http://harveyorgan.blogspot.com/2013/07/july-152013gld-spots-its-bleedinggofo.html
Gold closed up $6.30 to $1283.80 (comex closing time ). Silver is up by 5 cents to $19.83 (comex closing time)
In the access market at 5:00 pm, gold and silver finished trading at the following prices :
gold: $1283.20
At the Comex, the open interest in silver fell by 1157 contracts to 131,994.
Tonight, the Comex registered or dealer inventory of gold rises above 1 million oz to 1,003,240 oz or 31.20 tonnes. This is still dangerously low. The total of all gold at the comex (dealer and customer) falls slightly and registers a reading of 7.109 million oz or 221.11 tonnes of gold.
JPMorgan's customer inventory remains constant at 136,380.609 oz or 4.24 tonnes. It's dealer inventory also remains constant at 401,877.493 oz but it still must settle upon contracts issued in the May and June delivery month which far exceeds its inventory.
The total of the 3 major gold bullion dealers( Scotia , HSBC and JPMorgan) in its Comex gold dealer account registers only 26.56 tonnes of gold. The total of all of the dealers remains tonight at 31.20 tonnes!! Brinks continues to record a low of only 4.18 tonnes in its dealer account.
JPMorgan's customer inventory is now at a extremely low 136.38 million oz or 4.24 tonnes of gold.
The GLD reported no loss in inventory tonight with an inventory reading of 939.07 tonnes of gold. We gained 1.93 million oz silver inventory at the SLV
and this from Dave Kranzler of the GoldenTruth:
"GOFO negative for 6th day in a row
It also increased in negativity from Friday. New territory here folks. With the managed money hedge fund category gross short Comex gold a record amount (it went up again last week) and the big banks net long Comex gold for the 1st time since Nov 2001, it's only a matter of time before this explodes to the upside."
***
Today we have physical commentaries from Turd Ferguson and Felix Moreno.
Dr Craig Roberts and Art Cashin have a good discussion on gold with Eric King.
Ned Naylor Leyland discusses the broken monetary system with Alasdair Macleod. Alan Seccombe discusses the deteriorating financial scene in the mining sector of South Africa.
And finally, another great commentary from Bill Holter on gold.
On the paper side of things, we have a commentary from Mark Grant, on what to expect after the German elections Sept 22.2013 and another great discussion with Bill Black and Adam Taggart, as they tackle the criminal enterprise of the banking sector.
The total gold comex open interest rose by 3825 contracts from 429,870 up to 433,695 with gold falling in price by $3.30 on Friday. The large specs are slowly being let to the slaughterhouse. We are now into the the non active July contract and here the OI rests at 105 down 4 contracts . We had 5 delivery notices filed on Friday so in essence we gained 1 contract or 100 oz gold additional ounces will stand for the July delivery month. The next active delivery month for gold is August and here the OI fell by 13,892 contracts from 174,730 down to 160,838 as we are less than 2 1/2 weeks away from first day notice for the August contract month. The estimated volume today was poor at 127,911 contracts. The confirmed volume on Friday was also poor at 163,715.
The total silver Comex OI fell by 1157 contracts with silver falling in price on Friday by 16 cents. The total of all comex silver OI stands at 131,994 contracts. We are now into the big delivery month of July and here the OI fell by 35 contracts down to 932. We had 56 notices filed on Friday so in essence we gained 21 contracts or 105,000 additional silver oz will stand for the July delivery month. The next big delivery month is September and here the OI fell by 767 contracts down to 78,697. The estimated volume today was anemic coming in at 24,724 contracts. The confirmed volume on Friday was also anemic at 30,942.
We had 0 customer deposits today :
total customer deposits: nil oz
we had 1 customer withdrawals
i) out of HSBC: 64.30 oz
Total Customer withdrawals: 64.30 oz
Today we had 1 adjustments
i) out of HSBC: 16,675.526 oz was adjusted out of the customer and into the dealer account at HSBC.
Thus tonight we have the following JPMorgan gold inventory which remains constant: (same as Friday's level)
JPM dealer inventory: 401,877.493 oz 12.50 tonnes
JPM customer inventory: 136,380.609 oz or 4.24 tonnes
As we reported to you 5 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 (May 28), 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
and on, June 28.2013 we had 4,817.251 oz leave jPMorgan customer account
and on Friday July 5.2013: we had 6,831.54 oz leave jPMorgan customer account
Summary for the last week of issuance from JPMorgan:
On Friday, June 28th we had 23 notices filed and all of these were issued by JPMorgan on the customer side.
Tuesday we had 24 contracts were issued and all from the dealer or house account.
Thursday, 20 contracts were issued and all from JPMorgan's dealer or house account.
Friday,we had 10 contracts were issued and all from JPMorgan's dealer or house account.
In summary on the customer side of things for JPMorgan:
On Friday, the 28th of June, I reported that we had from the beginning of June, 2543 notices or 254,300 oz issued. If we add the 71,611.00 oz owing from May issuance, we get 325,911 oz. If we subtract the actual withdrawal of gold from JPMorgan of 229,493.75 (which includes the June 28th withdrawal customer side 6,831.54), this still leaves 96,417.25 oz that needs to be settled upon from the vaults of JPMorgan customer side.
The total dealer comex gold remains constant tonight below 1 million oz at 986.464 oz or 30.68 tonnes of gold.The total of all comex gold, dealer and customer falls slightly again tonight to 7.109 million oz or 221.14 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(dealer account) since first day notice and not yet subtracted out of inventory.
Tuesday, July 2: 24 contracts (notices) were issued by JPMorgan's dealer or house account.
Wednesday: July 3: 20 contracts were issued by JPMorgan's dealer or house account.
Friday: July 5: 10 contracts were issued byJPMorgan's dealer our house account.
You will also recall 5 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, 68,444.61 oz was either withdrawn or adjusted out(on the dealer side), leaving the dealer side at 401,877.493 oz where it sits tonight.
On the dealer side here are the last 25 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). Their dealer gold remains at 26.046 tonnes tonight
i) Scotia: 199,539.37 oz or 6.206 tonnes
ii) HSBC: 252,843.678 or 7.86 tonnes (prev 236,168.152 oz or 7.34 tonnes)
iii) JPMorgan: 401,877.493 oz or 12.50 tonnes
total: 26.56 tonnes
Brinks dealer account which did have the lions share of the dealer gold remains tonight at 134,524.79 oz or 4.18 tonnes (last Friday they had over 13 tonnes and today only 4.18 tonnes!!)
Today we had 0 notices served upon our longs for nil oz of gold(and none were issued by JPMorgan from neither their dealer nor customer account). In order to calculate what I believe will stand for delivery in July, I take the total number of notices served (86) x 100 oz per contract to give us 8600 oz served + I take the OI remaining for July (105) and subtract out today's notices (0) which leaves us with 105 notices still left to be served upon our longs.
Thus we have the following gold ounces standing for metal:
86 contracts served x 100 oz = 8,600 oz, + 105 contracts left to be served upon x 100 oz = 10,500 oz to give us 19,100 oz or 0.5940 tonnes of gold. We gained 100 gold ounces standing for July.
Ladies and Gentlemen: we have a three-fold problem:
i) the total dealer inventory of gold remains at a very dangerously low level of only 31.22 tonnes and none of the 9.5 tonnes delivery notices from May and the major part of the 30.70 tonnes from June issued by JPM on its dealer side has yet to leave.
ii) a) JPMorgan's customer inventory remains at an extremely low 136,380.609 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 401,877.493 oz. However all of this gold has been spoken for plus an additional 98,122.51 oz of deficient gold.
iii) the 3 major bullion banks have collectively only 26.56 tonnes of gold left in their dealer account.
i) Out of CNT 102,090.50 oz
ii) Out of Delaware: 25,103.617 oz
total customer withdrawal : 127,194.117 oz
Now let us check on gold inventories at the GLD first:
July 15.2013: good news!! we lost no gold today
The physical gold at the GLD may be gone ! ! :
July 12:2013: we lost no gold today
Monday, July 15, 2013
July 15.2013:/GLD spots its bleeding/GOFO still negative for 6 days/Gold and silver rise today/
Good evening Ladies and Gentlemen:
Gold closed up $6.30 to $1283.80 (comex closing time ). Silver is up by 5 cents to $19.83 (comex closing time)
In the access market at 5:00 pm, gold and silver finished trading at the following prices :
gold: $1283.20
silver: $19.93
At the Comex, the open interest in silver fell by 1157 contracts to 131,994.
The open interest on the entire gold comex contracts rose by 3825 contracts to 433,695 with gold's fall in price of $3.30 on Friday.
Tonight, the Comex registered or dealer inventory of gold rises above 1 million oz to 1,003,240 oz or 31.20 tonnes. This is still dangerously low. The total of all gold at the comex (dealer and customer) falls slightly and registers a reading of 7.109 million oz or 221.11 tonnes of gold.
JPMorgan's customer inventory remains constant at 136,380.609 oz or 4.24 tonnes. It's dealer inventory also remains constant at 401,877.493 oz but it still must settle upon contracts issued in the May and June delivery month which far exceeds its inventory.
The total of the 3 major gold bullion dealers( Scotia , HSBC and JPMorgan) in its Comex gold dealer account registers only 26.56 tonnes of gold. The total of all of the dealers remains tonight at 31.20 tonnes!! Brinks continues to record a low of only 4.18 tonnes in its dealer account.
JPMorgan's customer inventory is now at a extremely low 136.38 million oz or 4.24 tonnes of gold.
The GLD reported no loss in inventory tonight with an inventory reading of 939.07 tonnes of gold. We gained 1.93 million oz silver inventory at the SLV
and this from Dave Kranzler of the GoldenTruth:
"GOFO negative for 6th day in a row
It also increased in negativity from Friday. New territory here folks. With the managed money hedge fund category gross short Comex gold a record amount (it went up again last week) and the big banks net long Comex gold for the 1st time since Nov 2001, it's only a matter of time before this explodes to the upside."
***
Dr Craig Roberts and Art Cashin have a good discussion on gold with Eric King.
Ned Naylor Leyland discusses the broken monetary system with Alasdair Macleod. Alan Seccombe discusses the deteriorating financial scene in the mining sector of South Africa.
And finally, another great commentary from Bill Holter on gold.
On the paper side of things, we have a commentary from Mark Grant, on what to expect after the German elections Sept 22.2013 and another great discussion with Bill Black and Adam Taggart, as they tackle the criminal enterprise of the banking sector.
We will go over these and many other stories today, 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 rose by 3825 contracts from 429,870 up to 433,695 with gold falling in price by $3.30 on Friday. The large specs are slowly being let to the slaughterhouse. We are now into the the non active July contract and here the OI rests at 105 down 4 contracts . We had 5 delivery notices filed on Friday so in essence we gained 1 contract or 100 oz gold additional ounces will stand for the July delivery month. The next active delivery month for gold is August and here the OI fell by 13,892 contracts from 174,730 down to 160,838 as we are less than 2 1/2 weeks away from first day notice for the August contract month. The estimated volume today was poor at 127,911 contracts. The confirmed volume on Friday was also poor at 163,715.
The total silver Comex OI fell by 1157 contracts with silver falling in price on Friday by 16 cents. The total of all comex silver OI stands at 131,994 contracts. We are now into the big delivery month of July and here the OI fell by 35 contracts down to 932. We had 56 notices filed on Friday so in essence we gained 21 contracts or 105,000 additional silver oz will stand for the July delivery month. The next big delivery month is September and here the OI fell by 767 contracts down to 78,697. The estimated volume today was anemic coming in at 24,724 contracts. The confirmed volume on Friday was also anemic at 30,942.
Comex gold/May contract month:
July 15/2013
the July contract month
the July contract month
Ounces
| |
Withdrawals from Dealers Inventory in oz
|
nil
|
Withdrawals from Customer Inventory in oz
|
64.30 (HSBC)
|
Deposits to the Dealer Inventory in oz
|
nil
|
Deposits to the Customer Inventory, in oz
| nil |
No of oz served (contracts) today
|
0 ( nil oz)
|
No of oz to be served (notices)
|
105 (10,500 oz)
|
Total monthly oz gold served (contracts) so far this month
|
86 (8,600 oz)
|
Total accumulative withdrawal of gold from the Dealers inventory this month
|
329,994.08 oz
|
Total accumulative withdrawal of gold from the Customer inventory this month
| 335,306.17 oz |
We had poor activity at the gold vaults
The dealer had 0 deposits and no dealer withdrawal
We had 0 customer deposits today :
total customer deposits: nil oz
we had 1 customer withdrawals
i) out of HSBC: 64.30 oz
Total Customer withdrawals: 64.30 oz
Today we had 1 adjustments
i) out of HSBC: 16,675.526 oz was adjusted out of the customer and into the dealer account at HSBC.
Thus tonight we have the following JPMorgan gold inventory which remains constant: (same as Friday's level)
JPM dealer inventory: 401,877.493 oz 12.50 tonnes
JPM customer inventory: 136,380.609 oz or 4.24 tonnes
As we reported to you 5 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 (May 28), 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
and on, June 28.2013 we had 4,817.251 oz leave jPMorgan customer account
and on Friday July 5.2013: we had 6,831.54 oz leave jPMorgan customer account
Summary for the last week of issuance from JPMorgan:
On Friday, June 28th we had 23 notices filed and all of these were issued by JPMorgan on the customer side.
Tuesday we had 24 contracts were issued and all from the dealer or house account.
Thursday, 20 contracts were issued and all from JPMorgan's dealer or house account.
Friday,we had 10 contracts were issued and all from JPMorgan's dealer or house account.
In summary on the customer side of things for JPMorgan:
On Friday, the 28th of June, I reported that we had from the beginning of June, 2543 notices or 254,300 oz issued. If we add the 71,611.00 oz owing from May issuance, we get 325,911 oz. If we subtract the actual withdrawal of gold from JPMorgan of 229,493.75 (which includes the June 28th withdrawal customer side 6,831.54), this still leaves 96,417.25 oz that needs to be settled upon from the vaults of JPMorgan customer side.
The total dealer comex gold remains constant tonight below 1 million oz at 986.464 oz or 30.68 tonnes of gold.The total of all comex gold, dealer and customer falls slightly again tonight to 7.109 million oz or 221.14 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(dealer account) since first day notice and not yet subtracted out of inventory.
Tuesday, July 2: 24 contracts (notices) were issued by JPMorgan's dealer or house account.
Wednesday: July 3: 20 contracts were issued by JPMorgan's dealer or house account.
Friday: July 5: 10 contracts were issued byJPMorgan's dealer our house account.
You will also recall 5 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, 68,444.61 oz was either withdrawn or adjusted out(on the dealer side), leaving the dealer side at 401,877.493 oz where it sits tonight.
On the dealer side here are the last 25 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
Tuesday: 0
Wednesday: 0
Thursday:0
Friday: 0
Monday: 0
Tuesday: 24
Wednesday: 20
Thursday/Friday: 10
Monday: 0
Tuesday: 0
Wednesday:0
Thursday: 0
Friday: 0
Friday: 0
Monday: 0 .
Tuesday: 0
Wednesday: 0
Thursday: 0
Friday: 0
Monday:0
Tuesday: 0
Wednesday: 0
Thursday:0
Friday: 0
Monday: 0
Tuesday: 24
Wednesday: 20
Thursday/Friday: 10
Monday: 0
Tuesday: 0
Wednesday:0
Thursday: 0
Friday: 0
Monday: 0
Thus, 5000 notices have been issued by JPMorgan (dealer side) for the month of June and til today for 500,000 oz and these ounces have yet to settle from JPMorgan's dealer side.
JPMorgan's dealer vault registers tonight 401,877.493 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 98,122.51 oz (401,877.493 inventory - 500,000 oz issued = -98,122.51 oz)
In other words, the entire 401,877.493 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 98,122.51 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??
Thus, 5000 notices have been issued by JPMorgan (dealer side) for the month of June and til today for 500,000 oz and these ounces have yet to settle from JPMorgan's dealer side.
JPMorgan's dealer vault registers tonight 401,877.493 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 98,122.51 oz (401,877.493 inventory - 500,000 oz issued = -98,122.51 oz)
In other words, the entire 401,877.493 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 98,122.51 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). Their dealer gold remains at 26.046 tonnes tonight
i) Scotia: 199,539.37 oz or 6.206 tonnes
ii) HSBC: 252,843.678 or 7.86 tonnes (prev 236,168.152 oz or 7.34 tonnes)
iii) JPMorgan: 401,877.493 oz or 12.50 tonnes
total: 26.56 tonnes
Brinks dealer account which did have the lions share of the dealer gold remains tonight at 134,524.79 oz or 4.18 tonnes (last Friday they had over 13 tonnes and today only 4.18 tonnes!!)
Today we had 0 notices served upon our longs for nil oz of gold(and none were issued by JPMorgan from neither their dealer nor customer account). In order to calculate what I believe will stand for delivery in July, I take the total number of notices served (86) x 100 oz per contract to give us 8600 oz served + I take the OI remaining for July (105) and subtract out today's notices (0) which leaves us with 105 notices still left to be served upon our longs.
Thus we have the following gold ounces standing for metal:
86 contracts served x 100 oz = 8,600 oz, + 105 contracts left to be served upon x 100 oz = 10,500 oz to give us 19,100 oz or 0.5940 tonnes of gold. We gained 100 gold ounces standing for July.
Ladies and Gentlemen: we have a three-fold problem:
i) the total dealer inventory of gold remains at a very dangerously low level of only 31.22 tonnes and none of the 9.5 tonnes delivery notices from May and the major part of the 30.70 tonnes from June issued by JPM on its dealer side has yet to leave.
ii) a) JPMorgan's customer inventory remains at an extremely low 136,380.609 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 401,877.493 oz. However all of this gold has been spoken for plus an additional 98,122.51 oz of deficient gold.
iii) the 3 major bullion banks have collectively only 26.56 tonnes of gold left in their dealer account.
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:
July 15/2013: July silver contract month:
July contract month
July contract month
| Silver |
Ounces
|
| Withdrawals from Dealers Inventory | nil |
| Withdrawals from Customer Inventory | 127,194.117 oz (CNT, Delaware,) |
| Deposits to the Dealer Inventory | nil |
| Deposits to the Customer Inventory | 9817.80 (Scotia) |
| No of oz served (contracts) | 24 (120,000 oz) |
| No of oz to be served (notices) | 898 (4,490,000 oz) |
| Total monthly oz silver served (contracts) | 2416 (12,080,000) |
| Total accumulative withdrawal of silver from the Dealers inventory this month | 143,024.57 |
| Total accumulative withdrawal of silver from the Customer inventory this month | 1,622,367.1 oz |
Today, we had good activity inside the silver vaults.
we had 0 dealer deposits and 0 dealer withdrawals.
We had 1 customer deposit:
i) Into Scotia: 9817.80 oz
total customer deposit: 9817.80 oz
We had 2 customer withdrawals:
We had 1 customer deposit:
i) Into Scotia: 9817.80 oz
total customer deposit: 9817.80 oz
We had 2 customer withdrawals:
i) Out of CNT 102,090.50 oz
ii) Out of Delaware: 25,103.617 oz
total customer withdrawal : 127,194.117 oz
we had 1 adjustments today
ii) Out of HSBC: 433,698.92 oz was adjusted out of the customer and back into the dealer account of dealer of HSBC.
Thus we have the following:
ii) Out of HSBC: 433,698.92 oz was adjusted out of the customer and back into the dealer account of dealer of HSBC.
Thus we have the following:
Registered silver at : 49.114 million oz
total of all silver: 165.844 million oz.
The CME reported that we had 24 notices filed for 120,000 oz today.
To calculate what will stand for this active delivery month of July, I take the number of contracts served thus far this month at 2416 x 5,000 oz per contract = 12,080,000 oz + 898 notices left to be served upon our longs x 5000 oz per contract = 4,490,000 oz to give us a total of 16,490,000 oz
we gained 21 contracts or 105,000 oz of additional silver oz will stand this month.
we gained 21 contracts or 105,000 oz of additional silver oz will stand this month.
Thus here are the standings:
2416 contracts served x 5000 oz per contract (served) or 12,080,000 oz + 898 notices x 5,000 oz or 4,490,000 oz = 16,570,000 oz
end
The two ETF's that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.
Now let us check on gold inventories at the GLD first:
July 15.2013: good news!! we lost no gold today
The physical gold at the GLD may be gone ! ! :
Tonnes939.07
Ounces30,192,195.27
Value US$38.770 billion
July 12:2013: we lost no gold today
Tonnes939.07
Ounces30,192,195.27
Value US$38.630 billion
* * *
selected news and views.....
A must see
(courtesy Turd Ferugson/Felix Moreno)
A must see
(courtesy Turd Ferugson/Felix Moreno)
Gold suppression is obvious with a little research, TF Metals Report's Ferguson says
Submitted by cpowell on Sun, 2013-07-14 16:11. Section: Daily Dispatches
12:09p ET Sunday, July 14, 2013
Dear Friend of GATA and Gold:
Turd Ferguson of the TF Metals Report tells GoldMoney's Felix Moreno that the fair value of gold is impossible to calculate unless the real supply is known and that there is so much imaginary gold floating around that the real supply can't be known.
Ferguson adds that gold price suppression long has been the policy of Western central banks and becomes obvious with a little research; that gold's recent plunge was orchestrated to get major banks out of their short positions before the price is allowed to rise again; and that, indeed, an upward revaluation is likely.
The interview is a half hour long and can be heard at GoldMoney's Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold premiums in Shanghai remain high at 30 dollars per oz. Supply is extremely tight:
(courtesy Reuters)
Asia Gold-Shanghai gold premiums remain high, supply tight
* Shanghai gold trading at $30 over London spot
* Supplies tight, gold bars scarce in China
* Demand not at April levels, but still above average - traders
By A. Ananthalakshmi
SINGAPORE, July 12 (Reuters) - Shanghai gold premiums were at high levels this week as supplies into the world's second-biggest gold consumer dwindled and are set to remain tight over the next few months.
Prices for gold of 99.99 percent purity on the Shanghai Gold Exchange were nearly $30 per ounce higher than London spot prices.
Normal premiums in Shanghai are about $5 to $7 an ounce, traders said, adding that premiums have been higher than those levels for a while now.
Gold supply in the Chinese market is tight due to import quotas imposed by the central bank. Import licenses are granted only to a handful of banksand export permits are given only to authorized jewellery makers.
A seasonal summer shutdown by gold refineries is also adding to the pressure. Gold bars are scarce in the country, dealers said.
"They say the whole summer will be like this. If you ask the refineries, they say they can deliver only after two months," said one Hong Kong-based dealer.
Another trader said the full impact of the shutdowns will be felt in August, when demand tends to pick up ahead of the wedding season in September.
"The current gold supply is getting increasingly constrained while the demand remains strong," said Albert Cheng, managing director for the Far East region of the World Gold Council.
Cheng said gold jewellery factories in China are working at high levels of capacity and 24-hour shifts to meet the demand.
Scrap supply is also expected to fall this quarter as lower prices prevent customers from selling their old jewellery.
Spot gold is nearly $400 an ounce lower from the beginning of the year and is trading near $1,300, following big dips in April and June.
Premiums in Hong Kong, the main supplier for China, have also moved higher due to supply issues.
Dealers are mostly quoting $4 to $5.50 per ounce for gold kilobars. One dealer told Reuters he was quoting an $8 premium. In Singapore, premiums are about $3.
RESILIENT DEMAND
Traders said demand from China has been above normal levels in recent weeks, though not similar to the rush seen in April when prices fell $200 in two days.
"They have been buying steadily since the April fall," said a trader in Hong Kong. "It's not very aggressive, but they are definitely buying."
The first big drop in April prompted a mad rush in Asia but the subsequent price declines have not, as consumers expect more volatility.
Hong Kong's Chow Tai Fook Jewellery Group Ltd, the world's largest jewellery retailer by market value, said its sales to the Chinese mainland jumped 45 percent in April-June mainly due to gold products.
Wholesale business in the mainland improved as franchisees increased their replenishment of inventories, the company said in a statement on Wednesday. (Editing by Muralikumar Anantharaman)
Comments on gold by Roberts, Cashin in King World News interviews
Submitted by cpowell on Fri, 2013-07-12 23:32. Section: Daily Dispatches
7:26p ET Friday, July 12, 2013
Dear Friend of GATA and Gold:
King World News tonight has two important interviews.
The first is with former Assistant U.S. Treasury Secretary Paul Craig Roberts, who describes how he thinks the U.S. Federal Reserve is scheming to keep European and Asian countries using the dollar for international trade while suppressing the gold price so that the monetary metal won't be seen as an alternative to the dollar:
The second is with Art Cashin of UBS, who notes backwardation in gold and says the rising price of oil seems to signify that the Fed is losing control of the bond market:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc
Ned Naylor Leyland and Alasdair Macleod detailing how the monetary system is totally broken:
(courtesy Ned Naylor Leyland/Alasdair Macleod)
Ned Naylor-Leyland: we know that the monetary system is broken
Published on Jul 15, 2013
Episode 140: Alasdair Macleod interviews Ned Naylor-Leyland of Quilter Cheviot Investment Management. Ned discusses his recent paper (www.scribd.com/doc/152683206/Gold-Update-July-2013) and his view that gold has actually been in backwardation a lot longer than this just this last week. Ned sees this backwardation as a very telling point when one considers the large aboveground stock of gold.
Ned brings up a very interesting point regarding velocity within the LBMA physical gold market versus the paper money markets. Physical gold, which should sit relatively still, is moving while currency velocity is low.
They then discuss daily trading volumes and the fractional nature of the precious metals markets before analysing the movement of physical metal, from West to East.
This podcast was recorded on 12 July 2013.
As we have pointed out to you on many occasions, South African gold mining companies are in serious trouble.
(courtesy Business Day/Johannesburg)
***
Data Paint Dire Picture of South Africa's Gold Producers
By Alan Seccombe
Business Day, Johannesburg
Monday, July 15, 2013
As they gold sector prepares to deliver its counteroffer on wage increases to the unions on Monday, a report from a leading analyst shows just how dire the financial situation is for producers.
Seven gold companies represented by the Chamber of Mines at centralised wage talks with four unions, including newcomer the Association of Mineworkers and Construction Union (AMCU), will unveil their counteroffer on Monday.
Amcu and the National Union of Mineworkers have tabled wage increase demands for entry-level workers of between 100% and 60% of prevailing salaries.
The companies are expected to table a counter offer that is below inflation, which was 5.6% in the May measure of consumer price inflation. Some analysts are expecting the gold companies to stick close to this measure, perhaps rising by two or three percentage points.
Chamber chief gold wage negotiator Elize Strydom said a couple of weeks ago the key challenge would be to manage what companies could afford to pay in a difficult financial environment and accounting for workers' expectations, given the scale of increases demanded by unions.
"At the prevailing gold price, gold miners are already under pressure to sustain operations and will struggle to grant double-digit wage increases sought by the unions," Investec's Kamilla Kaplan said last week.
The chamber told the unions in a meeting last week that 40% of the South African gold sector was loss-making or marginal in cash cost terms in the fourth quarter of last year, when the average price was a record R509,783/kg.
The gold price is now R412,200/kg and closer to 60% of mines are in a loss-making or marginal position.
But the problems for the sector run far deeper than that, said SBG Securities gold analyst David Davis. Using the new cost reporting metrics proposed by the World Gold Council last month, the average all-in cost for the world's top five global gold mining companies was $1,467/oz in the first quarter of this year against the current spot price of $1,287/oz, Mr Davis said in a note on Friday.
By next year, about half of global production will need a break-even gold price of $2,400/oz, using a 10% year-on-year mining inflation assumption, he said.
Gold companies could start using the new cost metrics from January next year. Companies such as AngloGold Ashanti, Gold Fields and Harmony are estimated to have had all-in costs of $1,580, $1,426 and $1,762 per ounce, respectively, in the first quarter of this year.
These costs are high relative to the average of their peer group because they are involved in capital projects, with AngloGold commissioning three big projects between now and 2016.
Gold Fields is ramping up its South Deep mine.
Harmony's capital expenditure will taper off in coming years as it nears the completion of big growth projects in South Africa and revises the size of the Wafi Golpu project in Papua New Guinea to bring down costs.
Gold companies are currently using a far narrower cost measurement, which had "led to mining companies recording inflation margins in an environment of declining gold and equity prices", Mr Davis said. "This disconnect has sent confusing signals to governments, labour unions, the investment community and other stakeholders."
SBG had "long held the view that, with a few exceptions, global mining companies have been misrepresenting their costs by quoting cash costs as a measure of their efficiency in producing an ounce of gold", he said.
The widely used cash cost figure did not include capital to sustain production, to build new projects or to explore for new gold to replace mined ounces.
Chamber senior executive Roger Baxter has said that between 2007 and 2012 there was a 238% increase in electricity prices for mining companies and a 12%-a-year rise in the annual remuneration paid per worker, roughly five percentage points higher than producer inflation.
More than half of the costs of South Africa's deep-level, labour-intensive mines come from paying workers, Mr Baxter said.
Gold output of 167 tons last year was the lowest since 1905.
If gold production keeps falling at the 8%-a-year average rate it has recorded in the past decade, South Africa's production could fall below 100 tons by 2020, Mr Baxter said.
With declining production there is less gold to pay for fixed costs. Cash costs have increased by 23% in the past five years for South African gold mining companies, he said.
The gold sector's output in May fell 14.6% year on year, Statistics SA said last week.
Shanghai Gold Exchange delivered 1098 tonnes of real metal for the first six month of the year. As this rate they will surpass 2000 tonnes of gold. The world produces ex China and ex Russia, 2200 tonnes per year. It looks like the supplier of this gold was the GLD. If the GLD is out, where will the Shanghai gold exchange obtain its gold.
(courtesy Bloomberg)
Gold Deliveries From Shanghai Bourse Jump on Physical Demand
By Bloomberg News - Jul 15, 2013 6:43 AM ET
Physical gold delivered to buyers by China’s largest bullion bourse in the first half of this year almost matched the entire amount taken from its vaults in 2012, and was more than double the country’s annual production.
The Shanghai Gold Exchange supplied 1,098 metric tons in the six months through June, compared with 1,139 tons for the whole of last year, according to data from the bourse today. Output in China, the world’s largest gold producer, reached a record 403 tons last year, according to the China Gold Association.
The surge in deliveries underscores buying interest in China, which may pass India as the largest bullion consumer as early as this year after the government in New Delhi raised import taxes while regulators in Beijing made investing in the metal easier. Miners, smelters and refineries are required to sell gold via the Shanghai bourse, the only state-sanctioned marketplace for spot bullion in China.
"The number shows demand for bullion as an underlying asset in China that investors here remained big buyers of the physical commodity this year," said Fu Peng, a commodity strategist in Beijing at Galaxy Futures Co, a brokerage controlled by the country’s sovereign wealth fund.
Bullion lost 23 percent last quarter amid speculation that the Federal Reserve would curb its asset-buying program as the U.S. economy recovers. Bullion may drop to $1,050 an ounce over 12 months as demand for the metal as a safe haven wanes, UBS AG said on July 4. Citigroup lowered its 2013 gold estimate to $1,358 an ounce.
Import Rules
The gold exchange was set up in 2002 and under the jurisdiction of the central bank. Commercial banks that are qualified to import gold are also required to sell their shipments into the bourse.
Bullion of 99.99 percent purity on the Shanghai Gold Exchange fell 27 percent in the first six months and was at 259.70 yuan a gram ($1,315.93 an ounce) today. In London, gold for immediate delivery traded at $1,282.89 an ounce at 5:55 p.m. Shanghai time, 23 percent lower this year.
Still, monthly gold deliveries are now below the record 236 tons in April, having eased to 224 tons in May and 180 tons in June.
"Investors aren’t inclined to rush to buy gold the way they did to the abrupt price drop in mid-April," said Long Ling, an analyst at Industrial Futures Co. in Shanghai.
Volume Peak
Trading of spot bullion of 99.99 percent purity on the Shanghai exchange exceeded 20 tons every day between April 16 and May 6. That’s more than four times the daily average in 2012. Volume reached a record 43.27 metric tons on April 22 and climbed above 20 tons for two days through June 21, according to the exchange.
China’s net gold imports from Hong Kong increased 40 percent in May from a month earlier as the metal’s deepening slump continued to attract bargain hunters to bullion shops.
Mainland buyers purchased 106 tons during the month, after deducting flows from China into Hong Kong, compared with 76 tons a month earlier, according to calculations by Bloomberg based on data from the Hong Kong government. Inbound shipments including scrap were 127 tons, from 75.6 tons a year earlier and 126.1 tons in April.
A great commentary on gold from Bill Holter/Miles Franklin
(courtesy Bill Holter/Miles Franklin)
THE biggest "fake out" in the history of history!
When we look back at the last 9 months (the last 90 days in particular) in hindsight, I believe it will turn out to have been THE biggest "fake out" in the history of history. The operation that has been pulled off has made some of the biggest Gold bulls to question their logic and at this point those who "could" be shaken out have been. Investors in the East have looked at the price drops as a gift from heaven while many Westerners got the "deer in the headlights" syndrome and
Please pay attention to this. Mark Grant is perfectly correct!!
(courtesy Mark Grant/zero hedge)
The Drop-Dead Day
Submitted by Tyler Durden on 07/15/2013 08:23 -0400
Submitted by Mark J. Grant, author of Out of the Box,
Everyone wants to know what day everything will change. I have been asked and asked and asked when the cat will come out of the bag, when Jack will jump out of the Box and when the weasel will pop. I have even been asked when the cow will jump over the moon but I will let the cat with the fiddle answer that one.
I could tell you that I have spent long nights with the ancient runes. Maybe I should claim that, being the Wizard, I have cast the Calendarus Spell and divined the future. Another option would be to claim secret knowledge from the newest Sage, Ms. Lalique. None of these would be true though so I will not make such statements.
No, the Drop Dead Day will prove to be accurate but for other reasons.
It is the date of the German elections - September 22, 2013.
Portugal is about a nano-second from blowing up. Their ten year yield is now north of 7% and their political coalition is a hair's breadth from collapsing. The government has asked the IMF to delay their financial review until August citing political uncertainty.
Greece is right on the verge of coming unglued again. The Troika is demanding that Greece cute fifteen thousand Civil Service jobs. The unions are calling strikes once again and the current coalition rules by a handful of votes. Trouble is again on the horizon.
The Prime Minister and the government of Spain are accused of graft. The Spanish economy is worsening dramatically while unemployment surges. The Spanish banks are asking for their deferred tax assets to be guaranteed by the nation in another attempt to turn water into wine. Things are not going well.
France is in a recession and their economy is getting worse. Last Friday they lost the last of their "AAA" ratings and there is no joy in Paris I can assure you. Further budget cuts are on the horizon as encouraged by the IMF while Monsieur Hollande sinks in the polls.
Having identified all of this it will not matter until the day after September 22. Nothing is going to be allowed to upset the bratwurst cart and I mean nothing. If more money is needed it will be spent. If favors need to be called the phone will be in use. If Frau Merkel needs to give Mr. Draghi a new set of instructions; they will be issued. Whatever it takes. Whatever must be done. Nothing will get in the way of the Chancellor's re-election.
In the days following the election, however, the gates of Hell may open and the brimstone may spill out. Every problem, question and issue that was delayed, put-off and tabled until the German election took place will rear their ugly heads for public inspection. Attitudes will change. Money will not be easily forthcoming and the noose will tighten around the necks of the troublemakers. Portugal, Spain, Italy, Cyprus and Greece will be wailing once again.
http://www.zerohedge.com/news/2013-07-15/hinde-capital-china-gold-andthe-continuing-unravelling-our-monetary-order
Hinde Capital On China, Gold, AndThe Continuing Unravelling Of Our Monetary Order
Submitted by Tyler Durden on 07/15/2013 19:17 -0400
The global crisis is a financial crisis driven primarily by global trade and capital imbalances; and Hinde Capital believes the crisis is in full swing again and asset prices are in danger of falling globally. Money is less effective at catching the falling knife. Investors and policymakers do not believe this is the beginning of a major EM contagion crisis. They are lulling themselves into a false sense of security. They see the EM market tremors, and do not fear a re-run of the EM crises of old. They are right. This is not (just) going to be an EM crisis. The disproportionate reaction of central bankers and policymakers alike has merely succeeded in compounding and exacerbating the error of this highly imbalanced monetary system. Recent events in emerging countries are a manifestation of the continuing unravelling of our monetary order.
Via Hinde Capital,
Over the past four decades the global economy has largely experienced prolonged imbalances, with countries running large current account deficits in symbiotic relationships with those running large surpluses. In our recent HindeSight Investor Letter – Top of the BoPs (below) - we revisit our long held belief that the current monetary order as defined by a constellation of exchange rate arrangements between the major global currencies, and which maintained these imbalances artificially, has led to excessive global liquidity and credit creation. This in turndrove a litany of asset price bubbles.
The bursting of these asset bubbles has continued in a series these past two decades, each one’s demise leading to more disruptive policy responses which have only succeeded in igniting yet more bubbles, only for those too to fail.
Finally in 2008 we witnessed the finale of decades of credit creation, rising in what appeared to be a crescendo of credit excess and widespread asset booms. We saw this event as the death throes of an unstable monetary regime, only then to see an unprecedented global reaction by policymakers in a coordinated fashion to keep the global system alive. For a moment here today, there are those who dare to believe they have succeeded, with rising equity markets a testimony to a reviving global economy. Nothing could be further from reality.
We stand by our assessment that the disproportionate reaction of central bankers and policymakers alike has merely succeeded in compounding and exacerbating the error of this highly imbalanced monetary system. Recent events in emerging countries are a manifestation of the continuing unravelling of our monetary order.
...
In the 1980s it was a hike by the US Fed that triggered the LatAm crisis. Today, the mere whisper of tighter monetary conditions in the US, vis-a-vis a tapering of QE has led to higher bond rates globally. Note tapering is not the same as hiking interest rates.
The consequences of multiple rounds of QE have heightened global risks as it has both exacerbated ‘currency competition’ and hot capital flows into countries seeking desperately for a return both from income and capital growth. This has created major distortions in term rates, equity and bond values, driving them artificially high in price.
These distortions have created risks far greater than the fragilities of EM countries of yesterday years. The system of credit creation has produced unstable growth underpinned with collateral which is both mobile and suspect in its integrity.
Investors have nowhere to turn, emerging market countries growth is faltering in response to export disadvantages brought about by rampant G10 currency devaluations. China is finally succumbing to its side of the global imbalance excesses. First it was the deficit nations now it’s the turn of the creditor nations to falter, primarily China.
Trade flow reversals are leading to massive capital outflows out of EMs and the question remains: will the central banks of these countries sell their FX reserves, UST- bonds and euro government bonds (bunds) to finance this surge in outflows?
It is not clear that renewed global central bank liquidity provision will even stabilise a situation we see as growing dire by the day. China is the driver. All eyes on China.
...
We believe the bursting of the ‘Great Bond Bubble’ will lead to a formative and substantial rise in gold as official money, institutional and investor money seeks an asset that can protect us all from a global default and resetting of the monetary order. The time to buy gold is fast approaching, if that time is not already upon us.
Submitted by cpowell on Sun, 2013-07-14 16:11. Section: Daily Dispatches
By Bloomberg News - Jul 15, 2013 6:43 AM ET
Physical gold delivered to buyers by China’s largest bullion bourse in the first half of this year almost matched the entire amount taken from its vaults in 2012, and was more than double the country’s annual production.
The Shanghai Gold Exchange supplied 1,098 metric tons in the six months through June, compared with 1,139 tons for the whole of last year, according to data from the bourse today. Output in China, the world’s largest gold producer, reached a record 403 tons last year, according to the China Gold Association.
The surge in deliveries underscores buying interest in China, which may pass India as the largest bullion consumer as early as this year after the government in New Delhi raised import taxes while regulators in Beijing made investing in the metal easier. Miners, smelters and refineries are required to sell gold via the Shanghai bourse, the only state-sanctioned marketplace for spot bullion in China.
"The number shows demand for bullion as an underlying asset in China that investors here remained big buyers of the physical commodity this year," said Fu Peng, a commodity strategist in Beijing at Galaxy Futures Co, a brokerage controlled by the country’s sovereign wealth fund.
Bullion lost 23 percent last quarter amid speculation that the Federal Reserve would curb its asset-buying program as the U.S. economy recovers. Bullion may drop to $1,050 an ounce over 12 months as demand for the metal as a safe haven wanes, UBS AG said on July 4. Citigroup lowered its 2013 gold estimate to $1,358 an ounce.
Import Rules
The gold exchange was set up in 2002 and under the jurisdiction of the central bank. Commercial banks that are qualified to import gold are also required to sell their shipments into the bourse.
Bullion of 99.99 percent purity on the Shanghai Gold Exchange fell 27 percent in the first six months and was at 259.70 yuan a gram ($1,315.93 an ounce) today. In London, gold for immediate delivery traded at $1,282.89 an ounce at 5:55 p.m. Shanghai time, 23 percent lower this year.
Still, monthly gold deliveries are now below the record 236 tons in April, having eased to 224 tons in May and 180 tons in June.
"Investors aren’t inclined to rush to buy gold the way they did to the abrupt price drop in mid-April," said Long Ling, an analyst at Industrial Futures Co. in Shanghai.
Volume Peak
Trading of spot bullion of 99.99 percent purity on the Shanghai exchange exceeded 20 tons every day between April 16 and May 6. That’s more than four times the daily average in 2012. Volume reached a record 43.27 metric tons on April 22 and climbed above 20 tons for two days through June 21, according to the exchange.
China’s net gold imports from Hong Kong increased 40 percent in May from a month earlier as the metal’s deepening slump continued to attract bargain hunters to bullion shops.
Mainland buyers purchased 106 tons during the month, after deducting flows from China into Hong Kong, compared with 76 tons a month earlier, according to calculations by Bloomberg based on data from the Hong Kong government. Inbound shipments including scrap were 127 tons, from 75.6 tons a year earlier and 126.1 tons in April.
12:09p ET Sunday, July 14, 2013
Dear Friend of GATA and Gold:
Turd Ferguson of the TF Metals Report tells GoldMoney's Felix Moreno that the fair value of gold is impossible to calculate unless the real supply is known and that there is so much imaginary gold floating around that the real supply can't be known.
Ferguson adds that gold price suppression long has been the policy of Western central banks and becomes obvious with a little research; that gold's recent plunge was orchestrated to get major banks out of their short positions before the price is allowed to rise again; and that, indeed, an upward revaluation is likely.
The interview is a half hour long and can be heard at GoldMoney's Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
Gold premiums in Shanghai remain high at 30 dollars per oz. Supply is extremely tight:
(courtesy Reuters)
Gold premiums in Shanghai remain high at 30 dollars per oz. Supply is extremely tight:
(courtesy Reuters)
(courtesy Reuters)
Asia Gold-Shanghai gold premiums remain high, supply tight
* Shanghai gold trading at $30 over London spot
* Supplies tight, gold bars scarce in China
* Demand not at April levels, but still above average - traders
By A. Ananthalakshmi
SINGAPORE, July 12 (Reuters) - Shanghai gold premiums were at high levels this week as supplies into the world's second-biggest gold consumer dwindled and are set to remain tight over the next few months.
Prices for gold of 99.99 percent purity on the Shanghai Gold Exchange were nearly $30 per ounce higher than London spot prices.
Normal premiums in Shanghai are about $5 to $7 an ounce, traders said, adding that premiums have been higher than those levels for a while now.
Gold supply in the Chinese market is tight due to import quotas imposed by the central bank. Import licenses are granted only to a handful of banksand export permits are given only to authorized jewellery makers.
A seasonal summer shutdown by gold refineries is also adding to the pressure. Gold bars are scarce in the country, dealers said.
"They say the whole summer will be like this. If you ask the refineries, they say they can deliver only after two months," said one Hong Kong-based dealer.
Another trader said the full impact of the shutdowns will be felt in August, when demand tends to pick up ahead of the wedding season in September.
"The current gold supply is getting increasingly constrained while the demand remains strong," said Albert Cheng, managing director for the Far East region of the World Gold Council.
Cheng said gold jewellery factories in China are working at high levels of capacity and 24-hour shifts to meet the demand.
Scrap supply is also expected to fall this quarter as lower prices prevent customers from selling their old jewellery.
Spot gold is nearly $400 an ounce lower from the beginning of the year and is trading near $1,300, following big dips in April and June.
Premiums in Hong Kong, the main supplier for China, have also moved higher due to supply issues.
Dealers are mostly quoting $4 to $5.50 per ounce for gold kilobars. One dealer told Reuters he was quoting an $8 premium. In Singapore, premiums are about $3.
RESILIENT DEMAND
Traders said demand from China has been above normal levels in recent weeks, though not similar to the rush seen in April when prices fell $200 in two days.
"They have been buying steadily since the April fall," said a trader in Hong Kong. "It's not very aggressive, but they are definitely buying."
The first big drop in April prompted a mad rush in Asia but the subsequent price declines have not, as consumers expect more volatility.
Hong Kong's Chow Tai Fook Jewellery Group Ltd, the world's largest jewellery retailer by market value, said its sales to the Chinese mainland jumped 45 percent in April-June mainly due to gold products.
Wholesale business in the mainland improved as franchisees increased their replenishment of inventories, the company said in a statement on Wednesday. (Editing by Muralikumar Anantharaman)
Comments on gold by Roberts, Cashin in King World News interviews
Submitted by cpowell on Fri, 2013-07-12 23:32. Section: Daily Dispatches
7:26p ET Friday, July 12, 2013
Dear Friend of GATA and Gold:
King World News tonight has two important interviews.
The first is with former Assistant U.S. Treasury Secretary Paul Craig Roberts, who describes how he thinks the U.S. Federal Reserve is scheming to keep European and Asian countries using the dollar for international trade while suppressing the gold price so that the monetary metal won't be seen as an alternative to the dollar:
The second is with Art Cashin of UBS, who notes backwardation in gold and says the rising price of oil seems to signify that the Fed is losing control of the bond market:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc
Submitted by cpowell on Fri, 2013-07-12 23:32. Section: Daily Dispatches
7:26p ET Friday, July 12, 2013
Dear Friend of GATA and Gold:
King World News tonight has two important interviews.
The first is with former Assistant U.S. Treasury Secretary Paul Craig Roberts, who describes how he thinks the U.S. Federal Reserve is scheming to keep European and Asian countries using the dollar for international trade while suppressing the gold price so that the monetary metal won't be seen as an alternative to the dollar:
The second is with Art Cashin of UBS, who notes backwardation in gold and says the rising price of oil seems to signify that the Fed is losing control of the bond market:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc
Gold Anti-Trust Action Committee Inc
Ned Naylor Leyland and Alasdair Macleod detailing how the monetary system is totally broken:
(courtesy Ned Naylor Leyland/Alasdair Macleod)
Ned Naylor-Leyland: we know that the monetary system is broken
Published on Jul 15, 2013
Episode 140: Alasdair Macleod interviews Ned Naylor-Leyland of Quilter Cheviot Investment Management. Ned discusses his recent paper (www.scribd.com/doc/152683206/Gold-Update-July-2013) and his view that gold has actually been in backwardation a lot longer than this just this last week. Ned sees this backwardation as a very telling point when one considers the large aboveground stock of gold.
Ned brings up a very interesting point regarding velocity within the LBMA physical gold market versus the paper money markets. Physical gold, which should sit relatively still, is moving while currency velocity is low.
They then discuss daily trading volumes and the fractional nature of the precious metals markets before analysing the movement of physical metal, from West to East.
This podcast was recorded on 12 July 2013.
Ned brings up a very interesting point regarding velocity within the LBMA physical gold market versus the paper money markets. Physical gold, which should sit relatively still, is moving while currency velocity is low.
They then discuss daily trading volumes and the fractional nature of the precious metals markets before analysing the movement of physical metal, from West to East.
This podcast was recorded on 12 July 2013.
As we have pointed out to you on many occasions, South African gold mining companies are in serious trouble.
(courtesy Business Day/Johannesburg)
***
Data Paint Dire Picture of South Africa's Gold Producers
By Alan Seccombe
Business Day, Johannesburg
Monday, July 15, 2013
Business Day, Johannesburg
Monday, July 15, 2013
As they gold sector prepares to deliver its counteroffer on wage increases to the unions on Monday, a report from a leading analyst shows just how dire the financial situation is for producers.
Seven gold companies represented by the Chamber of Mines at centralised wage talks with four unions, including newcomer the Association of Mineworkers and Construction Union (AMCU), will unveil their counteroffer on Monday.
Amcu and the National Union of Mineworkers have tabled wage increase demands for entry-level workers of between 100% and 60% of prevailing salaries.
The companies are expected to table a counter offer that is below inflation, which was 5.6% in the May measure of consumer price inflation. Some analysts are expecting the gold companies to stick close to this measure, perhaps rising by two or three percentage points.
Chamber chief gold wage negotiator Elize Strydom said a couple of weeks ago the key challenge would be to manage what companies could afford to pay in a difficult financial environment and accounting for workers' expectations, given the scale of increases demanded by unions.
"At the prevailing gold price, gold miners are already under pressure to sustain operations and will struggle to grant double-digit wage increases sought by the unions," Investec's Kamilla Kaplan said last week.
The chamber told the unions in a meeting last week that 40% of the South African gold sector was loss-making or marginal in cash cost terms in the fourth quarter of last year, when the average price was a record R509,783/kg.
The gold price is now R412,200/kg and closer to 60% of mines are in a loss-making or marginal position.
But the problems for the sector run far deeper than that, said SBG Securities gold analyst David Davis. Using the new cost reporting metrics proposed by the World Gold Council last month, the average all-in cost for the world's top five global gold mining companies was $1,467/oz in the first quarter of this year against the current spot price of $1,287/oz, Mr Davis said in a note on Friday.
By next year, about half of global production will need a break-even gold price of $2,400/oz, using a 10% year-on-year mining inflation assumption, he said.
Gold companies could start using the new cost metrics from January next year. Companies such as AngloGold Ashanti, Gold Fields and Harmony are estimated to have had all-in costs of $1,580, $1,426 and $1,762 per ounce, respectively, in the first quarter of this year.
These costs are high relative to the average of their peer group because they are involved in capital projects, with AngloGold commissioning three big projects between now and 2016.
Gold Fields is ramping up its South Deep mine.
Harmony's capital expenditure will taper off in coming years as it nears the completion of big growth projects in South Africa and revises the size of the Wafi Golpu project in Papua New Guinea to bring down costs.
Gold companies are currently using a far narrower cost measurement, which had "led to mining companies recording inflation margins in an environment of declining gold and equity prices", Mr Davis said. "This disconnect has sent confusing signals to governments, labour unions, the investment community and other stakeholders."
SBG had "long held the view that, with a few exceptions, global mining companies have been misrepresenting their costs by quoting cash costs as a measure of their efficiency in producing an ounce of gold", he said.
The widely used cash cost figure did not include capital to sustain production, to build new projects or to explore for new gold to replace mined ounces.
Chamber senior executive Roger Baxter has said that between 2007 and 2012 there was a 238% increase in electricity prices for mining companies and a 12%-a-year rise in the annual remuneration paid per worker, roughly five percentage points higher than producer inflation.
More than half of the costs of South Africa's deep-level, labour-intensive mines come from paying workers, Mr Baxter said.
Gold output of 167 tons last year was the lowest since 1905.
If gold production keeps falling at the 8%-a-year average rate it has recorded in the past decade, South Africa's production could fall below 100 tons by 2020, Mr Baxter said.
With declining production there is less gold to pay for fixed costs. Cash costs have increased by 23% in the past five years for South African gold mining companies, he said.
The gold sector's output in May fell 14.6% year on year, Statistics SA said last week.
Shanghai Gold Exchange delivered 1098 tonnes of real metal for the first six month of the year. As this rate they will surpass 2000 tonnes of gold. The world produces ex China and ex Russia, 2200 tonnes per year. It looks like the supplier of this gold was the GLD. If the GLD is out, where will the Shanghai gold exchange obtain its gold.
(courtesy Bloomberg)
Gold Deliveries From Shanghai Bourse Jump on Physical Demand
Physical gold delivered to buyers by China’s largest bullion bourse in the first half of this year almost matched the entire amount taken from its vaults in 2012, and was more than double the country’s annual production.
The Shanghai Gold Exchange supplied 1,098 metric tons in the six months through June, compared with 1,139 tons for the whole of last year, according to data from the bourse today. Output in China, the world’s largest gold producer, reached a record 403 tons last year, according to the China Gold Association.
The surge in deliveries underscores buying interest in China, which may pass India as the largest bullion consumer as early as this year after the government in New Delhi raised import taxes while regulators in Beijing made investing in the metal easier. Miners, smelters and refineries are required to sell gold via the Shanghai bourse, the only state-sanctioned marketplace for spot bullion in China.
"The number shows demand for bullion as an underlying asset in China that investors here remained big buyers of the physical commodity this year," said Fu Peng, a commodity strategist in Beijing at Galaxy Futures Co, a brokerage controlled by the country’s sovereign wealth fund.
Bullion lost 23 percent last quarter amid speculation that the Federal Reserve would curb its asset-buying program as the U.S. economy recovers. Bullion may drop to $1,050 an ounce over 12 months as demand for the metal as a safe haven wanes, UBS AG said on July 4. Citigroup lowered its 2013 gold estimate to $1,358 an ounce.
Import Rules
The gold exchange was set up in 2002 and under the jurisdiction of the central bank. Commercial banks that are qualified to import gold are also required to sell their shipments into the bourse.
Bullion of 99.99 percent purity on the Shanghai Gold Exchange fell 27 percent in the first six months and was at 259.70 yuan a gram ($1,315.93 an ounce) today. In London, gold for immediate delivery traded at $1,282.89 an ounce at 5:55 p.m. Shanghai time, 23 percent lower this year.
Still, monthly gold deliveries are now below the record 236 tons in April, having eased to 224 tons in May and 180 tons in June.
"Investors aren’t inclined to rush to buy gold the way they did to the abrupt price drop in mid-April," said Long Ling, an analyst at Industrial Futures Co. in Shanghai.
Volume Peak
Trading of spot bullion of 99.99 percent purity on the Shanghai exchange exceeded 20 tons every day between April 16 and May 6. That’s more than four times the daily average in 2012. Volume reached a record 43.27 metric tons on April 22 and climbed above 20 tons for two days through June 21, according to the exchange.
China’s net gold imports from Hong Kong increased 40 percent in May from a month earlier as the metal’s deepening slump continued to attract bargain hunters to bullion shops.
A great commentary on gold from Bill Holter/Miles Franklin
(courtesy Bill Holter/Miles Franklin)
A great commentary on gold from Bill Holter/Miles Franklin
(courtesy Bill Holter/Miles Franklin)
THE biggest "fake out" in the history of history!
When we look back at the last 9 months (the last 90 days in particular) in hindsight, I believe it will turn out to have been THE biggest "fake out" in the history of history. The operation that has been pulled off has made some of the biggest Gold bulls to question their logic and at this point those who "could" be shaken out have been. Investors in the East have looked at the price drops as a gift from heaven while many Westerners got the "deer in the headlights" syndrome and
Please pay attention to this. Mark Grant is perfectly correct!!
(courtesy Mark Grant/zero hedge)
The Drop-Dead Day
Submitted by Tyler Durden on 07/15/2013 08:23 -0400
Submitted by Mark J. Grant, author of Out of the Box,
Everyone wants to know what day everything will change. I have been asked and asked and asked when the cat will come out of the bag, when Jack will jump out of the Box and when the weasel will pop. I have even been asked when the cow will jump over the moon but I will let the cat with the fiddle answer that one.
I could tell you that I have spent long nights with the ancient runes. Maybe I should claim that, being the Wizard, I have cast the Calendarus Spell and divined the future. Another option would be to claim secret knowledge from the newest Sage, Ms. Lalique. None of these would be true though so I will not make such statements.
No, the Drop Dead Day will prove to be accurate but for other reasons.
It is the date of the German elections - September 22, 2013.
Portugal is about a nano-second from blowing up. Their ten year yield is now north of 7% and their political coalition is a hair's breadth from collapsing. The government has asked the IMF to delay their financial review until August citing political uncertainty.
Greece is right on the verge of coming unglued again. The Troika is demanding that Greece cute fifteen thousand Civil Service jobs. The unions are calling strikes once again and the current coalition rules by a handful of votes. Trouble is again on the horizon.
The Prime Minister and the government of Spain are accused of graft. The Spanish economy is worsening dramatically while unemployment surges. The Spanish banks are asking for their deferred tax assets to be guaranteed by the nation in another attempt to turn water into wine. Things are not going well.
France is in a recession and their economy is getting worse. Last Friday they lost the last of their "AAA" ratings and there is no joy in Paris I can assure you. Further budget cuts are on the horizon as encouraged by the IMF while Monsieur Hollande sinks in the polls.
Having identified all of this it will not matter until the day after September 22. Nothing is going to be allowed to upset the bratwurst cart and I mean nothing. If more money is needed it will be spent. If favors need to be called the phone will be in use. If Frau Merkel needs to give Mr. Draghi a new set of instructions; they will be issued. Whatever it takes. Whatever must be done. Nothing will get in the way of the Chancellor's re-election.
In the days following the election, however, the gates of Hell may open and the brimstone may spill out. Every problem, question and issue that was delayed, put-off and tabled until the German election took place will rear their ugly heads for public inspection. Attitudes will change. Money will not be easily forthcoming and the noose will tighten around the necks of the troublemakers. Portugal, Spain, Italy, Cyprus and Greece will be wailing once again.
http://www.zerohedge.com/news/2013-07-15/hinde-capital-china-gold-andthe-continuing-unravelling-our-monetary-order
Hinde Capital On China, Gold, AndThe Continuing Unravelling Of Our Monetary Order
Submitted by Tyler Durden on 07/15/2013 19:17 -0400
The global crisis is a financial crisis driven primarily by global trade and capital imbalances; and Hinde Capital believes the crisis is in full swing again and asset prices are in danger of falling globally. Money is less effective at catching the falling knife. Investors and policymakers do not believe this is the beginning of a major EM contagion crisis. They are lulling themselves into a false sense of security. They see the EM market tremors, and do not fear a re-run of the EM crises of old. They are right. This is not (just) going to be an EM crisis. The disproportionate reaction of central bankers and policymakers alike has merely succeeded in compounding and exacerbating the error of this highly imbalanced monetary system. Recent events in emerging countries are a manifestation of the continuing unravelling of our monetary order.
Via Hinde Capital,
Over the past four decades the global economy has largely experienced prolonged imbalances, with countries running large current account deficits in symbiotic relationships with those running large surpluses. In our recent HindeSight Investor Letter – Top of the BoPs (below) - we revisit our long held belief that the current monetary order as defined by a constellation of exchange rate arrangements between the major global currencies, and which maintained these imbalances artificially, has led to excessive global liquidity and credit creation. This in turndrove a litany of asset price bubbles.
The bursting of these asset bubbles has continued in a series these past two decades, each one’s demise leading to more disruptive policy responses which have only succeeded in igniting yet more bubbles, only for those too to fail.
Finally in 2008 we witnessed the finale of decades of credit creation, rising in what appeared to be a crescendo of credit excess and widespread asset booms. We saw this event as the death throes of an unstable monetary regime, only then to see an unprecedented global reaction by policymakers in a coordinated fashion to keep the global system alive. For a moment here today, there are those who dare to believe they have succeeded, with rising equity markets a testimony to a reviving global economy. Nothing could be further from reality.
We stand by our assessment that the disproportionate reaction of central bankers and policymakers alike has merely succeeded in compounding and exacerbating the error of this highly imbalanced monetary system. Recent events in emerging countries are a manifestation of the continuing unravelling of our monetary order.
...
In the 1980s it was a hike by the US Fed that triggered the LatAm crisis. Today, the mere whisper of tighter monetary conditions in the US, vis-a-vis a tapering of QE has led to higher bond rates globally. Note tapering is not the same as hiking interest rates.
The consequences of multiple rounds of QE have heightened global risks as it has both exacerbated ‘currency competition’ and hot capital flows into countries seeking desperately for a return both from income and capital growth. This has created major distortions in term rates, equity and bond values, driving them artificially high in price.
These distortions have created risks far greater than the fragilities of EM countries of yesterday years. The system of credit creation has produced unstable growth underpinned with collateral which is both mobile and suspect in its integrity.
Investors have nowhere to turn, emerging market countries growth is faltering in response to export disadvantages brought about by rampant G10 currency devaluations. China is finally succumbing to its side of the global imbalance excesses. First it was the deficit nations now it’s the turn of the creditor nations to falter, primarily China.
Trade flow reversals are leading to massive capital outflows out of EMs and the question remains: will the central banks of these countries sell their FX reserves, UST- bonds and euro government bonds (bunds) to finance this surge in outflows?
It is not clear that renewed global central bank liquidity provision will even stabilise a situation we see as growing dire by the day. China is the driver. All eyes on China.
...
We believe the bursting of the ‘Great Bond Bubble’ will lead to a formative and substantial rise in gold as official money, institutional and investor money seeks an asset that can protect us all from a global default and resetting of the monetary order. The time to buy gold is fast approaching, if that time is not already upon us.
When we look back at the last 9 months (the last 90 days in particular) in hindsight, I believe it will turn out to have been THE biggest "fake out" in the history of history. The operation that has been pulled off has made some of the biggest Gold bulls to question their logic and at this point those who "could" be shaken out have been. Investors in the East have looked at the price drops as a gift from heaven while many Westerners got the "deer in the headlights" syndrome and
It will be obvious in hindsight that Gold and Silver were THE lifeboats after the currency crisis. "How could anyone have been fooled?" will be the word of the day. "Why in the world would anyone have considered selling anything Gold or Silver?" "Were they stupid"? Yes, hindsight is 20/20 and with the "result" a known entity it will be easy to look back and wonder "what were they thinking?".
Please understand that all of the reasons to have purchased Gold in the first place are not only still firmly in place, they are now more severe. Some purchased Gold because it was trading at or below the cost of production, others believed the banking system was going to come down. Is the banking system any better today than it was even in the fear days of 2008? I would tell you that were it not for the banks' ability to price nearly any asset at any price of its choosing that systemically they ALREADY are dead. Think about the derivatives market, how is it possible for 2 banks trading with each other, both on opposite sides of the trade to be carrying the trade as a "profit"? In reality this cannot be possible ...and lends credence to the thought process that the "winner" will become a loser when the loser fails to nor can "pay up".
Others bought Gold because they were crazy enough to think that the U.S. Treasury would default either through non payment or debauching the currency. In retrospect, these "crazies" were right! The Treasury is only "solvent" at this point because the Fed (the buyer of last and now only resort) is buying Treasuries that no one else will. Could the Treasury afford an interest rate structure at the "exorbitant" rate of 5%? Could they go forward paying double the interest that they are paying now? Triple or more?
There were still others who bought Gold simply because they believed that the Fed would "inflate", were these buyers correct? Are the "official" inflation numbers correct? I would like to remind you what exactly "inflation" is...it is the creation , or better said OVER creation of currency. Does $85 billion per month qualify? When looked back upon, "QE" will be synonymous and interchangeable with the word monetization, period.
How about those who feared the breakdown of society and the rule of law? Were they correct? Just look around you, would MF Global ever have been allowed in the past? Or bail ins? What more do you need to know than the FDIC changing the rules and saying that "depositors" are creditors...and apparently unsecured at this point. How about all of the spying? Race baiting? Are these conducive to a society going in the right direction?
I could go on and on but there is no point. The real point is that ALL of the reasons that people bought Gold in the first place are still here and now much more severe. "Because" the paper markets were used to crash the price, many have questioned their logic. Many "paper" holders have panicked and fled while physical buyers stepped up to the plate and have been gorging themselves. As mentioned in the title, when all is said and done the current correction will be viewed as one gigantic fake out. I believe that this manufactured correction will go down as one of, if not THE best buying opportunity in the entire bull market. We are in the midst of the greatest transfer of wealth in human history. Just look at the export (from the West) and import (to the East) numbers to see this as true... If you believe that the Dollar will "strengthen" while it is being over issued and the Gold is fleeing our shores then "fake out" is an excellent description. Regards, Bill H.
Please pay attention to this. Mark Grant is perfectly correct!!
(courtesy Mark Grant/zero hedge)
Please pay attention to this. Mark Grant is perfectly correct!!
(courtesy Mark Grant/zero hedge)
(courtesy Mark Grant/zero hedge)
The Drop-Dead Day
Submitted by Tyler Durden on 07/15/2013 08:23 -0400
Submitted by Mark J. Grant, author of Out of the Box,
Everyone wants to know what day everything will change. I have been asked and asked and asked when the cat will come out of the bag, when Jack will jump out of the Box and when the weasel will pop. I have even been asked when the cow will jump over the moon but I will let the cat with the fiddle answer that one.
I could tell you that I have spent long nights with the ancient runes. Maybe I should claim that, being the Wizard, I have cast the Calendarus Spell and divined the future. Another option would be to claim secret knowledge from the newest Sage, Ms. Lalique. None of these would be true though so I will not make such statements.
No, the Drop Dead Day will prove to be accurate but for other reasons.
It is the date of the German elections - September 22, 2013.
Portugal is about a nano-second from blowing up. Their ten year yield is now north of 7% and their political coalition is a hair's breadth from collapsing. The government has asked the IMF to delay their financial review until August citing political uncertainty.
Greece is right on the verge of coming unglued again. The Troika is demanding that Greece cute fifteen thousand Civil Service jobs. The unions are calling strikes once again and the current coalition rules by a handful of votes. Trouble is again on the horizon.
The Prime Minister and the government of Spain are accused of graft. The Spanish economy is worsening dramatically while unemployment surges. The Spanish banks are asking for their deferred tax assets to be guaranteed by the nation in another attempt to turn water into wine. Things are not going well.
France is in a recession and their economy is getting worse. Last Friday they lost the last of their "AAA" ratings and there is no joy in Paris I can assure you. Further budget cuts are on the horizon as encouraged by the IMF while Monsieur Hollande sinks in the polls.
Having identified all of this it will not matter until the day after September 22. Nothing is going to be allowed to upset the bratwurst cart and I mean nothing. If more money is needed it will be spent. If favors need to be called the phone will be in use. If Frau Merkel needs to give Mr. Draghi a new set of instructions; they will be issued. Whatever it takes. Whatever must be done. Nothing will get in the way of the Chancellor's re-election.
In the days following the election, however, the gates of Hell may open and the brimstone may spill out. Every problem, question and issue that was delayed, put-off and tabled until the German election took place will rear their ugly heads for public inspection. Attitudes will change. Money will not be easily forthcoming and the noose will tighten around the necks of the troublemakers. Portugal, Spain, Italy, Cyprus and Greece will be wailing once again.
http://www.zerohedge.com/news/2013-07-15/hinde-capital-china-gold-andthe-continuing-unravelling-our-monetary-order
Hinde Capital On China, Gold, AndThe Continuing Unravelling Of Our Monetary Order
Submitted by Tyler Durden on 07/15/2013 19:17 -0400
The global crisis is a financial crisis driven primarily by global trade and capital imbalances; and Hinde Capital believes the crisis is in full swing again and asset prices are in danger of falling globally. Money is less effective at catching the falling knife. Investors and policymakers do not believe this is the beginning of a major EM contagion crisis. They are lulling themselves into a false sense of security. They see the EM market tremors, and do not fear a re-run of the EM crises of old. They are right. This is not (just) going to be an EM crisis. The disproportionate reaction of central bankers and policymakers alike has merely succeeded in compounding and exacerbating the error of this highly imbalanced monetary system. Recent events in emerging countries are a manifestation of the continuing unravelling of our monetary order.
Via Hinde Capital,
Over the past four decades the global economy has largely experienced prolonged imbalances, with countries running large current account deficits in symbiotic relationships with those running large surpluses. In our recent HindeSight Investor Letter – Top of the BoPs (below) - we revisit our long held belief that the current monetary order as defined by a constellation of exchange rate arrangements between the major global currencies, and which maintained these imbalances artificially, has led to excessive global liquidity and credit creation. This in turndrove a litany of asset price bubbles.
The bursting of these asset bubbles has continued in a series these past two decades, each one’s demise leading to more disruptive policy responses which have only succeeded in igniting yet more bubbles, only for those too to fail.
Finally in 2008 we witnessed the finale of decades of credit creation, rising in what appeared to be a crescendo of credit excess and widespread asset booms. We saw this event as the death throes of an unstable monetary regime, only then to see an unprecedented global reaction by policymakers in a coordinated fashion to keep the global system alive. For a moment here today, there are those who dare to believe they have succeeded, with rising equity markets a testimony to a reviving global economy. Nothing could be further from reality.
We stand by our assessment that the disproportionate reaction of central bankers and policymakers alike has merely succeeded in compounding and exacerbating the error of this highly imbalanced monetary system. Recent events in emerging countries are a manifestation of the continuing unravelling of our monetary order.
...
In the 1980s it was a hike by the US Fed that triggered the LatAm crisis. Today, the mere whisper of tighter monetary conditions in the US, vis-a-vis a tapering of QE has led to higher bond rates globally. Note tapering is not the same as hiking interest rates.
The consequences of multiple rounds of QE have heightened global risks as it has both exacerbated ‘currency competition’ and hot capital flows into countries seeking desperately for a return both from income and capital growth. This has created major distortions in term rates, equity and bond values, driving them artificially high in price.
These distortions have created risks far greater than the fragilities of EM countries of yesterday years. The system of credit creation has produced unstable growth underpinned with collateral which is both mobile and suspect in its integrity.
Investors have nowhere to turn, emerging market countries growth is faltering in response to export disadvantages brought about by rampant G10 currency devaluations. China is finally succumbing to its side of the global imbalance excesses. First it was the deficit nations now it’s the turn of the creditor nations to falter, primarily China.
Trade flow reversals are leading to massive capital outflows out of EMs and the question remains: will the central banks of these countries sell their FX reserves, UST- bonds and euro government bonds (bunds) to finance this surge in outflows?
It is not clear that renewed global central bank liquidity provision will even stabilise a situation we see as growing dire by the day. China is the driver. All eyes on China.
...
We believe the bursting of the ‘Great Bond Bubble’ will lead to a formative and substantial rise in gold as official money, institutional and investor money seeks an asset that can protect us all from a global default and resetting of the monetary order. The time to buy gold is fast approaching, if that time is not already upon us.
Submitted by Mark J. Grant, author of Out of the Box,
Everyone wants to know what day everything will change. I have been asked and asked and asked when the cat will come out of the bag, when Jack will jump out of the Box and when the weasel will pop. I have even been asked when the cow will jump over the moon but I will let the cat with the fiddle answer that one.
I could tell you that I have spent long nights with the ancient runes. Maybe I should claim that, being the Wizard, I have cast the Calendarus Spell and divined the future. Another option would be to claim secret knowledge from the newest Sage, Ms. Lalique. None of these would be true though so I will not make such statements.
No, the Drop Dead Day will prove to be accurate but for other reasons.
It is the date of the German elections - September 22, 2013.
Portugal is about a nano-second from blowing up. Their ten year yield is now north of 7% and their political coalition is a hair's breadth from collapsing. The government has asked the IMF to delay their financial review until August citing political uncertainty.
Greece is right on the verge of coming unglued again. The Troika is demanding that Greece cute fifteen thousand Civil Service jobs. The unions are calling strikes once again and the current coalition rules by a handful of votes. Trouble is again on the horizon.
The Prime Minister and the government of Spain are accused of graft. The Spanish economy is worsening dramatically while unemployment surges. The Spanish banks are asking for their deferred tax assets to be guaranteed by the nation in another attempt to turn water into wine. Things are not going well.
France is in a recession and their economy is getting worse. Last Friday they lost the last of their "AAA" ratings and there is no joy in Paris I can assure you. Further budget cuts are on the horizon as encouraged by the IMF while Monsieur Hollande sinks in the polls.
Having identified all of this it will not matter until the day after September 22. Nothing is going to be allowed to upset the bratwurst cart and I mean nothing. If more money is needed it will be spent. If favors need to be called the phone will be in use. If Frau Merkel needs to give Mr. Draghi a new set of instructions; they will be issued. Whatever it takes. Whatever must be done. Nothing will get in the way of the Chancellor's re-election.
In the days following the election, however, the gates of Hell may open and the brimstone may spill out. Every problem, question and issue that was delayed, put-off and tabled until the German election took place will rear their ugly heads for public inspection. Attitudes will change. Money will not be easily forthcoming and the noose will tighten around the necks of the troublemakers. Portugal, Spain, Italy, Cyprus and Greece will be wailing once again.
I could tell you that I have spent long nights with the ancient runes. Maybe I should claim that, being the Wizard, I have cast the Calendarus Spell and divined the future. Another option would be to claim secret knowledge from the newest Sage, Ms. Lalique. None of these would be true though so I will not make such statements.
No, the Drop Dead Day will prove to be accurate but for other reasons.
It is the date of the German elections - September 22, 2013.
Portugal is about a nano-second from blowing up. Their ten year yield is now north of 7% and their political coalition is a hair's breadth from collapsing. The government has asked the IMF to delay their financial review until August citing political uncertainty.
Greece is right on the verge of coming unglued again. The Troika is demanding that Greece cute fifteen thousand Civil Service jobs. The unions are calling strikes once again and the current coalition rules by a handful of votes. Trouble is again on the horizon.
The Prime Minister and the government of Spain are accused of graft. The Spanish economy is worsening dramatically while unemployment surges. The Spanish banks are asking for their deferred tax assets to be guaranteed by the nation in another attempt to turn water into wine. Things are not going well.
France is in a recession and their economy is getting worse. Last Friday they lost the last of their "AAA" ratings and there is no joy in Paris I can assure you. Further budget cuts are on the horizon as encouraged by the IMF while Monsieur Hollande sinks in the polls.
Having identified all of this it will not matter until the day after September 22. Nothing is going to be allowed to upset the bratwurst cart and I mean nothing. If more money is needed it will be spent. If favors need to be called the phone will be in use. If Frau Merkel needs to give Mr. Draghi a new set of instructions; they will be issued. Whatever it takes. Whatever must be done. Nothing will get in the way of the Chancellor's re-election.
In the days following the election, however, the gates of Hell may open and the brimstone may spill out. Every problem, question and issue that was delayed, put-off and tabled until the German election took place will rear their ugly heads for public inspection. Attitudes will change. Money will not be easily forthcoming and the noose will tighten around the necks of the troublemakers. Portugal, Spain, Italy, Cyprus and Greece will be wailing once again.
http://www.zerohedge.com/news/2013-07-15/hinde-capital-china-gold-andthe-continuing-unravelling-our-monetary-order
Hinde Capital On China, Gold, AndThe Continuing Unravelling Of Our Monetary Order
The global crisis is a financial crisis driven primarily by global trade and capital imbalances; and Hinde Capital believes the crisis is in full swing again and asset prices are in danger of falling globally. Money is less effective at catching the falling knife. Investors and policymakers do not believe this is the beginning of a major EM contagion crisis. They are lulling themselves into a false sense of security. They see the EM market tremors, and do not fear a re-run of the EM crises of old. They are right. This is not (just) going to be an EM crisis. The disproportionate reaction of central bankers and policymakers alike has merely succeeded in compounding and exacerbating the error of this highly imbalanced monetary system. Recent events in emerging countries are a manifestation of the continuing unravelling of our monetary order.
Via Hinde Capital,
Over the past four decades the global economy has largely experienced prolonged imbalances, with countries running large current account deficits in symbiotic relationships with those running large surpluses. In our recent HindeSight Investor Letter – Top of the BoPs (below) - we revisit our long held belief that the current monetary order as defined by a constellation of exchange rate arrangements between the major global currencies, and which maintained these imbalances artificially, has led to excessive global liquidity and credit creation. This in turndrove a litany of asset price bubbles.
The bursting of these asset bubbles has continued in a series these past two decades, each one’s demise leading to more disruptive policy responses which have only succeeded in igniting yet more bubbles, only for those too to fail.
Finally in 2008 we witnessed the finale of decades of credit creation, rising in what appeared to be a crescendo of credit excess and widespread asset booms. We saw this event as the death throes of an unstable monetary regime, only then to see an unprecedented global reaction by policymakers in a coordinated fashion to keep the global system alive. For a moment here today, there are those who dare to believe they have succeeded, with rising equity markets a testimony to a reviving global economy. Nothing could be further from reality.
We stand by our assessment that the disproportionate reaction of central bankers and policymakers alike has merely succeeded in compounding and exacerbating the error of this highly imbalanced monetary system. Recent events in emerging countries are a manifestation of the continuing unravelling of our monetary order.
...
In the 1980s it was a hike by the US Fed that triggered the LatAm crisis. Today, the mere whisper of tighter monetary conditions in the US, vis-a-vis a tapering of QE has led to higher bond rates globally. Note tapering is not the same as hiking interest rates.
The consequences of multiple rounds of QE have heightened global risks as it has both exacerbated ‘currency competition’ and hot capital flows into countries seeking desperately for a return both from income and capital growth. This has created major distortions in term rates, equity and bond values, driving them artificially high in price.
These distortions have created risks far greater than the fragilities of EM countries of yesterday years. The system of credit creation has produced unstable growth underpinned with collateral which is both mobile and suspect in its integrity.
Investors have nowhere to turn, emerging market countries growth is faltering in response to export disadvantages brought about by rampant G10 currency devaluations. China is finally succumbing to its side of the global imbalance excesses. First it was the deficit nations now it’s the turn of the creditor nations to falter, primarily China.
Trade flow reversals are leading to massive capital outflows out of EMs and the question remains: will the central banks of these countries sell their FX reserves, UST- bonds and euro government bonds (bunds) to finance this surge in outflows?
It is not clear that renewed global central bank liquidity provision will even stabilise a situation we see as growing dire by the day. China is the driver. All eyes on China.
...
We believe the bursting of the ‘Great Bond Bubble’ will lead to a formative and substantial rise in gold as official money, institutional and investor money seeks an asset that can protect us all from a global default and resetting of the monetary order. The time to buy gold is fast approaching, if that time is not already upon us.
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