http://harveyorgan.blogspot.com/2012/05/egan-jones-downgrades-spainpapademos_22.html
Shortages in Gold and Silver have started!
Just a short note to let you and your subscribers know that shortages have started to develop in both Gold and Silver during the past few days. This has been confirmed by 3 of my wholesale suppliers.
I have purchased these products during this past sell-off and have received delivery so that I have sufficient inventory. Others in my industry have been unable to get products. Unlike other similar sell-off periods, Customers have not sold of their holdings and instead we are seeing both current as well as new customers asking about products and their pricing.
As you say, all the best, and have a little shine and glitter in your life. Hope Vancouver went well.
Ed Sheldon CPAwww.SheldonsFinestCoins.com
Good evening Ladies and Gentlemen:
Gold closed today down $12.00 to finish the comex session at $1576.40.
Silver finished the day at $28.17 down 13 cents. Late in the day, rumours starting swirling the globe that Greece will exit the Euro. Immediately the eur/usa cross fell to 1.266 and the Dow fell from positive territory for a loss of 50 points. It then rebounded with a hail Mary for a loss of only a couple of points. In Europe it has a good day for stocks as investors were contemplating the introduction of more QE III (LTRO etc). Let us head over to the comex at assess trading for today.
The total gold comex OI rose by 5638 contracts from 429,575 to 435,213.
Gold had a good day yesterday so the increase is quite normal. No doubt
the bankers supplied the necessary paper yesterday keeping gold in check.
The non official delivery month of May saw its OI rise by 10 contracts.
We had 19 delivery notices so we lost 9 contracts. This is probably correcting
yesterday's big increase in additional gold standing. We are 1 1/2 weeks away
from first day notice in the gold contract for June. Here the OI fell marginally
by 5530 contracts. All of these rolled into August. The estimated volume
at the gold comex today came in at 154,564 which is not bad. The volume yesterday
was quite large at 175,036 and is confirmed.
The total silver comex OI rose marginally again with today's reading at 113,893 a gain
of 979 contracts from yesterday's level of 112,914. The silver comex OI continues
in its narrow channel. The longs here are quite patient and ready, willing and able
to attack our bankers by standing for metal. The front delivery month of May saw its OI
fall by 11 contracts. We had 11 delivery notices so everything is in balance and
we lost zero ounces to cash settlements. The next big delivery month which
will also prove to be a big battleground will be July and here the OI rose marginally
by 813 contracts from 58,627 to 59,440. The estimated volume today was still on
the low side coming in at 38,142. The confirmed volume yesterday came in
at 37,475. It seems that many players have vacated the silver and gold arena
as they find other places to obtain their metal.
and....
In physical news, we find that the Swiss Parliament is exploring the use of the Swiss gold franc
where one gold coin equals 5 Swiss francs. This coin will be official tender and run parallel to the Swiss Franc. This is similar to the silver libertad proposal of Hugo Salinas Price in Mexico.
Also note that China continues to hoard silver onto her shores. This month 237 tonnes of silver was imported ( 1,185,000 ounces). Last month 256 tonnes was imported (1.28 million oz)
China is thus importing approximately 14.4 million oz of silver per year.
and....
"This week in gold, the commercials reduced their total net short position by 12,500 contracts, to just under 139,000 contracts. This is another multi-year low number for the total commercial net short position. The big 4 bought back 5700 contracts and the gold raptors about the same amount. The big 4 now hold their lowest net short position in years at close to 95,000 contracts, while the raptors hold a net long position of over 5,000 contracts, the most since Jan 3. On the flip side, the speculators, both large and small, hold their lowest net long positions in years. According to how I and many now evaluate the COT, gold is spectacularly bullish by any historical standard."
"In silver, the total commercial short position was reduced by 2,000 contracts to just under 16,000 contracts, effectively at the low levels of December, which, in turn, were decade extreme readings. The big 4 (read JPM) accounted for about 650 of the 2,000 commercial contracts bought back during the reporting week, with the raptors adding 1,000 contracts to a net long position now totaling 17,800 contracts. New silver COT extremes in this week’s report included the lowest big 4 short position ever in my memory, as well as the lowest net long position ever by the little guys. In terms of a low commercial net short and speculative net long position being considered bullish, then it hasn’t been much better than it is now."
"I would estimate JPMorgan’s concentrated net short position to be around 11,000 contracts at the Tuesday cut-off, the lowest since taking over Bear Stearns in 2008. At its peak, in December 2009, JPMorgan was short more than 40,000 silver contracts; so the reduction is significant. More significant, of course, is what the prime silver manipulator intends to do on the next silver rally. I know I beat it to death, but that will determine the fate of silver prices. That’s what makes JPMorgan the prime silver manipulator."
and....
from Sheldon Fine coins indicating a shortage in physical gold and silver.
I have noticed a big decline in good quality gold coins as well.
(Sheldon gold coins)
Just a short note to let you and your subscribers know that shortages have started to develop in both Gold and Silver during the past few days. This has been confirmed by 3 of my wholesale suppliers.
I have purchased these products during this past sell-off and have received delivery so that I have sufficient inventory. Others in my industry have been unable to get products. Unlike other similar sell-off periods, Customers have not sold of their holdings and instead we are seeing both current as well as new customers asking about products and their pricing.
As you say, all the best, and have a little shine and glitter in your life. Hope Vancouver went well.
Ed Sheldon CPAwww.SheldonsFinestCoins.com
and...
LME eyes renminbi move for metals
The London Metal Exchange is considering offering traders the chance to settle its contracts in the Chinese renminbi, a move that could lead to its dropping sterling after 135 years.
The move, still at an early stage of discussion, would highlight the shift in power in global metals markets.
When the LME was established in 1877, Britain was one of the world’s most important manufacturing powerhouses, and the LME’s benchmark contracts for delivery in three months were designed to mirror the length of time needed to reach British ports for shipments of copper from Chile and tin from Malaysia.But now China is the dominant force in the market, accounting for more than 40 per cent of global demand for most metals and a rapidly increasing share of trading in LME futures.
While LME contracts – which serve as global benchmarks for metals from aluminium to zinc – are denominated in dollars, the exchange offers companies the option of settling and clearing their trades in euro, yen and sterling.
The LME is asking its members as part of a survey to help the exchange design its planned new clearing house whether they would like the renminbi to be added to the roster of currencies on offer for settling and clearing, and sterling dropped. The LME plans to maintain its benchmark denominated in US dollars. “We are always looking at new ways to help the market,” the exchange said.
The move would be a final blow to sterling’s role in metals trading. The LME’s flagship copper contract was denominated in sterling until 1993, when it switched to dollars in the wake of the Black Wednesday sterling crisis.
The use of the UK currency to settle and clear LME contracts has dwindled to negligible levels in recent years, brokers say. “I haven’t traded a contract in sterling for five years,” said the head of one large LME brokerage.The use of the renminbi in commodities markets is, on the other hand, slowly increasing as China moves to internationalise its currency. Hong Kong Exchanges & Clearing (HKEx) has announced plans for a range of renminbi-denominated commodity futures, while the Hong Kong Mercantile Exchange (HKMEx) is planning to launch renminbi gold and copper contracts.
The Chinese currency would need to become more freely tradable before it could be used for LME trading and settlement. Over the weekend Beijing announced the latest step in the internationalisation of the renminbi, widening its daily trading band.
The discussion at the LME reflects the growing involvement of Chinese companies on the exchange. The LME announced this month thatBank of China had applied to become its first Chinese member. It opened an office in Asia in 2010 and members of staff now have business cards printed in both English and Mandarin.
Moreover, HKEx is seen as a frontrunner to acquire the LME, with final bids due to be submitted by May 7. CME Group, ICE and NYSE Euronext are also bidding.
and.....
"The real battle is over the ECB. It is the only body that can act swiftly enough to underwrite the bond markets. But the crisis may have to get far worse before the Germans yield. It will take immediate contagion, far beyond Greece."
Matt King, credit stategist at Citigroup, said Italian banks lost €160bn in deposits last year and Spanish banks lost €100bn, based on the ECB's Target2 payments data. The pattern seen in Greece, Ireland, and Portugal -- where deposits have together fallen 52pc -- is that a haemorrhage is hard to halt once it begins. "Capital flight, is a self-reinforcing process. It will stop only once there is decisive policy intervention. The longer investors have to wait, the more decisive it will need to be," he said
Mr King said foreign bondholders act like sheep not wolves. They graze quietly on their coupons until disturbed. Once frightened, they flee. He expects Spain and Italy to lose another €200bn each as foreigners retreat.
The coalition building against German Chancellor Angela Merkel is speckled. The British, Italians, and Poles are wary of relaxing fiscal austerity. They want the ECB to print money and take all risk of sovereign default off the table with unlimited bond purchases. The French want Keynesian spending. The Spanish want ECB action and a slower fiscal squeeze.
Between them they make up five of the EU's 'Big Six'. Their shared goal is to end the contractionary policy mix that has aborted Europe's recovery and tipped the South into 1930s debt-deflation. Mrs Merkel is "extremely isolated", said Greece's radical Syriza leader Alexis Tsipras.
Giles Merritt, head of the Brussels think-tank Friends of Europe, said the mood is ugly in the corridors of EU power. "The sheer anger directed against Angela Merkel is starting to shake the Germans for the first time. They are beginning to understand how deeply unpopular they have become, and how little time they have to act. The pressure from Beijing and Washington is mounting," he said.
It is not clear what Mrs Merkel can concede. Germany's constitutional court has ruled that the budgetary powers of the Bundestag cannot be alienated to any EU body, implying that Eurobonds might breach the Basic Law.
A change to the ECB mandate requires a treaty change and a two-thirds majority in the Bundestag. While quantitative easing is legal under current treaties, it would set off a political storm in Germany.
and....
For those of you who think that Greece is the only one in trouble today, guess again as India
just saw its rupee crash to an all time low of 54.9 rupees to the dollar.
(courtesy IFR)
India faces mass default and restructuring as devaluation looms
May 22, 2012 8:57 AM ET
SINGAPORE, May 22 (IFR) - India's mounting economic and political woes are prompting market players to raise the specter of a Greek-style crisis in Asia's third largest economy.
This is not simply idle speculation. Last Friday, the rupee crashed to an all-time low against the dollar of 54.9 and it was stuck most of Tuesday at the psychologically significant Rs55/USD level, where the currency is seen as having no obvious technical support. And the implications of a rupee collapse would be immense.
"It could go to stratospheric levels against the dollar and it looks to me as if the Indian government is aiming at a de facto devaluation in an effort to prop up flagging economic growth. And you then have to worry about all the unpleasant boxes such an action would inevitably tick, such as straining further the country's already strained balance of payments as well as bringing on an almighty wave of inflationary pressure," said a credit analyst at a ratings agency in Singapore.
He added that a spike in the rupee would strain the cashflow of corporates and banks as they struggled to service dollar-denominated debt and that the odds of a widespread Indian debt restructuring would be low.In his opinion the market will determine the rupee's level, with a formal devaluation seen as unlikely given the consequent need for interest rates to be pushed significantly higher to contain capital flight and counter toxic inflation levels.
This scenario was seen in the UK in 1992 when the country exited the ERM and the government pushed short term interest rates up to 15% from 10%, spending billions of pounds of reserves to defend the currency in the process.
Should something similar occur to India, it would almost certainly lose its coveted investment-grade rating, with a one-notch demotion required for that to occur. S&P has India on negative watch for its Baa3 foreign currency rating while Moody's and Fitch retain a stable outlook on the country.
As the country's government faces political impasse amid infighting, principally between prime minister Manmohan Singh and finance minister Pranab Mukherjee on the subject of tax reform, and India limps from one corruption scandal to the next, the sense of decay is palpable.
Surprisingly, India's deteriorating economic fundamentals and toxic politics have not yet impacted the relative value of its issuers offshore debt. In fact, on Tuesday India's dollar offshore curve recovered the 10bp it had widened on Monday. But that situation is unlikely to hold much longer.
"As market players start to fret about the possibility of a full-blown rupee devaluation, you will see this start to impact spreads on the country's offshore curve. If the currency goes in a big way, you will have a unilateral replaying in India of the Asian financial crisis, which involved default on short-dated offshore debt and a mass round of debt restructuring. India is hanging in the balance right now, and the worst case scenario seems increasingly likely to play out," said a Hong Kong-based syndicate head.
Just as the tide moves against them, though, Indian corporates are seeing the need for offshore funding increase. According to the credit analyst, many Indian corporates have reached borrowing ceilings with local banks and are sizing up offshore bond issuance as a result. That would be a tall order and an expensive trip, though.With massive convertible maturities coming up, some in dollars, a local market that is increasingly saturated and has less support from foreign investors and a closed dollar market, it seems inevitable that restructuring will soon become the main activity for Mumbai-based investment-bankers.
LME eyes renminbi move for metals
The London Metal Exchange is considering offering traders the chance to settle its contracts in the Chinese renminbi, a move that could lead to its dropping sterling after 135 years.
The move, still at an early stage of discussion, would highlight the shift in power in global metals markets.
When the LME was established in 1877, Britain was one of the world’s most important manufacturing powerhouses, and the LME’s benchmark contracts for delivery in three months were designed to mirror the length of time needed to reach British ports for shipments of copper from Chile and tin from Malaysia.But now China is the dominant force in the market, accounting for more than 40 per cent of global demand for most metals and a rapidly increasing share of trading in LME futures.
While LME contracts – which serve as global benchmarks for metals from aluminium to zinc – are denominated in dollars, the exchange offers companies the option of settling and clearing their trades in euro, yen and sterling.
The LME is asking its members as part of a survey to help the exchange design its planned new clearing house whether they would like the renminbi to be added to the roster of currencies on offer for settling and clearing, and sterling dropped. The LME plans to maintain its benchmark denominated in US dollars. “We are always looking at new ways to help the market,” the exchange said.
The move would be a final blow to sterling’s role in metals trading. The LME’s flagship copper contract was denominated in sterling until 1993, when it switched to dollars in the wake of the Black Wednesday sterling crisis.
The use of the UK currency to settle and clear LME contracts has dwindled to negligible levels in recent years, brokers say. “I haven’t traded a contract in sterling for five years,” said the head of one large LME brokerage.The use of the renminbi in commodities markets is, on the other hand, slowly increasing as China moves to internationalise its currency. Hong Kong Exchanges & Clearing (HKEx) has announced plans for a range of renminbi-denominated commodity futures, while the Hong Kong Mercantile Exchange (HKMEx) is planning to launch renminbi gold and copper contracts.
and.....The Chinese currency would need to become more freely tradable before it could be used for LME trading and settlement. Over the weekend Beijing announced the latest step in the internationalisation of the renminbi, widening its daily trading band.
The discussion at the LME reflects the growing involvement of Chinese companies on the exchange. The LME announced this month thatBank of China had applied to become its first Chinese member. It opened an office in Asia in 2010 and members of staff now have business cards printed in both English and Mandarin.
Moreover, HKEx is seen as a frontrunner to acquire the LME, with final bids due to be submitted by May 7. CME Group, ICE and NYSE Euronext are also bidding.
"The real battle is over the ECB. It is the only body that can act swiftly enough to underwrite the bond markets. But the crisis may have to get far worse before the Germans yield. It will take immediate contagion, far beyond Greece."Matt King, credit stategist at Citigroup, said Italian banks lost €160bn in deposits last year and Spanish banks lost €100bn, based on the ECB's Target2 payments data. The pattern seen in Greece, Ireland, and Portugal -- where deposits have together fallen 52pc -- is that a haemorrhage is hard to halt once it begins. "Capital flight, is a self-reinforcing process. It will stop only once there is decisive policy intervention. The longer investors have to wait, the more decisive it will need to be," he saidMr King said foreign bondholders act like sheep not wolves. They graze quietly on their coupons until disturbed. Once frightened, they flee. He expects Spain and Italy to lose another €200bn each as foreigners retreat.The coalition building against German Chancellor Angela Merkel is speckled. The British, Italians, and Poles are wary of relaxing fiscal austerity. They want the ECB to print money and take all risk of sovereign default off the table with unlimited bond purchases. The French want Keynesian spending. The Spanish want ECB action and a slower fiscal squeeze.Between them they make up five of the EU's 'Big Six'. Their shared goal is to end the contractionary policy mix that has aborted Europe's recovery and tipped the South into 1930s debt-deflation. Mrs Merkel is "extremely isolated", said Greece's radical Syriza leader Alexis Tsipras.Giles Merritt, head of the Brussels think-tank Friends of Europe, said the mood is ugly in the corridors of EU power. "The sheer anger directed against Angela Merkel is starting to shake the Germans for the first time. They are beginning to understand how deeply unpopular they have become, and how little time they have to act. The pressure from Beijing and Washington is mounting," he said.It is not clear what Mrs Merkel can concede. Germany's constitutional court has ruled that the budgetary powers of the Bundestag cannot be alienated to any EU body, implying that Eurobonds might breach the Basic Law.A change to the ECB mandate requires a treaty change and a two-thirds majority in the Bundestag. While quantitative easing is legal under current treaties, it would set off a political storm in Germany.
For those of you who think that Greece is the only one in trouble today, guess again as India
just saw its rupee crash to an all time low of 54.9 rupees to the dollar.
(courtesy IFR)
India faces mass default and restructuring as devaluation looms
May 22, 2012 8:57 AM ET
SINGAPORE, May 22 (IFR) - India's mounting economic and political woes are prompting market players to raise the specter of a Greek-style crisis in Asia's third largest economy.
This is not simply idle speculation. Last Friday, the rupee crashed to an all-time low against the dollar of 54.9 and it was stuck most of Tuesday at the psychologically significant Rs55/USD level, where the currency is seen as having no obvious technical support. And the implications of a rupee collapse would be immense.
"It could go to stratospheric levels against the dollar and it looks to me as if the Indian government is aiming at a de facto devaluation in an effort to prop up flagging economic growth. And you then have to worry about all the unpleasant boxes such an action would inevitably tick, such as straining further the country's already strained balance of payments as well as bringing on an almighty wave of inflationary pressure," said a credit analyst at a ratings agency in Singapore.
He added that a spike in the rupee would strain the cashflow of corporates and banks as they struggled to service dollar-denominated debt and that the odds of a widespread Indian debt restructuring would be low.In his opinion the market will determine the rupee's level, with a formal devaluation seen as unlikely given the consequent need for interest rates to be pushed significantly higher to contain capital flight and counter toxic inflation levels.
This scenario was seen in the UK in 1992 when the country exited the ERM and the government pushed short term interest rates up to 15% from 10%, spending billions of pounds of reserves to defend the currency in the process.
Should something similar occur to India, it would almost certainly lose its coveted investment-grade rating, with a one-notch demotion required for that to occur. S&P has India on negative watch for its Baa3 foreign currency rating while Moody's and Fitch retain a stable outlook on the country.
As the country's government faces political impasse amid infighting, principally between prime minister Manmohan Singh and finance minister Pranab Mukherjee on the subject of tax reform, and India limps from one corruption scandal to the next, the sense of decay is palpable.
Surprisingly, India's deteriorating economic fundamentals and toxic politics have not yet impacted the relative value of its issuers offshore debt. In fact, on Tuesday India's dollar offshore curve recovered the 10bp it had widened on Monday. But that situation is unlikely to hold much longer.
"As market players start to fret about the possibility of a full-blown rupee devaluation, you will see this start to impact spreads on the country's offshore curve. If the currency goes in a big way, you will have a unilateral replaying in India of the Asian financial crisis, which involved default on short-dated offshore debt and a mass round of debt restructuring. India is hanging in the balance right now, and the worst case scenario seems increasingly likely to play out," said a Hong Kong-based syndicate head.
Just as the tide moves against them, though, Indian corporates are seeing the need for offshore funding increase. According to the credit analyst, many Indian corporates have reached borrowing ceilings with local banks and are sizing up offshore bond issuance as a result. That would be a tall order and an expensive trip, though.With massive convertible maturities coming up, some in dollars, a local market that is increasingly saturated and has less support from foreign investors and a closed dollar market, it seems inevitable that restructuring will soon become the main activity for Mumbai-based investment-bankers.
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