February 4 - Gold
$1251.70 down $8.70 - Silver $19.40 up 1 cent
"Reality is something you pick up like a signal. Most
people just don't have their radio on." … Anonymous
Would gold be allowed
to really break out? Would a DOW that is falling apart be allowed to
continue its downward trek, one which is bringing on the first signs of
serious concerns in the public arena?
No and no are the
answers.
Gold was stopped once
again at The Gold Cartel’s PLAN A hit time in London this morning and was
pressed on lower from there, falling to $1246 and change before the drop
was arrested. Breakout aborted. "Signal Silver" was the
predictive indicator for the zillionth time. May it be the reverse for a
change. Its price held up well today despite the pressure on gold and
quickly recovered to the unchanged level.
The DOW and friends
were called a good deal higher for their openings. This stood out because
the Nikkei was so weak again and the Chinese stock market dropped even
further. Yesterday the stock market weakness in Japan was viewed as a
contributor to our sharp drops. The latest…
Japan leads global
sell-off as jitters remain
Associated Press
By By YOUKYUNG LEE, AP Business Writer
Tuesday February 04, 2014 2:23 AM
SEOUL, South Korea
(AP) — Japan's Nikkei 225 stock average dived more than 4 percent Tuesday
as weakness in U.S. and Chinese manufacturing sent world markets sharply
lower.
Early European trading
mirrored the slide in Asian stock markets, showing investor sentiment
remained fragile as weak data from the world's two biggest economies
sparked concerns that growth could wane.
Germany's DAX drooped
1.1 percent to 9,088.62. Britain's FTSE 100 fell 0.6 percent to 6,429.07
and France's CAC 40 lost 0.5 percent to 4,085.76.
Earlier, Japan led the
slide in Asian stocks. The Nikkei tumbled 4.2 percent to 14,008.47 and is
down 14 percent over the past month. Toyota Motor Corp. sank 5.7 percent
before reporting a fivefold surge in its quarterly profit and Sharp Corp.
plunged 8.4 percent…
Before the Plunge
Protection Team became so active, the norm would have been to see further
selling in our markets, some distress selling kick in, and then perhaps a
good recovery (second time in a week this observation has been made here).
But the PPT was taking no chances any downside pressure might get out of
control and made sure we came in higher to counter weaker stock markets all
over the place.
Not much new to bring
your way today. Gold is in lockdown. While the price is not allowed to go
where it wants to on the upside yet, The Gold Cartel has been unable to
gain any downside traction with their attacks … and they seem unwilling to
press that case with their own dwindling supply of central bank physical
gold ammo.
The AM Fix was $1253.
The PM Fix fell to $1250.25.
The gold open interest
fell another 2673 contracts to 371,133, as its open interest closes in on
new multi-month lows. Silver, on the other hand, is back to encroaching on
multi-month highs. Its OI rose 1378 contracts to 147,365. This represents
nearly a 40% rise off of its lows of last year.
The dichotomy remains
baffling. The contrast between the two might be the most visible EVER. I
can only think of one explanation, and it is just a hunch. Physical gold
demand is really stressing out The Gold Cartel’s ability get the price lower.
While the bullion banks are publicly bearish with their market forecasts,
fewer and fewer of them are willing to put their money where their mouth is
these days. The "interest" in being short at these price levels
is drying up … hence the lower open interest.
We covered what JPM is
probably up to yesterday in gold, using derivatives to keep gold in check
as best they can. Silver is a bit of a different animal in that there are
not the above ground stocks available compared to gold. Simplistically, the
central banks don’t have silver in their vaults as they do gold. They have
dumped it over the past years.
So, they may have
decided they needed to play a more concerted role on the short side of the
futures market in the US to prevent silver from moving much higher. It is
possible that this very elevated silver open interest is subtly revealing a
growing stress in the silver arena. We don’t know if this is the case yet,
but we ought to find out once gold breaks its shackles and explodes to the
upside. When this occurs, JPM and cabal allies ought to be forced to cover
and the open interest should drop considerably as it does, before rising in
normal fashion as the price of silver heads for all-time highs.
Management of
perspective
* Hit gold at the obligatory
3:00 AM, 8:20 AM, and 9:00 AM MOPE points.
* Paint the tape.
* No follow-through allowed.
* Deny breakout.
* Set algos to pressure longs all day long.
* Force a close below $1255.
* Wait for idiot MSM to explain: Gold retreats as dollar gains, equities rebound
* Drain a little more physical out of the GLD, repeat as necessary.
The featured hit was
2,359 April contracts at 8:20 & 8:21 AM. Maybe Heaven can wait but
cartel rigging obviously can't. Even a +1% follow-through capping was
overly optimistic this time around. With JPM at over 60% of all gold
derivatives you wonder who is actually left to even show up on the long
side. Will the real Washington Generals please stand up?
Let's all be mindful
of NFP Friday coming up. It should be a jobs disaster, therefore all the
more reason to give gold a gooning. As of right now up is still down, white
is still black, and the word "counterintuitive" is all we are
given to explain such blatant interference.
JMc
Negative
GOFO and the silver signal
Good
morning Bill,
One month GOFO just dropped from +0.02800 on 2/3/14 to -0.00400 on 2/4/14
which is a big drop for one day. I find it interesting that GOFO goes
negative again while China is supposedly on holiday.
While
gold is down a fraction, silver and the gold stocks are up. As I type this,
GDX is up about ¼ percent and GDXJ is up 2%. GDXJ was flat yesterday even
as the stock market was really hit. In the past when the stock market gets
really hit, GDXJ would get totally trashed.
I
noticed that in Barron’s over the last two weeks that Marc Faber and Fred
Hickey both recommended the purchase of GDXJ. Not a bad day so far.
Paul
*08:15 Narrowing Treasury
spreads a sign of fading growth expectations -FT
The FT reported that the two- and 10-year bond yield spread has contracted
by about 30 bps since the start of the year, an unwelcome sign to the Fed
as growth expectations fade.
The article said that the important question is whether or not the drop in
stocks and rally in bonds represents some portfolio adjusting or reflects
fundamental concerns that recent soft economic data has not just been a
weather-related aberration. It added the 2-10 spread's reaction to upcoming
economic data should help answer that question.
* * * * *
*The yield on the 10
yr T note fell to 2.62%.
Crude oil rose 86
cents per barrel to $97.29.
The dollar rose .11 to
81.12. The euro fell .0011 to 1.3516. The pound rose .0020 to 1.6325. The
yen lost .65 to 101.65.
CARTEL CAPITULATION
WATCH
The DOW rose 72 to
15,445. The DOG gained 34 to 4031.
03 February 2014 NYSE Margin Debt - Take It to the
Limit, One More Time This gang
of Merry Banksters made a 1929-like policy error, as they did in 2000 for the
first crash, and then followed that up by blowing yet another asset bubble
in mortgage debt, and crashed it all over again, almost taking down the
world financial sysem.
And now they turn around and do it for a third time, with financial paper
assets. Will they keep going until the middle class and the real economy is
beaten, like pulp into the ground, and a few jokers sitting on the top of
the financial pyramid own nearly everything?
What are they thinking? Who are these guys, Mortimer and Randolph Duke?
Greenspan and Bernanke: Worst
Federal Reserve Policy, ever.
Watch the margin debt story unfold here.
Let's see what happens next.
***
10:00 Dec US Factory
Orders (1.5%) vs. consensus (1.9%)
Nov revised to +1.5% from +1.8%
* * * *
U.S. factories
expanded at much slower pace in January
Tuesday, February 04,
2014 8:48 AM
WASHINGTON — U.S.
manufacturing barely expanded last month, in part because cold weather
delayed shipments of raw materials and caused some factories to shut down.
The report from the Institute for Supply Management, a trade group of
purchasing managers, contributed to a plunge on Wall Street. The
manufacturing report raised the possibility that the U.S. economy might be
starting to weaken.
The Dow Jones industrial average tumbled 326 points — more than 2 percent.
The Dow has sunk 7 percent so far in 2014.
The ISM said Monday that its index of manufacturing activity fell to 51.3
in January from 56.5 in December. It was the lowest reading since May,
though any reading above 50 signals growth. Manufacturers said export
orders grew at a healthy pace but slightly less than in the previous month.
The figures suggest that U.S. manufacturing is slowing after a strong
finish to last year. Auto sales have decelerated, and businesses are
spending cautiously on machinery and other large factory goods. The
slowdown means that economic growth in the first three months of this year
will probably come in below the strong 3.6 percent annual pace in the
second half of 2013.
In addition, China's factory output grew at a slower pace in January, a
government report over the weekend showed. That report added to concerns
that the world's second-largest economy is weakening.
On the positive side, a measure of Europe's manufacturing sector showed
that it expanded at the fastest pace in nearly three years.
Some economists cautioned against reading too much into Monday's report on
U.S. manufacturing, given the weather impact. George Mokrzan, chief
economist at Columbus, Ohio-based Huntington Bank, said there were some
"very unusual shutdowns as a result of the cold weather" at auto
plants and other factories.
"I'd be a little bit cautious about interpreting too much from this
report," Mokrzan said. "If we don't get a bounce next month, I
would start asking deeper questions."
Monday's report showed that a measure of new orders plummeted 13.2 points
to 51.2. That is the steepest drop since December 1980. A gauge of
production also fell. Factories added jobs, the report showed, but at a
slower pace.
Bradley Holcomb, chair of the ISM's survey committee, said cold weather
affected the report in several ways. Factory closings led to lower output
and caused manufacturers to receive fewer new orders. Stockpiles of raw
materials also fell as trucking routes were closed and shipping was
delayed.
Other recent indicators have painted a mixed picture of manufacturing.
Factory output rose for a fifth straight month in December, according to
the Federal Reserve. Manufacturers cranked out more cars, trucks,
appliances and processed food.
But businesses are still spending cautiously. Orders for machinery and
other large factory goods fell in December.
DJ ISM-New York:
January Business Activity Ramps Up
Tue Feb 04 09:45:00
2014 EDT
Business activity in
the New York City area accelerated further last month as the region's
employment gauge jumped to a three-year high, according to data released
Tuesday.
The Institute for
Supply Management-New York's Current Business Conditions index rose to
64.4, from 63.8 in December and 69.5 in November. The report said that was
the first three-month streak where the reading came in above 60 in three
years. A reading below 50 indicates contracting activity.
Subindexes covering
current activity broadly improved.
The employment index
rose to its highest in three years, to 60.7 for January from 55.1 in
December. The prices-paid index increased to 63.0 from 60.0, while
purchasing volume rose to 53.8 from a neutral 50.0.
The current-revenues
index advanced to 63.5 from 60.0, while a gauge on expected revenue surged
to 71.7, its highest since August.
Only the six-month
outlook index cooled a bit to 70.0 last month, from 73.2 in December, but
still higher than any other month in 2013.
When asked about
business impediments, regulation was cited most as an issue, mentioned by
54% of respondents. A little over a third pointed to inflation as an
impediment, while 42% pointed to the cost of benefits.
Members were also
asked what factors helped to generate business opportunities. About 30%
said management skills, while 23% cited skilled labor. More than a quarter
attributed opportunities to technology.
In January's special
questions, the ISM-NY asked its members if their company expenses ran
within budget plans last quarter.
The majority, 57%,
said costs were in line with budget projections, while a quarter saw
spending running above budget and 11% below. A year ago, the exact same
proportions were reported for the last quarter of 2012.
The ISM-NY releases
its activity report, which comprises mainly non-manufacturers, one business
day before the national ISM non-manufacturing report, which is typically
released on the third business day of each month.
The national ISM
manufacturing report surprised economy-watchers Monday, when the main index
fell to its lowest since May.
U.S. IBD/TIPP economic
optimism declines to 44.9 from 45.2
U.S. IBD/TIPP economic
optimism declines to 44.9 in February
In a report,
Investor's Business Daily and TechnoMetrica Market Intelligence said their
IBD/TIPP Economic Optimism Index fell to 43.1 this month from January’s
reading of 45.2. Economists had expected the index to rise to 46.1 in
February.
A reading above 50.0
indicates optimism, while those below 50.0 point to pessimism.
The index is 0.4
points above its 12-month average of 44.5, 0.5 points above its reading of
44.4 in December 2007 when the economy entered the recession, and 4.5
points below its all-time average of 49.4.
Following the release
of the data, the U.S. dollar held on to gains against the euro, with EUR/USDshedding
0.16% to trade at 1.3507.
Meanwhile, U.S. stock
markets were higher after the open. The Dow Jones Industrial Average rose
0.35%, the S&P 500 index added 0.6%, while the Nasdaq Composite index
increased 0.55%
-END-
06:50 FT discusses
barrage of bad news that has hit emerging markets
The discussed barrage of bad news that has driven the latest bout of
emerging market turbulence. The paper highlighted the growth slowdown in
China, strikes in South Africa, political crises of varying degrees of
severity in Ukraine, Turkey and Thailand, and Argentina's devaluation. It
also pointed out that these developments have taken place against the
background of Fed tapering.
The article noted that when it comes to the potential for market
stabilization, the Institute of International Finance (IIF) seems
relatively upbeat. It said that the IIF does not believe that there will be
a sustained pullback from emerging markets. In addition, it is forecasting
a gradual rebound in capital flows in 2014 and 2015, albeit at a much lower
level to GDP than from 2010 to 2012.
However, the paper went on to highlight concerns about the negative responses
to recent tightening moves that suggest investors may be looking for even
higher rates to drive a more credible rebalancing. It also discussed the
adverse growth impact from aggressive tightening measures and the lingering
currency risk surrounding the early stages of the Fed's policy
normalization process.
http://www.ft.com/intl/cms/s/0/ddefc730-8cff-11e3-ad57-00144feab7de.html?siteedition=intl#axzz2sG1clJm6
06:00 Macro Summary:
Eurozone
ECB's Draghi is
seeking German support on bond sterilization:
Bloomberg reported
that ECB President Draghi would only consider ending the sterilization of
crisis-era bond purchases if he is openly backed by the Bundesbank,
according to two unnamed euro-area central bank officials. The article said
Draghi may ask policy makers to stop the absorption of the terminated
Securities Markets Program (SMP) if the Bundesbank sells the move to the
German public.
It noted that this
could add nearly €180B to Eurozone financial system, help to curb
volatility in money market rates and reduce banks incentive to keep cash at
the ECB rather than lend it on. It also pointed out that the ECB has failed
to fully sterilize bonds in last two weeks in a sign that banks may be
reluctant to park cash with the ECB amid tighter funding conditions.
There have also been
suggestions that the recent bond sterilization dynamic may be part of the
process of market normalization as the Eurozone emerges from crisis. In
addition, there is conjecture that some banks could be hoarding cash ahead
of the ECB's AQR. Note that the WSJ reported last Friday that despite its
typically hawkish leanings, the Bundesbank would favor an end to ECB
sterilization.
German yields fall to
six month lows: Reuters discussed the downturn in German Bund yields, which
hit the lowest levels since 5-Aug at 1.63%. It noted that the downturn in
stocks boosted demand for safe haven assets and also pointed out that
demand has accelerated since Eurozone inflation data reinforced the debate
on more ECB policy action. In addition, it discussed the speculation
surrounding ECB bond sterilization and noted this could also keep German
bond yields under pressure.
Euro may be
resurfacing as a safe haven: The WSJ reported that the euro may be
re-emerging as a safe haven currency. It noted that on some days when
emerging markets experienced a steep fall the euro has managed to rally,
which is usually a dynamic associated with JPY or USD. It discussed some of
the factors that could support the euro, including the Eurozone's large and
growing current account surplus, along with overseas demand for Eurozone
debt. It also pointed out that the ECB's low interest rate makes loans in
euros attractive and in times of stress investors that borrowed cheap money
in euros may be unwinding these bets. In addition, the article noted that
if the markets remained uncertain and the euro stayed strong then exports
would be become more expensive.
Banks/Banking
Union/Stress Tests:
European banks have
$3T of exposure to emerging markets: Reuters discussed analyst estimates
that noted European banks have loaned in excess of $3T to emerging markets,
more than four times US lenders, which puts them at greater risk if
financial market turmoil intensifies. It noted that the risk is most acute
for six European banks, BBVA, Erst Bank, HSBC, Santander and Standard
Chartered and Unicredit, which had more than $1.7T and around 12% of assets
in exposure to developing markets. In addition, it said exposure could have
an influence for the industry as a whole due to the ECB's AQR, which aims
to expose weak points and restore investor confidence in the wake of the
2008 financial crisis.
ECB's Constancio
defends strength of bank stress tests: The FT discussed yesterday's ECB
press conference, which outlined the details of its AQR and stress test
parameters. It noted comments from ECB vice-president Constancio, who said
that the exercise will be tough, demanding and very rigorous, which will
will leave no doubt over the financial system and help to boost the
Eurozone's weak recovery. Recall that the ECB said the portfolio of assets
set for inclusion in the AQR would be decided by mid-February.
ECB's Lautenschlaeger
wants swift agreement on bank failures: Reuters cited comments from ECB's
Sabine Lautenschlaeger, who urged EU negotiators to make a swift agreement
on a shared mechanism for closing down failed banks. She said that all
banks under the direct or indirect watch of the ECB's Single Supervisory
Mechanism (SSM) should fall under the joint resolution mechanism. She added
that public backstops should be in place by the time ECB starts supervising
Eurozone banks from November to ensure that any possible fallouts from the
AQR can be handled in an orderly way. She also reiterated that if possible
the period of 10 years for moving toward a single resolution fund should be
shortened.
Latest Greek data and
estimates point to a rebound: Ekathimerini discussed the latest Greek data
and estimates for the 2013 fiscal year and noted that it pointed to a
smaller-than-expected economic contraction and clear indications of a
market rebound. The rationale for this view was the primary surplus for
last year is now expected to reach €1.5B and GDP will contract less than 4%
when figures are published on 14-Feb. In addition, it expected that the
current account balance will show a surplus for 2013 and noted yesterday's
manufacturing PMI, which climbed to 51.2 in January, leaving it in
expansionary territory for the first time since August 2009.
Greece seeks deal on
Swiss secret funds to target tax evaders: Ekathimerini noted that Greek
Finance Minister Stournaras will meet with his Swiss counterpart Eveline
Widmer-Schlumpf today and Greek tax evasion will be on the agenda. The
article noted that talks on the issue have stalled since 2012 and any
progress toward an agreement would provide a boost for Greece. The report
said that Greece has vowed to clamp down on tax evasion as part of its
bailout agreement. It cited figures at the end of November, which showed
that the the country was owed €63B in unpaid taxes, fines and loans.
* * * * *
Bank of China
International hires Ex-Goldman metals chief
* Initial focus on
investor products, physical metals
SYDNEY, Feb 4
(Reuters) - Bank of China International (BOCI)
has recruited former Goldman Sachsmetals trading
chief as an adviser to help it expand its commodities business.
Chinese banks are
stepping away from mainly consumer-led business to take advantage of a
tough climate for Western brokers - grappling with strict European and U.S.
regulations - to expand their presence in natural resources, and trading in
particular.
BOCI's appointment of
Stephen Branton-Speak as an adviser is one of the highest profile metals
industry hires by a Chinese bank since Hong Kong Exchanges & Clearing
Ltd bought the London Metal Exchange (LME) for $2.2 billion in 2012.
Branton-Speak was also
on the LME board.
The initial focus of the
expansion will be on investor products and physical metals, Arthur Fan,
London-based chief executive of BOCI Global Commodities, told Reuters.
Last week, South
Africa's Standard Bank said it would sell a 60 percent stake in its
London-basedglobal markets unit to China's ICBC
for $765 million. The sale includes the metals unit of Standard Bank, a
member of the LME.
In December, a unit of
China's Shenzhen-listed GF Securities applied to trade in the LME ring. Its
local unit, GF Financial Markets Ltd, bought the commodities brokerage unit
of Natixis, including its LME ring dealing business, as the French bank
wound up its commodities broking unit.
BOCI became the first
Chinese member of the LME to much fanfare in 2012, but markets participants
have said it has failed to build on momentum.
Branton-Speak built up
Goldman Sachs' physical trading desk in the aftermath of the 2008 financial
crisis to become one of the giants on Wall Street, as banks made a bid to
offset the loss of income from the forced closure of proprietary trading
desks due to stricter regulatory reforms.
As one of the LME
executive committee members, he also played a leading part in steering the
LME's $2.2 billion sale before retiring in December of 2012.
Branton-Speak joined
Goldman Sachs in 1997 as a metals trader, before became a managing director
in 2006 and a partner in 2008. He was also on the management committee of
the London Bullion Market Association (LBMA). He is also principal
consultant with Calnic Commodity Consultancy, according to his LinkedIn
page.
-END-
06:28 Macro Summary:
China
Chinese markets remain
closed for the Lunar New Years holiday.
Jan MNI China Consumer
Indicator 95.1 (lowest since Sept) vs 97.5 prior (which was an 18-month
high)
Current conditions and future expectations both fell, with the latter
leading the decline.
Employment indicator fell sharply from an 18-month high in Dec.
Missing data may signal rising unemployment: Nikkei reported that there
were two strange developments concerning employments statistics in 2013.
The first is the unemployment rate, which dropped to 4.04% in September,
after holding steady at 4.1% since autumn 2010. It said Beijing may have
tampered with the rate to avoid problems during the party conference to
calm nerves and make the economy seem stronger than it actually is. The
other development is that the government stopped announcing the number of
jobless workers in cities. It stood at 9.18M at the end of June 2012 and
9.17M at the end of 2012, but no figures were released last year. Some
analysts suspect that the omission means there are more jobless workers
now.
China demand still
buoys global producers: The WSJ noted that China's resilient global demand
has spared many suppliers - such as tobacco farmers in Zimbabwe - even as
investors flee emerging markets. The article said a slowing China hasn't
hurt it suppliers much because massive demand hasn't significantly weakened
and many emerging economies now have their own consumers to help pick up
any slack.
China warns officials
not to cover up corruption: Reuters reported that Chinese authorities have
warned they will go after officials who cover up corruption, in the
government's latest move to curb widespread graft.
* * * * *
05:19 Macro Summary:
Japan
Nikkei continues
correction: The Nikkei closed ~4.2% lower on Tuesday, the largest
single-day loss for the index since 13-Jun. A variety of external risks
continued to weigh on the index. Weaker-than-expected data out of the US
overnight was cited as a catalyst, prompting concerns over the pace of the
US recovery. Caution surrounding emerging markets also was cited as an
overhang. It was the fifth straight negative close for the index. The
Nikkei is now down more than 14% on the year.
Amari concerned about
market overreaction: Reuters cited comments from Economics Minister Akira
Amari, who said that he was worried that investors were overreacting to US
economic data and Fed tapering. Amari cited Japanese corporate profit
growth as proof of Japan's economic revival.
Government ponders
expanding tax base to offset potential impact from cutting corporate tax:
The Nikkei reported that the Ministry of Finance is considering expanding
the tax base to offset any potential losses from cutting the corporate tax.
Recall that the government estimated that a 1% cut in the corporate tax
would decrease tax revenue by ¥470B, and that the effective corporate tax
rate will be 35.64% in fiscal 2014. The government is considering
tightening restrictions on loss carry forwards as a tool to broaden the tax
base, which would increase some companies taxable income. Also being
considered is a reduction in the exemption granted for dividend income on
entities such as subsidiaries, which would mainly target holding companies.
Muted effect of weak
yen shows hollowing-out of industrial base: The WSJ reported that exports
have not spiked as expected on a weaker yen, which the paper speculates
indicates a hollowing-out of Japan's industrial base. The article noted
that despite a 15.3% increase in the value of exports on a ~20% fall in the
value of the yen, export volumes are largely unchanged. It attributed the
lack of growth in export volume to Japanese companies moving production
overseas to hedge exchange-rate risks and weak domestic demand. There have
been a number of similar articles in recent months discussing the inability
of yen weakness to drive a pickup in export volume.
Economy:
GDP grows 0.2% m/m in
December: The Nikkei cited data from the Japan Center for Economic
Research, which revealed that seasonally adjusted real GDP was up 0.2% m/m
in December. It was the fifth consecutive month of growth. Consumer
spending increased 0.4% m/m, led by solid car sales ahead of the sales tax
increase scheduled for April. Capex declined for a second month running,
falling 0.7% m/m.
Kuroda sees 2%
inflation in late FY14/early FY15: Reuters cited comments from BoJ Governor
Kuroda, who said that Japan will experience 2% inflation at the end of FY14
or beginning of FY15. He said that Japan was "making steady
progress" towards the inflation target. Recall that when the BoJ
embarked on its QQE program, it set a 2% inflation target to be achieved
within two years. However, recently some governors have advocated extending
the two-year timeframe as they do not believe that 2% inflation is
attainable within that period.
Large Japanese
companies receive greater benefits from Abenomics: The Asahi Shimbun cited
a survey in the Diet's Lower House that revealed large companies have
received outsized benefits from Abenomics. Of respondents, 60% said that
they saw no impact or both positive and negative results, while 20% said
that they saw benefits. However 40% of large companies saw benefits,
whereas only 20% of SMEs reported seeing them. Additionally, 20% of
companies said they saw a negative impact from Abenomics, with the majority
being SMEs. Businesses biggest worry was a fall in demand following the
sales tax increase, which 34% of respondents cited, followed by increased
costs of imports including energy and raw materials, which 32% cited as the
biggest challenge that they face.
Japanese megabanks
bolstered by demand for domestic lending: Reuters cited results from
Japan's three largest banks, Mitsubishi UFJ (8306.JP), Mizuho (8411.JP),
and Mitsui (8316.JP), which all benefited from an increase in domestic
lending. Domestic loans grew 2% at the banks, the quickest since 2009, and
passed ¥200T for the first time in more than three years. The article noted
that the outlook remains bright as around 25% of Japanese companies plan to
increase capex.
Japanese megabanks
still trail big US banks in profits, market cap: The Nikkei reported that
although Japanese megabanks' earnings have outperformed, they still trail
US banks in profit and market capitalization. The article noted that US
banks profits dwarf the megabanks, and by market capitalization Japan's
largest bank ranks 14th globally. The paper attributed the relatively low
valuations to lagging profit growth, and added that Japanese banks are
looking to make overseas acquisitions to help bolster growth.
* * * * *
04 February 2014
NAV Premium of Certain Precious Metal Trust and Funds
- 91,680 Ounces of Gold Out of Sprott The premiums on PHYS and PSLV are back more to 'normal' levels now,
although still hardly exuberant. PSLV is at a slight premium, and PHYS is
almost flat.
The deeper discounts on CEF and GTU are still there, but a bit thinner that
they have been.
Since the
last time I
put out this chart, another 91,680 ounces of gold bullion have been
redeemed from the Sprott Physical Gold Trust.
I can imagine someone rationalizing this redemption as an arbitrage deal
because PHYS is selling at a slight discount to its NAV. However, given the
'friction' of the transaction, and the necessity of storing this amount of
gold, it seems like a fairly small amount to be tempting for a mere
arbitrage.
Although it is possible that PHYS has priced its redemption process too cheaply.
And there is no allowing for the desperation of a hedge fund that is
willing to scrape for thin returns.
But one would think that playing the spread with paper and leverage, and
betting that there would be a reversion to norms if the premiums fall to
historically low discounts, would be a smoother and more scalable wager for
any fund truly interested in paper profits.
But this seems to be viewing a phenomenon in isolation that I think it is
more correctly seen as part of a general trend, that one is foolish to
ignore.
As I have shown here repeatedly, there is a general scouring of enormous proportions of the physical
gold bullion from most if not all of the Western trusts and funds at these prices as
set by the Comex, which unfortunately is still a price maker for the
physical trade despite its own shrinking physical basis. That is the
inconvenient reality that gold imposes on the financiers: they cannot print
it into existence, except as an apparition of paper, without genuine
substance.
And there are none so blind as those whose paychecks depend on their
willing ignorance. It is unfortunate, but a fact of life.
So, let's see where this grand experiment goes. I have not been keeping an
eye on the short interest in the PHYS, but I think the greater problem is
the price of gold overall, which does not seem to be a market clearing
price in terms of the actual commodity. And as a result, the physical
bullion is flowing towards markets paying fairer prices, and finding
ownership in stronger hands.
But why argue about it? Let the tide go out, and we will see what allocated
and unallocated funds are naked. And who, at the end of the day, is
actually holding what gold, and with what encumbrances, cross claims, and
counterparty risks.
So in summary, some might say that gold is flowing out of Sprott because of
its discount to NAV, which I point out is miniscule, and much more adeptly
gamed through the usual paper games.
Rather, gold is flowing from financialised markets to cash basis markets,
from highly leveraged schemes to the vaults of stronger hands flush with
paper of less confident value, and put even more simply, from West to East.
This is what happens when once again we begin to see 'peak paper.' Yes it
certainly has not failed yet, and yes, the official measures may show
little devaluation from inflation and mask the enormous leverage and
undisclosed counterparty risk that is still in the system, après Crash.
And to this I say, 'in time.'
Not everyone is investing with a two month time horizon, as is de rigueur in the City and on
the Wall Street these days, and passing around their hot potatoes of dodgy
paper from hand to hand as quickly as possible, before the next bell rings.
***
BullionVault’s Gauge
of Client Gold Buying Falls to 18-Month Low
BullionVault, an
online service for investors to buy and sell physical gold and silver, said
its Gold Investor Index slipped to an 18-month low in January as prices
posted the first monthly advance since August.
The gauge fell to 51.9
last month, the lowest since July 2012, from 52.9 in December, the
London-based company said in an e-mailed report today. A reading above 50
indicates more buyers than sellers…
Buy while the price of
gold is still supressed - Levenstein
While the price of
gold remains suppressed, take advantage of the situation and accumulate
more gold and silver, says David Levenstein.
Author: David
Levenstein
Posted: Tuesday , 04 Feb 2014
As gold prices
continue to hover around the $1240 an ounce level, demand for the physical
metal remains extremely robust especially demand from China. Yet, despite
reports of strong demand, prices still seem to be taking the lead from
traders reacting to announcements from central banks, particularly the US
Federal Reserve and certain non-related economic news.
After gaining for most
of the month, the price of gold notched up its first weekly drop in six due
to further signs of U.S. economic growth, concerns over the U.S. Federal
Reserve's withdrawal of monetary stimulus and a slump in Chinese demand.
Last Wednesday, the US
Federal Reserve announced its’ FOMC's decision to taper its asset-purchase
program. The FOMC decided to trim its bond purchases by another $10 billion
in its first meeting of 2014. In December when the Fed announced that it
was going to taper its purchases, gold prices fell sharply. But, this time
the Fed's decision to cut down on its asset-purchase program had little
adverse effect on gold prices. Therefore, even if the Fed continues to
taper its asset-purchase program, it is unlikely to have any long-term
effect on gold.
The recently appointed
chairman of the Federal Reserve, Janet Yellen, is considered dovish, much
like former Fed chairman Ben Bernanke. Thus, Yellen may opt for additional
monetary expansion should the recovery in U.S economy falter. And, if the
Fed comes up with new monetary measures such as pegging long-term interest
rates or raising the inflation target, these measures could increase the
demand for the yellow metal as a safe-haven investment.
When Ben Bernanke took
office in 2006, the Fed had $834.6 billion in assets, the vast majority of
which were US Treasuries. The Fed now holds around $4.1 trillion in assets.
And, the balance sheet consists of toxic debt such as mortgage debt 'guaranteed'
by insolvent government agencies.
In 2006 the Fed's
capital ratio was 3.22%. But, currently as Bernanke leaves office, the
Fed’s capital ratio is just 1.34%. And it's deteriorating rapidly.
This capital ratio in
banking represents a sort of 'margin of safety'. In a severe crisis
situation, banks with a higher capital ratio are able to withstand major
financial shocks.
Three years ago, the
Fed's capital ratio was 2.17%. A year ago it was 1.82%. Six months ago it
was 1.54%. Now, it is only 1.34%. This means that the Fed would effectively
be rendered insolvent if its assets lost more than 1.34% of their value.
So, the Fed now has a razor thin margin of safety to guarantee an exploding
balance sheet, filled with what could become worthless paper.
While the policies of
the Fed may have benefited a small percentage of people owning stocks, it
has also caused prices of many basic foodstuffs to increase, and the labour
force participation rate in the US has declined to its lowest level in
decades. So apart from artificially propping up prices of equities, I
believe that Bernanke's policies have left the Fed as well as the global
financial system in a far more precarious condition than when he started.
And, unless the US economy suddenly grows at an incredible rate, which I
very much doubt, the dollar will come under more pressure during this year.
This will in turn put pressure on dollar denominated assets. The Chinese
have obviously figured this out and hence have chosen to buy as much gold
as possible…
Barrick Gold to sell
its one-third stake in Nevada mine for $86 million
Canadian Press
DataFile
Tuesday February 04, 2014 2:47 AM
TORONTO _ Barrick Gold
Corp. (TSX:ABX) says it has agreed to divest its one-third interest in the
Marigold mine in Nevada to Silver Standard Resources Inc. for $86 million .
The deal is subject to
certain closing adjustments and is expected to close in April.
Barrick has a 33.3 per
cent share of Marigold, with the other 66.7 per cent owned by the operator,
Goldcorp Inc. (TSX:G).
The divestiture is
part of Toronto -based Barrick's ongoing effort to maximize cash flow.
Barrick's share of
production at Marigold in 2013 was about 55,000 ounces of gold.
In late January,
Barrick said it was selling its interest in two mine operations in Western
Australia for AU$75 million in cash.
The sale of the
Kanowna Belle and Kundana operations to Northern Star Resources Ltd is
expected to close in March. Barrick says the price, equivalent to about
C$73.6 million , is subject to certain closing conditions…
GATA Representative
Says:
'West Cheats Suriname with Low Gold Price'
By Ivan Cairo
De Ware Tijd
Paramaribo, Suriname
Monday, February 3, 2014
Chris Powell,
co-founder of the U.S.-based Gold Anti-Trust Action Committee, accuses
Western countries and institutions of deliberately keeping the price of
gold at a low level.
The United States, the
Netherlands, Great Britain, and even the International Monetary Fund (IMF)
have been conspiring for decades to influence the international gold
market, he says.
GATA has been voicing
its conspiracy theory on how wheeling and dealing by the American
government, the Federal Reserve (the U.S. central banking system), other
Western central banks, and the IMF have deliberately created a low price
for gold and maintained that to their advantage to protect their own
national currencies.
GATA's proof for its
theory includes a 1999 IMF document kept from the public. The document
describes in detail how the gold market is manipulated and influenced to
force the price to an acceptable level. A former president of the
Netherlands central bank made reference to gold price suppression in his
memoirs, Powell says.
Unfortunately GATA has
not had any luck with its international campaign so far. Large
gold-producing nations including South Africa have not heeded its advice to
protest the unfair dealing. Even gold multinationals, which would profit
from a higher price have not protested.
Powell explains that
it all has to do with the amount of capital invested in the gold industry.
The capital comes from the international capital market, another
institution that profits from a low price of gold. "If mining
companies go public with their accusations, they might not get the funds
needed for their investment plans," he says.
Powell argues that in
the 1960s Western central banks kept the price of gold low by selling part
of their reserves. As reserves plummeted they found new methods. One
often-used method is issuing certificates for fake gold.
Recent years have seen
the creation of large quantities of fake gold, Powell says. However, the
banks never really have the gold and they would all go bankrupt if the
public started selling their certificates and demanded their gold.
Powell considers the
move by the Central Bank of Suriname to sell part of its gold reserves an
enormous blunder. The move was likely instigated by the IMF, he says. Gold
is a solid currency with much more value than some experts claim, he adds.
New Front for
Democracy and Development Party leader Carl Breevald says this is the first
time he has heard about this theory. He will ask questions about this in
Parliament. The party had questioned the sale of the gold reserves, he
says, so Powell's theory deserves closer study.
Although he is not
aware of GATA's statements and principles, Breeveld says, it would be
unwise to ignore them. That South Africa refuses to act should not keep
Suriname from trying to find out if GATA's statements are true.
Three cheers for CP!
Chris
Just to say congratulations on a great program in Suriname!
Your invitation has ,
in my opinion, promoted you to global Ambassador status for Gata, and
deservedly so.
This is a first for
Gata, but hopefully not the last.
We need Gata
Ambassadors in every country!
Of course Gata is not
yet a nation, but that is another aspect to discuss on another day.
While the global
political Tsunami towards independence is still in its infancy, (Scotland,
Catalonia, Basques.........et cetera), Gata's time may well be arriving
faster than we think.
Gata's location will
eventually be Galt's Gulch, the only question being where, or I should say
by now, which Gulch?
Best
Alan
The shares didn't pay
much attention to the gold selloff today. After a lower opening, a number of
them drifted back up. The XAU rose .63 to 90.56. The HUI went up 1.07 to
217.51. It needs to clear 225, where there is a wall of technical
resistance.
Gold has followed
silver higher in late Access Market trading. Gold last at $1254.60. Silver
last at $12.47.
Still seems to me that
in spite of all the huffing and puffing by The Gold Cartel, the price of
gold is gearing up for an explosive move to the upside.
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