BIS

It will come as no surprise to regular readers that gold (and silver) have suffered from 'odd' violent down-slams in the last few months but, as Bloomberg reports, those 'sneak-attacks' have become increasingly more prevalent during the thin illiquid hours of the Asia trading session. "It is unusual for Asia to be seeing these busy trading sessions," notes on trader, adding that "consensus seems to be that there is a big increase in algorithmic and high-frequency trading in this time zone." The trend began on Oct. 31, with gold futures falling $11 in a minute on nearly 9,000 lots (20x the norm) - all happening when the Chinese market is at lunch. As one Hong Kong precious metals trader remarked, "someone is utilising these thin trading volumes to get a turbo steroid move."

Here we go again. By now everyone, including 2 year old E-trade babies and Atari algos know, that the only reason the market soared from the October 15 bottom, a move which we showed was entirely due to multiple expansion and thus nothing to do with earnings and everything to do with faith in even more free central-planning liquidity (something the PBOC was all too happy to provide overnight), was James Bullard's casual "QE4" hint on Bloomberg TV. And now that the market is at ridiculous all time highs and trading above 19x GAAP PE, far above the level when in September the IMF, the G-20, the BIS and even the Fed all warned of assets bubbles, here is Bullard once again, with a fresh mea culpa and a new attempt to jawbone stocks, only this time back down, because as Dow Jones reports, "Bullard Says Markets Misread Him In October Bond-Buying Dustup."

“If [They're] Right, Everything The Fed Has Been Doing To Try To Stimulate The Economy Isn’t Just Useless — It’s Backward”

"... the gold community paid great attention to the decision of the German Bundesbank to “bring German gold home”. At the beginning of 2013, the Bundesbank announced it would repatriate 300 tonnes of gold stored in the US by 2020. It is well behind schedule, citing logistical difficulties. Yet diplomatic difficulties are more likely to be the chief cause of the delay, especially seeing as the Bundesbank has proven its capacity to organise large-scale gold transports. In the early 2000s, the Bundesbank incrementally repatriated 930 tonnes of German gold held by the Bank of England."

For anyone curious how banks "represent and warrant" that they have thousands of tons of physical gold when in reality they have far less if not zero physical in storage and all in "synthetic" form, here is the blow by blow.

Here is the BIS once again with its noble - and now thorughly 'Austrian' - public service announcement, this time warning about the implications of a global "debt trap" and how everything will end in tears (stop us when this becomes familiar). We have just one request. Next time, instead of sharing these profoundly Austrian observations with the general public, maybe you can just discuss them at the next BIS Board of Directors' meeting which consists of...

"On 30 November, the Swiss will vote in a referendum to decide whether the SNB’s constitutional mandate should be changed to require the central bank to 1) never sell any gold reserves once acquired, 2) store all its gold on Swiss territory, 3) hold at least 20% of its official reserve assets in gold. The likelihood of a yes vote is considerable. The proposal requires a simple country-wide majority to pass, as well as a majority in at least 50% of Swiss cantons. Current polling shows the ‘yes’ campaign with a narrow but clear lead and there are reasons to believe that factors on the day could be favourable for the amendment. If an affirmative vote was recorded, there is little political leeway to delay or dilute implementation."

‘Gold wars’ are intensifying with just 16 days left to polling day in the Swiss Gold Initiative.  If the Swiss vote to revert to having 20% of currency reserves in gold, the Swiss National Bank will be forced to make huge purchases of gold bullion. Switzerland  and its ‘Gold Initiative’ would contribute to driving the price of gold higher - likely in the short term and contributing to higher prices in the long term. Understanding the important recent past and what has led to the forthcoming Swiss Gold Initiative is important and why we look at it today. This context is all important and is essential reading for all who wish to understand the key issues in the debate, for all who invest in and own gold internationally and for all Swiss people.

• Obama urges China to be partner in ensuring world order (Reuters)
• China Sees Itself at Center of New Asian Order (WSJ)
• Xi Dangles $1.25 Trillion as China Counters U.S. Refocus (BBG)
• China's Xi, Japan's Abe hold landmark meeting after awkward handshake (Reuters)
• Revenue Softness Worries Stock Investors (WSJ)
• How BOJ’s Kuroda Won the Vote for Stimulus Expansion (WSJ)
• Bonus Season Brings More Pain for Traders (WSJ)
• Russia’s Military Encounters Risk Clash in Europe (BBG)

And then there was the precious metals market: a market which all the Keynesian fanatic paper bugs said was immune from manipulation, be it of the central or commercial bank kind, even with every other market clearly exposed for perpetual rigging either by hedge funds, by prop desks, by HFTs, or central banks themselves. Sadly this too conspiracy theory just was crushed into the reality of conspiracy fact, when moments ago the FT reported that alongside admissions of rigging every other market, UBS - always the proverbial first rat in the coalmine, to mix and match metaphors- is about to "settle" allegations of gold and silver rigging. In other words: it admits it had rigged the gold and silver markets, without of course "admitting or denying" it did so.

"... the admissions of financial danger by internationalists, the sharp drop in stocks at the beginning of fall, the reversal of the political theater, and the fact that mainstream investors now recognize the illegitimacy of the markets yet continue with the scam anyway, signals the last gasp of the global economy. I expect increasing market instability from this point on, as well as numerous geopolitical distractions which will be blamed for the fiscal chaos. Needless to say, the coming storm is a deliberately engineered one, meant to achieve very specific goals, including a fearful and panicked populace, easy to manipulate as the system goes off the rails for the last time."

 "The US Mint has just announced that they are temporarily sold out of American Eagle Silver Bullion Coins.  They are in the process of producing more and will advise when additional inventory is available." To paraphrase: the US mint just sold out of all silver American Eagle silver bullion coins, following "tremendous" demand in the past several weeks, according to Reuters reports.

With the Swiss gold stored at the Bank of Canada, now having been transferred out of the Bank of Canada’s Ottawa vault to an unknown location, the Swiss public would be wise to question the SNB on this move. The Swiss gold stored at the Bank of England in London seemingly being ‘actively managed’ one of the world’s largest centres for unallocated gold trading, the Swiss public would also be wise to enquire on this issue. And with significant historical quantities of Swiss gold that were stored with the US Federal Reserve Bank in New York no longer there after the SNB seemingly brought their US vaulted gold holdings to zero, the Swiss public need to question why these particular holdings were targeted for sales from 2000-2005 and not domestically held gold.

It never fails: any time there is a dump in precious metals through their paper representation (GLD, SLV, or futures) typically as a hedge to a rally in the dollar (because last week Japan materially increasing its fiat monetary base was also somehow negative for gold and silver) or to meet margin demands from cross-asset liquidation, demand for physical PMs soars confirming yet again that any connection between paper prices and physical demand no longer exists. As reported on Friday, sales of American Eagle silver coins by the U.S. Mint jumped 40 percent in October to the highest in 21 months, defying a slump in New York futures to the lowest in more than four years.

We have a modest proposal to the Bank of International Settlements, aka the "central banks' central bank": the next time you feel like warning the general public about: "low volatility everywhere" or that asset prices are at "elevated" level, that "it is hard to avoid the sense of a puzzling disconnect between the markets’ buoyancy and underlying economic developments globally", that "despite the euphoria in financial markets, investment remains weak" that "the temptation to go for shortcuts is simply too strong, even if these shortcuts lead nowhere" that "As each day goes by, it seems less and less likely central banks can now really do “whatever it takes”, maybe it should discuss its asset-bubble, volatility-crushing, impotent-central banking concerns with its Board of Directors first?