Wednesday, May 1, 2013

Huge Raid on gold and silver/Gold continues to leave the GLD and the comex vaults.

Good evening  Ladies and Gentlemen:

 
Gold closed down $25.90 to $1446.30 (comex closing time).  Silver fell by 88 cents to $23.30  (comex closing time). 

In the access market at 5 pm gold and silver  rose :

gold: $1457.00
silver: $23.60

With Europe closed for its May day holiday, the bankers took advantage of the thin trading to whack gold and silver.  Another of their usual criminal tricks.

Gold and silver got a little boost this afternoon after the release of the FOMC report.  The market decided that the Fed will continue with its QE.  Actually they have no choice but to monetize its debt as it must fund its 1.2 trillion in deficit.  Nobody else will pony up the money.

Today, the whole story is the FOMC and we have details courtesy of Goldman Sachs.  In the USA, the ADP report was dismal as was the ISM report.




At the comex, the open interest in silver fell  another 2833 contracts to 143,477 contracts as we probably had some short covering yesterday. The silver OI is  holding firm at elevated levels . The open interest on the gold contract fell by 1646 contracts to 421,087. It is interesting that the gold deliveries for May has now exceeded 5 tonnes at 5.76 tonnes and this is an off month for gold. 

Today, physical gold continues to leave London with 3.31 tonnes of gold departing the GLD for the shores of China/and or Russia. The game ends when the last physical ounce held at the GLD departs. 


 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 1646 contracts today  from 421,087  down to 421,087,  with gold rising by $3.80 on Tuesday. The front non active delivery month of May saw its OI fall by 871 contracts.  However we had 1288 delivery notices filed for yesterday.  Thus we actually gained 417 contracts or an additional 41700 oz will stand for May's delivery.     The next active contract month is June and here the OI fell by 1666 contracts to 244,945. June is the second biggest delivery month in gold's calender.  The estimated volume today was fair at 142,594.   The confirmed volume on Tuesday was a little better at 170,733 contracts.


The total silver comex OI fell  by a hefty 2833  contracts from 146.310 down to 144,310  with silver's price unchanged yesterday. No doubt we had some short covering yesterday.  Those contracts  that remain are stoic and ready to take on the bankers at their crooked game.  The front active silver delivery month of May saw it's OI fall by 1806 contracts.  We had 1506 delivery notices filed yesterday so we lost  300 contracts or 1.5 million oz.  The next  delivery month for silver is June and here the OI rose by 1 contracts to stand at 487. The next big active contract month is July and here the OI fell by 762 contracts to rest tonight at 78,748.   The estimated volume today was good, coming in at 48,320 contracts.  The confirmed volume yesterday was  good at 46,651.


Comex gold/May contract month:


May 1/2013




Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
 128,163.18 (Brinks,Scotia)oz
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
nil
No of oz served (contracts) today
 394 (39,400  oz)
No of oz to be served (notices)
170 (17,000)
Total monthly oz gold served (contracts) so far this month
1682  (168,200)
Total accumulative withdrawal of gold from the Dealers inventory this month
nil
Total accumulative withdrawal of gold from the Customer inventory this month


 
317,421.29  oz  




We had huge activity at the gold vaults.
The dealer had 0 deposits and 0  dealer withdrawals.


We had 0 customer deposits today:



total customer deposit: nil oz



We had 2 customer withdrawals:

i) Out of Scotia:  128,099.009 oz
ii) Out of Brinks:  64.18

total withdrawal:  128,163.18 oz

We had 1 big  adjustments 




1.  From the Scotia vault:  44,243.633 oz was adjusted out of the dealer and back into the customer account.


Thus the dealer inventory  rests tonight at 2.103 million oz (65.41) 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 8.000 million oz or 248.8 tonnes.


The CME reported that we had 394 notices filed today for 39,400  oz of gold today.
To calculate the quantity of gold ounces that will stand, I take the OI standing for May  (564) and subtract out today's notices (394) which leaves us with 170 notices or 17000 oz left to be served upon our longs. 
Thus  we have the following gold ounces standing for metal in May:

1682 contracts x 100 oz per contract  or  168,200 oz (served)  +  170 notices or 17,000 oz (to be served upon)  =  185,200 oz or 5.76 tonnes of gold.
This is extremely high for a non active month.

end


Silver:



May 1.2013:  May silver: 



Silver
Ounces
Withdrawals from Dealers Inventorynil
Withdrawals from Customer Inventory 282,575.969( Delaware, Scotia, Brinks,CNT and HSBC)   
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory  672,681.42  (Delaware,Scotia)
No of oz served (contracts)357 contracts ( 1,785,000 oz)  
No of oz to be served (notices)809  (4,045,000 oz)
Total monthly oz silver served (contracts) 1863  (9,315,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal of silver from the Customer inventory this month282,575.969


Today, we  had good activity  inside the silver vaults.

 we had 0 dealer deposits and 0  dealer withdrawals.



We had 2 customer deposits:

i) Into Delaware: 10,774.2 oz
ii) Into Scotia; 661,907.22

Total deposits:  672,681.42  oz

We had 5 customer withdrawals:

1) Out of Delaware:  4,048.45 oz
ii) Out of Scotia;  80,805.74 oz  
iii) Out of CNT:  20,546.87 oz
iv) Out of HSBC  5048.309
v) Out of Brinks;  172,176.60

total withdrawal:  282,575.969



we had 1   adjustments:

i) Out of Delaware:  10,468. oz was adjusted out of the dealer and back into the customer account


Registered silver  at :  45.934 million oz
total of all silver:  166.44 million oz.




The CME reported that we had a small 357 notices filed.  To calculate the number of ounces that will stand in silver, I take the OI standing for May (1166) and subtract out today's notices (357) which leaves us with 807 notices or 4,045,000 oz 
  
Thus the total number of silver ounces standing in this  active delivery month of May is as follows:

1863 contracts x 5000 oz per contract (served) = 9,315,000 +  809 contracts x 5000 oz =  4,045,000 oz ( to be served)  =  13,360,000 oz

we lost 1.5 million oz standing.




end



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:



May 1.2013:






Tonnes1,075.23

Ounces34,569,726.95

Value US$50.265 billion







april 30.2013:








Tonnes1,078.54

Ounces34,676,103.28

Value US$50.915  billion







april 29.2013:



Tonnes1,080.64

Ounces34,743,798.37

Value US$50.963  billion







april 26.13:



Tonnes1,083.05

Ounces34,821,165.00

Value US$51.217  billion





april 25.2013:





Tonnes1,090.27

Ounces35,053,272.79

Value US$50.841   billion






april 24.2013:








Tonnes1,092.98

Ounces35,140,313.66

Value US$50.177   billion







April 23.2013:






Tonnes1,097.19

Ounces35,275,711.20

Value US$49.648 billion






April 22.2013:









Tonnes1,104.71

Ounces35.517,493.78

Value US$50.575  billion.






april 19.2013:







Tonnes1,123.06

Ounces36,107,452.35

Value US$50.731  billion.





April 18.2013:







Tonnes1,132.99

Ounces36,426,619.21

Value US$50.752   billion




Today, we lost another 3.31 which follows the 2.14 tonnes of gold lost yesterday.
The registered  vaults at the GLD will eventually become a crime scene as real physical gold will depart for eastern shores leaving behind paper obligations to the remaining shareholders.  As you can see, the bleeding of physical gold from this locale continues unabated.


As a reminder the total comex gold had inventories of around 11 million oz in 2011. Today it held just above 8 million oz. (8.000 million oz)



end




And now for silver:


Inception Date4/21/2006
Ounces of Silver in Trust336,055,837.000
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.
10,452.50






april 30.2013:


Inception Date4/21/2006
Ounces of Silver in Trust334,607,098.000
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.
10,407.44



april 29.2013:


Inception Date4/21/2006
Ounces of Silver in Trust334,607,098.000
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.
10,407.44








Inception Date4/21/2006
Ounces of Silver in Trust334,124,167.000
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.
10,392.42






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.
10,318.82



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.
10,318.82


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.
10,451.01



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.
10,451.01



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.
10,451.01


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.
10,451.01


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.
10,451.01




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.
10,497.59



 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.
10,497.59


 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.
10,497.59




Today we gained 1.448 million  oz of silver at the SLV. No doubt that this is really "paper" silver
Note the difference between silver and gold.



end



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 negative 2.3% percent to NAV in usa funds and a negative 2.4%  to NAV for Cdn funds. ( May 1.2013)   

2. Sprott silver fund (PSLV): Premium to NAV rose to +0.87% NAV May 1/2013
3. Sprott gold fund (PHYS): premium to NAV  rose to+ .18% positive to NAV May 1/ 2013.




end

And now for the major physical stories we faced today:




Your early morning gold and silver trading in Europe this morning

(courtesy Goldcore)




“They Don’t Want Certificates, They Want the Real Product” - CME President on Gold


-- Posted Wednesday, 1 May 2013 | Share this article | 8 Comments
Today’s AM fix was USD 1,469.50, EUR 1,113.60 and GBP 942.95 per ounce.
Yesterday’s AM fix was USD 1,472.75, EUR 1,126.13 and GBP 950.04 per ounce.
Gold climbed $5.60 or 0.38% yesterday to $1,476.00/oz and silver finished down 0.27%.

Cross Currency Table – (Bloomberg)
In a remarkably candid interview, the President and Executive Chairman of CME Group Inc, Terrence Duffy, told Bloomberg TV that today gold buyers "don’t want certificates ... They want the real product".
When asked by Cristina Alecci at the Milken Institute 2013 Global Conference in Los Angeles on Bloomberg Television's "Street Smart" about gold, Duffy says.
"What’s interesting about gold, when we had that big break two weeks ago we saw all the gold stocks trade down significantly, we saw all the gold products trade down significantly, but one thing that did not trade down, was gold coins, tangible real gold. That’s going to show you, people don’t want certificates, they don’t want anything else. They want the real product."
"I think that is the value of gold."
"Whether you are going to own mining stocks are anything else. I think the coins are probably of more value than anything else."
The CME Group Inc or Chicago Mercantile Exchange is the world's largest futures exchange company. It owns and operates large derivatives and futures exchanges in Chicago and New York City, as well as online trading platforms. It also owns the Dow Jones stock and financial indexes, and CME Clearing Services, which provides settlement and clearing of exchange trades.
The CME's President's comments were noticed by Mike Krieger of Liberty BlitzKrieg and featured on Zero Hedge.
Slowly but surely, gold coins and bars value as safe haven assets, unlike gold futures and other paper and digital forms of gold, is being realised.
All paper forms of gold, particularly leveraged ones, should be avoided due to counter party and systemic risk.
The exception to the rule regarding certificates are Perth Mint Certificates. They are in effect warehouse receipts which are fully backed by physical gold, silver and platinum - ounce for ounce - from the AAA rated government of Western Australia.
Mints from the U.S., Great Britain and Australia have all seen a surge in demand after gold futures fell 13% in mid April.
The U.S. Mint’s gold coin sales have reached their highest level since December 2009.

Gold in USD, 5 Year – (Bloomberg)
Gold coin sales at the U.S. Mint in March were 62,000 ounces, while in April sales reached 209,500 ounces and back in December 2009 they recorded 231,500 ounces of coins sold.
Silver-coin sales in April were 4.2 million ounces up from 3.36 million in March.

Silver in USD, 5 Year – (Bloomberg)
The price drop has shifted investor sentiment out of gold backed ETF’s and into physical gold.
The yellow metal has fallen 12% this year, even after an 11% gain from $1,321.50/oz on April 16.
Demand was so strong after the price retracement that the U.S. Mint ceased sales of its .10/oz gold coins on April 23.

Platinum in USD, 5 Year – (Bloomberg)
In Australia, consumers were cueing in lines ½ of a kilometre to purchase gold coins. In jewellery stores in China and India they had their stock depleted in a day, according to The World Gold Council.
The heightened demand brings premiums that investors are paying to have the precious metal in their hands.
In India they are paying 5 times the amount before the price drop in April. In Singapore and Hong Kong consumers are paying nearly $3/oz, said to Ng Cheng Thye, the head of precious metals at Standard Merchant Bank (Asia) Ltd.
In the U.S., the Arizona Senate passed legislation to make gold and silver accepted as currency, and it now goes to the governor for approval. This is a further step by citizens to protect themselves against the lack of control and collusion in the current international monetary system.

Palladium in USD, 20 Year – (Bloomberg)
Structure in Gold and Silver Spread Fluctuations – Social Science Research Network
For breaking news and commentary on financial markets and gold, follow us on Twitter.


end



Arizona now becomes the second state




Arizona Becomes 2nd State To Make Gold & Silver Legal Tender

Tyler Durden's picture





Just under a month ago we raised the prospect of a number of states following Utah (which authorized bullion for currency in 2011) down the path of gold and silver as legal tender. "The legislation is about signaling discontent with monetary policy and about what Ben Bernanke is doing," was how this shift was previously described and as Yahoo reports, the Arizona Senate on Tuesday approved a measure to make gold and silver legal currency in the state, in a response to what backers said was a lack of confidence in the international monetary system. The bill will make gold and silver coins legal tender as ofmid-2014 and more than a dozen other states continue to mull the transition. Those against the bill argue somewhat ironically, "anybody who thinks gold or silver is a really safe place to put your money had better think again," anchored on the last two weeks, but as one supporter of the bill added, a "sound and honest money system such as gold and silver" is needed to bring stability.

Via Yahoo,
The Arizona Senate on Tuesday approved a measure to make gold and silver legal currency in the state, in a response to what backers said was a lack of confidence in the international monetary system.

...

The bill calls for Arizona to make gold and silver coins and bullion legal tender beginning in mid-2014, joining existing U.S. currency issued by the federal government.

If signed into law, Arizona would become the second state in the nation to establish these precious metals as legal tender. Utah approved such legislation in 2011.

More than a dozen states have considered similar legislation in recent years, according to the National Conference of State Legislatures.

...

He also pointed to the recent decline in the value of gold - which sank to $1,321.35 per ounce on April 16, its lowest price in more than two years - noting that "anybody who thinks gold or silver is a really safe place to put your money had better think again."

The push to establish gold and silver as currency has become increasingly popular in the United States in recent years

...

... the legislation was needed to counter what he sees as insolvency in the global monetary system.
"The dollar system and all of the other derivative currencies, including the euro, are a recipe for worldwide bankruptcy," Weiner told lawmakers at an earlier hearing, adding that a "sound and honest money system such as gold and silver" was needed to bring stability.
end



USA Mint sales of gold coins jump to its highest in 3 years

(courtesy Bloomberg)




U.S. Mint Sales of Gold Coins Jump to Highest in Three Years

By Debarati Roy - May 1, 2013 2:32 AM ET


Sales of gold coins by the U.S. Mint rose to the highest since December 2009 after the price of the metal in April fell the most in 16 months.
Last month, sales totaled 209,500 ounces, up from 62,000 ounces in March, data on the mint’s website show. The amount for December 2009 was 231,500 ounces. Silver-coin sales rose to 4.2 million ounces from 3.36 million in March.
http://www.bloomberg.com/photo/u-s-mint-sales-of-gold-coins-at-three-year-high-on-price-drop-/320285.html
U.S. gold dollar coins are displayed at Avenue Coins & Currency in Stockton, California. Photographer: David Paul Morris/BloombergMay 1 (Bloomberg) -- David Lennox, a resource analyst at Fat Prophets in Sydney, talks about the outlook for commodities including oil and gold. He also discusses Federal Reserve and European Central Bank monetary policies with Zeb Eckert on Bloomberg Television's "On the Move." (Source: Bloomberg)Demand surged at mints from Australia to the U.K. and the U.S. after futures slumped 13 percent in two days through April 15. Gold futures tumbled 7.8 percent last month and dropped into a bear market as some investors lost faith in the metal as a store of value. Perth Mint, which refines almost all of the nation’s bullion, said that demand jumped to the highest in five years after prices plunged, with the factory kept open through the weekend to meet orders.
"People are flocking to buy physical gold," Todd Dutkevitch, a senior account executive at Los Angeles-based American Bullion Inc., said in a phone interview. "The price drop has made it possible for many retail buyers to add gold."Futures for June delivery rose 0.1 percent to $1,473.30 an ounce on the Comex in New York today. The metal is down 12 percent this year, even after advancing 11 percent from a 26- month low of $1,321.50 on April 16.
The U.S. mint said April 23 it suspended sales of coins weighing a 10th of an ounce after demand more than doubled from a year earlier.

Most Popular

The mint sells 22-karat American Eagles of 1 ounce at a 3 percent premium toLondon "p.m. fixing" prices. A half-ounce coin is set at 5 percent above, a quarter-ounce coin is 7 percent above, and one weighing a 10th of an ounce fetches a 9 percent premium, according to Michael White, a Mint spokesman.
"The 1-ounce gold bullion coins are the most popular," White said last week.In Australia, buyers were waiting in lines half a kilometer (0.3 mile) long to get minted coins, and jewelry shops in India and China ran out of gold in a single day, Jason Toussaint, the managing director of investments at the London-based World Gold Council, said in an interview. India and China are the world’s largest consumers of bullion.
Surging demand from Dubai to Istanbul has pushed physical premiums in the region to levels not seen in years as the biggest price slump in three decades lures consumers, according to MKS (Switzerland) SA.

Shanghai Trading

Trading for the benchmark contract on the Shanghai Gold Exchange surged to a record last week, while premiums to secure supplies in India jumped to five times the level before the slump. China and India are the world’s largest buyers.
Consumers in Singapore and Hong Kong are paying premiums of about $3 an ounce, compared with about $2 just after the rout, according to Ng Cheng Thye, the head of precious metals at Standard Merchant Bank (Asia) Ltd.
Still, holdings in exchange-traded products backed by the precious metal tumbled 174 metric tons in April, a record drop, according to data compiled by Bloomberg.
"This drop has made physical gold much more attractive than paper gold," Dutkevitch said.To contact the reporter on this story: Debarati Roy in New York atdroy5@bloomberg.net

-end



And now your more important paper stories which will influence the price of gold and silver:



May l st  is a holiday throughout much of Europe so trading is thin.
A good time to raid gold and silver where much of the physical demand is located. 





(courtesy zero hedge)



Overnight Sentiment: "Buy In May, And Buy Every Day"



Tyler Durden's picture




While it is the labor day holiday in most of the world, and as a result volumes will be more subdued than ever (meaning at least a 10 point algorithmic levitation on no volume for the S&P), let's not forget that Benny and the Inkjets are doing their best to make everyone into a professional day trader (the only "wealth effect" transmission mechanism left) so markets being open seems somewhat counterproductive. That said, futures are already up on the usual atrocious economic data out of Asia this time. First China's official manufacturing PMI slipped 0.3pt to 50.6, coming below expectations, suggesting weak momentum going into Q2. Meanwhile, Korea trade data indicated weaker momentum in exports than expected, rising 0.4% on expectations of a 2% bounce courtesy of Abenomics, and hence a lower trade surplus, while inflation defied median expectations of a rise and slowed yet further. Finally, Australia PMI was an absolute disaster printing even worse than the Chicago PMI, plunging from 44.4 to 36.7, meaning that the RBA is about to join the global "reflation effort." Given that most markets in Asia are closed today, there is no market reaction worth mentioning, aside from the fact that the yen which was logically weaker overnight then ramped up into the European open and US pre-trading as it is, after all, the primary source of "beta" for the global stock markets.
May Day has delayed the release of global PMI data until tomorrow, however the Manufacturing ISM will be released today as scheduled. If the leading Chicago PMI is any indication, it is very likely that we will see a sub-50 number, likely plunging to levels not seen since June of 2009 (45.8) - the worst in four years. If that doesn't send the S&P over 1600 we don't know what will. And just to make sure the S&P is well on its way to 1700 on onward too, the ADP Private payrolls number today should be a huge miss sending the ES limit up.
Also later today Ben Bernanke will release the latest FOMC statement however without a following press conference this time, which is even more reason to not expect the Fed to say or do anything notable, and will most likely highlight the recent weakness seen in the economy, thus cementing QE4EVA well into 2016-2017.
Finally, while some are dreading the start of "sell in May and go away" season, what most have forgotten is that never before has May been accompanied by $160 billion per month in central bank de novo liquidity (a number which will only go up- you know, for the wealth effect). Which is why our redefinition of this infamous phrase is "buy in May and buy every day."
The full bulletin summary of the few things taking place today, via Bloomberg:
  • Treasuries little changed before Fed statement, rate decision at 2pm in Washington; 10Y yields yesterday touched lowest level since Dec.  12 before reversing higher amid gains in stocks, Apple’s record $17b debt offering.
  • Fed not likely to change $85b/mo. in asset purchases, will probably put off any decision to taper buying, based on review of selected research
  • ECB rate decision and Draghi press conference tomorrow; U.S. nonfarm payrolls Friday
  • China’s manufacturing expanded at a weaker pace in April in a sign that the slowdown in the world’s second-largest economy is extending into the second quarter; crude and copper decline
  • A U.K. factory index rose more than economists forecast in April, indicating that manufacturing barely shrank
  • Central bank veterans are lining up to highlight the Achilles’ heel of Prime Minister Shinzo Abe’s economic revival plan: the world’s fastest aging society
  • Denmark’s government says it has exhausted all avenues for adding stimulus as the economy shows signs of sinking into its third recession since the global financial crisis started
  • Most European markets, China closed for May Day holiday
  • Nikkei -0.4%, FTSE +0.5%, U.S. stock-index futures gain
As stated not much going on today, but here is what is on the macro list from SocGen:
The European economic calendar will be light today with most markets shut for the May Day holiday and positions light in any case as participants trim positions ahead of tomorrow's ECB meeting. Market attention will essentially focus on UK and US manufacturing PMI and ISM: the release last week of higher-than-expected UK Q1 GDP figures (and better lending data to small businesses) has reassured GBP-based investors and encouraged our UK economists to postpone their call for more BoE QE. An increase in the UK manufacturing PMI today would reinforce such a scenario, but echoes of weaker PMI trends cannot be ruled out (weaker China data overnight and a terrible Australian print of '36.7') . A better number would be all the more GBP-positive should the ECB embark on more accommodative measures tomorrow and so the squeeze higher could have further to run. EUR/GBP-wise, the 0.8400 area remains a key support area. A dovish FOMC statement should help to underpin GBP/USD too, with a close above the 100d ma (1.5561) likely to draw fresh buying.
The US economic calendar will be heavier than that of Europe today with all the attention centred on the FOMC. Before that, the ADP report will give some colour ahead of Friday's NFP. Although the correlation between the two reports is not very strong on a long historical series comparison, both indicators ran out of steam last month with the ADP dropping back from 237k to 158k. Can they both edge back north this month? The gradual improvement in the labour market, subdued inflation and a slight softening in the manufacturing ISM (latest report also due today) are three messages the Fed has factored in its economic scenario and so a reaffirmation of its dovish stance can be expected this evening when the FOMC meeting concludes. Overall, we do not think the policy stance should alter significantly compared with the previous meeting, and thus impact on global financial markets should be limited. The ECB meeting (tomorrow) and the NFP (on Friday) are likely to be the main market movers over the closing stages of the week where light liquidity has the capacity of magnifying intra-day moves.
* * *
And the comprehensive overnight summary courtesy of DB's Jim Reid
Today will likely be fairly quiet as it seems like most of Asia and much of Europe are on holiday. This is delaying Global PMI day until tomorrow. We do have US ISM though (previewed below) and this morning we've already seen China's official PMI manufacturing falling slightly to 50.6 in April from 50.9 the month before. This is broadly consistent with market expectations (50.7) as the series continues to move sideways (range: 50.1-50.9 in the past 7 months). One of the few Asian markets open - the Nikkei - is a little softer (-0.2%) but credit continues to rally with the Aus iTraxx a little over 1bp tighter on the day.
Those who (like us) are in the office today will see an important day for US data. The ADP Employment report will be the first main release to hit the wires today (1.15pm London) ahead of April’s ISM manufacturing print (3pm London). The latter will be followed closely especially after the very disappointing Chicago PMI print (49.0 v 52.5 expected) yesterday. Given the recent weakness in regional activity data our economists have lowered their ISM call to 49.5 from 51.0 previously (market at 50.6). The last time the ISM dipped below 50 was in November 2012 (49.9) and before that in July 2009 (49.9), June 2009 (45.8) and May 2009 (41.7). So if Joe Lavorgna is correct then we could be looking at the poorest ISM report in nearly four years (for details see Data Flash - US: Chicago PMI is a downer; confidence is stronger dated Apr 30). The ADP report may serve as an interesting preview of Friday’s payroll. Will it be another weaker than expected report? Even ahead of this, DB has revised down the headline payrolls forecast for April by 50k to 140k.
After the data we have the FOMC meeting statement at 7pm London time. Markets will have to read between the lines as there won’t be a Bernanke press conference to follow this time. In short, DB’s Peter Hooper is not expecting much out of the statement today and the Fed will most likely pass on making any major changes in their guidance to markets. The tone will likely be slightly more dovish given the recent softening in activity and inflation data but with things not yet weak enough to warrant a change in their policy stance.
Indeed the data weakness yesterday failed to deter another record high close for the S&P 500 (+0.25%). Credit spreads also edged tighter but the focus was on Apple’s $17bn jumbo bond issue across 6 different tranches. The deal size managed to top Roche’s $16.5bn 9-part deal seen in February 2009. In Europe, equity markets were mostly softer across the board although OATs performed strongly with its 10-year yield dipping to a fresh record low of 1.7%.
Staying in Europe, Slovenia’s delayed bond offer was one of the interesting market stories yesterday. The government had initially planned to issue 5-year and 10-year US$ bonds after having received good feedback from bond investor meetings but at the end decided to delay the offering following Moody’s negative rating action. The agency downgraded Slovenia’s sovereign rating to Ba1 from Baa2 and the outlook remains Negative. Moody’s said the action reflects the state of Slovenia’s banking sector, the marked deterioration of Slovenia’s government balance sheet and uncertain funding prospects that heighten the probability that external assistance will be needed. Moody’s two notch downgrade means its rating on Slovenia is now multiple notches below S&P’s A-/Stable and Fitch’s A-/Neg.
According to a Bloomberg article, the said 5-year and 10-year debt were initially being offered in the region of 5% and 6.12% respectively, according to Bloomberg. Staying in the region, yesterday was a mixed day for European data with the most recent retail sales and unemployment numbers in Germany as well as Euro area CPI all coming below expectations. Spain’s economy contracted 0.5% in Q1 as expected although on a positive note Italian unemployment surprisingly fell in March while French consumer spending also rose much stronger than expected. That said all these are perhaps seen as a side show for now as all eyes will be what the ECB does tomorrow and Draghi’s performance at the post-meeting press event.

end




You must see this:



(courtesy Nigel Farage/zero hedge)




Nigel Farage On "Wholesale, Violent Revolution" In Europe

Tyler Durden's picture




In a little under two minutes, Nigel Farage sums up the utter farce that "the religion" that Europe has become. He explains, his fear is that what will break up the Euro, "is not the economics of it, but wholesale, violent revolution," in the Mediterranean, and that is "all so unnecessary!" Speaking at Simon Black's Offshore Tactics workshop, the so-called modern day Cicero goes on to point out that France's Hollande is "the number 1 among idiots running countries around the world," and worries that Merkel's pending election means there will be more and more 'tough talk and action' as she shows the people she is in charge. Simply put he warns, alongside Ron Paul, that if you have money in European banks, "Get your money out," because, "when the next phase of the disaster comes, they will come for you."



5

Early Tuesday  morning currency crosses;  (8 am)


Tuesday morning we  see a little euro weakness against the dollar from the close on Monday  with this time still trading well above  the  1.30 mark at 1.3077. . The yen this  morning, temporarily stops  with its bleeding  against  the dollar for now,  trading well below the 98 column early in the session  at  97.46 yen to the dollar.  The pound, this morning is a little weaker against the USA dollar, falling below  the 1.55 column at 1.5477. The Canadian dollar is also a little weaker  against the dollar at 1.0116.   We have the sentiment this morning with a mainly  risk on situation with most of our European  bourses  in the green.   The Nikkei exchange  fell as the perceived stimulus is just not functioning and of course, the reason for the yen to rise .  Gold and silver are down  in the early morning, with gold trading at $1470.00 (down $2.20 )  and silver is at $24.02 down 16 cents in early morning European trading.

The USA index is down 17 cents at 81.52.



Euro/USA    1.3209  up  .00420
USA/yen  97.46  up .049
GBP/USA     1.5573 up .0035
USA/Can      1.0047 down .0016

end






And now your closing Spanish 10 year bond yield: (higher by 01 in yield)


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



SPANISH GOVERNMENT GENERIC BONDS - 10 YR NOTE

GSPG10YR:IND

4.140.01 0.22%
As of 12:02:00 ET on 05/01/2013.




Your Italian 10 year bond yield;  (rise .02 in yield )




Italy Govt Bonds 10 Year Gross Yield

GBTPGR10:IND

3.910.02 0.39%
As of 12:02:00 ET on 05/01/2013.



end





The Euro rose throughout the afternoon closing above the 1.31 mark at 1.3167 .  The yen remained the same  in the afternoon closing at 97.41.  The pound strengthened this afternoon after its  advance yesterday, closing  at 1.5532.  The Canadian dollar firmed up a bit this afternoon  against the dollar closing at 1.0116.



The USA index fell  from the morning session with the final index number down 43 cents to 81.72

Euro/USA    1.3208 up  .0041
USA/Yen  97.405    down .050
GBP/USA     1.5579  up .0045
USA/Can      1.0065  down .0003







end.




Your closing figures from Europe today. 



i) England/FTSE up 21.17  points   or 0.33%  

ii) Paris/CAC  closed today
  
iii) German DAX: closed 
  
iv) Spanish ibex   closed

v) Italian bourse (MIB) closed 


and the Dow down 138 points (0.94%)  


end.






And now for your important USA stories:

Everyone was waiting for the fed announcement:  an absolutely brilliant statement:

they are prepared to "increase" or "reduce" purchases.

There is absolutely no way ever that the Fed could curtail their purchases.  QE must continue to infinity.

(courtesy zero hedge)



Fed Holds The Course, Prepared To "Increase Or Reduce Purchases" - Full Redline Comparison

Tyler Durden's picture





With the equity market dropping rather notedly into the release of the FOMC decision, chatter was that the 'early release' button had been hit, but...
  • *FED SAYS LABOR MARKET HAS SHOWN SOME IMPROVEMENT
  • *FED SEES `DOWNSIDE RISKS' TO ECONOMIC OUTLOOK
  • *FED SAYS IT'S `PREPARED TO INCREASE OR REDUCE' PURCHASES
Which suggests some management of expectations... but more of the same and no big surprise. The only real difference from the March statement, as shown below, is the following sentence added in the fourth paragraph:
The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes.
Market stance pre: ES 1582, 10Y 1.62%, Gold, $1450, WTI $90.65, EUR 1.3200
Since the close of the last FOMC decision, the US long bond has gained 4.5% and is the big winner, with the S&P up only 1.8% (and gold and silver the biggest losers)...
Full redline below:  see zero hedge)


end

Goldman Sachs comments on the release of the FOMC report:

FOMC Statement Post-Mortem

Tyler Durden's picture





Goldman Sachs saw no major surprises in the May FOMC statement, which, as we noted in the redline, was very little changed from the March statement. The most notable change, however, introduced additional flexibility around purchases, noting that "the Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes." The slightly more aggressive nod towards fiscal policy "restraining" growth as opposed to "becoming restrictive" is perhaps yet another plea for some help from Washington - for, as we noted earlier"the ability of a central bank, exclusively, without the rest of Washington doing any bit of the task, to turn an economy from a modest recovery to a robust one is an experiment that is untested - and will not prove to be successful."
Via Goldman Sachs,
MAIN POINTS:
1. The May FOMC statement was very little changed from the March statement. Most notably, the statement included one wholly new sentence: "The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes." We see this as introducing flexibility for the Committee, consistent with past statements from the Chairman and other Fed officials, rather than necessarily suggesting a near-term policy bias in one direction or the other. However, it may be notable that this sentence specifically refers to the pace of purchases, rather than the expected period of time over which purchases will continue, or the expected holding period of purchases.
2. There were also modest changes to the economic summary paragraph. According to the May statement, labor market conditions have shown signs of improvement only "on balance," probably a reference to the weaker March payrolls report since the last meeting. Fiscal policy "is restraining growth" rather than "has become somewhat more restrictive," a more direct characterization of the drag. There was no change to the inflation language, despite inflation readings softening over the intermeeting period. However, the new sentence about varying the pace of purchases implicitly recognizes the risk of inflation falling too low, raising the possibility that purchases could be increased if the current trend continues.


The private ADP jobs report dismal:

(courtesy zero hedge)



ADP Private Jobs Plunge, Miss; Fall For Fifth Month In A Row

Tyler Durden's picture




With the March Payroll number printing at a miserable 88K compared to ADP's 158K print, it was only a matter of time before Mark Zandi, still furious from getting the news he won't be the next GSE Tzar, revised the last month's data to 131K as he just did. Concurrently he also announced that the just released April ADP was a huge miss to expectations of 150K, printing at just 119K, or a 31K miss. This was the 5th month in a row of declines excluding the small bounce in February data. It also means that the combined miss to expectations including March (original estimate +200K) and April (estimate 150K) is precisely 100K. This excludes whatever revisions ADP will do to the April number following the even bigger looming NFP miss. Manufacturing jobs? -10,000. Oh yes, anyone looking for seasonally unadjusted ADP data, good luck - keep on looking. In short: yet another atrocious economic data point which however may need the support of the equally horrible sub-49 Mfg ISM due out shortly to take out 1600 in the S&P. 
Aside for the tiny bounce in February, this would be the 5th consecutive drop in the ADP number starting with the November 276K surge, driven purely by the QE4EVA euphoria.
Broken down by job category:
Where the jobs are(n't): anyone still paying attention to Obama's promise to add however many million manufacturing jobs in five years or whatever?
The bulk of jobs created in ultra small and mega large companies. Supposedly. At least until the revision.

For the second miss (amassing a 100k miss overall in two months thanks to the revision) in a row...

From the press release:
Service-providing jobs increased by 113,000, the weakest pace of growth in seven months. Among the service industries reported by the ADP National Employment Report, trade/transportation/utilities had the largest gain with 29,000 jobs added over the month.

Professional/business services followed, adding 20,000 jobs, and financial activities added 7,000 jobs.

"During the month of April 2013, U.S. private sector employment increased by 119,000 jobs, representing the slowest pace of expansion since September 2012," said Carlos A. Rodriguez, president and chief executive officer of ADP. "The services sector generated the overwhelming majority of new jobs in April, contributing a total of 113,000, which helped to offset overall softness in the goods-producing sector, which was marked by a loss of 10,000 manufacturing jobs."

Mark Zandi, chief economist of Moody’s Analytics, said, “Job growth appears to be slowing in response to very significant fiscal headwinds. Tax increases and government spending cuts are beginning to hit the job market. Job growth has slowed across all industries and most significantly among companies that employ between 20 and 499 workers.”
And the best thing of all: the social-media friendly ADP infographic:
Infographic: ADP National Employment Report Shows Slower Pace of Job Gains; 119,000 Jobs Added in April

Former Fed Governor Warsh Admits "There Is No Plan B"

Tyler Durden's picture





At the very crux of the financial crisis, former Fed governor Kevin Warsh notes, "experimental extreme monetary policy," had the "right risk-reward", but, he warns, in this excellent (and somewhat chilling) discussion at the Milken Institute, "we left a financial crisis more than for years ago." While the politicians may 'prefer' to think of this as a crisis - and indeed "for them it is a crisis as they preside over an economy that refuses to grow," which has tended to lead to loss of office, but, Warsh condemns, "they have run out of excuses."Over the last several years, "[the Fed] has over-promised and under-delivered," and the bank's most important asset - credibility - is under attack.
The Fed has "enabled" Washington to do nothing, since the politicians expect the same "rabbit out of the hat" rescuethat occurred in the darkest days of the financial crisis. This means no growth strategies ("the mix of policies has to be right") will occur. Since the financial crisis, Washington has done its level best to focus on GDP in the next quarter, or perhaps the election, and precious little beyond that short-term horizon. Warsh concludes, "There Is No Plan B."
The Fed has fewer degrees of freedom and the rest of Washington is not coming to the rescue; and furthermore "the ability of a central bank, exclusively, without the rest of Washington doing any bit of the task, to turn an economy from a modest recovery to a robust one is an experiment that is untested - and will not prove to be successful."
The entire discussion is worthy of attention but Warsh's comments begin around 18:00:
...but "the ability of a central bank, exclusively, without the rest of Washington doing any bit of the task, to turn an economy from a modest recovery to a robust one is an experiment that is untested - and will not prove to be successful."

...The Fed is taking on the problem of the shortfall in aggregate demand alone. Warsh does not believe that the Fed means to do this alone but their "good intentions" are simply not enough to get the economy to a 3-4% growth rate neededto create sustainable improvements in the labor markets.

... Warsh adds, "over the last several years, [the Fed] has over-promised and under-delivered," and the bank's most important asset - credibility - is under attack.

...The Fed has "enabled" Washington to do nothing, since the politicians expect the same "rabbit out of the hat" rescue that occurred in the darkest days of the financial crisis. This means no growth strategies ("the mix of policies has to be right") will occur - until the Fed draws the line.

...Since the financial crisis, Washington has done its level best to focus on GDP in the next quarter, or perhaps the election, and precious little beyond that short-term horizon. Warsh concludes, "There Is No Plan B." The Fed has fewer degrees of freedom and the rest of Washington is not coming to the rescue.

...In light of our status as reserve currency, the rest of the world's central banks feel empowered to match the Fed's efforts since "we do not act in a vaccuum" which due to economic and comptetive reasons, means "the US economy will not break out to the upside."

...It is not bad luck that is creating this medicority, it is bad policy
Then at 36:30, Warsh expands on the Fed's awful alternatives and his views on whether Bernanke's transmission channels via Animal Spirits and portfolio rebalancing will have any lasting impact...

end



5

12 comments:

JT said...

So Harvey, when GLD loses gold, it's real metal, but when SLV gains silver it's only paper. Could it be that you have a pre-conceived idea of what's going on? The fact is, no one outside of the inner circle knows how much real metal backs up those ETFs. To make flip comments like you do only impugns your credibility. Similarly, you say you can personally vouch for the fact that Sprott's funds have real metal behind them. Really? Have you personally audited them? Are you a close personal friend of Sprott? While I certainly trust Sprott more than the GLD/SLV backers, I put as much faith in you vouching for Sprott as I should have in my ex-wife's wedding vows.

stacker#155010552 said...

is this what the silver and gold community has been reduced to?


accusations, lies, pump and dump schemes? you obviously dont do very much research.

Mike Mouse said...

Delivery of metal is specifically different than purchasing a long contract. Isnt this a basic fact

Jack Lee said...

JT looks like another lying troll to me. Won't be here long if so.

JT said...

A lying troll,huh? Amuse me, wise one, what lie did I tell? Be specific now, you worthless POS. Does it pain your tiny brain when people point out truths that conflict with your world view? All I'm asking is for Harvey to be accountable and state facts, not speculation.

JT said...

I wish I could understand your comment but even the Google translator couldn't make sense of it. What exactly are you trying to say?

Mike said...

Harvey, well done! At last someone speaks the truth about QE. What is this nonsense about "tapering off". Who will fund the $1.2 trillion deficit? Ask the Chinese. You will hear them laughing themselves silly. Who else? The British? The Germans? No, you are right. NOBODY!!

Jack Lee said...

You called Harvey a liar didn't you? Yeah, you won't be here long. Been nice knowing you. Now go run along and play jerkoff.

JT said...

I have a lot of respect for Harvey and this website. I want it to be better, that's all. I never accused Harvey of lying, only of making unsupported statements--there's a big difference--obviously a difference your pea brain is incapable of discerning. If Harvey can back up what he says I'm all for it. One day, when you grow up, you'll learn the difference between constructive and destructive criticism.

Jack Lee said...

I've seen your type before. You sow doubt, require people to prove things, but nothing is ever satisfactory, therefore you try to damage their credibility all the while proclaiming your innocence.


In other words, a lying POS.


I'm not reply to you again. Goodbye.

JT said...

My type? The type who ask for proof? Yes, we're called scientists. Get busy you proto-human and study for your GED.

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