Thursday, February 6, 2014

Midas du Metropole

 
This contains the data showing the latest level of margin debt.   It is breath taking!!!!! 
On Tuesday, February 4, 2014 5:50 PM, > wrote:

The James Joyce Table
Midas du Metropole
Topic du Jour
February 4 - Gold $1251.70 down $8.70 - Silver $19.40 up 1 cent
"The Silver Signal"
"Reality is something you pick up like a signal. Most people just don't have their radio on." … Anonymous
GO GATA!
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…
-END-
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.
James Mc…
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
Inputs and comments
*Paul Yusem...
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. 
* * * * *
Behavioral Finance
*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.
Jesse last night…
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.
***
U.S. economic news:
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
Associated Press
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.
-END-
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.
-END-
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-
World economic news:
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:
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.
Bonds:
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/FX:
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.
Greece:
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
* Chinese bank seeks to expand commodities business
* 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.
BOCI is the investment banking arm of state-backed Bank of China , the country's No.4 lender by market value.
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
Market:
Chinese markets remain closed for the Lunar New Years holiday.
Economic data:
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.
Foreign trade:
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.
Reform:
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
Stocks:
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.
Corporate taxes:
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.
Yen:
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.
Corporate:
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.
Financials:
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. 
* * * * *
GOLD/SILVER
Jesse…

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.
***
Bloomberg
BullionVault’s Gauge of Client Gold Buying Falls to 18-Month Low
Feb 4, 2014 3:00 AM CT
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…
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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
JOHANNESBURG -
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…
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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…
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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.
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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.
MIDAS
 

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