Before commencing with my commentary, I would like to announce that we have added one bank to our failed list as this bank entered the morgue last night courtesy of the FDIC guillotine:
First National Bank of Florida, Milton Florida.
May they rest in peace.
Gold closed the comex session at $1856.40 for a gain of $2.00. Silver faltered to the tune of 91 cents to $41.56.
The price of gold as I promised you on Thursday night would be extremely volatile and I did not disappoint you with that. The morning fix of gold at 3 am Friday morning was $1879.50. It hit its zenith at over $1880.00 a few minutes before that. It then began to swoon and hit its nadir at around 6 am at 1822.30. It then started its assault again rising to 1851.50 which became the afternoon London fix. Another wave of selling brought gold to around $1840 when our gold bugs again took charge and gold never looked back. It finished the comex session at $1856.40 and in the access market it gained another $2.00 to close out the gold book at $1858.60. It seems the entire planet was aware of the gold manipulation including Goldman Sachs
who are now long in gold as they have not been shy commenting on the manipulation of gold by authorities.
Silver was hit because of its label as an industrial metal. The Dow suffered a big loss of over 303 points.(2.69%)
Here are the losses of the other major bourses:
1. The German Dax: down 218 points or 4.08%
2. The London FTSE down 77.92 points or 2.76%
3. The French CAC down 121.24 points or 3.6%
4. Belgium stock Index down 70.97 points or 3.24%
5. Japanese Nikkei down 55.46 or .65%
Europe was whacked across the board as rumours spread that Greece might fail this weekend.
We will explore those major stories later in the commentary. First let us head over to the comex and see how trading fared yesterday.
The total gold comex open interest fell by 3000 contracts to 514,198 from Thursday's reading of 517,132.
Since gold was on a tear on Thursday we must have had some bankers cover a small fraction of their shorts. The bankers are getting very desperate as the price of gold continues to rise and the losses to the banks mount. The front options expiry month of September saw its OI fall from 549 to 221 for a loss of 328 contracts. We had 342 deliveries yesterday so again we lost no gold to cash settlements and we gained some more gold standing. This has happened for the last 4 days and it definitely shows that the name of the game is physical gold. The next delivery month is October which is 3 weeks away from first day notice. Here the OI fell by about 1500 contracts to close out the week at 33,007 OI contracts. The big December contract will no doubt will be the ultimate battle royale for physical gold and silver. Friday saw the December OI fall from 345,479 to 342,426 with a rising gold price. The bankers covered some of their big shorts here. The estimated volume at the gold comex was very high at 259,854 as Friday saw the bankers throw everything at the gold complex and fail.
The confirmed volume on Thursday, with the huge rise on that day in the gold price saw its reading of 233,695 which is also extremely high.
The total silver comex OI continues again in a narrow channel. Today the OI registered a gain of around 1000 contracts to 113,213 with the big rise in silver. The bankers again decided that the arena was too steamy for them and they covered some of their shorts. They are beginning to realize that the holders of the silver contracts are all in strong hands and it would be difficult to shake the silver leaves from the tree.
However that did not stop them from trying yesterday. The big December OI contract rose by a tiny 300 contracts. Now please try and understand this next data point: the estimated volume at the silver comex yesterday was a paltry 36,912 with the big rise in rise. You see here that the bankers could not supply or refused to supply any more silver paper short. The confirmed volume on Thursday was also quite low at 38,993.
Inventory Movements and Delivery Notices for Gold: Sept 10.2011:
again we had no gold deposited to the dealer as well as no withdrawals by the dealer.
We did have another of our exact round number of deposit to the customer to the tune of 2400.00 oz of
gold and the vault was of course, Brinks which seems to be the only vault that handles
these exact weights of gold.
We also had an adjustment of 2693 oz of gold whereby the dealer repaid gold back to a customer.
Thus the registered or dealer gold falls to 1.848 million oz.
The CME notified us that we had delivery notices of 32 contracts or 3200 oz of gold.
The total number of gold notices filed so far this month total 2363 for 236300 oz.
To obtain what is left to be served upon, I take the OI standing (221) and subtract out Friday's deliveries (32)
which leaves me with 189 notices or 18900 oz left to be served upon.
Thus the total number of gold oz standing in this non delivery month is as follows:
236,300 oz (served) + 18,900 (oz to be served) = 255,200 oz or 7.937 tonnes.
we gained 1200 oz from yesterday standing.
And now for silver
oh my goodness, did we get violent activity in the silver vaults today.
However the dealer was again left out of the action. There were no dealer deposits
and no dealer withdrawals.
The customer had a single deposit of 3077 oz into a Delaware vault.
However quite a few customers decided it was necessary to vacate the official vaults at the silver comex:
The total withdrawal by the customer totaled 1,334,791 and here is the summary of those transactions:
1. 715,358 out of Brinks.
2. 24,511 oz out of Delaware
3. 594,922 oz out of Scotia
total withdrawal: 1,334,791 oz
We also had an adjustment of 4994 oz where a customer leased silver to a dealer.
Also we had an accounting error of 4 oz removed from JPMorgan.
The total registered silver remains at 32.048 million oz
The total of all silver lowers to 103,030 oz.
The CME notified us that we got a biggy one contract served upon our longs for a total of 5000 oz
The total number of notices filed for the month now total 1009 for 5,045,000 oz
To obtain what is left to be served, I take the OI standing (615) and subtract out Friday's deliveries (1)
which leaves me with 614 or 3,070,000 oz left to be served upon.
Thus the total number of silver oz standing in this delivery month is as follows:
5,045,000 (served) + 3,070,000 (oz to be served) = 8,115,000 oz
we had 8,515,000 oz standing on Thursday so we lost 400,000 oz to cash settlements yesterday.
Blythe is having so much fun handing out fiat bonuses to longs.
Late last night the CME notified us on the deliveries for Monday:
Gold: 56 notices for 5600 oz (there were 189 contracts standing as of Friday evening)
Silver: again another biggy: 1 notice or 5000 oz (there were 614 notices or 3,070,000 oz standing on Friday evening)
Total Gold in Trust
Total Gold in Trust: Sept 8.2011:
The demand for gold was fierce as 10.51 tonnes was added to the GLD's.
thus not share in the rise in the price of gold. Lawsuits will start flying which no doubt will bring down the LBMA, then the B. of England as the gold in possession of the B. of E is not really theirs but on deposit by wealthy people like Arab sheiks etc.
|Ounces of Silver in Trust||316,597,277.300|
|Tonnes of Silver in Trust||9,847.28|
|Ounces of Silver in Trust||316,840,752.300|
|Tonnes of Silver in Trust||9,854.85|
Friday night saw the release of the COT report and it was a little surprising.
First the gold COT:
Gold COT Report - Futures
Change from Prior Reporting Period
non reportable positions
Change from the previous reporting period
COT Gold Report - Positions as of
Tuesday, September 06, 2011
Let us see first the gold COT.
Our large speculators that have been long in gold saw the landscape of world finances and jumped into the fray with both feet as they added a huge 11,227 contracts to their longs.
Those large speculators that have been short in gold, succumbed to the bankers folly and added another 3,803 contracts to their short positions and these guys are crying the blues this weekend. They are sweating bullets.
And now for our commercials:
Those commercials that are long in gold did not see the tea-leaves properly as they covered 2375 contracts
of their longs.
And now for our famous commercials that have been perennially short gold from the beginning of time like JPMorgan and cohorts:
they added surprisingly 7984 contracts to the shorts. These guys were providing the paper.
The small specs that were long in gold read the tea-leaves properly and added 3520 contracts to their longs.
The small specs that have been short in gold added a tiny 585 contracts to their shorts.
Please remember that all COT reports are from Tuesday to Tuesday. This report ends Sept 06.2011
the bankers are supplying the paper at higher and higher prices which becomes very scary for them especially if London is on the verge of defaulting on physical requests for repatriation.
and now for our silver COT:
Silver COT Report - Futures
non reportable positions
Change from the previous reporting period
COT Silver Report - Positions as of
Tuesday, September 06, 2011
Here those speculators that have been long in silver added a smallish 648 contracts to their positions. This would be normal as silver has such huge margin constraints on them.
Those large speculators that have been short in silver added a tiny 284 contracts to their shorts and these guys are not happy campers this weekend.
And now for our commercials:
Those large commercials who have been long in silver and are close to the physical scene covered a large 1,381 contracts of their longs. This could also been are short bankers who buy a long contract in another future month which is the same as covering for them.
And now for our commercials that are always short in silver: these guys were quite timid in providing the paper as they only increased their shorts by 777 contracts.
The smalls specs are finally getting their feet wet in silver. They must be careful dealing with the crooked bankers.
The small specs that have been short silver added 478 contracts to their short side.
The small specs that have been long added a large 2272 contracts to their long side.
Conclusion: more bullish than the gold COT.
The silver comex is becoming strictly a physical market due to the high margin requirements.
This is why the OI remains in a narrow channel of around 111,000-113,000 and the holders of the longs are very strong.
Let us now see some of the major stories of yesterday that shapes the price of gold and silver.
This startled Europe yesterday and sent all bourses to their nadir as this is the second German banker to leave the ECB after Axel Weber. He opposes the huge purchases of bonds of the PIIGS countries: (courtesy Bloomberg)
ECB Dealt Blow as Executive Board Member Stark Resigns Before End of TermBy Matthew Brockett and Jeff Black -
No ‘Glowing Advocate’
The news caused the Euro to plummet and it finished at 1.36493 to the dollar on fears that Greece may default as early as this weekend. (courtesy Bloomberg)
Euro Falls Most in a Year on Greek Financial Distress, ECB; Dollar Surges
‘Periphery Concern’11:14 Greece denies talk of weekend default plans -- Dow Jones citing Greek Finance Minister * The comment follows a number of circulating rumors that Greece may default as early as this week-end as Bond yields continue to rise sharply.* CNBC also reported a denial of the rumor about a half hour ago.
Germany Said to Ready Plan to Help Banks If Greece Defaults
FRIDAY, SEPTEMBER 9, 2011
Here Comes The Non-Boring Weekend: G7 Says "Central Banks Ready To Provide Liquidity As Required"
Submitted by Tyler Durden on 09/09/2011 18:04 -0400
The G-7 is in full panic mode. The organization for the prevention of harm to the Status Quo was expected to release a communique possibly over the weekend, but the speed with which one was dropped for mass circulation is stunning and confirms that its members are in full meltdown as the weekend comes. It is now certain that the G-7 will attempt some major intervention over the next 48 hours to inject a last dose of hope into capital markets, or else the Monday open will be an epic collapse.
G-7 Statement on Tackling Slowdown, Supporting Banks
“We met at a time of new challenges to global economic recovery, with significant challenges to growth, fiscal deficits and sovereign debt, stemming from past accumulated imbalances.
This is reflected in heightened tensions in financial markets.
There are now clear signs of a slowdown in global growth. We are committed to a strong and coordinated international response to these challenges.
“We are taking strong actions to maintain financial stability, restore confidence and support growth. In the U.S., President Obama has put forward a significant package to strengthen growth and employment through public investments, tax incentives and targeted job measures, combined with fiscal reforms designed to restore fiscal sustainability over the medium term. Euro area countries are implementing the decisions taken on July 21 to address financial tensions, notably through theflexibilization of the EFSF, reaffirming their inflexible determination to honor fully their own individual sovereign signatures and their commitments to sustainable fiscal conditions and structure reforms. Japan is implementing substantial fiscal measures for reconstruction from the earthquake while ensuring the commitment to medium-term fiscal consolidation.
“Concerns over the pace and future of the recovery underscore the need for a concerted effort at a global level in support of strong, sustainable and balanced growth. We must all set out and implement ambitious and growth-friendly fiscal consolidation plans rooted within credible fiscal frameworks.
Fiscal policy faces a delicate balancing act. Given the still fragile nature of the recovery, we must tread the difficult path of achieving fiscal adjustment plans while supporting economic activity, taking into account different national circumstances.
“Monetary policies will maintain price stability and continue to support economic recovery. Central Banks stand ready to provide liquidity to banks as required. We will take all necessary actions to ensure the resilience of banking systems and financial markets. In this context we reaffirm our commitment to implement fully Basel III.
“We reaffirmed our shared interest in a strong and stable international financial system, and our support for market- determined exchange rates. Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability. We will consult closely in regard to actions in exchange markets and will cooperate as appropriate.
“We look forward to working with our colleagues in the G20 and the IMF in the coming weeks to rebalance demand and strengthen global growth. As previously agreed, structural reforms will make an important contribution in this regard.”
Translation: the great experiment in encroaching statism, failed monetary policy and central planning continues... Until imminent failure.
And select soundbites of last ditch desperation courtesy of Reuters:
FRENCH FINANCE MINISTER FRANCOIS BAROIN
"The G7 reaffirmed its comittment to safeguarding the solidity of sovereign ratings."
"We have to get away from the idea there is only one solution for all... It's not rigour versus growth."
"It was a G7 where everything was raised. There was no dead time."
BANK OF FRANCE GOVERNOR CHRISTIAN NOYER
"There is an extreme tension on the markets, what's important is that very strong measures are taken by governments concerned."
"It was really a meeting of great cohesion and force. There was a determination by everyone to meet challenges."
"The G7 sees a need for a concerted effort at global level in support of strong, sustainable and balanced growth.
"We must all set out and implement ambitious and growth-friendly fiscal consolidation plans rooted within credible frameworks.
"The G7 affirmed its interest in a strong, stable international financial system."
U.S. TREASURY SECRETARY TIMOTHY GEITHNER
"It is completely within the capacity of the stronger members of the euro area to absorb those costs. Those costs would be much, much greater for them and their economies if they sit here and do nothing and they recognize that."
CANADIAN FINANCE MINISTER JIM FLAHERTY
"I hope we would all agree we have to stay the course, that we have to go through the pain of fiscal consolidation. It's not easy, it creates stresses in some countries, but it's necessary, we have to get through this rough patch.
"There's no point kicking the can down the road. If we don't deal with it now we'll have to deal with it later and we know that these problems do not get better with the passage of time."
EU ECONOMIC AND MONETARY AFFAIRS COMMISSIONER OLLI REHN
"We support the United States in its work so that the U.S. recovery can continue, while in Europe we have our own challenges related to fiscal consolidation and restoring confidence in the European economy."
On bank funding:
"Solutions should be found from private markets, from private investors and if that is not is possible there should be national backstops in place to ensure recapitalisations or restructuring for these banks."
International Monetary Fund chief Christine Lagarde has urged "bold action" on the faltering world economy, as the G7 group of leading economies met for talks in Marseille.
IMF's Christine Lagarde urges global action as G7 meet
Below is her speech on why global stimulus is necessary:
The G7 is discussing a "coordinated response" to the economic turmoil.
The two-day meeting comes as the Organisation for Economic Co-operation and Development (OECD) predicted a global slowdown this year.
Europe is also struggling with a sovereign debt crisis.
"The key message I wish to convey today [Friday] is that countries must act now - and act boldly - to steer their economies through this dangerous new phase of the recovery," Ms Lagarde said in London, before flying to the G7 meeting.
She also praised President Barack Obama's new $450bn (£282bn) jobs plan to try to boost the world's largest economy.
"All this is happening at a time when the scope for policy action is considerably narrower than when the crisis first erupted," she said. "But while the policy options may be fewer, there is a path to recovery."
Speaking at the same event in London before leaving for the G7 talks, Chancellor George Osborne vowed to stick to the UK's deficit reduction plan - which has so far helped the UK avoid the kind of bond market turmoil seen in the eurozone.
"It is the rock of stability on which our economy is built," he said.
The IMF chief praised the UK's plans - with several caveats.
"Since the summer, the outlook has become more subdued - including in the rest of Europe and the United States, the UK's major trading partners. So risk levels are rising," she said.
"The policy stance remains appropriate, but this heightened risk means a heightened readiness to respond - particularly if it looks like the economy is headed for a prolonged period of weak growth and high unemployment."
In response, Labour's Ed Balls again argued for temporary tax cuts to help kick-start the economy.
"While George Osborne insists there can never be a change of course and we must plough on regardless, Christine Lagarde rightly warns ministers will need to act if slow growth and high unemployment continues," the shadow chancellor said.
Rocky road ahead
No communique will be issued after the talks in Marseille, according to French Finance Minister Francois Baroin.
Earlier, Japanese Finance Minister Jun Azumi said he would explain his nation's intervention to stem the increase in its currency, which has hurt its exporters.
"Japan's economy has been steadily recovering, but I'm concerned that it is showing some signs of downturn due to the yen's rise," Mr Azumi said.
"I want to share the view that it would be bad for the world economy if Japan's economy faces downturn."
The OECD predicts the G7 economies will grow by just 0.2% in the last three months of the year.
The group also expects 0.3% growth in the UK in the fourth quarter, but said the economy could contract by as much as 1%.
The IMF Proudly Presents.... "Threat To The International Monetary System" Part Three
Things In Europe Go From Bad To Worse As Germany's FDP Party Seeks Referendum Over EFSF
Submitted by Tyler Durden on 09/09/2011 13:05 -0400
No sooner has the EFSF "passed" the German constitutional court (with large caveats, most notably that the German government will have a much greater say in any and all future European bailouts, assuming such are actually needed and the Euro does not implode), that we learn that yet another hurdle for the Greek bailout presents itself courtesy of primary fund provider, Germany, which is now finally very angry (as suggested first here "The Fatal Flaw In Europe's Second "Bazooka" Bailout: 82 Million Soon To Be Very Angry Germans, Or How Euro Bailout#2 Could Cost Up To 56% Of German GDP" two months ago) at what it realizes is an ongoing transfer without checks and balances (remember: the insolvent PIIGS hold all the trump cards) of capital from Europe's prudent workers to those who are, well, not. To wit, according to the Spiegel, German FDP Party has just announced that it will seek a referendum on the ESM/EFSF. What this means is that while the hurdle is not insurmountable from a legal perspective, it will merely add further uncertainty to the final bailout of a country that according to the market at least is 100% bankrupt in an alternative universe in which fundamentals matters.
Several front against the Liberals make permanent euro rescue ESM. With a membership vote, a group wants to prevent the FDP politician Schäffler and stag party for the approval of the aid package.
The Christian Lindner letter reached Friday afternoon by 17 clock by messenger. Since then, should the weekends of the FDP-General to be thrown overboard. In order to prevent the approval of the FDP faction in the Bundestag for permanent euro rescue ESM in the fall, a group aimed at the euro-skeptic Frank Schäffler and the Old Liberals Burkhard Hirsch, a membership vote on. "The discussion in the FDP on more measures to rescue debt-ridden countries in Europe is an important political issue and requires a broad discussion in the FDP," it said in a letter to FDP General Secretary Christian Lindner on Friday. The letter is from SPIEGEL ONLINE.
In a decision that the critics of the euro rescue measures apply to "permanent emergency measures for which Germany is liable for the debts of other European states." It continues: "The FDP opposes hence the establishment of a permanent European Stability Mechanism (ESM)." Should not the previously agreed measures prove to be sufficient, says the FDP in favor of over-indebted countries in an orderly exit from the to allow Euro to avoid a messy break-up of our currency. "
For Chancellor Angela Merkel (CDU) and the FDP, the party leadership is bad news. And it comes at an inopportune time. Just ECB chief economist Juergen Stark has resigned. In addition, the conservative-liberal government is currently fighting for the majority of the extended, temporary rescue EFSF. Now threatens the later vote on the following permanent pilot chute for ESM to be cliffhanger. Lacks the Chancellor with such a central issue in European politics with a majority, it could mean the end for the black-yellow coalition.
Especially since it is not excluded that the Euro-critics with their application be successful. 3,400 signatures have to collect the protesters for the action, which is five percent of about 68,000 FDP members. It provides for the Rules of Procedure. The last and only time the FDP had consulted their members in 1997 when the Great eavesdropping. The party leadership has the opportunity to amend the critics with its own alternative proposal to counter. One-third of the members involved in the decision, the result is official policy position of the FDP. The faction in the Bundestag must vote accordingly.
Initiator of the request is € tireless critic Frank Schäffler. That he is supported by Burkhard Hirsch, a Liberal of the old school, his concerns should give a new impetus. "I'm for Europe. But I am afraid that the way we want to save the euro, it says that we will divide Europe at the end," said Hirsch SPIEGEL ONLINE. "I am against a slide into a debt union. So far, all the billions we have paid to Greece, led to no result."
We expect the market will take the usual several hours to process this.
Central bank flight to Federal Reserve safety tops
A key warning signal of global financial stress has shot above the extreme levels seen at the height of the Lehman crisis in 2008.
Central banks and official bodies have parked record sums of dollars at the US Federal Reserve for safe-keeping, indicating a clear loss of trust in commercial banks.
Data from the St Louis Fed shows that reserve funds from "official foreign accounts" have doubled since the start of the year, with a dramatic surge since the end of July when the eurozone debt crisis spread to Italy and Spain.
"This shows a pervasive loss of confidence in the European banking system," said Simon Ward from Henderson Global Investors. "Central banks are worried about the security of their deposits so they are placing the money with the Fed."
These dollar accounts are just over $100bn (£62bn) and are small beer compared to the vast sums invested in bonds as foreign reserve holdings. Yet they serve as stress indicator, reflecting the operating decisions of the world's top insiders.
The dollar data refers specifically to reverse repurchase agreements.
Lars Tranberg from Danske Bank said European banks are reduced to borrowing dollar funds for "a week at a time" rather than the usual six to 12 months. "This closely resembles what happened in late 2008, though the difference this time is that the major central banks have dollar swap lines in place. If the dollar funding markets completely freeze up, the European Central Bank can act as a backstop."
Mr Tranberg said dollar deposits of US banks have increased by $400bn since mid-June, mostly offset by dollar reductions in Europe. "It is clear that the problem lies with the European banks. The credit default swaps on these banks are very high and provide a risk gauge."
The Bank for International Settlements says European and British banks have a dollar "funding gap" of up to $1.8 trillion stemming from global expansion during the boom that relies on dollar financing and has to be rolled over. This is not normally a problem but funding can seize up in a crisis.
European officials hotly disputed claims in a leaked document from International Monetary Fund claiming that a realistic "mark-to-market" of Italian, Spanish, Greek, Irish, Portuguese and Belgian sovereign debt would reduce the tangible equity of Europe's banks by €200bn (£176bn).
"French banks passed stress tests which were extremely tough less than a month ago: there is no cause for worry," said Valerie Pecresse, France's budget minister.
"It is ill advised to provoke alarm," said Michael Kummer, head of Germany's BdB bank federation.
The IMF was attacked as a Cassandra when it warned early in the credit crisis that debt write-downs would reach $600bn, yet losses have since reached $2.1 trillion.
European banks are still struggling to access America's $7 trillion money market funds. Fitch Ratings said last week that Spanish and Italian banks have been cut off altogether.
Investors do not fully believe EU pledges that the 21pc "haircut" agreed for private holders of Greek debt is the end of the story, or will remain confined to Greece, as the second Greek rescue is already unravelling. A Greek parliament report concluded that deep recession is pushing the country into a downward spiral, causing debt dynamics to fly "out of control". Public debt will reach 172pc of GDP next year.
Simon Derrick from BNY Mellon said Germany, Holland, and Finland may balk at a third rescue in the current tetchy mood, implying bigger haircuts instead. That will set a precedent for Portugal, and others. Until markets can see an end to the blood-letting, Europe's banks will remain untouchables.
Another way of viewing the parking of dollars from Europe at the Fed can be highlighted by the difference in spread of the Euri-Libor vs the USA -Libor: the European banks are surely in trouble here:
courtesy Zero hedge and author Peter Tchir:
Guest Post: Euribor-Libor Basis Swap Highlights Funding Stress For EU Banks
Submitted by Tyler Durden on 09/09/2011 11:41 -0400
From Peter Tchir of TF Market Advisors
I can't take credit for finding this graph of Eur Basis Swap [the cross currency basis swap between 3M EURIBOR and 3M LIBOR], but it seems to be a decent indicator of European banks having difficulty funding their USD business. Maybe I'm reading more into the chart than there is, but that is what I see going on.
It makes sense with all the other data that is out there and the anecdotal evidence that US banks are pulling back their lending to European banks.
Germany just announced they are preparing to prepare for a Greek default (my take on Merkel's statement). I have been arguing for a long time that they have to let Greece default and then try and pick up the pieces in a less complex and less intertwined world.
I guess it is time to say goodbye until Monday night.
I hope you all have a grand weekend.
all the best