Friday, October 13, 2017 8:58:37 PM
Can Of Worms Data
Opening the whole can tonight EnJoy
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Oct 13/GOLD AND SILVER RISE DUE TO POOR USA WAGE GROWTH/TRUMP DECERTIFIES USA /IRAN NUCLEAR AGREEMENT/
October 13, 2017 · by harveyorgan · in Uncategorized
GOLD: $1302.35 up $10,15
Silver: $1739 up 22 cents
Closing access prices:
Gold $1303.90
silver: $17.42
SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
SHANGHAI FIRST GOLD FIX: $1304,65 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1295,60
PREMIUM FIRST FIX: $9.05 (premiums getting larger)
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SECOND SHANGHAI GOLD FIX: $1305.65
NY GOLD PRICE AT THE EXACT SAME TIME: $1297.00
Premium of Shanghai 2nd fix/NY:$8.65(PREMIUMS GETTING LARGER)
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LONDON FIRST GOLD FIX: 5:30 am est $1293.90
NY PRICING AT THE EXACT SAME TIME: $1293.90
LONDON SECOND GOLD FIX 10 AM: $1299.60
NY PRICING AT THE EXACT SAME TIME. 1299.60
For comex gold:
OCTOBER/
NOTICES FILINGS TODAY FOR OCT CONTRACT MONTH: 5 NOTICE(S) FOR 500 OZ.
TOTAL NOTICES SO FAR: 2334 FOR 233,400 OZ (7.259TONNES)
For silver:
OCTOBER
124 NOTICES FILED TODAY FOR
620,000 OZ/
Total number of notices filed so far this month: 516 for 2,580,000 oz
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end
Let us have a look at the data for today
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In silver, the total open interest ROSE BY 1289 contracts from 187,422 UP TO 188,711 WITH RESPECT TO YESTERDAY’S TRADING (UP 9 CENTS). THE CROOKS ARE HAVING AN AWFUL TIME TRYING TO COVER THEIR MASSIVE SILVER SHORTS. IT IS OBVIOUS THAT WE MUST HAVE HAD ZERO BANKER SHORT COVERING.
RESULT: A GOOD SIZED RISE IN OI COMEX WITH THE 9 CENT PRICE RISE. OUR BANKERS COULD NOT COVER ANY OF THEIR HUGE SHORTFAL .
In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e. 0.944BILLION TO BE EXACT or 135% of annual global silver production (ex Russia & ex China).
FOR THE NEW FRONT OCT MONTH/ THEY FILED: 124 NOTICE(S) FOR 620,000 OZ OF SILVER.
In gold, the open interest ROSE BY 2858 CONTRACTS WITH THE GOOD SIZE RISE in price of gold ($6.20 ) . The new OI for the gold complex rests at 521,247. OUR BANKER FRIENDS COULD NOT COVER ANY OF THEIR GOLD SHORTS AS THEY RETREATED TO HIGHER GROUND.
Result: A GOOD SIZED INCREASE IN OI WITH THE RISE IN PRICE IN GOLD ($6.20). WE PROBABLY HAD ZERO BANKER GOLD SHORT COVERING BY THE BANKERS.
we had: 5 notice(s) filed upon for 500 oz of gold.
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With respect to our two criminal funds, the GLD and the SLV:
GLD:
Tonight , NO CHANGES in gold inventory at the GLD/
Inventory rests tonight: 858.45 tonnes.
SLV
Today: NO changes in inventory:
INVENTORY RESTS AT 326.898 MILLION OZ
end
.
First, here is an outline of what will be discussed tonight:
1. Today, we had the open interest in silver ROSE BY 1289 contracts from 187,442 UP TO 188,711(AND now A LITTLE CLOSER TO THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) . IT SEEMS THAT OUR BANKERS WERE AGAIN UNSUCCESSFUL IN COVERING THEIR SILVER SHORTS. THE DATA SEEMS TO SUGGEST THAT THE BANKERS COULD NOT ALSO COVER THEIR GOLD SHORTS COVERING . HOWEVER IT IS CLEAR THAT SILVER IS BECOMING IMPOSSIBLE FOR THE CROOKS TO COVER. THE BANKERS RETREATED TO HIGHER GROUND WHERE THEY WILL TRY AGAIN.
RESULT: A GOOD SIZED INCREASE IN SILVER OI AT THE COMEX WITH THE RISE IN PRICE OF 9 CENTS WITH RESPECT TO YESTERDAY’S TRADING. OUR BANKER FRIENDS WERE UNSUCCESSFUL IN THEIR ATTEMPT TO COVER ANY OF OUR SILVER SHORTS
(report Harvey)
.
2.a) The Shanghai and London gold fix report
(Harvey)
2 b) Gold/silver trading overnight Europe, Goldcore
(Mark O’Byrne/zerohedge
and in NY: Bloomberg
3. ASIAN AFFAIRS
i)Late THURSDAY night/FRIDAY morning: Shanghai closed UP 4,42 points or .13% /Hang Sang CLOSED UP 17,40 pts or .06% / The Nikkei closed UP 200.46 POINTS OR .96/Australia’s all ordinaires CLOSED UP 0.35%/Chinese yuan (ONSHORE) closed UP at 6.5877/Oil UP to 51.58 dollars per barrel for WTI and 57.45 for Brent. Stocks in Europe OPENED MIXED . ONSHORE YUAN CLOSED UP AGAINST THE DOLLAR AT 6.5877. OFFSHORE YUAN CLOSED STRONGER TO THE ONSHORE YUAN AT 6.5826 AND BOTH YUANS ARE STRONGER AGAINST THE DOLLAR. THE DOLLAR (INDEX) IS STRONGER AGAINST ALL MAJOR CURRENCIES. CHINA IS NOT HAPPY TODAY
i
3a)THAILAND/SOUTH KOREA/NORTH KOREA
i)North Korea/USA
b) REPORT ON JAPAN
c) REPORT ON CHINA
4. EUROPEAN AFFAIRS
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
6 .GLOBAL ISSUES
7. OIL ISSUES
8. EMERGING MARKET
9. PHYSICAL MARKETS
10. USA Stories
i
Let us head over to the comex:
The total gold comex open interest ROSE BY A STRONG 2858 CONTRACTS UP to an OI level of 521,247 WITH THE RISE IN THE PRICE OF GOLD ($6.20 RISE IN YESTERDAY’S TRADING). IT SEEMS THAT OUR BANKER FRIENDS TRIED TO COVER SOME OF THEIR HUGE GOLD SHORTFALL BUT TO NO AVAIL. SO THE BANKERS RETREATED TO HIGHER GROUND HOPING TO TRY AGAIN COVERING SOME OF THEIR SHORTFALL. OCTOBER IS AN ACTIVE DELIVERY MONTH ALTHOUGH IT IS THE WEAKEST IN TERMS OF ACTUAL DELIVERIES AND OPEN INTEREST. WE VISUALIZED THAT THROUGHOUT THE MONTH OF SEPTEMBER, THE CROOKS UTILIZED THE EMERGENCY EFP SCHEME TO TRANSFER OBLIGATIONS OVER TO LONDON. IT THEN STANDS TO REASON THAT IF THE EMERGENCY WAS IN FORCE THROUGHOUT THE MONTH OF SEPTEMBER IT WOULD CONTINUE ON FIRST DAY NOTICE WHEREBY ANOTHER 7200 LONG COMEX CONTRACTS WERE GIVEN 7200 EFP’S. WE HAVE NOW ENDED GOLDEN WEEK WHERE ALL OF CHINA WAS OFF AND AS SUCH WE SHOULD EXPECT GOLD TO BE STRONG THIS WEEK WITH CHINA RETURNING TO ACTIVE DUTY PURCHASING OUR PRECIOUS METALS.
Result: a GOODSIZED open interest INCREASE WITH THE GOOD SIZED RISE IN THE PRICE OF GOLD ($6.20). BANKERS RETREATED TO HIGHER GROUND AND COULD NOT COVER ANY PORTION OF THE GOLD SHORTFALL
IN SEPTEMBER,CHINA THREW OUT A TRIAL BALLOON LAST MONTH THAT THEY WERE CONSIDERING A YUAN BASED OIL CONTRACT ON THE SHANGHAI EXCHANGE AND THEN THE RECIPIENT OF YUAN WILL ALSO HAVE THE OPTION OF CONVERTING TO GOLD. I NOW STRONGLY BELIEVE THAT THAT IS THE REASON FOR THE CONSTANT TORMENT. THE BANKERS KNOW THAT THEIR GAME WILL BE UP ONCE WE GET A YUAN-PETRO SCHEME WITH A CONVERSION OF YUAN INTO GOLD.
I BELIEVE THE CHINESE WILL INTRODUCE THIS SCHEME AT THEIR BIG 5 YR FORUM BEGINNING ON OCT 18.
I WOULD IMAGINE THAT THE CHINESE WOULD TAKE IN ALL GOLD INITIALLY AT SAY $2,000…AND THE NEW GOLD RECEIVED WOULD BE USED TO SETTLE ON YUAN CASHED. IF 2,000 DOLLARS IS INSUFFICIENT TO RAISE ENOUGH GOLD, THEN FURTHER INCREASES WILL BE THE ORDER OF THE DAY UNTIL EQUILIBRIUM.
THE BANKERS FEARING THIS, HAS ORCHESTRATED HUGE RAIDS THESE PAST 3 WEEKS HOPING TO COVER AS MANY GOLD/SILVER SHORTS AS POSSIBLE.
NOW THAT WE ARE CLOSE TO THE 29TH CHINESE CONGRESS, THE BANKERS ARE TAKING NO CHANCES AS THEY START TO COVER THEIR GOLD/SILVER SHORTFALL.
We have now entered the active contract month of Oct and here we saw a LOSS of 0 contracts DOWN to 220 contracts. We had 0 notices filed yesterday so we LOST 0 contracts or NIL oz will NOT stand for delivery at the comex in this active delivery month of October and 0 EFP notices were given. The low number of notices early in the delivery cycle is evidence of a lack of physical gold.
The November contract saw A loss OF 90 contracts down to 1297.
The very big active December contract month saw it’s OI GAIN OF 310 contracts UP to 399,883
.
We had 5 notice(s) filed upon today for 500 oz
VOLUME FOR TODAY (PRELIMINARY) 273,662
CONFIRMED VOLUME YESTERDAY: 258,630
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And now for the wild silver comex results. Total silver OI ROSE BY 1289 CONTRACTS FROM 187,422 UP TO 188,711 WITH YESTERDAY’S 9 CENT RISE IN PRICE. WE HAVE HAD NO BANKER SHORT COVERING AS THE CROOKS TRY AND FAILED TO LOOSEN ANY SILVER LONGS FROM THE SILVER TREE AS THE BANKERS RETREATED TO HIGHER GROUND. THE GOOD SIZED RISE IN SILVER PRICE MEANS THAT THEY HAVE ABANDONED ALL HOPE OF COVERING AT LOWER PRICES, SO THEY REGROUP AT MUCH HIGHER PRICES WHERE THEY WILL ATTEMPT AGAIN AT COVERING.
We have now entered the non active contract month of October and here the OI LOST 87 contacts DOWN TO 425. We had 1 notice filed on yesterday so we LOST 86 contracts or AN ADDITIONAL 430,000 oz will NOT stand for delivery and 86 EFP’s were issued IN WHICH DEPARTING LONGS RECEIVED A FIAT BONUS PLUS A FUTURE DELIVERABLE PRODUCT AND NO DOUBT THAT WOULD BE A LONDON BASED FORWARD. November saw a GAIN of 17 contract(s) and thus RISIING TO 307. After November, the NEXT big active contract month is December and here the OI GAINED 437 contracts UP to 142,081 contracts.
We had 124 notice(s) filed for 620,000 oz for the OCT. 2017 contract
INITIAL standings for OCTOBER
Oct.13/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz n/a
Withdrawals from Customer Inventory in oz
n/a oz
Deposits to the Dealer Inventory in oz n/a oz
Deposits to the Customer Inventory, in oz
n/a
No of oz served (contracts) today
5notice(s)
500 OZ
No of oz to be served (notices)
215contracts
(21,500 oz)
Total monthly oz gold served (contracts) so far this month
2334 notices
233,400 oz
7.2441 tonnes
Total accumulative withdrawals of gold from the Dealers inventory this month NIL oz
Total accumulative withdrawal of gold from the Customer inventory this month xxx oz
Today we HAD xx kilobar transaction(s)/
WE HAD xx DEALER DEPOSIT:
total dealer deposits: xx oz
We had xxx dealer withdrawals:
total dealer withdrawals: xx oz
we had xxx customer deposit(s):
total customer deposits; xx oz
We had n/a customer withdrawal(s)
total customer withdrawals; nil oz
we had xxx adjustment(s)
For OCT:
Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 5 contract(s) of which 0 notices were stopped (received) by j.P. Morgan dealer and 4 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.
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To calculate the INITIAL total number of gold ounces standing for the OCTOBER. contract month, we take the total number of notices filed so far for the month (2334) x 100 oz or 232,900 oz, to which we add the difference between the open interest for the front month of OCT. (220 contracts) minus the number of notices served upon today (5) x 100 oz per contract equals 254,900 oz, the number of ounces standing in this active month of OCT.
Thus the INITIAL standings for gold for the OCTOBER contract month:
No of notices served (2334) x 100 oz or ounces + {(220)OI for the front month minus the number of notices served upon today (5) x 100 oz which equals 254,900 oz standing in this active delivery month of OCTOBER (7.928tonnes).
WE LOST 0 CONTRACTS OR AN ADDITIONAL NIL OZ WILL STAND
IT WAS OBVIOUS THAT THERE WAS HARDLY ANY GOLD TO DELIVER UPON LONGS IN SEPTEMBER AND THIS CONTINUES ON IN OCTOBER. THE CROOKS USE THE EFP’S TO TRANSFER THEIR OBLIGATION TO ANOTHER EXCHANGE. THIS IS WHY ANOTHER 5400 EFP’S WERE ISSUED FOR OCTOBER GOLD ON FIRST DAY NOTICE AND IT ALSO EXPLAINS THE LACK OF DELIVERY NOTICES IN THE EARLY PART OF THIS DELIVERY ACTIVE MONTH.
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Total dealer inventory 598,132.542 or 18.604 tonnes (dealer gold continues to disappear)
Total gold inventory (dealer and customer) = 8,771,375.170 or 272.82 tonnes
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process and are being used in the raiding of gold!
The gold comex is an absolute fraud. The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction. This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
IN THE LAST 13 MONTHS 80 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE OCTOBER DELIVERY MONTH
OCTOBER INITIAL standings
Oct 13. 2017
Silver Ounces
Withdrawals from Dealers Inventory n/a
Withdrawals from Customer Inventory
n/a oz
Deposits to the Dealer Inventory
n/a oz
Deposits to the Customer Inventory
n/a
No of oz served today (contracts)
124 CONTRACT(S)
(620,000 OZ)
No of oz to be served (notices)
301contracts
(1,505,000 oz)
Total monthly oz silver served (contracts) 516contracts
(2,580,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month NIL oz
Total accumulative withdrawal of silver from the Customer inventory this month xx oz
today, we had xxx deposit(s) into the dealer account:
total dealer deposit: xxx oz
we had xxx dealer withdrawals:
total dealer withdrawals: xxx oz
we had xx customer withdrawal(s):
TOTAL CUSTOMER WITHDRAWALS: xx oz
We had xx Customer deposit(s):
***deposits into JPMorgan have stopped again
In the month of March and February, JPMorgan stopped (received) almost all of the comex silver contracts.
why is JPMorgan bringing in so much silver??? why is this not criminal in that they are also the massive short in silver
total customer deposits: 600,627.490 oz
we had 0 adjustment(s)
The total number of notices filed today for the OCTOBER. contract month is represented by 124 contract(s) for 620000 oz. To calculate the number of silver ounces that will stand for delivery in OCTOBER., we take the total number of notices filed for the month so far at 514 x 5,000 oz = 2,580,000 oz to which we add the difference between the open interest for the front month of OCT. (425) and the number of notices served upon today (124x 5000 oz) equals the number of ounces standing.
.
Thus the INITIAL standings for silver for the OCTOBER contract month: 516 (notices served so far)x 5000 oz + OI for front month of OCTOBER(425) -number of notices served upon today (124)x 5000 oz equals 4,085,000 oz of silver standing for the OCTOBER contract month. This is HUGE for this NON active delivery month. THE INCREASE IN TOTAL OZ STANDING FOR SILVER CONTINUES TO ADVANCE
WE LOST 86 CONTRACTS OR AN ADDITIONAL 430,000 OZ WILL NOT STAND FOR DELIVERY.
ESTIMATED VOLUME FOR TODAY: 80,543
CONFIRMED VOLUME FOR YESTERDAY: 64,376 CONTRACTS
Total dealer silver: 39.345 million (close to record low inventory
Total number of dealer and customer silver: 220.100 million oz
The record level of silver open interest is 234,787 contracts set on April 21./2017 with the price at that day at $18.42
The previous record was 224,540 contracts with the price at that time of $20.44
end
NPV for Sprott and Central Fund of Canada
1. Central Fund of Canada: traded at Negative 1.7 percent to NAV usa funds and Negative 1.5% to NAV for Cdn funds!!!!
Percentage of fund in gold 62.6%
Percentage of fund in silver:37.4%
cash .+0.0%( Oct13/2017)
2. Sprott silver fund (PSLV): STOCK FALLS TO -0.60% (Oct 13/2017)
3. Sprott gold fund (PHYS): premium to NAV falls TO -0.58% to NAV (Oct 13/2017 )
Note: Sprott silver trust back into NEGATIVE territory at -0.60%-/Sprott physical gold trust is back into NEGATIVE/ territory at -0.58%/Central fund of Canada’s is still in jail but being rescued by Sprott.
Sprott WINS hostile 3.1 billion bid to take over Central Fund of Canada
(courtesy Sprott/GATA)
Sprott Inc. to take control of rival gold holder Central Fund of Canada
by THE CANADIAN PRESS
Posted Oct 2, 2017 8:43 am PDT
Last Updated Oct 2, 2017 at 9:20 am PDT
TORONTO – Sprott Inc. (TSX:SII) says it has struck a deal to take control of rival gold-holding firm Central Fund of Canada Ltd. (TSX:CEF.A) after a protracted takeover effort.
Toronto-based Sprott said Monday it will pay $120 million in cash and stock for Central Fund of Canada Ltd.’s common shares and for the right to administer and manage the fund’s assets.
The deal, which requires approval from Central Fund shareholders, would see its class A shareholders transferred to a new Sprott Physical Gold and Silver Trust.
Sprott says the deal would add $4.3 billion to its assets under management, which are focused largely on holding physical precious metals on behalf of clients, and 90,000 investors to its client base.
In March, Sprott tried to go through the Court of Queen’s Bench of Alberta to allow Central Fund’s class A shareholders to swap their shares to Sprott after the family that controls Central Fund rebuffed their attempt to make a deal.
Last year Sprott took over Central GoldTrust, a similar fund controlled by the same family, after securing support from more than 96 per cent of shareholder votes cast.
END
And now the Gold inventory at the GLD
0CT 13/ NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 858.45 TONNES
Oct 12/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 858.45 TONNES
Oct 10/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 858.45 TONNES
Oct 9/ANOTHER DEPOSIT OF 4.43 TONNES INTO GLD/INVENTORY RESTS AT 858.45 TONNES
Oct 6/A DEPOSIT OF 2.96 TONNES OF GOLD INVENTORY INTO THE GLD/TONIGHT IT RESTS AT 854.02 TONNES
Oct 5/A LOSS OF 3.24 TONNES OF GOLD INVENTORY FROM THE GLD/INVENTORY RESTS AT 851.06 TONNES
Oct 4/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 854.30 TONNES
oCT 3/ A HUGE WITHDRAWAL OF 10.35 TONNES FROM THE GLD/INVENTORY RESTS AT 854.30 TONNES
Oct 2/STRANGE/WITH GOLD’S CONTINUAL WHACKING WE GOT A BIG FAT ZERO OZ LEAVING THE GLD/INVENTORY RESTS AT 864.65 TONNES
SEPTEMBER 29/no changes in gold inventory at the GLD/Inventor rests at 864.65 tonnes
Sept 28/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 864.65 TONNES
Sept 27/WOW!! WITH GOLD DOWN $13.25, WE HAD A HUGE 8.57 TONNES OF GOLD ADDED TO THE GLD/
Sept 26/no changes in gold inventory at the GLD/Inventory rests at 856.08 tonnes
Sept 25./Another big deposit of 3.84 tonnes into GLD/Inventory rests tonight at 856.08 tonnes
Sept 22/with gold up only 1 dollar on the day we had a massive 6.21 tonnes of gold added to the GLD/.this is a good sign that gold will advance nicely this coming week.
Sept 21/no change in gold inventory tonight/inventory rests at 846.03 tonnes
Sept 20/no change in gold inventory tonight/inventory rests at 846.03 tonnes
Sept 19/another deposit of 2.07 tonnes of gold into the GLD/inventory rests at 846.03 tonnes
Sept 18/a huge 5.32 tonnes of gold deposit into the GLD despite gold’s whack today/inventory rests at 843.96 tonnes
Sept 15./strange!!no change in GLD after the whacking of gold/inventory remains at 838.64 tonnes
Sept 14./no changes at the GLD/inventory rests at 838.64 tonnes
Sept 13/late last night a huge 4.14 tonnes of gold was added to the GLD inventory/inventory rests at 838.64 tonnes.
Sept 12/as of 5: 40 pm est, no changes in gold inventory at the GLD/Inventory rests at 834.50 tonnes
Sept 11/Today we had a rather large 2.37 tonnes of gold removed from the GLD/Inventory rests at 834.50 tonnes
Sept 8/we had a tiny withdrawal of .34 tonnes and probably that would be to pay for fees like insurance etc.
Inventory rests at 836.87 tonnes
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Oct 12/2017/ Inventory rests tonight at 858.45 tonnes
*IN LAST 250 TRADING DAYS: 82.50 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 185 TRADING DAYS: A NET 74.78 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
*FROM FEB 1/2017: A NET 43.67 TONNES HAVE BEEN ADDED.
end
Now the SLV Inventory
oCT 13/ NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 325.765 MILLION OZ
Oct 12/THE LAST TWO DAYS WE LOST 1.113 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 325.765 MILLION OZ
Oct 10/NO CHANGE IN INVENTORY AT THE SLV/INVENTORY RESTS AT 326.898 MILLION OZ/
Oct 9/A HUGE DEPOSIT OF 1.227 MILLION OZ INTO THE INVENTORY OF THE SLV/INVENTORY RESTS AT 326.898 MILLION OZ
Oct 6/NO CHANGE IN SILVER INVENTORY/ INVENTORY RESTS AT 325.671 MILLON OZ
Oct 5/ANOTHER WITHDRAWAL OF 944,000 OZ FROM THE SLV/INVENTORY RESTS AT 325.671 MILLION OZ
OCT 4/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 326.615 MILLION Z
Oct 3/A TINY WITHDRAWAL OF 143,000 FROM THE SLV FOR FEES/INVENTORY RESTS AT 326.615 MILLION OZ
Oct 2/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 326,757 MILLION OZ
SEPTEMBER 29/no changes in silver inventory at the SLV/inventory rests at 326.757 million oz/
Sept 28/NO CHANGES IN SILVER INVENTORY/INVENTORY RESTS AT 326.757 MILLION OZ/
Sept 27/STRANGE!! SILVER IS HIT FOR 24 CENTS YESTERDAY AND. 9 CENTS TODAY AND YET NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 326.757 MILLION OZ
Sept 26./no change in silver inventory at the SLV/.inventory rests at 326.757 million oz
Sept 25./ a big deposit of 1.842 million oz into the SLV/inventory rests at 326.757 million oz/
Sept 22/no change in silver inventory at the SLV/Inventory rests at 324.915 million oz/
Sept 21/no change in silver inventory at the SLV/Inventory rests at 324.915 million oz
Sept 20/no changes in silver inventory/Inventory remains at 324.915 million oz
Sept 19/strange!! another withdrawal of 1.134 million oz despite the rise in silver/inventory rests at 324.915 million oz
Sept 18/a withdrawal of 1.039 million oz from the SLV/Inventory rests at 326.049 million oz
Sept 15./no change in silver inventory at the SLV/Inventory rests at 327.088 million oz/
Sept 14/no change in silver inventory at the SLV/Inventory rests at 327.088 million oz/
Sept 13/no change in silver inventory at the SLV/Inventory rests at 327.088 million oz/
Sept 12.2017/no change in silver inventory at the SLV/Inventory rests at 327.088 million oz/
Sept 11.2017: no change in silver inventory at the SLV/Inventory rests at 327.088 million oz/
Sept 8/no change in silver inventory at the SLV/Inventory rests at 327.088 million oz/
Oct 11/2017:
Inventory 325.765 million oz
end
6 Month MM GOFO
Indicative gold forward offer rate for a 6 month duration
+ 1.43%
12 Month MM GOFO
+ 1.64%
30 day trend
end
Major gold/silver trading/commentaries for FRIDAY
GOLDCORE/BLOG/MARK O’BYRNE.
GOLD/SILVER
U.S. Mint Gold Coin Sales and VIX Point To Increased Market Volatility and Higher Gold
By janskoyles October 13, 2017 0 Comments
– US Mint gold coin sales and VIX at weakest in a decade
– Very low gold coin sales and VIX signal volatility coming
– Gold rises 1.7% this week after China’s Golden Week; pattern of higher prices after Golden Week
– U.S. Mint sales do not provide the full picture of robust global gold demand
– Perth Mint gold sales double in September reflecting increased gold demand in both Asia and Europe
– Middle East demand likely high given geopolitical risks
– Iran seeing increased gold demand and Iran’s gold coin price up by 5%
– Trump’s war mongering could see demand accelerate
– Germany seeing very robust demand and now world’s largest gold buyer
Editor: Mark O’Byrne
Source: ZeroHedge
US Mint coin sales fell to a decade low last month. This follows poor sales since the beginning of 2017. In the third quarter sales reached nearly 3.7 million ounces. September gold coin sales were down a whopping 88% compared to the same period last year.
Year to date sales at 232,000 ounces are 66.5% lower than the 692,500 ounces delivered during the first nine months of 2016, according to the U.S. Mint.
American Eagle gold coin sales did see a slight uptick in demand from very low levels and increased by 11,500 ounces in September which was up by 21.1% in August.
Is this pick-up in US coin demand a sign of things turning around? Perhaps, but we believe the low coin sales this year might say something else about the wider economy. It is also important to look at gold coin and bar sales across the globe to get a better feel for actual demand.
Sign of the end, but for what?
Bloomberg were quick to point out that US Mint sales were at a decade low.
They believed this was due to investors turning ‘sour on bullion’ and that gold’s appeal ‘is waning as retail investors seek better returns in equities, lured by the S&P 500 Index’s climb to records.’
However, the picture of declining gold coin sales has not been taken against the backdrop of the last decade.
ZeroHedge were quick to spot a potential pattern and correlation with the VIX which may point to increased volatility and uncertainty and a prompt recovery in the gold price:
“The first nine months of 2017 have seen demand for gold coins slump. As stocks soar unendingly (and vol drops unerringly) the US Mint notes that sales of coins is at its weakest in a decade as complacency in the face of ever-increasing potential-crisis-events nears record highs.
The question is – what happened the last time the public gave up on buying “protection against the idiocy of the political cycle”?
The answer is awkwardly simple… everything collapsed.”
This is important news for those who are getting wary about the massive complacency and “irrational exuberance” currently seen in global stock and bond markets.
It’s not all about the U.S. Mint gold coin demand
Given how much Trump dominates the headlines it might be hard to remember that U.S. demand is not a reflection of total gold demand.
Whilst the U.S. Mint poor gold coin continued in September, their cousins ‘down under’ recorded excellent sales in September.
On Monday we covered how Perth Mint gold coins sales doubled in September. Last month the Perth Mint sold 46,415 ounces of gold in bars and coins. In August, its gold bullion sales were just 23,130 ounces. Silver product sales soared by 78 percent from the previous month.
Why is this relevant? The Perth Mint sells gold all over the world. The US Mint predominantly sells domestically and would be more dependent on domestic demand.
The Australian Mint’s sales figures are a better reflection of the robust demand in the likes of Asia and Europe, where investors are growing increasingly risk aware.
Data released by the World Gold Council last week showed Germany is now the world’s largest buyers of gold. We explained:
Last year, more than €6bn was ploughed into gold investment products in Germany and, encouragingly, there is room for further growth: consumer research indicates there is latent retail demand which the industry can tap into.
We have long said that German physical and ETF gold demand is a very important demand factor in the gold market and one that is continuously underestimated. It was good to have the WGC research bolster our view.
No way of knowing real levels of demand
In the short-term we need to remind ourselves that these are only official figures for two mints.
When we reported on the 11% increase in gold bar and coin demand for the first half of 2017, we reminded readers that there are likely other sources of demand that are not recorded. We said that it is
“Important to note this is all official, transparent and recorded demand. There is demand and flows of gold that cannot be and are not recorded – especially into the Middle East, India, Russia and of course China.”
Each week there are stories of gold smugglers caught in airports, but this is just the tip of the iceberg. At a much higher level we know that the likes of Russia and China are working together to fight US dollar hegemony, with the help of gold.
The Government of India Ministry Of Commerce and Industry reported this month that $1.9 billion worth of gold was imported to the county in August. In the same month last year, it was more than $1.1 billion worth of gold
We also see record numbers of gold imports and exchange activity in the Middle East, especially in Dubai.
Last month the Central Bank of Iran cut interest rates. Since then the gold price has surged, setting a new five-year record. The price of a gold coin in Iran, according to the Tehran Gold and Jewelry Union, has climbed by 5% in the last month.
What about China? The mainstream have also been quick to point to weak sales despite China’s Golden Week. This is also missing the bigger picture, argues ZeroHedge.
“China will be back in business on October 9th, and that means the Shanghai Gold Exchange, which opened in 2015 to counter Western manipulation of precious metals, will likely help re-balance prices to where they were before this recent takedown.
We could be wrong, but something tells us gold and silver prices won’t stay this low for much longer and that they could well see a complete turnaround when China reopens on October 9th.”
China’s Golden Week might even point to a quick recovery and the gold price coming back stronger than before, if earlier years are anything to go by:
Complacency dominates
Currently the mood of markets is thick with complacency. Risk is significantly under priced and underestimated.
It is tough to reconcile the risks we see currently and on the horizon against the backdrop of record stock market prices. Complacency may well have seeped into the market for the US Mint’s coins.
However, it is clear market volatility is coming. It looks like central bankers and governments won’t be able to forestall the inevitable for much longer.
Some in the mainstream media are, as ever, keen to point to ‘disaster’ in the gold market.
At worst, the US Mint figures are a small snapshot of complacency in a world which is otherwise focused on stocking up on gold. At best they are an indication that markets are due to have another roller coaster ride of uncertainty and volatility making the case for hedging with gold even more compelling.
Investors should be taking advantage of the valuable time in this the ‘calm before the storm’ and the low gold price. In Europe and Asia it is the imminent feeling of uncertainty and growing instability which is driving buyers to allocate more to gold. This might not be felt just yet in the United States, but lots of indications suggest it soon will be.
As ever, best to hope for the best but be financially prepared for less benign scenarios …
News and Commentary
Gold rally pauses ahead of U.S. inflation data (Reuters.com)
Dollar Snaps Four-Week Rally as Stocks Consolidate (Bloomberg.com)
Inflation weighs on yields, dollar; stocks lackluster (Reuters.com)
U.S. producer prices increase; weekly jobless claims fall (Reuters.com)
Bitcoin Breaches New Milestone by Smashing Past $5,000 Mark (Bloomberg.com)
Bitcoins surges to new record over $5000. Source Bloomberg
Five things to do when every investment is too expensive (MarketWatch.com)
Stocks will beat houses over the next few years – Frisby (MoneyWeek.com)
Three ways that China’s big political congress matters to investors (StansBerryChurcHouse.com)
Bob Corker Is Just the Beginning of Trump’s Tax-Cut Problems (Bloomberg.com)
Yellowstone Supervolcano’s Nasty Surprise: Only Decades To Prepare For An Eruption (Forbes.com)
Central banks hedging against geopolitical risk with gold (Nikkei.com)
Gold Prices (LBMA AM)
13 Oct: USD 1,293.90, GBP 972.88 & EUR 1,093.73 per ounce
12 Oct: USD 1,294.45, GBP 977.96 & EUR 1,092.26 per ounce
11 Oct: USD 1,290.20, GBP 978.62 & EUR 1,091.90 per ounce
10 Oct: USD 1,289.60, GBP 977.77 & EUR 1,094.61 per ounce
09 Oct: USD 1,282.15, GBP 976.23 & EUR 1,092.01 per ounce
06 Oct: USD 1,268.20, GBP 970.43 & EUR 1,083.93 per ounce
05 Oct: USD 1,278.40, GBP 969.28 & EUR 1,086.51 per ounce
Silver Prices (LBMA)
13 Oct: USD 17.20, GBP 12.94 & EUR 14.55 per ounce
12 Oct: USD 17.20, GBP 13.06 & EUR 14.50 per ounce
11 Oct: USD 17.15, GBP 13.00 & EUR 14.51 per ounce
10 Oct: USD 17.12, GBP 12.98 & EUR 14.53 per ounce
09 Oct: USD 16.92, GBP 12.86 & EUR 14.41 per ounce
06 Oct: USD 16.63, GBP 12.73 & EUR 14.20 per ounce
05 Oct: USD 16.66, GBP 12.64 & EUR 14.19 per ounce
Recent Market Updates
– Global Outlook – Mad, Mad, Mad, MAD World: News in Charts
– Young Guns of Gold Podcast – ‘The Everything Bubble’
– London House Prices Are Falling – Time to Buckle Up
– Perth Mint Gold Coins Sales Double In September
– Survey shows UK and US Pensions Crisis is Imminent
– Gold Investment In Germany Surges – Now World’s Largest Gold Buyers
– Yahoo Hacking Highlights Cyber Risk and Increasing Importance of Physical Gold
– Safe Haven Silver To Outperform Gold In Q4 And In 2018
– Plan For Run On The Pound
– Russia Gold Rush Sees Record Reserves For Putin Era
– China Catalyst To Send Gold Over $10,000 Per Ounce?
– Gold Matches S&P 500 Performance In First 3 Quarters; Up 12% 2017 YTD
– Gold Standard Resulted In “Fewer Catastrophes” – FT
http://www.goldcore.com/us/gold-blog/gold-investment-germany-surges-now-worlds-largest-gold-buyers/
END
This is a big story as China now establishes a yuan-rouble payment system which will be a forerunner for the eventual backing of the yuan with gold and the setting up of the yuan -petro –gold payment system.
(courtesy Reuters)
China establishes yuan-ruble payment system
SHANGHAI (Reuters) – China has established a payment versus payment (PVP) system for Chinese yuan and Russian ruble transactions in a move to reduce risks and improve the efficiency of its foreign exchange transactions.
FILE PHOTO: A China yuan note is seen in this illustration photo May 31, 2017. REUTERS/Thomas White/Illustration/File Photo
The PVP system for yuan and ruble transactions was launched on Monday after receiving approval from China’s central bank, according to a statement by the country’s foreign exchange trading system.
It marks the first time a PVP system has been established for trading the yuan and foreign currencies, said the statement, which was posted on Wednesday on the website of the China Foreign Exchange Trade System (CFETS).
PVP systems allow simultaneous settlement of transactions in two different currencies.
CFETS said the system would reduce settlement risk as well as the risk of transactions taking place in different time zones, and improve foreign exchange market efficiency.
CFETS said it plans to introduce PVP systems for yuan transactions with other currencies based on China’s Belt and Road initiative, and complying with the process of renminbi internationalization.
China has ambitious plans to create a New Silk Road to expand links between Asia, Africa, Europe.
Russia and Central Asia are considered top-priority oil and gas sources for China, the world’s top energy consumer.
Reporting by Andrew Galbraith; Editing by Kim Coghill
Our Standards:The Thomson Reuters Trust Principles.
end
ZEROHEDGE COMMENTS ON THE ABOVE STORY
(COURTESY ZEROHEDGE)
China Launches Yuan-Ruble Payment System
The monetary regimes of China and Russia, two of the world’s most resource-rich nations, are drawing closer with every passing day.
In the latest push for convergence, China has established a payment versus payment (PVP) system for Chinese yuan and Russian ruble transactions in a move to reduce risks and improve the efficiency of its foreign exchange transactions. The PVP system for yuan and ruble transactions, designed to streamline commerce and curency transactions between the two nations, was launched on Monday after receiving approval from China’s central bank, according to a statement by the country’s foreign exchange trading system.
It marks the first time a PVP system has been established for trading the yuan and foreign currencies, said the statement, which was posted on Wednesday on the website of the China Foreign Exchange Trade System (CFETS). PVP systems allow simultaneous settlement of transactions in two different currencies.
According to CFETS, the system would reduce settlement risk as well as the risk of transactions taking place in different time zones, and improve foreign exchange market efficiency. Of course, if the two countries had a blockchain-based settlement system, they would already have all this and much more.
CFETS said it plans to introduce PVP systems for yuan transactions with other currencies based on China’s Belt and Road initiative, and complying with the process of renminbi internationalization. Russia, however, is a top priority: the world’s biggest oil producer recently became the largest source of oil for China, the world’s top energy consumer.
To be sure, the monetary convergence between Beijing and Moscow is hardly new. The most notable recent development took place in April, when the Russian central bank opened its first overseas office in Beijing on March 14, marking a step forward in forging a Beijing-Moscow alliance to bypass the US dollar in the global monetary system, and to phase-in a gold-backed standard of trade. As the South China Morning Post reported at the time, the new office was part of agreements made between the two neighbours “to seek stronger economic ties” since the West brought in sanctions against Russia over the Ukraine crisis and the oil-price slump hit the Russian economy.
At the time, Vladimir Shapovalov, a senior official at the Russian central bank, said the two central banks were drafting a memorandum of understanding to solve technical issues around China’s gold imports from Russia, and that details would be released soon, to which we said that If Russia – the world’s fourth largest gold producer after China, Japan and the US – is indeed set to become a major supplier of gold to China, the probability of a scenario hinted by many over the years, namely that Beijing is preparing to eventually unroll a gold-backed currency, increases by orders of magnitude.
Furthermore, also around the same time, as the Russian central bank was getting closer to China, China was responding in kind with the establishment of a clearing bank in Moscow for handling transactions in Chinese yuan. The Industrial and Commercial Bank of China (ICBC) officially started operating as a Chinese renminbi clearing bank in Russia on Wednesday this past Wednesday
“The financial regulatory authorities of China and Russia have signed a series of major agreements, which marks a new level of financial cooperation,” Dmitry Skobelkin, the abovementioned deputy head of the Russian Central Bank, said. “The launching of renminbi clearing services in Russia will further expand local settlement business and promote financial cooperation between the two countries,” he added according to.
Irina Rogova, a Russian financial analyst told the Russian magazine Expert that the clearing center could become a large financial hub for countries in the Eurasian Economic Union.
* * *
The creation of the clearing center, and the launch of PVP systems enables the two countries to further increase bilateral trade and investment while decreasing their dependence on the US dollar. It will create a pool of yuan liquidity in Russia that enables transactions for trade and financial operations to run smoothly. In expanding the use of national currencies for transactions, it could also potentially reduce the volatility of yuan and ruble exchange rates. The clearing center is one of a range of measures the People’s Bank of China and the Russian Central Bank have been looking at to deepen their co-operation, Sputnik reported.
But one of the most significant measures under consideration is the previously reported push for joint organization of trade in gold.
In recent years, China and Russia have been the world’s most active buyers of the precious metal. On a visit to China last year, the deputy head of the Russian Central Bank Sergey Shvetsov said that the two countries want to facilitate more transactions in gold between the two countries.
“We discussed the question of trade in gold. BRICS countries are large economies with large reserves of gold and an impressive volume of production and consumption of this precious metal. In China, the gold trade is conducted in Shanghai, in Russia it is in Moscow. Our idea is to create a link between the two cities in order to increase trade between the two markets,” First Deputy Governor of the Russian Central Bank Sergey Shvetsov told Russia’s TASS news agency.
In other words, China and Russia are continuing to shift away from dollar-based trade, to commerce which will eventually be backstopped by gold, or what is gradually emerging as an Eastern gold standard, one shared between Russia and China, and which may day backstop their respective currencies.
Meanwhile, the price of gold continues to reflect none of these potentially tectonic strategic shifts, just as China – which has been the biggest accumulator of gold in recent years – likes it.
END
Ridiculous!! Bitcoin is now 5625.00. I guess another way of viewing Bitcoin is that gold would be trading at this price if it was not for manipulation
(courtesy zerohedge)
Bitcoin Is Now Bigger Than Morgan Stanley
On the back of (unconfirmed) rumors suggesting China may back down from its harsh stance of ICOs and crypto exchanges following this week’s National Congress, the price of Bitcoin soared overnight, testing near $5900 before falling back a little this morning.
That has pushed Bitcoin’s market cap above $90 billion for the first time, surpassing PayPal, Netflix, and Morgan Stanley…
Goldman Sachs’ market cap is looming ($96bn) but JP Morgan’s $337 billion market cap is a long way off for now.
end
Only central bank intervention keeps gold down, USGlobal’s Frank Holmes says
Submitted by cpowell on Thu, 2017-10-12 13:56. Section: Daily Dispatches
9:55a ET Thursday, October 12, 2017
Dear Friend of GATA and Gold:
Only intervention by central banks in the gold market is keeping the monetary metal’s price down, fund manager Frank Holmes of U.S. Global Investors told Daniela Cambone of Kitco News in an interview yesterday. The interview is five minutes long and can be viewed here:
http://www.kitco.com/news/video/show/Gold-Game-Film/1735/2017-10-11/Gold…;
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
end
Another Swiss bank won’t let customer see his gold, von Greyerz tells KWN
Submitted by cpowell on Thu, 2017-10-12 18:45. Section: Daily Dispatches
2:45p ET Thursday, October 12, 2017
Dear Friend of GATA and Gold:
Swiss gold fund manager Egon von Greyerz today tells King World News that another Swiss bank has refused to let a substantial customer inspect the gold bars the bank claims to be vaulting for him. Von Greyerz reminds investors that they should not trust the banking system with their metal. His comments to KWN are posted here:
https://kingworldnews.com/breaking-another-well-known-swiss-bank-has-jus…;
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
end
Oil for gold – the real story
By Alasdair Macleod
Alasdair Macleod October 12, 2017
Following an article in the Nikkei Asia Review, which reported China will shortly introduce an oil futures contract priced in yuan, there has been some confusion about what it means. The article pointed out that in combination with existing gold futures priced in yuan, an oil exporter to China contracting to accept yuan could use these two futures contracts to take delivery of physical gold in payment for oil.
I was quoted in that article as follows:
“It is a mechanism which is likely to appeal to oil producers that prefer to avoid using dollars, and are not ready to accept that being paid in yuan for oil sales to China is a good idea either,”i
The mechanism of introducing an oil for yuan contract could hardly be clearer, yet the rumour mill went overtime into Chinese whispers. Some analysts appeared to think China was authorising a new oil for gold contract of some sort, or that China would be supplying the gold, both of which are untrue.
The purpose of this article is to put the proposed oil for yuan contract, which has been planned for some time, into its proper context. It requires knowledge of the history of how China’s policy of internationalising the yuan has been developed, and will be brought up to date with an analysis of how the partnership of China and Russia is taking over as the dominant power over the Eurasian land-mass, a story that is now extending to the Middle East.
This fulfils the prophecy of the founder of geopolitics, Sir Halford Mackinder, made over a century ago. He described the conjoined continents of Eurasia and Africa as the World Island, and that he who controls the Heartland, which lies between the Volga and the Yangtze, and the Himalayas and the Artic, controls the World Island.ii The Chinese-Russian partnership is well on its way to controlling the World Island, including sub-Saharan Africa. We know that successive Soviet and Russian leaders have been guided by Mackinder’s concept.
Events of recent months have accelerated the pace of the Heartland’s growing dominance over the World Island, and become pivotal to the balance of global power shifting in favour of the Heartland. Even political commentators in the mainstream media are hardly aware this is happening, let alone future implications. Financial commentators and economists are even less informed, despite the monetary consequences being of overriding importance for the impact on the wealth of nations and their peoples.
This is the backdrop to China’s internationalisation of her currency. To enhance our understanding of the implications of the introduction of yuan futures contracts, we must begin with the relevant monetary developments.
The Hong Kong – London axis
For a considerable time, China has followed a policy of replacing the dollar as its settlement currency for the purposes of trade. After all, China dominates international trade, and on a purchasing power parity basis, her economy rivals that of the US, and if it hasn’t done so already will soon overtake it. From China’s point of view, being forced by her trading partners to accept and pay in dollars is an irritating anachronism, a hangover from American imperialism.
Furthermore, China’s strategic military analysis has convinced her that America uses the dollar as an economic weapon, wielding it to sustain global hegemony and to support her own economy at the expense of others. Therefore, there are clear strategic reasons for China to do away with the dollar for as much of her international and trans-Asian trade as possible.iii
For America’s part, she has strongly resisted moves to have the dollar replaced as the world’s dominant trade currency. America has a tough grip on all commodities, because international physical and derivative markets are priced almost exclusively in dollars. Furthermore, nearly all currency hedging has the dollar on one side of the transaction. This allows the Americans to exercise enormous control over international markets, and even to artificially inflate commodity supplies through the creation of futures contracts, keeping prices lower than they would otherwise be. By these means, America has suppressed the relationship between monetary and price inflation, increasing the apparent stability of the dollar. This is central to the illusion of American monetary hegemony. Therefore, China’s policy of doing away with the dollar is, from the American standpoint, a fundamental challenge to her post-war global domination, and amounts to a declaration of financial war.
China’s problem in displacing the dollar is the lack of an international market for the yuan. Furthermore, with strict exchange controls limiting the ability of Chinese citizens and businesses to trade on the foreign exchanges, it was always going to be an uphill struggle to provide the necessary liquidity in the yuan to make it acceptable to foreign counterparties. China had to come up with a plan, and it made sense to use the existing financial links between Hong Kong and London to develop international markets for her own currency.
We can date public awareness of China’s strategy to June 2012, when Hong Kong Exchanges and Clearing made a successful offer for the London Metal Exchange. While noting that Hong Kong is an autonomous region, and that, officially at least, China does not meddle in Hong Kong’s affairs, China has a direct interest in important acquisitions of this sort. China is the world’s largest importer of base metals, and London is the global metal pricing centre for warehouse stocks and physical delivery.
The LME earlier this year decided to offer a series of precious metal futures contracts, priced in dollars, centred on gold. The gold contract has been a great success, something guaranteed when you bear in mind that the Industrial and Commercial Bank of China, owned by the Chinese state, is a lead sponsor of these precious metals contracts. By this action, China is parking its tanks on the London Bullion Market Association’s lawn. At some stage in the future, the LME will almost certainly offer deliverable futures contracts priced in yuan, not just for precious metals but for base metals as well.
In October 2013, fifteen months after the acquisition of the LME, Boris Johnson as Mayor of London led a trade mission to Beijing. British trade missions are a major feature of Foreign Office duties, the way Britain develops bilateral trade relationships. These trade missions, being planned through diplomatic channels, are prearranged and coordinated well in advance. Therefore, it was unusual to find that George Osborne, the Chancellor of the Exchequer, at very short notice got up a second trade mission, and met Johnson in China.
The reasons for this turn of events were never properly explained; however, we can work them out. In May 2012, David Cameron had met the Dalai Lama in London, which caused a diplomatic furore with China. Despite this earlier public spat and the point having been made, Osbourne was sent to China. While it is likely his trade mission was a cover for UK Government efforts to smooth things over, subsequent events suggest financial cooperation between Hong Kong and London was discussed, and Chinese plans to use Hong Kong and London to enhance the yuan’s international liquidity were agreed in principal. Following Osborne’s visit, David Cameron himself went to Beijing for discussions with President Xi the following month, confirming the importance to Britain of bilateral financial relations with China.
The following year, the UK took the unusual step of issuing a 3bn yuan bond, both as an indication of intent, and to help kick-start the offshore yuan market in London. This was followed by Britain being the first non-Asian nation to join the Asia Infrastructure Investment Bank as a founder member in March 2015 (announced by none other than George Osborne). The AIIB, which was set up by China and headquartered in Beijing, is the first supra-national organisation independent of the Bretton Woods institutions, which are all controlled by the US. These institutions, led by the World Bank and the IMF, as well as several regional development banks, were how the US, using the dollar, dominates the world’s finances. The establishment of the AIIB was an unwelcome development for America, and the US expressed acute disappointment that Britain had decided to join.
And lastly, after six or seven years of lobbying the IMF, the yuan was finally included in the SDR basket from 1 October last year, further promoting it as a trade settlement currency to be included in foreign countries’ reserves.
There can be no clearer evidence of China’s intention to replace the dollar with her own currency, than the sequence of events outlined above. She identified that Britain’s interests were aligned with her own, enabling her to cut out America from future developments. She has obtained arms-length control over London’s physical metal exchange. She had set up a non-dollar rival to the World Bank and IMF, ensuring future Asian development financing is under her control. And, with more than 80 member countries eventually joining the AIIB, she has successfully picked off America’s allies. The inclusion of the yuan in the SDR basket can be taken as an acknowledgement of China’s importance on the world stage.
The eventual intention is to price in yuan everything imported into and exported from China. Much trans-Asian business is already settled in yuan, and even remote Angola settles her oil sales to China in yuan. It will in time involve developing yuan futures contracts for all the tradeable commodities the state deems significant. The most important of these is a standard oil contract. But before we cover the genesis of the oil contract, we should remind ourselves about China’s gold strategy.
Cornering the physical gold market
It is only relatively recently that Western capital markets have become aware that Chinese demand for physical gold absorbs large quantities of annual mine production, and that the country is now the largest mining nation by far, extracting it at a rate of over 450 tonnes per annum. Knowledge of China’s overall demand is restricted to deliveries out of the Shanghai Gold Exchange’s vault into public hands, running at about 2,000 tonnes per annum, which with India’s public demand accounts for nearly all global mine extraction of about 3,000 tonnes.
The SGE was established in 2002, yet China began to embrace capitalism in 1980, when the first Special Economic Zone was established. China at that time showed reserves of 395 tonnes, a figure that was unchanged until 2001, when it was increased to 500 tonnes, and the following year to 600 tonnes, which it remained until 2009. Over this time, the Chinese economy enjoyed enormous capital inflows from 1980 until the early 1990s, when Western companies set up manufacturing facilities. These were followed by growing export surpluses thereafter. The Peoples Bank of China (PBOC), the state-owned central bank, was managing the currency, neutralising these flows by buying mostly dollars.
It also made sense for the Chinese to diversify the foreign exchange portfolio gained through intervention. The need to increase gold holdings would have been obvious to communist-trained economists at the heart of government. They had had the Marxist belief drummed into them that capitalism would eventually destroy itself, and the capitalists’ paper currencies with it. Rather like Germany in the 1950s and the Arabs in the 1970s, they felt it was prudent to put a significant part of their foreign exchange into gold.
Consequently, new regulations appointing the PBOC to “guarantee the state’s requirements for gold and silver” came into force on June 15, 1983.iv Private ownership of gold and silver remained banned.
It should be noted that state-owned gold declared as official reserves bear little relation to the total accumulated. Anecdotal evidence informs us that bullion is dispersed into accounts in the possession of the Peoples Liberation Army and the Communist Party. Therefore, we cannot know China’s true holdings. All one can do is make a reasonable assessment of how much gold the PBOC is likely to have accumulated since 1983 and before 2002, when private citizens were allowed for the first time to buy physical gold and silver. During this period gold had suffered the greatest bear market in the history of fiat currencies. The scale of redistribution from weak hands into stronger long-term hands was enormous, bearing in mind that Indians, the other great national buyers today, only began to buy gold in significant quantities in the early-nineties, after the repeal of the 1968 Gold Control Act in 1990. It is also known that in 1990-2000, many Middle Eastern portfolios sold gold in favour of equity investment, as did many other private investors with Swiss private bank accounts. Furthermore, central banks were leasing gold in large quantities, artificially inflating physical supply.
Taking all these factors into account, plus mine production totalling 42,460 tonnes over the period, it was easily possible for the Chinese state to secretly amass over 20,000 tonnes by 2002, through a process of gradual accumulation. As to whether they did so, we must look at the evidence from China’s gold strategy. The following bullet list is a summary:
The introduction of the 1983 regulations appointing the PBOC amounts to a declaration of intent. The PBOC as a central bank has access to capital markets, and commands the state-owned commercial banks. Accumulating gold is a natural extension of the PBOC’s currency management.
There were both the opportunity and the supply during the greatest bear market gold has ever seen. Between 1983-2002, world mine output added an estimated 42,460 tonnes to above-ground stocks at a time when the West was disgorging both central bank and privately owned physical gold. All that gold went somewhere, so China must have been a major buyer.
In 2002, the Shanghai Gold Exchange (SGE) was set up by the PBOC to permit the public to buy gold. This signalled that the state had acquired sufficient gold and silver bullion for its own purposes by then.
The state actively advertised gold ownership through the media, promoting a policy to its citizens of holding gold as sound money. This would help her corner the physical market.
The state deliberately fostered gold mining, to the point where Chinese mines are now the largest producers in the world by far. Mine output was a record 463.7 tonnes in 2016.
The state monopolises China’s refining capacity, taking in doré from other countries as well, retaining control over ingot production.
China now hosts the world’s most important bullion exchange in Asia, has set itself up as a rival to the LBMA in London through the London Metal Exchange, and is developing gold futures markets.
The LBMA 400 ounce 99.50 standard bar has been replaced by the new Chinese 99.99 one kilo bar as the Asian standard. The large Swiss refiners have been converting LBMA bars into the new standard for customers, particularly those resident in the Middle East.
Almost all gold acquired by China and her citizens remains in China. Chinese refined bars are almost never seen in Switzerland, the West’s principal refining centre.v
Gold futures contracts in yuan are now available to international dealers in Hong Kong and Dubai using the SGE gold price as benchmark.
Private ownership of gold in China is now estimated to total over 15,000 tonnes, in addition to anything the state has acquired since 1983. China’s gold policy, which may have commenced as a sensible diversification of reserves, now has strategic implications. China’s gold is now a vital defence against the hegemony of the dollar, and as Major-General Qiao Liang has advised the Peoples Liberation Army, there is a continuing risk that America will try to use its currency as a financial and economic weapon against China.vi
The Chinese state, having secured its physical gold dominance, has little need to acquire more gold in the market: that much was signalled by the establishment of the SGE in 2002. It may well have accumulated further gold since, but this is incidental. Russia is now accumulating gold under President Putin, who belatedly learned of the dangers the Western financial system poses Russia in the wake of American sanctions, and more particularly the financial devastation faced by Iran, when America forced the supposedly independent SWIFT inter-bank settlement system to ban Iranian transfers in all other currencies. Gold smuggled from Turkey via Dubai proved to be Iran’s saviour.
By having control of the physical market for gold, China can threaten to use it to destabilise the dollar, without destabilising the yuan. As such, it is potentially devastating, and used carelessly could trigger an economic collapse in Western capital markets, wreaking financial and economic havoc in America and other advanced nations. China will never be wholly independent from trade with these nations, and severe financial and economic damage to the advanced economies will rebound upon her to some extent. For this reason, she has so far held off using gold as an economic and financial weapon, while she continues to insulate herself from periodic crises in Western economies.
China, with Russia, clearly plans to create what amounts to an enormous internal market, covering most of Asia. It is doing this through trade, in contrast with the way America traditionally wields her influence, through the sticks and carrots of guns and butter. In every minor geopolitical skirmish with America, the Sino-Russian partnership has won. The patient approach of letting American influence diminish through her own errors has made the economic violence of driving up the gold price unnecessary. However, times are changing, and this phase is passing.
The oil connection
The success of the Sino-Russian partnership in outwitting the Americans has overtaken China’s own plans to develop liquidity for a wide range of derivative contracts priced in yuan on its own and other international exchanges. Nowhere has this been more obvious than in the delay of introducing an oil futures contract priced in yuan.
This was first mooted, so far as we are aware, in 2012, when it was intended to introduce a contract based on the high-sulphur grades China commonly used at that time. This contract was to be settled in either dollars or yuan at the oil supplier’s choice. However, the absence of an offshore market for yuan meant this proposal was premature.vii
In 2014, these plans resurfaced, with the Shanghai Futures Exchange chairman quoted as saying that the yuan had become more international and recognised in the market. He added that the proposed contract had support from both the government and financial regulators.viii
At about that time, Guo Jianwei, a PBOC monetary policy official, was quoted in the Shanghai Securities News as saying that the PBOC planned to start yuan-denominated gold and oil futures to help establish a global payment system for the Chinese currency.ix This statement gets to the nub of the reason for introducing oil and gold contracts together, and that is they will internationalise the yuan, probably more quickly than any other measure taken by the PBOC. To back up his quote, Mr Guo then described how the PBOC had agreed CNY2.5 trillion of currency swaps with 23 central banks, pointedly excluding the US.
The oil for yuan story rumbled on, with the Chinese delaying the introduction of internationally tradable oil futures. That is, until Damon Evans reported that not only were traders being trained, but that locally registered entities of JPMorgan and UBS are among the first to have gained regulatory approval to trade the contract.
Geopolitical developments relative to the oil contract
It is natural to assume that China and Russia are controlling, Svengali-like, all the geopolitical outcomes. China has retained an unerring focus on the grand prize of excluding the dollar from all her trade, and with it US monetary influence in Asia. But, being reliant on America to make strategic mistakes, China is not totally in control of events and their timing. For example, the collapse in July of the American campaign in Syria was sudden and unexpected, leaving Russia, in partnership with Syria, Iran, and Turkey to sort out the mess.
Even Mr Netanyahu, the Prime Minister of Israel, has beaten a path to Mr Putin’s door several times. When Turkey, still a NATO member, decided to side with Russia along with Iran, Israel recognised that US protection was no longer good enough to secure her future. When Saudi Arabia was under American influence, Israel had felt as safe as she could be in that turbulent region. But a combination of a Hezbollah/Syrian/Turkish/Iranian axis to Israel’s north, and Prince Mohammed bin Salman’s silent coup in Saudi Arabia has fundamentally altered the balance of power.
Prince Salman is now the heir-apparent to King Salman, having replaced Mohammed bin Nayef, America’s nominee, as heir to the throne. Only last week, King Salman himself visited Moscow as the guest of President Putin. No doubt, the other gulf states will follow the Saudi lead.
Instead of President Trump, Putin finds himself, very suddenly, the ring-master for most of the Middle East. And while we cannot rule out a counter-move from the Americans, it should be noted that the Arabs dislike the Americans and much of what they stand for. However, notwithstanding its national antipathy, Saudi Arabia went along with Kissinger’s plan in 1973 to use the dollar for oil payments, and to buy US Treasuries and to deposit surplus dollars in American banks. In return, America guaranteed it would protect Saudi Arabia from outside influences. Also, part of the deal was Saudi Arabia would not support Israel’s enemies.
Now that the Kissinger deal is unravelling, it is reasonable to assume the financial deal, the Middle East’s support of the petrodollar to the exclusion of all rival currencies, will also come to an end, more rapidly than thought possible only four months ago. But for this to be realised requires an alternative settlement currency to be available. And while Russia and China have already agreed joint investment projects involving both their currencies, Saudi Arabia is almost certainly not ready to accept the yuan as a full currency replacement for the dollar.
The rest of the world is watching closely. America’s allies officially remain onside with America, but in terms of foreign relations, interests guide relationships, not the other way around. We saw this when Britain joined the AIIB, demoting the special relationship with America. Central banks, holding massive quantities of the dollar, will be particularly jittery. Knowing this, will China dare make a move to undermine the dollar and trigger a run against it by providing the means for oil exporters to sell oil for yuan and then yuan for gold in international futures exchanges? If Shanghai fails to offer the facility, other markets, such as Hong Kong or Dubai, where there are already yuan gold contracts, could do so.
Realistically, China now has limited control over the timing of her planned moves, and this is particularly true about the prospective oil future priced in yuan. China imports over 8 million barrels of oil per day, for a total annual value of $150bn. She imports oil from a wide variety of sources, including Russia, Angola, Saudi Arabia, Iraq, Brazil, Iran and Venezuela. Some of these countries are on the US black-list (such as Russia, Iran and Venezuela) and others may prefer gold to dollars. If we assume that one-third of China’s oil imports are converted into gold, that amounts to 1,200 tonnes of gold at current prices to be sourced annually in a tight gold moarket.
The effect on the dollar could be catastrophic. Not only would the dollar sink as it loses its exorbitant privilege, but finding the extra physical gold would drive up the gold price. Inevitably, foreign holders of the dollar would probably join in by dumping the dollar and any fiat currencies aligned with it and join the rush for gold.
Conclusion
The ideal way for China to replace the dollar as the dominant currency for her cross-border trade is to encourage her oil suppliers to accept payment in her own currency, the yuan. It is clear from statements made in 2014 by Guo Jianwei, a PBOC monetary policy official, that China had already planned to wean her oil suppliers off the dollar by introducing both oil and gold futures denominated in yuan, allowing them to take at least part-payment in gold. Persuading them to do so without unduly disrupting global capital markets should have been a gradual process, perhaps spread out over the best part of another decade. Instead, geopolitical developments have accelerated the time-table following the election of President Trump, who is noticeably lacking in diplomatic patience. His latest renegation of the Iran nuclear deal is for Asian observers classic US perfidy.
China’s energy suppliers are not yet prepared to accept the full exposure to the yuan that oil sales contracted in yuan implies. Meanwhile, it is becoming apparent that the petrodollar has a limited life, the duration of which has been significantly shortened by America’s withdrawal from the Syrian conflict. The balance of interests is therefore undergoing a seismic change, with the dollar facing the real prospect of becoming redundant for the most significant aspect of its global use.
But if you dump your petrodollars, what do you buy? This is the question which China’s geopolitical and monetary policies must now address.
Perhaps the reason why China has been forced to bring forward plans to introduce the oil futures contract priced in yuan is indirectly due to America abandoning control over the Middle East. If so, the loss of American influence over the Eurasian continent will accelerate, and the status of the dollar will sink with
Your early FRIDAY morning currency, Asian stock market results, important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight
i) Chinese yuan vs USA dollar/CLOSED UP AT 6.5877/shanghai bourse CLOSED UP AT 4.42POINTS .13% / HANG SANG CLOSED UP 17.40 POINTS OR .06%
2. Nikkei closed UP 200,46 POINTS OR .96% /USA: YEN FALLS TO 112,15
3. Europe stocks OPENED MIXED ( /USA dollar index RISES TO 93.16/Euro UDOWNto 1.1842
3b Japan 10 year bond yield: FALLS TO -+.0676/ GOVERNMENT INTERVENTION !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 112.44/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!
3c Nikkei now JUST BELOW 17,000
3d USA/Yen rate now well below the important 120 barrier this morning
3e WTI:: 51.58 and Brent: 57.45
3f Gold DOWN/Yen UP
3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS AND SELLING THE SHORT END
Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.
3h Oil UP for WTI and UP or Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO +.422%/Italian 10 yr bond yield UP to 2.097% /SPAIN 10 YR BOND YIELD DOWN TO 1.612%
3j Greek 10 year bond yield RISES TO : 5.555???
3k Gold at $1293.20 silver at:17.21:15 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50
3l USA vs Russian rouble; (Russian rouble UP 3/100 in roubles/dollar) 57.68
3m oil into the 51 dollar handle for WTI and 57 handle for Brent/
3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT A GOOD SIZED REVALUATION NORTHBOUND
JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 112.15 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION
30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning 0.9759 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1530 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.
3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT/ARTICLE 50 COMMENCES MARCH 29/2017
3r the 10 Year German bund now POSITIVE territory with the 10 year FALLING to +0.422%
The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”. Next step for Greece will be the recapitalization of the banks and that will be difficult.
4. USA 10 year treasury bond at 2.325% early this morning. Thirty year rate at 2.853% /
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)
World Stocks Hit 4th Consecutive Record High, Bonds Rise On ECB QE Report
World stocks rose to a 4th consecutive record highs, while the dollar headed for its worst week; U.S. stock-index futures are steady, with European and Asian stocks higher ahead of much anticipated US inflation data, which is expected to give cues on the outlook for the Federal Reserve’s interest rates. MSCI’s all world equity index was up 0.1% after hitting record highs on Thursday. Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan hit a 10-year high, up 0.3 percent on the day.
The Stoxx Europe 600 Index rose 0.3%, led by steelmakers and miners as most industrial metals gained and WTI crude rose back above $51 a barrel. The dollar nudged lower as investors awaited the U.S. latest inflation data. Sterling pared gains after European Commission President Jean-Claude Juncker said “new problems” were emerging “day after day” in the Brexit withdrawal process. The British currency had rallied earlier on a report that the EU may offer the U.K. a two-year transition period to stay in the union.
Elsewhere, Asian stocks rose for a sixth day, the longest winning streak in three months, on optimism that U.S. economic data will prompt gradual rate hikes by the Federal Reserve. The MSCI Asia Pacific Index rose 0.5 percent to 166.47 as of 4:59 p.m. in Hong Kong, the highest level since November 2007. In Tokyo, the Nikkei 225 powered past 21,000 and completed a nine-day winning streak. The equities benchmark in the Philippines rose to a record, while mainland Chinese shares trading in Hong Kong extended their advance to a two-year high. The MSCI Asia Pacific Index has advanced 23 percent this year, poised for its sharpest annual gain since 2009. The gauge is trading at 14 times 12-month forward estimated earnings, highest since January.
The Asian highlight was once again Japan’s Nikkei 225 Stock Average, which completed a nine-day winning streak to close above 21,000 for the first time since November 1996. Fast Retailing Co., which accounts for about 6.5 percent of the measure, contributed most to its rise, after the company predicted that international sales for its Uniqlo chain will surpass those in Japan this fiscal year and reported the biggest jump in annual earnings in more than a decade on Thursday. The Topix index rose to a fresh decade-high even as the yen advanced against the dollar for a second day. The gauge was boosted by electronics makers and retailers. Both indexes posted a fifth consecutive week of gains, the longest weekly rally this year. The market will target the 22,000 mark next for the Nikkei 225, anticipating a currency rate of 115 yen per dollar and positive earnings continuing in the following fiscal year, said Takuya Takahashi, a strategist at Daiwa Securities Co. in Tokyo.
The U.S. later today will publish data on consumer prices and retail sales for September. Fed minutes released Wednesday showed several policy makers looking for stronger evidence of price gains before supporting a third interest-rate increase this year.
“The market is pricing another rate increase in December and it won’t derail the bounce in the U.S. economy because there won’t be a sharp rate ascent,” said Noel Reyes, chief investment officer at Security Bank Corp. in Manila. “Also, improving economic outlook in Asia, Europe and the U.S. are translating to better performance for stocks.”
Among the main overnight reports which pushed European bonds higher was a trial balloon “leak” to bother Reuters and Bloomberg, according to which the ECB was considering cutting quantitative easing in half to €30 billion euros a month from the current pace of €60 billion, according to officials familiar with the debate. While the central bank’s governors are split on the need to identify an end date for purchases, a pledge to keep buying bonds until September may offer grounds for compromise, they said.
“For the ECB, duration of the program should trump monthly purchases,” Royal Bank of Canada economists including Sam Hill said in a client note. “This should anchor front-end rates firmly, through the forward guidance linking interest rates to the duration of the bond buying, and steepen the yield curve.”
Following the reports, the EURUSD first dropped, then spiked, and ultimately dumped on what, on the surface at least, would look like hawkish news.
Also overnight we got the latest trade data from China, which missed modestly on exports, even as imports rose more than expected.
Chinese Trade Balance (CNY)(Sep) 193.0B vs. Exp. 266.05B (Prev. 286.50B). (Newswires)
Chinese Exports (CNY)(Sep) Y/Y 9.0% vs. Exp. 10.9% (Prev. 6.9%)
Chinese Imports (CNY)(Sep) Y/Y 19.5% vs. Exp. 16.5% (Prev. 14.4%)
Chinese Trade Balance (USD)(Sep) 28.47B vs. Exp. 38.00B (Prev. 41.99B). (Newswires)
Chinese Exports (USD)(Sep) Y/Y 8.1% vs. Exp. 10.0% (Prev. 5.5%)
Chinese Imports (USD)(Sep) Y/Y 18.7% vs. Exp. 14.7% (Prev. 13.5%)a
Commenting on the data, Goldman said, “Exports growth for China accelerated to 8.1% yoy in September from 5.6% yoy in August, slightly below consensus. Imports growth was also up to 18.7% yoy from 13.5% yoy in August, above expectations. In sequential terms, exports grew by 0.2% mom sa non-annualized, up from a fall of 0.2% in August. Imports increased by 2.4% mom sa non-annualized, moderating from 3.2% in August. The trade surplus moderated significantly to US$29.2bn from US$41.0bn in August. Sequential momentum in exports remained mild in September though picking up a bit, and has weakened significantly in Q3 as a whole to -4.5% from a significant rise of 12.0% in Q2. Trade prices might have decelerated modestly in Q3 (data on September trade prices have not been released), but sequential growth in real exports should have also moderated. This is consistent with our previous expectation that the strong exports growth we saw in H1 could probably be hard to maintain in H2. Going forward, sequential momentum in real exports should remain modest, and year-on-year growth will probably moderate due to a high base of Q4 last year.”
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Elsewhere, in the U.S., the Trump administration’s tax plan clouded up as the president was said to voice frustration with certain aspects of the existing framework. Some Congressional Republicans have aired concerns, though Treasury Secretary Steven Mnuchin reiterated his confidence that a plan will get passed this year. Data Friday on prices and retail sales may give more clues about the Fed’s policy path amid a debate about whether low inflation is temporary or permanent.
“The hurricane effects will mean that interpretations of the data will be difficult,” John Cairns, a strategist at Rand Merchant Bank in Johannesburg, said in a client note. “Anyway, the Fed has made it clear that it intends to raise rates in December even if inflation remains weak.”
Overnight Fed’s Rosengren (Non-Voter, Soft Hawk) said a December hike is appropriate and that 3 rate hikes next year seems appropriate, while he added that low inflation gives the Fed the luxury of being gradual. Meanwhile, Fed’s Bostic (Non-Voter, N/A) repeated he is unsure if Fed will hike rates in December and said US is moving quickly towards full employment.
In geopolitical updates, the White House will keep the Iran nuclear deal for now, but wants Congress to make a list of actions that would prompt sanctions, according to NYT
Meanwhile, overnight bitcoin soared to just shy of $6,000 before easing back modestly.
In rates, the yield on 10-year Treasuries climbed one basis point to 2.33%. Germany’s 10-year yield dipped two basis points to 0.43 percent, the lowest in more than two weeks. Britain’s 10-year yield gained two basis points to 1.363 percent, the highest in more than eight months. Spain’s 10-year yield fell three basis points to 1.608 percent, the lowest in more than a week.
In commodities, West Texas Intermediate crude gained 1.6 percent to $51.41 a barrel, the highest in more than a week. Gold climbed less than 0.05 percent to $1,293.86 an ounce. Copper increased 0.3 percent to $3.13 a pound, hitting the highest in almost five weeks with its fifth consecutive advance.
Today we get earnings from Bank of America and First Horizon. Also on
the agenda are a number of data points, including CPI, retail sales and
Michigan sentiment.
Bulletin headline summary from RanSquawk
ECB is reported to mull reducing QE to EUR 30bln/month from January and extending it until at least September 2018
Indecisive trade in major EU bourses this morning with the Eurostoxx 50 relatively flat; traders await tier 1 US data
Looking ahead, highlights include US CPI, retail sales, business inventories, Uni. of Michigan and a slew of central bank speakers
Market Snapshot
S&P 500 futures little changed at 2,550.25
VIX Index down 0.4%, at 9.87
STOXX Europe 600 up 0.3% to 391.42
MSCI Asia up 0.5% to 166.47
MSCI Asia ex Japan up 0.3% to 549.57
Nikkei up 1% to 21,155.18
Topix up 0.5% to 1,708.62
Hang Seng Index up 0.06% to 28,476.43
Shanghai Composite up 0.1% to 3,390.52
Sensex up 0.9% to 32,463.58
Australia S&P/ASX 200 up 0.3% to 5,814.15
Kospi down 0.05% to 2,473.62
German 10Y yield fell 1.9 bps to 0.426%
Euro down 0.03% to $1.1827
WTI crude up 1.5% at $51.40
Brent up 1.8% to $57.25/bbl
Italian 10Y yield fell 4.4 bps to 1.848%
Spanish 10Y yield fell 1.7 bps to 1.62%
Gold spot up 0.03% to $1,294.15
U.S. Dollar Index down 0.02% to 93.04
Top Overnight News
The Trump administration is cutting tens of millions of dollars from organizations that help Americans enroll in Obamacare health plans
Trump is expected to refuse to certify that the multinational accord to curb Iran’s nuclear program sufficiently serves U.S. interests, though he will stop short of abandoning it, according to two senior administration officials; Trump’s Iran Decision Throws New Uncertainty Into Business Plans
European Central Bank officials are considering cutting their monthly bond buying by at least half starting in January and keeping their program active for at least nine months, according to officials familiar with the debate
China’s overseas shipments rose from a year earlier amid robust external demand, the latest sign Asian trade is strengthening as the global outlook brightens
Equity funds globally record inflows of $11.6b in the week to Oct. 11, the largest in 17 weeks, BofAML strategists write in note, citing EPFR Global data
Emerging markets equity funds see inflows of $3.3b, largest in 21 weeks; Japanese equity funds see inflows of $0.3b, first in 4 weeks
Turkey sent special forces and commandos over the border into Syria, the start of a joint mission with Russia and Iran whose stated goal is to monitor a cease-fire agreement and pacify a stronghold for Islamic militants — but one that also has major implications for the region’s Kurds
Trump Digs In on Health Care, Iran Deal; Bank of America, Wells Fargo Earnings; Samsung’s CEO Steps Down as Profit Beats
President Donald Trump’s administration took its most drastic step yet to roll back the Affordable Care Act on Thursday evening, cutting off a subsidy to insurers just hours after issuing an executive order designed to draw people away from the health law’s coverage markets
JPMorgan Chase & Co. and Citigroup Inc. kicked off banks’ earnings season by showing the effects of muted trading and concerns about consumer credit; both beat earnings as JPMorgan relied on improved lending margins while Citigroup continued to squeeze costs
The chief executive officer of Samsung Electronics Co. is stepping down in a surprise resignation after decades at the company
The strength of the U.S. shale boom and prospects for electric vehicles are stoking fears for the oil industry’s future. But that’ll only make crude more valuable, one analyst says, boosting prices as high as $80 a barrel by 2022
Asia-Pac equity markets shrugged off the pullback in US stocks from record levels, although upside was somewhat capped as the region digested the latest Chinese trade figures. ASX 200 (+0.45%) and Nikkei 225 (+1.0%) were mildly ositive with Australia underpinned by defensive stocks, while Nikkei 225 tested 21,200 and was led by strength in index heavyweight Fast Retailing after the Co. reported its FY net more than doubled. Elsewhere, Shanghai Comp. (+0.1%) and Hang Seng (+0.1%) traded indecisive after the PBoC skipped open market operations but then offered funds via its MLF facility and as participants mulled over mixed Chinese trade data. Finally, 10yr JGBs were initially subdued with demand sapped amid a positive risk tone in Japan, before an improved enhanced liquidity auction result for longer-dated JGBs supported in late trade. MAS (Singapore central bank) kept the appreciation of SGD NEER unchanged at 0%, while it also maintained the width and level of the policy band. MAS made a reference to neutral policy being appropriate for an extended period of time from the October 2016 Monetary Policy Statement and said that it sees Singapore economy likely to expand at a steady, but slightly slower pace in 2018 compared to 2017.
Top Asian News
China Exports Remain Resilient as Import Gains Signal Strength
Big Banks Winning in China Battle of Unequals as Curbs Bite
In Surprise Move, Samsung CEO to Step Down After Record Profit
‘Enigma Network’ Crash Spurs Hong Kong’s Largest Financial Raid
Nomura Probe Said to Find No Evidence of Aomori Stock Sale Leaks
In European markets, there has been indecisive trade in major EU bourses this morning with the Eurostoxx 50 relatively flat. Focus in the session will be on the slew of central bank speakers and US data later in the session. Energy names have been supported by the upside in WTI and Brent crude futures, in which Brent briefly made a break above USD 57. In stock specific news, Bayer shares are outperforming in the DAX after reports that BASF is to purchase the company’s seed unit for EUR 5.9bln. FTSE 100 the laggard today, slipping 0.4% amid the move higher in GBP, while the worst performing stock in the FTSE, GKN, has seen a sharp drop after a profit warning. Bunds bolstered by latest ECB source reports and a technical short squeeze, which lifted the core 10 year bond future through this week’s previous peak and a new high for the month. EZ periphery debt also benefiting from suggestions that QE could be extended by 9 months at least (longer end of the previously touted 6-9 month range), and seemingly unperturbed by talk that the monthly pace of asset purchases could be scaled down relatively sharply to Eur30 bn from January 2018. Conversely, some signs of compromise in the form of a contingent 2-year Brexit transition offer from the EU, per media reports, has left UK Gilts languishing and underperforming again, with similar divergence seen at the short end of the curve (ie Short Sterling contracts down vs firmer Euribor and Eurodollar peers). US Treasuries largely holding modest gains made in wake of a solid 30 year auction, and braced for Friday’s key data (CPI and retail sales, latter possibly carrying an upside skew on above consensus PPI).
Top European News
ECB Is Said to Consider Cutting QE Flow in Half in Next Year
Saudis Mull Slower Subsidy, Spending Cuts to Support Economy
Greece Dreams of Bailout-Free Existence as Creditor Audit Looms
More Than 400 Firms ‘Expelled’ From Catalonia: PP’s Hernando
Romania Ruling Party Defuses Crisis as Three Ministers Quit
BASF Enters Seeds Market as Bayer Sells $7 Billion in Assets
In currencies, Much of the latest FX volatility occurred post European close yesterday, as reports from Handelsblatt circulated, stating thatmEU Brexit negotiator Barnier could offer the UK a two-year transitional deal, with the offer tied to the UK meeting its exit obligations to the EU. Sterling has recovered all and more of the losses prompted by Barnier’s earlier comments on Thursday, as Cable breaks through 1.33, and above October’s previous highs to resume this week’s overall bullish trend. Comments could continue to dictate Sterling direction as many will await BoE’s Carney this evening. EUR/GBP initially followed the trend of the bullish pound, however, marginal support was seen on reports that the ECB is set to mull reducing QE to EUR 30bln/month from January and extending it until at least September 2018, while sources also stated that policymakers are in agreement about extending asset purchases at the October meeting, but are still debating the taper size. EUR 30bln over nine months was initially perceived by markets as marginally hawkish. Nevertheless, the Euro has been offered against most of its major counterparts in early European trade, amidst comments from ECB’s Weidmann, stating again that he is against softening the capital key, and thus favouring Bunds. The Yen has outperformed generally, up 0.37% for the session vs the Usd, despite this week’s option expiries closing with just short of 2bln between 112.65 – 113.00. The pair trades sub-112.00, looking at the 200 DMA at 111.82. The dollar index has been muted, with much of the trade impetus coming from the other major currencies, as anticipation turns to tier 1 data (CPI and retail sales), then Yellen who is set to speak over the weekend.
In commodities, WTI and Brent crude futures hovering near intra-day highs this morning. Participants will be keeping an eye out on President Trumps remarks over the Iran nuclear deal, where it is expected that he will refuse to certify Iran’s compliance with the accord and as such this may lead to sanctions on Iran yet again. Additionally, Chinese trade data out last night showed that Chinese imports of crude oil climbed to the second highest level on record.
Looking at the day ahead, in the US it’s all eyes on the September CPI report, while last month’s retail sales numbers are also worth keeping a close eye on. The preliminary October University of Michigan consumer sentiment reading will also be out along with August business inventories data. Onto other events, the Fed’s Evans, Kaplan and Rosengren are all on the cards to speak on Friday. President Trump will speak on Iran later in the day and Wells Fargo / Bank of America also report earnings.
US Event Calendar
8:30am: US CPI MoM, est. 0.6%, prior 0.4%; CPI Ex Food and Energy MoM, est. 0.2%, prior 0.2%
US CPI YoY, est. 2.3%, prior 1.9%; CPI Ex Food and Energy YoY, est. 1.8%, prior 1.7%
Real Avg Weekly Earnings YoY, prior 0.88%
8:30am: Retail Sales Ex Auto MoM, est. 0.9%, prior 0.2%; Retail Sales Ex Auto and Gas, est. 0.4%, prior -0.1%; Retail Sales Control Group, est. 0.4%, prior -0.2%
10am: U. of Mich. Sentiment, est. 95, prior 95.1; Current Conditions, est. 111.6, prior 111.7; Expectations, est. 85.3, prior 84.4
10am: Business Inventories, est. 0.7%, prior 0.2%
DB’s Jim Reid concludes the overnight wrap
there’s definitely chocolate inflation in the modern world but is there any outside of the ‘brown gold’? Today’s US CPI number will likely cast a large shadow over the next month’s trading and is therefore a key release. The market’s expectation is for a +0.6% mom headline number and +0.2% mom for the core. DB in is line with the market. Remember that last month (+0.2% core) marked the first time in 6 months that US CPI didn’t undershoot expectations. In terms of the details, headline CPI should get a boost from gas prices post the hurricane disruption so be a bit careful when interpreting this part. In terms of the core, DB’s Brett Ryan expects some modest negative payback for rent and owners’ equivalent rent following a big monthly gain in August. Lodging away from home prices may also dip reflecting the weather events, as evidenced by the post Hurricane Katrina data. In fairness though this is overall a small part of the CPI data though. Don’t forget US retail sales is realised at the same time so something else to add to the mix.
Ahead of this the most interesting story yesterday was around Brexit with wildly conflicting stories buffeting the currency. Indeed Sterling had a bit of a roller coaster ride yesterday versus the Euro, falling as much as 0.9% intraday but closing up 0.55%. Initially, markets were disappointed on how negative Chief EU negotiator Michel Barnier was in his press conference after the fifth round of Brexit talks. He noted that “we have reached a state of deadlock…” over the Brexit divorce bill and “no deal will be a very a bad deal (for the UK)” and then followed up with firm comments like “to be clear on our side, we’ll be ready to face any and all eventualities”. However, Sterling rebound after Handlesblatt reported (after the UK closed) that Barnier may still offer the UK a two-year transition deal provided that the deadlock can be overcome and there is still hope that sufficient progress can be made by the December summit if the UK provided more clarity on what PM May alluded to back in her Florence speech. DB’s Oliver Harvey believes next week’s European Council meeting will be an important turning point for talks. If unsatisfactory, it could increase the risks to the UK growth and may undermine market’s confidence in a BOE hike at its November meeting.
Onto the US tax reforms, where the plan continues to be to get something done by the end of the year. However, the rhetoric is stepping up now, with House speaker Paul Ryan noting “we’re going to keep everybody (in Congress) here to Christmas if we have to, I don’t care, it’s that important”. He added that he wants to wake up on New Year’s Day 2018 with the new tax code.
Staying with politics, the Italian government has now won all of the confidence votes to pass a new electoral law (375 vs. 215 against), which could potentially penalise the 5-Star Movement party (5SM). The bill will now go to the upper house later in the month where the government has no clear majority. Italy’s bond markets slightly outperformed yesterday, with 10y yields down 4.6bp, while core bond yields (UST 10y -3bp; Bunds -1.7bp; OATs -2.1bp) were also down slightly, but Gilts was broadly flat. At the 2y part of the curve, yields were mixed but little changed, with UST (-0.6bp) and Bunds (-1bp) down marginally, but Gilts (+0.6bp) and Italy BTPs (+1.2bp) rose.
Turning to equities and US bank results yesterday. US equities softened, with the S&P 500 (-0.17%), Dow (-0.14%) and Nasdaq (-0.18%) down slightly, impacted by weakness in the financials and telco sector, where AT&T dropped 6.1% after losing 90k video subscribers in 3Q due to heavy competition and the recent Hurricanes. Both Citi and JPM’s 3Q EPS beat consensus, mainly driven by better than expected cost discipline (at Citi) and lending margins (at JPM),but shares fell 3.43% and 0.88% respectively, partly due to concerns of a higher than expected build up in provisions for credit losses, albeit off a low base. Elsewhere, 3Q total trading income was weak but broadly similar to management’s prior guidance (JPM: -21% pcp vs. -20%; Citi -11% on pcp vs. -15%).
European markets were mixed but little changed, with the Stoxx (+0.03%) broadly flat, but the DAX (+0.09%) and FTSE 100 (+0.30%) both nudged up to a fresh record high. Elsewhere, the CAC (-0.02%) and Italy’s FTSE MIB (-0.68%) fell slightly.
Turning to the search for the next Fed Chair, White House Chief of Staff John Kelly said “all of the people who’ve been in to interview (with President Trump) have been first round draft choices…..we still have more to come”. He didn’t specify who the candidates were, but prior reports suggests a shortlist including: Mrs Yellen, Fed governor Jerome Powell, former Fed governor Kevin Warsh, Stanford University economist John Taylor and National economic council director Gary Cohn. Elsewhere, Treasury Secretary Mnuchin said President Trump hopes to make a decision within a month.One of the candidates, the Fed’s Powell echoed his peers by saying “it’s likely that the process of (monetary) normalisation will proceed without significant disruption”, but cautioned that “significant risks of more adverse scenarios remains”. One area he has flagged is corporate debt in emerging markets, where the current situation may not be alarming, “but risks can be significant and bear close watching, especially in China”, where “markets reactions to even small surprises can be outsized”. For those who have missed it, our note “The next financial crisis” takes a closer look at this and other developing risks. Elsewhere, he said differences in the projections of interest rate moves between the Fed’s dot plot and market prices should be ‘taken with a grain of salt”.
Staying with central bankers’ commentaries. The Fed’s Brainard was a bit dovish, noting that temporary factors impact inflation both ways, “so that (temporary factors) cannot fully account for what we’ve been observing in the inflation data” and “…it seems to be that the Phillips curve is just not very important in the overall inflation process”. Further, she added that a lot of time-series work would suggests that we have actually seen “a reduction in the underlying trend rate of inflation that’s material”. Elsewhere, ECB’s Draghi reiterated that interest rates will remain low “well past” the end of QE. He added that the “well past” reference is “very, very important”. On wage inflation, he is seeing some progress, but “we’re still not there” yet.
This morning in Asia, markets are trading slightly higher.The Nikkei (+0.23%), ASX (+0.30%), Chinese bourses (up c0.2%) and Kospi (+0.15%) are up slightly, while the Hang Seng (-0.08%) is marginally down.
Quickly recapping other markets performance yesterday. Excluding Sterling, currencies were little changed with the US dollar index up 0.05% while Euro/ USD dipped 0.24%. In commodities, WTI oil fell 1.36% despite the last EIA report showing lower US crude inventories, in part as the IEA estimated that the decline in supply could be offset in 2018 due to rising output from US and other countries. Elsewhere, precious metals were marginally higher (Gold +0.15%; Silver +0.43%) while other base metals also increased slightly (Copper +0.93%; Zinc +1.53%; Aluminium +1.13%).
Away from the markets, the IMF’s MD Christine Lagarde was reasonably optimistic on global economic growth, noting “it’s broad based, more solid and it should get better”, but added that “it needs to get sustainable and benefit all”. The Fed’s Powell also agrees, noting “there have been signs lately that a sustainable global recovery may finally be materialising” although caveat it with “significant risks and uncertainties remain”.
This Sunday, we’ll see another election, this time over at Austriawhere the centre-right People’s Party (OVP) led by its 31 year old leader Sebastian Kurz is expected to win c33% of the votes. As per the Independent, an average of major pollsters (The Independent) suggest the other two parties are currently neck and neck, with FPO at c26% and the Social Democrats (SPO) at c24.4%. A renewed coalition between OVP and SPO is seen as less likely, which makes the far right, anti-immigrant and euro-sceptic FPO party in a strong bargaining position when forming the next coalition government. Mr Kurz has been Austria’s foreign minister since 2013, with one of his key policies being “above all, we want to stop illegal immigration so there is order and security in our country”. So it will be interesting to see what an OVP & FPO tie up would mean for Europe if it eventuates.
Turning to job security in the world of politics. In the US, White House Chief of Staff Kelly said “I’m not getting fired and I don’t think I’ll fire anyone tomorrow”. In the UK, former Finance Chief Nigel Lawson suggested PM May should fire Chancellor Hammond over his negative Brexit comments, noting “what he is doing is very close to sabotage”. Later on, a spokesman for PM May said “May has full confidence in Hammond”. Elsewhere, the FT reported the UK government is planning to hire 2,000 more staff to deal specifically with Brexit. So all this is bubbling along in the background while tax reforms and Brexit alks are underway.
Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the core September PPI (ex food and energy) was above consensus at 0.4% mom (vs. 0.2%) and 2.2% yoy (vs. 2.0% expected). Notably, the healthcare costs component edged up 0.1% mom so that throughyear inflation was broadly steady at 1.2% yoy, which at least suggests that healthcare will not be a drag on core PCE inflation like it was last month. Elsewhere, the weekly initial jobless claims (243k vs. 250k expected) and continuing claims (1.89m vs. 1.93m expected) were both lower than expectations, with continuing claims down to a new 44-year low.
The Eurozone’s August IP was higher than expectations at 1.4% mom (vs. 0.6%) and 3.8% yoy (vs. 2.6% expected), while France’s final September CPI reading was broadly in line at 1.1% yoy. In the UK, the BOE released its 3Q Credit Conditions Survey and Bank Liabilities Survey. For households, i) the availability of secured credit has increased slightly in 3Q, but ii) the availability of unsecured credit has decreased in 3Q and lenders expected a further substantial decrease in 4Q, likely a response to rising default rates for these loans. Finally, there was no change in the availability of credit to the corporate sector.
Looking at the day ahead, we get the final September CPI revisions for Germany and Italy. In the US it’s all eyes on the September CPI report, while last month’s retail sales numbers are also worth keeping a close eye on. The preliminary October University of Michigan consumer sentiment reading will also be out along with August business inventories data. Onto other events, the Fed’s Evans, Kaplan and Rosengren are all on the cards to speak on Friday. President Trump will speak on Iran later in the day and Wells Fargo / Bank of America also report earnings.
3. ASIAN AFFAIRS
i)Late THURSDAY night/FRIDAY morning: Shanghai closed UP 4,42 points or .13% /Hang Sang CLOSED UP 17,40 pts or .06% / The Nikkei closed UP 200.46 POINTS OR .96/Australia’s all ordinaires CLOSED UP 0.35%/Chinese yuan (ONSHORE) closed UP at 6.5877/Oil UP to 51.58 dollars per barrel for WTI and 57.45 for Brent. Stocks in Europe OPENED MIXED . ONSHORE YUAN CLOSED UP AGAINST THE DOLLAR AT 6.5877. OFFSHORE YUAN CLOSED STRONGER TO THE ONSHORE YUAN AT 6.5826 AND BOTH YUANS ARE STRONGER AGAINST THE DOLLAR. THE DOLLAR (INDEX) IS STRONGER AGAINST ALL MAJOR CURRENCIES. CHINA IS NOT HAPPY TODAY.
3a)THAILAND/SOUTH KOREA/NORTH KOREA
NORTH KOREA/USA
Trump sends a second aircraft carrier to the Korean peninsula
(courtesy zerohedge)
Trump Sends Second Aircraft Carrier To Korean Peninsula With 7,500 Marines Aboard
Just one week after uttering his now-infamous “this is the calm before the storm” statement to the press ahead of a dinner with military leaders, we now learn that President Trump has dispatched a second nuclear aircraft carrier, the USS Theodore Roosevelt, filled with 7,500 marines, to the Korean Peninsula. Of course, this comes after rumors swirled earlier this week that North Korea is preparing to fire multiple short-range rockets around the opening of the Chinese Communist Party’s twice-a-decade congress on Oct. 18th.
The USS Theodore Roosevelt, a Nimitz-class aircraft carrier, is en route to the western Pacific after leaving San Diego port last week.
The Roosevelt will focus on maritime security operations in the Pacific and Middle East, the US military announced.
But the £3.4billion ($4.5billion) warship, known as “the Big Stick”, has been sent to boost US defence on the Korean peninsula, according to South Korean media.
It is expected to arrive in region in the coming weeks amid fears North Korea is about to test another missile or nuclear weapon.
Per the following map from Stratfor, the USS Theodore Roosevelt will join the USS Ronald Reagan which is already operating in the region.
According to a statement from Admiral Steve Koehler, a strike group commander on the ship, the Roosevelt is carrying some 7,500 sailors and marines that are “ready as a war fighting force”.
“The US Navy carrier strike group is the most versatile, capable force at sea,” he said in a statement before the ship’s launch.
“After nearly a year of training and integration exercises, the entire team is ready as a warfighting force and ready to carry out the nation’s tasking.”
Of course, as we noted above, this buildup of naval forces in the Pacific follows an ominous warning from the President last week that preceded a dinner with military leaders: “You guys know what this represents? Maybe it’s the calm before the storm,” he said: “It could be the calm… before… the storm.”
A reporter quickly asked what the storm might be -“Is it Iran, ISIS, what’s the storm?” to which he replied… “…you’ll find out.”
So what say you? Just more bluster from a headline seeking President and normal-ish naval patrols in the Pacific or have we reached a point of no return in an escalating conflict with a rogue North Korean leader that could turn violent at any moment?
end
b) REPORT ON JAPAN
4. EUROPEAN AFFAIRS
5. RUSSIA AND MIDDLE EASTERN AFFAIRS
Turkey
this morning we witness 100 Turkish soldiers and 30 armored vehicles cross into Syria. Their stated goal is to help the Syrian government out iSIS and Sunni influences in Northern Syria. Their real goal is try and remove the Syrian Kurds. Thus on the surface they are turning their backs against the West and joining forces with Russia and Iran
(courtesy zerohedge)
More Than 100 Turkish Soldiers, 30 Armored Vehicles Cross Into Syria
A large Turkish army convoy consisting of more than 100 Turkish soldiers, including special forces and commandos, along with at least 30 armored trucks entered Syria’s Idlib region around 22:15 local time, for a joint mission with Russia and Iran to monitor a local de-escalation zone and “pacify al-Qaeda linked militants” there, Hurriyet newspaper reports. While their destination was not clear, local sources told Al Jazeera the troops were headed towards the western part of Aleppo province.
The de-escalation zone forms part of an agreement reached between Turkey, which backs forces battling the government of President Bashar al-Assad, and Iran and Russia, which support his government.
This move by the Turkish Army comes just days after Turkish President, Recep Tayyip Erdogan, announced that the Ankara-backed Euphrates Shield Forces were preparing an operation to expel the Al-Qaeda linked Hay’at Tahrir Al-Sham terror group from the Idlib Governorate.
Al Jazeera, reporting from Antakya, along Turkey’s border with Syria, said:
“This is what we know so far: dozens of military vehicles have crossed into Syria. “It remains to be seen what happens to the fighters who control Idlib province. Civilians there have been living in fear of potential clashes between Turkish-backed opposition Free Syrian Army fighters and Hayat Tahrir al-Sham, an alliance of armed groups that controls Idlib.”
A military build-up has taken place of late along Turkey’s border with Syria, with Turkey supporting a campaign to secure opposition control over Idlib province.
With Turkish relations with the US – not to mention Europe – at rock bottom, we doubt that the US State Department will be pleased by this sudden escalation in which Russia once again projects to the west that Syria is its domain, and that NATO member Turkey has become one of its biggest allies in the middle east region. The US, however, will have no choice but to respond as the Turkish incursion means that Kurdish US-coalition allies will demand a US response, or else the entire region will henceforth perceive Washington as a paper tiger
end
Israel:
not good: Israeli TV shows footage of iSIS training camp on Israel’s border
Israeli TV Shows Footage Of ISIS Training Camp On Israel’s Border
for complete report see zerohedge)
http://www.zerohedge.com/news/2017-10-13/israeli-tv-shows-footage-isis-training-camp-israels-border
Last November Israel Prime Minister Benjamin Netanyahu said his country “won’t allow Islamic State figures or other enemy actors, under the cover of the war in Syria, to set up next to our borders,” but it appears this has already happened, to the point that a sizable ISIS training camp has been set up just across the Golan Heights border with Israel. Though Syrian al-Qaeda has long been a mainstay in southern Syria along Israel’s border, this constitutes the first widespread public acknowledgement and confirmation of a significant ISIS base of operations in the Golan region.
Israeli media this week is reporting news of the base camp after Israel’s Channel 2 aired an extensive report with video and photographic evidence of what’s being described as a training and recruitment center which has already attracted hundreds of new terror recruits. Channel 2 is one of Israel’s most visible and established news broadcast channels and operates under “The Second Authority for Television and Radio” licensed by the Knesset and the Ministry of Communications. According to the Times of Israel:
Israel’s Channel 2 said the commanders have made their way to an Islamic State-controlled enclave “close to the border” with Israel. They have set up a training camp to which they have recruited 300 local youths, said the report, which showed footage apparently of the camp and training sessions.
Among the commanders is one of Islamic State’s most notorious recruiters, Abu Hamam Jazrawi, the TV report said.
The commanders are also now running Islamic State internet propaganda campaigns from their new base, in place of the former campaign headquarters in Raqqa, the extremists’ former de facto capital in northwest Syria where the fight to oust them has entered what appear to be its final stages.
Featured in Israel’s Channel 2 broadcast: Islamic State training camp (Channel 2 screenshot)
Channel 2 screenshot purporting to show the ISIS base camp just across Israel’s border.
The Channel 2 exposé further notes the presence of multiple senior Islamic State commanders at the camp, which suggests the terror group could be attempting to relocate its assets to Syria’s south as it appears to be crumbling with the onset of SDF, Syrian Army, and Russian forces in the eastern part of the country.
The Times of Israel acknowledges another shocking fact, which has itself become an open secret of sorts among Israeli defense and policy officials: what it calls the long lasting “live and let live” relationship with al-Qaeda in the region. The Times of Israel explains:
Both the IS-affiliated Khalid ibn al-Walid Army and the Jabhat Fateh al-Sham, formerly the al-Nusra Front, which is linked to al-Qaeda, have been set up on Israel’s borders for years.
Despite a relatively long-lasting “live and let live” relationship with these groups, the IDF has warned of a potential — some say inevitable — conflict with them and has been preparing to respond to cross-border attacks.
Though the IDF has “warned” of some “potential” direct action against the most notorious terrorist groups in the world which seem to be comfortably ensconced within eyesight of Israeli border posts, it has never taken significant direct action against these groups, instead routinely targeting the Syrian army, Iranian-linked militias, and Hezbollah with airstrikes. This is a general reflection of the Israeli strategy of regime change in Syria, which has resulted in a well-documented history of assistance to al-Qaeda affiliated rebel groups.
A Wall Street Journal investigation found that this relationship involved weapons transfers, salary payments to anti-Assad fighters, and treatment of wounded jihadists in Israeli hospitals, the latter which was widely promoted in photo ops picturing Netanyahu himself greeting militants. As even former Acting Director of the CIA Michael Morell once directly told the Israeli public, Israel’s “dangerous game” in Syria consists in getting in bed with al-Qaeda in order to fight Shia Iran.
Channel 2 News and the The Times of Israel also featured an image from a prior video of a lone ISIS militant holding an Islamic State flag with the Israeli side of the Golan border in clear view.
The Times of Israel featured the above image: “Threats from across the border in a video released by an Islamic State affiliate on the Syrian side of the Golan Heights on September 3, 2016.”
In recent years, multiple current and former Israeli defense officials have gone so far as to say that ISIS is ultimately preferable to Iran and Assad. For example, former Israeli Ambassador to the US Michael Oren in 2014 surprised the audience at Colorado’s Aspen Ideas Festival when he said in comments related to ISIS that, “the lesser evil is the Sunnis over the Shias.” Oren, while articulating Israeli defense policy, fully acknowledged he thought ISIS was “the lesser evil.”
Likewise, for Netanyahu and other Israeli officials the chief concern was never the black clad death cult which filmed itself beheading Americans and burning people alive, but the possibility of, in the words of Henry Kissinger, “a Shia and pro-Iran territorial belt reaching from Tehran to Beirut” and establishment of “an Iranian radical empire.”
With Israeli media now widely reporting the Islamic State’s presence along Israel’s border we wonder why such a clear and documented fact isn’t cause for bigger outrage. Though Israel’s Channel 2 bombshell report aired earlier this week, there’s been resounding silence in international press. ISIS is camping out along Israel’s border, yet all we hear about is the supposed “Iranian threat” to Israel’s existence
end
https://www.silverdoctors.com/tag/harvey-organ/
Opening the whole can tonight EnJoy
.jpg)
Oct 13/GOLD AND SILVER RISE DUE TO POOR USA WAGE GROWTH/TRUMP DECERTIFIES USA /IRAN NUCLEAR AGREEMENT/
October 13, 2017 · by harveyorgan · in Uncategorized
GOLD: $1302.35 up $10,15
Silver: $1739 up 22 cents
Closing access prices:
Gold $1303.90
silver: $17.42
SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
SHANGHAI FIRST GOLD FIX: $1304,65 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1295,60
PREMIUM FIRST FIX: $9.05 (premiums getting larger)
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SECOND SHANGHAI GOLD FIX: $1305.65
NY GOLD PRICE AT THE EXACT SAME TIME: $1297.00
Premium of Shanghai 2nd fix/NY:$8.65(PREMIUMS GETTING LARGER)
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LONDON FIRST GOLD FIX: 5:30 am est $1293.90
NY PRICING AT THE EXACT SAME TIME: $1293.90
LONDON SECOND GOLD FIX 10 AM: $1299.60
NY PRICING AT THE EXACT SAME TIME. 1299.60
For comex gold:
OCTOBER/
NOTICES FILINGS TODAY FOR OCT CONTRACT MONTH: 5 NOTICE(S) FOR 500 OZ.
TOTAL NOTICES SO FAR: 2334 FOR 233,400 OZ (7.259TONNES)
For silver:
OCTOBER
124 NOTICES FILED TODAY FOR
620,000 OZ/
Total number of notices filed so far this month: 516 for 2,580,000 oz
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
end
Let us have a look at the data for today
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In silver, the total open interest ROSE BY 1289 contracts from 187,422 UP TO 188,711 WITH RESPECT TO YESTERDAY’S TRADING (UP 9 CENTS). THE CROOKS ARE HAVING AN AWFUL TIME TRYING TO COVER THEIR MASSIVE SILVER SHORTS. IT IS OBVIOUS THAT WE MUST HAVE HAD ZERO BANKER SHORT COVERING.
RESULT: A GOOD SIZED RISE IN OI COMEX WITH THE 9 CENT PRICE RISE. OUR BANKERS COULD NOT COVER ANY OF THEIR HUGE SHORTFAL .
In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e. 0.944BILLION TO BE EXACT or 135% of annual global silver production (ex Russia & ex China).
FOR THE NEW FRONT OCT MONTH/ THEY FILED: 124 NOTICE(S) FOR 620,000 OZ OF SILVER.
In gold, the open interest ROSE BY 2858 CONTRACTS WITH THE GOOD SIZE RISE in price of gold ($6.20 ) . The new OI for the gold complex rests at 521,247. OUR BANKER FRIENDS COULD NOT COVER ANY OF THEIR GOLD SHORTS AS THEY RETREATED TO HIGHER GROUND.
Result: A GOOD SIZED INCREASE IN OI WITH THE RISE IN PRICE IN GOLD ($6.20). WE PROBABLY HAD ZERO BANKER GOLD SHORT COVERING BY THE BANKERS.
we had: 5 notice(s) filed upon for 500 oz of gold.
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With respect to our two criminal funds, the GLD and the SLV:
GLD:
Tonight , NO CHANGES in gold inventory at the GLD/
Inventory rests tonight: 858.45 tonnes.
SLV
Today: NO changes in inventory:
INVENTORY RESTS AT 326.898 MILLION OZ
end
.
First, here is an outline of what will be discussed tonight:
1. Today, we had the open interest in silver ROSE BY 1289 contracts from 187,442 UP TO 188,711(AND now A LITTLE CLOSER TO THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) . IT SEEMS THAT OUR BANKERS WERE AGAIN UNSUCCESSFUL IN COVERING THEIR SILVER SHORTS. THE DATA SEEMS TO SUGGEST THAT THE BANKERS COULD NOT ALSO COVER THEIR GOLD SHORTS COVERING . HOWEVER IT IS CLEAR THAT SILVER IS BECOMING IMPOSSIBLE FOR THE CROOKS TO COVER. THE BANKERS RETREATED TO HIGHER GROUND WHERE THEY WILL TRY AGAIN.
RESULT: A GOOD SIZED INCREASE IN SILVER OI AT THE COMEX WITH THE RISE IN PRICE OF 9 CENTS WITH RESPECT TO YESTERDAY’S TRADING. OUR BANKER FRIENDS WERE UNSUCCESSFUL IN THEIR ATTEMPT TO COVER ANY OF OUR SILVER SHORTS
(report Harvey)
.
2.a) The Shanghai and London gold fix report
(Harvey)
2 b) Gold/silver trading overnight Europe, Goldcore
(Mark O’Byrne/zerohedge
and in NY: Bloomberg
3. ASIAN AFFAIRS
i)Late THURSDAY night/FRIDAY morning: Shanghai closed UP 4,42 points or .13% /Hang Sang CLOSED UP 17,40 pts or .06% / The Nikkei closed UP 200.46 POINTS OR .96/Australia’s all ordinaires CLOSED UP 0.35%/Chinese yuan (ONSHORE) closed UP at 6.5877/Oil UP to 51.58 dollars per barrel for WTI and 57.45 for Brent. Stocks in Europe OPENED MIXED . ONSHORE YUAN CLOSED UP AGAINST THE DOLLAR AT 6.5877. OFFSHORE YUAN CLOSED STRONGER TO THE ONSHORE YUAN AT 6.5826 AND BOTH YUANS ARE STRONGER AGAINST THE DOLLAR. THE DOLLAR (INDEX) IS STRONGER AGAINST ALL MAJOR CURRENCIES. CHINA IS NOT HAPPY TODAY
i
3a)THAILAND/SOUTH KOREA/NORTH KOREA
i)North Korea/USA
b) REPORT ON JAPAN
c) REPORT ON CHINA
4. EUROPEAN AFFAIRS
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
6 .GLOBAL ISSUES
7. OIL ISSUES
8. EMERGING MARKET
9. PHYSICAL MARKETS
10. USA Stories
i
Let us head over to the comex:
The total gold comex open interest ROSE BY A STRONG 2858 CONTRACTS UP to an OI level of 521,247 WITH THE RISE IN THE PRICE OF GOLD ($6.20 RISE IN YESTERDAY’S TRADING). IT SEEMS THAT OUR BANKER FRIENDS TRIED TO COVER SOME OF THEIR HUGE GOLD SHORTFALL BUT TO NO AVAIL. SO THE BANKERS RETREATED TO HIGHER GROUND HOPING TO TRY AGAIN COVERING SOME OF THEIR SHORTFALL. OCTOBER IS AN ACTIVE DELIVERY MONTH ALTHOUGH IT IS THE WEAKEST IN TERMS OF ACTUAL DELIVERIES AND OPEN INTEREST. WE VISUALIZED THAT THROUGHOUT THE MONTH OF SEPTEMBER, THE CROOKS UTILIZED THE EMERGENCY EFP SCHEME TO TRANSFER OBLIGATIONS OVER TO LONDON. IT THEN STANDS TO REASON THAT IF THE EMERGENCY WAS IN FORCE THROUGHOUT THE MONTH OF SEPTEMBER IT WOULD CONTINUE ON FIRST DAY NOTICE WHEREBY ANOTHER 7200 LONG COMEX CONTRACTS WERE GIVEN 7200 EFP’S. WE HAVE NOW ENDED GOLDEN WEEK WHERE ALL OF CHINA WAS OFF AND AS SUCH WE SHOULD EXPECT GOLD TO BE STRONG THIS WEEK WITH CHINA RETURNING TO ACTIVE DUTY PURCHASING OUR PRECIOUS METALS.
Result: a GOODSIZED open interest INCREASE WITH THE GOOD SIZED RISE IN THE PRICE OF GOLD ($6.20). BANKERS RETREATED TO HIGHER GROUND AND COULD NOT COVER ANY PORTION OF THE GOLD SHORTFALL
IN SEPTEMBER,CHINA THREW OUT A TRIAL BALLOON LAST MONTH THAT THEY WERE CONSIDERING A YUAN BASED OIL CONTRACT ON THE SHANGHAI EXCHANGE AND THEN THE RECIPIENT OF YUAN WILL ALSO HAVE THE OPTION OF CONVERTING TO GOLD. I NOW STRONGLY BELIEVE THAT THAT IS THE REASON FOR THE CONSTANT TORMENT. THE BANKERS KNOW THAT THEIR GAME WILL BE UP ONCE WE GET A YUAN-PETRO SCHEME WITH A CONVERSION OF YUAN INTO GOLD.
I BELIEVE THE CHINESE WILL INTRODUCE THIS SCHEME AT THEIR BIG 5 YR FORUM BEGINNING ON OCT 18.
I WOULD IMAGINE THAT THE CHINESE WOULD TAKE IN ALL GOLD INITIALLY AT SAY $2,000…AND THE NEW GOLD RECEIVED WOULD BE USED TO SETTLE ON YUAN CASHED. IF 2,000 DOLLARS IS INSUFFICIENT TO RAISE ENOUGH GOLD, THEN FURTHER INCREASES WILL BE THE ORDER OF THE DAY UNTIL EQUILIBRIUM.
THE BANKERS FEARING THIS, HAS ORCHESTRATED HUGE RAIDS THESE PAST 3 WEEKS HOPING TO COVER AS MANY GOLD/SILVER SHORTS AS POSSIBLE.
NOW THAT WE ARE CLOSE TO THE 29TH CHINESE CONGRESS, THE BANKERS ARE TAKING NO CHANCES AS THEY START TO COVER THEIR GOLD/SILVER SHORTFALL.
We have now entered the active contract month of Oct and here we saw a LOSS of 0 contracts DOWN to 220 contracts. We had 0 notices filed yesterday so we LOST 0 contracts or NIL oz will NOT stand for delivery at the comex in this active delivery month of October and 0 EFP notices were given. The low number of notices early in the delivery cycle is evidence of a lack of physical gold.
The November contract saw A loss OF 90 contracts down to 1297.
The very big active December contract month saw it’s OI GAIN OF 310 contracts UP to 399,883
.
We had 5 notice(s) filed upon today for 500 oz
VOLUME FOR TODAY (PRELIMINARY) 273,662
CONFIRMED VOLUME YESTERDAY: 258,630
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And now for the wild silver comex results. Total silver OI ROSE BY 1289 CONTRACTS FROM 187,422 UP TO 188,711 WITH YESTERDAY’S 9 CENT RISE IN PRICE. WE HAVE HAD NO BANKER SHORT COVERING AS THE CROOKS TRY AND FAILED TO LOOSEN ANY SILVER LONGS FROM THE SILVER TREE AS THE BANKERS RETREATED TO HIGHER GROUND. THE GOOD SIZED RISE IN SILVER PRICE MEANS THAT THEY HAVE ABANDONED ALL HOPE OF COVERING AT LOWER PRICES, SO THEY REGROUP AT MUCH HIGHER PRICES WHERE THEY WILL ATTEMPT AGAIN AT COVERING.
We have now entered the non active contract month of October and here the OI LOST 87 contacts DOWN TO 425. We had 1 notice filed on yesterday so we LOST 86 contracts or AN ADDITIONAL 430,000 oz will NOT stand for delivery and 86 EFP’s were issued IN WHICH DEPARTING LONGS RECEIVED A FIAT BONUS PLUS A FUTURE DELIVERABLE PRODUCT AND NO DOUBT THAT WOULD BE A LONDON BASED FORWARD. November saw a GAIN of 17 contract(s) and thus RISIING TO 307. After November, the NEXT big active contract month is December and here the OI GAINED 437 contracts UP to 142,081 contracts.
We had 124 notice(s) filed for 620,000 oz for the OCT. 2017 contract
INITIAL standings for OCTOBER
Oct.13/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz n/a
Withdrawals from Customer Inventory in oz
n/a oz
Deposits to the Dealer Inventory in oz n/a oz
Deposits to the Customer Inventory, in oz
n/a
No of oz served (contracts) today
5notice(s)
500 OZ
No of oz to be served (notices)
215contracts
(21,500 oz)
Total monthly oz gold served (contracts) so far this month
2334 notices
233,400 oz
7.2441 tonnes
Total accumulative withdrawals of gold from the Dealers inventory this month NIL oz
Total accumulative withdrawal of gold from the Customer inventory this month xxx oz
Today we HAD xx kilobar transaction(s)/
WE HAD xx DEALER DEPOSIT:
total dealer deposits: xx oz
We had xxx dealer withdrawals:
total dealer withdrawals: xx oz
we had xxx customer deposit(s):
total customer deposits; xx oz
We had n/a customer withdrawal(s)
total customer withdrawals; nil oz
we had xxx adjustment(s)
For OCT:
Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 5 contract(s) of which 0 notices were stopped (received) by j.P. Morgan dealer and 4 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.
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To calculate the INITIAL total number of gold ounces standing for the OCTOBER. contract month, we take the total number of notices filed so far for the month (2334) x 100 oz or 232,900 oz, to which we add the difference between the open interest for the front month of OCT. (220 contracts) minus the number of notices served upon today (5) x 100 oz per contract equals 254,900 oz, the number of ounces standing in this active month of OCT.
Thus the INITIAL standings for gold for the OCTOBER contract month:
No of notices served (2334) x 100 oz or ounces + {(220)OI for the front month minus the number of notices served upon today (5) x 100 oz which equals 254,900 oz standing in this active delivery month of OCTOBER (7.928tonnes).
WE LOST 0 CONTRACTS OR AN ADDITIONAL NIL OZ WILL STAND
IT WAS OBVIOUS THAT THERE WAS HARDLY ANY GOLD TO DELIVER UPON LONGS IN SEPTEMBER AND THIS CONTINUES ON IN OCTOBER. THE CROOKS USE THE EFP’S TO TRANSFER THEIR OBLIGATION TO ANOTHER EXCHANGE. THIS IS WHY ANOTHER 5400 EFP’S WERE ISSUED FOR OCTOBER GOLD ON FIRST DAY NOTICE AND IT ALSO EXPLAINS THE LACK OF DELIVERY NOTICES IN THE EARLY PART OF THIS DELIVERY ACTIVE MONTH.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Total dealer inventory 598,132.542 or 18.604 tonnes (dealer gold continues to disappear)
Total gold inventory (dealer and customer) = 8,771,375.170 or 272.82 tonnes
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process and are being used in the raiding of gold!
The gold comex is an absolute fraud. The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction. This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
IN THE LAST 13 MONTHS 80 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE OCTOBER DELIVERY MONTH
OCTOBER INITIAL standings
Oct 13. 2017
Silver Ounces
Withdrawals from Dealers Inventory n/a
Withdrawals from Customer Inventory
n/a oz
Deposits to the Dealer Inventory
n/a oz
Deposits to the Customer Inventory
n/a
No of oz served today (contracts)
124 CONTRACT(S)
(620,000 OZ)
No of oz to be served (notices)
301contracts
(1,505,000 oz)
Total monthly oz silver served (contracts) 516contracts
(2,580,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month NIL oz
Total accumulative withdrawal of silver from the Customer inventory this month xx oz
today, we had xxx deposit(s) into the dealer account:
total dealer deposit: xxx oz
we had xxx dealer withdrawals:
total dealer withdrawals: xxx oz
we had xx customer withdrawal(s):
TOTAL CUSTOMER WITHDRAWALS: xx oz
We had xx Customer deposit(s):
***deposits into JPMorgan have stopped again
In the month of March and February, JPMorgan stopped (received) almost all of the comex silver contracts.
why is JPMorgan bringing in so much silver??? why is this not criminal in that they are also the massive short in silver
total customer deposits: 600,627.490 oz
we had 0 adjustment(s)
The total number of notices filed today for the OCTOBER. contract month is represented by 124 contract(s) for 620000 oz. To calculate the number of silver ounces that will stand for delivery in OCTOBER., we take the total number of notices filed for the month so far at 514 x 5,000 oz = 2,580,000 oz to which we add the difference between the open interest for the front month of OCT. (425) and the number of notices served upon today (124x 5000 oz) equals the number of ounces standing.
.
Thus the INITIAL standings for silver for the OCTOBER contract month: 516 (notices served so far)x 5000 oz + OI for front month of OCTOBER(425) -number of notices served upon today (124)x 5000 oz equals 4,085,000 oz of silver standing for the OCTOBER contract month. This is HUGE for this NON active delivery month. THE INCREASE IN TOTAL OZ STANDING FOR SILVER CONTINUES TO ADVANCE
WE LOST 86 CONTRACTS OR AN ADDITIONAL 430,000 OZ WILL NOT STAND FOR DELIVERY.
ESTIMATED VOLUME FOR TODAY: 80,543
CONFIRMED VOLUME FOR YESTERDAY: 64,376 CONTRACTS
Total dealer silver: 39.345 million (close to record low inventory
Total number of dealer and customer silver: 220.100 million oz
The record level of silver open interest is 234,787 contracts set on April 21./2017 with the price at that day at $18.42
The previous record was 224,540 contracts with the price at that time of $20.44
end
NPV for Sprott and Central Fund of Canada
1. Central Fund of Canada: traded at Negative 1.7 percent to NAV usa funds and Negative 1.5% to NAV for Cdn funds!!!!
Percentage of fund in gold 62.6%
Percentage of fund in silver:37.4%
cash .+0.0%( Oct13/2017)
2. Sprott silver fund (PSLV): STOCK FALLS TO -0.60% (Oct 13/2017)
3. Sprott gold fund (PHYS): premium to NAV falls TO -0.58% to NAV (Oct 13/2017 )
Note: Sprott silver trust back into NEGATIVE territory at -0.60%-/Sprott physical gold trust is back into NEGATIVE/ territory at -0.58%/Central fund of Canada’s is still in jail but being rescued by Sprott.
Sprott WINS hostile 3.1 billion bid to take over Central Fund of Canada
(courtesy Sprott/GATA)
Sprott Inc. to take control of rival gold holder Central Fund of Canada
by THE CANADIAN PRESS
Posted Oct 2, 2017 8:43 am PDT
Last Updated Oct 2, 2017 at 9:20 am PDT
TORONTO – Sprott Inc. (TSX:SII) says it has struck a deal to take control of rival gold-holding firm Central Fund of Canada Ltd. (TSX:CEF.A) after a protracted takeover effort.
Toronto-based Sprott said Monday it will pay $120 million in cash and stock for Central Fund of Canada Ltd.’s common shares and for the right to administer and manage the fund’s assets.
The deal, which requires approval from Central Fund shareholders, would see its class A shareholders transferred to a new Sprott Physical Gold and Silver Trust.
Sprott says the deal would add $4.3 billion to its assets under management, which are focused largely on holding physical precious metals on behalf of clients, and 90,000 investors to its client base.
In March, Sprott tried to go through the Court of Queen’s Bench of Alberta to allow Central Fund’s class A shareholders to swap their shares to Sprott after the family that controls Central Fund rebuffed their attempt to make a deal.
Last year Sprott took over Central GoldTrust, a similar fund controlled by the same family, after securing support from more than 96 per cent of shareholder votes cast.
END
And now the Gold inventory at the GLD
0CT 13/ NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 858.45 TONNES
Oct 12/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 858.45 TONNES
Oct 10/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 858.45 TONNES
Oct 9/ANOTHER DEPOSIT OF 4.43 TONNES INTO GLD/INVENTORY RESTS AT 858.45 TONNES
Oct 6/A DEPOSIT OF 2.96 TONNES OF GOLD INVENTORY INTO THE GLD/TONIGHT IT RESTS AT 854.02 TONNES
Oct 5/A LOSS OF 3.24 TONNES OF GOLD INVENTORY FROM THE GLD/INVENTORY RESTS AT 851.06 TONNES
Oct 4/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 854.30 TONNES
oCT 3/ A HUGE WITHDRAWAL OF 10.35 TONNES FROM THE GLD/INVENTORY RESTS AT 854.30 TONNES
Oct 2/STRANGE/WITH GOLD’S CONTINUAL WHACKING WE GOT A BIG FAT ZERO OZ LEAVING THE GLD/INVENTORY RESTS AT 864.65 TONNES
SEPTEMBER 29/no changes in gold inventory at the GLD/Inventor rests at 864.65 tonnes
Sept 28/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 864.65 TONNES
Sept 27/WOW!! WITH GOLD DOWN $13.25, WE HAD A HUGE 8.57 TONNES OF GOLD ADDED TO THE GLD/
Sept 26/no changes in gold inventory at the GLD/Inventory rests at 856.08 tonnes
Sept 25./Another big deposit of 3.84 tonnes into GLD/Inventory rests tonight at 856.08 tonnes
Sept 22/with gold up only 1 dollar on the day we had a massive 6.21 tonnes of gold added to the GLD/.this is a good sign that gold will advance nicely this coming week.
Sept 21/no change in gold inventory tonight/inventory rests at 846.03 tonnes
Sept 20/no change in gold inventory tonight/inventory rests at 846.03 tonnes
Sept 19/another deposit of 2.07 tonnes of gold into the GLD/inventory rests at 846.03 tonnes
Sept 18/a huge 5.32 tonnes of gold deposit into the GLD despite gold’s whack today/inventory rests at 843.96 tonnes
Sept 15./strange!!no change in GLD after the whacking of gold/inventory remains at 838.64 tonnes
Sept 14./no changes at the GLD/inventory rests at 838.64 tonnes
Sept 13/late last night a huge 4.14 tonnes of gold was added to the GLD inventory/inventory rests at 838.64 tonnes.
Sept 12/as of 5: 40 pm est, no changes in gold inventory at the GLD/Inventory rests at 834.50 tonnes
Sept 11/Today we had a rather large 2.37 tonnes of gold removed from the GLD/Inventory rests at 834.50 tonnes
Sept 8/we had a tiny withdrawal of .34 tonnes and probably that would be to pay for fees like insurance etc.
Inventory rests at 836.87 tonnes
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Oct 12/2017/ Inventory rests tonight at 858.45 tonnes
*IN LAST 250 TRADING DAYS: 82.50 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 185 TRADING DAYS: A NET 74.78 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
*FROM FEB 1/2017: A NET 43.67 TONNES HAVE BEEN ADDED.
end
Now the SLV Inventory
oCT 13/ NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 325.765 MILLION OZ
Oct 12/THE LAST TWO DAYS WE LOST 1.113 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 325.765 MILLION OZ
Oct 10/NO CHANGE IN INVENTORY AT THE SLV/INVENTORY RESTS AT 326.898 MILLION OZ/
Oct 9/A HUGE DEPOSIT OF 1.227 MILLION OZ INTO THE INVENTORY OF THE SLV/INVENTORY RESTS AT 326.898 MILLION OZ
Oct 6/NO CHANGE IN SILVER INVENTORY/ INVENTORY RESTS AT 325.671 MILLON OZ
Oct 5/ANOTHER WITHDRAWAL OF 944,000 OZ FROM THE SLV/INVENTORY RESTS AT 325.671 MILLION OZ
OCT 4/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 326.615 MILLION Z
Oct 3/A TINY WITHDRAWAL OF 143,000 FROM THE SLV FOR FEES/INVENTORY RESTS AT 326.615 MILLION OZ
Oct 2/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 326,757 MILLION OZ
SEPTEMBER 29/no changes in silver inventory at the SLV/inventory rests at 326.757 million oz/
Sept 28/NO CHANGES IN SILVER INVENTORY/INVENTORY RESTS AT 326.757 MILLION OZ/
Sept 27/STRANGE!! SILVER IS HIT FOR 24 CENTS YESTERDAY AND. 9 CENTS TODAY AND YET NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 326.757 MILLION OZ
Sept 26./no change in silver inventory at the SLV/.inventory rests at 326.757 million oz
Sept 25./ a big deposit of 1.842 million oz into the SLV/inventory rests at 326.757 million oz/
Sept 22/no change in silver inventory at the SLV/Inventory rests at 324.915 million oz/
Sept 21/no change in silver inventory at the SLV/Inventory rests at 324.915 million oz
Sept 20/no changes in silver inventory/Inventory remains at 324.915 million oz
Sept 19/strange!! another withdrawal of 1.134 million oz despite the rise in silver/inventory rests at 324.915 million oz
Sept 18/a withdrawal of 1.039 million oz from the SLV/Inventory rests at 326.049 million oz
Sept 15./no change in silver inventory at the SLV/Inventory rests at 327.088 million oz/
Sept 14/no change in silver inventory at the SLV/Inventory rests at 327.088 million oz/
Sept 13/no change in silver inventory at the SLV/Inventory rests at 327.088 million oz/
Sept 12.2017/no change in silver inventory at the SLV/Inventory rests at 327.088 million oz/
Sept 11.2017: no change in silver inventory at the SLV/Inventory rests at 327.088 million oz/
Sept 8/no change in silver inventory at the SLV/Inventory rests at 327.088 million oz/
Oct 11/2017:
Inventory 325.765 million oz
end
6 Month MM GOFO
Indicative gold forward offer rate for a 6 month duration
+ 1.43%
12 Month MM GOFO
+ 1.64%
30 day trend
end
Major gold/silver trading/commentaries for FRIDAY
GOLDCORE/BLOG/MARK O’BYRNE.
GOLD/SILVER
U.S. Mint Gold Coin Sales and VIX Point To Increased Market Volatility and Higher Gold
By janskoyles October 13, 2017 0 Comments
– US Mint gold coin sales and VIX at weakest in a decade
– Very low gold coin sales and VIX signal volatility coming
– Gold rises 1.7% this week after China’s Golden Week; pattern of higher prices after Golden Week
– U.S. Mint sales do not provide the full picture of robust global gold demand
– Perth Mint gold sales double in September reflecting increased gold demand in both Asia and Europe
– Middle East demand likely high given geopolitical risks
– Iran seeing increased gold demand and Iran’s gold coin price up by 5%
– Trump’s war mongering could see demand accelerate
– Germany seeing very robust demand and now world’s largest gold buyer
Editor: Mark O’Byrne
Source: ZeroHedge
US Mint coin sales fell to a decade low last month. This follows poor sales since the beginning of 2017. In the third quarter sales reached nearly 3.7 million ounces. September gold coin sales were down a whopping 88% compared to the same period last year.
Year to date sales at 232,000 ounces are 66.5% lower than the 692,500 ounces delivered during the first nine months of 2016, according to the U.S. Mint.
American Eagle gold coin sales did see a slight uptick in demand from very low levels and increased by 11,500 ounces in September which was up by 21.1% in August.
Is this pick-up in US coin demand a sign of things turning around? Perhaps, but we believe the low coin sales this year might say something else about the wider economy. It is also important to look at gold coin and bar sales across the globe to get a better feel for actual demand.
Sign of the end, but for what?
Bloomberg were quick to point out that US Mint sales were at a decade low.
They believed this was due to investors turning ‘sour on bullion’ and that gold’s appeal ‘is waning as retail investors seek better returns in equities, lured by the S&P 500 Index’s climb to records.’
However, the picture of declining gold coin sales has not been taken against the backdrop of the last decade.
ZeroHedge were quick to spot a potential pattern and correlation with the VIX which may point to increased volatility and uncertainty and a prompt recovery in the gold price:
“The first nine months of 2017 have seen demand for gold coins slump. As stocks soar unendingly (and vol drops unerringly) the US Mint notes that sales of coins is at its weakest in a decade as complacency in the face of ever-increasing potential-crisis-events nears record highs.
The question is – what happened the last time the public gave up on buying “protection against the idiocy of the political cycle”?
The answer is awkwardly simple… everything collapsed.”
This is important news for those who are getting wary about the massive complacency and “irrational exuberance” currently seen in global stock and bond markets.
It’s not all about the U.S. Mint gold coin demand
Given how much Trump dominates the headlines it might be hard to remember that U.S. demand is not a reflection of total gold demand.
Whilst the U.S. Mint poor gold coin continued in September, their cousins ‘down under’ recorded excellent sales in September.
On Monday we covered how Perth Mint gold coins sales doubled in September. Last month the Perth Mint sold 46,415 ounces of gold in bars and coins. In August, its gold bullion sales were just 23,130 ounces. Silver product sales soared by 78 percent from the previous month.
Why is this relevant? The Perth Mint sells gold all over the world. The US Mint predominantly sells domestically and would be more dependent on domestic demand.
The Australian Mint’s sales figures are a better reflection of the robust demand in the likes of Asia and Europe, where investors are growing increasingly risk aware.
Data released by the World Gold Council last week showed Germany is now the world’s largest buyers of gold. We explained:
Last year, more than €6bn was ploughed into gold investment products in Germany and, encouragingly, there is room for further growth: consumer research indicates there is latent retail demand which the industry can tap into.
We have long said that German physical and ETF gold demand is a very important demand factor in the gold market and one that is continuously underestimated. It was good to have the WGC research bolster our view.
No way of knowing real levels of demand
In the short-term we need to remind ourselves that these are only official figures for two mints.
When we reported on the 11% increase in gold bar and coin demand for the first half of 2017, we reminded readers that there are likely other sources of demand that are not recorded. We said that it is
“Important to note this is all official, transparent and recorded demand. There is demand and flows of gold that cannot be and are not recorded – especially into the Middle East, India, Russia and of course China.”
Each week there are stories of gold smugglers caught in airports, but this is just the tip of the iceberg. At a much higher level we know that the likes of Russia and China are working together to fight US dollar hegemony, with the help of gold.
The Government of India Ministry Of Commerce and Industry reported this month that $1.9 billion worth of gold was imported to the county in August. In the same month last year, it was more than $1.1 billion worth of gold
We also see record numbers of gold imports and exchange activity in the Middle East, especially in Dubai.
Last month the Central Bank of Iran cut interest rates. Since then the gold price has surged, setting a new five-year record. The price of a gold coin in Iran, according to the Tehran Gold and Jewelry Union, has climbed by 5% in the last month.
What about China? The mainstream have also been quick to point to weak sales despite China’s Golden Week. This is also missing the bigger picture, argues ZeroHedge.
“China will be back in business on October 9th, and that means the Shanghai Gold Exchange, which opened in 2015 to counter Western manipulation of precious metals, will likely help re-balance prices to where they were before this recent takedown.
We could be wrong, but something tells us gold and silver prices won’t stay this low for much longer and that they could well see a complete turnaround when China reopens on October 9th.”
China’s Golden Week might even point to a quick recovery and the gold price coming back stronger than before, if earlier years are anything to go by:
Complacency dominates
Currently the mood of markets is thick with complacency. Risk is significantly under priced and underestimated.
It is tough to reconcile the risks we see currently and on the horizon against the backdrop of record stock market prices. Complacency may well have seeped into the market for the US Mint’s coins.
However, it is clear market volatility is coming. It looks like central bankers and governments won’t be able to forestall the inevitable for much longer.
Some in the mainstream media are, as ever, keen to point to ‘disaster’ in the gold market.
At worst, the US Mint figures are a small snapshot of complacency in a world which is otherwise focused on stocking up on gold. At best they are an indication that markets are due to have another roller coaster ride of uncertainty and volatility making the case for hedging with gold even more compelling.
Investors should be taking advantage of the valuable time in this the ‘calm before the storm’ and the low gold price. In Europe and Asia it is the imminent feeling of uncertainty and growing instability which is driving buyers to allocate more to gold. This might not be felt just yet in the United States, but lots of indications suggest it soon will be.
As ever, best to hope for the best but be financially prepared for less benign scenarios …
News and Commentary
Gold rally pauses ahead of U.S. inflation data (Reuters.com)
Dollar Snaps Four-Week Rally as Stocks Consolidate (Bloomberg.com)
Inflation weighs on yields, dollar; stocks lackluster (Reuters.com)
U.S. producer prices increase; weekly jobless claims fall (Reuters.com)
Bitcoin Breaches New Milestone by Smashing Past $5,000 Mark (Bloomberg.com)
Bitcoins surges to new record over $5000. Source Bloomberg
Five things to do when every investment is too expensive (MarketWatch.com)
Stocks will beat houses over the next few years – Frisby (MoneyWeek.com)
Three ways that China’s big political congress matters to investors (StansBerryChurcHouse.com)
Bob Corker Is Just the Beginning of Trump’s Tax-Cut Problems (Bloomberg.com)
Yellowstone Supervolcano’s Nasty Surprise: Only Decades To Prepare For An Eruption (Forbes.com)
Central banks hedging against geopolitical risk with gold (Nikkei.com)
Gold Prices (LBMA AM)
13 Oct: USD 1,293.90, GBP 972.88 & EUR 1,093.73 per ounce
12 Oct: USD 1,294.45, GBP 977.96 & EUR 1,092.26 per ounce
11 Oct: USD 1,290.20, GBP 978.62 & EUR 1,091.90 per ounce
10 Oct: USD 1,289.60, GBP 977.77 & EUR 1,094.61 per ounce
09 Oct: USD 1,282.15, GBP 976.23 & EUR 1,092.01 per ounce
06 Oct: USD 1,268.20, GBP 970.43 & EUR 1,083.93 per ounce
05 Oct: USD 1,278.40, GBP 969.28 & EUR 1,086.51 per ounce
Silver Prices (LBMA)
13 Oct: USD 17.20, GBP 12.94 & EUR 14.55 per ounce
12 Oct: USD 17.20, GBP 13.06 & EUR 14.50 per ounce
11 Oct: USD 17.15, GBP 13.00 & EUR 14.51 per ounce
10 Oct: USD 17.12, GBP 12.98 & EUR 14.53 per ounce
09 Oct: USD 16.92, GBP 12.86 & EUR 14.41 per ounce
06 Oct: USD 16.63, GBP 12.73 & EUR 14.20 per ounce
05 Oct: USD 16.66, GBP 12.64 & EUR 14.19 per ounce
Recent Market Updates
– Global Outlook – Mad, Mad, Mad, MAD World: News in Charts
– Young Guns of Gold Podcast – ‘The Everything Bubble’
– London House Prices Are Falling – Time to Buckle Up
– Perth Mint Gold Coins Sales Double In September
– Survey shows UK and US Pensions Crisis is Imminent
– Gold Investment In Germany Surges – Now World’s Largest Gold Buyers
– Yahoo Hacking Highlights Cyber Risk and Increasing Importance of Physical Gold
– Safe Haven Silver To Outperform Gold In Q4 And In 2018
– Plan For Run On The Pound
– Russia Gold Rush Sees Record Reserves For Putin Era
– China Catalyst To Send Gold Over $10,000 Per Ounce?
– Gold Matches S&P 500 Performance In First 3 Quarters; Up 12% 2017 YTD
– Gold Standard Resulted In “Fewer Catastrophes” – FT
http://www.goldcore.com/us/gold-blog/gold-investment-germany-surges-now-worlds-largest-gold-buyers/
END
This is a big story as China now establishes a yuan-rouble payment system which will be a forerunner for the eventual backing of the yuan with gold and the setting up of the yuan -petro –gold payment system.
(courtesy Reuters)
China establishes yuan-ruble payment system
SHANGHAI (Reuters) – China has established a payment versus payment (PVP) system for Chinese yuan and Russian ruble transactions in a move to reduce risks and improve the efficiency of its foreign exchange transactions.
FILE PHOTO: A China yuan note is seen in this illustration photo May 31, 2017. REUTERS/Thomas White/Illustration/File Photo
The PVP system for yuan and ruble transactions was launched on Monday after receiving approval from China’s central bank, according to a statement by the country’s foreign exchange trading system.
It marks the first time a PVP system has been established for trading the yuan and foreign currencies, said the statement, which was posted on Wednesday on the website of the China Foreign Exchange Trade System (CFETS).
PVP systems allow simultaneous settlement of transactions in two different currencies.
CFETS said the system would reduce settlement risk as well as the risk of transactions taking place in different time zones, and improve foreign exchange market efficiency.
CFETS said it plans to introduce PVP systems for yuan transactions with other currencies based on China’s Belt and Road initiative, and complying with the process of renminbi internationalization.
China has ambitious plans to create a New Silk Road to expand links between Asia, Africa, Europe.
Russia and Central Asia are considered top-priority oil and gas sources for China, the world’s top energy consumer.
Reporting by Andrew Galbraith; Editing by Kim Coghill
Our Standards:The Thomson Reuters Trust Principles.
end
ZEROHEDGE COMMENTS ON THE ABOVE STORY
(COURTESY ZEROHEDGE)
China Launches Yuan-Ruble Payment System
The monetary regimes of China and Russia, two of the world’s most resource-rich nations, are drawing closer with every passing day.
In the latest push for convergence, China has established a payment versus payment (PVP) system for Chinese yuan and Russian ruble transactions in a move to reduce risks and improve the efficiency of its foreign exchange transactions. The PVP system for yuan and ruble transactions, designed to streamline commerce and curency transactions between the two nations, was launched on Monday after receiving approval from China’s central bank, according to a statement by the country’s foreign exchange trading system.
It marks the first time a PVP system has been established for trading the yuan and foreign currencies, said the statement, which was posted on Wednesday on the website of the China Foreign Exchange Trade System (CFETS). PVP systems allow simultaneous settlement of transactions in two different currencies.
According to CFETS, the system would reduce settlement risk as well as the risk of transactions taking place in different time zones, and improve foreign exchange market efficiency. Of course, if the two countries had a blockchain-based settlement system, they would already have all this and much more.
CFETS said it plans to introduce PVP systems for yuan transactions with other currencies based on China’s Belt and Road initiative, and complying with the process of renminbi internationalization. Russia, however, is a top priority: the world’s biggest oil producer recently became the largest source of oil for China, the world’s top energy consumer.
To be sure, the monetary convergence between Beijing and Moscow is hardly new. The most notable recent development took place in April, when the Russian central bank opened its first overseas office in Beijing on March 14, marking a step forward in forging a Beijing-Moscow alliance to bypass the US dollar in the global monetary system, and to phase-in a gold-backed standard of trade. As the South China Morning Post reported at the time, the new office was part of agreements made between the two neighbours “to seek stronger economic ties” since the West brought in sanctions against Russia over the Ukraine crisis and the oil-price slump hit the Russian economy.
At the time, Vladimir Shapovalov, a senior official at the Russian central bank, said the two central banks were drafting a memorandum of understanding to solve technical issues around China’s gold imports from Russia, and that details would be released soon, to which we said that If Russia – the world’s fourth largest gold producer after China, Japan and the US – is indeed set to become a major supplier of gold to China, the probability of a scenario hinted by many over the years, namely that Beijing is preparing to eventually unroll a gold-backed currency, increases by orders of magnitude.
Furthermore, also around the same time, as the Russian central bank was getting closer to China, China was responding in kind with the establishment of a clearing bank in Moscow for handling transactions in Chinese yuan. The Industrial and Commercial Bank of China (ICBC) officially started operating as a Chinese renminbi clearing bank in Russia on Wednesday this past Wednesday
“The financial regulatory authorities of China and Russia have signed a series of major agreements, which marks a new level of financial cooperation,” Dmitry Skobelkin, the abovementioned deputy head of the Russian Central Bank, said. “The launching of renminbi clearing services in Russia will further expand local settlement business and promote financial cooperation between the two countries,” he added according to.
Irina Rogova, a Russian financial analyst told the Russian magazine Expert that the clearing center could become a large financial hub for countries in the Eurasian Economic Union.
* * *
The creation of the clearing center, and the launch of PVP systems enables the two countries to further increase bilateral trade and investment while decreasing their dependence on the US dollar. It will create a pool of yuan liquidity in Russia that enables transactions for trade and financial operations to run smoothly. In expanding the use of national currencies for transactions, it could also potentially reduce the volatility of yuan and ruble exchange rates. The clearing center is one of a range of measures the People’s Bank of China and the Russian Central Bank have been looking at to deepen their co-operation, Sputnik reported.
But one of the most significant measures under consideration is the previously reported push for joint organization of trade in gold.
In recent years, China and Russia have been the world’s most active buyers of the precious metal. On a visit to China last year, the deputy head of the Russian Central Bank Sergey Shvetsov said that the two countries want to facilitate more transactions in gold between the two countries.
“We discussed the question of trade in gold. BRICS countries are large economies with large reserves of gold and an impressive volume of production and consumption of this precious metal. In China, the gold trade is conducted in Shanghai, in Russia it is in Moscow. Our idea is to create a link between the two cities in order to increase trade between the two markets,” First Deputy Governor of the Russian Central Bank Sergey Shvetsov told Russia’s TASS news agency.
In other words, China and Russia are continuing to shift away from dollar-based trade, to commerce which will eventually be backstopped by gold, or what is gradually emerging as an Eastern gold standard, one shared between Russia and China, and which may day backstop their respective currencies.
Meanwhile, the price of gold continues to reflect none of these potentially tectonic strategic shifts, just as China – which has been the biggest accumulator of gold in recent years – likes it.
END
Ridiculous!! Bitcoin is now 5625.00. I guess another way of viewing Bitcoin is that gold would be trading at this price if it was not for manipulation
(courtesy zerohedge)
Bitcoin Is Now Bigger Than Morgan Stanley
On the back of (unconfirmed) rumors suggesting China may back down from its harsh stance of ICOs and crypto exchanges following this week’s National Congress, the price of Bitcoin soared overnight, testing near $5900 before falling back a little this morning.
That has pushed Bitcoin’s market cap above $90 billion for the first time, surpassing PayPal, Netflix, and Morgan Stanley…
Goldman Sachs’ market cap is looming ($96bn) but JP Morgan’s $337 billion market cap is a long way off for now.
end
Only central bank intervention keeps gold down, USGlobal’s Frank Holmes says
Submitted by cpowell on Thu, 2017-10-12 13:56. Section: Daily Dispatches
9:55a ET Thursday, October 12, 2017
Dear Friend of GATA and Gold:
Only intervention by central banks in the gold market is keeping the monetary metal’s price down, fund manager Frank Holmes of U.S. Global Investors told Daniela Cambone of Kitco News in an interview yesterday. The interview is five minutes long and can be viewed here:
http://www.kitco.com/news/video/show/Gold-Game-Film/1735/2017-10-11/Gold…;
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
end
Another Swiss bank won’t let customer see his gold, von Greyerz tells KWN
Submitted by cpowell on Thu, 2017-10-12 18:45. Section: Daily Dispatches
2:45p ET Thursday, October 12, 2017
Dear Friend of GATA and Gold:
Swiss gold fund manager Egon von Greyerz today tells King World News that another Swiss bank has refused to let a substantial customer inspect the gold bars the bank claims to be vaulting for him. Von Greyerz reminds investors that they should not trust the banking system with their metal. His comments to KWN are posted here:
https://kingworldnews.com/breaking-another-well-known-swiss-bank-has-jus…;
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
end
Oil for gold – the real story
By Alasdair Macleod
Alasdair Macleod October 12, 2017
Following an article in the Nikkei Asia Review, which reported China will shortly introduce an oil futures contract priced in yuan, there has been some confusion about what it means. The article pointed out that in combination with existing gold futures priced in yuan, an oil exporter to China contracting to accept yuan could use these two futures contracts to take delivery of physical gold in payment for oil.
I was quoted in that article as follows:
“It is a mechanism which is likely to appeal to oil producers that prefer to avoid using dollars, and are not ready to accept that being paid in yuan for oil sales to China is a good idea either,”i
The mechanism of introducing an oil for yuan contract could hardly be clearer, yet the rumour mill went overtime into Chinese whispers. Some analysts appeared to think China was authorising a new oil for gold contract of some sort, or that China would be supplying the gold, both of which are untrue.
The purpose of this article is to put the proposed oil for yuan contract, which has been planned for some time, into its proper context. It requires knowledge of the history of how China’s policy of internationalising the yuan has been developed, and will be brought up to date with an analysis of how the partnership of China and Russia is taking over as the dominant power over the Eurasian land-mass, a story that is now extending to the Middle East.
This fulfils the prophecy of the founder of geopolitics, Sir Halford Mackinder, made over a century ago. He described the conjoined continents of Eurasia and Africa as the World Island, and that he who controls the Heartland, which lies between the Volga and the Yangtze, and the Himalayas and the Artic, controls the World Island.ii The Chinese-Russian partnership is well on its way to controlling the World Island, including sub-Saharan Africa. We know that successive Soviet and Russian leaders have been guided by Mackinder’s concept.
Events of recent months have accelerated the pace of the Heartland’s growing dominance over the World Island, and become pivotal to the balance of global power shifting in favour of the Heartland. Even political commentators in the mainstream media are hardly aware this is happening, let alone future implications. Financial commentators and economists are even less informed, despite the monetary consequences being of overriding importance for the impact on the wealth of nations and their peoples.
This is the backdrop to China’s internationalisation of her currency. To enhance our understanding of the implications of the introduction of yuan futures contracts, we must begin with the relevant monetary developments.
The Hong Kong – London axis
For a considerable time, China has followed a policy of replacing the dollar as its settlement currency for the purposes of trade. After all, China dominates international trade, and on a purchasing power parity basis, her economy rivals that of the US, and if it hasn’t done so already will soon overtake it. From China’s point of view, being forced by her trading partners to accept and pay in dollars is an irritating anachronism, a hangover from American imperialism.
Furthermore, China’s strategic military analysis has convinced her that America uses the dollar as an economic weapon, wielding it to sustain global hegemony and to support her own economy at the expense of others. Therefore, there are clear strategic reasons for China to do away with the dollar for as much of her international and trans-Asian trade as possible.iii
For America’s part, she has strongly resisted moves to have the dollar replaced as the world’s dominant trade currency. America has a tough grip on all commodities, because international physical and derivative markets are priced almost exclusively in dollars. Furthermore, nearly all currency hedging has the dollar on one side of the transaction. This allows the Americans to exercise enormous control over international markets, and even to artificially inflate commodity supplies through the creation of futures contracts, keeping prices lower than they would otherwise be. By these means, America has suppressed the relationship between monetary and price inflation, increasing the apparent stability of the dollar. This is central to the illusion of American monetary hegemony. Therefore, China’s policy of doing away with the dollar is, from the American standpoint, a fundamental challenge to her post-war global domination, and amounts to a declaration of financial war.
China’s problem in displacing the dollar is the lack of an international market for the yuan. Furthermore, with strict exchange controls limiting the ability of Chinese citizens and businesses to trade on the foreign exchanges, it was always going to be an uphill struggle to provide the necessary liquidity in the yuan to make it acceptable to foreign counterparties. China had to come up with a plan, and it made sense to use the existing financial links between Hong Kong and London to develop international markets for her own currency.
We can date public awareness of China’s strategy to June 2012, when Hong Kong Exchanges and Clearing made a successful offer for the London Metal Exchange. While noting that Hong Kong is an autonomous region, and that, officially at least, China does not meddle in Hong Kong’s affairs, China has a direct interest in important acquisitions of this sort. China is the world’s largest importer of base metals, and London is the global metal pricing centre for warehouse stocks and physical delivery.
The LME earlier this year decided to offer a series of precious metal futures contracts, priced in dollars, centred on gold. The gold contract has been a great success, something guaranteed when you bear in mind that the Industrial and Commercial Bank of China, owned by the Chinese state, is a lead sponsor of these precious metals contracts. By this action, China is parking its tanks on the London Bullion Market Association’s lawn. At some stage in the future, the LME will almost certainly offer deliverable futures contracts priced in yuan, not just for precious metals but for base metals as well.
In October 2013, fifteen months after the acquisition of the LME, Boris Johnson as Mayor of London led a trade mission to Beijing. British trade missions are a major feature of Foreign Office duties, the way Britain develops bilateral trade relationships. These trade missions, being planned through diplomatic channels, are prearranged and coordinated well in advance. Therefore, it was unusual to find that George Osborne, the Chancellor of the Exchequer, at very short notice got up a second trade mission, and met Johnson in China.
The reasons for this turn of events were never properly explained; however, we can work them out. In May 2012, David Cameron had met the Dalai Lama in London, which caused a diplomatic furore with China. Despite this earlier public spat and the point having been made, Osbourne was sent to China. While it is likely his trade mission was a cover for UK Government efforts to smooth things over, subsequent events suggest financial cooperation between Hong Kong and London was discussed, and Chinese plans to use Hong Kong and London to enhance the yuan’s international liquidity were agreed in principal. Following Osborne’s visit, David Cameron himself went to Beijing for discussions with President Xi the following month, confirming the importance to Britain of bilateral financial relations with China.
The following year, the UK took the unusual step of issuing a 3bn yuan bond, both as an indication of intent, and to help kick-start the offshore yuan market in London. This was followed by Britain being the first non-Asian nation to join the Asia Infrastructure Investment Bank as a founder member in March 2015 (announced by none other than George Osborne). The AIIB, which was set up by China and headquartered in Beijing, is the first supra-national organisation independent of the Bretton Woods institutions, which are all controlled by the US. These institutions, led by the World Bank and the IMF, as well as several regional development banks, were how the US, using the dollar, dominates the world’s finances. The establishment of the AIIB was an unwelcome development for America, and the US expressed acute disappointment that Britain had decided to join.
And lastly, after six or seven years of lobbying the IMF, the yuan was finally included in the SDR basket from 1 October last year, further promoting it as a trade settlement currency to be included in foreign countries’ reserves.
There can be no clearer evidence of China’s intention to replace the dollar with her own currency, than the sequence of events outlined above. She identified that Britain’s interests were aligned with her own, enabling her to cut out America from future developments. She has obtained arms-length control over London’s physical metal exchange. She had set up a non-dollar rival to the World Bank and IMF, ensuring future Asian development financing is under her control. And, with more than 80 member countries eventually joining the AIIB, she has successfully picked off America’s allies. The inclusion of the yuan in the SDR basket can be taken as an acknowledgement of China’s importance on the world stage.
The eventual intention is to price in yuan everything imported into and exported from China. Much trans-Asian business is already settled in yuan, and even remote Angola settles her oil sales to China in yuan. It will in time involve developing yuan futures contracts for all the tradeable commodities the state deems significant. The most important of these is a standard oil contract. But before we cover the genesis of the oil contract, we should remind ourselves about China’s gold strategy.
Cornering the physical gold market
It is only relatively recently that Western capital markets have become aware that Chinese demand for physical gold absorbs large quantities of annual mine production, and that the country is now the largest mining nation by far, extracting it at a rate of over 450 tonnes per annum. Knowledge of China’s overall demand is restricted to deliveries out of the Shanghai Gold Exchange’s vault into public hands, running at about 2,000 tonnes per annum, which with India’s public demand accounts for nearly all global mine extraction of about 3,000 tonnes.
The SGE was established in 2002, yet China began to embrace capitalism in 1980, when the first Special Economic Zone was established. China at that time showed reserves of 395 tonnes, a figure that was unchanged until 2001, when it was increased to 500 tonnes, and the following year to 600 tonnes, which it remained until 2009. Over this time, the Chinese economy enjoyed enormous capital inflows from 1980 until the early 1990s, when Western companies set up manufacturing facilities. These were followed by growing export surpluses thereafter. The Peoples Bank of China (PBOC), the state-owned central bank, was managing the currency, neutralising these flows by buying mostly dollars.
It also made sense for the Chinese to diversify the foreign exchange portfolio gained through intervention. The need to increase gold holdings would have been obvious to communist-trained economists at the heart of government. They had had the Marxist belief drummed into them that capitalism would eventually destroy itself, and the capitalists’ paper currencies with it. Rather like Germany in the 1950s and the Arabs in the 1970s, they felt it was prudent to put a significant part of their foreign exchange into gold.
Consequently, new regulations appointing the PBOC to “guarantee the state’s requirements for gold and silver” came into force on June 15, 1983.iv Private ownership of gold and silver remained banned.
It should be noted that state-owned gold declared as official reserves bear little relation to the total accumulated. Anecdotal evidence informs us that bullion is dispersed into accounts in the possession of the Peoples Liberation Army and the Communist Party. Therefore, we cannot know China’s true holdings. All one can do is make a reasonable assessment of how much gold the PBOC is likely to have accumulated since 1983 and before 2002, when private citizens were allowed for the first time to buy physical gold and silver. During this period gold had suffered the greatest bear market in the history of fiat currencies. The scale of redistribution from weak hands into stronger long-term hands was enormous, bearing in mind that Indians, the other great national buyers today, only began to buy gold in significant quantities in the early-nineties, after the repeal of the 1968 Gold Control Act in 1990. It is also known that in 1990-2000, many Middle Eastern portfolios sold gold in favour of equity investment, as did many other private investors with Swiss private bank accounts. Furthermore, central banks were leasing gold in large quantities, artificially inflating physical supply.
Taking all these factors into account, plus mine production totalling 42,460 tonnes over the period, it was easily possible for the Chinese state to secretly amass over 20,000 tonnes by 2002, through a process of gradual accumulation. As to whether they did so, we must look at the evidence from China’s gold strategy. The following bullet list is a summary:
The introduction of the 1983 regulations appointing the PBOC amounts to a declaration of intent. The PBOC as a central bank has access to capital markets, and commands the state-owned commercial banks. Accumulating gold is a natural extension of the PBOC’s currency management.
There were both the opportunity and the supply during the greatest bear market gold has ever seen. Between 1983-2002, world mine output added an estimated 42,460 tonnes to above-ground stocks at a time when the West was disgorging both central bank and privately owned physical gold. All that gold went somewhere, so China must have been a major buyer.
In 2002, the Shanghai Gold Exchange (SGE) was set up by the PBOC to permit the public to buy gold. This signalled that the state had acquired sufficient gold and silver bullion for its own purposes by then.
The state actively advertised gold ownership through the media, promoting a policy to its citizens of holding gold as sound money. This would help her corner the physical market.
The state deliberately fostered gold mining, to the point where Chinese mines are now the largest producers in the world by far. Mine output was a record 463.7 tonnes in 2016.
The state monopolises China’s refining capacity, taking in doré from other countries as well, retaining control over ingot production.
China now hosts the world’s most important bullion exchange in Asia, has set itself up as a rival to the LBMA in London through the London Metal Exchange, and is developing gold futures markets.
The LBMA 400 ounce 99.50 standard bar has been replaced by the new Chinese 99.99 one kilo bar as the Asian standard. The large Swiss refiners have been converting LBMA bars into the new standard for customers, particularly those resident in the Middle East.
Almost all gold acquired by China and her citizens remains in China. Chinese refined bars are almost never seen in Switzerland, the West’s principal refining centre.v
Gold futures contracts in yuan are now available to international dealers in Hong Kong and Dubai using the SGE gold price as benchmark.
Private ownership of gold in China is now estimated to total over 15,000 tonnes, in addition to anything the state has acquired since 1983. China’s gold policy, which may have commenced as a sensible diversification of reserves, now has strategic implications. China’s gold is now a vital defence against the hegemony of the dollar, and as Major-General Qiao Liang has advised the Peoples Liberation Army, there is a continuing risk that America will try to use its currency as a financial and economic weapon against China.vi
The Chinese state, having secured its physical gold dominance, has little need to acquire more gold in the market: that much was signalled by the establishment of the SGE in 2002. It may well have accumulated further gold since, but this is incidental. Russia is now accumulating gold under President Putin, who belatedly learned of the dangers the Western financial system poses Russia in the wake of American sanctions, and more particularly the financial devastation faced by Iran, when America forced the supposedly independent SWIFT inter-bank settlement system to ban Iranian transfers in all other currencies. Gold smuggled from Turkey via Dubai proved to be Iran’s saviour.
By having control of the physical market for gold, China can threaten to use it to destabilise the dollar, without destabilising the yuan. As such, it is potentially devastating, and used carelessly could trigger an economic collapse in Western capital markets, wreaking financial and economic havoc in America and other advanced nations. China will never be wholly independent from trade with these nations, and severe financial and economic damage to the advanced economies will rebound upon her to some extent. For this reason, she has so far held off using gold as an economic and financial weapon, while she continues to insulate herself from periodic crises in Western economies.
China, with Russia, clearly plans to create what amounts to an enormous internal market, covering most of Asia. It is doing this through trade, in contrast with the way America traditionally wields her influence, through the sticks and carrots of guns and butter. In every minor geopolitical skirmish with America, the Sino-Russian partnership has won. The patient approach of letting American influence diminish through her own errors has made the economic violence of driving up the gold price unnecessary. However, times are changing, and this phase is passing.
The oil connection
The success of the Sino-Russian partnership in outwitting the Americans has overtaken China’s own plans to develop liquidity for a wide range of derivative contracts priced in yuan on its own and other international exchanges. Nowhere has this been more obvious than in the delay of introducing an oil futures contract priced in yuan.
This was first mooted, so far as we are aware, in 2012, when it was intended to introduce a contract based on the high-sulphur grades China commonly used at that time. This contract was to be settled in either dollars or yuan at the oil supplier’s choice. However, the absence of an offshore market for yuan meant this proposal was premature.vii
In 2014, these plans resurfaced, with the Shanghai Futures Exchange chairman quoted as saying that the yuan had become more international and recognised in the market. He added that the proposed contract had support from both the government and financial regulators.viii
At about that time, Guo Jianwei, a PBOC monetary policy official, was quoted in the Shanghai Securities News as saying that the PBOC planned to start yuan-denominated gold and oil futures to help establish a global payment system for the Chinese currency.ix This statement gets to the nub of the reason for introducing oil and gold contracts together, and that is they will internationalise the yuan, probably more quickly than any other measure taken by the PBOC. To back up his quote, Mr Guo then described how the PBOC had agreed CNY2.5 trillion of currency swaps with 23 central banks, pointedly excluding the US.
The oil for yuan story rumbled on, with the Chinese delaying the introduction of internationally tradable oil futures. That is, until Damon Evans reported that not only were traders being trained, but that locally registered entities of JPMorgan and UBS are among the first to have gained regulatory approval to trade the contract.
Geopolitical developments relative to the oil contract
It is natural to assume that China and Russia are controlling, Svengali-like, all the geopolitical outcomes. China has retained an unerring focus on the grand prize of excluding the dollar from all her trade, and with it US monetary influence in Asia. But, being reliant on America to make strategic mistakes, China is not totally in control of events and their timing. For example, the collapse in July of the American campaign in Syria was sudden and unexpected, leaving Russia, in partnership with Syria, Iran, and Turkey to sort out the mess.
Even Mr Netanyahu, the Prime Minister of Israel, has beaten a path to Mr Putin’s door several times. When Turkey, still a NATO member, decided to side with Russia along with Iran, Israel recognised that US protection was no longer good enough to secure her future. When Saudi Arabia was under American influence, Israel had felt as safe as she could be in that turbulent region. But a combination of a Hezbollah/Syrian/Turkish/Iranian axis to Israel’s north, and Prince Mohammed bin Salman’s silent coup in Saudi Arabia has fundamentally altered the balance of power.
Prince Salman is now the heir-apparent to King Salman, having replaced Mohammed bin Nayef, America’s nominee, as heir to the throne. Only last week, King Salman himself visited Moscow as the guest of President Putin. No doubt, the other gulf states will follow the Saudi lead.
Instead of President Trump, Putin finds himself, very suddenly, the ring-master for most of the Middle East. And while we cannot rule out a counter-move from the Americans, it should be noted that the Arabs dislike the Americans and much of what they stand for. However, notwithstanding its national antipathy, Saudi Arabia went along with Kissinger’s plan in 1973 to use the dollar for oil payments, and to buy US Treasuries and to deposit surplus dollars in American banks. In return, America guaranteed it would protect Saudi Arabia from outside influences. Also, part of the deal was Saudi Arabia would not support Israel’s enemies.
Now that the Kissinger deal is unravelling, it is reasonable to assume the financial deal, the Middle East’s support of the petrodollar to the exclusion of all rival currencies, will also come to an end, more rapidly than thought possible only four months ago. But for this to be realised requires an alternative settlement currency to be available. And while Russia and China have already agreed joint investment projects involving both their currencies, Saudi Arabia is almost certainly not ready to accept the yuan as a full currency replacement for the dollar.
The rest of the world is watching closely. America’s allies officially remain onside with America, but in terms of foreign relations, interests guide relationships, not the other way around. We saw this when Britain joined the AIIB, demoting the special relationship with America. Central banks, holding massive quantities of the dollar, will be particularly jittery. Knowing this, will China dare make a move to undermine the dollar and trigger a run against it by providing the means for oil exporters to sell oil for yuan and then yuan for gold in international futures exchanges? If Shanghai fails to offer the facility, other markets, such as Hong Kong or Dubai, where there are already yuan gold contracts, could do so.
Realistically, China now has limited control over the timing of her planned moves, and this is particularly true about the prospective oil future priced in yuan. China imports over 8 million barrels of oil per day, for a total annual value of $150bn. She imports oil from a wide variety of sources, including Russia, Angola, Saudi Arabia, Iraq, Brazil, Iran and Venezuela. Some of these countries are on the US black-list (such as Russia, Iran and Venezuela) and others may prefer gold to dollars. If we assume that one-third of China’s oil imports are converted into gold, that amounts to 1,200 tonnes of gold at current prices to be sourced annually in a tight gold moarket.
The effect on the dollar could be catastrophic. Not only would the dollar sink as it loses its exorbitant privilege, but finding the extra physical gold would drive up the gold price. Inevitably, foreign holders of the dollar would probably join in by dumping the dollar and any fiat currencies aligned with it and join the rush for gold.
Conclusion
The ideal way for China to replace the dollar as the dominant currency for her cross-border trade is to encourage her oil suppliers to accept payment in her own currency, the yuan. It is clear from statements made in 2014 by Guo Jianwei, a PBOC monetary policy official, that China had already planned to wean her oil suppliers off the dollar by introducing both oil and gold futures denominated in yuan, allowing them to take at least part-payment in gold. Persuading them to do so without unduly disrupting global capital markets should have been a gradual process, perhaps spread out over the best part of another decade. Instead, geopolitical developments have accelerated the time-table following the election of President Trump, who is noticeably lacking in diplomatic patience. His latest renegation of the Iran nuclear deal is for Asian observers classic US perfidy.
China’s energy suppliers are not yet prepared to accept the full exposure to the yuan that oil sales contracted in yuan implies. Meanwhile, it is becoming apparent that the petrodollar has a limited life, the duration of which has been significantly shortened by America’s withdrawal from the Syrian conflict. The balance of interests is therefore undergoing a seismic change, with the dollar facing the real prospect of becoming redundant for the most significant aspect of its global use.
But if you dump your petrodollars, what do you buy? This is the question which China’s geopolitical and monetary policies must now address.
Perhaps the reason why China has been forced to bring forward plans to introduce the oil futures contract priced in yuan is indirectly due to America abandoning control over the Middle East. If so, the loss of American influence over the Eurasian continent will accelerate, and the status of the dollar will sink with
Your early FRIDAY morning currency, Asian stock market results, important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight
i) Chinese yuan vs USA dollar/CLOSED UP AT 6.5877/shanghai bourse CLOSED UP AT 4.42POINTS .13% / HANG SANG CLOSED UP 17.40 POINTS OR .06%
2. Nikkei closed UP 200,46 POINTS OR .96% /USA: YEN FALLS TO 112,15
3. Europe stocks OPENED MIXED ( /USA dollar index RISES TO 93.16/Euro UDOWNto 1.1842
3b Japan 10 year bond yield: FALLS TO -+.0676/ GOVERNMENT INTERVENTION !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 112.44/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!
3c Nikkei now JUST BELOW 17,000
3d USA/Yen rate now well below the important 120 barrier this morning
3e WTI:: 51.58 and Brent: 57.45
3f Gold DOWN/Yen UP
3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS AND SELLING THE SHORT END
Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.
3h Oil UP for WTI and UP or Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO +.422%/Italian 10 yr bond yield UP to 2.097% /SPAIN 10 YR BOND YIELD DOWN TO 1.612%
3j Greek 10 year bond yield RISES TO : 5.555???
3k Gold at $1293.20 silver at:17.21:15 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50
3l USA vs Russian rouble; (Russian rouble UP 3/100 in roubles/dollar) 57.68
3m oil into the 51 dollar handle for WTI and 57 handle for Brent/
3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT A GOOD SIZED REVALUATION NORTHBOUND
JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 112.15 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION
30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning 0.9759 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1530 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.
3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT/ARTICLE 50 COMMENCES MARCH 29/2017
3r the 10 Year German bund now POSITIVE territory with the 10 year FALLING to +0.422%
The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”. Next step for Greece will be the recapitalization of the banks and that will be difficult.
4. USA 10 year treasury bond at 2.325% early this morning. Thirty year rate at 2.853% /
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)
World Stocks Hit 4th Consecutive Record High, Bonds Rise On ECB QE Report
World stocks rose to a 4th consecutive record highs, while the dollar headed for its worst week; U.S. stock-index futures are steady, with European and Asian stocks higher ahead of much anticipated US inflation data, which is expected to give cues on the outlook for the Federal Reserve’s interest rates. MSCI’s all world equity index was up 0.1% after hitting record highs on Thursday. Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan hit a 10-year high, up 0.3 percent on the day.
The Stoxx Europe 600 Index rose 0.3%, led by steelmakers and miners as most industrial metals gained and WTI crude rose back above $51 a barrel. The dollar nudged lower as investors awaited the U.S. latest inflation data. Sterling pared gains after European Commission President Jean-Claude Juncker said “new problems” were emerging “day after day” in the Brexit withdrawal process. The British currency had rallied earlier on a report that the EU may offer the U.K. a two-year transition period to stay in the union.
Elsewhere, Asian stocks rose for a sixth day, the longest winning streak in three months, on optimism that U.S. economic data will prompt gradual rate hikes by the Federal Reserve. The MSCI Asia Pacific Index rose 0.5 percent to 166.47 as of 4:59 p.m. in Hong Kong, the highest level since November 2007. In Tokyo, the Nikkei 225 powered past 21,000 and completed a nine-day winning streak. The equities benchmark in the Philippines rose to a record, while mainland Chinese shares trading in Hong Kong extended their advance to a two-year high. The MSCI Asia Pacific Index has advanced 23 percent this year, poised for its sharpest annual gain since 2009. The gauge is trading at 14 times 12-month forward estimated earnings, highest since January.
The Asian highlight was once again Japan’s Nikkei 225 Stock Average, which completed a nine-day winning streak to close above 21,000 for the first time since November 1996. Fast Retailing Co., which accounts for about 6.5 percent of the measure, contributed most to its rise, after the company predicted that international sales for its Uniqlo chain will surpass those in Japan this fiscal year and reported the biggest jump in annual earnings in more than a decade on Thursday. The Topix index rose to a fresh decade-high even as the yen advanced against the dollar for a second day. The gauge was boosted by electronics makers and retailers. Both indexes posted a fifth consecutive week of gains, the longest weekly rally this year. The market will target the 22,000 mark next for the Nikkei 225, anticipating a currency rate of 115 yen per dollar and positive earnings continuing in the following fiscal year, said Takuya Takahashi, a strategist at Daiwa Securities Co. in Tokyo.
The U.S. later today will publish data on consumer prices and retail sales for September. Fed minutes released Wednesday showed several policy makers looking for stronger evidence of price gains before supporting a third interest-rate increase this year.
“The market is pricing another rate increase in December and it won’t derail the bounce in the U.S. economy because there won’t be a sharp rate ascent,” said Noel Reyes, chief investment officer at Security Bank Corp. in Manila. “Also, improving economic outlook in Asia, Europe and the U.S. are translating to better performance for stocks.”
Among the main overnight reports which pushed European bonds higher was a trial balloon “leak” to bother Reuters and Bloomberg, according to which the ECB was considering cutting quantitative easing in half to €30 billion euros a month from the current pace of €60 billion, according to officials familiar with the debate. While the central bank’s governors are split on the need to identify an end date for purchases, a pledge to keep buying bonds until September may offer grounds for compromise, they said.
“For the ECB, duration of the program should trump monthly purchases,” Royal Bank of Canada economists including Sam Hill said in a client note. “This should anchor front-end rates firmly, through the forward guidance linking interest rates to the duration of the bond buying, and steepen the yield curve.”
Following the reports, the EURUSD first dropped, then spiked, and ultimately dumped on what, on the surface at least, would look like hawkish news.
Also overnight we got the latest trade data from China, which missed modestly on exports, even as imports rose more than expected.
Chinese Trade Balance (CNY)(Sep) 193.0B vs. Exp. 266.05B (Prev. 286.50B). (Newswires)
Chinese Exports (CNY)(Sep) Y/Y 9.0% vs. Exp. 10.9% (Prev. 6.9%)
Chinese Imports (CNY)(Sep) Y/Y 19.5% vs. Exp. 16.5% (Prev. 14.4%)
Chinese Trade Balance (USD)(Sep) 28.47B vs. Exp. 38.00B (Prev. 41.99B). (Newswires)
Chinese Exports (USD)(Sep) Y/Y 8.1% vs. Exp. 10.0% (Prev. 5.5%)
Chinese Imports (USD)(Sep) Y/Y 18.7% vs. Exp. 14.7% (Prev. 13.5%)a
Commenting on the data, Goldman said, “Exports growth for China accelerated to 8.1% yoy in September from 5.6% yoy in August, slightly below consensus. Imports growth was also up to 18.7% yoy from 13.5% yoy in August, above expectations. In sequential terms, exports grew by 0.2% mom sa non-annualized, up from a fall of 0.2% in August. Imports increased by 2.4% mom sa non-annualized, moderating from 3.2% in August. The trade surplus moderated significantly to US$29.2bn from US$41.0bn in August. Sequential momentum in exports remained mild in September though picking up a bit, and has weakened significantly in Q3 as a whole to -4.5% from a significant rise of 12.0% in Q2. Trade prices might have decelerated modestly in Q3 (data on September trade prices have not been released), but sequential growth in real exports should have also moderated. This is consistent with our previous expectation that the strong exports growth we saw in H1 could probably be hard to maintain in H2. Going forward, sequential momentum in real exports should remain modest, and year-on-year growth will probably moderate due to a high base of Q4 last year.”
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Elsewhere, in the U.S., the Trump administration’s tax plan clouded up as the president was said to voice frustration with certain aspects of the existing framework. Some Congressional Republicans have aired concerns, though Treasury Secretary Steven Mnuchin reiterated his confidence that a plan will get passed this year. Data Friday on prices and retail sales may give more clues about the Fed’s policy path amid a debate about whether low inflation is temporary or permanent.
“The hurricane effects will mean that interpretations of the data will be difficult,” John Cairns, a strategist at Rand Merchant Bank in Johannesburg, said in a client note. “Anyway, the Fed has made it clear that it intends to raise rates in December even if inflation remains weak.”
Overnight Fed’s Rosengren (Non-Voter, Soft Hawk) said a December hike is appropriate and that 3 rate hikes next year seems appropriate, while he added that low inflation gives the Fed the luxury of being gradual. Meanwhile, Fed’s Bostic (Non-Voter, N/A) repeated he is unsure if Fed will hike rates in December and said US is moving quickly towards full employment.
In geopolitical updates, the White House will keep the Iran nuclear deal for now, but wants Congress to make a list of actions that would prompt sanctions, according to NYT
Meanwhile, overnight bitcoin soared to just shy of $6,000 before easing back modestly.
In rates, the yield on 10-year Treasuries climbed one basis point to 2.33%. Germany’s 10-year yield dipped two basis points to 0.43 percent, the lowest in more than two weeks. Britain’s 10-year yield gained two basis points to 1.363 percent, the highest in more than eight months. Spain’s 10-year yield fell three basis points to 1.608 percent, the lowest in more than a week.
In commodities, West Texas Intermediate crude gained 1.6 percent to $51.41 a barrel, the highest in more than a week. Gold climbed less than 0.05 percent to $1,293.86 an ounce. Copper increased 0.3 percent to $3.13 a pound, hitting the highest in almost five weeks with its fifth consecutive advance.
Today we get earnings from Bank of America and First Horizon. Also on
the agenda are a number of data points, including CPI, retail sales and
Michigan sentiment.
Bulletin headline summary from RanSquawk
ECB is reported to mull reducing QE to EUR 30bln/month from January and extending it until at least September 2018
Indecisive trade in major EU bourses this morning with the Eurostoxx 50 relatively flat; traders await tier 1 US data
Looking ahead, highlights include US CPI, retail sales, business inventories, Uni. of Michigan and a slew of central bank speakers
Market Snapshot
S&P 500 futures little changed at 2,550.25
VIX Index down 0.4%, at 9.87
STOXX Europe 600 up 0.3% to 391.42
MSCI Asia up 0.5% to 166.47
MSCI Asia ex Japan up 0.3% to 549.57
Nikkei up 1% to 21,155.18
Topix up 0.5% to 1,708.62
Hang Seng Index up 0.06% to 28,476.43
Shanghai Composite up 0.1% to 3,390.52
Sensex up 0.9% to 32,463.58
Australia S&P/ASX 200 up 0.3% to 5,814.15
Kospi down 0.05% to 2,473.62
German 10Y yield fell 1.9 bps to 0.426%
Euro down 0.03% to $1.1827
WTI crude up 1.5% at $51.40
Brent up 1.8% to $57.25/bbl
Italian 10Y yield fell 4.4 bps to 1.848%
Spanish 10Y yield fell 1.7 bps to 1.62%
Gold spot up 0.03% to $1,294.15
U.S. Dollar Index down 0.02% to 93.04
Top Overnight News
The Trump administration is cutting tens of millions of dollars from organizations that help Americans enroll in Obamacare health plans
Trump is expected to refuse to certify that the multinational accord to curb Iran’s nuclear program sufficiently serves U.S. interests, though he will stop short of abandoning it, according to two senior administration officials; Trump’s Iran Decision Throws New Uncertainty Into Business Plans
European Central Bank officials are considering cutting their monthly bond buying by at least half starting in January and keeping their program active for at least nine months, according to officials familiar with the debate
China’s overseas shipments rose from a year earlier amid robust external demand, the latest sign Asian trade is strengthening as the global outlook brightens
Equity funds globally record inflows of $11.6b in the week to Oct. 11, the largest in 17 weeks, BofAML strategists write in note, citing EPFR Global data
Emerging markets equity funds see inflows of $3.3b, largest in 21 weeks; Japanese equity funds see inflows of $0.3b, first in 4 weeks
Turkey sent special forces and commandos over the border into Syria, the start of a joint mission with Russia and Iran whose stated goal is to monitor a cease-fire agreement and pacify a stronghold for Islamic militants — but one that also has major implications for the region’s Kurds
Trump Digs In on Health Care, Iran Deal; Bank of America, Wells Fargo Earnings; Samsung’s CEO Steps Down as Profit Beats
President Donald Trump’s administration took its most drastic step yet to roll back the Affordable Care Act on Thursday evening, cutting off a subsidy to insurers just hours after issuing an executive order designed to draw people away from the health law’s coverage markets
JPMorgan Chase & Co. and Citigroup Inc. kicked off banks’ earnings season by showing the effects of muted trading and concerns about consumer credit; both beat earnings as JPMorgan relied on improved lending margins while Citigroup continued to squeeze costs
The chief executive officer of Samsung Electronics Co. is stepping down in a surprise resignation after decades at the company
The strength of the U.S. shale boom and prospects for electric vehicles are stoking fears for the oil industry’s future. But that’ll only make crude more valuable, one analyst says, boosting prices as high as $80 a barrel by 2022
Asia-Pac equity markets shrugged off the pullback in US stocks from record levels, although upside was somewhat capped as the region digested the latest Chinese trade figures. ASX 200 (+0.45%) and Nikkei 225 (+1.0%) were mildly ositive with Australia underpinned by defensive stocks, while Nikkei 225 tested 21,200 and was led by strength in index heavyweight Fast Retailing after the Co. reported its FY net more than doubled. Elsewhere, Shanghai Comp. (+0.1%) and Hang Seng (+0.1%) traded indecisive after the PBoC skipped open market operations but then offered funds via its MLF facility and as participants mulled over mixed Chinese trade data. Finally, 10yr JGBs were initially subdued with demand sapped amid a positive risk tone in Japan, before an improved enhanced liquidity auction result for longer-dated JGBs supported in late trade. MAS (Singapore central bank) kept the appreciation of SGD NEER unchanged at 0%, while it also maintained the width and level of the policy band. MAS made a reference to neutral policy being appropriate for an extended period of time from the October 2016 Monetary Policy Statement and said that it sees Singapore economy likely to expand at a steady, but slightly slower pace in 2018 compared to 2017.
Top Asian News
China Exports Remain Resilient as Import Gains Signal Strength
Big Banks Winning in China Battle of Unequals as Curbs Bite
In Surprise Move, Samsung CEO to Step Down After Record Profit
‘Enigma Network’ Crash Spurs Hong Kong’s Largest Financial Raid
Nomura Probe Said to Find No Evidence of Aomori Stock Sale Leaks
In European markets, there has been indecisive trade in major EU bourses this morning with the Eurostoxx 50 relatively flat. Focus in the session will be on the slew of central bank speakers and US data later in the session. Energy names have been supported by the upside in WTI and Brent crude futures, in which Brent briefly made a break above USD 57. In stock specific news, Bayer shares are outperforming in the DAX after reports that BASF is to purchase the company’s seed unit for EUR 5.9bln. FTSE 100 the laggard today, slipping 0.4% amid the move higher in GBP, while the worst performing stock in the FTSE, GKN, has seen a sharp drop after a profit warning. Bunds bolstered by latest ECB source reports and a technical short squeeze, which lifted the core 10 year bond future through this week’s previous peak and a new high for the month. EZ periphery debt also benefiting from suggestions that QE could be extended by 9 months at least (longer end of the previously touted 6-9 month range), and seemingly unperturbed by talk that the monthly pace of asset purchases could be scaled down relatively sharply to Eur30 bn from January 2018. Conversely, some signs of compromise in the form of a contingent 2-year Brexit transition offer from the EU, per media reports, has left UK Gilts languishing and underperforming again, with similar divergence seen at the short end of the curve (ie Short Sterling contracts down vs firmer Euribor and Eurodollar peers). US Treasuries largely holding modest gains made in wake of a solid 30 year auction, and braced for Friday’s key data (CPI and retail sales, latter possibly carrying an upside skew on above consensus PPI).
Top European News
ECB Is Said to Consider Cutting QE Flow in Half in Next Year
Saudis Mull Slower Subsidy, Spending Cuts to Support Economy
Greece Dreams of Bailout-Free Existence as Creditor Audit Looms
More Than 400 Firms ‘Expelled’ From Catalonia: PP’s Hernando
Romania Ruling Party Defuses Crisis as Three Ministers Quit
BASF Enters Seeds Market as Bayer Sells $7 Billion in Assets
In currencies, Much of the latest FX volatility occurred post European close yesterday, as reports from Handelsblatt circulated, stating thatmEU Brexit negotiator Barnier could offer the UK a two-year transitional deal, with the offer tied to the UK meeting its exit obligations to the EU. Sterling has recovered all and more of the losses prompted by Barnier’s earlier comments on Thursday, as Cable breaks through 1.33, and above October’s previous highs to resume this week’s overall bullish trend. Comments could continue to dictate Sterling direction as many will await BoE’s Carney this evening. EUR/GBP initially followed the trend of the bullish pound, however, marginal support was seen on reports that the ECB is set to mull reducing QE to EUR 30bln/month from January and extending it until at least September 2018, while sources also stated that policymakers are in agreement about extending asset purchases at the October meeting, but are still debating the taper size. EUR 30bln over nine months was initially perceived by markets as marginally hawkish. Nevertheless, the Euro has been offered against most of its major counterparts in early European trade, amidst comments from ECB’s Weidmann, stating again that he is against softening the capital key, and thus favouring Bunds. The Yen has outperformed generally, up 0.37% for the session vs the Usd, despite this week’s option expiries closing with just short of 2bln between 112.65 – 113.00. The pair trades sub-112.00, looking at the 200 DMA at 111.82. The dollar index has been muted, with much of the trade impetus coming from the other major currencies, as anticipation turns to tier 1 data (CPI and retail sales), then Yellen who is set to speak over the weekend.
In commodities, WTI and Brent crude futures hovering near intra-day highs this morning. Participants will be keeping an eye out on President Trumps remarks over the Iran nuclear deal, where it is expected that he will refuse to certify Iran’s compliance with the accord and as such this may lead to sanctions on Iran yet again. Additionally, Chinese trade data out last night showed that Chinese imports of crude oil climbed to the second highest level on record.
Looking at the day ahead, in the US it’s all eyes on the September CPI report, while last month’s retail sales numbers are also worth keeping a close eye on. The preliminary October University of Michigan consumer sentiment reading will also be out along with August business inventories data. Onto other events, the Fed’s Evans, Kaplan and Rosengren are all on the cards to speak on Friday. President Trump will speak on Iran later in the day and Wells Fargo / Bank of America also report earnings.
US Event Calendar
8:30am: US CPI MoM, est. 0.6%, prior 0.4%; CPI Ex Food and Energy MoM, est. 0.2%, prior 0.2%
US CPI YoY, est. 2.3%, prior 1.9%; CPI Ex Food and Energy YoY, est. 1.8%, prior 1.7%
Real Avg Weekly Earnings YoY, prior 0.88%
8:30am: Retail Sales Ex Auto MoM, est. 0.9%, prior 0.2%; Retail Sales Ex Auto and Gas, est. 0.4%, prior -0.1%; Retail Sales Control Group, est. 0.4%, prior -0.2%
10am: U. of Mich. Sentiment, est. 95, prior 95.1; Current Conditions, est. 111.6, prior 111.7; Expectations, est. 85.3, prior 84.4
10am: Business Inventories, est. 0.7%, prior 0.2%
DB’s Jim Reid concludes the overnight wrap
there’s definitely chocolate inflation in the modern world but is there any outside of the ‘brown gold’? Today’s US CPI number will likely cast a large shadow over the next month’s trading and is therefore a key release. The market’s expectation is for a +0.6% mom headline number and +0.2% mom for the core. DB in is line with the market. Remember that last month (+0.2% core) marked the first time in 6 months that US CPI didn’t undershoot expectations. In terms of the details, headline CPI should get a boost from gas prices post the hurricane disruption so be a bit careful when interpreting this part. In terms of the core, DB’s Brett Ryan expects some modest negative payback for rent and owners’ equivalent rent following a big monthly gain in August. Lodging away from home prices may also dip reflecting the weather events, as evidenced by the post Hurricane Katrina data. In fairness though this is overall a small part of the CPI data though. Don’t forget US retail sales is realised at the same time so something else to add to the mix.
Ahead of this the most interesting story yesterday was around Brexit with wildly conflicting stories buffeting the currency. Indeed Sterling had a bit of a roller coaster ride yesterday versus the Euro, falling as much as 0.9% intraday but closing up 0.55%. Initially, markets were disappointed on how negative Chief EU negotiator Michel Barnier was in his press conference after the fifth round of Brexit talks. He noted that “we have reached a state of deadlock…” over the Brexit divorce bill and “no deal will be a very a bad deal (for the UK)” and then followed up with firm comments like “to be clear on our side, we’ll be ready to face any and all eventualities”. However, Sterling rebound after Handlesblatt reported (after the UK closed) that Barnier may still offer the UK a two-year transition deal provided that the deadlock can be overcome and there is still hope that sufficient progress can be made by the December summit if the UK provided more clarity on what PM May alluded to back in her Florence speech. DB’s Oliver Harvey believes next week’s European Council meeting will be an important turning point for talks. If unsatisfactory, it could increase the risks to the UK growth and may undermine market’s confidence in a BOE hike at its November meeting.
Onto the US tax reforms, where the plan continues to be to get something done by the end of the year. However, the rhetoric is stepping up now, with House speaker Paul Ryan noting “we’re going to keep everybody (in Congress) here to Christmas if we have to, I don’t care, it’s that important”. He added that he wants to wake up on New Year’s Day 2018 with the new tax code.
Staying with politics, the Italian government has now won all of the confidence votes to pass a new electoral law (375 vs. 215 against), which could potentially penalise the 5-Star Movement party (5SM). The bill will now go to the upper house later in the month where the government has no clear majority. Italy’s bond markets slightly outperformed yesterday, with 10y yields down 4.6bp, while core bond yields (UST 10y -3bp; Bunds -1.7bp; OATs -2.1bp) were also down slightly, but Gilts was broadly flat. At the 2y part of the curve, yields were mixed but little changed, with UST (-0.6bp) and Bunds (-1bp) down marginally, but Gilts (+0.6bp) and Italy BTPs (+1.2bp) rose.
Turning to equities and US bank results yesterday. US equities softened, with the S&P 500 (-0.17%), Dow (-0.14%) and Nasdaq (-0.18%) down slightly, impacted by weakness in the financials and telco sector, where AT&T dropped 6.1% after losing 90k video subscribers in 3Q due to heavy competition and the recent Hurricanes. Both Citi and JPM’s 3Q EPS beat consensus, mainly driven by better than expected cost discipline (at Citi) and lending margins (at JPM),but shares fell 3.43% and 0.88% respectively, partly due to concerns of a higher than expected build up in provisions for credit losses, albeit off a low base. Elsewhere, 3Q total trading income was weak but broadly similar to management’s prior guidance (JPM: -21% pcp vs. -20%; Citi -11% on pcp vs. -15%).
European markets were mixed but little changed, with the Stoxx (+0.03%) broadly flat, but the DAX (+0.09%) and FTSE 100 (+0.30%) both nudged up to a fresh record high. Elsewhere, the CAC (-0.02%) and Italy’s FTSE MIB (-0.68%) fell slightly.
Turning to the search for the next Fed Chair, White House Chief of Staff John Kelly said “all of the people who’ve been in to interview (with President Trump) have been first round draft choices…..we still have more to come”. He didn’t specify who the candidates were, but prior reports suggests a shortlist including: Mrs Yellen, Fed governor Jerome Powell, former Fed governor Kevin Warsh, Stanford University economist John Taylor and National economic council director Gary Cohn. Elsewhere, Treasury Secretary Mnuchin said President Trump hopes to make a decision within a month.One of the candidates, the Fed’s Powell echoed his peers by saying “it’s likely that the process of (monetary) normalisation will proceed without significant disruption”, but cautioned that “significant risks of more adverse scenarios remains”. One area he has flagged is corporate debt in emerging markets, where the current situation may not be alarming, “but risks can be significant and bear close watching, especially in China”, where “markets reactions to even small surprises can be outsized”. For those who have missed it, our note “The next financial crisis” takes a closer look at this and other developing risks. Elsewhere, he said differences in the projections of interest rate moves between the Fed’s dot plot and market prices should be ‘taken with a grain of salt”.
Staying with central bankers’ commentaries. The Fed’s Brainard was a bit dovish, noting that temporary factors impact inflation both ways, “so that (temporary factors) cannot fully account for what we’ve been observing in the inflation data” and “…it seems to be that the Phillips curve is just not very important in the overall inflation process”. Further, she added that a lot of time-series work would suggests that we have actually seen “a reduction in the underlying trend rate of inflation that’s material”. Elsewhere, ECB’s Draghi reiterated that interest rates will remain low “well past” the end of QE. He added that the “well past” reference is “very, very important”. On wage inflation, he is seeing some progress, but “we’re still not there” yet.
This morning in Asia, markets are trading slightly higher.The Nikkei (+0.23%), ASX (+0.30%), Chinese bourses (up c0.2%) and Kospi (+0.15%) are up slightly, while the Hang Seng (-0.08%) is marginally down.
Quickly recapping other markets performance yesterday. Excluding Sterling, currencies were little changed with the US dollar index up 0.05% while Euro/ USD dipped 0.24%. In commodities, WTI oil fell 1.36% despite the last EIA report showing lower US crude inventories, in part as the IEA estimated that the decline in supply could be offset in 2018 due to rising output from US and other countries. Elsewhere, precious metals were marginally higher (Gold +0.15%; Silver +0.43%) while other base metals also increased slightly (Copper +0.93%; Zinc +1.53%; Aluminium +1.13%).
Away from the markets, the IMF’s MD Christine Lagarde was reasonably optimistic on global economic growth, noting “it’s broad based, more solid and it should get better”, but added that “it needs to get sustainable and benefit all”. The Fed’s Powell also agrees, noting “there have been signs lately that a sustainable global recovery may finally be materialising” although caveat it with “significant risks and uncertainties remain”.
This Sunday, we’ll see another election, this time over at Austriawhere the centre-right People’s Party (OVP) led by its 31 year old leader Sebastian Kurz is expected to win c33% of the votes. As per the Independent, an average of major pollsters (The Independent) suggest the other two parties are currently neck and neck, with FPO at c26% and the Social Democrats (SPO) at c24.4%. A renewed coalition between OVP and SPO is seen as less likely, which makes the far right, anti-immigrant and euro-sceptic FPO party in a strong bargaining position when forming the next coalition government. Mr Kurz has been Austria’s foreign minister since 2013, with one of his key policies being “above all, we want to stop illegal immigration so there is order and security in our country”. So it will be interesting to see what an OVP & FPO tie up would mean for Europe if it eventuates.
Turning to job security in the world of politics. In the US, White House Chief of Staff Kelly said “I’m not getting fired and I don’t think I’ll fire anyone tomorrow”. In the UK, former Finance Chief Nigel Lawson suggested PM May should fire Chancellor Hammond over his negative Brexit comments, noting “what he is doing is very close to sabotage”. Later on, a spokesman for PM May said “May has full confidence in Hammond”. Elsewhere, the FT reported the UK government is planning to hire 2,000 more staff to deal specifically with Brexit. So all this is bubbling along in the background while tax reforms and Brexit alks are underway.
Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the core September PPI (ex food and energy) was above consensus at 0.4% mom (vs. 0.2%) and 2.2% yoy (vs. 2.0% expected). Notably, the healthcare costs component edged up 0.1% mom so that throughyear inflation was broadly steady at 1.2% yoy, which at least suggests that healthcare will not be a drag on core PCE inflation like it was last month. Elsewhere, the weekly initial jobless claims (243k vs. 250k expected) and continuing claims (1.89m vs. 1.93m expected) were both lower than expectations, with continuing claims down to a new 44-year low.
The Eurozone’s August IP was higher than expectations at 1.4% mom (vs. 0.6%) and 3.8% yoy (vs. 2.6% expected), while France’s final September CPI reading was broadly in line at 1.1% yoy. In the UK, the BOE released its 3Q Credit Conditions Survey and Bank Liabilities Survey. For households, i) the availability of secured credit has increased slightly in 3Q, but ii) the availability of unsecured credit has decreased in 3Q and lenders expected a further substantial decrease in 4Q, likely a response to rising default rates for these loans. Finally, there was no change in the availability of credit to the corporate sector.
Looking at the day ahead, we get the final September CPI revisions for Germany and Italy. In the US it’s all eyes on the September CPI report, while last month’s retail sales numbers are also worth keeping a close eye on. The preliminary October University of Michigan consumer sentiment reading will also be out along with August business inventories data. Onto other events, the Fed’s Evans, Kaplan and Rosengren are all on the cards to speak on Friday. President Trump will speak on Iran later in the day and Wells Fargo / Bank of America also report earnings.
3. ASIAN AFFAIRS
i)Late THURSDAY night/FRIDAY morning: Shanghai closed UP 4,42 points or .13% /Hang Sang CLOSED UP 17,40 pts or .06% / The Nikkei closed UP 200.46 POINTS OR .96/Australia’s all ordinaires CLOSED UP 0.35%/Chinese yuan (ONSHORE) closed UP at 6.5877/Oil UP to 51.58 dollars per barrel for WTI and 57.45 for Brent. Stocks in Europe OPENED MIXED . ONSHORE YUAN CLOSED UP AGAINST THE DOLLAR AT 6.5877. OFFSHORE YUAN CLOSED STRONGER TO THE ONSHORE YUAN AT 6.5826 AND BOTH YUANS ARE STRONGER AGAINST THE DOLLAR. THE DOLLAR (INDEX) IS STRONGER AGAINST ALL MAJOR CURRENCIES. CHINA IS NOT HAPPY TODAY.
3a)THAILAND/SOUTH KOREA/NORTH KOREA
NORTH KOREA/USA
Trump sends a second aircraft carrier to the Korean peninsula
(courtesy zerohedge)
Trump Sends Second Aircraft Carrier To Korean Peninsula With 7,500 Marines Aboard
Just one week after uttering his now-infamous “this is the calm before the storm” statement to the press ahead of a dinner with military leaders, we now learn that President Trump has dispatched a second nuclear aircraft carrier, the USS Theodore Roosevelt, filled with 7,500 marines, to the Korean Peninsula. Of course, this comes after rumors swirled earlier this week that North Korea is preparing to fire multiple short-range rockets around the opening of the Chinese Communist Party’s twice-a-decade congress on Oct. 18th.
The USS Theodore Roosevelt, a Nimitz-class aircraft carrier, is en route to the western Pacific after leaving San Diego port last week.
The Roosevelt will focus on maritime security operations in the Pacific and Middle East, the US military announced.
But the £3.4billion ($4.5billion) warship, known as “the Big Stick”, has been sent to boost US defence on the Korean peninsula, according to South Korean media.
It is expected to arrive in region in the coming weeks amid fears North Korea is about to test another missile or nuclear weapon.
Per the following map from Stratfor, the USS Theodore Roosevelt will join the USS Ronald Reagan which is already operating in the region.
According to a statement from Admiral Steve Koehler, a strike group commander on the ship, the Roosevelt is carrying some 7,500 sailors and marines that are “ready as a war fighting force”.
“The US Navy carrier strike group is the most versatile, capable force at sea,” he said in a statement before the ship’s launch.
“After nearly a year of training and integration exercises, the entire team is ready as a warfighting force and ready to carry out the nation’s tasking.”
Of course, as we noted above, this buildup of naval forces in the Pacific follows an ominous warning from the President last week that preceded a dinner with military leaders: “You guys know what this represents? Maybe it’s the calm before the storm,” he said: “It could be the calm… before… the storm.”
A reporter quickly asked what the storm might be -“Is it Iran, ISIS, what’s the storm?” to which he replied… “…you’ll find out.”
So what say you? Just more bluster from a headline seeking President and normal-ish naval patrols in the Pacific or have we reached a point of no return in an escalating conflict with a rogue North Korean leader that could turn violent at any moment?
end
b) REPORT ON JAPAN
4. EUROPEAN AFFAIRS
5. RUSSIA AND MIDDLE EASTERN AFFAIRS
Turkey
this morning we witness 100 Turkish soldiers and 30 armored vehicles cross into Syria. Their stated goal is to help the Syrian government out iSIS and Sunni influences in Northern Syria. Their real goal is try and remove the Syrian Kurds. Thus on the surface they are turning their backs against the West and joining forces with Russia and Iran
(courtesy zerohedge)
More Than 100 Turkish Soldiers, 30 Armored Vehicles Cross Into Syria
A large Turkish army convoy consisting of more than 100 Turkish soldiers, including special forces and commandos, along with at least 30 armored trucks entered Syria’s Idlib region around 22:15 local time, for a joint mission with Russia and Iran to monitor a local de-escalation zone and “pacify al-Qaeda linked militants” there, Hurriyet newspaper reports. While their destination was not clear, local sources told Al Jazeera the troops were headed towards the western part of Aleppo province.
The de-escalation zone forms part of an agreement reached between Turkey, which backs forces battling the government of President Bashar al-Assad, and Iran and Russia, which support his government.
This move by the Turkish Army comes just days after Turkish President, Recep Tayyip Erdogan, announced that the Ankara-backed Euphrates Shield Forces were preparing an operation to expel the Al-Qaeda linked Hay’at Tahrir Al-Sham terror group from the Idlib Governorate.
Al Jazeera, reporting from Antakya, along Turkey’s border with Syria, said:
“This is what we know so far: dozens of military vehicles have crossed into Syria. “It remains to be seen what happens to the fighters who control Idlib province. Civilians there have been living in fear of potential clashes between Turkish-backed opposition Free Syrian Army fighters and Hayat Tahrir al-Sham, an alliance of armed groups that controls Idlib.”
A military build-up has taken place of late along Turkey’s border with Syria, with Turkey supporting a campaign to secure opposition control over Idlib province.
With Turkish relations with the US – not to mention Europe – at rock bottom, we doubt that the US State Department will be pleased by this sudden escalation in which Russia once again projects to the west that Syria is its domain, and that NATO member Turkey has become one of its biggest allies in the middle east region. The US, however, will have no choice but to respond as the Turkish incursion means that Kurdish US-coalition allies will demand a US response, or else the entire region will henceforth perceive Washington as a paper tiger
end
Israel:
not good: Israeli TV shows footage of iSIS training camp on Israel’s border
Israeli TV Shows Footage Of ISIS Training Camp On Israel’s Border
for complete report see zerohedge)
http://www.zerohedge.com/news/2017-10-13/israeli-tv-shows-footage-isis-training-camp-israels-border
Last November Israel Prime Minister Benjamin Netanyahu said his country “won’t allow Islamic State figures or other enemy actors, under the cover of the war in Syria, to set up next to our borders,” but it appears this has already happened, to the point that a sizable ISIS training camp has been set up just across the Golan Heights border with Israel. Though Syrian al-Qaeda has long been a mainstay in southern Syria along Israel’s border, this constitutes the first widespread public acknowledgement and confirmation of a significant ISIS base of operations in the Golan region.
Israeli media this week is reporting news of the base camp after Israel’s Channel 2 aired an extensive report with video and photographic evidence of what’s being described as a training and recruitment center which has already attracted hundreds of new terror recruits. Channel 2 is one of Israel’s most visible and established news broadcast channels and operates under “The Second Authority for Television and Radio” licensed by the Knesset and the Ministry of Communications. According to the Times of Israel:
Israel’s Channel 2 said the commanders have made their way to an Islamic State-controlled enclave “close to the border” with Israel. They have set up a training camp to which they have recruited 300 local youths, said the report, which showed footage apparently of the camp and training sessions.
Among the commanders is one of Islamic State’s most notorious recruiters, Abu Hamam Jazrawi, the TV report said.
The commanders are also now running Islamic State internet propaganda campaigns from their new base, in place of the former campaign headquarters in Raqqa, the extremists’ former de facto capital in northwest Syria where the fight to oust them has entered what appear to be its final stages.
Featured in Israel’s Channel 2 broadcast: Islamic State training camp (Channel 2 screenshot)
Channel 2 screenshot purporting to show the ISIS base camp just across Israel’s border.
The Channel 2 exposé further notes the presence of multiple senior Islamic State commanders at the camp, which suggests the terror group could be attempting to relocate its assets to Syria’s south as it appears to be crumbling with the onset of SDF, Syrian Army, and Russian forces in the eastern part of the country.
The Times of Israel acknowledges another shocking fact, which has itself become an open secret of sorts among Israeli defense and policy officials: what it calls the long lasting “live and let live” relationship with al-Qaeda in the region. The Times of Israel explains:
Both the IS-affiliated Khalid ibn al-Walid Army and the Jabhat Fateh al-Sham, formerly the al-Nusra Front, which is linked to al-Qaeda, have been set up on Israel’s borders for years.
Despite a relatively long-lasting “live and let live” relationship with these groups, the IDF has warned of a potential — some say inevitable — conflict with them and has been preparing to respond to cross-border attacks.
Though the IDF has “warned” of some “potential” direct action against the most notorious terrorist groups in the world which seem to be comfortably ensconced within eyesight of Israeli border posts, it has never taken significant direct action against these groups, instead routinely targeting the Syrian army, Iranian-linked militias, and Hezbollah with airstrikes. This is a general reflection of the Israeli strategy of regime change in Syria, which has resulted in a well-documented history of assistance to al-Qaeda affiliated rebel groups.
A Wall Street Journal investigation found that this relationship involved weapons transfers, salary payments to anti-Assad fighters, and treatment of wounded jihadists in Israeli hospitals, the latter which was widely promoted in photo ops picturing Netanyahu himself greeting militants. As even former Acting Director of the CIA Michael Morell once directly told the Israeli public, Israel’s “dangerous game” in Syria consists in getting in bed with al-Qaeda in order to fight Shia Iran.
Channel 2 News and the The Times of Israel also featured an image from a prior video of a lone ISIS militant holding an Islamic State flag with the Israeli side of the Golan border in clear view.
The Times of Israel featured the above image: “Threats from across the border in a video released by an Islamic State affiliate on the Syrian side of the Golan Heights on September 3, 2016.”
In recent years, multiple current and former Israeli defense officials have gone so far as to say that ISIS is ultimately preferable to Iran and Assad. For example, former Israeli Ambassador to the US Michael Oren in 2014 surprised the audience at Colorado’s Aspen Ideas Festival when he said in comments related to ISIS that, “the lesser evil is the Sunnis over the Shias.” Oren, while articulating Israeli defense policy, fully acknowledged he thought ISIS was “the lesser evil.”
Likewise, for Netanyahu and other Israeli officials the chief concern was never the black clad death cult which filmed itself beheading Americans and burning people alive, but the possibility of, in the words of Henry Kissinger, “a Shia and pro-Iran territorial belt reaching from Tehran to Beirut” and establishment of “an Iranian radical empire.”
With Israeli media now widely reporting the Islamic State’s presence along Israel’s border we wonder why such a clear and documented fact isn’t cause for bigger outrage. Though Israel’s Channel 2 bombshell report aired earlier this week, there’s been resounding silence in international press. ISIS is camping out along Israel’s border, yet all we hear about is the supposed “Iranian threat” to Israel’s existence
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