thursday that his office is planning to release the highly anticipated report detailing broad allegations of misconduct by FBI and Justice Department officials in the months leading up to the 2016 presidential election on June 14.

It only gets better from there because Horowitz also said that he will testify before the Judiciary Committee on June 18 in what may be the most watched Congressional testimony since Comey spoke on the Hill on June 8, 2017The House Judiciary and Oversight committees are expected to hold a hearing on the report the next day.

As we have reported over the past year, the inspector general’s probe has so far focused on former FBI Director James Comey’s various statements and letters regarding the investigation into Hillary Clinton’s use of a private email server while she was secretary of State, as well as the unauthorized disclosure of nonpublic information by Justice Department employees.

As ABC reported yesterday – oddly enough this particular leak did not make it to either WaPo, nor NYT nor CNN –   the report is expected to fault Comey, accusing him of defying authority at times during his tenure as the nation’s top FBI official. It’s also expected to criticize former Attorney General Loretta Lynch for her handling of the Clinton email investigation.

The inspector general’s report has been more than a year in the making. The DOJ launched the investigation into the matter in January 2017, roughly a week before President Trump took office; ironically it was commissioned by Democrats and was intended to look into the FBI’s reopening of the Clinton email probe, something which Hillary has repeatedly blamed losing the presidential election on.

Trump questioned on Tuesday why the report was “taking so long” to release, and raised questions about whether internal investigators were seeking to make the report’s findings “weaker.”

“What is taking so long with the Inspector General’s Report on Crooked Hillary and Slippery James Comey,” Trump tweeted. “Numerous delays. Hope Report is not being changed and made weaker! There are so many horrible things to tell, the public has the right to know. Transparency!”

Of course, should the IG investigation challenge Comey’s work as FBI director, which we now know it will, it will bolster Trump’s argument that he did the right thing by firing Comey. It also brings the debate back to Clinton’s email server.

“When will people start saying, “thank you, Mr. President, for firing James Comey?” Trump tweeted Thursday.

Trump will also point to a previous IG report that accused Comey’s deputy, Andrew McCabe, of misleading internal investigators about a news media disclosure.

In short, the IG will find major problems with the actions of both Comey and McCabe; whether it will also conclude that Comey acted in a biased, political manner, may be all that Trump needs to be vindicated in his ongoing crusade against Comey, whome he fired Comey in May 2017, citing the former FBI director’s handling of the Clinton email investigation. He later acknowledged that the bureau’s probe into potential collusion between his campaign and Russia also factored into his decision.

Horowitz’ full letter to Grassley is below (link)

2018-07-18 Doj Oig to Ceg – Doj, FBI Pre-election Report by Zerohedge on Scribd

https://www.scribd.com/embeds/381300273/content?start_page=1&view_mode=scroll&access_key=key-VuvdzaPb2OGh142OB3DQ&show_recommendations=true

end
This is a big story!! A top intelligence senate staffer has been arrested in a leak probe.  New York times also had their records seized along with a reporter
(courtesy zerohedge)

Top Senate Intel Staffer Arrested In Leak Probe; NYT Journo’s Records Seized

Longtime former director of security for the Senate Intelligence Committee, James A. Wolfe, was indicted and arrested Thursday night on charges of giving false statements to FBI agents in 2017 about repeated contacts with three reporters, according to the Washington Examiner.

Jim Wolfe, a longtime former director of security at the Senate Intelligence Committee, was indicted and arrested Thursday night for giving false statements to F.B.I. agents during their investigation into leaks of classified information to the media.

According to the Department of Justice, Wolfe lied to F.B.I. agents back in 2017 “about his repeated contacts with three reporters, including through his use of encrypted messaging applications.”

Wolfe is also accused of making false statements about providing “non-public information related to matters occurring before the [Senate Intelligence Committee]”to two additional reporters. –Washington Examiner

Ryan J. Reilly

@ryanjreilly

James Wolfe indicted

Wolfe, 57, is a former Army intelligence analyst who worked for the Senate for over 30 years. He stopped performing work for the committee in December and retired last month. More from the NYT:

Court documents describe Mr. Wolfe’s communications with four reporters, using encrypted messaging applications. It appeared that the F.B.I. was investigating how Ms. Watkins learned that Russian spies in 2013 had tried to recruit Carter Page, a former Trump foreign policy adviser. She published an article for BuzzFeed News on April 3, 2017, about the attempted recruitment of Mr. Page in which he confirmed the contacts.

In another case, the indictment said, Mr. Wolfe used an encrypted messaging app to alert another reporter in October 2017 that he had served Mr. Page with a subpoena to testify before the committee. The reporter, who was not named, published an article disclosing that Mr. Page had been compelled to appear. After it was published, Mr. Wolfe wrote to the journalist to say, “Good job!” and, “I’m glad you got the scoop,” according to court papers.

The same month, Mr. Wolfe reached out to a third reporter on the same unidentified app to offer to serve as an unnamed source, the documents said.

Mr. Wolfe also communicated with a fourth reporter, using his Senate email account, from 2015 to 2017, prosecutors said. They said he denied those contacts.

Mr. Wolfe’s alleged conduct is a betrayal of the extraordinary public trust that had been placed in him. It is hoped that these charges will be a warning to those who might lie to law enforcement to the detriment of the United States,” said Assistant Attorney General John. Demers

See the indictment here:

Ex-girlfriend’s communications seized

News of Wolfe’s arrest follows an article by the New York Times which claims that the Department of Justice “secretly seized years’ worth of a New York Times reporter’s phone and email records,” in connection with an investigation into classified leaks.

NYT national security reporter Ali Watkins – formerly of Buzzfeed and Politico, came under investigation as part of a DOJ inquiry into Wolfe. FBI agents approached Watkins about her relationship with Wolfe while investigating unauthorized leaks – the first known instance of the Justice Department seizing a reporter’s data under President Trump.

Ali Watkins

Watkins claims that Wolfe was not a source of classified information during their relationship.

A prosecutor notified Ms. Watkins on Feb. 13 that the Justice Department had years of customer records and subscriber information from telecommunications companies, including Google and Verizon, for two email accounts and a phone number of hers. Investigators did not obtain the content of the messages themselves. The Times learned on Thursday of the letter, which came from the national security division of the United States attorney’s office in Washington. –New York Times

Attorney General Jeff Sessions said last year that the DOJ was aggressively pursuing around three timx as many leak investigations as were open at the end of Obama’s second term – while Obama’s DOJ prosecuted more leaks than all previous administrations combined.

The seizure — disclosed in a letter to the reporter, Ali Watkins — suggested that prosecutors under the Trump administration will continue the aggressive tactics employed under President Barack Obama.

When law enforcement officials obtained journalists’ records during the Obama administration, members of Congress in both parties sounded alarms, and the moves touched off such a firestorm among advocates for press freedom that helped prompt the Justice Department to rewrite its relevant guidelines. -NYT

In early 2013, for example, the Obama DOJ led by Attorney General Eric Holder secretly obtained the home and cell phone numbers of individual AP journalists, in what the news agency called a “serious interference with AP’s constitutional rights to gather and report the news.”

“It’s always disconcerting when a journalist’s telephone records are obtained by the Justice Department — through a grand jury subpoena or other legal process,” said Ms. Watkins’s personal lawyer, Mark J. MacDougall to The Times. “Whether it was really necessary here will depend on the nature of the investigation and the scope of any charges.”

The Senate Intelligence Committee hinted at the leak investigations on Wednesday, noting that it was cooperating with the DOJ “in a pending investigation,” while the Senate had earlier voted unanimously to adopt a resolution to share committee information with the DOJ”in connection with a pending investigation arising out of the unauthorized disclosure of information.”

Press advocates have long considered the idea of mining a journalist’s records to be an intrusion of First Amendment freedoms – one which federal prosecutors at the DOJ acknowledge must be dealt with delicately. “Freedom of the press is a cornerstone of democracy, and communications between journalists and their sources demand protection,” said Eileen Murphy, a Times spokeswoman.

Developing…

end

This is getting out of hand:  Mueller charges Manafort with witness tampering and still leaves Hillary scot free

(courtesy zerohedge)

Mueller Charges Manafort With Witness Tampering

Just weeks after a Virginia judge nearly dismissed some of the charges against former Trump campaign executive Paul Manafort, Special Counsel Robert Mueller has filed a superseding indictment of Manafort accusing him of witness tampering. He has also asked a federal judge to consider revoking Manafort’s bail.

Prosecutors accused Manafort and a longtime associate – described only as “Person A” but, according to the Washington Post, is believed to be Konstantin Kilimnik, a Ukrainian associate of Manafort’s – of repeatedly contacting two members of a public relations firm and asking them to testify falsely about secretive lobbying they did for Manafort.

The firm whose employees were allegedly the targets of Manafort’s harassment is identified only as “the Habsburg Group,” allegedly a nickname bestowed by Manafort. It was retained by Manafort in 2012 to help with his lobbying work on behalf of Ukraine. Which makes us wonder: Could this firm be the Podesta Group? After all, we know they did work with Manafort on that campaign.

In court documents, prosecutors with special counsel Robert S. Mueller III allege that Manafort and his associate — referred to only as Person A — tried to contact the two witnesses by phone and through encrypted messaging apps. The description of Person A matches his longtime business colleague in Ukraine, Konstantin Kilimnik.

Manafort, 69, has been on home confinement pending trial.

FBI agent Brock W. Domin said that one of the public relations firm’s executives identified as Person D1 told the government he “understood Manafort’s outreach to be an effort to ‘suborn perjury’ ” by encouraging others to lie to federal investigators by concealing the firm’s work in the United States.

Spokesmen for Manafort and the special counsel’s office, who are under a court gag order in the case, declined to comment.
Instead of presenting an actual legal threat, the indictment reads like an attempt by Mueller to send a message to Manafort: If he continues to refuse cooperation, Mueller will try and take away his freedom for the duration of the trial. And as WaPo reminds us, this is the second time prosecutors have complained about Manafort’s behavior while he awaits trial. Last year, investigators said they had intercepted emails showing Manafort had ghostwritten an editorial defending his actions that ran in a Ukrainian newspaper. The charges were filed as part of Manafort’s Washington case, which involves charges of filing misleading lobbying disclosures.

As for Kilimnick, whose name popped up earlier in the investigation due to his connection to aluminum magnate Oleg Deripaska, it’s unlikely the special counsel will ever be able to make an arrest, seeing as he lives in Ukraine. The indictment is a gesture – like Mueller’s indictment of 13 Russian nationals and three entities for their involvement in a “troll farm” that allegedly try to sway the election. Mueller just needs to remind the public that he’s keeping busy, while justifying the expense of the investigation.

end

Let us close out the week with this offering courtesy of Greg Hunter of USAWatchdog

(courtesy Greg Hunter)

Trump Winning Trade War, Iran Used US Dollar, Media

Propaganda Continues

By Greg Hunter On June 8, 2018 In Weekly News Wrap-Ups

Greg Hunter’s USAWatchdog.com (WNW 338 6.8.18)

A very big story has emerged out of a Senate probe that uncovered a secret deal to allow Iran to sidestep U.S. sanctions and use the U.S. financial system. The Obama Administration continually told the public it would not allow Iran to use the dollar for transactions, but did so anyway as part of the Iran nuclear deal that was supposed to curtail its nuclear programs. This is on top of the fact that the so-called “Iran Nuclear Deal,” or JCPOA, was never signed – by anyone.

There is a trade war brewing, and it involves Germany, France, Canada and the rest of the G7 nations. It seem all the world leaders are down with the one world government and New World Order except President Trump, who is for “America First.” Trump has backed out of many “deals” supported by the New World Order, and that is exposing them for the crooks they really are and they do not like it.

The mainstream media (MSM) is not letting up on Trump and continues to spew fake news and ignore the real news because they are just part of the Democrat Super-PAC. The latest insult comes from Time Magazine depicting President Trump as a king. This is why almost all MSM, especially CNN, are tanking. Let the lay-offs continue.

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

(To Donate to USAWatchdog.com Click Here)

After the Interview:

Steve Quayle will be the guest for the Early Sunday Release. He will talk about technology and the dark places it is taking humanity, among other subjects.

Video Link

https://usawatchdog.com/trump-winning- trade-war-iran-used-us-dollar-media-propaganda- continues/

end

I WISH YOU ALL A GRAND WEEKEND AND I WILL SEE YOU

ON  MONDAY night

HARVEY

 

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One comment

  1. Silver is about to blow. Look at First Majestic…the people in the know are piling in.

    Like

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