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October 6, 2018 | Silver & Gold Closed Below Their 50-Day Moving Averages Again

"Ed wrote the daily precious metal commentary for Casey Research starting in 2008. His stand-alone column became their most highly-rated blog [either free or paid] almost from the outset—and remained that way until he started his own subscription-based website in June of 2015."
06 October 2018 — Saturday


The gold price chopped sideways to down a bit in Far East and very early London trading — and the low tick, such as it was, came a few minutes after the London open.  From the point, it began to head unsteadily higher, but obviously ran into ‘something’ at, or shortly after, the morning gold fix in London.  It chopped very unsteadily higher from there until the afternoon gold fix — and then was sold a bit lower until noon in New York.  It traded sideways from there until shortly before 3 p.m. in the thinly-traded after-hours market — and it popped a few dollars into the close from there.


The low and high ticks certainly aren’t worth looking up.


Gold was closed in New York on Friday afternoon at $1,202.70 spot, up $3.00 from Thursday — and about a dollar below its 50-day moving average.  It did trade above it for a while on Friday, but was hauled down below it once the afternoon gold fix was put to bed.  Net HFT gold volume was 241,500 contracts — and there was a bit under 14,500 contracts worth of roll-over/switch volume on top of that.



The price activity in silver was very similar…including the times of the low and high price ticks, so I shan’t spend any more time on it.


The low and high ticks in this precious metal were reported by the CME Group as $14.54 and $14.75 in the December contract.


Silver finished the Friday session in New York at $14.63 spot, up 6 cents on the day.  Like gold, it too traded above its 50-day moving average yesterday for a while, but was carefully hauled down and closed below it by a nickel.  Net HFT silver volume was 56,300 contracts — and there was 5,840 contracts worth of roll-over/switch volume in this precious metal.



Platinum traded mostly higher by a few dollars in Far East trading on their Friday, but once Zurich opened, it was sold down to its low tick of the day about two hours later.  Its subsequent rally got capped and driven lower starting a minute or so after 8 a.m. in New York.  Its low tick was set at noon EDT on the button — and it ticked higher into the COMEX close by a few dollars.  It didn’t do much of anything after that.  Platinum was closed at $821 spot, down a dollar on the day.  It would have obviously closed materially higher, if allowed.



Palladium followed a very similar price path as platinum, except when its rally began around 11 a.m. [CEST] Central European Summer Time in Zurich, it really began to sail…but ran into obvious ‘resistance’ at the afternoon gold fix in London.  It’s $1,075 up/down high price spike was set shortly after the COMEX close — and it traded sideways from there, before getting sold sharply lower around 1 p.m. EDT.  It edged quietly higher in after-hours trading — and finished the Friday session at $1,069 spot, up 17 bucks on the day.  Once wonders how many hundreds of dollars higher its price would be if it wasn’t being constantly held back by the bullion banks.



The dollar index closed very late on Thursday afternoon in New York at 95.76 — and began to creep quietly higher shortly after trading began at 6:00 p.m. EDT a few minutes later on Wednesday evening.  Then, starting a minute or so before 2 p.m. CST in Far East trading, the index began to jump around a bit.  It rallied briefly on the job numbers at 8:30 a.m. in New York, but then plunged to its 95.52 low tick of the day, where it certainly appeared that the usual ‘gentle hands’ were laying in wait.  It didn’t do much from there until the noon gold fix in London…10:00 a.m. EDT…and it chopped quietly higher until minutes before noon in New York.  From that juncture, it chopped unevenly lower until trading ended.  The dollar index finished the Friday session at 95.60…down another 16 basis points.


There was almost no sign of these dollar index machinations at 8:30 a.m. showing up in any of the precious metals, as gold, silver and platinum were in full lock-down mode by that time.



And here’s the 6-month U.S. dollar index chart — and the delta between its close — and the close on the intraday chart above, was 29 basis points yesterday.



The gold stocks rallied unsteadily to their respective high ticks of the day — and that event occurred shortly after 10 a.m. in New York trading.  They sold off from there — and back into the red by a bit, by minutes after the 11 a.m. EDT London close — and didn’t do much after that.  The HUI finished lower by 0.54 percent.



The trading pattern in the silver equities was very similar, except their highs came just a few minutes after the 9:30 a.m. open of the equity markets in New York on Friday morning.  The rest is the same.  Nick Lairds’ Intraday Silver Sentiment/Silver 7 Index closed down 0.50 percent.  Click to enlarge if necessary.



And here’s the 1-year Silver Sentiment/Silver 7 Index chart.  Click to enlarge as well.



Here are the usual charts from Nick that show what’s been happening for the week, month-to-date — and year-to-date.  The first one shows the changes in gold, silver, platinum and palladium for the past trading week, in both percent and dollar and cents terms, as of their Friday closes in New York – along with the changes in the HUI and the Silver 7 Index.


Here’s the weekly chart — and it was a bit of an up week for the gold stocks — and the silver equities finished basically unchanged.  They more or less reflected the performance of their respective underlying precious metals.  Click to enlarge.



For obvious reasons, the month-to-date chart is identical to the weekly chart, so I won’t bother posting it.


The year-to-date chart continues to be a sea of red but, once again I will point out that the silver equities continue to outperform their golden brethren over the longer term so far this year — and not by inconsequential amounts, either.  This certainly shows that silver — and its associated equities, are going to vastly outperform their golden cousins when the next big rally is allowed to get underway.  That certainly didn’t apply to this past week’s price action, but the chart below shows the overall ratio much better.  Click to enlarge.



Nothing much should be read into the above charts.  As I’ve pointed out too many times already this past week, the precious metals…along with their respective equities, are marking time — and in ‘care and maintenance’ mode.  We could blast higher at any time, but it won’t occur until JPMorgan decides, or is requested to step aside.  Could we go lower from here?  Sure, but it won’t change the fact one iota that the set-up in the COMEX futures market in both silver and gold is still very much in wildly bullish territory.



The CME Daily Delivery Report showed that, for the second day in a row, zero gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  This lack of delivery two days in a row is without precedent as far as I know.  The link to yesterday’s Issuers and Stoppers Report is here.


The CME Preliminary Report for the Friday trading session showed that gold open interest in October declined by 15 contracts, leaving, 2,148 still open.  Thursday’s Daily Delivery Report showed that zero gold contract were actually posted for delivery on Monday, so that means that 15 more gold contracts vanished from the October delivery month.  Silver o.i. in October remained unchanged at 4 contracts — and no silver contracts were posted for delivery on Monday…so the numbers match.


Ted may or may not have something to say about this in his weekly commentary later today.



There was a withdrawal from GLD on Friday, as an authorized participant took out 47,312 troy ounces of gold.  There were no reported changes in SLV.


There was a tiny sales report from the U.S. Mint yesterday.  They sold 1,500 troy ounces of gold eagles — and that was it.


For the week of October — and month-to-date, the mint has sold 6,000 troy ounces of gold eagles — 1,500 one-ounce 24K gold buffaloes — and 670,000 silver eagles.


There was certainly some activity in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.  The only ‘in’ activity was 96.10 troy ounces…one good delivery bar…that was received at Delaware — and that bar came from Brink’s, Inc.  The ‘out’ activity was the talk of the town as JPMorgan shipped out 160,750.000 troy ounces/5,000 kilobars [U.K./U.S. kilobar weight] for parts unknown.  JPMorgan also transferred 37,808.400 troy ounces/1,176 kilobars [U.K./U.S. kilobar weight] out of the Registered category — and back into Eligible.  That’s a lot of kilobars — and I would suspect that those 5,000 are China bound.  The link to all this is here.
And as eye-opening as it was in gold, it was even more incredible incredible in silver.  There was 2,398,073 troy ounces received — and another 1,378,533 troy ounces shipped out.  In the ‘in’ category, there was 1,106,758 troy ounces dropped off at Brink’s, Inc…753,872 troy ounces at Canada’s Scotiabank — and the remaining 537,443 troy ounces found a home over at JPMorgan.  The ‘out’ category included four depositories on total.  The two biggest were the 685,079 troy ounces pulled out of CNT — and the 537,443 troy ounces taken out of Scotiabank.  There was a paper transfer of 237,862 troy ounces from the Registered category — and back into Eligible over at JPMorgan.  The link to all this — and a little more, is here.


Because of the ‘Golden Week’ in Hong Kong, there was very little activity at the COMEX-approved gold kilobar depositories on their Thursday.  Nothing was received — and only 270 were shipped out.  That activity was at Brink’s, Inc. of course — and I won’t bother linking that amount.



Gold 20-stater of Eucratides 1 [reigned c. 171-145 B.C], the largest known gold coin from antiquity. The coin weighs 169.2 grams, and has a diameter of 58 millimeters. It was originally found in Bukhara, Uzbekistan, and later acquired by Napoleon III. Eucratides had a vast and prestigious coinage, suggesting a rule of considerable importance. It’s currently housed a the Cabinet des Médailles in Paris.  Click to enlarge, as it’s a very impressive coin.



The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, October 2 were pretty much as expect in silver, but a positive surprise in gold for the second week in a row.


In silver, the Commercial traders increased their short position by 6,398 contracts, or 32.0 million troy ounces of paper silver.


They arrived at that number by increasing their long position by 695 contracts, but they also added 7,093 short contracts — and it’s the difference between those two numbers that represents their change for the reporting week.


The position changes of the Big 4 and Big ‘5 through 8’ traders are still immaterial because of the contamination of that data by the large number of Managed Money traders that now inhabit this group.


Under the hood in the Disaggregated COT Report, it was all Managed Money traders, plus a bit more, as they reduced their long position by 1,998 contacts — and they also reduced their short position by 8,611 contracts as well.  It’s the difference between those two numbers…6,613 contracts…that represents their change for the reporting week.


The difference between that number — and the change in the Commercial net short position…6,613 minus 6,398 equals only 215 contracts.  As always, it was the traders in the other two categories that made up that tiny difference.  But each group went about it slightly differently…the ‘Other Reportables’ decreased their net long position — and the ‘Nonreportable’/small traders decreased their net short position.  Here’s the snip from the Disaggregated COT Report, so you can see these changes for yourself.  Click to enlarge.



We’re back to a Commercial net short position in silver once again after this week’s COT Report, but only by the tiniest amount…1,012 contracts…or 5.1 million troy ounces of paper silver which, compared to what we’ve been living with over the last fifteen years or so, is a big fat nothing.  Using the numbers in the Producer/Merchant category in the Disaggregated COT Report, plus the data in the yesterday’s Bank Participation Report, Ted calculates JPMorgan’s short position at somewhere between zero and 2,000 contracts.  For the last few weeks they’ve been net long silver in the COMEX futures market — and now they may be net short by a bit.  But this falls into the ”nothingburger” category  as well.


Here’s the 3-year COT Report chart — and this week’s minor deterioration should be noted.  Click to enlarge.



As Ted pointed out on the phone yesterday, silver had about a 90 cent price move between its low and high ticks  during the reporting week…blowing above its 50-day moving average briefly in the process.  At silver’s low price tick, it was all Managed Money traders going short — and Commercial traders of all types going long as much as possible — and at the top…above its 50-day moving…it was all Managed money short covering and most likely Ted’s raptors [the small Commercial traders other than the Big 8] selling their newly minted long positions for big profits.  So some deterioration in the Commercial net short position in silver should come as no surprise.


In gold, it was another positive surprise, as the commercial traders increased their long position by 1,795 contracts, or 179,500 troy ounces of paper silver.  Not much, to be sure…but certainly better than the alternative.


They arrived at this number by adding 1,467 long contracts, plus the reduced their short position by 328 contracts — and it’s the sum of those two numbers that represents their change for the reporting week.


Like in silver, the position changes of the Big 4 and Big ‘5 through 8’ traders are still immaterial because of the contamination of that data by the large number of Managed Money traders that now inhabit this group.


Under the hood in the Disaggregated COT Report, it was a real dog’s breakfast — and a rather surprising one.  The Managed Money traders weren’t involved at all, as they decreased their short position by 1,916 contracts, plus they added 2,158 long contracts, for a total weekly change of net long 4,074 contracts.  It was the traders in the other two categories that made up the difference, but mostly the ‘Other Reportables’, as they increased their net short position by 8,248 contracts — and the ‘Nonreportable’/small trader category, like the Managed Money traders, increased their net long position during the reporting week by 2,379 contracts.


Doing the math in the Disaggregated Report…8,248 minus 2,379 minus 4,074 equals 1,795 contracts…the change in the commercial net short position for the reporting week.  Here’s the snip from the Disaggregated Report that shows these changes.  Click to enlarge.



The commercial net long position in gold is now up to 8,875 contracts, or 887,500 troy ounces of paper gold.  Ted says that it’s a new record high commercial net long position in this precious metal.


Here’s the 3-year COT chart for gold — and the tiny change for the reporting week just past, should be noted. But, like for silver, it’s pretty much an immaterial change.  Click to enlarge.



As Ted pointed out — and correctly so, the price rally in gold during the reporting week was not anywhere near the size of the one in silver, so the changes in COMEX positioning were not as extreme — and most of the changes were “under the hood” in the Disaggregated COT Report — and didn’t involve the commercial traders at all.


Like for silver, the set-up for an explosive price move to the upside in gold is still very much in a “locked and loaded” state.  And if you note on the 6-month gold chart in The Wrap section, JPMorgan has been very carefully closing gold below its 50-day moving average, even though it may trade a few dollars above it intraday.  And almost the same can be said of silver.


Except for copper, where the Managed Money traders added to their short position by about 1,500 contracts, they were [for the most part] going long and covering short position in both platinum and palladium during the reporting week.



Here’s Nick Laird’s “Days to Cover” chart updated with yesterday’s COT data for positions held at the close of COMEX trading on Tuesday.  It shows the days of world production that it would take to cover the short positions of the Big 4 – and Big ‘5 through 8’ traders in each physically traded commodity on the COMEXClick to enlarge.



But, like the COT Report itself, the chart above is basically irrelevant at this point, as well — and for the same reason.  Except for Scotiabank — and maybe one or two U.S. banks…not including JPMorgan…the positions of the Big 4 and Big 8 traders are mostly made up of the brain-dead/moving average-following Managed Money traders now.


For the current reporting week, the Big 4 traders are short 99 days of world silver production-and the ‘5 through 8’ large traders are short an additional 66 days of world silver production-for a total of 165 days, which is five and a half months of world silver production, or about 385.1 million troy ounces of paper silver held short by the Big 8.  [In the COT Report last week, the Big 8 were short 170 days of world silver production.]


The Big 8 commercial traders are short 38.5 percent of the entire open interest in silver in the COMEX futures market, which is down a hair from the 38.9 percent that they were short in last week’s COT Report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be something over 40 percent.  In gold, it’s 33.0 percent of the total COMEX open interest that the Big 8 are short, up a bit from the 32.2 percent they were short in last week’s report — and just under 40 percent once the market-neutral spread trades are subtracted out.


In gold, the Big 4 are short 36 days of world gold production, which is up 1 day from what they were short last week — and the ‘5 through 8’ are short another 17 days of world production, which is down 1 day from what they were short the prior week, for a total of 53 days of world gold production held short by the Big 8 — which is unchanged from what they were short in last week’s report.  Based on these numbers, the Big 4 in gold hold about 68 percent of the total short position held by the Big 8…which is up 2 percentage point from last week’s COT Report.
And, once again, don’t forget that a lot of the traders in the Big 4 and Big 8 categories in both gold and silver are Managed Money traders now — and not commercial traders.


The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 60, 64 and 73 percent respectively of the short positions held by the Big 8.  Silver is down two percentage points from the previous week’s COT Report, platinum is up three percentage points from a week ago.  Palladium is unchanged from last week’s COT Report.



The October Bank Participation Report [BPR] data is extracted directly from the above Commitment of Traders Report.  It shows the COMEX futures contracts, both long and short, that are held by all the U.S. and non-U.S. banks as of Tuesday’s cut-off.  For this one day a month we get to see what the world’s banks are up to in the COMEX futures market, especially in the precious metals-and they’re usually up to quite a bit.


In gold, 5 U.S. banks were net short 22,119 COMEX contracts in the October BPR…none of which belongs to JPMorgan.  In September’s Bank Participation Report [BPR], these same 5 U.S. banks were net short 16,384 contracts, so there was a bit of an increase…5,735 contracts…during this reporting period.  That change is certainly not material in the grand scheme of things.


Also in gold, 28 non-U.S. banks are net short a piddling 1,960 COMEX gold contracts, which isn’t even a rounding error per bank…70 contracts each.  In the September BPR, these same 28 non-U.S. banks were net short 7,310 COMEX contracts, so the month-over-month decline is 5,420 contracts.  I suspect that there’s at least one large non-U.S. bank in this group [probably Scotiabank] that holds all of that amount, plus much more, all by itself…as the 1,960 contracts is a net number.  What that means is that a goodly number of these foreign banks are now net long the COMEX futures market in gold.


The world’s banks…with the exception of the remaining four U.S. banks, plus most likely Scotiabank…are basically gone out of the gold market.  They, along with the Managed Money traders, have been left holding the bulk of the remaining short positions in gold…courtesy of JPMorgan.


As of this Bank Participation Report, 33 banks [both U.S. and foreign] are now net short only 5.2 percent of the entire open interest in gold in the COMEX futures market, which is virtually unchanged from the 5.0 percent they were short in the September BPR.


Here’s Nick’s chart of the Bank Participation Report for gold going back to 2000.  Charts #4 and #5 are the key ones here.  Note the blow-out in the short positions of the non-U.S. banks [the blue bars in chart #4] when Scotiabank’s COMEX short position was outed by the CFTC in October of 2012.  Click to enlarge.



In silver, 5 U.S. banks are net short 16,529 COMEX silver contracts in October’s BPR.  Of that amount, JPMorgan holds about 2,000 contracts maximum, according to Ted.  In September’s BPR, the net short position of these U.S. banks was 14,527 contracts, so the short position of the U.S. banks is up 2,002 contracts from a month ago.  All of that increase might be attributed to JPMorgan, as per Ted.


Also in silver, 21 non-U.S. banks are net short 20,167 COMEX contracts…which is up a decent amount from the 14,073 contracts that these same non-U.S. banks were short in the September BPR.  I would suspect that Canada’s Scotiabank still holds a goodly chunk of the short position of the non-U.S. banks.  And since that’s probably the case, it certainly means that a number of the remaining 20 non-U.S. banks might actually be net long the COMEX futures market in silver.  But even if they aren’t, the remaining short positions divided up between these other 20 non-U.S. banks are immaterial – and have always been so.


As of October’s Bank Participation Report, 26 banks [both U.S. and foreign] are net short 24.4 percent of the entire open interest in the COMEX futures market in silver-which is up a decent amount from the 13.4 percent that they were net short in the September BPR – with much, much, much more than the lion’s share of that now held by four U.S. banks, other than JPMorgan…plus Scotiabank.


Here’s the BPR chart for silver.  Note in Chart #4 the blow-out in the non-U.S. bank short position [blue bars] in October of 2012 when Scotiabank was brought in from the cold.  Also note August 2008 when JPMorgan took over the silver short position of Bear Stearns-the red bars.  It’s very noticeable in Chart #4-and really stands out like the proverbial sore thumb it is in chart #5.  Click to enlarge.



In platinum, 5 U.S. banks are net short 4,770 COMEX contracts in the October Bank Participation Report.  In the September BPR, 4 U.S. banks were net long 2,573 COMEX platinum contracts, so there’s been a massive deterioration…7,343 contracts…since the last BPR.


How much of that deterioration can be chocked up to JPMorgan during the last month is unknown, as is the short position of the one new U.S. bank that showed up during the reporting month as well.


Also in platinum, 16 non-U.S. banks are net short 3,604 COMEX contracts, which is up from the 1,192 contracts they were net short in the September BPR.


And as of October’s Bank Participation Report, 21 banks [both U.S. and foreign] are now net net short 11.5 percent of platinum’s open interest in the COMEX futures market, which is a dramatic increase from the 1.5 percent they were net long in the September BPR.


Here’s the Bank Participation Report chart for platinum — and even though there was a sharp deterioration month-over-month, they’re aren’t much of a factor, except for the fact that they trade, as Ted Butler says….”all for one, and one for all“…so they’re obviously still a force to be reckoned with.  Click to enlarge.



In palladium, 4 U.S. banks were net short 6,018 COMEX contracts in the October BPR, which is up from the 3,429 contracts they held net short in the September BPR.


Also in palladium, 14 non-U.S. banks are net short 2,192 COMEX contracts-which is up a bit from the 1,847 COMEX contracts that 12 non-U.S. banks were short in the September BPR.  When you divide up the short positions of these non-U.S. banks more or less equally, they’re immaterial…especially when you compare them to the positions held by the 4 U.S. banks.


However, it’s obvious from the increases, that the banks have been adding to their short positions during this continuing rally in palladium, most likely to prevent it from running away to the upside, which is precisely what it would do if they weren’t there to hold the price back.


As of this Bank Participation Report, 18 banks [U.S. and foreign] are net short 34.8 percent of the entire COMEX open interest in palladium.  In September’s BPR, the world’s banks were net short 29.3 percent of total open interest, so there’s been a noticeable increase in the concentrated short position of the banks in this precious metal.


It’s apparent that the banks can move palladium prices around even with small amounts of trading, as they are a large part of total open interest in a very tiny and illiquid market at the best of times — and also trade “all for one, and one for all“.  For that reason alone, they’re still the dominant factor in the price of palladium.


Here’s the palladium BPR chart.  You should note that the U.S. banks were almost nowhere to be seen in the COMEX futures market in this metal until the middle of 2007-and they became the predominant and controlling factor by the end of Q1 of 2013. That has changed completely over the last six months.  Click to enlarge.



Despite the deterioration in all four precious metals in the Bank Participation Report — and in the COT Report, the set-up still remains wildly bullish in the extreme in both gold and silver.  We’re still basically in ‘care and maintenance’ mode as far as I can tell, especially when one considers how carefully that silver and gold prices are being managed vis-à-vis their respective 50-day moving averages.


All we’re [still] waiting for is CME CEO Terry Duffy’s “event” that will set it off because, as I’ve said before, a huge rally in the precious metals will NOT happen in a news vacuum.  I’ll have more on this in The Wrap.


I only have a tiny handful of stories for you again today, including a couple of repeats from my Friday column that you may have not had the time for yesterday, but do over the weekend.


Doug Noland: Contemporary Finance’s Defect

As much as currencies and stocks were under pressure, the more ominous EM moves were in bond markets. Ten-year (local) sovereign yields surged 33 bps in Indonesia, 26 bps in Russia, 21 bps in South Africa, and 14 bps in Hungary. And dollar-denominated EM debt provided no safe haven. Venezuela’s 10-year dollar yields surged 70 bps to 38.55%; Argentina’s 64 bps to 9.90%; and Turkey’s 52 bps to 7.86%. Ten-year dollar yields jumped 19 bps in Indonesia, 19 bps in Chile, 18 bps in Russia, 17 bps in Mexico and 14 bps in Colombia.


How were markets faring at the “Periphery of the Core”? Italian 10-year yields surged another 28 bps to 3.42%, the high going back to March 2014. Italian bank stocks were hit another 4.7%, bringing 2018 losses to 19.2%. Contagion saw Greek yields jump 33 bps to 4.45%, with Greece’s major equities indices down 5.0%. European bank stocks fell another 1.9% this week. Equities indices were down 2.4% in France and 2.6% in the UK. UK yields jumped 15 bps to the high since January 2016.


It was as if the dam finally broke. Ten-year Treasury yields jumped 17 bps this week to 3.23% (high since May 2011). Interestingly, long-bond yields were under even more pressure, as yields rose 20 bps to 3.41% (high since July ’14). Mortgage securities fell under intense pressure, with benchmark MBS yields jumping 20 bps – surpassing 4.00% for the first time since July 2011. The old mortgage duration problem: When rates jump, borrowers are less likely to refinance their mortgages or upgrade to new homes. Investment-grade corporate debt was under pressure as well, with the LQD ETF declining 1.7% to a multi-year low.


The DJIA traded to a record high Wednesday before reality began to set in. The S&P500 also reached all-time highs in Wednesday trading before selling took over. The broader market was under heavy selling pressure.


It certainly had the appearance of incipient fear of tightening financial conditions – contagion having made important headway from the “Periphery” to the “Core.” If, as it appears, global “Risk Off” is attaining some momentum, my thoughts return to Contemporary Finance’s Defect: it doesn’t function in reverse.


This longish, but very worthwhile commentary by Doug Noland appeared on his Internet site shortly after 2 a.m. EDT this morning — and another link to it is here.

U.S. exits international treaties after International Court of Justice ruling

The Trump administration has announced it will exit a 1955 Treaty of Amity with Iran after the International Court of Justice (ICJ) ruled Wednesday that the U.S. must abide by parts of the treaty.
The unanimous ruling ordered the United States to remove “any impediments” to the export of humanitarian goods to Iran, as well as on goods related to the safety of civil aviation. It further stated that the U.S. could not limit financial transactions related to those goods.


The hawkish national security advisor announced that President Trump had decided to not only withdraw his country from the 1955 amity treaty, but also to exit an optional protocol and dispute resolution linked to the Vienna Convention, which governs international diplomatic relations.
This is in connection to a case brought by the so-called state of Palestine, naming the U.S. as a defendant, challenging our move of our embassy from Tel Aviv to Jerusalem,” Bolton said.
These withdrawals, Bolton explained, were about more than the individual cases but about rejecting binding rulings against the United States.


This really has less to do with Iran and the Palestinians than the continued consistent policy of the United States to reject the jurisdiction of the International Court of Justice.”


It relates obviously in part to our views on the International Criminal Court (ICC) and to the nature of so-called purported international courts to be able to bind the United States,” he said.
Bolton warned that the administration would henceforth “commence a review of all international agreements that may still expose the United States to purported binding jurisdiction dispute resolution in the International Court of Justice.”


The U.S is about to put itself above its own laws…plus international law, as well.  You should be very afraid, dear reader. I posted a story similar to this in my Friday missive, but this one goes into far more detail.  This worthwhile news item showed up on the Asia Times Internet site at 11:57 a.m. Hong Kong Time on their Friday morning, which was 11:57 p.m. EDT on Thursday night.  I thank Tolling Jennings for sending this along — and another link to it is here.


Pentagon pushed to explain broad powers to protect allies overseas

A Democratic senator is pressing the Pentagon to explain a policy that allows the military to launch attacks to protect an array of foreign forces, a practice that critics contend adds to already inflated powers to conduct counterterrorism missions overseas.


Sen. Tim Kaine (D-Va.), in a letter to Defense Secretary Jim Mattis, asked the Pentagon to explain what he described as a “broad and troubling” interpretation of presidential authority under a military doctrine known as “collective self-defense.”


Under that principle, the military can conduct strikes to defend foreign troops it identifies as partner forces, even when U.S. personnel are not at risk and when no engagement has been authorized by Congress. Because U.S. troops might not be involved or even present when the strikes occur, it goes beyond the right of self-defense that U.S. troops have at all times.


In his Oct. 2 letter, Kaine said that the “unintended consequences of this policy could be grave, and it raises the possibility of inadvertently becoming entangled in other countries’ conflicts, especially as U.S. forces are deployed to over 170 countries around the world.”


I view the use of collective self-defense as yet another unilateral expansion of the President’s Article II authority in a now 17-year counterterrorism campaign that seemingly knows no limits or end,” he said. Article II of the Constitution, among other things, lays out the president’s role as commander in chief of the military.


Very scary stuff, dear reader!  This must read story was posted on The Washington’s Post’s website on Wednesday — and I thank Larry Galearis for pointing it out.  Another link to it is here.


Cold War 2.0: The Russian Peace “Threat” and America’s Addiction to War [Repost]

Global Research: We’re joined by Dmitry Orlov. He is a Russian-American writer, blogger, and geopolitical analyst. His work has centered around the political, economic, and ecological and political decline and collapse in the United States, and he’s also the author of numerous articles. His books include Reinventing Collapse: The Soviet Experience and American Prospects and Shrinking the Technosphere: Getting a Grip On the Technologies That Limit Our Autonomy Self-Sufficiency, and Freedom. He joins us here from Moscow. Thanks so much for coming back to the show Dmitry.


GR: Now I think the first thing I wanted to bring up is some of the recent news. There was the… Recently the shooting down of a Russian Il-20 reconnaissance plane by Syrian forces, but it was, the Russian military has argued that this is actually a result of Israeli actions, just, sort of, I guess you say shadowing that plane, and it was in response to that incident that a number of S-300 missile systems were moved into Syria.


I know that there’s been commentary by…The Saker, for one, said that this is a de facto no-fly zone over Syria. Now we know that things have not been going so well up to now for US imperial aims in the country. I’m wondering what, how significant this latest event is in the overall context of what we’ve been seeing?


DO: Well it’s a bit of a wake-up call for the Israelis because Russia has been extremely accommodating when it comes to Israel’s security concerns. There is the realization that the rhetoric coming from Tehran has been quite virulent. Iran is still telling itself that it has the goal of destroying Israel. There’s no way that Israel can avoid responding to such a provocation, and the fact that there are now Iranian troops close to the Israeli border, and that there is weapons manufacturing going on on Syrian territory is something that is a concern to them that the Russians have to allow Israel to take care of its own security concerns.


But the Israelis have acted most irresponsibly because they gave less than a minute warning that this attack was coming. They misnamed the targets, and they misbehaved in the airspace in the sense that they couldn’t have not seen this big lumbering propeller plane that was absolutely no threat to anyone, and they knew that there would be some anti-aircraft fire and drew it not on themselves but on this plane. There are some other unfortunate mishaps that occurred, which are all coming out as a result of the investigation, so it’s still early to say.


[I posted this interview in Friday’s column, but for length reasons, I thought I’d stick it in today’s column as well, in case you didn’t have time for it yesterday – Ed]  This 59:01 minute video interview, complete with a full transcript, appeared on the Internet site on Monday — and it’s definitely worth your time if you have the interest.  Another link to it is here — and I thank Larry Galearis for pointing it out.


Tales of the New Cold War: Escalations in Europe, Syria, U.K., Ukraine and the USA — John Batchelor Interviews Stephen F. Cohen  [Repost]

Part 1: After ten days of leave, John Batchelor has a long list of serious news events to discuss with Stephen F. Cohen about the New Cold War. These include alarming statements by Kay Bailey Hutchison, U.S. Representative to NATO, about “taking out” Russia’s 9M729 cruise missile (which is still under development) as this missile breaks the 1987 Intermediate-Range Nuclear Forces Treaty; another U.S. bureaucrat, Sec. Interior, Ryan Zinke, suggested the U.S. navy could blockade Russia to stop LNG sales to other nations; the U.S. also gave Ukraine two U.S. coastguard patrol craft to police the Sea of Azov; Sergei Skripal of recent poisoning fame made a statement that he thinks Russia did not try to poison him and his daughter, and finally the very serious shoot down incident with the IL Russian plane near Syria. And now the S-300 anti-air system is in Syria.


Cohen succinctly debunks (again) and dismisses the Skripal poisoning event, but is alarmed at “the extremism” shown by the Hutchison and Zinke statements, and also mentions further distress with the irresponsible statements by U.S. senators threatening “crippling economic sanctions against Russia“. These are war threats! He again mentions Professor McFaul, former ambassador to Russia and leading Russia expert, supporting this policy by promoting the idea of “permanent escalating sanctions against Russia for anything the U.S. does not like” -which is also extremism and reflects that kind of escalation as a new norm. This situation also encompasses Russiagate as well – and the accusations are now treated as reality by (perhaps) fifty percent of the people (and virtually all of government).


Part 2: The second segment opens with the discussion of the IL plane shoot down involving Israel and Syria. Putin was initially conciliatory towards Israel, but his own military openly stated that Israel was responsible for the tragedy (this was a pilot initiated tactical ploy using the Russian plane as cover against the S-200 missile attack), but a stronger response was required. Cohen goes on to explain that both Iran and Syrian governments had pushed for the S-300 to be deployed in Syria and now this incident was to be the means. The presence of these units would mean that Putin could declare a no fly zone – and Cohen states that this changes everything for both the U.S. presence in Syria and Israeli ability to attack.  Batchelor points out that this change makes Syria a Russian protectorate. Politically this is huge, Cohen continues, as Russia now declares itself to be a very big player in geopolitics, and he also sees the Russian/Israeli relationship drawing closer with Russia’s increasing military and diplomatic stature in the M.E. Also Russia and Israel have common family connections historically. Many Israelis also speak Russian.


The final quarter segment brings us to Ukraine and the Sea of Azov – where Kiev’s navy calls home base. It is also Russian waters and Russian navy patrol crafts have been increasingly stopping and checking shipping moving in and out of this part of the Black Sea. The area is gaining importance as a potential flash point in the civil war, and will probably involve Russia directly. The interesting question remains for Cohen: Who is in charge in Washington of the events unfolding around Russia?




Cohen states that he sees Israel and Russia drawing closer together in the years ahead given Russia’s growing stature as a world power. This infers that the U.S. will continue to decline – as it is indeed doing. In the end Israel will likely end its Zionist policies as incompatible with declining support from the U.S. and the rise of Russian influence in the M.E. That is my prediction too. But again I find myself in disagreement with the professor’s present “soft” view on the machinations of Israel against Syria. He mentions that Obama sent then Sec. State, Kerry to negotiate a deal that the U.S. would essentially not attack Syria. That failed with an attack by U.S. forces against the SAA, and the deal was nullified. And yet in just over a year Israel has attacked Syria over 200 times with no reaction from Putin. This confirms a double standard was present, but politics and forced Putin to this complete reversal of relationship with Israel with the loss of fifteen Russians in the IL shoot down event. There have been other signs. For example, Cohen maintains that Putin responds to pressure from his Israeli lobby, but Cohen does not mention that the Jewish lobby is a factor in Washington’s foreign policy in Syria. Nevertheless, the S-300 is present in Syria now. But it remains to be seen if they will be used against Israel, as we are not informed about the rules of engagement for using them. Israel will surely test Putin on this and probably soon.


This 2-part audio interview, with each segment being about 20-minute long, was posted on the Internet site on Tuesday and, as always, I thank Larry Galearis for his excellent executive summary, plus his own personal comments. [This was in Friday’s column as well — and as promised, here it is in my Saturday column. – Ed]  The link to Part 1 is in the headline — and here.  The link to Part 2 is here.


S-300s and other military hardware for Syria — The Saker

This week Russian officials declared that the delivery of S-300s for Syria was completed and that this first batch included 49 pieces of “military equipment“, including radars, control vehicles and four launchers. Russian officials added that, if needed, this figure could be increased to 8-12 launchers. Defense Minister Shoigu added that “the measures we will take will be devoted to ensure 100 percent safety and security of our men in Syria, and we will do this“. This leaves a lot of unanswered questions.


First, it is still unclear which version of the S-300 was delivered to Syria. Some sources say that this might be the S-300PMU2, others mention the S-300VM while, yet other sources speculate that this might be an S-300V4 or its export version the Antey-2500. I will spare you the technical details (those interested can look at the pretty detailed Wikipedia entry here), but it should be noted that until the specific version of the S-300 becomes known it will be very hard to assess the potential impact of this delivery. The original S-300s are by now maybe not obsolete, but most definitely not the bleeding edge of air defense technologies. (The first S-300s entered service with the Soviet military in the late seventies!). But the newest version of the S-300s are very close in capabilities to the S-400 system and thus rank among the most capable air defense systems ever built. For example, a lot has been made from the fact that the Israelis have had many years to study the S-300s delivered to Greece, but what is often overlooked is that the version delivered to Cyprus and which was later re-deployed to Greece was the (relatively outdated) S-300PMU-1. The probability that the Russians would deliver this version to the Syrians is close to zero. However, when I think of Israeli Defense Minister (and bona fide nutcase) Lieberman declaring that “one thing needs to be clear: If someone shoots at our planes, we will destroy them. It doesn’t matter if it’s an S-300 or an S-700” he probably was told by the Israeli military analysts that the S-300 is not that formidable a weapon and missed the fact that they were referring to the older version and not the kind of kit the Russians would be using nowadays.


What is sure is that just four launchers are not very many, but are enough to protect any one specific part of Syria. They will also increase the overall number of Russian/Syrian air defense missiles thus helping to achieve the officially stated goal of ensuring “the 100 percent safety” of the Russian forces in Syria. However, this is certainly not enough to create a complete no-fly zone over the entire country, at least not against a large scale attack.


This commentary by the Saker, which I must admit that I haven’t had time to read yet, showed up on his Internet site on Friday sometime — and it comes to us courtesy of Larry Galearis as well.  Another link to it is here.


Mike Pence: Trump’s fight with China just got personal

Events of the past year have left no doubt that the relationship between Washington and Beijing has fundamentally changed for the worse. Words from the Trump administration on Thursday confirmed that there is plenty of room for it to deteriorate even more before it gets better.


A new consensus on China is rising across America,” U.S. Vice-President Mike Pence told an audience in Washington, warning Beijing in fighting terms that “this president will not back down.”


The wide-ranging speech called out China for criticisms long-levied against Beijing, including back peddling on reforms and representing a malign influence in global politics. But Pence also denounced the Chinese government on a new front that related to U.S. President Donald Trump himself: election meddling.


China has initiated an unprecedented effort to influence American public opinion, the 2018 elections and the environment leading into the 2020 presidential elections.”


Beijing, he said, “is pursuing a comprehensive and coordinated campaign to undermine support for the president, our agenda, and our most cherished ideals.”


President Trump’s leadership is working,” Pence said, “and China wants a different American president.”


Wow!  More push, push, push.  The deep state is obviously on the warpath now.  This very worthwhile article put in an appearance on the Asia Times website at 5:32 a.m. Hong Kong Time on their Friday morning, which was 5:32 p.m. on Thursday afternoon in Washington.  It’s the second contribution of the day from Tolling Jennings — and another link to it is here.


Australia warned China against ‘intimidation’ in the South China Sea after a tense standoff with a U.S. destroyer

Australia is warning Beijing not to use “intimidation or ­aggressive tactics” after a Chinese destroyer challenged a U.S Navy warship during a tense standoff in the South China Sea.


The Chinese ship faced off with the U.S. Navy’s Arleigh Burke-class destroyer USS Decatur on Sunday during a close encounter near Gaven Reef in the disputed Spratly Islands. U.S. officials described the showdown as “unsafe,” claiming that the Chinese ship sailed within 45 yards of the U.S. naval vessel.


We would view any use of ­intimidation or aggressive tactics as destabilizing and potentially dangerous“, Australian Defense Minister Christopher Pyne said, according to The Australian.
Australia has consistently expressed concern over ongoing militarization of the South China Sea and we continue to urge all claimants to refrain from unilateral actions that would increase tension in the region,” he added.


Australia’s military began a two-week multilateral security exercise in the South China Sea on Tuesday along with military forces from Singapore, Malaysia, New Zealand and the U.K.


The move follows a further deterioration of relations between the U.S. and China.


Another American toady shouting at China at its master’s request.  This news item appeared on the Internet site on Tuesday — and I thank Swedish reader Patrik Ekdahl for sending it our way.  Another link to it is here.


The Deep State — Doug Casey

I’d like to address some aspects of the Greater Depression in this essay.


I’m here to tell you that the inevitable became reality in 2008. We’ve had an interlude over the last few years financed by trillions of new currency units.


However, the economic clock on the wall is reading the same time as it was in 2007, and the Black Horsemen of your worst financial nightmares are about to again crash through the doors and end the party. And this time, they won’t be riding children’s ponies, but armored Percherons.


Fortunately, for those who benefit from the status quo, and members of something called the Deep State, the trillions of new currency units delayed the liquidation. But they also ensured it will now happen on a much grander scale.


The Deep State is an extremely powerful network that controls nearly everything around you. You won’t read about it in the news because it controls the news. Politicians won’t talk about it publicly. That would be like a mobster discussing murder and robbery on the 6 o’clock news. You could say the Deep State is hidden, but it’s only hidden in plain sight.


The Deep State is the source of every negative thing that’s happening right now. To survive the coming rough times, it’s essential for you to know what it’s all about.


This very worthwhile commentary by Doug was posted on the Internet site on Friday sometime — and another link to it is here.


In Perth, Eric Sprott scorns gold forecasters and paper gold and silver

Eric Sprott knows just a bit about how to make money in mining, so when the Canadian billionaire investor gets up to address a crowd people listen.


It was no different when Mr Sprott took the stage on the second day of the Precious Metals Investment in Symposium in Perth to provide his thoughts on the gold space.


The 73-year-old – described by Bloomberg as “one of the world’s premiere gold and silver investors” – kicked off an hour-long presentation by expressing his disgust at the underwhelming forecasts for gold.


These guys that make these forecasts have no friggin’ idea okay – and why do I say that?


I say that because I have been doing this for 20 years and when I got involved in 2000 when [gold] was just around $US260 odd dollars, what was everyone’s forecast? 1 per cent, 2 per cent.

“And of course, the price between 2000 and 2011 went up by 750 per cent.”


Even the World Gold Council is too conservative with its forecasts, according to Mr Sprott.
“I watch China consume massive amounts of gold. I saw India this year double their silver imports,” he said.


Suddenly they went from 15 per cent of the world’s silver to 30 per cent of the world’s silver and yet somebody is going to tell me that silver demand is going to go up 1 per cent this year?”
This worthwhile commentary by Eric was posted on the Internet site on Friday sometime ‘down under’ — and I found it in a GATA dispatch.  Another link to it is here.


Michigan Man Discovers His Doorstop Actually a Meteorite Worth $100,000

A Michigan man recently learned that this 22-pound rock he used for decades as a doorstop on his farm was in fact a meteorite worth over $100,000.


According to a Central Michigan University press release:
The man, who asked to remain anonymous, obtained the meteorite in 1988 when he bought a farm in Edmore, Michigan, about 30 miles southwest of Mount Pleasant.

As the farmer was showing him around the property, they went out to a shed. The man asked about the large, odd-looking rock that was holding the door open.

“A meteorite,” the farmer said matter-of-factly. He went on to say that in the 1930s he and his father saw it come down at night on their property “and it made a heck of a noise when it hit.” In the morning they found the crater and dug it out. It was still warm.

The farmer told the man that as it was part of the property, he could have it.
The man brought the rock into Central Michigan University geologist Mona Sirbescu earlier this year. She analyzed a slice of the rock and performed an x-ray analysis. Its composition, 88 percent iron and 12 percent nickel, proved it authentic, and an analysis at the Smithsonian verified the conclusion.


This very interesting article showed up on the Internet site yesterday — and I thank reader M.A. for pointing it out.  Another link to it is here.


Today’s ‘critter’ is the wandering albatross.  I’ve featured it before, but it’s been many years.  It is one of the two largest members of the genus Diomedea (the great albatrosses), being similar in size to the southern royal albatross — and one of the largest birds in the world.  This is also one of the most far ranging birds. Some individual wandering albatrosses are known to circumnavigate the Southern Ocean three times (covering more than 120,000 km or 75,000 miles) in one year. They have the longest wingspan of any living bird, typically ranging from 2.51 to 3.5 m (8 ft 3 in to 11 ft 6 in), with a mean span of 3.1 m (10 ft 2 in).  Click to enlarge.


Today’s pop ‘blast from the past’ was a no-brainer, unfortunately.  I say that because Marty Balin, the founder and lead singer of Jefferson Airplane/Starship, passed away this week at the tender age of 76.  If you are a baby boomer — and a child of the 1960s, these names should mean something to you.  When he went on his own, his biggest hit was ‘Hearts’ — and it’s linked here.
Today’s classical ‘blast from the past’ is by German composer Max Bruch.  He’s most well know for three works: his first violin concerto, his Scottish Fantasy for violin and orchestra — and Kol Nidrei, Op. 47 for cello and orchestra.  I’ve posted them all before, but today I’m featuring the last of the three.  Here’s Mischa Maisky as soloist, along with the Frankfurt Radio Symphony, under the baton of Paavo Järvi.  It’s wonderful.  The link is here.

Like on Thursday, the saw-tooth price patterns in morning trading in New York on Friday were the tell-tale signs that JPMorgan et al were actively capping precious metal prices.  Gold and silver were allowed to trade over their respective 50-day moving average for a bit, but were both hauled down below that mark before the COMEX close.  Platinum was on a similar short leash.  Palladium continued to power higher, but was obviously still being suppressed, even though the physical shortage has not gone away.  The fundamentals certainly indicate that higher prices would be in the cards, if allowed.
Here are the 6-month charts for the Big 6 commodities — and how carefully silver and gold are being closed just below their respective 50-day moving averages should be noted.  The ‘click to enlarge‘ feature only helps with the four precious metal charts.
Another week has gone by with no precious metal price explosion to the upside.  JPMorgan has been as careful as possible to keep prices under control without expending too much in the way of their current wildly bullish set-up in the COMEX futures market.
As I said further up, when precious metal prices are finally allowed to run to the upside, it will only be allowed to happen under circumstances that will allow the deep state to divert world attention elsewhere with some other event.  They thought they were given the opportunity in Syria a couple of weeks back, but Putin didn’t take the bait.
Now they’re attempting to get China all riled up, since Russia is too smart to fall into their various traps that they’ve set.  And if you spent any time in the Critical Reads section above, you’ll see that the mask has been ripped off the deep state — and we can see them for what they are.  They are going for world domination, no matter who they crush in the process…international law, or the U.S. Constitution, be damned.
The situation with the world equity and bond markets has become even more precarious — and at some point it will crash and burn despite all the efforts of the powers-that-be/deep state to keep them afloat.  Of course it’s always a possibility that they may precipitate that event themselves if it suits their interests.
This has nothing to do about money, as the deep state has lots of it.  It has everything to do with power and control.  Unfortunately, I suspect that the American Republic and its Constitution will be the first casualty of whatever ‘event’ lies in our future.
As Doug Casey pointed out in his article about the Deep State in the Critical Reads section above, their power…along with their twisted determination…should not be underestimated.
All we’re doing now is marking time, with the precious metals still on ‘care and maintenance’, waiting for their next move.
I’m done for the day — and the week — and I’ll see you here on Tuesday.

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October 6th, 2018

Posted In: Ed Steer's Gold and Silver Digest

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