SHANGHAI vs COMEX: Opposite Moves In Silver Inventories

Ever since July, there has been some interesting changes in the COMEX and Shanghai Futures Exchange silver inventories. The increase in physical silver investment demand that surged in July, had a direct impact on COMEX silver inventories.
As we can see from the chart below, total COMEX silver inventories peaked in the beginning of July at 184.5 million oz (Moz) and then continued to decline, reaching a low of 159.9 Moz presently. The majority of the declines came from the Registered category (the category that represents inventory that is available for delivery into the market).

This post was published at SRSrocco Report on November 20, 2015.

For Sale: Apocalypse Bunker, Can Withstand 20 Kiloton Nuclear Blast; Furnished: Asking $17,500,000

Earlier this week we presented the Oppidium: a concept doomsday shelter which would be located in the Czech Republic, catering exclusively to billionaires who could watch mushroom clouds wrap the earth in a radioactive glow just the way they like it: in posh opulence, as the following proposed images suggested:

This post was published at Zero Hedge on 11/20/2015.

Average Annual Cost Of Specialty Drugs Now Exceeds US Median Household Income

Earlier this month, we reported that Senators Susan Collins (R-Maine) and Claire McCaskill (D-Mo.), who together lead the Senate Special Committee on Aging, have opened a bipartisan investigation into pharmaceutical drug pricing.
In the crosshairs are Valeant, Turing, Retrophin, and Rodelis.
News of the investigation came after Turing CEO Martin Shkreli (who also founded Retrophin) decided to boost the price of a toxoplasmosis drug he bought by some 5000%. Valeant – also known for jacking up prices on acquired drugs – was thrust into the spotlight after a series of reports prompted scrutiny of the company’s apparently less-than-‘limited’ relationship with pharmacy Philidor.
Whether Shkreli – who, you might have noticed, made a few moves this week in KaloBios that cost the E-trading Joe Campbells of the world a small fortune – realized it or not, his decision to raise the price of Daraprim from $13.50 to $750/pill may have been the tipping point for a market that has until now borne the rising cost of prescription drugs.

This post was published at Zero Hedge on 11/20/2015.

Weekend Reading: Interesting Diatribes

As expected, the market rallied from short-term support levels as the year-end rush to chase returns has started in full swing. To wit:
“With the markets NOW oversold, it will be critically important that support at 2020 is not broken. The next critical level of support is the short-term moving average (dashed blue line) at 2010, and then 1990 at previous support levels from early this year. It will be important for the market to hold these current levels of support without violating it over the next few trading days to set up a more tradeable short-term rally.
As shown in the chart below, the markets did not disappoint. Even with Japan slipping into its fifth recession in the last 5-years, despite massive infusions of capital, and the devastating attacks in Paris over the weekend, the market rallied strongly off of support as expected.”

This post was published at StreetTalkLive on 18 November 2015.

20/11/15: The Inversion Debate Isn’t Over: Credit Suisse

A brief Credit Suisse note on corporate inversions, with an honourable mentioning for Ireland: over the story covered on this blog earlier (see background here including further links).
I especially like that little twist on tax optimisation that are inter-company loans: whilst the original inversion leads to a direct negative impact on tax revenues for our trading and investment partners, it adds a cherry on the proverbial cake by reducing companies’ tax liabilities even further through lending to U. S.-based business.
OECD compliant, it all is…

This post was published at True Economics on November 20, 2015.


Gold: $1076.40 down $1.60 (comex closing time)
Silver $14.10 down 14 cents
In the access market 5:15 pm
Gold $1078.40
Silver: $14.20
First, here is an outline of what will be discussed tonight:
At the gold comex today, we had a very poor delivery day, registering 0 notice for nil ounces. Silver saw 8 notices for 40,000 oz.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 200.01 tonnes for a loss of 103 tonnes over that period.
In silver, the open interest fell by 1454 contracts despite silver being up by 16 cents in yesterday’s trading. We probably had some short covering. The total silver OI now rests at 170,549 contracts In ounces, the OI is still represented by .852 billion oz or 122% of annual global silver production (ex Russia ex China).
In silver we had 8 notices served upon for 40,000 oz.
In gold, the total comex gold OI was hit again with this time 1182 contracts removed as the OI fell to 423,392 contracts despite gold being up by $9.20 in yesterday’s trading. It seems the modus operandi of the bandits is to try and liquefy gold/silver OI as we approach first day notice on Monday, November 30. The bankers get very nervous when OI is rising despite awful prices for the metals. We had 0 notices filed for nil today.
We had a huge withdrawal in gold inventory at the GLD to the tune of 1.19 tonnes/ thus the inventory rests tonight at 660.75 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. Our 670 tonnes of rock bottom inventory in GLD gold has been broken. It looks to me that China has taken the last amounts of physical gold from the GLD. I guess the only place left for China to receive physical gold, after they deplete the GLD will be the FRBNY and the comex. In silver, we had no change in silver inventory to the tune of / Inventory rests at 317.256 million oz.
We have a few important stories to bring to your attention today…

This post was published at Harvey Organ Blog on Nov 20, 2015.

What Will Happen To Corporate Profits If The Fed Hikes In December

Q3 will be the first quarter in which the US officially suffers an earnings recession: two consecutive quarters of declining annual EPS growth despite hundreds of billions in stock buybacks reducing the per share denominator in the EPS calculation. Q4 will not be any better and while EPS are expected to decline one again, it will be the fourth consecutive decline in revenues in the S&P that will be the highlight.
The reasons for this slowdown in both sales and profits are well-known: the surge in the dollar, the slowdown in global trade, the collapse in commodity prices, and the suddenly weak consumer (just look at retail stocks in the past month).
Furthermore, and contrary to conventional wisdom, net income is declining both with and without energy companies. As Socgen notes, Net reported income is declining not just in energy, but in a variety of other sectors and those who do not yet have negative EPS growth have very low single digit growth numbers.

This post was published at Zero Hedge on 11/20/2015.

Gold Daily and Silver Weekly Charts – Bonfire of the Vanities – Thanksgiving Holiday Thursday 26 Nov

“And when the last law was down, and the Devil turned ’round on you, where would you hide, Roper, the laws all being flat? This country is planted thick with laws, from coast to coast, Man’s laws, not God’s!
And if you cut them down, and you’re just the man to do it, do you really think you could stand upright in the winds that would blow then?”
Robert Bolt, A Man For All Seasons
“Sherman, who started with so much, lost everything. But he gained his soul. Whereas I, you see, who started with so little, gained everything. ‘What does it profit a man if he gains the whole world, but loses…’ Ah well. There are compensations.”
Tom Wolfe, Bonfire of the Vanities
Gold and silver struggled to hold on to support today in a lackluster trade. They faded into what might best be described as a fairly irrelevant close.
There was a fairly large intraday comment here called ‘An Essay Considering the Current Monetary Orthodoxy and Gold.’
In this I consider a statement that seems to represent the picture, a collection of received catch phrases, that many financial journalists, and economists for that matter, walk around repeating as the commonly accepted dogma that signifies good standing in their profession.

This post was published at Jesses Crossroads Cafe on 20 NOVEMBER 2015.

The Global Economy Is Now Approaching A Critical Stage – Episode 823a

The following video was published by X22Report on Nov 20, 2015
Subprime auto lending has hit all time highs, now credit is being issued to anyone. Sales and profits are falling and companies are hiring, this makes no sense. The Baltic Dry Index has just imploded and the economy is entering into a critical stage. Private western central bankers very nervous about Congress’s new bill to audit them. BRICs member currencies will be used in transaction which will bypass the dollar.

The Fed’s ‘Expedited, Closed’ Meeting Is Pure Kabuki Theatre

More like Theatre of the Absurd, will all due respect and apologies to Albert Camu and Samuel Beckett.
The Fed announced a ‘meeting under Expedited Procedures’ that will take place on Monday, November 23. The ‘matter(s) considered’ is a ‘review and determination by the Board of Governors of the advance and discount rates to be charged by the Federal Reserve Banks (regional). You can see the notice as posted on the Fed website.
This meeting appears to be much ado about nothing – with all due respect to Shakespeare. Why? The matter to be considered is the rates charged to banks under the Fed’s ‘Primary Credit’ program – LINK. This is commonly, generically referred to as the ‘discount window.’
Historically the discount window was the mechanism used by the Fed to enable member banks to borrow on a short term basis to meet temporary liquidity issues. With the development of financial market technologies and the liberal use of the printing press since 1980, the discount window – i.e. the Primary Credit program – is rarely used. The current rate charged to discount window borrowers is 50 basis points above the Fed Funds rate.

This post was published at Investment Research Dynamics on November 20, 2015.

Puerto Rico Faces “Public Unrest” As Cash Crunch May Leave Government Workers Unpaid

Heavily indebted Puerto Rico was due to meet with representatives of its creditors on Friday in a desperate attempt to forge ahead with a plan to restructure some $72 billion in debt. No offer is expected to be made at the meetings in New York, but the commonwealth’s Government Development Bank says it hopes to provide creditors’ advisors with greater clarity on “the proposed restructuring process,’ which GDB says ‘is a comprehensive plan that will benefit all parties while supporting the creation of a sustainable path forward.’
As Reuters notes, ‘creditors have been resistant to cuts to their repayment, insisting that Governor Alejandro Garcia Padilla’s administration do more to curb spending, boost government efficiency and promote economic growth.’
The GDB is facing a $354 million principal and interest payment on December 1 – some $270 million of that is GO debt guaranteed by the National Public Finance Guarantee Corp. Defaulting on that is bad news and as Moody’s warned earlier this month, a missed payment on the commonwealth’s highest priority obligations ‘would likely trigger legal action from creditors, commencing a potentially drawn-out process absent swift federal intervention.’

This post was published at Zero Hedge on 11/20/2015.

Whither Gold? What The Banks Think

Despite soaring physical demand, and a clear unwillingness to give up precious metals, gold’s “price” is on pace to close down for the 5th straight week at its lowest in 6 years. So where do the banks think gold goes next?
It seems The French really do not like the barbarous relic… but The Germans do.

This post was published at Zero Hedge on 11/20/2015.

Persistent Overoptimism Three Ways: Truckers, Fed Economists, Manufacturers

The other day I noted a persistent overoptimism regarding manufacturers.
Since then, I have seen a couple articles regarding overoptimism at the Fed and overoptimism in trucking. Of course, there is also persistent overoptimism about earnings growth and stock market expectations.
The track record on recessions is perfect. The Fed never sees them coming. Let’s investigate the overoptimism phenomena starting with trucking.
Profit-Killing Overcapacity in Trucking Coming Up
SupplyChain247 asks Is the U. S. Trucking Industry Entering a Profit-Killing Era of Overcapacity?
As surface transportation’s peak period ends for the year, and trucking eyes the traditionally slowest time for the industry as first quarter 2016, economic signals are, at best, mixed.
U. S. factory activity grew last month at its slowest pace since May 2013 as manufacturers pared their stockpiles and cut jobs.
The Institute for Supply Management’s index of factory activity slipped to 50.1 in October from 50.2 in September. The figures barely signal growth, which is any reading above 50.
Third-quarter Gross Domestic Product grew at a 1.5 percent annual rate in the third quarter, far below the 3.9 percent pace in the April-June quarter.
What the Economists Are Saying
‘We’re hopeful this will mark the low,’ Ian Shepherdson, an economist at Pantheon Macroeconomics, said in a note to clients. ‘It looks as though the downshift in manufacturing activity may be coming to an end.’

This post was published at Global Economic Analysis on November 20, 2015.

The Long, Cold Winter Ahead

Not Immune
Cold winds of deflation gust across the autumn economic landscape. Global trade languishes and commodities rust away like abandoned scrap metal with a visible dusting of frost. The economic optimism that embellished markets heading into 2015 have cooled as the year moves through its final stretch.
If you recall, the popular storyline since late last year has been that the U. S. economy is moderately improving while the world’s other major economies – Japan, China, and Europe – are rolling over. The U. S. economy would power through. Moreover, stock prices had achieved a permanently high plateau.

This post was published at Acting-Man on November 20, 2015.

These Are The Year-End Pain Trades

With just over a month left in the trading year, and the S&P 500 on pace to experience its best week of the year, morbidly enough in the aftermath of the Paris bombings, hedge funds, traders, banks and everyone else are once again commiting the cardinal sin of investing and the reason why so many “marquee” hedge funds blew up together over the summer: herding, and rushing into the handful of trades that have worked recently, which work until the blow up spectacularly.
But then again, with year-end bonuses on the table, few will dare to move against the herd, and while another eventual hedge fund hotel implosion is again assured, for now the clustering is imminent.
So what are the consensus trades as we approach the year end? They also happen to be the year-end “pain trades” because in a year full of flash crashes, close calls, dramatic reversals and international risk flaring, the Fed’s ability to maintain the illusion of the rigged market is highly suspect, and if any of these “groupthink” positions blows up, that’s precisely what will follow. Pain.
Here they are courtesy of Bank of America’s Michael Hartnett.

This post was published at Zero Hedge on 11/20/2015.

Gold Miners’ Strong Q3 Results

The beleaguered gold-mining sector continues to be plagued by monumental universal bearishness. Nearly everyone assumes the gold miners are doomed, that they can’t survive for long in a sub-$1200-gold environment. But this belief is totally wrong, a consequence of extreme fear’s fog of war. The gold miners’ underlying earnings fundamentals remain very strong, as evidenced by their recent Q3 results.
In all the stock markets, corporate profits ultimately drive stock prices. Because a stock simply represents a fractional stake in its underlying company’s future earnings stream, all stock prices eventually revert to some reasonable multiple of those profits. These earnings are truly the only fundamental driver of stock prices. All deviations from righteous valuations based on profits are just the temporary products of herd sentiment.
The gold stocks are suffering such an extreme psychological anomaly today, drowning in mind-boggling depths of popular fear and despair. The leading HUI gold-stock index just slumped to a brutal new 13.3-year secular low this week! The apathy and hate for this sector is nothing short of astounding. Anyone masochistic enough to make a bullish contrarian case on gold stocks will be peppered with scathing ridicule.
But in the midst of any universal sentiment extreme, prudent investors and speculators must disconnect from the herd emotions to take a rational look at the underlying profits fundamentals. And there is zero doubt today that prevailing gold-stock prices are truly fundamentally absurd. The last time gold stocks were priced at these levels per the HUI ages ago in July 2002, the gold price was merely trading around $305.

This post was published at ZEAL LLC on November 20, 2015.

If The Fed So Much As Blinks, The Stock Market Will Collapse

Although the stock market has had several ‘shock and awe’ straight up rallies this year, since the beginning of January the graph of the S&P 500 looks like the infamous ‘bridge to nowhere:’
Up until January, the S&P 500 had risen at a near-continuous 45-degree angle, punctuated with an occasional and very brief 1% sell-off. Every time the stock market attempted to correct, the Fed either rolled out another new QE program in some form or used its regional emissaries to soothe the computer algos and retail investor cattle with sweet nothings designed to jawbone the stock market higher. As you can see from the graph above, the one sell-off prior to this past summer was halted a by a Fed puppet’s call for more QE.
The big plunge that occurred in August was triggered by economic fears and the plunging price of oil, capped by concern about the Fed raising interest rates by one-quarter of one percent. And of course the Fed rolled out its emissaries to soothe the market and a decision to defer the one-quarter of one percent rate hike. What does it tell us that minuscule rate hike threat that looms like a nuclear bomb over the markets?…
The truth is, the markets are so disconnected from the underlying fundamentals that if the Fed were to pause for just a brief moment from its continuous market intervention, the stock market – along with the entire financial system – would collapse.

This post was published at Investment Research Dynamics on November 20, 2015.

Money and Credit in China: I’ll Raise You One Sweden

Let’s Buy Sweden and Put it on our Front Lawn
Or rather, let’s not. As Bloomberg reports, the officially admitted to amount of bad loans in China’s banking system has by now swelled to approx 4 trillion yuan, or $628 billion, which is roughly equivalent to Sweden’s total economic output per year.
Sweden is a small, but highly developed country which exhibits astonishing rates of monetary and credit inflation at present. It has slightly less than 10 million inhabitants, and its ‘GDP per capita’ on a purchasing power parity basis amounts to approx. $44,000 compared to $12,600 in China. We are mentioning this to make clear that such comparisons have to be put into proper perspective.
Annualized loan growth of China’s banking system. After the huge post GFC surge in bank lending (the government essentially ordered the large state-owned banks to expand credit willy-nilly) it has slowed to a still quite extraordinary 14.4% as of October.
In short, bad loans equal to the GDP of Sweden still represent a very low NPL ratio of just 5.5% – and this is including so-called ‘special mention’ loans, which are dud loans that are held not to be complete write-offs just yet, primarily based on assorted extend & pretend schemes. In China this method of masking the extent of bad loans is called ‘evergreening’ loans. Naturally, everything is done to hide the true extent of deterioration, but this is by no means unique to China.
For instance, the successfully ‘stress-tested’ banking systems of Europe’s peripheral countries are weighed down by staggering amounts of dud loans as well, but extend & pretend is the order of the day everywhere these days. Based on official data and the relative sizes of their economies, the banking systems of countries like Spain and Greece are for the time being in a far worse position than China’s. In Sweden the credit bubble sun is still shining, but when (not if) its credit and real estate bubbles burst, it is highly likely to become the next Spain.
But what about China? Chinese data generally have to be taken with a big barrel-full of salt. A great many ancillary data that describe economic activity, such as electricity consumption, cargo traffic or steel prices belie official GDP growth rates. In fact, if all we knew were those ancillary data, we would never suspect GDP to be growing at all, let alone at a rate of 6.9%. Of course, one must never lose sight of the fact that GDP is a quite useless statistic to begin with. We have discussed this on several occasions (readers may want to check out ‘The GDP Illusion’ and ‘The Mirage of Economic Growth’ for details). In the words of Oscar Morgenstern: ‘[T]here is real trouble with the basic underlying notion of GNP. It is not an acceptable scientific concept for the purposes it is used’.

This post was published at Acting-Man on November 20, 2015.