In the access market at 5:30 pm, gold and silver finished trading at the following prices :
gold: 1386.30
silver: $22.39
Friday is generally a day that the bankers try and subdue to the price of gold and silver and they did not disappoint us with their criminal behaviour. Please remember that options expire Tuesday and first day notice for both the gold and silver contracts will be this coming Friday, the 31st of May.
At the Comex, the open interest in silver rose by 31 contracts to 147,342 contracts with silver's rise in price yesterday by 3 cents. The silver OI is holding firm at elevated levels . The open interest on the gold contract fell by 5,818 contracts to 445,517. The gold deliveries for May rose a bit today to 9.48 tonnes and this is an off month for gold. The number of silver ounces, standing for delivery in May remained constant at 17.210 million oz. ( On first day notice: 14.860 million oz.)
Again, at the Comex, gold is departing as investors are frightened to death of a confiscation similar to what happened at MFGlobal or Refco. Tonight, the Comex registered or dealer gold remains at 1.641 million oz or 51.04 tonnes. The total of all gold at the comex rose slightly but still well below the 8 million oz at 7.993 million oz or 248.6 tonnes of gold.
The GLD reported another loss in gold inventory of 2.41 tonnes. The SLV inventory of silver remained constant.
Today we have a great commentary from Bill Holter as he tackles flash trading. You do not want to miss this very important commentary.
In physical commentaries, we have a story on Barrick gold which was fined 16 million dollars..the maximum fine in Chile for environmental issues on its Pascua Lama project. The Argentinian side also state that there are issues with the many glaciers. It looks like this mine will be delayed again going into production.
We have reports on increase demand for Chinese jewellery re gold.
Egon Von Greyerz provided more stories on Swiss allocated gold holders who were refused entry to see their gold.
On the paper side of things:
Japan stabilized Thursday night but not before the yen increased in value sending holders of the Yen carry trade in a tizzy. The high volatility in the Japanese bond yields are causing massive derivative blowups at the Japanese banks. Also remember that the higher yields causes tier 1 asset to deteriorate which forces the banks to call in massive loans. Japan is one big mess!!
In Europe we had problems in Spain where banking officials stated that they now need an additional 10 billion euros. The shares of Bankia plummeted by 51% as they came to realize that there is no sovereign guarantee. Already 133 billion euros have been pumped into the Spanish banks all guaranteed by the sovereign and also remember that none of these loans has been included in sovereign Spain's total debt to GDP figures. They view this as a contingency liability and thus the authorities over there do not include it in official figures.
Over in Italy we are now witnessing a big increase in their non performing loans.
This has caused yields in the 10 yr Italy bonds (as well as Spain) to increase (lower prices). The NPL's of course create additional havoc to our bankers balance sheets.
Friday afternoon, we witnessed a surprise Bloomberg article suggesting that the Europe was ready to abandon the shadow banking industry. The shadow banking industry is huge and if you outlaw this practice, you suck the entire oxygen from the financial world. The world would immediately go into hyper-deflation as the entire world would stop functioning.
Then why would these guys announce this? Something sinister is rearing its ugly head.
We will go over these and other stories but first.....................
Here are the details:
The total gold comex open interest fell by 5818 contracts from 451,335 down to 445,517 with gold rising by $15.40 yesterday. I guess some of the paper players are giving up playing in the rigged Comex casino. The front non active delivery month of May saw its OI rise by 11 contracts up to 1067. However we had 25 delivery notice filed on Thursday. Thus we gained 36 gold contracts in May or an additional 3600 oz will stand for the May delivery month. The next active contract month is June and here the OI fell by 12,727 contracts to 147,241 as those who did not give up, rolled into August. June is the second biggest delivery month in gold's calender and first day notice is a week away on Friday the 31st of May .( I erred in my previous commentaries thinking that Memorial day is on Friday, it is this Monday) The estimated volume Friday was fair at 164,465 contracts. The confirmed volume on Thursday was extremely good at 257,252 contracts.
The total silver Comex OI completely plays to a different drummer than gold. It rose by 31 contracts from 147,311 up to 147,342, with silver's slight rise in price of 3 cents yesterday. The front active silver delivery month of May saw it's OI fall by 40 contracts down to 109. We had 40 delivery notices filed on Thursday so we neither gained nor lost any silver ounces standing in the May delivery month. The next delivery month for silver is June and here the OI fell by 23 contracts to stand at 349. The next big active contract month is July and here the OI fell by 1196 contracts to rest tonight at 76,667. The estimated volume on Friday was poor, coming in at 26,768 contracts. The confirmed volume on Thursday was excellent at 50,132.
Comex gold/May contract month:
May 24/2013
Ounces
| |
Withdrawals from Dealers Inventory in oz
|
nil
|
Withdrawals from Customer Inventory in oz
|
64.3 (Scotia, Brinks)
|
Deposits to the Dealer Inventory in oz
|
nil
|
Deposits to the Customer Inventory, in oz
| 96,146.86 oz (Scotia) |
No of oz served (contracts) today
|
25 (2,500 oz)
|
No of oz to be served (notices)
|
1042 (104,200)
|
Total monthly oz gold served (contracts) so far this month
|
2007 (200,700 oz)
|
Total accumulative withdrawal of gold from the Dealers inventory this month
|
10,656.61
|
Total accumulative withdrawal of gold from the Customer inventory this month
| 732,301.75 oz |
We had fair activity at the gold vaults.
The dealer had 0 deposits and 0 dealer withdrawals.
We had 1 customer deposit today:
Into Scotia: 96,146.868 oz
total customer deposit: 96,146.868 oz
We had 2 customer withdrawal today:
i) Out of Scotia: 32.15 oz
ii) Out of HSBC: 32.15 oz
total customer withdrawals: 64.30 oz
We had 2 adjustments
i) Out of HSBC: 14,143.915 oz was adjusted out of the dealer account and back into the customer account at Brinks.
ii) Out of JPMorgan: 12,963.649 oz was adjusted out of the dealer account and back into the customer account.
The JPMorgan customer vault rises to close the week at 310,390.402 oz or 9.65 tonnes.
i) Out of HSBC: 14,143.915 oz was adjusted out of the dealer account and back into the customer account at Brinks.
ii) Out of JPMorgan: 12,963.649 oz was adjusted out of the dealer account and back into the customer account.
The JPMorgan customer vault rises to close the week at 310,390.402 oz or 9.65 tonnes.
Tonight the dealer inventory reduces again and stands tonight at a low of 1.641 million oz (51.04) tonnes of gold. The total of all gold slightly rises, resting tonight at 7.993 million oz or 248.68 tonnes.
The CME reported that we had 25 notices filed Friday for 2500 oz of gold.
To calculate the quantity of gold ounces that will stand, I take the OI standing for May (1067) and subtract out Friday's notices (25) which leaves us with 1042 notices or 104,200 oz left to be served upon our longs.
To calculate the quantity of gold ounces that will stand, I take the OI standing for May (1067) and subtract out Friday's notices (25) which leaves us with 1042 notices or 104,200 oz left to be served upon our longs.
Thus we have the following gold ounces standing for metal in May:
2007 contracts x 100 oz per contract or 200,700 oz (served) + 1042 notices or 104,200 oz (to be served upon) = 304,900 oz or 9.483 tonnes of gold.
We gained an additional 200 oz of gold standing for the May delivery month.
This is extremely high for a non active month.
We now have the official USA production of gold last year and it registered 230 tonnes. Thus approximately 19.16 tonnes of gold is produced by all mines in the USA. Thus the amount standing for gold this month represents 49.5% of that total production.
The big June delivery month will surely be exciting to watch judging by the huge demand for gold in May. We will also see if the boys have any trouble servicing the last 1,042 contracts in the May delivery month We have 3 more trading sessions before first day notice. We will also watch what happens with JPMorgan with respect to its customer gold. It remains now at 9.25 tonnes of gold.
end
Silver:
May 24.2013: May silver:
| Silver |
Ounces
|
| Withdrawals from Dealers Inventory | nil |
| Withdrawals from Customer Inventory | 163,800.38 oz (Scotia) |
| Deposits to the Dealer Inventory | nil |
| Deposits to the Customer Inventory | 1,551,187.73 (Brinks, Delaware, Scotia) |
| No of oz served (contracts) | 10 (50,000) |
| No of oz to be served (notices) | 99 (495,000 oz) |
| Total monthly oz silver served (contracts) | 3343 (16,715,000 oz) |
| Total accumulative withdrawal of silver from the Dealers inventory this month | 903,273.57 oz |
| Total accumulative withdrawal of silver from the Customer inventory this month | 4,914,163.30 oz |
Today, we had good activity inside the silver vaults.
we had 0 dealer deposits and 0 dealer withdrawals.
We had 3 customer deposits:
i) Into Brinks: 300,413.01 oz
ii) Into Scotia: 618,994.22 oz
iii) Into JPM: 631,780.50
total customer deposit; 1,551,187.73 oz
We had 3 customer withdrawals:
We had 3 customer deposits:
i) Into Brinks: 300,413.01 oz
ii) Into Scotia: 618,994.22 oz
iii) Into JPM: 631,780.50
total customer deposit; 1,551,187.73 oz
We had 3 customer withdrawals:
i) Out of Scotia: 40,823.95 oz
ii) Out of Delaware: 1954.60 oz
iii) Out of Brinks: 121,021.83 oz
total customer withdrawals: 163,800.38 oz
we had 2 adjustments today
i. Out of the JPM vault: 235,898.45 oz was adjusted out of the dealer and back into the dealer account at JPM
ii) Out of Scotia: 10,187.50 oz was adjusted out of the customer and this silver landed in the dealer account.
i. Out of the JPM vault: 235,898.45 oz was adjusted out of the dealer and back into the dealer account at JPM
ii) Out of Scotia: 10,187.50 oz was adjusted out of the customer and this silver landed in the dealer account.
Registered silver at : 43.49 million oz
total of all silver: 166.725 million oz.
The CME reported that we had 10 notices filed for 50,000 oz. We have a total of 3,343 notices filed so far this month for 16,715,000 oz. To calculate the number of ounces that will stand in silver, I take the OI standing for May (109) and subtract out today's notices (10) which leaves us with 99 notices or 495,000 oz left to be served upon our longs.
Thus the total number of silver ounces standing in this active delivery month of May is as follows:
3333 contracts x 5000 oz per contract (served) = 16,665,000 + 109 contracts x 5000 oz = 545,000 oz ( to be served) = 17,210,000 oz.
We neither gained nor lost any silver standing on Friday. The total standing for silver is still superb for May.
The total amount standing for May in silver represents 51.22% of ANNUAL silver production from the USA (the USA produces around 33.6 million oz per year.)
Thus the total number of silver ounces standing in this active delivery month of May is as follows:
3333 contracts x 5000 oz per contract (served) = 16,665,000 + 109 contracts x 5000 oz = 545,000 oz ( to be served) = 17,210,000 oz.
We neither gained nor lost any silver standing on Friday. The total standing for silver is still superb for May.
The total amount standing for May in silver represents 51.22% of ANNUAL silver production from the USA (the USA produces around 33.6 million oz per year.)
end
Late Friday night, only 1 silver contract was issued for Tuesday
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 24.2013:
May 23.2013:
May 22.2013:
May 21:2013
May 20.2013:
May 17.2013:
May 16.2013:
May 15.2013:
may 14.2013:
May 10.2013:
May 8.2013:
may 7.2013:
May 6.2013:
end
Now let us check on gold inventories at the GLD first:
May 24.2013:
Tonnes1,016.16
Ounces32,670,593.55
Value US$45.403 billion
May 23.2013:
Tonnes1,018.57
Ounces32,747,937.28
Value US$45.192 billion
May 22.2013:
Tonnes1,020.07
Ounces32,796,277.52
Value US$46.177 billion
May 21:2013
Tonnes1,023.08
Ounces32,892,959.74
Value US$44.743 billion
May 20.2013:
Tonnes1,031.50
Ounces33,163,669.76
Value US$44.913 billion
May 17.2013:
Tonnes1,038.41
Ounces33,386,040.80
Value US$45.683 billion
May 16.2013:
Tonnes1,041.42
Ounces33,482,727.36
Value US$46.226 billlion
May 15.2013:
Tonnes1,047.13
Ounces33,666,434.30
Value US$47.457 billion
may 14.2013:
Tonnes1,051.65
Ounces33,811,468.47
Value US$48.465 billion
May 13.2013:
Tonnes1,051.65
Ounces33,811,468.47
Value US$48.364 billion
May 10.2013:
Tonnes1,051.65
Ounces33,811,468.47
Value US$48.222 billion
May 9.2013:
Tonnes1,054.18
Ounces33,892,812.62
Value US$49.641 billion
May 8.2013:
Tonnes1,051.47
Ounces33,805,784.75
Value US$49.598 billion
may 7.2013:
Tonnes1,057.79
Ounces34,008,852.21
Value US$49.089 billion
May 6.2013:
Tonnes1,062.30
Ounces34,153,900.65
Value US$50.153 billion
end
Here are the withdrawals for the week:
Friday: 2.41 tonnes
Thursday: 1.5 tonnes
Wednesday: 3.01 tonnes
Tuesday: 8.42 tonnes
Monday: 6.91 tonnes
The registered vaults at the GLD will eventually become a crime scene as real physical gold departs 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. There is no doubt in my mind that GLD has nowhere near the gold that say they have and this will eventually lead to the default at the LBMA and then onto the comex in a heartbeat (same banks)
As a reminder the total comex gold had inventories of around 11 million oz in 2011. Today it fell a bit and now stands at 7.993 million oz (248.68 tonnes)
end
Inventory at SLV (6 pm est)
May 24.2013:
May 23.2013:
May 22.2013
May 21/2013:
May 20.2013:
May 17/2013
May 16.203:
Inventory at SLV (6 pm est)
May 24.2013:
| Inception Date | 4/21/2006 |
| Ounces of Silver in Trust | 322,245,369.800 |
| Tonnes of Silver in Trust | 10,022.95 |
May 23.2013:
| Inception Date | 4/21/2006 |
| Ounces of Silver in Trust | 322,245,369.800 |
| Tonnes of Silver in Trust | 10,022.95 |
May 22.2013
| Inception Date | 4/21/2006 |
| Ounces of Silver in Trust | 327,893,650.100 |
| Tonnes of Silver in Trust | 10,198.63 |
May 21/2013:
| Inception Date | 4/21/2006 |
| Ounces of Silver in Trust | 327,893,650.100 |
| Tonnes of Silver in Trust | 10,198.63 |
May 20.2013:
| Inception Date | 4/21/2006 |
| Ounces of Silver in Trust | 329,631,679.700 |
| Tonnes of Silver in Trust | 10,252.69 |
May 17/2013
| Inception Date | 4/21/2006 |
| Ounces of Silver in Trust | 329,631,679.700 |
| Tonnes of Silver in Trust | 10,252.69 |
May 16.203:
| Inception Date | 4/21/2006 |
| Ounces of Silver in Trust | 334,121,683.000 |
| Tonnes of Silver in Trust | 10,392.35 |
May 15:2013:
| Inception Date | 4/21/2006 |
| Ounces of Silver in Trust | 335,666,675.000 |
| Tonnes of Silver in Trust | 10,440.40 |
May 14.2013:
| Inception Date | 4/21/2006 |
| Ounces of Silver in Trust | 335,666,675.000 |
| Tonnes of Silver in Trust | 10,440.40 |
May 13.2013:
| Inception Date | 4/21/2006 |
| Ounces of Silver in Trust | 335,666,675.000 |
| Tonnes of Silver in Trust | 10,440.40 |
May 10.2013:
| Inception Date | 4/21/2006 |
| Ounces of Silver in Trust | 335,666,675.000 |
| Tonnes of Silver in Trust | 10,440.40 |
May 9.2013:
| Inception Date | 4/21/2006 |
| Ounces of Silver in Trust | 335,666,675.000 |
may 8.2013
| Inception Date | 4/21/2006 |
| Ounces of Silver in Trust | 335,376,960.800 |
| Tonnes of Silver in Trust | 10,431.39 |
may 7.2013:
| Inception Date | 4/21/2006 |
| Ounces of Silver in Trust | 335,376,960.800 |
| Tonnes of Silver in Trust | 10,431.39 |
May 6.2013:
| Inception Date | 4/21/2006 |
| Ounces of Silver in Trust | 335,376,960.800 |
| Tonnes of Silver in Trust | 10,431.39 |
we had no change in silver inventory at the SLV
end
we had no change in silver inventory at the SLV
end
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)
Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
(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 2.8% percent to NAV in usa funds and a negative 2.8% to NAV for Cdn funds. ( May 24/13) .
1. Central Fund of Canada: traded at negative 2.8% percent to NAV in usa funds and a negative 2.8% to NAV for Cdn funds. ( May 24/13) .
2. Sprott silver fund (PSLV): Premium to NAV fell to .30% NAV May 24/2013
3. Sprott gold fund (PHYS): premium to NAV rose to - .72% positive to NAV May 24/ 2013
3. Sprott gold fund (PHYS): premium to NAV rose to - .72% positive to NAV May 24/ 2013
end
At 3:30 the CME releases its report on position levels of our major players in gold and silver.
Let us now head over and see the gold COT:
Gold COT Report - Futures
Large Speculators
Commercial
Total
Long
Short
Spreading
Long
Short
Long
Short
189,401
109,142
22,414
192,147
276,269
403,962
407,825
Change from Prior Reporting Period
2,480
5,947
-3,299
1,645
1,621
826
4,269
Traders
129
111
70
62
64
222
218
Small Speculators
Long
Short
Open Interest
42,125
38,262
446,087
1,455
-1,988
2,281
non reportable positions
Change from the previous reporting period
COT Gold Report - Positions as of
Tuesday, May 21, 2013
Our large specs:
Those large speculators who are long in gold added a large 2480 contracts to their long side.
Those large speculators who are short in gold added another hefty 5947 contracts to their short side.
This is an accident waiting to happen..the large specs have been continually loading the boat on the short side Very shortly the boat will leak and be filled with water.
Our commercials:
Those commercials that have been long in gold added 1645 contracts to their long side
Those commercials that have been short in gold added another 1621 contracts to their short side.
Our small specs:
Those small specs that have been long in gold added 1455 contracts to their long side.
Those small specs that have been short in gold covered 1988 contracts from their short side.
Conclusion:
From the dealer side of things: neutral
From the large specs side of things: hugely bullish as they are continually going net short.
Are these guys being set up to be slaughtered..... (see zero hedge below)
end
Zero hedges catches what is going on with respect to the large speculators. It certainly looks like these guys are being setting up to take a massive hit. When the bankers are ready you are going to see a plethora of buyers (bankers, gold bugs and shorts trying to cover ) with a scarcity of sellers.
(courtesy zero hedge)
end
At 3:30 the CME releases its report on position levels of our major players in gold and silver.
Let us now head over and see the gold COT:
At 3:30 the CME releases its report on position levels of our major players in gold and silver.
Let us now head over and see the gold COT:
Gold COT Report - Futures
| ||||||
Large Speculators
|
Commercial
|
Total
| ||||
Long
|
Short
|
Spreading
|
Long
|
Short
|
Long
|
Short
|
189,401
|
109,142
|
22,414
|
192,147
|
276,269
|
403,962
|
407,825
|
Change from Prior Reporting Period
| ||||||
2,480
|
5,947
|
-3,299
|
1,645
|
1,621
|
826
|
4,269
|
Traders
| ||||||
129
|
111
|
70
|
62
|
64
|
222
|
218
|
Small Speculators
| ||||||
Long
|
Short
|
Open Interest
| ||||
42,125
|
38,262
|
446,087
| ||||
1,455
|
-1,988
|
2,281
| ||||
non reportable positions
|
Change from the previous reporting period
| |||||
COT Gold Report - Positions as of
|
Tuesday, May 21, 2013
| |||||
Our large specs:
Those large speculators who are long in gold added a large 2480 contracts to their long side.
Those large speculators who are short in gold added another hefty 5947 contracts to their short side.
This is an accident waiting to happen..the large specs have been continually loading the boat on the short side Very shortly the boat will leak and be filled with water.
Our commercials:
Those commercials that have been long in gold added 1645 contracts to their long side
Those commercials that have been short in gold added another 1621 contracts to their short side.
Our small specs:
Those small specs that have been long in gold added 1455 contracts to their long side.
Those small specs that have been short in gold covered 1988 contracts from their short side.
Conclusion:
From the dealer side of things: neutral
From the large specs side of things: hugely bullish as they are continually going net short.Are these guys being set up to be slaughtered..... (see zero hedge below)
end
Zero hedges catches what is going on with respect to the large speculators. It certainly looks like these guys are being setting up to take a massive hit. When the bankers are ready you are going to see a plethora of buyers (bankers, gold bugs and shorts trying to cover ) with a scarcity of sellers.
(courtesy zero hedge)
Forget Prayer, It's Lamb Slaughter Time: A Rational Man's Response To All Time High Gold Shorts
Submitted by Tyler Durden on 05/24/2013 18:47 -0400
Two days ago we suggested that "they better pray there is no short squeeze." Today, following the just released latest CFTC Commitment of Traders data which showed that the Comex gold short position grew once again to a new all time high of 79,416 shorts, all prayers are now off. If we may be so bold as to we suggest, the time has come to upgrade to the sacrificial slaughtering of at least a lamb on the altar of Saint Ben, because even the tiniest hint of a forced cover will now result in the biggest rip your face off levered short squeeze seen in the history of the yellow metal. Maybe throw in an ink cartridge or two for good measure...
Short positions in gold have risen 25% in the last 3 weeks
Chart: Bloomberg
end
And now for our Silver COT:
Silver COT Report - Futures
Large Speculators
Commercial
Total
Long
Short
Spreading
Long
Short
Long
Short
35,533
26,718
24,576
67,754
79,680
127,863
130,974
-157
1,822
1,584
1,037
-255
2,464
3,151
Traders
57
55
46
40
38
123
119
Small Speculators
Long
Short
Open Interest
20,756
17,645
148,619
1,489
802
3,953
non reportable positions
Change from the previous reporting period
COT Silver Report - Positions as of
Tuesday, May 21, 2013
a lot different than gold
Our large speculators:
Those large specs that have been long in silver pitched a tiny 157 contracts from their long side
Those large specs that have been short in silver added a rather large 1822 contracts to their short side.
Our commercials;
Those commercials that have been long in silver added another 1037 contracts to their long side
Those commercials that have been short in silver covered 255 contracts from their short side
Our small specs;
Those small specs that have been long in silver added a rather large 1489 contracts to their long side.
Those small specs that have been short in silver added another 802 contracts to their short side.
Conclusion;
from a commercial standpoint: very bullish.
end
Two days ago we suggested that "they better pray there is no short squeeze." Today, following the just released latest CFTC Commitment of Traders data which showed that the Comex gold short position grew once again to a new all time high of 79,416 shorts, all prayers are now off. If we may be so bold as to we suggest, the time has come to upgrade to the sacrificial slaughtering of at least a lamb on the altar of Saint Ben, because even the tiniest hint of a forced cover will now result in the biggest rip your face off levered short squeeze seen in the history of the yellow metal. Maybe throw in an ink cartridge or two for good measure...
Short positions in gold have risen 25% in the last 3 weeks
Chart: Bloomberg
end
And now for our Silver COT:
Silver COT Report - Futures
| ||||||
Large Speculators
|
Commercial
|
Total
| ||||
Long
|
Short
|
Spreading
|
Long
|
Short
|
Long
|
Short
|
35,533
|
26,718
|
24,576
|
67,754
|
79,680
|
127,863
|
130,974
|
-157
|
1,822
|
1,584
|
1,037
|
-255
|
2,464
|
3,151
|
Traders
| ||||||
57
|
55
|
46
|
40
|
38
|
123
|
119
|
Small Speculators
| ||||||
Long
|
Short
|
Open Interest
| ||||
20,756
|
17,645
|
148,619
| ||||
1,489
|
802
|
3,953
| ||||
non reportable positions
|
Change from the previous reporting period
| |||||
COT Silver Report - Positions as of
|
Tuesday, May 21, 2013
| |||||
a lot different than gold
Our large speculators:
Those large specs that have been long in silver pitched a tiny 157 contracts from their long side
Those large specs that have been short in silver added a rather large 1822 contracts to their short side.
Our commercials;
Those commercials that have been long in silver added another 1037 contracts to their long side
Those commercials that have been short in silver covered 255 contracts from their short side
Our small specs;
Those small specs that have been long in silver added a rather large 1489 contracts to their long side.
Those small specs that have been short in silver added another 802 contracts to their short side.
Conclusion;
from a commercial standpoint: very bullish.
end
And now for the major physical stories we faced today:
Jewellery demand in China is now 185 tonnes in the first quarter. If we extrapolate for the full year we can easily see 740 tonnes. With Indian demand clearly in excess of 1000 tonnes, together these two nations brings in 1740 tonnes out of 2200 tonnes produced by all mining operations globally ex China ex Russia or roughly 80% of global production.
(courtesy Goldcore)
-- Posted Friday, 24 May 2013 | | Comment - New! 
Today’s AM fix was USD 1,385.25, EUR 1,068.95 and GBP 917.81 per ounce.
Yesterday’s AM fix was USD 1,386.00, EUR 1,074.92 and GBP 919.16 per ounce.
Gold climbed $24.80 or 1.78% yesterday to $1,392.00/oz and silver finished up 0.16%.
After a volatile and momentous week for global markets, gold and silver look set to finish higher in all currencies and have their best week in a month.
 Cross Currency Table – (Bloomberg)
Holdings in gold exchange-traded funds fell to fresh four-year lows yesterday but demand from central banks for bullion coins and bars, plus store of wealth jewellery demand is supporting gold.
SPDR Gold Trust, the world's largest exchange-traded gold fund, said its holdings fell 0.15% to four-year lows of 1,018.57 tonnes on Thursday.
Gold held by gold-backed ETFs, which in 2012 accounted for just 6% of the world's gold demand, fell by 177 tonnes in the first quarter according to the World Gold Council data.
ETF demand is just one facet of the broad based global demand that gold enjoys today and this fact continues to be not fully appreciated by many market participants who are tending to focus on falling ETF demand and liquidation to the exclusion of all else.
In the first quarter alone, central banks acquired 109 tonnes of gold – the seventh consecutive quarter of central bank gold accumulation.
Central Banks Diversifying Into Gold Bullion “As Prices Fall”Central banks are continuing to diversify into gold due to significant systemic and monetary risk and many will use the recent price weakness as an opportunity to diversify into gold at cheaper prices.
 Gold, 5 Min, May 20-24 2013 – (Bloomberg)
The Deputy Governor of the South African central bank, South African Reserve Bank, Daniel Mminele, said yesterday that central banks are “buying bullion” “as prices fall” to reach a 10% ratio of overall foreign exchange reserves – according to Bloomberg.
The South African Reserve Bank said it’s “comfortable” with its holdings of gold and doesn’t have plans to boost gold reserves because they already make up about 10% of foreign reserves.
South Africa’s central bank holds four million ounces of gold bullion.
Referring to the very low levels of gold owned by creditor nation central banks with massive foreign exchange and in particular dollar reserves such as China, the Deputy Governor said “some of these central banks would come off very low levels and are looking at getting to levels of around 10% of holdings in gold and we’re already there.”
Gold ETF Liquidations Dwarfed By Global Central Bank, Jewellery and Coin and Bar DemandJewelry demand has also picked up and total jewellery demand was up 12% year-on-year in the first quarter, driven in the main by Asian markets.
Asian buyers tend to be value buyers and like buying on weakness. Their demand is not for jewelry as a fashion accessory but rather as a store of wealth to protect from bank and currency risk.
Jewellery demand in China was up 19% on the same period last year and stood at a record 185 tonnes.
Interestingly, demand for jewellery in China alone at 185 tonnes and central banks demand at 109 tonnes equals 294 tonnes of demand for physical gold bullion which is much greater than the fall in ETF demand of just 177 tonnes.
This 294 tonnes of demand does not include global jewellery demand, excluding China, coin and bar demand globally, investment demand for digital gold, allocated gold demand and storage.
With regards to global jewellery demand in the first quarter, demand in both India and the Middle East was up 15% respectively and in the US, demand showed a significant increase, 6%, for the first time since 2005.
Demand in both India and the Middle East was up 15% respectively and in the US, demand showed a significant increase, 6%, for the first time since 2005.
Demand for gold in China and India was also driven by an increase in bar and coin sales - up 22% year-on-year in China and 52% in India. In the US demand for bars and coins was up 43% compared with the same quarter in 2012. Globally, bar investment was up 8% while official coins (such as American Eagles and Canadian Maple Leafs) were up 18%.
 Silver, 5 Min, May 20-24 2013 – (Bloomberg)
The fundamentals of the gold, and indeed of the silver, market remain as sound as ever and will reward those with an allocation to physical bullion – either in allocated accounts or in one’s possession.
NEWS Gold Traders Most Bullish in a Month After Bernanke - Bloomberg
South African Reserve Bank 'Comfortable’ With Gold Holdings - Bloomberg
COMMENTARY Gold Deliveries Delayed In London – King World News
Faber: Central Banks Should Be Manipulating Gold Higher, Not Lower – Financial Sense
"Keep Your Cash Out of the Bank" – You Tube
For breaking news and commentary on financial markets and gold, follow us on Twitter.
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end
An excellent paper on which countries are producing the greatest number of gold tonnes.
And how Russia is coping with its decline in production:
(courtesy Michael Kosares)
How the bear is preparing for a global currency war
by Michael J. Kosares
“The more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound or any other reserve currency.” — Evgeny Fedorov, Russian lawmaker, United Russia Party
* * *
As it stands today, the top seven global gold producers, according to the U.S. Geological Survey, are:
1. China (370 Metric Tonnes)
2. Australia (250 MT)
3. United States (230 MT)
4. Russia (205 MT)
5. South Africa (170 MT)
6. Peru (165 MT)
7. Canada (102 MT)
2. Australia (250 MT)
3. United States (230 MT)
4. Russia (205 MT)
5. South Africa (170 MT)
6. Peru (165 MT)
7. Canada (102 MT)
When you take-in this table, it inspires little beyond a shrug until you consider the monetary policies, and the policies toward gold, in the countries listed. China, for example, is the world’s biggest producer of gold, but its production is essentially sequestered, i.e., it stays in the country and forms part of its monetary reserves. The same is true with Russia. Thus 21% (575 tonnes) of the world’s gold production in 2012 did not see the light of day on international markets.
In addition among the countries that still make their gold production available to world markets, four of the top seven are in long-term decline — the United States, South Africa, Australia and Canada, some would say precipitously. Three enjoy rising production — China, Russia and Peru. Among the declining states, South Africa suffered the worst cutbacks, down 52% from production in 2000. U.S. production is down 39% over the same period; Canada is down 38% and Australia, 24%.
So what does this mean with respect to the long-term, overall supply-demand picture?
Obviously there is substantially less gold actually reaching the market today than there was 12 years ago, and by a wide margin when you consider the tonnage sequestered as mentioned above. In 2000, none of the gold production was sequestered by nation states to build monetary reserves (at least none that we know of), now, a significant portion is going into reserves in what might be considered a trend, or the first baby steps, toward a 21st century version of a gold reserve standard. (Think where South Africa would be as a nation state today if it had kept even one-third of its production as a monetary reserve.) The world of gold from a supply perspective has changed remarkably over the past dozen years.
Given the problem of money printing on a global basis, the trend of rising official sector gold reserves is likely to continue as more and more emerging countries see it in their best interest to diversify their monetary reserves. I wouldn’t be surprised to learn at some point down the road that Peru, for example, decided it might be in its best interest to retain production.
—————-
Russia’s gold production is an important piece of the overall supply puzzle in terms of both production and reserves. Few people know (or remember) that in 1980, Russia was the second largest global gold producer at 21% of the total global output (258 metric tonnes) South Africa was number one at 55% of the total global output (675 metric tonnes). With respect to future gold production, Russia is a sleeping giant that could leap-frog the United States and Australia soon.
Reuters quotes Sergei Kashuba, head of the Russian Gold Industrialists’ Union as saying, “If gold prices remain at a high level, gold output in Russia will continue to grow by 4-5 percent per year, which will allow it to become the third largest producer in the world in 2015.”
After the collapse of the old Soviet Union in late 1991, gold production plummeted. In 1995, Russia produced only 133 metric tonnes — 5.9% of the global total output. South Africa, still number one in 1995, produced 524 metric tonnes. Overall production globally more than doubled between 1980 and the present from 1220 MT in 1980 to about 2700 MT today. The United States (with its vast deposits in Nevada), Australia, Peru and Indonesia were primarily responsible for the increases in overall production.
Now Russian gold production is on the mend, and building its gold reserves is part of the Putin government’s attempt to shield Russia from a potential currency war between the yen, yuan, dollar and euro — the first volleys for which we have seen over the past few months. Keep in mind too that in terms of known reserves Russia reports 5000 metric tonnes. It ranks third behind Australia (7400 MT) and South Africa (6000 MT). The United States reports 3000 MT.
Here’s an interesting graph from my old friend Nick Laird over at Sharelynx that shows the effects of Russia’s gold strategy on its reserve position and buttresses the Evgeny Federov quote at the top of this post:
- Michael J. Kosares, http://www.usagold.com
end
Barrick pays a $16 million dollar fine for environmental violations. In the official story we are now hearing about the glaciers and how they are impacting production.
Barrick still has a long way to go before getting this mine into production
(courtesy Associated Press/Globe and Mail)
‘Chile blocks Pascua-Lama mine, fines Barrick for environmental violations
VALLENAR, Chile — The Associated Press
Published Friday, May. 24 2013, 12:24 PM EDT
Chile’s environmental regulator has stopped construction and imposed sanctions on Barrick Gold Corp.’s $8.5-billion Pascua-Lama project, citing "serious violations" of its environmental permit.
The $16-million fine is the maximum allowable under Chilean law. It was applied Friday because the world’s largest gold mining company acknowledged that it failed to keep its promises to build systems for containing contaminated water.
end
The official story from the Globe and Mail
Toronto:
(courtesy Henao, Globe and Mail)
Chile blocks Pascua-Lama mine, fines Barrick for environmental violations
Submitted by cpowell on Fri, 2013-05-24 21:33. Section: Daily Dispatches
By Luis Andres Henao
Associated Press
via The Globe and Mail, Toronto
Friday, May 24, 2013
Associated Press
via The Globe and Mail, Toronto
Friday, May 24, 2013
VALLENDAR, Chile -- Chile's environmental regulator blocked Barrick Gold Corp.'s US$8.5-billion Pascua-Lama project on Friday and imposed its maximum fine on the world's largest gold miner, citing "very serious" violations of its environmental permit as well as a failure by the company to accurately describe what it had done wrong.
After a four-month investigation, the environmental superintendent said all other construction work on Pascua-Lama must stop until Barrick builds the systems it promised to put in place beforehand for containing contaminated water.
The fines add up to 8 billion pesos -- about $16 million -- the highest possible under Chilean law.
The regulator noted that while Barrick itself reported failures, a separate and intensive investigation already begun by the agency's own inspectors found that the company wasn't telling the full truth about the bi-national mine, which straddles the Chile-Argentina border at the top of the Andes mountain chain.
"We found that the acts described weren't correct, truthful, or provable. And there were other failures of Pascua Lama's environmental permit as well," said the superintendent, Juan Carlos Monckeberg.
Barrick said the company was reviewing the order by the environmental superintendent in detail.
"Barrick is fully committed to complying with all aspects of the resolution and to operating at the highest environmental standards," the company said in a brief statement.
Mr. Monckeberg described the Barrick sanctions as the first since his agency was given enforcement power in December, and said they were based on a thorough investigation by agency inspectors as well as government experts in mining, farming, and water.
"This is what we have always been hoping for," said Maglene Camillay, a Diaguita Indian leader whose community downstream from the mine alleges its river has been contaminated by the construction work.
"This makes us very content. Finally the state is showing its power. They never investigated this and now they're doing their job," she said. "Our valley is fragile but we're strong. The strength we get from the earth, the water, and the mountains."
The violations include failing to build structures to contain contaminated water before mine construction began, failing to keep the agency informed about problems and changes, and failing to provide data sought by inspectors, the agency said.
The sanctions don't mean the end of Pascua-Lama -- far from it.
Barrick has committed to $30 million in remedial work, and the agency urged the company to do this quickly, starting with temporary measures to contain any runoff while it builds more permanent structures.
Still, the Diaguita Indians, who live in small towns along rivers that flow down from the mine through an otherwise completely barren Atacama Desert, were feeling powerful on Friday.
"Even though we seem so small, we could beat Barrick, which is a giant," said Osvaldina Guzman Villegas, who lives in Diaguita community of Chipasse Tamaricunga. "And with the help of our ancestors, we're going to beat them."
President Sebastian Pinera’s spokeswoman, Cecilia Perez, said the government is "very much in agreement" with the sanctions.
"What should happen is that until they remedy all the requirements of the environmental permit, fix all the issues that the environmental superintendent is asking for, and finally until this is decided by the Supreme Court, they cannot keep operating," she said.
The sanctions also were praised by independent mining experts, who noted that the containment structures Barrick failed to build -- including a canal to divert rainwater from huge piles of cast-off rock, and thus to minimize the acid runoff that broken rock releases into the groundwater -- were a fundamental part of the environmental permit Barrick obtained.
"Twenty years ago maybe nobody would have required these fixes, and perhaps wouldn't even have required the canal to divert rainwater, but today it's necessary, more than anything because there's agriculture down below," said Gustavo Lagos, mining professor at Santiago's Universidad Catolica.
The sanctions are very strong but justified, he said, and show the mining industry that Chile's independent environmental regulator intends to use its new enforcement powers. "This sets a tough example and I think it should show other companies, not just in mining but in all industries, that this is becoming serious."
It wasn't immediately clear how the ruling might affect the future costs of the many other international mining companies in Chile, but Lagos said it's a very good thing that Chile has strong institutions.
"It shouldn't be forgotten that new environmental institutions were required of Chile as a condition for its entry into the OECD," he said, referring to the Organization for Economic Co-operation and Development, which represents the world's leading economies. "It's a good signal to the world that in Chile there are controls, that there's a new institutionality that is working."
Environmentalists say regulators have been much less demanding on the Argentina side of the project, where mining is regulated at the provincial level. Barrick and other pro-mining groups obtained injunctions to block enforcement of a national glacier protection law passed in 2010 in response to the Pascua-Lama project.
"In Argentina, despite public statements that the house is in order, we are beginning to reveal serious environmental flaws regarding dozens and dozens of glaciers that have been unaccounted for in Barrick's environmental impact studies. The Glacier Law further complicates Pascua-Lama," said Jorge Daniel Taillant, director of the Centre for Human Rights and the Environment, which tracks environmental compliance by mining companies.
end
The following illustrates how Swiss individuals attempting to retrieve their allocated gold have been turned away by Swiss bankers.
(courtesy Kingworldnews/Egon von Greyerz)
More gold depositors can't retrieve metal from Swiss banks, von Greyerz says
Submitted by cpowell on Fri, 2013-05-24 21:06. Section: Daily Dispatches
2p PT Friday, May 24, 2013
Dear Friend of GATA and Gold:
Matterhorn Asset Management's Egon von Greyerz today tells King World News more troubling stories of clients who have been unable to withdraw the gold they thought they had on deposit in Swiss banks. "The bottom line," von Greyerz says, "is that the banks don't have enough physical gold to cover the commitment to their clients, and governments in the West also have a lot less physical gold than they claim to have. As the paper market is 100 times larger than the physical market, it means that paper market has virtually no physical gold to back it."
An excerpt from von Greyerz's interview is posted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
end
Another author, Addison Wiggin now believes that gold has been manipulated by government officials. Wiggins believes that governments have dishoarded their gold reserves.
(courtesy Chris Powell/GATA)
Addison Wiggin: Cooking the gold books
Submitted by cpowell on Fri, 2013-05-24 21:46. Section: Daily Dispatches
2:46p PT Friday, May 24, 2013
Dear Friend of GATA and Gold:
The Daily Reckoning's Addison Wiggin today gives credence to suspicions that the recent smashing of the gold price was heavily abetted by dishoarding of government gold reserves, but he adds that the price of real metal seems to be breaking away from the futures market price. Wiggin quotes GATA supporters or sympathizers Eric Sprott and John Embry of Sprott Asset Management, coin dealer Richard Nachbar, and market analyst Chris Martenson. Wiggin's commentary is headlined "Cooking the Gold Books" and it's posting at the Daily Reckoning here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
end
And now your more important paper stories which will influence the price of gold and silver:
Your overnight sentiment
Major points:
1. The Nikkei was up 3% until some unexpected comments from Kuroda sent this bourse down 3% until it recovered and finished slightly above par. No question here that the government is trying to prop up markets. The USA dollar/yen cross which started the session at 102.60 last night finished at extreme level up at 101.17. Only the action of the government propping up the NIKKEI prevented another rout.
2. Europe trading in the red Friday morning. However this time it was good German IFO business climate report at 105.7 from last month's 104.4
3. The positive surprise moved the Euro/USA higher to 1.2966 after coming close to the 1.30 level.
4. This sends the European bourses down as it is perceived that Draghi is less likely to lower interest rates.
5. Thus as explained yesterday all good news will be perceived as bad news for the stock market and bad news reported will be treated as good news: thus Bizarro days ahead.
6. Big fear now is the disappearance of the yen carry trade as the yen increases in value. The fear of course is the yields on our European PIIGS nations. These nations have benefited by the borrowing of yen at zero yields and purchase of these bonds at 4%. This will slowly unwind if the yen does not falter.
7. Jim Reid of Deutsche bank summaries the last 48 hours perfectly:
"The last 36 hours have perhaps been evidence as to what might happen if stimulus is withdrawn before the global recovery has been cemented and what might happen if Japan makes mistakes along the way to their attempted new dawn. With the Chinese data still ambiguous, Europe still in recession, Japan in the very early stages of a growth experiment and with the US recovery still historically very weak one has to say that liquidity has been the main market fuel in recent months. So central banks have to tread carefully and the Fed tapering talk and the BoJ's seemingly benign neglect policy towards JGBs has had the market fretting."
8. Details from Soc Gen and Jim Reid of Deutsche Bank
(courtesy zero hedge/Soc Gen/Jim Reid/Deutsche bank)
(courtesy zero hedge/Soc Gen/Jim Reid/Deutsche bank)
Bizarro Time As Better Data Sends Stocks Lower
- Bloomberg News
- BLS
- Bond
- Bureau of Labor Statistics
- Carry Trade
- Central Banks
- Continuing Claims
- European Central Bank
- Gross Domestic Product
- Initial Jobless Claims
- Japan
- Jim Reid
- LTRO
- Markit
- Monetary Policy
- Morgan Stanley
- New Home Sales
- Nikkei
- POMO
- POMO
- Recession
- recovery
- Unemployment
- United Kingdom
- Volatility
As the accelerating global currency wars, global money printing and abdication of fiscal policy on behalf of monetary policy becomes a worldwide pandemic, increasingly more markets are now trading like pennystocks, case in the point the world's second "deepest" stock market, the Nikkei225 has moved nearly 2000 points from high to low in the past two days on no actual news, while last night in particular was a complete embarrassment for anyone who still claims central banks aren't the only thing that moves markets: from up 3% to down 3% (under 14,000) following some "unexpected" comments from Kuroda, and finally closing up just barely, the entire move was tracing every squiggle in the USDJPY.
Then on to Europe where stock markets are now trading at their lows on the latest incarnation of bizarro day: it turns out the catalyst for the red stock market move and the sudden blow out in peripheral yields (, was the better than expected German IFO Business Climate print which came at 105.7, up from 104.4, and better than the expected 104.4. The "positive" surprise, which has moved the EURUSD to nearly 1.30, has turned out to be stock negative as it means the ECB is now less likely to cut rates even more, according to Morgan Stanley first and then all other penguins. As we said yesterday: all good news is now explicitly bad news if only for stocks, and Europe just figured this out. As for the peripheral bonds, we doubt the widening is due to a better German IFO and in all likelihood is driven by fearsof what may and will happen once the Japanese carry trade, which has been the sole source of plunging PIIGS yields for the past 6months, finally unwinds: a moment which appears to be getting closer with every passing day.
Perhaps the best summary of the last two days comes from Deutsche's Jim Reid:
The last 36 hours have perhaps been evidence as to what might happen if stimulus is withdrawn before the global recovery has been cemented and what might happen if Japan makes mistakes along the way to their attempted new dawn. With the Chinese data still ambiguous, Europe still in recession, Japan in the very early stages of a growth experiment and with the US recovery still historically very weak one has to say that liquidity has been the main market fuel in recent months. So central banks have to tread carefully and the Fed tapering talk and the BoJ's seemingly benign neglect policy towards JGBs has had the market fretting.
Looking ahead at the US which will have a holiday shortened trading session, and where the carbon-based traders will be on their way to the Hamptons around lunchtime, the only data is Durable goods, but most importantly, there is no POMO today.
Here is SocGen's take on the main FX catalysts:
A much quieter session was observed in Japan overnight after US stocks squeezed off their lows and this should lead us into a fairly orderly session in Europe where the focus this morning will on the German IFOP survey for May. The Nikkei rebounded 0.9% into the close, after falling 3.4% at one point. Though the 14,000 level has been successfully defended, we may not yet have seen the tail end of this week's wobble. 10y JGB yields dropped 2bp after fluctuating in a 0.83%-0.91% range.
The consensus forecast for the German IFO calls for no change from April at 104.4, but the stronger manufacturing PMI published yesterday (49.0 vs 48.1) is cause for optimism. Conversely, a third successive decline would pour cold water on the upbeat monthly Bundesbank report released earlier in the week and would dampen hopes of an acceleration in Q2 GDP from 0.1% qoq in Q1. A stronger IFO does not make the EUR a buy but, after the rebound in EUR/USD above 1.2900 from the 1.2822 low, a weekly close at the highs would validate a short-term tactical switch for a chance to capitalise on a possible return to 1.3021 (200d ma). Trend line resistance above runs at 1.3135. USD bulls have been in command since mid-February and will have been emboldened by yesterday's weekly claims data, i.e. a drop in continuing claims to below the 3m mark (2.912m). This is the lowest level since March 2008 when the BLS unemployment rate stood at 5.1%. We are still over 2.5ppts away from that but the downtrend in continuing claims will inevitably get spirits up for the 7 June employment report. That may be too early to tempt the Fed to review its asset purchase programme but the bond market will not stand still. A 7bp rebound off the 1.96% intra-day low in UST 10y yields yesterday shows the bond market has decided not to downplay Bernanke's midweek comments and an attempt to move past the 3 March highs (2.08%) could be earmarked for next week as $99bn of supply looms (2y/5y/7y). US/EU 10y swaps look set to end the week at or above 50bp for the second week in a row.
Also on the agenda today are US durable goods orders and ECB weekly LTRO repayments. Paybacks in 3y funds have slowed to a trickle in recent weeks. A combined total of EUR1.124bn this week was the lowest combined total since the start of the repayments in February. A stronger IFO could ignite short-term paying interest in Eonias and swaps and add to the curve steepening bias observed yesterday.
* * *
And the remainder of Jim Reid's overnight recap:
Thursday's BoJ press briefing saw Kuroda suggesting that gains in yields could be expected as the economy improved. This was after previously saying that the BOJ was aiming to lower interest rates. This confusion accelerated the sell-off which helped lead to the 7.32% fall in the Nikkei on Thursday. This morning we initially saw calmer markets largely thanks to a relatively steady performance in the US session overnight. However after being positive for most of the session the Nikkei is dropping sharply into negative territory as we type this (now -2.5%). 10 year JGBs are more stable at 0.83% but did briefly touch 1% late yesterday. Speaking at a parliamentary session overnight in Tokyo, Japanese PM Shinzo Abe declined to comment on yesterday’s drop in Japanese equities and said he expects the BoJ to have appropriate communications with financial market participants. Shortly after, Kuroda said that the BoJ will continue with its efforts to end deflation and the BoJ will stablise the bond market with “flexible operations”.
Elsewhere in Asia, the Hang Seng (-0.2%), ASX 200 (-1.8%) and KOSPI (-0.1%) are also on a weaker footing in overnight trading. Asian credit markets are fairly quiet given a public holiday in Singapore. I don't think it’s in honour of my visit earlier this week.
As mentioned above, the US session prior to this saw a recovery from a weak open with the S&P 500 recovering throughout the day to close 0.9% off the opening lows and finishing -0.29%. Considering the overall volatility that preceded it the US market session was remarkably dull. Some of the ‘tapering’ fears were probably eased by comments from San Francisco Fed’s Williams where he told Bloomberg news that the Fed could step up the pace of QE again after tapering and that they won’t go on autopilot. St Louis Fed‘s Bullard said that the Fed was not "that close" to tapering QE, and noted that "even if we do taper it would still be a very aggressive pace of purchases because we would only be moderating by a small amount." Indeed as we said yesterday we do think QE or derivations thereof will be around for many years to come even if there is a possibility of slowing purchases in the near term.
Better US data perhaps also played its part yesterday in stabilising markets with initial jobless claims (340k v 345k) coming in stronger than estimates while the Markit US PMI Preliminary number (51.9 v 51.2) also topped market consensus. House prices and new home sales data were also better so all up US releases were certainly more encouraging than the Chinese and European prints that we’ve seen over the last 24 hours. Indeed, the Euroarea composite PMI rose by 0.8pts to 47.7, higher than consensus estimates of 47.2, but still firmly in contractionary territory. There was little cheer elsewhere as the French composite PMI was unchanged at 44.3, with manufacturing improving but services unchanged on the month. Germany’s flash composite PMI improved (up 0.8 points to 49.9), driven by both manufacturing (49.0 vs 48.5 expected) and services (49.8 vs 50.0 expected) indices. The Stoxx600 finished 2.1% lower in its first -2% move since July 2012.
Turning to today’s calendar, we look set to have a quieter day ahead of Memorial Day long weekend in the US and a probably wet bank holiday here in the UK on Monday. CME & CBOT interest rate and fx products close early today. In terms of data, the German IFO and US durable goods orders are the main prints.
end
The closing yield on the 10 year Japanese bond early Friday morning:
(it fluctuated between .83 and .91 yield throughout the night).
Japan Govt Bond Year to maturity 10 Year Simple Yield
GJGB10:IND
0.840.02 2.78%
As of 01:31:00 ET on 05/24/2013.
end
Highlights from trading over in Asia with Japan paring its losses after breaking below 14,000; the Topix was down 11% from its highs.
Japan trading (and Taiwan) throughout the night
(courtesy zero hedge)
Highlights from trading over in Asia with Japan paring its losses after breaking below 14,000; the Topix was down 11% from its highs.
Japan trading (and Taiwan) throughout the night
(courtesy zero hedge)
Despite 'Promises', Japanese Market Chaos Continues
UPDATE 1: Japanese stocks turned negative (NKY -600pts from highs, -1.5% on day; and TOPIX down over 4% from highs); Japanese banks -11% from yesterday highs; S&P futures down 10 points from after-hours highs...
UPDATE 2: *KURODA WANTS TO AVOID INCREASING VOLATILITY IN BOND MARKET (yeah thanks... as useful as saying "we all want to avoid syphilis")
UPDATE 3: Nikkei 225 Drops below 14,000 - TOPIX down 11% from highs
For the second day in a row, and in spite of comments from Abe and Kuroda on communicating with the market (as Kuroda says BoJ Monetary easing sufficient), Japanese capital markets are out of control.
JPY, after weakening 150 pips from early this morning and breaking back over 102.50 has just given 100 pips back in matter of minutes and is now trading stronger vs the USD on the Japanese session. Japanese stocks have cliff-dived with the NKY dropping 400 points in minutes and TOPIX over 1.5%. JGB futures (prices not yields) have surged back higher to trade unchanged on the day as the correlation we noted earlier - and believe is now critical - has held between an out of control bond market and any further sustainable gains in stocks.
This is not good... as if the JPY carry trade implodes (driven quite simply by a total lack of reward-to-risk given the volatility in the carry currency and loan rates themselves) then what happens to all the levered longs in European peripheral bonds and any number of the 'most-shorted' companies in the US... It seems clear that this is all an experiment to see how markets react - the answer - not well!
30 minutes later...
Where's Maria B and the 'Buy on the dip mentailty' when we need her?
When is Tuesday already??
This seemed to sum it up nicely:
Tweet from zero hedge early Friday morning:
KURODA WANTS TO AVOID INCREASING VOLATILITY IN BOND MARKET. Well then goodbye Nikkei and USDJPY gains
Kuroda wants to debase his currency + inflate away massive debts, without spooking the bond market. Hmm. Good luck with that.
end
Kuroda wants to debase his currency + inflate away massive debts, without spooking the bond market. Hmm. Good luck with that.
end
Nikkei Futures Resume Plunge
Submitted by Tyler Durden on 05/24/2013 08:25 -0400
Japanese stocks had another violent night with record trading volumes on the TOPIX. The early 'buy the dip mentality' rapidly escalated into sell-Mortimer-sell as the Nikkei 225 dropped another 1000 points after the lunch break. A late day recovery managed to close the index just in the green and all could relax that the world was once again a better place thanks to Abenomics. However, since Japan closed, Nikkei futures have been sold aggressively now testing back down towards overnight lows.
The overnight destruction was save by a late-day recovery just into the green - but things are escalatung rapidly once again...
Last night's drop occurred on record trading volume on the TOPIX...
Charts: Bloomberg and @InsideGame
end
Italian bonds have retreated in price (higher in yield) during the last two days, as the Japanese yen strengthened again last night. The flow of funds from Japan has thus slowed to a trickle. Thus we have nobody to buy the periphery's bonds.
However the real big problem in Italy is the non performing loans which continue to escalate as a percentage of all Italian loans. This is a huge problem for Italy and another nail in the coffin for our Italian banks.
Japanese stocks had another violent night with record trading volumes on the TOPIX. The early 'buy the dip mentality' rapidly escalated into sell-Mortimer-sell as the Nikkei 225 dropped another 1000 points after the lunch break. A late day recovery managed to close the index just in the green and all could relax that the world was once again a better place thanks to Abenomics. However, since Japan closed, Nikkei futures have been sold aggressively now testing back down towards overnight lows.
The overnight destruction was save by a late-day recovery just into the green - but things are escalatung rapidly once again...
Last night's drop occurred on record trading volume on the TOPIX...
Charts: Bloomberg and @InsideGame
end
Italian bonds have retreated in price (higher in yield) during the last two days, as the Japanese yen strengthened again last night. The flow of funds from Japan has thus slowed to a trickle. Thus we have nobody to buy the periphery's bonds.
However the real big problem in Italy is the non performing loans which continue to escalate as a percentage of all Italian loans. This is a huge problem for Italy and another nail in the coffin for our Italian banks.
Why Italian Bonds Have A Long Way Down To Go
Submitted by Tyler Durden on 05/24/2013 07:47 -0400
As we hinted last night, and as the market is starting to realize, one of the bigger downstream casualties of the first rumblings that Abenomics is starting to crack, have been peripheral bond yields, with Spanish, Italian and Portuguese yields all wider by 10 bps and rising: after all who will buy this worthless garbage (in which Spain's pension fund has gone all in) if the Japan hot money flows stop or even reverse?
However, that is only half the story. The other half is that, with its usual 6-8 week delay, the market is finally grasping the biggest danger in Europe - one which we have been pounding the table on week after week after week (most recently here): the soaring non-performing loans held by European banks. In fact, it took the FT to confirm what we have been warning about all along. And just so the market has a sense of how much downside may be imminent if indeed reality reasserts itself and frontrunning the Japanese carry trade both occur at the same time, here is a rather unpleasant chart courtesy of Diapason, of what expects all those who bought up Italian bonds in the recent dash-for-trash, oblivious of the collapsing fundamentals, and driven purely by FOMO. The downside could be big to quite big.
end
The following is a very important commentary. During Friday's session, the shares of Spanish bank Bankia plunged by 51% to 0.68 euros. Many citizens bought the preferred stock thinking that they had a sovereign guarantee which it did not.
News surfaced Thursday night, that Spanish banks will be in need of another 10 billion euros.
The number is a joke..they need 50 billion euros. Already around 133 billion euros have been given to the Spanish banks but guaranteed by the sovereign. These contingency liabilities are not included in the official sovereign Debt to GDP figures.
Mark Grant touches on the 1.03 trillion dollars of loans given by the Fed to foreign banks domiciled in the USA. For what purpose was this largesse granted? The banks in Europe must be in much deeper trouble than first thought.
(a very important commentary/courtesy of Mark Grant)
As we hinted last night, and as the market is starting to realize, one of the bigger downstream casualties of the first rumblings that Abenomics is starting to crack, have been peripheral bond yields, with Spanish, Italian and Portuguese yields all wider by 10 bps and rising: after all who will buy this worthless garbage (in which Spain's pension fund has gone all in) if the Japan hot money flows stop or even reverse?
However, that is only half the story. The other half is that, with its usual 6-8 week delay, the market is finally grasping the biggest danger in Europe - one which we have been pounding the table on week after week after week (most recently here): the soaring non-performing loans held by European banks. In fact, it took the FT to confirm what we have been warning about all along. And just so the market has a sense of how much downside may be imminent if indeed reality reasserts itself and frontrunning the Japanese carry trade both occur at the same time, here is a rather unpleasant chart courtesy of Diapason, of what expects all those who bought up Italian bonds in the recent dash-for-trash, oblivious of the collapsing fundamentals, and driven purely by FOMO. The downside could be big to quite big.
end
The following is a very important commentary. During Friday's session, the shares of Spanish bank Bankia plunged by 51% to 0.68 euros. Many citizens bought the preferred stock thinking that they had a sovereign guarantee which it did not.
News surfaced Thursday night, that Spanish banks will be in need of another 10 billion euros.
The number is a joke..they need 50 billion euros. Already around 133 billion euros have been given to the Spanish banks but guaranteed by the sovereign. These contingency liabilities are not included in the official sovereign Debt to GDP figures.
Mark Grant touches on the 1.03 trillion dollars of loans given by the Fed to foreign banks domiciled in the USA. For what purpose was this largesse granted? The banks in Europe must be in much deeper trouble than first thought.
(a very important commentary/courtesy of Mark Grant)
The following is a very important commentary. During Friday's session, the shares of Spanish bank Bankia plunged by 51% to 0.68 euros. Many citizens bought the preferred stock thinking that they had a sovereign guarantee which it did not.
News surfaced Thursday night, that Spanish banks will be in need of another 10 billion euros.
The number is a joke..they need 50 billion euros. Already around 133 billion euros have been given to the Spanish banks but guaranteed by the sovereign. These contingency liabilities are not included in the official sovereign Debt to GDP figures.
Mark Grant touches on the 1.03 trillion dollars of loans given by the Fed to foreign banks domiciled in the USA. For what purpose was this largesse granted? The banks in Europe must be in much deeper trouble than first thought.
(a very important commentary/courtesy of Mark Grant)
The Rout In Spain
Submitted by Tyler Durden on 05/24/2013 08:13 -0400
- Central Banks
- European Central Bank
- Federal Reserve
- Federal Reserve Bank
- Gross Domestic Product
- International Monetary Fund
- Reality
- Yen
From Mark Grant, author of Out Of The Box
There Are Those Weeks
The Rout in Spain
Overnight the shares of Bankia plunged 51.4%. This, by any definition, is a rout. The citizens of Spain had bought preferred shares, hybrid bonds on the basis of an "implied guarantee" from the sovereign. No such luck. It had been a tout sold by the bank and guaranteed by no one. Now the owners are suffering the disastrous consequences.
Many European analysts had suggested that the swap out of these instruments into equity would drop the price of the stock to about 1.35 Euros but reality emerged today as the equity price plunged to 0.68 Euros. The shares traded today were forty-two times the normal average trading volume and indicated the size of the problem. The stock has lost 90% of its value since May 6.
In the meantime the central bank of Spain has said that the Spanish banks might have to reserve 5-10 billion Euros in more provisioning. This number is a joke and one more IMF/EU/ECB projection with all of the merits of two sparrows lifting a 747 for take-off. The number is more like 50 billion Euros and possibly twice that much the way things are going in Spain.
Spain has already gone bankrupt. It is not spoken of in this fashion, no one mentions it in public but that is the truth of it. The money, some $172 billion, was funneled to the banks and not to the sovereign in one more European ruse to distract everyone but the results are the same. Now it is becoming apparent that even this amount of money was not enough so more will have to be given. The money will go to the Spanish banks, the debt will be guaranteed by Spain, the contingent liability will not be counted as part of Spain's debt to GDP ratio but we will know the truth of it. Whatever direct money from Spain that goes into their banks will be called an "investment" and put on the left side of their balance sheet as an asset and the mockery will continue but I can still read a ledger; thank you very much.
This path then leads to our own Federal Reserve Bank. They have lent more than one trillion dollars now to foreign banks. Now many people nod and go to sleep as this number floats past. "Not so fast," I say, "Not so fast."
The Fed is lending about $700 billion to American banks and $1.03 trillion to foreign banks. Two issues are raised here in my opinion. Why is America lending all of this money to foreign institutions and I would hope that Congress will begin an inquiry into this question. The second issue is that since we are engaged in this lending why is it? One assumes that it is not for nothing and so it raises the question of the health of the European banks that must be so serious that the Fed is forced to come to their rescue. I repeat, the financial health of the European banks must be so impaired that the Fed has been forced to lend them ever increasing amounts of money.
Our world is like a Dali painting; distorted, out of balance and disjointed. The central banks pump in the money, the governments distort the data and lie, the markets head every higher and Puff the Magic Dragon flies on unencumbered.
In fact, according to the most recent data, the Fed now owns 30.32% of all ten year equivalent government debt. At the current trajectory the Fed will own all of the government's debt by 2018. The value of the Dollar may be three Nigerian bananas by then but not to worry because the Euro will only fetch two bananas and the Yen only one. It is indeed hard to see where we are going here. Deception and monetary creation have gotten us where we are but how long until someone actually climbs up Mt. Olympus and discovers that there are no gods is anyone's guess.
“There are decades where nothing happens; and there are weeks where decades happen.”
-Vladimir Ilyich Lenin
Watch out for those weeks!
end
Does this comedy sketch ever end?
Head of the IMF Christine Lagarde in court charged with embezzlement and fraud
23 May 2013
The head of the International Monetary Fund arrived in the dock of a Paris courtroom today as she braced herself to be formally charged with embezzlement and fraud.
Christine Lagarde’s humiliation is not only a massive personal blow which could lead to her resignation, but one which will plunge the world’s banking system into further ignominy.
The clearly nervous 57-year-old said nothing to reporters as she entered the Court of Justice of the Republic, a special tribunal set up to judge the conduct of France’s government ministers, shortly after 8.30am.
Lagarde faces a maximum sentence of 10 years in jail if found guilty of the very serious charges.
It was when she was President Nicolas Sarkozy’s finance minister that she is said to have authorised a 270 million pounds payout to one of his prominent supporters, so abusing her government position.
The money went to Bernard Tapie, a convicted football match fixer and tax dodger who supported Lagarde and Sarkozy’s UMP party.
It came after Dominque Strauss-Kahn, another senior French politician, was sacked as IMF chief following allegations that he attempted to rape a chambermaid in a New York hotel.
Ms Lagarde began campaigning to succeed Mr Strauss-Kahn soon after his arrest for the alleged crime.
But now it is Ms Lagarde, a lawyer and retired synchronised swimming star, who is facing a long court process of her own, as well as a possible jail sentence.
The scandal will not only pile further shame on France’s political class, but worry politicians and bankers desperately trying to resolve the global financial crisis.
Mr Tapie, the former head of adidas in France, claims he was cheated out of millions by Credit Lyonnais bank when the sports kit empire was sold in 1993.
In 2007, Ms Largarde ended the epic dispute by ordering a panel of judges to arbitrate and, in turn, they awarded Tapie the damages.
Opposition MPs were furious, with former presidential candidate Francois Bayrou accusing Ms Lagarde of ‘dipping into the taxpayers’ pocket for a private beneficiary.’
Mr Strauss-Kahn’s Socialist Party also accused Ms Lagarde of improper conduct, pointing to the fact that Mr Tapie was a vocal supporter of Sarkozy.
Ms Lagarde’s lawyer, Yves Repiquet, said the inquiry was ‘in no way incompatible’ with her new job, and expected the case to be dismissed.
Ms Lagarde denies any wrongdoing, saying before today’s court appearance: ‘If it’s decided to continue with this inquiry it won’t be particularly surprising. Personally, it doesn’t worry me at all – I didn’t benefit personally’.
But it has been widely reported in the French media that investigators intend to charge her with fraud and embezzlement.
Le Monde said that magistrates had already written to Mrs Lagarde to tell her that she should not expect any special treatment because of her high-profile international job.
http://www.standard.co.uk/news/world/head-of-the-imf-christine-lagarde-in-court-charged-with-embezzlement-and-fraud-8628670.html
end
Without a doubt, your most important article of the day. The EU is weighing on curbing the bank's use of client assets as collateral. The use of excess collateral is the shadow banking industry and they use the collateral to hypothecate and rehypothecate these assets hundreds times over. The total shadow banking industry has sums in the trillions of dollars.
If you withdraw these funds from circulation worthy collateral will disappear on the planet and send all of the oxygen out of the markets. Within an nanosecond, the entire global economy will seize. It makes no sense that they would make this announcement, unless....
something big is going on behind the scenes and they need this as a cover.
stay tuned on this one..
(courtesy Brunsden/Bloomberg)
- Central Banks
- European Central Bank
- Federal Reserve
- Federal Reserve Bank
- Gross Domestic Product
- International Monetary Fund
- Reality
- Yen
From Mark Grant, author of Out Of The Box
There Are Those Weeks
The Rout in Spain
Overnight the shares of Bankia plunged 51.4%. This, by any definition, is a rout. The citizens of Spain had bought preferred shares, hybrid bonds on the basis of an "implied guarantee" from the sovereign. No such luck. It had been a tout sold by the bank and guaranteed by no one. Now the owners are suffering the disastrous consequences.
Many European analysts had suggested that the swap out of these instruments into equity would drop the price of the stock to about 1.35 Euros but reality emerged today as the equity price plunged to 0.68 Euros. The shares traded today were forty-two times the normal average trading volume and indicated the size of the problem. The stock has lost 90% of its value since May 6.
In the meantime the central bank of Spain has said that the Spanish banks might have to reserve 5-10 billion Euros in more provisioning. This number is a joke and one more IMF/EU/ECB projection with all of the merits of two sparrows lifting a 747 for take-off. The number is more like 50 billion Euros and possibly twice that much the way things are going in Spain.
Spain has already gone bankrupt. It is not spoken of in this fashion, no one mentions it in public but that is the truth of it. The money, some $172 billion, was funneled to the banks and not to the sovereign in one more European ruse to distract everyone but the results are the same. Now it is becoming apparent that even this amount of money was not enough so more will have to be given. The money will go to the Spanish banks, the debt will be guaranteed by Spain, the contingent liability will not be counted as part of Spain's debt to GDP ratio but we will know the truth of it. Whatever direct money from Spain that goes into their banks will be called an "investment" and put on the left side of their balance sheet as an asset and the mockery will continue but I can still read a ledger; thank you very much.
This path then leads to our own Federal Reserve Bank. They have lent more than one trillion dollars now to foreign banks. Now many people nod and go to sleep as this number floats past. "Not so fast," I say, "Not so fast."
The Fed is lending about $700 billion to American banks and $1.03 trillion to foreign banks. Two issues are raised here in my opinion. Why is America lending all of this money to foreign institutions and I would hope that Congress will begin an inquiry into this question. The second issue is that since we are engaged in this lending why is it? One assumes that it is not for nothing and so it raises the question of the health of the European banks that must be so serious that the Fed is forced to come to their rescue. I repeat, the financial health of the European banks must be so impaired that the Fed has been forced to lend them ever increasing amounts of money.
Our world is like a Dali painting; distorted, out of balance and disjointed. The central banks pump in the money, the governments distort the data and lie, the markets head every higher and Puff the Magic Dragon flies on unencumbered.
In fact, according to the most recent data, the Fed now owns 30.32% of all ten year equivalent government debt. At the current trajectory the Fed will own all of the government's debt by 2018. The value of the Dollar may be three Nigerian bananas by then but not to worry because the Euro will only fetch two bananas and the Yen only one. It is indeed hard to see where we are going here. Deception and monetary creation have gotten us where we are but how long until someone actually climbs up Mt. Olympus and discovers that there are no gods is anyone's guess.
Overnight the shares of Bankia plunged 51.4%. This, by any definition, is a rout. The citizens of Spain had bought preferred shares, hybrid bonds on the basis of an "implied guarantee" from the sovereign. No such luck. It had been a tout sold by the bank and guaranteed by no one. Now the owners are suffering the disastrous consequences.
Many European analysts had suggested that the swap out of these instruments into equity would drop the price of the stock to about 1.35 Euros but reality emerged today as the equity price plunged to 0.68 Euros. The shares traded today were forty-two times the normal average trading volume and indicated the size of the problem. The stock has lost 90% of its value since May 6.
In the meantime the central bank of Spain has said that the Spanish banks might have to reserve 5-10 billion Euros in more provisioning. This number is a joke and one more IMF/EU/ECB projection with all of the merits of two sparrows lifting a 747 for take-off. The number is more like 50 billion Euros and possibly twice that much the way things are going in Spain.
Spain has already gone bankrupt. It is not spoken of in this fashion, no one mentions it in public but that is the truth of it. The money, some $172 billion, was funneled to the banks and not to the sovereign in one more European ruse to distract everyone but the results are the same. Now it is becoming apparent that even this amount of money was not enough so more will have to be given. The money will go to the Spanish banks, the debt will be guaranteed by Spain, the contingent liability will not be counted as part of Spain's debt to GDP ratio but we will know the truth of it. Whatever direct money from Spain that goes into their banks will be called an "investment" and put on the left side of their balance sheet as an asset and the mockery will continue but I can still read a ledger; thank you very much.
This path then leads to our own Federal Reserve Bank. They have lent more than one trillion dollars now to foreign banks. Now many people nod and go to sleep as this number floats past. "Not so fast," I say, "Not so fast."
The Fed is lending about $700 billion to American banks and $1.03 trillion to foreign banks. Two issues are raised here in my opinion. Why is America lending all of this money to foreign institutions and I would hope that Congress will begin an inquiry into this question. The second issue is that since we are engaged in this lending why is it? One assumes that it is not for nothing and so it raises the question of the health of the European banks that must be so serious that the Fed is forced to come to their rescue. I repeat, the financial health of the European banks must be so impaired that the Fed has been forced to lend them ever increasing amounts of money.
Our world is like a Dali painting; distorted, out of balance and disjointed. The central banks pump in the money, the governments distort the data and lie, the markets head every higher and Puff the Magic Dragon flies on unencumbered.
In fact, according to the most recent data, the Fed now owns 30.32% of all ten year equivalent government debt. At the current trajectory the Fed will own all of the government's debt by 2018. The value of the Dollar may be three Nigerian bananas by then but not to worry because the Euro will only fetch two bananas and the Yen only one. It is indeed hard to see where we are going here. Deception and monetary creation have gotten us where we are but how long until someone actually climbs up Mt. Olympus and discovers that there are no gods is anyone's guess.
“There are decades where nothing happens; and there are weeks where decades happen.”-Vladimir Ilyich Lenin
Watch out for those weeks!
Does this comedy sketch ever end?
Head of the IMF Christine Lagarde in court charged with embezzlement and fraud
23 May 2013
The head of the International Monetary Fund arrived in the dock of a Paris courtroom today as she braced herself to be formally charged with embezzlement and fraud.
Christine Lagarde’s humiliation is not only a massive personal blow which could lead to her resignation, but one which will plunge the world’s banking system into further ignominy.
The clearly nervous 57-year-old said nothing to reporters as she entered the Court of Justice of the Republic, a special tribunal set up to judge the conduct of France’s government ministers, shortly after 8.30am.
Lagarde faces a maximum sentence of 10 years in jail if found guilty of the very serious charges.
It was when she was President Nicolas Sarkozy’s finance minister that she is said to have authorised a 270 million pounds payout to one of his prominent supporters, so abusing her government position.
The money went to Bernard Tapie, a convicted football match fixer and tax dodger who supported Lagarde and Sarkozy’s UMP party.
It came after Dominque Strauss-Kahn, another senior French politician, was sacked as IMF chief following allegations that he attempted to rape a chambermaid in a New York hotel.
Ms Lagarde began campaigning to succeed Mr Strauss-Kahn soon after his arrest for the alleged crime.
But now it is Ms Lagarde, a lawyer and retired synchronised swimming star, who is facing a long court process of her own, as well as a possible jail sentence.
The scandal will not only pile further shame on France’s political class, but worry politicians and bankers desperately trying to resolve the global financial crisis.
Mr Tapie, the former head of adidas in France, claims he was cheated out of millions by Credit Lyonnais bank when the sports kit empire was sold in 1993.
In 2007, Ms Largarde ended the epic dispute by ordering a panel of judges to arbitrate and, in turn, they awarded Tapie the damages.
Opposition MPs were furious, with former presidential candidate Francois Bayrou accusing Ms Lagarde of ‘dipping into the taxpayers’ pocket for a private beneficiary.’
Mr Strauss-Kahn’s Socialist Party also accused Ms Lagarde of improper conduct, pointing to the fact that Mr Tapie was a vocal supporter of Sarkozy.
Ms Lagarde’s lawyer, Yves Repiquet, said the inquiry was ‘in no way incompatible’ with her new job, and expected the case to be dismissed.
Ms Lagarde denies any wrongdoing, saying before today’s court appearance: ‘If it’s decided to continue with this inquiry it won’t be particularly surprising. Personally, it doesn’t worry me at all – I didn’t benefit personally’.
But it has been widely reported in the French media that investigators intend to charge her with fraud and embezzlement.
Le Monde said that magistrates had already written to Mrs Lagarde to tell her that she should not expect any special treatment because of her high-profile international job.
http://www.standard.co.uk/news/world/head-of-the-imf-christine-lagarde-in-court-charged-with-embezzlement-and-fraud-8628670.html
end
Without a doubt, your most important article of the day. The EU is weighing on curbing the bank's use of client assets as collateral. The use of excess collateral is the shadow banking industry and they use the collateral to hypothecate and rehypothecate these assets hundreds times over. The total shadow banking industry has sums in the trillions of dollars.
If you withdraw these funds from circulation worthy collateral will disappear on the planet and send all of the oxygen out of the markets. Within an nanosecond, the entire global economy will seize. It makes no sense that they would make this announcement, unless....
something big is going on behind the scenes and they need this as a cover.
stay tuned on this one..
(courtesy Brunsden/Bloomberg)
EU Weighs Curbs on Banks’ Use of Client Assets as Collateral
By Jim Brunsden - May 24, 2013 10:29 AM ET
Banks and brokers face a clampdown on using assets they hold for clients as collateral for their own trades as part of European Union moves to bolster market stability and rein in shadow banking.
The European Commission is weighing whether firms should have to obtain formal consent from their clients before being allowed to reuse assets to back other trades, according to a document obtained by Bloomberg News. The consent would be enshrined in a “contractual agreement” between the parties.
The handing over of collateral is an integral part of repurchase agreements, or repos -- one of the activities under review by global regulators as part of their efforts to regulate shadow banking. The reuse of clients’ assets poses a potential threat to financial stability should one of a chain of firms that handled the securities go bankrupt, according to the document prepared by commission officials and dated May 15. Uncertainty about who holds an asset can fuel panic in times of market stress, according to the paper.
“Complex” chains of collateral can make it difficult for investors to “identify who owns what, where risk is concentrated and who is exposed to whom,” according to the document. “This has consequences for transparency and financial stability.”
Under the plans being weighed by the commission, banks and brokers holding securities for clients wouldn’t be allowed to reuse the assets for trading on their own account -- speculation on the markets aimed solely at boosting their own revenues, according to the document.
By Jim Brunsden - May 24, 2013 10:29 AM ET
Banks and brokers face a clampdown on using assets they hold for clients as collateral for their own trades as part of European Union moves to bolster market stability and rein in shadow banking.
The European Commission is weighing whether firms should have to obtain formal consent from their clients before being allowed to reuse assets to back other trades, according to a document obtained by Bloomberg News. The consent would be enshrined in a “contractual agreement” between the parties.
The handing over of collateral is an integral part of repurchase agreements, or repos -- one of the activities under review by global regulators as part of their efforts to regulate shadow banking. The reuse of clients’ assets poses a potential threat to financial stability should one of a chain of firms that handled the securities go bankrupt, according to the document prepared by commission officials and dated May 15. Uncertainty about who holds an asset can fuel panic in times of market stress, according to the paper.
“Complex” chains of collateral can make it difficult for investors to “identify who owns what, where risk is concentrated and who is exposed to whom,” according to the document. “This has consequences for transparency and financial stability.”
Under the plans being weighed by the commission, banks and brokers holding securities for clients wouldn’t be allowed to reuse the assets for trading on their own account -- speculation on the markets aimed solely at boosting their own revenues, according to the document.
Repo Trades
The EU market for repo trades, contracts in which one investor agrees to sell a security and then buy it back at a future date at a fixed price, is worth more than 5.6 billion euros ($7.2 billion) according to the most recent survey published by the International Capital Market Association.
Repos are a major source of short-term finance for banks, allowing them to use securities as collateral for short-term loans from investors such as other banks or money-market mutual funds.
The Financial Stability Board has estimated that the global shadow-banking system was worth $67 trillion in 2011, with EU-based activities accounting for about $31 trillion.
Shadow banking is a term used by regulators to define activities that fall outside the scope of most banking and market regulation, and which they believe could be a source of systemic risk. The FSB has identified repos, securities lending agreements and securitization as examples of shadow banking activities.
Chantal Hughes, a spokeswoman for Michel Barnier, the EU’s financial services chief, declined to immediately comment on the document.
To contact the reporter on this story: Jim Brunsden in Brussels at jbrunsden@bloomberg.net
end
The EU market for repo trades, contracts in which one investor agrees to sell a security and then buy it back at a future date at a fixed price, is worth more than 5.6 billion euros ($7.2 billion) according to the most recent survey published by the International Capital Market Association.
Repos are a major source of short-term finance for banks, allowing them to use securities as collateral for short-term loans from investors such as other banks or money-market mutual funds.
The Financial Stability Board has estimated that the global shadow-banking system was worth $67 trillion in 2011, with EU-based activities accounting for about $31 trillion.
Shadow banking is a term used by regulators to define activities that fall outside the scope of most banking and market regulation, and which they believe could be a source of systemic risk. The FSB has identified repos, securities lending agreements and securitization as examples of shadow banking activities.
Chantal Hughes, a spokeswoman for Michel Barnier, the EU’s financial services chief, declined to immediately comment on the document.
To contact the reporter on this story: Jim Brunsden in Brussels at jbrunsden@bloomberg.net
end
Early Friday morning currency crosses (7 am)
Early Friday morning currency crosses (7 am)
Friday morning we see some euro strength against the dollar from the close on Thursday with this time trading well above the 1.29 mark at 1.2966. The yen this morning,is a lot stronger trading up 85 basis points to 101.19 yen to the dollar (dollar down). The yen carry traders are sweating bullets. The pound, this morning is a little stronger against the USA dollar, with this time trading above the 1.51 column at 1.5123. The Canadian dollar currency is however a lot weaker against the dollar climbing above the 1.03 column at 1.0336. We have the sentiment this morning with a mainly risk off situation with all of our European bourses in the red. The Nikkei exchange finished marginally in the green this morning despite the big rise in the yen/usa value . Gold and silver are down in the early morning, with gold trading at $1386.00 (up $6.00) and silver is at $22.42 down 7 cents in early morning European trading.
The USA index is down this morning by 33 cents at 83.53
Euro/USA 1.2966 up .0036
USA/yen 101.17 down 0.85
GBP/USA 1.5123 up .0017
USA/Can 1.0336 up .0029
Friday morning we see some euro strength against the dollar from the close on Thursday with this time trading well above the 1.29 mark at 1.2966. The yen this morning,is a lot stronger trading up 85 basis points to 101.19 yen to the dollar (dollar down). The yen carry traders are sweating bullets. The pound, this morning is a little stronger against the USA dollar, with this time trading above the 1.51 column at 1.5123. The Canadian dollar currency is however a lot weaker against the dollar climbing above the 1.03 column at 1.0336. We have the sentiment this morning with a mainly risk off situation with all of our European bourses in the red. The Nikkei exchange finished marginally in the green this morning despite the big rise in the yen/usa value . Gold and silver are down in the early morning, with gold trading at $1386.00 (up $6.00) and silver is at $22.42 down 7 cents in early morning European trading.
The USA index is down this morning by 33 cents at 83.53
Euro/USA 1.2966 up .0036
USA/yen 101.17 down 0.85
GBP/USA 1.5123 up .0017
USA/Can 1.0336 up .0029
end
And now your closing Spanish 10 year bond yield: ( up .13 in yield). This is absolutely deadly to the Euro boys as it signals that the flow from Japan is over:
(a huge jump in yield!!)
(a huge jump in yield!!)
SPANISH GOVERNMENT GENERIC BONDS - 10 YR NOTE
GSPG10YR:IND
4.420.13 2.91%
As of 11:59:00 ET on 05/24/2013.
4.420.13 2.91%
As of 11:59:00 ET on 05/24/2013.
You will recall, that on Thursday night we had this closing:
a rise of another 11 basis points.
a rise of another 11 basis points.
SPANISH GOVERNMENT GENERIC BONDS - 10 YR NOTE
GSPG10YR:IND
4.290.11 2.70%
As of 11:59:00 ET on 05/23/2013.
end
As of 11:59:00 ET on 05/23/2013.
end
Your Italian 10 year bond yield (rise 11 in yield ...a huge jump in yield plus now over the 4% level)
Italy Govt Bonds 10 Year Gross Yield
GBTPGR10:IND
4.140.11 2.68%
As of 12:00:00 ET on 05/24/2013.
On Thursday night:
4.140.11 2.68%
As of 12:00:00 ET on 05/24/2013.
On Thursday night:
Italy Govt Bonds 10 Year Gross Yield
4.030.12 3.02%
As of 11:59:00 ET on 05/23/2013.
As of 11:59:00 ET on 05/23/2013.
end
Key crosses Friday 5 pm:
Key crosses Friday 5 pm:
The Euro weakened considerably this Friday afternoon closing now just above the 1.29 mark at 1.2930. The yen strengthened again a tiny bit this afternoon driving the yen carry traders crazy, resting this weekend at 101.07. The pound weakened a little more from Friday morning , closing just above the 1.51 barrier at 1.5120. The Canadian dollar also weakened more on Friday afternoon against the dollar closing at 1.0321.
The Euro weakened considerably this Friday afternoon closing now just above the 1.29 mark at 1.2930. The yen strengthened again a tiny bit this afternoon driving the yen carry traders crazy, resting this weekend at 101.07. The pound weakened a little more from Friday morning , closing just above the 1.51 barrier at 1.5120. The Canadian dollar also weakened more on Friday afternoon against the dollar closing at 1.0321.
The USA index was whacked big time today with the final index number down 67 cents to 83.64
but a touch higher from early Friday morning.
but a touch higher from early Friday morning.
Euro/USA 1.2930 flat .000
USA/Yen 101.07 down 0.93
GBP/USA 1.5120 up .0014
USA/Can 1.0321 up .0019
end.
Euro/USA 1.2930 flat .000
USA/Yen 101.07 down 0.93
GBP/USA 1.5120 up .0014
USA/Can 1.0321 up .0019
Your closing figures from Europe today.
i) England/FTSE down 42.45 0.63%
ii) Paris/CAC down 10.36 or 0.26%
iii) German DAX: down 46.66 points or 0.56%
iv) Spanish ibex down 79.00 or 0.95%
v) Italian bourse (MIB) down a whopping 111.61 (.66%)
and the Dow up 8.6 points .06%
v) Italian bourse (MIB) down a whopping 111.61 (.66%)
end.
And now for USA news:
The housing market is in recovery with architectural billings plunging?
(courtesy zero hedge)
end.
The housing market is in recovery with architectural billings plunging?
(courtesy zero hedge)
The Housing UnRecovery Is Here: Architectural Billings Plunge Most Since 2008
Submitted by Tyler Durden on 05/24/2013 08:55 -0400
Not only is this 'housing recovery' being built without the use of Lumber (as we explained here), but Architects are no longer useful either. The last two months - as homebuilder stocks surge and house prices spike - has seen Architectural billings plunge by the most since November 2008. The current level of activity is at its lowest since June 2012 - hardly indicative of the rampaging rapacious demand for homes that we are spoon-fed day after day...
Charts: Bloomberg
Not only is this 'housing recovery' being built without the use of Lumber (as we explained here), but Architects are no longer useful either. The last two months - as homebuilder stocks surge and house prices spike - has seen Architectural billings plunge by the most since November 2008. The current level of activity is at its lowest since June 2012 - hardly indicative of the rampaging rapacious demand for homes that we are spoon-fed day after day...
Charts: Bloomberg
end.
Quantitative easing just does not work
(courtesy Graham Summers)
Quantitative easing just does not work
(courtesy Graham Summers)
The Fed's Hands Are Tied... Right as the Financial System Begins to Crack
Submitted by Phoenix Capital Research on 05/24/2013 12:30 -0400
The Fed would do well to look at Japan.
Japan’s Nikkei, after rallying over 70% since November, just collapsed 11% in less than two days. Looking at the chart, it’s pretty clear where this thing is heading: the same as the NASDAQ in 2000.
This is the problem with economic policy that focuses on pushing stocks higher: eventually the collapsing economy comes home to roost and stocks implode. We saw this in 2000 and 2008. We’re currently seeing it in Japan. And it’s only a matter of time before it his the US.
Indeed, Bernanke’s whole life work has been based on the belief that the Fed didn’t do enough during the Great Depression. So he’s opted to expand the Fed’s balance sheet to over $3 trillion and to monetize most of the US’s debt issuance via QE to battle the Financial Crisis.
Altogether, the Fed has monetized QE equal to 15% or so of the US’s GDP. Doing this has already put stocks back in a bubble and damaged the economy to no end. Marginal debt is back at record highs, housing has not bottomed, and Bernanke is still talking about a “recovery” FIVE years after the Crash. At this point based on the business cycle alone we should be in a roaring growth spurt.
QE doesn’t work. It never has. Look at Japan.
Japan has monetized an amount equal to well over 25% of its GDP via QE. And at that point its bond market began to crash. It’s not coincidence that the Fed is beginning to talk about tapering QE now that this is happening. Even a career academic can look at what’s going on in Japan and know that more QE won’t help the US.
So the Fed is essentially handcuffed at this point. Increasing QE in any way risks a Japan-bond market style rout.
Can you imagine what would happen if the financial system faces another Crisis? The Fed has already thrown everything including the kitchen sink at the system. If the system collapses now the Fed will be powerless to stop it.
For some insights on how to prepare for a market collapse, visit us at:
Best Regards,
Graham Summers
end.
Today, Bill Holter tackles the huge problem in the USA: flash crashes
and how it is scary people away from equity markets.
(courtesy Bill Holter/Miles Franklin)
The Fed would do well to look at Japan.
Japan’s Nikkei, after rallying over 70% since November, just collapsed 11% in less than two days. Looking at the chart, it’s pretty clear where this thing is heading: the same as the NASDAQ in 2000.
This is the problem with economic policy that focuses on pushing stocks higher: eventually the collapsing economy comes home to roost and stocks implode. We saw this in 2000 and 2008. We’re currently seeing it in Japan. And it’s only a matter of time before it his the US.
Indeed, Bernanke’s whole life work has been based on the belief that the Fed didn’t do enough during the Great Depression. So he’s opted to expand the Fed’s balance sheet to over $3 trillion and to monetize most of the US’s debt issuance via QE to battle the Financial Crisis.
Altogether, the Fed has monetized QE equal to 15% or so of the US’s GDP. Doing this has already put stocks back in a bubble and damaged the economy to no end. Marginal debt is back at record highs, housing has not bottomed, and Bernanke is still talking about a “recovery” FIVE years after the Crash. At this point based on the business cycle alone we should be in a roaring growth spurt.
QE doesn’t work. It never has. Look at Japan.
Japan has monetized an amount equal to well over 25% of its GDP via QE. And at that point its bond market began to crash. It’s not coincidence that the Fed is beginning to talk about tapering QE now that this is happening. Even a career academic can look at what’s going on in Japan and know that more QE won’t help the US.
So the Fed is essentially handcuffed at this point. Increasing QE in any way risks a Japan-bond market style rout.
Can you imagine what would happen if the financial system faces another Crisis? The Fed has already thrown everything including the kitchen sink at the system. If the system collapses now the Fed will be powerless to stop it.
For some insights on how to prepare for a market collapse, visit us at:
Best Regards,
Graham Summers
end.
and how it is scary people away from equity markets.
(courtesy Bill Holter/Miles Franklin)
Flash crashes...
We have seen "flash crashes" from time to time. We first saw the entire market flash crash 1,000 points 2 years ago and since then we have seen it many times in individual stock issues. The latest was yesterday with two utilities (you know, the widow and orphan stocks) NEE and American Electric Power http://www.businessinsider.
"One of these days" (as Jackie Gleason was found of saying)...the flash crash scenario will appear and not be "repaired". One of these days a flash crash will happen, all at once with everything you own and everywhere you look! It will be stocks bonds,commodities...everything...
But here's the thing, while nobody really cares about it now, what will happen when we a flash crash isn't so "neatly" repaired? http://www.nbcnews.com/
...And this is something that instills confidence? ...In a world that runs and goes forward only based on "confidence"? Whoever is running this show has and is definitely leaving some loose ends to flap in the breeze, if I was running a scam or a Ponzi scheme like the current one I would surely never allow stupid mistakes like a utility company to lose 50% of its value in 1 minute or less to ever happen. Even the most dense of the bunch will ask questions and more than likely exit the game.
It's as if they are "testing" to see how stupid or gullible people really are. They lower interest rates to 0% and watch to see how many leave their money in the bank. Then they allow rogue trading programs to decimate supposedly "safe" stocks that people have been goaded into buying because there is no "income" anywhere else. Do they not think that even Fred Flintstone and dimwitted Barney Rubble can't figure out that Gold and Silver that pay no interest are better choices than Dollars, Yen, Euros or Pounds that also pay no interest? I get it, they want people to spend their money but some people just won't do it as they have a "saver" mentality. The need to get velocity turned up, they won't get it with a weak economy and scaring the wits out of people.
People are not stupid. Sometimes they may be a little slow but, once they know that they've been had...they won't play the game anymore. And this is where we are headed. People only need to see so many flash crashes of "names" that have no business flash crashing and Joe farmer and his wife Jane will not play the game anymore. They will decide using common sense as follows...I can't get interest in banks, I can't get interest in bonds, I thought I could get interest in utilities but...but...but I just heard of one that dropped over 50% in 1 minute...forget about "return on capital, I just want return OF capital!". Yes, via "policy" the owners of the casino are telling you to exit and then immediatelypurchase precious metals.
Laugh or boo or whatever you'd like, this is merely human nature. I've seen it a thousand times during my career, people will not put up with the bullcrap of flash crashes in things that they invested in thinking that they sere "safe" in the first place. These are not people who were looking to "shoot the lights out", no, these are people who worked their butts off to save money and don't want to lose it. Yes, they would like "some" interest but too bad, that's no longer available...
So, do you see where this leads to? "Where" exactly that any person with half a brain will end up putting their money? You know, the person who has given up on making interest and is only concerned with "return" of capital or in other words retaining value or purchasing power? Yes, that is correct. Exactly where TPTB have and are trying their damndest to scare you and everyone else away from, precious metals. The harder they try to scare people away, the more they are luring people in with "policy".
Regards, Bill H.
end.
Well that about does it for today.
Monday is a holiday in the USA (Memorial Day) so I will see
you on Tuesday.
Have a great and safe holiday weekend
Harvey
