Saturday, February 16, 2013

Gold and silver hit again with silver breaking below 30.00/Yet silver OI rises to 154,300 contracts/European data still remains weak

Good morning Ladies and Gentlemen:

Gold closed down $25.90 to finish the comex session at $1608.80.  Silver finished down 56 cents at $29.84.

In the access market, here are the final prices:

gold; $1610.10
silver: $29.80

Friday's selling was well orchestrated and hopefully we had capitulation.  The bankers have sold enough paper shorts to get the main stream media to state that the gold/silver bull run is over.  This has brought on the large specs to play along with the bankers and  go short e.g. Dennis Gartman. (see the COT report below)

The rigging started in earnest when the CME lowered the margin requirements.  This brought in more weaker longs into gold and silver.  Then the constant raids brought main stream media to report the end of the gold/silver bull.  Dennis Gartman who always gets the sell side  right but never the buy side, announced that he was going short in gold.  Today the selling reached a climax with gold at one point gold breaching the 1600 dollar barrier.  Silver on the other hand breached 30.00 and stayed below that level for the rest of the day. However, when you have massive selling of paper silver and gold, you generally see liquidation of the paper contracts (OI).  You will see below that in gold we had only a minor contraction.  In silver strangely the CME reported a gain of 1417 contracts up to 154,364.  We are now at a two year record high in silver OI with a lower price in silver ($29.86 today vs $49.00 in April 2011),  In gold, the bankers are getting their way as the OI has fallen to  442,000 contracts. Earlier this year it hit its low point just below 400,000.  In June 2010, it hit it's all time high of 603,000 contracts. The problem this time for the bankers is that the silver OI is ramping higher while the OI in gold is being crushed.  Why? it seems that physical silver is becoming scarce and producers are hoarding the metal  (see below).  The bankers do not like what they see with silver as every raid at these low prices brings on more longs and they seem to represent strong hands.  If the OI on Monday is again higher, our banker friends might as well throw in the towel as nothing can help them. The massive not for profit selling of non backed silver paper at lower prices is futile. The bankers are having trouble removing their huge shorts in silver  as our resolute silver holders, instead of pitching their contracts with the onset of a raid, buy more.

The news from Europe on the economy is not good as UK retail sales fall -.5% instead of rising .5%.
European exports fall in the euro area and imports fall even further showing the entire region showing contraction.  Bundesbank's Weidmann announced that the ECB will not cut interest rates and the Euro is not overvalued.

The G7 basically let Japan trash its currency. Thus currency wars will be tolerated in order to inflate their economies.  They allowed Japan to trash its currency because all nations are doing the same thing.

The Euro area banks revealed bad loans equal to 7.6% of all loans equating to over 900 million euros.
The ESM must recapitalize these banks but by doing so this would hurt their AAA ratings.  The ESM must obtain euros through bond offerings.

In the USA, Wal-Mart set the tone for early trading with statements from the company saying that February has been the worst ever on record for them.

Also the state of Illinois has been downgraded, making this state the worst nation in the Union.






We will discuss these and many other stories but first let us head over to the comex and assess trading today............



The total comex gold open interest fell by a tiny 1715 contracts from 446,274 down to 444,559 despite the massive raid on Thursday.  It will be very interesting to see what happens to the OI on Monday's reading.
The active February contract month saw it's OI fall 125 contracts from 1464 down to 1339.  We had
129 delivery notices filed Thursday so we gained 4 contracts or 400 oz of additional gold will stand in February. The March non active gold contract month saw a gain of 77 contracts up to 1281.  The next big active contract month is April and here the OI fell by 4868 contracts from 263,963 down to 259,095. The estimated volume at the gold comex today was 258,376 compared to the confirmed volume of 191,795 yesterday.

The total silver comex OI surprised everyone as it rose by 1417 contracts, from 152,947 down to 154,364. With silver falling badly these past couple of days, one would have thought that liquidation was the order of the day.  I guess not. The non active February contract month saw it's OI rise by 15 contracts up to 79. We had 51 delivery notices filed on Thursday so we again gained 66 contracts or an additional 330,000 oz of silver will stand in February. The big March delivery month is less than 2 weeks away.  Here the OI only fell by 1756 contracts from 53,277 down to 51,992.  It looks to me like many OI holders in the March contract will not budge as they refuse so far to roll. They seem to be not intimidated by the antics of the bankers. The estimated volume on Friday was huge at 84,429.  The confirmed volume on Thursday was large but not as big as Friday coming in at 57,748.








Comex gold/February contract month:
Feb 15.2013    




Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
119,939.578(JPM)
Deposits to the Dealer Inventory in oz
899.97 (Brinks)
Deposits to the Customer Inventory, in oz
3,472.2  (Scotia)
No of oz served (contracts) today
 127    (127,000  oz)
No of oz to be served (notices)
1212  (121,200) oz
Total monthly oz gold served (contracts) so far this month
11,149  (1,114,900 oz) 
Total accumulative withdrawal of gold from the Dealers inventory this month
63,755.606
Total accumulative withdrawal of gold from the Customer inventory this month


 
211,718.23




We had fair  activity at the gold vaults.
The dealer had i deposits and no   withdrawals.

Dealer deposit:  899.97 oz into Brinks




We had 1   customer deposits:


1) Into scotia:  3472.2 oz


total deposit: 3472.2    oz



We had 1  customer withdrawal:

i) Out of JPM:  119,939.578 oz  (approx.3.7 tonnes)

total withdrawal: 119,939.578 oz









We had 0  adjustments:




Thus the dealer inventory rests tonight at 2.702 million oz (84.01) tonnes of gold.

The CME reported that we had 127 notices filed for 12,700 oz of gold today.   The total number of notices so far this month is thus 11,149 contracts x 100 oz per contract or 1,149,200 oz of gold.  To determine how much will stand for February,  I take the OI standing for February (1339) and subtract out Friday's notices (127) which leaves me with 1212 notices or 121,200 oz left to be served upon our longs.

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

1,149,900 oz (served ) + 121,200 oz (to be served upon) = 1,236,100 oz or 38.45  Tonnes.



we gained  400 oz of gold standing for the February delivery month.






Silver:



February 15.2013:   The February silver contract month




Silver
Ounces
Withdrawals from Dealers Inventorynil
Withdrawals from Customer Inventory  350,997.75 (Scotia)
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory  nil
No of oz served (contracts)66  (330,000 oz)  
No of oz to be served (notices)13  (65,000  oz) 
Total monthly oz silver served (contracts) 318  (1,590,000  oz) 
Total accumulative withdrawal of silver from the Dealers inventory this month984,015.06
Total accumulative withdrawal of silver from the Customer inventory this month2,347,328.3


Today, we  had fair activity  inside the silver vaults.

 we had no dealer deposit and no dealer withdrawal.



We had 0  customer deposits of silver:




 total customer deposit: nil oz









we had 1 customer withdrawals:




ii) out of Scotia:  350,997.75 oz





total customer withdrawal:  350,997.75 oz






we had 0  adjustments:



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

  
Registered silver remains today at :  37.522 million oz
total of all silver:  160.242 million oz.




The CME reported that we had  66 notices filed for 330,000 oz of silver for the February contract month. To obtain what is left to be served upon our longs, I take the OI standing for February (79) and subtract out Tuesday's notices (66) which leaves us with 13 notices or 65,000 oz left to be served upon our longs. 

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

1,590,000 oz (served)  +  65,000 oz (to be served upon)  =  1,655,000 oz

We  gained 330,000 oz of silver standing for February.

As I promised you, the total silver ounces that are standing for February is advancing.











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


Total Gold in Trust:   Feb 15/2013:






Tonnes1,322.97

Ounces42,534,954.30

Value US$68.535   billion





Feb 14.2013:


Tonnes1,322.97

Ounces42,534,954.30

Value US$69.972   billion









Feb 13.2013:









Tonnes1,325.99

Ounces42,631,744.80

Value US$70.089   billion





Feb 12.2013:










Tonnes1,326.89

Ounces42,660,782.25

Value US$70.244  billion





Feb 11.2013:













Tonnes1,326.89

Ounces42,660,782.25

Value US$70.437   billion







Feb 8.2013















Tonnes1,326.89

Ounces42,660,782.25

Value US$71.133   billion








Feb 7.2013:















Tonnes1,329.90

Ounces42,757,579.81

Value US$71.284   billion






we neither gained nor lost any gold at the GLD on Friday. 


and now for silver:



Feb 15: 2013:


Ounces of Silver in Trust338,276,212.400
Tonnes of Silver in Trust Tonnes of Silver in Trust10,521.57



Feb 14.2013:

Ounces of Silver in Trust337,406,018.600
Tonnes of Silver in Trust Tonnes of Silver in Trust10,494.50



Feb 13.2013:



Ounces of Silver in Trust337,406,018.600
Tonnes of Silver in Trust Tonnes of Silver in Trust10,494.50




feb 12.2013:

Ounces of Silver in Trust337,406,018.600
Tonnes of Silver in Trust Tonnes of Silver in Trust10,494.50



Feb 11.2013:




Ounces of Silver in Trust337,406,018.600
Tonnes of Silver in Trust Tonnes of Silver in Trust10,494.50



Feb 8.2013:



Ounces of Silver in Trust335,858,876.200
Tonnes of Silver in Trust Tonnes of Silver in Trust10,446.38









 we  gained 870,000 oz of silver at the SLV


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 to a positive .9 percent to NAV in usa funds and a positive .6%  to NAV for Cdn funds. ( Feb 15 2013)   

2. Sprott silver fund (PSLV): Premium to NAV fell to 1.39% NAV  Feb 15/2013
3. Sprott gold fund (PHYS): premium to NAV  fell to 1.22% positive to NAV Feb 15/ 2013.

 Now we witness the Central fund of Canada  gaining big time in its positive to NAV, as we now see CEF at a positive .9% in usa and .6% in Canadian.This fund is back in premiums to it's former self with respect to premiums per NAV. 

The silver Sprott fund announced a big silver purchase and this reduces the premium to NAV temporarily. 

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






 






end




At 3:30 pm Friday we received the COT report which gives us position levels of our main players.

Let us head to the gold COT and see what we can glean from it:




Gold COT Report - Futures
Large Speculators
Commercial
Total
Long
Short
Spreading
Long
Short
Long
Short
193,941
67,106
24,521
154,573
315,226
373,035
406,853
Change from Prior Reporting Period
1,135
11,765
-290
9,282
-4,672
10,127
6,803
Traders
184
76
63
61
44
272
163


Small Speculators




Long
Short
Open Interest



62,053
28,235
435,088



979
4,303
11,106



non reportable positions
Change from the previous reporting period

COT Gold Report - Positions as of
Tuesday, February 12, 2013


Our large specs;

Those large specs that have been long in gold added a tiny 1135 contracts to their long side.

Surprisingly the large specs that have been short in gold added a monstrous 11,765 contracts to their short side.  (they knew something?)

Our commercials;

Those commercials that have been long in gold added a huge 9,282 contracts to their long side.
Those commercials that have been short in gold covered a huge 4672 contracts.

Our small specs;

Those small specs that have been long in gold added a very tiny 979 contracts to their long side
Those small specs that have been short in gold added a monstrous 4303 contracts to their short side.

Conclusion: strange indeed.  The commercials went net long by 13,954.  Remember this is from last Tuesday until this Tuesday last.

This is bullish but what caused the specs to go massively short?  We have the specs going short and the commercials going net long:  it cannot get any more bullish.



And now let us now see the silver COT:


Silver COT Report: Futures
Large Speculators
Commercial
Long
Short
Spreading
Long
Short
40,205
8,133
33,747
52,182
98,979
-2,244
1,545
-1,977
5,889
740
Traders
72
34
52
37
39
Small Speculators
Open Interest
Total
Long
Short
152,817
Long
Short
26,683
11,958
126,134
140,859
-363
997
1,305
1,668
308
non reportable positions
Positions as of:
138
103

Tuesday, February 12, 2013
  © SilverSeek.co


Our large specs:

Those large specs that have been long in silver, pitched 2244 contracts from their long side
as if they sensed something was going to happen.

Our large specs that have been short in silver added 1545 contracts to their long side.

Our commercials;

Those commercials that have been long in silver added a huge 5889 contracts to their long side.
Those commercials that have been short in silver added a very tiny 740 contracts to their long side.

Our small specs;

Those small specs that have been long in silver pitched a tiny 363 contracts from their long side
Those small specs that have been short in silver added 997 contracts to their short side.

Conclusion: and they raided?  The commercials went net long a huge 5149 contracts
And the specs went net short on the week?  This should set up a very bullish situation as the specs will  get annihilated when the bankers go long.





And now for the major physical stories we faced today:



First gold trading from Europe and Asia courtesy of Goldcore.


I discussed the details with you on Thursday.  The story of record gold demand in 2012
is important, in light of the massive selling by the bankers;

(courtesy Goldcore)




Record Dollar Value Gold Demand In 2012 - India, China and Central Banks Buy

GoldCore's picture





Gold edged up on Thursday, as bargain hunters showed buying interest and gold was particularly strong in euro terms after data from Europe confirmed the continent remains very vulnerable to economic shocks.
The euro area recession deepened and data showed that the euro area economy shrank the most since 2009 and its three biggest economies, Germany, France and Italy, suffered slumping output.
G20 nations should take a stronger stance against currency manipulation the Russian Finance Minister said this morning after G7 conflicting statements about currency wars in recent days.
Hong Kong opened trading today and is seeing the physical jewellery demand pick up, but the bulk of Asia is still closed for the entrance of the Year of the Snake for the lunar New Year.
U.S. weekly jobless claims are reported at 1330 GMT.    
The world's largest gold-backed ETF, SPDR, said its holdings edged off 0.07% to 1325.99 tonnes on Wednesday from 1326.89 tonnes on Tuesday, but remains near record highs.
According to the World Gold Council’s Q4 2012 report issued today, Global gold demand in Q4 2012 reached 1,195.9 tonnes, up 4% from Q4 2011. In value terms gold demand for the quarter was 6% higher year-on-year at $66.2bn marking the highest ever Q4 total and driving annual demand in 2012 to a record value of US$236.4bn.
Gold demand ended a challenging year on a strong note, with a level of demand in Q4 2012 second only to the record level in Q3 2011, highlighting gold’s ongoing attraction and resilience to economic uncertainty. Overall gold demand remains above the five year average with demand in Q4 2012 driven by India, China and the official sector.
In India, investment and jewellery demand reached their highest levels for six quarters with overall demand up 41% on Q4 2011. China recovered from a difficult start to the year, with strong demand in investment and jewellery, both up marginally on the high levels from the final quarter in the previous year. 
Central bank purchasing was up 29% on Q4 2011 marking the eighth consecutive quarter of official sector net purchasing, with full year 2012 seeing the highest levels of central bank purchasing since 1964.
The key findings from the report are as follows:
• Whilst Indian full year demand was down 12% on the previous year, the market performed strongly in the final quarter with total demand at 261.9t, an increase of 41% on the same period last year.  Both jewellery and investment demand reached their highest levels for six quarters. Demand for jewellery was up 35% year-on-year to reach 153.0t, and strong retail demand led to 108.9t of investment buying.  In India the prospect of duty increases, which came in to force in January 2013, may have added to strong buying in the final quarter to beat the anticipated price rises.
• Chinese demand was flat year-on–year, reflecting the impact of economic slowdown. However looking at Q4, total demand was up 1% on the previous quarter to 202.5t. Jewellery demand was137.0t up 1% on Q4 2011 and investment demand was 65.5t, up 2% on the previous year. These increases may reflect the fact that the economic slowdown in China appears to have been shorter than expected.
• Central bank buying for the full year rose by 17% compared to 2011, totaling 534.6t, the highest level since 1964. Central bank purchases stood at 145.0t in Q4, up 29% on the corresponding quarter in the previous year, making this the eighth consecutive quarter in which central banks have been net purchasers of gold. 
• Global investment in ETFs in 2012 was up significantly by 51% on the preceding year, though Q4 was down 16% to 88.1t when compared with the high levels recorded in Q3 2012.
The World Gold Council’s Gold Demand Trends report for Q4 2012 and full year 2012 is now available to download from here.



end




The USA is not happy with Turkey supplying Iran with gold. Turkey needs to pay for gas and oil from Iran and thus the gold transactions 

(courtesy Reuters/Kandemir) 




New U.S. sanction killing Iran-Turkey gold trade, bankers tell Reuters

 Section: 
Turkey-to-Iran Gold Trade Wiped Out by New U.S. Sanction
By Asli Kandemir
Reuters
Friday, February 15, 2013
ISTANBUL -- Tighter U.S. sanctions are killing off Turkey's gold-for-gas trade with Iran and have stopped state-owned lender Halkbank from processing other nations' energy payments to the OPEC oil producer, bankers said on Friday.
U.S. officials have sought to prevent Turkish gold exports, which indirectly pay Iran for its natural gas, from providing a financial lifeline to Tehran, largely frozen out of the global banking system by Western sanctions over its nuclear program.
Turkey, Iran's biggest natural gas customer, has been paying Iran for its imports with Turkish lira because sanctions prevent it from paying in dollars or euros.

Iranians then use those lira, held in Halkbank accounts, to buy gold in Turkey, and couriers carry bullion worth millions of dollars in hand luggage to Dubai, where it can be sold for foreign currency or shipped to Iran.
Halkbank had also been processing a portion of India's payments for Iranian oil.
A provision of U.S. sanctions, made law last summer and implemented from February 6, effectively tightens control on sales of precious metals to Iran and prevents Halkbank from processing oil payments by other countries back to Tehran, bankers said.
"Halkbank can only accept payments for Turkish oil and gas purchases and Iran is only allowed to buy food, medicine, and industrial products with that money," one senior Turkish banker told Reuters.
"The gas-for-gold trade is very difficult after the second round of sanctions. Iranians cannot just withdraw the cash and buy whatever they want. They have to prove what they are buying ... so gold exports will definitely fall," he said.
Trade in Turkish gold bars to Iran via Dubai was already drying up as banks and dealers declined to buy the bullion to avoid sanctions risks associated with the trade.
Reuters first reported the boom in Turkish gold sales to Iran via Dubai last year.
Turkish Economy Minister Zafer Cağlayan signaled a decline in the trade last week when he said that, while Turkey would not be swayed by U.S. pressure to halt gold exports to Iran, Tehran's demand for the metal was expected to fall.
"You could say that the United States has achieved its aim," said a Western diplomat. "If Turkey is going to continue energy imports from Iran, there is no other way to go than trading sanction-free goods."
Washington says Tehran is enriching uranium to levels that could be used in nuclear weapons and has been trying to ratchet up economic pressure on Tehran. Iran says the program is for peaceful purposes.
Turkish ministers had acknowledged the gold-for-gas trade but said it was carried out entirely by the private sector and was not subject to U.S. sanctions.
Turkey, like China, India, and Japan, is heavily dependent on imported energy and, while it has cut back on oil from Iran, has made clear it cannot simply stop buying Iranian oil and gas.
"With so many restrictions, Iran's cash may accumulate in Halkbank accounts. ... They may have difficulty getting some of that money out of Turkey," another senior Turkish banker said.
That could mean Tehran will look elsewhere for allies willing to try to get round the U.S. sanctions, although it may struggle to continue to receive gold as a payment method.
"The gold trade may switch to countries that support Iran politically but Russian banks, for example, would be very cautious because they are very much in the global banking system," the second banker said.
"China may be another option. But I can say that the gold trade is over for Turkey."
Turkey, which is not a major gold producer, was a net gold, jewelry, and precious metals importer in 2011 but swung to being a net exporter last year. Analysts said Iranian demand had prompted both the high imports two years ago -- which were largely sold on to Iran -- and the surge in exports last year.
Gold exports to Iran rose to $6.5 billion in 2012, more than ten times the level of 2011, while exports to the United Arab Emirates -- much of it for onward shipment to Iran or conversion to hard currency -- rose to $4.6 billion from $280 million.
Overall Turkish bullion exports fell to 10.5 tonnes in December from 15.2 tonnes in November.

end

A very important article from Alasdair Macleod who points out correctly that the bankers are covering their gold shorts but cannot cover their silver shorts.
He discusses this from the Bank Participation Report released in early February.

(Alasdair MacLeod/GATA)


GoldMoney's Macleod: Banks closing gold shorts but can't in silver

 Section: 
2:44p ET Friday, February 15, 2013
Dear Friend of GATA and Gold:
GoldMoney research director Alasdair Macleod reports today that bullion banks have been aggressively closing their short positions in gold but have been unable to close them in silver. His report is headlined "Spike in Banks' Net Short Silver Position" and it's posted at the research section of GoldMoney's Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


end

Seems that a German Automaker is hoarding as much physical silver as they can possibly acquire

(courtesy silver doctors website)

GERMAN AUTOMAKER REPORTEDLY HOARDING AS MUCH PHYSICAL SILVER AS IT CAN ACQUIRE

German silver shortageLast month we posted a report (which subsequently went viral)from an Apple contractor who claimed that Apple has delayed production on the new 27″ iMacs due to an industrial silver shortage in China.
New signs of an extremely tight wholesale physical silver market have now emerged, as a first-hand account has revealed that one of the largest and most famous German automakers is hoarding massive amounts of physical silver inside one of the most secure vaults in Zurich, Switzerland.
Financial writer Byron King, who viewed the massive German automaker’s silver hoard in Zurich stated:
Why does the German company store dozens of pallets of silver in a secure vault deep in the mountains of Switzerland? It’s simple, really. So that the metal is there when the car maker needs it. As one purchasing manager explained later in my travels, “For some metals, like silver, there’s no such thing as ‘just in time’ delivery anymore.
In other words, this German company buys silver when it’s availableIn fact, the company buys as much as it can acquire. Then it stores and stockpiles the material in a vault in the mountains of Switzerland, right next to the pope’s gold.
Ted Butler’s long anticipated panic buying & stockpiling of physical silver by industrial users appears to be gaining momentum.
end


The following is an important article for all of you to read as it outlines in detail the mechanics of the massive raids at the comex time and time again.  Once you read this, you will understand how the raids are paper driven and "not for profit".  The regulators are bought and paid for. The comex should be a price discovery mechanism. Instead it morphed into a criminal collusive vehicle to trap unsuspecting longs to be separated from their hard earned dollars.

an important read for you....

(courtesy Dr Jeffrey Lewis)


The untold reality of gold and silver price controls


February 15, 2013 • Reprints

The financial backdrop to the current prices of precious metals like silver and gold is that trillions of dollars and other currencies have been created to reflate stock markets and attempt to create a recovery in the property market, which will only serve to re-inflate real estate prices back to their former unsustainable levels once again.  This seems so utterly obvious, and yet it is rarely discussed.
Furthermore, far too many investors continue to rely on and even hope for the continuance of the status quo, despite the fact that their futile wishes for the financial alchemy to prevail — so that the “free lunch” creation of money from nothing but paper and ink will lead to more jobs and economic growth — have been increasingly frustrated.
Trading Volume Speaks Volumes
Consider for a moment the remarkably high volume of COMEX contracts traded during the days when the spot prices for gold and/or silver were driven sharply lower.
An illusion of weakness tends to prevail in these situations because the majority of precious metal traders do not seem to understand the difference between a paper claim and the real thing, nor do they seem to realize that only paper contracts or claims are being sold when the price of the precious metals drops — not the actual metal itself. Basically, the futures contract seller cannot be forced to deliver physical metal, and so sellers can simply settle their profit or loss on the trade in cash.
Furthermore, the fact that such price drops are typically initiated by the dumping of huge swaths of paper contracts by proprietary traders working at giant bullion banks that are too big to bail and/or fail, makes them seem more like manipulative attempts to scare the precious metals market into a selling panic.
No one is actually selling real bullion during these allegedly “not-for-profit”-led precious metal sell-offs. Instead, the paper market is moving the metal prices as the tail seemingly wags the dog.

Perhaps this was once a civilized way to discover the fair price of a commodity, but in today's age — regardless of the obvious and highly questionable concentration of only a few sellers comprising the entire net short position of the futures market — every market trades in a high speed, momentum-based, and computer program monitored environment.

Regulators and Exchanges Permit Manipulation
This manipulative activity is also permitted by regulators and exchanges in the equities market via dark pools that spoof and front-run millions of unsuspecting penny stock day traders who seem caught up in the race to catch the elusive Red Queen of a good trade.
In the meantime, the bullish fundamentals for higher silver and gold prices are slowly but surely forcing their way into the psyches of the few market participants whose minds remain open to that possibility.
On the surface, the alleged ‘not-for-profit’ seller(s) has created the illusion of a bear market — fanned by a slew of market experts who fall right into line by describing a hundred reasons why the selling might have occurred — without ever getting close to stating the real reasons that the crash happened.
Practically every notable move lower comes from concentrated short sellers intentionally destabilizing the market to force precious metal prices down, although the so-called exports never seem to see it this way. Furthermore, no matter how blatant the sudden dumping is, it is almost always painted and viewed publically as a 'longs selling' event.
If all of that were not enough, predictable sell-offs almost always occur after margin announcements. As a case in point, maintenance margins were lowered last week, thereby providing an incentive for unsuspecting momentum or technical oriented longs to enter the market.
As usual, these weak longs were quickly harvested in less than two trading sessions after the margin announcement was made. Traders operating on margin face considerable pressure to put up more money or exit their positions — typically ultimately dumping their positions at a loss. This is exactly why this harvesting goes on month after month.
Open Interest Offers Better News
The good news, or the flip side, is that open interest has remained high in the precious metals futures markets, despite the numerous downdrafts. This indicates that stronger hands are accumulating.
Uncharacteristically, dips have been bought aggressively — often intra-session — which seems especially unusual for silver.  
Furthermore, awareness is growing among futures traders about retail and wholesale shortages developing in the physical market — combined with the widespread acceptance that central banks of the developing world are accumulating gold at a feverish pace.
This ongoing process is leading more and more investors to wonder why they are not also accumulating silver and gold for their own portfolios.

end

Dave from Denver talks about today's gold/silver trading:


(courtesy Dave from Denver/Golden Truth)

FRIDAY, FEBRUARY 15, 2013

Starting To Feel Like A Bottom

I can go to sleep at night and know one thing–the Fed will not allow deflation. The reason is simple, according to Harris...Debt based societies cannot absorb a deflationary spiral. - Yra Harris, legendary and longtime commodities trader.
 It's been a rough period of time since the beginning of October for precious metals and mining stock investors.  In fact, its been a rough 22 months, dating back to the end of April 2011, when Sunday night paper ambush on silver started the current price correction cycle in the precious metals sector.

I have to say, while this current bull market correction has been the longest so far since 2001, it hasn't been even close to the worst.  In 2008, the HUI index dropped  70% in the space of 6 months.  Ironically, if you had the courage to buy that drop, you are still sitting on a 250% gain.  The first correction I lived through back in 2002 took the HUI from 148 down  to 95  - 36% - in the space of a little more than a month.  The next one started in December 2003, lasted 18 months, and took the HUI down 34%.   For the current HUI correction (which started after silver peaked) dating to August 2011, the index is currently down 40%.  Please note and to reiterate, if you had bought (or added to positions) near the bottom in 2008, you are up 250% on that capital.

For comparison purposes, the SPX index is up 227% since its bottom in early 2009.  I think the fact that the HUI has outperformed the SPX since both indices' respective bottoms, which heralded the banking system collapse and the subsequent transfer of trillions of dollar of public wealth into the banking system to bail it out.

Before you lose your gold, silver and mining stock positions, you need to ask yourself this question:  Has anything gotten better?   Be honest.  Obviously, if look at the Treasury's balance sheet and the Fed's balance sheet, the fundamentals have deteriorated significantly since late 2008.  How about the Government's income statement?  That's gotten worse too.  Housing market?   If you believe the b.s. being thrown at you by Obama and the complicit media, you should read, or re-read this:  LINK  After you're done with that, read this:  LINK  And then read this:  LINK  The latter article is Obama's promise to transfer more money from the general public to the homebuilding companies and mortgage banks and to home buyers who otherwise can't afford a home.

The bottom line is that the fundamentals underpinning our economic and political system continue to deteriorate, masked only by trillions in funny money coming from the Fed and from complete Orwellian diarrhea of the mouth coming from Obama and both sides of the aisle in Congress (note: both Dems and Republicans).  It's those very fundamentals that vary inversely with same fundamentals driving the price of gold and silver.

Here's the only difference between now and 12 years ago when the bull market in the precious metals sector started?   Back 2001, it was primarily the deteriorating fiscal and economic situation in the U.S. and Europe driving gold and silver;  now, it's the deterioration of those same fundamentals globally that will lift the precious metals sector out of the current price correction and on to even higher price levels than the previous highs.  One more important factor.  Back in 2001, up until 2010, Central Banks globally were selling and leasing out their gold.  Now, except for the U.S., British, and European Central Banks, the rest of the CB's globally are accumulating gold - some of them hand over fist.

Have a great weekend.



And now for your important paper stories which will certainly have an influence on gold and silver.


First, overnight sentiment

Important points:

1. The Bundesbank's Weidmann reports that the ECB will not cut interest rates and he feels the rise in the Euro is fine i.e. it is not overvalued.

2. The Eur/USA cross rises with Weidmann's statement

3.  However on European opening, the Euro/USA plummeted to 1.3310 with news of a drop in European area exports to the tune of 1.8% in December (month/month)

4. Imports decline even more by 3% showing the real weakness in Europe.

5. European exports to China drop to multi year lows

6. In the UK, retail sales fall by -.5%

7. Details from Bloomberg and Deutsche Bank

(courtesy zero hedge/early Friday morning sentiment)


Start Your Day With The Usual Disappointing European Economic Data

Tyler Durden's picture





The quiet overnight session was started by comments from Buba's Weidmann, whose statement, among others, that the ECB will not cut interest rates just to weaken the EUR together with the assertion that the EUR is not seriously overvalued, sent the EURUSD briefly higher in pre-European open trading. Of secondary importance was his "hope" that the ECB will not have to buy bonds (it will once the market gets tired of Draghi open-ended verbal intervention), something he himself admitted when he said the ECB "may be forced to show its hand on OMT." The stronger EUR did not last long, and in a peculiar reversal from prior weeks when the European open led to a spike in the cross, saw the EURUSD dip to three week lows, touching on 1.3310, before modestly rebounding. This validity of the drop was confirmed two hours later when in the first key economic datapoint, it was revealed the Euroearea exports fell 1.8% in December, the most in five months. As SocGen said "the monthly trade data rounded off what has undoubtedly been a pretty dismal quarter for the euro area. Overall euro area exports fell by 1.8% m/m in December although this was offset by a even bigger 3% decline in imports - which itself reflects the weakness of domestic demand in some euro area countries. Maybe of more interest is the latest data on the destination of euro exports. These continue to show a pronounced weakness in global demand (albeit for November).This indicates that weakness in Q4 is not solely a domestic affair but also reflects a wider slowdown in the global economy."
SocGen is correct, and as the chart below shows, there is much more to the Chinese hard landing than the Politburo's liea, as European exports to China just dropped to a fresh multi-year low.
The other key economic news of the night was yet another economic miss in the UK, where retail sales ex autos/fuel dropped -0.5% on expectations of a +0.5% print, best summarized laughably by Goldman as "retail sales hit by the January snow... the weakness of today's data was largely caused by the unusually bad weather." These excuses are just getting plain silly.
Finally, despite expectations for a major repayment in today's LTRO put back announcement, only 9 banks repaid some €3.79 billion in LTRO funds, even smaller than last week's €4.99 billion repaied by 21 banks.
Various other key overnight news from Bloomberg:
  • Treasuries steady, 10Y headed for weekly decline; yen gains vs. dollar as G-20 finance chiefs and bankers meet in Moscow amid speculation of a currency war.
  • Japanese ruling party lawmaker Kozo Yamamoto said a race to devalue currencies would spark global growth, dismissing German criticism of Prime Minister Shinzo Abe’s plans for monetary easing which have weakened the yen
  • Bundesbank’s Jens Weidmann said an appreciating euro alone won’t trigger a cut in interest rates and the exchange rate’s gains are justified by the economic outlook; EUR/USD reached 14-month and 3-yr highs against USD and JPY earlier this month
  • U.K. retail sales unexpectedly fell in January for a second consecutive month
  • France’s Socialist president Hollande, facing EU pressure to reach budget targets, is risking the wrath of his core supporters to shrink the pension  system, which had a deficit of EU14b ($19b) in 2011
  • S&P owner McGraw-Hill Cos. was downgraded by Moody’s after the U.S. government filed a lawsuit that seeks as much as $5b in damages
  • BofAML Corporate Master Index OAS holds at 147bps as $4.625b priced yesterday; Markit IG at 86bps, near YTD low 85bps.  High Yield Master II OAS steady at  497bps; $875m priced yesterday. CDX High Yield little changed at 102.75
  • Nikkei falls 1.1%; China closed all week for New Year’s. European stocks, U.S. equity-index futures decline. Italian and Spanish bonds little changed.  Energy lower, precious metals rise
More on the overnight action from DB:
Despite the S&P500 (+0.07%), Dow Jones (+0.07%) NASDAQ (+0.06%) and CDX IG (+0bp) indices all closing virtually unchanged on the day, there was a lot to digest. The opening bell saw the S&P 500 trade 0.4% lower after euro area GDP disappointed (-0.6%qoq vs -0.4% expected) with Germany, Italy and France all coming in lower than expected. Our economists note that together with the earlier -0.7% qoq figure for Spain, these make Q4 the worst quarterly GDP print since H1 2009 for the EMU4 countries. US equities spent the rest of the day recovering from the lows as sentiment took on news  that Berkshire Hathaway was joining with an investment firm in acquiring Heinz in a transaction valued at $23bn.
The announcement certainly added to talk of a return of LBOs and investors seemed to spend much of the session yesterday scouring for similar names. It also comes just a few weeks after the news of Dell’s management buyout and probably explained some of the underperformance in CDX IG (of which Heinz is a member) versus European credit indices. Yesterday also saw the last day for the filing of quarterly Form 13Fs in the US, where investment managers are required to report their holdings to the SEC. This apparently resulted in a number of unusual market moves towards the end of the session. In terms of the economic data, initial jobless claims declined 27k to 341k (vs 360k expected) while continuing claims declined -130k to 3114k, the lowest reading since July 12, 2008. This number has been up and down a lot in recent weeks and months so its probably a bit too early for markets to get excited/worried about the improvements.
Turning to Asia, most of the attention overnight has been squarely focused on Japan ahead of today’s G20 meeting. The WSJ wrote that a draft communiqué being put together by the G20 will include a general pledge for members to refrain from currency manipulation but will not single out any particular country or currency. The communiqué will be released at the G20 meeting today and will include a recommendation that monetary policy should focus on price stability and that “persistent exchange rate misalignment" should be avoided. This comes despite pressure from Russia to use “stronger and more specific language” on the need to avoid currency manipulation, according to the WSJ who cite a senior G20 official.
In Japan itself, reports suggest that the Japanese PM Abe is close to selecting his nominee for the next BoJ governor and will likely finalise his decision over the next few days. Former deputy BoJ governor Toshiro Muto is the leading candidate for the post which may disappoint some who were hoping for a candidate with a more openly radical approach to monetary policy (Reuters). Japan’s economy minister Amari said today that the government has no target for the domestic stock market, seemingly back tracking on recent comments that he would like to see the Nikkei at 13,000 by the end of March.
For the moment though, the Nikkei is down 1.2% as we type, and is poised to extend its streak of +/- 0.5% days to eight trading days. USDJPY is down 0.36% overnight. Outside of Japan, Asian equities are mixed with the Hang Seng (-0.1%) trading marginally lower but the KOSPI (+0.08%) making back to positive territory. Newsflow remains fairly thin on the last day of the Lunar New Year holidays before the Chinese market reopens next week.
In other news, Fed’s Bullard reiterated that it made sense for the Fed to slow asset purchases as data improved, rather than to suddenly bring the purchases to a halt, and said this could even be done in a formulaic manner where for every one-tenth decrease in the unemployment rate, the pace of purchases could be brought down by $15bn per month. In a touch of irony, Moody’s downgraded McGraw-Hill, parent of Standard & Poor’s overnight from A3 to Baa2. The outlook remains negative. Moody’s cited the recent civil lawsuits filed against McGraw-Hill in relation to its ratings on mortgage securities as one of the reasons for the downgrade.
Glancing through today’s data calendar we have Spanish CPI and Eurozone trade balance in Europe. In the US, the Empire State Manufacturing, TIC Flows data, Industrial Production, and the preliminary print of the UofM Consumer Confidence survey are the highlights. Draghi will also speak at the G20 conference this morning at 9.15am London time.


end

A discussion on currency crosses early this morning;

(courtesy Marc to Market)

Apocalyptic Week Winds Down

Marc To Market's picture





The resignation of the Pope was followed by a lightning strike on the Vatican. A meteor storm has hurt hundreds of people in Russia. UK retail sales collapse in January, falling 0.6% increased of rising 0.5% as the consensus expected. Insult was added to injury as the November and December series were revised lower.
Sterling made a new low for the move, to bring its loss against the dollar since the second of January to 5.6%. How much worse can the news get for the sterling? It is not simply the retail sales report. Most of the economic data has disappointed.
The economy remains stagnant to worse and fiscal policy remains pro-cyclical. King says more monetary easing can be provided if needed. Hello? Where is the bar? If it is not needed now, under what conditions would it be needed? King welcomed sterling's weakness, suggesting that it was helping the UK, though inflation will likely remain above target for the next two years.
Sterling is showing some resilience today. It has already traded on both sides of yesterday's range as the North American session gets under way sterling is a bit higher than where they left it yesterday. ?A close above $1.5545, roughly yesterday's high, would be a technical constructive development. If sterling cannot sustain downticks on a poor news stream, it is at least flashing a yellow light, warning bears should be cautious. We had suggested a technical objective near $1.53. Sterling has moved within 1% of this target by declining a little less than a dime this year.
Official comments from the G20 meeting that concludes tomorrow dominates the headlines.  Without the French at the microphones (yet) and aside from Brazil's Mantega, nearly everyone seems to be reading from the same chorus book.   Countries can pursue the monetary and fiscal policies as their domestic economy and political decision making allows.  They should not target foreign exchange prices, which should be determined by the market.  The foreign exchange market needs to be able to clear global trade and capital flows.  At the same time, excessive volatility needs to be avoided. 
This is largely boiler plate stuff and the G20 statement is unlikely to be substantively different that the G7 statement.  Japan will not be singled out as that is not the modus operandi of such G7 or G20 statements.  Many parties besides Japan can be said to have violated the spirit of the general understanding.  In most discussions of currency wars the focus is on the high income countries, yet the reluctance of large current account surplus countries in lower income countries to allow their currencies to participate in the adjustment process is an important part of the underlying tension.
The dollar slipped to new lows for the week against the yen today, but held last Friday's low set just below JPY92.20.  The euro briefly fell through JPY123 to set a new low for February Indeed, it traded below the 20-day moving average for the first time since the Japanese election was announced on November 15.  The 20-day moving average comes in near JPY123.55.  It appears to have stabilized in the European morning and a move back above that average now may mitigate some of the technical damage.
Meanwhile the euro itself continues to track the short-term interest rate spreads.  The 2-year swap rate or interest rate differential has been moving in the US direction in recent days and at almost 9 bp is the biggest US premium since January 16.  Not that there is a one-to-one correspondence between a specific spread level and a particular euro-dollar rate, we note that on January 16, the euro finished the North American session just below $1.33. 


end




Looks like price controls are coming to Venezuela following in the footsteps of Argentina.
Dollars are scare after Venezuela devalued the bolivar to 6.3 to the dollar form 4.3 to the dollar.
The grey market sometimes make sales in 22 to 1 area.  However the equilibrium ratio is really 9 to the dollar. The fear is hyperinflation as food prices are rising due to their scarcity.

(courtesy zero hedge)





Are Price Controls Coming To Venezuela, Where "Nymphomania" For Dollars Is The Next Big Thing

Tyler Durden's picture




In typical 'crazy-talk' ways, Venezuela is 'pledging' that its currency devaluation will not increase inflation in the countryand, as The FT reports, has warned it will crack down on businesses that raise prices. Hot on the heels of Argentina's ignoration of inflation and recent price controls (and advertising bans), it would appear Venezuela is next as grey market dollars are changing hands for 22 Bolivars - massively lower than the official (just devalued) 6.3 Bolivars per USD rate. An 'equilibrium' rate is believed to be around 9 Bolivars but with Chavez still MIA and Maduro running the show, the'nymphomania' for dollars - as Venezuela's finance minister called it - continues as businesses are simply unable to find tenable USD to use for imports. Contagion is also spreading as Colombia's FinMin Cardenas fears goods being smuggled across the border - creating inflation there too.

Venezuela’s government warned that it would crack down on businesses that raise prices as it pledged that a devaluation of its currency would not increase inflation.

The black market price for dollars in the country has risen to a record high, at more than 22 bolivars. That compares to the new official exchange rate of 6.3 bolivars per dollar, with the old 4.3 rate eliminated last Friday. Economists said that at 6.3 bolivars to the dollar, Venezuela’s currency remains overvalued, with the “equilibrium” price believed to be about 9 bolivars.

...

Finance minister Jorge Giordani spoke of“nymphomania” for dollars in Venezuela this week. But businesses criticised his failure to announce alternative sources of foreign currency for importers after a central bank-run system known as the Sitme was scrapped last Friday. Businesses had been able to obtain dollars for 5.3 bolivars through the Sitme.

Fears are growing that businesses will find it increasingly hard to obtain dollars to import goods, possibly forcing them to resort to the more expensive black market for foreign currency, with about a third of consumption in Venezuela supplied by imports.

Mauricio Cárdenas, the finance minister in neighbouring Colombia, expressed concern that the devaluation could lead to an increase in goods being smuggled across the border. A rise in inflation in Venezuela and other distortions caused by price controls could create an incentive for some goods to be sold illegally in Colombia.

Mr Chávez cracked down on businesses after the government’s previous devaluation in January 2010, expropriating supermarkets deemed to be raising prices excessively. There are signs that Mr Maduro will be no less severe.

end




Marc to Market tackles  France:

1.Nineteen consecutive months of  increases in the joblessness
2. Larger than expected decline in GDP
3. France will again miss on its 3% deficit to GDP and France is one of the two pillars of Europe
4, Hollande is now looking at pension reform and that will bring out the populace to the streets as this was the undoing of Sarkozy



an important read  courtesy of Marc to Market



The Next Push : France

Marc To Market's picture




Many investors understandably have not focused on France. The threat of scandal in Spain, the need for yet another round of government support for Italy's third largest bank and the country's upcoming election have commanded attention. What seems to have been a free ride for France may be coming to an end.
Even though the German economy contracted twice as much as the French economy in Q4, we learned this week, the implications for France are greater. Recent data suggests that the German economy has stabilized and may be expanding albeit slowly this quarter. French data continues to disappoint.
This is particularly important because the French government's growth forecast for this year is optimistic, well above the consensus.  It was on the basis of the optimism that the Hollande government forecast that its deficit would fall to 3% of GDP, as the EU requires.
Following news that included the nineteenth consecutive monthly increase in French joblessness (Dec) and the larger than expected contraction in Q4, the French government will likely soon cut is 2013 GDP forecasts.  The issue is whether it does so before or after the EC updates its forecasts at the end of next week.  Currently the EC projects 0.4% growth in France, half of the government's forecast. 
Hollande has sold the tax hikes and spending cuts on the basis that they were necessary to reach the 3% deficit target.   Senior officials in the Hollande government, including Finance Minister Moscovici,  are admitting, just six weeks into the new year, that the 3% target will be overshot.   The push back was nearly immediate.  Asumussen, the German member of the ECB's board, was crystal clear:  France and Germany have a special responsibility to meet the 3% target.
Perhaps if one were sitting in the Elysee Palace, EU Commissioner Rehn's comments earlier this week that some members could be granted more time to bring the deficits in line with EU targets could apply to France.  However, it is not clear whether France would be understood to have met the conditionality; namely a program in place to correct public finances. 
Hollande is under pressure to take additional remedial action.  One area that he is being forced by circumstances to address is the pension system which runs a large deficit.  Some reports suggest Hollande is preparing proposals that include decoupling pensions from inflation.  Pension reforms undermined Sarkozy's support and Hollande's support has waned. 
In terms of policy, outside of the hike of  the marginal tax rate of high income earners and the modification of the higher pension age introduced by Sarkozy, Hollande's policies as a Socialist, do not seem that different.  The modest liberalization of the labor market seems perfectly consistent with the neo-liberal agenda.  Perhaps Hollande has up until now relied more on tax increases than the right would have done, but that path appears to have been nearly exhausted and spending cuts loom.
Investors still appear to regard French bonds as slightly better yielding German bund. Over the past 60-days, the yield of the 2-year notes (of France and Germany) move in the same direct 96% of the time.  The 10-year yields move together 93% of the time.  French yields are inversely correlated to Italian yields, especially in the 2-year area, where the correlation is -63% (vs -11% in the 10 year sector).  French bond yields are also inversely correlated with Spanish bonds at -43%.  However, the correlation of 10-year bonds is zero, but trending up from -35% in mid-December.
Investors who share are misgivings about France should continue to monitor these correlations.  A break down in the French-German correlation and an increase in the French-periphery correlation would suggest a new phase of euro area tension is at hand.

end




Ernst and Young has revealed that bad loans at European banks total 918 billion euros or 7.6% of all loans.  Spain and Italy have much higher ratios of bad loans with Spain at 15.5% and Italy at 10.2%  Already the ESM has placed 300 billion euros to the badly ailing banking sector.  It needs to keep it's AAA rating.  However it must raise funds from the market and if investors see these problem bank loans, they will shun the ESM

(courtesy zero hedge)



Euro-Land Banks In Trouble

Tyler Durden's picture




Via Pater Tenebrarum of Acting-Man blog,

A Record Amount of Bad Loans

recent study by Ernst & Young has revealed that euro-land banks in the aggregate now hold € 918 billion ($1.23 trn.) in non-performing loans (7.6% of all loans outstanding). E&Y sees about 15.5% of all loans in Spain and 10.2% of all loans in Italy as likely to be in NPL status (this exceeds the most recent official numbers somewhat).
In light of such staggering numbers, the idea to use the ESM for direct bank recapitalization seems somewhat ambitious. This is especially so as the idea to employ the ESM to take over the costs of already bailed out banks is being pushed by a number of euro area members. No doubt Ireland and Spain would be happy to see that (in fact, Spain is already the 'exception' as the ESM is potentially on the hook for € 100 billion for its banks – but this is structured as a loan to Spain's government, not a direct bank bailout).
The problem is that if the ESM wants to retain its AAA rating, it will have to back any financing it obtains from the markets with far higher guarantees if it rescues banks rather than governments. Given that what has been pumped into ailing euro-zone banks to date already amounts to €300 billion,  its official capacity could be quickly exceeded if these existing bailout commitments were taken over by it.



bank rescue
Taxpayer-funded bank rescues in the euro area so far – the total already amounts to €300 billion, and that is not counting what might be used to bail out Cypriot banks and what may still be required in Italy and Spain (chart via Die Welt).





Your early Friday morning currency crosses;  (8 am)

 

Friday morning we  see some euro weakness  against the dollar   from the close on Thursday. The yen this the morning  is much stronger  against  the dollar, again retreating to the 92 barrier   at 92.66 yen to the dollar .    The pound, this morning is very weak against the USA dollar breaking into the 1.54 column earlier in the session at  1.5481. The Canadian dollar became a little weaker against the dollar at 1.0026.   We have a mixed risk   situation  this morning with the major European bourses in the red, but some in the green . Gold and silver are lower  in the early morning, with gold trading at $1628. (down $6.70 )  and silver at $30.27 (down 13 cents)

The USA index is up 12 cents at 80.56.



Euro/USA    1.3313  down .0036
USA/yen  92.66 down 0.284
GBP/USA     1.5481 down .0002
USA/Can      1.0026 up .0017

end






your closing 10 year bond yield from Spain: 

...no real change in yield. 







SPANISH GOVERNMENT GENERIC BONDS - 10 YR NOTE

GSPG10YR:IND

5.19-0.00-0.04%
As of 02/15/2013.


Thursday's yield:



SPANISH GOVERNMENT GENERIC BONDS - 10 YR NOTE

GSPG10YR:IND

5.200.01 0.14%





end.





The Italian 10 year bond yield:

small decrease in yield.





Italy Govt Bonds 10 Year Gross Yield

 

GBTPGR10:IND

4.380.02 0.55%
As of 02/15/2013.



Thursday's yield:





ITALY GOVT BONDS 10 YEAR GROSS YIELD

GBTPGR10:IND

4.410.01 0.21%

As of 11:59:58 ET on 02/14/2013.






Your 4:00 pm closing Friday currency crosses:


The Euro strengthened  somewhat from Friday morning's initial fall  finishing at 1.3361.
The yen weakened terribly Friday afternoon to finish at 93.49 .   The pound rebounded from it's lows and it settled at 1.5516.  The Canadian dollar fell a tiny fraction against the dollar.  The USA index reversed course again from the morning with the final index number up  5 cents to 80.48. 


Euro/USA    1.3361  up  .0012
USA/Yen  93.49  up .546
GBP/USA     1.5516  up .0032
USA/Can      1.0060  up 0032







end.




Your closing figures from Europe and the USA:
everybody in the red today except the Dow and the FTSE 


i) England/FTSE up 0.9   or 0.01%

ii) Paris/CAC down 9.23 or .25% 

iii) German DAX: down 37.68 or 0.49%

iv) Spanish ibex down 97.2 points  or  1.18%

v) Italian bourse (MIB) down 55.15 points or 0.33%

and the Dow: up 8.37 points or 0.06% 





end.



And now for some USA stories:




Illinois credit ratings downgraded as this state now drops to the worst in the nation:

(courtesy Jim Sinclair/Sean Lewis)

Illinois’ credit rating downgraded; state drops to worst in the nation 01/26/13
by Sean Lewis

A warning came Saturday morning from state treasurer Dan Rutherford (R) IL State Treasurer. The Standard and Poor’s downgrade from A to A-minus puts Illinois last on the list– and means a higher cost to borrow money.
On Wednesday, the state will issue $500 million in new bonds to pay for roads and other transportation projects. Rutherford says the credit downgrade will cost taxpayers an additional $95 million in interest,
When compared to a perfect triple-a bond rating enjoyed by other11 states including neighboring Indiana, Iowa and Missouri.
“Our problem in Illinois is that we have not substantively and fairly addressed the state public pension issue.”
Rutherford points to Governor Quinn and the democratically controlled general assembly for making matters worse in the last two years– raising taxes but not acting on pension reform.
“This problem didn’t come along just now it’s been accumulating for actually decades. Each time the governor set a deadline and didn’t meet it there was some negative reaction,” he said.
More…




end




This set the tone for USA trading throughout the day. Only a last minute Hail Mary, prevented the USA for ending the session in negative territory:

(courtesy zero hedge)






Wal-Mart Says February Sales "Total Disaster", Worst Monthly Start Since 2006; Stock Drops

Tyler Durden's picture




Wal-Mart shares are plunging as the firm reports a 'total disaster' in its February sales. Bloomberg obtained internal emails that note:
"In case you haven’t seen a sales report these days, February MTD sales are a total disaster,” Jerry Murray, Wal-Mart’s vice president of finance and logistics, said in a Feb. 12 e-mail to other executives, referring to month-to-date sales. “The worst start to a month I have seen in my ~7 years with the company.... That points to our competitive landscape, which means everyone is suffering and probably worse than we are
It gets better:
“We have to fight against the tougher economic environment to earn a bigger share of a smaller consumer spending pie"
Obviously in WMT speak, "tougher" is what Obama would call "much better and rapidly improving."
Things must not be serious over in Bentonville for this much truth to suddenly hit the tape.
One senior executive summed it up perfectly - “Well, we just had one of those weeks here at Walmart U.S. Where are all the customers? And where’s their money?” The company notes the end of the payroll tax cut by Obama and asks "We need to stop the stupid."
How odd: why is WMT focused on such trivial anachronisms as "money": can't it just boost its multiple by promising 2022 sales will be stupendously  marvelously humongous. It works for every other hollowed shell of a firm, gutted by Bernanke's central planning.
Perhaps, just perhaps, some reality will finally come back to the market as a result of this disclosure.


end


A terrific article on how the global endgame is played out:

(courtesy Charles Hugh Smith)





Guest Post: The Global Endgame in Fourteen Points

Tyler Durden's picture




Submitted by Charles Hugh-Smith of OfTwoMinds blog,
An over-indebted, overcapacity economy cannot generate real expansion. It can only generate speculative asset bubbles that will implode, destroying the latest round of phantom collateral.
I have endeavored to lay out the global endgame in four recent entries:
Europe Is Not "Fixed": Two Charts (February 13, 2013)
For those seeking a summary, here is the global endgame in fourteen points:
1. In the initial "boost phase" of credit expansion, credit-based capital ( i.e. debt-money) pours into expanding production and increasing productivity: new production facilities are built, new machine and software tools are purchased, etc. These investments greatly boost production of goods and services and are thus initially highly profitable.
2. As credit continues to expand, competitors can easily borrow the capital needed to push into every profitable sector. Expanding production leads to overcapacity, falling profit margins and stagnant wages across the entire economy.
Resources (oil, copper, etc.) may command higher prices, raising the input costs of production and the price the consumer pays. These higher prices are negative in that they reduce disposable income while creating no added value.
3. As investing in material production yields diminishing returns, capital flows into financial speculation, i.e. financialization, which generates profits from rapidly expanding credit and leverage that is backed by either phantom collateral or claims against risky counterparties or future productivity.
In other words, financialization is untethered from the real economy of producing goods and services.
4. Initially, financialization generates enormous profits as credit and leverage are extended first to the creditworthy borrowers and then to marginal borrowers.
5. The rapid expansion of credit and leverage far outpace the expansion of productive assets. Fast-expanding debt-money (i.e. borrowed money) must chase a limited pool of productive assets/income streams, inflating asset bubbles.
6. These asset bubbles create phantom collateral which is then leveraged into even greater credit expansion. The housing bubble and home-equity extraction are prime examples of theis dynamic.
7. The speculative credit-based bubble implodes, revealing the collateral as phantom and removing the foundation of future borrowing. Borrowers' assets vanish but their debt remains to be paid.
8. Since financialization extended credit to marginal borrowers (households, enterprises, governments), much of the outstanding debt is impaired: it cannot and will not be paid back. That leaves the lenders and their enabling Central Banks/States three choices:
A. The debt must be paid with vastly depreciated currency to preserve the appearance that it has been paid back.
B. The debt must be refinanced to preserve the illusion that it can and will be paid back at some later date.
C. The debt must be renounced, written down or written off and any remaining collateral liquidated.
9. Since wages have long been stagnant and the bubble-era debt must still be serviced, there is little non-speculative surplus income to drive more consumption.
10. In a desperate attempt to rekindle another cycle of credit/collateral expansion, Central Banks lower the yield on cash capital (savings) to near-zero and unleash wave after wave of essentially "free money" credit into the banking sector.
11. Since wages remain stagnant and creditworthy borrowers are scarce, banks have few places to make safe loans. The lower-risk strategy is to use the central bank funds to speculate in "risk-on" assets such as stocks, corporate bonds and real estate.
12. In a low-growth economy burdened with overcapacity in virtually every sector, all this debt-money is once again chasing a limited pool of productive assets/income streams.
13. This drives returns to near-zero while at the same time increasing the risk that the resulting asset bubbles will once again implode.
14. As a result, total credit owed remain high even as wages remain stagnant, along with the rest of the real economy. Credit growth falls, along with the velocity of money, as the central bank-issued credit (and the gains from the latest central-bank inflated asset bubbles) pools up in investment banks, hedge funds and corporations.
The net result: an over-indebted, overcapacity economy cannot generate real expansion. It can only generate speculative asset bubbles that will implode, destroying the latest round of phantom collateral.
Here are three charts that illustrate #14:
Eurozone credit since the inception of the euro. This is roughly equivalent to TCMDO (Total Credit Market Debt Owed) in the U.S.
Eurozone credit growth:
Money velocity in the U.S.:
That is the endgame in three charts. Checkmate, game over



end


Alan Greenspan states quite clearly that the economy is the stock market:

the tape starts at  1:50

(courtesy zero hedge/CNBC) 


Greenspan: Ignore The Economy, "Only The Stock Market Matters"

Tyler Durden's picture




Starting at around 1:50, Greenspan states the odds of sequester occurring are very high - in fact, the playdough-faced ex-Chair-head notes, "I find it very difficult to find a scenario in which [the sequester] doesn't happen" But when asked how this will affect the economy, Awkward Alan is unusually clearly spoken - "the issue is how does it affect the stock market."
While not so many of our leaders have taken the path to direct truthiness, Greenspan somewhat shocks a Botox'd and babbling Bartiromo when he admits "the stock market is the key player in the game of economic growth."
Bartiromo shifts uncomfortably in her seat, strokes her imaginary beard and stares blankly as Greenspan explains that while the sequester will have a real effect on the real economy, "if the stock market can hold up through this, then the effect will be rather minor."
He ends with a couple of wonderful truthisms - data shows that not only are stock markets a leading indicator of economic activity, they are a major cause of it - 6% of the change in the growth in GDP results from changes in the value of stocks and homes. So there it is - if we didn't already know, straight from an old horse's mouth - it's all about stocks!
Fiscal problems? "The problem is so severe at this stage that unless we come to terms with it in a large way, we are running into very serious trouble," but Dr. Greenspan, if stocks stay up, it's all good right? Greenspan's wealth effect meme is all there is...




We will close with your weekly wrap with Greg Hunter of USAWatchdog





 Greg Hunter’s USAWatchdog.com 



The big story this week was the State of the Union address by the President and the rebuttals.  Please note “rebuttals” plural.  Everyone knows Senator Marco Rubio, but not much coverage was given to Senator Rand Paul from Kentucky.  I thought President Obama and Senator Rubio did a fine job of presenting their points and vision.  (I do not care about the stupid controversy over Rubio picking up a bottle of water.)  I thought the most important points made in the State of the Union address were given by Senator Paul, but most people didn’t hear or see what he had to say because of the near blackout by the mainstream media (MSM.)  Senator Paul called for a balanced budget amendment to get the U.S. fiscal house in order.  He noted we are borrowing $50,000 per second. 
The Republicans are blocking Chuck Hagel’s confirmation for Secretary of Defense.  They want more information on Benghazi where four citizens were murdered by terrorists.  In the end, the Secretary of Defense will do what the President says no matter who is in charge over there, but before there is a confirmation, there will likely be more information disclosed about that terror attack. 
The automatic cuts in social programs and defense spending called “sequestration” are edging closer to the March 1st date.  Some say this will be a disaster, but others say the cuts are a drop in the bucket of government spending.  Democrats want more taxes.  Republicans want the spending cuts now because they already caved in on $600 billion in new taxes.  This is setting up to be a one-two punch on the economy.  First the sequestration, then the debt ceiling will expire in mid-May.  I see both sides digging in their heels and not solving the problem.  This could really upset the financial markets.  
A senior Iranian commander was assassinated in Syria.  This is yet another escalation in the two year old Syrian civil war that has claimed the lives of more than 60,000.   
North Korea has test fired another nuclear weapon.  Some liken them to a four year old wanting attention and assistance from the world.  I say a four year old with a nuclear weapon is a very dangerous situation.  Lots of folks are worried about this wild card state. 
You want to know why the car industry is making a big comeback.  Sub-prime car loans are back with a vengeance.  Two local car dealers were advertising 0% down car loans and were touting that you could get a car loan even if you had a bankruptcy or other money problems.  45% of new car loans are sub-prime.  I hear another bubble blowing. 
Join Greg Hunter as he gives his analysis of the news in the Weekly News Wrap-Up.


end

See you Monday night

Have a grand weekend

harvey

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