Speculator ‘Insurance Shorts’ and Swap Dealer Shorts Likely to Spark a Counter Rally in Gold

HOUSTON – (Got Gold Report) — Just a little ‘thinking out loud’ on the Managed Money, what I call ‘insurance short’ positions. Doing so shows a considerable amount of gun powder laying on a large wooden box of short covering dynamite, metaphorically speaking.
That’s because while The Funds piled on new shorts Swap Dealing banks hung onto most of their record high shorts.
An imbalance is an understatement. See if you agree…
Recall that as of August 12, with gold then $1309, Managed Money, aka, The Funds, held a smallish 21,930 short contracts for gold futures on the COMEX bourse.
Recall that The Funds are trend followers that will generally continue to add to their positions in the direction of the trend until they ‘break’ that trend (or it breaks of its own volition). Below is (are?)* the Managed Money data since July 8 for reference.

This post was published at GotGoldReport on September 12, 2014.

The Game Of Thrones & The Game Of Markets

A few brief thoughts on an Epsilon Theory connection between modern capital markets and the NFL (and between Central Bankers and Roger Goodell). The connection is solipsism – a pathological egocentrism where reality is defined by an individual’s mental perceptions and constructs.
For individuals like Goodell and Yellen we’re talking about good old-fashioned individual solipsism. These are people who have never been proven wrong about anything in their professional lives. I know that sounds weird to professional investors and allocators, because we are demonstrably wrong aboutsomething every single freaking day, and it’s a hard concept to describe effectively to someone who’s never lived within a sheltered organization where empirical outcomes are either pre-ordained or immaterial. But both Goodell and Yellen have spent their entire professional careers as the modern equivalents of cloistered monks or nuns, the former within the Holy Order of the National Football League and the latter within the High Church of UC Berkeley.

This post was published at Zero Hedge on 09/12/2014.

Stocks Slump As Hawkish Fed Fears Send 10Y Yields Back Over 2.60%

It appears the upwards revisions for retail sales and not missing expectations for the headline data is thegood news that is bad news for markets. With just a few days until the FOMC, it seems market perceptions of potential fed hawkishness (no good excuses recently not to be) is weighing on bonds and stocks. Treasury yields are accelerating higher (10Y above 2.60% for first time since July) tracking oddly perfectly with USDJPY and stocks, having entirely decoupled from JPY, are tanking on the rising rates/Fed hawkishness concerns. Of course, it’s Friday so anything goes before we close.

This post was published at Zero Hedge on 09/12/2014.

Will The Real Silver Commercials Stand Up?

Sep 11, 2014
One of the more persistent flaws in the world’s most important price discovery mechanism comes down to a simple question.
How did it come to pass that banks were given access to the commercial category of traders?
It’s a given that the market is rigged to high heaven. And it’s completely obvious by now how it is accomplished. They only folks left in denial about it have a direct incentive for ignoring it – usually an obvious one.
The nature of the players should tell one all they really need to know about price discovery and a system that is corrupt through to the core. They have 24/7 access to a paper market that is a gamblers den, and a faint shadow of that which it is purported to represent: fair price discovery.
What you have in the silver market is an extreme continuation of a policy from long ago. The commercials that operate these massive illegal and naked short positions are simply an extension of the users, the original CBOT board members whose positions were threatened by the Hunts.
Of course, the Hunts were easy scapegoats. The users were protecting themselves long before the Hunts. The users have been around since the days before silver was officially demonetized.
By extension, they opened the avenue for big finance.
The users could now operate in the background, while financial conglomerates could do what all giant trusts strive to accomplish – dominate with deep pockets, tentacles spread everywhere. Completely above the law by sheer size and political revolving door connection.

This post was published at Silver-Coin-Investor on Dr. Jeffrey Lewis /.

Market Report: Strong dollar undermines precious metals

Precious metals have had to endure a week of gathering dollar strength, which is at least partly the result of problems specific to the euro, yen and sterling. The result is gold has fallen a further $30 over the week, and silver by about $0.70c. The first chart is of gold and open interest on Comex. Over the last two weeks the gold price has been falling while open interest has been rising: in other words paper gold has been flooding the market. This is illustrated in the second chart, of Managed Money short positions.
Last Tuesday’s position (not yet in this chart) will be released after-hours tonight, and I expect these shorts to rise to about 70,000 contracts. Given the action of the last few days I would expect this short interest to currently be at a new record. For the third time in a year, hedge funds and other fund managers are betting the ranch on a falling gold price.

This post was published at GoldMoney on 12 September 2014.

Schrodinger’s Confidence: US Consumers Both More And Less Confident At The Same Time

Despite Gallup’s poll showing consumer confidence going nowhere this year, and Bloomberg’s consumer comfort level for high-income earners collapsing, the government’s UMich Consumer Sentiment measure has soared to its highest since last July’s exuberance (at 84.6). Take your pick which data you trust…
UMich beats and surges to 15-month highs…

This post was published at Zero Hedge on 09/12/2014.

How the Government Deliberately Understates Inflation as Rents and Housing Costs are Soaring

It’s hard these days to worry about inflation amidst a maelstrom of voices claiming that there isn’t enough inflation to begin with, and that the world will end if prices stop rising for a moment. Whatever inflation we may encounter in daily life, whether for healthcare, tuition, beef, gas, or cars, we’re told not to worry about it because the higher prices are either annulled by an elegant scheme called hedonic regression, or they’re only temporary, or the amounts are too small to impact the overall budget.
But when it comes to housing, which now accounts for 33.6% of what Americans spend [What’s Draining American Wallets? Interactive Chart], none of these excuses fly. Because inflation in housing has been red-hot.
Actually, it hasn’t been red-hot, the way the Bureau of Labor Statistics measures it. Its CPI contains two housing components: Owners’ equivalent rent of primary residence (OER) and Rent of primary residence (Rent). They purport to measure the cost of ‘shelter,’ which is the ‘consumption item’ that a home provides and is thus included in CPI. The cost of the home itself and any improvements to the home are considered an investment, not consumption, and therefore not part of CPI.
Owners’ equivalent rent accounts for 23.83% of the CPI and rent for 5.93%, for a combined weight in the CPI of about 30%. It is by far the largest and most important component.
Inflation in these two categories was contained, as they say at the Fed. In July, owners’ equivalent rent rose 2.7% and rent rose a minuscule 1.0%.

This post was published at Wolf Street by Wolf Richter ‘ September 12, 2014.

Gold’s best days are still to come say professional investors

Gold prices may be low again right now but this is just a temporary buying opportunity in the view of some experts.
Chris Watling, CEO of Longview Economics, and Jim McCormick, head of asset allocation research at Barclays, discuss the prospects for gold with both suggesting prices could rise in the next couple of years…

This post was published at Arabian Money on 12 September 2014.

BofA Warns “Risk Of Selloff” After September’s FOMC

While BofAML’s Michael Hanson expects Yellen’s overall tone to remain dovish, market perception will be key. The combination of changes to the forward guidance language, upward drift of the dots, and any comments seen as potentially hawkish, could lead to a selloff…
Via BofAML,
Risk of a hawkish read
The September FOMC meeting may be the most anticipated in nearly a year. We expect no fundamental changes in Fed policy, despite revising the statement to clarify policy data dependence and some upward drift in the dots. The FOMC should taper by another $10bn as well. Fed Chair Janet Yellen’s press conference will set the tone for the market reaction. While we anticipate she will continue to support a patient and gradual normalization process, the risk is that markets may sell off on the perception of a less dovish Fed.

This post was published at Zero Hedge on 09/12/2014.

Weekly Gold Chart – Updated

I have posted this chart fairly regularly now for some time to give a more intermediate term look at the gold market for those who are interested. Not a single thing has changed for gold in over a year now. The metal is still trapped within a broad range defined on the chart. It is now working its way down toward the bottom of the range having failed to make any new weekly high. As a matter of fact, the pattern for gold has been one of LOWER HIGHS for over a year now within that range. That is suggestive of weakness. This week the HIGHER LOW was broken and while it is still not the end of the trading session for Friday, the metal is threatening to put in a LOWER LOW within the range compared to the May close. That is a sign that the odds favor a move down towards $1200 unless it swiftly reverses and regains the $1240 level in a convincing fashion.

This post was published at Trader Dan Norcini on Thursday, September 11, 2014.

Antidote to an Equity Realignment? Invest in Fundamentally New Industries

Professional Investors Are Preparing For A Stock Market Crash … It looks like a growing number of professional investors are preparing for a stock market crash, as hedge fund filings for the second quarter show a spike in defensive positions. In particular, legendary billionaire George Soros made a huge bet against the market. He increased his short position on the Standard & Poor’s 500 by a startling 605%. The 9.69 million new shares of SPDR S&P 500 ETF Trust (NYSE Arca: SPY) put options gave Soros a total of 11.29 million shares and made it the biggest holding in his portfolio. – ETFDailyNews
Dominant Social Theme: This market is going down, down, down … Or maybe not …
Free-Market Analysis: According to this article, there may be a crash in the fall, but investors should protect themselves, stay in the market and treat a crash as a buying opportunity.
The market is having a long-term bull run, according to this article, and investors should be expecting to take profits for many years to come.
This may be an overly optimistic perspective about what’s going on. But that’s the takeaway …

This post was published at The Daily Bell on September 12, 2014.

RBS, 4 Other Banks Warn of Relocation to England if Scots Vote Yes; Catalans Stage Mass Protest for Independence

Tale of Two Countries
Fearmongering in Scotland hits fever pitch as RBS and four other banks threaten to leave the country if Scotland votes “Yes” for independence.
In Spain, Catalans staged a huge protest in favor of independence. The Spanish government hopes Scotland will vote “No” even though it seeks to halt a Catalan vote altogether.
Let’s take a close look at these stories starting with Scotland.
RBS, 4 Other Banks Warn of Relocation to England if Scots Vote Yes
On the fearmongering front, RBS warns it would relocate to England if Scots vote Yes.
Royal Bank of Scotland led a host of banks employing more than 35,000 people in Scotland who warned that they would relocate their headquarters south of the border in the event of a Yes vote in the Scottish independence referendum next week.
‘RBS believes that it would be necessary to re-domicile the bank’s holding company and its primary rated operating entity (The Royal Bank of Scotland plc) to England,’ it said in a statement on Thursday.

This post was published at Global Economic Analysis on Friday, September 12, 2014.

What If the Easy Money Is Now on the Bear Side?

Complacent melt-ups aren’t just boring–they’re not very profitable.
File this under Devil’s Advocate: what if the easy money in the stock market is no longer the “guaranteed” Bull melt-up but the Bearish bet on a sudden air pocket?Just as a thought experiment, put yourself in the shoes of the money managers who have the leverage to move the markets.
You probably know the drill: program your trading bots to recognize every technical trading scheme’s key support and resistance levels, and then unleash huge futures/options buys after hours or pre-open so the market jumps in the direction that makes you the most money. Unleashing a tsunami of buy orders forces Bears to cover their bets on a decline (shorts), goosing the market higher. The melt-up depends not just on trading bots hammering the market in the desired direction with massive buy orders–it depends on a supply of nervous Bears to cover their shorts by buying stocks. This buying triggers others’ trading bots to buy into the rally.
Short-covering is an essential source of the self-reinforcing buying that has kept the U. S. market melting up for years without any gyrations down of more than a few percentage points.

This post was published at Charles Hugh Smith on THURSDAY, SEPTEMBER 11, 2014.

Panic On The Streets Of London … Can Scotland Ever Be The Same Again?

Panic On The Streets Of London … Can Scotland Ever Be The Same Again? There is now less than one week of campaigning remaining before the Scottish Independence Referendum, which takes place next Thursday, September 18.

The pro-union ‘no’ vote campaign is back in the lead this week after the latest opinion poll from pollsters YouGov put them at 52%, marginally ahead of the pro-independence ‘yes’ campaign.
The referendum question being asked is simply ‘Should Scotland be an independent country?’
After being ahead significantly since the outset of the independence campaign, the pro-union side was abruptly shocked last weekend when the pro-independence side took the lead based on an opinion poll result, also from YouGov, released on Saturday, September 6.

This post was published at Gold Core on 12 September 2014.

Currency turbulence

You’d think that the US dollar has suddenly become strong, and the chart below of the other three major currencies confirms it. The US dollar is the risk-free currency for international accounting, because it is the currency on which all the others are based. And it is clear that three months ago dollar exchange rates against the three currencies shown began to strengthen notably. However, each of the currencies in the chart has its own specific problems driving it weaker. The yen is the embodiment of financial kamikaze, with the Abe government destroying it through debasement as a cover-up for a budget deficit that is beyond its control. The pound is being poleaxed by a campaign to keep Scotland in the union which has backfired, plus a deferral of interest rate expectations. And the euro sports negative deposit rates in the belief they will cure the Eurozone’s gathering slump, which if it develops unchecked will threaten the stability of Europe’s banks. So far this has been mainly a race to the bottom, with the dollar on the side-lines. The US economy, which is officially due to recover (as it has been expected to every year from 2008) looks like it’s still going nowhere. Indeed, if you apply a more realistic deflator than the one that is officially calculated, there is a strong argument that the US has never recovered since the Lehman crisis.

This post was published at GoldMoney on 12 September 2014.

Gold engagement ring from 17th Century discovered lying in field by pensioner

A gold engagement ring from the 17th Century has been unearthed by a pensioner with a metal detector – more than 300 years after it was lost. 
Tom Ross, 69, was sweeping his metal detector over a ploughed farmer's field near Newtownabbey in County Antrim, Northern Ireland, when he stumbled across the item.
The rare 'posy' ring, which dates back to the late 1600s and is 85 per cent gold, bears the Old English inscription 'I noght on gift bot gifer', or 'Look not on the gift, but the giver'. Also known as a 'betrothal' ring, it pre-dates the custom of proposing with an engagement ring, but essentially served the same purpose.
Men and women exchanged the items from the 1500s onwards to symbolise their future commitment to each other.

This post was published at Daily Mail

China gold group, WGC ink co-operative agreement

The World Gold Council (WGC), the London headquartered market development organisation for the gold industry, and the China Gold Association have signed a ‘Comprehensive Strategic Cooperation Agreement’, at the official launch of the China Gold Congress & Expo 2014 in Beijing.
The aim of the agreement is stated to be to enhance the global understanding of the gold market and supply chain and China’s role within it through the exchange of research, data insights and developing innovations for gold in investment, technology and jewellery.
One hopes that this may give WGC researchers perhaps a better understanding of the Chinese gold supply and demand situation than seems to be the case at present where known import figures, stated gold demand figures and published data out of the Shanghai Gold Exchange seem to suggest a wide disparity in apparent demand in particular. However given the China Gold Association’s ties with the Chinese government, as will have any Chinese trade organisation, which may have an agenda to only let Western organisations, like the WGC, know what it wants them to know, then the co-operation agreement might not actually provide a great deal of new information on these disparities, although any such regular contact should be helpful.
It is also highly unlikely to throw any new light on whether the Chinese Central Bank is surreptitiously increasing its gold reserves without reporting them to the IMF – as many Western analysts believe – or not. We will almost certainly have to wait until the Chinese government deems it politic to announce any reserve upgrade, if any, before we know for sure.

This post was published at Mineweb

How important is the financial sector to Scotland’s economy?

Scotland has a long, rich history in the financial sector. Royal Bank of Scotland has been based there for nearly 300 years, while money manager Standard Life has had its headquarters in Scotland for 189 years.
But several Scottish-based financial institutions have now said they will relocate to England if Scottish voters back the break-up of the UK in next week's referendum on independence.
Uncertainty over the currency an independent Scotland would use, who would be the lender of last resort for Scottish banks and who would regulate them have led to concerns of "capital flight" – where deposits are moved out of the country.
Scottish First Minister Alex Salmond denied uncertainty in the markets was caused by the Scottish government's stance on a shared currency, and instead blamed "the unreasonable posture of the UK government who have refused to discuss this at any stage throughout the last two years".

This post was published at BBC

Foreclosure Activity Rises for Second Straight Month in August: RealtyTrac

U.S. foreclosure activity jumped in August for the second consecutive month as banks started the process on more properties and scheduled more housing auctions, industry firm RealtyTrac said on Thursday.
Overall, 116,913 properties were at some stage of the foreclosure process, which includes foreclosure notices, scheduled auctions and bank repossessions, the group said.
That pushed overall activity up 7 percent from July, it said. From a year ago, foreclosure activity was down 9 percent.
Lenders started the foreclosure process on about 55,000 properties in August, up 12 percent from July, but unchanged from a year ago. It was the second consecutive month in which foreclosure starts were up month-over-month.

This post was published at Money News

American credit-card debt hits a post-recession high

U.S. consumers may be relying too heavily on their plastic.
Americans added $28.2 billion to their credit cards in the second quarter of 2014, the largest amount in the last six years and nearly 200% more than in the second quarter of 2009, when the economy emerged from the depths of the Great Recession, according to new research from personal finance website CardHub.com. After paying off $32.5 billion owed during the first quarter of 2014, consumers ran up roughly 86% more debt during the following quarter.
The average household’s credit-card balance now stands at $6,802, up slightly from $6,628 in the first quarter, but still down from $8,431 at the end of 2008. By the end of the year, this figure is expected to exceed $7,000, reaching levels not seen since the end of 2010. U.S. consumers will be roughly $1,300 away from the credit card debt “tipping point,” where minimum payments become unsustainable and delinquencies skyrocket, the report says.

This post was published at Market Watch