The Decline and Fall of Silver Backwardation 11 Oct, 2015

The gold price moved up $18. However, the silver price moved up 60 cents which is a much bigger percentage. The silver community is getting pretty excited.
A market trend will often begin when a small number of traders learn something new. As they begin buying (or selling), the price begins to move. Others become aware of the truth, and they begin buying. There’s just one problem with these moves.
By the time most people hear about it, the fundamentals have changed. Oh the discovery may still be true, but the new, higher price offers no bargain.
For years, silver has been priced in the market above its fundamental (with a few momentary exceptions, such as one year ago). The fundamental price was way below the market, and led it down.
Then this summer, the market and fundamental inverted as the market price fell. The fundamental caught down to it by July 14. In the last week of August, another inversion occurred. The market price dropped through the fundamental, which was rising by then.
Now the market price has shot up, probably for two reasons. One is the persistent rumors of silver coin shortages that people mistake for a silver bullion shortage. The other is the nonfarm payrolls report, which they interpret as a green light for more quantitative easing. Add to this the fact that the gold price is rising in the face of strong fundamentals, and people buy up silver.

This post was published at SilverSeek on Sunday, October 11th.

Obama Defends The Failure Of His Syria Policy Before A Beligerent 60 Minutes

Yesterday, in a comprehensive takedown of Obama’s handling of the second Syrian proxy war in three years (which is not over yet), we summarized events as follows: “The Tragic Ending To Obama’s Bay Of Pigs: CIA Hands Over Syria To Russia.”
The facts, which are largely undisputed, confirm this: having achieved no progress “against ISIS”, thestated goal of US intervention in Syria, and no progress in kicking Assad out of office and starting the Qatar has pipeline to Europe, the real goal of US intervention in Syria, the top democrat on the House Intelligence Committee, Adam Schiff, said that Obama “is debating the merits of taking further action orwhether they are better off letting Putin hang himself.”
By “hanging himself”, the democrat meant handing Syria over to the Kremlin on a silver platter aafter just a few short weeks of Russian military intervention in Syria which has crushed US supply routes to ISIS and other CIA-sponsored rebel groups, and once again – just like in 2013 – put a premature end to US attempts to overthrow yet another head of state.
Fast forward to today when in what may have been the most awkward 60 Minutes interview for Obama before the US nation, Steve Kroft asked Obama about Trump, about Hillary, but it was Obama’s take on the US loss in (and of) Syria and the Russian gains there, and everywhere else, that demonstrated two things.
The first is just how marginalized the US has suddenly become in the global arena, with an impotent and insolvent Europe behind its back for moral if no other support, opposing a suddenly ascendant Russian axis in the middle-east, one which has China’s backing, especially in the aftermath of the quite demonstrative US implementation

This post was published at Zero Hedge on 10/11/2015 –.

New Hedge Fund buying enters Crude Oil market

First, let’s start with an updated chart of the WTI Crude oil.

Crude has been in a range for most of the month of September oscillating near the 50 day moving average. It had been unable to do much in the way of additional upside however until this month, when it finally broke out above resistance at the top of the range near the $48 level. Friday it managed to best 50 on an intraday basis but then faded well off the highs heading into the close.
Notice that the rally was stopped dead in its tracks by the falling 200 day moving average. That will serve to reinforce Friday’s high as a significant technical inflection point moving forward. If crude is going to be able to extent this month’s push higher, it will have to clear that level. If it does, a goodly number of shorts will come out as they have all been watching how this market handles itself near that 200 DMA.

This post was published at Trader Dan on October 10, 2015.

Japanese Firms Admit Abenomics Failed, Government Now “Left Trying To Redistribute Wealth”

Do not believe in official statistics, Japanese retailers seem to be saying, as they cut earnings forecasts and warn of lackluster consumer spending, a key growth engine for Japan at a time when exports and factory output are stalling. Despite government statistics claining a 2.9% rise in household spending, Reuters reports Japanese retailers exclaimed “Consumer spending has ground to a halt,” as Japan heads for a quintuple dip recession. Amid falling wages and higher costs, on apparel maker warned“shoppers are tightening their purse strings.”
Abenomics is not working…

This post was published at Zero Hedge on 10/11/2015 –.

Fed Managing Only the Expectations of the Ignorant

The Fed has done it again, purporting to manage our expectations with yet more, excruciatingly public dithering over the timing of a rate hike. The central bank is now saying there will be no policy change before June at the earliest. This latest little piece of kabuki can only add to the credibility of our own forecast, which is that that the Fed will never raise rates. Okay, we were being facetious when we first made that prediction a couple of years ago; never is indeed a long time. But what kind of odds would you take to wager that there will be no rate hike for at least another ten years? You could probably get thirty-to-one from economists, editorialists, pundits and other useful idiots who never seem to tire of telling us that a rate hike is imminent. Realize that you would be within a year of collecting on the bet if you’d made it back in 2006, when the last rate hike was announced.
Things were different then, as readers will recall. For one, the danger of crashing the financial system with a small turn of the monetary screw was not as great. The dot-com crash was a distant memory, and, outside of the doomsday blogosphere, the gestating housing bubble was not a concern. These days, however, the banking system is as shaky as a drunk on a high wire. Still worse is that the drunk has much farther to fall, since the financial leveraging that has occurred since 2009 is so vast as to be almost beyond calculation. The derivatives bubble is estimated by some to be as large as a quadrillion dollars. But even if you accept more conservative valuations of around $300 trillion, you’re still talking about a highly flammable gas-bag of digital money that dwarfs global GDP fourfold. The clear implication is that the main business our planet, economically speaking, is creating financial instruments, not providing actual goods and services.

This post was published at Rick Ackerman on Sunday, October 11, 2015.

The G-30 Group Of Central Bankers Warn They Can “No Longer Save The World”

In a detailed report by the Group of Thirty, central bankers warned that ZIRP and money printing were not sufficient to revive economic growth and risked becoming semi-permanent measures. As Reuters reports, the flow of easy money has inflated asset prices like stocks and housing in many countries but have failed to stimulate economic growth; and with growth estimates trending lower and easy money increasing company leverage, the specter of a debt trap is now haunting advanced economies. “Central banks have described their actions as ‘buying time’ for governments to finally resolve the crisis… But time is wearing on,” sending a message of “you’re on your own” to governments around the world.
The G30 begins their report rather pointedly…
Central banks worked alongside governments to address the unfolding crises during 2007 – 09, and their actions were a necessary and appropriate crisis management response. But central bank policies alone should not be expected to deliver sustainable economic growth. Such policies must be complemented by other policy measures implemented by governments. At present, much remains to be done by governments, parliaments, public authorities, and the private sector to tackle policy, economic, and structural weaknesses that originate outside the control or influence of central banks. In order to contribute to sustainable economic growth, the report presumes that all other actors fulfill their responsibilities.

This post was published at Zero Hedge on 10/11/2015 –.

Bernanke: The Courage To Print – Reading Between The Lies

Submitted by Doug Noland via The Credit Bubble Bulletin,
Dr. Bernanke has referred to understanding the forces behind the Great Depression as the ‘Holy Grail of Economics.’ I believe understanding the ongoing Bubble period offers the best opportunity to discover the ‘Grail.’ When the Washington establishment believed THE Bubble had burst back in 2000/2001, the leading academic espousing inflationism was beckoned to Washington to provide cover for the Fed’s experimental post-tech Bubble reflationary measures. He first served as a member of the Board of Governors of the Federal Reserve System (2002), before being appointed chairman of the President’s Council of Economic Advisors (2005). From the day Ben Bernanke burst onto the scene in 2002, I’ve taken strong exception with his economic doctrine and analysis.
I have yet to read his new memoir. However, I listened attentively this week as he blanketed the airwaves. As I’ve done on occasion for going on 13 years now, I highlight some of Bernanke’s thinking (and provide brief comments).
CNBC’s Steve Liesman: ‘His new book, ‘The Courage to Act – A memoir of a Crisis and Its Aftermath,’ details what he calls ‘the darkest days of the financial crisis when’ he quote ‘stared into the abyss and the behind the scenes struggle to enact innovative policies that he believed saved the economy’… Are you surprised and are you disappointed that after six years of zero percent interest rates – a four and one-half trillion dollar balance sheet – that this economy still struggles with 2% growth?’
Bernanke: ‘The low growth is coming not from the recession, per se. We’ve come back quite a bit. Unemployment is down to 5%. So we’ve come pretty close to full employment. The slow growth is coming from slow productivity growth. Output per worker has not been growing quickly, and why that’s happening is not totally understood. I don’t think it has much to do with monetary policy. It has to do with the waves of intervention. We saw slowing of productivity growth even before the crisis. So I think that’s part of it. But clearly one of the issues is that we’ve been relying too much on the Fed. The Fed has been the only game in town. It’s been doing most of the policy heavy lifting for the last few years. We need to see more action from other policymakers.’

This post was published at Zero Hedge on 10/11/2015 –.

TPP and Free Trade Canadian Style

As I have commented before alleged “free trade” agreements are anything but. We now have confirmation from Canada as to what it took for other signatories to agree to to the monstrosity of TPP.
Reader TB passed along Alan Guebert’s Free Trade’s Cheap Talk is Big Money.
These easy-to-find challenges to NCBA’s silly Trans-Pacific cheerleading point to several underlying myths at the heart of Big Ag’s rock-ribbed belief that free trade is the past, current, and future salvation of American farms and ranches.
One myth is that all U. S. farm and ranch profits are tied directly to free trade. The Obama White House made that connection again Oct. 5 when it noted ‘roughly 20 percent of all farm income in the United States,’ is ‘provided’ by ‘exports.’
True, but farm income is not farm profit. If it were, U. S. net farm income would have risen when ag exports rose from $141 billion in 2013 to $152 billion in 2014. Instead, U. S. net farm income fell from $135 billion to $126 billion in that period.

This post was published at Global Economic Analysis on Sunday, October 11, 2015.

Here’s What We’ll Try – And What Will Fail – Next

The UK’s Guardian newspaper, of Edward Snowden leaks fame, just published a good overview of the world’s recent financial missteps titled The world economic order is collapsing and this time there seems no way out.
Some excerpts:
The heart of the economic disorder is a world financial system that has gone rogue. Global banks now make profits to a extraordinary degree from doing business with each other. As a result, banking’s power to create money out of nothing has been taken to a whole new level.
The emergence of a global banking system means central banks are much less able to monitor and control what is going on. And because few countries now limit capital flows, in part because they want access to potential credit, cash generated out of nothing can be lent in countries where the economic prospects look superficially good. This provokes floods of credit, rather like the movements of refugees.

This post was published at DollarCollapse on October 11, 2015.

The Endgame Takes Shape: “Banning Capitalism And Bypassing Capital Markets”

One month ago we presented to readers that in the first official “serious” mention of “Helicopter Money” as the next (and final) form of monetary stimulus, Australia’s Macquarie Bank said that there is now about 12-18 months before this “unorthodox” policy is implemented. We also predicted that now that the seal has been broken, other banks would quickly jump on board with an idea that is the only possible endgame to 8 years of monetary lunacy, and sure enough, both Citigroup and Deutsche Bank within days brought up the Fed’s monetary paradrop as the up and coming form of monetary policy.
So while the rest of the street is undergoing revulsion therapy, as it cracks its “the Fed will hike rates any minute” cognitive dissonance and is finally asking, as Morgan Stanley did last week, whether the Fed will first do QE4 or NIRP (something we have said since January), here is what is really coming down the line, with the heretic thought experiment of the endgame once again coming from an unexpected, if increasingly credibly source, Australia’s Macquarie bank.
* * *
Would more QE make a difference? Have to move to different types of QE or allow nature to take its course
It seems that over the last week investor consensus swung from expecting Fed tightening and some form of normalization of monetary policy to delaying expectation of any tightening until 2016 and possibly beyond whilst discussion of a possibility of QE4 has gone mainstream.
Although ‘QE forever’ and no tightening has been our base case for at least the last 12-18 months, we also tend to emphasize the diminishing impact of conventional QE policies. As the latest Fed paper (San Francisco) highlighted, ‘There is no work, to my knowledge, that establishes a link from QE to the ultimate goals of the Fed-inflation and real economic activity. Indeed, casual evidence suggests that QE has been ineffective in increasing inflation’.

This post was published at Zero Hedge on 10/10/2015 –.

Silver Price Manipulation – Where are the Regulators and How Will It End?

The following is an edited excerpt from our recent Q&A interview with Ted Butler.
It’s the even worse than the fox guarding the henhouse. It’s more like rabid raccoons.
In this section continue the discussion of HFT, while answering the question of how the regulators could miss all of this. We end on how it will end.
Dr. Lewis: The ‘foxes’ will say that these traders actually provide crucial market making capacity. Because they are an outgrowth of market-makers in the traditional sense – by providing some liquidity. But it also enables them to set the price.
Ted Butler: Absolutely and they want to stray away from the purpose why we allow commodity futures trading which has been around for a hundred years. It’s supposed to exist for legitimate hedging purposes, where an industrial user or producer of a commodity will look to lay off price risk associated with production or consumption to a willing speculator. That’s why commodity trading is allowed. It’s not just like another Las Vegas that we intentionally created just to let people gamble. There’s an economic justification for commodity trading, and it happens to reside in offering legitimate hedging opportunities. The problem is what I just described that took place this week (and over and over again) has nothing to do with legitimate hedging.

This post was published at SilverSeek on October 11, 2015 –.

Bill Gross Seeks Revenge: Blockbuster of Deceit, Greed, and a Brutal Power Struggle, All in One Lawsuit

On October 8, 2015, Glaser Weil Fink Howard Avchen & Shapiro LLP, as attorney for the now deposed ‘Bond King’ Bill Gross, filed suit in Orange County, California. The complaint is a gripping story of a sordid scheme of deceit and greed, of younger versus older – of a power struggle and a palace revolt.
The conspirators, according to the complaint, fought with all means available, including numerous leaks that the Financial Times and the Wall Street Journalpublished eagerly, and that other media outlets of all kinds picked up, thus turning themselves into often brutal tools for the conspirators and their agenda to destroy Bill Gross.
If the Complaint is right, the media got the story very wrong. But in the end it’s all about money – hundreds of millions of dollars.
We haven’t heard from the other side. We don’t know who is right and what to believe. Gross had made a career out of riding up the three-decade-long bond bull market, got immensely rich doing so, but now got knocked off his horse. The 37-page Complaintexplains from Gross’s point of view how it happened. It’s a page-turner, and an eye-opener about what’s going on behind the scenes. This is how it starts out….

This post was published at Wolf Street by Wolf Richter ‘ October 11, 2015.

Fed Quietly Revises Total US Debt From 330% To 350% Of GDP, After “Discovering” Another $2.7 Trillion In Debt

Everyone has seen the chart of “Total Credit Market Instruments“, which as of its most recent update on March 31, 2015, was just over $59 trillion, or 330% of US GDP.
For those who have not seen it, as well as for those who are familiar with this chart, take a long look, because this is the last update of this particular data series, pulled straight from the Fed’s Z.1 Flow of Funds (section L.1), you will ever see.
So did the Fed spontaneously terminate the reporting of what until the second quarter’s update of the Flow of Funds, was the most comprehensive official summary of Household, Financial, Corporate and Government debt in existence? And if so why?
Many Fed watchers assumed that this is precisely what happened, and indeed, searching high and low for the infamous L.1 Section revealed nothing.
We can only assume that the vocal outcry that emerged in the aftermath of the Fed’s release of its Q2 Flow of Funds statement missing this most critical of data sets on September 18, was so loud that three weeks later, this past Friday on October 9, the Fed released an official follow up explanation what exactly happened.

This post was published at Zero Hedge on 10/11/2015 –.

The Problem Explained In 110 Words

It took the Fed 7 years, countless white papers, Congressional testimonies, economist reports, and goalseeked narratives explaining why QE should work, before the St. Louis Fed finally realized and admitted one month ago that QE, in fact, does notwork (which is almost as ironic as the Davos World Economic folks explaining “Why we shouldn’t borrow money from the future“… which is great if only it hadn’t come some $200 trillion too late). It took the Fed only $4.5 trillion in balance sheet assets, and making the rich richer beyond their wildest dreams, to admit what we said all along.

This post was published at Zero Hedge on 10/11/2015.

Dealing Desk: Back to selling as investors look for quick profit

Investors in precious metals have been realising quick profits over the last seven days, as increases in prices across gold, silver, platinum and palladium saw the recent trend of net buying reversed.
Kelly-Ann Kearsey, Dealing Manager at GoldMoney, says that weaker than expected US jobs data last week led to a jump in the gold price – which went up by around US$ 25 in just minutes on the publication of the data. That has prompted some short-term investors to sell, and realise a quick profit.
“We have seen a big boost in the USD price, and that was purely down to the US jobs data which showed that there was far less growth than analysts were predicting – the reality was that we saw the weakest US jobs figures for 18 months, which gave prices a tangible boost which lasted through the week.

This post was published at GoldMoney BY KELLY-ANN KEARSEY.