Monday, January 17, 2022

The Key Test Ahead – Ted Butler

by Ted Butler, Silverseek:

Before getting into the subject of today’s title, allow me to update a couple of topics previously discussed. Last Wednesday, I offered a review of world silver inventories in which I concluded that there were roughly one billion oz in fully documented inventories of metal in industry standard 1000 oz bars and perhaps another 500 million to one billion additional oz in unverified holdings; making a grand total of 1.5 to 2 billion oz for world silver inventories in, essentially, the only form that matters.

I went on to claim that JPMorgan owned a total of 600 million oz of that silver, including just over 100 million oz in its COMEX warehouse and 500 million in unverified holdings. In essence, I was claiming that JPMorgan held either all of the world’s unverified silver inventories or that there might be another 500 million oz out there that JPM didn’t own. I know this is a pretty outrageous claim, but I study this stuff closely and it is my firm conclusion that JPMorgan holds between 30{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to 40{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of all the 1000 oz bars in the world.  Most outrageous of all, of course, is that JPMorgan bought all this silver over the past six years as it depressed the price by virtue of it also being the largest paper short seller on the COMEX.

When I wrote last week’s article, I knew full well that the LBMA was about to publish, for the first time ever, the quantities of gold and silver bullion held in London. To be frank, one reason I wrote the inventory article was to preempt the LBMA, because I was sure they would overstate world silver inventories. In the interest of full disclosure, please know that in terms of transparency and reasonable verification of its published statistics, I hold the LBMA in the lowest possible regard –almost to the point of disregarding everything they claim. I had every expectation that the LBMA would report that many billions of silver ounces resided in their affiliated vaults.

Therefore, it came as quite a bit of a shock to read that the LBMA reported that it held “only” one billion oz of silver, since it was much less than I would have expected it to report.  I’m not going to get into the amount of gold (240 million oz) that the LBMA claims to have in its vaults, for the simple reason that no one argues that there isn’t roughly 5.6 billion oz of gold in all forms throughout the world and the amount said to be in the LBMA is less than 5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the total gold in the world (even though it’s the second largest gold holding in the world, behind the US Government’s holdings). A key point I tried to make last Wednesday was that individual gold stockpiles were less critical because there was no dispute about how much total gold existed. There could be (and is) endless discussion about who really owns the world’s gold, but not that it exists in reasonably-known quantities.

http://www.lbma.org.uk/_blog/lbma_media_centre/post/demystifying-londons-gold-and-silver-vault-holdings/

It’s much different in silver than it is in gold because there is great question about how much silver exists in the world. That’s because we know that silver is a vital industrial commodity consumed in an incredibly wide variety of applications and because of that consumption, world silver inventories have been massively depleted – by 90{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} over the past 50 to 75 years. Therefore I was relieved that the LBMA published silver numbers that in no way disagreed with my take last week that there might be 500 million to one billion oz of silver in 1000 oz bar form in London in previously unverified holdings.

I would have let the matter slide and not even have brought it up today had I not received an email this morning from a subscriber who is a money manager in Switzerland.  He included a private report from UBS to clients (that I cannot provide to you), but upon further investigation, I noticed that there was a separate link to a similar UBS report contained in the official LBMA link provided above. Here is that separate link –

http://www.lbma.org.uk/assets/blog/DemystifyingLondonvaultholdings.pdf

The bottom line is this – according to UBS, included in the one billion oz of silver the LBMA claims to be in London are the ETF holdings in London in SLV and SIVR, amounting to more than 400 million oz. Since I already included these holdings in the verified category of silver holdings, this amount must be subtracted from the LBMA’s count; meaning that ex-ETF holdings, there are only 600 million oz of newly reported silver in London, much closer to the lowest number ofmy 500 million to one billion oz estimate.

So, instead of the LBMA reporting billions of ounces of silver in previously unverified holdings, it is reporting only 600 million oz when all is said and done. You could have knocked me over with a feather on this news. And you can bet that JPMorgan owns nearly all of this newly reported silver.  As you know, I no longer seek out new bullish surprises in silver, fearing my brain will explode if I add just one more. But despite my fears, the small amount of silver just reported by the LBMA, even without the mandatory reduction of ETF holdings, is really messing with my mind because it’s so bullish.

The other matter previously discussed involves the old issue of futures market positioning setting prices, not just in gold and silver, but other commodities as well. Just this week, for example, the price of copper rose to new two-year highs. I have written about the price of copper being depressed due to aggressive selling by the managed money technical funds on the COMEX, both late last year and as recently as May. Recent COT reports have indicated that the managed money technical funds have flipped completely to the long side and now hold their largest COMEX (gross) long position in history.

Read More @ Silverseek.com

Gold sales soaring in Croatia and Turkey as confidence in sovereign currencies continue to wane

by Kenneth Schortgen, The Daily Economist:

While often the business media reports on gold sales in much larger markets such as the U.S., China, India, and even Russia, often the smaller economies are overlooked when it comes to a populace moving their wealth into the world’s most historical asset of choice.

So it is quite interesting to see places like Turkey and Croatia beginning to ramp up their gold markets, and this is really seeming to signal a growing decline in confidence in sovereign currencies.

The largest Croatian gold dealer, Auro Domus from Kastav, which gold about 50{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the market, sold investment gold and silver in the amount of 30.2 million kunas in the first half of this year, reports Jutarnji List on 2 August 2017. 

The company points out that this is an increase of 83{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, or nearly twice as much as in the same period last when the company generated income in the amount of 16.5 million kunas.  This is proof that the demand for investment gold in Croatia continues to grow and that Croats are buying more than ever before. – Croatia News

Over in Turkey the environment is also ramping up for gold purchases and investment, where July saw the Turks import the most gold ever for a single month.

An eight-fold increase in gold imports to $2.8 billion from $354 million in the same month last year made the precious metal the second-most imported product and one of the main contributors to the trade gap. 

June gold imports were also up by 216 percent year-on-year to $2.1 billion, according to final figures reported by Turkstat, the state statistics agency. –  Zerohedge

Read More @ TheDailyEconomist.com

One of the Largest Banks in the World Just Accused of Laundering Millions for Drug Cartels

by Claire Bernish, The Free Thought Project:

Commonwealth Bank of Australia stands accused by the Australian Transaction Reports and Analysis Centre (AUSTRAC) of a stupefying 53,700 violations of money laundering and counter-terrorism-financing laws, in which the financial institution failed to notify in a timely fashion — and, sometimes, not at all — transactions topping a mountainous A$77 million.

As the case unfolds, it should be noted, each breach of the act carries a jaw-dropping potential penalty of A$18 million — meaning Commonwealth Bank could be slapped with an astonishing level of fines.

Alleging ‘serious and systemic non-compliance’ with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), the regulator commenced civil penalties proceedings against CommBank on Thursday, after the tentative conclusion of an investigation — the heft of which focused on the bank’s use of intelligent deposit machines (IDMs) — revealed rampant breaches of the act, according to acting CEO Peter Clark.

“The effect of CommBank’s conduct in this matter has exposed the Australian community to serious and ongoing financial crime,” asserted AUSTRAC in a statement.

Bloomberg notes of IDMs, “Commonwealth Bank’s automated cash deposit machines, which allow anonymous deposits to recipient accounts that can then be funneled offshore or to other domestic accounts, Austrac said in documents lodged with the Federal Court in Sydney on Thursday. The cash deposit machines were used by drug rings to move the proceeds of crime, the agency said […]

“The automated machines were introduced in May 2012, and the amount of cash flowing though them grew exponentially, the court documents say. In the six months to November 2012 about A$89.1 million was deposited. By May and June 2016 this had risen to more than A$1 billion per month. About A$8.9 billion in cash was put through the system before the bank conducted any assessment of the money laundering risk, Austrac said.”

 

In this post-9/11 world, Western governments take seriously the tracking of larger banking transactions, under the premise that watching the money by moved terrorists and other high-level criminals through such institutions could stem the spread of violence. But machines like those at the center of the controversy make apparent avenues for significant anonymous banking indeed still exist — if skirting the lines of legality — or, at least, did until recently.

Five money laundering syndicates opportuned CommBank’s IDMs, AUSTRAC claims, with just one drug case totaling A$21 million distributed across eleven separate accounts. Even an alert from the Australian Federal Police to the bank about multiple accounts used for illicit purposes failed to provoke a substantial response — with several tacitly permitted to continue operating afterward.

Suspect accounts attempted to divert suspicion by keeping deposits small and inconspicuous, as well as by moving funds into offshore accounts.

“CommBank permitted several of the accounts to remain open even after this time and further transactions occurred. Eight individuals have been charged with dealing in proceeds of crime, with 6 of these individuals already having been convicted,” the Guardian reports.

“In another case,” Bloomberg continues, the agency “alleges A$20.6 million was deposited into 30 accounts, 29 of which were in fake names, which shortly after was transferred abroad. After the bank identified ‘repeated, suspicions and connected’ patterns of cash deposits, it permitted a further approximately A$9.1 million to be transferred from these accounts to Hong Kong, Austrac said.”

By statement, cited by the Sydney Morning Herald, CommBank contends, “On an annual basis, we report over 4 million transactions to Austrac in an effort to identify and combat any suspicious activity as quickly and efficiently as we can.”

Read More @ TheFreeThoughtProject.com

 

Follow the money

by Alasdair Macleod, GoldMoney:

Since 2009, equities and other financial assets have climbed a wall of worry. Initially, it was recovery from the threat of a complete financial collapse, before the Fed saved the system once again.

Systemic collapse continued to be on the cards, with European banks at risk of bankruptcy. We still talk about this today. More walls of worry to climb.

The global economy has not imploded, as the bears have consistently warned. Systemic and other dangers still exist. The bears now point to excessive valuations as the reason for staying out of the market. But this misses the point: the general level of asset valuations depends not on fundamentals, but on credit flows. It matters not whether there is cash sitting on the side-lines, or whether speculators borrow to invest, so long as the credit keeps flowing into financial assets. Just follow the money.

It is all about credit, and when you have central banks suppressing interest rates and causing bank credit to expand, they create a credit cycle. Modern credit cycles have existed since Victorian times, the consequence of fractional reserve banking. The cycle varies in length and the specifics, but its basic components are always the same: recovery, expansion, crisis and destruction. Today, central banks reckon their mission is to stop the destruction of credit, and to keep it continually expanding to stimulate the economy.

The economic and financial community fails to understand that the sequence of booms and slumps is not a free market disorder, but the consequence of a credit cycle distorting how ordinary people go about their business. It is a waste of time trying to understand what is happening in the economy without analysing credit flows. It is Hamlet without the Prince. This article walks the reader through the phases of the credit cycle, identifying the key credit flow characteristics, whose starting point we will take to be the end of the great financial crisis. It will conclude with a summary of what this tells us about current credit flows, and prospects for the near future.

The seeds of recovery

In a modern credit-driven economy, central banks see their role as preventing recessions, slumps, and depressions. The need to preserve the banking system, to stop one bank taking out the others in a domino effect, is paramount. To prevent the weakest banks collapsing takes financial support from the central bank by increasing the quantity of base money, while at the same time discouraging banks from calling in loans, particularly from their larger customers.

Central bank priorities will have switched from fear of price inflation ahead of the crisis to fear of deflation. They are still informed by Irving Fisher’s description of how an economic crisis develops from financial flows. When businesses start to fail, banks call in their loans, causing otherwise sound businesses to collapse. The banks liquidate collateral into the market, undermining asset prices in a self-feeding downward spiral. The way to prevent it is to backstop the banks by issuing more money.

We saw this at its most spectacular in the great financial crisis. The Fed effectively wrote open cheques to any bank that needed money, and for some that didn’t. The most important rescue was of Fannie Mae and Freddie Mac, the two private-public entities that dominated the residential property market, with some $5 trillion of agency securities outstanding. The Fed’s initial involvement was to buy up to $500bn of agency debt through quantitative easing, supporting the remaining mortgage debt values and injecting a matching quantity of money into the banks in the form of excess reserves.

This didn’t stop with Fannie and Freddie. AIG, Bear Sterns and Lehman were just a few of the names associated with the crisis. Term Auction Facility, Primary Dealer Credit Facility, Asset-backed Commercial Paper, Money Market Mutual Fund Liquidity Facility, Commercial Paper Funding Facility, and Term Asset-Backed Securities Loan Facility entered the financial language as new rescue vehicles financed with raw money from the Fed.

It wasn’t just the US. Most major jurisdictions were locked into the same credit cycle, and by 2007-08 they were all on the edge of the crisis. Consequently, the financial crisis in America was replicated in the UK and the Eurozone. Including Japan, the sum of the balance sheets of their four central banks increased from about $6.5 trillion to nearly $19.5 trillion today.

The increase in the liability side of central bank balance sheets has been substantially in the reserves of commercial banks. This is the most pronounced feature of the current credit cycle, potentially fuelling substantial levels of bank lending when the banks eventually become more confident in their lending to the non-financial sector.

The recovery phase has now been in place for an extended period, lasting eight years so far. It has been characterised, as it always is, by an increase of financial asset prices. This is partly driven by the suppression of interest rates, which creates a bull market for bond prices, and partly by banks buying government bonds.

Government bonds are always accumulated by the banks in large quantities during the recovery phase of the credit cycle. The shortfall in fiscal revenue and the increased cost-burden on government finances leads to a general demand for credit to be switched from private sectors to governments. For the banks, investing in government debt is a safe harbour at a time of heightened lending risk, further encouraged by Basel regulatory risk weightings. On the back of falling bond yields, other financial assets rise in value, and therefore banks increasingly make credit available for purely financial activities.

In the current credit cycle, the boom in financial assets has been exaggerated by central banks buying government bonds as well. The result is a bond bubble far greater than would otherwise be the case. Consequently, when an economy moves from recovery into expansion, the price effect of the credit flows as they wash out of bonds into lending is likely to be more dramatic than we have ever seen before.

We appear to be on the cusp of this change into a phase of economic expansion for much of the world, though the situation in America is less clear. To understand the implications of this change, we must first examine the underlying credit flows.

Expansion – credit hidden then in plain sight

The stability that returns in the recovery phase, coupled with fading memories of the previous crisis, engenders growing confidence in the non-financial economy, which demands credit in increasing quantities for expansion of production. While interest rates remain suppressed, financial calculations, such as return on capital, make investment in even unwanted production appear profitable. It is the bankers which impede this early demand for money, because they still retain memories of the previous crisis and are determined not to repeat the errors of the past. Furthermore, bank regulators are still closing stable doors long after the horses have bolted.

Banks will have continued lending to big business throughout the recovery phase. Under pressure from large corporates, this lending also extends to their consumers, currently evident with car, or auto loans, financing most of the products of major motor manufacturers. Without this consumer credit, vehicles cannot be sold, and manufacturers would be forced to close factories. That is not where the problem under discussion lies: it is in the other 80{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the economy, the small and medium-size enterprises (SMEs), which the banks see as too risky. However, gradually at first, the banks begin to reassess the risk of lending to non-financial entities relative to owning the government bonds on their balance sheets.

Read More @ GoldMoney.com

Keiser Report: Mergers & Monopolies (E1105)

from RT:

Holding the show at Freedom Fest in Las Vegas, Max and Stacy discuss mergers, monopolies and antitrust.  Max interviews early bitcoin adopter Charlie Shrem about the state of play in the bitcoin market. This interview took place a week before the hard fork.

How The Fed Enabled Corporate Kingpins To Scalp Billions

by David Stockman, Daily Reckoning:

Here’s a comparison that is surely vertigo inducing. On the one hand, the financial system is implicitly held to be so incredibly stable and healthy that volatility on the S&P 500 has been driven to 50-year lows.

Indeed, that lovely condition is apparently expected to persist indefinitely as signaled by implied volatility. During the last 6,000 trading days (since the early 1990s), the VIX Index closed below 10 on 26 occasions or just 0.4{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the time. No less than 16 out of those 26‘below-10’ closes occurred in the last three months!

Yet this insensible bullish calm is happening even as Wall Street is showing itself to be in the throes of unhinged leveraged speculation.

With respect to the unhinged part, consider an incisive post by Wolf Richter on the present carnage in the retail sector. His point was that virtually every one of the rash of companies filing bankruptcy in the sector during the recent past had been strip-mined by private equity operators:

Nearly every retail chain caught up in the brick & mortar meltdown is an LBO queen – acquired in a leveraged buyout by a private equity firm either during the LBO boom before the Financial Crisis or in the years of ultra-cheap money following it.

But Richter’s real point is that the private equity operators in the retail space brought down a double-whammy of leverage on the companies they ransacked. That is, they first loaded up the companies with buyout debt, and then came back for second and third helpings.

Accordingly, since 2010, retail chains controlled by private equity firms issued $91 billion in junk bonds and leveraged loans.

Needless to say, in drastically falsifying debt prices in order to stimulate housing and other investments, the Fed had no clue about the collateral effects of its massive and persistent intrusion in the delicate clockwork of capital markets pricing.

So when Janet Yellen & Co profess to see no bubbles they prove their own clueless incompetence. Do they actually think that this would happen in a free market with honest money and market-clearing interest rates?

The question answers itself.

In fact, the asset stripping pattern is every bit as irrational and toxic as were the slicing and dicing of subprime mortgage pools in the run-up to the 2008 financial crisis.

Needless to say, so-called “investors” piled into the flood of dodgy paper because they were desperate for yield. In the dollar fixed income markets, $3.5 trillion of the Fed’s U.S. Treasury and other securities purchases after September 2008 drove real interest rates so low that it virtually forced money managers to scramble out the risk curve in order to find minimally attractive yields.

So doing, they enabled strip-mining transactions that resulted in the eventual destruction of the debt issuers and vast windfall distributions to a few hundred corporate kingpins.

What possessed institutional investors such as state pension funds to invest in such shaky operations?

The answer to this seeming mystery is simply that institutional investors have been completely corrupted by the casino environment that has resulted from three decades of Bubble Finance. In clamoring for yield, institutions have been induced to embrace sweetheart deals for the kingpins that would be laughed out of court in an honest market.

For example, Payless Inc, which was a shoe retailer with 22,000 employees and 4,000 stores, filed for bankruptcy last April. That was less than five years after its original $670 million LBO in 2012. But it was not at all surprising since the company was heading for the wall from the get-go.

But the Payless bankruptcy was apparently dismissed as a victim of bad luck and timing.

I don’t think so. The two LBO firms that did the deal — Golden Gate Capital and Blum Capital Partners — are serial asset strippers and crony capitalist rip-off outfits.

The latter was founded in 1975 by one Richard Blum of San Francisco. He is a classic crony capitalist who parlayed his contacts in the world of California and national democratic politics — ranging from Jimmy Carter to his wife, Senator Diane Feinstein, into billions of funding from political controlled institutions.

Thus, upwards of $1 billion in capital was supplied to Blum’s fund by the California Public Employees’ Retirement System, the California State Teachers’ Retirement System and the Los Angeles County Employee Retirement System, among others. That Blum served as a long-time regent of the giant University of California System is surely not coincidental.

Nor is the fact that his fund was among a pack of hedge fund jackals that ran up the stock prices of for-profits education companies to absurd heights based on growth momentum that was totally unsustainable. In fact, these outfits harvested hundreds of billions of student loans from hapless enrollees — of which 33{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the tuition proceeds went to selling bonuses and expenses, 33{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to operating profits and the left-overs to the purported cost of education.

Read More @ DailyReckoning.com

GOLD RECOVERS FROM LAST NIGHT’S 7 PM FLASH CRASH BUT STILL DOWN $3.65/SILVER DOWN 10 CENTS

by Harvey Organ, Harvey Organ Blog:

DESPITE THE DROP IN PRICE OF GOLD YESTERDAY, OPEN INTEREST RISES BY OVER 7,000 CONTRACTS/WAR OF WORDS BETWEEN INDIA AND CHINA INTENSIFY AS INDIAN TROOPS ARE STATIONED ON DISPUTED CHINESE LANDS/TRUMP TO ANNOUNCE A TRADE WAR WITH CHINA TOMORROW: CHINA IS FURIOUS!

In silver, the total open interest FELL BY A TINY 1023 contracts from 207,258 DOWN TO 206,233 WITH THE FALL IN THE PRICE THAT SILVER TOOK WITH RESPECT TO YESTERDAY’S TRADING (DOWN 5 CENT(S). WHEN YOU COMPARE THE HUGE GAIN IN OI FOR GOLD THEN YOU MUST ADMIT THAT IT SURE LOOKS LIKE BOTH THE SPECULATOR SHORTS AND THE BANKER SHORTS ARE HAVING SEVERE PROBLEMS TRYING TO COVER THEIR SHORTFALL WHICH CANNOT COME TO FRUITION. THE LONGS REMAIN STOIC AND NOTHING WILL BUDGE OUR SILVER LEAVES FROM DEPARTING OUR SILVER TREE. YESTERDAY’S TRADING IS EVIDENCE OF THAT.

 In ounces, the OI is still represented by just OVER 1 BILLION oz i.e.  1.030 BILLION TO BE EXACT or 147{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 2 NOTICE(S) FOR 10,000OZ OF SILVER

In gold, the open interest ROSE by A MONSTROUS 6,896 despite the FALL in price of gold ($0.65 yesterday.)  The new OI for the gold complex rests at 455,605. Yesterday we had the bankers supplying a major amount of short paper to newbie longs who entered the arena again like gangbusters.  The specs shorts covered what they could. .No wonder a flash crash was orchestrated at 7.01 pm last night with the intention of cooling gold’s jets. It seems that the raid failed again.  The bankers are losing control over the precious metal markets

we had: 73 notice(s) filed upon for 7300 oz of gold.

Read More @ HarveyOrganBlog.com

Western Central Bank Fear Of Gold Is In The Air

by Dave Kranzler, Investment Research Dynamics:

Ballooning open interest, heavy fix selling, aggressive post-settlement selling, flash crashes – this all seems a lot of bother. Perhaps the Other Side is afraid of something.– John Brimelow from his Gold Jottings report

Wednesday  evening at 7:06 EST, at one of the least liquid trading periods of the 23 hour trading day for Comex paper gold, a “motivated” seller unloaded 10,777 August gold contracts into the CME’s Globex trading system, knocking the price of gold down $9 in 25 minutes.  There were no obvious news or events reported that would have triggered any investor to dump over 1 million ozs of gold with complete disregard to price execution.

Rather, the selling was the act of an entity looking to push the price of gold a lot lower in “shock and awe” fashion.  The 10.7k contracts sold were just the August contracts.   There was also related selling in several other contract months.  To be sure, the total number of contracts unloaded included  hedge fund selling from stop-losses triggered in the black boxes of momentum-chasing hedge funds.

In addition to the appearance of frequent, strategically-timed “fat finger” flash crashes, the open interest in paper gold on the Comex has soared by 23,000 contracts since last Friday. This added 2.3 million paper gold ounces to the Comex open interest, which represents nearly 27{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the total amount of alleged physical gold ounces sitting Comex vaults.   In fact, the total paper gold open interest on the Comex is 455,605 contracts, or 45.5 million ounces of gold. This is 530{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} more paper gold than the total amount of gold reported to be sitting in Comex vaults.

The dramatic rise in open interest accompanied gold’s move in price above the 50 dma.  It’s typical for the bullion banks on the Comex to start flooding the market with additional paper contracts in order to suppress strong rallies in the price of gold.  Imagine what would happen to the price of gold if the regulatory authorities forbid the open interest in Comex gold contracts to never exceed 120{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the total amount of gold in the Comex vaults.  This is unwritten “120{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} rule” is de rigeur with every other commodity contract except, of course, silver.

The “flash crash” and “open interest inflation” are two of the obvious signals that the western Central Banks/bullion banks are worried about the rising price of gold.  The recent degree of blatant manipulation reflects outright fear. I suspect the fear is derived from two sources.  First is a growing shortage of physical gold that is available to deliver into the eastern hemisphere’s voracious import appetite.  Exports from Swiss refineries have been soaring.   India’s appetite for gold has not been even slightly derailed by the 3{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} additional sales tax imposed on gold.

Speaking of India, the World Council has put forth a Herculean effort to down-play to amount of gold India has been and will be buying.  After India’s 351 tonnes imported in Q1, the WGC tried to shove a 90 tonne per quarter forecast down our throats for the rest of the year. India’s official tally for Q2 is 167.4 tonnes.  Swing and a miss for the WGC.  Now the WGC  is forecasting  at total of 650-750 tonnes for all of 2017.

The WGC forecast is idiotic given that India officially imported 518.6 tonnes in 1H and 2H is traditionally the best seasonal buying period of the year AND a copious monsoon season means that farmers will be flush with cash – or rupees, rather – which will be quickly converted into gold.  Two more swings and misses for Q3 and Q4 and the WGC is out of excuses for why India likely will have imported around 1,000 tonnes, not including smuggled gold, in 2017.  This aggressive misrepresentation of India’s gold demand reeks of propaganda.  But for what purpose?

Back to the second reason for the banks to fear a rising price of gold:  the inevitable collapse of the largest financial bubble in history inflated by Central Bank money printing and credit creation.   The trading action in the gold and silver markets resembles the trading activity in 2008 leading up to the collapse of Lehman and the de facto collapse of Goldman Sachs.

One significant  difference is the relative effort exerted to keep a lid on the price of silver.   In early 2008, with the price of silver trading between $17 and $19, the open interest in Comex silver peaked at 189k contracts (Feb 29th COT report).   Currently the open interest is 206k contracts and it’s been over 240k.    In late 2008, the Comex was reporting over 80 million ozs of “registered” silver in its vaults. “Registered” means “available for delivery.” There were thus roughly 3 ozs of paper gold for every reported ounce of physical gold available for delivery.  Currently the Comex is reporting 38.5 million ozs of registered silver. That’s 5.3 ozs of paper silver for every ounce of registered silver.

Read More @ InvestmentResearchDynamics.com

Our European Tour – Part II – Seizing All Bank Accounts Throughout EU

by Martin Armstron, Armstron Economics:

Many financial firms in London claim to be looking to move to Frankfurt or Paris with BREXIT. They are going to have a very rude awakening. The proposition to demand all euro clearing takes place inside the EU will be the death of Europe – not the rebirth. The dominating position in Brussels among the majority is control the financial markets to prevent any free market movement against the designs of the EU Commission. Additionally, this position of draconian absolute dictatorial control over European markets includes a pan-European freezing of all bank accounts in the event of an impending banking crisis. The EU Commission is deeply concerned what happens when the EU stops its life-support for Eurozone government debt. They are actually considering the way in which multi-day cash disbursements can be practically implemented in order to resolve emergency measures for banks. Their plan is looking at a prolonged banking and financial crisis that would be 20 to 30 days in duration. If government debt crashes with rising rates, then the reserves of banks will decline and this could result in a banking crisis unleashed when the EU stops its life-support program.

The EU Commission will freeze al bank accounts for one week and up to one month if the crisis continues. When Banco Popular went into crisis in Spain, there was a Bankrun which unfolded as a contagion against other banks in Spain. In Greece, accounts were frozen and cash withdrawals were limited for extended periods. This is an ongoing proposition since not all EU members agree. Some countries already have legislation allowing for a total bank freeze such as Germany. Instead of bailouts, we have now move even beyond bail-ins, and into the realm of just total seizure. It is more likely that such a freeze will not preserve banks, but will result in more bank failures.

Clearly, people should be fully aware of the thinking process in government. Brussels will become authoritarian when the free markets rain on their parade. I strongly recommend that everyone should keep 30 days worth of cash to cover your basic needs.

Read More @ ArmstrongEconomics.com