Thursday, April 25, 2013

Gold rises by $38.40 to $1461.80./Silver has best day in 15 months by rising $1.31. Comex gold continues to leave comex vaults.

Good evening  Ladies and Gentlemen:

Gold closed up $38.40 to $1461.80 (comex closing time).  Silver rose by $1.31   to $24.14 (comex closing time). This was the best showing for silver in 15 months.

In the access market at 5 pm gold and silver continue on in full force and rose :

gold: $1466.0
silver: $23.34

At the comex, the open interest in silver fell  by a smallish 1,567 contracts to 157,403 contracts (short covering by the bankers) as it is still  holding firm at elevated levels . The open interest on the gold contract fell by 3972 contracts to 411,102. The total amount of gold ounces standing for April rose slightly to 34.46 tonnes as silver remained relatively constant at 3,765,000 oz.

Over at the gold comex inventories we witnessed another huge withdrawal. Tonight the dealer (registered gold) rests at 2.174 million oz or 67.6 tonnes.  I cannot recall this level being so low.  The total of all gold at the comex drops below 8 million oz at 7.990 million oz or 248.5 tonnes. 

The big news comes from Toronto, were Barrick may have to write off the entire Pascua Lama project.  This will put a huge crimp into future gold supplies entering the market place.

we have a report from India which shows that Indian dealers have been cleaned out.

We also have commentaries on the physical gold metal from Eric King, John Embry, Jim Sinclair Aladair MacLeod, Keith Barron and Dave Kranzler from the GoldenTruth.

In paper stories the only significant one was the huge rise in Spanish unemployment to over 27%.

We also have lots of chatter of an invasion in Syria.

 We will go over these and other stories but first.........................

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

The total gold comex open interest fell by 3972 contracts today  from  415,074 down to 411,102,  with gold rising by $14.80 on Wednesday.It looks like we had massive short covering yesterday.  The front April OI fell by 239 contracts from  548 down to 309. We had 271 notices filed on Wednesday so we gained 32 contracts or 3200   oz of additional gold which will  be standing for the April gold contract month. The next non active contract month is May and here the OI fell by 616 contracts to 855. The next big contract month is June and here the OI fell by  5,994 contracts from 251,249 down to 245,255.  The estimated volume today was very good at 197,313.   The confirmed volume on Wednesday was good at 153,871 contracts.

The total silver comex OI fell slightly by 1567  contracts from 158,970 down to 157,403  despite silver's rise yesterday. It still looks like we still have some  stoic longs who seem impervious to pain as the OI in silver continues to remain elevated despite the constant whacking of this metal. The front non active delivery month of April saw its OI fall by 1 contracts from 15  down to 14 . We had 0 delivery notices filed on Wednesday, so in essence we  lost  1 silver contract standing for delivery in April or 5,000 oz.  The next big delivery month for silver is May and here the OI fell by 4581 contracts to stand at 30,754. We are less than 1  week away from first day notice for the May silver delivery month  (Tuesday April 30/2013).   The estimated volume today was huge, coming in at 108,026 contracts which equates close to 540 million oz of silver. The world produces 700 million oz per year ex China ex Russia so in essence today's volume equates to 77% of annual silver production. We had confirmed volume on Tuesday at 107,502 contracts which is a huge volume day . (.537 billion oz or 76.7% of annual silver production)

Comex gold/April contract month:

April 25.2013      April gold.

Withdrawals from Dealers Inventory in oz
70,767.144  (Scotia)
Withdrawals from Customer Inventory in oz
 167,948.938 (HSBC,JPM, Scotia)
Deposits to the Dealer Inventory in oz
Deposits to the Customer Inventory, in oz
852.17 (Brinks)
No of oz served (contracts) today
 98  (9,800  oz)
No of oz to be served (notices)
211  (21,100)  oz
Total monthly oz gold served (contracts) so far this month
10,868  (1,086,800 oz) 
Total accumulative withdrawal of gold from the Dealers inventory this month
168,018.42  oz
Total accumulative withdrawal of gold from the Customer inventory this month

943,780.96  oz  (29 tonnes)

We had huge activity at the gold vaults.
The dealer had 0 deposits and 1 major dealer withdrawal.

i) Out of the Scotia warehouse another huge 36,646.06 ounces of gold was withdrawn from the dealer and out of all registered comex vaults.

We had 1 tiny   customer deposits:

i) Into Brinks:  1286.000 oz  (another of those perfectly round deposits)

total customer deposit:  1286.000 oz

We had 3 customer withdrawals two of which were huge :

i) Out of JPM*:   260,792.233 oz  (see commentary on JPM gold removals below)
ii) Out of HSBC:  5,409.659 oz
iii) Out of Scotia:  53,148.413

*a monstrous 65% drop in eligible inventories in 24 hours

total customer withdrawal: 319,350.29   oz  (9.9 tonnes of gold removed) 

We had 0  adjustments:

The following is very scary!!!
Thus the dealer inventory  rests tonight at 2.174 million oz (67.6) tonnes of gold.
The total of all gold declines again at the comex and this time breaking below 8 million oz as it rests at 7.990 million oz or 248.5 tonnes.

I cannot recall seeing the registered or dealer inventory in gold this low.
The comex is slowly losing all of its gold.

The CME reported that we had 98 notices filed for 9,800 oz of gold today.   The total number of notices so far this month is thus 10,868 contracts x 100 oz per contract or 1,086,800 oz of gold. In order to establish what will be the total number of gold ounces standing, I take the OI for April (309) and subtract out Thursday's delivery notices (98) which leaves us with 211 contracts or 21,100 oz left to be served upon our longs. 

Thus  we have the following gold ounces standing for metal:

1,086,800 (served)  + 21,100 oz (left to be served upon )  =  1,107,900 oz or
34.46 tonnes of gold.

we gained 3200 oz  of  gold standing for the April gold contract. This is turning out to be a very big delivery month!1

*Mark Lundeen…

COMEX Gold Inventory Continues to get the Hell out of Dodge City

Gold continues to exit from the COMEX storage facilities with no sign of slowing down. In the last five days 5% of the gold held at the COMEX has moved on to new locations. Let’s face it, it hasn’t been shipped to mints for fabrication into coins and bars to satisfy the public’s demand for gold. This could become the biggest story in the gold market if this continues.



At 3:30 we got an update on the outflow of gold from JPMorgan's vault as I reported on above.

Zero hedge comments:

JPMorgan's Eligible Gold Plummets 65% In 24 Hours To All Time Low

Tyler Durden's picture

We are confident that in the aftermath of our article from last night "Just What Is Going On With The Gold In JPMorgan's Vault?" in which we showed the absolute devastation of "eligible" (aka commercial) gold warehoused in JPM's vault just over the Manhattan bedrock at 1 Chase Manhattan Place (and also in the entire Comex vault network in the past month), we were not the only ones checking every five minutes for the Comex gold depository update for April 25. Moments ago we finally got it, and it's a doozy. Because in just the past 24 hours, from April 24 to April 25, according to the Comex, JPM's eligible gold plunged from 402.4K ounces to just 141.6K ounces, a drop of 65% in 24 hours,and  the lowest amount of eligible gold held at the vault on record, since its reopening in October 2010!
Everyone has seen what a run on the bank looks like. Below is perhaps the best chart of what a "run on the vault" is.
The absolute collapse in JPM's eligible gold inventory, means total Comex eligible gold has fallen to just 5.8 million ounces, half of what it was in early 2011, and back to levels last seen in March 2009.
So, once again, just like last night, we ask the same questions which are even more critical today than they were 24 hours ago:
  1. What happened to the commercial gold vaulted with JPM, and what was the reason for the historic drawdown?
  2. Gold, unlike fiat, is not created out of thin air, nor can it be shred or deleted. Where did the gold leaving the JPM warehouse end up (especially since registered JPM and total Comex gold has been relatively flat over the same period)?
  3. Did any of this gold make its way across the street, and end up at the vault of the building located at 33 Liberty street?
  4. What happens if and/or when the JPM vault is empty of commercial gold, and JPM receives a delivery notice?
Incidentally, JPM now has just under a paltry 5 tons of eligible gold left in storage. We hope this is also the maximum exposure it faces for imminent delivery requests, because if tomorrow it receives withdrawal requests for 141,581.5 ounces +1, then things get really interesting.



April 25.2013:  April silver: 

Withdrawals from Dealers Inventory633,866.43 (CNT)
Withdrawals from Customer Inventory 662,901.23 ( Delaware)   
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory  598,041.900  (CNT,)
No of oz served (contracts)3 contracts  (15,000 oz)  
No of oz to be served (notices)14  (70,000 oz)
Total monthly oz silver served (contracts) 742  (3,710,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month3,116,454.8 oz
Total accumulative withdrawal of silver from the Customer inventory this month5,384,669.5  oz

Today, we  had huge activity  inside the silver vaults.

 we had 0 dealer deposits and 1  dealer withdrawals.

Out of CNT:  663,866.43 oz leaves this registered vault. 

We had 1 customer deposits:

i) Into CNT: 598,041.900 oz 

Total deposits:  598,041.90  oz

We had 2 customer withdrawals:

i) Into  Delaware:  993.95 oz
ii) Out of our famous JPM:  661,907.28 oz

total customer withdrawal:  662,901.23 oz

we had 1  adjustments:

Out of the Delaware vault:  383,834.566 oz was adjusted out of the dealer and back into the customer account

Registered silver  at :  38.11 million oz
total of all silver:  166.61 million oz.

The CME reported that we had 3 notices filed for 15,000 oz of silver  for the non active contract month of April. In order to calculate the number of silver ounces that will stand, I take the OI for April silver (14) and subtract out Thursday's notices (3) which leaves us with 11 notices or 55,000 oz left to be served upon our longs.

Thus the total number of silver ounces standing in this non active delivery month of April is as follows:

3,710,000 oz served  +   55,000 oz to be served  =  3,765,000 oz

we  lost 5,000 silver ounces standing in the April contract month.

This is also turning out to be a very good delivery schedule for what is usually a quiet month as April is a non active 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.

Now let us check on gold inventories at the GLD first:

April 25.2013



Value US$50.841   billion

april 24.2013:



Value US$50.177   billion

April 23.2013



Value US$49.648 billion

April 22.2013:



Value US$50.575  billion.

april 19.2013:



Value US$50.731  billion.

April 18.2013:



Value US$50.752   billion

april 17.2013:



Value US$50.770  billion.

We have lost another, 2.71 tonnes of gold today, which followed  4.21 tonnes yesterday which followed a 18.35 tonnes of gold lost on Tuesday.

Ladies and Gentlemen: the ultimate battle ground is the physical gold vaults at the LBMA and GLD.  Everyday we are witnessing massive gold leaving these vehicles as well as the comex.  This is similar to the events where Richard Nixon abrogated Bretton Woods by outlawing any more conversion of gold for USA dollars held by central authorities in Europe (especially France).  We are witnessing the end game being played out before our eyes.  When the last physical ounce leaves for China, the game ends.

As a reminder the total comex gold had inventories of around 11 million oz in 2011. Today it broke well below 8 million oz. (7.99 million oz)


And now for silver:

April 25.2013:

Inception Date4/21/2006
Ounces of Silver in Trust331,757,790.600
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

april 24.2013:

Inception Date4/21/2006
Ounces of Silver in Trust331,757,790.600
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

April 23.2013:

Ounces of Silver in Trust336,007,785.800
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

april 19.2013:

Ounces of Silver in Trust336,007,785.800
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

april 18.2013

Ounces of Silver in Trust336,007,785.800
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

april 17.2013

Ounces of Silver in Trust336,007,785.800
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

April 16.2013:

Ounces of Silver in Trust336,007,785.800
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

april 15.2013

Ounces of Silver in Trust337,505,197.400
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

 april 12.2013:

Ounces of Silver in Trust337,505,197.400
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

 april 11.2013:

Ounces of Silver in Trust337,505,197.400
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

april 10.2013
Ounces of Silver in Trust337,505,197.400
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

april 9.2013:

Ounces of Silver in Trust337,505,197.400
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

Today we neither gained nor lost any silver at the SLV.  I doubt if they have any appreciable silver left.


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  at positive 2.0% percent to NAV in usa funds and a positive 2.0%  to NAV for Cdn funds. ( April  25.2013)   

2. Sprott silver fund (PSLV): Premium to NAV fell to +0.39% NAV  April 25/2013
3. Sprott gold fund (PHYS): premium to NAV  rose to- .16% positive to NAV April 25/ 2013.


And now for the major physical stories we faced today:

First off, we have your gold trading commentary from  Europe early Monday morning

1. Physical demand continues to rise as the USA mint suspends sales of the smallest denomination of gold coins:  1/10 oz

2. Premiums are rising across the board for physical

3. Indian dealers cleaned out!!

(courtesy Bullion vault/Adrian Ash)

Gold Forecasts Split at $10,000 and $1000 as ETFs Sell, Central Banks Buy, Indian Dealers Cleaned Out

-- Posted Thursday, 25 April 2013 | Share this article | 1 Comment 

From Adrian Ash

WHOLESALE GOLD rose to an 8-session high just shy of $1450 per ounce in London trade Thursday morning, recovering 45% of this month's near-record slump.

Asian stock markets also ticked higher, but European shares were flat while commodities extended their rally.

Silver prices were unchanged for the week so far at $23.30 per ounce.

Gold priced in Sterling fell £10 per ounce from an 8-session high of £946 as the Pound jump on news that the UK avoided recession – growing just 0.3% – in the first quarter of 2013.

"Gold is continuing [its] recovery," says the daily comment from the commodities team at Germany's Commerzbank.

"Rate-cut speculation ahead of next week's [Eurozone central bank] meeting – and the prospect of continued ultra-loose US monetary policy following more weak economic figures – are lending buoyancy to the gold price."

Investors who buy gold, writes Société Générale's global strategist Albert Edwards in a new report, are making "a bet against central banks' competency."

Given central banks' track record, he adds – repeating his team's forecast of $10,000 gold – "that's certainly a bet I'd be happy to still take."

Money-creation leading to a surge in inflation is also the forecast from billionaire hedge-fund manager John Paulson, who reportedly told clients on a webinar Wednesday that he and his chief precious metals strategist – the highly respected former UBS analyst John Reade – are also "holding course" despite last week's price crash.

Dutch bank ABN Amro however – which this month said "the demise of gold [was] still at an early stage" – today revised its $1000 gold forecast from end-2015 to the end of 2014.

"ETF [trust funds] still see sellers, but physical demand remains very strong," says Moudi Raad at Swiss refining and finance group MKS.

New York's giant SPDR Gold Trust yesterday shed another 4 tonnes of gold, taking the bullion held to back its shares down to the lowest level since the start of September 2009 at 1093 tonnes.

Over in India however – the world's heaviest gold-buying nation – "We are unable to get supply," Reuters quotes a state-bank dealer.

"Refiners have sold out till second or third week of May. Gold for immediate delivery is quoted at $10 on London prices."

Latest data from the International Monetary Fund meantime show that emerging-market central banks again chose to buy gold for their reserves in March.

Russia led central-bank gold buying, adding 4.7 tonnes to reach 981 tonnes, while Turkey continued to pull in metal from its commercial banks, adding a further 33 tonnes to reach 409.

"I think physical and central banks...those buyers are supporting the market," Reuters quotes Yuichi Ikemizu at Standard Bank in Tokyo.

"With this sharp decline in the price," he adds, "I think South Korea is buying gold too. [It] always buys gold when the price comes off."

Adrian Ash

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver in Zurich, Switzerland for just 0.5% commission.

(c) BullionVault 2013


The following is very important.  You will note that every day massive amounts of gold has been leaving JPMorgan and this has been pointed out to you.

Finally, zero hedge is catching on and something big is happening behind the scenes

(courtesy zero hedge)

Just What Is Going On With The Gold In JPMorgan's Vault?

Tyler Durden's picture

We know that back in early October 2010, when gold closed at a then record high of $1,320, JPM decided to reopen its previously mothballed precious metal vault due to soaring demand for metal vaulting, thus becoming only the fifth official Comex private gold depository in New York in addition to HSBC, Bank of Nova Scotia, Brinks and MTB (and of course the New York Fed).
We also know, courtesy of a Zero Hedge exclusive, that the JPM vault - the largest private gold vault in the world - is located at 1 Chase Manhattan Plaza, and is literally adjacent to the vault of the New York Fed 80 feet, and 5 sublevels, below street level.
We know that for a long time the vault held around 2.5 million ounces of eligible (commercial) gold, a number which declined only gradually until very recently.
We know that the total amount of registered (investment) gold has been steady for the past 4 years (after peaking in early 2006).
Finally, everyone knows that in the past month gold has experienced a very severe move lower which is still largely unexplained.
What many may not know, is that while registered Comex gold has been flat, the amount of eligible gold in Comex warehouses (the distinction between eligible and registered gold can be found here) in the past several weeks has plunged from nearly 9 million ounces, to just 6.1 million ounces as of today- the lowest since mid-2009.
What nobody knows, is why virtually the entire move in warehoused eligible gold is driven exclusively by one firm: JPMorgan, whose eligible gold has collapse from just under 2 million ounces as of the end of 2012 to a nearly record low 402,374 ounces as of todaya drop of 20% in one day, though slightly higher compared to the recent record low hit on April 5 when JPM warehoused commercial gold touched a post-vault reopening low of just over 4 tons, or 142,700 ounces.
This happened just days ahead of the biggest ever one-day gold slam down in history.
Some questions we would like answers to:
  1. What happened to the commercial gold vaulted with JPM, and what was the reason for the historic drawdown?
  2. Gold, unlike fiat, is not created out of thin air, nor can it be shred or deleted. Where did the gold leaving the JPM warehouse end up (especially since registered JPM and total Comex gold has been relatively flat over the same period)?
  3. Did any of this gold make its way across the street, and end up at the vault of the building located at 33 Liberty street?
  4. What happens if and/or when the JPM vault is empty of commercial gold, and JPM receives a delivery notice?
Inquiring minds want to know...


I am shedding a tear for these guys.  In the year 2000 I went to them and explained that leasing is hurting the gold industry and causing many mines to close up.  They just gave me lip service.

Now it looks like they may have to suspend the troubled Pascua Lama project.

What the article does not state is how are they going to compensate Silver Wheaton:

(courtesy Chris Powell/GATA)

Barrick Gold cuts spending, may suspend troubled Pascua-Lama project

By Madhavi Acharya-Tom Yew
Toronto Star
Wednesday, April 24, 2013
Facing sliding prices for gold and its shares as well as a shareholder revolt on executive pay, the top brass at Barrick Gold Corp. vowed Wednesday to cut costs and take a hard look at the company’s operations.
Executives of the world’s biggest gold mining company revealed plans to cut at least US$500 million from spending on major projects this year, and may consider suspending work at its troubled Pascua-Lama development in South America.
"I can assure you that everyone within Barrick shares your disappointment over the share price performance and we will do everything we can to reverse that," president and chief executive officer Jamie Sokalsky told shareholders at the company's annual general meeting, held at the Metro Toronto Convention Centre.
"2012 was a difficult year for Barrick and we face significant challenges. Some are out of our control and some within our control."
The pledge came as the Toronto-based company reported a decline in net earnings for the first quarter of 2013, driven by lower prices for gold and copper.
Barrick stock gained $1.37 to close at $19.38 per share on the Toronto Stock Exchange on Wednesday. The shares have lost more than 40 per cent of their value since the start of this year.
Barrick declared a dividend of 20 cents (U.S.) per share on Wednesday.
At the meeting shareholders voted down a motion by the company that asked for approval on the way Barrick pays its executives.
Last week institutional investors, including the Canada Pension Plan Investment Board, the Ontario Municipal Employees Retirement System, and Ontario Teachers Pension Plan, expressed concern over an $11.9 million signing bonus awarded by Barrick to co-chairman John Thornton.
The "no" vote was advisory and "doesn't impact any compensation," Andrew Lloyd, director of media relations, wrote in an email to the Star. "The Barrick board of directors takes the shareholder vote seriously and intends to carefully consider our shareholders' perspectives regarding executive compensation matters."
A spokesperson for the Caisse de depot et placement du Quebec, which led the charge, said the group was "thrilled" by the rejection.
"We knew that it was a consultative vote. We said this was a matter of principle in making ourselves heard and sending a message that there are things that shouldn't be done," Marie Giguere, executive vice-president, said in an interview. "In corporate governance things don't change overnight. It's a slow process but this is a first step."
The bonus, paid last June, was used to purchase Barrick shares that are held in trust for Thornton's children and are subject to a holding period, according to the company's latest management proxy circular.
"John was prepared to give up his other options. Believe me, he was a highly desirable, well-known commodity," Barrick founder and chairman Peter Munk told shareholders. "When we paid the kind of money we paid John to buy Barrick shares with, we had to secure him."
At the start of the meeting, two protestors slipped on stage and unfurled a banner that read "No Pascua-Lama" before being rushed away by security guards. Outside about a dozen protestors stood in the rain chanting "Divest from Barrick."
Barrick had US$923 million or 92 cents per share of adjusted earnings in the first quarter, down from US$1.1 billion or $1.10 per share in the year-earlier period. The results beat analyst estimates.
Barrick said it would cut its capital spending by $500 million and reduce exploration spending by $100 million.
Work on the Pascua-Lama silver and gold development in the Andes mountains was suspended by an appeals court in Chile amid environmental concerns. Barrick said it will work to address the regulatory concerns.
"We're serious about disciplined capital allocation," Sokalsky told shareholders. "That means we need to consider all options, including the possibility of suspending the project."
Gold futures are trading close to US$1,400 per ounce, after touching a high of over US$1,900 in 2011.


Chris Powell of GATA on Barrick:

Why invest in a company so disdainful of its own product?

11:56p ET Wednesday, April 24, 2013
Dear Friend of GATA and Gold:
Today's commentary by David Olive of the Toronto Star about Barrick Gold and its board chairman, Peter Munk, appended here, hauls out all the usual red herrings used against gold investment to suggest that gold's adherents are just doomsday cult members. Meanwhile Olive refuses to acknowledge the threat gold poses to central bank control of the world financial system and the enormous but largely surreptitious efforts central banks make to suppress gold's price. Anyone might safely bet his life that, as a certified mainstream financial journalist, Olive has taken an oath never, ever to put a question to a central bank, particularly about gold. Polite company doesn't do that. But then polite company is never journalism.
Rather, Olive's commentary is interesting for conveying the disdain Barrick's chairman always has had and continues to have for his company's own product. Of course, as Olive's commentary briefly suggests, years ago Barrick was not only disdaining its own product but was a primary intermediary in the Western central bank scheme to hold gold prices down through gold leasing, so much so that the company even claimed in federal court in New Orleans that, as the agent of central banks, it should share their sovereign immunity against lawsuit.

Quite apart from the prospects for gold in particular, investors might wonder why they should invest in a company so unenthusiastic about its own product. But this question doesn't seem to occur to Olive. Acknowledging himself as a gold disdainer too, he just seems to be glad to have Munk around to discredit gold and, by extension, the whole gold mining industry.
But as most of that industry remains silent in the face of decades of central bank assault, including this month's assault, the most comprehensive assault ever, the industry discredits itself these days just fine without any help from Munk.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


* * *
Munk Warned Against Irrational Exuberance in Gold
By David Olive
Toronto Star
Wednesday, April 24, 2013
If Peter Munk was a genuine goldbug, the kind who see the yellow metal as the "one true way," a lifetime gold bear like me could hail a comeuppance for the founder and chairman of Toronto-based Barrick Gold Corp., world's biggest gold miner.
But I don't, because the GTA philanthropist who rose phoenix-like from the ruins of Clairtone to build a global mining empire has always had a sensible regard for the aptly named "currency of fear." Real goldbugs are besotted with a commodity that doesn't pay interest or dividends, is too cumbersome to be a viable method of exchange, and even as a metal is too soft to be of use in all but a handful of industrial applications, suitable only for jewellery.
By contrast, in some 30 years of building Barrick, Munk has not been an evangelist for gold, despite having a powerful vested interest in being one.
You wouldn't want to be Peter Munk just now as he prepares to meet shareholders Wednesday at the company's annual general meeting in Toronto. The plunge in the world gold price has slashed the value of Barrick stock by more than half, from its $54 peak just 17 months ago. Barrick's flagship Pascua-Lama gold and silver project in Chile has been suspended over environmental concerns, one of many strategic setbacks in Barrick's sprawling operations.
Seven major Canadian pension funds are excoriating Barrick over what they regard as an unmerited $11.9-million signing bonus for co-chairman John Thornton after a miserable 2011 in which Barrick lost a staggering $665 million. They're none too pleased either that Munk, 85, has yet to designate a successor. Which makes Munk the leading local example of the Warren Buffett syndrome, now that Frank Stronach has finally left the building.
But give him this: Munk in his way warned against irrational exuberance in gold during its spectacular run-up in price beginning in the late 2000s.
In a Charlie Rose panel discussion back in 2010, Munk's fellow panelist James Grant, editor of the respected Grant's Interest Rate Observer, attributed the gold-price spike to feckless central bankers devaluing their currencies by resorting to the printing press to lift troubled economies out of recession.
Global investors driving up the gold price were motivated, Grant asserted, by the alchemy of Ben Bernanke, chairman of the U.S. Federal Reserve Board. The Fed chief was debasing the greenback -- the world's reserve currency -- "by inventing U.S dollars on computers, by conjuring money out of nothing." By that, Grant meant the so-called "quantitative easing" by which the Fed was snapping up U.S. Treasuries to reinforce federal finances.
Munk begged to differ with the theorizing of this "thinking goldbug" about a commodity whose price movements he regards as highly unpredictable. Munk would know, Barrick having lost a ton of money in the 2000s from a price-hedging strategy that worked like a charm until abruptly going awry. (The knee-jerk goldbugs, far less polished, try to top each other with apocalyptic visions, not excluding the outbreak of Lyme disease in the Holy See.)
Munk observed that "the price of soybeans, the price of corn, the price of copper, the price of tin, the price of rubber, the price of oil -- these have jumped tenfold, much more than gold. And nobody's worried about somebody conjuring up fake rubber."
No, Munk said, the gold spike had everything to do with fear. "You only buy gold as a substitute when you've lost confidence in every other asset class," he said. Conversely, when you learn, as I noticed recently, that house prices even in Florida, one of the epicentres of 2000s U.S. housing crash, are recovering, the time to ease up on fear -- and gold hoarding -- has arrived.
With a news media eagerly abetting the Cassandras, investors were whipped into fear about a world rife with terrorism, sovereign debt crises, nuclear-weapons proliferation, a eurocrisis, and a Chinese GDP slowdown. World ends, film at 11.
Today it doesn't take a Pollyanna to observe that North Korea's only ally, China, is leaning on Pyongyang to throttle back its nuclear ambitions. That al-Qaeda has been effectively routed. That Europeans are bent on keeping the EU intact. And that America is rising from its economic sickbed. It's time to diversify again, this time away from an investment that does not generate income.
Barrick is now bracing for a long bear market in gold, whose fair-market value is likely closer to US$800 than the current US$1,420, even after gold's 40 per cent tumble since last year's peak. The traditional ratio of inflation to the gold price is 3.2 to 1. At today's still overblown gold price, that ratio is an unsustainable 6 to 1.
Munk himself long ago diversified. He might just now hide out from his pension-fund tormentors at the Adriatic marina resort he began building as the gold price was beginning its climb.


Jim Sinclair delivers a powerful commentary with Eric King, of Kingworldnews:

"But here is the important point, as long as the physical market sells at a significant premium above the paper price of gold, the COMEX warehouse is going to be significantly drained.  You will also see the market, between various dealers and interbank 400 ounce gold bars, will also act like a vacuum in terms of the exchange warehouses.  Meaning that will also serve to deplete the COMEX inventories."

Metal drained away, Comex will move to cash settlement, Sinclair says

8:16a ET Thursday, April 25, 2013
Dear Friend of GATA and Gold:
Jim Sinclair today tells King World News that the New York Commodities Exchange's gold warehouses will be drained as long as the price of paper gold is so much lower than the price of real metal around the world and that he expects the exchange to stop metal delivery and convert to cash settlement or settlement in shares of exchange-traded funds. "This is the beginning of the end of the paper gold market being the superior price-setting mechanism," Sinclair says. An excerpt from his interview is posted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


Alasdair Macleod on gold:

(courtesy Alasdair Macleod)

Alasdair Macleod: Physical vs. paper gold -- waiting for the dam to break

11:34a ET Thursday, April 25, 2013
Dear Friend of GATA and Gold:
GoldMoney research director Alasdair Macleod today provides what is probably the most comprehensive and yet concise description of the world gold market, concluding most soberly that the recent gold price smash was likely engineered by Western central banks and that it may cost them not only control of the gold market but control of all markets.
Macleod writes: "We can only speculate about day-to-day interventions by Western central banks in gold markets. In this regard it seems that the slide in prices on the 12th and 15th April was triggered by a very large seller of paper gold; if this market story and the amount mentioned are correct, it can be only central bank intervention, acting to deliberately drive prices lower.
"Given the market position, with money managers in the futures markets already short and highly vulnerable to a bear squeeze, the story seems credible. The objective would be to persuade holders of physical exchange-traded funds and allocated gold accounts to sell and supply the market, on the assumption that they would behave as investors convinced the bull market is over."
Macleod's analysis is headlined "Physical Gold Vs. Paper Gold: Waiting for the Dam to Break" and it's posted at GoldMoney's Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


An important interview between John Embry and Eric King of Kingworld news:

(courtesy,Eric King/John Embry)

Embry – Panic In The Gold Market Creating

 Problems For Shorts

Posted  by  & filed under King World News.
Dear CIGAs,
On the heels of Jim Sinclair telling KWN that a full-blown panic has developed in the financial world with people wanting to know where their gold is, today John Embry spoke with King World News about this explosive situation and how he believes it will unfold.  Below is what Embry, who is chief investment strategist at Sprott Asset Management, had to say in his interview.
Embry:  “There was a fascinating study done by Kenneth Rogoff and Carmen Reinhart which stated that once an economy gets to 90% government funded debt as a percentage of GDP, its growth rate slows dramatically.  This was one of the underpinnings of the austerity movement.
Well, now they’ve come out and done an about face and said that model was all wrong.  This is indicative of the fact they (central planners) realize if that if they don’t go to the printing press immediately, this whole thing is going to collapse….

Dave from Denver comments on the importance of owing physical gold:
(courtesy Dave from Denver)


Is Your Gold Missing?

When it becomes widely known that all of the people who think they own gold in fact don’t own gold, that it’s been hypothecated and re-hypothecated so many times that there are 100 claims for every single ounce of physical gold, that is when the prices of gold and silver will really go berserk to the upside, and at that point the shorts will have serious problems  - John Embry on King World News
 The press pounced all over the massive smack down on gold/silver last week.  Headlines were thrust in everyone's face.  Gold dropped  $200 dollars in two days and the media wanted to make sure everyone knew about it.  Well, guess what?  As I write this, gold has gained back over $100 that drop. But is this being broadcast in flashing marquee lights the way the sell-off was?  Of course not.

In the aftermath of that sell down, a lot of facts have come to light.  But first, the bounce we're seeing is illustrative of the fact that you need to hold on tight in this sector in order to truly benefit from the wealth benefits of investing in physical gold/silver and good mining stocks.  As an example, since late 1999, the mining stocks have suffered two periods in which the mining stocks had severe sell-offs of this magnitude - late 1999 to early 2001 and mid-2008 - Oct 2008 - in response to large manipulated drops in the metals.  But after the sell-off ended, it literally took less than 3 months for the HUI/XAU indexes to double from their bottom and then head to new all-time highs a few years after that.  I feel bad for anyone who was shaken out this time around, but I guarantee you that Wall Street does not harbor the same sympathies...

At any rate, what's been exposed from this market price correction is that fact that 1) more people now understand why it is important to own physical gold and silver, as evidenced by the fact that U.S. quickly sold out of silver eagles and is on a track to sell a record monthly amount of gold eagles; and 2)  there is a serious problem globally with amount of gold that is available for physical delivery to the buyers who are demand actual delivery.

I thought I would go over some statistics from the Comex to illustrate why we know this is the case.  The total gold held on the Comex is 8.5mm ozs, of which 6.3mm is not available for delivery - i.e. it's investor gold being held in Comex vaults.  Stunningly, over 2 million ounces of gold -  roughly 60 tonnes - has been removed from the Comex vaults in the last three months.  Most of it has come from investor accounts.  You have to wonder why all of a sudden big investors have removed their gold from the Comex.

Investor gold is not "eligible" for delivery on futures contracts.  The gold that can be delivered is sitting in "registered"accounts. The amount of registered gold currently is 2.28 million ozs.  The total open interest in futures contracts for gold is 416k contracts, or contracts representing 41.6 million ozs.  Essentially there's 18x more paper gold in the form of futures open interest than there is gold that can be delivered.  The June front month for gold has 255k open contracts, or 25.5mm ozs open.  That's 11x the amount of gold available for delivery.  If even 10% of June gold contract longs held for delivery, the Comex would be completely wiped out of its gold and would have to default on the delivery of some.  But the Comex has a "force majeur" clause in its contract that allows cash settlement.  We won't see that happen in the near future most likely, but it will eventually happen.

In silver the total open interest represents 786.3 million ozs.  That's about 3/4 of global annual production, which includes 257mm ozs of recycled silver.  So, the total open interest on the Comex is about equal the total annual amount of silver mined globally.  There's 39mm ozs of silver available for delivery.  In other words the amount of paper silver on the Comex is 20x the amount of silver the Comex has for delivery.

I think that explains why big investors are removing their gold from the Comex.  The Comex is one giant Ponzi scheme.  Anyone who is going to rely on the Comex as a source of silver, either industrial or investment, is going to be left holding a giant, empty paper bag.  That explains why we are seeing a such frenetic activity - not just in this country but globally - by investors looking to get their hands on gold/silver that can physically delivered to their possession.  A long-time colleague of mine prepared this caption, which sums up the situation perfectly:

As the severity of the physical gold/silver shortage vs. the paper claims issued (futures, LBMA forwards, OTC derivatives and Central Bank leases and swaps) against that actual amount physically available - as demonstrated by my Comex example, which is only part of the global problem - the price of gold and silver are going to start to go parabolic.  Although most of you are not aware, but from 1974-1976, the price of gold dropped 47%.  But from 1976 to 1980 the price of gold went up 800%.  Given what we know about the massive, unsolvable global financial problems, and the enormous amount of money that will need to be printed to keep the system from collapsing outright, it's a good bet the next extended move in the metals will dwarf the move gold made in the late 1970's.


Just take a look at the premiums that are paid in Europe for double/single gold eagles:
(courtesy Kingworldnews/Keith Barron)

Stunning & Massive Run On Physical Gold & Silver Continues

Posted  by  & filed under King World News.
Dear CIGAs,
Today a legend in the business told King World News there is a continued massive run on physical gold and silver.  Keith Barron, who consults with major gold companies around the world and is responsible for one of the largest gold discoveries in the last quarter century, spoke about this remarkable situation and what it means for investors.  Below is what Barron had to say in this remarkbable interview.
Barron: “I was just asked by one of the major brokerage houses in Toronto to give a presentation on what has taken place in the gold market.  Many people inside the firm simply could not understand what happened with gold.  I told them what we had just witnessed was an orchestrated takedown. 
If the Dow, Nasdaq, or the S&P had tumbled in the same manner as what the gold market experienced, there would have been trading curbs, enquiries would have been made, etc.  In contrast, all we saw in the gold futures market were more and more margin calls.  But what is cleaning up this mess right now is the enormous physical demand.
We spoke last time on KWN about the tremendous demand at Scotia (Bank) in Canada and UBS in Switzerland, but the Japanese are coming in to the gold market in a shocking way right now….

Bron Suchecki, director of the Perth Mint comments on huge demand for his product:

From Ed Steer and Bron Suchecki

At 8:30 p.m. yesterday evening, I fired off an e-mail to Bron Suchecki at The Perth Mint, where it was already 10:30 a.m. on Thursday morning...and asked him this question: "G'Day Bron...What's happening in Oz in the precious metals world that's fit to print in tomorrow's column?"  Less than half an hour later I go this response...
Hi Ed,

With the [current production] issues at the RCM and US Mints, we are now starting to get hit with good orders from distributors, so we have prioritised manufacture of 1 oz. and kilo silver coins over our Lunar Snake coins so we can maximise the total amount of ounces we can supply. This is great news as that means more physical being taken off market.

That does lead me to the next point...which is buyers really need to go for the cheapest physical they can...and be a bit more flexible on who makes it...or go from coins to bars. Paying high premiums just because you want a certain brand or bar size just means your money buys less ounces, which takes less ounces off the market.


Bron Suchecki


Good grief!! Soc Gen last week warned that gold was heading lower!!.
Now this:

(courtesy Cosgrave/CNBC/Edwards/SocGenerale)

Warning! Stocks to Crash, Gold to Top $10,000: Albert Edwards

Published: Thursday, 25 Apr 2013 | 7:59 AM ET
By: Jenny Cosgrave, Staff Writer

Gold prices will top $10,000 per ounce, the stock market will tank and Treasurys will yield less than 1 percent, Societe Generale's Albert Edwards forecast in a trademark bearish report on Thursday.
"My working experience of the last 30 years has convinced me that policymakers' efforts to manage the economic cycle have actually made things far more volatile… The current round of quantitative easing will be no different," said Edwards in a weekly strategy report.
"We have written previously, quoting Marc Faber, that 'The Fed Will Destroy the World' through their money printing. Rapid inflation surely beckons. But that will not occur without firstly a Japanese-style loss of confidence in policymakers as we dive back into recession and produce dislocative market moves."
n the note, Edwards said central banks' stimulus measures will drive the world towards global recession, soaring inflation and a "Japanese-style" loss of confidence in policymakers."We may have seen the peak of nominal U.S. GDP growth for this cycle. An unfolding recession should see 10-year bond yields dragged ever lower and the Fed moving to QE infinity (squared)," he said.
Edwards advised investors to take refuge in gold, and added that gold's current fall-off was still in sync with his ultra-bullish outlook on the precious metal.
"Gold corrected 47 percent from 1974-1976, before rising more than eight times to $887 per ounce in 1980. A steep correction is normal before the parabolic move…Holding gold is a bet against central banks competency and given their track record that is certainly a bet I'd be happy to still take," he said.
And for those who might think his outlook outlandish, Edwards had pithy advice.
"The late Margaret Thatcher had a strong view about consensus. She called it: 'The process of abandoning all beliefs, principles, values, and policies in search of something in which no one believes, but to which no one objects.' The same applies to most market forecasts," said Edwards.
"In that vein, we repeat our key forecasts of the S&P Composite to bottom around 450, accompanied by sub-1 percent U.S. 10-year yields and gold above $10,000."


Agnico Eagle earnings came in pretty good considering the lower gold price.
The Goldex mine will commence in the 4th quarter of 2013 and El India in the first quarter of 2013.

They will produce 1.2 million oz next year:

Agnico-Eagle reports first quarter 2013 operating and financial 

results - Goldex and La India expected to commence production


ahead of schedule

(All amounts expressed in U.S. dollars unless otherwise noted)
Stock Symbol:    AEM (NYSE and TSX)
TORONTOApril 25, 2013 /CNW/ - Agnico-Eagle Mines Limited (NYSE:AEM, TSX:AEM) ("Agnico-Eagle" or the "Company") today reported quarterly net income of $23.9 million, or $0.14 per share for the first quarter of 2013.  This result includes a non-cash foreign currency translation loss of $3.7 million ($0.02 per share), non-cash stock option expense of $11.2 million ($0.07 per share), non-cash impairment loss on available for sale securities of $11.0 million($0.06 per share) and other non-recurring expense of $3.9 million ($0.02 per share).  Excluding these items would result in adjusted net income of $53.6 million, or $0.31 per share.  In the first quarter of 2012, the Company reported net income of $78.5 million, or $0.46 per share.
First quarter 2013 cash provided by operating activities was $146.1 million ($134.5 million before changes in non-cash components of working capital), compared to cash provided by operating activities of $196.5 million in the first quarter of 2012 ($181.3 million before changes in non-cash components of working capital).
The lower net income and cash provided by operating activities in 2013 was primarily due to lower gold prices and production combined with higher cash costs when compared to the first quarter of 2012.
"This year is a building year for Agnico-Eagle as we prepare to bring two mines into production over the next several quarters.  In the first quarter, our operations performed in line with expectations and we remain on track to achieve our 2013 production guidance" said Sean Boyd, President and Chief Executive Officer. "We are also pleased to announce that the expected startups at Goldex and La India are ahead of schedule. Goldex is expected to commence production in the fourth quarter of 2013, while La India is scheduled to be in commercial production in the first quarter of 2014.  These two mines are expected to make a meaningful contribution to the growth profile of the Company", added Mr. Boyd.
Operating highlights include:
  • First quarter 2013 production and costs in line with expectations
  • Goldex initial production expected in fourth quarter 2013, ahead of schedule and on budget - Estimated to contribute approximately 15,000 ounces of gold in 2013
  • La India anticipated to start commissioning by year-end 2013, ahead of schedule - Construction proceeding well and on budget
  • Creston Mascota Phase Two leach pad now on line - leaching resumed at Creston Mascota in March 2013, approximately one month ahead of schedule
  • Record quarterly throughput at Meadowbank - the mill processed a record daily average of 11,320 tonnes during the first quarter.
  • Scheduled mill maintenance at Kittila expected to take longer than planned - relining of autoclave expected to be complete in late June.  Estimated production impact is approximately 10,000 - 15,000 fewer ounces of gold in 2013.
  • Total cash cost per ounce1 guidance for 2013 revised upward to reflect current commodity prices and exchange rates - expected 2013 total cash costs to be between $735 and $785 per ounce
Payable gold production2 in the first quarter of 2013 was 236,975 ounces compared to 254,955 ounces in the first quarter of 2012.   The lower level of production in the 2013 period was primarily due to the Creston Mascota heap leach being suspended during most of the quarter.  A description of the production and cost performance for each mine is set out further below.
Total cash costs for the first quarter of 2013 were $740 per ounce.  This compares with $594 per ounce in the first quarter of 2012.  The higher cost in 2013 was largely attributable to lower byproduct revenue at LaRonde, lower grades at Meadowbank and a lack of production from the lower cost Creston Mascota mine.
Agnico-Eagle's production guidance for 2013 remains unchanged at 970,000 to 1,010,000 ounces of gold, as the expected 15,000 ounce production from Goldex offsets anticipated production decrease at Kittila related to a longer than anticipated maintenance shutdown.  The Company's cash cost estimates have been revised to reflect the production changes at Goldex and Kittila, as well as changes in commodity and currency price assumptions since the beginning of 2013.  New and old input assumptions and a reconciliation of the total cash cost estimates are provided below:


And is commentary from Ross Norman over at the renowned Internet site that was posted there yesterday..

"There an oddity about GOLD at the moment with phenomenal physical demand in Asia, US and Europe, while the actual spot prices languishes. We have written before about the strange disconnect between paper and physical demand - with the former bearish yet the latter bullish - but rarely has there been such a clear divergence.
"Over the last few days on we have many run stories about this ... Dubai running short of physical, US Mint selling out of smaller denomination bars, coins and bars flying off the shelves in India and China and queues outside leading gold sellers such as Degussa in Germany. The effect has been a massive drawdown in physical metal which has, by and large, caught the gold refineries and some stockists by surprise. It seems that the current buying in Europe is a delayed response to the Cyprus crisis, prompted by the price correction.

"Quite evidently it has been the sharp sell off on the gold futures (COMEX) a week ago that precipitated the price decline and drew out the physical buyers. While there remains stock of the traded inter-market London 'good delivery' bars weighing in at 400 ounces each (with a purity of 99.5%+), these would set an investor back about $570,000 each. However, for investment sized bars the market is drying up rapidly. Amongst the coins, the maples and Krugerrand are moving fast with premiums having just doubled and now typically trading at about 8% over the spot price. Meanwhile the wait for new 0.9999 kilobars from the refineries (cost about $48,000 each) would entail a wait of over 1 month - there are however some modest stocks of second-hand kilobars.

"While much of the buying in Europe has centered on Germany and Switzerland, there are also encouraging signs of good interest from UK retail investors who seem to be awakening to the notion of having gold in their savings. Google searches for the keyword "gold price" is rising to near record levels confirming what we are seeing in the markets.
"So, what does this tell us about gold ? To us, this is firstly a clear signal that the price correction has sparked latent interest for those who have wanted to enter the market - the current price represents an excellent entry point. Secondly, the fact that investors are going for physical over paper gold extends the argument that investors are increasingly wary of financial institutions, just as they are of the debasement of currencies.

"In 2008 and 2010 the physical markets dried up and deliveries were extended out to about 2 or 3 months at the retail level - if the current buying persists there is every reason to expect a recurrence... or worse."  END


And now for the major paper stories that will have an influence on the price of gold and silver:

First  your early market sentiment which shaped the trading in NY:.

Overnight sentiment will come from zero hedge

Major points:

1. Overnight we did not have the usual USA/Yen ramp up as the yen increased in value slightly.

2.  However we did have the Euro/USA ramp which set most of European bourses higher

3. the Nikkei, on steroids rose .6%

4.  China, did not participate as the Shanghai composite down another .86%

5. The British pound rose above the 1.54 mark on news that it was going to avoid a triple dip recession with first quarter rising by .3%. (expectations were for a .1% rise. Last quarter's GDP (Q4) showed a loss of .3%)

6. Finland states that the Euro can survive if Cyprus leaves the Euro

7.  In Italy, major parties state that they will not support Letta, as Italy seems to falling into an abyss of a leaderless government.

8. Spain announced that last quarter's unemployment rose to a record high 27.2% from 26%. (expectations of unemployment 26.5%)

9 Spanish and Italian bonds yields rose higher by 10 basis points which certainly does not explain the higher Euro/USA ramp higher.

10.  Goldman Sachs reports on Britain's first quarter GDP preliminary flash report showing evasion of entering a triple dip recession

11. Jim Reid of Deutsche bank discusses the overnight figures and events to come

(courtesy, zero hedge/Goldman Sachs/Jim Reid Deutsche Bank with your overnight European/Asian overnight trading)

Overnight Ramp Driven By Higher EURUSD On Plethora Of Negative European News

Tyler Durden's picture

A peculiar trading session, in which the usual overnight futures levitation has not been led by the BOJ-inspired USDJPY rise (even as the Nikkei225 rose another 0.6% more than offset by the Shanghai Composite drop of 0.86%), which actually has slid all session briefly dipping under 99 moments ago, but by the EURUSD, which saw a bout of buying around 5 am Eastern, just after news hit that the UK would avoid a triple dip recession with Q1 GDP rising 0.3% versus expectations of a 0.1% rise, up from a -0.3% in Q4 (more in Goldman note below). Since the news that the BOE will likely delay engaging in more QE (just in time for the arrival of Carney) is hardly EUR positive we look at the other news hitting around that time, such as Finland saying that the euro can survive if Cyprus exits the Eurozone, and that Merkel has rejected standardized bank guarantees for the foreseeable future, and we are left scratching our heads what is the reason for the brief burst in the Euro.
Said scratching only gets stronger once we learned that Italy's left-wing Vendola, a former Bersani ally, and president of Apulia, said his party would not support a Letta coalition government, even as Berlusconi himself - the key support of a new government - said parliament backing for a new coalition is not granted, and that it is not important who leads the government but programs that are key, a development which is hardly stability positive.
The scratching gets even stronger once we consider that Spain just announced Q1 unemployment which rose to an even record-er high of 27.2%, up from 26.02%, and "beating" estimates of a 26.5% increase. This too does not strike us as very euro positive.
Finally, the scratching concludes in frustration, following the rise of Spanish and Italian 10 Year yields wider by 10 bps, which most certainly can not explain the move higher in the EURUSD, whose only purpose, we are left to conclude, is to ramp US futures as high as possible on today's disconnect from reality, and that today the DE Shaw ES-trading algos will be following EURUSD signals, while the USDJPY will be off.
Finally, gold is back, baby, and was trading just shy of $1450 at last check, $125 higher than the recent "shock and awe" plunge lows.
Various other highlights, in bulletin format courtesy of Bloomberg:
  • Japan investors are net sellers of overseas debt a sixth straight week through April 19, MOF data shows today, the longest streak since Jan. 2010.
  • Central banks, guardians of the world’s $11t in forex reserves, are buying stocks in record amounts as falling bond yields push even risk-averse investors toward equities
  • Spanish unemployment rose to 27.2%, more than forecast, the highest in at least 37 years
  • Silvio Berlusconi, the three-time prime minister and two-time convicted lawbreaker, won a path back to power in Italy by outmaneuvering rivals during an eight-week political stalemate
  • The yuan climbed to a 19-year high as the central bank set a record reference rate amid growing usage of the currency for worldwide trade and investment
  • BofAML Corporate Master Index OAS holds at 147bps; $16.55b priced yesterday. Markit IG narrows to 80bps from 81bps, YTD low 78bps. High Yield Master II OAS narrows to 466 from 471bps; $600m priced yesterday. CDX High Yield rises to 104.89 from 104.73
  • Global sovereign yields mostly higher, led by U.K. and Italy; EU sovereign spreads to Germany widen
  • Nikkei +0.6%; other Asian stock markets mixed, with Shanghai down 0.9%. European equity markets decline U.S. index futures gain. Energy futures, gold, copper gain
For those curious, here is Goldman's take on the UK's last minute "triple-dip" evasion.
Bottom line: According to the ONS's preliminary estimate, UK GDP rose 0.3% qoq (+0.6% yoy, +1.2% qoq annl.), stronger than consensus expectation of a lower rise (Cons:+0.1% qoq, GS:+0.2% qoq). This was primarily driven by strong services sector output, which rose 0.6% qoq and contributed +0.47ppt to qoq growth.

1. The Q1 GDP reading of +0.3% qoq was 0.2ppt above the consensus estimate of a +0.1% qoq rise, and 0.1ppt above our forecast of +0.2% qoq growth. The estimates of economists surveyed by Bloomberg ranged from -0.3% qoq to +0.3% qoq, which reflects the significant uncertainty over the preliminary estimate of GDP. The ONS noted that the preliminary estimate is based on around 44% of the total information that will compromise the final output based GDP data. Consistent with this, the average absolute revision to the preliminary GDP estimate in the ten years to 2010 was +/-0.43ppts.

2. The sectoral breakdown shows a +0.6% qoq rise in services output, which contributed +0.47ppt to qoq growth (Table 1). This was offset slightly by a 2.5% qoq fall in construction output, which reduced headline growth by 0.17ppts. Production rose 0.2% qoq, contributing +0.03ppt to growth. Within this figure, mining and quarrying rose 3.2% qoq, as the maintenance which reduced oil and gas output in Q4 was reversed. Agricultural output fell 3.7% qoq, contributing -0.02ppt to qoq growth.

3. The ONS noted that the snowfall and cold weather during Q1 appears to have had a limited impact on growth. While retail sales in January and March seem to have been negatively affected, this was offset by higher demand for electricity and gas during February and March.

4. As part of the preliminary estimate, the ONS estimates industrial production and service sector output for March using early survey responses. The ONS estimates that industrial production rose 0.3% qoq in March, while service sector output edged up 0.1% qoq.

5. There were minimal revisions to previous quarters. The most notable was an upward revision of Q4 2011 from -0.3% qoq to -0.1% qoq. In time we expect further upward revisions to GDP growth such that the 'double dip' seen between Q4 2011 and Q2 2012 is revised away (Q1 2012 GDP growth is currently estimated at -0.07% qoq).
DB's Jim Reid recaps the balance of news:

We've been discussing how the artificially low default world (a theme of last week's annual default study) looks set to be re-inforced by Japanese QE. Global fixed income has just got a new and large marginal buyer and one which may actually force other regions to either commence QE (Europe at some point in the medium-term future?) or continue with it for longer. Indeed we think that if and when the FED do stop QE it may actually lead to a sharper appreciation of the Dollar which may not be welcome and thus might increase the chance of QE returning again in the US. So we feel that Japan has likely extended the life of Global QE (via a slow currency war) rather than accelerated its demise. For credit this means the technicals are likely to remain strong and defaults stay lower for longer. On the negative side this continues to interfere with the creative destruction forces that tend to be good for longer-term growth and instead locks in a sub-optimum allocation of resources in many developed economies. So lower defaults but lower trend growth. Its not a survival of the fittest world.
Right back to markets it was more of the same for European equities (DAX +1.32%, IBEX +1.21%) as hopes of an ECB easing continue to build along with further data weakness. Yesterday’s disappointing German IFO surveys, which dovetails the PMI weakness the day before, added further support to this theme. Recent negative readings for Germany are difficult to ignore and our European economists are now calling for a 25bps rate cut by the ECB next week (2nd May).
The Q1 Euro area Bank Lending Survey noted modestly improved lending standards (although demand for credit remains low), which led our European economists to think that a rate cut might be more appropriate than a new unconventional policy at this point.
The data flow on the other side of the Atlantic was also far from being spectacular. Durable goods orders in March were disappointing, with the headline reading falling more than expected (-5.7% v -3.0%). Ex-transports and the core reading also came below market consensus. The effects of sequestration is starting to be felt with new orders for defence goods down 29.3% in March, leaving the nominal defence spending amount at its lowest level since January 2006. For markets the price action in equities was uninspiring. The S&P 500 closed the day virtually where it started (at 1579) although we note that Gold is catching a bid after the woeful sell-off last week. The precious metal is now up 9% from the recent intraday lows of $1322/oz. Gold coin sales by the US Mint are reportedly at a 3- year high as the recent price moves have sparked an interest in physical holdings.
At the micro level, 48 S&P 500 companies reported yesterday with 36 of them beating EPS expectations. Top line performance remains sluggish at best with only half of those beating estimates. So the broad theme of top line underperformance in the US remains. European numbers were much worse yesterday as revenue and EPS beat:miss ratios were very weak at 36%:64% and 46%:54%, respectively.
Overnight we are seeing Asian equity markets generally in the green across the region, except for China. The Nikkei, KOSPI and the Hang Seng are up +0.3%, +0.5% and +0.6% as we type. Korea’s GDP came in better-than expected which is perhaps adding some support. The Shanghai Composite (-0.4%) is led lower by banks and developers. Taiwan yesterday confirmed its first H7N9 Avian flu infection. In credit markets, Korea sovereign CDS has recovered from its recent widening and is now back to flat against China’s sovereign at 73bp for the 5-year.
The UST 10-year is holding steady overnight at 1.706%. In fact yields have barely budged this week despite a 1.5% rally in the S&P 500.
Back to Europe, the center-left politician Enrico Letta was nominated by the President to be Italy’s next prime minister. Letta said he would start talks to form a broad-based coalition on today and it is likely to go to parliament for a vote of confidence by early next week. Reuters noted that the PM designate is expected to select a group of ministers, likely to be a mixture of politicians and technocrats. The new government will be backed primarily by Letta's center-left and the centerright PDL party led by Berlusconi.
Away from Italy, Fitch yesterday downgraded Bank of England’s credit rating to AA+/Stable from AAA. This follows on from its downgrade of the sovereign rating last week.
Indeed today’s Q1 UK GDP will be a notable release in Europe. Bloomberg poll is suggesting a +0.1%/+0.4% qoq/yoy rise versus -0.3%/+0.2% in the previous quarter. Spanish unemployment number for Q1 is also due today and the market is expecting a further nudge up to 26.50% from 26.02% in Q4 last year. In the US, initial jobless claims will be the key print to watch. Reporting wise we have 59 S&P 500 and 29 Stoxx600 companies lined up today.


And the Spanish ibex roars ahead????

Spanish unemployment levels now above 27%

(courtesy Bloomberg)

Spain Jobless Rate Breaches 27% on Recession Woes

Pablo Blazquez Dominguez/Getty Images

Spanish unemployment rose more than economists forecast in the first quarter to the highest in at least 37 years as efforts to tackle the European Union’s biggest budget deficit crimped economic growth.
The number of jobless rose to more than 6 million for the first time, climbing to 27.2 percent of the workforce, compared with 26.02 percent in the previous three months, the National Statistics Institute in Madrid said today. Photographer: David Ramos Vidal/Bloomberg
April 25 (Bloomberg) -- Robert-Jan van de Kraats, chief financial officer of Dutch staffing company Randstad Holding NV, discusses first-quarter profit reported today and the European and U.S. job markets. He speaks from Diemen, the Netherlands, with Mark Barton and Anna Edwards on Bloomberg Television's "Countdown." (Source: Bloomberg)
The number of jobless increased to more than 6 million for the first time, climbing to 27.2 percent of the workforce, compared with 26.02 percent in the previous three months, the National Statistics Institute in Madrid said today. That was more than the 26.5 percent median forecast of eight economists surveyed byBloomberg News.
Prime Minister Mariano Rajoy will tomorrow unveil measures aimed at halting a six-year economic slump. Spain’s recessiondragged into a seventh quarter in the first three months of 2013, leaving the country with more than a fifth of all jobless people in the EU.
“The pace of the increase is surprising given we were supposed to be in a softer phase of the recession,” Ricardo Santos, a euro region economist at BNP Paribas SA in London, said in a telephone interview. “We could now end the year at 28 percent unemployment and we may see a downward revision of first-quarter growth.”

Growth Forecasts

Rajoy has said the contraction in 2013 may be larger than his current forecast for a 0.5 percent slump after the deficit widened to 10.6 percent of gross domestic product last year. The government had projected in September that unemployment would fall to 24.3 percent this year from 24.6 percent in 2012.
The Bank of Spain estimated this week that output contracted 0.5 percent in the first three months of the year after a 0.8 percent drop in the previous quarter.
Unemployment in Spain, the euro region’s fourth-largest economy, has now topped the 27 percent prediction the International Monetary Fund last week made for the full year as it cut its growth forecast to a 1.6 percent contraction from 1.5 percent.
“In Spain, despite significant progress in 2012, there are still excessive macroeconomic imbalances,” European Union Economic and Monetary Affairs Commissioner Olli Rehn told a European Parliament committee in Brussels today. “Very high unemployment and excessively tight financing conditions have exposed the vulnerabilities represented by those imbalances.”

Franco Death

The jobless number is the highest since at least 1976, the year after dictator Francisco Franco’s death heralded Spain’s transition to democracy. Spain’s fourth-largest builder, Fomento de Construcciones & Contratas, may fire 9.7 percent of its 1,500 garbage collectors amid slower activity, Europa Press reported this month. FCC is already negotiating with labor unions to eliminate 17.5 percent of jobs in its construction unit.
The number of households in which all the active members are out of work increased by 72,400 in the first quarter to 1.9 million, INE said. That is 177,700 more than a year ago, it said.
As public administrations stepped up firings in the education and health sectors to reduce their deficits, the number of people they employed fell to 2.85 million in the first quarter from 2.92 million at the end of 2012, INE data show. Employment in the private sector fell to 13.6 million people from 13.9 million a quarter earlier.

No Improvement

“There is no real sign of a fundamental improvement in Spain’s underlying economic performance,” Jonathan Loynes, chief European economist at Capital Economics Ltd. in London, said in a telephone interview. “If anything, things look worse now than they did when bond yields rose to dangerously high levels last summer.”
The yield on Spain’s 10-year bonds climbed 8 basis points to 4.36 percent as of 12:36 p.m. Madrid time, after dropping as low as 4.22 percent yesterday, the least since November 2011. That compares with a euro-era high of 7.75 percent in July, before European Central Bank President Mario Draghi pledged to “do what it takes” to hold the euro together.
Spain’s leading stock market index IBEX 35 fell 1.3 percent after the nation’s biggest bank, Banco Santander SA, said first- quarter profit fell 26 percent, missing analysts’ estimates, as lending revenue in its home market dropped.
Comments by a German Finance Ministry official yesterday suggested a softening of Chancellor Angela Merkel’s austerity- first policy, after European Commission President Jose Barroso said the path of austerity has reached its limits.
Rajoy is hoping to convince investors and EU peers that the country may return to growth next year and eventually stop a surge in its public debt load if the European Commission agrees to ease Spain’s deficit targets next month.
European policy makers gathering in Washington last week for the World Bank and IMF’s spring meetings said they were conscious of the danger after IMF Managing Director Christine Lagardewarned against “up-front, heavily loaded fiscal consolidation.”
To contact the reporter on this story: Angeline Benoit in Madrid at
To contact the editor responsible for this story: Craig Stirling at


The following commentary is very important as it outlines the real risk that will be facing ALL of European banks.

Basically, Monte di Paschi's 4 billion euro bailout earlier this year is nothing but a margin call by the underwriter banks, Nomura and Deutsche Bank, of  derivative bets as Monte di Paschi was the counterparty to both bets.

Monte di Paschi bought Italian bonds and covered the bet with credit default swaps.  The problem was the value of the bonds plummeted faster than the credit default swap rose.

They received 4 billion rescue funds from the ECB through the Central Bank of Italy:

(courtesy zero hedge)

Italy's Monte Paschi Got A Sovereign Bailout To Avoid Being Corzined

Tyler Durden's picture

Those who think back to November 2011 will recall that it wasn't Jon Corzine's wrong way bet on Italian bonds that ultimately led to the bankruptcy of MF Global, well it did in part, but the real Chapter 11 cause was the sudden liquidity shortage due to the way the trades were structured as a Repo To Maturity, where the bank had hoped to collect the carry from the bond coupons, thereby offsetting the nominal repo cost of funding. The kind of deal which is the very definition of collecting pennies in front of a steamroller, as while the funding cost may be tiny and the capital allocated negligible (due to the nearly infinite implied leverage involved when using repo), when the underlying instrument crashes, and the originating counterparty has to fund a massive variation margin shortfall, that is when the shadow transformation cascade triggers an immediate liquidity crisis, which can result in liquidation cascade in a few brief hours. It happened with MF Global, it happened with Lehman too.
And, we now learn, it also happened with Italy's most troubled and oldest bank, Monte Paschi (BMPS), whose endless bailouts, political intrigue, depoit runs, and cooked books have all been covered extensively here previously.
Only unlike MF Global and Lehman, the Italian government came to the rescue of BMPS for one simple reason: a failure of one bank would have set off a chain of depositor-running dominoes that would have destroyed the Italian banking system, and likely led to a Europe-wide panic, leading to the collapse of the Eurozone.
As it turns out, it was precisely a repo (term repo to be precisely) that is what led to the most recent Monte Paschi bailout. Reuters reports:
Monte dei Paschi had to put up more than 2.8 billion euros ($3.65 billion) by way of collateral for two loss-making derivatives trades at the center of an investigation of alleged fraud at Italy's third-biggest lender.

The Tuscan bank said in a statement on Wednesday that it had provided collateral of 1.871 billion euros at the end of March for the derivative deal known as "Alexandria" with Japanese bank Nomura.

The bank also said it had put up a collateral of 939.1 million euros linked to the "Santorini" deal signed in 2008 with Deutsche Bank.
In other words virtually the entire (most recent) $4 billion Italian bailout of Monte Paschi was merely to satisfy the bank's margin calls with Nomura and Deutsche Bank. Net result: taxpayers end up funding obligations that BMPS had made long ago, yet which cash immediately left Italy and was promptly wired to offshore accounts of the German and Japanese banks. Yes, it may come back one day when the variation margin swings back the other way, but most likely it won't.
So what exactly did Monte Paschi purchase using the repo funding? Why the very same instrument that took down MF Global - Italian bonds.
Under the risky deals at the heart of the probe, Monte dei Paschi funded its investment in long-term Italian government bonds through long-term repurchase agreements with Nomura and Deutsche Bank.

In a repurchase, or repo, agreement, a company uses assets as collateral to raise funds and pledges to buy the assets back for a pre-agreed price at a later date.

But as the value of the bonds guaranteeing the loans fell because of the euro zone crisis, the bets backfired and Monte dei Paschi was forced to put up more collateral with both banks.
What is, however, hilarious, and what proves just how clueless almost everyone is about the true nature of the virtually unlimited in their leverage transactions (and needing zero initial capital, and in the case of government bonds - zero initial margin as well) taking place in the shadow economy such as repo, is that Siena prosecutors were so confused about who owned the underlying assets, they ordered the seizure of €1.95 billion in assets from Nomura, which were in fact assets belonging to the Japanese bank in lieu of the unsatisfied variation margin.
In other words, the Italian prosecutors nearly confiscated assets belonging to another bank just to distract from the epic financial crimes going on at the very much insolvent bank founded and operating in their city. Of course, in retrospect they were merely completely clueless and did whatever Monte Paschi' lawyers told them to do. After all, the number of people who truly understand the accounting of repo in the entire world can be counted on one or two hands.
Furthermore, not helping matters is that the guidelines for repo accounting in FAS 140 actually contradict themselves! Recall, from Matt King's "Are The Brokers Broken" when explaining the mechanics of "borrowed versus pledged" transactions:
Quite apart from the fact that FAS 140 contradicts itself (with paragraph 15 (d) making borrowed versus pledged transactions off balance sheet, and paragraph 94 making them on balance sheet, a topic complained about by many broker-dealers immediately  after its issue), there seems to be little consensus as to who is the borrower and who is the lender. As far as we can tell, terms like ‘borrower’ and ‘lender’ are used in exactly the opposite sense in the accounting regulations relative to standard market practice. The description above follows common market practice. The accounting documents seem to refer to this the other way around, a source of confusion commented upon in some of the accounting literature.
What makes things very scary is that the main reason to use repo is to avoid putting down cash or pledging assets in the form of a conventional loan. And since all of Europe is now asset strapped, virtually every insolvent banking system, be it Italy's or Spain's is now entirely reliant on repo: in short every single European bank is one massive MF Global-type blow up just waiting to happen.
And with peripheral European banks using repo to buy up as much sovereign bonds as they can, one thing is assured: once sovereign bond yields start blowing out, the liquidating cascade will commence, as margin call after margin call saps the collateral counterparty chain of any excess liquidity, forcing the ECB to finally not only use the OMT, but since the OMT is one big mirage which doesn't exist from a legal standpoint, to directly inject cash into countless banks: a move which Germany will just love.
However, for now why worry?
After all the BOJ's massive QE came just at the right time to find the next big marginal buyer of peripheral debt alongside domestic PIIGS banks (most likely just as the capacity for repo was about to be maxed out). The immediate result has been the epic and near record in many instances, tightening of peripheral spreads. Alas, they can only go to zero, before someone sells. And then someone else sells, and the carry trade unwinds.
Sadly, the last in this unwind chain will be the suddenly once again very much insolvent Italian and Spanish banks who will then have to once more get full taxpayer defaults while waving the Mutual Assured Destruction card.
The only question is when. However, if Abenomics does indeed suffer an early death due to program failure or whatever other reason, that will be the time to bolt the hatches and lower the periscope as the marginal buyer of European toxic hazard will be gone, and the European banks will have no choice but to dump it all, finally setting off the endspiel of the European crisis.

Slovenia will be next:

(courtesy Reuters)

Slovenian Banks Need $1.2 Billion by July 31, May Require More

Slovenian banks including Nova Ljubljanska Banka d.d and Nova Kreditna Banka Maribor d.d.will need a capital injection of at least 900 million euros ($1.2 billion) by the end of July as the government works to fix the banking industry without seeking outside aid.
The government of Prime Minister Alenka Bratusek, in power for five weeks, included a list of priorities in a draft document posted yesterday on the website of the parliament in Ljubljana. It said the plan will be sent to European officials by May 9.
“We don’t have the final cost of the bank recapitalization, but we estimate banks need to be recapitalized by July 31 with 900 million euros,” the government said in the draft. Lenders may need more, depending on how the Slovenian economy develops and how much money will be transfered to a bad bank currently being set up, it said.
The Adriatic nation, the first post-communist country to adopt the euro in 2007, is struggling to avoid asking for outside assistance after its bond yields advanced to record levels earlier this month on concern over its faltering banking industry. The three top banks, NLB, Nova Kreditna and Abanka Vipa (ABKN) d.d. need 2 billion euros of fresh capital, Fitch Ratings said April 5.
In addition to any capital injection, the government plans to exchange bad loans for as much as 4 billion euros of state- guaranteed bonds.
The government also said it would sell some state assets that it didn’t identify and create a state-asset holding company to improve management, the documents show.
Slovenia, rated Baa2 at Moody’s Investors Service, is carrying out a roadshow in the U.S. to check investor interest for another debt sale as it seeks to aid banks and finance the budget. The country last tapped into the U.S. market in October, when it sold $2.25 billion of notes on increased investor interest.
Bratusek said she would continue cutting the budget deficit, according to the document. Slovenia’s budget gap narrowed to 4 percent of GDP in 2012 from 6.4 percent a year earlier.
To contact the reporter on this story: Boris Cerni in Ljubljana at

Will there be an invasion on Syria?:

(courtesy zero hedge/Strafor)

Syrian "Incursion" Imminent? Hints From Current US Naval Positions

Tyler Durden's picture

Following the dramatic change in rhetoric from Washington over the past 24 hours regarding Syrian "Weapons of Chemical Destruction", the phrases "Middle East" and "geopolitical risk" are suddenly back in the same sentence on the lips of those sitting around trading desks, leading to a powerful jump in the oil complex where Brent is having its best day in four months, and WTI in give.
Yet the feasibility of an armed conflict with Syria, which Russia has made very clear in the past is a strategic ally in the region aside, is the probability of an incursion truly imminent? For that we go to Stratfor's latest weekly update of US naval assets, which shows that if indeed Obama is planning to do a flyover showing off his Nobel Peace prize above Damascus, there will be a waiting time of at least several weeks as there is nothing in the immediate Syrian offshore vicinity to provide the necessary naval support.
It appears that the 5th Fleet only has CVN-69 Eisenhower in the vicinity of Bahrain, as well as one big deck amphibious ship, the Kearsarge keeping an eye on the Straits of Hormuz. Assuming both ships are tasked to supervise any missions involving Syria that would leave Iran and the Straits of Hormuz unguarded, which is why we doubt this would happen. In fact, it is more likely that CVN 75 and 77, which are currently under way in the Atlantic, will be redirected to the east Mediterranean to provide the necessary air cover should operation "Liberating the Syrian Al-Qaeda funded Rebellion" be a go.
Perhaps as interesting is the positioning of LHA 5 and LHD 6 in the East China Sea, just off the China/Japan disputed island chain, where things are just as sensitive as they are in the middle east and where neither side is willing to back down.
Source: Stratfor


The German court late this afternoon said no to OMT:

we wish, Italy, Spain, Ireland, Portugal and Greece all the best:

(courtesy zero hedge)

Just Say Nein: Bundesbank Rejects OMT (Again)

Tyler Durden's picture

The last few minutes have seen markets taking a decidedly negative stance. Led by FX carry, risk-assets in general are rolling over. Some attributed it to Bernanke waking the devil from his slumber: 
but it appears that the decision of Germany's Top court is the market-moving event:
Instantaneously EUR is tumbling, financials are dropping, and the 'promise' of Draghi's tail-risk killer is perhaps being removed. Remember, the high court is due to vote in June on whether the ESM is constitutional under German law and this rejection of 'OMT' leaves that decision much more in limbo than the market was expecting.

Via Bloomberg:
German Bundesbank comments on the ECB’s bond-purchase program in a confidential opinion prepared for German constitutional court, Handelsblatt reports in an pre-release of an article to be published tomorrow.

  • Bundesbank rejects potential sovereign bond purchases because they would constitute “targeted” acquisitions of securities of “worse credit standards” and increase risks for the central bank: Handelsblatt
  • Bundesbank says outright monetary transactions could undermine independence of central banks
  • Bundesbank doubts that strong conditionality will be imposed on countries in exchange for aid
  • Bundesbank says the Greek experience “is reason for concern that the handling of conditionality within the framework of the OMT rogram, even in questionable cases, won’t protect against significant purchases and thereby against a redistribution of risks across the balance sheets of the Eurosystem”
  • Bundesbank says diverging borrowing costs for companies in different countries  may reflect different fiscal risks of sovereign
NOTE: German constitutional court announced it will examine ECB bond-purchase program
Of course, Draghi can just say 'Yes' to this 'Nein' but the points the court raises for the BuBa are hard to argue with...


Your afternoon sermon courtesy of Mark Grant:

(Mark Grant)

The Spins Of The Fathers

Tyler Durden's picture

Submitted by Mark Grant, author of Out of the Box,
A Dali Landscape

Imagine that you are walking through a Salvador Dali painting.Everything is disjointed, tilted and mangled. The clocks are dripping, the colors are ravishing and the trek is difficult as disorientation precedes each step.

In the financial world at present the markets are fueled by the liquidity of the central banks. Not only is nothing else of importance but good news becomes the joyful noise of some divinity, bad news is elevated to good news and horrible news brings ecstasy as it will enlarge the contributions of Mr. Bernanke and Mr. Draghi.

The various economies are irrelevant. Growth is insignificant. Debt levels are made up and then ignored. The growing stockpile of small bits of pulp mixed with water is all that matters as we stumble along in our Paper Mache world.

Now I do not argue with reality. Equities up, bond compression unrelenting, yields down and we play the Great Game to win and not to be right. Yet I am aware, I am always aware, that reality is lurking in the swirling mists. There is nothing that separates us from chaos except the unrelenting supply of money because the underlying economies in America and especially in Europe cannot support these kinds of markets. Even in Germany, who reports a debt to GDP ratio of 81% while the real number exceeds 200%; the storm clouds are gathering.

The next barrage will be fired soon by Mr. Draghi. It will be a cut in interest rates that will cause the next heretical dance but it will be short lived I fear. Markets up, the Euro down and right at Kelvin’s Absolute Zero will be the temperature reading. There is not a normal in sight. Not the old normal or the new normal or any sort of normal; just the Fed and the ECB with their fingers in the dike.

It is the land of easy money. Heaps of it more than just before the 2008/2009 debacle! That last go round was money provided by the private banks. This go round is provided by the central banks. The last time leverage was in play. This time the capital is minted by creation. Easy money though, always leads to serious mistakes as it gets shoved into inappropriate places.

Yields may be down for sovereign debt in Europe but debt levels are up as every country on the Continent has entered the sinkhole. Mandated debt levels are now being ignored as exemplified by Spain with a 10.6% ratio as ever more debt is added which must be serviced as the total amount of debt cannot be paid regardless of the interest rate.

We live in a world where everything is ignored but the time will come when this ignorance will be shattered. We will pay the price for our stupidity because there is always a price to be paid. Mr. Bernanke and Mr. Draghi have been the Saviors but the church has been built on thin air and the weight of the building is increasing and increasing at an alarming rate. This kind of normal is unsustainable.

The lessons of the past are being ignored once again but I caution you to not forget what you have learned.

Early Thursday morning currency crosses;  (8 am)

Thursday morning we  see good euro strength against the dollar from the close on Tuesday  with this time trading well above the  1.30 mark at 1.3073. . The yen this  morning  continues with its bleeding  against  the dollar for now,  trading above the 99 column early in the session  at  99.142 yen to the dollar.  . The pound, this morning is a lot stronger against the USA dollar, breaking the 1.53 barrier and entering into the 1.54 column at 1.5450 . The Canadian dollar is a bit stronger  against the dollar at 1.0227.   We have the sentiment this morning with a  risk on situation with most European  bourses are all in the green.   The Nikkei exchange finished strongly in the green on the day  as  it is still pumped up on steroids with the massive QE announced.  Gold and silver are up  in the early morning, with gold trading at $1445.40 (up $22.00 )  and silver is at $23.24 up 41 cents in early morning European trading.

The USA index is down 41 cents at 82.51.

Euro/USA    1.3073  up  .0059
USA/yen  99.142  down .377
GBP/USA     1.5450 up .0180
USA/Can      1.0227 down .0025


And now your closing Spanish 10 year bond yield: (flat in yield)

(excess USA, and Japanese funds are finding their way into Spanish and Italian bonds driving down their yield)


As of 11:59:00 ET on 04/25/2013.


Your Italian 10 year bond yield;  (rise in yield of .05)

taly Govt Bonds 10 Year Gross Yield


4.060.05 1.27%
As of 12:01:00 ET on 04/25/2013.


The Euro remained fell badly throughout the afternoon closing at 1.3012 .  The yen also remained constant in the afternoon closing at 99.58.  The pound slightly weakened this afternoon after its huge advance earlier in the morning, closing  at 1.5435.  The Canadian dollar firmed up a bit this afternoon  against the dollar closing at 1.0202.

The USA index fell  from the morning session with the final index number down 16 cents to 82.76

Euro/USA    1.3012 down  .0001
USA/Yen  99.28    down .245
GBP/USA     1.5435  up .0165
USA/Can      1.0202  down .0050


Your closing figures from Europe today. 

i) England/FTSE up 10.83  points   or 0.17%  

ii) Paris/CAC down 2.47 or 0.06% 
iii) German DAX:  up 73.83 or 0.95%
iv) Spanish ibex down 24.20 points  or 0.29%

v) Italian bourse (MIB) up  86.32  points or 0.52%

and the Dow up 24.50 (0.21%)  


And now for some USA news:

If you believe in the figures, the BLS released the jobless numbers today:

(courtesy zero hedge)

Initial Claims Better Than Expected, Down 16K From Upward Revised Prior

Tyler Durden's picture

Any hopes that the S&P would hit a new all time high on horrible initial claims data may have been dashed following a report that initial claims for unemployment insurance dropped from an upward revised 355K (was 352K) to 339K, better than the expected 350K, and down to a nearly fresh five year low. It was unclear immediately following the report which states were estimated if any: as a reminder last week the DOL announced that 2 states had their data estimated. Continuing claims dropped from an upward revised 3093K to 3000K, the lowest in 5 years. Of course, with millions of people now prematurely out of the labor participation rate, what if any data the initial claims report provides these days, is very much unclear.
Looking at the week ago, we find that the states with the biggest changes up and down in claims were NY and California:
  • NY -14,113:  Fewer layoffs in the transportation, educational services, and food service industries.
  • CA +24,303: Layoffs in the service industry.
Finally, extended claims in the form of EUC, have finally seen their weekly wild gyrating oscillations quiet down.
Source: DOL


I will leave you with this commentary from Michael Snyder:

(courtesy Michael Snyder)

Child Hunger Is Exploding In Greece – And 14 Signs That It Is Starting To Happen In America Too

Tyler Durden's picture

Submitted by Michael Snyder of The Economic Collapse blog,
The world is heading into a horrific economic nightmare, and an inordinate amount of the suffering is going to fall on innocent children.  If you want to get an idea of what America is going to look like in the not too distant future, just check out what is happening in Greece.  At this point, Greece is experiencing a full-blown economic depression.  As I have written about previously, the unemployment rate in Greece has now risen to 27 percent, which is much higher than the peak unemployment rate that the U.S. economy experienced during the Great Depression of the 1930s.  And as you will read about below, child hunger is absolutely exploding in Greece right now.  Some families are literally trying to survive on pasta and ketchup.  But don't think for a moment that it can't happen here.
Sadly, the truth is that child hunger is already rising very rapidly in our poverty-stricken cities.  Never before have we had so many Americans unable to take care of themselves.  Food stamp enrollment and child homelessness have soared to brand new all-time records, and there are actually thousands of Americans that are so poor that they live in tunnels underneath our cities.  But for millions of other Americans, the suffering is not quite so dramatic.  Instead, they just watch their hopes and their dreams slowly slip away as they struggle to find a way to make it from month to month.  There are millions of parents that lead lives that are filled with constant stress and anxiety as they try to figure out how to provide the basics for their children.  How do you tell a child that you can't give them any dinner even though you have been trying as hard as you can?  What many families go through on a regular basis is absolutely heartbreaking.
Unfortunately, more poor families slip through the cracks with each passing day, and these are supposedly times in which we are experiencing an "economic recovery".  So what are things going to look like when the next major economic downturn strikes?
A recent New York Times article detailed the horrifying child hunger that we are witnessing in Greece right now.  At some schools there are reports of children actually begging for food from their classmates...
As an elementary school principal, Leonidas Nikas is used to seeing children play, laugh and dream about the future. But recently he has seen something altogether different, something he thought was impossible in Greece: children picking through school trash cans for food; needy youngsters asking playmates for leftovers; and an 11-year-old boy, Pantelis Petrakis, bent over with hunger pains.
“He had eaten almost nothing at home,” Mr. Nikas said, sitting in his cramped school office near the port of Piraeus, a working-class suburb of Athens, as the sound of a jump rope skittered across the playground. He confronted Pantelis’s parents, who were ashamed and embarrassed but admitted that they had not been able to find work for months. Their savings were gone, and they were living on rations of pasta and ketchup.
Could you imagine that happening to your children or your grandchildren?
Don't think that it can't happen.  Just a few years ago the Greek middle class was vibrant and thriving.
And we are starting to see hunger explode in other European countries as well.  For example, in the UK the number of people receiving emergency food rations has increased by 170 percentover the past year.
This is one of the reasons why I get upset when people say that "things are getting better".  Yes, the stock market has been setting record highs lately, but things are most definitely not getting better.
Even during this false bubble of debt-fueled economic stability that we are enjoying right now, we continue to see hunger and poverty rise dramatically in America.
Since Barack Obama has been president, the number of Americans on food stamps has grown from 32 million to more than 47 million.
Will we all be on food stamps eventually?
Will we all become dependent on the government for our survival at some point?
According to the Boston Herald, even Tamerlan Tsarnaev was receiving government welfare benefits...
Marathon bombings mastermind Tamerlan Tsarnaev was living on taxpayer-funded state welfare benefits even as he was delving deep into the world of radical anti-American Islamism, the Herald has learned.

State officials confirmed last night that Tsarnaev, slain in a raging gun battle with police last Friday, was receiving benefits along with his wife, Katherine Russell Tsarnaev, and their 3-year-old daughter. The state’s Executive Office of Health and Human Services said those benefits ended in 2012 when the couple stopped meeting income eligibility limits.
Isn't that crazy?
And yes, there are some people out there that are abusing the system.  In fact, the cost of food stamp fraud has risen sharply to approximately $750 million in recent years.
But most of the people on these programs really need the help.  Thanks to our incredibly foolish economic policies, there are not enough good jobs for everyone and there never will be again.  The percentage of Americans that are unable to take care of themselves is going to continue to rise, and the suffering that we are witnessing right now is going to get much, much worse.
Not that things aren't really, really bad already.  Here are some signs that child hunger in America has already started to explode...
#1 Today, approximately 17 million children in the United States are facing food insecurity.  In other words, that means that "one in four children in the country is living without consistent access to enough nutritious food to live a healthy life."
#2 We are told that we live in the "wealthiest nation" on the planet, and yet more than one out of every four children in the United States is enrolled in the food stamp program.
#3 The average food stamp benefit breaks down to approximately $4 per person per day.
#4 It is being projected that approximately 50 percent of all U.S. children will be on food stamps before they reach the age of 18.
#5 It may be hard to believe, but approximately 57 percent of all children in the United States are currently living in homes that are either considered to be either "low income" or impoverished.
#6 The number of children living on $2.00 a day or less in the United States has grown to 2.8 million.  That number has increased by 130 percent since 1996.
#7 According to Feeding America, "households with children reported food insecurity at a significantly higher rate than those without children, 20.6 percent compared to 12.2 percent".
#8 According to a Feeding America hunger study, more than 37 million Americans are now being served by food pantries and soup kitchens.
#9 For the first time ever, more than a million public school students in the United States are homeless.  That number has risen by 57 percent since the 2006-2007 school year.
#10 Approximately 20 million U.S. children rely on school meal programs to keep from going hungry.
#11 One university study estimates that child poverty costs the U.S. economy 500 billion dollars each year.
#12 In Miami, 45 percent of all children are living in poverty.
#13 In Cleveland, more than 50 percent of all children are living in poverty.
#14 According to a recently released report, 60 percent of all children in the city of Detroit are living in poverty.
For many more facts about the dramatic explosion of poverty in this country, please see my previous article entitled "21 Statistics About The Explosive Growth Of Poverty In America That Everyone Should Know".
Unfortunately, most of the time statistics don't really tell the whole story.  Numbers alone cannot really communicate the soul-crushing despair that millions of American families are enduring on a daily basis at this point.
How can numbers communicate the pain that a child feels when her grandmother does not eat because there is not enough food for everyone in the family?  But this is what some families in America actually go through because there is not enough money...
Vanyshia tells about the sacrifices her Grandmother makes so that she and her siblings can eat. “Sometimes my Grandma can’t even eat because she has to feed me and my brother and sister. Sometimes I don’t eat as much as I want to because I leave some for my Grandma because I don’t want her to sit there and starve. Sometimes she doesn’t have enough money to buy food, so she has to go to the bank and borrow money. It makes me feel sad. I don’t want her to be hungry. I just feel sad sometimes,” says Vanyshia.
Things can be particularly tough when you are a single parent.  The BBC recently profiled a single mother that is struggling to raise two young children in Iowa...
"We don't get three meals a day like breakfast, lunch and then dinner," says Kaylie. "When I feel hungry I feel sad and droopy."

Kaylie and Tyler live with their mother Barbara, who used to work in a factory. After losing her job, she was entitled to unemployment benefit and food stamps - this comes to $1,480 (£974) a month.

But they were no longer able to afford to live in their house, which along with bills cost $1,326 (£873) a month, leaving little for food or petrol.

Kaylie supplemented their income by collecting cans along the railway track near their old home - earning between two and five cents per can.
For more examples like this one, I encourage everyone to go watch a recent BBC documentary entitled "America's Poor Kids" that you can see right here.
I wonder why we don't see more stuff like this on the mainstream news in this country?
Could it be that the mainstream media does not want to admit how bad things have really gotten?
All of this is also a reminder that we need to be generous to those in need.  Times are going to get much, much harder than this, and we are all going to need one another.


Well that about does it for tonight.

Tomorrow, gold and silver metal prices have zero change in rising at the comex.

This afternoon we witnessed a huge sell off in mining shares which is the tip off that a raid

is coming tomorrow.  The bankers never like to see gold and silver rise big time for two 

consecutive days of trading.

I will see you Saturday morning

by for now



Mike Mouse said...

Silver price at close wrong in your report

disqus_Rbfqk4GGqp said...

I think I am right on the silver close.
remember I always use comex closing and not access market.
I got a close of $24.14

neo maxwell said...

I wonder why we don't see more stuff like this on the mainstream news in this country?

Could it be that the mainstream media does not want to admit how bad things have really gotten?

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