Volume For Silver Futures Contracts Explodes in Shanghai; The Chinese Have a Hankering for the Poor Man’s Gold

This is indescribable. Maybe some local Chinese guru newsletter writer, a Gartman type of fellow, has been bussing in the farmers in from rural in-land China to stock trading centers, in order to leverage their farms 10:1, in order to bid up silver futures? God only knows. On Monday evening, without rhyme or reason, the price of silver exploded to the upside– by as much as 8%.

Now we know why. Crazy fucking Chinamen.

Shares of DGART hit a new record low today, after a CNBC ‘Fast Money’ appearance where he rambled on about contangos, spreads, and all sorts of meaningless horseshit as it pertains to crude. If you recall, several months ago, Lord Gartman of the Appalachia declared the end of crude oil as we knew it, thanks to Lockheed Martin’s fusion technology. He posited crude oil could trade back down to a nickel at some point. Then he reversed course and start sucking on Saudi dick again, loving their crude flavor. Now he hates crude again, citing contangos, shmofangos and crack spread mumbo jumbo coupled with the lack of bullish price action in the face of GREAT BOOLISH NEWS out of Saudi Arabia and Nigeria, where terrorists ended up killing a bunch of people.

So fucking bullish.

I sometimes marvel at the tone deafness that many money managers exhibit, completely unable to discern the direction of the market winds. He believes the recent spike in gold was nothing more than a bounce and that it will begin heading lower from here–retesting the lows of 1,050 reached last year.

Let’s not get into as panic just because the Dow closed down 100. Last week’s reflex rally off the BREXIT lows has provided us with a little wiggle room. But there are some things that were worrisome today, which should be watched very closely.

European banks were hammered today. Observe the cataclysmic trading action in PUK, DB, BCS, NBG, UBS, CS and LYG.

German sovereign yields are too low, delving into negative territory all the way through 15 years. Moreover, the entire Swiss yield curve is negative, through 50 years. This will have a debilitating effect on asset prices if this trend doesn’t reverse soon.

U.S. treasury yields are the most attractive in the world. Bear in mind, the meat ball’d nation of Italy has a 10 year bond yield that is 10bps LESS THAN ours. What sort of perversion of reality is this? Board the ark.

Gold and silver prices continue upwards, in spite of the fact that the deflationary vortex is ruinous banks.

The pound is at 31 year lows, now at the BREXIT lows. And, most importantly, the Japanese Yen continues to press forward, now  101.72 to the dollar. The Japanese yield curve is also a very negative one. Really, I don’t know what to tell you, other than stop being naive and don’t dismiss these unprecedented things as nothing. These are all gigantic bubbles that will one day explode and destroy the idiot portfolios of millions.

Lastly, keep your eye on crude. Should it get back down to the low $40s again, you will, once again, see a wholesale liquidation of that sector, which will, undoubtedly, spill over into our banks and the general market place.

These are not times to be greedy, but to be careful and wise.

It’s mainly a lot of transitory horseshit spouted out by this headline savoring analyst. Nonetheless, she makes valid points regarding some charges the company will need to take, following the horrendous slide in the pound. Netflix has upwards of 5 mill subs in the UK.

Obviously, no one gives a shit what Laura Martin has to say, as Netflix steamrolls higher by 1.5% in an otherwise dreadful day for stocks.

Well then, we ought to exploit the resources of our enemies first, deplete them, and then tap into our own. As you well know, this has been the standard operating procedure for the past 30 years.

Rystadt, an Oslo based consultant agency, has figured out what everyone at the Department of Energy already knew: we have more oil than anyone.

Bravo.

Of that oil, more than 50% remains embedded in hard to get shale, with upwards of 60 billion barrels in Texas alone. Mexico really fucked up losing that war, eh?

These numbers are, in fact, of the fantasy varietal–upwards of 70x the current production rate, so take it with a sharp grain of salt.

Crude down 4.7% isn’t an ordinary day at the office. More than that, it ruins a sector beguiled and hamstrung by a debt load it can no longer service. In order for James Cramer and his band of roving idiots to get erect over the prospects for crude oil stocks again, the commodity needs to sustain $60, a level it has not reached–thus far.

Bear in mind, there is a wall of debt coming due in 2017. Now that we’re in the 2nd half of 2016, investors will begin to price in the horseshit.

Let me explain.

According to Exodus, the amount of distressed debt in the basic resource space is $136 billion. These numbers are based upon companies having access to capital, gauged by their debt/equity ratios. In other words, the higher their stock prices go, the more access to capital they possess. Naturally, the opposite applies to when these stocks are getting hammered lower.

For example, the amount of debt for companies just below distressed, from 2-4.99x debt/eq is a staggering $446 billion. With crude stocks down 6% for the day, you can see how this can snowball quickly, into a problem that will ruin many days and nights for many bankers.

While BREXIT was an important tipping point for the scales of freedom v tyranny, the crux of the issues for this market has always been in the oil and gas space. Aside from the negative rate issue, this is my primary concern for 2017 and beyond.

Tell me how this is going to help the ailing Deutsche Bank?

Whereas H. Clinton might get off scot-free, the EU will not. Anyone who is a supporter of the EU, I beg you to defend the actions of its central bank, a bank which has caused misery on a biblical scale across europe. For the love of black holes and swans, the entirety of the German yield curve is on the precipice of disaster–now negative up to 15 years in duration.

German bunds at -0.185% is the backdrop for markets to work against. Sure, equities look damned good against those negative rates. But, then again, only an idiot would construe those rates to be a result of normal economic circumstances.

Ladies and gents, these are times wrought with financial penny dreadfuls. Nothing about this is normal, so cast aside any models you might have which helps you to sleep well at night.

Dark days are ahead. Board the fucking ark, already.

It was a cunning trap laid by nefarious banking powers in the east. I’m sure House Rothschild (shh, they don’t exist) will be more than happy to lend Russia money, in exchange for them declaring war on one of their neighbors.

Apparently, one of Russia’s giant sovereign wealth funds will be depleted by next year, due to the drop in crude coupled with excessive spending.

Russia will exhaust one of its two sovereign funds next year, according to a finance ministry proposal seen by Reuters, having by that point run through $87 billion since the beginning of 2014 to fill holes in the budget left by a slump in oil prices.

Russia will also spend over the next three years about a third of another of its funds on covering the budget shortfall, the proposal showed, even though that fund was originally intended to cover long-term deficits in the pension system.

The finance ministry proposal, which contains recommendations on spending, has been submitted to the government for its consideration but not yet approved.

Russia’s budget deficit has swollen as oil prices fell sharply from 2014 and the West imposed sanctions over the Ukraine crisis. The deficit stood at 4.3 pct of national output in the first half of 2016, up from 2.6 pct last year and against 0.5 pct in 2014.

At current rates of spending, it has been clear for some time that the Reserve Fund – which at the start of 2014 stood at $87 billion – would run out around 2017.

This is just a small taste of what is to come in 2017, should the price of crude remain depressed.

Save gold and silver, the commodity sector is enduring a harsh repudiation of last week’s rally, with corn, wheat and oil getting crushed into little fucking pieces.

Again, and this bears reminding, as sovereign bond yields dive deeper into negative territory so does the world into a deflationary vortex. Under such conditions, asset prices and commodities will get crushed. The only reason why gold is higher is because people are viewing central banks as crazy wall eyed fucking lunatics, willing to do anything possibile to denigrate and debase their currencies, in order to save banks from having to write down losses. At the end of the day, this is what it’s all about. The EU got deep into QE, only after coming to grips with the fact that it didn’t want their banks to write down bad Greek loans. Since then, they’ve been busy little bees at the printing press, trying to paper over the losses. But they cannot.

The only way to remedy this situation is by defaulting on the debt and permitting the system to reset. One does not grow out of 100-250% debt to GDP. You simply write it down and start fresh.