Month: September 2014

Submitted by John Rubino via DollarCollapse blog,

Reports of individuals snapping up near-record numbers of gold and silver coins are coming in from around the world:

U.S. Mint American Eagle gold coin sales set to rise sharply in Sept

(Reuters) – The U.S. Mint has sold nearly 50,000 ounces of American Eagle gold coins so far in September, almost double its total in August, as a sharp pullback in gold prices and geopolitical tensions boosted interest for physical products from retail investors.

With only six business days left until the end of September, sales of American Eagle bullion gold coins made for investors were 46,000 ounces, up 84 percent from August sales of 25,000 ounces, the latest U.S. Mint data showed on Monday.

 

Record highs in U.S. equities also prompted some retail investors to buy precious metal products to diversify their portfolios, said David Beahm, vice president at New Orleans coin dealer Blanchard & Co.

German Bullion Dealers Report Major Increase in Sales

(Gold Reporter) Bullion dealers from all regions report that gold sales in the German bullion trade market surge since last week. Suppressed prices for gold and silver are obviously considered buying rates by German investors. The German precious metals trade reports a surge in sales.

“For about a week we record considerably increased turnover again, which is now on previous year’s level, so it doubled compared to the recent months.”, Rene Lehman from the internet dealer Münzland in Dresden told Goldreporter.

“We can confirm that customer demand has considerably increased in the recent days.“, said Dominik Kochmann, CEO of ESG Edelmetalle in Rheinstetten.

 

Daniel Marburger, Director of Coininvest GmbH in Frankfurt/Main also stated that “In the past seven working days we have seen an extreme surge in demand.”

 

Christian Brenner, Chief Executive of Philoro Edelmetalle GmbH: “Already in August we noticed an increase on orders compared to the previous months, but September… September beats it all. From a German viewpoint it’s the strongest month of 2014.”

Perth Mint Gold and Silver Bullion Sales Surge in August

(Coin News) Australian sales of bullion gold and silver surged in August after falling to a three-month low in July, new figures from the Perth Mint of Australia show.

August sales of Perth Mint gold coins and gold bars at 36,369 ounces rallied 44.9% from July and jumped 19.5% from the same time last year. Gold sales were the highest since June. Sales of Perth Mint silver coins and silver bars at 818,856 ounces in August advanced 41.7% from the prior month and grew 18.5% from August 2013. They were the strongest since January. In July, gold and silver bullion sales retreated from the previous month and from year-ago levels.

Individual buyers aren’t the dominant players in precious metals but they do make a difference. And their renewed enthusiasm is matched by some recent national trends:

China imports more gold for holiday; Indian demand set to climb

SINGAPORE (Reuters) – Top bullion consumer China has been importing more gold in September than in the previous month due to demand from retailers stocking up for the upcoming National Day holiday, market sources said.

Demand in India – the second biggest buyer of the metal – is also set to pick up as the festival and wedding season kicked off this week.

 

With gold trading close to a key psychological level of $1,200 an ounce, markets are keenly watching physical demand in Asia – the top consuming region – to see if it could lend support to prices.

 

“The physical volumes have been high this month compared to August. I would say imports could be at least 30 percent higher than last month,” said a trader with one of the 15 importing banks in China.

Russia Boosts Gold Reserves by $400M to Highest Since ’93

(Bloomberg) Russia added about 9.4 metric tons of gold valued at $400 million to reserves in July as it expanded holdings for a fourth consecutive month to the highest in at least two decades.

The country’s stockpile, the fifth-biggest, increased to 35.5 million ounces (1,104 tons) last month from 35.2 million ounces at the end of June, data posted on the central bank’s website showed. The amount of gold now held is the most since at least 1993, according to International Monetary Fund data.

Central banks may add as much as 500 tons to reserves this year, the World Gold Council said on Aug. 14. Nations increased holdings by 409 tons last year and 544 tons in 2012.

There’s no guarantee that this buying, encouraging as it seems, is anything more than a blip. But in the aggregate it does seem like a lot of buyers, old and new, are finding current prices to be attractive.

That’s how bottoms form and new bull markets begin.

via Zero Hedge http://ift.tt/1vvgG2i Tyler Durden

Submitted by John Rubino via DollarCollapse blog,

Reports of individuals snapping up near-record numbers of gold and silver coins are coming in from around the world:

U.S. Mint American Eagle gold coin sales set to rise sharply in Sept

(Reuters) – The U.S. Mint has sold nearly 50,000 ounces of American Eagle gold coins so far in September, almost double its total in August, as a sharp pullback in gold prices and geopolitical tensions boosted interest for physical products from retail investors.

With only six business days left until the end of September, sales of American Eagle bullion gold coins made for investors were 46,000 ounces, up 84 percent from August sales of 25,000 ounces, the latest U.S. Mint data showed on Monday.

 

Record highs in U.S. equities also prompted some retail investors to buy precious metal products to diversify their portfolios, said David Beahm, vice president at New Orleans coin dealer Blanchard & Co.

German Bullion Dealers Report Major Increase in Sales

(Gold Reporter) Bullion dealers from all regions report that gold sales in the German bullion trade market surge since last week. Suppressed prices for gold and silver are obviously considered buying rates by German investors. The German precious metals trade reports a surge in sales.

“For about a week we record considerably increased turnover again, which is now on previous year’s level, so it doubled compared to the recent months.”, Rene Lehman from the internet dealer Münzland in Dresden told Goldreporter.

“We can confirm that customer demand has considerably increased in the recent days.“, said Dominik Kochmann, CEO of ESG Edelmetalle in Rheinstetten.

 

Daniel Marburger, Director of Coininvest GmbH in Frankfurt/Main also stated that “In the past seven working days we have seen an extreme surge in demand.”

 

Christian Brenner, Chief Executive of Philoro Edelmetalle GmbH: “Already in August we noticed an increase on orders compared to the previous months, but September… September beats it all. From a German viewpoint it’s the strongest month of 2014.”

Perth Mint Gold and Silver Bullion Sales Surge in August

(Coin News) Australian sales of bullion gold and silver surged in August after falling to a three-month low in July, new figures from the Perth Mint of Australia show.

August sales of Perth Mint gold coins and gold bars at 36,369 ounces rallied 44.9% from July and jumped 19.5% from the same time last year. Gold sales were the highest since June. Sales of Perth Mint silver coins and silver bars at 818,856 ounces in August advanced 41.7% from the prior month and grew 18.5% from August 2013. They were the strongest since January. In July, gold and silver bullion sales retreated from the previous month and from year-ago levels.

Individual buyers aren’t the dominant players in precious metals but they do make a difference. And their renewed enthusiasm is matched by some recent national trends:

China imports more gold for holiday; Indian demand set to climb

SINGAPORE (Reuters) – Top bullion consumer China has been importing more gold in September than in the previous month due to demand from retailers stocking up for the upcoming National Day holiday, market sources said.

Demand in India – the second biggest buyer of the metal – is also set to pick up as the festival and wedding season kicked off this week.

 

With gold trading close to a key psychological level of $1,200 an ounce, markets are keenly watching physical demand in Asia – the top consuming region – to see if it could lend support to prices.

 

“The physical volumes have been high this month compared to August. I would say imports could be at least 30 percent higher than last month,” said a trader with one of the 15 importing banks in China.

Russia Boosts Gold Reserves by $400M to Highest Since ’93

(Bloomberg) Russia added about 9.4 metric tons of gold valued at $400 million to reserves in July as it expanded holdings for a fourth consecutive month to the highest in at least two decades.

The country’s stockpile, the fifth-biggest, increased to 35.5 million ounces (1,104 tons) last month from 35.2 million ounces at the end of June, data posted on the central bank’s website showed. The amount of gold now held is the most since at least 1993, according to International Monetary Fund data.

Central banks may add as much as 500 tons to reserves this year, the World Gold Council said on Aug. 14. Nations increased holdings by 409 tons last year and 544 tons in 2012.

There’s no guarantee that this buying, encouraging as it seems, is anything more than a blip. But in the aggregate it does seem like a lot of buyers, old and new, are finding current prices to be attractive.

That’s how bottoms form and new bull markets begin.

via Zero Hedge http://ift.tt/1vvgG2i Tyler Durden

New investigations by the Small Business Administration (SBA) Office of Inspector General have found SBA Administrator Maria Contreras-Sweet’s announcement that small businesses received 23.39% of all federal contracts was greatly exaggerated. As WaPo reports, Federal agencies overstated their success last year in contracting with small businesses that face socio-economic disadvantages finding $400 million worth of contracts that agencies gave to ineligible firms but still counted toward their targets. Rather stunningly, the report found of the top 100 recipients of the highest dollar amount of federal small business contracts, over 75% were actually current large businesses. Trust…

 

 

As The Washington Post reports,

Federal agencies overstated their success last year in contracting with small businesses that face socio-economic disadvantages, according to a watchdog report released Wednesday.

 

The Small Business Administration’s inspector general’s office said it identified $400 million worth of contracts that agencies gave to ineligible firms but still counted toward their targets.

 

The findings are significant because 2013 was the first year that the Obama administration claimed to have met the federal government’s small-business contracting goals. The flawed numbers led to inaccurate reports to Congress and the American people, according to the report.

And as MarketWatch adds,

The most recent data from the Federal Procurement Data System indicates of the top 100 recipients of the highest dollar amount of federal small business contracts, over 75% were actually current large businesses.

 

…

 

The first SBA Inspector General investigation that uncovered fraud in federal small business contracting was released in 1995. In 2003 an investigation by the Government Accountability Office found over 5,000 large businesses were receiving federal small business contracts.

 

The American Small Business League (ASBL) has launched a national campaign to secure a Government Accountability Office (GAO) and FBI investigation to uncover the specific individuals that were responsible for the two decades of fraud that have been uncovered at the SBA.

*  *  *
So much for caring about the middle-class and small business… but we assume this won’t be mentioned on the mainstream media platforms that need access to The White House.

via Zero Hedge http://ift.tt/1xyVJWJ Tyler Durden

New investigations by the Small Business Administration (SBA) Office of Inspector General have found SBA Administrator Maria Contreras-Sweet’s announcement that small businesses received 23.39% of all federal contracts was greatly exaggerated. As WaPo reports, Federal agencies overstated their success last year in contracting with small businesses that face socio-economic disadvantages finding $400 million worth of contracts that agencies gave to ineligible firms but still counted toward their targets. Rather stunningly, the report found of the top 100 recipients of the highest dollar amount of federal small business contracts, over 75% were actually current large businesses. Trust…

 

 

As The Washington Post reports,

Federal agencies overstated their success last year in contracting with small businesses that face socio-economic disadvantages, according to a watchdog report released Wednesday.

 

The Small Business Administration’s inspector general’s office said it identified $400 million worth of contracts that agencies gave to ineligible firms but still counted toward their targets.

 

The findings are significant because 2013 was the first year that the Obama administration claimed to have met the federal government’s small-business contracting goals. The flawed numbers led to inaccurate reports to Congress and the American people, according to the report.

And as MarketWatch adds,

The most recent data from the Federal Procurement Data System indicates of the top 100 recipients of the highest dollar amount of federal small business contracts, over 75% were actually current large businesses.

 

…

 

The first SBA Inspector General investigation that uncovered fraud in federal small business contracting was released in 1995. In 2003 an investigation by the Government Accountability Office found over 5,000 large businesses were receiving federal small business contracts.

 

The American Small Business League (ASBL) has launched a national campaign to secure a Government Accountability Office (GAO) and FBI investigation to uncover the specific individuals that were responsible for the two decades of fraud that have been uncovered at the SBA.

*  *  *
So much for caring about the middle-class and small business… but we assume this won’t be mentioned on the mainstream media platforms that need access to The White House.

via Zero Hedge http://ift.tt/1xyVJWJ Tyler Durden

Via Nanex,

It is very common to find examples of stock quotes changing rapidly – hundreds and sometimes thousands of times per second in a single stock. At the extreme, we've seen in excess of 25,000 quote changes in a single stock in one second of time or less (this page has a chart that documents every extreme example). Often there are no trades during these events. Sometimes a simple pattern evolves from the quote price changes, such as in the case of a certain High Frequency Trading (HFT) algorithm that we've recently seen run every day in Google stock.

This particular algorithm starts with a bid (or offer) several dollars away from the bids (offers) from one of the other 10 exchanges trading Google Class A stock (symbol GOOGL). We've also seen this algo running in other higher priced stocks. The algo in this example only appears to run from the Nasdaq-Boston (BOST) exchange. In the chart below, we show bids and offers color coded by reporting exchange (there are 10 exchanges in GOOGL). Note that these are "top of book" quotes – that is, they are the highest bid price and lowest ask price from that exchange. The best top-of-book bid and ask become the National Best Bid/Offer (NBBO) and  is shown as light gray shading in these charts. Note, this algo only affects the NBBO when it gets near the end of its price stepping loop.

The algo starts with an order to buy 100 shares at $581.87. This is replaced, sometimes only milliseconds later, with an order to buy 100 shares at $581.88 (1 penny higher). Over the course of 1.5 seconds, this process repeats another 253 times, ending with a order to buy at $584.41. Within less than a second, the $584.41 order is canceled and replaced with an order several dollars lower, and the cycle repeats.

In the case below, the number of quote changes from this HFT algo is averaging 175 per second, but during some periods the rate approaches 1000 per second (1 per millisecond).

1. GOOGL bids and asks color coded by reporting exchange over a 5 second period of time.

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Now, some folks (particularly the math/physics challenged) will say:

"So what? HFT needs to be able to cancel quotes fast so they can tighten spreads, add liquidity and lower costs."

The problem is that when HFT cancels a quote after just 1 millisecond (ms), then anyone located more than 93 miles (150 km) away will see a stale quote. Worse, they won't know it's stale unless and until they try to act on it and wait for a response. The animation below shows how this works. Note, this animation assumes zero processing time on the part of the investor or any other real-world delays. In other words, this is the best possible case, and it will be much worse for the investor in the real-world.

• The animation starts at an Elapsed Time of 0 microseconds. 1 microsecond (?s) is 1 millionth of a second. 1000 ?s is 1 millisecond (ms).
• HFT places an order at the top of an exchange's order book, which causes a quote to be transmitted out to investors.
• An investor 93 miles away receives the quote after 500 ?s (0.5 ms).
• Assuming the perfect case, the investor immediately acts on the quote and transmits an order to the exchange (really their broker, but let's assume a perfect world).
• The exchange won't see this investor's order until a total elapsed time of at least 1000 ?s (1 ms).
• HFT changes its mind after 1 ms and cancels the order – just before the investor's order arrives.
• The investor won't know that their order failed for another 500 ?s or a total of 1500 ?s since HFT sent the initial order!

 

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Effectively, when HFT changes its mind 1000 times a second (or after 1 millisecond) anyone located outside the (93 miles/150 km) circle below will receive stale quotes:

An expanded map is shown below. Each red circle shows how far quotes can travel before expiring at different update rates. For example, the ring labeled 150 is how far quotes will get if HFT is canceling and replacing 150 quotes each second. At 150 quotes/second, people in Chicago will be processing quotes they can't act on! People in Los Angeles have it even worse – quotes changing just 38 times a second will render them all obsolete by the time Los Angelians or anyone on the Google Campus in Stanford California first sees them.

Now, look back at the example in Google above – that HFT algo was changing Google quotes an average of 175 per second, which means those quotes were expiring somewhere between the two rings labeled 150 and 250 in the map below.

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Back to our Google example, let's zoom out and see how often this HFT algo is running.

2. Zoomed out to just under 30 seconds of time (the zoom box is detailed in chart 1 at the top).

 

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3. Zoomed out to about 18 minutes of time (the zoom box is detailed in the chart above). Note how often this algo runs!
Each green sliver is made up of one HFT algo's bids or offers changing 1 penny at a time at rates exceeding 100 times and sometimes 1000 times a second.

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4. Zoomed out showing 9am to about 3pm Eastern Time (the zoom box is detailed in the chart above).
Note the distinct periods of time when this algo runs. Too bad other HFT algo's don't make themselves this visible.

 

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5. Another close-up, showing how the algo does the same thing on the offer size.

 

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6. A different pattern in a different stock on another day. This involves multiple exchanges and affects the NBBO.
Note: The chart shows 3,549 quote changes in about 1/4 of a second of time. These are not rare! Not many people outside of the exchange datacenter will see these quotes before they expire. Yet everyone will have to process them (because there is no way to know how long before they are canceled).

 

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via Zero Hedge http://ift.tt/1rrVjit Tyler Durden

Via Scotiabank's Guy Haselmann,

For a long time, Fed printing via balance sheet expansion has been the key to understanding markets and the predominant driver that has trumped all other matters.  Investors have been able to ignore significant global events, tensions, and economic conditions in faraway places, because a lower real and perceived risk premium from implicit Fed promises was the single most important aspect driving asset prices higher.  This game is quickly coming to an end.

As the Fed’s asset purchase program ends next month, global events and global economic fundamentals will have to be taken into account and priced accordingly.  Investors have become too comfortable and entrenched with the idea that Fed policy provided a win-win condition for taking risk; whereby, weak economic data meant more Fed printing, while strong data meant better fundamentals coupled with a Fed that would (still) only respond slowly and gradually. This cozy arrangement is ending and investors have not yet adequately recalibrated.

Furthermore, at 80:1 leverage, the Fed’s balance sheet is probably close to its practical limit.  It stood around 20:1 pre-2008.  As it currently stands, should the Republicans take the Senate during the mid-term election in November, criticisms will mount, potentially leading to a major restructuring of the institution.

The Fed has always been over-promising on what it can actually deliver.   Yet, it has been wildly successful at altering investor behavior.  Over the past several years, Fed ‘promises’ spawned investor fears of underperforming peers and benchmarks, and steered investors away from risk management and fiduciary prudence and concerns about receiving adequate compensation for the risk.  This needs to change.  The rise in asset prices in recent years means that assets today offer lower yield with higher risk.

The Fed zero interest rate policy has also fueled debt-financed share buyback activity by firms, amounting to over 7% of the total amount of the market capitalization of the S&P 500 over the last 18 months.  This indiscriminate buying has masked true fundamental conditions, thus aiding complacency and distorting accurate valuations.

Despite improved US economic progress, economic improvements were unlikely to ever get sustainably strong enough to justify valuations, so an adjustment down to appropriate valuations was inevitable and only a matter of time.  A move into the ‘right-tail’ of the asset price distribution typically precedes ‘busts’ into the ‘left-tail’.  The longer and deeper the current phase lasts, the worse will be the ultimate fallout. 

Fed money printing should have stopped when money velocity continued to fall.  Money, similar to US Treasury securities, is debt tied to the future taxing capacity of the US government, except it’s a liability that just circulates around.  Debt borrows from future output. Therefore, Fed and governmental actions that are taken today to prevent a depression could be sowing the seeds for causing a future one.

The Fed seems to be doing all that it can, but it is not a stretch to argue that maybe the Fed simply does not possess the proper tools in which to influence, let alone achieve, its mandates.  Unfortunately, ‘doing all it can’ while underestimating the unintended consequences may have calamitous implications for financial markets and the economy in the long run. 

The Fed can print, but it cannot increase demand, or determine where the dollars go.  Fed tools cannot deal with soaring social welfare costs, an aging population, and skill mismatches.  There has been a diminishing return of each dollar of newly printed debt, i.e., spending today barely buys any additional GDP.   Keynesian spending measures may (similarly) be counter-productive in the long-run.   Increasing debt levels depresses the money multiplier effects due to higher debt servicing levels (i.e., borrowing from future consumption).

Fed policy is shifting and no longer overwhelms all other factors.  Markets are no longer receiving quasi-coordinated one-way stimulus from central banks and governments.  Over-indebtedness has become a focus.  Some central banks are hiking rates to prevent capital outflows.  Japan and the EU are (arguably) in recession.  China is slowing and has credit and property bubbles to contend with.  Protectionist actions and counter-measures are beginning to have far-reaching economic effects.  Unrelenting violence between Shia and Sunnis rages. Hong Kong has spilled into mass civil disobedience. The list goes on.

The risk / reward skew has dramatically shifted in recent months.   Improving US fundamentals will not power (risk) asset prices higher, because prices have not been about valuation but rather only about Fed policy and investor behavior.  Investors should move toward capital preservation strategies.   In the meantime, long-dated Treasuries remain an excellent place to hide.  I remain a bond bull and still expect a move under 3% for the long bond.

“She was practiced at the art of deception / Well I could tell by her blood-stained hands / you can’t always get what you want, but if you try sometime you just might find you get what you need.” – The Rolling Stones

via Zero Hedge http://ift.tt/1CFkJeM Tyler Durden

Via Scotiabank's Guy Haselmann,

For a long time, Fed printing via balance sheet expansion has been the key to understanding markets and the predominant driver that has trumped all other matters.  Investors have been able to ignore significant global events, tensions, and economic conditions in faraway places, because a lower real and perceived risk premium from implicit Fed promises was the single most important aspect driving asset prices higher.  This game is quickly coming to an end.

As the Fed’s asset purchase program ends next month, global events and global economic fundamentals will have to be taken into account and priced accordingly.  Investors have become too comfortable and entrenched with the idea that Fed policy provided a win-win condition for taking risk; whereby, weak economic data meant more Fed printing, while strong data meant better fundamentals coupled with a Fed that would (still) only respond slowly and gradually. This cozy arrangement is ending and investors have not yet adequately recalibrated.

Furthermore, at 80:1 leverage, the Fed’s balance sheet is probably close to its practical limit.  It stood around 20:1 pre-2008.  As it currently stands, should the Republicans take the Senate during the mid-term election in November, criticisms will mount, potentially leading to a major restructuring of the institution.

The Fed has always been over-promising on what it can actually deliver.   Yet, it has been wildly successful at altering investor behavior.  Over the past several years, Fed ‘promises’ spawned investor fears of underperforming peers and benchmarks, and steered investors away from risk management and fiduciary prudence and concerns about receiving adequate compensation for the risk.  This needs to change.  The rise in asset prices in recent years means that assets today offer lower yield with higher risk.

The Fed zero interest rate policy has also fueled debt-financed share buyback activity by firms, amounting to over 7% of the total amount of the market capitalization of the S&P 500 over the last 18 months.  This indiscriminate buying has masked true fundamental conditions, thus aiding complacency and distorting accurate valuations.

Despite improved US economic progress, economic improvements were unlikely to ever get sustainably strong enough to justify valuations, so an adjustment down to appropriate valuations was inevitable and only a matter of time.  A move into the ‘right-tail’ of the asset price distribution typically precedes ‘busts’ into the ‘left-tail’.  The longer and deeper the current phase lasts, the worse will be the ultimate fallout. 

Fed money printing should have stopped when money velocity continued to fall.  Money, similar to US Treasury securities, is debt tied to the future taxing capacity of the US government, except it’s a liability that just circulates around.  Debt borrows from future output. Therefore, Fed and governmental actions that are taken today to prevent a depression could be sowing the seeds for causing a future one.

The Fed seems to be doing all that it can, but it is not a stretch to argue that maybe the Fed simply does not possess the proper tools in which to influence, let alone achieve, its mandates.  Unfortunately, ‘doing all it can’ while underestimating the unintended consequences may have calamitous implications for financial markets and the economy in the long run. 

The Fed can print, but it cannot increase demand, or determine where the dollars go.  Fed tools cannot deal with soaring social welfare costs, an aging population, and skill mismatches.  There has been a diminishing return of each dollar of newly printed debt, i.e., spending today barely buys any additional GDP.   Keynesian spending measures may (similarly) be counter-productive in the long-run.   Increasing debt levels depresses the money multiplier effects due to higher debt servicing levels (i.e., borrowing from future consumption).

Fed policy is shifting and no longer overwhelms all other factors.  Markets are no longer receiving quasi-coordinated one-way stimulus from central banks and governments.  Over-indebtedness has become a focus.  Some central banks are hiking rates to prevent capital outflows.  Japan and the EU are (arguably) in recession.  China is slowing and has credit and property bubbles to contend with.  Protectionist actions and counter-measures are beginning to have far-reaching economic effects.  Unrelenting violence between Shia and Sunnis rages. Hong Kong has spilled into mass civil disobedience. The list goes on.

The risk / reward skew has dramatically shifted in recent months.   Improving US fundamentals will not power (risk) asset prices higher, because prices have not been about valuation but rather only about Fed policy and investor behavior.  Investors should move toward capital preservation strategies.   In the meantime, long-dated Treasuries remain an excellent place to hide.  I remain a bond bull and still expect a move under 3% for the long bond.

“She was practiced at the art of deception / Well I could tell by her blood-stained hands / you can’t always get what you want, but if you try sometime you just might find you get what you need.” – The Rolling Stones

via Zero Hedge http://ift.tt/1CFkJeM Tyler Durden