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WORLD FINANCIAL REPORT ON RADIO NOVEMBER 27th 2015
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CHARTS OF THE WEEK-QUOTES-QUICK HITS
-CHART OF THE WEEK: Euro Area’s Negative-Yielding Debt Tops $2 Trillion on Draghi. Investor expectations that European Central Bank President Mario Draghi will expand monetary easing are pushing even more euro-area government-bond yields below zero. The total has risen to more than $2 trillion, or about one-third of the securities. Read more here-http://bloom.bg/1TfeTJa
-CHART OF THE WEEK: The biggest threat to the global economy in 2016. This growing divergence in central bank policy around the world has created a great imbalance in the global economic order, which establishes the very real potential for a rising dollar to trigger the next global financial crisis. The Dollar May Be Entering a Mega Bull Market. The divergence in economic growth and central bank policies has caused the dollar to break out in a big way. The US Dollar Index (DXY) broke out of a 30-year downtrend that began with the Plaza Accord way back in September 1985. There may be a new mega bull market forming in the US Dollar. The rising dollar is a big problem for the massive amount of dollar denominated debt held outside of the US. And this trend could very well be the trigger for the next global financial crisis. Read more here- http://read.bi/1Nw6BOc
-CHART OF THE WEEK: Puerto Rico’s Dec. 1 Deadline: A Guide as Possible Defaults Loom. Puerto Rico faces a dilemma: pay bondholders $354 million on Dec. 1 or hold on to the cash to ensure it can keep the government running. The decision may mark a turning point in the long-simmering fiscal crisis for the Caribbean island, which is seeking to cut its $70 billion of debt by persuading investors to accept less than they’re owed. While it began skipping payments on bonds backed only by legislative appropriations in August, next week’s payment includes debt that the central government has guaranteed, giving investors legal recourse. Another $957 million is due from Puerto Rico and its agencies on Jan. 1. Read more here- http://bloom.bg/1Tg1ErN
-CHART OF THE WEEK: Unemployment Debt Weighs on U.S. States 6 Years After Recession. U.S. states are still repaying federal loans for unemployment benefits more than six years after the recession, costing businesses from mighty Apple Inc. to Ohio’s humble Canton Chair Rental hundreds of millions in taxes and interest. And only a third of states are prepared for the next downturn. Thirty-five states borrowed from a federal fund when dismissals from the 18-month recession that began in December 2007 depleted jobless benefit accounts.
California, Ohio and Connecticut are the only ones that haven’t retired their debt, which businesses must repay through higher levies. California firms alone have already paid $1.8 billion though last year, and the loan isn’t projected to be paid off until sometime in 2018. “This is money that we should not be paying out,” said Ginny Grome of Restaurant Management Inc. in Cincinnati, which owns 65 Arby’s restaurants in seven states and has paid almost $218,000 in extra taxes because of Ohio’s outstanding loan. “That’s a lot of money as far as reinvesting or how many more employees could we have had.” Read more here-http://bloom.bg/1R6FlWg
-CHART OF THE WEEK: S&P 500 Profits Fall $25 Billion in First Three Quarters of 2015. Profits from S&P 500 companies have fallen by about $25 billion in the first three quarters of this year, and a further drop is expected before the end of 2015 as energy companies battle with lower oil prices and a sharp rally in the dollar hits exporters. Read more here-http://bloom.bg/1kVmyBh
-CHART OF THE WEEK: Investors are now a lot more worried about a geopolitical crisis. Of all the possible fears out there, one has increased the most for investors in the past month geopolitical risk. According to Bank of America Merrill Lynch’s monthly fund survey, a geopolitical crisis is the biggest tail risk for 18% of investors, up from 13% last month. The survey was carried out between November 6 and 13, which is before the Paris attacks on the night of November 14, and covered 201 investors managing a total of $576 billion. Read more here-http://bit.ly/1jlvYnT
-“According to Mother Jones, turkeys of the 1930s were, on average, 13.2 pounds. As of 2014, an average turkey weighed in at a whopping 29.8 pounds more than twice as big.” Businessinsider.com
-“In its twice-yearly Financial Stability Review, the European Central Bank has warned that chances of an ” abrupt risk reversal” are increasing due to Chinese turmoil and the withdrawal of monetary stimulus in the U.S. The euro currency dropped below $1.06 this morning as expectations of further easing from the ECB at its meeting next week increase.” Bloomberg
-“The Bloomberg Commodity Index of investor returns has fallen to levels not seen since the last millennium and the spot index is at its lowest since 2008 as the China slowdown continues to put pressure on prices and worries about Fed tightening push up the dollar. Iron ore is again in the crosshairs as it falls to another six-year low, dropping 1.9 percent to $43.89 a dry metric ton, according to Metal Bulletin Ltd.” Bloomberg
-“Federal Reserve Chair Janet Yellen has defended seven years of zero interest rates in a response to a letter from a group including Ralph Nader. Yellen repeated her expectation for a gradual tightening of policy after liftoff. Futures this morning indicate a 74 percent chance that the Fed will raise rates at its December meeting.” Bloomberg
-Deutsche Bank Co-CEO Cryan Says Bankers Still Paid Too Much. Deutsche Bank AG co-Chief Executive Officer John Cryan, almost five months into his revamp of the firm, said bankers still earn too much money and are often promised rewards too quickly. “Many people in the sector still believe they should be paid entrepreneurial wages for turning up to work with a regular salary, a pension and probably a health-care scheme and playing with other people’s money,” Cryan said at a conference in Frankfurt on Monday. “There doesn’t seem to be anything entrepreneurial about that except the compensation structures.” Read more here-http://bloom.bg/1XfSnpj
-Argentina elected centre-right Mauricio Macri to be president in a decisive vote which brings to an end the 12 years of socialist governments led by Nestor Kirchner and later his wife Cristina Fernandez. Macri, a 56-year-old Buenos Aires native, is pledging to quickly reverse much of the Kirchners’ policies and open up the economy, a move that is already being welcomed by international investors . Bloomberg
-There still seems to be no light at the end of the tunnel for oil bulls who see little hope of supply cuts at next week’s OPEC meeting in Vienna. Continued low oil prices are starting to hurt in Saudi Arabia, where pressure is now building for the Gulf kingdom to drop its currency peg to the dollar rather than impose more budget cuts. One state that has managed to do well in 2015 is Mexico which hedged its oil sales at $76.40 for 2015, meaning it is due a payment of at least $6 billion next month. Bloomberg
-“We are now just one big shock away from a global downturn, and the next one seems most likely to originate in China, where heavy debt, excessive investment, and population decline are combining to undermine growth.” Ruchir Sharma, head of emerging markets and global macro at Morgan Stanley Investment Management
-“We forecast the S&P 500 index will tread water for a second consecutive year in 2016. Our year-end 2016 target of 2100 represents a 1% price gain from the current index level (2089), which itself is just 1% above the year-end 2014 level of 2059. Including dividends, we expect the total return in 2016 will equal 3%.” David Kostin Goldman Sachs
-“Gold has historically been the best hedge against such excessive inflationary efforts. Gold was and remains an outstanding pillar as a store of value and medium of exchange. These qualities are likely to be rediscovered if, or rather when, paper currencies suffer a general loss of confidence. Lengthy periods of rising price inflation and negative real interest rates are the main catalyst for such a loss of confidence.” Ronald-Peter Stoeferle Incrementum AG
-A Swiss bank is about to charge customers a negative interest rate. A tiny Swiss bank specialised in financing social and environmental projects will on January 1 go where no retail lender has gone before, applying negative interest rates on individual clients. The Alternative Bank Schweiz (ABS) caused shockwaves with a letter sent to all clients in mid-October informing them that it would begin imposing interest charges on deposits in 2016. For current accounts, the bank said it would impose a -0.125-percent rate, while slapping a -0.75-percent rate on client deposits higher than 100,000 Swiss francs ($98,650, 92,420 euros). So far individual depositors have been shielded from the burn of decisions by several central banks, including Switzerland’s, to introduce negative interest rates to light a flame under growth or ward off unwanted currency investors. Read more here- http://read.bi/1R6KRIj
-Switzerland is about to launch a huge experiment in ‘the war on cash.’ A huge economic experiment will begin in Switzerland and Sweden in 2016, and some people are calling it the “war on cash.” Both countries have central banks that have imposed negative interest rates on their commercial banks, making it costly for those banks to store cash. The intent is to force the banks to lend out the cash, thus spurring the economy and a small amount of healthy inflation. But the two countries have very different attitudes to holding actual hard cash. So negative interest rates could have very different effects on the cash-free Swedes and the cash-loving Swiss.
That, some right-wing economists are arguing, is why you’re not seeing Swiss people complaining about the fact that they are penalised for keeping money in the bank. The SNB (the Swiss central bank) expects to hold its rates negative until 2017, according to board member Andréa Maechler so this war seems likely to last at least two years. At least one consumer bank will charge its customers negative rates beginning in 2016. Sweden, on the other hand, is one of the most cash-free societies on the planet. Many Swedish businesses are cashless, so you need electronic cash in the bank in order to buy anything.
If you use too much cash in Sweden, banks call the police because they think you might be a terrorist or a criminal. That means it’s a lot more difficult for any Swede encountering a negative interest rate (or increased bank fees that act like negative rates) to just pull cash out of the bank and hide it under the mattress until rates go positive again. To sum all that up: In the war on cash, Switzerland is taking the pro-cash position, and Sweden has the anti-cash position. This is interesting if you believe, as conservative “war on cash” theorists do, thatthe banks want to abolish cash in order to end your financial privacy and force you into the banking system for all electronic transactions. Those banks can then change the value of cash any time they want, thus making fiat currency even more of sham than it already is, these voices say. (And, by the way, hoard gold!) Read more here-http://read.bi/1MU2Axo
-People are hiding cash in their microwaves as Sweden gets closer to being the first cashless society with negative interest rates. Sweden is shaping up to be the first country to plunge its citizens into a fascinating and terrifying economic experiment: negative interest rates in a cashless society. The Swedish central bank, the Sveriges Riksbank, on Wednesday held its benchmark interest rate at -0.35%, the level it has been at since July. Though retail banks have yet to pass that negative rate on to Swedish consumers, they face increased pressure to do so as long as the rates remain where they are. That’s a problem, because Sweden is the closest country on the planet to becoming an all-electronic cashless society. Remember, Sweden is the place where, if you use too much cash, banks call the police because they think you might be a terrorist or a criminal. Swedish banks have started removing cash ATMs from rural areas, annoying old people and farmers. Credit Suisse says the rule of thumb in Scandinavia is: ” If you have to pay in cash, something is wrong.” Read more here-http://read.bi/1PZqpbA
-Ex-Barclays CEO: Banks are about to have an ‘Uber moment’ and it’s going to be painful. Antony Jenkins, the former CEO of Barclays, has a nightmare vision for the future of big banks. In a speech in London this week he said: “The incumbents risk becoming merely capital-providing utilities that operate in a highly regulated, less profitable environment, a situation unlikely to be tolerated by shareholders.” Jenkins says a series of Uber-style disruptions in the industry could shrink headcount at traditional big banks by as much as 50%, while profitability in some areas could collapse by over 60% huge predictions from a man who, until recently, ran one of Britain’s biggest banks.
He adds: “In my view only a few [incumbent banks] will have the courage and decisiveness to win in this new field.” We will see massive pressure on incumbent banks, which will struggle to implement new technologies at the same pace as their new rivals. That will make it increasingly challenging for them to deliver the returns and profitability that their shareholders demand. Ultimately, those forces will compel large banks to significantly automate their business. I predict that the number of branches and people employed in the financial services sector may decline by as much as 50% over the next 10 years, and even in a less harsh scenario I expect a decline of at least 20%. A halving of headcount and branches over 10 years! That is a huge decline. The prediction coincides with reports that Lloyds is poised to axe 1,000 jobs as part of branch closures and increased automation. Read more here-http://read.bi/1Ou0Nlt
-US National debt spikes $578 billion in three weeks. The national debt has surged more than half a trillion dollars in the last three weeks, as the suspension of the debt ceiling in late October has allowed the government to borrow as much as it wants. Before the debt ceiling was suspended, the national debt stood at $18.15 trillion. But over the last 22 days, it soared $578 billion. As of Friday, total national debt stood at $18.72 trillion. Read more here-http://washex.am/1PPKKl7
-Debt Under Obama Up $8,000,000,000,000. The debt of the federal government has now increased by more than $8,000,000,000,000 during the time President Barack Obama has been in office, according to the official debt numbers published by the U.S. Treasury. The total federal debt, which was $18,722,746,583,118.03 at the close of business on Monday, now equals about $159,007 per household. It has increased approximately $68,756 per household during Obama’s presidency. On Jan. 20, 2009, when Obama was inaugurated, the total debt of the federal government was $10,626,877,048,913.08. On Nov. 23, 2015, it was $18,722,746,583,118.03 Thus, so far in Obama’s presidency, the federal debt has increased $8,095,869,534,204.95. Read more here-http://bit.ly/1R7ojY6
-China Stocks Go From Zero to $7 Trillion in 25 Years: Timeline. This year has been a wild ride for Chinese stocks, something that long-time investors have come to expect from a country that’s seen 55 bull and bear markets since the ruling Communist Party first allowed equity trading in 1990. As the Shanghai Stock Exchange celebrates its 25th anniversary on Thursday, here’s a look at some of the key milestones on China’s path from equity-market upstart to $7 trillion behemoth. Read more here-http://bloom.bg/1Iihpb3
-Masters of the Finance Universe Are Worried About China. David Tepper says a yuan devaluation may be coming in China. John Burbank warns that a hard landing there could spark a global recession. Tepper, the billionaire owner of Appaloosa Management, said last week at the Robin Hood Investor’s Conference that the Chinese yuan is massively overvalued and needs to fall further. His comments follow similar forecasts from some of the biggest hedge fund managers, including Crispin Odey, founder of the $12 billion Odey Asset Management, who predicts China will devalue the yuan by at least 30 percent.
The money managers are losing faith in China’s ability to revive its economy, which suffers from rising nonperforming loans and falling exports, after the surprise 1.9 percent currency devaluation in August and global market rout that followed. The investors made their dire forecasts after shares of U.S.-traded Chinese companies, which their funds sold in the third quarter, began to rebound in October. “The downside scenario for China seems more intimidating than ever before,” billionaire Dan Loeb wrote on Oct. 30 to investors at Third Point, which manages $18 billion. “The new question is not whether but how severe the slowdown of the world’s foremost growth machine will be.” Read more here- http://bloom.bg/1lk0dg2
-Venezuela Sees Crude in Mid-$20s If OPEC Doesn’t Act. Oil prices may drop to as low as the mid-$20s a barrel unless OPEC takes action to stabilize the market, Venezuelan Oil Minister Eulogio Del Pino said. Venezuela is urging the Organization of Petroleum Exporting Countries to adopt an “equilibrium price” that covers the cost of new investment in production capacity, Del Pino told reporters Sunday in Tehran. Saudi Arabia and Qatar are considering his country’s proposal for an equilibrium price at $88 a barrel, he said.
OPEC ministers plan to meet on Dec. 4 to assess the producer group’s output policy amid a global supply glut that has pushed down crude prices by 45 percent in the last 12 months. OPEC supplies about 40 percent of the world’s production and has exceeded its official output ceiling of 30 million barrels a day for 17 months as it defends its share of the market. “We cannot allow that the market continue controlling the price,” Del Pino said. “The principles of OPEC were to act on the price of the crude oil, and we need to go back to the principles of OPEC.” Read more here
-The Future of Money. A “mobile money” revolution has swept Kenya, where people can send and receive money on their cell phones. It’s improved commerce and brought basic necessities to poorer areas. Tech giants like Google, Facebook, and PayPal are all steadily rolling out new-fangled services to turn our smartphones into digital wallets replacing cash and checks. And it’s been reported that Apple is working on a new payment option to let iPhone users send money directly to one another as easily as a text message.
If this all seems cutting edge, you may be surprised to learn there’s one country that adopted mobile money years ago: Kenya. Here in the U.S., we can use smartphones to pay for things, but you typically need to be linked to a bank account or credit card. In Kenya, you don’t need a bank account, you don’t need a credit history, or very much money for that matter, making this country in East Africa a giant experimental laboratory defining the future of money. Watch and read more here-http://cbsn.ws/1OiuY0C
-Responding to an active shooter. U.S. police departments are training their officers and members of the public, in some cases how to respond to and stay alive in active shooter attacks. The coordinated strikes in Paris, carried out by terrorists at multiple locations, as well as the attack this past Friday in Mali, are the latest examples of what American law enforcement calls “active shooter cases.” These are situations where gunmen are intent on killing as many people as possible, and often are still shooting when the police arrive on the scene. Watch and read more here- http://cbsn.ws/1Q0WLTb
-Half of New Yorkers Say They Are Barely or Not Getting By, Poll Shows. Half of New York City residents say they are struggling economically, making ends meet just barely, if at all, and most feel sharp uncertainty about the future of the city’s next generation, a new poll shows. Read more here- http://nyti.ms/1SmtMst
-Leaders Call for Calm After Russia Says Turkey Jet Downing Was Planned. Russia said Turkey may have planned the downing of one of its warplanes near the Syrian border as Germany bolstered calls to ease tensions and maintain focus on defeating Islamic State. The attack appeared to be “an ambush” and “looks very much like a planned provocation,” Foreign Minister Sergei Lavrov told reporters Wednesday in Moscow, suggesting Turkey was defending Syrian anti-government fighters based in nearby areas. “We can’t leave what happened without a response.” While Turkish President Recep Tayyip Erdogan maintained that the Russian jet was shot down after failing to heed multiple warnings and crossing into his nation’s airspace, he said in Istanbul that “we certainly don’t have any idea to escalate this issue.” Read more here-http://bloom.bg/1QIxBul
-How to fly free forever: Put $170 million on your AmEx. Chinese billionaire Liu Yiqian, who doesn’t exactly struggle to afford a plane ticket, can now probably fly free, in first class, with his whole family, anywhere in the world, for the rest of his life. All because he bought a painting. Read more here-http://read.bi/1SlEaRa
-It’s official: This is the biggest El Niño on record, and a killer La Niña is coming. On Wednesday morning, NOAA released its data for the Pacific Ocean temperatures for the week of November 9. We hit a record the current El Niño is the strongest in recorded history. Read more here- http://read.bi/1NdLQVr
-Richard Russell, Publisher of Dow Theory Letters, Dies at 91. Richard Russell, who shared his technical analysis with subscribers through the influential Dow Theory Letters since 1958, has died. He was 91. He died Nov. 21 at his home in La Jolla, California, his family said in a message to subscribers on the publication’s website. He had entered a hospital a week earlier and was diagnosed with blood clots in his leg and lungs “and other untreatable ailments,” his family said. He returned home under hospice care.
An adherent of the investing principles of Charles Dow, founder of the Wall Street Journal, Russell published his newsletter continuously from 1958, never missing an issue in more than half a century. In his last column, published Nov. 16, Russell wrote: “I read 10 newspapers a day, but the news is getting increasingly difficult to digest down to something understandable, and the vast array of news sources becomes more and more complex. I can only imagine what the newspapers will look like in 10 years.” Stock analyst Robert Prechter wrote in his 1997 book: “Russell has made many exceptional market calls. He recommended gold stocks in 1960, called the top of the great bull market in stocks in 1966 and announced the end of the great bear market in December 1974.” Read more here-http://bloom.bg/1lMISwU and http://bit.ly/1IkdWJ3
-The Final Warnings And Thoughts That Richard Russell Shared With His Subscribers. “The end of capitalism will be due to the unbelievable amount of debt that is currently being created. This will create monster inflation that will destroy every currency. The only currency that cannot be destroyed is gold. When investors realize this, we’ll have the makings of the greatest bull market in gold ever seen.” Read more here- http://bit.ly/1Nf3AQq
-Lucara CEO seeking over $60-million for 1,111-carat diamond. How much does the head of the company that unearthed the second-biggest ever diamond want for the gem? More than $60-million, that’s all he’ll say. “I haven’t even told my wife,” said William Lamb, chief executive officer of Lucara Diamond Corp., which last week announced the discovery of the 1,111-carat gem-quality diamond. It’s “higher than the current estimates that people are putting out there, which are north of $60-million.” The discovery sent shock waves through the $80-billion diamond industry. The type-IIa stone, just smaller than a tennis ball, is the biggest unearthed since the 3,106-carat Cullinan gem found in South Africa in 1905.
That was cut into pieces, which are set in the Crown Jewels of Britain. Exceptionally large rough diamonds can sell for about $60,000 a carat, though Mr. Lamb hopes that its status will boost its value. The first Lucara worker to touch the stone was at the time the only person still alive who’s handled a 1,000-carat diamond, he said. “A lot of people will use use $60,000 a carat as the basis,” Mr. Lamb said. “On top of that, you have to look at the size of the final polished diamond as well as the historical context. That’s going to play into it, too.”
The CEO, who has already turned down an offer of more than $40-million, said the company has been approached by London’s Natural History Museum about displaying the stone and the Discovery Channel who are interested in making a documentary about it. The Vancouver-based company isn’t in a rush to sell because it has no debt. “The diamond sector is not full of opportunities, so for us to run out and sell it now doesn’t really make sense,” Mr. Lamb said. “We have the time to look at what is the best way to sell it. Not selling it is actually an option.” Read more here- http://bit.ly/1Q0XweW and http://read.bi/1HpVPXi
-The world’s most expensive diamonds have all been sold. A collection of 65 rare pink and red diamonds from the Argyle mine in the North West of Australia has been sold in a global tender. The Argyle Pink Diamonds Tender, known as the Connoisseurs Collection weighing a total of 44.14 carats and including four what are known as fancy red diamonds, went to bidders from 11 countries. Rio Tinto, the owner of Argyle, doesn’t reveal what the tender winners paid for their diamonds.
However, pink diamonds can fetch 50 times more than the more common white diamonds. They often get $1 million a carat . Based on that the 2015 Argyle collection would have brought in more than $40 million. The most expensive pink diamond sold was the Graff Pink, a 24.78 carat fancy intense pink diamond, sold at Sotheby’s in 2010 for $US46 million. Josephine Johnson, the Argyle Pink Diamonds manager, says she’s delighted with this year’s results.
She says the 2015 Argyle pink diamonds achieved the highest average price per carat since the tender began in 1984. The five heroes of the collection were sold to notable investors, collectors and retailers based in Europe, US, China and the Middle East. The most valuable diamond was Lot Number 1, called Argyle Prima, a 1.20 carat fancy red pear-shaped diamond which went to Sciens Diamond Management. Almost the entire world supply of rare pink and red diamonds comes from Rio Tinto’s Argyle diamond mine in the east Kimberley region of Western Australia.
-Christie’s: Rare, 25-carat pink diamond found among Imelda Marcos collection. A rare 25-carat, barrel-shaped pink diamond has been found among the jewelry collection of former Philippine first lady Imelda Marcos, Christie’s said on Tuesday after the government asked the auction house to appraise her collection of rare stones. The Philippine government could decide to auction the collection after Christie’s and rival Sotheby’s appraise three sets of jewelry confiscated almost three decades ago after the fall of Imelda’s husband, the late dictator Ferdinand Marcos. “We had an extremely exciting find,” said David Warren, director of jewelry at London-based Christie’s.
“We found an old briolette-cut diamond, which is 25 carats. It has a distinct pink color. Pink diamonds are exceedingly rare.” He said the diamond could be valued at $5 million and would significantly increase the value of the entire collection if the collection is auctioned. The three sets in the collection were valued at $6 million-8 million in 1991. Only three pure, vivid pink diamonds of more than 10 carats have appeared for sale in almost 250 years of auction history, according to Christie’s. A large cushion-shaped, pink-hued diamond sold for $28.55 million at the Christie’s semi-annual jewelry sale in Geneva on Nov. 10. Read more here-http://reut.rs/1jlvoGE
-De Beers IPO Could Fetch $10 Billion for Anglo, HSBC Says. Anglo bought the Oppenheimer family’s 40 percent stake in De Beers for $5.1 billion in 2012, increasing its holding to 85 percent and ending the dynasty’s 80-year ownership. The southern African nation of Botswana controls the rest of the business, founded by the British imperialist Cecil Rhodes. Read more here-http://bloom.bg/1T4lOEg
-CHART OF THE WEEK: Is Gold a Bargain at Five-Year Low? One Measure Suggests Not. Gold that’s trading near a five-year low may look cheap, but at least one measure suggests further declines are in store. Bullion futures on the Comex are trading at more than five times the price of copper futures this week, the most since 2011, data compiled by Bloomberg show. For comparison, bullion averaged about 3.7 times higher than the industrial metal during the past decade.
Copper fell 27 percent this year through Tuesday, heading for the biggest annual decline since the financial crisis in 2008, while gold lost 9.4 percent. Copper’s steeper drop reflects concerns over faltering demand from China, the biggest use of the metal. But China is also a big gold buyer, vying with India as the largest bullion consumer. “Throughout the Asian region with economies slipping, jewelry demand is going to be weak also,” Bill O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview. “Fundamentally, the gold market doesn’t look good, psychologically it doesn’t look good and the money flows don’t look good. So that’s a negative trifecta.” Read more here- http://bloom.bg/1jmj3lp
-CHART OF THE WEEK: Chinese Savers Turn to Gold as Rest of the World Exits Holdings. Even as investors shed gold holdings almost everywhere else in the world, Chinese savers like Hu Jingjing are buying. Stung by a $5 trillion stock-market collapse, an overbuilt property market and a devaluation of the yuan, Chinese investors are adding to bullion holdings that have already made them the world’s largest consumers of the metal. A third straight annual decline in prices has failed to deter purchases, partly because there are few attractive alternatives for preserving assets. “It’s been a very tough year for investment because shares are so volatile and bank deposits are threatened by a weakening yuan,” Hu, a 36-year-old manager at a clothing retailer, said after buying a 30-gram bullion bar for 7,865 yuan ($1,232) at a jewelry store in Beijing on Nov. 4.
“I don’t think gold is going to drop anymore and I can sell it back to them if the price goes up.” China imported the most gold in 19 months from Hong Kong in September, following the surprise devaluation of the yuan in August and a rout in domestic shares that was the biggest since the global financial crisis. Even the central bank has been accumulating the metal, announcing in July that reserves were up 57 percent since 2009 and adding to holdings each month since then. While the stock market has recouped some of its losses, investors continue to withdraw gold from the bullion exchange in a sign they are still worried about the economic outlook. Read more here-http://bloom.bg/1PR92v9
-Frank Holmes: SWOT Analysis Gold Stocks Looks Disproportionately Cheap Relative To Gold. Read more here- http://bit.ly/1kVPmcK
Gold to silver ratio at 80 to 1 with gold at $2,000 the silver price would be $25.00
Gold to silver ratio at 70 to 1 with gold at $2,000 the silver price would be $28.57
Gold to silver ratio at 60 to 1 with gold at $2,000 the silver price would be $33.33
Gold to silver ratio at 50 to 1 with gold at $2,000 the silver price would be $40.00
Gold to silver ratio at 40 to 1 with gold at $2,000 the silver price would be $50.00
Gold to silver ratio at 30 to 1 with gold at $2,000 the silver price would be $66.67
Gold to silver ratio at 20 to 1 with gold at $2,000 the silver price would be $100.00
Gold to silver ratio at 15 to 1 with gold at $2,000 the silver price would be $133.33
-U.S. Mint set to stop making 2015 American Eagle silver coins. The U.S. Mint said on Tuesday that it would stop making 2015-dated American Eagle silver bullion coins after the week of Dec. 7 following a period of strong demand that forced it to place them on weekly allocations for much of the year. The annual halt to American Eagle silver coin production will come after an unprecedented supply squeeze spurred by spot silver prices that tumbled to a six-year low in July and then extended losses in November.
This attracted heavy coin demand that forced some sovereign mints around the world to ration sales while U.S. buyers raced abroad to fulfill this burst of interest. The mint said in an email that it expected the last American Eagle silver bullion coin allocation for 2015 to be on Dec. 14. Despite the weekly rationing, American Eagle silver coin sales this year have so far reached nearly 43.7 million ounces, making them on track to exceed the 44 million ounces of 2014. The mint already stopped producing 2015-dated American Eagle gold bullion coins in October and has sold out of this year’s supply of the 0.1-ounce and 0.25-ounce coins. Read more here- http://yhoo.it/1TgUQtX
-Thomson Reuters Releases Interim Silver Market Review. At the Annual Silver Industry Dinner hosted by the Silver Institute, Erica Rannestad, Senior Analyst in the GFMS team at Thomson Reuters, presented the Interim Silver Market Review, which included provisional supply and demand forecasts for 2015. The following are highlights from the report. Read more here- http://bit.ly/1NwqBQJ
-“On Saturday, I discussed the sharp two cent jump in the Nov-Dec COMEX silver spread on only 30 contracts, which left around 25 contracts still open and yet to be delivered on. This morning [Wednesday] 24 contracts were delivered and stopped (accepted) by one customer of ADM (somewhat of an “outsider” in metal dealings) and in which there were three separate issuers. This would seem to confirm that it was the buyer who initiated the transaction and whose purpose was the immediate receipt of physical silver before the end of November. I try not to see things as I want them to be, but as they are in reality; and this transaction reeks of tightness in physical silver (as do so many other things).” Silver analyst Ted Butler Nov 25 2015 via Ed Steer edsteergoldandsilver.com subscribe here- http://bit.ly/1fdAByN
-“It’s no secret that I’ve treated all past bullish setups as possibly turning into the big one in silver, even though that has yet to occur. But this current setup seems different. Not only are silver prices cheaper by any measure that can be measured, the quickness in reaching the current bullish market structure is unprecedented. I don’t think that was some mere coincidence; I don’t think anything that happens in silver or gold is by coincidence. By definition, nothing that occurs in a manipulated market is by coincidence every price move has a causation.
What’s baked into the price cake currently are tens of thousands of contracts that must be bought by managed money traders. These contracts won’t be bought or attempted to be bought until we get somewhat higher prices, but that must occur at some point. What remains to be seen is how aggressive the commercials will be in selling into the certain managed money buying to come, particularly the relative aggression of JPM and the other big shorts. Remember, if they do nothing, we fly.” Silver analyst Ted Butler Nov 25 2015 via Ed Steer edsteergoldandsilver.com subscribe here- http://bit.ly/1fdAByN
-I’d like to comment on another factor pointing to tightness in silver. On Thursday [of last week], there was an unusual transaction on the COMEX in which an entity bought around 30 contracts or so of the nearby November COMEX futures contract. Given the lack of liquidity in this contract month, the transaction was undoubtedly executed as a spread transaction against the very active December contract. Actually, the transaction itself wasn’t unusual, as to anyone looking to secure physical metal by way of accepting (stopping) actual delivery by the end of November, this would be what you would do. What was most unusual, at least to this old-time former spread trader, was the price reaction of the transaction. That day (Thursday), the November COMEX contract jumped by a full two cents over the December contract and settled there, an absolutely stunning move on a relatively small number of contracts (30 contracts equals 150,000 oz).
Some of the contracts appear to have been delivered via an EFP (exchange for physical) yesterday, but 25 contracts remain open and need to be delivered before the end of November. Also, the price of the November contract came back in by a penny to the December contract on Friday, but there was only one November contract traded on that day, so Friday’s settlement price seems somewhat arbitrary and suspect. I raise this issue because the sudden and unusual jump in the November contract on Thursday compared to the December contract would suggest, all things being equal, physical tightness in wholesale silver supplies. I’m not necessarily looking for any fireworks in the November contract next week, but I have been anticipating possible tightness in the upcoming December COMEX delivery period. Let me explain why I am writing about a two cent spread move.
As and when a physical shortage in silver first appears, it is most likely that if anyone who needs silver to use in manufacturing or fabrication applications is told by his supplier of a delay in a silver shipment; the entity who must wait for delivery may instead try to buy the silver elsewhere to get a quicker delivery. Since the COMEX is a contract market with rigid delivery quality and time covenants, almost everyone in the silver industry knows that you can get metal via futures contract delivery. If this transaction on Thursday was along these lines and indicates any type of delay in non-COMEX silver deliveries, all I can say is boy-oh-boy. I remember Izzy always saying that the silver shortage wouldn’t be kicked off by a 1,000 contracts but only by a few. Please understand that I can’t know if this transaction is of this type; but I also can’t know if it’s not. In any event, I certainly have no choice but to write about it. Silver analyst Ted Butler Nov 21 2015 via Ed Steer edsteergoldandsilver.com subscribe here- http://bit.ly/1fdAByN
-It looks increasingly clear that the big buyer has returned to buy Gold Eagle in force, now that the price has been knocked down in COMEX dealings. The big buyer never stopped buying Silver Eagles. What’s so astounding about the strong recent sales of Gold Eagles and the persistently strong sales of Silver Eagles (over the past 5 years) has been that the retail public has not been buying in earnest. Particularly in Silver Eagles, the only plausible explanation for the phenomenal sales over the past several years is that some very big entity (JPM) has been the buyer. Most astounding of all is the small number of commentators taking notice of this. Silver analyst Ted Butler Nov 21 2015 via Ed Steer edsteergoldandsilver.com subscribe here- http://bit.ly/1fdAByN
-Even when visible silver inventories grow, as was the case in deposits into the big silver ETF, SLV, [last] week, a case for tightness can be made. How so? Well the week’s inflow of metal of 3.5 million oz. into the SLV was strange and counterintuitive on its face. Since silver has declined progressively in price, it would be expected that metal would be redeemed and removed from the trust, as has been the case in the big gold ETF, GLD. Instead, significant silver metal deposits were made in SLV this week and the only plausible explanation is that someone (JPMorgan) made deposits of metal to receive SLV shares and then used those newly acquired shares to reduce their short position in SLV.
Why would anyone (JPM) do this? The simple answer is that by accumulating physical silver at prices determined by COMEX positioning (manipulation) and then delivering and converting the metal into shares of SLV in order to cover SLV short positions has less of an upward price impact than for JPM to just buy SLV shares in the open market. This is also seen in the dramatic short covering by JPMorgan in this week’s COT report. My point is that the metal that was deposited into SLV last week is not the result of some oversupply of metal or even plain vanilla investor buying, but rather an indication that JPMorgan was covering short positions in devious and cunning ways because there isn’t an abundance of metal, but an actual tightness instead. Silver analyst Ted Butler Nov 21 2015 via Ed Steer edsteergoldandsilver.com subscribe here- http://bit.ly/1fdAByN
-Silver prices can’t and won’t go down forever and sooner or later prices will turn higher. That means it won’t be long before the technical funds get buy signals on higher prices, in the same way they always get buy and sell signals and how they just got sell signals these past three weeks. Timing aside, this is as inevitable as the tides. Right now, we have a lot of pent up potential buying power in the form of new managed money buying and short covering it’s already baked into the cake.
Since the potential technical fund buying is certain at some point and price, attention must be directed to the other side of that certain buying, namely, who will sell to the technical funds when they come into buy and more importantly, at what price? As I’ve described previously, the technical funds buy and sell, effectively, with “at the market” or stop orders. These funds are not so much interested in the exact price they get filled at, as they are to complete buying their position on up markets and selling their position on declining prices. That’s part of their essence.
By comparison, the commercials who take positions opposite to the technical funds are all about extracting every penny of every fill, since they control prices to begin with. It’s a great racket the commercials get to take the right position always and do it at the most advantageous prices. The extent of any silver (and gold) rally is always what the commercials, particularly JPMorgan, decide it will be. If JPMorgan decides to add silver short positions around $16 (for example) and cap the price; the price will be capped there. But by the same reasoning, should JPMorgan decide to add sufficient shorts to cap the price at $25 or $50, then the price of silver will go to $25 or $50. Such is the power of JPMorgan in silver. Silver analyst Ted Butler Nov 18 2015 via Ed Steer edsteergoldandsilver.com subscribe here- http://bit.ly/1fdAByN
-It has now been 15 trading days, or three full weeks in which silver and gold prices have declined and established new price lows. In essence, the sharpest and most scripted price decline in history. Not the largest decline, to be sure, but certainly the most orchestrated. I don’t believe such a thing could happen without causation and if that causation could possibly be traced to anything other than deliberate COMEX positioning, then that would be obvious. That’s not the case.
And it’s not just COMEX silver and gold prices that have been scripted, as there has been an eerily-similar three week drop in platinum, palladium and copper (and, to a lesser extent in crude oil). That’s 5 or 6 commodities with strikingly different actual supply/demand characteristics all moving with a price unison worthy of the Joffrey Ballet. I have to tell you that I look on with amazement how this pattern is not commented on by those who purport to follow the markets.
In fact, so convinced am I that this three week decline was deliberately engineered (by the commercials and JPM) that this might be the clearest indication that the next move up will be the big move up. This rigged down move was so deliberate and blatant that it has taken on an aura of an urgency to get the job done quickly because something is brewing like the end of the silver manipulation. As I’ve indicated previously, I am as ‘all in’ on silver as I have ever been and lower prices from here only creates an even bigger cake of baked-in buying from the technical funds. Silver analyst Ted Butler Nov 18 2015 via Ed Steer edsteergoldandsilver.com subscribe here- http://bit.ly/1fdAByN