Thursday, December 27, 2012

Silver and gold advance/Silver will probably hit 19.4 million oz in deliveries/ Fiscal cliff problems/

Good evening Ladies and Gentlemen:

Gold closed up $2.80 to finish the comex session at $1662.60 while silver also had a good day climbing by
20 cents to $30.18.  Today almost all of the attention is on the fiscal cliff or the lack of progress. The Dow plummeted when Harry Reid did some name calling.  However with  news that the House will reconvene Sunday night sent the Dow from its nadir ( down 100 or so points) to reach the breakeven point.  Mitch McConnell spoiled the party at the end of the day by suggesting he will not support any Democratic bill unless it has a great chance of passing in the House.  We will go over these and other stories but first:

Let us now head over to the comex and assess trading today.

The total comex gold open interest fell today by 2012 contracts from 426,300 to rest tonight at 424,279.  It seems that many have abandoned this arena to purchase their gold.  The active December contract month saw it's OI fall from 102 to 77 for a loss of 25 contracts.  We had 22 delivery notices filed yesterday so we lost 300 oz of gold standing for December delivery. The non active January month saw it's OI fall by 133 contracts down to 988.  The next big active month for gold is February and here the OI fell by 2629 contracts down to 253,375.  The estimated volume at the gold comex today was pretty weak at 97,834.  The confirmed volume yesterday was in even worse at 55,761.

The total silver comex OI continues to hover at elevated levels surrounding the 140,000 mark.  Today, the OI registers 140,124 down 627 contracts from yesterday's level of 140,751.  The active December contract saw it's OI fall from 467 down to 55 for a loss of 414 contracts.  We had 388 notices filed yesterday so in essence we lost 24 contracts or 120,000 oz of silver standing for delivery in December. The non active January contract month saw it's OI fall 42 contracts down to 515.  The next active contract month for silver is March and here the OI fell by 167 contracts down to 78,735.  The estimated volume at the silver comex today was quite weak at 29,058.  The confirmed volume yesterday was also extremely weak at 16,736.

Comex gold figures 

Dec 27.2012    The  December contract month


Withdrawals from Dealers Inventory in oz
Withdrawals from Customer Inventory in oz
Deposits to the Dealer Inventory in oz
Deposits to the Customer Inventory, in oz
6,622.300  (Scotia,Brinks)
No of oz served (contracts) today
 23 (2,300 oz)
No of oz to be served (notices)
54  (5,400 oz)
Total monthly oz gold served (contracts) so far this month
3001 (300,100  oz)
Total accumulative withdrawal of gold from the Dealers inventory this month
Total accumulative withdrawal of gold from the Customer inventory this month

581456.42  (18.08 tonnes)
Today, we  had tiny activity  inside the gold vaults 

The dealer had no deposits  and no   withdrawals.

We had 2  customer deposit:

i) Into Scotia:  2,893.5 oz
ii) Into Brinks:  3,728.80 oz

total deposit:  6,622.300 oz

we had 0   customer withdrawals:

total customer withdrawal  zero oz

Adjustments: 0

Thus the dealer inventory rests tonight at 2.621 million oz (81.33) tonnes of gold.

You should also note that the dealer or registered account as not withdrawn one oz from their their inventory category.

The CME reported that we had 23 notices  filed  for 2,300 oz of gold. The total number of notices filed so far this month  thus rises to 3001 notices or 300,100 oz of gold. To obtain what will stand for December, we take the open interest standing for December (77) and subtract out today's notices (23) which leaves us with 54 contracts or 5400 oz of gold left to be served upon our longs.

Thus the total number of gold ounces standing for delivery in December  is as follows:

300,100 oz (served)  + 5,400 oz (to be served upon)  =  305,500 oz  (9.50 tonnes of gold).

we lost 300 oz of gold standing in the December delivery month.


Dec 27.2012:   The December silver contract month

Withdrawals from Dealers Inventorynil
Withdrawals from Customer Inventory  2,949.14  (Delaware)
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory   650,113.80 oz  (Delaware,Scotia, CNT)
No of oz served (contracts)1   (5,000 oz)
No of oz to be served (notices)54 (270,000 oz)
Total monthly oz silver served (contracts)3818  (19,090,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month4,430,570.9
Total accumulative withdrawal of silver from the Customer inventory this month11,232,034.14

Today, we again had tiny activity  inside the silver vaults.

 we had no dealer deposits and no dealer withdrawals:

We had 3 customer deposits of silver:

i) Into Delaware:  24,298.78  oz
ii) Into Scotia:  623,726.10 oz
ii) Into CNT:  2,089.000  oz  (another perfectly round number of a deposit)

total deposit: 650,113.8 oz

we had 1 customer withdrawals:

i) out of Delaware:  2949.14 oz

total customer withdrawal:  2,914.14  oz

we had 1  adjustments:

Today, we had 15,847.84 oz of silver leave the dealer to repay the customer's account  at HSBC. 

I have still not received any answer from the CFTC  regarding the round numbered deposits/withdrawals in gold and silver we have been witnessing lately, especially from the CNT vault.  

Registered silver remains today at :  42.684 million oz
total of all silver:  147.743  million oz.

The CME reported that we had 1 notice filed for 5,000 oz. 

To determine the number of silver ounces standing for December, I take the OI standing for December  (55) and subtract out today's notices (1) which leaves us with 54 notices left to be filed or 270,000 ounces left to be served upon our longs.
Thus the total number of silver ounces standing in this  active month of December is as follows:

19,090,000 oz (served) + 270,000 (oz to be served upon)  =  19,360,000 oz

we finally lost another 120,000 oz of addition silver  standing for December.


The two ETF's that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.

Total Gold in Trust   Dec 27.2012  ( at 6 pm)



Value US$71.873  billion.

Dec 26.2012:



Value US$72.178 billion.

Dec 24.2012:



Value US$72.180 Billion

we neither gained nor lost any gold ounces into/out of the GLD vaults.

and now for silver:

Dec 27.2012:  (at 6 pm est)

Ounces of Silver in Trust322,981,444.700
Tonnes of Silver in Trust Tonnes of Silver in Trust10,045.85

Ounces of Silver in Trust322,981,444.700
Tonnes of Silver in Trust Tonnes of Silver in Trust10,045.85

Dec 24.2012:

Ounces of Silver in Trust322,981,444.700
Tonnes of Silver in Trust Tonnes of Silver in Trust10,045.85

no change in the silver inventory

And now for our premiums to NAV for the funds I follow:  

Sprott and Central Fund of Canada. 

(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)

1. Central Fund of Canada: traded to a positive 4.6 percent to NAV in usa funds and a positive 4.4%  to NAV for Cdn funds. ( Dec27 2012)   

2. Sprott silver fund (PSLV): Premium to NAV rose to 1.65% NAV  Dec 27./2012
3. Sprott gold fund (PHYS): premium to NAV  fell to 1.56% positive to NAV Dec 26.2012. 

 Now we witness the Central fund of Canada  gaining big time in its positive to NAV, as we now see CEF at a positive 4.6% in usa and 4.4% in Canadian.This fund is back in premiums to it's former self with respect to premiums per NAV. 

The silver Sprott fund announced a big silver purchase and this reduces the premium to NAV temporarily.  It seems that the bankers are picking on Sprott to short their funds trying to cause an avalanche in selling in the precious metals.  They are foolhardy in their attempt.

It looks like England may have trouble in finding gold and silver for its clients.
It is worth watching the premium for gold at the Sprott funds which is a good indicator of shortage as investors bid up the premiums.



Here are your major physical stories:

From Mitsui Financial early this morning:

(courtesy GATA/Mitsui)

Mitsui Global Precious Metals: Singapore Morning Comment on December 27:
"On the fundamental front for precious metals, we saw silver physical holdings by ETFs rose to an all-time high of 18.9 thousand metric tons while gold physical holding remains near the record high at 2,631 metric tons. Further, US mints has reported 24.8% increase in gold coin sales. This decoupling of fundamental which paints an extremely bullish picture versus price action which had recently smashed faith in precious metals (best exemplified with silver at record physical holding yet posting 13.2% decline for the quarter), has confused and disillusioned many."


Ben Taynor of Bullionvault discusses gold/silver trading from Asia and Europe overnight:

(Ben Traynor/Bullionvault)

Precious Metals "Under Pressure" Ahead of Year-End, US "Due to Hit Debt Ceiling This Monday" says Geithner

By: Ben Traynor, BullionVault

-- Posted Thursday, 27 December 2012 | Share this article | Source:

London Gold Market Report

U.S. DOLLAR gold prices traded above $1650 an ounce Thursday morning, in line with where they started the week, as the London market reopened following Christmas.

Silver meantime hovered either side of $30 an ounce, while stock markets edged higher and the Dollar fell, following news that the US Treasury is to take extraordinary measures to avoid hitting the federal debt ceiling next Monday.

"I am still friendly with the [precious metals] market, but it looks like until the new year starts, it's under pressure," says Yuichi Ikemizu at Standard Bank in Tokyo.

US president Barack Obama has flown back early from Hawaii to resume talks on the so-called fiscal cliff, the $600 million of spending cuts and tax cut expiries due to come into effect from Monday. The House of Representatives remains on vacation.

"The Senate must act first" said a statement issued Wednesday by House speaker John Boehner and senior Republican colleagues.

"The House will then consider whether to accept the bills...or to send them back to the Senate with additional amendments."

Boehner's so-called 'Plan B' for dealing with the federal deficit, which included maintaining tax cuts for anyone earning less than $1 million, failed to reach a House vote last week due to lack of support from members of Boehner's own party.

The US Treasury meantime is to take extraordinary measures to avoid hitting the statutory federal debt limit next Monday, a letter from Treasury secretary Timothy Geinther published yesterday says. 

The measures include a halt to issuing debt for the purposes of assisting state and local governments, and suspending reinvestment of maturing securities into funds for government workers and the Exchange Stabilization Fund, an emergency fund set up for the purpose of exchange rate intervention.

"These extraordinary measures...can create approximately $200 billion in headroom under the debt limit," Geithner's letter says.

"Under normal circumstances, that amount of headroom would last approximately two months.

However, given the significant uncertainty that now exists for unresolved tax and spending policies for 2013, it is not possible to predict the effective duration of these measures."

The measures will "postpone the date that the United States would otherwise default on its legal obligations," the letter adds.

The US Treasury has taken similar measures on a number of occasions over the last two decades, including a series of measures starting in May 2011 that ended when the debt ceiling was last extended. 

The 2011 debt ceiling negotiations lasted until August 2 of that year, the date the Treasury had said the US would hit the ceiling. Ratings agency Standard & Poor's stripped the US of its triple-A credit rating a few days later.

"Progress on the fiscal cliff will continue to affect market sentiment," Feng Liang, analyst at GF Futures, part of China's third-biggest listed brokerage, told news agency Bloomberg yesterday.

"Gold's one of the few investments with positive returns this year and it's normal to get some [year-end selling]."

The gold price at Thursday morning's London Fix was $1655.25 an ounce, 5.1% up on the final fixing of 2011.

Over in India, gold demand stayed strong Thursday, newswire Reuters reports.

"Retail demand is still weak, but jewelers are restocking for Pongal festival," says Daman Prakash Rathod, director at Chennai wholesaler MNC Bullion, referring to next month's harvest festival in the state of Tamil Nadu.

Ben Traynor

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. Ben writes and presents BullionVault's weekly gold market summary on YouTube and can be found on Google+

(c) BullionVault 2012

Your early morning overnight sentiment from Europe/Asia:

Major points:

1.Obama flying back tonight hoping to broker a deal
2. China now plans to increase it's budgetary deficit by 50%  to 1.2 trillion yuan or 192 billion USA.
3. This means that the following nations are engaging in massive QE:

   i) USA

   ii) Europe
   iii) Japan
   iv) and now China

the world will be awash in paper fiat, totally worthless.

Barack Is Back: The 2012 Season Of The Fiscal Cliff Soap Opera Is Finally Concluding

Tyler Durden's picture

While the market will look with some last trace of hope to Obama's return from Hawaii to D.C. today, the reality is that even the mainstream media, which had so far gotten everything about the cliff spectacularly wrong (proving that sample polling and actual "predicting" are two very different things), is waking up and smelling the coffee. As Politico reports, "nearly all the major players in the fiscal cliff negotiations are starting to agree on one thing: A deal is virtually impossible before the New Year. Unlike the bank bailout in 2008, the tax deal in 2010 and the debt ceiling in 2011, the Senate almost certainly won’t swoop in and help sidestep a potential economic calamity, senior officials in both parties predicted on Wednesday. Hopes of a grand-bargain — to shave trillions of dollars off the deficit by cutting entitlement programs and raising revenue — are shattered. House Republicans already failed to pass their “Plan B” proposal. And now aides and senators say the White House’s smaller, fall-back plan floated last week is a non-starter among Republicans in Senate — much less the House. On top of that, the Treasury Department announced Wednesday that the nation would hit the debt limit on Dec. 31, and would then have to take “extraordinary measures” to avoid exhausting the government’s borrowing limit in the New Year."
Which means Obama must be particularly angry: his return to DC has nothing to do with negotiations, and everything to do with optics, and giving the popular impression that he is hard at leadership work. And what is supremely ironic is that suddenly everyone wants to go over the cliff: a move which incidentally is critically needed in a country which needs to apply some brakes to its runaway spending, where not even the mandatory expenditures (excluding military) could be covered in their entirety by government tax receipts.
Of course, all of this does not matter to the market which, just like the broader media, is incapable of rational thought, and especially not of forecasting, and will be grasping at straws onto any flashing red headline promising a deal is imminent in the 3 remaining trading days of 2012. In the meantime, instead of selling, traders will continue buying near-term puts, and sending the VIX ever higher because, as we noted last week, the fear is that once one starts selling, everyone starts selling, and nobody knows just how far the selling goes in a market as illiquid and broken as this one.
In this regard, watch out around 2:30 pm Eastern when House Republicans will hold a conference call to discuss next steps in the fiscal cliff stalemate. There will be many market moving headlines then.
In terms of actuall irrelevant newsflow, Italy sold some €11.75 billion in Bonds and Bills at a slighlty higher yield in its first debt auction to be settled in 2013. The treasury issued the targeted 8.5 billion euros of six-month bills, paying a yield of 0.949 percent, slightly up from 0.919 percent at a similar auction one month ago. Rome also sold 3.25 billion euros of two-year zero-coupon bonds at a yield of 1.884 percent, down from 1.923 percent in November. The tremors sent the yield on the benchmark 10 year BTP to a 10 day high. Is this merely the precursor of Italy taking the center bond stage in Europe in 2013: sit back in your easy chair and find out very soon.
Elsewhere, the Shanghai Composite did not share the enthusiasm of the Nikkei which is following the plunging Yen ever higher (but remaining flat in dollar terms), and posted its first red close in days, closing 0.6% lower as it flirts with the unchanged for the year level.
In far more important news out of China, we learned that the country plans to increase its budget deficit by a whopping 50% to 1.2 trillion yuan ($192b) in 2013, including sale of 350b yuan of bonds to fund local governments, a person familiar with matter tells Bloomberg News. Central government deficit is budgeted at 850 billion yuan, according to the person. Govt targets about 8% trade growth, down from this year’s 10% goal. So is China now becoming the US and joining every other country in the world in posting a whopping budget deficit? With all signs pointing to yes, one wonders: who in this world has a budget surplus left?
Yet all the above news is as always irrelevant: the only thing that matters is how the market, and the permawrong pundits spin any word coming out of Obama and Boehner, and how it digests the realization that it is increasingly likely that nothing at all will happen - as we have been saying for over 2 months - until the actual debt ceiling D-day deadline, some time in March.
More from DB's Jim Reid
Just five days to go until the year-end and the moment in which the US will reach its $16.4 trillion debt ceiling. According to a written warning from Tim Geithner to the Congress that was released after US market close overnight, the government will hit the debt ceiling this coming Monday and the Treasury will soon begin to take a series of “extraordinary measures” to create $200bn in debt ceiling headroom. According to CNN such measures include suspending the reinvestment of federal workers’ retirement account contributions in short-term government bonds. The headroom aims to buy the government approximately two months of time before it faces “default on its legal obligations” unless the ceiling is raised prior to that.
To briefly summarise the fiscal cliff discourse over the last week or so, we’ve gone from a “grand bargain” including a proposed extension of the debt ceiling debate for two more years, to Boehner’s Plan B which was abandoned before a House vote, followed by Obama’s fallback plan, and now reports of Senate Majority Leader Harry Reid’s so-called Plan C.
Reid’s plan, which is being described as a “stop-gap” measure, aims to extend tax rates for incomes up to $250k, limits tax deductions, sets the dividend/capital gains tax rate at 20% and delay across-the-board spending cuts until early in the New Year when Congress will again need to negotiate an increase in the debt ceiling (NY Times). It comes after Boehner insisted on Wednesday that “lines of communication remain open” but held firm that the Senate must make the next move.
So with the Senate reconvening today and President Obama returning to Washington from his Christmas vacation in Hawaii, all eyes will be on whether Harry Reid can broker a deal with the GOP to pass last-minute legislation that could then be brought to the House later in the week. House leaders have told lawmakers that they would receive a 48-hour notice before being called back to Washington. According to the NY Times, House leaders haven’t yet given that notice and are still discussing the schedule, so as we stand it appears that the earliest the House could reconvene would be Saturday if the 48-hour notice stands to be true. On that note, DB’s Head of Government Affairs, Frank Kelly, is hosting a daily conference call this week providing updates on the Fiscal Cliff. Details are provided at the end of today’s EMR for those interested.
Turning to markets now and the S&P 500 closed 0.48% lower yesterday led by Retailers (-1.27%) on reports of sluggish holiday season sales. The WSJ reported that US holiday retail sales grew at 0.7%yoy, the weakest pace since 2008, citing data from Mastercard. However, CNBC noted that the survey period included the week of Hurricane Sandy which explains some of the weakness in sales. In other data, the Case-Shiller October reading confirmed the continuing upward trend in house prices with the 20-city index up 0.66% mom (vs 0.48% expected) but this positive print was largely outweighed by the concerns over the looming fiscal cliff deadline. The VIX jumped another 4.8% on Wednesday to close at a 5-month high, bringing the total rise over the last 5 sessions to 25%.
As a reflection of the risk-off sentiment, 10yr UST yields edged 2bps lower to 1.751% while Gold rose marginally by 0.1% for its fourth gain in as many sessions.
In overnight markets, most Asian bourses are trading higher led by gains on the Nikkei (+1.0%) and Hang Seng (+0.42%). In Japan, Mr. Abe officially took office as the PM on Wednesday and was quick to reiterate his policy of pushing for “bold monetary easing” and “flexible” fiscal policy. Abe also named key members of his cabinet which included Taro Aso as finance minister. As Prime Minister in 2008-2009, Aso oversaw a JPY14 trillion stimulus package which was the largest Japanese spending plan on record (Nikkei). The JPY continued to slide against major currencies on Wednesday. USDJPY gained 1% on Wednesday and is consolidating at 85.80 overnight, its highest level since September 2010.
The other big mover of late in Asian markets has been onshore Chinese equities which have rallied 13% since the multi-year trough reached on 3rd December, or approximately two weeks after China’s new leaders were appointed. Following solid gains over Christmas, the Shanghai Composite has managed to claw back into positive territory for the year-to-date (+0.7%) although it still remains the worst-performing major equity index in Asia.
In European headlines, caretaker Italian PM Monti tweeted on Christmas night that “Together we have saved Italy from disaster. Now we have to renew politics…Let rise to politics!” which some saw as a strong indication of Monti’s intention to run in the next elections. Monti also published his pro-European political manifesto, titled “Change Italy. Reform Europe”, which drew endorsements from a number of centrist parties including Pier Ferdinando Casini’s Catholic UDC. According to the FT, Monti will meet with prospective coalition partners on Thursday to discuss strategy and candidate lists amidst reports of a likely Centrist-Democrats coalition heading into next year’s election (FT).
Looking at the day ahead, major European markets will reopen today after the Christmas/Boxing Day break. In Europe, the data flow will remain thin with French jobseekers and Italian business confidence the main highlights. In the US, the House Republicans will hold a conference call at 2:30pm USEST to discuss next steps in the fiscal cliff stalemate. In terms of US data, consumer confidence, jobless claims and new home sales are the major data points – although the next few days of data will likely be overshadowed by developments in Washington.


Marc to Mark talks about Japanese monetary policy and how that will drive the yen to absolute lows. As I pointed out to you yesterday the EU will grant France and Spain one more year to get their house in order.

There seems to be a rallying point around Monti being the leader of the next coalition which he would happily accept.  Strange politics in Italy.

And finally, the topic I brought to your attention earlier this week on the port lockouts, which will cause extreme havoc to the economy.  This is happening at the same time the Mississippi river is very low making shipping extremely hazardous

(courtesy Marc to Market)

Abenomics and other Drivers of Holiday Markets

Marc To Market's picture

The main feature in the foreign exchange market continues to
be the yen’s weakness.  This weakness, based on expectations that the new Japanese government will succeed in driving the dollar to JPY90 with a combination of more aggressive monetary and fiscal
policy (“Abenomics), is offering support to the other currencies. The yen sales are a combination of momentum and carry strategies. 

There are two other forces in the market as well.  First, the market is anticipating a further
reduction in tail risks in Europe.  Of course the large moves away from the abyss this year are clearly the doing of the ECB with its long-term repos and offer of (conditional) outright

However the European Commission will reportedly do its part by granting several countries, including
France and Spain, an extra year (and maybe two for Spain) to reach the 3% deficit
target.  An official announcement has not been made, but the signals from the EC and the Commissioner for Economic and Monetary Affairs Rehn are unmistakable.

The other driver is the looming US fiscal cliff and debt ceiling.  Yesterday the Treasury Department indicated that it will begin taking special measures to avoid violated the debt ceiling.   After last week’s failure in the House of Representatives, attention turns to the Senate.  With the Democrats enjoying a slim majority, it is possible that they vote on a bill along the lines that Obama outlined. 

There are a couple of other developments to note.  In Italy, “Agenda Monti” is drawing some
support from the UDC, some current cabinet members and some breakaway politicians.  A poll suggests such support may translate into 15-20% of the vote in the late Feb election.  Berlusconi at one and the same time wants to maintain that Italy is the second strongest economy in the euro area behind Germany and that Monti has driven the economy into the ground.    

Although it is hard to maintain both simultaneously, the unity of opposites during a campaign seems all too common.  Perhaps the most important character in the Italian drama is neither Monti nor Berlusconi at the moment, but the center-left leader Bersani.  He already made the most sensible response to Monti’s manifesto, saying that he agrees with some, others a bit less so and other are open for discussion.  Bersani has his own ambitions and seems reluctant to move over for Monti. 

In the US, we are also monitoring the labor dispute at ports ,on both coasts.  The eastern seaboard and gulf port dispute is the most pressing at the moment.  A last ditch effort to meet with federal
mediators was agreed upon, but time is running out.  The current contract extension expires Saturday night.   The ports handle a great deal of consumer goods and a labor dispute would disrupt the retail sector as well as distort trade and employment data.  Only container traffic would be impacted (so autos and some perishable items are not included nor is  military cargo). The National Retail Federation and various other industry associations are calling on Obama to invoke his authority to order a cooling off period.

The fund


Your early morning currency crosses: showing a huge  USA weakness against major currencies like the Euro .  This morning,  the pound also rose against the dollar along with the Canadian dollar . The yen also fell against all currencies as the world is waking up to Abe's huge monetization of Japanese debt:

Your early morning currency crosses;

Euro/USA    1.3280 up  .0053
Japan/USA  85.76  up .078
GBP/USA     1.6168 up .0046
USA/Can      .9912  down .0025


The fun now becomes within the Spanish banking sector as today the new financing just wipes out all equity for its 350,000 shareholders.  Next will come the bondholders:

(courtesy zero hedge)

Lede Of The Day: "Spanish Lender Bankia Will Wipe Out 350,000 Shareholders"

Tyler Durden's picture

Been a while since we had some amusement out of the Bazooko Circus known as Europe, which for the past month has gone completely dormant, not because "it is fixed" but because, just like in Japan where the JPY has plunged on expectations of an action by the BOJ, so Europe has continued to benefit from the threat of the latest and greatest proposed ECB intervention: the OMT, which on one hand keeps the vigilantes in check, but on the other delays any painful reforms even as the underlying Spanish economy continues to deteriorate without any real structural reforms: something which a surge in rates would promptly precipitate (and once expectations turn to reality, it's all over: just see the recent QE3 and QE4 attempts by the Fed). So speaking of Spain, today's recap sentence of the day goes to Reuters' Julien Toyer with the following: "Spanish lender Bankia will wipe out 350,000 shareholders, many of them small savers with little knowledge of financial markets, after it emerged it had a negative value of 4.2 billion euros." Now if only the Spanish wipe out ended with Bankia's shareholders...
The measure, which will hit shareholders who were encouraged by aggressive marketing tactics to invest in the company, is seen as vital if the nationalised bank is to be refloated.

A source close to the Bank of Spain said Bankia would receive 18 billion euros of European money by Friday and launch a capital increase in the first half of January when current shareholders will lose practically their entire investment.

Under the European Union plan to prop up Spain's banking sector, shareholders must be the first in the queue to suffer losses. This has already been the case in Ireland where shareholders in Anglo Irish Bank were left with nothing.

"Are we looking into leaving shareholders with something? Yes. How much? That's too soon to say. Will it be very little? For sure," said the source on condition of anonymity.

"But that will be purely symbolic. I can assure you they will lose up to the shirt on their back."
Bankia shareholders today; Spanish bondholders tomorrow... at least according to the brains behind the ongoing slow motion trainwreck European restructuring Lee Buccheit.


The following is a must see as Kyle Bass gives 5 reasons why Japan will implode:

(courtesy Kyle Bass/zero hedge)

The Annotated Kyle Bass 'Short-Japan' Thesis

Tyler Durden's picture

With JPY bleeding lower once again overnight extending to 28-month lows against the USD (and the long-end of the JGB curve starting to show some signs of anxiety), it is perhaps timely to revisit Kyle Bass's five key reasons why Japan is the epicenter of the world's failed monetary policy experiment. In this excellent and much-requested summary 8-minute clip, Basssummarizes his Japan thesis and destroys several of the myths that talking-heads like to assign to the so-called widow-maker trade.

JPY/USD...(higher = weaker JPY)

The long-end of the Japanese yield curve is at near-record steeps...

Bass's exact positioning is unknown but he has commented on using sovereign CDS and critically has not espoused a short Japanese equity position directly - preferring to focus on the debt problems.

(h/t InformedTrades)


The following is very scary as we see many banks scramble for euros and pay a punitive penalty for doing so, beautifying their books before the year end. Banks borrowed a whopping 16.3 billion euros at a punitive penalty of 1.5% with interest rates at zero.  Where there is smoke, there is fire!
Thus we now know that the recent rise in the Euro is due to two reasons:

1.) the uSA fiscal cliff issue which dampens the dollar against everybody else
2. Repatriating of Euros from failed investments back home.

(courtesy zero hedge)

Surge In Marginal Lending Facility Usage To One Year Highs Confirms Year End EUR Repatriation

Tyler Durden's picture

With four days to go until the end of 2012, it means that Europe can finally reveal its dirty underwear, and as it does at the end of every year, scramble to "window dress" its banks, who for one reason or another, suddenly find themselves needing gobs of liquidity - not USD-denominated liquidity, but domestic, EUR-based. So what do they do? They all, or at least those without direct access to FX markets and without assets to dispose of, engage in what is now a traditional year end surge in loans at the ECB's Marginal Lending Facility, whose punitive rate of 1.5% - a true outlier in this day and age of global ZIRP - makes borrowing from this facility truly a last resort option. And as the chart below shows, in the past few days, various European banks have come begging at the front door of the ECB's Frankfurt HQ and have demanded a whopping €16.3 billion, the highest amount in just about a year, going back to December 29, 2011.
What is interesting here is that this confirms, as we have been suggesting over the past several weeks, that the relentless push higher in the EUR virtually oblivious of global newsflow (which in turns correlates into a higher ES level) is nothing but more EUR repatriation by those banks who are not locked out of FX markets, and which don't have to pay an exorbitant fee to the ECB to procure much needed year-end Euros, and instead can go the foreign exchange route, sell USD assets, and repatriate the proceeds by selling USD and buying EUR.
Which also means that, just like last year after the surge in MLF loans going into 2012, the EUR too will proceed to slide, as the need for EUR goes de minimis, and everyone scrambles for the "safety" of the USD all over again.

And while on the path of the artifice that is the EURUSD rate, these 3 charts suggest the richness is unsustainable...
EUR vs Sov Risk...

EUR vs Swap-Spreads...

and comparing Fed and ECB balance sheets (implies a mere EUR300bn spend on OMT from the ECB - not enough to solve anything!)...

your closing 10 year bond yield from Spain:  



5.283000.02600 0.50%
As of 11:59:38 ET on 12/27/2012.


Your closing Italian 10 year bond yield: 
climbing faster in yield than Spanish bonds

Italy Govt Bonds 10 Year Gross Yield


4.528000.06400 1.43%
As of 11:59:50 ET on 12/27/2012.


Your 3:30 pm currency crosses: (  showing minuscule  USA weakness against major currencies
like the Euro on closing. The pound also fell against the dollar , as did the Canadian dollar. The yen  continues to fall against all currencies  as investors are becoming quite worried about the antics of their new prime minister Abe who wishes to massively monetize all debt and thus advancing the threat of hyperinflation in Japan:

Euro/USA    1.3243 up  .0016
Japan/USA  86.07  up  .328
GBP/USA     1.6109 down .0013
USA/Can      .99465  up .0010


Your closing figures from Europe and the USA:

  ( England and Germany closed , France and the USA in the red, Spain in the green.)

i) England/FTSE  up .12  or  .01%

ii) Paris/CAC  up 12.86 or  .35% 

iii) German DAX: down 16.22 or .22%

iv) Spanish ibex: down 18.60 up .22%

and the Dow: down 18.28 points  (.14%...another hail mary at the end of the trading session)


And now for major USA stories:

USA consumer confidence plummets from 70.05 down to 65.1 a 13 month low.
New home sales also slide to the lowest level since February.  It certainly does not look like any recovery to me

(courtesy zero hedge)

Consumer Confidence Plunges, Unadjusted New Homes Sales Slide To Lowest Since February

Tyler Durden's picture

Just as we saw with UMich, it appears the hope for change is wearing thin among the people. Today's Consumer Confidence data missed by its biggest margin in 7 months, dropped below the year's average, and saw the largest 2-month drop in over 15 months. All age cohorts lost confidence with the eldest most and it appears those earning over $35k are also beginning to worry (as those between $35k and $15k seem more confident). Over 40% expect stock prices to decline and it isexpectations that have plummeted from a hope-filled 80.9 to a 13-month low of 66.5.

In other news, we got the November New Homes Salesreport from the Census Bureau. On the surface the number was good, if a slight miss to expectations of 380K, printing at 377K, up from 361K in October, and "the highest in years." As we said on the surface. Because like the Initial Claims data earlier, where we subsequently learned that the DOL had to estimate the claims data of 19 states (!) as their labor offices were closed for the holiday, it is digging into the data that reveals the reality once more. Sure enough, on an unadjusted, unannualized basis, November saw a tiny 27K houses sold, of which just 2K in the northeast, and 3K in the Midwest. Furthermore, of these 27K actual new home sales, which by the way was the lowest number of home sales since February 2012, 9K were homes still under construction, and 8K were not even started, with just 10k homes completed and now sold. Digging further, on page 3 we found the dreaded (Z) designator in the $750,000 and over category, meaning that a negligible (taken to mean under 500 but usually implying 0) homes were sold in the $750,000 and higher price range. In fact, the only thing that really did soar was the number of homes for sale at the end of the period which rose to 151K: the highest since November of 2011. Yet magically the median month for sale since completion dropped to a tiny 5.3 months, down from 7.2 a year ago. It's a miracle what a few million mortgages in the "foreclosure stuffing" pathway will do to shadow and real inventory.


Rick Santelli provides another of his must see rants on the USA economy.
He states:  "the Fed doesn't have a clue..the President does not a clue"
as to how to solve the USA mess. Santelli states that the uSA has over 100 trillion of unfunded liability and this is important and the markets are only there for instant gratitication.

(courtesy CNBC/Rick Santelli/zero hedge) 

Santelli Channels Cramer: "The Fed Doesn't Have A Clue"

Tyler Durden's picture

Comparisons of the failure of the TARP vote and the fiscal cliff were summarily dismissed early in this clip - though CNBC's Rick Santelli does note, as we have vociferously stated that amarket correction is the only impetus to get something done in WashingtonHaving abandoned his channel's "Rise Above" meme in the face of this "childish nonsense", Santelli agrees that politicians "can show incompetence at very critical moments." Then, sparked by the anchor's comment that "the markets would know if [the cliff] was going be a horrific thing", Santelli goes 'off-script' with an epic take-down of all things CNBC: "the stock market is an immediate gratification for investors to make money;" and asks the key question "Why do we look to the Dow Jones Industrial Average to handicap if this country is going to go down the sewer in a couple of years? It doesn't give us a glimpse into the future." He adds that the market is not discounting $100 trillion of unfunded liabilities in our future and then slams the door shut with what will likely become the new meme: "The Fed doesn't have a clue, neither does the President, neither does Congress."

Forward to 4:30 for the epic rant (or enjoy the whole thing as Rick summarily dismisses the much hoped for "Rise Above" theme)


Initial claims drops to 350,000 even though last week was revised upwards again.
However because of the Christmas rush, they did not receive data from 19 states so the BLS estimated.

Basically garbage in, garbage out..

(courtesy BLS/zero hedge)

Initial Claims Drop To 350K, Beat Expectations From Upward Revised Baseline

Tyler Durden's picture

Update: the BLS disclosed that it had to estimate the data for 19 states due to holiday office closures. Good enough for Ministry of Truth work.
In what is a traditional slowdown to the layoffs season in the week leading into Christmas, initial unemployment claims, dropped from an upward revised 362K (was 361K) to 350K, below a consensus print of 360K, and the lowest seasonally-adjusted number in nearly 5 years. The boost, of course, was all in the ARIMA X-12 seasonal adjustments, as the not seasonally adjusted number rose by 39K to 441K. Although in a world in which only Case-Shiller says to use its Non-Seasonally Adjusted print as a far more accurate indicator of concurrent data, nobody cares about the BLS pre-adjustment data. In fact, judging by the market response, nobody cares about BLS data anymore, period, with absolutely no response by the market following the Claims print. Perhaps the only realm, unfudged notable number was the jump in people claiming claims at the State level, which soared by 71K in the week ending December 8, to a 3.238MM total. This happened even the surge of those collecting EUCs finally ended, with just 4K new collectors of EUCs and Extended Benefits. The good news is that at least nothing is Sandy's fault, at least this week.


I brought this to your attention this week.  It is explosive!

(courtesy Jim Sinclair commentary)

In The News Today

On The Watch List:
Container Cliff is the potential strike of all port activity from Texas to Maine now pending. It would be the first strike this broad in nature in 35 years.
Add this to the low levels of the Mississippi river blocking transportation, and the potential is that the USA goes into product consumption and export.
This would be a transport freeze frame while at the same time US political leadership plays chicken with the Fiscal Cliff.
Soon the discovery is going to take place that there is a thing called currency induced cost push inflation that occurs. That is a really bad dream. All this while the US Administration has New Years dreams put out, staying Roosevelt.
You have to ask yourself, why? We might not want to hear the answer.

Savings Deposits Soar By Most Since Lehman And First Debt Ceiling Crisis

Tyler Durden's picture

A month ago, we showed something disturbing: the weekly increase in savings deposits held at Commercial banks soared by a record $132 billion, more than the comparable surge during the Lehman Failure, the First Debt Ceiling Fiasco (not to be confused with the upcoming second one), and the First Greek Insolvency. And while there were certainly macro factors behind the move which usually indicates a spike in risk-aversion (and at least in the old days was accompanied by a plunge in stocks), a large reason for the surge was the unexpected rotation of some $70 billion in savings deposits at Thrift institutions leading to a combined increase in Savings accounts of some $60 billion. Moments ago the Fed released its weekly H.6 update where we find that while the relentless increase in savings accounts at commercial banks has continued, rising by another $70 billion in the past week, this time there was no offsetting drop in Savings deposits at Thrift Institutions, which also increased by $10.0 billion. The end result: an increase of $79.3 billion in total saving deposits at both commercial banks and thrifts, or an amount that is only the third largest weekly jump ever following the $102 billion surge following Lehman and the $92.4 billion rotation into savings following the first US debt ceiling debacle and US downgrade in August 2011.
In total, there has been an increase of $112 billion in deposits in savings accounts in the past month alone, roughly the same as the total non-M1 M2 momey stock in circulation.
Ironically, it was only yesterday that we demonstrated the relentless surge in bank deposits despite the ongoing contraction in total bank loans, and explained how it is possible that using repo and rehypothecation pathways, that banks are abusing the endless influx of deposits into banks and using this money merely as unregulated prop-trading funds, a la JPM's CIO. In other words the "money on the sidelines" now at all time record highs, is anything but, and is in fact about $2 trillion in dry powder to be used by the banks as they see fit.
But most importantly, we showed how even as those happy few who can still afford to save, are fooling themselves int believing that they are pulling money out of other assets and storing it in what they perceive to be electronic mattresses at their friendly neighborhood JPM, Wells or Citi branch, and thinking this money is safe and sound. Alas, nothing could be further from the truth.
Because by depositing money into banks, ordinary Americans (and companies) are merely providing even more dry powderfor the banks to trade on a prop, discretionary basis, either as directly investable capital or as asset collateral, and by handing over their hard earned cash to the banks are assuring that the scramble to bid up any and all risk assets continues indefinitely.
Yes, dear saver: the reason why stocks continue to soar above any fundamentally-driven level, is because you just made that bank deposit.


Anonymous said...

"probably 19.4 million ounces in deliveries" is this good or bad for silver? please advise and thanks.

Jack said...

I don't think that's an answerable question there ANON. Silver is a thing, not a person.

And COMEX constantly lies about their numbers, so who knows what really was "delivered" versus paid er bribed off in cash, versus a phony paper "delivered" to a vault under JPM control versus actual silver "delivered" to an actual person.

Harvey is correct to call it "probably", because that's all we can tell. The price of silver is controlled by computer software selling imaginary silver to suppress the price, not by physical metal. The "delivery" of "supposedly 19.4 million ounces" removes that physical from the marketplace and brings us closer to the time where a silver shortage forces higher prices.

However, since the "registered and ready for delivery" silver inventory at COMEX does not show any actual silver ever leaving the warehouses and in fact, increased from 39 million to 42 million ounces this month, despite "19.4 million ounces" being delivered, it's clear that COMEX is an epic scam waiting to be destroyed by physical demand. Can't wait for that day.

Harvey Organ said...


well said.

This has been my complaint to the CFTC for quite some time.

For those of you who just cannot wait until Saturday for delivery notices served late tonight for delivery on Monday:

gold: 43 (54 contracts outstanding so another 12 needs to be settled upon)

silver; a rather large 57 (fascinating only 54 contracts were outstanding. Somebody was badly in need of silver)

all the best guys and gals

see you on Saturday

Nose said...

Well Harvey, looks like you will be getting your wish on Monday. More than likely over 19.6 million ounces in deliveries. Like Jack says, are they "delivered"? Been following your work & stacking since crisis of '08'. Is this the highest delivery total we have seen?... With the utmost respect.

Anonymous said...

well who the hell is the watchdog for the CFTC?

Anonymous said...

Harvey,two quick questions...

Has Sprott received his latest 7 Million ounces of Silver yet?

Didn't you once tour the Scotia vaults and notice that the PSLV cage was full, but the SLV cage was bare bones empty?


Anonymous said...

Physical silver bullion in your possession is much better than any FDIC "insurance"

Anonymous said...

Yup That's about the way that it's goin' to have to be ! Balls to the walls ~ before anything changes for the true numbers that we haven't ever seen in the way of physical gold and silver !

We don't even know the 3 digits that physical silver prices will shoot up to and beyond !

Any trolls out there wanting to comment !?!

Anonymous said...

If China is the short behind gold and silver manipulation, are you currently thinking then that JP Morgan is simply taking orders from China to short the metals? Do you also think JP Morgan is taking orders from the FED's arm to short the metals? People have also been under the impression Goldman Sachs has not been involved in the metals lately. You disagree?
Thank you,

Harvey Organ said...

Re Scotia vaults:

It was my son that entered the Scotia vaults in Toronto
and basically saw very little silver

Remember that Scotia is the only bullion bank in Canada.

As per Sprott:

I believe that he has received most and not all of his purchases as of yet.

re China:

Reg Howe and I way back in 2000 thought that it is possible that China is the real short in silver due to the fact that only this nation had official reserves of silver (maybe around 300 million oz)

It is difficult to orchestrate a gold suppression scheme unless you can also suppress silver.

It is possible that China loaned the USA/LBMA 300 million oz of their silver.

China would then go along with the price suppression scheme by buying both metals at the LBMA and placing them on their shores.

JPMorgan and friends would facilitate the deal and the USA would go along with this as it would raise the value of paper .

Of course, we do not know what really is behind the scenes but it something to think about.

Tentek said...


There are incorrect figures for total sales in Gold and Silver for
2008 in Sprott's last article "Why Are Investors Buying 50 Times More Physical Silver Than Gold" . You re-posted it too.

According to us mint Silver total sales in 2008 were 19 583 500 oz , and Gold total sales in 2008 were 860 500 oz. Thus ratio Silver:Gold must be around 22.7.

I wrote to Sprott Managment , they agreed that is an error in report.
Just wanted let you know.

Tentek said...


There are incorrect figures for total sales in Gold and Silver for
2008 in Sprott's last article "Why Are Investors Buying 50 Times More Physical Silver Than Gold" . You re-posted it too.

According to us mint Silver total sales in 2008 were 19 583 500 oz , and Gold total sales in 2008 were 860 500 oz. Thus ratio Silver:Gold must be around 22.7.

I wrote to Sprott Managment , they agreed that is an error in report.
Just wanted let you know.

Tentek said...


There are incorrect figures for total sales in Gold and Silver for
2008 in Sprott's last article "Why Are Investors Buying 50 Times More Physical Silver Than Gold" . You re-posted it too.

According to us mint Silver total sales in 2008 were 19 583 500 oz , and Gold total sales in 2008 were 860 500 oz. Thus ratio Silver:Gold must be around 22.7.

I wrote to Sprott Managment , they agreed that was an error in report.
Just wanted let you know.

Anonymous said...

If China is the short, why wouldn't China just keep silver and gold prices low for years and years and years to come? Therefore, the only hope to end the manipulation from continuing indefinitely, is if the COMEX and LBMA dry up and blow up? Then the new Shanghai Exchange would carry on the farce (at post blow-up higher prices) in there stead? Is that basically the way you see it?
Thank you,

Jack said...

They have. You can only keep price suppressed until a metal shortage.

It is rumored that the huge silver US reserves of 2 billion ounces as of 1960 ran out in 2005. So they called China. Chinese Silver was reported to be the last large supply in the world, was loaned in 2005 and then sold into the market. When China wanted it back in 2009 or so, the US didn't have it. By 2010 the silver market was bone dry and the price ran from the teens up to $50. The price run up brought a couple hundred million ounces or so back into the market from sellers taking profits..which, according to the best rumors I know about has basically run out as of today. Hence, the US Mint has stopped selling silver eagles. The Chinese are collecting all the physical they can before the entire thing blows up again to 3 digits.

Will that happen? I don't know, but it's an interesting and fun rumor.

Good luck. Keep stacking.

Anonymous said...

Re: three digit silver

yeah yeah yeah and as the old saying goes, "wish in one hand and shit in the other"

Anonymous said...

There are many other reasons to believe China is short on silver : China (Hong Kong) is the new and current LME (London Metal Exchange) owner , China is a net silver buyer like the rest of us ....burning as many dollars they can, the cheaper the better.
China is the main investor on silver mines in Peru and Australia , the cheaper the better for tax purposes.
They can lose some money on COMEX but making billion getting cheap silver !!
Don't complain and keep stacking.

FunkyMonkeyBoy said...

Harvey, is there not a day that goes by that you don't make sh*t up to try and sell PMs on behalf of the PM miners and retailers.

Looks like your new made up sh*t for 2013 is "china is the bad guy now". Of course you provide no proof what so ever just like all your other assertions over the years that never became reality.

The simple truth is that your an old guy selling big pharma drugs to the masses by day and pumping PMs by night via made-up sh*t.

CDN Coin Man said...

I would guess that you do not invest in PM's, nor believe they are a good investment, or have any value as an inflation hedge. That is a problem that you will have to deal with down the road when paper asset values get inflated away with rampant money creation and when the only things that buy what you need will be tangible assets, especially gold and silver. But, hey, the Fed and ECB and Bank of Japan can continue with continuos injections and solve any crisis, right? There is also no evidence of market manipulation by any entity, as far as you concerned? Think what you want of Harvey, but it is the bankers of this world that are pumping the sh*t to everyone and reaping in the billions in paper profits to the management/owners.

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