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I'm going to take a few minutes of your time and walk you through the July Bank Participation Report. This report shows how many banks [both U.S. and foreign] are long and short the various markets... plus how many Comex contracts they are long and short. Silver and gold are the two commodities that are of interest here. Here's the link to the July report... with silver and gold being about two thirds of the way down the page... and it's ever so simple to follow... and I mean it.
In silver you will notice that 'X' number of U.S. bullion banks are long 257 Comex contracts and short a whopping 31,803 Comex contracts. As the numbers show... the 257 long contracts represent 0.2% of total Comex silver open interest which is stated here as 118,962 contracts. The 31,803 short contracts represents 26.7% of total open interest.
But what the silver numbers doesn't say is how many U.S. banks hold those positions. The CFTC used to publish them, but once Ted Butler discovered the Bank Participation report and started to write about it, the bullion banks screamed bloody murder, so the CFTC changed the report so that if there are less than 4 U.S. banks holding either a long or short position... the number is not shown. They don't show the number of non-U.S. banks either, because if they did... by the process of subtracting that from the total number of banks involved, you could figure it out all by yourself, dear reader... and we mustn't have that now, must we?
From past historical BPR data, the number of U.S. banks has pretty much always been two... and I see nothing in these numbers that indicate that this has changed. I can also pretty much say that 95% [or more] of that 31,803 Comex contracts held short... is held by JPMorgan... and the other 5% [or less] is most likely held by HSBC USA. So if you subtract 0.2% from 26.7%... you will see that JPMorgan and HSBC are short 26.5% of the entire Comex open interest in silver... and if you take out all the market-neutral spread trades... that shoots the percentage to well over 30% of the Comex silver market that is held short by these two banks. Any questions so far?
Looking at the six [8-2=6] non-U.S. banks' Comex silver positions... they hold 2,284 long positions and 614 short positions... for a net long position of 1,670 Comex contracts. This represents 1.9%-0.5%=1.4% of the total Comex open interest in silver.
Two U.S bullion banks are net short 26.5% of the total Comex open interest in silver... and 6 Non-U.S. banks are net long 1.4% of the total open interest. Who controls the silver price on the Comex, dear reader.
I'll leave gold up to you... which is a couple down from silver. There are 4 U.S. bullion banks here, so they show all the numbers. But even a cursory glance shows that the 4 U.S. bullion banks are net short 137,756 Comex contracts in gold [13.77 million ounces]... which represents 23.8% of the entire gold open interest on the Comex. And I'll bet you dollars to doughnuts, dear reader, that 95% of that 13.77 million ounces is held short by Morgan and HSBC. The 14 non-U.S. bullion banks are net short a whole 6,253 Comex contracts... which is 1.1% of total Comex open interest.
So, once again, 23.8% of the entire Comex open interest in gold is held short by two U.S. banks... the other two banks are virtually immaterial. But 14 non-U.S. banks are net short 1.1% of the total Comex open interest. Who controls the price?
This is a JPMorgan operation from one end to the other. But in all fairness, JPMorgan is only the executioner. They receive the order to swing their axe from either the Federal Reserve, the U.S. Treasury... or both. It's as simple as that. Then the boyz at Morgan pick up the phone, call the other bullion banks, set up the date and time... and then collectively pull the trigger... just like they did yesterday... and July 1st. That's all there is, dear reader... there's no more to it then that.
The fact that these regulators allow this kind of criminal behaviour is beyond me!!
| Silver | |
| Withdrawals from Dealers Inventory | ZERO oz |
| Withdrawals from customer Inventory | 923,430 oz |
| Deposits to the dealer Inventory | N/A |
| Deposits to the customer Inventory | N/A oz |
| No of oz served 8 | 40000 oz |
| No of oz to be served 707 | 3.5 million oz |
| Gold | |
| Withdrawals from Dealers Inventory | Zero |
| Withdrawals from customer Inventory | 127 oz |
| Deposits to the dealer Inventory | N/a oz |
| Deposits to the customer Inventory | N/a oz |
| No of oz served 31 | 3100 oz |
| No of oz to be served | xxxxx oz |
COMEX Warehouse Stocks July 16, 2010.
Notes: there was a massive 923,430 0z of silver removed from the customer inventory in silver
again no silver was added or withdrawn from dealer inventory.
There was a total of only 8 contracts served upon very patient longs. The total for yesterday was a very small 40,000 oz of silver served.
The total no of contracts served upon the longs so far this month total 1869 contracts or 9.3 million oz.
The total remaining to be served total 707 contracts or 3.5 million oz.
The total no of oz of silver standing this delivery month of July is as follows:
9.3 million oz (already served) + 3.5 million (waiting to be served) + .2 million oz (options exercised in June)= 13.0 million oz.
In gold:
In alarming fashion no gold has entered the gold comex vaults. A measly 127 oz of gold was withdrawn. ( I understand 100 of those oz
but have a hard time understanding the 27 oz.....the minimun bar is 100 oz ,so it is very difficult to explain the remaining 27 oz).
Yesterday saw another 31 contracts exercised for gold metal or 3,100 oz of gold.
The total number of gold exercised in this non delivery month of July total 694 contracts or 69400 oz of gold or 2.16 tonnes of gold.
In conclusion, we continue to see a massive exit of silver from the customer vaults.
I want to emphasize the small number of silver contracts that were served upon yesterday, ie 8 contracts. It seems to me that word is getting around to the ultimate silver owners at the comex to vacate the mother ship. It is also suprising that the bankers cannot get any other silver holders to lease their silver.
That will explain the massive exodus out of the comex. A default at the silver comex looks eminent. Silver will default first.
end.
Rumours are flying that the Canadian Mint has stopped providing silver coins to investors.
From Ed Steer;
While on the subject of silver, my coin guy informed me yesterday that the Royal Canadian Mint is running two to four weeks behind on virtually all of their bullion products right now... especially the 0.9999 silver Maple Leaf. And, to top that off, Chris Powell sent me an e-mail from someone that had just contacted Kitco about purchasing silver coins and rounds... and this is the reply he got... "Good afternoon Sir/Madam, Thank you for your e-mail. Unfortunately, many of the Silver products we sell, are currently out of stock for Canadians. As such, the items are 'Only Shipping to the US '. Certain products are 'Only shipping to the US ' due to our inventory at our Vaults in Canada. In other words our inventory is too low (depending on the item) to accept any new orders from Canadian or International customers. As such, we would simply have sufficient inventory to sell the items to US customer[s] as we also have Vaults located in the United States from where our products are also shipped. The product will be once again available, when we receive a new shipment of inventory. In the mean time we suggest signing up for our 'Bullion Alert Service' which provides an e-mail notification as soon as a shipment arrives for the item(s) selected." Here's a link to Kitco's product page. Except for the 1,000 ounce good delivery bar, they are completely out of all silver inventory for Canadian and international customers. Only if you live in the USA is there anything available at all.
end
09:55 Univ. of Michigan Consumer Sentiment (Jul prelim) 66.5 vs. StreetAccount consensus 74.5
NEW YORK, July 16 (Reuters) - U.S. consumer sentiment weakened in early July to its lowest in 11 months on a resurgence in fears about the economy, a year since the recovery began, a private survey released on Friday showed.
The reversal in consumer sentiment was dramatic after it reached its strongest level in nearly 2-1/2 years last month on hopes of better job and credit conditions, according to Thomson Reuters/University of Michigan's Surveys of Consumers.
The survey's preliminary July reading on the overall index on consumer sentiment plummeted to 66.5 from 76.0 in June. The figure was below the median forecast of 74.5 among economists polled by Reuters.
"Income and job prospects were extraordinarily weak and those bleak prospects have made consumers much more cautious spenders," Richard Curtin, director of the surveys, said in a statement.
This steep pullback in sentiment is ominous for the U.S. economy, which is already showing signs of slowing. Consumer spending accounts for some 70 percent of the U.S. economy.
The latest survey showed consumers' intention to buy durable items such as cars fell to its lowest in nine months.
"Moreover, consumers reported renewed weakness in the economy and were more likely to anticipate additional problems in the year ahead," Curtin said.
The survey's barometer of current economic conditions tumbled to 75.5 in early July, the lowest since November 2009.
This compared with 85.6 in June, which was the highest since March 2008. Analysts had predicted a figure of 84.0 for early July.
The survey's gauge of consumer expectations slid to 60.6, the lowest since March 2009. This compared with 69.8 in June, while analysts had predicted a reading of 68.4 in early July.
The measure on consumers' 12-month economic outlook deteriorated to 65.0 in early July, which was the lowest since April 2009. It stood at 79.0 in June.
In addition to worries about jobs and household finances, consumers expected inflation to pick up in the coming months.
The survey's one-year inflation expectations measure ticked up to 2.9 percent from 2.8 in June, while the five-to-10-year outlook index firmed to 2.9 percent from June's 2.8.
end.
As many of you know, I follow the TIC report every month to give an idea of who will support the usa dollar.
Yesterdays reading was abysmal as both China and Japan decided to lighten up on their dollar holders.
First the official TIC report: (from Reuters)
US net long-term capital inflows slips in May
NEW YORK, July 16 (Reuters) - Foreign investors reduced purchases of long-term U.S. securities in May, reining in their buying of U.S. government and corporate bonds, the Treasury Department said on Friday.
Net long-term capital inflows fell to $35.4 billion in May from a downwardly revised $81.5 billion inflow in April.
Net overall capital inflows into the United States, which include short-term securities such as Treasury bills, edged up to $17.5 billion in May from the prior month's $13 billion.
Buying of Treasury notes and bonds fell sharply, with foreigners snapping up a net $14.9 billion in May compared with $76.4 billion in April. China remained the biggest Treasury holder but saw its total stash slip by $32.5 billion.
end.
The usa has a trade deficit of about 40 billion usa dollars. It also has a service sector deficit of about 15 billion dollars each month. This is the minimum amount of dollars that must be financed by foreign entities to keep this fiat game alive. Please note that capital inflows came in at 35 billion dollars well short of the mark needed. The usa dollar will suffer badly as foreigners start to shun the usa.
The world is reacting to a few words placed in the beige book of the FOMC ie. the usa is comtemplating another round of quantitative easing.
I want to you to pay special attention to this Ambrose Pritchard Evans commentary on this subject and what it will mean to all of us:
Fed's volte face sends the dollar tumbling
By Ambrose Evans-Pritchard, International Business Editor
Published: 8:52PM BST 15 Jul 2010
London Telegraph
Rarely before have a few coded words in the minutes of the US Federal Reserve caused such an upheaval in the global currency system, or such a sudden flight from the dollar.
The euro rocketed to a two-month high of $1.29 and sterling jumped two cents to almost $1.54 after the Fed confessed that the US economy may not recover for five or six years. Far from winding down emergency stimulus, the bank may need a fresh blast of bond purchases or quantitative easing.
"The worm is turning," said David Bloom, currency chief at HSBC. "We're in a world of rotating sovereign crises. The market seems to become obsessed with one idea at a time, then violently swings towards another. People thought the euro would break-up. Now we're moving into a new phase because we're hearing alarm bells of a US double dip."
Mr Bloom said a deep change is under way in investor psychology as funds and central banks respond to the blizzard of shocking US data and again focus on the fragility of an economy where public debt is surging towards 100pc of GDP, not helped by the malaise enveloping the Obama White House. "The Europeans have aired their dirty debt in public and taken some measures to address it, whilst the US has not," he said.
The Fed minutes warned of "significant downside risks" and a possible slide into deflation, an admission that zero interest rates, $1.75 trillion of QE, and a fiscal deficit above 10pc of GDP have so far failed to lift the economy out of a structural slump.
"The Committee would need to consider whether further policy stimulus might become appropriate if the outlook were to worsen appreciably," it said. The economy might not regain its "longer-run path" until 2016.
"The Fed is throwing in the towel," said Gabriel Stein, of Lombard Street Research. "They are preparing to start QE again. This was predictable because the M3 broad money supply has been contracting for months."
The Fed minutes amount to a policy thunderbolt, evidence of how quickly the recovery has lost steam. Just weeks ago the Fed was mapping out withdrawal of stimulus.
Goldman Sachs said it expects the euro to rise to $1.35 by the end of the year. The yen will appreciate to ¥83, through the pain barrier for most of Japan's big exporters. The new twist is that SAFE, China's $2.4 trillion fund, has begun buying record amounts of Japanese bonds, a shift in reserve allocation away from the dollar.
The signs of a deep and sudden slowdown in the US are becoming ever clearer as the "sugar rush" from the Obama fiscal stimulus wears off and the inventory boost fades. California, Illinois and other states are cutting spending, tightening US fiscal policy by 0.8pc of GDP.
Thursday's plunge in the Philadelphia Fed's July index of new manufacturing orders to –4.3 suggests that the economy may have buckled abruptly, as it did in mid-2008. The Economic Cycle Research Institute's ECRI leading indicator has tumbled, reaching –8.3pc last week. This points to a sharp slowdown or recession within three months.
While US port data looked buoyant in June, the details were troubling. Outbound traffic from Long Beach fell from 139,000 containers in May to 116,000 in June. Shipments from Los Angeles fell from 161,000 to 155,000. This drop in exports is worsening the US trade deficit, eroding the dollar.
The US workforce has shrunk by a 1m over the past two months as discouraged jobless give up the hunt. Retail sales have fallen for the past two months. New homes sales crashed to 300,000 in May after tax credits ran out, the lowest since records began in 1963. Mortgage applications have fallen by 42pc to 13-year low since April. Paul Dales at Capital Economics said the "shadow inventory" of unsold properties has risen to 7.8m. "The double dip in housing has begun," he said.
Alcoa, CSX, Intel, and JP Morgan have reported good earnings, but they mostly did so in July 2008 just before their shares collapsed. Such earnings rarely catch turning points and can be a lagging indicator. Profits have been boosted in this cycle by cost-cutting, which is self-defeating for the economy as a whole.
The minutes confirm the Fed is split down the middle over QE. Fed watchers say the Board in Washington wants to be ready to launch another round of bond purchases if necessary, pushing the banks balance sheet from $2.4 trillion towards $5 trillion, but hawks at the regional banks are highly sceptical.
A study by the San Francisco Fed said the interest rates need to be –4.5pc to stabilise the economy under the Fed's "rule of thumb". Since this is impossible, massive QE needs to make up the difference.
Tim Congdon from International Monetary Research said the US authorities have botched policy response. "They are forcing banks to contract lending by raising their capital asset ratios. They have let M3 shrink by 1pc a month, as in the early 1930s. The solution is simple. The Fed must raise the level of deposits by purchasing bonds from the non-banking system as the Bank of England has done. They refuse to do it," he said.
end.
The stock market decided yesterday that it was not enthused with the earnings of JPMorgan, Citibank and Bank of America.
It seems that JPMorgan;s profit was basically the halfing of the loan loss provisions on JPM's balance sheet.
Yesterday Citibank confirmed that the bankers will be in trouble this quarter. Note that Citibank's earnings this quarter was a mere 9 cents. Here is there earnings report:
Citigroup Profit Falls 37%
By NATHAN BECKER
JULY 16, 2010, 8:56 A.M. ET
Citigroup Inc.'s second-quarter profit fell 37%, which was better than analyst estimates, as year-earlier results were heavily boosted by a $6.7 billion gain related to the combination of its Smith Barney brokerage operations with those of Morgan Stanley.
Citi reported profit of $2.7 billion, or nine cents a share, down from $4.28 billion, or 49 cents, a year earlier. Revenue dropped 33% to $22.07 billion.
"While the market environment lowered revenues in securities and banking, credit improved for the fourth consecutive quarter," Chairman and Chief Executive Vikram Pandit said.
Shares fell 1.7% to $4.09 in premarket trading, even as loan-loss provisions shrank and profit at the company's Citicorp unit rose 17%, although revenue fell 1.1%. As of Thursday's close, the stock had risen 37% in the past year.
In April the bank reported its strongest quarterly results in nearly three years as the fallout from the financial crisis settled down—a catalyst for improved results from most big banks. Citi has recently benefited from its ability to reduce its cost for bad loans and has been helped by an improving economy abroad.
More…
Here is a report on the JPMorgan's earnings:
http://www.federalreserve.gov/releases/h41/Current/
JPMorgan's Q2 profit jumped 76% on a revenue decline to $25.6B (-9% q/q, -2% y/y) from $27.7B because JP Morgan continues to reduce loss reserves, this time by $6.3B (52%!!). Analysts from far and wide slammed the report and JP Morgan for its transparent earnings gambit.
Chris Whalen notes: Nearly half of JP Morgan's Q2 2010 EPS came from reduction in provisions and credit from UK bonus tax…Total assets declined 6% q/q and 1% y/y.
Only the natural tendency to peg stocks at key strike prices (40 for JPM), as well as the manipulation for expiration, kept JPM from a bigger loss…
end.
The global sovereign debt keeps mounting..sooner or later the debt bubble will cause the economic collapse we are awaiting.
I really like this article from Jim Sinclair's comentary. The article is from CalculatedRisk:. It is well worth reading:
Jim Sinclair's Commentary
QE to infinity builds debt.
How Large is the Outstanding Value of Sovereign Bonds?
by CalculatedRisk on 7/08/2010 11:02:00 AM
CR Note: Reader "some investor guy" has put together some data on sovereign default risk. This is the first in a series of posts.
Debt issued by governments worldwide is immense. According to the Bank for International Settlements, at year end 2009 worldwide sovereign debt exceeded $34 trillion, and is greater than the amount of corporate bonds outstanding.
Japan and the US dwarf most other borrowers. Together they have about half of all sovereign debt worldwide. Still, 23 other countries have over $100 billion of debt outstanding. The other 100+ countries worldwide have a total debt of about $1.4 trillion.
Note: This graph shows the sovereign debt in December 2007 and December 2009.
Due to the recession and increased expenditures to rescue banking systems, total sovereign debts grew by almost 30% in just two years. Sovereigns became the majority of worldwide debt. Several countries doubled their debts from 2007 to 2009 (BIS data).
More…
This next commentary from Jessie's cafe shows the dire consequences of a huge mortgage debt with falling property values:
A Blistering Ride Through Hell Key Property Charts to Make Sense of This Week's Housing Numbers and This Year's Financial Crisis
Chart fromA Blistering Ride Through Hell by Michael David White.
http://jessescrossroadscafe.blogspot.com/2010/07/speaking-of-unresolved-bad-debt-in.html-END-
end.
Finally, I would like to highlight Mark Lundeen's great work on the balance sheet of the usa's Fed.
Note that the red line is now over 2.4 trillion dollars.
The green line is the usa dollars in circulation: 800 billion dollars
and the blue line, the entire portfolio of securities held by the fed (which is basically toxic):
2.1 trillion dollars.
Ladies and gentlemen: when this "blue stuff" leaves the banks and enters the general market,
hyperinflation will be upon us big time.
Here is this important graph to store in your minds:
Last night, I got this email from GATA. It is a little alarming. It is self explanatory:
Rust discovered on Bank of Russia-issued 'gold' coins
11:50p ET Friday, July 16, 2010
Dear Friend of GATA and Gold:
Zero Hedge reports tonight about Bank of Russia-issued gold coins that have been found rusting, which gold doesn't do.
Zero Hedge concludes: "The Central Bank of Russia has been one of the biggest purchasers of gold in 2010, having bought gold every single month. It would be embarrassing if it were discovered that not only is the bank diluting the gold content with oxidizable materials, but subsequently passing it off for .999-proof precious metal. And if this is happening in Russia, one wonder what trickery other central banks, with a far lower amount of gold in their vaults, resort to."
Now that it seems to be in a journalistic mode again, maybe Reuters should ask the Bank for International Settlements if its recent gold swaps have anything to do with those Bank of Russia coins. Another refusal to comment from the BIS would be especially delightful right now.
You can find the Zero Hedge report here:
http://www.zerohedge.com/article/rust-discovered-bank-russia-issued-999-...
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end.
I guess that about wraps up the weeks gold and silver story.
I wish you all to have a grand weekend
and I will see you on Monday.
Harvey
