Sunday, June 16, 2019

A2A with Chris Powell of GATA

by Turd Ferguson, TF Metals:

Chris Powell and Bill Murphy formed the Gold Anti-Trust Action Committee in 1998 and they’ve been stalwart allies in the fight against gold price suppression and manipulation ever since. What a pleasure it was today to get caught up with Chris and get his thoughts on the current state of the global market for gold.

As you listen, you’ll quickly be reminded that Chris is still one of the most informed and well-spoken advocates for our cause. Over the course of this webinar, he addresses a number of current issues including:

  • the most important lesson he’s learned in the 20 years he’s followed the gold market
  • the strange occurrence of SecTreas Mnuchin visiting Ft Knox and the equally strange television interview of Terry Duffy, the CEO of the CME Group
  • whether the US government would financially benefit from revaluing the price of gold
  • how physical demand will paly a role in finally ending the tyranny of the central banks and bullion banks
  • and much, much more!

Please be sure to give this discussion a thorough listen as you are almost certainly going to learn a few things that you didn’t previously know. And then, when you’re finished, please click over to the GATA site and send them some financial support. Their efforts are tireless and we need to ensure that they remain on our side in this fight. http://www.gata.org/node/16

Click HERE to listen.

Read More @ TFMetals.com

Eric Sprott: THE GREATS ARE BACK! – “It’s Going to SKYROCKET”

0

by Eric Sprott, via SilverDoctors:

ERIC SPROTT IS FIRED UP! He says there’s not much left, there are huge unknowns, and the greats are finally back! Eric suggests that ALL INVESTORS DO THIS right about now…

Craig Hemke interviews Eric Sprott on Sprott Money News going into the Labor Day weekend.

Eric is very bullish on gold. He says there are just too many unknowns right now, so the governments and central banks are going to have a difficult time orchestrating the markets from here.

Read More @ SilverDoctors.com

Michael Pento Exclusive: Gold Sniffing Out Coming Central Bank Failure; $2000+ Per Ounce?

by Mike Gleason, Money Metals:

Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Coming up we’ll hear from Michael Pento of Pento Portfolio Strategies on how the broken window fallacy is now becoming a part of the narrative surrounding the terrible tragedy in the Houston area and also talks about an exciting setup he sees in the gold market and what will be the tipping point. Don’t miss another wonderful interview with Austrian economist and money manager Michael Pento, coming up after this week’s market update.

Precious metals markets enter trading for the month of September with strong upside momentum on the heels of a late summer rally.

On Monday, gold prices broke out above the $1,300 resistance level to new highs for the year. As of this Friday recording gold trades at $1,323 an ounce, up 2.4{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} on the week. Gold’s gains are being confirmed by the gold mining stocks, which are now putting in their biggest weekly up moves of the summer.

Turning to the white metals, silver shows a weekly gain of 3.3{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to bring spot prices to $17.69 an ounce. Platinum poked back above the $1,000 level on Thursday and currently trades at $1,007 an ounce on the heels of this week’s 2.9{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} advance. Its sister metal palladium is up 3.9{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to $966.

Metals markets responded to the carnage inflicted by Hurricane Harvey and the inflationary implications for U.S. fiscal policy.

Lawmakers return to Capitol Hill next Tuesday. They will take up a Harvey aid bill expected to cost tens of billions of dollars. Whether it’s a clean bill or is tied to unrelated pork barrel spending or an increase in the debt limit remains to be seen.

The Treasury Department had said that the debt ceiling must be raised by September 29th. Officials now say that the deadline may move forward by a couple days because of disaster relief spending. These developments will make it more difficult for Freedom Caucus members of Congress to win any spending concessions.

President Donald Trump still intends to push for tax reform. Senate Republicans will be under tremendous pressure to deliver something on that front after they failed spectacularly on Obamacare repeal. Here’s what Trump had to say in a speech earlier this year:

Donald Trump: We need a tax code that is simple, fair, and easy to understand. That means getting rid of the loopholes and complexity that primarily benefit the wealthiest Americans and special interests. Our last major tax re-write was 31 years ago. And I am fully committed to working with Congress to get this job done, and I don’t want to be disappointed by Congress.

The President did get some good news on the economy this week. U.S. GDP growth got revised upward to a better than expected 3{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}.

Good news is often interpreted by markets as bad news for metals markets. A stronger economy makes the Federal Reserve more likely to tighten monetary policy. But this week, good news was good for stocks, commodities, and precious metals.

The bad news out of Texas may have something to do with that. Given the tremendous financial stresses on millions of families who have either been impacted or flooded out of their homes, the Fed is likely to hold off on any new rate hikes or quantitative tightening for a while. Central bankers don’t want to be perceived as villains for causing rates on mortgages and home improvement loans to rise.

Yet in keeping rates artificially low, central bankers are complicit in inflating asset bubbles to dangerous proportions. The stock market certainly wouldn’t be trading where it is today without Fed stimulus. The sky high costs of health insurance and college tuitions wouldn’t be where they are now, either.

In order to help qualified students pay for the ever-rising costs of higher education, Money Metals Exchange has teamed up with the Sound Money Defense League for a scholarship fund. It is the first gold-backed scholarship of the modern era. We’re setting aside 100 ounces of physical gold for scholarships to outstanding undergraduate and graduate students who display deep understanding of economics and monetary policy.

For 2017, we will be awarding this scholarship to two incoming or current undergraduate students and to two graduate students. First place winners will receive $2,000 each, with runner ups getting $1,000.

Applicants must submit an essay that answers a specific question about free markets and sound money. Essays will be reviewed by a blue ribbon committee of professors, economists, and executives of Money Metals Exchange and the Sound Money Defense League. The application and essay must be submitted by September 30, 2017.

Click HERE to listen.

Read More @ MoneyMetals.com

Market Report: $1300 easily surmounted

0

by Alasdair Macleod, GoldMoney:

Gold finally broke through the $1300 level on Monday, and did it in style. With London closed for a bank holiday, gold appeared to be edging better in quiet European trade, reflecting a lack of sellers rather than buying. When New York opened, the price rose towards the $1300 level, before roaring through it mid-morning. It closed $27 up at $1319.5 in very heavy Comex volume.

Silver followed suit, and gold by early European trade this morning (Friday) was up $28 on the week at $1318, and silver up 45 cents at $17.52. On Comex, gold is now firmly in overbought territory, with open interest up substantially and at the high for the year, as shown in our next chart.

After breaking the important $1300 level so decisively, some price consolidation was to be expected. And as volumes declined on Tuesday, there was some profit-taking. On Wednesday afternoon, Asian time when trading was very thin, someone dumped 26 tonnes of paper gold on the market, presumably with the intention of driving the price down back through the $1300 level. The attempt failed spectacularly and gold bounced back to close at its high for the year the following day.

There are two elements behind gold’s action. The first is the strength of the euro, pushing the dollar’s trade weighted index lower, and second is the performance of gold itself. Until recently, the recovery in the gold price was the mirror image of the dollar’s weakness, with the euro price down on the year at one point. But now, gold itself is beginning to rise against other currencies as shown in our next chart.

This is a different environment from that over the summer months. Interest in gold in all these currencies is building, and we can expect physical ETF demand to increase over the rest of the year. A resident in the Eurozone, for instance, sees a bull market in the dollar price, and finds that gold is still “good value” in euros. And at some point, the Japanese might see gold as a hedge for a weaker yen.

The dollar looks like weakening further. In the near term, there is the uncertainty over debt limit negotiations, with the US Government running out of money by mid-October. Furthermore, it is becoming clear that the US economy is stagnating, and the world is awash with dollars. Commodity prices are also rising on Asian demand.

Read More @ GoldMoney.com

A Labor Of Love With The Golden Jackass

by Turd Ferguson, TF Metals:

Well, here we are…the unofficial end of summer. It’s Labor Day weekend here in the U.S. which means we are in the midst of a 3-day weekend. And you know what that means here at TFMR! Fresh Jackass for everyone!

When Jim and I recorded this back on Thursday, time was somewhat short. So, with this constraint in mind, I asked Jim to focus on two, primary topics:

  1. Since we last spoke in July, what changes have occurred in the world of US dollar hegemony? Is the China-Russia-Saudi connection accelerating the demise of the petrodollar system?
  2. The current US debt and political situation and how this will increasingly impact global markets as traders return en masse on Tuesday.

Just two topics yet over an hour of audio? Yep, that’s how it works and you’re just going to have to listen to the entire thing if you want to unearth all the nuggets of knowledge that The Jackass has left behind for you.

Enjoy and have a great weekend!

TF

Click HERE to listen.

Read More @ TFMetals.com

GOLD RISES BY $8.65 AND SILVER UP 22 CENTS/EXTREMELY POOR JOBS REPORT INITIALLY SENDS DOLLAR SINKING

by Harvey Organ, Harvey Organ Blog:

ECB IN NO HURRY TO END QE AND THAT SENDS THE EURO DOWN AND THE DOLLAR UP/HURRICANE HARVEY SENDS OIL DEMAND DOWN AS WELL AS CURTAIL SUPPLY WITH LOWER DEMAND OUTSTRIPPING LOWER SUPPLY/HURRICANE HARVEY CAUSES HUGE DAMAGE TO THE CHEMICAL INDUSTRY WITH ETHYLENE PRODUCTION CURTAILED/NEW HURRICANE IRMA WITH A POSSIBLE CATEGORY 5 LEVEL IS BARRELING TOWARDS THE USA EASTERN COAST.

September 1, 2017 · by harveyorgan · in Uncategorized · 1 Comment 

GOLD: $1325.50 UP   $8.65

Silver: $17.73  UP 22 CENT(S)

Closing access prices:

Gold $1325.50

silver: $17.71

SHANGHAI GOLD FIX:  FIRST FIX  10 15 PM EST  (2:15 SHANGHAI LOCAL TIME)

SECOND FIX:  2:15 AM EST  (6:15 SHANGHAI LOCAL TIME)

SHANGHAI FIRST GOLD FIX: $1323.35 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  $1319.70

PREMIUM FIRST FIX:  $3.65

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

SECOND SHANGHAI GOLD FIX: $1324.95

NY GOLD PRICE AT THE EXACT SAME TIME: $1320.15

Premium of Shanghai 2nd fix/NY:$4.80

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

LONDON FIRST GOLD FIX:  5:30 am est  $1318.40

NY PRICING AT THE EXACT SAME TIME: $1318.15

LONDON SECOND GOLD FIX  10 AM: $1320.40

NY PRICING AT THE EXACT SAME TIME. 1319.15

For comex gold:

SEPTEMBER/

NOTICES FILINGS TODAY FOR SEPT CONTRACT MONTH: 9 NOTICE(S) FOR  900  OZ.

TOTAL NOTICES SO FAR: 49 FOR 4900 OZ  (0.1524 TONNES)

For silver:

SEPTEMBER

 

 364 NOTICES FILED TODAY FOR

 

1,820,000  OZ/

Total number of notices filed so far this month: 2545 for 12,725,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

 

end

I wrote this yesterday:

“Tomorrow is the dreaded non farm payrolls. This report is fabricated to the highest degree. However if the report is bad even with the fake numbers, gold/silver will be off to the races.”

I guess I got this one right!

the bankers are trapped with their mega shorts and they will now look for divine intervention over this long weekend hoping a miracle will extricate them from their mess..

Let us have a look at the data for today

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE BY AN SMALL BUT STEADY 554 contracts from 178,343 UP TO 178,897 WITH THE SMALL GAIN IN PRICE THAT SILVER UNDERTOOK WITH  YESTERDAY’S TRADING (UP 7 CENTS). WE NOW HAVE SOME NEWBIE LONGS ENTER THE SILVER CASINO WITH NO SILVER LONGS EXITING FOR EFP’S. THE BANKERS ARE STILL LOATHE TO SUPPLY THE SHORT PAPER

RESULT: A SMALL RISE IN OI COMEX  WITH THE 7 CENT PRICE RISE. 

 In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e.  0.894 BILLION TO BE EXACT or 128{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 364 NOTICE(S) FOR 1,820,000OZ OF SILVER

In gold, the open interest ROSE BY A MONSTROUS 15,279 CONTRACTS WITH THE RISE  in price of gold ($8.35 GAIN YESTERDAY). The new OI for the gold complex rests at 550,171.

AS IN SILVER, THE GEOPOLITICAL LANDSCAPE WITH TRUMP THREATENING TO CLOSE GOVERNMENT IF HE DID NOT GET HIS WALL , THE DOVISH SPEECHES BY BOTH DRAGHI AND YELLEN ON FRIDAY AT JACKSON HOLE, THE HOUSTON FLOODING & NORTH KOREA FIRING MORE MISSILES IS STILL AMPLE FUEL FOR ANOTHER  HUGE RISE IN THE NUMBER OF  NEWBIE SPECS  ENTERING THE GOLD ARENA WITH THE COMMERCIALS SUPPLYING THE NECESSARY PAPER LIKE DRUNKEN SAILORS. ONCE YESTERDAY’S FLASH CRASH WAS A COMPLETE FAILURE AS 1300 DOLLAR GOLD HELD BEAUTIFULLY, MORE NEWBIE LONGS CAME EMBOLDENED CONTINUING THEIR QUEST OF TAKING ON THE BANKERS WHO RECIPROCATED IN KIND WITH  SHORT PAPER.

Result: A MONSTROUS SIZED GAIN IN OI WITH THE RISE IN PRICE IN GOLD COUPLED WITH A FAILED FLASH CRASH RAID ON THURSDAY 

we had: 9 notice(s) filed upon for 900 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

With respect to our two criminal funds, the GLD and the SLV:

GLD:

Tonight , we had no  changes in gold inventory:

Inventory rests tonight: 816.43 tonnes

IN THE LAST 35 TRADING DAYS: GLD SHEDS 20.54 TONNES YET GOLD IS HIGHER BY $92.25 .

SLV

Today:  STRANGE!! WE HAD A HUGE CHANGE IN SILVER INVENTORY TONIGHT: A WITHDRAWAL OF 2.019 MILLION OZ

INVENTORY RESTS AT 331.178 MILLION OZ

 

end

.

First, here is an outline of what will be discussed tonight:

1. Today, we had the open interest in silver ROSE BY A SMALLISH 554 contracts from 178,343 UP TO 178,897 (AND now A LITTLE CLOSER TO THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) WITH YESTERDAY’S 7 CENT GAIN IN TRADING. SILVER RESPONDED TO 1) THE GEOPOLITICAL CLIMATE WHEREBY TRUMP THREATENED TO SHUT DOWN GOVERNMENT UNLESS HE GOT HIS WALL , 2) THE TWO DOVISH SPEECHES BY YELLEN 3) NORTH KOREA FIRING MORE MISSILES,4) THE HOUSTON FLOODING AND 5 . THE COMPLETE FAILURE OF ANOTHER FLASH CRASH AS SILVER HELD ITS FORMER RESISTANCE LEVEL AND NOW NEW SUPPORT LEVEL OF $17.25. NEWBIE LONGS ENTERED THE ARENA WHEN THEY SAW ANOTHER FAILED RAID ATTEMPT. HOWEVER IN TOTAL CONTRAST TO GOLD, THE BANKERS REFUSE TO SUPPLY THE SHORT PAPER AND IN FACT ARE DESPERATELY TRYING TO COVER.   SOME NEWBIE LONGS EXITED AT THE HIGHER PRICE. HOWEVER DEMAND FOR SILVER IS STILL QUITE STRONG AND YOU CAN SEE THAT FOR YOURSELF AS AGAIN THE AMOUNT STANDING FOR SILVER IN THE MONTH OF SEPTEMBER INCREASED.  WE HAVE BEEN WITNESSING THIS PHENOMENA FOR THE PAST 5 MONTHS.

RESULT:  A  HIGHER OI AT THE COMEX WITH THE INCREASE IN PRICE OF 7 CENTS.  BANKERS REFUSE TO SUPPLY THE SHORT PAPER AND ARE TRYING TO GET OUT OF THEIR SHORTFALL 

(report Harvey)

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS

i)Late THURSDAY night/FRIDAY morning: Shanghai closed UP 6.31 POINTS OR 0.19{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}   / /Hang Sang CLOSED DOWN 17.14 POINTS OR 0.06{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}/ The Nikkei closed UP 45.23 POINTS OR 0.23{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}/Australia’s all ordinaires CLOSED UP 0.17{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}/Chinese yuan (ONSHORE) closed UP at 6.5620/Oil UP to 46.74 dollars per barrel for WTI and 52.52 for Brent. Stocks in Europe OPENED DEEPLY IN THE GREEN. Offshore yuan trades  6.5650 yuan to the dollar vs 6.5620 for onshore yuan. NOW THE OFFSHORE MOVED SLIGHTLY WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN MUCH STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS MUCH STRONGER TO THE DOLLAR AND THIS IS COUPLED WITH THE  WEAKER DOLLAR. CHINA IS HAPPY TODAY

Read More @ HarveyOrganBlog.com

THERE JUST ISN’T ENOUGH GOLD

0

by Egon von Greyerz, Gold Switzerland:

There are lies damned lies and Central Bank Gold statistics. Total official global gold holdings are reported to be 33,000 tonnes. That is 19{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of all the gold ever produced in the world. But how can anyone ever believe any of these figures. Because no central bank ever has a public audit of all its gold holdings. Since the gold belongs to the people, they have the right to know if the gold actually exists, especially since the gold reserves are backing the currency.

WHY IS THE US GOLD NOT AUDITED?

But no, the truth about these gold reserves are veiled in total secrecy. And why we may ask. Why are the people as well as the creditors of a country not told the true financial position? What do these central banks have to hide? Let’s take the US. The US is allegedly holding 8,100 tonnes of gold, stored in Fort Knox, Denver and New York. The last official audit was 64 years ago in 1953 when Eisenhower was president. Since then, the US Government claims that the US gold has been audited over a period from 1974 to 2008. But no proper figures have ever been published.

FORT KNOX – WHERE IS THE GOLD?

The first question to ask is of course how an audit can ever take 34 years!!!! Only a government organisation can take 1/3 of a century to audit their assets. I know of no company in the world that can take 34 years to report their assets to the shareholders. The stakeholders of the US gold are the US people and they certainly have the right to know if the country really holds $332 billion worth of gold. Steve Mnuchin, the US Treasury Secretary, spent an afternoon in Fort Knox last week. After having seen a few percent of the total gold held there, he confirmed that it was SAFE! Well that’s good to know but he obviously hasn’t got a clue how much is there.

Secondly, an audit carried out over 34 years cannot possibly be accurate. The movement in gold over that period would totally nullify the accuracy of the audit.

Thirdly an audit should be carried out by independent auditors. This audit was done by a Government Committee for Gold and the Treasury. The exact method of the audit has not been revealed but according to some sources, the methods were highly suspect.

Fourthly and just as relevant is the total balance sheet position of the US gold holdings. The physical gold is only one part. Central banks practice gold lending or leasing on a major scale. Thus, the US could lease its gold to another bank against a fee. Lending can take place without the physical position of the gold changing. Other banks accept to borrow gold from the Fed without having it in their possession. There can also be swaps, forward sales and other derivative transactions that reduce the holding.

GERMAN STILL HOLDS 50{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} OF ITS GOLD ABROAD

Germany used to store 70{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of its gold abroad with the majority in the US. In 2013, they were under public pressure to repatriate the gold and declared that 674 tonnes would be repatriated from the US and France. They only received 5 tonnes in the first year because there was no gold available. It had probably been lent on to someone else. Finally, they just stated that the 674 tonnes are now in Germany. This means that around 50{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the German gold or 1,665 tonnes is still held abroad. The obvious question is of course why not hold it all in Germany. The official reason is risk spread and trading. It is dubious if the US or the UK are safer places than Germany. Financially Germany is clearly safer. All central banks trade part of their gold. To lease gold to someone, it doesn’t have to be held in New York or London. The leasing could easily be done from Germany.

Possibly, the 1,665 tonnes held abroad have been covertly sold or leased to a bullion bank which has sold it on to China. And China of course always takes delivery. They wouldn’t be so stupid to keep a major part of their gold in the US or London. If the German gold has been leased and shipped to China, all the German government has is an IOU from a bullion bank. So instead of physical gold they have a piece of paper.

SILK ROAD NATIONS ARE BUYING ALL THE GOLD

The same could easily be the case with the US gold or other central bank gold. With the massive buying we have seen from Silk Road countries in the last 10 years, it would not be surprising that a major part of the gold has come from Western Central banks. Since 2005, four Silk Road countries have bought 28,000 tonnes of gold.

Many market observers estimate that official gold holdings could be as little as half of the reported figures. In my view, that is not unrealistic. As the chart above shows, there has been a major shift of gold from West to East. Four Silk Road countries have absorbed more than the annual gold production for the last 10 years. An important part of the sales to the East will most certainly come from Western Central bank holdings.

UK A MAJOR GOLD EXPORTER

Switzerland publishes the monthly imports and exports of gold. These give a good indication of global gold trading since Switzerland refines up to 70{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the gold bars in the world. The chart below shows the Swiss gold imports from July. Of 152 tonnes imported, 80 tonnes came from the UK. The UK is certainly not known as a gold producer. The gold that the Swiss refiners get from the UK are 400 ounce (12kg) bars, most probably sold by central banks. The bars are broken down to 1 kilo bars and then shipped to China and India. These bars could either have been sold covertly by central banks or leased by them to the LMBA banks in London. In the past, the bars leased by central banks would have stayed in London.

Read More @ GoldSwitzerland.com

See no evil, speak no evil…

by Alasdair Macleod, Goldmoney:

The Jackson Hole speeches of Janet Yellen and Mario Draghi last week were notable for the omission of any comment about the burning issues of the day:

…where do the Fed and the ECB respectively think America and the Eurozone are in the central bank induced credit cycle, and therefore, what are the Fed and the ECB going to do with interest rates? And why is it still appropriate for the ECB to be injecting raw money into the Eurozone banks to the tune of $60bn per month, if the great financial crisis is over?i

Instead, they stuck firmly to their topics, the Jackson Hole theme for 2017 being Fostering a dynamic global economy. Both central bankers told us how good they have been at controlling events since the last financial crisis. Ms Yellen majored on regulation, bolstering her earlier-expressed belief that financial crises are now unlikely to happen again, because American banks are properly regulated and capitalised.

Incidentally, more regulation hampers economic dynamism, contra to the subject under discussion, and confirms Ms Yellen has little understanding of free markets. Mario Draghi, however, told us of the benefits of financial regulation and globalisation, and how that fostered a dynamic global economy. But a cynic reading between the lines would argue that Mr Draghi’s speech confirms the ECB is in thrall to Brussels and big business, and is merely representing their interests. And he couldn’t resist the temptation to have a poke at President Trump by expressing the benefits of free trade.

Hold on a moment, free trade? Does Mr Draghi really understand the benefits of free trade?

That’s what he said, but his speech was all about the importance of regulating everything Eurozone citizens can or cannot do. It is permitted free trade in a state-regulated environment. It is a version of free trade according to the EU rule book, agreed with big European business, which advises Brussels, which then sets the regulations. It is a latter-day Comintern that allows you to trade freely only on terms set by the state for prescribed goods with other states of a similar disposition. Draghi’s speech was essentially justifying the status quo laced with Keynesian-based central bank dogma.

The Fed is clueless about the credit cycle

Let us return to the real issue at hand, the questions that went begging about monetary policy. More confident central bankers in control of their brief might have said something about it, if only in passing. But with Ms Yellen we have a problem. If, as she claims, the Fed has cured America of financial crises, why hasn’t the Fed normalised interest rates already? Even on the US Government’s heavily-sedated consumer price index, inflation is at the Fed’s target, as are its highly-questionable unemployment numbers. Interest rates should already be normalised, which means they ought to be considerably higher than they are today.

As a rough rule of thumb, bond market investors in the past expected a free market to reflect the originary rate, the real rate shorn of all lending risk, of two or three per cent adjusted for price inflation for medium to long-term government bonds. That indicates a yield level of four per cent or more on 10-year Treasuries, even on government inflation estimates. Meanwhile, the 10-year US Treasury yields only 2.15{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, and the Fed funds rate is currently targeted between one and one and a quarter per cent. Something is very wrong.

Correction: everything about this is wrong. The statistics are self-serving and bogus, so you cannot judge interest rates by referring to them. But worst of all is something that goes unquestioned today, and that is interest rates are a function of the markets, not central banks. They cannot possibly know what normalised rates should be.

That’s why we have a credit cycle, born out of the central banking system’s guesses. Central banks always err on the low side for interest rates, partly because of the long-standing moral antipathy against high interest rates and partly because of the Keynesian theology which accords with it. Over time, this suppression of interest rates has led us all into a global debt trap, because of the sheer size of it, which has accumulated to well over $200 trillion. That’s about three times global GDP.

Normalising interest rates would spring the debt trap firmly shut. The whole Western financial system would be threatened by a combination of defaults and collapsing asset values, starting from the weakest point in the global financial system. With debt of today’s magnitude, it will take nominal interest rate rises of only one or two per cent to set off the crisis Ms Yellen believes will never happen again. It is a repeating credit cycle endemic to the fractional reserve monetary system and central banking’s monetary intervention. And when the crisis hits, yet again for the umpteenth time, central banks will flood the system with ever larger quantities of cash.

Easy money and credit does its hidden damage by subverting economic calculation. The accumulation of miscalculations always leads into a crisis. When it happens, the crisis is sudden and unexpected by the banking community. The crisis phase of the credit cycle is nowadays curtailed by central banks, who come charging to the rescue with unlimited fiat money to offset contracting bank credit. They think by stopping the reallocation of capital from miscalculated investments, they are saving the world. They are not: all they are doing is making the economy less efficient by burdening it with a legacy of unrepayable debt for the next credit cycle. Hence, the sluggishness of Western economies which have progressively lost their productive mojo. These are the monetary policies that have become a growing impediment to Jackson Holes’ “fostering a dynamic global economy”.

However, there is a way to assess where we are in the credit cycle. Gibson’s paradox, which was impossible for the Keynesians to resolve, demonstrated that in a free economy it is demand for savings from businessmen that sets the marginal rate at which savers are prepared to defer their current spending. It is not, as Keynes averred, the greedy rentier forcing an unnecessary cost on the entrepreneur. Instead of being set by the saver, the level of interest rates correlate with the one thing a businessman knows best, the price at which he can expect to sell his production.ii

Importantly, that is where the correlation lies, not with the rate of inflation, which is what central banks assume in setting interest rate policy. Therefore, the amount of interest a businessman is prepared to pay is determined by the difference between the other factor costs of production and the anticipated wholesale value of the product. If the differential widens, an investing businessman can afford to bid up interest rates. If the differential contracts, borrowing at higher rates becomes uneconomic. The correlation between wholesale prices and wholesale borrowing rates is a reasonable fit for this reason.

Therefore, we should pay attention to the yield on a suitable government bond, as an indicator for the wholesale originary borrowing rate in a fiat currency. If we take the 10-year US Treasury bond as a marker this loan rate, tracking the yield should indicate changes in the level of borrowing demand from the wider economy, the small and medium size enterprises that make up 80{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the non-financial sector, in accordance with Gibson’s paradox. It should give us an early warning of widening demand for bank credit.

Of course, this rate is distorted by interest rate suppression, and by loan demand from the financial sector itself, so we cannot take it as an interest rate proxy per se. It turns out that the yield first bottomed at 1.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} in 2012, which probably sets a date for the end of the crisis phase and the beginning of the recovery phase of the current credit cycle, now in its sixth year. This was followed by a rise in yield to touch 3{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, when corporate borrowing for share buy-backs and for geared financial speculation on Wall Street soared.

It then tested that low level again in July 2016, as these factors abated. More recently, it rose strongly from that time to hit a high of 2.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} last December, from which it has declined steadily to the current level at 2.15{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}.

This is admittedly imprecise, but if it is telling us anything it is that US businesses are most recently stalling in their loan demand. This could reflect margins being squeezed by rising commodity prices, though in a service-oriented economy this effect should not be given undue weighting. But on a flow of funds basis, we can take it that the US economy is still in the minor ups and downs of a recovery phase in terms of commercial demand for credit. The softness of credit demand since December is probably what convinces the Fed that the current level of interest rates can be maintained, with a modest upwards bias in time.

However, we know that while interest rates remain heavily suppressed, it allows business propositions to be financed which are not otherwise commercially justified. Long-term projects appear to become viable, that will be uneconomic when rates normalise. The longer this goes on, the greater will be the drip-feed accumulation of distortions during the credit recovery phase that will have to be washed out in the next credit crisis.

To summarise, credit demand from non-financial businesses is not yet expanding at an accelerating rate, the distortions from suppressed interest rates are nevertheless accumulating, and yet the Fed seems blissfully unaware of the dangers accruing for the next financial crisis.

The Eurozone is running into deep monetary trouble

The US is an economy geographically isolated from the rest of the world, except from its close neighbours. And even NAFTA, the trade agreement that conjoins them, is under threat from President Trump’s administration. Europe is very different, with a dynamic Asian economy, stimulated by massive Chinese investment and spending, offering new business opportunities. The development of China’s overland silk road is already having a major impact, with rail freight quantities rapidly expanding in both directions. Admittedly, some of this is replacing freight that would have gone by sea or air, but there is still a substantial increase in the transhipment of goods overall.

European manufacturers are waking up to this potential. A brand-new Mercedes can be shipped from Stuttgart and be in a saleroom in Beijing in a little over two weeks. Similarly, Zanussi can railroad white goods from its Chinese factories to its European distributors, saving both time and money compared with using sea routes. The benefits of this trade, even with EU protective tariffs, are not to be underestimated. Furthermore, it is expanding rapidly on the back of interest-free monetary policy.

Read More @ Goldmoney.com

INVESTORS RETURN: U.S. Silver Eagle Sales Surge Over Past Two Days

0

by Steve St. Angelo, SRSrocco:

While interest and sentiment in the precious metals have been depressed compared to the preceding month, this all changed during the past few days.  This trend change is particularly the case for silver.  Even though Silver Eagle sales have been much weaker this year, positive signs show that investors still believe in acquiring the shiny metal when fear and uncertainty enter into the markets.

Although, Silver Eagle sales for Jan-Aug 2017 are nearly 50{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} lower than they were during the same period last year.  I believe the biggest factor that hurt Silver Eagle sales was the election of Donald Trump as U.S. President.  Many individuals in the Alternative Media think that because Trump is in the Whitehouse versus Hillary Clinton, it translates to a lot less FEAR as it pertains to the control by the elite.  Thus, the motivation to continue purchasing precious metals, bulk food, guns-ammo and survival goods has diminished considerably since the election in November.

However, when serious geopolitical events arise, investors still want to rush into owning more gold and silver.  And they did so in a BIG WAY over the past few days.

According to the updates on the U.S. Mint website, Silver Eagle sales surged by 300,000 on Monday, August 28th and another 300,000 on Tuesday, August 29th:

As we can see, Silver Eagle sales for the first three weeks of August were only 425,000, the slowest trend compared to all the previous months.  But, after the N. Korean nuclear threat, the massive flooding in Houston Texas, and the U.S. debt ceiling issue over the past week, the U.S. Mint sold 600,000 Silver Eagles in two days, surpassing the 425,000 four-week total (Aug 1st-25th).

Again, the U.S. Mint sold 300,000 Silver Eagles on Monday, August 28th and another 300,000 on Tuesday, August 29th.  They may have another update today for the past two days, but sometimes they wait until the next month to list those sales.

Regardless, that is a great deal of Silver Eagles sales over those two days.  I would imagine the crazy events over the past week were instrumental in pushing up not only the silver price but also demand for Silver Eagles.

What is also extremely interesting about the recent U.S. Mint Gold and Silver Eagle sale figures, is that the silver to gold buying ratio is now above the 100 to 1 ratio.  The U.S. Mint sold 1,025,000 Silver Eagles vs. 9,500 oz of Gold Eagles in August (so far).  Thus, the Silver to Gold Eagle sales ratio is now 108 to 1.  Which means, investors are purchasing a great deal more Silver Eagles than Gold Eagles during these tumultuous geopolitical, natural disaster and upcoming financial events.

It will be interesting to see what happens with precious metals demand and prices when the U.S. debt ceiling debate becomes an issue next month.  Also, there is speculation that there will be a significant correction in the broader stock markets this fall.  If we do see a significant correction in the broader markets, I would imagine we will see a surge in the price and demand of gold and silver.

This is exactly what happened to the precious metals at the beginning of 2016 when the Dow Jones fell 2,000 points in a relatively short period.  In just two months as the Dow Jones sold off just 2,000 points, the silver price increased 17{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, and gold jumped 20{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}:

While the overly-inflated U.S. stock market could continue to rise even higher, at some point, it will suffer a substantial correction.  Because the U.S. govt has been propping up the markets, when this correction finally arrives, it will likely be the BIG ONE.

Read More @ SRSrocco.com