08:30 Jan Trade deficit narrows to ($36.0B) vs. consensus ($38.0B)
Prior figure ($39.9B).
* * * * *
US trade gap narrows for record sixth month
WASHINGTON, March 13 (Reuters) - The U.S. trade deficit shrank 9.7 percent in January to its smallest since October 2002, as both imports and exports tumbled for the sixth consecutive month in the face of shrinking global demand, a U.S. government report showed on Friday.
The monthly trade gap totaled $36.0 billion, below a Wall Street consensus estimate of $38.0 billion before the report. The deficit has now narrowed for a record six consecutive months, the longest previous run being from April through August 2007.
U.S. exports of goods and services fell 5.7 percent from December to the lowest since September 2006 and imports tumbled 6.7 percent to lowest since March 2005.
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The deficit shrank by almost 10% as both imports and exports tumbled. On closer examination of the figures we see that the two bright lights in the export side of things was gold and other precious metals:
that being silver and gold
Total January exports out of the United States fell 22% YOY; the one bright spot was non-monetary Gold and Precious Metals. January exports of non monetary Gold (Gold not in official central bank reserves) was $1.3B up 24% YOY. Other precious metals exports were $569MM up 29% Year over Year. In the month of January these were the U.S.’s two fastest growing exports. end
The usa produces 240 tonnes of gold per year or 20 tonnes per month. Each tonne has 31000 oz of gold.
If you take the average price last month of 920.00 usa you get 20 x 31,000 or 620,000 oz produced x 920 usa dollars or total revenue from gold production of $570 million dollars.
The usa exported 1.3 billion dollars of gold. They also state that it is non monetary gold which can only mean gold produced and not official gold. (Fort Knox)
The usa is including in their export figures gold shipped from the Federal Bank of NY. This bank is a foreign depository of gold. The other known foreign depository is the Bank of England.
The reason for picking these facilities is geography as a threat on a nations gold would wipe out that nation for good.
The usa for some hedonic reasoning include the export of foreign gold as an export on their books. They include it on the top line of the exports and remove it far below theline where nobody sees it.
What is fascinating to see is that foreigners are becoming reluctant to keep their gold on usa soil. It looks to us like 700 million usa dollars worth of gold have left the Bank of NY or about 25 tonnes last month.
If you look at the next precious metals export of 569 million it is even stranger. Silver production in the usa is about 10% of total production of 500 million oz or about 50 million oz. Thus 4 million oz of silver is produced per month on usa soil or approximately 50 million oz worth. Very little Platinum is produced.
Also no Platinum or silver are stored in safe-keeping facilities. So what is this 569 million export figure? I have no idea. This is the first time, the usa used other precious metals in its export figures.
Looks to me like a phony!.
The usa still exports 100% of their gold production. They keep zero gold on reserves as they print massive dollars. Foreign nations demand gold at a increasing clip. All the mints show record production and some like the usa mint are flat out:
World mints report soaring demand for gold coins
LONDON (Reuters) - Mints around the world say demand for gold coins has risen sharply as interest in the precious metal soars on the back of financial instability and concerns over the inflation outlook.
The Royal Canadian Mint, which produces Maple Leaf bullion coins, said it quadrupled its production capacity late last year as demand for gold and silver bullion products leapt.
Gold was one of the few commodities to rise last year as turmoil in the financial sector sharpened investors' appetite for assets seen as a safe store of value, such as bullion.
Spot gold rallied to an 11-month high of $1,005.40 on February 20 as a slide in equity markets increased interest in the precious metal. Demand for physical gold products such as coins and bars has been particularly strong, traders say.
The United States Mint said sales of its one-ounce American Eagle gold bullion coins rocketed to 710,000 ounces in 2008, from 140,000 ounces a year before.
"The demand for gold and silver has been unprecedented," a spokesman for the Mint told Reuters.
The chairman of the French Mint, Christophe Beaux, said sales roughly doubled last year in value terms and are expected to rise by another 50 percent this year.
The 2009 catalog the mint had produced was almost entirely pre-sold, he said. The French Mint produces 100 euro gold coins, and plans to mint 10-ounce and 1-kilo coins this year.
In South Africa -- the world's second-largest gold producer -- Natanya van Niekerk, deputy general manager for numismatics at the South African Mint Company, said she had seen a big increase in demand for gold.
"I think we will see this same trend in this and the next quarter," she said. "Gold surely has been resilient in these times."
Michael O'Kane, head bullion trader at the New Zealand Mint, said many overseas buyers had come into the New Zealand market. "We're seen as a safe-haven market," he said.
He said buying had been strong since the collapse of U.S. investment bank Lehman Brothers in September, as investors moved money from banks into hard assets like gold.
The mint was averaging "a month's transactions in a day," he said, adding he saw demand continuing to rise.
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American Eagle Gold Uncirculated CoinsProduction of United States Mint American Eagle Gold Proof and Uncirculated Coins has been temporarily suspended because of unprecedented demand for American Eagle Gold Bullion Coins. Currently, all available 22-karat gold blanks are being allocated to the American Eagle Gold Bullion Coin Program, as the United States Mint is required by Public Law 99-185 to produce these coins "in quantities sufficient to meet public demand . . . ."
The United States Mint will resume the American Eagle Gold Proof and Uncirculated Coin Programs once sufficient inventories of gold bullion blanks can be acquired to meet market demand for all three American Eagle Gold Coin products. Additionally, as a result of the recent numismatic product portfolio analysis, fractional sizes of American Eagle Gold Uncirculated Coins will no longer be produced.
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On the NYSE< the gold ETF GLD advanced a huge 15.29 tonnes yesterday. Gee! these guys are good. They can locate physical metal, air freight it, insure it, store and guard it. By the way 15.29 tonnes is 4 planeloads of gold. Here is the report:
The GLD ETF added a rather substantial 15.29 tonnes today (equal to 4,916 Comex lots) to a record 1056.82 tonnes. MarketVane’s Bullish Consensus added one point, to 77%.
If the usa exports all of its gold; how is it financing the comex? At the comex approximately 1.3 million oz of gold is called upon every two months. The usa must use official gold to supply the comex. This must be so because the usa exports 100% of its gold. It needs to finance the mint and comex and jewelry from official stocks. Who supplies the gold that London hands out everyday?
The big news of the day however was announcements by Mainland China. This next statement is a dandy:
In an astonishing development, the Chinese Central Bank, in its Annual Report, has predicted:
" in 2009…gold might scale a new peak"according to Reuters. See http://www.cnbc.com/id/29672477.
Wen, the Chinese Premier went on by stating that he felt that gold will rebound and he forsees a new gold peak.
China is sending messages to the usa that they are not happy with the risk of all the bonds and agency paper that it holds. The total usa holdings exceed 1.3 trillion. China holds amost 2 trilllion dollars of foreign debt.
There is no doubt that China is accumulating gold. Here is what our editor thinks of the situation:
That the Chinese Government is saying publicly that gold is going higher tells you they are accumulating gold using their heavily weighted US dollar reserves, they will continue to accumulate gold and, I believe cryptically, you can interpret this comment to signal a decline in their continued support of the U.S. dollar and U.S. Treasury bonds. I say this last point because they have dropped other hints over the past few months that they have become less interested in investing in U.S. debt, including their massive unloading of U.S. agency paper on swap for Treasuries.
And this certainly adds to the uncertainty of holding usa bonds:
Foreign central banks cut back US debt holdings
NEW YORK, March 12 (Reuters) - Foreign central banks sharply reduced their holdings of U.S. debt in the latest week, according to Federal Reserve data.
The Fed's holdings of U.S. securities for offshore central banks fell $15.2 billion to $2.584 trillion, reversing much of the prior week's $19.27 billion gain. The decline in U.S. Treasury holdings amounted to $11.03 billion.
Many investors fear overseas demand for U.S. government bonds could wane as the Treasury faces a record $1.75 trillion deficit.
Overseas central banks, particularly in Asia, have been huge buyers of U.S. debt in recent years and own over a quarter of marketable Treasuries. China recently overtook Japan as the biggest such buyer.
Thus far, concerns that they would stop buying American bonds have proved unfounded. A reopened auction of 30-year bonds on Thursday, for instance, drew a very strong indirect bid, a category that includes foreign central banks.
Still, the latest figures pointed to some reduction.
Holdings of debt issued or guaranteed by government-sponsored entities like Fannie Mae and Freddie Mac dropped $4.2 billion.
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Finally, it looks like the Swiss are moving into gold as they devalue their currency. This country knows this metal better than anybody as they accumulated their wealth by confiscation and destroying records.
If they must give up bank secretcy, they might as well accumulate the metal. This sovereign nation may be the nation repatriating its gold onto its soil from the usa. They may be the purchasers of gold with the Chinese on the comex. Here is what one cafe member remarks:
More on the Swiss move…
Bill
The SFr lost 3% yesterday vs the Euro, but independent commentary in the articles below suggests another 7% devaluation may be the primary target of the SNB.
If gold moves in tandem as yesterday, another 7% rise from 930 would take it to 995.
The comex shorts could have their work cut out to defend the 1000 in the next few days, if this scenario has legshttp://www.guardian.co.uk/business/feedarticle/8400348
« And the central bank may even have some more powerful aces up the sleeve should it become necessary:
Vice-chairman Philipp Hildebrand said in January, the SNB could start buying other currencies at a fixed rate, de-facto switching to a system of fixed foreign exchange rates, should it be necessary to avoid deflation. »
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and this from another member:
Tax Havens Pledge to Ease Secrecy Laws
http://online.wsj.com/article/SB123685028900906181.htmlNow some thoughts on yesterdays currency market events as seen from the conspiracy point of view.
The US pressure on the Swiss banking secrecy laws is increasing and the Europeans are jumping on the band wagon.
Is it just coincidence that the SNB’s timing in launching their currency intervention yesterday comes just before the Swiss announce what they intend to do on banking secrecy ?
Did the SNB buy US$ yesterday in one of the biggest daily moves ever in the SFr, over 3%, and then buy gold using the $ they had just purchased ?
Was this a warning shot across the bow of the US to get some leverage in their B.S. negotiations ?
Do the Swiss understand that the achilles heel of the US$ is the gold price ? (The Federal cabinet are probably not up to speed on this, but the guys at the SNB certainly understand)
How much of the SNB gold is actually stored in the USA and perhaps already compromised by swaps, sales or other transactions ?
Why would the Swiss buy gold after having sold half of their reserves a couple of years ago at lower prices ?
Answer : Because now they have a forecast for 2009 of 3% negative GDP, 1% deflation, and pressure on their banking industry from New York and London to steal their customers. (aka the UBS affair). Back then, when the SNB sold their gold to help the US$ they were on more amicable banking relation terms with the USA.
The BahnhoffStrasse had an axis with Wall St. !
All the above of course is pure conjecture and may be completely unfounded.
We will have to judge the situation by observing the outcome of the Bank Secrecy negotiations and following the SFr exchange rates and gold price over the next few weeks to see whether there is any merit in the above hypothetical scenario, because we will never get the truth !
After all Switzerland still has banking secrecy---- at least for today, ----- tomorrow may be another matter ?
Best
Alan
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From my vantage point, it sure looks like many central banks are turning to gold. We now have Venezuela, Ecuador, Russia, China and now Switzerland accumulating.
In economic news, I guess this is the only noteworthy story:
U.S. economic growth falls to a 14-year low -ECRI
NEW YORK, March 13 (Reuters) - A measure of U.S. future economic growth fell to a fresh 14-year low in the latest week although its annualized growth rate inched higher, a research group said on Friday.
The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index slipped to 104.8 for the week ending March 6, from 105.1 in the previous week.
It was the WLI's lowest reading since March 10, 1995, when it was 104.7.
The index's annualized growth rate edged up to a six-week high of negative 24.1 percent from negative 24.2 percent, offering some light in a period of economic downturn.
"While the WLI slid to a new cycle low, indicating that a business cycle recovery is not yet in sight, the uptick in its growth rate to a six-week high suggests the pace of contraction will slow in coming months," said Lakshman Achuthan, managing director at ECRI.
The weekly index fell due to higher interest rates and jobless claims data, with the decline partly offset by higher commodity prices, Achuthan said.
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I cannot see how the banks are making money unless the TARP dollars are turned into "profits" or another Ponzi or Madoff Scheme.
Today, the G20 meet in order to save the banking mess. I doubt that anything will come out of this.
Speak to you on Monday
Harvey.
