Precious Metals Supply and Demand

Fundamental Developments
There were big moves in the metals markets this week. The price of gold was up an additional $21 and that of silver $0.30.
Will the dollar fall further?As always, we are interested in the fundamentals of supply and demand as measured by the basis. But first, here are the charts of the prices of gold and silver, and the gold-silver ratio.

This post was published at Acting-Man on September 13, 2017.

Julian Robertson: “There’s A Bubble” And “It’s The Federal Reserve’s Fault”

Call it the “bearish billionaire” curse. One month ago, MarketWatch penned “7 billionaires who are worried about a stock-market correction” which listed Carl Icahn, David Tepper, Howard Marks, George Soros, Jeff Gundlach, Warren Buffett and Eliot Singer as some of the world’s wealthiest people who are losing sleep over the S&P trading at all time highs.

This post was published at Zero Hedge on Sep 12, 2017.

Hillary Almost Proposed ‘A Universal Basic Income’ In 2016, And The Idea Is Catching Fire Among Grassroots Democrats

Should you get free money from the U. S. government every month simply for being alive? That may sound like a crazy idea to many of us, but the truth is that this will likely be one of the biggest political issues in the 2020 presidential election. At this point, 40 percent of all Americans already ‘prefer socialism to capitalism’, and the concept of a ‘universal basic income’ is starting to catch fire among grassroots Democrats. Many liberals are convinced that the time has come to fight for the right to ‘a minimum standard of living’, and one study by a ‘left-leaning’ group found that giving every adult in the country $1,000 each month would increase the size of the U. S. economy by more than 2 trillion dollars…
Giving every adult in the United States a $1,000 cash handout per month would grow the economy by $2.5 trillion by 2025, according to a new study on universal basic income.
The report was released in August by the left-leaning Roosevelt Institute. Roosevelt research director Marshall Steinbaum, Michalis Nikiforos at Bard College’s Levy Institute, and Gennaro Zezza at the University of Cassino and Southern Lazio in Italy co-authored the study.
What an incredible idea, eh?
All we have to do is give out free stuff and the economy grows like magic. And the study also discovered that the larger the universal basic income is, the more the economy would grow.
So why not make it $10,000 a month for everyone?
Well, it turns out that there is a catch. According to the study, the economy only grows if the universal basic income is funded by deficit spending. If we have to raise taxes to pay for it, there is no positive benefit to the economy at all…

This post was published at The Economic Collapse Blog on September 12th, 2017.

Investors Fret as Catalonia’s Independence Turmoil Seethes

The closer the referendum, the more draconian Spain’s response.
After years of simmering tensions, the biggest showdown yet between Barcelona and Madrid appears to be just weeks away. On Oct 1, the regional government of Catalonia plans to hold a referendum on national independence, in complete defiance of Spain’s central government in Madrid. As a last show of strength, an estimated one million separatists filled the streets of Barcelona, a city of just one and a half million people, for Catalonia’s national holiday, La Diada, on Monday.
Companies and investors are somewhat less enthused by the prospect of a head-on clash between Madrid and Catalonia, Spain’s richest and fastest-growing regional economy. An increasing number of financial firms, analysts and rating agencies are finally warning that what began as a largely political (and perfectly avoidable) crisis has the potential to spiral into a financial maelstrom that could spread far beyond the borders of both Catalonia and Spain.
Catalonia accounts for almost one-fifth of the nation’s economic output, but for years it’s been locked out from the capital markets and unable to issue its own debt, which is in deep junk territory. As such, it depends on the central government’s national liquidity fund (FLA) for about 60% of its funding, while the central government depends on Catalonia’s tax revenues to keep meeting its financial obligations.
This mutually dependent relationship has been under heavy strain ever since 2010, when Spain’s highly politicized Supreme Court, at the urging of the People’s Party, then in opposition but now in govermnent, decided to annul many of the articles of the new Statute of Autonomy signed in 2006 between Spain’s previous Zapatero government and Catalonia’s regional government, effectively stripping the agreement of any meaning.

This post was published at Wolf Street on Sep 12, 2017.

What Fiduciary Duty? San Fran Politicians Try To Force Pension To Dump $470MM Of “Fossil Fuel” Stocks

We’ve frequently argued that public pension underfundings are perhaps the greatest threat to the long-term economic outlook of the United States, if not the globe. With aggregate underfunding levels of $5-$8 trillion, depending on what discount rate your local politicians decide to pull out of thin air, the forthcoming pension crisis will be too large for even the very generous American taxpayer to cover.
That said, and as if avoiding the next pension-induced global financial crisis weren’t hard enough, the San Francisco Board of Supervisors seems hell bent on accelerating the crisis by forcing their public pension board to completely ignore their fiduciary duty to retirees (and all taxpayers, frankly, as we’ll all be left holding the bag when these ponzi schemes implode) and immediately dump all “fossil fuel” investments irrespective of financial merit. You know, because restricting investing options is clearly in the best interest of retirees…even though we would venture to guess that most of them couldn’t care less where their money is invested as long as their benefits never get cut. Here’s more fromthe San Francisco Chronicle:

This post was published at Zero Hedge on Sep 12, 2017.

How Do You Spell ‘Relief’?

In this past weekend’s newsletter. I discussed the potential for the market to hit new highs. To wit:
‘The good news this week is that the market maintained last week’s advance despite the one-day tantrum earlier. Interestingly, since the election, the market has ratcheted higher in slightly more than 3% increments with each move higher followed by a drawn-out consolidation process that runs primarily along the 50-75 dma. The last sell-off tested, and held, the 100-dma but stayed within the confines of the consolidation process. The 2400 level on the S&P 500 remains the clear ‘warning level’ for investors currently.’
‘But this short-term bullish backdrop is offset by intermediate-term bearish underpinnings as shown by the next two charts. With an intermediate-term momentum sell-signal in place, combined with overbought conditions, continues to suggest further gains from this point will likely remain limited and more volatile to obtain. That statement DOES NOT preclude the markets reaching new highs, it just suggests that downside corrective risks outweigh the potential currently for further gains.’

This post was published at Zero Hedge on Sep 12, 2017.

The Terrible Facts about the Real Earnings of Men

The income data from the Census Bureau is here. Men, sit down.
On the surface, the data looks benign, with trends improving. And this is what you will see when you look at the media coverage of the Census Bureau’s Income and Poverty report (PDF) released today:
Median household income, adjusted for inflation (via CPI), rose 3.2% between 2015 and 2016 to $59,039, the second year in a row of annual increases. For ‘family households,’ the median income rose 2.7% to $75,062. For ‘nonfamily households,’ it rose 4.5% to $35,761. The official poverty rate (weighted average threshold for a family of four = $24,563) inched down from last year to 12.7%, about the same as in 2007, before the Financial Crisis made a mess of people’s lives. In total, 40.6 million people live in poverty by this definition. The poverty rate for families fell to 9.8%, from 10.4% a year earlier, affecting 8.1 million families. The survey is based on respondents at 98,000 addresses across the US – so a very large sample. Household income includes the amounts of money that the household received during that year from each of the following sources:

This post was published at Wolf Street on Sep 12, 2017.

Is It (Seasonally) Time To Turn To Steepeners?

All credit for the first part of today’s post goes to LongConvexity, the mysterious Ari-Gold-type hedge fund manager, who reminded me of the enormous seasonal effect in the US 5/30 year treasury yield curve spread.
For the past eight years, the US yield curve has been flattening like a banshee, with the 5/30 spread declining from 300 basis points, all the way to the current 102 bps.

This post was published at Zero Hedge on Sep 12, 2017.

Trump Suggests Eliminating the Debt Ceiling – Dollar Falls

Those who paid any attention to the financial press last week saw the following narrative; President Donald Trump betrayed Republicans by cutting a deal with Democrats Nancy Pelosi and Charles Schumer. They agreed to punt on the borrowing cap until December and spend $15 billion for hurricane relief.
Americans are supposed to conclude that Trump is flip-flopping, and that Republicans aren’t responsible. Dig just a little, and you’ll find only one of those things is true.
Trump is flip-flopping, no question about that. The president campaigned on promises to honor the borrowing limit. This tweet from 2013 is what candidate Trump had to say on the matter: ‘I cannot believe the Republicans are extending the debt ceiling – I am a Republican & I am embarrassed!’
But any implication that Republican leaders in Congress actually oppose more borrowing is patently false. Republicans in Congress overwhelmingly supported the deal. It was passed in the House with a vote of 316 to 90. The Senate voted 80 to 17.

This post was published at GoldSeek on 12 September 2017.

Irma’s Last-Minute Westward Shift May Have Saved Florida $150 Billion In Damages

As it traversed the state of Florida, Hurricane (now tropical depression) Irma left a trail of destruction not seen since Hurricane Andrew hammered the state in 1992. But despite the rising death toll, historic flooding and a ruined power grid that could take weeks to repair, meteorologists say Floridians should consider themselves fortunate.
Because it could’ve been much, much worse.

This post was published at Zero Hedge on Sep 12, 2017.


GOLD: $1328.60 DOWN $2.95
Silver: $17.83 DOWN 1 CENT(S)
Closing access prices:
Gold $1331.75
silver: $17.89
Premium of Shanghai 2nd fix/NY:$4.33
LONDON FIRST GOLD FIX: 5:30 am est $1326.25
For comex gold:
For silver:
790,000 OZ/
Total number of notices filed so far this month: 4,634 for 23,170,000 oz

This post was published at Harvey Organ Blog on September 12, 2017.

Bitcoin’s Biggest Bull Isn’t ‘Long Crypto’, He’s ‘Short Government’

Six years ago, Kyle Bass provided a crucial context for the debt-laden world of ever-increasing sovereign debt:
“Buying gold is just buying a put against the idiocy of the political cycle. It’s That Simple”
And now, as interest in Bitcoin surges, Arthur Hayes, a former CitiGroup trader who runs BitMEX – a Hong Kong-based crypto exchange – asks an interesting question – In the coming war between digital currencies, which side will your money be on?
As CoinDesk reports, Hayes thinks blockchain is lighting a fuse that will ignite open combat between “true cryptocurrencies” (like bitcoin) and a new “digital fiat” controlled by central banks.
These two parallel currency systems are the inevitable outcome of his core investing thesis:
“A digital society needs digital cash.”

This post was published at Zero Hedge on Sep 12, 2017.

My 2017 Silver Price Prediction Is Extremely Bullish Thanks to the U.S. Dollar

The silver price has been looking extremely bullish the past two weeks.
After hovering near the $17 level from Aug. 17 to Aug. 25, silver prices pushed all the way to a five-month high last week. Between Friday, Sept. 1, and Friday, Sept. 8, the metal climbed 1.7% to $18.12 – the highest settlement since April 19.
That was 6.1% above the 200-day moving average of $17.08, which has served as a sort of resistance level. By surpassing $17.08, silver looks poised to go higher.
But first, I expect we’ll see the price of silver retreat from here in the short term. A pullback following a 14.4% rally in just two months would be healthy at this juncture.
In fact, I think we have already seen a start to this move, as a possible bounce for the U. S. dollar may be in the cards. The U. S. Dollar Index (DXY) – which tracks the dollar against other currencies like the yen and the euro – is already up from 91.35 to 92.07 today (Tuesday, Sept. 12).

This post was published at Wall Street Examiner on September 12, 2017.

SocGen: “Now Entering Dangerous Volatility Regimes”

With the VIX back to a 10-handle and eagerly eyeing single-digits once again, commentary on market complacency and the low VIX, which was blissfully gone for the past month when the VIX surged valiantly if briefly only to be smacked right back down, has returned. In a note from SocGen’s Praveen Singh, the French bank analyst boldly goes where so many prognosticators have gone before, and looking at the evolving cross-asset volatility trends, warns that the market is “now entering dangerous volatility regimes.”
Hardly stating the unknown, Singh writes that “expected volatility has been falling consistently. Over the last year, expected volatility has been falling on a consistent basis. When we look at equity and government bonds, the current level of volatility is well below long-term average volatility. Falling volatility normally means stable environment for risk assets.”
So time for some (familiar) numbers: the current low level of volatility happens less than 2% of the time for equities. In the following chart, SocGen plots the distribution of equity volatility based on data since 1994. The bank’s analysis suggests that average equity volatility has been above the current level 98% of the time. This means that volatility is more likely to go up than fall further from current levels… at least in theory, of course. In practice, what it means these days is that some central banks unload a few thousand VIX contracts to prevent any vol spike at just the right time.

This post was published at Zero Hedge on Sep 12, 2017.

Cruz Blames Staff For Liking Porn

Well, that’s awkward.
Senator Ted Cruz (R-Texas) was trending on Twitter this morning after his official Senate account “liked” a pornographic video…

As The Hill reported, the tweet was from the account @SexuallPosts and includes a clip from a pornographic video. The like remained for nearly an hour before being undone by Cruz’s team around 1:20 a.m, according to The Verge.
Some claimed Cruz was hacked. But as The Hill reports, Cruz is blaming a “staffing issue” saying it was a mistake rather than a malicious hack.
“There are a number of people on the team that have access to the account and it appears that someone inadvertently hit the like button,” Cruz said.

This post was published at Zero Hedge on Sep 12, 2017.

Details Of Steve Bannon’s “Closed To The Press” China Speech Leak

Earlier this morning former White House Strategist Steve Bannon spoke at the CLSA investor forum in Hong Kong. While the event was originally intended to be open to the press via a live stream, CLSA officials later closed the interview to outsiders…presumably Bannon’s flare doesn’t quite fit with China’s desire to control media narratives. That said, luckily one local NEAsia correspondent, Wei Du, was kind enough to live tweet portions of Bannon’s speech for our reading pleasure.
Ironically, what was billed to be an “anti-China” speech turned out to be anything but that with Bannon repeatedly praising U. S.-China relations and saying “there isn’t a world leader he (Trump) respects more than the President of China.” Bannon went on to say that Trump will visit China in November and that the downside of an “economic war” with China is so huge that it has to be worked out.

This post was published at Zero Hedge on Sep 12, 2017.

Richard Sylla: Human Civilization at Momentous Turning Point With Record Debt Levels and Ultra-Low Interest Rates

Total US debt has now exceeded $20 trillion for the first time ever. Meanwhile, interest rates (i.e. the cost of debt) in the US and around the globe reached the lowest levels in recorded history.
Financial Sense recently spoke with Richard Sylla, professor emeritus of economics at New York University and the co-author of A History of Interest Rates, about the unique times we are living in and why, historically speaking, we may be looking at a momentous turning point in human civilization.
History of Interest Rates
‘As long as you have some commerce…people are going to demand credit,’ Sylla said.
Silver and gold have always been prized, but coin-based currency didn’t come in until the fifth or sixth century. This ushered in a new era, Sylla noted.
This was one of the most impactful economic innovations in history, basically beginning in Asia Minor or what is today Turkey.
This state of affairs changed over the years, but we basically had a monetary system based on precious metals until the classical gold standard in the late 19th and early 20th centuries, Sylla noted.

This post was published at FinancialSense on 09/12/2017.