GOLD: $1274.25 down $8.25
Silver: $16.60 down 8 CENT(S)
Closing access prices:
Gold $1271.10
silver: $16.60
PREMIUM FIRST FIX: $8.24 (premiums getting larger)
Premium of Shanghai 2nd fix/NY:$13.00 (PREMIUMS GETTING LARGER)
LONDON FIRST GOLD FIX: 5:30 am est $not important
For comex gold:
For silver:
95,000 OZ/
Total number of notices filed so far this month: 304 for 1,520,000 oz

This post was published at Harvey Organ Blog on October 2, 2017.

SocGen: “Global Earnings Are Back To 2014 Levels; Stocks Are 15% Higher”

Is it QE or is it earnings?
With the Dow starting off the final quarter with a bang, surging to new all time highs alongside the S&P, few care what is prompting the latest surge in risk assets, which is a problem because as One River CIO Eric Peters noted yesterday, we have gotten to the point where measures of market performance have mutated into trading vehicles (and price targets) – such as the VIX, which drifted lower after an early spike today that appeared to briefly break the Nasdaq, and launch today’s buying spree. And with everyone selling vol, the implication is that there is nothing to be worried about, even if the actual indicator of implied vol is no longer relevant as it itself has become the most actively traded product by retail and institutional investors alike (hardly surprising to anyone who has read Soros’ 10+ year old ruminations on market reflexivity).
Whatever the reason though, stocks continue to levitate and not just in the US, but across the world, with SocGen’s Andrew Lapthorne reporting that the MSCI World index surpassed 2000 for the first time and in turn has delivered its eleventh successive month of positive total returns. This ranks as the second longest period of consecutive gains for MSCI World since its formation in 1969, with realised volatility collapsing as a consequence.

This post was published at Zero Hedge on Oct 2, 2017.

Stocks and Precious Metals Charts – Risk On – Non-Farm Payrolls on Friday

Stocks were in ‘rally mode’ today, although the results were more mixed than one might initially realize. Big cap Techs, which have been leading the parade higher, ended the day essentially unchanged.
That is a big non-confirmation of the push to a new high on the SP 500. Let’s see if the kool-aid is served up again by Wall Street tomorrow.
The economic news this morning via the ISM was viewed as just peachy.
There will be a non-farm payrolls report on Friday.
Over the weekend there was police violence against voters in Catalan, and a very tragic mass shooting in Las Vegas. These are the times in which we live.
It was an absolutely gorgeous day here, with the bright but cool autumn weather settling in. The leaves have not started to change here yet. It will take a hard freeze or two to turn them. Dolly and I were out cruising the ‘hood with the sun roof open and the windows down, grabbing some fresh sweet cider and powdered sugar donuts from one of the local farms, along with the usual suspects from the vegetable family. We are getting exceptionally good white sweet corn much later than usual thanks to the weather. Even zucchini and tomatoes are still going gangbusters.

This post was published at Jesses Crossroads Cafe on 02 OCTOBER 2017.

Howard Marks Warns “Nobody Knows What Will Happen”

Howard Marks, Co-Chairman of the US investment firm Oaktree Capital warns that valuations in the financial markets are uncomfortably high and that investors are acting too complacent.
When Howard Marks speaks, financial markets listen. The renowned value investor and co-founder of Oaktree Capital looks back at almost fifty years on Wall Street and has seen a thing or two during his successful career. His Memos from the Chairman, which he sends sporadically to Oaktree’s clients are a must read for investors.
Mr. Marks welcomes the journalists in his corner office on the 34. floor in Midtown Manhattan with a partial view over Central Park: On the wall hangs a huge, gloomy oil painting showing two sailing ships in a severe storm. On the couch table lies a heavy volume with old issues of the New York Times from October 1929: the month of the historic stock market crash.
Today, Howard Marks is concerned. He sees growing complacency in the financial markets, high valuations and investors mindlessly shouldering bigger and bigger risks. He warns that central banks have distorted the risk curve and that we have no idea about what’s going to happen next, when they start to unwind their extreme policy measures. But one thing he knows for sure: As long as people are involved in the process, and given their tendency to take everything to the excess in the upward or the downward direction, there never will be permanent moderation.
Mr. Marks, you often write in your memos how important it is to know where we are in the cycle. So where are we today?

This post was published at Zero Hedge on Oct 2, 2017.

Auto OEMs Plan To Flood Market With New Electric Car Models Despite Massive Losses

Last month we noted that Tesla really outdid itself in 2Q 2017 by posting a record cash burn of $1.2 billion, or roughly $13 million every single day. Per the chart below, Tesla’s Q2 cash burn was just a continuation of the company’s money-losing trend that goes back at least 6 years and seems to be getting worse with each passing quarter.
But Tesla isn’t alone in burning cash on “EV’s” as pretty much every electric vehicle offered to customers loses money on a per unit basis.
At this point, expensive battery technology still makes them money drains. General Motors Co. loses about $9,000 on every Chevrolet Bolt electric car it sells. Tesla had record sales of its EVs last year — and still lost $675 million on $7 billion in sales. Fiat Chrysler Automobiles NV loses $20,000 on every electric version of its 500-model subcompact sold in the U. S., Chief Executive Officer Sergio Marchionne said in a speech in Italy on Monday. Battery-powered models should be marketed based on consumer demand and not depend on incentives, he said.
Of course, with statistics like that, it should come as no surprise that auto OEM’s all around the world are tripping over themselves to introduce dozens of new electric models in the coming years. Even Bloomberg was somewhat perplexed to report that OEMs will introduce 50 new electric vehicle models over the next 5 years despite the industry’s staggering cash burn.

This post was published at Zero Hedge on Oct 2, 2017.

“The End Of The QE Trade”: Why Bank of America Expects An Imminent Market Correction

Last Friday, when looking at the historic, record lows in September volatility and the daily highs in US and global equity markets, BofA’s chief investment strategist Michael Hartnett said that the “best reason to be bearish in Q4 is there is no reason to be bearish.”
That prompted quite a few responses from traders, some snyde, a handful delighted (some bears still do exist), but most confused: after all what does investors (or algo) sentiment have to do with a “market” in which as Hartnett himself admits over $2 trillion in central bank liquidity has been injected in recent years to prop up risk assets.
To explain what he meant, overnight Hartnett followed up with an explainer note looking at the “Great Rotation vs the Great DIsruption”, in which he first reverted to his favorite topic, the blow-off market top he dubbed the “Icarus Rally”, which he defined initially nearly a year ago, and in which he notes that “big asset returns in 2017 have been driven by big global QE & big global EPS.”
But mostly “big global QE.”
And with global QE continuing, Hartnett, who two months ago predicted a volatile fall (and winter), now sees that Icarus ‘long risk’ trade extended into autumn “by low inflation, big liquidity ($2.0tn central bank buying), high EPS, and promise of US tax reform.”

This post was published at Zero Hedge on Oct 2, 2017.

Russia Provides New Internet Connection To North Korea

A major Russian telecommunications company appears to have begun providing an Internet connection to North Korea. The new link supplements one from China and will provide back-up to Pyongyang at a time the US government is reportedly attacking its Internet infrastructure and pressuring China to end all business with North Korea.
The connection, from TransTeleCom, began appearing in Internet routing databases at 09:08 UTC on Sunday, or around 17:38 Pyongyang time on Sunday evening. Internet routing databases map the thousands of connections between telecom providers and enable computers to figure out the best route to a destination.
Until now, Internet users in North Korea and those outside accessing North Korean websites were all funneled along the same route connecting North Korean ISP Star JV and the global Internet: A China Unicom link that has been in operation since 2010.

This post was published at Zero Hedge on Oct 2, 2017.

The Best And Worst Performing Assets In September, Q3 And 2017 YTD

While September and Q3 were the latest solid month for US risk assets, which ended the month and quarter at all time highs, across the globe returns were relatively more mixed for the sample of assets tracked by Deutsche Bank. That said, a large number of assets (21 of 39 in local currency terms) finished with a total return between -1% and +1% which in part reflects another month of incredibly low volatility with the VIX in particular spending much of it trading between 9.5 and 11.0. In the end, excluding currencies 19 out of 39 assets finished the month with a positive total return in local currency and USD hedged terms.
As Deutsche Bank’s Jim Reid reports this morning, in terms of the movers and shakers, commodities dominated the top of the German bank’s leaderboard with Wheat (+9%), WTI (+9%) and Brent (+8%) all finishing with a high single digit return. It’s worth noting however that this does follow heavy falls for the price of Wheat and WTI in August. Equities generally had a strong month, particularly in Europe where a slightly weaker euro (-1%) aided local currency returns. The DAX (+6%), FTSE MIB (+5%), Stoxx 600 (+4%), Portugal General (+4%) and IBEX (+1%) all finished firmer – the latter underperforming however reflecting elevated tension around the Catalan referendum. Returns in USD terms were 0% to +6%. It’s worth also noting the return for European Banks (+5% local, +4% USD) which got a boost from the slightly higher rate environment. There were two standout underperformers in equity markets however. The first was the Greek Athex which tumbled -8% in local terms although still remains up an impressive +19% YTD. The other was the FTSE 100 which fell -1% under the weight of a strong month for Sterling (+4%) following the BoE signalling an imminent rate hike as well as some progress around Brexit talks. Indeed in USD terms the FTSE 100 was up +3%.

This post was published at Zero Hedge on Oct 2, 2017.

Goldman Shuns JPMorgan’s Dimon – Plans Bitcoin Trading Operation

wait what… pic.twitter.com/WKyrfDIHca
— zerohedge (@zerohedge) October 2, 2017

While JPMorgan CEO Jamie Dimon said he “would fire” any employee found trading Bitcoin, Goldman Sachs’ leadership is embracing reality as WSJ reports the bank is weighing a new trading operation dedicated to bitcoin and other digital currencies.
On the heels of IMF Chief Christine Lagarde’s comments that:
“… the technology itself can replace national monies, conventional financial intermediation, and even puts a question mark on the fractional banking model we know today… So I think it may not be wise to dismiss virtual currencies.”
Bitcoin’s price has continued higher – erasing the losses from China and Jamie Dimon’s comments…

This post was published at Zero Hedge on Oct 2, 2017.

The Pricing of Risk is Kaput

US Treasury Yield v. Euro ‘Junk Bond’ Yield. A new record in central-bank engineered absurdity.
US Treasury Securities with longer maturities fell this morning, with the 10-year Treasury yield rising above 2.37% early on and currently trading at 2.34%. This is still low by historical standards, and it’s still in denial of the Fed’s monetary tightening: Four rate hikes since it started this cycle, and the QE unwind has commenced as of today. But it cannot hold a candle to the Draghi-engineered negative-yield absurdity still unfolding in the Eurozone.
The average yield of junk bonds denominated in euros hit a new all-time record low at the close on Friday of 2.30%.
Let that sink in a moment. These euro corporate bonds are rated below investment grade. Companies, unlike the US, cannot print their own money to prevent default. There is little liquidity in the junk bond market, and selling these bonds when push comes to shove can be hard or impossible. The reason they’re called ‘junk’ is because of their high risk of default.

This post was published at Wolf Street on Oct 2, 2017.

Fed Admits The Failure Of Prosperity For The Bottom 90%

As the stock market hits all-time highs in its 2nd longest bull market run in history, the lift of asset prices has surely lifted the economic prosperity of all. Right?
Not really.
New reports from the Hamilton Project and The Federal Reserve show the real problems facing Americans today.
First, the Hamilton Project as noted by Pedro Nicolaci Da Costa last week:
‘An expansion that began, believe it or not, more than seven years ago has extended a longer-run trend of wage stagnation for the average US worker, despite a sharp drop in the official unemployment rate to 4.4% from an October 2009 peak of 10%.
No wonder the recovery seems so lopsided, particularly given economic inequality levels not seen since before the Great Depression. After adjusting for inflation, wages are just 10% higher in 2017 than they were in 1973, amounting to real annual wage growth of just below 0.2% a year, the report says. That’s basically nothing, as the chart below indicates.’

This post was published at Zero Hedge on Oct 2, 2017.

Trump’s China-Sanctions Madness Imperils the Dollar

Earlier this month, US Treasury Secretary Steven Mnuchin threatened China, saying the US would ‘put additional sanctions on them and prevent them from accessing the US and international dollar system’ if they don’t go along with the most recent round of sanctions slapped on North Korea. We argued that the threat may be meaningful, but it also might be empty.
In a recent article published on the Mises Wire, Ryan McMaken added another layer of analysis, arguing that if the US were to follow through on the threat, it would imperil the US dollar. McMaken’s reasoning dovetails with a point we’ve made more generally about Trump’s penchant for tariffs – that they will undermine the dollar. Of course, that’s good for gold.

US Treasury Secretary Steve Mnuchin warned the US will impose new sanctions on China if it doesn’t conform to UN sanctions on North Korea:
‘If China doesn’t follow these sanctions, we will put additional sanctions on them and prevent them from accessing the U. S. and international dollar system, and that’s quite meaningful.’

This post was published at Schiffgold on OCTOBER 2, 2017.

India’s Appetite for Silver

Indians love gold. Despite rising prices, a tax increase, and government attempts to tighten regulation of the jewelry industry, gold imports into the country nearly tripled year-on-year in August. India ranks as the second largest gold consuming country in the world, trailing only China. But gold isn’t the only precious metal Indians covet. They also buy a lot of silver.
According to a new report by the Silver Institute, India consumed 160.6 million ounces of silver in 2016, accounting for 16% of global silver demand.
More than half of the silver flowing into India is used in jewelry and silverware.
These are traditional markets, though the demand drivers and consumer profile vary considerably between both segments. Typically, silver jewelry is purchased by most income groups in India, whereas silverware is bought by the middle and affluent classes. Since the start of this decade, there has been a large expansion of demand in both markets, from around 39 Moz in 2010 to 88 Moz in 2016. Of note, the Indian silverware market is the largest in the world and its importance is growing, representing 70 percent of the total global demand.’

This post was published at Schiffgold on OCTOBER 2, 2017.

Dear Elon Musk: Your Dazzling Mars Plan Overlooks Some Big Nontechnical Hurdles

Elon Musk has a plan, and it’s about as audacious as they come. Not content with living on our pale blue dot, Musk and his company SpaceX want to colonize Mars, fast. They say they’ll send a duo of supply ships to the red planet within five years. By 2024, they’re aiming to send the first humans. From there they have visions of building a spaceport, a city and, ultimately, a planet they’d like to ‘geoengineer’ to be as welcoming as a second Earth.
If he succeeds, Musk could thoroughly transform our relationship with our solar system, inspiring a new generation of scientists and engineers along the way. But between here and success, Musk and SpaceX will need to traverse an unbelievably complex risk landscape.
Many will be technical. The rocket that’s going to take Musk’s colonizers to Mars (codenamed the ‘BFR’ – no prizes for guessing what that stands for) hasn’t even been built yet. No one knows what hidden hurdles will emerge as testing begins. Musk does have a habit of successfully solving complex engineering problems though; and despite the mountainous technical challenges SpaceX faces, there’s a fair chance they’ll succeed.

This post was published at FinancialSense on 10/02/2017.

Is That a Feature or a Bug?

We have covered many reasons why bitcoin is unsound and not money. It’s a ledger of unbacked liabilities. It is designed to have finite quantity but therefore indeterminate and hence volatile value. This makes it unusable for borrowing or lending and hence savings, but a great a vehicle for conversion of one person’s wealth into another’s income. It is not a commodity – discussion of the usefulness of the network notwithstanding – nor is it backed by a commodity or any asset. It is a perfect, cryptographically secure record – of itself. People use it to get rich quick. In other words, it’s the very model of a (post)modern monetary marvel (OK, Keith is not the next Gilbert and Sullivan).
And bitcoin has a questionable feature. Transactions are irreversible.
First it should be addressed that irreversible transactions have an appeal to merchants. Everyone who sells on eBay knows the frustration of shipping merchandise to a customer only to have the customer claim it was never received. Merchants would surely love the idea that once payment is made, it cannot be unmade.
However, there are good reasons why our payments system was designed as it is. Sometimes there is a clear mistake. No one has an interest in allowing the payee to keep $100,000 when $10,000 was the purchase price of the used car. No one wants to see Jon Schmidt get the money that was intended for John Smith. There is also the occasional case of fraud. If someone breaks into your account, you want recourse to recover the lost funds. Irreversible transactions are not a dream come true for consumers who are defrauded by merchants.

This post was published at GoldSeek on Monday, 2 October 2017.

Former FOMC Member Admits The Fed Manipulates Asset Prices

The Fed often treats financial markets as a beast to be tamed, a cub to be coddled, or a market to be manipulated. It appears in thrall to financial markets, and financial markets are in thrall to the Fed, but only one will get the last word. – Former FOMC member, Kevin Warsh – The Fed Needs New Thinking
Please note, a large portion of the source links, plus the idea for this commentary, were sourced from GATA’s latest dispatch regarding the possible appointment of Warsh as the next Fed Chairman.
The quote above is from former FOMC board member, Kevin Warsh, who appears to be Trump’s top candidate to assume the Fed’s mantle of manipulation from Janet Yellen. By way of relevant reference, Warsh happens to be the son-in-law of Ronald Lauder, who is a good friend of Trump’s. He is also a former Steering Committee member of the Bilderberg Group. GATA has published a summary reprise of direct evidence from previous written admissions by Warsh the the Fed actively manages financial asset prices, ‘including bolstering the share price of public companies’ (from link above).
In addition to stocks, Warsh admitted in the same essay that, ‘The Fed seeks to fix interest rates and control foreign-exchange rates simultaneously’ (same link above). This task is impossible without suppressing the price of gold, something which began in earnest in 1974 when, under the direction of then Secretary of State, Henry Kissinger, paper gold futures contracts were introduced to the U. S. capital markets. This memo, written by the Deputy assistant Secretary of State for International Finance and Development, was sent to Kissinger and Paul Volcker in March 1974: Gold and the Monetary System: Potential U. S.-EC Conflict (note: the source-link is from GATA – it was discovered in the State Department archives by Goldmoney’s John Butler).

This post was published at Investment Research Dynamics on October 2, 2017.