Thursday, September 16, 2010

Sept 16.2010

Good evening Ladies and Gentlemen;
 
Gold closed up today by a good margin resting at $1271.90 up $5.20.  The closing price today is an all time closing high for gold.
 
Silver closed at 20.74 up a huge  20 cents as  JPMorgan and fellow bankers huddle around the midnight oil tonight for the 3rd straight day.
 
The comex gold OI fell by 1951 contracts to rest at 592,107 as some of the long speculators took profits.  The silver comex OI
 
continued its assault on the bankers rising another 2101 contracts to 146,899.The situation does not look good for our silver cartel!
 
Now let us go to the comex inventories and notices.
 
First a review from yesterday's chart:
 
 
 
 
Silver
Withdrawals from Dealers Inventory   507,226 oz
Withdrawals from customer Inventory  n/a
Deposits to the dealer Inventory    n/aoz
Deposits to the customer Inventory 493,824 oz
No of oz served  (contracts=54) 270,000 oz
No of oz to be served 1204  contracts)  6,020,000oz
Gold
Withdrawals from Dealers Inventory 
 10,000 oz
Withdrawals from customer Inventory   n/a
Deposits to the dealer Inventory  n/a
Deposits to the customer Inventory  993
No of oz served (contracts =0  
No of oz to be served 180  18000
 
And now for todays chart
 
 
 
sept 16.2010
Silver
Withdrawals from Dealers Inventory   31,159 oz
Withdrawals from customer Inventory  n/a
Deposits to the dealer Inventory    n/aoz
Deposits to the customer Inventory 300,000  oz
No of oz served  (contracts=33 165,000 oz
No of oz to be served 1093  contracts)  5,465,000oz
Gold
Withdrawals from Dealers Inventory 
 zero oz
Withdrawals from customer Inventory   n/a
Deposits to the dealer Inventory  n/a
Deposits to the customer Inventory 1608 oz
No of oz served (contracts =100       10,000
No of oz to be served 185  18500
 
 
Let us now go to gold in which the month of September is not a delivery month.
 
I have been asked to define some of the terms at the comex so please forgive me for those that already understand.
 
In gold, there were zero oz withdrawn from the dealer and thus no actual metal serviced a long.  However we did
 
see 1608 oz of gold deposited in the customer account from sources unknown.
 
However the big news came from the notices to deliver in gold.  Today 100 notices were sent to long option holders of a September
 
options contract or 10,000 oz of gold notices were sent out with serial numbers and bar weights to patiently waiting long holders.
 
Please note the number of oz to be served.  The total rose to 185 from 180 yesterday.  In essence this number is the open interest still
 
standing in the front delivery month.  These gentlemen  (or ladies) have exercised a September gold contract and by plucking all their money down for an entire contract,
 
they now wish to get physical metal.  Generally all options exercised in a non delivery month stand for delivery of the actual metal.
 
Even though 100 notices were sent out, the OI rose by 5 instead of declining by 100.  Looks like the comex are hiding the number of gold contracts standing.
 
The total number of notices sent out so far in gold stand at 404 or 40,400 0z of gold.
 
The total number of oz that seems to be standing in gold is as follows:
 
40,400  +  18500 =    58900 oz or close to 2 tonnes of gold.  This is very high for a non delivery month.
 
 
and now let us go to  silver:
 
Today we witnessed 31,159 0z of silver leave the comex from the dealer.  This amount probably, entered the customer
 
account to settle on our longs.  However there was a massive 300,000 oz of silver deposited to the customer account.The net amount of silver deposited  to the customer is
 
thus  300,000 minus 31,159 oz or 269,841 oz
 
This is the third day in a row that a massive amount of silver has entered the customer silver comex vaults. I am clueless as to why.  Maybe Ed Steer or our other silver gurus can figure out what is going on here.
 
A  total of 33 contracts were served.  These are notices with serial numbers and bar weights and this gives the long holder assurances that eventually the comex
 
will settle with the requisite bar.
 
The total number of notices sent today total  33 or 165,000 oz of silver
 
The total number of notices sent so far this month total  1658 or 8,290,000  oz of silver.
 
So the total number of oz of silver standing this delivery month is as follows:
 
8,290,000 oz (already served with notices to deliver)  +  5,465,000 oz (open interest or oz of silver that have to be settled with a delivery slip) +  115,000 oz(options exercised for metal the previous month) =  13.87 million oz of silver.Very little silver has entered the dealer inventory to satisfy long holders of a comex silver contract.
 
end.
 
Our ETF's are still registering a huge positive to NAV.  The Central Fund of Canada registered a positive to NAV of 8.5% (basis yesterday).  This fund is half gold and silver and it is the real metal.
 
The PHYS fund registered a 6.62% positive to NAV. It is strictly gold  The other big gold fund is GTU.un and its positive to NAV is similar to PHYS.
 
The GLD registered a change in inventory for the 3rd consecutive day.  Today's announcement revealed that the GLD  shed 3.9 tonnes of gold and its new inventory level
now rests at 1294.73 tonnes of gold. Whenever you see changes like this you knew that there is fire.  Looks like the fire is spreading from the comex to the LBMA or vica versa.
 
 
end.
 
 
And now for the big economic stories of the day:
 
I like to start off with this biggy.  Why are earth are you going to alienate your big supporter and banker?
 

US-China clash over yuan escalates, risking superpower stand-off

 

US Treasury Secretary Tim Geithner has issued his harshest attack to date on China’s currency policy, the latest move in an escalating superpower clash across the gamut of commercial and strategic relations.

By Ambrose Evans-Pritchard
Published: 7:09PM BST 16 Sep 2010
 

We are very concerned about the negative impact of (China’s) policies on our economic interests,” he told a Congressional hearing on Beijing’s use of exchange intervention for trade advantage.

“The pace of appreciation has been to slow. The undervalued renminbi helpsChina’s export sector. It encourages out-sourcing of production and jobs from the United States. By continuing a rigid exchange rate, China is impeding the adjustments needed to secure sustainable global growth,” he said.

The tough talk comes amid concerns that the global currency order is unravelling, with countries breaking ranks in a `beggar-thy-neigbour’ use of 1930s-style devaluation to help exporters and shore up their economies.

Japan became the latest country to intervene this week, carrying out massive dollar and euro purchases to weaken the yen. Sander Levin, chair of the US House Ways and Means Committee, called the move “deeply disturbing”, chiefly because it muddies the political water and lets China off the hook.

Mr Geithner’s ire follows a move by US trade chief Ron Kirk to file two cases against China at the World Trade Organization, alleging bias against US steel producers and credit card companies. Mr Kirk said he was “fighting for the American jobs threatened by China’s actions.”

Trade expert Gary Hufbauer from Washington’s Peterson Institute said the tensions risk triggering a dangerous clash.” The US and China are now adversaries, not enemies, but if the Obama administration pushes this trade agenda the way it is now doing, we will end up antagonists,” he said.

Professor Hufbauer said the White House has lost faith in “quiet diplomacy”, irked that the yuan has hardly moved since Beijing ended the dollar peg in June. This is spiced by populist fever before the mid-term elections in November.

“The US trade deficit with China is widening, yet the Chinese are still accumulating reserves at remarkable rate, beyond their needs. They know that growth in China’s coastal provinces is their passport to political stability, but this is incompatible with US political stability,” he said.

“We have grievances piling up in tyres, aluminium, paper, and steel, and it has all come to a head. Of course, China is getting an unfair share of the blame from this anti-globalisation mood on Capitol Hill. The truth is that when the US curbed imports of Chinese tyres, sales went to Brazil and Mexico instead, not to US producers,” he said.

Jiang Yu from China’s foreign ministry echoed the point. “Appreciation of the renminbi will not resolve the deficit between the US and China and will not resolve US domestic unemployment. Pressure will not only fail to solve the problems; it could have the opposite effect,” she said..

Views are clearly hardening on both sides. Over 140 members of Congress have so far backed the Ryan-Murphy bill enforcing sanctions against China for currency abuse, siding with US domestic industry and trade unions against US multinationals with plant in China.

There are few saints in this global currency game. Sterling has dropped by 20pc since the credit crisis, a side-effect of low interest rates. The US Federal Reserve has been “steering” the dollar lower. But the Anglo-Saxon duo they at least have trade deficits.

It is very different when surplus states such as China intervene to prevent trade adjustment. They are in effect exporting surplus capacity, and starving the world of demand. This is a recipe for global slumps.

Japan’s leaders say privately that China’s actions have begun to threaten their country’s industrial base, forcing Tokyo to respond with its own solo intervention or stand by as its exporters are asphyxiated and its economy tips into a deflationary spiral.

The twist is that Japan itself has a large trade surplus -- though for different reasons -- so it is in effect passing the unwanted parcel to the US and Europe rather than allowing the global system to come back into equilibrium.

If Britain and the US launch decide to a launch fresh blast of monetary stimulus, they in turn may succeed in passing the parcel back again. Economists say this is not a healthy way to run a global currency system.

 
 
end.
 
 
China has been scaling back on  their accumulation of usa dollars.
 
Today we got this reuters report on the current account gap.  The current account is the trade deficit coupled with the service sector deficit.
 
The second quarter reading had the current account rising to 123.3 billion dollars. The street was looking for 125 billion dollar current account deficit. 
 
 

US current account gap widens in Q2 to $123.3 bln

WASHINGTON, Sept 16 (Reuters) - The U.S. current account deficit widened in the second quarter to $123.3 billion, or 3.4 percent of gross domestic product, as imports of capital goods, automotive products and consumer goods rose, the U.S. Commerce Department said on Thursday.

It was the fourth consecutive quarterly increase from a low of $84.4 billion in the second quarter of 2009, when world trade fell sharply because of the global recession.

Wall Street analysts had expected the second quarter deficit to widen to $125.0 billion. Commerce revised the first quarter deficit slightly to $109.2 billion.

-END-

 

We also today received the TIC report which measures the cash inflow or outflow to finance the deficit.  Today it showed an inflow of 63.7 billion dollars.

However Wall Street needs the minimum of 123 billion to prevent a run on the usa dollar.

 

Here is the TIC report:

U.S. net overall capital inflows $63.7 bln in July

NEW YORK, Sept 16 (Reuters) - Foreigners resumed purchases of U.S. securities in July, reversing the prior month's net outflow, and China and Japan both added to holdings of U.S. government debt, the U.S. Treasury Department said Thursday.

Overseas investors bought a net $63.7 billion, including short-term instruments such as Treasury bills. That was a sharp reversal from a revised net outflow of $5.2 billion in June.

Treasury initially reported the June outflow at $6.7 billion. Net long-term capital inflows also rose to $61.2 billion from $44.4 billion the prior month.

Foreigners poured back into equities and U.S. corporate debt in July after being net sellers of both in June.

China, the biggest holder of Treasury debt, increased its holdings by $3 billion while No. 2 Treasury holder Japan swelled its stash by $17.4 billion.

 

 

end.

 

Yesterday, I reported that the Empire Manufacturing number was bad.  This is the New York manufacturing area.

 

Today we get the big Philly number which represents Pennsylvania and New Jersey, the heartland of manufacturing.  The figure was awful:

 

from Reuters:

 

Philly Fed factory index shrinks again in Sept

NEW YORK, Sept 16 (Reuters) - Factory activity in the U.S. Mid-Atlantic region contracted for the second straight month in September, but the shrinkage was at a slower rate, a survey showed on Thursday.

The Philadelphia Federal Reserve Bank said its business activity index came in at minus 0.7 in September from minus 7.7 in August.

Economists had expected a reading of 2.0, based on the median of forecasts in a Reuters poll which ranged from minus 7.7 to 8.0.

Any reading above zero indicates expansion in the region's manufacturing.

The survey covers factories in eastern Pennsylvania, southern New Jersey and Delaware.

It is seen as one of the first monthly indicators of the health of U.S. manufacturing leading up to the national report by the Institute for Supply Management, which is due next on Oct. 1.

The Philadelphia Fed report follows a similar release on Wednesday showing manufacturing growth in New York State slowed in September.

 

 

end.

 

This is also a huge story..the banks have finally taken over possession of a record number of homes: (from Reuters).

The balance sheet of the banks are deteriorating exponentially!

 

Banks take over record number of homes in August

NEW YORK (Reuters) - A record number of U.S. homeowners lost houses to their banks in August as lenders worked through the backlog of distressed mortgages, real estate data company RealtyTrac said on Thursday.

New default notices decreased at the same time, suggesting that lenders managed the flow of troubled loans and foreclosed properties hitting the market to limit price declines, the company said.

Root problems of high unemployment, wage cuts, negative home equity and restrictive lending practices persist, however, pointing to lingering housing market pain.

RealtyTrac sees a record 1.2 million repossessions this year, up from just under 1 million last year, with more than 3.2 million homes in some stage of foreclosure.

In 2005, before the housing bust, banks took over just about 100,000 houses, according to the Irvine, California-based company.

"It really does look like we're seeing a slowdown of new foreclosures being initiated as part of a means to manage inventory levels on the market," RealtyTrac senior vice president Rick Sharga said in an interview.

Banks foreclosed on 95,364 properties in August, topping the May 2010 record by 2 percent. These repossessions, or real estate owned (REO) homes, jumped 3 percent in the month and 25 percent in the year.

At the same time, a similar amount -- 96,469 homes -- got a default notice. Defaults declined 1 percent from July and 30 percent from August 2009 after peaking at 142,064 properties in April 2009.

It will take about three years to work through the stockpile of distressed housing, Sharga said, resulting in a market that moves sideways.

"I don't think it gets any better really until the end of 2013," he said…

 

end.

 

The jobless number was down a touch this week but nothing to write home about.

Here is todays jobless claims report from Reuters:

 

Weekly jobless claims hit two-month low

WASHINGTON (Reuters) - Claims for unemployment benefits unexpectedly fell last week, dropping to a two-month low, according a government report on Thursday that hinted at some stability in the labor market.

Initial claims for state unemployment benefits slipped 3,000 to a seasonally adjusted 450,000, the lowest since the week ended July 10, the Labor Department said.

Analysts polled by Reuters had forecast claims rising to 460,000 from the previously reported 451,000 the prior week, which was slightly revised up to 453,000 in Thursday's report.

A Labor Department official said data for only two states had been estimated for last week's report. The four-week average of new jobless claims, considered a better measure of underlying labor market trends, dropped 13,500 to 464,750.

The second straight week of declines pulled claims for unemployment benefits further away from a nine-month high of 504,000 touched in mid-August and claims are now in the upper end of a 400,000-450,000 range that analysts say is associated with sustainable job growth.

The impaired labor market, characterized by a 9.6 percent unemployment rate, is hobbling the economy's recovery from its most painful recession since the 1930s.

The Federal Reserve is closely watching the jobs market, but is not expected to announce any news steps to ease monetary policy at a regular meeting next Tuesday. Many analysts, however, believe it will resume purchases of government debt by year- end to keep interest rates low and shore up the economy.

The number of people still receiving benefits after an initial week of aid fell 84,000 to 4.49 million in the week ended September 4 from an upwardly revised 4.57 million the prior week.

Analysts polled by Reuters had forecast so-called continuing claims falling to 4.46 million from a previously reported 4.48 million.

The insured unemployment rate, which measures the percentage of the insured labor force that is jobless, dipped to 3.5 percent during that period from 3.6 percent the prior week.

The number of people on emergency benefits fell 402,116 to 4.11 million in the week ended August 28.

-END-

 

Here is a study which shows that Americans are at least 6 trillion dollars short of money needed to retire:

 

(from Yahoo finance.com and Jim Sinclair's commentary..www.jsmineset.com

 

Retirement on Hold: American Workers $6 Trillion Short 
CIGA Eric

This required a study? The American household is over leveraged to USA, Inc. USA, Inc is currently being debased to protect interests other than American households.

The study, conducted by Boston College’s Center for Retirement Research, says savings have been squeezed by declines in stock and housing values.

Source: finance.yahoo.com

More…

 

end.

 

Here is a story from New Jersey where the states have to cut benefits to stay alive:

Again less dollars to spend at stores:

 

States cutting benefits for public-sector retirees 
CIGA Eric

An outcome that will be replayed in nearly all States across the U.S.

After telegraphing his intentions for months, Christie spelled out the details of his proposal Tuesday. They include: repealing an increase in benefits approved years ago; eliminating automatic cost-of-living adjustments; raising the retirement age to 65 from 60 in many cases; reducing pension payouts for many future retirees; and requiring some employees to contribute more to their pensions.

"We must reverse the damage caused by fairy-tale promises that have fattened benefits and pensions to unsustainable levels," the governor said.

Source: finance.yahoo.com

More…

 

Many of you sent me this article last night from Greg Hunter.  It is very good and I wish to pass it on to you/

In a nutshell it says:  "what recovery?"

 

Posted: Sep 15 2010     By: Greg Hunter      Post Edited: September 15, 2010 at 10:12 pm

Filed under: Greg Hunter

(Courtesy of Greg Hunter of www.USAWatchdog.com)

The economic “recovery” talk picked up some speed yesterday as retail sales for August were announced.  The government said sales were up a whopping .4%. It seemed everybody on financial TV was talking like the worst is now behind us, and there was no chance of a dreaded “double-dip” in the economy.  Even Warren Buffett ruled out a falling economy.  Yesterday, Bloomberg quoted the “Oracle of Omaha” in a report  where he said, “I am a huge bull on this country,” Buffett, Berkshire’s chief executive officer, said today in remarks to the Montana Economic Development Summit. “We will not have a double-dip recession at all. I see our businesses coming back almost across the board.” (Click here for the complete Bloomberg report.)

I guess I’d be bullish on America, too, if companies I invested in (Wells Fargo, American Express, GE and Goldman Sachs, to name a few) all got taxpayer bailouts to help them survive the economic meltdown in 2008.  Mr. Buffett might not look so smart or be so optimistic if those bailouts had not happened.

Last week, FDIC Chairman Shelia Bair said pretty much the same thing as Mr. Buffett. Bair said on CNBC, “We are not predicting–I would use the “we” for the FDIC. I rely on a lot of very smart economists at the FDIC in helping us make those judgments, but right now, no, our economic staff do not predict a double dip.” (Click here to see Bair’s entire CNBC interview.) This optimism is despite the recent addition of 54 more banks to the “Troubled Bank” list for a new grand total of 829.  The majority of those banks, according to recent comments by renowned economist Nouriel Roubini, will go bust.

Didn’t we just get news that car sales are down sharply? Yes. (Click here.) Didn’t we just get news that home sales are down sharply? Yes. (Click here.) Don’t we still have 15 million Americans unemployed?  Yes. (Click here.) Forget the fantasy 9.6% number the government claims. The real figure is 22%, if unemployment was figured the same way the Bureau of Labor Statistics did it before 1994.

Click here to read the full article on www.USAWatchdog.com

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end.

 

 

I think that about wraps it up to tonight.

 

Expect another full frontal attack by our gold and silver long speculators tomorrow as gold has no resistance level as it is in record territory.

Silver's resistance is around 21.00 so watch for a battle royale at that level . let us watch to see how much paper the bankers wish to supply before

retreating to higher ground again!

 

I will be reporting this weekend but it will be on Sunday morning and it will be a comprehensive review of everything including the COT report and the

inventories at the comex and notices to deliver.

 

I wish you all a grand weekend and I will speak to you on Sunday.

 

Harvey

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