Monday, March 6, 2017

Gold World News Flash

Gold World News Flash

Trapped Longs In Miners As Gold Poised For Fed Fuelled Fall

Posted: 06 Mar 2017 01:10 AM PST

Sk Options Trading

Worried You Might Buy Bitcoin or Gold, Report 5 Mar, 2017

Posted: 05 Mar 2017 09:45 PM PST

The price of gold has been rising, but perhaps not enough to suit the hot money. Meanwhile, the price of bitcoin has shot up even faster. From $412, one year ago, to $1290 on Friday, it has gained over 200% (and, unlike gold, we can say that bitcoin went up—it's a speculative asset that goes up and down with no particular limit). Compared to the price action in bitcoin, gold seems boring. While this is a virtue for gold to be used as money (and a vice for bitcoin), it does tend to attract those who just want to get into the hottest casino du jure.

Perhaps predictably, we saw an ad from a gold bullion dealer. This well-known dealer is comparing gold to bitcoin, and urging customers to stick with gold because of gold's potential for price appreciation. We would not recommend this argument. Whatever the merits of gold may be, going up faster than bitcoin is not among them.

We spotted an ad today from a mainstream financial adviser. The ad urged clients not to buy gold. This firm should have little need to worry. Stocks have been in a long, long, endless, forever, never-to-end bull market. Gold is not doing anything exciting now. $1234? "WhatEVAH (roll eyes)!" Stocks, well, the prices just keep on going up. Like we said, nothing whatsoever to worry about. Other than declining dividend yields. There's more than enough irony to go around.

Speaking of dividend yield, that leads us to an idea. Readers know that we like to compare the yield of one investment to another. This is why we quote the basis as an annualized percentage. You can compare basis to LIBOR easily. And also stocks. Or anything else.

For example, the basis for December—a maturity of well under a year—is 1.2%. The dividend yield of the S&P stocks is just 1.9%. For that extra 70bps, you are taking a number of known risks, and some unknown risks too.

It is worth noting that the yield on the 10-year Treasury is up to 2.5%. Yes, that's right, you are paid less for the risk of investing in big corporations than you are for holding the risk free asset. Of course, the Treasury bond is not really risk free. But in any case, if the Treasury defaults then it's safe to assume most corporations will be destroyed, if not our whole civilization.

We have heard the mainstream theory so many times, our heads are hurting. Here are the myths: the Chinese are selling, inflation is coming, and the economy is picking up.

China is selling. The Chinese people are selling the yuan to buy dollars. When they can get through the increasingly-strict capital controls. The People's Bank of China takes the other side of the trade—selling dollars and buying yuan—to keep the yuan from collapsing. When a foreign central bank holds dollars, it does not hold paper notes. Nor does it deposit them in a commercial bank. It holds Treasury bonds. Its sales of Treasurys may look scary, but that is just the seen. The unseen is that the Chinese people are buying dollars. Those dollars come back to the Treasury market one way or the other.

Inflation is coming. The Fed is printing, the quantity of money is going up, there will be demand-pull, etc. Well, if that were true then the last place you would want to be is in an asset whose price is set by the net present value of its future free cash flows. Or at least the price should be. If you think that stock prices have to rise in inflationary periods, look at what happened in the 1970's.

The economy is picking up. What can we say? There are two views on this. One has seen (or looked for) green shoots and nascent recoveries since the crisis. The other has seen rising asset prices, and with that a small wealth effect. We will not opine about Trump and the future of the economy here. We just wish to note that junk bonds have not sold off the way Treasurys have. Junk bonds have hardly sold off at all.

Quite the opposite. They have been massively bid up (i.e. yield has been crushed). We submit for your consideration that if inflation was coming and/or the economy was picking up, you would do even worse in junk bonds than in S&P stocks.

The 10-year Treasury hit its low yield (so far) of 1.3% in July. Since then, it has been a wild ride mostly up to 2.6% in December. Since then it's been choppy but falling (i.e. prices rising a bit).

July also happens to be when the yield on the Swiss 10-year government bond began rising. It made a low of -0.6% (yes, negative). Since then, the yield has gone up (i.e. bond price has gone down) to near zero in December. It is currently -0.1%.

In Japan, the same occurred. Low yield on the 10-year government bond in July was -0.3%. High was hit in December. Still elevated now, but off the December high.

It's almost as if government bond yields around the world were moved by the same drivers, or even connected by some kind of arbitrage…

Whatever the cause of this worldwide selloff of government bonds may be, it is not selling by China. It is not inflation. It is not expectations that the economy will take off under Trump.

Maybe it's just traders looking at price charts, buying because stocks are going up?

This week, the prices of the metals dropped. As always, the question is what happened to the fundamentals?

Below, we will show the only true picture of the gold and silver supply and demand. But first, the price and ratio charts.

The Prices of Gold and Silver
The Prices of Gold and Silver

Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. It moved sideways again this week.

The Ratio of the Gold Price to the Silver Price
The Ratio of the Gold Price to the Silver Price

For each metal, we will look at a graph of the basis and cobasis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide brief commentary. The dollar will be represented in green, the basis in blue and cobasis in red.

Here is the gold graph.

The Gold Basis and Cobasis and the Dollar Price
The Gold Basis and Cobasis and the Dollar Price

This week, our old friend returned. He is the correlation between the price of the gold (i.e. inverse of the price of gold in dollar terms) and the cobasis (i.e. our scarcity indicator). They had been moving together.

This week, they met up for old time's sake. The dollar is up from 24.75mg gold to 25.20mg. And the cobasis is up from -0.41% to -0.16%. At least in the April contract which is rapidly approaching First Notice Day, and already under downward pressure. For farther contracts, the cobasis is up, but not that much.

Our calculated fundamental price dipped twenty bucks. It's still $150 over the market price.

Now let's look at silver.

The Silver Basis and Cobasis and the Dollar Price
The Silver Basis and Cobasis and the Dollar Price

The cobasis in silver move up big-time as well.

The silver fundamental price also fell, about fifteen cents.

© 2017 Monetary Metals Radio: Andrew Maguire and Robert Ian, and your host Chris Waltzek

Posted: 05 Mar 2017 09:00 PM PST

Andrew Maguire, of Andrew Maguire Gold Trading a 40 year gold market veteran and whistleblower, returns with startling news on the precious metals. Our guest examines the minutiae of the markets noting that decades of manipulation has broken the gold / silver paper markets. As a result, the physical market is reasserting dominance over paper promises. Analysis of the options markets suggests that the 6 major bullion banks via the BOE are locked into losing short-sale positions.

Arizona Challenges the Fed's Money Monopoly

Posted: 05 Mar 2017 08:15 PM PST

History shows that, if individuals have the freedom to choose what to use as money, they will likely opt for gold or silver. Of course, modern politicians and their Keynesian enablers despise the gold or silver standard. This is because linking a currency to a precious metal limits the ability of central banks to finance the growth of the welfare-warfare state via the inflation tax. This forces politicians to finance big government much more with direct means of taxation.

Citi's Matt King: "We Think You Should Sell"

Posted: 05 Mar 2017 07:27 PM PST

With spreads at post-crisis tights, equities making new highs, and new issues oversubscribed, markets are clearly exuberant. But could it be rational this time? We're not convinced.

      - Citi's Matt King

In a surprisingly bearish report, Citi's Matt King has issued a new, long-awaited note in which he asks rhetorically "what's a manager supposed to do when by early March your asset class has already exceeded your expectation for full-year returns? Take profit and take the rest of the year off, of course! And if it carries on rallying, go outright short!" And yet, he adds, "somehow nobody seems to want to." The reason for that, according to King is that as we showed demonstrated last week using JPM and BofA data, "the rally owes more to inflows and short covering than to institutional investor exuberance. And part is that the economic data do seem genuinely to be improving."

Nonetheless, King's assessment of the current environment is downbeat and to the point: "sell we think you should, not only in € credit (as we advised a couple of weeks ago) but also more broadly."

He then lays out seven reasons "not to trust your inner Trump", which are as follows:

1. The Fed may stop the inflow party

The Citi strategist begins by noting that "perhaps the best reason to remain long is that institutional investors seem not to be." He adds that the vast majority of the FI investors we have seen in recent weeks still believe in secular stagnation, and further notes that "to judge from our survey, overall positions have been creeping longer, but this is due overwhelmingly to positions among $ investors: those in € and £ credit have actually been falling (Figure 1)."

King joins the strategist bandwagon pointing out to the source of recent inflows and states that "the principal driver of investors' buying seems to have been a response to mutual fund inflows. Not only equity funds but also bond (including both credit and EM) mutual funds have had their biggest 4-week run of inflows since 2013 (Figure 2). Numbers in Europe have been slightly weaker than the US-dominated  global totals, but the pattern is similar."

There is a problem with that: "But while this too might normally be a reason for bullishness, we doubt that the current pace is sustainable."

Quite apart from the historical inability to maintain this flow rate for long, there is the small problem of the Fed. While at this point a hike on March 15 has been so well telegraphed that it ought not to cause a 2013-style tantrum, we do think much of investors' willingness to pile into risky assets stems from the lack of return on cash. Each and every additional bp in risk-free yield is likely to make investors think twice about the risk they are running in order to generate return elsewhere.

It is also worth noting that over the past two weeks, BofA has caveated that while retail inflows are seemingly relentless, institutions and hedge funds have recently turned sellers into the rally, and are aggressively offloading to retail, traditionally a market-top indicator. 

2. A rise in real yields should weigh on risk assets

King's second reason why he thinks the rally has been so strong is that real yields have remained surprisingly low. Even as nominal yields have risen since the US election, almost all of the action has been in inflation (and growth) expectations (Figure 3). Traditionally this is positive for risk assets; in contrast, when real yields rise, it weighs on risk assets – albeit sometimes with a lag (Figure 4).

Citi suspects that what has made this move possible is the market's willingness to focus on all the potential growth positives and yet shrug off the increasing signs of hawkishness from the Fed. "Such a position seems increasingly untenable on two counts. First, rates markets have now finally adjusted to the new mood music from the Fed, and seem increasingly likely to be confronted with an actual hike; second, the rally in credit was starting to look out of whack even with today's real yield levels, never mind following any proper adjustment to follow."

3. Central bank support is set to diminish

While it is no secret that King has long been a closet adherent to Austrian Monetary Theory, in his latest piece King reminds regular readers that one of his favourite model for markets' behaviour in recent years is their correlation with central bank liquidity. While the scale of their purchases over the past half-year or so has been close to record highs, it is already diminishing, and set to diminish further (Figure 5).

He brings attention to BoJ purchases, which in recent months have almost halved since their shift to yield targeting; furthermore ECB purchases will be reduced by one quarter from this month on. In EM, FX reserves have held up well since February last year, and in recent months have been propped up as EM portfolio inflows have gone a long way towards offsetting a worrying trend towards net FDI outflows.

But this too we suspect was aided by the Fed being on hold, and is liable to face renewed pressure as it returns to rate hikes. Besides, the extent of the rally once again seems excessive even for today's level of CB purchases, never mind relative to its likely future trajectory (Figure 6).

In short, absent a material shift in central bank posture, the traditional driver of risk asset upside will be gone for the foreseeable future.

4. It's the stimulus, stupid

And then there is China. 

As a recent NY Fed report pointed out, "China Accounts For Half Of All Global Debt Created Since 2005." This echoes what we have been writing about for years, starting back in 2013 showing "How In Five Short Years, China Humiliated The World's Central Banks", when we showed that in just the brief period since the financial crisis "Chinese bank assets (and by implication liabilities) have grown by an astounding $15 trillion, bringing the total to over $24 trillion. In other words, China has expanded its financial balance sheet by 50% more than the assets of all global central banks combined."

This, too, is a worry for the Citi strategist, who writes that "continuing with the idea that market strength owes more to a wave of technical support than to fundamentals, we remain convinced that the recent explosion of credit in China – visible in the monthly total social financing numbers – is of greater global significance than is widely recognized."

King posits that while it is hard to prove empirically, at an anecdotal level almost every place you visit from San Francisco to Sydney seems to be awash with stories of Chinese investment propping up prices. While most of this is in real estate, King thinks the effects of credit creation spill over from one asset class to another, and increasingly from one region to another also.

The punchline: "fully 80% of the world's private sector credit creation at present is occurring in China. The evolution of this global total bears at least a passing resemblance to global asset prices (Figure 7)."

Which leads us to the $64 trillion question: is this pace of credit expansion sustainable? Citi's answer: "we rather doubt it."

Chinese numbers tend to reach a seasonal high in January as new lending quotas are granted but then to fall off sharply thereafter. And the positive impulse from the recent acceleration in credit creation in China will in any case be hard to sustain just because the absolute rate of growth is already so high. If anything, the recent tendency towards renewed FX outflows – even in the face of tightening capital controls – speaks to a reduction in demand for investment in China itself (Figure 8), itself encouraged by a series of measures designed to introduce brakes on lending, in the property sector in particular. To our minds the wave of recent strong data in China, and associated run-up in many commodity prices which has itself fuelled optimism about a global reflation trade, owes less to a durable upswing in growth – and more to an unsustainable temporary resurgence in credit – than has been reported.

At this point it is worth reminding readers of a recent note from UBS which likewise looked at the global credit impulse and found that it had "suddenly collapse to negative", primarily as a result of an annualized slowdown in Chinese credit creation.

There is some hope that US or DM credit stimulus would be able to take over even if Chinese stimulus wanes – and indeed, exactly such a hope would seem to be one of the drivers of both the rally and the improvement in much DM survey data. The hope here is that abnormally high savings rates in various developing nations would propel a spending surge. However, King then quickly shoots down the suggestion saying that such an alternative source of credit creation "seems unlikely." His skepticism is borne from a simple problem of scale: "Corporate balance sheets are already highly levered. Besides, the sheer scale of Chinese borrowing – $3tn/year relative to a mere $800bn in US and Europe combined – makes it difficult to see how these could substitute."

5. Just how strong are growth prospects really?

To provide a counterpoint to his bearish points, King then asks "what of the counterargument to all this, namely that markets are merely responding to a marked pick-up in global growth prospects, sending secular stagnationists like ourselves scurrying for cover and raising the prospect of a longawaited return to 'normal' growth?" He admits that there has been a pickup in both growth and inflation data, and indeed in corporate earnings. And we do buy the argument that, while corporate capex has been weak relative to profits and to GDP, in outright terms it is not perhaps as moribund as pessimists (ourselves included) sometimes make it sound.

Alas, for the Citi strategist, this may be as good as it gets when it comes to global growth, which as DB warned several weeks ago has already started to revert lower, and furthermore as we have been pounding the table for weeks, the improvement has been mostly focused in "soft", survey-based data:

We are much more skeptical of the likelihood of a continued and self-reinforcing cycle of growth from here. Economic surprises have a natural tendency towards mean reversion and in the US are already starting to come down. A number of commentators are starting to point to the fact that the improvement in economic numbers is heavily skewed towards survey data as opposed to actual production and consumption numbers. US jobless claims at 40-year lows in any case suggests that further hiring may begin to contribute more to inflation than to real GDP

Meanwhile, on the corporate side, while leverage has been declining, recent reports fail to show any evidence of significant revenue growth – one of the vital missing ingredients that could conceivably lead to an acceleration of capex (Figure 11). Perhaps revenues were crimped by $ strength, but overall this suggests that the EPS growth everyone is getting excited about owes more to further cost cutting and perhaps currency moves (helping explain why the pick-up is greater in Europe than in the US) than it does to anything that will sustainably buoy the economy.

As King notes, the market internals already point to this:

Sadly, there are even signs that the equity market itself recognizes this likelihood. While the S&P has continued to rally at a headline level, our equity strategists have pointed out that it is again being driven by defensive sectors, not cyclicals – something historically more consistent with a rally in Treasury yields and a global reach-for-yield than with a growth-led reflation

And then there is the political front: Citi writes that its take on the Trump speech to Congress – with its repeated reference to infrastructure spend but general lack of detail – is that prospects for widespread fiscal reform remain so contentious, even among Republicans, that the likelihood that they drive a significant near-term boost to growth is actually dimming. "Once again, this suggests that markets may be getting ahead of themselves."

6. The beast that refuses to die – European political risk

And then there is Europe, and especially France where over the past few days, the market promptly assumed that any Le Pen risk overhang has been eliminated. Not so fast, according to King:

To judge from the recent rally in OATs, you could be forgiven for thinking that Macron had been elected already, and that euro break-up risk was once again off the table. Without wanting to get too involved in the labyrinthine twists and turns of what is already turning out to be a decidedly antagonistic campaign, we doubt very much that this risk is gone for good.

Citi then highlights four factors which keep it convinced European periphery risk and French domestic-law bonds are still a 'sell' here – and that renewed periphery widening may yet upset markets more broadly.

  • First, we still think there is the potential for significant nervousness among real money investors in the run-up to, and immediately after, the likely first-round Le Pen victory. Notwithstanding demand from domestic institutions for bonds that others wish to sell, experience suggests that there is nevertheless a point where domestics become full.
  • Second, we still meet too many investors convinced that the ECB will somehow come to the rescue, or even that the market would shrug off a Le Pen victory in the same way as it did Brexit. We could not disagree more strongly.
  • Third, even a Macron or Fillon victory seems unlikely to us to consign European political risk to the dustbin of history in the way some have been arguing. Populists everywhere still feel as though they are in the ascendant – just look at the disarray among Democrats in the US, or the heated response to Sir John Major's and Tony Blair's stands on Brexit in the UK.
  • Fourth and most persuasively, almost regardless of what you think the actual probabilities of euro break-up are, we still see too little by way of premia across markets to compensate investors for the potential risks. Central banks appear to have succeeded in squashing the volatility and fear out of markets without removing the underlying risk factors themselves. The more markets rally, the greater is the potential vulnerability.

7. Finally, Valuations

Last but by no means least, King brings up the most sensitive topic for the market: massively stretched valuations. His rhetorical question is simple: "Do you really want to be buying credit at post-crisis tights, or the S&P at a cyclically-adjusted P/E which has been exceeded only in 1998-2000 and 1929?"

He then notes that the "only metrics on which € credit does not look expensive in our regular Valuations Report are those that are survey-based" and cautions that to the extent that investors want such upside, "we think they would be better served targeting assets that rallied less hard in the first place – albeit in small doses. And yet there, too, our outright inclination is more towards reduction and waiting for a better entry point than towards adding at current levels."

King's Conclusion

Having taken a several month sabbatical, the bearish Matt King is officially back: "To sum up, markets seem increasingly to be pricing all of the upside and none of the downside. When there was a risk premium in spreads, and when a wave of central bank and private credit creation seemed likely to carry everything tighter regardless of underlying fundamentals, we were happy to run with that. But we think that risk premium has long gone, and that markets' strength owes more to those technicals than is widely recognized."

And a farewell anecdote from the bank's leading strategist:

When in the days of the Roman Republic generals were awarded the highest honour the Senate could bestow – the right to lead a "triumph", or parade of the spoils of war, into the city – it is said that a slave was required to stand at their side and whisper constantly into their ear that they too were merely mortal. With the Ides of March approaching – and, rather neatly, coinciding both with an FOMC meeting and with the Dutch elections – we think the timing would be good for investors too to remember to what they owe their improvement in fortunes. We don't think it's the arrival of a new emperor.

Is Retail Commercial Real Estate The Next Financial Implosion?

Posted: 05 Mar 2017 01:31 PM PST

There is much more happening in the rapidly rupturing retailing industry than a shift to online buying, a collapse in US shopping mall traffic and the decline of the "Department Store" model. Over two years ago Charles Hugh Smith and I produced a number of research videos ( 02 03 14 - THE RETAIL CRE DOMINO, 11 30 13 - LOOMING US RETAIL IMPLOSION: An Urgent Re-Think Required! ) outlining the alarming changes in US retailing. We revisited the current status of that work to find the rate of decline now even faster and accelerating.

Gold price suppression is breaking the paper gold market, Maguire tells GoldSeek Radio

Posted: 05 Mar 2017 11:03 AM PST

2:05p ET Sunday, March 5, 2017

Dear Friend of GATA and Gold:

Interviewed by GoldSeek Radio's Chris Waltzek, London metals trader Andrew Maguire says the longstanding gold price suppression scheme is breaking the paper gold market, the physical gold market is starting to challenge it, and bullion bank shorts cannot rely on another bailout by central banks. The interview can be heard at GoldSeek Radio here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


K92 Mining is producing much more gold than planned

Company Announcement
Wednesday, March 1, 2017

K92 Mining Inc. is pleased to report that mining production has shown a steady ramp up over the last three months with ore tonnes mined being over 50 percent above budget in January while contained gold ounces were almost 20 percent above budget.

The company mined more than 8,000 ore tonnes by February 24 and is on target to achieve 10,000 tonnes by month end, which is 40 percent above February budget. The increased ore production is in part due to significant lower-grade ore being identified outside the planned ore envelope, which was identified by our ongoing grade-control program, highlighting the importance and success of this program. ...

... For the remainder of the announcement:

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Wasn’t The Dollar Supposed To Go “UP” On A Rate Hike?

Posted: 05 Mar 2017 08:05 AM PST

The dollar has been one of the biggest contrarian trades I have seen in years. Every time the market is so certain about the direction it will run, it does the exact opposite and often in extreme fashion. In my last weekend update, I noted how we called the multi-year rally off the 2011 lows when the market was expecting the dollar to crash due to all the QE. And, I also noted how the dollar has been moving down after the Fed has raised rates, despite the common expectations that the dollar should rise.

Avery Goodman: Explosion in Comex gold offtake hints at LBMA defaults

Posted: 05 Mar 2017 07:34 AM PST

10:35a ET Sunday, March 5, 2017

Dear Friend of GATA and Gold:

Securities lawyer and market analyst Avery Goodman writes this weekend that the recent explosion in offtake of gold bars from the New York Commodities Exchange is signalling something, and he thinks it may constitute short-covering in preparation for the default of members of the London Bullion Market Association and even the Comex itself. Goodman's analysis is headlined 'President Trump, "Making America Great Again,' the Gold Standard, and a 230% Increase in Physical Gold Bar Deliveries -- All Connected?" and it's posted at his internet site here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


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Please call 1-800-869-5115x100 and ask for the trading desk, or visit:

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Will banks' excess reserves fuel a new monetary crisis?

Posted: 05 Mar 2017 07:15 AM PST

Professional investors are selling stocks and buying gold. Small investors are buying stocks and neglecting gold. While the bulk of attention has gone to the stock market thus far this year, gold is up 7.2% and the Dow Jones Industrial Average is up 6.2%. What is going on? In this month's issue we explore what the professional investors might know that small investors are missing?

Mining entrepreneur, Clinton confidant Giustra concedes gold price suppression

Posted: 05 Mar 2017 07:13 AM PST

The price of gold has been heavily suppressed by the U.S. government, Wall Street financial houses, and the banking system, according to billionaire Canadian mining and movie entrepreneur Frank Giustra, a confidant and philanthropy associate of former President Bill Clinton. Giustra's remarks were made in late January at the Vancouver Resource Investment Conference during an interview with Marin Katusa of Katusa Research and were publicized today by GATA Board of Directors member Ed Steer's Gold and Silver Daily newsletter.

GoldSeek Radio Nugget: John Embry and Chris Waltzek

Posted: 05 Mar 2017 07:00 AM PST

John Embry, Chief Investment Strategist at Sprott Asset Management, returns to the program with his thoughts on the precious metals sector. The duo caution investors from parking too many investment portfolio eggs in paper assets, stocks / bonds given the abrupt rout in the Shanghai index. Conversely, the pullback in the precious metals sector is presenting a golden opportunity to procure value via dollar cost averaging.

CME and Reuters to stop providing LBMA silver price benchmark

Posted: 05 Mar 2017 05:59 AM PST

By Jan Harvey
Friday, March 3, 2017

CME Group and Thomson Reuters are to step down from providing the LBMA silver price benchmark auction, the London Bullion Market Association said today, less than three years after they successfully bid to provide the process.

"In consultation with the LBMA, CME Group and Thomson Reuters have decided to step down from their respective roles in relation to the LBMA Silver Price auction," the LBMA said in a members update seen by Reuters.

The two will continue to operate and administer the silver auction until a new provider is appointed, the LBMA said. It will launch a new tender to appoint an alternative provider to operate the process "shortly," it said. ...

... For the remainder of the report:


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Breaking News And Best Of The Web

Posted: 05 Mar 2017 01:37 AM PST

US stocks finish the week just below record levels. Gold and silver down from multi-week highs. Bitcoin now higher than gold. Fed expected to raise rates at next meeting. Trump budget to increase defense, cut EPA, State. Trump’s secretary of state forced to recuse himself from Russia investigation.   Best Of The Web Reality vs. […]

The post Breaking News And Best Of The Web appeared first on

Will Banks' Excess Reserves Fuel a New Monetary Crisis?

Posted: 04 Mar 2017 09:49 AM PST

Don't look now but inflation and a new gold rush might be in our future Introduction: Professional investors are selling stocks and buying gold. Small investors are buying stocks and neglecting gold. While the bulk of attention has gone to the stock market thus far this year, gold is up 7.2% and the Dow Jones Industrial Average is up 6.2%. What is going on? In this month's issue we explore what the professional investors might know that small investors are missing? "Banks in the United States have the potential to increase liquidity suddenly and significantly – from $12 trillion to $36 trillion in currency and easily accessed deposits—and could thereby cause sudden inflation. This is possible because the nation’s fractional banking system allows banks to convert excess reserves held at the Federal Reserve into bank loans at about a 10-to-1 ratio. Banks might engage in such conversion if they believe other banks are about to do so, in a manner similar to a bank run that generates a self-fulfilling prophecy. . . What potentially matters about high excess reserves is that they provide a means by which decisions made by banks – not those made by the monetary authority, the Federal Reserve System – could increase inflation-inducing liquidity dramatically and quickly." – Christopher Phelan, economist, Minneapolis Federal Reserve

The Deep State’s Gold Scam And The Demonization Of Russia

Posted: 04 Mar 2017 03:06 AM PST

As the Fiscal Year 2018 budget, and particularly its war component are floated, it has become clear that without continued, massive military spending, paid for with mass-produced electrons masquerading as money, U. S. GDP would collapse, taking the country’s financial and monetary systems with it. The nation, whose real economy has been hollowed out, for profit, by the Deep State plunderers, has become significantly reliant upon deliberately contrived wars and military tensions for its economic survival. With systemic monetary risk now at an unprecedented level, intensified by a new, partisan, “politics of defeat,” scorched earth agenda being implemented by those displeased with the results of the 2016 election, there has never been a more dangerous time for people to denominate their wealth in unbacked, baseless, debt-drugged dollars.

Stocks, Bonds, CRB and Gold Multi-Markets Summary

Posted: 03 Mar 2017 08:25 AM PST

Using the most representative or notable index/ETF for each segment, let’s update the general status for a range of items (U.S. and global stocks, T bonds, commodities and gold) with a few informal thoughts. As it’s older brother, the Dow, exceeds our target (21,000), the S&P 500 lurks just below its target of 2410.  While the market can (and probably should) correct at any time, the lack of climactic volume (ref. yesterday’s post comparing the current Dow to Silver in 2011) along with over bullish sentiment that continues to resist becoming massively (as in ‘all in’) over bullish imply that such a correction would be a pit stop, not a bear market.

Silver Is Collapsing On Massive Volume

Posted: 02 Mar 2017 04:17 PM PST


At exactly 1130ET (as Europe closed), someone decided to unload over $2 billion notional of silver into the futures pits...

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