GOLD: $xx
Silver: $xx
Closing access prices:
Gold $
silver: $
PREMIUM FIRST FIX: $11.31 (premiums getting larger)
Premium of Shanghai 2nd fix/NY:$9.00 (PREMIUMS GETTING LARGER)
LONDON FIRST GOLD FIX: 5:30 am est $1290.20
For comex gold:
For silver:
5,000 OZ/
Total number of notices filed so far this month: 392 for 1,960,000 oz

This post was published at Harvey Organ Blog on October 11, 2017.

1987, 1997, 2007… Just How Crash-Prone are Years Ending in 7?

Bad Reputation
Years ending in 7, such as the current year 2017, have a bad reputation among stock market participants. Large price declines tend to occur quite frequently in these years.
Just think of 1987, the year in which the largest one-day decline in the US stock market in history took place: the Dow Jones Industrial Average plunged by 22.61 percent in a single trading day. Or recall the year 2007, which marked the beginning of the GFC (‘great financial crisis’).
Given that the current year is ending in 7 as well, is there a reason to be concerned, or is the year 7 crash pattern a myth?
The Pattern of the Dow Jones Industrial Average in the Course of a Decade
Below you can see a chart of the typical pattern of the DJIA in the course of a decade. This is not a standard chart. Instead it shows the average price pattern of the DJIA in the course of a decade since 1897.

This post was published at Acting-Man on October 11, 2017.

Is Bridgewater A Fraud? Here Are The Troubling Questions Posed By Jim Grant

Jim Grant, author of Grant’s Interest Rate Observer, first hinted last week that not all is well when it comes to the world’s biggest hedge fund, Ray Dalio’s $160 billion Bridgewater (of which one half is the world’s biggest risk-parity juggernaut). Speaking to Bloomberg last week, Grant said he was “bearish” on Bridgewater because founder Dalio has become “less focused on investing, while the firm lacks transparency and has produced lackluster returns.”
Grant slammed Dalio’s transition from investor to marketer, and in a five-page critique of the world’s largest hedge fund, said Dalio has been preoccupied with his new book, sitting for media interviews and sending Tweets.
‘Such activities have one thing in common: They are not investing,’ Grant writes in the Oct. 6 issue of his newsletter. ‘Yet here he is, laying it all out to the world again, Tweeting, promoting his book, attacking the press — necessarily doing less of his day job than he would otherwise do.’
Grant continued his scathing critique, accusing Bridgewater of “lately performed no better than the typical hedge fund.’ Grant is right: since the start of 2012, Bridgewater’s Pure Alpha II Fund has posted an annualized return of 2.5% vs its historic average of 12%, and is down 2.8% this year through July.
The underperformance may be explainable: after all the polymath billionaire has been busy opining in recent months on subjects from the rise of populism to his affinity for China, “which are distraction from making money” Grant said.
But if Grant had limited himself to merely Dalio’s stylistic drift, it would be one thing: to be sure, the fund’s billionaire founder may simply have lost a desire to manage money and has instead discovered a flair for writing books and being in the public spotlight.
However, Grant – or rather his colleague Evan Lorenz – went deeper, and as he writes in the latest Grants letter, he raises several troubling points, which go not to the hedge fund’s recent underprofmrance – which can be perfectly innocuous – but implicitly accuse the world’s biggest hedge fund of borderline illegal activities and, gasp, fraud. Some of the more troubling points brought up by Lorenz are the following:

This post was published at Zero Hedge on Oct 11, 2017.

De-dollarization Not Now

USD-denominated debt outside the US hits record – even junk bonds.
China announced today that it would sell $2 billion in government bonds denominated in US dollars. The offering will be China’s largest dollar-bond sale ever. The last time China sold dollar-bonds was in 2004.
Investors around the globe are eager to hand China their US dollars, in exchange for a somewhat higher yield. The 10-year US Treasury yield is currently 2.34%. The 10-year yield on similar Chinese sovereign debt is 3.67%.
Credit downgrade, no problem. In September, Standard & Poor’s downgraded China’s debt (to A+) for the first time in 19 years, on worries that the borrowing binge in China will continue, and that this growing mountain of debt will make it harder for China to handle a financial shock, such as a banking crisis.
Moody’s had already downgraded China in May (to A1) for the first time in 30 years. ‘The downgrade reflects Moody’s expectation that China’s financial strength will erode somewhat over the coming years, with economy-wide debt continuing to rise as potential growth slows,’ it said.
These downgrades put Standard & Poor’s and Moody’s on the same page with Fitch, which had downgraded China in 2013.

This post was published at Wolf Street on Oct 11, 2017.

Kentucky Pension Crisis Goes Nuclear As Teacher Retirements Surge 64% Over Last Year

As Kentucky’s Governor Matt Bevin and legislators attempt to design a pension reform bill that will save the state’s various public pension plans from literally running of cash in “three to five years,” or worse yet bankrupting their state, some teachers and other public employees have decided they’re not going to wait around to negotiate and instead turned in their retirements notices to lock in their current benefit structures.
As the Carrier-Journal points out today, Kentucky’s Teachers’ Retirement System saw a 64% surge in teacher retirements YoY in the month of September. Meanwhile, system-wide retirements increased a staggering 37.4% in September and are up 23% so far in October.
The number of public employees deciding to retire has surged in recent weeks as the governor and legislative leaders prepare to enact a pension reform plan this fall.
The Teachers’ Retirement System has received applications of 120 members who have decided to retire on Nov. 1. That’s up 64 percent over the 73 members who retired on Nov. 1 of last year.

This post was published at Zero Hedge on Oct 11, 2017.

Hoisington Quarterly Review and Outlook, Third Quarter 2017

Lacy Hunt and Van Hoisington of Hoisington Investment Management do not exactly get us off to a hopeful start in their third-quarter review, today’s Outside the Box:
The worst economic recovery of the post-war period will continue to be restrained by a consumer sector burdened by paltry income growth, a low and falling saving rate, and an increasingly restrictive Federal Reserve policy. Additionally, with the extremely high level of U. S. government debt and deteriorating fiscal situation, the economy is unlikely to benefit from any debt-financed tax changes. Finally, from a longer-term perspective, the recent natural disasters are an additional constraint on economic growth.
Having set the stage for this rather dark and doomy tale, our intrepid authors launch into a blow-by-blow exegesis of the role the beleaguered consumer has played in keeping the economic beast on its feet and slowly stumbling forward.
We consumers account for two-thirds of US GDP, they remind us. And ‘Consumer spending is funded either by income growth, more debt, or some other reduction in saving. Recent trends in each of these categories, as outlined below, do not bode well for this critical sector of the U. S. economy.’ I’ll let Lacy and Van fill in all the gruesome details.
But they bring up the point – and do it mathematically and in depth – that I made in last week’s letter: The Federal Reserve is embarked upon an extraordinarily dangerous course as it both raises rates and reduces its balance sheet.

This post was published at Mauldin Economics on OCTOBER 11, 2017.

Jimmy Carter Offers To Meet With Kim Jong-Un To Prevent War With North Korea

With tensions once again flaring up between the United States and North Korea, it was reported Tuesday that former U. S. president Jimmy Carter has offered to meet with leader Kim Jong-un to discuss ways to achieve peace.
The revelation comes by way of South Korean news outlet JoongAng Ilbo, which spoke with Park Han-shik, a prominent scholar on North Korean-related issues. Park previously helped Carter plan diplomatic trips to the country in 1994 and 2010.
JoongAng Ilbo writes that Park met with the former president at his home in Georgia on September 28, and it was there that Carter reportedly expressed his wishes.

This post was published at Zero Hedge on Oct 11, 2017.

Powell Fed Chair Odds Surge After Politico Doubles Down On “Mnuchin Support” Report

It was exactly one week ago when just as Bloomberg reported that Yellen was most likely out of consideration as next Fed chair, and as the WSJ reported that Trump was meeting with Kevin Warsh, that Politico reported, for the first time, that discussions with people close to the Fed Chair selection process “confirmed Kevin Warsh and Jerome Powell as the current front-runners with Treasury Secretary Steven Mnuchin said to be favoring Powell. That’s something of a head scratcher to outside observers of the process who did not have Powell on short-lists before the process began. Warsh was always viewed as a top contender though he does not really know President Trump.”
Well, since algos have short memories (and humans dont care about news at all), Politico doubled down on what it reported one week ago, and shortly after 3pm ET today, wrote that “Treasury Secretary Steven Mnuchin is strongly pushing for the White House to name Jerome Powell as the next chair of the Federal Reserve – the most powerful economic job in the U. S. government, according to three people close to the selection process.”
Mnuchin has privately recommended Powell to President Donald Trump, according to one adviser close to the administration.
Why does the former hedge fund manager and Goldman employee like Power? According to Politico’s sources, “Mnuchin, who knows Powell well, feels comfortable with him and feels like Powell is a safe pick over whom he can exert some measure of influence.”

This post was published at Zero Hedge on Oct 11, 2017.

Stocks and Precious Metals Charts – Nobody Wins Unless Everybody Wins

“Even in a time of elephantine vanity and greed, one never has to look far to see the campfires of gentle people. Lacking any other purpose in life, it would be good enough to live for their sake.”
Garrison Keillor, The Prairie Home Companion
I spent much of the afternoon picking up my in-laws from Ohio from their cruise up the East coast. So I missed some of the antics, in New York and Washington.
They were on a ‘fall foliage’ cruise that left a couple of weeks ago from Port Liberty, but this year the leaves are turning late. If they are falling here it has been from a recent lack of rain. And they tell me that they did not see the leaves turning color on the cruise until they reached Quebec. Even in Maine, in the coastal cities at least, autumn’s paintbrush has not yet been unleashed.
We loved to visit Quebec City. We used to drive up there by car every other year or so. The city is beautiful and the people are cordial and most often kind. And the drive up to Montreal was always a nice one particularly in the autumn. We often stopped for an overnight at Lake George.
I have literally never been to Maine. Their cruise stopped in Portland, Rockland, and Bar Harbor. They had a nice time at each place, and again, the people and the atmosphere is wonderful. And apparently the price and quality of the lobsters is equally impressive. For that I miss my days as a computer science student in Boston.

This post was published at Jesses Crossroads Cafe on 11 OCTOBER 2017.

Germany’s Budding Love Affair with Gold

We talk a lot about India’s love affair with gold. The Asian nation ranks as the second largest gold consumer in the world, behind only China. Gold is intimately intertwined with Indian cultural and marriage rights, and it serves as a vital cog in India’s economy, both above ground and underground. But the yellow metal has a new lover vying for its attention.
Over the last 10 years, gold investment has boomed in Deutschland, according to a report by the World Gold Council. Last year alone, Germans poured 6.8 billion ($8 billion) into gold investment products, with 22% of German investors buying goldover the past 12 months. Over the last 10 years, Germany has established itself as a 100 ton-plus per year market for gold bars and coins. The WGC calls the growth in the German gold market a ‘radical transformation.’
Before 2008 it was small. Bar and coin demand languished at low levels: average demand between 1995 and 2007 was a modest 17 tons and, in
some years, there were more sellers than buyers … Since then, the German gold investment market has flourished. Germany has established itself as a 100t-plus per year market for bars and coins, and a vibrant domestic ETC market has developed: during Q3 2017, German-listed ETC AUM hit an all-time high of 252.1 tons, equivalent to 9.8 billion.’

This post was published at Schiffgold on OCTOBER 11, 2017.

White House Lashes Out At IMF’s Tax Reform Skepticism

White House budget director Mike Mulvaney has come out swinging at The IMF, after the establishment-sponsored organization threw shade at Trump’s tax reform plan’s growth expectations, accusing them of wanting the reforms to fail.
The angry response came after Vitor Gaspar, The IMF’s head of fiscal affairs, told the Financial Times:
‘The idea that one would produce additional revenue by lowering tax rates is something that, being a conceptual possibility, is rarely documented empirically.’
Asked about the IMF’s scepticism, The FT reports that Mr Mulvaney, previously a deficit hawk, said:
‘Yes, they are heavily invested in it not working out.’ He drew a parallel with critics who challenge the growth-enhancing properties of Mr Trump’s deregulatory agenda.

This post was published at Zero Hedge on Oct 11, 2017.

Bubble Juice? Shiller’s CAPE Ratio Now Above 1929 Black Tuesday Level With Historically Low Volatility

Recently-minted Nobel Laureate Richard Thaler from University of Chicago confessed his puzzlement (and nervousness) at the historically low stock market volatility.
Adding to Thaler’s puzzlement is that another Nobel Laureate, Robert Shiller, has a cycically-adjust price-earnings (CAPE) ratio that just exceed the level found on Black Tuesday, October 29 1929, that helped ignite The Great Depression. However, the CAPE Ratio is still below its peak found during the infamous Dot-com bubble (and bust)

This post was published at Wall Street Examiner on October 11, 2017.

FOMC Minutes Show Schizophrenic Fed Fears Low Inflation Is Here To Stay But Push For Another Rate Hike In 2017

The yield curve has collapsed since The Fed’s hawkish September statement (but bank stocks have soared) as rate-hike odds hit 80%and balance sheet normalization is believed to be like watching paint dry. All eyes going into the FOMC Minutes were on just how transitory The Fed believed inflation’s dip was – “many Fed officials concerned low inflation is not transitory,” but schizophrenically “many Fed officials saw another rate hike warranted this year.”
While the dollar was weak on the market’s first skim of the minutes, with algos focusing on the “low inflation not only transitory”, the offset was the noted bizarro preview that “another hike in 2017 is warranted”, which confirms what we suggested one month ago, namely that the Fed is no longer data dependant, but will continue hiking until the Fed regains control over the stock bubble.
Furthermore, while it is clear that the Fed will keep a very close eye on inflation data into the December meeting, it is unclear just how it will be able to do that: as the minutes read: “Participants generally agreed it would be important to monitor inflation developments closely. Several of them noted that interpreting the next few inflation reports would likely be complicated by the temporary run-up in energy costs and in the prices of other items affected by storm-related disruptions and rebuilding.’
The next CPI print is this Friday, and it will be significantly impacted by the Hurricanes, to the upside: will the Fed ignore it or will it focus on this as confirmation of a job well-done and hike aggressively in the coming months?
Additional highlights include:

This post was published at Zero Hedge on Oct 11, 2017.

Trading And Investing In Gold: Follow The Money

The paper gold attack that I first suggested might occur in the September 7th issue has taken gold from $1360 down to $1270 (continuous contract basis). Technically, gold has moved from an ‘overbought’ condition to a mildly ‘oversold’ condition. The RSI and MACD indicate that gold is slightly ‘oversold’ but I believe both indicators will flash ‘extremely oversold’ before this price attack over. This should occur sometime in the next 2-3 weeks.
I say this because I continue to believe the open interest in Comex paper gold, combined with the analyzing the weekly Commitment of Traders report, is the best indicator of gold’s next move, at least until the western Central Banks are unable to control the price of gold with paper derivatives. To be sure, the COT report is not always a perfect predictor but in the last 15 years the two reports combined have been around 90% accurate.
Currently, the Comex banks’ net short position in paper gold is at the high end of its historical range. Concomitantly, the net long position of the hedge funds is also at the high end of its historical range. Per last Friday’s COT report, the banks began to reduce the short positions, thereby reducing their net short position, and the hedge funds began to reduce the long positions, thereby reducing their net short position (click to enlarge):

This post was published at Investment Research Dynamics on October 11, 2017.

OPEC To Take Drastic Action Despite Shale Slowdown

WTI recently dipped below $50 per barrel for the first time in a month, erasing the strong September rally. It’s no coincidence that after two weeks of price declines, OPEC has tried to talk up the oil market again, hinting that more drastic action could be forthcoming.
Echoing the world’s top central bankers, OPEC’s Secretary General said that the oil cartel might need to take ‘extraordinary’ measures to balance the oil market next year. ‘There is a growing consensus that, number one, the re-balancing process is underway,’ OPEC’s Mohammad Barkindo told reporters on Sunday in New Delhi. ‘Number two, to sustain this into next year, some extraordinary measures may have to be taken in order to restore this stability on a sustainable basis going forward.’
As always, OPEC is vague on the specifics, but the working assumption is that the group will agree to an extension of the cuts until at least mid-2018, or perhaps even as late as through the end of the year. There’s been some discussion about deeper production cuts, but there aren’t a ton of analysts who see OPEC going that far, despite Barkindo’s cryptic language.

This post was published at Zero Hedge on Oct 11, 2017.

China Riding the Global Economic Recovery

The global economic recovery is strengthening and becoming more synchronized, according to updated projections for 2017 and 2018 by both the Organization for Economic Cooperation and Development (OECD) and the International Monetary Fund (IMF). China, the world’s second largest economy, is an important part of this improved outlook, and its equity markets have been outperforming.
Last year’s global growth was 3.1%. The OECD is forecasting a 3.5% advance this year and even stronger, 3.7% growth in 2018. China’s economic growth rate is projected at 6.8% this year, compared with 6.7% in 2016. The OECD anticipates moderate slowing to a 6.6% pace in 2018, in response to some easing of stimulus measures and efforts to stabilize the corporate debt and further balance the economy.
The IMF sees the present acceleration of the global economy as the broadest in the past 10 years. Their economists project a 3.6% advance this year, slightly faster than the OECD estimate, and 3.7% growth in 2018. China’s economy is projected to grow 6.8% this year, a 0.2 percentage point increase over the IMF’s April forecast. Similarly, their forecast for 2018 has been increased by 0.3 percentage points to 6.5%, based on the expectation that expansionary policies will be sufficient to maintain such an advance and external demand will remain strong

This post was published at FinancialSense on 10/11/2017.