Tuesday, January 8, 2013

Huge gold imports into China/Japanese Pension funds eyeing gold for first time/Unemployment in Spain rises to 26.6%/

Good evening Ladies and Gentlemen:

Gold closed up $16.00 to finish the comex session at $1661.50  Silver also followed gold rising by 39 cents to $30.42. Today we saw gold and silver actually strength as the Dow fell deeper into the red.
Demand for physical continues to strength despite the crazy antics of our bankers. Today we witnessed a huge increase in physical imports into China through Hong Kong to the tune of 91 tonnes of gold last month. Also silver imports are rising as well.  The USA mint saw a big rise in silver eagle sales. The Shanghai physical exchange continues to show huge strength with a total monthly sales of 19.5 tonnes of gold turnover.
The bankers will have massive trouble shorting gold as turnover sales continue to strengthen each and every month.

With gold shares performing poorly despite gold/silver's rise, expect more of the same raiding by the bankers as they try and quell these two precious metal's demand!!

In other news, Greece again is in need of cash.  Today, the Greek banks announced that due to the Greek haircut on the bonds it held, its income was curtailed badly.  Thus the Greek banks have a non performing problem coupled with a lack of income.  The EU set aside 50 billion euros and already the banks need more than that.

Unemployment again rises in Spain, this time a record 26.6% and all of Europe has an unemployment level of 11.8%.

Barrick gold again get it's teeth kicked in as the Chinese sovereign wealth fund has passed on it's investment with Barrick's African gold division.

Perhaps the biggest news from the Japanese pension funds who are now willing to buy gold ETF's as every other asset class seems to be waning.

Also Japan seems to be following Switzerland's move in buying other nations bailout funds.  Japan wishes to purchase the European ESM bailout funds and thus finance the deficit's of European peripheral nations debt.

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 OI rose by 5,090 contracts from 428,747 to close at 433,837.  The non active
January contract fell by 112 contracts from 176 down to 64.  We had 129 delivery notices on Monday so in essence we gained 17 contracts or an additional 1700 oz of gold will stand for delivery in January.  The next big active delivery month is February and here the OI fell by 2084 contracts finishing the session with a reading of 246,404 from Monday's level of 248,488.  The estimated volume at the gold comex today was fair at 162,310. The confirmed volume on the Monday was also in the same ballpark at 161,190.

The total silver comex OI rose by 303 contracts from 138,375 up to 138,678.  The non active January contract month saw it's OI rise by 80 up to 222.  We had 0 delivery notices filed yesterday so in essence we gained  80 contracts or 400,000 oz of additional silver will stand for delivery in January. The next big active delivery month is March and here the OI rose by 512 contracts from 77,248 up to 77760. The estimated volume today was fair at 41,331 contracts.  The confirmed volume yesterday was also in the same ballpark at 40,398.

Comex gold figures 

Jan 8.2013    The  January contract month

Withdrawals from Dealers Inventory in oz
Withdrawals from Customer Inventory in oz
Deposits to the Dealer Inventory in oz
0   (nil)
Deposits to the Customer Inventory, in oz
32,422.083 (Brinks,HSBC.Scotia)
No of oz served (contracts) today
 4    (400)
No of oz to be served (notices)
60  (6,000 oz)
Total monthly oz gold served (contracts) so far this month
893  (89,300 oz) 
Total accumulative withdrawal of gold from the Dealers inventory this month
Total accumulative withdrawal of gold from the Customer inventory this month

200,165.0 oz
Today, we  had a some big transactions  inside the gold vaults 

The dealer had no deposits  and no   withdrawals.

We had 3   customer deposits and zero  customer withdrawals:

Customer deposits:

i) Into Brinks:  1,993.30 oz
ii) Into HSBC: 23,829.308 oz
iii) Into Scotia:  6,599.475 oz

total deposit:  32,422.083 oz

Total customer withdrawal:  nil oz

We had 0 adjustments:

Thus the dealer inventory rests tonight at 2.282 million oz (70.97) tonnes of gold.

The CME reported that we had 4 notices filed or 400 oz of gold. To obtain what is left to be served upon, I take the OI for January  (64) and subtract out today's delivery notices (4) which leaves us with 60 notices or 6,000 oz of gold left to be served upon our longs.

Thus the total number of gold ounces standing in this non active month of January is as follows:

89,300 oz (served)  +  6000 oz (to be served upon) =   95,300 oz or 2.96 tonnes.
we gained 1700 additional oz of gold standing for the January delivery month.

Generally, January is a very weak delivery period for both gold and silver and thus the 2.96 tonnes of gold is quite a surprise.
Also at the beginning of this month I promised you that we will see advancing amounts of metal standing and it sure looks like that is where we are heading.
You will see the same in silver with increasing amounts standing in that arena.


January 8.2013:   The January silver contract month

Withdrawals from Dealers Inventorynil
Withdrawals from Customer Inventory  1,009,276.015  (Delaware,HSBC,Scotia))
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory   1,237,155.78 (JPM,Scotia)
No of oz served (contracts)0  (nil oz)
No of oz to be served (notices)222  (1,110,000 oz)
Total monthly oz silver served (contracts)308  (1,540,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month914,342.42
Total accumulative withdrawal of silver from the Customer inventory this month1,455,849.8

Today, we  had huge activity  inside the silver vaults.

 we had no dealer deposits and no dealer withdrawals:

We had 2 customer deposits of silver:

Into JPM:  616,977.300 oz
Into Scotia:  620,178.48 oz

total customer deposit;  1,237,155.78

we had 3 customer withdrawals:

i) out of Delaware:  7,000.925 oz 
ii) Out of HSBC: 400,336.32  oz
iii) Out of Scotia:  601,938.77 oz

total customer withdrawal:  1,009,276.015  oz

we had 0  adjustments:

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. 

When you see massive deposits and withdrawals you know that there is turmoil inside the silver vaults. 

Registered silver remains today at :  39.522 million oz
total of all silver:  149.581 million oz.

The CME reported that we had zero  notices filed for zero oz of silver.  To obtain what is left to be served upon, I take the OI standing for January (222) and subtract out Monday's delivery notices (0) which leaves us with 222 or 1,110,000 oz left to be served upon our longs.

Thus the total number of silver oz standing for the month of January is as follows:

1,540,000 oz (served)  +  1,110,000 (oz to be served upon)  = 2,650,000 oz
we  gained 400,000 oz of silver  standing for January. This is turning out to be a very good delivery month for silver.


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   Jan 8.2013 



Value US$71.324  billion

Jan 7.2012:



Value US$70.955  Billion

January 4.2012:



Value US$71.078  billion

Jan 3.2013:



Value US$72.340  billion

Total Gold in Trust   Jan 2.2013  



Value US$73.480 billion

Here we go again.  The GLD lost 2.19 tonnes of gold over at the GLD vaults in London England.  Such crooks!!

and now for silver:

Jan 8.2013:

Ounces of Silver in Trust325,115,347.800
Tonnes of Silver in Trust Tonnes of Silver in Trust10,112.22

Jan 7.2012;

Ounces of Silver in Trust323,470,757.600
Tonnes of Silver in Trust Tonnes of Silver in Trust10,061.07

Jan 4.2013:

Ounces of Silver in Trust323,470,757.600
Tonnes of Silver in Trust Tonnes of Silver in Trust10,061.07

Jan 3.2013:

Ounces of Silver in Trust324,239,127.100
Tonnes of Silver in Trust Tonnes of Silver in Trust10,084.96

Jan 2.2012

Ounces of Silver in Trust324,239,127.100
Tonnes of Silver in Trust Tonnes of Silver in Trust10,084.96

we  gained 1.645 MILLION OZ.  of silver at the SLV vaults.

I wonder where they got their silver!!

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 4.1 percent to NAV in usa funds and a positive 3.9%  to NAV for Cdn funds. ( Jan 8 2013)   

2. Sprott silver fund (PSLV): Premium to NAV fell to 2.07% NAV  Jan 8./2013
3. Sprott gold fund (PHYS): premium to NAV  rose to 2.46% positive to NAV Jan 8/ 2013..

 Now we witness the Central fund of Canada  gaining big time in its positive to NAV, as we now see CEF at a positive 4.1% in usa and 3.9% 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:

The big physical news comes from the huge demand in gold coming from massive imports  from Hong Kong into China to the tune of 91 tonnes of gold last month.  This represents a massive 91% increase fro the month before. China also exported 28 tonnes of gold in finished product back to Hong Kong.

The demand for gold coming from China seems to be around 1100 tonnes of gold per year.
On top of this the new Shanghai physical gold exchange saw contracts totaling 19.5 tonnes of gold.  Also for the first time, we witness gold investment into gold ETF's from the Japanese pension funds (see below)

Over in Europe, Spain saw it's unemployment rise to 26.6% with all of Europe coming in at 11.8%, a record high.

a very important gold trading report today

(courtesy Ben Traynor/bullion vault)

Dealers Report "Very Strong" Gold Demand from China, Indian Interest "Significant"

By: Ben Traynor, BullionVault

-- Posted Tuesday, 8 January 2013 | Share this article | Source: GoldSeek.com
London Gold Market Report

WHOLESALE gold bullion prices ended Tuesday morning in London at $1655 per ounce, regaining ground lost yesterday to climb back to where it started the week, with dealers reporting signs of strong demand from India and China, the world's two biggest gold buying nations.

Silver climbed to $30.40 an ounce, slightly up on the week so far, while stocks and commodities also edged higher and US Treasuries fell.

The Shanghai Gold Exchange Monday reported record trading volumes equivalent to 19.5 tonnes for its Au9999 contract, which represents gold bullion of 99.99% purity. Tuesday's Au9999 volume fell to just under 9.3 tonnes, still significantly above the last year's daily average.

"Physical [gold] demand is very strong," one Beijing trader told newswire Reuters this morning.

"It's a combination of the attraction of lower prices as well as pre-holiday demand."
China celebrates Lunar New Year on 10 February this year.

Official customs data from Hong Kong meantime shows China imported 90.7 tonnes of gold from Hong Kong in November, a 91% increase from the previous month. The volume of gold flowing the other way rose 23% to 27.7 tonnes. Hong Kong is widely regarded as the major conduit for Chinese precious metals imports.

Premiums on gold bullion shipments to India hit a two-month high Tuesday, with dealers blaming a rush to buy gold before an expected import duty hike.

Gold shipped to India traded between $2 and $3 an ounce above London prices, dealers reported.

By comparison, premiums in Singapore this morning were around $1-$1.20 an ounce.

"Our physical desk has already noted significant interest from Indian clients looking for gold, which could push up imports until the tax in announced," says a note from Nick Trevethan, senior commodity strategist at ANZ.

"Nothing is available readily," adds one dealer at a bullion importing bank in Mumbai, adding that some shipments are taking up to a week to arrive.

Western investors  meantime continued to add to their gold positions in December, according to data from BullionVault.

The Gold Investor Index, which tracks buying and selling on the world's largest online precious metals exchange, rose to a 12-month high in December.

Over in Japan, investment by pension funds in gold exchange traded funds could more than double over the next two years, according to Itsuo Toshima, pension fund advisor  and former regional director Japan/Korea at the World Gold Council.

"Bullion's role as an inflation hedge, long ignored by Japanese fund operators, has come under the spotlight thanks to [Japan's prime minister Shinzo] Abe's economic policy," said Toshima Tuesday.

Following his election victory last month, Abe said the Bank of Japan should adopt a 2% inflation target, double the current targeted level, having previously called for unlimited quantitative easing during the election campaign.

"Gold may be a standard asset-class in the portfolio of Japanese pension funds as Abe's target is realized," said Toshima.

Over in Europe, the Eurozone unemployment rate rose to a record 11.8% last month, figures published Tuesday show. Spain had the highest unemployment rate of any Euro member at 26.6%, while Austria's rate was the lowest at 4.5%.

"The Eurozone needs easier monetary policy," says Standard Bank currency analyst Steve Barrow.

"This can happen through lower policy rates...[as well as] the activation of the [European Central Bank's] Outright Monetary Transactions program, although the ECB would claim that this is not equivalent to monetary easing."

The OMT program, announced last September, would see the ECB commit to buy sovereign bonds in whatever quantity needed to prevent borrowing costs rising too far above those of other Euro members. A condition of the OMT is that a beneficiary government has accepted a bailout program and its attached conditions.

"A move to negative deposit rates [also] seems very possible in our view," adds Barrow, "and we would not even rule out the possibility that the ECB will have to undertake quantitative easing of its own."

The ECB announces its latest policy decisions this Thursday.

Deutsche Bank meantime cut its average gold price forecasts for 2013 and 2014 Tuesday.

Deutsche's 2013 forecast is down 12.1% to $1856 an ounce, while next year's forecast is down 5% to $1900 an ounce.

"The whole debt situation remains a major challenge, and accommodative monetary policy is very much seen as a way to minimize the negative repercussions of that," says Daniel Brebner, the bank's head of metals research.

"So I don't believe the gold story is over, but certainly, the market is likely to continue to pause."

Shares in London-listed African Barrick Gold meantime fell 20%this morning after the state-owned China National Gold ended talks to buy the 74% stake in African Barrick owned by parent Barrick Gold. 

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


The following is a gold trading report from Europe early this morning, where Goldcore is pounding the table on the huge increase in gold volume from the Shanghai gold physical exchange equivalent to 19.5 tonnes of gold for the month.

(courtesy Goldcore)

China's Gold Volume “Shot Through The Roof” Yesterday Ahead Of Lunar New Year

Tyler Durden's picture

From GoldCore
China's Gold Volume “Shot Through The Roof” Yesterday Ahead Of Lunar New Year
Today’s AM fix was USD 1,653.75, EUR 1,261.06 and GBP 1,028.07 per ounce.
Yesterday’s AM fix was USD 1,653.75, EUR 1,267.82 and GBP 1,029.60 per ounce.
Silver is trading at $30.38/oz, €23.25/oz and £18.95/oz. Platinum is trading at $1,569.50/oz, palladium at $672.00/oz and rhodium at $1,150/oz.
Gold fell $9.90 or 0.6% in New York yesterday and closed at $1,646.40/oz. Silver slipped to a low of $29.84 and finished with a loss of 0.2%.
Gold’s losses in recent days have been more pronounced in dollar terms as gold’s price fall in euros, pounds and other fiat currencies has been far more modest (see charts). Given the challenges facing all currencies in 2013 the price decline is likely another correction prior to further gains. 
Gold edged up on Tuesday as the euro held steady on to two days of gains on hopes that the European Central Bank will not cut interest rates at a meeting this week.
A Reuter’s poll of economists forecast no rate cut but they cannot agree on whether there will be further cuts in the next few months due to a muddled Eurozone economy.
Data showed Eurozone sentiment improved for its 5th month in a row, based on a drop in Spanish jobless figures and a successful Greek bond repurchase.  
Harmony Gold, South Africa’s 3rd biggest gold producer said its Kusasalethu mine remains closed and could be shut permanently with the loss of around 6,000 jobs after managers received death threats and police were shot at. 
Reuters report that Asia's physical market has picked up so far this year, with buyers tempted by last week's big drop in prices -- when prices retreated to as low as 1,626 per ounce -- and on demand ahead of the Lunar New Year, traders said.
The trading volume on the Shanghai Gold Exchange's 99.99 gold physical contract shot through the roof on Monday, hitting a record of 19,504.8 kilograms, after double-counting transactions in both directions.
"Physical demand is very strong," said a Beijing-based trader. "It's a combination of the attraction of lower prices as well as pre-holiday demand."
But such appetite could waver if prices recover towards $1,700, he added. 
U.S. gold gained 0.1 percent to $1,648.60. Shanghai's 99.99 gold traded at 331.58 yuan a gram, or $1,658 an ounce - a $10 premium over spot prices, compared to single-digit premium most of last year.
Technical analysis suggested that spot gold could edge higher to $1,665 an ounce, and a previous target of $1,625.79 has been temporarily aborted, said Reuters market analyst Wang Tao.
Bloomberg quoted Feng Liang, an analyst at GF Futures Co., a unit of China’s third-biggest listed brokerage who said “the recent price drop has attracted some purchases, evidenced by the volumes in China,”  “Whether this rebound can be sustained depends on the emergence of physical buyers, especially from China and India, at a time when demand is meant to be strong.”
In China, demand typically picks up before Christmas and lasts through the Lunar New Year in February. India’s wedding season, a peak-consumption period for gold jewelry, runs from November to December and from late March through early May. The countries are the two biggest bullion consumers.
For breaking news and commentary on financial markets and gold, follow us on Twitter.


Peter Cooper talks about Japanese pension funds wishing to double its exposure to gold by buying gold ETF's:

(courtesy Peter Cooper/Arabian money)

Japanese pension funds and ETPs to buy $550 million in gold over the next two years and what about joe public?

By: Peter Cooper, Arabian Money

-- Posted Tuesday, 8 January 2013 | Share this article | Source: GoldSeek.com

Japanese pension funds and gold-backed exchange traded products are going to more than double their gold holdings over the next two years to $1.1 billion, buying some 27 tons of gold at current prices, according to veteran World Gold Council representative Itsuo Toshima who is quoted today on Bloomberg.
His warning comes as new prime minister Shinzo Abe has pledged to push inflation to two per cent leaving Japan’s pension funds no option but to hedge against a weakening yen. Japanese investors have long ignored gold as irrelevant in their depressed, inflation-free economy. That is set to change.
Gold’s return
‘Bullion’s role as an inflation hedge, long ignored by Japanese fund operators, has come under the spotlight thanks to Abe’s economic policy,’ said Mr. Toshima. ‘Gold may be a standard asset-class in the portfolio of Japanese pension funds as Abe’s target is realized.’
The Government Pension Investment Fund of Japan, the operator of the world’s largest pension fund has avoided bullion and commodities and has 67 per cent of their assets allocated to Japanese bonds.
‘Pension money invested in bullion is ‘peanuts’ at the moment,’ Mr. Toshima added. ‘If one per cent of their total assets shift to the metal, the gold market would explode.’
Joe public?
ArabianMoney concurs and we also wonder what will happen as the Japanese public catches on. They are among the greatest savers in the world and also huge holders of domestic bonds.
Is this not the transfer from bonds to the very tight gold and silver markets that we have been talking about for some time now? The price upside for precious metals in this transfer is going to be huge because there is a collossal value stored in paper and to absorb that money bullion will have to soar in value.
We think the Japanese market is the one to watch at the moment for the next step in the global financial crisis. This is it, a bond crisis in the making and a massive transfer of wealth into gold and silver.


Zero hedge weighs in on what could happen if just 1% OF THE Japanese pension funds shifted into gold:

(courtesy zero hedge)

“If Just 1%Of Japanese Pension Assets Shift Into Gold, The Gold Market Would Explode”

Tyler Durden's picture

Last night we reported that in the encroaching attempt to globalize the fiat ponzi regime, in Japan's latest rush to crushTM(sounds even better than race to debase) its currency it would proceed to monetize even more debt, only not its own debt - a strategy that has failed miserably to stimulate inflation for the past 30 years - but that of Europe.
So far so good, and perfectly expected in a monetary lunatic asylum in which coining money without an appropriate collateral backing is actually considered sound monetary policy by Nobel prize winners.
What gives us some hope that there may be at least one sane voice left in the wilderness is the far less trumpeted news overnight that "Japanese pension funds, the world’s second-largest pool of retirement assets after the U.S., will more than double their gold holdings in the next two years as the new government pushes for a higher inflation target, according to an adviser to the funds. Assets held by Japanese pension funds in gold-backed exchange-traded products may expand to 100 billion yen ($1.1 billion) by 2015 from less than 45 billion yen at present." The reason for the move is fear that Abe is actually able (unlike last time when his failure was accompanied by an inexplicable case of career-ending diarrhea) to hit his goal of 2% inflation, without in the process sending bond yields so high all tax revenue goes solely to cover interest expense on the JPY 1 quadrillion pyramid of debt and rising. Which, incidentally, according to many traders is the reason for the move higher in gold prices today.
From Bloomberg:
Mitsubishi UFJ Trust and Banking Corp., which introduced Japan’s first gold ETF in 2010, expects assets held in the product to double over the next several years from 26.2 billion yen as of Nov. 30. Global investors are holding a near-record amount in gold-backed ETPs that are valued at $139.6 billion, data compiled by Bloomberg show.

Assets held by corporate pension funds in Japan amounted to 72.24 trillion yen as of March 2012, declining 0.9 percent from a year earlier, according to Yasuo Sugeno, director at Daiwa Institute of Research in Tokyo. Of the total, about 72 billion yen were allocated to commodities including gold through hedge funds, he said Dec. 10.

Government Pension Investment Fund of Japan, the operator of the world’s largest pension fund with 113.6 trillion yen, stays away from commodity investment as 67 percent of their assets were allocated to Japanese bonds, Sugeno said.

Japanese pensions oversee $3.36 trillion, according to human-resource
and consulting services company Towers Watson & Co. 
pension funds in Japan will diversify 72 trillion yen in assets after
domestic stocks produced little return in the past two decades,
according to Daiwa Institute of Research.
So after the rotation, paper gold holding will double to a whopping... 0.03% of all pension fund assets! Now imagine what happens to the price of gold if Japan does indeed succeed in generating inflation, and pension funds scramble to push 1, 2, 5% or more of their assets into gold. Sure enough:
Perhaps it is time for the punditry and the chatterbox media to start considering what happens not when the much anticipated rotation out of bonds and into stocks, which has not happened for 4 years now, and won't, at least not until the government bond bubble finally pops which will only happen when the central banks finally lose control, but what happens if even a tiny amount of the global pension capital allocated to bonds and/orequities, is rotated into gold.
“Pension money invested in bullion is ‘peanuts’ at the moment,” Toshima
said. “If 1 percent of their total assets shift to the metal, the gold
market would explode.”
Could not have said it better ourselves.


Big sales volume for American Silver eagles:

(Michael Zielinski/coinupdate.com)

Highest Ever One-Day Sales for American Silver Eagles?January 7, 2013 By Michael Zielinski

Today, January 7, 2013, the United States Mint began accepting orders from authorized purchasers for 2013-dated American Silver Eagle bullion coins. The opening day sales tally of 3,937,000 coins seems to represent the highest one-day sales total in the history of the program.
In recent years it has been typical for the Mint to experience the strongest sales for Silver Eagle bullion coins on the first day of availability for newly dated coins. Last year, orders had been placed for 3,197,000 Silver Eagles on the first day of availability for the 2012-dated coins. In 2011, opening day sales had measured 2,085,000 coins, and in 2010 opening day sales had measured 2,440,000 coins.
For the years 2009 and prior back to the start of the program in 1986, none of the monthly sales totals have exceeded today's one-day sales total of 3,937,000 coins.
Today's apparently record breaking one-day sales are driven by the typically high demand for newly dated coins as well as pent up demand following the unexpected sell out of 2012-dated Silver Eagle bullion coins on December 17, 2012. This sell out created a three week period during which no Silver Eagle bullion coins were available for authorized purchasers to order from the Mint.
During 2012, the Mint had sold 6,107,000 Silver Eagle bullion coins during the full month of January. Annual sales had reached 33,742,500 coins.



Note: the big increase in Chinese importing of silver

(courtesy of Australia's Dr Alex Cowie/Diggers and Drillers)

How the ‘China Money’ Could Push Silver 58% Higher in 2013

by Dr. Alex Cowie on 8 January 2013

If the mainstream perceives gold investors as cranks, they see silver investors as the real nutters out there.
Yet this scorn is misplaced. In the space of just one decade, silver has quietly gained 233% – and that’s even factoring in the rising Aussie dollar.
This 233% gain means that if an Aussie investor had bought A$15,000 of silver in 2003, it would be worth A$50,000 today.
The gains have come in fits and starts – as is the way with silver. However the average gain for Aussie dollar silver has been 16.3% per annum, which puts it well ahead of Aussie dollar gold at 11.6% per annum.
The trick is to maximise your gain by timing your entry.
And the good news is that after two slow years for silver, it now looks more than ready for its next big rally.
In 2012, silver notched up just 5.4% (I’ll refer to all gains in Aussie dollar terms). This was a pretty disappointing year for silver, particularly as it was sitting above 20% as recently as late November.
And back in 2011 (a nightmare year for silver investors) it finished the year with a loss of 10.8%.
So silver has had a couple of years in the wilderness now.
And this could pave the way for a big 2013. Take a look at this chart I’ve put together for you below to show how wildly silver’s performance has varied in the last ten years.

Aussie dollar silver: slow years followed by a few big years
Aussie dollar silver: slow years
        followed by a few big years
Source: Money Morning Australia
The pattern with silver is very much one of a few slow years followed by a few big years. For example, after a dismal 2007-2008, silver went on to gain 15.8% in 2009, then an epic 58% in 2010.
So after enduring a very weak 2011-2012, the chances are now much higher that we see some real action from silver in 2013. Another year like 2010, in which we see silver gain 58% is entirely possible from here. 

Technical set says: now is a good time to buy
Looking at annual performance statistics is a bit misleading of course. Using the 1st of January and 31st of December as start and end-dates respectively is totally arbitrary.
A slightly different picture may emerge if we used May the 7th as our start date, for example. The silver price is dancing to a beat that has little to do with when we celebrate the New Year, after all. An ever increasing amount of silver is bought by China, which observes a totally different New Year.
So looking at annual performance is just a starting point. Taking a step back and looking at a ten-year, weekly silver chart gives a more comprehensive view, as well as a good idea of where we are in the rally. 

Aussie Dollar silver up 233% in a decade – and trend intact
Aussie Dollar silver up 233% in a
        decade - and trend intact
Source: stockcharts
Over this time, the 200-week moving average (red line) has been remarkably steady. This strong trend is still very much intact, and has driven Aussie dollar silver to a 233% gain over the last decade.
Even in the chaos of 2008, 2009 and 2010, the price rarely broke below this 200-week level. It has given excellent support. And buying at, or close to, this level has proven to be good timing, and a great opportunity.
And it’s one I think we are looking at again right now.
After slipping in December, the silver price is A$28.70 today, just a few bucks from the current 200-week level of A$26.50.
Last time silver got this close to the 200-week was back in July last year. Without first reaching the level, the silver price took off like a stung cat and soared 28% in a few months.
So I think silver looks like a great entry level around these prices.
Silver has really got close to the 200-week moving average in the last ten years, so it’s hard to see it falling much further. However, if it does fall a few more dollars further to reach A$26.50 (the current 200-week level) then that would be the clearest buying signal for three years. 

Silver sailing on the same strong winds
Projecting the trend to continue like this of course assumes that the macro forces that have pushed silver up in the last ten years are still active.
This is absolutely the case.
Investor demand is still raging, and record sales from major mints keep hitting the headlines. Institutional demand for silver is just as active, with institutions now owning around 50-60 million ounces of silver in the silver ETF, ‘SLV’.
Some big silver bets went on when Obama was voted in for a second term, as silver was the best performing commodity during his first term. Investors are betting that his second term will see just as much money printing and debt accumulation as his first.
With QE3 underway, and QE4 to commence presently, they made the right bet. And with Japan now pumping out the Yen too, there will be no shortage of paper, while the global silver inventory is relatively steady – and small too at just A$50 billion in value.
A real game changer the market hasn’t caught onto yet is Chinese silver demand. Although China has a huge silver mining industry, it can no longer meet rapidly growing domestic demand. And in the last few years, it has gone from a serious exporter to a significant importer of silver. This changes the dynamics of the market completely.
You can see the red bars below under the axis (which show China exporting silver) gradually decrease, and then swing above the grey bars (which shows China net importing silver). 

China: the new silver elephant in the room
China: the new silver elephant in the
Source: world gold charts

It’s a familiar story. We saw China become a huge importer of gold in recent years as its demand overtook its domestic production. Now China is steadily buying gold on all the price dips, and the same is also now true of silver.

The black line in the chart shows the amount of silver potentially held in China. The rocket-like trend shows no sign of slowing! So, assuming no big jump in domestic production, I’d expect Chinese silver imports to explode very soon.
After a few tough years for silver, including getting beaten up twice in 2011, and a few false starts in 2012, we are now looking at a very cheap entry – and this year looks good for silver to shine brightly again.
Dr Alex Cowie
Editor, Diggers & Drillers


A must view of Richard Russell's latest commentary through Kingworld news:

special thanks to Robert Busser and the Silver doctors for sending this to us:

eMust read by Richard Russell! WOW


Your early morning overnight sentiment from Europe/Asia:  

Major points:

1. Greece in need of more bailout funds for it's banks as non performing loans increase and
also Greek banks lost income due to their early haircut

2. China expects to cut interest rates shortly to stimulate it's economy
3. The USA seems to be heading to a deadline of Feb 15.2012 for it's debt ceiling
4. The ECB is still funding Italy to the tune of 271 billion euros most of which came from the two LTRO's.
5. Japan set to purchase European ESM i.e. finance European peripheral deficits.

your early market sentiment/courtesy zero hedge)

Daily US Opening News And Market Re-Cap: January 8

Tyler Durden's picture

From RanSquawk
  • Sources at Hellenic Financial Stability Fund deny reports that Greek banks need additional funds
  • Alcoa to kickoff earnings season after the closing bell
Market Re-Cap
Equity markets recovered from a lower open following press reports overnight by eKathimerini that the country’s main banks are considering requesting additional funds for their recapitalization and edged higher throughout the session after sources at Hellenic Financial Stability Fund said that there no indications that Greek banks need more recap funds. In addition to that, Xinhua reported that chance of China RRR cut is increasing for January, citing industry insiders for RRR cut forecast. This follows on from the reports in ChinaDaily last week, which suggested that a small interest rate cut at the right time could substantially decrease financing costs and improve expectations for profitability, citing researchers from the China Development Bank, the State Information Center and the Shanghai Securities News who have worked together to forecast key economic indicators and policies in 2013. The risk sentiment was also supported by well subscribed debt auctions from the Netherlands, Austria, Greece and Belgium. As a result, peripheral bond yield spreads are tighter by around 5bps in 10s. Going forward, market participants will get to digest the latest NFIB, IBD/TIPP and Consumer Credit reports. The Fed is due to conduct Treasury op targeting Oct'18-Dec'19 (USD 3.00-3.75bln) and the US Treasury is also set to auction USD 32bln in 3y notes.
Asian Headlines
Japanese PM Abe says he will compile government's economic stimulus measures on January 11th. In relation to this, a Japanese economic stimulus package draft released overnight said the government is to closely monitor Forex moves and take appropriate actions when needed.
EU & UK Headlines
German Factory Orders SA (Nov) M/M -1.8% vs. Exp. -1.4% (Prev. 3.9%, Rev. 3.8%)
German Factory Orders NSA (Nov) Y/Y -1.0% vs. Exp. -0.4% (Prev. -2.4%, -2.5%)
The German economy minister says demand for industrial orders seems to be stabilizing, sentiment indicators point to small improvement.
Euro-Zone Retail Sales (Nov) M/M 0.1% vs Exp. 0.3% (Prev. -1.2%)
Euro-Zone Retail Sales (Nov) Y/Y -2.6% vs Exp. -2.1% (Prev -3.6%)
Spain's target for total borrowing this year to 7.5% compared to the forecast set out in September last year to EUR 215-230bln vs. Prev. estimate of EUR 207bln. 2013 net debt issuance target at EUR 71bln.
UK inflation expectations for year ahead fall 2.7% in December from 2.8% in November according to YouGov/Citi. Inflation expectations for the next 5-10 years dropped to 3.3% in December from 3.4% in November.
US Headlines
The Hill writes "US could hit debt-limit deadline as early as Feb. 15, say experts". The United States could face a debt-ceiling crisis as early as mid-February, according to an expert report out Monday. The Bipartisan Policy Center (BPC) estimates that the nation will begin defaulting on its payment obligations between Feb. 15 and March 1, unless Congress raises the USD 16.4tln debt ceiling. Coming on the heels of the "fiscal cliff" crisis, both sides are already gearing up for the next budget fight.
Equity markets recovered from a lower open following press reports overnight by eKathimerini that the country’s main banks are considering requesting additional funds for their recapitalization and edged higher throughout the session after sources at Hellenic Financial Stability Fund said that there no indications that Greek banks need more recap funds. In addition to that, Xinhua reported that chance of China RRR cut is increasing for January, citing industry insiders for RRR cut forecast. Alcoa is due to kick off the latest earnings season after the closing bell on Wall Street.
ECB funding to Italian banks at EUR 271.8bln in December from EUR 273.3bln in November. Of note, the amount held on deposit at the ECB increased to EUR 3bln from EUR 2.7bln. The breakdown of borrowing also shows that EUR 268.3bln was borrowed via LTROs while only EUR 3.5bln was borrowed via the MRO.
EUR/USD traded steady today, in close proximity to intraday 1.3000 option expiry level , with near side resistance levels noted at 1.3140 (Oct 17th high) and then at 1.3172 (Sep 17th high). The pair was supported overnight by comments from Japanese finance minister Aso who said that Japan are to buy ESM bonds using foreign exchange reserves. He added that ESM purchases will help to stabilize the JPY and that the Japanese government wants to draw up a new written agreement with the Bank of Japan. Nevertheless, USD/JPY failed to benefit from the so-called Abe trade and remains under pressure as market participants book profits following the recent bout of depreciation.
Israel's Finance Minister Yuval Steinitz on Monday became the latest member of Israel’s cabinet and national security establishment to visit Washington to press senior US officials to lay out a tougher line on the Islamic Republic’s nuclear activities.
Deutsche bank says oil prices should rise in 2014 to average USD 113.25/BBL for Brent, USD 103.25/BBL for WTI on a full year basis.
Goldman Sachs cuts 2013 natural gas forecast to USD 3.75 per million Btu from USD 4.25 per million Btu because of mild weather.


Axel Merk has a good track record discussing currencies and I thought you might like to see what he thinks will happen to currencies in the 2013:

(courtesy Axel Merk/Merk Investments)


Merk 2013 Dollar & Currency Outlook

By: Axel G. Merk, Merk Investments

-- Posted Tuesday, 8 January 2013 | Share this article | Source: GoldSeek.com

Sidetracked by the discussion over the “fiscal cliff” and possibly a New Year’s hangover, it’s time to face 2013 in earnest. Is the yen doomed? Will the euro shine? What about Asian and emerging market currencies? Will gold continue its ascent? And the greenback, will it be in the red?
Before we look too far forward, let’s get some context:
  • “Central banks hope for the best, but plan for the worst” was our theme a year ago. With everyone afraid of the fallout from the Eurozone, printing presses in major markets were working overtime. We argued this would benefit currencies of smaller countries – be that the so-called commodity currencies or select Asian currencies - that feel less of a need to “take out insurance.”
  • While we were positive on the euro when it approached 1.18 versus the U.S. dollar in 2010, arguing the challenges are serious, but ought to be primarily expressed in the spreads of the Eurozone bond market. Then in the fall of 2011, we grew increasingly cautious because of the lack of process: just as it is difficult to value a company if one doesn’t know what management is up to, it’s difficult to value a currency if policy makers have no plan. In the spring of 2012, when we were most negative about the euro, we lamented the lack of process in a Financial Times column. European Central Bank (ECB) chief Mario Draghi appeared to agree with our concerns, imploring policy makers to define processes, set deadlines, hold people accountable. After his “do whatever it takes” speech in July 2012, he took it upon himself to impose a process on European policy makers in early August 1. We published a piece "Draghi’s genius" where we called for a bottom in the euro. We were inundated with negative feedback in the immediate aftermath of our analysis from professional and retail investors alike, confirming that were not following the herd, nor buying something that’s too expensive.
  • While we liked commodity currencies in the first half of the year because of printing presses in larger economies working overtime, we grew a little cautious as the year moved on, partly because of valuations. Each commodity currency has its own set of dynamics, as well as their own Achilles heel: in the case of the Australian dollar, we had some concerns about its two tier domestic economy (not all of Australia was benefiting from the commodity boom), but also about the perceived slowdown in China.
  • We studied the Chinese leadership transition with great interest; while 2012 may have been a year in transition, more on the dynamics as we see them play out below.
  • Back in the U.S., we squandered another year to get the house in order. The fiscal cliff was a distraction; we need entitlement reform to make deficits sustainable. Europeans have no patent on kicking the can down the road. But unlike Europe, the U.S. has a current account deficit, making it more vulnerable should investors demand more compensation to finance U.S. deficits (that is, higher interest rates).
  • Japan: the more dysfunctional the Japanese government has been, the less it could spend, the less pressure it could exert on the Bank of Japan. Add to that a current account surplus, and all this “bad news” was good news for the yen. Countries with a current account surplus don’t need inflows from abroad to finance government deficits; as a result, the absence of economic growth that keeps foreign investors away is of no detriment to the currency. Conversely, countries with current account deficits tend to pursue policies fostering economic growth to attract capital from abroad. However, in late 2012, we published a piece “Is the Yen Doomed?” What happened? Japan was about to have a strong government. More in the outlook below.
We believe the currency markets are well suited for decision-making based on macro-analysis. Just as throughout 2012 the themes were evolving, please keep in mind that our 2013 outlook may be outdated the moment it is published, as we update our views based on new information or a new analysis of old information. Still, those who have followed us over the years are well aware that we like to shift our views within a framework. Please consider our 2013 outlook in this context:
  • We believe the yen is indeed doomed. We remove the question mark. Prime Minister Abe’s new government sets the stage, but key to watch are:
    • Abe’s government will appoint the three top positions at the Bank of Japan, as the governor and both deputy governors retire. Recent appointees have already been more dovish. Japanese culture is said to prefer talk over action, but the time for dovish talk may finally be over (despite their dovish reputation, the Bank of Japan barely expanded its balance sheet since 2008; in many ways, of the major central banks, only the Reserve Bank of Australia has been more hawkish).
    • Japan’s current account is sliding towards a deficit. That means, deficits will start to matter, eventually pushing up the cost of borrowing, making a 200%+ debt-to-GDP ratio unsustainable.
    • Abe’s government is as determined as it is blind. Abe believes a major spending program is just what Japan needs. As far as the yen is concerned, Abe may be getting far more than he is bargaining for.
    • But isn’t everyone negative on the yen already? Historically, it’s been most painful to short the yen; as such, many have not walked their talk. We expect some fierce rallies in the yen throughout the year. Having said that, the yen looks a lot like Nasdaq in 2000 to us. Not as far as technicals are concerned, but as far as the potential to fall without much reprieve.
  • The euro may be the rock star of 2013. Boring is beautiful. Sure, there are plenty of problems, but the euro is morphing into yet another currency, but is still priced as if it had a contagious disease. While the Fed, the Bank of England, the Bank of Japan are all likely to engage in further balance sheet expansion (we refer to it as “printing money” as assets are purchased by central banks, paid for by entries on computer keyboards, creating money out of thin air), there’s a chance the ECB balance sheet may actually shrink. That’s because some banks have indicated they will pay back early part of the €1 trillion in 3-year loans taken from the ECB. Some suggest the ECB might print a boatload of money should the “Outright Monetary Transaction” (OMT) program be activated to buy the debt of peripheral Eurozone countries. Keep in mind that the OMT program would be sterilized, likely by offering interest on deposits at the ECB. As such, the OMT would lower spreads in the Eurozone and, through that, act as a massive stimulus. In our assessment, however, such a stimulus is far less inflationary than central bank action in other regions. It’s no longer a taboo to be positive on the euro, but most we talk to are at best “closet bulls.”
  • The British pound sterling. The Brits are getting a new governor at the Bank of England (BoE) in the summer, the current head of the Bank of Canada (BoC), Carney. One of the first speeches Carney gave after his appointment was made public was about nominal GDP targeting. Carney will have a chance to replace many of the current BoE board members. That’s the good news, as the old men’s club is in need of a makeover. The not-so-good news is for the sterling. British 10 year borrowing costs have just crossed above those of France. We’ll monitor this closely.
  • As the head of the BoC, Carney was particularly apt at talking down the Loonie, the Canadian dollar, whenever it appeared to strengthen. If Macklem, his current deputy, is appointed, we may get a real hawk at the helm of the BoC. We are positive on the Loonie heading into 2013, but will monitor developments closely, as there are economic cross-currents that, for now, Canada appears to be handling very well.
  • Staying with commodity currencies, we are cautiously optimistic on the Australian dollar (China better than expected; monetary policy more hawkish than priced in) and New Zealand dollar (more hawkish monetary policy on better than expected growth). We continue to stay away from the Brazilean real and leave it for masochistic speculators looking for excitement.
  • We are positive on Norway’s currency (joining the above mentioned rock star, with greater volatility), yet cautious on Sweden’s (priced to perfection is not ideal when things are not perfect, even in Sweden).
  • China: the new leadership has indicated that liquidity for the Chinese yuan may be their top currency priority. That’s great news, as we believe it implies policies that attract investment, not just from the outside, but also with regard to a development of a more vibrant domestic fixed income market. We are more positive on China than many; more on that, in an upcoming newsletter (click to sign up to receive Merk Insights)
  • Korea, Malaysia, Taiwan: all positive, benefiting from both internal forces, but also beneficiaries of actions in other large economies. If we have to pick a favorite today, it would be Korea, but keep in mind that the Korean won is the most volatile of these currencies.
  • Singapore: we continue to like the Singapore dollar. A year ago, we started using it as a substitute for the euro (rather than using the U.S. dollar as the safe haven currency). The currency may well lag the euro’s rise, but the lower risk profile of the currency makes it a potentially valuable component in a diversified basket of currencies.
  • Gold. We expect the volatility in gold to be elevated in 2013, but consider it good news, as it keeps the momentum players at bay. We own gold not for the crisis of 2008, not for the potential contagion from Europe, but because there is too much debt in the world. We think inflation is likely a key component of how developed countries will try to deal with their massive debt burdens, even as cultural differences will make dynamics play out rather differently in different countries. Please see merkinvestments.com/gold for more in-depth discussion on our outlook on gold.
And what about the U.S. dollar? While much of the discussion above is relative to the U.S dollar, the greenback itself warrants its own analysis:
  • Investors in the U.S. should fear growth. The spring of 2012 saw the bond market sell off rather sharply as a couple of economic indicators in a row came out positively. Bernanke wants to keep the cost of borrowing low, but can only control the yield curve so much. That’s why, in our assessment, he is emphasizing employment rather than inflation, in an effort to prevent a major sell-off in the bond market before the recovery is firmly established. Growth is dollar negative because the bond market would turn into a bear market: foreigners’ love for U.S. Treasuries might wane, just as it historically often does during early and mid-phases of an economic upturn as the bond market is in a bear market.
  • Good luck to Bernanke to raising rates in 15 minutes, as he promised he could do in a 60 Minutes interview. Sure he can, but because there’s so much leverage in the economy, any tightening would have an amplified effect. At best, we might get a rather volatile monetary policy. But we are promised by the Fed that this is not a concern for 2013.
  • Both of these, however, suggest volatility will rise in the bond market. Remember what got the housing bubble to burst? An uptick in volatility. That’s because leveraged players, momentum players run for the hills when volatility picks up. And a lot of money has chased Treasuries, praised as the best investment for over two decades. We don’t need foreigners to sell their U.S. bonds for there to be a rude awakening in the bond market; we merely need a return to historic levels of volatility. Why is this relevant to a dollar discussion? Because a bond market selloff makes it more expensive for the U.S. to finance its deficits. Please see our recent analysis of the risks posed to the dollar by a bond market selloff for a more in-depth discussion on this topic.
Please sign up for our Webinar on Tuesday, January 15, 2013, that focuses on our outlook for this year. Please also sign up for our newsletter to be informed as we discuss global dynamics and their impact on gold and currencies.
Axel Merk

Axel Merk is President and Chief Investment Officer, Merk Investments.


Your early Tuesday morning currency crosses; 

This morning we continue to see the euro weaken somewhat against the dollar. The yen also weakens against the dollar as well as the pound.  However the Canadian dollar strengthens and thus becomes the strongest major currency today.  We have a slight risk is on situation with most European bourses in the green as well as gold and silver:

Euro/USA    1.3092 down  .0033
USA/yen  87.57  up  .312
GBP/USA     1.6065 down .0054
USA/Can      .9853  down   .0003


Two problems here with the Greek banks:

1. The powers to be could not foresee the increase in the non performing loans  held on Greek bank's books.

2. The Greek buyback of bonds held by banks cut badly into their interest income as they had to tender these bonds and thus forgo interest.

They thus need a dramatic amount of a new cash infusion greater than 50 billion euros.  The EU has set aside only 50 billion for the rescue of Greek banks:

(courtesy zero hedge)

Greek Banks To Merkel: "Please Ma'am, Can We Have Some Moar", Or Here Comes Bailout #4

Tyler Durden's picture

As loathed as we are to say "we told you so," but we did and sure enough eKathimerini is reporting this evening that: thanks to the 'voluntary' haircuts the Greek banks were force-fed via the latest buyback scheme and the political uncertainty causing non-performing loans (NPLs) to rise (in a magically unknowable way), they will need significantly more 'capital' to plug their increasingly leaky boats. The original Blackrock report from a year did not foresee a rise in NPLs (which Ernst & Young now estimates stands at 24% of all loans) and the buyback dramatically reduces the expected profitability of the banks as itremoves critical interest payments that would have been due. Whocouldanode? Well, plenty of people who did not just buy-in blindly to the promise of future hockey-stick returns to growth.Expectations are now for the Greek bank recap to be over EUR30bn.

The country’s main banks are considering requesting additional funds for their recapitalization.

Senior bank officials say that the rapid deterioration in financial conditions caused by the back-to-back elections in mid-2012 has led to a greater increase in nonperforming loans than originally foreseen in the BlackRock report a year ago. They add that banks should proceed to greater share capital increases in order to respond to the new reality.

Ernst & Young estimates that nonperforming loans in Greece approached 24 percent of all loans at the end of 2012.

The bond buyback dealt another great blow to the credit sector that has made a revision of the capital requirements necessary. The Bank of Greece had estimated that operating profits for National, Alpha, Eurobank and Piraeus for the 2012-14 period would amount to 11.09 billion euros, which had been excluded from the calculation of the lenders’ capital needs. One of the main sources of those future revenues would have been the interest from the bonds amounting to 16 billion euros that banks had in their portfolios. However, the so-called voluntary sale of the bonds entailed a loss of those revenues for the banks.

According to estimates for the country’s four main banks, the buyback signifies a revenue reduction of at least 1.5 billion euros, thereby increasing their capital requirements. The Bank of Greece has announced that the four systemic banks will need in the region of 27.5 billion euros for their recapitalization, but if that estimate on the buyback is upheld, the bill will reach up to at least 29 billion euros.

The four lenders’ losses from the credit risk (including loans in Greece and abroad) are estimated at 14.58 billion euros, but if the deepening of the recession is factored in, the losses would grow by about 10 to 20 percent and the capital needs would expand by between 1.5 and 3 billion euros.

As a result the capital stock of 5 billion euros formed by the Bank of Greece for future needs may have to be used immediately by the big banks,eventually taking the total bill of the recapitalization process to over 30 billion euros.

Japan May Or May Not Mint Quadrillion Yen Coins, But It Will Monetize European Debt

Tyler Durden's picture

Just when we thought America would be alone in crossing into the monetary twilight zone where so many Keynesian lunatics have gone before, and where trillion dollar platinum coins fall from the sky right onto the heads of all those who have not even the faintest understanding of money creation, here comes Japan:
For those who have forgotten, the E in ESM stands forEuropean (the S for Stability), not Japanese (Stability). Otherwise it would be, er... well, JSM. Keynesian at that. But yes - Japan will now proceed to "stabilize" itself by monetizing European debt. Because its own JPY 1 quadrillion in debt was not enough.
As for a rehash of the old lunacy, which just like the OMT has driven the JPY much lower on nothing but innuendo and speculation, and will end the second the BOJ's plan is formalized, we get:
Of course, when the latest and greatest "invention" out of the soon to be annexed 4th branch of Japanese government fails, and this time is not different after all, Japan will shock everyone when it unveils to the world...
no seriously...

Japan to Buy European Debt With Currency Reserves to Weaken Yen

Japan plans to use its foreign- exchange reserves to buy bonds issued by the European Stability Mechanism and euro-area sovereigns, as the nation seeks to weaken its currency, Finance Minister Taro Aso said.
“The financial stability of Europe will help the stability of foreign-exchange rates, including the yen,” Aso told reporters today at a briefing in Tokyo. “From this perspective, Japan plans to buy ESM bonds,” he said. The purchase amount is undecided, Aso said.
One-hundred euro, from top, U.S. one-hundred dollar, and ten-thousand yen banknotes. Photographer: Kiyoshi Ota/Bloomberg
The move may help Prime Minister Shinzo Abe temper criticism of Japan’s currency policies from trading partners such as the U.S. The yen has fallen around 8 percent against the dollar since mid-November on Abe’s pledge to reverse more than a decade of deflation as his Liberal Democratic Party won an election victory last month.
“The Europeans would be happy to see Japan buy ESM bonds, so Japan can avoid criticism from abroad and at the same time achieve its objective,” said Masaaki Kanno, chief economist at JPMorgan Securities Japan Co. and a former central bank official.
The yen erased gains after Aso’s comments, reaching 87.81 per dollar, before appreciating again to 87.51 as of 7:14 a.m. New York time. The Japanese currency appreciated 0.3 percent to 114.86 per euro.
The ESM held its first debt auction today, selling 1.9 billion euros ($2.5 billion) of three-month bills at an average yield of minus 0.0324 percent. Investors placed bids for 6.2 billion euros of the securities, the Bundesbank said.

‘Political Move’

Marshall Gittler, head of global foreign-exchange strategy at IronFX Financial Services in Cyprus and a former yen strategist at Deutsche Bank AG in Tokyo, said he doesn’t think the plan will have a significant impact on the Japanese currency.
“This might be more of a political move to counter any criticism that the Europeans might have about any other steps that Japan might take to weaken the yen,” he said. “So watch out for the next shoe to drop.”
The U.S. criticized Japan for undertaking unilateral sales of the yen in 2011, after Group of Seven economies jointly intervened to weaken the currency in the aftermath of the record earthquake and tsunami that year.
“Rather than reacting to domestic ‘strong-yen’ concerns by intervening to try to influence theexchange rate, Japan should take fundamental and thoroughgoing steps to increase the dynamism of the domestic economy,” the Treasury Department said in a report in December 2011.

Reviving Growth

Last month, Aso said other countries have “no right” to criticize Japan’s currency policies, saying that the U.S. should have a stronger dollar. He also questioned whether major Group of 20 nations had stuck to pledges from 2009 to avoid competitive currency devaluations.
Abe faces the task of reviving growth after the economy contracted in the second and third quarters of last year, meeting the textbook definition of a recession. The nation’s industrial output tumbled more than forecast in November to the lowest level since the aftermath of 2011’s quake.
The ESM replaces the temporary European Financial Stability Facility, and the two funds will run in parallel until the EFSF is phased out in mid-2013. The EFSF was formed in 2010 to provide loans to cash-strapped European Union countries.
The ESM’s birth was eased by the European Central Bank’s offer to buy bonds of fiscally struggling countries, which has driven down interest rates in Spain and Italy and bought European governments time to address the root causes of the crisis.
“Japan considers ESM bonds a major investment tool just like euro-denominated sovereign bonds” Aso said today.
Japan purchased about 7 billion euros of EFSF bonds, or 6.7 percent of total issuance, between the lender’s first auction in January 2011 and the end of 2012, according to the Finance Ministry.
Japan held $1.27 trillion in foreign reserves as the end of November, according to finance ministry data.
To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net


  A humorous story for you today courtesy of the French Minister in charge of battling tax fraud:

(courtesy zero hedge)

Tax Fraud Investigation Opened Into French Minister Tasked With Battling Tax Fraud

Tyler Durden's picture

It is one thing for Pineapple republics like Greece (because only the US has full faith and credit in the "Banana" adjective) to have their former Prime Minister's mom be uncovered with $700 millions in Swiss accounts, or its former finance minister get caught literally whiting out his relatives (and perhaps himself?) from a list exposing tax evaders and offshore bank holders, but when the rulers of that bastion of neo-socialism, where everyone is equal, are shown as having done the same, and ostensibly "laundering tax fraud" and hiding unpaid taxes in some bank vault deep under the Swiss alps, implicitly having been part of that group of much hated "rich people" that the same regime is doing all it can to expel to progressive places such as Russia and Belgium, one can't help but wonder, are some more equal than others?
From Reuters:
The Paris Prosecutor's office said on Tuesday that it was opening a preliminary investigation into French Budget Minister Jerome Cahuzac over allegations that he had an undisclosed bank account in Switzerland.

The prosecutor's office said that given the sensitivity of the allegations, which Cahuzac denies, and the time it would take to investigate them, it had no option but to open an inquiry immediately.

"The Paris prosecutor has as a result decided to open a preliminary investigation for tax fraud," it said in a statement.
For those who are unfamiliar, Jerome Cahuzac is the ministertasked with battling tax fraud!
Next: Jerome Cahuzac resigns in disgust with his government's own policies, hands over his French passport, and gets Russian citizenship?
Because the "unintended consequences" of the second coming of global socialism appear to be just as predictable as those in its first iteration, which incidentally, did not end too well for those subscribing to its policies...

Secret French Plan In the European War Of The Automakers

testosteronepit's picture

“Volkswagen has chosen to wipe out PSA,” a source in President François Hollande’s entourage told Le Monde. PSA Peugeot Citroën, Europe’s second largest automaker, is teetering. Volkswagen Group, Europe’s largest automaker, appears invincible. Its brands range from entry-level Škoda to exotic Bugatti, with SEAT, Volkswagen, Audi, Porsche, Bentley, and Lamborghini in between. It wants to reduce overcapacity in Europe “on the backs of the French,” the source said. But now a secret plan has seeped from the woodwork at the Ministry of Finance—a desperate, misbegotten, taxpayer-funded deal. 
The new car market in France is morose. Sales in 2012 dropped 13.9% from the miserable levels of 2011. PSA sank even deeper into that quagmire, with sales dropping 17.5%. All hopes had been riding on its new Peugeot 208 that hit the streets in the fall. But hope has turned into disappointment. An initial restructuring plan was nixed by the government. Nevertheless, PSA will shutter its plant at Aulnay (Seine-Saint Denis) and lay off 8,000 people ... by 2014  [As Cars Burn In France, The Industry Of Hope Booms].
The company has been bleeding cash. Its finance subsidiary, Banque PSA Finance, was bailed out by taxpayers last fall to the tune of €7 billion—a bailout that came under heavy fire from Renault, Ford, and the German state of Lower Saxony, which owns 20% of Volkswagen.
Saving PSA without major restructuring, and layoffs, has become a government priority. Economy Minister Pierre Moscovici, who is rumored to be close to the Peugeot family—which owns 30% of PSA—dropped some hints about the secret plan Sunday evening. He was discussing PSA, “a strong company” that happened to be in a “severe crisis.” More government help? “It’s without doubt necessary to go further,” he said. “It would be up to the executives to initiate therapprochement that they find useful, and we are here both to accompany them and to weigh in that direction.”
Then the leaks emerged. “If car sales collapse in Europe as they did in 2012, PSA won’t make it through the first half,” a source at the Ministry of Finance told Le Monde.
Bailouts are designed to protect stockholders, bondholders, and other stakeholders, especially the elite—such as the Peugeot family—at the expense of taxpayers. A real restructuring through a bankruptcy, after the model of GM, would wipe out the Peugeots’ investment and would slam the banks that own much of the debt. Not a good option.
Hence the secret plan. The government is deeply worried about Volkswagen’s strategy of lowering its prices in Europe. The source explained the thinking: Volkswagen can afford it as it sits on €25 billion in cash, but PSA cannot afford it.
A form of governmental dementia. Volkswagen, despite lowering its prices, is immensely profitable. It’s not a perceived pile of cash that gives it the power to lower prices, but its operating efficiencies, cost structure, and booming sales in China and the US. But even Volkswagen’s sales dropped 5.1% in France last year. The marauders in Peugeot’s and Citroën’s backyard were Kia and Hyundai whose sales, albeit a fraction of those of the giants, jumped 18.1% and 42.2% respectively!
Nevertheless, to throw a monkey wrench into Volkswagen’s presumed strategy of wiping out PSA, the government has come up with an ingenious plan: push PSA to acquire GM’s European subsidiary that has been bleeding to death for years, and whose sales in France have crashed last year by 23.8%—Opel.
Simple: take two dying cats and make a healthy one out of them. And do so without major surgery. Or, as Le Monde’s source would have it, build a European champion able to resist the German attacks.
The idea had bubbled up in September as PSA and GM were nitpicking through the details of their new alliance. GM ought to trade Opel for more shares in PSA. But GM rejected it; it was already stuck with 7% of PSA and didn’t want to get dragged deeper into the quagmire. GM had also been scared off by hot-headed declarations of various government officials in response to PSA’s now nixed restructuring plan. Explains the source at the Finance Ministry: “The only way to convince the Americans would be for PSA to buy Opel directly.”
There are some roadblocks. PSA doesn’t have the means. It would require an infusion of government capital, which has been discussed over the last few months, particularly during the Banque PSA Finance bailout. But the Peugeot family stonewalled a dilution of its holdings. And there was resistance among some elected officials and within the Finance Ministry. “It would nationalize the losses of a private company that is responsible for its own difficulties,” groused an enraged bureaucrat.
Indeed. And it would create the worst possible automaker, one that would not be able to exist without taxpayer subsidies. Both are lousy players in the same tough markets with uncompetitive products in the very segment that is in most trouble, the mid-range. But it might be a relief for GM, which for years has been desperately trying to shed Opel. If it could just get unstuck from PSA as well.
And more on governmental dementia, by Bianca Fernet, stilettos-on-the-ground economist in Argentina. The dust has settled—for the time being—from the drama of the US Court rulings regarding Argentina’s payment on defaulted bonds. But it remains a confounding snaggle. And an appeal is coming. It will certainly be a titillating February. Read.... Argentina’s Bonds, Defaults, and Vultures.
your closing 10 year bond yield from Spain:  




5.071000.04100 0.80%
As of 11:59:56 ET on 01/08/2013.


Your closing Italian 10 year bond yield: 
a drop in yield.

Italy Govt Bonds 10 Year Gross Yield



4.286000.06200 1.43%
As of 12:00:00 ET on 01/08/2013.


Your 4:00 pm Tuesday currency crosses: 

The Euro continues to lose steam.  The Yen is trading around the same place as early this morning.  The pound is slightly weaker and the Canadian dollar is also slightly weaker than this morning:

Euro/USA    1.3082 down   .0040
USA/Yen  87.07 down  .187
GBP/USA     1.6056 down .0063
USA/Can      .9863  up .0010


Your closing figures from Europe and the USA:
England, Germany and the USA in the red.  France basically flat
and Spain modestly in the green:

i) England/FTSE down 10.95  or 0 .18%

ii) Paris/CAC  up 1.24 or  0.03% 

iii) German DAX: down 36.83 or .48% 

iv) Spanish ibex: up 34.00  or .40%

and the Dow: down 55.44  points or .41% 


And now for major USA stories:

Almost off all 2012 consumer debt is funded by the USA

(courtesy zero hedge)

November Consumer Credit Soars, Driven By Student And Car Loans: 95% Of All 2012 Consumer Debt Funded By Uncle Sam

Tyler Durden's picture

SSDM: just like in October, and September, and August, and so on, November consumer credit saw a decent pick up of $16 billion, well above the expectation of $12.75 billion, above the $14.1 billion in October, and the third highest monthly print of 2012. And if this was driven even remotely by actual short-term consumption demand, it would likely be a good sign, as it would imply consumers have more faith in being able to repay their credit cards. Sadly, of the entire $16 billion jump, only $817 million, or 5%, was based on a jump in revolving credit. The real "growth" came as usual courtesy of Uncle Sam handouts, solely in the form of auto and student loans, which accounted for a whopping $15.2 billion of the increase in consumer debt, the second largest jump in the year, second only to the $18 billion in January. And as everyone knows, student loans are already on fast track to forgiveness (full forgiveness in 10 years if one works for the government), as will be the case for those NINJAs who buy GM cars using government loans. For all of 2012, a whopping $130 billion of the $137 billion total has been in the form of government handouts. In other words, nearly 1% of 2012 GDP has been funded by Uncle Sam in the form of (dischargeable) loans which everyone else will be responsible for, until nobody at all is responsible.
Expect non-revolving debt (i.e., student loans) to literally explode once it becomes better known that the Obama administration is preparing a wholesale debt forgiveness programas reported previously.
Source: G.19


Additional humour for you today:

AIG Considers Suing US Over US Bailout Of AIG

Tyler Durden's picture

Sometimes you just have to laugh - or you will cry. In what could well have been Tuesday Humor if it wasn't so real, the AIG board (fulfilling its shareholder fiduciary duty) is considering joining Hank Greenberg's suit against the government over the cruel-and-unusual bailout that saved the company. The $25bn lawsuit, as NY Times reports, based not on the basis that help was needed but that the onerous nature "taking what became a 92% stake in the company with high interest rates and funneling billions to the insurer's Wall Street clients" deprived shareholders of tens of billions of dollars and violated the Fifth Amendment (prohibiting the taking of private property for "public use, without just compensation"). The 'audacious display of ingratitude' comes weeks after the firm has repaid the $182 billion bailout funneled to it and its clients by an overly generous Treasury. The firm has asked for 16 million pages of government documentation, this "slap in the face of the government" portends a question of whether the government will sue The Fed for enabling the recovery that strengthened Greenberg's case that the bailout was so harsh. Happy retirement Tim Geithner.


Well that about does it for today.

I will see you tomorrow night



Anonymous said...

Does any believe this "$3000 bid no offer" on gold and "$50 bid no offer" on silver going to happen in 2013?

Anonymous said...

probably more like 2213

Anonymous said...

C'mon..even in Zimbabwe there's an offer.

FunkyMonkeyBoy said...

Anon @ 5.54PM,

Ignore Harvey' wild pump merchant bull. He'll say whatever it takes to get people to buy buy buy PMs, that's his agenda. They literally make sh*t up daily.

If there was no offer for silver at $50, it would just go to $51, $52, $53 etc, until someone is willing to sell...

... and believe me, if silver even doubled from the current price in one step over night, then there would be queues outside the coin stores the next morning with every housewife, retiree, coin collector, etc selling what silver they had while the price was at the high... cause all that selling would cause it to come down just as quick a it went up... there would certainly be few buyers if the price doubled over night...

... but keep swallowing the bull Harvey and his ilk put out if you like... many are starting to see that they have unfortunately been had in a simple scam by the PM miners and retailers.

Did you get a Christmas gift from your friend Bart Chilton Harvey?

Anonymous said...

A Christmas gift? hahaha Evidently old Bart won't even answer Harvey in an email. IE: Todays post (and yesterdays post and the day before and the day before and the day before....

Harvey writes in his blog: "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."

Anonymous said...

MAYBE he'll get an answer in four years or so... like the CFTC silver "INVESTIGATION".

Anonymous said...

Thanks as always Harvey. We really appreciate the countless hours that go into these reports...


Fred said...


Your headline reads:

Japanese Pension funds eyeing gold for first time

..but both the articles you copied and pasted say Japanese pension fund gold purchases are expected to DOUBLE. So either they're going to double from zero, which is still zero, or they have bought before and your headline is wrong.

Anonymous said...

FMB...ya dope...

Surely you realize that even if everyone SOLD silver/gold at their local coin shop at $60 silver, or $3000 gold, it certainly would have ZERO bearing on the price of the metals....

I am sure you get that though....and surely you are as educated as Freddy boy....therefore you know that paper trading BS such as the COMEX sets the price for metals....and those players have NOTHING to do with your local LCS....

Thanks for playin though...

Now, why don't you and Freddy boy go and polish some wood together.

Your pal,

Anonymous said...

Who in their right mind would show up here, week after week, to tell the same handful people that post here, over and over again, that Harvey is some sort of inept shill?

A troll, that's who. No ordinary person would do this, excepting gross personality defect.

Therefore, Fred/FMB, you've hopelessly self-compromised yourself. Either inform your employer you've completely failed or seek psychological counseling, whichever applies. (Or both).

themagicbusguy said...

BwaHahahahaha! Check out the Troll. Harvey, you know you are cutting close to the bone when (cowardly) Anonymous Trolls look to dominate the discussion section. Please everyone, don't feed the Trolls!
Harv! Best wishes and thanks for all you do.

Anonymous said...

Gainesville coins look sold out of Silver Eagles.

The premium on 90% halfs is $3.69 over spot, highest I have ever seen.

Also guns, ammo and magazines completely sold out everywhere.

PeaknikMicki said...

Where is this $3000 and $50 coming from. I don't believe it's from Harvey. (Alternatively link please).

The only similar I've seen Harvey post was an example supply drying up in the face of increased demand. And even those figures he gave were for illustration purposes.

Correct me (with a link) if I am wrong.

Jack said...

APMEX down to 3500 Silver Eagles. Was 5900 yesterday.

But no worries. "Fred" says we have plenty of silver. It's just that no one can find it.

Jack said...

Yeah Harvey's words are being taken out of context again by the liars.

Fred said...


I guess the United States Mint found 3+ million ounces to crank out a few silver eagles.

Fred said...

To Anon @ 9:07--

Anyone stupid enough to deal with Gainesville Coins will find a welcome home on this blog.

Oy vey.....

Fred said...

Hey Jack--

I'll make to same offer to you I made to someone else on here.

I'll sell you 50,000 oz of that "rare" physical silver. All 1000 oz +/- bars, FOB my depository.

10 cents over spot.

Come 'n git 'em.

Anonymous said...

fred and fmb can forecast whatever they want.. i'm betting my PM'S will be worth considerably more in 10 , 15, 20 yrs from now .. this isn't a sprint its a marathon..

Anonymous said...

Moron at 3:27 AM said:

"fred and fmb can forecast whatever they want.. i'm betting my PM'S will be worth considerably more in 10 , 15, 20 yrs from now .. this isn't a sprint its a marathon."

If this isn't the dumbest statement I have ever read it certainly is at the top! Hey Einstein. EVERYTHING will be worth more in 10, 15 or 20 years from now! That sure doesn't mean it's a good investment.

I would also like to point out that30 YEARS AGO silver broke $50/oz. I bet all the silver stackers were saying the EXACT same thing back then and what is silver today? TWENTY DOLLARS PER OUNCE LESS!

Everyone wants to talk about silver going from $5.00 to $30.00 but the fact is that it also went from $50.00 to $5.00 oh yeah boy! "Oh I just know silver will be worth more in 10, 15 or 20 years from now." hahaha

After falling hook, line and sinker for the "silver will save the day bullshit" over the past few years on here and KWN and seeing the opposite happen; falling prices instead of increasing prices of $49/oz back down to $30/oz in less than two years I don't see much of a silver lining anymore even though I own the amount of silver do. But hey, at least I dont have a big bank account holding a bunch of "Fiat" money do I?

Hmmm, I wonder if my supermarket, utility companies, gas station or doctor will take my silver rounds....

Anonymous said...

Fred. Why the fuck did u buy 50000 oz in firt place if you are saying theres plenty of it? Sell your fucking phyzz fast before the bublle bursts. Buy aapl or bonds and go watch dansing with stars

DUH said...

coordinated troll attack?
As if I am allowing these hobgoblins trick me out of my metal.
I have yet to see any action or leadership to protect the currencies so no matter how many cheap shots they try take, I keep buying.

Anonymous said...

Yeah you got me guys. Im selling my silver. Maybe theres a shortage of FRN.

Fred said...

To Anon @ 5:27--

I guess reading and comprehension weren't your strong subjects in school.

I have never advocated selling your physical metals. If fact I've repeatedly said I am long physical gold, silver, platinum and palladium.

Get a clue, pal.

Anonymous said...

Well, im trying to figure out where you stand? So you are bullish in silver but you say there is plenty of it available and offering to sell 50000oz in 1000oz bars? WTF?

Fred said...

To Anon @ 11:22--

If you have been reading this comment section for any period of time, you would have read that I wrote the United States can print currency faster than silver can be mined.
I've written that I have about 50% of my net worth in metals and that with the re-election of Obama I plan to move that up to about 65%.

None of that conflicts with the assertion that there is plenty of physical silver around. It's not rare. They pull 2 million ounces a day out of the ground and with decreased economic activity the metal is not getting "used up", it's getting bought by investors.

I'm not sure why you find that difficult to understand.

As for why I would sell my physical at 10 cents over spot, the answer is simple....

I can replace it for less than that.

FunkyMonkeyBoy said...

Thanks goodness that there are critical thinking people like Fred on the same side of the boat as myself (i.e. long physical PMs)...

Over the past few years It's made me sick reading the sheep who post on all these gold/silver celebrity blog sites, lapping up the bull daily from the gold/silver celebrities and their made up nonsense, when it's clearly made-up bull with no proof and never materializes...

... it's not good to be on the same side of the boat as so many simpleton sheeple.

The gold/silver celebrity blog movement is nothing more than a PR/Marketing campaign by the PM miners and retailers... and it's done a great job of getting people to part with huge sums of cash for their product.

Anonymous said...

Ok. Now i do get what you mean. But still i disagree with you. So where is that silver now? I can tell you where its not. Look at apmex. They have only 200- 100oz bars and literally all ase sold out. Someone is buying it

Fred said...

Who cares what APMEX has in stock?!

It's the analogy I made days ago: Just because your local store is out of bread doesn't mean that wheat is scarce. It means the local store ran out of bread.

That APMEX is low on 100 oz bars, or that someone is out of 1 oz units, or Silver Eagles are selling well DOES NOT mean that 1000 oz bars, the basis of most large silver trades, are scarce.
It simply means the fabricators are running behind the retail demand for small bars.
It's great that retail buyers are taking the stuff, but that doesn't "use up" the metal. It just makes it's ownership price sensitive.

Fred said...

...further, when APMEX runs out of 100 oz bars I'll be happy to sell you mine at $1.25 over. Couple hundred bars available FOB my depository.

FunkyMonkeyBoy said...

Where's the proof that ANY of the gold/silver celebrities have purchased a notable amount of gold/silver? Well? Surely, something a critical thinker would ask for?

Seems like they are purely on the sell side...

... don't forget to use Harvey's discount code at silverdoctors.com

Anonymous said...

"Who in their right mind would show up here, week after week, to tell the same handful people that post here, over and over again, that Harvey is some sort of inept shill?"

That is precisely my point too. Why waste you time?

Fred is NOT a shill. At least the guy is respectable and makes sense.

FMB on the other hand is the WORST possible one you can have. He says he is long, yet he continually bashes people on here with name calling and incessantly tries to scare people out of their positions. That is a mainstream tactic.

Then to top it off, you get this statement:

"If this isn't the dumbest statement I have ever read it certainly is at the top! Hey Einstein. EVERYTHING will be worth more in 10, 15 or 20 years from now! That sure doesn't mean it's a good investment."

Keynesian bullshit, complete with more name calling.

That gallon of gasoline is worth ZERO more to me than it was yesterday, because it will not take my car any further than it did yesterday. Same with that loaf of bread.. it will not fuel my body for one SECOND more than it did yesterday, just as that kilowatt of electricity will not light any more light bulbs. Your commodities are not losing value, the Federal Reserve Note is.

ANYONE on this planet who has access to a chart can sit and whine about how much silver is lower than it was two years ago.. if I bought it five years ago, than that statement has no relevance whatsoever to me. If you bought at a cyclical top that is YOUR stupidity, and yours ALONE. I need a whaaammmbulance stat!

"But hey, at least I dont have a big bank account holding a bunch of "Fiat" money do I?"

Yup and if you do have that fiat, congratualtions! You are now five times POORER purchasing power wise than you were back when silver hit that $50 an ounce in 1980. Good job. /golfclap

Anonymous said...


Doesn't matter what anybody puts down on ole Harvey's blog !!!

The damage has been done !!!

You don't hold it ~ You don't own it !!!!!!!!!

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