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Thursday, April 10, 2014

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Chicken Little market tests resolve after mini gold/junior bump

Posted: 10 Apr 2014 06:23 PM PDT

Markets aren't hot, no, but Eric Coffin suggests it's not so bad as some would have you think about gold & juniors.

Gold: what a difference a year makes

Posted: 10 Apr 2014 03:22 PM PDT

During 2013, gold did not have the word "support" in its lexicon. This year it has been remarkably resilient so far and is poised for even better things says Mark Mead Baillie

Gold ETFs stable, silver catching up - Phillips

Posted: 10 Apr 2014 12:14 PM PDT

Gold ETF holdings were stable in recent trading and the silver price starts to move, Julian Phillips writes.

USD/JPY - Yen Rally Continues Despite Strong U.S. Unemployment Claims

Posted: 10 Apr 2014 10:36 AM PDT

By Kenny Fisher

The Japanese yen continues to post gains on Thursday, as USD/JPY trades below the 102 line in the North American session. The yen has enjoyed an outstanding week, gaining over 200 points against the US dollar. On the release front, US Unemployment Claims dropped nicely, posting its lowest levels in almost seven years. In Japan, Preliminary Machine Tool Orders jumped in March. Later in the day, the Bank of Japan releases the minutes from its monetary policy meeting.

Unemployment Claims rebounded sharply, as the key indicator dropped to 300 thousand last week. This beat the estimate or 314 thousand and marked the lowest reading since May 2007. With the Federal Reserve looking to trim its QE program and speculation rising about a possible interest rate increase, every employment release is under the market microscope.

Wednesday's release of the Federal Reserve minutes was eagerly anticipated, but the minutes

Family Dollar Stores' CEO Discusses F2Q2014 Results - Earnings Call Transcript

Posted: 10 Apr 2014 10:18 AM PDT

Family Dollar Stores, Inc. (FDO)

F2Q2014 Results Earnings Conference Call

April 10, 2014, 10:00 am ET

Executives

Kiley Rawlins - Vice President of Investor Relations and Communications

Howard Levine - Chairman of the Board, Chief Executive Officer

Mary Winston - Chief Financial Officer, Executive Vice President

Analysts

Dan Wewer - Raymond James

John Heinbockel - Guggenheim Securities

Scott Mushkin - Wolfe Research

Stephen Grambling - Goldman Sachs

Mark Montagna - Avondale Partners

Patrick McKeever - MKM Partners

Anthony Chukumba - BB&T Capital Markets

Peter Keith - Piper Jaffray

Laura Champinehank - Canaccord

Meredith Adler - Barclays

Presentation

Operator

Good morning. My name is Rebecca and I will be your conference facilitator today. I would like to welcome everyone to the Family Dollar earnings conference call. All lines have been placed on mute to prevent any background noise. After the company's prepared remarks, there will be a brief question-and-answer period. The

Gold And Real Interest Rates Are Virtually Uncorrelated

Posted: 10 Apr 2014 10:16 AM PDT

There is a popularly held notion in the gold market that negative real interest rates result in higher gold prices and when real interest rates turn positive the price of gold declines. Numerous research reports being released in recent months point toward the forecast increase in real interest rates as the number one reason for weaker gold prices now and in the future. The relation between these two metrics is not that straightforward, however.

Studying the two metrics over the long term shows that there is virtually no relation between them. Gold prices have risen strongly in periods of both negative real interest rates and positive real interest rates. They also have declined just as strongly when real interest rates were negative and when they were positive. The data on which these statements are based is shown in the chart titled "Returns on Gold and Real Interest Rates."

In the

Commodities Today: Profiting From Volatility In These Names

Posted: 10 Apr 2014 10:07 AM PDT

With the Federal Reserve having had dovish commentary in their minutes which were released yesterday commodities saw increased interest during the session. A number of those names which rose sharply are giving back some of their gains today, but we would point to the 10-year Treasury as a bullish sign moving forward as well as the US Dollar Index, both which are in areas that are bullish for commodity investors.

With an accommodative Fed still in place it seems as though the rate on the 10-year shall remain below 3% through the end of the year, even if there are no flights to safety in the next 8 months. Although we are bullish of commodities as a whole with news like this, it does make us wonder whether we should be even more bullish of copper at these levels.

Chart of the Day:

The yield on the 10-year Treasury has

Safe Haven bids boost Gold

Posted: 10 Apr 2014 09:58 AM PDT

Gold put in a nice showing today building on last week's bounce away from chart support near $1280 and the change in handles from "12" to "13".

The FOMC minutes released yesterday continue to put pressure on the US Dollar, but even more importantly, acted to depress US interest rates. That is the key driver for gold in my view at this time. Gold seems to struggle when interest rates here in the US rise as investors see little threat of inflation and seek out assets that will throw off some sort of yield rather than the yellow metal which only provides gains if it continues to rise in price. In a benign inflation environment, many do not believe gold will continue to rise.

For those who are new to this blog, a bit of a disclaimer here - I am giving you the broader market view of the inflation picture ( plus that of the Fed ), not my own view. As someone who lives in the real world and sees grocery prices moving higher, health insurance premiums rising, local taxes and fees rising, etc., I reject the argument that consumers are not getting squeezed by such things. However, until the broader market consensus shifts towards genuine fears of inflation, rallies in gold are going to be viewed as selling opportunities.

By the way, those record high beef prices that are finally being felt at the grocery store should begin to decline over the course of the next few weeks. It takes a while for the higher priced beef ( and pork for that matter ) to make its way into the pipeline but wholesale beef prices have already peaked for now and are working lower. Consumers should see some relief on both the beef and the pork front  beginning within the next few weeks. What happens this summer depends on whether or not grocers can move the high priced stuff during the warmer months. There is an old adage that the "best cure for high prices is high prices" and that is what we will soon see as demand will shift to chicken until consumers get sick of that. Maybe then beef and pork prices will stabilize at lower levels and we can all afford to eat bacon and throw some red meat on the pit smokers. Grocers are usually hesitant to raise retail red meat prices ( they have excellent margins in meat ) for fear of stunting demand but with the goings on in the livestock markets over the last few weeks, many have had no choice but to bite the bullet, raise prices and hope for the best. From what I am hearing, consumers are noticing and are balking.

Back to gold -

From a chart perspective, gold continues to remain within the broad trading range that I have outlined for some time now. It will need a catalyst of some sort to kick it higher or send it lower. What that might be remains unclear to me.


As you can see from the chart, it has run into some selling near the resistance level noted near the $1320 region. Above that, resistance is layered in approximately $20 increments, first near $1340 and then again near $1360.

Downside support comes in near and just above $1300 followed by our old friend near $1280.

On the ADX, which indicates a trendless market, the bulls have regained the short term advantage ( when it held at $1280). Stochastics are rising as price moves up in the range showing the near term friendly picture. How this market handles this $1320 level today and tomorrow, will be a key as to how to approach it. The trading range is pretty broad ( up near $1400 on the top and $1280 on the bottom ). We could see this range tighten up a bit and narrow down somewhat from the current $120.

As mentioned above, I cannot see what would cause this market to break out of its current range at this time. The Dollar would either have to drop off sharply breaking down below 79 on the USDX or interest rates would have to plummet sharply here in the US, along with perhaps a larger selloff in the broader equity markets to take it up out of the top end of the range. On the downside, we would need to see a sharp rally higher in the US Dollar ( alongside especially of a sharp selloff in the Euro ) and a surge in interest rates above the 3% level in the Ten Year to take it down below $1280 in my view.

Take a look at Eurogold ( gold priced in terms of the Euro ). Notice how it too is essentially rangebound. The ADX reveals the lack of a clearly defined trend. The top of the range is up near the 1000 euro region; the bottom down near 880 - 860. If gold could clear the 1000 euro level, we might finally have something to write about. Can it do that? Who knows but if the ECB were to actually proceed with their chatter about their own version of QE and forcing banks to pay interest on reserves held there at the ECB, then we might finally see the Euro weaken sharply enough to send gold higher and through that 1000 level.

Apparently Europe is having the same problems over there as we are over here - a lack of inflation and in their case, an excessively strong currency, which no one over there wants.



Back to the safe haven thing - equities are showing some surprising signs of weakness today, which is odd considering that they got all bulled up yesterday on those dovish FOMC minutes.

A lot of technicians are watching the 1830 - 1820 zone on the S&P 500. That is a big support level. If it were to give way, especially on a closing weekly basis, we could finally see some deeper losses in stocks. As you can see on the weekly chart, that is some uptrend so unless bulls are sent packing by an avalanche of selling, odds favor them coming in and continuing to buy dips. Maybe we can get some range trading/consolidation in stocks for a change instead of this nearly one-way ticket north.




The gold mining shares are providing little if any support to gold judging from their mediocre performance today. One gets the impression that they do not know whether to follow the broader market lower or the metal higher. Either way, it is not exactly a ringing endorsement of further strong gains in the actual metal. Then again the day is yet young and we could see some better buying enter before the close of today's session.

Switching gears just one more time - recent hog slaughter data shows its running a bit more than 7% below last year's levels. USDA told us in their recent Hogs and Pigs report that the worst we could expect was 5%. Their own data is proving the inaccuracy of that last quarterly report; however, the trade is still confused and unclear. Those who are lending credence to that report have been able to gain some advantage but yesterday's bizarre and extremely rare move from limit down to limit up within the matter of a few hours time shows just how unsettled this issue is in the industry. It is going to take at least another full month to sort it out and even then we might not really know for sure. In all my years of trading the livestock markets, I have never seen the hogs so unsettled or so volatile. They are making my old deceased friend, the pork bellies contract, look tame by comparison and that is saying something. I miss that contract and all the shenanigans that accompanied it.

Corn is moving lower today as once again improving weather conditions are stirring talk of field work taking place. Beans are moving lower probably due to some profit taking by longs who have been making small fortunes playing the demand side of the bean equation. Large expected soybean acreage this season is taking a backseat to insatiable demand for beans. While prices for corn and beans are far off record highs from two years ago, they are still very profitable. I am happy for our hard working farmers but I still must take this opportunity to vent against that boondoggle ethanol mandate. I hate that stuff with a passion because of its adverse impact on our livestock sector. That plus the idea of burning 40% of our corn crop in our gasoline tanks strikes me as the height of stupidity. Whenever I hear some politician from the corn belt start talking up a 15% ethanol blend, I want to scream. Anyone seen what that stuff does to seals?

Silver: Triple Bottom Or Lower Lows?

Posted: 10 Apr 2014 09:45 AM PDT

By Ivan Y.

Silver (SLV) bottomed twice in 2013: once at the end of June and again in December. I prefer to look at end-of-day spot prices so the exact dates would be June 27 ($18.40) and December 3 ($19.11). After rallying nearly 10% in the first two months of this year, silver has given up almost all of those gains for the year in the past few weeks and is currently holding above the two bottoms in 2013. It is currently up 2% for the year as I write this. The question now is whether silver is at or near a triple bottom or whether silver drops to lower lows. An argument can be made for both cases.

(click to enlarge)

The Case for Lower Lows: Supply Continues to Increase

The problem with silver right now is that mining supply continues to increase despite depressed prices. For example, First

Comex Gold (GC) Futures Technical Analysis – April 10, 2014 Forecast

Posted: 10 Apr 2014 09:40 AM PDT

fxempire

Gold Price Analysis- April 10, 2014

Posted: 10 Apr 2014 09:40 AM PDT

dailyforex

CHARTS - Gold and the Ideal Buy Point

Posted: 10 Apr 2014 09:35 AM PDT

miningfeeds

Gold Prices Show Signs of Life, May Recover Further

Posted: 10 Apr 2014 09:35 AM PDT

dailyfx

Are Tensions About to Flare Up Between the U.S., Iran and Russia Over Oil Barter Deal?

Posted: 10 Apr 2014 09:30 AM PDT

Are Tensions About to Flare Up Between the U.S., Iran and Russia Over Oil Barter Deal?

While people remain focused on Russia's annexation of Crimea and fears that Putin may make aggressive moves in eastern Ukraine, it may be a barter deal between Russia and Iran for oil that takes tensions between the U.S. and Russia to a whole other level.     Submitted by Michael Krieger, Liberty Blitzkrieg: For example The [...]

The post Are Tensions About to Flare Up Between the U.S., Iran and Russia Over Oil Barter Deal? appeared first on Silver Doctors.

Check out these similar articles:
  1. Switzerland defies US, EU ban on Iran oil
  2. US Caves, Grants China 6 Month Exemption on Iran Sanctions
  3. Iran Activates Alternative System for SWIFT

Gold Technicals – Confirmation Of 1,315 Break Needed For Further Bullish Push

Posted: 10 Apr 2014 09:30 AM PDT

forexnews

CHARTS - Gold begins tentative recovery

Posted: 10 Apr 2014 09:30 AM PDT

cityindex

Gold to Resume Lower?

Posted: 10 Apr 2014 09:25 AM PDT

dailyfx

The Natural Life-Cycle Of A Collapsing System

Posted: 10 Apr 2014 08:15 AM PDT

The Natural Life-Cycle Of A Collapsing System

The SEC has been nothing but a lap-dog for Wall Street for years.  Everybody who gives a rat's a** about this issue already knows that.  The current head of the SEC, Mary Jo White, was the chief legal defense bull-dog for Jamie Dimon and JP Morgan at Debevoise &  Plimpton.   Putting her in charge of [...]

The post The Natural Life-Cycle Of A Collapsing System appeared first on Silver Doctors.

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  1. Junior Explorers to see 10x-50x Moves in Next Up Cycle
  2. Jim Sinclair on His Life, the Markets, the Dollar, Silver, & Gold
  3. Is The United States Going To Go To War With Syria Over A Natural Gas Pipeline?

Is Desperation Setting In?

Posted: 10 Apr 2014 08:15 AM PDT

Is Desperation Setting In?

After the metals staged their usual overnight rally while the physical gold hoarding Asian markets were open, Wednesday morning featured two HFT-algorithm flash crashes. One at 7:00 am. EST and one right at the Comex open (the latter occurs at least 85% of the time). The intervention in the gold/silver market reflects desperation from the [...]

The post Is Desperation Setting In? appeared first on Silver Doctors.

Check out these similar articles:
  1. The Price Of Gold: The Fed’s 60 Seconds Of Desperation
  2. Deutsche Bank to Quit PM Price Setting Due to Manipulation Investigation
  3. Public Will be Slaughtered as Fed is Setting Up the Biggest Pump & Dump the World Has Ever Seen!

Endeavour Silver Corp posts strong Silver, Gold production results in Q1,2014

Posted: 10 Apr 2014 08:13 AM PDT

Silver production increased 27% to 1,898,999 ozGold production jumped 23% to 18,519 ozSilver equivalent production rose 26% to 3.0 million oz (at a 60:1 silver: gold ratio)Silver oz sold up 1% to 1,537,665 ozGold oz sold up 5% to 16,445 oz

This could be the end of the U.S. dollar's reign as the global reserve currency. See what happens next.

Posted: 10 Apr 2014 08:00 AM PDT

Zero Hedge reports the era of the U.S. dollar as a reserve currency is coming to an end.

More and more countries are looking – or are already in direct discussions – to diversify away from the U.S. dollar. As former World Bank chief economist Jukka Pihlman puts it… "the dominance of the greenback is the root cause of global financial and economic crisis."

It should be no surprise then that at least 40 central banks have invested in the Chinese yuan… and several more are preparing to do so. This could put the yuan on the path to reserve status even before full convertibility.

The U.S. dollar still accounts for 33% of global foreign exchange holdings… but this is down from 55% in 2000. Emerging and developed countries have been seeking "other currencies" for their reserves since 2003. Emerging countries have increased other currencies in reserve by 400%... and developed countries by 200% since 2003.

Pihlman says, "The yuan has effectively already become a de facto reserve currency because so many banks have already invested in it… even before it's fully convertible."

He adds, "The yuan's convertibility may be already there for central banks in a way that has got them comfortable to start investing in the currency."

Reserve currencies don't last forever. While the U.S. dollar still remains the king… we'd better be ready for whatever comes next.

 

More on the U.S. dollar and the "End of America":

This is how Russia will replace the U.S. "petrodollar"

We know China wants to displace the U.S. dollar. But now we know how.

Porter Stansberry: A shocking secret about Warren Buffett and the End of America

The 401k Scheme -Government to Confiscate?

Posted: 10 Apr 2014 07:00 AM PDT

The 401k Scheme -Government to Confiscate?

“They will take our retirement accounts, they will take our IRA’s. They will say we’re going to save you, we’re going to give you government bonds.“- Jim Rogers From Obama’s MyRA announcement to Russia massively divesting itself of UST bond holdings, it is becoming apparent that something we have been warning about for years here [...]

The post The 401k Scheme -Government to Confiscate? appeared first on Silver Doctors.

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  3. FLASHBACK: Jim Rogers & Ron Paul Predicted MyRA, IRA/401K Confiscation

Dollar hit by Fed, Swedish crown stung by inflation shock

Posted: 10 Apr 2014 06:30 AM PDT

The dollar fell to three-week lows versus the yen and the Swiss franc on Thursday after minutes of the Federal Reserve's March meeting disappointed investors positioned for a gradual tightening in monetary policy...

Read

Geopolitical tensions push gold higher

Posted: 10 Apr 2014 06:01 AM PDT

Bail-in regime facing increasing opposition in EU.

SDBlowout! 2014 Silver Buffs 65 Cents Over Spot, ANY QTY!

Posted: 10 Apr 2014 06:00 AM PDT

Bail-In Regime Facing Increasing Opposition In EU

Posted: 10 Apr 2014 04:32 AM PDT

gold.ie

A major market reversal could be coming. Keep an eye on this chart.

Posted: 10 Apr 2014 04:00 AM PDT

From Jeff Clark in Growth Stock Wire:

Last [month], I told you to keep an eye on the financial sector to spot trouble in the stock market.

Now there's another indicator that traders need to start watching.

The Volatility Index (the "VIX") is the market's "fear gauge." It rallies when investors get scared. And it falls as investors get more comfortable owning stocks.

Successful traders often profit by doing the opposite of what the investment crowd is doing. So we use the VIX as a contrary indicator. There's a well-known saying on Wall Street that goes... "When the VIX is high, it's time to buy. And when the VIX is low, it's time to go."

It's the second half of that saying that traders should start focusing on today...

Take a look at this chart of the VIX...

 

 

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Over the past year, the VIX has traded within a range of about 12 on the downside and 21 on the upside. The red arrows point to low readings on the VIX – which correlate to high levels of investor complacency. The blue arrows point to high levels on the VIX – which correlate to high levels of fear.

Here's how the S&P 500 looked at each of those extreme points...

 

 

Of the six turning points on the VIX over the past year, five of them led to sharp reversals in the stock market. That's a good track record for any technical indicator. And it's one that bears watching right now since the S&P 500 is powering to new all-time highs and the VIX is dropping back down.

There's still some room for the VIX to fall farther before hitting an extreme level. So stocks could head even higher. But along with keeping an eye on the financial sector to spot a reversal in the market, traders ought to watch this chart of the VIX.

It's getting pretty low, so it's almost time to go.

 

More from Jeff Clark:

Master trader Clark: Watch this chart for an "early warning" of stock market trouble

Master trader Clark: A must-see update on the "ugliest chart in the market"

Master trader Clark: How I'm trading silver now

Will gold bugs be validated by new bull market?

Posted: 10 Apr 2014 03:55 AM PDT

Gold juniors with cash and good projects are trading at tiny fractions of their worth. But not for long.

Bail-In Regime Facing Increasing Opposition In EU

Posted: 10 Apr 2014 03:51 AM PDT

The landmark EU agreement on a common rulebook for handling bank failures, including bail-ins, is in danger of unravelling over the fine print restricting when a state can intervene to rescue a struggling bank . Britain is facing objections from several other EU member states as it scrambles to revise a political deal, hastily reached in December. The FT reports that it is "an attempt to protect the Bank of England's emergency role as covert lender of last resort."

Today's AM fix was USD 1,321.50, EUR 953.19 & GBP 787.73 per ounce.
Yesterday's AM fix was 1,309.75, EUR 949.92 & GBP 782.74 per ounce.

Gold rose $2.30 or 0.18% yesterday to $1,308.80/oz. Silver lost $0.13 or 0.65% to $19.88/oz.


Market Futures Snapshot – (Financial Visualisations)

Gold extended gains to a third session today, scaling to fresh two week highs above $1,320/oz. Silver surged 2.5% to $20.26/oz.

Gains were due to geopolitical tensions, dovish sounds from the Fed and the very poor exports data from China which led to concerns about the Chinese and global economy. Minutes from the Federal Reserve’s policy meeting which showed that officials were not keen on increasing interest rates anytime soon are also supporting gold.

Low interest rates, which cut the opportunity cost of holding non yielding bullion above other assets, have been an important factor driving prices higher in recent years. Real interest rates are set to remain negative for the foreseeable future which will be supportive of precious metals.


Silver in U.S. Dollars – 5 Years (Daily)

Gold has gained 1.2% in the previous two sessions due to rising geopolitical tensions between Russia and NATO and the West. These tensions are set to remain and will not be resolved anytime soon.

Silver continues to be favoured by contrarian investors who see it as oversold and very undervalued vis a vis other assets including gold.

Bail-In Regime Facing Increasing Opposition In EU
The landmark EU agreement on a common rulebook for handling bank failures, including bail-ins, is in danger of unravelling over the fine print restricting when a state can intervene to rescue a struggling bank according to the Financial Times.

Britain is facing objections from several other EU member states as it scrambles to revise a political deal, hastily reached in December. The FT reports that it is "an attempt to protect the Bank of England's emergency role as covert lender of last resort."

The political stad-off over the bank resolution directive – including bail-ins of bank depositors – comes days before the European parliament is supposed to adopt the agreed text of the legislation.

While London insists it is belatedly rectifying a technical discrepancy, other diplomats suspect it is revisiting a fundamental element of the reforms, which aim to spare taxpayers from the costs of bank failure.

"This is a complete mess, a nightmare and we have to decide what to do fast," one person involved told the FT.

At issue is what form of support a state can provide to a lender in difficulty without triggering a so-called bail-in, where losses are imposed on bond holders who lent money to a bank and on depositors – both household and corporate.

The British want to clarify that central banks can extend liquidity even when relying on a specific government guarantee, without triggering haircuts on bondholders. The position is acceptable to parliament but, since Friday, has prompted several member states to raise concerns. At this late stage any revisions to the text require unanimity.

It is important to realise that not just the EU, but also the UK, the U.S., Canada, Australia, New Zealand and most G20 nations have plans for bail-ins in the event that banks and other large financial institutions get into difficulty again. This seems likely given the lack of effective and real reform.

The coming bail-ins pose real risks to investors and of course depositors – both household and corporate. Return of capital, rather than return on capital is now of paramount importance.

Educate yourself about this emerging threat to your livelihood by reading:

Bail-In Short Guide: Protecting your Savings In The Coming Bail-In Era

Bail-In Research: From Bail-Outs to Bail-Ins: Risks and Ramifications

Great Panther Silver announces resignation of director

Posted: 10 Apr 2014 03:51 AM PDT

Geoff Chater has resigned as a director of Great Panther to become president and CEO at Luna Gold.

Interest rate hikes on the horizon? Not likely.

Posted: 10 Apr 2014 03:45 AM PDT

If history tells us anything about gold's past market values, it is this: Watch out for the feds!

Hecla Mining Silver output rises sharply to 2.5 million ounces in Q1

Posted: 10 Apr 2014 03:35 AM PDT

Hecla Mining Co. has reported that its silver output rose sharply to 2.5 million ounces in the first quarter, up 32% from 1.9 million in the same period a year ago.

Jay Taylor: Prepare For a Bull Market to Shock Even the Most Ardent Goldbugs

Posted: 10 Apr 2014 02:23 AM PDT

"Silver price came within a few pennies of taking out its March 27 low"

¤ Yesterday In Gold & Silver

The gold price rallied about five bucks or so during early trading in the Far East on their Wednesday, but then began to sell off a bit starting around 2 p.m. Hong Kong time---an hour before the London open.  Then, at the noon London silver fix, the gold price got sold down another five bucks or so---and then didn't do much until the Fed minutes were released at 2 p.m. EDT.  The subsequent price spike ran into a not-for-profit seller within 30 minutes---and that was pretty much it for the remainder of the day.

The CME recorded the high and low ticks at $1,301.10 and $1,315.50 in the June contract.

The gold price closed in New York on Wednesday at $1,312.30 spot, up $4.30 on the day.  Volume, net of April and May, was fairly decent at 137,000 contracts.

The silver price got sold down back down below the $20 level the moment trading began at 6 p.m. EDT in New York on Tuesday evening---and traded within a dime of that price until noon Hong Kong time.  Then, like gold, the HFT boyz went to work, with the absolute low of the day coming minutes before 9 a.m. in New York.  The subsequent rally didn't get far---and the price spike at 2 p.m. ran into the usual sellers of last resort shortly after that.  From there, the price traded sideways into the close.

The high and low price ticks were reported as $20.095 and $19.60 in the May contract.

Silver closed yesterday in New York at $19.845 spot, down 21.5 cents from Tuesday's close.  Not surprisingly, gross volume was through the roof at almost 90,000 contracts, but netted out to 36,000 contracts---which was more than double the net volumes of both Monday and Tuesday.

The platinum price also rallied a bit in Far East trading yesterday---and also began to sell off about an hour before the London open.  The low tick, like silver, came at 9 a.m. in New York.  The metal rallied a bit after that---and manged to close up a couple of bucks on the day.

Palladium traded ruler flat once again, but popped five bucks or so on the Fed news---and finished up on the day as well.

The dollar index closed at 79.78 on Tuesday afternoon in New York---and then didn't do much until an hour before London opened.  At 10 a.m. BST, the index hit its 79.86 'high' of the day---and then began to fade until about 11:20 a.m. in New York. From there it rallied into the release of the Fed minutes, before getting hit for around 25 basis points when the news actually hit the tape.  After that, the index barely twitched.  The index closed at 79.53 down 25 basis points.

The gold stocks only opened down a percent---and then chopped sideways until 2 p.m.---before blasting skywards on the 'news'.   The rally ended when the seller of last resort showed up in the Comex futures market shortly after 2:30 p.m. EDT, but the stocks finished the day in the plus column, with the HUI up 0.65%.

The silver equities opened down a bit over a percent, but climbed back to unchanged within a couple of hours.  They, too, took off to the upside at 2 p.m.---but gave up a percent of those gains when JPMorgan et al put in an appearance in the Comex futures market around 2:30 p.m.  Considering the fact that silver closed down more than a percent yesterday, Nick Laird's Intraday Silver Sentiment Index closed up a remarkable 1.63%---and well off its high tick to boot!

The CME Daily Delivery Report showed that 16 gold and 14 silver contracts were posted for delivery within the Comex-approved depositories on Friday.  Once again, the Issuers and Stoppers Report isn't worth the effort of hyperlinking.

There were no reported changes in GLD yesterday---and as of 10:07 p.m. EDT yesterday evening, there were no reported changes in SLV, either.

Yesterday evening, the good folks over at the shortsqueeze.com Internet site updated the short positions of both GLD and SLV as of the end of March.  The short position in SLV declined by 4.77%---and is now down to 12,657,900 ounces/shares, or just under 394 tonnes.  The decline in the short position in GLD was far more substantial, as it dropped by 21.11%.  The short position in that ETF is now down to 1.09 million troy ounces of gold, or just under 34 tonnes.

Over at Switzerland's Zürcher Kantonalbank they reported that both their gold and silver ETFs had withdrawals for the week ending April 4.  Their gold ETF declined by 15,997 troy ounces---and their silver ETF dropped by 100,030 troy ounces.

There was a tiny sales report from the U.S. Mint yesterday, as they only sold 1,500 troy ounces of gold eagles.

Over at the Comex-approved depositories on Tuesday, there was pretty big activity in gold.  Precisely 1 metric tonne [32,150.000 troy ounces] was reported received over at Brink's, Inc.---and 148,344 troy ounces were shipped out for parts unknown.  The biggest chunk of it came out of JPMorgan's warehouse.  The link to that activity is here.

In silver, only one good delivery bar was reported received, but a very chunky 1,062,229 troy ounces were reported shipped out.  With the exception of one bar, all of it came out of HSBC USA and Canada's Scotiabank.  The link to that action is here.

I have the usual number of stories for a mid-week column but, once again, I'm a little short of precious metal related news items.

¤ Critical Reads

If this happens, the S&P 500 is in real trouble: Yamada

After two tough sessions for the market, the S&P 500 hit a one-month low on Tuesday morning before turning positive for the day. But technical analyst Louise Yamada says the stock slide isn't over just yet.

"I don't think the pullback is already over," Yamada, of Louise Yamada Technical Research Advisors, said on Tuesday's episode of "Futures Now."  I think that it's an interim pullback, and we've certainly seen what we've expected, in the Internet and biotechs coming off. And I think that although they may bounce, there's probably still a little bit more to go on the downside."

Worse yet, the selling could spread to other sectors, such as aerospace and consumer discretionary stocks.

This CNBC news item was picked up by the finance.yahoo.com Internet site on Tuesday afternoon just before the markets closed in New York.  I thank reader David Ball for today's first story.

Wall Street soars after Fed minutes signal support

U.S. stocks rallied on Wednesday after minutes from the Federal Reserve's latest policy meeting showed a more supportive central bank than investors had previously expected.

All three major U.S. stock indexes ended up more than 1 percent, with eight of the 10 S&P 500 sector indexes closing higher. Internet and biotech stocks were among the day's biggest gainers.

Fed policymakers were unanimous in wanting to ditch the thresholds they had been using to telegraph a policy tightening, according to minutes of a meeting last month that shed little new light on what might prompt an eventual interest-rate rise.

"People are taking solace in the idea that the Fed may be more accommodative than previously thought, for longer than previously thought," said Steve Sosnick, equity-risk manager at Timber Hill/Interactive Brokers Group in Greenwich, Connecticut.

This Reuters story, was also picked up by the yahoo.com Internet site, but this one showed up on their Internet site shortly after the markets closed yesterday.  I found this article on their website when I was checking out today's first story.

BofA to pay $727 million to consumers over credit card practices

Bank of America agreed to pay nearly $800 million in fines and restitution to settle allegations of deceptive marketing and unfair billing involving credit card products, U.S. regulators said on Wednesday.

The Consumer Financial Protection Bureau and Office of the Comptroller of the Currency said they had ordered the bank to pay $727 million in relief to consumers to resolve problems with add-on products providing identity theft and payment protection products.

The bank must also pay fines of $20 million to the bureau $25 million to the OCC.

"We have consistently warned companies about illegal practices related to credit card add-on products," bureau Director Richard Cordray said in a statement. "We will not tolerate such practices and will continue to be vigilant in our pursuit of companies who wrong consumers in this market."

This Reuters story showed up on their Internet site late yesterday afternoon EDT---and I thank Harry Grant for sending it to me just after midnight MDT.

98% of All Consumer Credit in Past Year Was Student and Car Loans

Same sh*t, different month. If last month total consumer credit increased by $13.8 billion, of which $14.0 billion went into student and car loans meaning consumers continued de-leveraging on their credit card statements (some expectation for a recovery there), then February was even worse. The headline number was great: $16.5 billion, well above the $14.0 billion expected. The problem is that of this number well more than 100%, or $18.9 billion was once again slated for car purchases and paying down "student bills" (not really - as has been reported numerous times before Americans increasingly use student loans as a means to pay for everything else but tuition).

In other words, anyone suggesting that the "surge" in household lending is in any way remotely indicative of consumer hope in a recovery is i) an idiot or ii) clueless and won't even be bothered to read the fine print which once again suggests that the only credit Americans will take on is whatever comes implicitly free, and is certainly not meant to be repaid, courtesy of Uncle Sam. Unlike credit cards.

This short commentary, with two excellent charts embedded, was posted on the Zero Hedge website on Monday afternoon EDT---and it's definitely worth reading.  I thank Casey Research's own Dennis Miller for sending it our way.

Triple Whammy Shocker: Goldman Shutting Down Sigma X?

Back on March 21, before the release of Michael Lewis' Flash Boys and before the infamous 60 Minutes interview, when Goldman COO Gary Cohn wrote his infamous WSJ Op-ed bashing HFT, it was clear that something was afoot. That something became promptly clear when it was revealed that Goldman is among the core backers of the pseudo dark-pool IEX exchange popularized as the protagonist in Flash Boys, and juxtaposed to the front-running, and faceless, HFT antagonist that Lewis managed to demonize so well in the span of a few hundred pages, he promptly provoked a renewed investigation by the FBI, the SEC and DOJ into HFT.

A few days later, the shocker became a double whammy when Goldman announced that in addition to turning its back on HFT which had served it so well for years, the firm would also say goodbye to the NYSE and its designated market maker post, the last remaining legacy of its $6.5 billion Spear Ledds & Kellogg acquisition from 2000. That Goldman was asking mere pennies on the dollar for the residual assets also showed just how "highly" Goldman valued said legacy operation.

Moments ago we got the third and final "shocker" in this series of stunning disclosures by Goldman, this time involving Goldman's own "unlit" venue - one involving its own Dark Pool - the infamous, and market dominant Sigma X, which according to the WSJ, is about to be shut down!

This very interesting Zero Hedge article was posted on their website late on Tuesday evening EDT---and it's definitely worth reading.  I thank reader Bryan Cooke for digging it up for us.

Florida's orange production is declining

This year’s Florida orange crop is approaching the fruit’s lowest harvest in decades, and experts say a deadly bacteria that’s infecting the trees is to blame.

The U.S. Department of Agriculture on Wednesday released its citrus production forecast and the news isn’t good. The 2013-2014 orange forecast is 110 million boxes, down 4 percent from last month, and 18 percent less than last season’s final production figure.

Orange harvesting ends in June, and if the crop doesn’t decline further, it will barely exceed the 110.2 million orange boxes harvested in 1989-90 following the worst freeze in Florida citrus history.

Andrew Meadows, a spokesman for the Lakeland-based Florida Citrus Mutual, said that citrus greening disease is the reason for the crop decline.

This very interesting news item, filed from St. Petersburg in Florida, was posted on The Washington Post's website yesterday afternoon---and I thank West Virginia reader Elliot Simon for sharing it with us.

Snowden: NSA lies about me not trying to spur internal investigation

The United States National Security Agency was well aware that Edward Snowden was troubled by the spy office’s activities, the intelligence contractor-turned-leaker tells Vanity Fair, and that evidence exists to confirm that claim.

Ahead of a 20,000-word article on the former NSA analyst expected to be published later this week, the US-based magazine has released excerpts from an interview with Snowden in which he specifically calls for the intelligence agency to come clean about allegations concerning any complaints he may have made before he began to leak classified documents to the press.

Snowden, 30, said last month in testimony delivered to the European Parliament that he spoke up to "more than 10 distinct officials” about his concerns regarding the NSA’s activities, but was eventually driven to leak documents about those programs due to the lack of response he received. He is currently in Russia after being granted asylum there, and is wanted in the US for disclosing classified documents.

This is the first of many stories from the Russia Today website---and the first of many stories that are courtesy of Roy Stephens.  This one was posted on their Internet site yesterday afternoon Moscow time.

NSA monitors WiFi on US planes 'in violation' of privacy laws

Companies that provide WiFi on US domestic flights are handing over their data to the NSA, adapting their technology to allow security services new powers to spy on passengers. In doing so, they may be in violation of privacy laws.

In a letter leaked to Wired, Gogo, the leading provider of inflight WiFi in the US, admitted to violating the requirements of the Communications Assistance for Law Enforcement Act (CALEA). The act is part of a wiretapping law passed in 1994 that requires telecoms carriers to provide law enforcement with a backdoor in their systems to monitor telephone and broadband communications.

Gogo states in the letter to the Federal Communications Commission that it added new capabilities to its service that go beyond CALEA, at the behest of law enforcement agencies.

This incredible story showed up in my in-box long after I'd filed today's column, but Julie over at Casey Research was kind enough to add it to today's column---and I thank South African reader B.V. for finding it for us.  It's a must read.

German Minister: 'U.S. Operating Without any Kind of Boundaries'

SPIEGEL: Minister de Maizière, nine weeks ago at the Munich Security Conference you demanded that the United States provide detailed information about its spying activities in Germany. Have you received anything from them yet?

De Maizière: The information we have received thus far is insufficient. That remains my opinion. The US' surveillance measures are largely a result of its security needs, but they are being implemented in an excessive, boundless fashion.

SPIEGEL: How did you come to this conclusion?

De Maizière: If even two-thirds of what Edward Snowden has presented or what has been presented with his name cited as the source is true, then I would conclude that the USA is operating without any kind of boundaries.

SPIEGEL: Are you hopeful that anything will change in the near future -- perhaps when Chancellor Angela Merkel visits President Barack Obama in May?

De Maizière: I have low expectations that further talks will prove to be successful. But of course these talks are continuing.

SPIEGEL: So you don't expect a no-spy agreement to result from these discussions?

De Maizière: Going by everything that I've heard, that's the case.

As I've been saying for years, dear reader---the U.S.A. has gone rogue.  This interview showed up on the German website spiegel.de at noon Europe time yesterday---and it's the second offering in a row from Roy Stephens.

Triple Whammy Shocker: Goldman Shutting Down Sigma X?

Posted: 10 Apr 2014 02:23 AM PDT

Triple Whammy Shocker: Goldman Shutting Down Sigma X?

Back on March 21, before the release of Michael Lewis' Flash Boys and before the infamous 60 Minutes interview, when Goldman COO Gary Cohn wrote his infamous WSJ Op-ed bashing HFT, it was clear that something was afoot. That something became promptly clear when it was revealed that Goldman is among the core backers of the pseudo dark-pool IEX exchange popularized as the protagonist in Flash Boys, and juxtaposed to the front-running, and faceless, HFT antagonist that Lewis managed to demonize so well in the span of a few hundred pages, he promptly provoked a renewed investigation by the FBI, the SEC and DOJ into HFT.

A few days later, the shocker became a double whammy when Goldman announced that in addition to turning its back on HFT which had served it so well for years, the firm would also say goodbye to the NYSE and its designated market maker post, the last remaining legacy of its $6.5 billion Spear Ledds & Kellogg acquisition from 2000. That Goldman was asking mere pennies on the dollar for the residual assets also showed just how "highly" Goldman valued said legacy operation.

Moments ago we got the third and final "shocker" in this series of stunning disclosures by Goldman, this time involving Goldman's own "unlit" venue - one involving its own Dark Pool - the infamous, and market dominant Sigma X, which according to the WSJ, is about to be shut down!

This very interesting Zero Hedge article was posted on their website late on Tuesday evening EDT---and it's definitely worth reading.  I thank reader Bryan Cooke for digging it up for us.

Russia can’t support Ukrainian economy forever- Putin

Posted: 10 Apr 2014 02:23 AM PDT

Russia can't support Ukrainian economy forever- Putin

Russia can’t continue to prop up Ukraine’s faltering economy, and this responsibility should fall on the US and EU, which have recognized the authorities in Kiev but not yet given one dollar to support the economy, President Putin has said.

“The situation is - to put it kindly, strange. It’s known our partners in Europe have recognized the legitimacy of the government in Kiev, yet have done nothing to support Ukraine – not even one dollar or one euro,” Putin said at a meeting with government officials at his residence outside of Moscow.

“The Russian Federation doesn’t recognize the legitimacy of the authorities in Kiev, but it keeps providing economic support and subsidizing the economy of Ukraine with hundreds of millions and billions of dollars. This situation can’t last indefinitely,” Putin said.

You couldn't make this stuff up, dear reader.  This must read story was posted on the Russia Today website early yesterday afternoon Moscow time---and once again I thank Roy S. for sharing it with us.

Ukraine’s Rust Belt Fears Ruin as Putin Threatens Imports

Posted: 10 Apr 2014 02:23 AM PDT

Ukraine's Rust Belt Fears Ruin as Putin Threatens Imports

For Pavel Cesnek, the future of his sprawling locomotive maker in eastern Ukraine lies in the balance and its fate will be sealed across the Russian border.

The head of Luganskteplovoz in the city of Luhansk rules over a communist-era factory and workforce of 6,500 that builds trains primarily for state-run OAO Russian Railways. Like many local businessmen, he fears the pro-European government in Kiev will antagonize the Kremlin into unleashing trade restrictions that could wipe out industry across Ukraine’s rust belt.

“Trade ties with Russia are an existential question -- to be or not to be,” said the 40-year-old Czech. “Without Russia, there’d be a total collapse for me, my workers and my owner.”

This very interesting news item was posted on the Bloomberg website yesterday afternoon Denver time---and once again my thanks go out to Roy Stephens.

Three King World News Blogs

Posted: 10 Apr 2014 02:23 AM PDT

Three King World News Blogs

1. Gerald Celente: "This Disastrous Event is Going to Shock the World"  2. Rick Rule: "Silver---and a Golden Opportunity For Investors"  3. David P.: "Shocking Charts Show Silver Set For a Staggering $70 Surge"

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests, to them, and not to me. Thank you. - Ed]

Perth Mint: Monthly Sales for March 2014

Posted: 10 Apr 2014 02:23 AM PDT

Perth Mint: Monthly Sales for March 2014

According to Bron Suchecki over at The Perth Mint: "The chart below shows our sales of minted bars and coins, with gold down and silver up on last month. However, minted products are only about 10% by volume, with our cast bar sales usually over 600,000 oz/ a month, mostly in the form kilobars into China – premiums have come off and back to normal. Perth Mint Depository is stable with a lot of buying and selling by clients."

This tiny blog, with an excellent chart, is worth a few seconds of your time---and I thank Bron for sending it our way.

Platinum prices stagnant given supply - for now

Posted: 10 Apr 2014 02:23 AM PDT

Platinum prices stagnant given supply - for now

Michael Kavanagh, Noah Capital Markets metals and mining analyst, told Mineweb that if the platinum price hasn't moved, then it means there is no shortage in supply. “It looks like the buyers of the product in the open market have all the platinum they need," Kavanagh said. "And at the end of the day, the price goes up if there is a need of metals. So clearly there is no fear that they (markets) will not get it in the near future."

Ryan Seaborne, an equity analyst at 36one Asset Management, said out of the three major producers of platinum, Anglo American Platinum had the most on ground stock, while Lonmin stock was nearly depleted and Impala Platinum's was nearing its end. Amplats stock can last towards the middle of the year, Seaborne estimated. On price, he said it was stagnant - so far- because there had been no supply response. But if the unions held out the platinum price could go higher. He also claimed all three companies made a gentleman’s agreement to help each other in meeting contractual obligations. “Amplats will most likely assist with helping the others reach their (contractual) obligations and if the strike ends soon there is no risk to supply,” he said.

What no serious precious metal analysts knows, or will admit to if they do, is that 3 or 4 U.S. bullion banks, probably led by JPMorgan, hold a 19% short-side corner in the Comex platinum market, along with a 23% short-side corner in the palladium market---according to last week's Bank Participation Report.  In such tiny and illiquid markets, the price will go nowhere if the dominant players won't allow them to.  This tiny article, filed from Johannesburg, was posted on the mineweb.com Internet site yesterday.

Jay Taylor: Prepare for bull market to shock even most ardent goldbugs

Posted: 10 Apr 2014 02:23 AM PDT

Jay Taylor: Prepare for bull market to shock even most ardent goldbugs

This interview with Jay by The Gold Report showed up on the mineweb.com Internet site earlier this morning British Summer Time---and it's a must read.  I've known Jay for about ten years---and with the possible exception of Leonard Melman---a nicer man you could never hope to meet.

Why no direct relationship between price and stocks

Posted: 10 Apr 2014 01:45 AM PDT

A great article by Keith Weiner explaining why open interest in gold has fallen but in silver it has increased - hint: to do with profit from carrying gold. Apart from that, it is also useful for those who falsely think that if the price goes up (or down) then open interest should increase (or fall), and also that ETF holdings should increase (or decrease).

It does puzzle me why people think there should be a direct relationship between open interest or ETF stocks and price, given that they don't have any problem understanding that the price of a company's shares can go up and down while the number of shares on issues doesn't change.

For a company ownership of shares is just transfered between buyer and seller and that doesn't drive price. Price is a function of there being more buying pressure resulting in buyers not being willing to sit around waiting for people to accept their bids and instead accepting seller's offers (and vice versa).

The same can happen with precious metal ETFs. ETFs shares are only created or redeemed if the person on the other side of the trade is someone with no interest in the ETF (ie a market maker). Where existing holders sell to new buyers no new shares need to be created, yet the price can still go up if the buyers are willing to accept the seller's offers (and the non-market maker sellers are adjusting their offers to match gold prices on Comex or the spot market.

Also, check out Warren's latest bullion bars project post, where he notes that 70% of bars added to GLD during 2013 where previously in the GLD list, demonstrating that "there is a really large stock of gold in London and that it doesn't necessarily all vanish instantly to China". He also predicts the return of specific bar numbers by July 30th - now that's a real forecast, no vague hedged cop out wording.

Gold: Confirmation Of 1,315 Break Needed For Further Bullish

Posted: 10 Apr 2014 12:40 AM PDT

investing

Bullion and Energy Market Commentary

Posted: 10 Apr 2014 12:35 AM PDT

oilngold

TECHNICAL Gold 1320 is a Possible Reaction Level

Posted: 10 Apr 2014 12:35 AM PDT

dailyfx

US Dollar Selloff Continues as Gold, Crude Oil and SPX 500 Score Gains

Posted: 10 Apr 2014 12:30 AM PDT

dailyfx

Are We On The Cusp Of A Bull Market For The Ages In Gold?

Posted: 10 Apr 2014 12:25 AM PDT

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Gold holds above US$1300oz technical level

Posted: 10 Apr 2014 12:20 AM PDT

proactiveinvestors

Mirable Dictu! US Regulators Impose Tougher Rules on Bank Capital

Posted: 09 Apr 2014 11:58 PM PDT

It’s easy to be cynical about the state of bank regulations, since the regulators themselves have for the most part been badly captured by the industry. So it’s important to give them credit when they take a meaningful step in the right direction.

Readers of Sheila Bair’s book Bull by the Horns may recall that one of her big fights was to implement a simple leverage ratio as the test of the adequacy of bank capital. Of course in banking nothing is simple; we’ll get to some of the complexities in due course. The original Basel accords, and Basel II, which had been implemented in Europe before the crisis and went live in the US in 2008, allow banks to risk weight their assets for the calculation of how much capital they need to hold against it. Certain assets, like sovereign debt, carried a zero risk weight (as in banks had to hold no capital against it) and AAA mortgage securities had a low risk weight. Guess what banks loaded up on?

Bair determined that banks that looked to have a decent level of capital per the Basel accords but were highly levered when measured by a simple equity to total assets ratio were the ones most likely to fail. She enlisted the Fed’s Danny Tarullo to campaign for a simple leverage ratio. They got 3% into Basel III, which was better than nothing but short of what they wanted.

Remarkably, today the Fed, FDIC and Office of the Comptroller of the Currency announced that the US was implementing a 5% simple leverage ratio for big bank. From the OCC’s press release:

The final rule applies to U.S. top-tier bank holding companies with more than $700 billion in consolidated total assets or more than $10 trillion in assets under custody (covered BHCs) and their insured depository institution (IDI) subsidiaries. Covered BHCs must maintain a leverage buffer greater than 2 percentage points above the minimum supplementary leverage ratio requirement of 3 percent, for a total of more than 5 percent, to avoid restrictions on capital distributions and discretionary bonus payments. IDI subsidiaries of covered BHCs must maintain at least a 6 percent supplementary leverage ratio to be considered "well capitalized" under the agencies' prompt corrective action framework. The final rule, which has an effective date of January 1, 2018, currently applies to eight large U.S. banking organizations that meet the size thresholds and their IDI subsidiaries. The final rule is substantively the same as the rule proposed by the banking agencies in July 2013.

And perhaps more important, their notion of what has to be counted in determining the level of total balance sheet exposures is more comprehensive than the version the Europeans are using. And the simple leverage ratio is 6% in the banks’ federally insured depositaries, which is where they’ve chosen to park risky derivatives positions.

Moreover, the difference between the more permissive European view of what gets counted as a balance sheet exposure and the US posture is not trivial. Matt Levine at Bloomberg looks at Morgan Stanley, the bank that will come up the most short despite having Tier 1 capital of 7.3% relative to its audited financials. But that’s not how regulators look at it:

Thinking about the actual size of a bank’s assets will lead to madness. There’s nothing actual about a bank. A bank is a pure creature of accounting; how much of it there is depends entirely on what you are trying to measure. One form of measurement is U.S. generally accepted accounting principles, which have their purposes, one of which is to be included in publicly released financial statements. Under U.S. GAAP, Morgan Stanley has $832.7 billion of assets, and so Morgan Stanley tells you that that’s how many assets it has.

Another form of measurement is the thing used to calculate the leverage ratio. This manages to find rather more assets at Morgan Stanley. Where does it find them? Oh, places. Generally, the new rule counts “total leverage exposure” to include:

• GAAP assets;
• potential future exposures for derivatives;
• other adjustments for derivatives to back out some cash collateral netting;
• lending commitments;
• sold credit protection;
• “repo-style” transactions;
• “all other off-balance sheet exposures”; and
• probably some other things too?

So you just dump all those things on the table, without risk-weighting them, and … wait no hang on that’s not true either. The claim that assets are not risk-weighted for the leverage ratio turns out to be totally untrue. GAAP assets are, for these purposes, assigned a risk weighting of 100 percent, whether they’re Treasuries or junk bonds. But everything else gets its own specialized weight. Lending commitments are risk-weighted at 10 percent of the amount of the commitment. Derivatives are weighted at 100 percent of notional, for sold credit derivatives,4 or 10 percent, for bought high-yield credit derivatives or 5+ year equity derivatives, or 8 percent, for 1-5 year equity derivatives or 5+ year precious metal derivatives (except gold, which is risk-weighted at 7.5 percent), or 6 percent, for 1-year-or-less equity derivatives, or 5 percent, for bought investment-grade credit derivatives or 1-5 year foreign exchange derivatives, or 1.5 percent, for 5+ year interest rate derivatives, or … you get the idea. Or do you? Is there an idea?

Risk Magazine, which was correctly worried that these tougher rules were likely to be implemented, flagged what businesses would be most affected:

Banks have since downplayed the impact during earnings calls, but the tougher ratio will deal a heavy blow to certain businesses – custody, repo and derivatives trading, for example.

What can banks do about it? Well, when it comes to derivatives, one option is to clean house. Swap portfolios invariably comprise layer upon layer of partially offsetting trades that amount to a relatively small net risk position, but it's the gross number that matters from the point of view of the leverage ratio. So, tearing up unnecessary positions can be a big help, and many dealers have thrown a lot of energy into this compression process over the past year. But as well as being a science, this is also an art – and one that smaller institutions admit they have not yet mastered.

US regulators had from time to time said they wanted to make it more costly and difficult to be too big to fail; this is one way to go about it. The New York Times reports that regulators estimate that the banks subject to this rule will have to raise as much as $68 billion in capital by 2018. They can do that by selling new equity, shedding operations by selling them, shrinking their balance sheets, or retaining more earnings. The most logical route, if banking weren’t an exercise in looting, would be to retain more earnings, which means lowering pay levels. But that may wind up happening regardless as formerly attractive-looking business become less so under the new rules.

John Cassidy at the New Yorker discussed how this new rule was implemented despite the usual vigorous financial lobbyist campaign against it, but that this could augur in more restrictions on banks’ freewheeling ways:

The new requirements certainly don't rule out the possibility of another banking crisis, and they don't solve the too-big-to-fail model. But they make the former less likely, and they go some way toward addressing the negative externality that lies at the heart of the latter. Another promising thing about them is that they can be further developed. Once you accept the logic of beefing up capital requirements, there is nothing sacred, or particularly persuasive, about stopping at five per cent…

In her statement, Yellen talked about extending the new rule to international banks that are active in the United States, a possibility that would be allowed under the latest version of Basel III. Daniel Tarullo, a Fed governor who has been one of the strongest proponents of using capital requirements as a regulatory tool, reiterated his call for a surcharge on "risk-based" capital, which could discourage the big banks from relying on short-term funding that tends to dry up in a crisis. These are both eminently reasonable ideas, and a few years ago I would have said that they had little chance of being enacted. But the new rule shows that some progress is indeed possible.

While one robin does not make a spring, this is an important, and unambiguously positive development. Giving the authorities credit for moving in the right direction will encourage them to do more of the same.

Start-up Marka IPO raises eyebrows while Emirates REIT IPO higher in first week and Gold Holding prepares IPO

Posted: 09 Apr 2014 10:33 PM PDT

A start-up company in the fast moving fashion stores, restaurants and cafes sector called Marka will launch its IPO to raise $135 million on the Dubai Financial Market from 13-24th April, with public subscriptions open for 55 per cent of the offer. The new venture obviously has no experience or track record in the sector as a start-up, so its business plans are awaited with interest by investors.

This is not quite the South Sea Bubble when a company was launched ‘for great purposes whose business plan was to be kept a secret’. But it is a leap of faith for shareholders and a substantial additional risk.

Sketchy plans

The precedents are not all bad. Emaar Properties was once such a start-up with no business track record. Today it dominates the DFM. Then again it did launch with Mohamad Alabbar as CEO and Dubai Government as a major shareholder.

A statement declared Marka’s ambition to open more than 100 outlets with half the capital raised in the IPO paying for fashion stores and the other half going towards new restaurants and cafes. Speculators will be more interested on how the share price will perform.

IPOs on the DFM are traditionally underpriced due to the arcane listing process with all shares starting at one dirham. That could give them a better pop on day one than the Emirates REIT this week which was up 5.7 per cent. It listed on the Nasdaq Dubai that uses a book building system to establish the launch price.

Still this is unlikely to be the last we hear of IPOs as long as the current stock market bull run lasts, and with a 140 per cent year-on-year gain there must be worries that it will run out of steam before the flow of IPOs is done.

Gold Holding IPO

Last night we attended a reception for Gold Holding at the Dubai International Financial Centre’s Ritz-Carlton and talked to COO Andre Gauthier about its preparations for an IPO on the Nasdaq Dubai, although it has yet to file an application. Gold Holding is owned by private shareholders including Mr. Gauthier and members of the royal families of Abu Dhabi, Qatar, Kuwait and Saudi Arabia.

It’s a fully integrated gold company from exploration to production and retail sales that fully capitalises on the zero taxation benefits of being based in Dubai. Mr. Gauthier is a well respected figure in the gold mining community and also president of Vancouver-based Lara Exploration.

Readers will know that ArabianMoney reckons gold is still yet to have its greatest price rises and Gold Holding would offer a unique local, listed investment to lever this market. We liked the sound of it.

Why you should prepare for the collapse of the US dollar and buy real assets

Posted: 09 Apr 2014 09:37 PM PDT

Should investors prepare for the coming collapse of the US dollar? Is the US economy approaching take-off speed?

James Rickards, managing director at Tangent Capital Partners and author of ‘The Death of Money,’ explains his view of a coming collapse for the US dollar and the role confidence plays in supporting the currency on Bloomberg Television's ‘Market Makers’…
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