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WORLD FINANCIAL REPORT ON RADIO DECEMBER 4th 2015
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CHARTS OF THE WEEK-QUOTES-QUICK HITS
-CHART OF THE WEEK: November was another ugly month for a swathe of financial asset classes, with almost everything down in dollar terms. Read more here-http://read.bi/1ImWokN
-CHART OF THE WEEK: The commodities bloodbath of 2015 in one chart. Commodities have been getting creamed in 2015. And according to Jodie Gunzberg, global head of commodities at S&P Dow Jones Indices, it isn’t going to get any better any time soon. “Unfortunately for commodities, there’s no waking up from this nightmare.” So far, 2015 has not yet been the worst year for any single commodity, Gunzberg noted in a November 30 report, but there are a number of commodities that are on pace for one of their worst years on record. “Aluminum is having its second worst year in history and gold is having its sixth worst year in history,” Gunzberg writes. The S&P tracked each commodity’s performance back to 1970 for its research. No fewer than 17 are having one of the their five worst years out of 45. Natural gas is down more than 40% this year, according to S&P, and energy is down more than 30% making 2015 the fifth-worst year for each. Read more here-http://read.bi/21t2UNz
-CHART OF THE WEEK: ECB’s Split With Fed Risks Running Until Draghi Near Retirement. By the time the European Central Bank raises its key interest rate again, Mario Draghi might be on the verge of retirement. As the euro area’s chief monetary-policy maker prepares to deliver another salvo of stimulus this week, a Morgan Stanley gauge based on financial-market trading indicates the ECB won’t raise its benchmark until November 2018. That’s just a year before President Draghi’s eight-year term ends.
Some economists say he won’t even achieve his inflation goal before he goes. The outlook signals that despite more quantitative easing and ultra-low borrowing costs, the 19-nation economy will be plagued by weak economic growth and consumer-price gains consistently short of the ECB’s target of just under 2 percent. It also sets the stage for a multi-year divergence with the Federal Reserve, which is poised to raise rates on Dec. 16. “Draghi would, in our central scenario, kick off the normalization process shortly before he left for pastures new,” said Ken Wattret, co-head of European market economics at BNP Paribas SA in London. “But it looks like a close-run thing and is far from guaranteed.” Read more here-http://bloom.bg/1HEzIMX
-CHART OF THE WEEK: There’s a Big Drop in U.S. Treasury Debt Supply Coming in 2016. Lost in the debate over the U.S. Treasury market’s resilience as the Federal Reserve starts to raise interest rates is one simple fact: supply is falling and fast. Net issuance of U.S. notes and bonds will tumble 27 percent next year, according to estimates by primary dealers that are obligated to bid at Treasury debt auctions. The $418 billion of new supply would be the least since 2008. While a narrowing budget deficit is reducing the U.S.’s funding needs, the Treasury has shifted its focus to T-bills as post-crisis regulations prompt investors to demand a larger stock of short-term debt instead. The drop-off in longer-term debt supply may keep a lid on yields, providing another reason to believe Fed Chair Janet Yellen can end an unprecedented era of easy money without causing a jump in borrowing costs that derails the economy. Read more here-http://bloom.bg/1ODL03r
-CHART OF THE WEEK: Manufacturing in U.S. Contracts at Fastest Pace Since 2009. Manufacturing in the U.S. unexpectedly contracted in November at the fastest pace since the last recession as elevated inventories led to cutbacks in orders and production. The Institute for Supply Management’s index dropped to 48.6, the lowest level since June 2009, from 50.1 in October, a report from the Tempe, Arizona-based group showed Tuesday. The November figure was weaker than the most pessimistic forecast in a Bloomberg survey. Readings less than 50 indicate contraction. The report showed factories believed their customers continued to have too many goods on hand, indicating it will take time for orders and production to stabilize. Manufacturers, which account for almost 12 percent of the economy, are also battling weak global demand, an appreciating dollar and less capital spending in the energy sector. Read more here-http://bloom.bg/1PwBz9q
-CHART OF THE WEEK: Macau’s Third-Quarter Economy Sinks 24% Compared to a Year Ago. Macau’s economy contracted a fifth straight quarter as the world’s largest center of gambling was pummeled by an economic slowdown in China and the government’s attack on corruption which scared off high-rollers. The Chinese city, which relies on gamblers for about two-thirds of economic output, saw GDP tumble 24.2 percent in the three months through September, easing from the 26.4 percent drop in the second quarter, government data released Monday showed. Read more here-http://bloom.bg/1NoRGDH
-“Demographics have long been a key determinant of potential growth rates, but the change in the global population over the next few years is unprecedented. Japan’s population started to shrink in the mid-1990s and Germany’s started shrinking around the year 2000, but the world’s most populous country, China, is now seeing its working-age population shrink for the first time. Smaller populations mean less demand and less potential output. More retirees relative to the number of working-age people means more fiscal pressure: greater expenditure on healthcare and less tax income. Globally, although working-age populations are still growing, we would expect global potential growth to be 0.6ppt lower per year over the next decade compared with the past decade given these demographic changes. Not great news for heavily indebted economies.” James Pomeroy HSBC economist
-“As for what to do with investments, Gross thinks 2016 is a time to take risk off the table. Gross writes: “Less credit risk, reduced equity exposure, placing more emphasis on the return of your money than a double digit return on your money. Even Martingale casinos eventually fail. They may not run out of chips but like Atlantic City, the gamblers eventually go home, and their doors close.” Businessinsider.com
-“The Chinese continue every month to buy large quantities of physical gold. China has now become officially the 5th largest holder of gold in the world. The Chinese plan to make gold a significant part of their monetary portfolio and so I expect to see the massive demand for gold coming from China to continue well into the future.” John Ing
-“So from a financial point of view this is a time to seek safety. Gold and silver have proven to provide that safety for thousands of years, and with the threat of the abolition of cash, ever greater emphasis on negative interest rates globally, and overvalued financial and real estate markets everywhere, I can’t think of a more appropriate strategy.” John Embry
-“Gold didn’t hit a low, it was artificially driven down by the bullion banks, who are agents of the Federal Reserve and acting on the Fed’s orders. This is the way the Fed protects the dollar from losing value. This has been going on in earnest since the fall of 2011. We see the appearance at the most odd times of day and night, for no reason whatsoever, of massive short sale of paper contracts that cause the price of gold to move straight down.” Paul Craig Roberts
-“Yes, this money-printing bonanza will soon come to a tragic end. Due to the massive bubbles created worldwide, there will be a lot of suffering as the world financial system and economy implode. We are also facing massive geopolitical problems that could lead to major wars, even a nuclear war. There will be wealth destruction never experienced before. Just as in the last 5,000 years, physical gold will give protection against this. But there are many other things that are important to plan for besides the protection of assets. Most important is of course to help family and friends during the coming tumultuous times.” Egon von Greyerz
-In real terms I would not be surprised to see stocks worldwide lose at least 90 percent and gold go up by 1,000 percent, both in today’s money. I know that this sounds unrealistic to most people. But we must understand is that the last hundred years, since the creation of the Fed, have also been totally unreal. Unthinkable wealth has been created for an elite and debt that can never be repaid is the burden of the masses. Since unreal situations never last, even this one will come to an end too. I do admit that central banks have kept the circus going a lot longer than many of us could have imagined. Secular bulls are not killed easily. They do go out with a bang. And that is what is happening right now.” Egon von Greyerz
-“According to recent data, nearly half of all Americans own stocks or stock-based investments such as mutual funds. However, only 26% of Millennials fall into that category.” Matthew Frankel The Motley Fool
-Yellen Signals Economy Nearly Ready for First Interest-Rate Hike. Federal Reserve Chair Janet Yellen delivered a cautiously upbeat outlook for the U.S. economy, signaling the conditions necessary for an interest-rate increase have been met and that she hopes to tighten monetary policy slowly after liftoff. “I currently judge that U.S. economic growth is likely to be sufficient over the next year or two to result in further improvement in the labor market,” Yellen said, according to the text of testimony Thursday before Congress’s Joint Economic Committee.
“Ongoing gains in the labor market, coupled with my judgment that longer-term inflation expectations remain reasonably well anchored, serve to bolster my confidence in a return of inflation to 2 percent.” Yellen’s comments were nearly identical to portions of a speech she gave Wednesday to the Economic Club of Washington and comes two weeks before the Federal Open Market Committee meets in Washington. The group is expected to end an historic era of near-zero interest rates in the U.S that dates back to December 2008, when crisis gripped global financial markets. Read more here-http://bloom.bg/1MYIPXJ
-Draghi Braves QE Hype With Boost That Leaves ECB Room to Do More. The European Central Bank unveiled a package of measures to tackle too-low inflation, from a cut in the floor for interest rates to an expansion of its bond-buying program by at least 360 billion euros ($390 billion). Investors were unimpressed. The Frankfurt-based ECB will extend quantitative easing by six months until at least March 2017 at the current rate of 60 billion euros a month, and broaden the assets purchased to include local and regional debt, ECB President Mario Draghi said on Thursday. The Governing Council earlier reduced its deposit rate by 10 basis points to minus 0.3 percent.
The fresh stimulus coincides with a shift in global monetary policy, with the ECB adding stimulus as the U.S. Federal Reserve prepares to start its process of normalization. Even so, financial markets reacted with skepticism, sending the euro up as much as 2.6 percent and equities and government bonds down in a sign that Draghi’s measures fell short of expectations. “The expectations were too high, and this was the minimum he could do,” said Marco Valli, chief euro-area economist at UniCredit SpA in Milan. “I think this was a mix of Draghi being held back by the conservatives, but also him wanting to keep some powder dry in case more is needed.” Read more here-http://bloom.bg/1LRdx0R
-Greeks Told To Declare Cash “Under The Mattress”, Jewelry And Precious Stones. When earlier today we read a report in the Greek Enikonomia, according to which Greek taxpayers would be forced to declare all cash “under the mattress” (including inside) or boxes that contain more than 15,000 euros as well as jewelry and precious stones (including gold) worth over 30,000 euros, starting in 2016, we assumed this has to be some early April fool’s joke or a mistake.
After all, this would be merely the first step toward full-blown asset confiscation, conducted so many times by insolvent governments throughout history, once the government cracks down on those who made a “mistake” in their asset declaration form or simply refuse to fill such a declaration, thereby making all their assets eligible for government confiscation. It was not a joke. Here is the take of Keep Talking Greece, whose stunned response mirrors ours. Cash “under the mattress” totaling more than 15,000 euro, jewelry and other valuable items such as diamonds and gemstones, should be declared to electronic system of tax authorities, Taxisnet, as of 1 January 2016. Next to properties and vehicles and shares, now the taxpayers will also have to declare their deposits. And not only that. They will have to fill if they rent bank lockers and if yes, also the name of the bank and the branch, even if abroad. Read more here-http://bit.ly/1TlbHLB
-Negative interest rates in Switzerland have started a bizarre debate among economists over whether cash should be abolished. The Swiss franc fell to a sharp low on November 27 after the head of the Swiss National Bank said on November 26 that he was prepared to drive interest rates even further into negative territory. Switzerland already has a -0.75% “overnight” rate for banks that draw from it. One Swiss bank plans to charge customers negative interest if they keep cash in their accounts. The European Central Bank now looks like it will also go further negative in its attempts to cheapen the euro against the dollar, according to Reuters. The ECB currently has a -0.2% deposit rate for banks. Denmark and Sweden also have negative policy rates for their banks. The problem for the Swiss is that if the ECB cuts further, the Swiss franc will then look relatively expensive by comparison, again.
So now Switzerland is locked into a race that no one wants to win: It must match each negative ECB move with an even more negative one of its own. Swiss National Bank President Thomas Jordan told Handelszeitung that negative rates were now a “pillar” of SNB policy: “Our monetary policy is clear,” he said. “It is based on two pillars: the negative interest rates and the willingness to intervene in the currency market if necessary.” The intention behind negative interest rates is twofold: First, it makes your country’s currency cheap by comparison. Who wants to hold a currency that only loses value? Cheap currency fuels exports and drives inflationary economic growth. Second, it punishes people who keep cash in the bank. Rather than let yourself be charged interest for storing it in an account, the thinking is you would rather take it out and spend it, thus generating economic activity.
But negative rates also create a surreal world in which you are charged for lending money and you make money by borrowing it. That is driving economists to speculate about all sorts of scary scenarios, on the assumption that the devaluation trend gets deeper and extends itself to consumer banking rates or countries outside Europe. Like the US. One obvious side effect of negative rates is that people would withdraw money from their banks and hold cash. That practical problem means that it is very difficult for banks to push a “real” interest rate on consumers past about -0.5%. Once the negative penalty starts to bite, people just hold bank notes that don’t cost fees. Read more here-http://read.bi/1QSJGgq
-We’re seeing the first real-world effects of negative interest rates in Europe. Four European central banks have set technical or “policy” interest rates that are negative, in the hope of discouraging people from storing money inside bank accounts. To juice the economy, the banks want people to pull their money out of savings and spend it or invest it. But until recently we hadn’t seen much a real-world effect from negative rates. Now, thanks to Bank of America Merrill Lynch and Citi, we have some hard numbers showing that negative rates are indeed having an effect. Read more here-http://read.bi/1XwvdLw
-Our children won’t know what cash is. In the Irish city of Cork, business leaders recently launched a three-month pilot project to encourage consumers to abandon the archaic use of cash by offering the chance to enter into a prize draw if they use electronic means of payment. It is a cheap, almost insulting inducement, but nonetheless probably an effective one. The ultimate aim of the scheme is to transform Cork into the first Irish city to go completely cashless.
A few years ago such an aspiration to do away with physical cash, a form of payment that has served mankind, for better or worse, richer or poorer, for millennia might have seemed a little odd. Not anymore. Today cities all over the globe and even entire nations appear to be in a mad rush to kill off cash. One obvious place that springs to mind is Scandinavia, where Denmark and Sweden are engaged in a neck and neck race to become Europe’s first cashless nation. But the trend extends far beyond Scandinavia.
In London, where physical money has been practically abolished from the public transport system, the borough of Brent has proudly declared itself the first district council to go completely cashless with a little bit of help from MasterCard. In May this year the city of Bergamo launched an ambitious pilot scheme to become Italy’s first cashless city. The initiative, which awards people who use electronic payments with discounts on retail products, is sponsored by (once again) MasterCard, together with CartaSi, Visa, UbiBanca, Banca Popolare di Bergamo and Banco Popolare. Read more here-http://read.bi/1lWlXiM
-We got another major sign that cash is dying. De La Rue, the world’s biggest banknote supplier, is slashing its capacity from 8 billion notes a year to 6 billion. The company said it would close four of its eight production lines, and cut up to 300 jobs, to save around £13 million ($19.5 million). De La Rue is struggling with falling profit margins and an increase in mobile internet-based payments, such as Apple Pay, taking over from cash. Martin Sutherland, De La Rue’s CEO, said: “Today we are announcing plans to achieve a more streamlined De La Rue, in line with the future needs of our global customers, focused on centres for excellence with investment that underpins our future.”
The move to cut cash production comes as economists begin to debate eliminating paper money altogether. It all comes down to negative interest rates. Central banks, particularly in Sweden and Switzerland, have targeted negative interest rates as a way to turn savers into spenders and get the economy moving. The logic goes that by making people pay interest to banks for keeping deposits, they will change their behaviour and spend the money it instead. The only problem is that anyone can escape having to pay money on savings by taking it all out in the form of cash and hiding it in a shoebox somewhere, making the negative-interest-rate policy less effective. Read more here-http://read.bi/1MXh4Pi
-IMF Approves Reserve-Currency Status for China’s Yuan. The IMF will add the yuan to its basket of reserve currencies, an international stamp of approval of the strides China has made integrating into a global economic system dominated for decades by the U.S., Europe and Japan. The International Monetary Fund’s executive board, which represents the fund’s 188 member nations, decided the yuan meets the standard of being “freely usable” and will join the dollar, euro, pound and yen in its Special Drawing Rights basket, the organization said Monday in a statement.
Approval was expected after IMF Managing Director Christine Lagarde announced Nov. 13 that her staff recommended inclusion, a position she supported. It’s the first change in the SDR’s currency composition since 1999, when the euro replaced the deutsche mark and French franc. It’s also a milestone in a decades-long ascent toward international credibility for the yuan, which was created after World War II and for years could be used only domestically in the Communist-controlled nation. The IMF reviews the composition of the basket every five years and rejected the yuan during the last review, in 2010, saying it didn’t meet the necessary criteria. Read more here-http://bloom.bg/1PtjJ73
-U.S. Total Debt Soars By $674 Billion In November. When the US reached a debt ceiling deal in the beginning of November, it was common knowledge that there would be a debt accrual “catch up” to make up for lost time when the US was operating under emergency measures to avoid breach of the debt ceiling. And sure enough, when the accurate total debt number was released on November 2, this was indeed the case, when we learned that the US had added some $339 billion in debt during the “emergency measures” period. However, what is unclear is how in the remaining 4 weeks of November, the US managed to add another $335 billion in total debt, bringing the total increase for the month of November to a whopping $674 billion, and total US debt to a record $18.827 trillion. Read more here-http://bit.ly/1HGBQE5
-Puerto Rico Avoids Default by Redirecting Revenue From Bonds. Puerto Rico said it made all principal and interest payments due Tuesday, averting a default on directly guaranteed bonds and allowing the commonwealth to continue talks with creditors to reduce its $70 billion debt burden. Governor Alejandro Garcia Padilla signed an executive order to permit the redirection of revenue budgeted for highway and convention center bonds and other agencies to pay for debt issued or guaranteed by the commonwealth, according to a Government Development Bank statement. The GDB, which lends to the commonwealth and its agencies, had $354 million in principal and interest payments due Tuesday. Read more here-http://bloom.bg/1OxOEOg
-Watch for U.S. recession, zero interest rates in China next year, Citi says. The outlook for the global economy next year is darkening, with a U.S. recession and China becoming the first major emerging market to slash interest rates to zero both potential scenarios, according to Citi. As the U.S. economy enters its seventh year of expansion following the 2008-09 crisis, the probability of recession will reach 65 percent, Citi’s rates strategists wrote in their 2016 outlook published late on Tuesday. A rapid flattening of the bond yield curve towards inversion would be an key warning sign. “The cumulative probability of U.S. recession reaches 65 percent next year,” Citi’s rates strategists wrote in their 2016 outlook published late on Tuesday. “Curve inversion will likely come more quickly than the consensus thinks.” Read more here-http://read.bi/1Np1glD
-Morgan Stanley: Get Ready for a Period of Low Returns in the Market. Morgan Stanley has some bad news for portfolio managers: The easy money has been made. Chief Cross-Asset Strategist Andrew Sheets is warning asset managers that the efficient frontier the mix of stocks, bonds, and other instruments that produces the best risk-adjusted return is about to collapse. Read more here-http://bloom.bg/1TweUsb
-World’s Biggest Pension Fund Loses $64 Billion Amid Equity Rout. The world’s biggest pension fund posted its worst quarterly loss since at least 2008 after a global stock rout in August and September wiped $64 billion off the Japanese asset manager’s investments. The 135.1 trillion yen ($1.1 trillion) Government Pension Investment Fund lost 5.6 percent last quarter as the value of its holdings declined by 7.9 trillion yen, according to documents released Monday in Tokyo. That’s the biggest percentage drop in comparable data starting from April 2008. The fund lost 8 trillion yen on its domestic and foreign equities and 241 billion yen on overseas debt, while Japanese bonds handed GPIF a 302 billion yen gain. Read more here-http://bloom.bg/1Xw8Oha and http://read.bi/1LN0iOQ
-A hedge fund that was once one of the world’s largest is now returning money to investors. Michael Platt, who runs the $8 billion BlueCrest Capital Management, will return all client money and instead focus on managing his own wealth and that of his partners and employees. Outside investors, who account for about $7 billion of the firm’s assets, will get 75 percent of their money before the end of January and 90 percent by the end of the first quarter, the firm said in a statement. BlueCrest will become a private investment partnership, according to the statement, which cited declining fees and rising costs as reasons for the move. Read more here-http://bloom.bg/1YFY651 and http://read.bi/1QSFTQ9
-Oil States Need Price Jump to Balance Budget: OPEC Reality Check. If the Organization of Petroleum Exporting Countries keeps its policy of favoring market share over prices when it meets Dec. 4, most members will probably find themselves unable to balance their budgets. Oil futures have tumbled more than 25 percent since OPEC’s last meeting in June, yet the group will keep pumping to batter rival producers, according to 30 analysts and traders surveyed by Bloomberg. With Brent crude forecast to average about $57.50 a barrel next year, only Qatar would be able to keep its finances in check. Read more here-http://bloom.bg/1Ov5T2A and http://bloom.bg/1Qcxo0I
-Oil Plunge Raises Fears of Societal Unrest. With Wall Street shops like Goldman Sachs and government officials in Venezuela signaling oil could go to the mid-$20 per barrel range next year, analysts at places like RBC Capital Markets have been warning that chronically low oil prices plunging towards seven-year lows means increasing social chaos in countries on the edge—including those battling ISIS. Five countries are high on the radar screen for societal risks from low oil prices, which RBC Capital Markets has labeled the “Fragile Five.”
They are Algeria, Iraq, Libya, Nigeria, and Venezuela. ISIS operatives are believed to be in most of these countries. The wealthier Gulf State governments can adapt to low oil prices by borrowing in the bond market or raising taxes and cutting government spending, though the latter risks more social unrest. Already, the United Arab Emirates pulled fuel subsidies and is mulling corporate and sales taxes. Still, OPEC member countries have seen their group’s revenues drop by nearly $500 billion in the past year, as oil has plunged more than 40%. Read more here-http://fxn.ws/1MVI9m0
-The $30 Oil Cliff Threatening Russia’s Economy. For Russia, $30 is the number to watch. Crude prices at that level will push the economy to depths that would threaten the nation’s financial system, according to 15 of 27 respondents in a Bloomberg survey. Lower prices for the fuel are next year’s biggest risk for Russia, which is unprepared to ride out another shock on the oil market, most economists said. Other dangers for 2016 include geopolitics, strains in the banking industry and the ruble, according to the poll of 27 analysts. “If oil prices fall lower and stay at that low level for longer, risks of fiscal and financial destabilization increase significantly,” Sergey Narkevich, an analyst at PAO Promsvyazbank in Moscow, said by e-mail. Read more here-http://bloom.bg/1HGBAor
-Canada Keeps Key Rate 0.5% as ‘Complex’ Adjustment Unfolds. The Bank of Canada kept its key interest rate unchanged and said the economic recovery is unfolding as expected, with momentum from non-energy exports and the weaker currency helping to contain the damage from lower oil prices. In a decision released Wednesday from Ottawa, policy makers kept the benchmark rate on overnight loans between commercial banks at 0.5 percent, where it’s been since July. Read more here-http://bloom.bg/1QUgS7o
-Canadian economy returns to quarterly growth amid signs of weakness. Mini-recession ends as GDP growth turns positive, but signs of weakness reappear. Canada’s economy resumed growing in the third quarter, Statistics Canada reported today, officially ending the mild recession that hit the country in the first two quarters of 2015. But there are already signs that the rebound may not be very robust. The economy expanded at an annual pace of 2.3 per cent in the three months that ended in September, slightly below economists’ expectations of 2.4 per cent growth. Read more here-http://bit.ly/1jxAJuw
-Foreign Buyers Increase Condo Stakes in Canada Cities, CMHC Says. Foreign owners are taking a larger share of the condominium markets in Toronto and Vancouver, Canada’s housing agency said. Foreigners owned 3.5 percent of all condos in Vancouver and 3.3 percent in Toronto, Canada’s largest city, according to a report Thursday from Canada Mortgage & Housing Corp. which surveyed property managers.
That’s up from the 2014 share of 2.3 percent and 2.4 percent. In the downtown core, foreign buyers made up 5.4 percent of Vancouver condo buyers this year and 5.8 percent in Toronto, both up from last year. Politicians have been under pressure from many quarters including Vancouver Mayor Gregor Robertson, HSBC Holdings Plc and local residents to start monitoring offshore money that may be pushing up home prices, particularly in Vancouver. The average price for a detached home rose 9 percent to C$1.02 million ($760,000) in Toronto in November from a year ago while Vancouver home prices soared 18 percent to C$752,500. Read more here-http://bloom.bg/1NJXg5u
-Oil at $35 Would Trigger 26% Canada Home Price Drop, CMHC Says. Oil at $35 a barrel for a period of five years would trigger a 26 percent collapse in Canadian home prices, according to stress tests run by Canada’s housing agency. The results were part of a slide presentation Evan Siddall, chief executive officer at Canada Mortgage & Housing Corp., gave Monday to a private audience in New York. The “Stress tests Financial impacts” slide included five scenarios, one of which was called “Oil Price Shock,” which also predicts the unemployment rate would peak at 12.5 percent. Spokesman Charles Sauriol said later in an e-mail the scenario assumes oil at $35 a barrel over five years. The “Base Case” scenario calls for housing prices to climb 9.1 percent and joblessness to peak at 6.6 percent. Read more here-http://bloom.bg/1NqI5wa
-Goldman Warns of Brazil Depression After GDP Plunges Again. Latin America’s largest economy shrank more than analysts forecast, as rising unemployment and higher inflation sapped domestic demand, pulling the nation deeper into what Goldman Sachs now calls “an outright depression.” Gross domestic product in Brazil contracted 1.7 percent in the three months ended in September, after a revised 2.1 percent drop the previous quarter, the national statistics institute said in Rio de Janeiro. It also marks the first three-quarter contraction since the institute’s series began in 1996, and a seasonally adjusted annual drop of almost 7 percent. Read more here-http://bloom.bg/1jxiaqn
-Pope Orders Audit of Church’s Wealth. Pope Francis, galvanized by a scandal over Vatican finances, has ordered the most powerful bodies in the city-state to launch an unprecedented audit of its wealth and crack down on runaway spending. Read more here-http://bloom.bg/1Nm9o6i
-“Mysterious” Fire Hits Argentine Ministry Of Finance, Destroys Years Of Prior Regime’s Files. Read more here-http://bit.ly/1LRf7A2
-The San Bernardino shooting is America’s 352nd mass shooting in the 336 days of 2015. There have been more mass shootings in the US than days in 2015. A Reddit-based Mass Shooting Tracker keeps count of incidents in which at least four people are killed or injured by gunshots, based on media reports. Including the shooting in San Bernardino, California, on Wednesday, there have been a total of 352 mass shootings in the US this year, according to the Mass Shooting Tracker. In the 336 days that have passed so far in 2015, there was at least one mass shooting on 208 of those days: 62% of days in 2015 had at least one mass shooting. On 81 days, there were at least two separate mass-shooting incidents. Read more here-http://read.bi/1QhZWGk
-Christie’s Hong Kong Magnificent Jewels Sale, Dec 1 2015, Hong Kong China. Auction Results Here-http://bit.ly/1lzXu2m
-Flaming Red Ruby Fetches $18 Million at Christie’s Hong Kong. “The Crimson Flame,” an exceptionally rare Burmese ruby sold for $18.3 million, setting a world auction record per carat of $1.2 million at Christie’s Hong Kong sale of Magnificent Jewels Tuesday. The 15-carat “pigeon’s blood” gem surpassed its high estimate of $15 million. The auction house said it is “undoubtedly the most important pigeon’s blood ruby to come to auction in Asia.” Read more here-http://onforb.es/1jC5MFI
-Lot 2078: A RARE COLOURED DIAMOND AND DIAMOND RING. Set with a pear-shaped fancy intense pink diamond, weighing approximately 7.53 carats, flanked by half-moon diamonds, mounted in gold, ring size 5¾. Accompanied by report no. 2105404565 dated 16 March 2015 from the GIA Gemological Institute of America stating that the diamond is fancy intense pink colour, VS2 clarity; and a Diamond Type Classification letter stating that the diamond has been determined to be Type IIa. Estimate $5,833,620-$8,426,340. Price Realized $6,258,826. See more here-http://bit.ly/1IswDQe
-Lot 2075: A RARE COLOURED DIAMOND AND DIAMOND RING. Set with a cushion-shaped fancy intense pink diamond, weighing approximately 5.22 carats, flanked by heart-shaped diamonds, mounted in gold, ring size 5¾. Accompanied by report no. 11013063 dated 7 August 2015 from the GIA Gemological Institute of America stating that the diamond is fancy intense pink colour, internally flawless clarity; and a Diamond Type Classification letter stating that the diamond has been determined to be Type IIa. Estimate $3,240,900-$4,537,260. Price Realized $4,443,922. See more here-http://bit.ly/1O6GMys
-Lot 2040: AN IMPORTANT COLOURED DIAMOND AND DIAMOND RING. Set with a pear-shaped fancy brown-pink diamond, weighing approximately 15.82 carats, to the pear-shaped rose-cut diamond gallery, joined to the circular-cut diamond frame, extending to the three quarter-hoop, mounted in gold, ring size 6. Accompanied by report no. 15696902 dated 24 May 2013 from the GIA Gemological Institute of America stating that the diamond is fancy brown-pink colour, VS2 clarity. Estimate $1,620,450-$2,333,448. Price Realized $1,716,381. See more here-http://bit.ly/1XLGUbW
Lot 2061: AN IMPORTANT COLOURED DIAMOND AND DIAMOND RING. Set with a square-shaped fancy vivid yellow diamond, weighing approximately 13.79 carats, flanked by shield-shaped diamonds, mounted in platinum and gold, ring size 6. Accompanied by report no. 15146164 dated 8 August 2006 from the GIA Gemological Institute of America stating that the diamond is fancy vivid yellow colour, VVS1 clarity. Estimate $933,379-$1,231,542. Price Realized $1,063,015. See more here-http://bit.ly/1HJCkco
-Lot 2067: AN IMPORTANT COLOURED DIAMOND AND DIAMOND RING, BY CARTIER. Set with a cushion-shaped fancy vivid yellow diamond, weighing approximately 7.16 carats, flanked by fancy-cut diamonds, mounted in platinum and gold, ring size 5¼. Signed Cartier. Accompanied by report no. 5151574972 dated 25 July 2013 from the GIA Gemological Institute of America stating that the diamond is fancy vivid yellow colour, VS2 clarity. Estimate $648,180-$1,037,088. Price Realized $876,339. See more here-http://bit.ly/1TomCUx
-Lot 2073: A COLOURED DIAMOND AND DIAMOND RING. Set to the centre with a rectangular-cut fancy intense green diamond, weighing approximately 2.16 carats, within a circular-cut pink diamond frame, pear-shaped diamond surround spaced by circular-cut diamonds, extending to the half-hoop, mounted in gold, ring size 5¾. Accompanied by report no. 5156646309 dated 28 August 2013 from the GIA Gemological Institute of America stating that the diamond is fancy intense green colour, SI1 clarity. Estimate $298,163-$453,726. Price Realized $658,551. See more here-http://bit.ly/1QXxf2S
-Lot 2065: A COLOURED DIAMOND AND DIAMOND RING, BY CARTIER. Set with an oval-shaped fancy vivid yellow diamond, weighing approximately 7.28 carats, flanked by pentagon-shaped diamonds, mounted in gold, ring size 5½. Signed Cartier. Accompanied by report no. 3205649950 dated 20 August 2015 from the GIA Gemological Institute of America stating that the diamond is fancy vivid yellow colour, VVS1 clarity. Estimate $103,709-$155,563. Price Realized $565,213. See more here-http://bit.ly/1jCfhV8
-Lot 2076: A COLOURED DIAMOND AND DIAMOND RING. Set with an oval-shaped fancy orangy pink diamond, weighing approximately 3.08 carats, within a circular-cut diamond surround and openwork flowerhead frame, extending to the half-hoop, mounted in gold, ring size 5½. Accompanied by report no. 2207823254 dated 24 September 2015 from the GIA Gemological Institute of America stating that the diamond is fancy orangy pink colour, VVS2 clarity. Estimate $194,454-$324,090. Price Realized $331,868. See more here-http://bit.ly/1jCfCam
-Jewelry Returns Outperform UK Equities, London Real Estate: Knight Frank. Jewelry outperformed UK equities and prime central London real estate over the past decade, generating a higher level of return amid lower volatility. While jewelry and the Knight Frank Prime Central London Residential Index grew more than 100 percent in the past 10 years to the end of September, the former has outpaced the latter, a Knight Frank report showed. UK Equities produced less than 50 percent return over the same period. Jewelry grew 159 percent over the past decade, data from Knight Frank show.
It is also the third-least volatile asset class, with gold at the highest level of the price-swing spectrum and furniture at the lowest, out of the asset classes measured by Knight Frank over the period under review. Pink diamonds surged 315 percent over the ten years to June 30, blue diamond’s soared 154 percent and yellow diamonds jumped 50 percent. Over the five years to the end of the third quarter, jewelry has amassed 71 percent and colored diamonds appreciated 43 percent. “The short-term growth of colored diamond prices has been more muted,” Oren Schneider, the co-founder of Adama Partners, a New York venture firm, and member of the board of advisors to the Fancy Color Research Foundation, was cited as saying in the research report. “This is due to a lull in Chinese buyer activity.” Read more here-http://bit.ly/1XLDq9t
-Petra discovers major pink diamond. The giant pink diamond discovered at the Williamson mine in Tanzania has made its way to Antwerp ahead of an auction for the 23.16 carat stone that for the meantime is being called “The Williamson Pink.” Petra Diamonds has been operating the mine for nearly eight years as the largest shareholder (75%) with the Tanzanian government the co-owner (25%). The mine has been in operation since the 1940s. While pink diamonds have been found at the mine before none have enjoyed the size and characteristics of this stone according to Petra marketing manager, Greg Stephenson. The Williamson mine boasts one of the largest kimberlite pipes.
“We are currently mining at a depth of about 90m on a prospective region 146 hectares in size,” says Stephenson. “The tone and saturation of this stone are simply exquisite,” says Stephenson. “The colour is the purest pink what we refer to as a carnation pink. There are no moderating colours. The stone’s structure lends itself to being a large polished stone as opposed to being cleaved/lazered into smaller stones. So this makes it particularly rare.” Stephenson remained mum on what the company expects to fetch for the stone, but it will become public knowledge when the auction process concludes on December 11. Read more here-http://bit.ly/1TCoRV9
-Rio Tinto finds one of Canada’s largest diamonds at Arctic mine. Rio Tinto announced it has unearthed one of Canada’s largest-ever, gem-quality rough diamonds at its Diavik diamond mine in the remote Northwest Territories, a 187.7-carat stone called the Diavik Foxfire. The gem, now being showcased at Kensington Palace in London, will later be assessed at Rio Tinto’s diamond sales and marketing hub in Antwerp. Rio Tinto, which expects the stone to produce at least a 50-carat polished diamond, did not estimate the gem’s value. Discovered in August, the diamond is the second or third largest rough diamonds mined in Canada and the largest ever for a Rio Tinto diamond mine, a spokeswoman said. Rio Tinto operates the mine and owns a 60-per-cent share, with Dominion Diamond Corp. holding the remainder. Read more here-http://bit.ly/21zBZ2q Video here-http://bloom.bg/1MZxtTf
-CHART OF THE WEEK: Hedge Funds Boost Bearish Gold Bets to Record as Rate Rise Nears. Fund managers aren’t waiting to see whether U.S. interest rates rise this month. They’ve already turned the most bearish ever on gold. Speculators boosted their net-short positions to 14,655 contracts in gold futures and options in the week ended Nov. 24, the most since the U.S. government data begins in 2006. They’re not the only bears. Investors in exchange-traded funds backed by the metal cut their holdings for an eighth session through Monday, to the smallest since 2009. Almost $10 billion has been wiped from the value of gold ETPs this year. Read more here-http://bloom.bg/1NtIhL1
-Half of Gold Output May Not Be ‘Viable’ as Price Sags: Randgold. Half of the gold coming from mines may not be viable at current prices, underscoring the industry’s need for consolidation and output cuts, according to the best-performing producer of the metal in the past decade. “The more we continue to produce unprofitable gold, the more pressure we put on the gold price,” Randgold Resources Ltd. Chief Executive Officer Mark Bristow said in an interview in Toronto on Friday. “In the medium term, it’s a very bullish outlook for the gold industry.
The question is, how long are we going to supply it with unprofitable gold?” Gold fell to a five-year low on Friday as a rising dollar and speculation that U.S. policy makers will boost interest rates next month curbed the appeal of bullion as a store of value. While industrial metal producers have promised output cuts, “we don’t have that psyche in the gold industry, we just send it off our mine and somebody buys it,” Bristow said. Gold miners buffeted by the drop in prices are shortening the life of mines by focusing only on the best quality ore, a practice known as high grading, which will restrict future output and support higher prices, according to Bristow.
He said in a presentation to bankers in Toronto that the industry life span is down to about five years because companies have been aggressively high grading at the expense of future production. “The industry has moved away from looking at optimal life of mines because everyone is trying to demonstrate short-term delivery,” he said in the interview after the presentation. “Where is all this value that people promised in the gold industry? It’s not there.” Traditionally, the industry would address this through “survival” mergers, Bristow said. Read more here-http://bloom.bg/1NIkgBL
-Lawrie Williams: COMEX is fiction; a casino for paper gold John Hathaway. John Hathaway Senior Portfolio Manager for Tocqueville Asset Management in the U.S. is one of the most respected gold fund managers and analysts around so his observations should not be taken lightly. Speaking late in the afternoon on the second day of the Mines & Money conference and exhibition in London following on from a busy day featuring a hugely impressive array of some of the resource sector’s top investors, miners and commentators including Frank Holmes, Pierre Lassonde, Grant Williams, John Kaiser, Rick Rule, David Humphreys, Mark Bristow, Peter Hambro, Neil Froneman, Rob McEwen and several more Hathaway had some very harsh words for the impact on the gold market and on price of the massive paper gold trading volumes on the COMEX in particular.
Describing COMEX as ‘fiction: a casino for paper gold’ he seized on latest figures showing that paper gold trades on COMEX in a day were running at a level around 300 times annual daily new physical gold supply and questioning how such trades can effectively set the gold price bearing little or no relation to gold supply and demand fundamentals. On fundamentals he said he wouldn’t be surprised to see new mine supply fall by around 25% over the next few years failing any substantial gold price increase. And even then it would be difficult for the industry to recoup these supply losses. Virtually no major new gold mines are coming on stream or are any longer in the pipeline, expansion projects have been put back or abandoned and mineral exploration, particularly by juniors, is grinding to a halt. Read more here-http://bit.ly/1OJzwvg
-Lawrie Williams: Gold nears $1050. Could go lower on Fed interest rates move. Much as it may grieve me to say so, Jeffrey Currie of Goldman Sachs’ long time forecast for gold to fall to $1050 or lower looks as though it may be coming right although around a full year later than he originally predicted. This low level has been reached in part due to continuing Fed prevarication on beginning to raise interest rates. This time around Janet Yellen, with her definitive statement that the Fed would start raising this year, and her colleagues on the FOMC, may have at last talked themselves into starting to raise rates in December, whether this is actually sensible to do so or not there are mixed views on the advisability of this.
The impact, particularly on some other economies than that of the U.S., is hard to predict, and with the interconnections in the global financial system a rate raising decision in the U.S. while others notably the Eurozone and Japan may still be moving in the other direction could have some unforeseen consequences with the U.S. dollar finding itself being driven ever higher (the US dollar Index breached the 100 mark on Friday) with adverse effects on the nation’s already disastrous debt position. Read more here-http://bit.ly/1TBuQcU
-Lawrie Williams: Asian gold demand soars in 2015 yet price still falls. Let’s face it, the gold price seems to bear little correlation to global physical metal demand. In the face of reducing supply (low gold prices keep scrap sales depressed, new mined gold supply is plateauing and beginning to fall and sales out of the big gold ETFs this year are a fraction of those seen back in 2013) and increasing demand China, India and Central Banks in particular surely the pressure on gold prices should be upwards not negative as it appears to be at present.
But at the moment gold is moving down as the US dollar moves up with the likelihood of interest rate rises in the US coupled with more easing in the Eurozone and Japan has pushed the dollar index over the 100 mark. But, consider the demand data. Chinese Shanghai Gold Exchange (SGE) physical metal deliveries are at an all-time high having already this year exceeded the full year total for 2013 the previous record year. Deliveries out of the SGE are rising again as we draw nearer to the year-end with the latest figure for the week ending Nov 20th at 54 tonnes bringing the year to that date total to a massive 2,313 tonnes (as compared with the previous record 2013 full year total of 2,182 tonnes). The year to date figure is equivalent to around 80% of current global new mined production on its own. Read more here-http://bit.ly/21z95Q1
-U.S. Mint American Eagle gold coin sales surge, silver at record. The U.S. Mint’s sales of American Eagle coins surged in November, with gold nearly tripling month-over-month and silver already reaching a new annual record as bullion prices fell to multi-year lows, data released on Monday showed. The mint sold 97,000 ounces of American Eagle gold coins in November, up 185 percent from October and 62 percent higher from a year ago, after selling out of most of the 2015-dated coins as falling bullion prices attracted buyers. Read more here-http://reut.rs/1YLAX1d
-Clive Maund: Latest Gold COTs Most Bullish For 14 Years, And Call for a Sizeable Tradeable Rally Soon. Read more here-http://bit.ly/1TDi3Xc
-Frank Holmes: SWOT Analysis Mauldin Economics Calls Gold “Universal Deficiency” In Most Investors’ Portfolios. Read more here-http://bit.ly/1IsDrNF
-Why you should buy gold even though Warren Buffett hates it. Read more here-http://read.bi/1m0dWcM
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
-Steve St. Angelo: Record Silver Coin Demand Signals Financial Trouble Ahead. The world doesn’t realize it, but record global silver coin demand is warning that big trouble is coming to the financial system. More investors are waking up to the fact that there is something seriously wrong with the financial industry and broader stock markets and are buying more physical gold and silver than ever. Read more here-http://bit.ly/1jChfoB
-Steve St. Angelo: Mike Maloney 2015 Silver Summit Presentation. The Perfect Economic Storm Is Here. Watch more here-http://bit.ly/1m0rZz5
-Let’s face it, managed money technical fund positioning has grown massive to the point where analysts like John Kemp and many others have focused on it. No one, other than me, has called it the most important market issue of our age, but give it time. Yet, not one word from the CFTC or CME has been uttered on this issue. That should give you a sense of how corrupt the regulators are – refusing to wade in on what is their single most important mission, preventing artificial pricing and manipulation.
Something will come along to kill the absurdity of the increasingly massive technical fund positioning and the commercials’ ability to extract untold profits from these funds. This is so crazy, it can’t last for long. My best guess is that the CFTC will come to enact collective position limits after some type of a market event; an event that to me must include something dramatic in silver. And if my hunch that JPMorgan may refrain from adding new short positions on the next silver rally proves true, that will provide the drama.
Another day, another sell-off. It has now been more than a month of almost continuously lower gold and silver prices, as the managed money traders continue to plow onto the short side of gold, silver and other commodities led by their price-nose by the commercials. We witnessed new price lows in gold today, both on the COMEX and in GLD, but so far not quite in COMEX silver (although we finally got a new low in SLV). Thus the salami price slicing has continued. Silver analyst Ted Butler Dec 2 2015 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN
-If the deliveries were light in COMEX gold futures [on First Day Notice last Friday], that certainly wasn’t the case in silver, as 2,746 contracts were issued and where only 1,300 contracts still remain open for delivery. Most unusual about the 2,746 delivered contracts (the equivalent of more than 13.7 million oz) is that they were issued by a customer of JPMorgan and accepted (stopped) by 21 different clearing firms, including 937 contracts stopped by JPMorgan for its house or proprietary trading account. Thus, not only was JPMorgan the sole silver issuer for a customer, it was the largest stopper by far for its own account. Just to remind you, I have previously reported this year that JPMorgan has been the largest acceptor of silver deliveries on the COMEX and with this delivery has now stopped 4,776 total silver contracts this year, or nearly 23.9 million oz, a small portion of the 400 million oz I estimate the bank has acquired over the past 4.5 years.
Undoubtedly, many of the 21 different stoppers of silver on the first notice day will redeliver (sell) their metal quickly, as this normally happens. And while it’s not unusual to see only one big issuer in COMEX gold or silver on first notice day, some other facts stand out. Among them is the observation that COMEX gold and silver deliveries and trading are dominated by three banks – JPMorgan, HSBC USA, and the Bank of Nova Scotia, with JPM as the king fish (or king crook). Unless I’ve been in some deep coma, I thought there was a movement over the past 5 years and longer to rein in big banks from speculating and dominating commodity markets via Dodd-Frank and the Volcker Rule. The facts clearly document that the big banks are more dominant in gold and silver (and other commodities) than ever before, and most usually for their own house speculative trading accounts.
The whole idea behind manipulation is control and dominance by a few large traders. It’s hard to imagine markets more dominated and concentrated than COMEX gold and silver; at least, that’s what the facts indicate. What are the most plausible explanations for that dominance and control? I still hold the most plausible explanation is pure greed on behalf of the big banks, with the most greedy of all being JPMorgan; but the dominance and concentration are so well-defined by the facts that there has to be government and regulator involvement of some type. Surely, the CFTC and CME have to be aware that the data they are publishing prove control and price manipulation beyond question. Not being able to refute these allegations has to be why the issue is not addressed. Silver analyst Ted Butler Nov 28 2015 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN
-In COMEX gold futures, the commercials reduced their total net short position by 16,500 contracts (I guessed more than 10,000) to 12,000 contracts; which I believe is the lowest (most bullish) commercial net short position in more than 12 years. By commercial category, I was surprised that the 4 largest shorts added 4,400 new short contracts and the big 5 thru 8 traders also added 700 new shorts; meaning the gold raptors (the smaller commercials) bought a hefty 21,600 new long contracts. It’s possible a managed money trader may have snuck into the ranks of big 8 gold shorts, but I’m not sure since managed money shorts only grew marginally this reporting week. Another possibility is that the 4 largest gold shorts knew they were going to bomb the gold market on Friday (3 days after the cut-off) and had added a few new shorts to position themselves for the price raid.
I wasn’t that close in the predictive game in terms of managed money selling, as these traders only added 3,290 new gold shorts; but it does look to me like the managed money traders are now more net short (more than 16,500 contracts) than any time in the 8 years the CFTC has broken out managed money data. The only way that can get more bullish for gold is if new managed money shorts have been or are added but it most likely won’t be in tremendous numbers at this point. The managed money longs actually added 500 contracts or so, reaffirming 90,000 contract non-technical fund core long position in gold which is not likely to get sold on new price lows. In COMEX silver futures, the commercials reduced their total net short position by 6,800 contracts (I guessed 5000+), to 28,700 contracts.
By commercial category, the big 4 (read JPMorgan) bought back and reduced their net short position by 1,200 contracts and the big ‘5 thru 8’ also bought back 500 shorts (even though managed money traders added shorts meaning the commercials bought back more shorts than reported). The raptors were the big buyers in adding 5,100 new longs and now hold a very large net long position of 45,600 contracts. I’d peg JPMorgan’s net silver short position at 15,000 contracts, not the lowest in the eight years this crooked bank has been the big silver manipulator; but low (and bullish) nonetheless. A big raptor net long position, coupled with a small concentrated net short position by the 8 big commercials, and further combined with a large managed money short position has been a proven prescription for a price rally in the past and I can’t conceive of a valid reason why it should be different now.
The managed money traders in COMEX silver only added 3,350 new shorts, but that looked fine to me considering they added close to 30,000 new shorts in the few prior COT reports. Also of interest was that the managed money longs added 1,000 new longs to a gross long position now more than 52,600 contracts, making my new non-technical fund core long position of 50,000 contracts look more valid. This new COT report does support the cake being baked premise, not just in gold and silver, but in other COMEX/NYMEX metals, like copper, platinum and palladium, as well as crude oil. Not every one of these commodities has record bullish extreme readings in every category, like gold has in its two headline numbers, but I haven’t seen a better overall setup for all these commodities combined. It really is quite remarkable how this all came together. Silver analyst Ted Butler Nov 30 2015 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN
-Both gold and silver deliveries [on First Notice Day on Friday] were unusual, but in different ways. First gold. After the non-traditional delivery month of November, in which 200 contracts remained open for delivery for nearly the entire month, the delivery was completed on the last delivery day of November. That’s a simple fact that implies physical tightness in gold, as I have commented on recently. The first notice day for December does nothing to eliminate the tightness premise in gold, as only 2 contracts were issued for delivery against nearly 8,000 COMEX contracts still open as of the close of business yesterday.
Furthermore, JPMorgan stopped one of the two gold contracts issued, which usually means it will stop many more (as, and when, issued). Much can and will happen as this delivery month progresses, but at this moment, the most plausible, albeit preliminary explanation surrounding it is that physical gold looks tight. Perhaps this is speculation, but I can’t help but feel, because the commercials have done such a remarkable job in reducing their total net short position over the past month by manoeuvring the managed money traders onto the sell side of COMEX gold and silver, that this is the main plausible explanation in advance for a short squeeze in gold (and silver), tied to COMEX delivery circumstances.
I know many point to the low levels of COMEX gold inventories and I do believe there is some truth in that; but when the commercials are favorably positioned for such a squeeze, as they are now, this positioning is many times more important. Much less important is, for some reason, the relative lack of public pronouncements that this current delivery period will be the one in which prices soar. Up until now, there were always widespread predictions of delivery squeezes that never came to fruition. Silver analyst Ted Butler Nov 28 2015 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN
-The world produces and consumes roughly one billion ounces of silver annually. That includes total world mining and recycling production and total demand, including industrial and other fabrication consumption, coins and investment demand. At current prices that comes to roughly $15 billion, making silver perhaps the least valued of all commodities. For example, gold and copper annual production is well in excess of $100 billion, crude oil near $2 trillion (even at depressed prices). In a world of 7.3 billion people, silver’s total production and consumption comes to $2 per capita. Gold’s production value on a world per capita basis is $16; in oil, it’s $240.
Because the total value of world silver production and consumption is so small on any relevant or relative basis that automatically magnifies the impact of the “at the margin” effect. If the total amount of supply and demand is small, that means that the amount remaining at the margin must also be small. The smaller the at-the-margin amount, the larger the price impact. With only $15 billion in total annual silver production value, the “at the margin” segment is also proportionately less, probably way less than $1 billion.
The fact is that it would take an incredibly small amount of buying in silver at the margin to impact the price to a much greater degree than in any other commodity or investment asset. It is this phenomenon that has fueled silver’s big gains in the past and that will fuel the big gains to come. To be sure, none of this is having any impact on the price currently, due to the ongoing price manipulation on the COMEX. But you can only fool Mother Nature or the law of actual supply and demand for so long and at-the-margin buying will eventually drive prices to heights that seem impossible now. Silver analyst Ted Butler Nov 25 2015 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN
-At the end of October, quite literally just several weeks ago, about the last thing I was looking forward to were many months of resolution to the downside to get the managed money traders fully sold out and sold short. Therefore, not only am I enthused that the managed money traders have sold enough to put us into a strongly bullish market structure; I’m extremely thankful that they did it as quickly as they did (even though they were tricked by the commercials).
Let me keep this as simple as possible what’s baked into the price cake is the 130,000 gold and 40,000 silver contracts that were sold by the managed money traders over the past three weeks. These contracts were sold because the commercials sliced the price salami to the downside not due to any other reason, like the fundamentals or world events. Now that these contracts have been sold, close to the same number or maybe even more will be bought on higher prices, whenever the commercials decide to slice the price salami higher. There are now at least 130,000 COMEX gold contracts and at least 40,000 silver contracts that will be bought as and when prices move higher through the important moving averages.
I can’t tell you exactly when the managed money buying surge will commence, just that it must occur at some point in the relative near future. I also can’t tell you how far the certain coming gold and silver rally will carry, as that is dependent on how many new shorts are placed by the crooks at JPMorgan and the other big commercial shorts. Finally, I can’t even rule out further new price lows in the very short term and can only attest that new lows only bake the cake better. The good news is that this cake can’t be burnt the more it is baked, the surer and stronger the inevitable rally. Silver analyst Ted Butler Nov 26 2015 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN