http://harveyorgan.blogspot.com/2013/06/comex-dealer-gold-falls-to-all-time-low.html
Monday, June 24, 2013
Comex dealer gold falls to all time low of 42.27 tonnes/ The amount of gold standing for June rises to 29.59 tonnes/silver also increases in amount standing to 715,000 oz/
Good evening Ladies and Gentlemen:
Gold closed down by $14.90 to $1276.80 (comex closing time ). Silver fell by 47 cents to $19.49 (comex closing time)
In the access market at 5:00 pm, gold and silver finished trading at the following prices :
gold: 1282.60
silver: $19.70
At the Comex, the open interest in silver fell by 4638 contracts to 149,240 contracts despite silver's rise in price on Friday. The silver OI is still holding firm at these highly elevated levels and within spitting distance of record level highs. As I mentioned to you on Friday, the bankers will try and do everything possible to remove as many longs from the silver arena as possible. The high OI in silver could only mean somebody with huge deep pockets is standing and of course quite impervious to the pain of huge losses (e.g. a sovereign like China)
The open interest on the entire gold comex contracts fell by 525 contracts to 392,752 despite gold's rise in price on Friday. The number of ounces which is standing for gold in this June delivery month rose to 951,400 or 29.59 tonnes. The number of silver ounces standing in this non active month of June also rose by 10,000 oz to 715,000 oz
Tonight, the Comex registered or dealer inventory of gold lowers in inventory to 1.359 million oz or 42.27 tonnes. This is still dangerously low. The total of all gold at the comex rose sightly to 7.681 million oz or 238.9 tonnes of gold.
JPMorgan's customer inventory remains constant tonight at 141,197.86 oz or 4.39 tonnes. Its dealer inventory also remains constant at 408,709.033 oz but it still must settle upon contracts issued in the June delivery month which far exceeds its inventory.
The total of the 3 major gold bullion dealers( Scotia , HSBC and JPMorgan) in its gold Comex dealer account registers only 27.76 tonnes of gold
The GLD reported another loss in inventory of 4.21 tonnes of gold inventory. The SLV inventory of silver showed a minor loss in inventory of 483,000 oz.
Kingworldnews and Eric King provide two great interviews with Dan Norcini and Egon Von Greyerz.
We also two terrific commentaries from Bill Holter (Miles Franklin) for you to ponder over.
ON the paper side of things, Mark Grant, and Ambrose Evans Pritchard give very important commentaries, as does Charles Krauthammer of the Washington Post.
We will go over these and many other stories but first.....................
Let us now head over to the comex and assess trading over there today.
Here are the details:
The total gold comex open interest fell by 5,25 contracts from 393,277 down to 392,752 with gold rising by $5.50 on Friday. The front active month of June saw it's OI fall by 3 contracts from 949 down to 946. We had 70 delivery notice served upon our longs on Friday,thus we gained 67 gold contracts or 6700 additional ounces will be standing in this June delivery contract month. The next delivery month is the non active July contract and here the OI rose by 88 contracts up to 580. The next active delivery month for gold is August and here the OI fell by 3821 contracts from 227,295 down to 223,474. The estimated volume today was poor at 146,947 contracts. The confirmed volume on Friday was good at 205,646.
The total silver Comex OI fell by 4638 contracts despite silver rising in price Friday by 14 cents. The front non active June silver contract month shows a gain of one contract up to 26. We had 1 notice filed on Friday so in essence we gained 2 silver contracts or an additional 10,000 oz of silver will stand for the June delivery month. The next big delivery month is July and here the OI fell by only 7211 contracts down to 42,092. We have 4 days left before first day notice (June 28.2013) and judging from the relatively high OI in July, we may see some fireworks in silver. The estimated volume today was excellent coming in at 72,375 contracts. The confirmed volume on Friday was excellent at 87,770.
We had one customer deposits today :
total customer deposits: Into HSBC: 4950.487 oz
It is very strange that in a big delivery month, we are witnessing hardly any gold enter the dealer or even the customer.
we had 1 tiny customer withdrawals:
ii) Out of Brinks: 321.50 oz
total customer withdrawals: 321.50 oz
Today we had two major adjustments:
i) Out of HSBC: 17,514.101 oz was adjusted out of the dealer and back into the customer account.
ii) Out of Scotia a monstrous 53,977.072 oz was adjusted out of the dealer and back into the customer.
We have had very little issuance from HSBC and Scotia so I doubt if any of these adjustments was due to settlements. Maybe the customer refused to sell gold at these levels and just removed the warrant for sale
Thus tonight we have the following JPMorgan gold inventory:
JPM dealer inventory: 408,709.033 oz 12.17 tonnes (prev 413,526.284 oz)
JPM customer inventory: 141,197.86 oz or 4.39 tonnes (prev 136,380.611 oz)
As we reported to you two weeks ago, that JPMorgan withdrew a huge amount of gold from its customer account:
Out of JPMorgan: 217,844.96 oz.
If you will recall, we needed to see 100,000 oz of gold removed from JPMorgan's customer account. (1000 contracts served upon our longs in mid May).
The last Tuesday in May, we had 15,416.93 oz removed from the JPM's customer account. No doubt that this gold was part of the 1000 contracts issued by JPMorgan customer account and thus we calculated that as of tonight 28,389.579 oz was settled upon, leaving 71,611.00 oz still left to arrive in the settling process.
Tuesday, June 11, we had 217,844.96 actual ounces leave JPMorgan
Today, the CME reported that 12 notices were issued of which 0 came from JPMorgan's customer or dealer account.
In summary on the customer side of things for JPMorgan:
Today 0 notices were served upon our longs from the JPMorgan's customer side
(and zero from its dealer side).
Thus on JPMorgan customer side:
From the beginning of June we have had 1591 notices served from the customer side of JPMorgan for 159,100 oz. If we add the 71,611.00 oz owing from May issuance, we get 230,711 oz. If we subtract the actual withdrawal of gold from JPMorgan of 217,844.96, this still leaves 12,867.04 oz that needs to be settled upon from the vaults of JPMorgan customer side. Let us see how JPMorgan settles upon the new 4,817.251 oz of gold received on Friday from its dealer account into its customer account.
The total dealer comex gold falls dramatically to 1.359 million oz or 42.27 tonnes of gold.
The total of all comex gold, dealer and customer rests tonight at 7.681 million oz or 238.90 tonnes..
Now for JPMorgan's dealer side and what the inventory should be:
On June 11.2013 we reported that 4935 contracts have been issued by JPMorgan's house account since first day notice and not yet subtracted out of inventory
You will also recall two weeks ago on Saturday (and again on that following Monday night,) I reported that JPMorgan had 470,322.102 oz in it's dealer account. From that day until now, 61,613.07 oz was either withdrawn or adjusted out, leaving the dealer side at 408,709.033 oz where it sits tonight.
On the dealer side here are the last 12 trading sessions as to notices issued from JPMorgan's dealer side:
Friday: zero
Monday: 1
Another disturbing piece of news is the low dealer gold inventory for our 3 major bullion banks: Scotia, HSBC and JPMorgan equal to 27.76 tonnes
i) Scotia: 231,619.164 oz or 7.204 tonnes (previous... 285,596.23 oz or 8.88 tonnes)
ii) HSBC: 252,683.176 oz or 7.85 tonnes (previous 270,197.277 oz or 8.4 tonnes)
iii) JPMorgan: 408,709.033 oz or 12.71 tonnes (same)
Brinks dealer account has the lions share of the dealer gold at 446,698.99 oz 13.894 tonnes and it remains the same.
Today we had 12 notices served upon our longs for 1,200 oz of gold. In order to calculate what I believe will stand for delivery in June, I take the OI standing for June (946) and subtract out today's notices (12) which leaves us with 934 contracts or 93,400 oz left to be served upon our longs.
8580 contracts x 100 oz per contract or 858,000 oz served upon + 934 contracts or 93,400 oz (left to be served upon) = 951,400 oz or 29.59 tonnes of gold.
We gained 6700 gold ounces standing in this June delivery 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 per month. Thus the amount standing for gold this month represents 154.4% of that total production.
Ladies and Gentlemen: we have a three-fold problem:
i) the total dealer inventory of gold is at a very dangerously low level of only 42.27 tonnes and none of the 9.5 tonnes delivery notices from May and the 29.38 tonnes from June have been removed from JPMorgan's inventory as of yet.
ii) a) JPMorgan's customer inventory remains at an extremely low 141,197.86 oz.
If you are a customer of JPMorgan and have your gold in its vault, I think it is best to remove it before we have another fiasco like MFGlobal.
ii b) JPMorgan's dealer account rests tonight at 408,709.03 oz. However all of this gold has been spoken for plus an additional 85,890. oz of deficient gold.
iii) the 3 major bullion banks have collectively only 27.76 tonnes of gold left!!
Gold closed down by $14.90 to $1276.80 (comex closing time ). Silver fell by 47 cents to $19.49 (comex closing time)
In the access market at 5:00 pm, gold and silver finished trading at the following prices :
gold: 1282.60
silver: $19.70
At the Comex, the open interest in silver fell by 4638 contracts to 149,240 contracts despite silver's rise in price on Friday. The silver OI is still holding firm at these highly elevated levels and within spitting distance of record level highs. As I mentioned to you on Friday, the bankers will try and do everything possible to remove as many longs from the silver arena as possible. The high OI in silver could only mean somebody with huge deep pockets is standing and of course quite impervious to the pain of huge losses (e.g. a sovereign like China)
The open interest on the entire gold comex contracts fell by 525 contracts to 392,752 despite gold's rise in price on Friday. The number of ounces which is standing for gold in this June delivery month rose to 951,400 or 29.59 tonnes. The number of silver ounces standing in this non active month of June also rose by 10,000 oz to 715,000 oz
Tonight, the Comex registered or dealer inventory of gold lowers in inventory to 1.359 million oz or 42.27 tonnes. This is still dangerously low. The total of all gold at the comex rose sightly to 7.681 million oz or 238.9 tonnes of gold.
JPMorgan's customer inventory remains constant tonight at 141,197.86 oz or 4.39 tonnes. Its dealer inventory also remains constant at 408,709.033 oz but it still must settle upon contracts issued in the June delivery month which far exceeds its inventory.
The total of the 3 major gold bullion dealers( Scotia , HSBC and JPMorgan) in its gold Comex dealer account registers only 27.76 tonnes of gold
The GLD reported another loss in inventory of 4.21 tonnes of gold inventory. The SLV inventory of silver showed a minor loss in inventory of 483,000 oz.
Kingworldnews and Eric King provide two great interviews with Dan Norcini and Egon Von Greyerz.
We also two terrific commentaries from Bill Holter (Miles Franklin) for you to ponder over.
ON the paper side of things, Mark Grant, and Ambrose Evans Pritchard give very important commentaries, as does Charles Krauthammer of the Washington Post.
We will go over these and many other stories but first.....................
Here are the details:
The total gold comex open interest fell by 5,25 contracts from 393,277 down to 392,752 with gold rising by $5.50 on Friday. The front active month of June saw it's OI fall by 3 contracts from 949 down to 946. We had 70 delivery notice served upon our longs on Friday,thus we gained 67 gold contracts or 6700 additional ounces will be standing in this June delivery contract month. The next delivery month is the non active July contract and here the OI rose by 88 contracts up to 580. The next active delivery month for gold is August and here the OI fell by 3821 contracts from 227,295 down to 223,474. The estimated volume today was poor at 146,947 contracts. The confirmed volume on Friday was good at 205,646.
The total silver Comex OI fell by 4638 contracts despite silver rising in price Friday by 14 cents. The front non active June silver contract month shows a gain of one contract up to 26. We had 1 notice filed on Friday so in essence we gained 2 silver contracts or an additional 10,000 oz of silver will stand for the June delivery month. The next big delivery month is July and here the OI fell by only 7211 contracts down to 42,092. We have 4 days left before first day notice (June 28.2013) and judging from the relatively high OI in July, we may see some fireworks in silver. The estimated volume today was excellent coming in at 72,375 contracts. The confirmed volume on Friday was excellent at 87,770.
Comex gold/May contract month:
June 24/2013
the June contract month:
the June contract month:
Ounces
| |
Withdrawals from Dealers Inventory in oz
|
nil
|
Withdrawals from Customer Inventory in oz
|
321.50(Brinks)
|
Deposits to the Dealer Inventory in oz
|
nil
|
Deposits to the Customer Inventory, in oz
| 4950.487 (HSBC) |
No of oz served (contracts) today
|
70 (7,000 oz)
|
No of oz to be served (notices)
|
934 (93,400 oz
|
Total monthly oz gold served (contracts) so far this month
|
8580 (858,000 oz)
|
Total accumulative withdrawal of gold from the Dealers inventory this month
|
78,856.579 oz
|
Total accumulative withdrawal of gold from the Customer inventory this month
| 291,491.72 oz |
We again had good activity at the gold vaults
The dealer again had 0 deposit and no withdrawals.
We had one customer deposits today :
total customer deposits: Into HSBC: 4950.487 oz
It is very strange that in a big delivery month, we are witnessing hardly any gold enter the dealer or even the customer.
we had 1 tiny customer withdrawals:
ii) Out of Brinks: 321.50 oz
total customer withdrawals: 321.50 oz
Today we had two major adjustments:
i) Out of HSBC: 17,514.101 oz was adjusted out of the dealer and back into the customer account.
ii) Out of Scotia a monstrous 53,977.072 oz was adjusted out of the dealer and back into the customer.
We have had very little issuance from HSBC and Scotia so I doubt if any of these adjustments was due to settlements. Maybe the customer refused to sell gold at these levels and just removed the warrant for sale
Thus tonight we have the following JPMorgan gold inventory:
JPM dealer inventory: 408,709.033 oz 12.17 tonnes (prev 413,526.284 oz)
JPM customer inventory: 141,197.86 oz or 4.39 tonnes (prev 136,380.611 oz)
As we reported to you two weeks ago, that JPMorgan withdrew a huge amount of gold from its customer account:
Out of JPMorgan: 217,844.96 oz.
If you will recall, we needed to see 100,000 oz of gold removed from JPMorgan's customer account. (1000 contracts served upon our longs in mid May).
The last Tuesday in May, we had 15,416.93 oz removed from the JPM's customer account. No doubt that this gold was part of the 1000 contracts issued by JPMorgan customer account and thus we calculated that as of tonight 28,389.579 oz was settled upon, leaving 71,611.00 oz still left to arrive in the settling process.
Tuesday, June 11, we had 217,844.96 actual ounces leave JPMorgan
Today, the CME reported that 12 notices were issued of which 0 came from JPMorgan's customer or dealer account.
In summary on the customer side of things for JPMorgan:
Today 0 notices were served upon our longs from the JPMorgan's customer side
(and zero from its dealer side).
Thus on JPMorgan customer side:
From the beginning of June we have had 1591 notices served from the customer side of JPMorgan for 159,100 oz. If we add the 71,611.00 oz owing from May issuance, we get 230,711 oz. If we subtract the actual withdrawal of gold from JPMorgan of 217,844.96, this still leaves 12,867.04 oz that needs to be settled upon from the vaults of JPMorgan customer side. Let us see how JPMorgan settles upon the new 4,817.251 oz of gold received on Friday from its dealer account into its customer account.
The total dealer comex gold falls dramatically to 1.359 million oz or 42.27 tonnes of gold.
The total of all comex gold, dealer and customer rests tonight at 7.681 million oz or 238.90 tonnes..
Now for JPMorgan's dealer side and what the inventory should be:
On June 11.2013 we reported that 4935 contracts have been issued by JPMorgan's house account since first day notice and not yet subtracted out of inventory
You will also recall two weeks ago on Saturday (and again on that following Monday night,) I reported that JPMorgan had 470,322.102 oz in it's dealer account. From that day until now, 61,613.07 oz was either withdrawn or adjusted out, leaving the dealer side at 408,709.033 oz where it sits tonight.
On the dealer side here are the last 12 trading sessions as to notices issued from JPMorgan's dealer side:
Friday: zero
Monday: 1
Tuesday: 0
Wednesday : 0
Wednesday : 0
Thursday: 0
Friday: 0
Monday: 0 .
Tuesday: 0
Wednesday: 0
Thursday: 0
Friday: 0
Monday 0
Thus, 4946 notices have been issued by JPMorgan (dealer side) so far in June for 494,600 oz and these ounces have yet to settle from JPMorgan's dealer side.
JPMorgan's dealer vault registers tonight 408,709.033 oz.
Somehow we have a huge negative balance as i) the gold has not left JPMorgan's dealer account and has yet to settle
and
ii) it is now deficient by 85,890.97 oz (408,709.03 inventory - 494,600 oz issued = 85,890.97 oz)
In other words, the entire 408,709.03 oz must be first transferred out of Morgan's dealer category ( in the same format as in the customer category) leaving it with zero, plus the 85,890.97 of additional deficient gold
JPMorgan has not had any deposits in gold in quite some time. As a matter of fact, zero ounces has entered on the dealer side from the beginning of 2013.
How will JPMorgan satisfy this shortfall??
Friday: 0
Monday: 0 .
Tuesday: 0
Wednesday: 0
Thursday: 0
Friday: 0
Monday 0
Thus, 4946 notices have been issued by JPMorgan (dealer side) so far in June for 494,600 oz and these ounces have yet to settle from JPMorgan's dealer side.
JPMorgan's dealer vault registers tonight 408,709.033 oz.
Somehow we have a huge negative balance as i) the gold has not left JPMorgan's dealer account and has yet to settle
and
ii) it is now deficient by 85,890.97 oz (408,709.03 inventory - 494,600 oz issued = 85,890.97 oz)
In other words, the entire 408,709.03 oz must be first transferred out of Morgan's dealer category ( in the same format as in the customer category) leaving it with zero, plus the 85,890.97 of additional deficient gold
JPMorgan has not had any deposits in gold in quite some time. As a matter of fact, zero ounces has entered on the dealer side from the beginning of 2013.
How will JPMorgan satisfy this shortfall??
Another disturbing piece of news is the low dealer gold inventory for our 3 major bullion banks: Scotia, HSBC and JPMorgan equal to 27.76 tonnes
i) Scotia: 231,619.164 oz or 7.204 tonnes (previous... 285,596.23 oz or 8.88 tonnes)
ii) HSBC: 252,683.176 oz or 7.85 tonnes (previous 270,197.277 oz or 8.4 tonnes)
iii) JPMorgan: 408,709.033 oz or 12.71 tonnes (same)
Brinks dealer account has the lions share of the dealer gold at 446,698.99 oz 13.894 tonnes and it remains the same.
Today we had 12 notices served upon our longs for 1,200 oz of gold. In order to calculate what I believe will stand for delivery in June, I take the OI standing for June (946) and subtract out today's notices (12) which leaves us with 934 contracts or 93,400 oz left to be served upon our longs.
Thus we have the following gold ounces standing for metal in June:
8580 contracts x 100 oz per contract or 858,000 oz served upon + 934 contracts or 93,400 oz (left to be served upon) = 951,400 oz or 29.59 tonnes of gold.
We gained 6700 gold ounces standing in this June delivery 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 per month. Thus the amount standing for gold this month represents 154.4% of that total production.
Ladies and Gentlemen: we have a three-fold problem:
i) the total dealer inventory of gold is at a very dangerously low level of only 42.27 tonnes and none of the 9.5 tonnes delivery notices from May and the 29.38 tonnes from June have been removed from JPMorgan's inventory as of yet.
ii) a) JPMorgan's customer inventory remains at an extremely low 141,197.86 oz.
If you are a customer of JPMorgan and have your gold in its vault, I think it is best to remove it before we have another fiasco like MFGlobal.
ii b) JPMorgan's dealer account rests tonight at 408,709.03 oz. However all of this gold has been spoken for plus an additional 85,890. oz of deficient gold.
iii) the 3 major bullion banks have collectively only 27.76 tonnes of gold left!!
end
now let us head over and see what is new with silver:
now let us head over and see what is new with silver:
Silver:
June 24.2013: June silver contract month:
| Silver |
Ounces
|
| Withdrawals from Dealers Inventory | nil |
| Withdrawals from Customer Inventory | 540,763.75 oz (CNT,HSBC Scotia,) |
| Deposits to the Dealer Inventory | nil |
| Deposits to the Customer Inventory | 1,659,533.86 (CNT,Brinks,HSBC) |
| No of oz served (contracts) | 8 (40,000 oz) |
| No of oz to be served (notices) | 18 (90,000 oz) |
| Total monthly oz silver served (contracts) | 125 (620,000 oz) |
| Total accumulative withdrawal of silver from the Dealers inventory this month | 988,092.07 oz |
| Total accumulative withdrawal of silver from the Customer inventory this month | 4,939,232.2 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 CNT: 610,002.62 oz
ii) Into Brinks: 599,879.01 oz
iii) Into HSBC: 449,652.23 oz
total customer deposits 1,659,533.86 oz
We had 3 customer withdrawals:
We had 3 customer deposits:
i) Into CNT: 610,002.62 oz
ii) Into Brinks: 599,879.01 oz
iii) Into HSBC: 449,652.23 oz
total customer deposits 1,659,533.86 oz
We had 3 customer withdrawals:
i) Out of CNT: 20,556.88 oz
ii) Out of HSBC: 209,229.58 oz
iii) Out of Scotia; 310,977.26 oz
total customer withdrawal : 540,763.75 oz
ii) Out of HSBC: 209,229.58 oz
iii) Out of Scotia; 310,977.26 oz
total customer withdrawal : 540,763.75 oz
we had 0 adjustments today
Registered silver at : 41.397 million oz
total of all silver: 165.103 million oz.
The CME reported that we had 8 notices filed for 40,000 oz today. In order to calculate what we believe will stand in the month of June, I take the Oi standing for June (26) and subtract out today's notices (8) which leaves us with 18 notices or 90,000 oz.
Thus the total number of silver ounces standing in this non active delivery month of June is as follows:
125 contracts x 5000 oz per contract (served) = 620,000 oz + 18 contracts x 5000 oz or 90,000 oz left to be served upon = 715,000 oz
we neither gained nor lost any silver ounces standing today.
Thus the total number of silver ounces standing in this non active delivery month of June is as follows:
125 contracts x 5000 oz per contract (served) = 620,000 oz + 18 contracts x 5000 oz or 90,000 oz left to be served upon = 715,000 oz
we neither gained nor lost any silver ounces standing today.
Now let us check on gold inventories at the GLD first: 4.2 more tons melt away from GLD gold inventory....
June 24.2013:
June 21/2013:
June 24.2013:
Tonnes985.73
Ounces31,692,296.65
Value US$40.764 billion
June 21/2013:
Tonnes989.94
Ounces31,827,598.71
Value US$41.210 billion
* * *
selected news and views......
The BIS in its annual report shows a massive swap positions with the major banks to the tune of
404 tonnes. What on earth are the central banks doing with these swaps?
The BIS in its annual report shows a massive swap positions with the major banks to the tune of
404 tonnes. What on earth are the central banks doing with these swaps?
404 tonnes. What on earth are the central banks doing with these swaps?
BIS annual report is a reminder of who really makes the gold market
Submitted by cpowell on Mon, 2013-06-24 18:58. Section: Documentation
3:08p ET Monday, June 24, 2013
Dear Friend of GATA and Gold:
Publishing its annual report Sunday, the Bank for International Settlements provided more documentation that central banks remain the biggest participants in the gold market even as their activity in that market is carefully overlooked by the mainstream financial news media, which struggle every day to contrive rationalizations for gold price movements without ever getting too close to what is really going on.
The BIS annual report, posted at the bank's Internet site here --
-- and at GATA's here --
-- describes in general the bank's involvement in the gold market on behalf of its members or "customers," which are exclusively central banks.
On Page 110 the BIS says: "The bank transacts foreign exchange and gold on behalf of its customers, thereby providing access to a large liquidity base in the context of, for example, regular rebalancing of reserve portfolios or major changes in reserve currency allocations. The foreign exchange services of the bank encompass spot transactions in major currencies and Special Drawing Rights (SDR) as well as swaps, outright forwards, options, and dual currency deposits (DCDs). In addition, the bank provides gold services such as buying and selling, sight accounts, fixed-term deposits, earmarked accounts, upgrading and refining, and location exchanges."
Again, on Page 131: "The bank operates a banking business in currency and gold on behalf of its customers. In this business the bank takes limited gold price, interest rate, and foreign currency risk."
Exactly why and for whom and for what purposes does the BIS trade gold, and why secretly?
Is all of this trading really just for "rebalancing of reserve portfolios"? If so, why the trading in gold derivatives?
The German financial journalist Lars Schall tried putting such questions to the BIS last year and was brushed off:
And what about the secret gold market interventions advertised by the BIS to potential central bank members?:
Truthful answers here might be sensational. Indeed, the BIS' refusal to answer might be sensational enough if widely reported. But news organizations like the Financial Times, Wall Street Journal, and Reuters are too polite to put to the most authoritative sources any relevant questions about gold.
GATA consultant Robert Lambourne, a bit of a student of the BIS, has reviewed what the bank's latest report says about gold and provides the commentary appended.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
BIS Reports Substantial Increase in Gold Swaps
By Robert Lambourne
Monday, June 24, 2013
In my view the most striking news in regard to gold in the annual report of the Bank for International Settlements is the increase in the level of gold swaps of 49 tonnes, from 355 tonnes to 404 tonnes.
The first BIS gold swaps were reported in 2009/10 when the bank swapped 346 tonnes and there was considerable speculation that this might have come from Portugal, though the BIS said at the time that the swaps were transactions with commercial banks.
In 2012-13 the amount of gold deposited on an unallocated basis with the BIS by central banks has declined by about 55 tonnes. Yet the amount of gold the BIS holds in gold loans or
deposits in gold sight accounts with central banks located in the major gold trading centers has fallen by about 6 tonnes to 917.5 tonnes, excluding the BIS' own gold of 115 tonnes.
Hence central banks have decreased by 55 tonnes the level of gold deposited with the BIS in sight accounts while the BIS has reduced its holdings of gold in sight accounts with the central banks located in the major gold trading centers by only 6 tonnes, with the difference taken up by increased gold swaps from undisclosed parties.
This pattern is entirely consistent with a hypothesis that there is a shortage of gold in physical form at the major gold centers.
In the case of gold swaps it appears that the BIS has a liability to return specific gold, while its own gold assets are in unallocated form, so it seems a slight puzzle as to why the BIS is seemingly assuming a greater degree of risk than its gold creditors have done under their swap contracts. Could it be because there is a shortage of available gold?
end
Barrick lays off workers in Nevada, Utah with Newmont laying off huge numbers in Colorado:
(courtesy GATA)
Barrick lays off workers in Nevada, Utah, Newmont in Colorado
Submitted by cpowell on Sun, 2013-06-23 01:37. Section: Daily Dispatches
Barrick Gold to Reduce Workforce by 55 in Nevada, Utah
By Martin Griffith
Associated Press
via Las Vegas (Nevada) Review-Journal
Saturday, June 22, 2013
RENO, Nevada -- The world's largest gold mining company has announced plans to reduce its workforce by 55 positions in Nevada and Utah, citing falling gold prices, rising costs and sagging stock prices.
Barrick Gold Corp. plans to slash about 40 positions in Nevada, 15 in Salt Lake City and five to 10 elsewhere in the region through voluntary severance packages to certain employees, spokesman Lou Schack said.
The Toronto-based company did not rule out further such reductions to deal with what it calls "a very difficult business environment." Since late 2011, the gold price has fallen by $600 -- over 30 percent
"As always, we will continually adapt our business to suit changing market conditions," Schack said. "This may include further restructuring and/or reductions in the future."
The move affects several groups of support function employees, including administrative, human resources, and purchasing workers. The company has some 4,500 employees in Nevada -- which comprises the bulk of its North American operations -- and 140 employees in Salt Lake City.
Affected employees have been given time to review the severance offers initiated Thursday and to make their decisions. The offers include a payment based on years of service and base pay, and limited continuation of some benefits.
The reduction follows a thorough review of the company’s organizational structure that was prompted by the change in business conditions.
"Our North American operations, most of which are in Nevada, comprise the most valuable and productive of Barrick's four regional business units -- and we intend to keep it that way," Schack said. "To do so we must cut costs and become a more efficient business."
Shares of Barrick and almost every major gold miner hit new annual lows before recovering Friday as a drop in gold prices leveled off.
Gold prices plunged 7 percent this week to levels not seen since September 2010. On Friday, after declining sharply the day before, gold for August delivery rose $5.80 to finish at $1,292 per ounce.
On Friday, shares of Barrick rose $0.29 or 1.7 percent to $16.89. Its market value is less than half of what it was a year ago.
Another leading gold miner, Newmont Mining Co., hinted it might lay off some employees in Nevada after announcing plans Wednesday to cut its workforce in Colorado by 33 percent. The company cited falling gold prices and rising costs as factors for considering such reductions elsewhere.
* * *
And today, they announced layoffs of 30% of corporate HQ here in Toronto:
(courtesy Associated Press/Rob Gillies/GATA)
Barrick laying off 30% of corporate HQ staff
Submitted by cpowell on Mon, 2013-06-24 18:27. Section: Daily Dispatches
Barrick to Lay Off 100 at Toronto Head Office
By Rob Gillies
Associated Press
Monday, June 24, 2013
TORONTO -- The world's largest gold mining company has announced plans to eliminate 100 jobs at its corporate headquarters in Toronto.
Barrick Gold Corp. said Monday the reduction represents 30 percent of the head office. Barrick spokesman Andy Lloyd cited a challenging business environment. Falling gold prices, rising costs and a sagging stock price weighed down by its Pascua-Lama project have plagued the company. Since late 2011, the gold price has fallen by $600, over 30 percent.
Last month Chile's environmental regulator stopped construction and imposed sanctions on Barrick's $8.5 billion Pascua-Lama gold mine, citing "serious violations" of its environmental permit. Barrick has already spent $5 billion on the project, which straddles the Chile-Argentine border at 6,400 feet (5,000 meters) above sea level. Barrick had hoped to begin production in early 2014, and warned shareholders that it might abandon Pascua's Chilean side if construction delays keep the mine from opening this year.
he company announced last week it planned to reduce its work force by 55 positions in Nevada and Utah. The company has some 4,500 employees in Nevada -- which comprises the bulk of its North American operations -- and 140 employees in Salt Lake City. Barrick has 25,000 employees worldwide.
Lloyd said impacted employees will receive severance packages and access to career placement services. The reduction follows a thorough review of the company's organizational structure that was prompted by the change in business conditions.
Barrick CEO Jamie Sokalsky promised shareholders in April that Barrick was committed to be focus on producing returns for investors. Shares of Barrick and almost every major gold miner have hit new annual lows recently.
Barrick ousted former CEO and President Aaron Regent a year ago, citing its disappointing share price performance. The stuck has plummeted from over $40 to less than $16 since then.
Shares dropped 94 cents, or 5.6 percent, to $15.95 in Monday morning trading on the New York Stock Exchange.
end
Fed's reducing bond monetization will crash both U.S. and world, von Greyerz says
Submitted by cpowell on Mon, 2013-06-24 00:13. Section: Daily Dispatches
8:10p ET Sunday, June 23, 2013
Dear Friend of GATA and Gold:
Gold fund manager Egon von Greyerz today tells King World News that the Federal Reserve can't possibly reduce its bond monetization because much of the world is already on the edge of collapse along with the United States itself. An excerpt from the interview is posted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
This BIS report which stated that central banks must stop QE or else inflation will catch hold.
This started the negative sentiment and coupled with China's liquidity problems sealed the fate of global trading today.
(courtesy London's Financial Times/Claire Jones/GATA)
BIS tells central banks to stop pumping, start watching inflation
Submitted by cpowell on Sun, 2013-06-23 15:48. Section: Daily Dispatches
Central Banks Told to Head for Exit
By Claire Jones
Financial Times, London
Sunday, June 23, 2013
Central banks must head for the exit and stop trying to spur a global economic recovery, the organisation representing the world's monetary authorities has warned following a week of market turbulence sparked by the US Federal Reserve's signal that it would soon cut the pace of its bond buying.
The Basel-based Bank for International Settlements used its influential annual report to call on members to re-emphasise their focus on inflation and press governments to do more to spearhead a return to growth.
The report, presented to many of the world's top central bankers in Basel for the BIS's annual meeting at the weekend, follows last week's selloff in equities, bonds, and commodities, fuelled by fears the Fed's tapering would spark a fresh wave of turmoil in global financial markets. Ben Bernanke, the Fed chairman, said last Wednesday that the central bank could slow its $85 billion monthly bond-buying programme this year and end it by mid-2014.
The BIS, often referred to as the central bankers' bank, said the global economy was "past the height of the crisis" and that the goal of policy was "to return still-sluggish economies to strong and sustainable growth."
It said cheap and plentiful central bank money had merely bought time, warning that more bond buying would retard the global economy's return to health by delaying adjustments to governments' and households’ balance sheets.
"Alas, central banks cannot do more without compounding the risks they have already created," the BIS said, adding that delivering more "extraordinary" stimulus was "becoming increasingly perilous."
"How can central banks encourage those responsible for structural adjustment to implement those reforms? How can they avoid making the economy too dependent on monetary stimulus? When is the right time for them to pull back . . . [and] how can they avoid sparking a sharp rise in bond yields? It is time for monetary policy to begin answering these questions?," the report said.
Mario Draghi's rallying cry, uttered last summer at the height of the eurozone turmoil, that the European Central Bank would do "whatever it takes" to preserve the currency bloc was now being misconstrued, it warned.
"Can central banks now really do 'whatever it takes'?" the BIS asked. "As each day goes by, it seems less and less likely. Central banks cannot repair the balance sheets of households and financial institutions. Central banks cannot ensure the sustainability of fiscal finances. And, most of all, central banks cannot enact the structural economic and financial reforms needed to return economies to the real growth paths."
Stephen Cecchetti, head of the BIS's monetary and economic department, recently said that the initial rise in yields for US Treasuries following Mr Bernanke's hints in May that the Fed would slow the pace of its asset purchases "should come as no surprise."
Though he warned market volatility did "create risks," Mr Cecchetti flagged that the reaction of stock markets to the hints had been far from disastrous. "A few months ago this would probably have set equity markets into free-fall, but this time stock prices seemed largely unaffected, suggesting that market participants are quite optimistic about the outlook for the US economy."
Separately, the BIS said Jaime Caruana, its general manager, would remain in office until March 2017. His current five-year term was due to end in March 2017.
Mr Caruana said at the AGM on Sunday: "Ours is a call for acting responsibly now to strengthen growth and avoid even costlier adjustment down the road . . . . Monetary policy has done its part. Recovery now calls for a different policy mix -- with more emphasis on strengthening economic flexibility and dynamism and stabilising public finances."
end
The first commentary is quite a powerful one from Bill Holter. I urge you to read every word carefully as he unleashes a firestorm:
(courtesy Bill Holter/Miles Franklin)
The Great Unwind has finally arrived.
50+ years of credit creation and living beyond our means year after year is finally coming to an end. Ben Bernanke spoke last week regarding "tapering" Treasury and MBS purchases some time next year, the market then immediately reacted. Stocks were sold, bonds were sold, commodities were sold and so were Silver and Gold (much more on this shortly). Did the Fed actually do anything? Did they tighten at all? Has their balance sheet shrunk or even stagnated at all? The answer(s) are an emphatic NO!. The bloodbath last week was merely "front running" on the fear that the Fed will back away and stop administering the crack credit doses that the financial community have become accustomed to. Basically free money and $ trillions of it, can you imagine what will happen should the Fed ACTUALLY slow down or stop giving out free cash so that banks can cover up losses?
Last week was only a preview to what is coming. I personally do not believe that any "tapering" will ever come about, last week's financial action only supports my thesis. Last week happened after only the mention of "tapering", do you think the Fed may now know the end result of an ACTUAL exit strategy? One where the markets would have to fend for itself and be self supporting along with the economy? They do know, the Fed knows that it will be forced again and again to not only continue QE but increase it exponentially. There is one minor "problem", the more they monetize, the less "collateral" (there's that word again) there is available to an economy and financial market that... runs on collateral. Can you imagine the immediate bloodbath of panic selling if the Fed not only stopped purchasing bonds but actually tried to sell some to reduce their own balance sheet? The are now purchasing more than half of the Treasury's new issuance, if they turned seller, who is left as the buyer? What would happen should China's current "cash crunch" cause them to turn seller?
As a result of the mere murmur of slowing QE the most shocking action last week was in the Treasury market. The 10yr ended Friday night at 2.54%, This was a rise of .40 basis points or so and nearly equal to the rise in yield for all of May. May, if you recall was the month where the Fed lost about $115 billion on their bond holdings (certainly far more if they had to mark the non Treasuries to market). The volatility was staggering and without a doubt there are now some dead institutions out there because of how fast and violent the move was. There is $200 trillion outstanding in interest rate derivatives. This past week alone, these contracts on average probably moved more than 5% in value. This would indicate a movement of maybe $10 trillion (with a T) worth of net change from one side to the other in less than 5 days. Do you really believe that this type of "wins and losses" could have occurred without someone, probably "many one's" becoming insolvent? The Fed only purports to have $65 billion of equity capital, between May 1 and now their portfolio has dropped nearly $250 billion. Is this "insolvent"? Yes it is but they have the ability to run the presses so not to worry I guess?
Forget the stock market, the Fed has now lost control of the Treasury market. Interest rates on the 10 year have now gone from just under 1.6% to over 2.5% in a very short period of time. This is now a 60+% rise in rates. Were this truly because the economy was strengthening it would be bad enough but the selling that has come about has nothing to do with the economy. The selling in reality started as "front running" by those smart enough to leave the party while the music was still playing. Now, it is evolving into one gigantic and global margin call. This will feed on itself, winners will not get paid, sovereigns will lose the ability to "fund" and ultimately the global real economy will suffer from the financial implosion.
Before getting to the Gold and Silver travesties I'd like to mention that market "don't just crash" on their own. If you look back to every crash (with the exception of the metals "forced" crashes) of any asset throughout all of history, they all have one thing in common...debt. TOO MUCH debt to be exact. We have now passed the peak of the "debt bubble", there is no question now. Debt got us into the 2008 calamity and the solution was ...MORE debt. Even though the bubble burst back then they were able to reflate it one last time. "They" being central banks and sovereign treasuries. Now, there is no ability anywhere on the planet to reflate. Why? Because there are no sovereign treasuries healthy enough or big enough to be able to issue enough new debt to reflate one more time. It's over, plain and simple.
Gold. For those of you who can remember years back the "4 pillars" that Jim Sinclair always talked about, this, what is happening now, is exactly what he was talking about. The 4th pillar was the U.S. Treasury market and it has now been "pulled". This was the last horse big enough and strong enough to "pull" (push) the economic cart. The only description of the Treasury market last week was "panic" selling and this coming week should be interesting to see how the margin calls are handled. We got a preview back in 2008 and '09 how firms treated each other which ended with Lehman (and many others) being devoured.
So Gold got hit for another $80 and we are told it has no direction to go but down because interest rates are going up...because the economy is so strong. First off, yes I call bullshit on the strong economy story. Secondly, even if the Fed DID want interest rates to go up (they don't) they would never want rates to move like they just did last week. They know that "fast" is a killer (remember the JPM London whale) and firms cannot "adjust" when market prices (yields) move quickly (think margin calls and delta hedging). Firms blow up when this happens and of course then makes the panic selling that much worse. As an interesting aside, "usually" money flows INTO Treasuries when there is fear but not this time, the "fear" IS the Treasury market!
But something just does not add up here. First, we know that physical demand was huge going into this week and now we hear that physical off take has again increased with this latest price takedown. Secondly, if the COMEX numbers are to be believed, the open interest numbers actually went up Fridayo a whopping 10,000+ contracts in Gold and in Silver over 2,000 contracts...but how can this be? If everyone was selling to get out then the open interest would have dropped by these amounts or more, they did not which means that more and more "shorts" piled on. Again, if the CME numbers are to be trusted and are correct then we also have a clue as to "who" the shorts are...the specs (hedge funds) and the commercials look now to finally be on the long side after 15 years on the short side.
Here are a couple of speculations on my part. Is this a trap being set for the shorts? A trap for the commercials (banks) to clean out the hedge funds? Follow this through, in the past the CME would raise margins to pressure the prices of Gold and Silver. I believe that 100% of the time after the CME has raised margin rates, Gold and Silver would get hammered, why didn't they get hammered on Friday? If history was any guide at all they should have but they did not, why? Surely there were margin calls issued Thursdayhnight to be met on Friday and a margin hike on top of that. What the heck happened? Why the difference? ...Maybe because the longs are a different group now than in the past? Maybe because in the past the longs were the hedge funds who would receive margin calls and then cut and run, now maybe the longs have deeper pockets?
And speaking of "deeper pockets", the open interest in Silver continues to stay very high...and even after a 50% drop in price. The longs have now effectively PAID for more than half of the Silver if they met each and every margin call and now stand for delivery. Will July be the month that Silver defaults on the COMEX? There are still 50,000 July contracts outstanding with 1st notice day this Fridayy. This represents 250 million ounces...the dealers only hold about 40 million for delivery. Who, other than a sovereign government (China?) or a collective of sovereigns could have met the margin calls over the last 6-8 months? Have they allowed the short specs to build up and get bolder in their sales? On the Gold side it is interesting to note that JP Morgan has not reported 1 single ounce of Gold entering their dealer depository so far this year...they have 1 week to go before June deliveries must be made and they have a negative 80,000+ ounce deficit to cover. Where will this Gold come from? Could we be set up for the Chinese to stand for delivery from under stocked vaults...and at the same time sell some of their Treasury holdings?
This upcoming week could be a doozy. So many potential train wrecks from so many different directions to keep your eyes on all of them. Just remember that "credit" is what runs everything and it looks like "credit" is now at the center stage of problems. Should rates continue to rise this week in U.S. Treasuries you should expect to see some very major firms run into trouble. This time around it will be real as there are no solvent white knights left with the ability to leverage up and save the day. The U.S. Treasury and Fed are now in the crosshairs, they need to catch a bid this week or they will be at the center of the biggest one time margin call ever! Regards, Bill H.
end
Bill continues with the theme of derivative losses but also discusses the huge story over the weekend that the ESM will be limited to a 60 billion euro rescue PAST and PRESENT. Spain itself was promised 100 billion euros and now must fight with Portugal, and Ireland for the sum promised.
No question about it..the button has been pushed!!!
(courtesy Bill Holter/Miles Franklin)
The button has been pushed...r
This week has started off miserably. China had problems within their banking system last night as bank transfers, ATM's, online banking and wires did not work. Europe announced that their E500 billion bailout fund for banks is no longer the case, they now say that 60 billion Euros will be the limit...retroactively. To put this in perspective, Spain had already been promised 100 billion Euros for their banking system, I guess the money is not coming? Our stock market has started the day down 230 points and the 10yr. Treasury yield is now 2.64%, this is another .12 basis points higher on the day and now nearly 70% higher than it was back in April.
As I wrote over the weekend, this is "one gigantic global margin call". Please understand how many of these interest rate derivatives work. When the rates go against you, "margin" must be posted. By "margin" I mean collateral. Collateral must be shifted from the losing institution to the one on the winning side. When the loser "runs out" of collateral...that is when you get a situation similar to MF Global or Lehman Bros., they are forced to shut down and the vultures then come in and pick the bones clean...normally. Now it is no longer "normal", now a Lehman Bros. will take the whole tent down.
To put in perspective what is happening, Zerohedge calculated that the Fed lost $35 billion this morning alone and $250 billion over the last 2 months http://www.zerohedge.com/news/
end
Your sermon for today, courtesy of Mark Grant
(courtesy Mark Grant/out of the Box)
Deluded Worlds And Unpleasant Realities
Submitted by Tyler Durden on 06/24/2013 08:57 -0400
Submitted by Mark J. Grant, author of Out of the Box,
“Words are, of course, the most powerful drug used by mankind.”
-Rudyard Kipling
In business, in relationships, words spoken or memorialized in the Press, once out there the damage has been done; the consequences on the way to creation. You can't deny them, you can't hide them and you are accountable for what has passed your lips or the roller ball on your pen. This is just the way of it in the world which is why it is always important to not only choose your words carefully but to carefully decide if they should be released into the wild. Words are the Pandora's Box of everyday life.
“Words are like eggs dropped from great heights; you can no more call them back than ignore the mess they leave when they fall.”
-Jodi Picoult
Words also have another fascinating characteristic. When you spit them out you know what you meant. Then someplace in the air between their release and someone hearing or reading them they get jumbled up. What you were trying to communicate is often, and as an author I can tell you with certainty that it is more than one might imagine, that what you were trying to say is not at all what is heard. There have been countless times when I have stared at people's comments about something that I have written and wondered, "Where in God's name did they come up with that?" It is not just "lost in translation" but "lost in space."
“Be silent or let thy words be worth more than silence.”
-Pythagoras
I make these points today for a very important reason. Mr. Bernanke, and it had to come to this eventually, there was no other real choice, has now unleashed the Fates that could no longer be contained and the harpies are free once more. The world had deluded itself that it would never come to pass. The world had also looked at Mr. Draghi's comments as if they were certain prophecy not uttered by Mr. Draghi himself but as if he was just the mouthpiece for some higher divinity that had taken over his body during the length of his famous speech.
In both cases the world had become delusional. In both cases the fantasy has ended and we have been pushed back to our unpleasant reality where one and one still makes two. Living with Alice in Wonderland was certainly more pleasant!
Mr. Bernanke's comment about "things could change" is nothing more than the recital of verse. Of course, thing can always change and he acknowledged what each of us already knew. There were sounds in those sentences worthy of no significant meaning. What was full of the sound and fury of important meaning though was that the dream was over. With his soliloquy of "ending," the dream was shattered and lays now upon the floor all around us like broken shards of razor sharp glass.
You and everyone else will try and step carefully but you are going to get cut because avoidance is impossible.Bonds, stocks, commodities or Real Estate; you are going to bleed. In the same manner as we cannot invest off-world. We cannot avoid being hurt on-world. The real pain of induced withdrawal from the central banks' monetary creation is upon us. The words cannot be taken back. The meat is minced!
Words, once spoken, are no longer your own. Words, strung together, may be the most powerful spells in our kingdom. Two speeches, one in America and one in Europe buoyed the world. One speech made in America has now ended the experiment. No magic wand was needed.
Submitted by cpowell on Mon, 2013-06-24 18:58. Section: Documentation
Again, on Page 131: "The bank operates a banking business in currency and gold on behalf of its customers. In this business the bank takes limited gold price, interest rate, and foreign currency risk."
3:08p ET Monday, June 24, 2013
Dear Friend of GATA and Gold:
Publishing its annual report Sunday, the Bank for International Settlements provided more documentation that central banks remain the biggest participants in the gold market even as their activity in that market is carefully overlooked by the mainstream financial news media, which struggle every day to contrive rationalizations for gold price movements without ever getting too close to what is really going on.
The BIS annual report, posted at the bank's Internet site here --
-- and at GATA's here --
-- describes in general the bank's involvement in the gold market on behalf of its members or "customers," which are exclusively central banks.
On Page 110 the BIS says: "The bank transacts foreign exchange and gold on behalf of its customers, thereby providing access to a large liquidity base in the context of, for example, regular rebalancing of reserve portfolios or major changes in reserve currency allocations. The foreign exchange services of the bank encompass spot transactions in major currencies and Special Drawing Rights (SDR) as well as swaps, outright forwards, options, and dual currency deposits (DCDs). In addition, the bank provides gold services such as buying and selling, sight accounts, fixed-term deposits, earmarked accounts, upgrading and refining, and location exchanges."
Exactly why and for whom and for what purposes does the BIS trade gold, and why secretly?
Is all of this trading really just for "rebalancing of reserve portfolios"? If so, why the trading in gold derivatives?
The German financial journalist Lars Schall tried putting such questions to the BIS last year and was brushed off:
And what about the secret gold market interventions advertised by the BIS to potential central bank members?:
Truthful answers here might be sensational. Indeed, the BIS' refusal to answer might be sensational enough if widely reported. But news organizations like the Financial Times, Wall Street Journal, and Reuters are too polite to put to the most authoritative sources any relevant questions about gold.
GATA consultant Robert Lambourne, a bit of a student of the BIS, has reviewed what the bank's latest report says about gold and provides the commentary appended.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
* * *
BIS Reports Substantial Increase in Gold Swaps
By Robert Lambourne
Monday, June 24, 2013
Monday, June 24, 2013
In my view the most striking news in regard to gold in the annual report of the Bank for International Settlements is the increase in the level of gold swaps of 49 tonnes, from 355 tonnes to 404 tonnes.
The first BIS gold swaps were reported in 2009/10 when the bank swapped 346 tonnes and there was considerable speculation that this might have come from Portugal, though the BIS said at the time that the swaps were transactions with commercial banks.
In 2012-13 the amount of gold deposited on an unallocated basis with the BIS by central banks has declined by about 55 tonnes. Yet the amount of gold the BIS holds in gold loans or
deposits in gold sight accounts with central banks located in the major gold trading centers has fallen by about 6 tonnes to 917.5 tonnes, excluding the BIS' own gold of 115 tonnes.
deposits in gold sight accounts with central banks located in the major gold trading centers has fallen by about 6 tonnes to 917.5 tonnes, excluding the BIS' own gold of 115 tonnes.
Hence central banks have decreased by 55 tonnes the level of gold deposited with the BIS in sight accounts while the BIS has reduced its holdings of gold in sight accounts with the central banks located in the major gold trading centers by only 6 tonnes, with the difference taken up by increased gold swaps from undisclosed parties.
This pattern is entirely consistent with a hypothesis that there is a shortage of gold in physical form at the major gold centers.
In the case of gold swaps it appears that the BIS has a liability to return specific gold, while its own gold assets are in unallocated form, so it seems a slight puzzle as to why the BIS is seemingly assuming a greater degree of risk than its gold creditors have done under their swap contracts. Could it be because there is a shortage of available gold?
end
Barrick lays off workers in Nevada, Utah with Newmont laying off huge numbers in Colorado:
(courtesy GATA)
Barrick lays off workers in Nevada, Utah with Newmont laying off huge numbers in Colorado:
(courtesy GATA)
(courtesy GATA)
Barrick lays off workers in Nevada, Utah, Newmont in Colorado
Submitted by cpowell on Sun, 2013-06-23 01:37. Section: Daily Dispatches
Barrick Gold to Reduce Workforce by 55 in Nevada, Utah
By Martin Griffith
Associated Press
via Las Vegas (Nevada) Review-Journal
Saturday, June 22, 2013
RENO, Nevada -- The world's largest gold mining company has announced plans to reduce its workforce by 55 positions in Nevada and Utah, citing falling gold prices, rising costs and sagging stock prices.
Barrick Gold Corp. plans to slash about 40 positions in Nevada, 15 in Salt Lake City and five to 10 elsewhere in the region through voluntary severance packages to certain employees, spokesman Lou Schack said.
The Toronto-based company did not rule out further such reductions to deal with what it calls "a very difficult business environment." Since late 2011, the gold price has fallen by $600 -- over 30 percent
"As always, we will continually adapt our business to suit changing market conditions," Schack said. "This may include further restructuring and/or reductions in the future."
The move affects several groups of support function employees, including administrative, human resources, and purchasing workers. The company has some 4,500 employees in Nevada -- which comprises the bulk of its North American operations -- and 140 employees in Salt Lake City.
Affected employees have been given time to review the severance offers initiated Thursday and to make their decisions. The offers include a payment based on years of service and base pay, and limited continuation of some benefits.
The reduction follows a thorough review of the company’s organizational structure that was prompted by the change in business conditions.
"Our North American operations, most of which are in Nevada, comprise the most valuable and productive of Barrick's four regional business units -- and we intend to keep it that way," Schack said. "To do so we must cut costs and become a more efficient business."
Shares of Barrick and almost every major gold miner hit new annual lows before recovering Friday as a drop in gold prices leveled off.
Gold prices plunged 7 percent this week to levels not seen since September 2010. On Friday, after declining sharply the day before, gold for August delivery rose $5.80 to finish at $1,292 per ounce.
On Friday, shares of Barrick rose $0.29 or 1.7 percent to $16.89. Its market value is less than half of what it was a year ago.
Another leading gold miner, Newmont Mining Co., hinted it might lay off some employees in Nevada after announcing plans Wednesday to cut its workforce in Colorado by 33 percent. The company cited falling gold prices and rising costs as factors for considering such reductions elsewhere.
* * *
And today, they announced layoffs of 30% of corporate HQ here in Toronto:
(courtesy Associated Press/Rob Gillies/GATA)
Barrick laying off 30% of corporate HQ staff
Submitted by cpowell on Mon, 2013-06-24 18:27. Section: Daily Dispatches
Barrick to Lay Off 100 at Toronto Head Office
By Rob Gillies
Associated Press
Monday, June 24, 2013
TORONTO -- The world's largest gold mining company has announced plans to eliminate 100 jobs at its corporate headquarters in Toronto.
Barrick Gold Corp. said Monday the reduction represents 30 percent of the head office. Barrick spokesman Andy Lloyd cited a challenging business environment. Falling gold prices, rising costs and a sagging stock price weighed down by its Pascua-Lama project have plagued the company. Since late 2011, the gold price has fallen by $600, over 30 percent.
Last month Chile's environmental regulator stopped construction and imposed sanctions on Barrick's $8.5 billion Pascua-Lama gold mine, citing "serious violations" of its environmental permit. Barrick has already spent $5 billion on the project, which straddles the Chile-Argentine border at 6,400 feet (5,000 meters) above sea level. Barrick had hoped to begin production in early 2014, and warned shareholders that it might abandon Pascua's Chilean side if construction delays keep the mine from opening this year.
he company announced last week it planned to reduce its work force by 55 positions in Nevada and Utah. The company has some 4,500 employees in Nevada -- which comprises the bulk of its North American operations -- and 140 employees in Salt Lake City. Barrick has 25,000 employees worldwide.
Lloyd said impacted employees will receive severance packages and access to career placement services. The reduction follows a thorough review of the company's organizational structure that was prompted by the change in business conditions.
Barrick CEO Jamie Sokalsky promised shareholders in April that Barrick was committed to be focus on producing returns for investors. Shares of Barrick and almost every major gold miner have hit new annual lows recently.
Barrick ousted former CEO and President Aaron Regent a year ago, citing its disappointing share price performance. The stuck has plummeted from over $40 to less than $16 since then.
Shares dropped 94 cents, or 5.6 percent, to $15.95 in Monday morning trading on the New York Stock Exchange.
end
Fed's reducing bond monetization will crash both U.S. and world, von Greyerz says
Submitted by cpowell on Mon, 2013-06-24 00:13. Section: Daily Dispatches
8:10p ET Sunday, June 23, 2013
Dear Friend of GATA and Gold:
Gold fund manager Egon von Greyerz today tells King World News that the Federal Reserve can't possibly reduce its bond monetization because much of the world is already on the edge of collapse along with the United States itself. An excerpt from the interview is posted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
This BIS report which stated that central banks must stop QE or else inflation will catch hold.
This started the negative sentiment and coupled with China's liquidity problems sealed the fate of global trading today.
(courtesy London's Financial Times/Claire Jones/GATA)
BIS tells central banks to stop pumping, start watching inflation
Submitted by cpowell on Sun, 2013-06-23 15:48. Section: Daily Dispatches
Central Banks Told to Head for Exit
By Claire Jones
Financial Times, London
Sunday, June 23, 2013
Central banks must head for the exit and stop trying to spur a global economic recovery, the organisation representing the world's monetary authorities has warned following a week of market turbulence sparked by the US Federal Reserve's signal that it would soon cut the pace of its bond buying.
The Basel-based Bank for International Settlements used its influential annual report to call on members to re-emphasise their focus on inflation and press governments to do more to spearhead a return to growth.
The report, presented to many of the world's top central bankers in Basel for the BIS's annual meeting at the weekend, follows last week's selloff in equities, bonds, and commodities, fuelled by fears the Fed's tapering would spark a fresh wave of turmoil in global financial markets. Ben Bernanke, the Fed chairman, said last Wednesday that the central bank could slow its $85 billion monthly bond-buying programme this year and end it by mid-2014.
The BIS, often referred to as the central bankers' bank, said the global economy was "past the height of the crisis" and that the goal of policy was "to return still-sluggish economies to strong and sustainable growth."
It said cheap and plentiful central bank money had merely bought time, warning that more bond buying would retard the global economy's return to health by delaying adjustments to governments' and households’ balance sheets.
"Alas, central banks cannot do more without compounding the risks they have already created," the BIS said, adding that delivering more "extraordinary" stimulus was "becoming increasingly perilous."
"How can central banks encourage those responsible for structural adjustment to implement those reforms? How can they avoid making the economy too dependent on monetary stimulus? When is the right time for them to pull back . . . [and] how can they avoid sparking a sharp rise in bond yields? It is time for monetary policy to begin answering these questions?," the report said.
Mario Draghi's rallying cry, uttered last summer at the height of the eurozone turmoil, that the European Central Bank would do "whatever it takes" to preserve the currency bloc was now being misconstrued, it warned.
"Can central banks now really do 'whatever it takes'?" the BIS asked. "As each day goes by, it seems less and less likely. Central banks cannot repair the balance sheets of households and financial institutions. Central banks cannot ensure the sustainability of fiscal finances. And, most of all, central banks cannot enact the structural economic and financial reforms needed to return economies to the real growth paths."
Stephen Cecchetti, head of the BIS's monetary and economic department, recently said that the initial rise in yields for US Treasuries following Mr Bernanke's hints in May that the Fed would slow the pace of its asset purchases "should come as no surprise."
Though he warned market volatility did "create risks," Mr Cecchetti flagged that the reaction of stock markets to the hints had been far from disastrous. "A few months ago this would probably have set equity markets into free-fall, but this time stock prices seemed largely unaffected, suggesting that market participants are quite optimistic about the outlook for the US economy."
Separately, the BIS said Jaime Caruana, its general manager, would remain in office until March 2017. His current five-year term was due to end in March 2017.
Mr Caruana said at the AGM on Sunday: "Ours is a call for acting responsibly now to strengthen growth and avoid even costlier adjustment down the road . . . . Monetary policy has done its part. Recovery now calls for a different policy mix -- with more emphasis on strengthening economic flexibility and dynamism and stabilising public finances."
end
The first commentary is quite a powerful one from Bill Holter. I urge you to read every word carefully as he unleashes a firestorm:
(courtesy Bill Holter/Miles Franklin)
The Great Unwind has finally arrived.
50+ years of credit creation and living beyond our means year after year is finally coming to an end. Ben Bernanke spoke last week regarding "tapering" Treasury and MBS purchases some time next year, the market then immediately reacted. Stocks were sold, bonds were sold, commodities were sold and so were Silver and Gold (much more on this shortly). Did the Fed actually do anything? Did they tighten at all? Has their balance sheet shrunk or even stagnated at all? The answer(s) are an emphatic NO!. The bloodbath last week was merely "front running" on the fear that the Fed will back away and stop administering the crack credit doses that the financial community have become accustomed to. Basically free money and $ trillions of it, can you imagine what will happen should the Fed ACTUALLY slow down or stop giving out free cash so that banks can cover up losses?
Last week was only a preview to what is coming. I personally do not believe that any "tapering" will ever come about, last week's financial action only supports my thesis. Last week happened after only the mention of "tapering", do you think the Fed may now know the end result of an ACTUAL exit strategy? One where the markets would have to fend for itself and be self supporting along with the economy? They do know, the Fed knows that it will be forced again and again to not only continue QE but increase it exponentially. There is one minor "problem", the more they monetize, the less "collateral" (there's that word again) there is available to an economy and financial market that... runs on collateral. Can you imagine the immediate bloodbath of panic selling if the Fed not only stopped purchasing bonds but actually tried to sell some to reduce their own balance sheet? The are now purchasing more than half of the Treasury's new issuance, if they turned seller, who is left as the buyer? What would happen should China's current "cash crunch" cause them to turn seller?
As a result of the mere murmur of slowing QE the most shocking action last week was in the Treasury market. The 10yr ended Friday night at 2.54%, This was a rise of .40 basis points or so and nearly equal to the rise in yield for all of May. May, if you recall was the month where the Fed lost about $115 billion on their bond holdings (certainly far more if they had to mark the non Treasuries to market). The volatility was staggering and without a doubt there are now some dead institutions out there because of how fast and violent the move was. There is $200 trillion outstanding in interest rate derivatives. This past week alone, these contracts on average probably moved more than 5% in value. This would indicate a movement of maybe $10 trillion (with a T) worth of net change from one side to the other in less than 5 days. Do you really believe that this type of "wins and losses" could have occurred without someone, probably "many one's" becoming insolvent? The Fed only purports to have $65 billion of equity capital, between May 1 and now their portfolio has dropped nearly $250 billion. Is this "insolvent"? Yes it is but they have the ability to run the presses so not to worry I guess?
Forget the stock market, the Fed has now lost control of the Treasury market. Interest rates on the 10 year have now gone from just under 1.6% to over 2.5% in a very short period of time. This is now a 60+% rise in rates. Were this truly because the economy was strengthening it would be bad enough but the selling that has come about has nothing to do with the economy. The selling in reality started as "front running" by those smart enough to leave the party while the music was still playing. Now, it is evolving into one gigantic and global margin call. This will feed on itself, winners will not get paid, sovereigns will lose the ability to "fund" and ultimately the global real economy will suffer from the financial implosion.
Before getting to the Gold and Silver travesties I'd like to mention that market "don't just crash" on their own. If you look back to every crash (with the exception of the metals "forced" crashes) of any asset throughout all of history, they all have one thing in common...debt. TOO MUCH debt to be exact. We have now passed the peak of the "debt bubble", there is no question now. Debt got us into the 2008 calamity and the solution was ...MORE debt. Even though the bubble burst back then they were able to reflate it one last time. "They" being central banks and sovereign treasuries. Now, there is no ability anywhere on the planet to reflate. Why? Because there are no sovereign treasuries healthy enough or big enough to be able to issue enough new debt to reflate one more time. It's over, plain and simple.
Gold. For those of you who can remember years back the "4 pillars" that Jim Sinclair always talked about, this, what is happening now, is exactly what he was talking about. The 4th pillar was the U.S. Treasury market and it has now been "pulled". This was the last horse big enough and strong enough to "pull" (push) the economic cart. The only description of the Treasury market last week was "panic" selling and this coming week should be interesting to see how the margin calls are handled. We got a preview back in 2008 and '09 how firms treated each other which ended with Lehman (and many others) being devoured.
So Gold got hit for another $80 and we are told it has no direction to go but down because interest rates are going up...because the economy is so strong. First off, yes I call bullshit on the strong economy story. Secondly, even if the Fed DID want interest rates to go up (they don't) they would never want rates to move like they just did last week. They know that "fast" is a killer (remember the JPM London whale) and firms cannot "adjust" when market prices (yields) move quickly (think margin calls and delta hedging). Firms blow up when this happens and of course then makes the panic selling that much worse. As an interesting aside, "usually" money flows INTO Treasuries when there is fear but not this time, the "fear" IS the Treasury market!
But something just does not add up here. First, we know that physical demand was huge going into this week and now we hear that physical off take has again increased with this latest price takedown. Secondly, if the COMEX numbers are to be believed, the open interest numbers actually went up Fridayo a whopping 10,000+ contracts in Gold and in Silver over 2,000 contracts...but how can this be? If everyone was selling to get out then the open interest would have dropped by these amounts or more, they did not which means that more and more "shorts" piled on. Again, if the CME numbers are to be trusted and are correct then we also have a clue as to "who" the shorts are...the specs (hedge funds) and the commercials look now to finally be on the long side after 15 years on the short side.
Here are a couple of speculations on my part. Is this a trap being set for the shorts? A trap for the commercials (banks) to clean out the hedge funds? Follow this through, in the past the CME would raise margins to pressure the prices of Gold and Silver. I believe that 100% of the time after the CME has raised margin rates, Gold and Silver would get hammered, why didn't they get hammered on Friday? If history was any guide at all they should have but they did not, why? Surely there were margin calls issued Thursdayhnight to be met on Friday and a margin hike on top of that. What the heck happened? Why the difference? ...Maybe because the longs are a different group now than in the past? Maybe because in the past the longs were the hedge funds who would receive margin calls and then cut and run, now maybe the longs have deeper pockets?
And speaking of "deeper pockets", the open interest in Silver continues to stay very high...and even after a 50% drop in price. The longs have now effectively PAID for more than half of the Silver if they met each and every margin call and now stand for delivery. Will July be the month that Silver defaults on the COMEX? There are still 50,000 July contracts outstanding with 1st notice day this Fridayy. This represents 250 million ounces...the dealers only hold about 40 million for delivery. Who, other than a sovereign government (China?) or a collective of sovereigns could have met the margin calls over the last 6-8 months? Have they allowed the short specs to build up and get bolder in their sales? On the Gold side it is interesting to note that JP Morgan has not reported 1 single ounce of Gold entering their dealer depository so far this year...they have 1 week to go before June deliveries must be made and they have a negative 80,000+ ounce deficit to cover. Where will this Gold come from? Could we be set up for the Chinese to stand for delivery from under stocked vaults...and at the same time sell some of their Treasury holdings?
This upcoming week could be a doozy. So many potential train wrecks from so many different directions to keep your eyes on all of them. Just remember that "credit" is what runs everything and it looks like "credit" is now at the center stage of problems. Should rates continue to rise this week in U.S. Treasuries you should expect to see some very major firms run into trouble. This time around it will be real as there are no solvent white knights left with the ability to leverage up and save the day. The U.S. Treasury and Fed are now in the crosshairs, they need to catch a bid this week or they will be at the center of the biggest one time margin call ever! Regards, Bill H.
end
Bill continues with the theme of derivative losses but also discusses the huge story over the weekend that the ESM will be limited to a 60 billion euro rescue PAST and PRESENT. Spain itself was promised 100 billion euros and now must fight with Portugal, and Ireland for the sum promised.
No question about it..the button has been pushed!!!
(courtesy Bill Holter/Miles Franklin)
The button has been pushed...r
This week has started off miserably. China had problems within their banking system last night as bank transfers, ATM's, online banking and wires did not work. Europe announced that their E500 billion bailout fund for banks is no longer the case, they now say that 60 billion Euros will be the limit...retroactively. To put this in perspective, Spain had already been promised 100 billion Euros for their banking system, I guess the money is not coming? Our stock market has started the day down 230 points and the 10yr. Treasury yield is now 2.64%, this is another .12 basis points higher on the day and now nearly 70% higher than it was back in April.
As I wrote over the weekend, this is "one gigantic global margin call". Please understand how many of these interest rate derivatives work. When the rates go against you, "margin" must be posted. By "margin" I mean collateral. Collateral must be shifted from the losing institution to the one on the winning side. When the loser "runs out" of collateral...that is when you get a situation similar to MF Global or Lehman Bros., they are forced to shut down and the vultures then come in and pick the bones clean...normally. Now it is no longer "normal", now a Lehman Bros. will take the whole tent down.
To put in perspective what is happening, Zerohedge calculated that the Fed lost $35 billion this morning alone and $250 billion over the last 2 months http://www.zerohedge.com/news/
end
Your sermon for today, courtesy of Mark Grant
(courtesy Mark Grant/out of the Box)
Deluded Worlds And Unpleasant Realities
Submitted by Tyler Durden on 06/24/2013 08:57 -0400
Submitted by Mark J. Grant, author of Out of the Box,
“Words are, of course, the most powerful drug used by mankind.”
-Rudyard Kipling
In business, in relationships, words spoken or memorialized in the Press, once out there the damage has been done; the consequences on the way to creation. You can't deny them, you can't hide them and you are accountable for what has passed your lips or the roller ball on your pen. This is just the way of it in the world which is why it is always important to not only choose your words carefully but to carefully decide if they should be released into the wild. Words are the Pandora's Box of everyday life.
“Words are like eggs dropped from great heights; you can no more call them back than ignore the mess they leave when they fall.”
-Jodi Picoult
Words also have another fascinating characteristic. When you spit them out you know what you meant. Then someplace in the air between their release and someone hearing or reading them they get jumbled up. What you were trying to communicate is often, and as an author I can tell you with certainty that it is more than one might imagine, that what you were trying to say is not at all what is heard. There have been countless times when I have stared at people's comments about something that I have written and wondered, "Where in God's name did they come up with that?" It is not just "lost in translation" but "lost in space."
“Be silent or let thy words be worth more than silence.”
-Pythagoras
I make these points today for a very important reason. Mr. Bernanke, and it had to come to this eventually, there was no other real choice, has now unleashed the Fates that could no longer be contained and the harpies are free once more. The world had deluded itself that it would never come to pass. The world had also looked at Mr. Draghi's comments as if they were certain prophecy not uttered by Mr. Draghi himself but as if he was just the mouthpiece for some higher divinity that had taken over his body during the length of his famous speech.
In both cases the world had become delusional. In both cases the fantasy has ended and we have been pushed back to our unpleasant reality where one and one still makes two. Living with Alice in Wonderland was certainly more pleasant!
Mr. Bernanke's comment about "things could change" is nothing more than the recital of verse. Of course, thing can always change and he acknowledged what each of us already knew. There were sounds in those sentences worthy of no significant meaning. What was full of the sound and fury of important meaning though was that the dream was over. With his soliloquy of "ending," the dream was shattered and lays now upon the floor all around us like broken shards of razor sharp glass.
You and everyone else will try and step carefully but you are going to get cut because avoidance is impossible.Bonds, stocks, commodities or Real Estate; you are going to bleed. In the same manner as we cannot invest off-world. We cannot avoid being hurt on-world. The real pain of induced withdrawal from the central banks' monetary creation is upon us. The words cannot be taken back. The meat is minced!
Words, once spoken, are no longer your own. Words, strung together, may be the most powerful spells in our kingdom. Two speeches, one in America and one in Europe buoyed the world. One speech made in America has now ended the experiment. No magic wand was needed.
Submitted by cpowell on Sun, 2013-06-23 01:37. Section: Daily Dispatches
Barrick Gold to Reduce Workforce by 55 in Nevada, Utah
By Martin Griffith
Associated Press
via Las Vegas (Nevada) Review-Journal
Saturday, June 22, 2013
Associated Press
via Las Vegas (Nevada) Review-Journal
Saturday, June 22, 2013
RENO, Nevada -- The world's largest gold mining company has announced plans to reduce its workforce by 55 positions in Nevada and Utah, citing falling gold prices, rising costs and sagging stock prices.
Barrick Gold Corp. plans to slash about 40 positions in Nevada, 15 in Salt Lake City and five to 10 elsewhere in the region through voluntary severance packages to certain employees, spokesman Lou Schack said.
The Toronto-based company did not rule out further such reductions to deal with what it calls "a very difficult business environment." Since late 2011, the gold price has fallen by $600 -- over 30 percent
"As always, we will continually adapt our business to suit changing market conditions," Schack said. "This may include further restructuring and/or reductions in the future."
The move affects several groups of support function employees, including administrative, human resources, and purchasing workers. The company has some 4,500 employees in Nevada -- which comprises the bulk of its North American operations -- and 140 employees in Salt Lake City.
Affected employees have been given time to review the severance offers initiated Thursday and to make their decisions. The offers include a payment based on years of service and base pay, and limited continuation of some benefits.
The reduction follows a thorough review of the company’s organizational structure that was prompted by the change in business conditions.
"Our North American operations, most of which are in Nevada, comprise the most valuable and productive of Barrick's four regional business units -- and we intend to keep it that way," Schack said. "To do so we must cut costs and become a more efficient business."
Shares of Barrick and almost every major gold miner hit new annual lows before recovering Friday as a drop in gold prices leveled off.
Gold prices plunged 7 percent this week to levels not seen since September 2010. On Friday, after declining sharply the day before, gold for August delivery rose $5.80 to finish at $1,292 per ounce.
On Friday, shares of Barrick rose $0.29 or 1.7 percent to $16.89. Its market value is less than half of what it was a year ago.
Another leading gold miner, Newmont Mining Co., hinted it might lay off some employees in Nevada after announcing plans Wednesday to cut its workforce in Colorado by 33 percent. The company cited falling gold prices and rising costs as factors for considering such reductions elsewhere.
* * *
And today, they announced layoffs of 30% of corporate HQ here in Toronto:
(courtesy Associated Press/Rob Gillies/GATA)
And today, they announced layoffs of 30% of corporate HQ here in Toronto:
(courtesy Associated Press/Rob Gillies/GATA)
(courtesy Associated Press/Rob Gillies/GATA)
Barrick laying off 30% of corporate HQ staff
Submitted by cpowell on Mon, 2013-06-24 18:27. Section: Daily Dispatches
Barrick to Lay Off 100 at Toronto Head Office
By Rob Gillies
Associated Press
Monday, June 24, 2013
TORONTO -- The world's largest gold mining company has announced plans to eliminate 100 jobs at its corporate headquarters in Toronto.
Barrick Gold Corp. said Monday the reduction represents 30 percent of the head office. Barrick spokesman Andy Lloyd cited a challenging business environment. Falling gold prices, rising costs and a sagging stock price weighed down by its Pascua-Lama project have plagued the company. Since late 2011, the gold price has fallen by $600, over 30 percent.
Last month Chile's environmental regulator stopped construction and imposed sanctions on Barrick's $8.5 billion Pascua-Lama gold mine, citing "serious violations" of its environmental permit. Barrick has already spent $5 billion on the project, which straddles the Chile-Argentine border at 6,400 feet (5,000 meters) above sea level. Barrick had hoped to begin production in early 2014, and warned shareholders that it might abandon Pascua's Chilean side if construction delays keep the mine from opening this year.
he company announced last week it planned to reduce its work force by 55 positions in Nevada and Utah. The company has some 4,500 employees in Nevada -- which comprises the bulk of its North American operations -- and 140 employees in Salt Lake City. Barrick has 25,000 employees worldwide.
Lloyd said impacted employees will receive severance packages and access to career placement services. The reduction follows a thorough review of the company's organizational structure that was prompted by the change in business conditions.
Barrick CEO Jamie Sokalsky promised shareholders in April that Barrick was committed to be focus on producing returns for investors. Shares of Barrick and almost every major gold miner have hit new annual lows recently.
Barrick ousted former CEO and President Aaron Regent a year ago, citing its disappointing share price performance. The stuck has plummeted from over $40 to less than $16 since then.
Shares dropped 94 cents, or 5.6 percent, to $15.95 in Monday morning trading on the New York Stock Exchange.
end
Fed's reducing bond monetization will crash both U.S. and world, von Greyerz says
Submitted by cpowell on Mon, 2013-06-24 00:13. Section: Daily Dispatches
8:10p ET Sunday, June 23, 2013
Dear Friend of GATA and Gold:
Gold fund manager Egon von Greyerz today tells King World News that the Federal Reserve can't possibly reduce its bond monetization because much of the world is already on the edge of collapse along with the United States itself. An excerpt from the interview is posted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
This BIS report which stated that central banks must stop QE or else inflation will catch hold.
This started the negative sentiment and coupled with China's liquidity problems sealed the fate of global trading today.
(courtesy London's Financial Times/Claire Jones/GATA)
BIS tells central banks to stop pumping, start watching inflation
Submitted by cpowell on Sun, 2013-06-23 15:48. Section: Daily Dispatches
Central Banks Told to Head for Exit
By Claire Jones
Financial Times, London
Sunday, June 23, 2013
Central banks must head for the exit and stop trying to spur a global economic recovery, the organisation representing the world's monetary authorities has warned following a week of market turbulence sparked by the US Federal Reserve's signal that it would soon cut the pace of its bond buying.
The Basel-based Bank for International Settlements used its influential annual report to call on members to re-emphasise their focus on inflation and press governments to do more to spearhead a return to growth.
The report, presented to many of the world's top central bankers in Basel for the BIS's annual meeting at the weekend, follows last week's selloff in equities, bonds, and commodities, fuelled by fears the Fed's tapering would spark a fresh wave of turmoil in global financial markets. Ben Bernanke, the Fed chairman, said last Wednesday that the central bank could slow its $85 billion monthly bond-buying programme this year and end it by mid-2014.
The BIS, often referred to as the central bankers' bank, said the global economy was "past the height of the crisis" and that the goal of policy was "to return still-sluggish economies to strong and sustainable growth."
It said cheap and plentiful central bank money had merely bought time, warning that more bond buying would retard the global economy's return to health by delaying adjustments to governments' and households’ balance sheets.
"Alas, central banks cannot do more without compounding the risks they have already created," the BIS said, adding that delivering more "extraordinary" stimulus was "becoming increasingly perilous."
"How can central banks encourage those responsible for structural adjustment to implement those reforms? How can they avoid making the economy too dependent on monetary stimulus? When is the right time for them to pull back . . . [and] how can they avoid sparking a sharp rise in bond yields? It is time for monetary policy to begin answering these questions?," the report said.
Mario Draghi's rallying cry, uttered last summer at the height of the eurozone turmoil, that the European Central Bank would do "whatever it takes" to preserve the currency bloc was now being misconstrued, it warned.
"Can central banks now really do 'whatever it takes'?" the BIS asked. "As each day goes by, it seems less and less likely. Central banks cannot repair the balance sheets of households and financial institutions. Central banks cannot ensure the sustainability of fiscal finances. And, most of all, central banks cannot enact the structural economic and financial reforms needed to return economies to the real growth paths."
Stephen Cecchetti, head of the BIS's monetary and economic department, recently said that the initial rise in yields for US Treasuries following Mr Bernanke's hints in May that the Fed would slow the pace of its asset purchases "should come as no surprise."
Though he warned market volatility did "create risks," Mr Cecchetti flagged that the reaction of stock markets to the hints had been far from disastrous. "A few months ago this would probably have set equity markets into free-fall, but this time stock prices seemed largely unaffected, suggesting that market participants are quite optimistic about the outlook for the US economy."
Separately, the BIS said Jaime Caruana, its general manager, would remain in office until March 2017. His current five-year term was due to end in March 2017.
Mr Caruana said at the AGM on Sunday: "Ours is a call for acting responsibly now to strengthen growth and avoid even costlier adjustment down the road . . . . Monetary policy has done its part. Recovery now calls for a different policy mix -- with more emphasis on strengthening economic flexibility and dynamism and stabilising public finances."
end
The first commentary is quite a powerful one from Bill Holter. I urge you to read every word carefully as he unleashes a firestorm:
(courtesy Bill Holter/Miles Franklin)
The Great Unwind has finally arrived.
50+ years of credit creation and living beyond our means year after year is finally coming to an end. Ben Bernanke spoke last week regarding "tapering" Treasury and MBS purchases some time next year, the market then immediately reacted. Stocks were sold, bonds were sold, commodities were sold and so were Silver and Gold (much more on this shortly). Did the Fed actually do anything? Did they tighten at all? Has their balance sheet shrunk or even stagnated at all? The answer(s) are an emphatic NO!. The bloodbath last week was merely "front running" on the fear that the Fed will back away and stop administering the crack credit doses that the financial community have become accustomed to. Basically free money and $ trillions of it, can you imagine what will happen should the Fed ACTUALLY slow down or stop giving out free cash so that banks can cover up losses?
Last week was only a preview to what is coming. I personally do not believe that any "tapering" will ever come about, last week's financial action only supports my thesis. Last week happened after only the mention of "tapering", do you think the Fed may now know the end result of an ACTUAL exit strategy? One where the markets would have to fend for itself and be self supporting along with the economy? They do know, the Fed knows that it will be forced again and again to not only continue QE but increase it exponentially. There is one minor "problem", the more they monetize, the less "collateral" (there's that word again) there is available to an economy and financial market that... runs on collateral. Can you imagine the immediate bloodbath of panic selling if the Fed not only stopped purchasing bonds but actually tried to sell some to reduce their own balance sheet? The are now purchasing more than half of the Treasury's new issuance, if they turned seller, who is left as the buyer? What would happen should China's current "cash crunch" cause them to turn seller?
As a result of the mere murmur of slowing QE the most shocking action last week was in the Treasury market. The 10yr ended Friday night at 2.54%, This was a rise of .40 basis points or so and nearly equal to the rise in yield for all of May. May, if you recall was the month where the Fed lost about $115 billion on their bond holdings (certainly far more if they had to mark the non Treasuries to market). The volatility was staggering and without a doubt there are now some dead institutions out there because of how fast and violent the move was. There is $200 trillion outstanding in interest rate derivatives. This past week alone, these contracts on average probably moved more than 5% in value. This would indicate a movement of maybe $10 trillion (with a T) worth of net change from one side to the other in less than 5 days. Do you really believe that this type of "wins and losses" could have occurred without someone, probably "many one's" becoming insolvent? The Fed only purports to have $65 billion of equity capital, between May 1 and now their portfolio has dropped nearly $250 billion. Is this "insolvent"? Yes it is but they have the ability to run the presses so not to worry I guess?
Forget the stock market, the Fed has now lost control of the Treasury market. Interest rates on the 10 year have now gone from just under 1.6% to over 2.5% in a very short period of time. This is now a 60+% rise in rates. Were this truly because the economy was strengthening it would be bad enough but the selling that has come about has nothing to do with the economy. The selling in reality started as "front running" by those smart enough to leave the party while the music was still playing. Now, it is evolving into one gigantic and global margin call. This will feed on itself, winners will not get paid, sovereigns will lose the ability to "fund" and ultimately the global real economy will suffer from the financial implosion.
Before getting to the Gold and Silver travesties I'd like to mention that market "don't just crash" on their own. If you look back to every crash (with the exception of the metals "forced" crashes) of any asset throughout all of history, they all have one thing in common...debt. TOO MUCH debt to be exact. We have now passed the peak of the "debt bubble", there is no question now. Debt got us into the 2008 calamity and the solution was ...MORE debt. Even though the bubble burst back then they were able to reflate it one last time. "They" being central banks and sovereign treasuries. Now, there is no ability anywhere on the planet to reflate. Why? Because there are no sovereign treasuries healthy enough or big enough to be able to issue enough new debt to reflate one more time. It's over, plain and simple.
Gold. For those of you who can remember years back the "4 pillars" that Jim Sinclair always talked about, this, what is happening now, is exactly what he was talking about. The 4th pillar was the U.S. Treasury market and it has now been "pulled". This was the last horse big enough and strong enough to "pull" (push) the economic cart. The only description of the Treasury market last week was "panic" selling and this coming week should be interesting to see how the margin calls are handled. We got a preview back in 2008 and '09 how firms treated each other which ended with Lehman (and many others) being devoured.
So Gold got hit for another $80 and we are told it has no direction to go but down because interest rates are going up...because the economy is so strong. First off, yes I call bullshit on the strong economy story. Secondly, even if the Fed DID want interest rates to go up (they don't) they would never want rates to move like they just did last week. They know that "fast" is a killer (remember the JPM London whale) and firms cannot "adjust" when market prices (yields) move quickly (think margin calls and delta hedging). Firms blow up when this happens and of course then makes the panic selling that much worse. As an interesting aside, "usually" money flows INTO Treasuries when there is fear but not this time, the "fear" IS the Treasury market!
But something just does not add up here. First, we know that physical demand was huge going into this week and now we hear that physical off take has again increased with this latest price takedown. Secondly, if the COMEX numbers are to be believed, the open interest numbers actually went up Fridayo a whopping 10,000+ contracts in Gold and in Silver over 2,000 contracts...but how can this be? If everyone was selling to get out then the open interest would have dropped by these amounts or more, they did not which means that more and more "shorts" piled on. Again, if the CME numbers are to be trusted and are correct then we also have a clue as to "who" the shorts are...the specs (hedge funds) and the commercials look now to finally be on the long side after 15 years on the short side.
Here are a couple of speculations on my part. Is this a trap being set for the shorts? A trap for the commercials (banks) to clean out the hedge funds? Follow this through, in the past the CME would raise margins to pressure the prices of Gold and Silver. I believe that 100% of the time after the CME has raised margin rates, Gold and Silver would get hammered, why didn't they get hammered on Friday? If history was any guide at all they should have but they did not, why? Surely there were margin calls issued Thursdayhnight to be met on Friday and a margin hike on top of that. What the heck happened? Why the difference? ...Maybe because the longs are a different group now than in the past? Maybe because in the past the longs were the hedge funds who would receive margin calls and then cut and run, now maybe the longs have deeper pockets?
And speaking of "deeper pockets", the open interest in Silver continues to stay very high...and even after a 50% drop in price. The longs have now effectively PAID for more than half of the Silver if they met each and every margin call and now stand for delivery. Will July be the month that Silver defaults on the COMEX? There are still 50,000 July contracts outstanding with 1st notice day this Fridayy. This represents 250 million ounces...the dealers only hold about 40 million for delivery. Who, other than a sovereign government (China?) or a collective of sovereigns could have met the margin calls over the last 6-8 months? Have they allowed the short specs to build up and get bolder in their sales? On the Gold side it is interesting to note that JP Morgan has not reported 1 single ounce of Gold entering their dealer depository so far this year...they have 1 week to go before June deliveries must be made and they have a negative 80,000+ ounce deficit to cover. Where will this Gold come from? Could we be set up for the Chinese to stand for delivery from under stocked vaults...and at the same time sell some of their Treasury holdings?
This upcoming week could be a doozy. So many potential train wrecks from so many different directions to keep your eyes on all of them. Just remember that "credit" is what runs everything and it looks like "credit" is now at the center stage of problems. Should rates continue to rise this week in U.S. Treasuries you should expect to see some very major firms run into trouble. This time around it will be real as there are no solvent white knights left with the ability to leverage up and save the day. The U.S. Treasury and Fed are now in the crosshairs, they need to catch a bid this week or they will be at the center of the biggest one time margin call ever! Regards, Bill H.
end
Bill continues with the theme of derivative losses but also discusses the huge story over the weekend that the ESM will be limited to a 60 billion euro rescue PAST and PRESENT. Spain itself was promised 100 billion euros and now must fight with Portugal, and Ireland for the sum promised.
No question about it..the button has been pushed!!!
(courtesy Bill Holter/Miles Franklin)
The button has been pushed...r
This week has started off miserably. China had problems within their banking system last night as bank transfers, ATM's, online banking and wires did not work. Europe announced that their E500 billion bailout fund for banks is no longer the case, they now say that 60 billion Euros will be the limit...retroactively. To put this in perspective, Spain had already been promised 100 billion Euros for their banking system, I guess the money is not coming? Our stock market has started the day down 230 points and the 10yr. Treasury yield is now 2.64%, this is another .12 basis points higher on the day and now nearly 70% higher than it was back in April.
As I wrote over the weekend, this is "one gigantic global margin call". Please understand how many of these interest rate derivatives work. When the rates go against you, "margin" must be posted. By "margin" I mean collateral. Collateral must be shifted from the losing institution to the one on the winning side. When the loser "runs out" of collateral...that is when you get a situation similar to MF Global or Lehman Bros., they are forced to shut down and the vultures then come in and pick the bones clean...normally. Now it is no longer "normal", now a Lehman Bros. will take the whole tent down.
To put in perspective what is happening, Zerohedge calculated that the Fed lost $35 billion this morning alone and $250 billion over the last 2 months http://www.zerohedge.com/news/
end
Your sermon for today, courtesy of Mark Grant
(courtesy Mark Grant/out of the Box)
Deluded Worlds And Unpleasant Realities
Submitted by Tyler Durden on 06/24/2013 08:57 -0400
Submitted by Mark J. Grant, author of Out of the Box,
“Words are, of course, the most powerful drug used by mankind.”
-Rudyard Kipling
In business, in relationships, words spoken or memorialized in the Press, once out there the damage has been done; the consequences on the way to creation. You can't deny them, you can't hide them and you are accountable for what has passed your lips or the roller ball on your pen. This is just the way of it in the world which is why it is always important to not only choose your words carefully but to carefully decide if they should be released into the wild. Words are the Pandora's Box of everyday life.
“Words are like eggs dropped from great heights; you can no more call them back than ignore the mess they leave when they fall.”
-Jodi Picoult
Words also have another fascinating characteristic. When you spit them out you know what you meant. Then someplace in the air between their release and someone hearing or reading them they get jumbled up. What you were trying to communicate is often, and as an author I can tell you with certainty that it is more than one might imagine, that what you were trying to say is not at all what is heard. There have been countless times when I have stared at people's comments about something that I have written and wondered, "Where in God's name did they come up with that?" It is not just "lost in translation" but "lost in space."
“Be silent or let thy words be worth more than silence.”
-Pythagoras
I make these points today for a very important reason. Mr. Bernanke, and it had to come to this eventually, there was no other real choice, has now unleashed the Fates that could no longer be contained and the harpies are free once more. The world had deluded itself that it would never come to pass. The world had also looked at Mr. Draghi's comments as if they were certain prophecy not uttered by Mr. Draghi himself but as if he was just the mouthpiece for some higher divinity that had taken over his body during the length of his famous speech.
In both cases the world had become delusional. In both cases the fantasy has ended and we have been pushed back to our unpleasant reality where one and one still makes two. Living with Alice in Wonderland was certainly more pleasant!
Mr. Bernanke's comment about "things could change" is nothing more than the recital of verse. Of course, thing can always change and he acknowledged what each of us already knew. There were sounds in those sentences worthy of no significant meaning. What was full of the sound and fury of important meaning though was that the dream was over. With his soliloquy of "ending," the dream was shattered and lays now upon the floor all around us like broken shards of razor sharp glass.
You and everyone else will try and step carefully but you are going to get cut because avoidance is impossible.Bonds, stocks, commodities or Real Estate; you are going to bleed. In the same manner as we cannot invest off-world. We cannot avoid being hurt on-world. The real pain of induced withdrawal from the central banks' monetary creation is upon us. The words cannot be taken back. The meat is minced!
Words, once spoken, are no longer your own. Words, strung together, may be the most powerful spells in our kingdom. Two speeches, one in America and one in Europe buoyed the world. One speech made in America has now ended the experiment. No magic wand was needed.
Submitted by cpowell on Mon, 2013-06-24 18:27. Section: Daily Dispatches
Barrick to Lay Off 100 at Toronto Head Office
By Rob Gillies
Associated Press
Monday, June 24, 2013
Associated Press
Monday, June 24, 2013
TORONTO -- The world's largest gold mining company has announced plans to eliminate 100 jobs at its corporate headquarters in Toronto.
Barrick Gold Corp. said Monday the reduction represents 30 percent of the head office. Barrick spokesman Andy Lloyd cited a challenging business environment. Falling gold prices, rising costs and a sagging stock price weighed down by its Pascua-Lama project have plagued the company. Since late 2011, the gold price has fallen by $600, over 30 percent.
Last month Chile's environmental regulator stopped construction and imposed sanctions on Barrick's $8.5 billion Pascua-Lama gold mine, citing "serious violations" of its environmental permit. Barrick has already spent $5 billion on the project, which straddles the Chile-Argentine border at 6,400 feet (5,000 meters) above sea level. Barrick had hoped to begin production in early 2014, and warned shareholders that it might abandon Pascua's Chilean side if construction delays keep the mine from opening this year.
he company announced last week it planned to reduce its work force by 55 positions in Nevada and Utah. The company has some 4,500 employees in Nevada -- which comprises the bulk of its North American operations -- and 140 employees in Salt Lake City. Barrick has 25,000 employees worldwide.
Lloyd said impacted employees will receive severance packages and access to career placement services. The reduction follows a thorough review of the company's organizational structure that was prompted by the change in business conditions.
Barrick CEO Jamie Sokalsky promised shareholders in April that Barrick was committed to be focus on producing returns for investors. Shares of Barrick and almost every major gold miner have hit new annual lows recently.
Barrick ousted former CEO and President Aaron Regent a year ago, citing its disappointing share price performance. The stuck has plummeted from over $40 to less than $16 since then.
Shares dropped 94 cents, or 5.6 percent, to $15.95 in Monday morning trading on the New York Stock Exchange.
end
Fed's reducing bond monetization will crash both U.S. and world, von Greyerz says
Submitted by cpowell on Mon, 2013-06-24 00:13. Section: Daily Dispatches
8:10p ET Sunday, June 23, 2013
Dear Friend of GATA and Gold:
Gold fund manager Egon von Greyerz today tells King World News that the Federal Reserve can't possibly reduce its bond monetization because much of the world is already on the edge of collapse along with the United States itself. An excerpt from the interview is posted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
This BIS report which stated that central banks must stop QE or else inflation will catch hold.
This started the negative sentiment and coupled with China's liquidity problems sealed the fate of global trading today.
(courtesy London's Financial Times/Claire Jones/GATA)
BIS tells central banks to stop pumping, start watching inflation
Submitted by cpowell on Sun, 2013-06-23 15:48. Section: Daily Dispatches
Central Banks Told to Head for Exit
By Claire Jones
Financial Times, London
Sunday, June 23, 2013
Central banks must head for the exit and stop trying to spur a global economic recovery, the organisation representing the world's monetary authorities has warned following a week of market turbulence sparked by the US Federal Reserve's signal that it would soon cut the pace of its bond buying.
The Basel-based Bank for International Settlements used its influential annual report to call on members to re-emphasise their focus on inflation and press governments to do more to spearhead a return to growth.
The report, presented to many of the world's top central bankers in Basel for the BIS's annual meeting at the weekend, follows last week's selloff in equities, bonds, and commodities, fuelled by fears the Fed's tapering would spark a fresh wave of turmoil in global financial markets. Ben Bernanke, the Fed chairman, said last Wednesday that the central bank could slow its $85 billion monthly bond-buying programme this year and end it by mid-2014.
The BIS, often referred to as the central bankers' bank, said the global economy was "past the height of the crisis" and that the goal of policy was "to return still-sluggish economies to strong and sustainable growth."
It said cheap and plentiful central bank money had merely bought time, warning that more bond buying would retard the global economy's return to health by delaying adjustments to governments' and households’ balance sheets.
"Alas, central banks cannot do more without compounding the risks they have already created," the BIS said, adding that delivering more "extraordinary" stimulus was "becoming increasingly perilous."
"How can central banks encourage those responsible for structural adjustment to implement those reforms? How can they avoid making the economy too dependent on monetary stimulus? When is the right time for them to pull back . . . [and] how can they avoid sparking a sharp rise in bond yields? It is time for monetary policy to begin answering these questions?," the report said.
Mario Draghi's rallying cry, uttered last summer at the height of the eurozone turmoil, that the European Central Bank would do "whatever it takes" to preserve the currency bloc was now being misconstrued, it warned.
"Can central banks now really do 'whatever it takes'?" the BIS asked. "As each day goes by, it seems less and less likely. Central banks cannot repair the balance sheets of households and financial institutions. Central banks cannot ensure the sustainability of fiscal finances. And, most of all, central banks cannot enact the structural economic and financial reforms needed to return economies to the real growth paths."
Stephen Cecchetti, head of the BIS's monetary and economic department, recently said that the initial rise in yields for US Treasuries following Mr Bernanke's hints in May that the Fed would slow the pace of its asset purchases "should come as no surprise."
Though he warned market volatility did "create risks," Mr Cecchetti flagged that the reaction of stock markets to the hints had been far from disastrous. "A few months ago this would probably have set equity markets into free-fall, but this time stock prices seemed largely unaffected, suggesting that market participants are quite optimistic about the outlook for the US economy."
Separately, the BIS said Jaime Caruana, its general manager, would remain in office until March 2017. His current five-year term was due to end in March 2017.
Mr Caruana said at the AGM on Sunday: "Ours is a call for acting responsibly now to strengthen growth and avoid even costlier adjustment down the road . . . . Monetary policy has done its part. Recovery now calls for a different policy mix -- with more emphasis on strengthening economic flexibility and dynamism and stabilising public finances."
end
The first commentary is quite a powerful one from Bill Holter. I urge you to read every word carefully as he unleashes a firestorm:
(courtesy Bill Holter/Miles Franklin)
The Great Unwind has finally arrived.
50+ years of credit creation and living beyond our means year after year is finally coming to an end. Ben Bernanke spoke last week regarding "tapering" Treasury and MBS purchases some time next year, the market then immediately reacted. Stocks were sold, bonds were sold, commodities were sold and so were Silver and Gold (much more on this shortly). Did the Fed actually do anything? Did they tighten at all? Has their balance sheet shrunk or even stagnated at all? The answer(s) are an emphatic NO!. The bloodbath last week was merely "front running" on the fear that the Fed will back away and stop administering the crack credit doses that the financial community have become accustomed to. Basically free money and $ trillions of it, can you imagine what will happen should the Fed ACTUALLY slow down or stop giving out free cash so that banks can cover up losses?
Last week was only a preview to what is coming. I personally do not believe that any "tapering" will ever come about, last week's financial action only supports my thesis. Last week happened after only the mention of "tapering", do you think the Fed may now know the end result of an ACTUAL exit strategy? One where the markets would have to fend for itself and be self supporting along with the economy? They do know, the Fed knows that it will be forced again and again to not only continue QE but increase it exponentially. There is one minor "problem", the more they monetize, the less "collateral" (there's that word again) there is available to an economy and financial market that... runs on collateral. Can you imagine the immediate bloodbath of panic selling if the Fed not only stopped purchasing bonds but actually tried to sell some to reduce their own balance sheet? The are now purchasing more than half of the Treasury's new issuance, if they turned seller, who is left as the buyer? What would happen should China's current "cash crunch" cause them to turn seller?
As a result of the mere murmur of slowing QE the most shocking action last week was in the Treasury market. The 10yr ended Friday night at 2.54%, This was a rise of .40 basis points or so and nearly equal to the rise in yield for all of May. May, if you recall was the month where the Fed lost about $115 billion on their bond holdings (certainly far more if they had to mark the non Treasuries to market). The volatility was staggering and without a doubt there are now some dead institutions out there because of how fast and violent the move was. There is $200 trillion outstanding in interest rate derivatives. This past week alone, these contracts on average probably moved more than 5% in value. This would indicate a movement of maybe $10 trillion (with a T) worth of net change from one side to the other in less than 5 days. Do you really believe that this type of "wins and losses" could have occurred without someone, probably "many one's" becoming insolvent? The Fed only purports to have $65 billion of equity capital, between May 1 and now their portfolio has dropped nearly $250 billion. Is this "insolvent"? Yes it is but they have the ability to run the presses so not to worry I guess?
Forget the stock market, the Fed has now lost control of the Treasury market. Interest rates on the 10 year have now gone from just under 1.6% to over 2.5% in a very short period of time. This is now a 60+% rise in rates. Were this truly because the economy was strengthening it would be bad enough but the selling that has come about has nothing to do with the economy. The selling in reality started as "front running" by those smart enough to leave the party while the music was still playing. Now, it is evolving into one gigantic and global margin call. This will feed on itself, winners will not get paid, sovereigns will lose the ability to "fund" and ultimately the global real economy will suffer from the financial implosion.
Before getting to the Gold and Silver travesties I'd like to mention that market "don't just crash" on their own. If you look back to every crash (with the exception of the metals "forced" crashes) of any asset throughout all of history, they all have one thing in common...debt. TOO MUCH debt to be exact. We have now passed the peak of the "debt bubble", there is no question now. Debt got us into the 2008 calamity and the solution was ...MORE debt. Even though the bubble burst back then they were able to reflate it one last time. "They" being central banks and sovereign treasuries. Now, there is no ability anywhere on the planet to reflate. Why? Because there are no sovereign treasuries healthy enough or big enough to be able to issue enough new debt to reflate one more time. It's over, plain and simple.
Gold. For those of you who can remember years back the "4 pillars" that Jim Sinclair always talked about, this, what is happening now, is exactly what he was talking about. The 4th pillar was the U.S. Treasury market and it has now been "pulled". This was the last horse big enough and strong enough to "pull" (push) the economic cart. The only description of the Treasury market last week was "panic" selling and this coming week should be interesting to see how the margin calls are handled. We got a preview back in 2008 and '09 how firms treated each other which ended with Lehman (and many others) being devoured.
So Gold got hit for another $80 and we are told it has no direction to go but down because interest rates are going up...because the economy is so strong. First off, yes I call bullshit on the strong economy story. Secondly, even if the Fed DID want interest rates to go up (they don't) they would never want rates to move like they just did last week. They know that "fast" is a killer (remember the JPM London whale) and firms cannot "adjust" when market prices (yields) move quickly (think margin calls and delta hedging). Firms blow up when this happens and of course then makes the panic selling that much worse. As an interesting aside, "usually" money flows INTO Treasuries when there is fear but not this time, the "fear" IS the Treasury market!
But something just does not add up here. First, we know that physical demand was huge going into this week and now we hear that physical off take has again increased with this latest price takedown. Secondly, if the COMEX numbers are to be believed, the open interest numbers actually went up Fridayo a whopping 10,000+ contracts in Gold and in Silver over 2,000 contracts...but how can this be? If everyone was selling to get out then the open interest would have dropped by these amounts or more, they did not which means that more and more "shorts" piled on. Again, if the CME numbers are to be trusted and are correct then we also have a clue as to "who" the shorts are...the specs (hedge funds) and the commercials look now to finally be on the long side after 15 years on the short side.
Here are a couple of speculations on my part. Is this a trap being set for the shorts? A trap for the commercials (banks) to clean out the hedge funds? Follow this through, in the past the CME would raise margins to pressure the prices of Gold and Silver. I believe that 100% of the time after the CME has raised margin rates, Gold and Silver would get hammered, why didn't they get hammered on Friday? If history was any guide at all they should have but they did not, why? Surely there were margin calls issued Thursdayhnight to be met on Friday and a margin hike on top of that. What the heck happened? Why the difference? ...Maybe because the longs are a different group now than in the past? Maybe because in the past the longs were the hedge funds who would receive margin calls and then cut and run, now maybe the longs have deeper pockets?
And speaking of "deeper pockets", the open interest in Silver continues to stay very high...and even after a 50% drop in price. The longs have now effectively PAID for more than half of the Silver if they met each and every margin call and now stand for delivery. Will July be the month that Silver defaults on the COMEX? There are still 50,000 July contracts outstanding with 1st notice day this Fridayy. This represents 250 million ounces...the dealers only hold about 40 million for delivery. Who, other than a sovereign government (China?) or a collective of sovereigns could have met the margin calls over the last 6-8 months? Have they allowed the short specs to build up and get bolder in their sales? On the Gold side it is interesting to note that JP Morgan has not reported 1 single ounce of Gold entering their dealer depository so far this year...they have 1 week to go before June deliveries must be made and they have a negative 80,000+ ounce deficit to cover. Where will this Gold come from? Could we be set up for the Chinese to stand for delivery from under stocked vaults...and at the same time sell some of their Treasury holdings?
This upcoming week could be a doozy. So many potential train wrecks from so many different directions to keep your eyes on all of them. Just remember that "credit" is what runs everything and it looks like "credit" is now at the center stage of problems. Should rates continue to rise this week in U.S. Treasuries you should expect to see some very major firms run into trouble. This time around it will be real as there are no solvent white knights left with the ability to leverage up and save the day. The U.S. Treasury and Fed are now in the crosshairs, they need to catch a bid this week or they will be at the center of the biggest one time margin call ever! Regards, Bill H.
end
Bill continues with the theme of derivative losses but also discusses the huge story over the weekend that the ESM will be limited to a 60 billion euro rescue PAST and PRESENT. Spain itself was promised 100 billion euros and now must fight with Portugal, and Ireland for the sum promised.
No question about it..the button has been pushed!!!
(courtesy Bill Holter/Miles Franklin)
The button has been pushed...r
This week has started off miserably. China had problems within their banking system last night as bank transfers, ATM's, online banking and wires did not work. Europe announced that their E500 billion bailout fund for banks is no longer the case, they now say that 60 billion Euros will be the limit...retroactively. To put this in perspective, Spain had already been promised 100 billion Euros for their banking system, I guess the money is not coming? Our stock market has started the day down 230 points and the 10yr. Treasury yield is now 2.64%, this is another .12 basis points higher on the day and now nearly 70% higher than it was back in April.
As I wrote over the weekend, this is "one gigantic global margin call". Please understand how many of these interest rate derivatives work. When the rates go against you, "margin" must be posted. By "margin" I mean collateral. Collateral must be shifted from the losing institution to the one on the winning side. When the loser "runs out" of collateral...that is when you get a situation similar to MF Global or Lehman Bros., they are forced to shut down and the vultures then come in and pick the bones clean...normally. Now it is no longer "normal", now a Lehman Bros. will take the whole tent down.
To put in perspective what is happening, Zerohedge calculated that the Fed lost $35 billion this morning alone and $250 billion over the last 2 months http://www.zerohedge.com/news/
end
Your sermon for today, courtesy of Mark Grant
(courtesy Mark Grant/out of the Box)
Deluded Worlds And Unpleasant Realities
Submitted by Tyler Durden on 06/24/2013 08:57 -0400
Submitted by Mark J. Grant, author of Out of the Box,
“Words are, of course, the most powerful drug used by mankind.”
-Rudyard Kipling
In business, in relationships, words spoken or memorialized in the Press, once out there the damage has been done; the consequences on the way to creation. You can't deny them, you can't hide them and you are accountable for what has passed your lips or the roller ball on your pen. This is just the way of it in the world which is why it is always important to not only choose your words carefully but to carefully decide if they should be released into the wild. Words are the Pandora's Box of everyday life.
“Words are like eggs dropped from great heights; you can no more call them back than ignore the mess they leave when they fall.”
-Jodi Picoult
Words also have another fascinating characteristic. When you spit them out you know what you meant. Then someplace in the air between their release and someone hearing or reading them they get jumbled up. What you were trying to communicate is often, and as an author I can tell you with certainty that it is more than one might imagine, that what you were trying to say is not at all what is heard. There have been countless times when I have stared at people's comments about something that I have written and wondered, "Where in God's name did they come up with that?" It is not just "lost in translation" but "lost in space."
“Be silent or let thy words be worth more than silence.”
-Pythagoras
I make these points today for a very important reason. Mr. Bernanke, and it had to come to this eventually, there was no other real choice, has now unleashed the Fates that could no longer be contained and the harpies are free once more. The world had deluded itself that it would never come to pass. The world had also looked at Mr. Draghi's comments as if they were certain prophecy not uttered by Mr. Draghi himself but as if he was just the mouthpiece for some higher divinity that had taken over his body during the length of his famous speech.
In both cases the world had become delusional. In both cases the fantasy has ended and we have been pushed back to our unpleasant reality where one and one still makes two. Living with Alice in Wonderland was certainly more pleasant!
Mr. Bernanke's comment about "things could change" is nothing more than the recital of verse. Of course, thing can always change and he acknowledged what each of us already knew. There were sounds in those sentences worthy of no significant meaning. What was full of the sound and fury of important meaning though was that the dream was over. With his soliloquy of "ending," the dream was shattered and lays now upon the floor all around us like broken shards of razor sharp glass.
You and everyone else will try and step carefully but you are going to get cut because avoidance is impossible.Bonds, stocks, commodities or Real Estate; you are going to bleed. In the same manner as we cannot invest off-world. We cannot avoid being hurt on-world. The real pain of induced withdrawal from the central banks' monetary creation is upon us. The words cannot be taken back. The meat is minced!
Words, once spoken, are no longer your own. Words, strung together, may be the most powerful spells in our kingdom. Two speeches, one in America and one in Europe buoyed the world. One speech made in America has now ended the experiment. No magic wand was needed.
Submitted by cpowell on Mon, 2013-06-24 00:13. Section: Daily Dispatches
8:10p ET Sunday, June 23, 2013
Dear Friend of GATA and Gold:
Gold fund manager Egon von Greyerz today tells King World News that the Federal Reserve can't possibly reduce its bond monetization because much of the world is already on the edge of collapse along with the United States itself. An excerpt from the 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.
This BIS report which stated that central banks must stop QE or else inflation will catch hold.
This started the negative sentiment and coupled with China's liquidity problems sealed the fate of global trading today.
(courtesy London's Financial Times/Claire Jones/GATA)
This BIS report which stated that central banks must stop QE or else inflation will catch hold.
This started the negative sentiment and coupled with China's liquidity problems sealed the fate of global trading today.
(courtesy London's Financial Times/Claire Jones/GATA)
This started the negative sentiment and coupled with China's liquidity problems sealed the fate of global trading today.
(courtesy London's Financial Times/Claire Jones/GATA)
BIS tells central banks to stop pumping, start watching inflation
Submitted by cpowell on Sun, 2013-06-23 15:48. Section: Daily Dispatches
Central Banks Told to Head for Exit
By Claire Jones
Financial Times, London
Sunday, June 23, 2013
Central banks must head for the exit and stop trying to spur a global economic recovery, the organisation representing the world's monetary authorities has warned following a week of market turbulence sparked by the US Federal Reserve's signal that it would soon cut the pace of its bond buying.
The Basel-based Bank for International Settlements used its influential annual report to call on members to re-emphasise their focus on inflation and press governments to do more to spearhead a return to growth.
The report, presented to many of the world's top central bankers in Basel for the BIS's annual meeting at the weekend, follows last week's selloff in equities, bonds, and commodities, fuelled by fears the Fed's tapering would spark a fresh wave of turmoil in global financial markets. Ben Bernanke, the Fed chairman, said last Wednesday that the central bank could slow its $85 billion monthly bond-buying programme this year and end it by mid-2014.
The BIS, often referred to as the central bankers' bank, said the global economy was "past the height of the crisis" and that the goal of policy was "to return still-sluggish economies to strong and sustainable growth."
It said cheap and plentiful central bank money had merely bought time, warning that more bond buying would retard the global economy's return to health by delaying adjustments to governments' and households’ balance sheets.
"Alas, central banks cannot do more without compounding the risks they have already created," the BIS said, adding that delivering more "extraordinary" stimulus was "becoming increasingly perilous."
"How can central banks encourage those responsible for structural adjustment to implement those reforms? How can they avoid making the economy too dependent on monetary stimulus? When is the right time for them to pull back . . . [and] how can they avoid sparking a sharp rise in bond yields? It is time for monetary policy to begin answering these questions?," the report said.
Mario Draghi's rallying cry, uttered last summer at the height of the eurozone turmoil, that the European Central Bank would do "whatever it takes" to preserve the currency bloc was now being misconstrued, it warned.
"Can central banks now really do 'whatever it takes'?" the BIS asked. "As each day goes by, it seems less and less likely. Central banks cannot repair the balance sheets of households and financial institutions. Central banks cannot ensure the sustainability of fiscal finances. And, most of all, central banks cannot enact the structural economic and financial reforms needed to return economies to the real growth paths."
Stephen Cecchetti, head of the BIS's monetary and economic department, recently said that the initial rise in yields for US Treasuries following Mr Bernanke's hints in May that the Fed would slow the pace of its asset purchases "should come as no surprise."
Though he warned market volatility did "create risks," Mr Cecchetti flagged that the reaction of stock markets to the hints had been far from disastrous. "A few months ago this would probably have set equity markets into free-fall, but this time stock prices seemed largely unaffected, suggesting that market participants are quite optimistic about the outlook for the US economy."
Separately, the BIS said Jaime Caruana, its general manager, would remain in office until March 2017. His current five-year term was due to end in March 2017.
Mr Caruana said at the AGM on Sunday: "Ours is a call for acting responsibly now to strengthen growth and avoid even costlier adjustment down the road . . . . Monetary policy has done its part. Recovery now calls for a different policy mix -- with more emphasis on strengthening economic flexibility and dynamism and stabilising public finances."
end
The first commentary is quite a powerful one from Bill Holter. I urge you to read every word carefully as he unleashes a firestorm:
(courtesy Bill Holter/Miles Franklin)
The Great Unwind has finally arrived.
50+ years of credit creation and living beyond our means year after year is finally coming to an end. Ben Bernanke spoke last week regarding "tapering" Treasury and MBS purchases some time next year, the market then immediately reacted. Stocks were sold, bonds were sold, commodities were sold and so were Silver and Gold (much more on this shortly). Did the Fed actually do anything? Did they tighten at all? Has their balance sheet shrunk or even stagnated at all? The answer(s) are an emphatic NO!. The bloodbath last week was merely "front running" on the fear that the Fed will back away and stop administering the crack credit doses that the financial community have become accustomed to. Basically free money and $ trillions of it, can you imagine what will happen should the Fed ACTUALLY slow down or stop giving out free cash so that banks can cover up losses?
Last week was only a preview to what is coming. I personally do not believe that any "tapering" will ever come about, last week's financial action only supports my thesis. Last week happened after only the mention of "tapering", do you think the Fed may now know the end result of an ACTUAL exit strategy? One where the markets would have to fend for itself and be self supporting along with the economy? They do know, the Fed knows that it will be forced again and again to not only continue QE but increase it exponentially. There is one minor "problem", the more they monetize, the less "collateral" (there's that word again) there is available to an economy and financial market that... runs on collateral. Can you imagine the immediate bloodbath of panic selling if the Fed not only stopped purchasing bonds but actually tried to sell some to reduce their own balance sheet? The are now purchasing more than half of the Treasury's new issuance, if they turned seller, who is left as the buyer? What would happen should China's current "cash crunch" cause them to turn seller?
As a result of the mere murmur of slowing QE the most shocking action last week was in the Treasury market. The 10yr ended Friday night at 2.54%, This was a rise of .40 basis points or so and nearly equal to the rise in yield for all of May. May, if you recall was the month where the Fed lost about $115 billion on their bond holdings (certainly far more if they had to mark the non Treasuries to market). The volatility was staggering and without a doubt there are now some dead institutions out there because of how fast and violent the move was. There is $200 trillion outstanding in interest rate derivatives. This past week alone, these contracts on average probably moved more than 5% in value. This would indicate a movement of maybe $10 trillion (with a T) worth of net change from one side to the other in less than 5 days. Do you really believe that this type of "wins and losses" could have occurred without someone, probably "many one's" becoming insolvent? The Fed only purports to have $65 billion of equity capital, between May 1 and now their portfolio has dropped nearly $250 billion. Is this "insolvent"? Yes it is but they have the ability to run the presses so not to worry I guess?
Forget the stock market, the Fed has now lost control of the Treasury market. Interest rates on the 10 year have now gone from just under 1.6% to over 2.5% in a very short period of time. This is now a 60+% rise in rates. Were this truly because the economy was strengthening it would be bad enough but the selling that has come about has nothing to do with the economy. The selling in reality started as "front running" by those smart enough to leave the party while the music was still playing. Now, it is evolving into one gigantic and global margin call. This will feed on itself, winners will not get paid, sovereigns will lose the ability to "fund" and ultimately the global real economy will suffer from the financial implosion.
Before getting to the Gold and Silver travesties I'd like to mention that market "don't just crash" on their own. If you look back to every crash (with the exception of the metals "forced" crashes) of any asset throughout all of history, they all have one thing in common...debt. TOO MUCH debt to be exact. We have now passed the peak of the "debt bubble", there is no question now. Debt got us into the 2008 calamity and the solution was ...MORE debt. Even though the bubble burst back then they were able to reflate it one last time. "They" being central banks and sovereign treasuries. Now, there is no ability anywhere on the planet to reflate. Why? Because there are no sovereign treasuries healthy enough or big enough to be able to issue enough new debt to reflate one more time. It's over, plain and simple.
Gold. For those of you who can remember years back the "4 pillars" that Jim Sinclair always talked about, this, what is happening now, is exactly what he was talking about. The 4th pillar was the U.S. Treasury market and it has now been "pulled". This was the last horse big enough and strong enough to "pull" (push) the economic cart. The only description of the Treasury market last week was "panic" selling and this coming week should be interesting to see how the margin calls are handled. We got a preview back in 2008 and '09 how firms treated each other which ended with Lehman (and many others) being devoured.
So Gold got hit for another $80 and we are told it has no direction to go but down because interest rates are going up...because the economy is so strong. First off, yes I call bullshit on the strong economy story. Secondly, even if the Fed DID want interest rates to go up (they don't) they would never want rates to move like they just did last week. They know that "fast" is a killer (remember the JPM London whale) and firms cannot "adjust" when market prices (yields) move quickly (think margin calls and delta hedging). Firms blow up when this happens and of course then makes the panic selling that much worse. As an interesting aside, "usually" money flows INTO Treasuries when there is fear but not this time, the "fear" IS the Treasury market!
But something just does not add up here. First, we know that physical demand was huge going into this week and now we hear that physical off take has again increased with this latest price takedown. Secondly, if the COMEX numbers are to be believed, the open interest numbers actually went up Fridayo a whopping 10,000+ contracts in Gold and in Silver over 2,000 contracts...but how can this be? If everyone was selling to get out then the open interest would have dropped by these amounts or more, they did not which means that more and more "shorts" piled on. Again, if the CME numbers are to be trusted and are correct then we also have a clue as to "who" the shorts are...the specs (hedge funds) and the commercials look now to finally be on the long side after 15 years on the short side.
Here are a couple of speculations on my part. Is this a trap being set for the shorts? A trap for the commercials (banks) to clean out the hedge funds? Follow this through, in the past the CME would raise margins to pressure the prices of Gold and Silver. I believe that 100% of the time after the CME has raised margin rates, Gold and Silver would get hammered, why didn't they get hammered on Friday? If history was any guide at all they should have but they did not, why? Surely there were margin calls issued Thursdayhnight to be met on Friday and a margin hike on top of that. What the heck happened? Why the difference? ...Maybe because the longs are a different group now than in the past? Maybe because in the past the longs were the hedge funds who would receive margin calls and then cut and run, now maybe the longs have deeper pockets?
And speaking of "deeper pockets", the open interest in Silver continues to stay very high...and even after a 50% drop in price. The longs have now effectively PAID for more than half of the Silver if they met each and every margin call and now stand for delivery. Will July be the month that Silver defaults on the COMEX? There are still 50,000 July contracts outstanding with 1st notice day this Fridayy. This represents 250 million ounces...the dealers only hold about 40 million for delivery. Who, other than a sovereign government (China?) or a collective of sovereigns could have met the margin calls over the last 6-8 months? Have they allowed the short specs to build up and get bolder in their sales? On the Gold side it is interesting to note that JP Morgan has not reported 1 single ounce of Gold entering their dealer depository so far this year...they have 1 week to go before June deliveries must be made and they have a negative 80,000+ ounce deficit to cover. Where will this Gold come from? Could we be set up for the Chinese to stand for delivery from under stocked vaults...and at the same time sell some of their Treasury holdings?
This upcoming week could be a doozy. So many potential train wrecks from so many different directions to keep your eyes on all of them. Just remember that "credit" is what runs everything and it looks like "credit" is now at the center stage of problems. Should rates continue to rise this week in U.S. Treasuries you should expect to see some very major firms run into trouble. This time around it will be real as there are no solvent white knights left with the ability to leverage up and save the day. The U.S. Treasury and Fed are now in the crosshairs, they need to catch a bid this week or they will be at the center of the biggest one time margin call ever! Regards, Bill H.
end
Bill continues with the theme of derivative losses but also discusses the huge story over the weekend that the ESM will be limited to a 60 billion euro rescue PAST and PRESENT. Spain itself was promised 100 billion euros and now must fight with Portugal, and Ireland for the sum promised.
No question about it..the button has been pushed!!!
(courtesy Bill Holter/Miles Franklin)
The button has been pushed...r
This week has started off miserably. China had problems within their banking system last night as bank transfers, ATM's, online banking and wires did not work. Europe announced that their E500 billion bailout fund for banks is no longer the case, they now say that 60 billion Euros will be the limit...retroactively. To put this in perspective, Spain had already been promised 100 billion Euros for their banking system, I guess the money is not coming? Our stock market has started the day down 230 points and the 10yr. Treasury yield is now 2.64%, this is another .12 basis points higher on the day and now nearly 70% higher than it was back in April.
As I wrote over the weekend, this is "one gigantic global margin call". Please understand how many of these interest rate derivatives work. When the rates go against you, "margin" must be posted. By "margin" I mean collateral. Collateral must be shifted from the losing institution to the one on the winning side. When the loser "runs out" of collateral...that is when you get a situation similar to MF Global or Lehman Bros., they are forced to shut down and the vultures then come in and pick the bones clean...normally. Now it is no longer "normal", now a Lehman Bros. will take the whole tent down.
To put in perspective what is happening, Zerohedge calculated that the Fed lost $35 billion this morning alone and $250 billion over the last 2 months http://www.zerohedge.com/news/
end
Your sermon for today, courtesy of Mark Grant
(courtesy Mark Grant/out of the Box)
Deluded Worlds And Unpleasant Realities
Submitted by Tyler Durden on 06/24/2013 08:57 -0400
Submitted by Mark J. Grant, author of Out of the Box,
“Words are, of course, the most powerful drug used by mankind.”
-Rudyard Kipling
In business, in relationships, words spoken or memorialized in the Press, once out there the damage has been done; the consequences on the way to creation. You can't deny them, you can't hide them and you are accountable for what has passed your lips or the roller ball on your pen. This is just the way of it in the world which is why it is always important to not only choose your words carefully but to carefully decide if they should be released into the wild. Words are the Pandora's Box of everyday life.
“Words are like eggs dropped from great heights; you can no more call them back than ignore the mess they leave when they fall.”
-Jodi Picoult
Words also have another fascinating characteristic. When you spit them out you know what you meant. Then someplace in the air between their release and someone hearing or reading them they get jumbled up. What you were trying to communicate is often, and as an author I can tell you with certainty that it is more than one might imagine, that what you were trying to say is not at all what is heard. There have been countless times when I have stared at people's comments about something that I have written and wondered, "Where in God's name did they come up with that?" It is not just "lost in translation" but "lost in space."
“Be silent or let thy words be worth more than silence.”
-Pythagoras
I make these points today for a very important reason. Mr. Bernanke, and it had to come to this eventually, there was no other real choice, has now unleashed the Fates that could no longer be contained and the harpies are free once more. The world had deluded itself that it would never come to pass. The world had also looked at Mr. Draghi's comments as if they were certain prophecy not uttered by Mr. Draghi himself but as if he was just the mouthpiece for some higher divinity that had taken over his body during the length of his famous speech.
In both cases the world had become delusional. In both cases the fantasy has ended and we have been pushed back to our unpleasant reality where one and one still makes two. Living with Alice in Wonderland was certainly more pleasant!
Mr. Bernanke's comment about "things could change" is nothing more than the recital of verse. Of course, thing can always change and he acknowledged what each of us already knew. There were sounds in those sentences worthy of no significant meaning. What was full of the sound and fury of important meaning though was that the dream was over. With his soliloquy of "ending," the dream was shattered and lays now upon the floor all around us like broken shards of razor sharp glass.
You and everyone else will try and step carefully but you are going to get cut because avoidance is impossible.Bonds, stocks, commodities or Real Estate; you are going to bleed. In the same manner as we cannot invest off-world. We cannot avoid being hurt on-world. The real pain of induced withdrawal from the central banks' monetary creation is upon us. The words cannot be taken back. The meat is minced!
Words, once spoken, are no longer your own. Words, strung together, may be the most powerful spells in our kingdom. Two speeches, one in America and one in Europe buoyed the world. One speech made in America has now ended the experiment. No magic wand was needed.
Submitted by cpowell on Sun, 2013-06-23 15:48. Section: Daily Dispatches
The BIS, often referred to as the central bankers' bank, said the global economy was "past the height of the crisis" and that the goal of policy was "to return still-sluggish economies to strong and sustainable growth."
Central Banks Told to Head for Exit
By Claire Jones
Financial Times, London
Sunday, June 23, 2013
Financial Times, London
Sunday, June 23, 2013
Central banks must head for the exit and stop trying to spur a global economic recovery, the organisation representing the world's monetary authorities has warned following a week of market turbulence sparked by the US Federal Reserve's signal that it would soon cut the pace of its bond buying.
The Basel-based Bank for International Settlements used its influential annual report to call on members to re-emphasise their focus on inflation and press governments to do more to spearhead a return to growth.
The report, presented to many of the world's top central bankers in Basel for the BIS's annual meeting at the weekend, follows last week's selloff in equities, bonds, and commodities, fuelled by fears the Fed's tapering would spark a fresh wave of turmoil in global financial markets. Ben Bernanke, the Fed chairman, said last Wednesday that the central bank could slow its $85 billion monthly bond-buying programme this year and end it by mid-2014.
It said cheap and plentiful central bank money had merely bought time, warning that more bond buying would retard the global economy's return to health by delaying adjustments to governments' and households’ balance sheets.
"Alas, central banks cannot do more without compounding the risks they have already created," the BIS said, adding that delivering more "extraordinary" stimulus was "becoming increasingly perilous."
"How can central banks encourage those responsible for structural adjustment to implement those reforms? How can they avoid making the economy too dependent on monetary stimulus? When is the right time for them to pull back . . . [and] how can they avoid sparking a sharp rise in bond yields? It is time for monetary policy to begin answering these questions?," the report said.
Mario Draghi's rallying cry, uttered last summer at the height of the eurozone turmoil, that the European Central Bank would do "whatever it takes" to preserve the currency bloc was now being misconstrued, it warned.
"Can central banks now really do 'whatever it takes'?" the BIS asked. "As each day goes by, it seems less and less likely. Central banks cannot repair the balance sheets of households and financial institutions. Central banks cannot ensure the sustainability of fiscal finances. And, most of all, central banks cannot enact the structural economic and financial reforms needed to return economies to the real growth paths."
Stephen Cecchetti, head of the BIS's monetary and economic department, recently said that the initial rise in yields for US Treasuries following Mr Bernanke's hints in May that the Fed would slow the pace of its asset purchases "should come as no surprise."
Though he warned market volatility did "create risks," Mr Cecchetti flagged that the reaction of stock markets to the hints had been far from disastrous. "A few months ago this would probably have set equity markets into free-fall, but this time stock prices seemed largely unaffected, suggesting that market participants are quite optimistic about the outlook for the US economy."
Separately, the BIS said Jaime Caruana, its general manager, would remain in office until March 2017. His current five-year term was due to end in March 2017.
Mr Caruana said at the AGM on Sunday: "Ours is a call for acting responsibly now to strengthen growth and avoid even costlier adjustment down the road . . . . Monetary policy has done its part. Recovery now calls for a different policy mix -- with more emphasis on strengthening economic flexibility and dynamism and stabilising public finances."
end
The first commentary is quite a powerful one from Bill Holter. I urge you to read every word carefully as he unleashes a firestorm:
(courtesy Bill Holter/Miles Franklin)
The first commentary is quite a powerful one from Bill Holter. I urge you to read every word carefully as he unleashes a firestorm:
(courtesy Bill Holter/Miles Franklin)
(courtesy Bill Holter/Miles Franklin)
The Great Unwind has finally arrived.
50+ years of credit creation and living beyond our means year after year is finally coming to an end. Ben Bernanke spoke last week regarding "tapering" Treasury and MBS purchases some time next year, the market then immediately reacted. Stocks were sold, bonds were sold, commodities were sold and so were Silver and Gold (much more on this shortly). Did the Fed actually do anything? Did they tighten at all? Has their balance sheet shrunk or even stagnated at all? The answer(s) are an emphatic NO!. The bloodbath last week was merely "front running" on the fear that the Fed will back away and stop administering the crack credit doses that the financial community have become accustomed to. Basically free money and $ trillions of it, can you imagine what will happen should the Fed ACTUALLY slow down or stop giving out free cash so that banks can cover up losses?
Last week was only a preview to what is coming. I personally do not believe that any "tapering" will ever come about, last week's financial action only supports my thesis. Last week happened after only the mention of "tapering", do you think the Fed may now know the end result of an ACTUAL exit strategy? One where the markets would have to fend for itself and be self supporting along with the economy? They do know, the Fed knows that it will be forced again and again to not only continue QE but increase it exponentially. There is one minor "problem", the more they monetize, the less "collateral" (there's that word again) there is available to an economy and financial market that... runs on collateral. Can you imagine the immediate bloodbath of panic selling if the Fed not only stopped purchasing bonds but actually tried to sell some to reduce their own balance sheet? The are now purchasing more than half of the Treasury's new issuance, if they turned seller, who is left as the buyer? What would happen should China's current "cash crunch" cause them to turn seller?
As a result of the mere murmur of slowing QE the most shocking action last week was in the Treasury market. The 10yr ended Friday night at 2.54%, This was a rise of .40 basis points or so and nearly equal to the rise in yield for all of May. May, if you recall was the month where the Fed lost about $115 billion on their bond holdings (certainly far more if they had to mark the non Treasuries to market). The volatility was staggering and without a doubt there are now some dead institutions out there because of how fast and violent the move was. There is $200 trillion outstanding in interest rate derivatives. This past week alone, these contracts on average probably moved more than 5% in value. This would indicate a movement of maybe $10 trillion (with a T) worth of net change from one side to the other in less than 5 days. Do you really believe that this type of "wins and losses" could have occurred without someone, probably "many one's" becoming insolvent? The Fed only purports to have $65 billion of equity capital, between May 1 and now their portfolio has dropped nearly $250 billion. Is this "insolvent"? Yes it is but they have the ability to run the presses so not to worry I guess?
Forget the stock market, the Fed has now lost control of the Treasury market. Interest rates on the 10 year have now gone from just under 1.6% to over 2.5% in a very short period of time. This is now a 60+% rise in rates. Were this truly because the economy was strengthening it would be bad enough but the selling that has come about has nothing to do with the economy. The selling in reality started as "front running" by those smart enough to leave the party while the music was still playing. Now, it is evolving into one gigantic and global margin call. This will feed on itself, winners will not get paid, sovereigns will lose the ability to "fund" and ultimately the global real economy will suffer from the financial implosion.
Before getting to the Gold and Silver travesties I'd like to mention that market "don't just crash" on their own. If you look back to every crash (with the exception of the metals "forced" crashes) of any asset throughout all of history, they all have one thing in common...debt. TOO MUCH debt to be exact. We have now passed the peak of the "debt bubble", there is no question now. Debt got us into the 2008 calamity and the solution was ...MORE debt. Even though the bubble burst back then they were able to reflate it one last time. "They" being central banks and sovereign treasuries. Now, there is no ability anywhere on the planet to reflate. Why? Because there are no sovereign treasuries healthy enough or big enough to be able to issue enough new debt to reflate one more time. It's over, plain and simple.
Gold. For those of you who can remember years back the "4 pillars" that Jim Sinclair always talked about, this, what is happening now, is exactly what he was talking about. The 4th pillar was the U.S. Treasury market and it has now been "pulled". This was the last horse big enough and strong enough to "pull" (push) the economic cart. The only description of the Treasury market last week was "panic" selling and this coming week should be interesting to see how the margin calls are handled. We got a preview back in 2008 and '09 how firms treated each other which ended with Lehman (and many others) being devoured.
So Gold got hit for another $80 and we are told it has no direction to go but down because interest rates are going up...because the economy is so strong. First off, yes I call bullshit on the strong economy story. Secondly, even if the Fed DID want interest rates to go up (they don't) they would never want rates to move like they just did last week. They know that "fast" is a killer (remember the JPM London whale) and firms cannot "adjust" when market prices (yields) move quickly (think margin calls and delta hedging). Firms blow up when this happens and of course then makes the panic selling that much worse. As an interesting aside, "usually" money flows INTO Treasuries when there is fear but not this time, the "fear" IS the Treasury market!
But something just does not add up here. First, we know that physical demand was huge going into this week and now we hear that physical off take has again increased with this latest price takedown. Secondly, if the COMEX numbers are to be believed, the open interest numbers actually went up Fridayo a whopping 10,000+ contracts in Gold and in Silver over 2,000 contracts...but how can this be? If everyone was selling to get out then the open interest would have dropped by these amounts or more, they did not which means that more and more "shorts" piled on. Again, if the CME numbers are to be trusted and are correct then we also have a clue as to "who" the shorts are...the specs (hedge funds) and the commercials look now to finally be on the long side after 15 years on the short side.
Here are a couple of speculations on my part. Is this a trap being set for the shorts? A trap for the commercials (banks) to clean out the hedge funds? Follow this through, in the past the CME would raise margins to pressure the prices of Gold and Silver. I believe that 100% of the time after the CME has raised margin rates, Gold and Silver would get hammered, why didn't they get hammered on Friday? If history was any guide at all they should have but they did not, why? Surely there were margin calls issued Thursdayhnight to be met on Friday and a margin hike on top of that. What the heck happened? Why the difference? ...Maybe because the longs are a different group now than in the past? Maybe because in the past the longs were the hedge funds who would receive margin calls and then cut and run, now maybe the longs have deeper pockets?
And speaking of "deeper pockets", the open interest in Silver continues to stay very high...and even after a 50% drop in price. The longs have now effectively PAID for more than half of the Silver if they met each and every margin call and now stand for delivery. Will July be the month that Silver defaults on the COMEX? There are still 50,000 July contracts outstanding with 1st notice day this Fridayy. This represents 250 million ounces...the dealers only hold about 40 million for delivery. Who, other than a sovereign government (China?) or a collective of sovereigns could have met the margin calls over the last 6-8 months? Have they allowed the short specs to build up and get bolder in their sales? On the Gold side it is interesting to note that JP Morgan has not reported 1 single ounce of Gold entering their dealer depository so far this year...they have 1 week to go before June deliveries must be made and they have a negative 80,000+ ounce deficit to cover. Where will this Gold come from? Could we be set up for the Chinese to stand for delivery from under stocked vaults...and at the same time sell some of their Treasury holdings?
This upcoming week could be a doozy. So many potential train wrecks from so many different directions to keep your eyes on all of them. Just remember that "credit" is what runs everything and it looks like "credit" is now at the center stage of problems. Should rates continue to rise this week in U.S. Treasuries you should expect to see some very major firms run into trouble. This time around it will be real as there are no solvent white knights left with the ability to leverage up and save the day. The U.S. Treasury and Fed are now in the crosshairs, they need to catch a bid this week or they will be at the center of the biggest one time margin call ever! Regards, Bill H.
end
Bill continues with the theme of derivative losses but also discusses the huge story over the weekend that the ESM will be limited to a 60 billion euro rescue PAST and PRESENT. Spain itself was promised 100 billion euros and now must fight with Portugal, and Ireland for the sum promised.
No question about it..the button has been pushed!!!
(courtesy Bill Holter/Miles Franklin)
50+ years of credit creation and living beyond our means year after year is finally coming to an end. Ben Bernanke spoke last week regarding "tapering" Treasury and MBS purchases some time next year, the market then immediately reacted. Stocks were sold, bonds were sold, commodities were sold and so were Silver and Gold (much more on this shortly). Did the Fed actually do anything? Did they tighten at all? Has their balance sheet shrunk or even stagnated at all? The answer(s) are an emphatic NO!. The bloodbath last week was merely "front running" on the fear that the Fed will back away and stop administering the crack credit doses that the financial community have become accustomed to. Basically free money and $ trillions of it, can you imagine what will happen should the Fed ACTUALLY slow down or stop giving out free cash so that banks can cover up losses?
Last week was only a preview to what is coming. I personally do not believe that any "tapering" will ever come about, last week's financial action only supports my thesis. Last week happened after only the mention of "tapering", do you think the Fed may now know the end result of an ACTUAL exit strategy? One where the markets would have to fend for itself and be self supporting along with the economy? They do know, the Fed knows that it will be forced again and again to not only continue QE but increase it exponentially. There is one minor "problem", the more they monetize, the less "collateral" (there's that word again) there is available to an economy and financial market that... runs on collateral. Can you imagine the immediate bloodbath of panic selling if the Fed not only stopped purchasing bonds but actually tried to sell some to reduce their own balance sheet? The are now purchasing more than half of the Treasury's new issuance, if they turned seller, who is left as the buyer? What would happen should China's current "cash crunch" cause them to turn seller?
As a result of the mere murmur of slowing QE the most shocking action last week was in the Treasury market. The 10yr ended Friday night at 2.54%, This was a rise of .40 basis points or so and nearly equal to the rise in yield for all of May. May, if you recall was the month where the Fed lost about $115 billion on their bond holdings (certainly far more if they had to mark the non Treasuries to market). The volatility was staggering and without a doubt there are now some dead institutions out there because of how fast and violent the move was. There is $200 trillion outstanding in interest rate derivatives. This past week alone, these contracts on average probably moved more than 5% in value. This would indicate a movement of maybe $10 trillion (with a T) worth of net change from one side to the other in less than 5 days. Do you really believe that this type of "wins and losses" could have occurred without someone, probably "many one's" becoming insolvent? The Fed only purports to have $65 billion of equity capital, between May 1 and now their portfolio has dropped nearly $250 billion. Is this "insolvent"? Yes it is but they have the ability to run the presses so not to worry I guess?
Forget the stock market, the Fed has now lost control of the Treasury market. Interest rates on the 10 year have now gone from just under 1.6% to over 2.5% in a very short period of time. This is now a 60+% rise in rates. Were this truly because the economy was strengthening it would be bad enough but the selling that has come about has nothing to do with the economy. The selling in reality started as "front running" by those smart enough to leave the party while the music was still playing. Now, it is evolving into one gigantic and global margin call. This will feed on itself, winners will not get paid, sovereigns will lose the ability to "fund" and ultimately the global real economy will suffer from the financial implosion.
Before getting to the Gold and Silver travesties I'd like to mention that market "don't just crash" on their own. If you look back to every crash (with the exception of the metals "forced" crashes) of any asset throughout all of history, they all have one thing in common...debt. TOO MUCH debt to be exact. We have now passed the peak of the "debt bubble", there is no question now. Debt got us into the 2008 calamity and the solution was ...MORE debt. Even though the bubble burst back then they were able to reflate it one last time. "They" being central banks and sovereign treasuries. Now, there is no ability anywhere on the planet to reflate. Why? Because there are no sovereign treasuries healthy enough or big enough to be able to issue enough new debt to reflate one more time. It's over, plain and simple.
Gold. For those of you who can remember years back the "4 pillars" that Jim Sinclair always talked about, this, what is happening now, is exactly what he was talking about. The 4th pillar was the U.S. Treasury market and it has now been "pulled". This was the last horse big enough and strong enough to "pull" (push) the economic cart. The only description of the Treasury market last week was "panic" selling and this coming week should be interesting to see how the margin calls are handled. We got a preview back in 2008 and '09 how firms treated each other which ended with Lehman (and many others) being devoured.
So Gold got hit for another $80 and we are told it has no direction to go but down because interest rates are going up...because the economy is so strong. First off, yes I call bullshit on the strong economy story. Secondly, even if the Fed DID want interest rates to go up (they don't) they would never want rates to move like they just did last week. They know that "fast" is a killer (remember the JPM London whale) and firms cannot "adjust" when market prices (yields) move quickly (think margin calls and delta hedging). Firms blow up when this happens and of course then makes the panic selling that much worse. As an interesting aside, "usually" money flows INTO Treasuries when there is fear but not this time, the "fear" IS the Treasury market!
But something just does not add up here. First, we know that physical demand was huge going into this week and now we hear that physical off take has again increased with this latest price takedown. Secondly, if the COMEX numbers are to be believed, the open interest numbers actually went up Fridayo a whopping 10,000+ contracts in Gold and in Silver over 2,000 contracts...but how can this be? If everyone was selling to get out then the open interest would have dropped by these amounts or more, they did not which means that more and more "shorts" piled on. Again, if the CME numbers are to be trusted and are correct then we also have a clue as to "who" the shorts are...the specs (hedge funds) and the commercials look now to finally be on the long side after 15 years on the short side.
Here are a couple of speculations on my part. Is this a trap being set for the shorts? A trap for the commercials (banks) to clean out the hedge funds? Follow this through, in the past the CME would raise margins to pressure the prices of Gold and Silver. I believe that 100% of the time after the CME has raised margin rates, Gold and Silver would get hammered, why didn't they get hammered on Friday? If history was any guide at all they should have but they did not, why? Surely there were margin calls issued Thursdayhnight to be met on Friday and a margin hike on top of that. What the heck happened? Why the difference? ...Maybe because the longs are a different group now than in the past? Maybe because in the past the longs were the hedge funds who would receive margin calls and then cut and run, now maybe the longs have deeper pockets?
And speaking of "deeper pockets", the open interest in Silver continues to stay very high...and even after a 50% drop in price. The longs have now effectively PAID for more than half of the Silver if they met each and every margin call and now stand for delivery. Will July be the month that Silver defaults on the COMEX? There are still 50,000 July contracts outstanding with 1st notice day this Fridayy. This represents 250 million ounces...the dealers only hold about 40 million for delivery. Who, other than a sovereign government (China?) or a collective of sovereigns could have met the margin calls over the last 6-8 months? Have they allowed the short specs to build up and get bolder in their sales? On the Gold side it is interesting to note that JP Morgan has not reported 1 single ounce of Gold entering their dealer depository so far this year...they have 1 week to go before June deliveries must be made and they have a negative 80,000+ ounce deficit to cover. Where will this Gold come from? Could we be set up for the Chinese to stand for delivery from under stocked vaults...and at the same time sell some of their Treasury holdings?
This upcoming week could be a doozy. So many potential train wrecks from so many different directions to keep your eyes on all of them. Just remember that "credit" is what runs everything and it looks like "credit" is now at the center stage of problems. Should rates continue to rise this week in U.S. Treasuries you should expect to see some very major firms run into trouble. This time around it will be real as there are no solvent white knights left with the ability to leverage up and save the day. The U.S. Treasury and Fed are now in the crosshairs, they need to catch a bid this week or they will be at the center of the biggest one time margin call ever! Regards, Bill H.
end
Bill continues with the theme of derivative losses but also discusses the huge story over the weekend that the ESM will be limited to a 60 billion euro rescue PAST and PRESENT. Spain itself was promised 100 billion euros and now must fight with Portugal, and Ireland for the sum promised.
No question about it..the button has been pushed!!!
(courtesy Bill Holter/Miles Franklin)
The button has been pushed...r
This week has started off miserably. China had problems within their banking system last night as bank transfers, ATM's, online banking and wires did not work. Europe announced that their E500 billion bailout fund for banks is no longer the case, they now say that 60 billion Euros will be the limit...retroactively. To put this in perspective, Spain had already been promised 100 billion Euros for their banking system, I guess the money is not coming? Our stock market has started the day down 230 points and the 10yr. Treasury yield is now 2.64%, this is another .12 basis points higher on the day and now nearly 70% higher than it was back in April.
As I wrote over the weekend, this is "one gigantic global margin call". Please understand how many of these interest rate derivatives work. When the rates go against you, "margin" must be posted. By "margin" I mean collateral. Collateral must be shifted from the losing institution to the one on the winning side. When the loser "runs out" of collateral...that is when you get a situation similar to MF Global or Lehman Bros., they are forced to shut down and the vultures then come in and pick the bones clean...normally. Now it is no longer "normal", now a Lehman Bros. will take the whole tent down.
To put in perspective what is happening, Zerohedge calculated that the Fed lost $35 billion this morning alone and $250 billion over the last 2 months http://www.zerohedge.com/news/
end
Your sermon for today, courtesy of Mark Grant
(courtesy Mark Grant/out of the Box)
Deluded Worlds And Unpleasant Realities
Submitted by Tyler Durden on 06/24/2013 08:57 -0400
Submitted by Mark J. Grant, author of Out of the Box,
“Words are, of course, the most powerful drug used by mankind.”
-Rudyard Kipling
In business, in relationships, words spoken or memorialized in the Press, once out there the damage has been done; the consequences on the way to creation. You can't deny them, you can't hide them and you are accountable for what has passed your lips or the roller ball on your pen. This is just the way of it in the world which is why it is always important to not only choose your words carefully but to carefully decide if they should be released into the wild. Words are the Pandora's Box of everyday life.
“Words are like eggs dropped from great heights; you can no more call them back than ignore the mess they leave when they fall.”
-Jodi Picoult
Words also have another fascinating characteristic. When you spit them out you know what you meant. Then someplace in the air between their release and someone hearing or reading them they get jumbled up. What you were trying to communicate is often, and as an author I can tell you with certainty that it is more than one might imagine, that what you were trying to say is not at all what is heard. There have been countless times when I have stared at people's comments about something that I have written and wondered, "Where in God's name did they come up with that?" It is not just "lost in translation" but "lost in space."
“Be silent or let thy words be worth more than silence.”
-Pythagoras
I make these points today for a very important reason. Mr. Bernanke, and it had to come to this eventually, there was no other real choice, has now unleashed the Fates that could no longer be contained and the harpies are free once more. The world had deluded itself that it would never come to pass. The world had also looked at Mr. Draghi's comments as if they were certain prophecy not uttered by Mr. Draghi himself but as if he was just the mouthpiece for some higher divinity that had taken over his body during the length of his famous speech.
In both cases the world had become delusional. In both cases the fantasy has ended and we have been pushed back to our unpleasant reality where one and one still makes two. Living with Alice in Wonderland was certainly more pleasant!
Mr. Bernanke's comment about "things could change" is nothing more than the recital of verse. Of course, thing can always change and he acknowledged what each of us already knew. There were sounds in those sentences worthy of no significant meaning. What was full of the sound and fury of important meaning though was that the dream was over. With his soliloquy of "ending," the dream was shattered and lays now upon the floor all around us like broken shards of razor sharp glass.
You and everyone else will try and step carefully but you are going to get cut because avoidance is impossible.Bonds, stocks, commodities or Real Estate; you are going to bleed. In the same manner as we cannot invest off-world. We cannot avoid being hurt on-world. The real pain of induced withdrawal from the central banks' monetary creation is upon us. The words cannot be taken back. The meat is minced!
Words, once spoken, are no longer your own. Words, strung together, may be the most powerful spells in our kingdom. Two speeches, one in America and one in Europe buoyed the world. One speech made in America has now ended the experiment. No magic wand was needed.
This week has started off miserably. China had problems within their banking system last night as bank transfers, ATM's, online banking and wires did not work. Europe announced that their E500 billion bailout fund for banks is no longer the case, they now say that 60 billion Euros will be the limit...retroactively. To put this in perspective, Spain had already been promised 100 billion Euros for their banking system, I guess the money is not coming? Our stock market has started the day down 230 points and the 10yr. Treasury yield is now 2.64%, this is another .12 basis points higher on the day and now nearly 70% higher than it was back in April.
As I wrote over the weekend, this is "one gigantic global margin call". Please understand how many of these interest rate derivatives work. When the rates go against you, "margin" must be posted. By "margin" I mean collateral. Collateral must be shifted from the losing institution to the one on the winning side. When the loser "runs out" of collateral...that is when you get a situation similar to MF Global or Lehman Bros., they are forced to shut down and the vultures then come in and pick the bones clean...normally. Now it is no longer "normal", now a Lehman Bros. will take the whole tent down.
To put in perspective what is happening, Zerohedge calculated that the Fed lost $35 billion this morning alone and $250 billion over the last 2 months http://www.zerohedge.com/news/
Can you see what is happening? The "button has been pushed" either on purpose, inadvertently or because "they had to". Banking laws over the last 3 months have been altered to allow "bail ins" where depositors lose rather than governments "bailing out" losing banks. Do you think that these laws were changed by mistake? Or inadvertently? No, the laws were changed because they KNEW this was coming. Now control has been lost in the sovereign government bond markets which are creating "losers" all over the place. The problem now is that the entire world's banking system is a chain, a daisy chain where if one goes down...they all go down. Yes yes I know, there are those running around saying "but we are hedged"...so there is nothing to worry about. Really? Someone, somewhere is on the losing side of the trade. With over a $1 quadrillion (with a big fat capital Q) derivatives market a 5% move creates over $50 trillion worth of winners and losers. Do you know of any institution that could absorb even a small piece of this? What if a JP Morgan took only 2% of this loss, could they pony up $1 trillion? Maybe... and only... if they could use customer funds would be my first thought
Unfortunately it looks like the U.S. Treasury market is experiencing some forced selling. This may abate and we may get a rally where everyone thinks "whew, that was close". This happens almost always during a crash sequence. "The worst is over" and confidence briefly comes back, this would not surprise me at all. Don't be fooled by this however as the detonation has already occurred and cannot be reversed.
I must confess that I had no idea that China's banking system went into seizure mode until I woke up this morning. I mention this because as you know I believe that when this comes it will be a Monday morning event. Will it be China? Japan or Europe? Surely not the U.S.?! Will it be the banks? Or will it be a broker, insurance company or even a sovereign govt. itself? I don't know and it really doesn't matter because the result will be the same no matter where "the chain breaks".
Please ask yourself this question, "if I woke up this Monday morning, today, in retrospect, and the world had blown up financially over the weekend where the banks did not open for whatever reason...would I have been ready for it? Maybe a bad question because NO ONE can ever really be ready for it but have you done everything that you think necessary? This is a very real question. What would you be doing right now if the banks didn't open this morning? Would you go to work? Would you be going nuts and trying to scramble to figure out a way to buy food for the next week? Would you be calling your broker to see if they could cut you a check (which no bank could cash until "later")? What would you be doing?
I could go on and on but you really do need to ask yourself this question now because the threat is not only real, mathematically this is what will come...whether you are ready or not. Regards, Bill H.
end
Your sermon for today, courtesy of Mark Grant
(courtesy Mark Grant/out of the Box)
Your sermon for today, courtesy of Mark Grant
(courtesy Mark Grant/out of the Box)
Deluded Worlds And Unpleasant Realities
Submitted by Tyler Durden on 06/24/2013 08:57 -0400
Submitted by Mark J. Grant, author of Out of the Box,
“Words are, of course, the most powerful drug used by mankind.”
-Rudyard Kipling
In business, in relationships, words spoken or memorialized in the Press, once out there the damage has been done; the consequences on the way to creation. You can't deny them, you can't hide them and you are accountable for what has passed your lips or the roller ball on your pen. This is just the way of it in the world which is why it is always important to not only choose your words carefully but to carefully decide if they should be released into the wild. Words are the Pandora's Box of everyday life.
“Words are like eggs dropped from great heights; you can no more call them back than ignore the mess they leave when they fall.”
-Jodi Picoult
Words also have another fascinating characteristic. When you spit them out you know what you meant. Then someplace in the air between their release and someone hearing or reading them they get jumbled up. What you were trying to communicate is often, and as an author I can tell you with certainty that it is more than one might imagine, that what you were trying to say is not at all what is heard. There have been countless times when I have stared at people's comments about something that I have written and wondered, "Where in God's name did they come up with that?" It is not just "lost in translation" but "lost in space."
“Be silent or let thy words be worth more than silence.”
-Pythagoras
I make these points today for a very important reason. Mr. Bernanke, and it had to come to this eventually, there was no other real choice, has now unleashed the Fates that could no longer be contained and the harpies are free once more. The world had deluded itself that it would never come to pass. The world had also looked at Mr. Draghi's comments as if they were certain prophecy not uttered by Mr. Draghi himself but as if he was just the mouthpiece for some higher divinity that had taken over his body during the length of his famous speech.
In both cases the world had become delusional. In both cases the fantasy has ended and we have been pushed back to our unpleasant reality where one and one still makes two. Living with Alice in Wonderland was certainly more pleasant!
Mr. Bernanke's comment about "things could change" is nothing more than the recital of verse. Of course, thing can always change and he acknowledged what each of us already knew. There were sounds in those sentences worthy of no significant meaning. What was full of the sound and fury of important meaning though was that the dream was over. With his soliloquy of "ending," the dream was shattered and lays now upon the floor all around us like broken shards of razor sharp glass.
You and everyone else will try and step carefully but you are going to get cut because avoidance is impossible.Bonds, stocks, commodities or Real Estate; you are going to bleed. In the same manner as we cannot invest off-world. We cannot avoid being hurt on-world. The real pain of induced withdrawal from the central banks' monetary creation is upon us. The words cannot be taken back. The meat is minced!
Words, once spoken, are no longer your own. Words, strung together, may be the most powerful spells in our kingdom. Two speeches, one in America and one in Europe buoyed the world. One speech made in America has now ended the experiment. No magic wand was needed.
Submitted by Mark J. Grant, author of Out of the Box,
“Words are, of course, the most powerful drug used by mankind.”
-Rudyard Kipling
In business, in relationships, words spoken or memorialized in the Press, once out there the damage has been done; the consequences on the way to creation. You can't deny them, you can't hide them and you are accountable for what has passed your lips or the roller ball on your pen. This is just the way of it in the world which is why it is always important to not only choose your words carefully but to carefully decide if they should be released into the wild. Words are the Pandora's Box of everyday life.
“Words are like eggs dropped from great heights; you can no more call them back than ignore the mess they leave when they fall.”
-Jodi Picoult
Words also have another fascinating characteristic. When you spit them out you know what you meant. Then someplace in the air between their release and someone hearing or reading them they get jumbled up. What you were trying to communicate is often, and as an author I can tell you with certainty that it is more than one might imagine, that what you were trying to say is not at all what is heard. There have been countless times when I have stared at people's comments about something that I have written and wondered, "Where in God's name did they come up with that?" It is not just "lost in translation" but "lost in space."
“Be silent or let thy words be worth more than silence.”
-Pythagoras
I make these points today for a very important reason. Mr. Bernanke, and it had to come to this eventually, there was no other real choice, has now unleashed the Fates that could no longer be contained and the harpies are free once more. The world had deluded itself that it would never come to pass. The world had also looked at Mr. Draghi's comments as if they were certain prophecy not uttered by Mr. Draghi himself but as if he was just the mouthpiece for some higher divinity that had taken over his body during the length of his famous speech.
In both cases the world had become delusional. In both cases the fantasy has ended and we have been pushed back to our unpleasant reality where one and one still makes two. Living with Alice in Wonderland was certainly more pleasant!
Mr. Bernanke's comment about "things could change" is nothing more than the recital of verse. Of course, thing can always change and he acknowledged what each of us already knew. There were sounds in those sentences worthy of no significant meaning. What was full of the sound and fury of important meaning though was that the dream was over. With his soliloquy of "ending," the dream was shattered and lays now upon the floor all around us like broken shards of razor sharp glass.
You and everyone else will try and step carefully but you are going to get cut because avoidance is impossible.Bonds, stocks, commodities or Real Estate; you are going to bleed. In the same manner as we cannot invest off-world. We cannot avoid being hurt on-world. The real pain of induced withdrawal from the central banks' monetary creation is upon us. The words cannot be taken back. The meat is minced!
Words, once spoken, are no longer your own. Words, strung together, may be the most powerful spells in our kingdom. Two speeches, one in America and one in Europe buoyed the world. One speech made in America has now ended the experiment. No magic wand was needed.
-Rudyard Kipling
In business, in relationships, words spoken or memorialized in the Press, once out there the damage has been done; the consequences on the way to creation. You can't deny them, you can't hide them and you are accountable for what has passed your lips or the roller ball on your pen. This is just the way of it in the world which is why it is always important to not only choose your words carefully but to carefully decide if they should be released into the wild. Words are the Pandora's Box of everyday life.
“Words are like eggs dropped from great heights; you can no more call them back than ignore the mess they leave when they fall.”
-Jodi Picoult
Words also have another fascinating characteristic. When you spit them out you know what you meant. Then someplace in the air between their release and someone hearing or reading them they get jumbled up. What you were trying to communicate is often, and as an author I can tell you with certainty that it is more than one might imagine, that what you were trying to say is not at all what is heard. There have been countless times when I have stared at people's comments about something that I have written and wondered, "Where in God's name did they come up with that?" It is not just "lost in translation" but "lost in space."
“Be silent or let thy words be worth more than silence.”
-Pythagoras
I make these points today for a very important reason. Mr. Bernanke, and it had to come to this eventually, there was no other real choice, has now unleashed the Fates that could no longer be contained and the harpies are free once more. The world had deluded itself that it would never come to pass. The world had also looked at Mr. Draghi's comments as if they were certain prophecy not uttered by Mr. Draghi himself but as if he was just the mouthpiece for some higher divinity that had taken over his body during the length of his famous speech.
In both cases the world had become delusional. In both cases the fantasy has ended and we have been pushed back to our unpleasant reality where one and one still makes two. Living with Alice in Wonderland was certainly more pleasant!
Mr. Bernanke's comment about "things could change" is nothing more than the recital of verse. Of course, thing can always change and he acknowledged what each of us already knew. There were sounds in those sentences worthy of no significant meaning. What was full of the sound and fury of important meaning though was that the dream was over. With his soliloquy of "ending," the dream was shattered and lays now upon the floor all around us like broken shards of razor sharp glass.
You and everyone else will try and step carefully but you are going to get cut because avoidance is impossible.Bonds, stocks, commodities or Real Estate; you are going to bleed. In the same manner as we cannot invest off-world. We cannot avoid being hurt on-world. The real pain of induced withdrawal from the central banks' monetary creation is upon us. The words cannot be taken back. The meat is minced!
Words, once spoken, are no longer your own. Words, strung together, may be the most powerful spells in our kingdom. Two speeches, one in America and one in Europe buoyed the world. One speech made in America has now ended the experiment. No magic wand was needed.
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