Precious Metals

A few days of near-record crude volatility (which the CME is scrambling to reduce following 2 crude margin hikes in the past week) is giving way to the New Normal default thinking: that central banks will soon take care of everything. And sure enough, just an hour earlier, US equity futures had jumped 8 points on virtually zero volume, wiping out all of yesterday's losses, driven higher by that new "old favorite", the USDJPY, which has once again resumed its climb higher, briefly rising above 119.00 once again and sending the Nikkei and the Topix to fresh 7 year highs, perfectly oblivious to both yesterday's Moody's downgrade and now open warnings from both Eisuke Sakakibara and Goldman Sachs that further declines in the Yen will accelerate the collapse of the Japanese economy. And, since there is also zero liquidity in the market, that entire gain was also just as promptly wiped out with futures now practically unchanged from yesterday's close.

Switzerland’s ‘Save our Swiss Gold’ referendum was convincingly rejected yesterday by the Swiss electorate following an aggressive anti-gold campaign in recent weeks that had been closely watched both in Switzerland and abroad. 

Unusually, it involved the Swiss National Bank (SNB) very actively, and ultimately successfully, trying to convince the electorate along with the main political parties to return a ‘no’ vote.

Western dominance was born from a distrust in the dominant reserve currency at the time. Its decline will be because they followed the same route. And the canary in the coal mine is what’s happening in Switzerland this weekend.

• Oil Seen in New Era as OPEC Won’t Yield to U.S. Shale (BBG)
• Alberta Producers With World’s Cheapest Oil Face Cascading Woes (BBG)
• Bundesbank’s Weidmann Rejects Calls for German Stimulus Plan (WSJ)
• Google Should Be Broken Up, Say Euro MPs (BBC)
• Calm comes to troubled Ferguson; protests dwindle across U.S. (Reuters)
• Russia’s Banks Feel Capital Squeeze in Grip of Sanctions (BBG)
•  Italian Unemployment Rate Rises to Record, Above Forecasts (BBG)

In the case of a "yes" vote, gold prices are likely to surge. Analysts do not believe a yes vote is possible. However, analysts have got the mood of the people wrong in many referendums both in Switzerland and throughout Europe in recent years.

While the US takes the day off after another near-record low volume surge to a new all time high in the S&P500, a level which is now just 125 points away from Goldman's year end target for 2016, the rest of the world will be patiently awaiting to see if oil's next step, as a result of today's OPEC meeting will be to $60 or to $100. For now at least the answer is the former (see more here from the WSJ), with Brent recently touching a fresh 4 year low in the mid-$75s, as WTI doesn't fare much better and was down 2% at last check to $72.20 after touching a low of $71.89. It appears the prepared remarks by the OPEC president to the 166th conference have not eased fears that despite all the rhetoric OPEC will be unable to get all sides on the same story, even though the speech notes "ample supply, moderate demand and warns that "if falling price trend continues, “long-term sustainability of capacity expansion plans and investment projects may be put at risk."

Precious metals have taken a horrible beating over the past month. They were suppressed to levels not seen since 2010. The result of this price depression was a massive increase in demand from individual investors and nations alike.

Gold spiked higher in many price feeds overnight and was $270 higher or more than 22% higher to $1,467.50/oz at one stage in what appears to have been some form of computer glitch.  It was not manipulation, a short squeeze, or a modern Chinese or Russian ‘Goldfinger’ sending a pointed message to Washington.

“Ordinary people are unnerved about how money works in a bottomless cyber space. Gold seems tangible, clear and timeless”

Just two months after the OECD cut its global growth outlook, overnight the Organisation for Economic Co-operation and Development cut it again, taking down its US, Chinese, Japanese but mostly, Eurozone forecasts. In the report it said: "The Economic Outlook draws attention to a global economy stuck in low gear, with growth in trade and investment under-performing historic averages and diverging demand patterns across countries and regions, both in advanced and emerging economies.  “We are far from being on the road to a healthy recovery. There is a growing risk of stagnation in the euro zone that could have impacts worldwide, while Japan has fallen into a technical recession,” OECD Secretary-General Angel Gurria said.  “Furthermore, diverging monetary policies could lead to greater financial volatility for emerging economies, many of which have accumulated high levels of debt.” And sure enough, the OECD's prescription: more Eurozone QE. As a result, futures in the US are in fresh all time high territory ignoring any potential spillover from last night's Ferguson protests, just 30 points from Goldman's latest 2015 S&P target, Stoxx is up 0.5%, while bond yields are lower as frontrunning of central bank bond purchases resumes. Oil is a fraction higher due to a note suggesting the Saudi's are preparing for a bigger supply cut than expected, although as the note says "it is unclear if the cut sticks."

As the debate regarding whether or not Switzerland should keep the bulk of its gold reserves at home on Swiss soil reaches it's climax - the referendum takes place on Sunday - it is telling that the Dutch announced on Friday that they have just secretly repatriated 122 tonnes of their sovereign gold reserves from New York back to Amsterdam.

Sporadic confrontations and violence between protesters and police continued to occur overnight in Ferguson as multiple news agencies report grand jury considering whether to indict the Ferguson police officer who shot and killed teenager Michael Brown is unlikely to meet and render a decision this weekend. The fear, as we have previously noted, is a major uprising as one sign protested, "if the killer cop walks, AmeriKKKa Halts," and as Fox reports, Brown family attorney is managing expectations, "99% of the time the police officer is not held accountable for killing a young black boy," Crump said. "The police officer gets all the consideration." There is, however, another potential reason for delaying the decision's reporting, as VICE reports, business owners in the St. Louis, Missouri area have hired private military contractors to transport guns and gold, fearing their shops will be targeted by looters if a grand jury does not indict.

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."

November 21 - Gold $1197.50 up $6.80 – Silver $16.40 up 26 cents

Bill Cosby And GATA

"We are living in an aberrational world. It’s all driven by an orgy of money printing...it sure feels to me that we’re nearing the day that it spins out of control. By the end of this year or by the start of next year, without QE, the market is going down."

"To maintain your sanity, you need to turn off the hype machines of some of the financial media like CNBC."