EURO PLUNGE: Single currency could 'COLLAPSE' against dollar amid record losing streak

THE euro has plunged to its lowest level against the dollar since December 2015, as experts warned the currency could collapse next week amid concerns for the eurozone economy.

By LANA CLEMENTS

Investors have frantically dumped the single currency over 10 consecutive trading sessions - the worst performance since the euro was introduced in 1999. 

Head of the European Central Bank (ECB) Mario Draghi failed to ease fears after warning that the eurozone recovery depends on action by monetary policymakers. 

Since the start of November the single currency has tumbled by around five per cent against the dollar, to sit at around 1.0584. 

GETTY

The euro has plunged against the dollar

The two currencies are set to reach parity and the euro could even dip below one.

Mr Draghi's comments were seen as a hint that the ECB is set to extend its trillion euro money-printing programme in another desperate bid to shore up the economy. 

But the US central bank - the Federal Reserve - is moving in the opposite direction and is expected to raise interest rates next month. 

As a result, the dollar has experienced a huge rally.

Fawad Razaqzada, market analyst at Forex.com, said: "The EUR/USD is still limping, now below 1.06. 

"It could absolutely collapse next week as the dollar appreciates further. 

"The market seems convinced that the Fed will hike interest rates in December and tighten its belt further in 2017. 

"Meanwhile the ECB and other major central banks are widely expected to maintain their current extremely loose policy stances intact well into 2017 at the very least. 

"As such, the dollar is getting stronger across the board, but especially against currencies where the central bank is still uber-dovish such as the euro."

Five things to know about Trump's infrastructure plan

Buzz is growing around President-elect Donald Trump's plans for a massive infrastructure package.

Republican and Democratic lawmakers frustrated by the lack of significant federal transportation spending are hopeful they can work with Trump on a bill, making it one of the few bipartisan issues that could see action next year.

Construction stocks soared following Trump’s acceptance speech in which he pledged to rebuild the country’s crumbling infrastructure, according to the Wall Street Journal.

“We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals,” Trump said. “We’re going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it.”

While the final details of Trump’s plan are still in flux, the real estate mogul has offered clues on the campaign trail about how he would work to repair the nation’s ailing transportation system.

Here are five things to know about Trump’s infrastructure ideas.

Trump's plan relies heavily on private financing

A 10-page white paper posted on Trump’s campaign website last month makes private financing the cornerstone of his infrastructure plan.

The proposal would offer $137 billion in federal tax credits to private investors who want to back transportation projects, which the blueprint says would unleash up to $1 trillion worth of infrastructure investment over 10 years.

Historically, the country’s infrastructure is financed through state and local governments using a mix of their own revenues, federal highway aid and issued bonds.

But the sketch of Trump’s proposal claims that construction costs tend to be higher and take longer when the government builds projects instead of the private sector.

“The Trump infrastructure plan features a major private sector, revenue neutral option to help finance a significant share of the nation’s infrastructure needs,” the outline says. “This innovative financing option would serve as a critical supplement to existing financing programs, public-private partnerships, Build America Bonds, and other prudent funding opportunities.”

Private funding won't help all projects

mp’s private financing plan, however, say that private investors would only fund projects that have tolls or user fees that can recoup investment costs.

Therefore, critical infrastructure needs like repairing aging pipes, deepening ports or fixing existing roads and bridges without tolls may go neglected under Trump’s plan.

Public-private partnerships (PPPs) “only work on projects that create revenues,” said Rep. Peter DeFazio (D-Ore.), ranking member on the Transportation and Infrastructure Committee. “The vast majority of the national highway system, and our bridge problems and all our transit problems, do not generate revenues. It will not help them.”

Public-private partnerships allow private firms to bid on transportation projects, build and maintain the project for a set amount of time, and recover costs through tolls or set state payments.

The Congressional Budget Office says only 14 highway projects have been completed using PPPs with private financing.

While most transportation advocates agree that getting more private capital off the sidelines is beneficial overall for the nation’s infrastructure, they also caution that it’s only one tool in the tool belt.

“If it’s managed well, it’s a wonderful way of creating a hamburger helper, in terms of increasing the overall level of investment,” said Norman Anderson, president and chief executive officer of CG/LA Infrastructure.

Trump wants to cut regulatory ‘red-tape’

In his infrastructure package, Trump wants to tackle the “mountain of red tape” that slows down construction projects.

“Infrastructure projects across the U.S. are routinely delayed for years and years due to endless studies, layer-upon-layer of red-tape, bureaucracy, and lawsuits—with virtually no end in sight,” his campaign website says. “This increases costs on taxpayers and blocks Americans from obtaining the kind of infrastructure that is needed for them to compete economically.”

Rolling back regulatory hurdles could be a key factor in attracting conservative support for Trump’s infrastructure plan in Congress. One of the major critiques of President Obama’s “shovel-ready” transportation projects in the 2009 economic stimulus plan was that they took too long to get off the ground.

But thus far, his proposal has been light on details about exactly how he would cut red tape.

Trump's website simply notes that he wants to link spending to reforms that “streamline permitting and approvals, improve the project delivery system, and cut wasteful spending on boondoggles.”

Trump thinks the plan would pay for itself

Trump claims his infrastructure proposal would be revenue neutral because it would pay for itself.

His blueprint assumes that the tax credits offered to private investors would be offset by tax revenue from new wages to construction workers and new profits from contractors.

“Importantly for the government budget, there will not be much of a time gap between the granting of the credit and receipt of the tax payments under the Trump plan,” the summary says.

But a research fellow for the Competitive Enterprise Institute called many of the financing specifics of the plan “dubious.”

If Trump’s final plan isn’t revenue neutral, it could spell trouble for the bill’s fate in Congress. Fiscal conservatives on Capitol Hill are already warning the president-elect that they will not support any legislation that adds to the deficit.

“If Trump doesn’t find a way to pay for it, then I think the majority of us, if not all of us, are going to vote against it,” Rep. Raúl Labrador (R-Idaho), a member of the House Freedom Caucus, said at a Heritage Foundation event Wednesday.

Trump’s open to ideas — including from Democrats

Trump has laid out his basic vision for infrastructure spending, but his plan is far from finalized.

Just this week, Trump’s transition team said it was exploring whether to establish a national infrastructure bank, which has long been favored by Democrats but gone nowhere under a GOP-led Congress.

That talk shows his team is willing to explore new policy ideas — even Democratic ones.

In Congress, though, Republicans are leaning toward taxing corporate earnings that are stored abroad when that money returns to the U.S., a process called "repatriation," and using that revenue to pay for infrastructure spending.

“I look forward to working with the administration,” said Rep. Mario Diaz-Balart (R-Fla.), chairman of the Appropriations Subcommittee on transportation. “I’ve always had the attitude that it doesn’t matter if the idea is brought up by a Republican member or Democratic member. The issue is: Are there good ideas?”

Italy’s Crisis Turns into a Multi-Headed Hydra

Making Retail Investors pay.

By Don Quijones, Spain & Mexico, editor at WOLF STREET.

Bank stocks have surged just about everywhere since Trump’s election, with one exception: Italy. In the last month only one large Italian bank has seen its shares rise, and that’s the 500-year old bank at the center of Italy’s banking crisis, Monte dei Paschi di Siena, whose nearly worthless shares jumped to €0.24.

All the Wrong Signals

Shares of Italy’s other large banks have suffered heavy losses. Over the past week alone, shares of Italy’s largest bank, Unicredit, plunged 15%, as did the shares of Banca Popular and UBI Banca. Shares of Italy’s second largest bank, Intesa Sanpaolo, fell just under 10%.

The recent losses compound what’s been a miserable year for Italy’s banking stocks. The best performing stock is the investment bank Mediobanca, which is down a mere 24% for 2016. During the same period, Unicredit has shed over 60%, UBI Banca 65%, Banco Popolare 80%, and Monte dei Paschi 85%.

It’s not just banks’ shares that are flashing all the wrong signals. UniCredit’s five-year credit default swap surged to 221.2 basis points on Friday, meaning it now costs €221,200 to insure €10 million of UniCredit’s debt against default over five years.

A Multi-Headed Hydra

As with all major crises, Italy’s current predicament is a multi-headed hydra. It’s a banking crisis, an economic crisis, a debt crisis, and a political crisis all rolled into one, and all coming to a head at the same time.

Italy’s economy has been in reverse ever since it joined the euro 17 years ago. Since 2007, its GDP has shrunk by a staggering 10%. In the meantime its public debt has continued to grow, reaching 135% of GDP today, the highest level of any Eurozone country with the exception of Greece. And now the yield on Italy’s 10-year bond is on the rise, hitting 2.09% on Friday in a NIRP world, its highest point in over 13 months.

Investors are worried about two things: the very real prospect of a government defeat in the upcoming referendum on constitutional reforms (a subject I covered last week) and Italy’s blossoming banking crisis.

The government’s solution to that crisis has been to create two woefully underfunded, deeply opaque bad banks — Atlante I and Atlante II — whose job it’s been to hoover up the worst of the toxic debt off the banks’ balance sheets. Atlante I and II don’t have enough firepower to steady even Italy’s smallish regional banks, like Veneto Banca, which keep coming back for more handouts, let alone the likes of Monte dei Paschi or Uncredit, each of which has tens of billions of euros of nonperforming loans (NPLs) festering on their books.

Two weeks ago when Giuseppe Guzzetti, a senior Italian banker who helped create the two bad banks, admitted that after six months of frenzied activity Atlante II is already “out of breath.”

Meanwhile, JP Morgan Chase’s last-ditch rescue of Monte dei Paschi continues to flounder, as shareholders who have already lost €8 billion in two previous capital expansions seem strangely reluctant to provide the bank with another €5 billion in fresh capital. That has left MPS and its handsomely compensated rescuers little choice but to unveil Plan Y this week, which essentially involves offering holders of the bank’s subordinate bonds a debt-for-equity swap.

Making Retail Investors Pay

Debt-for-equity swaps are a feature of debt restructuring. Put simply, for MPS to restructure its debts, the current owners will have to be diluted or wiped out. To all intents and purposes that has already happened, as MPS’s stock price has barrel-bombed from over €10 in early 2013 to €0.24 today — a 98% decline.

As for the bank’s creditors, they’re invited to become new owners of the reborn entity, by trading in roughly €5 billion worth of subordinate bonds at remarkably generous terms — 85% of face value for those holding junior tier 1 debt and 100% for those with slightly less junior tier 2 bonds — in return for one billion euro’s worth of equity. It’s a shitty deal and there’s no telling just high or low that equity will go, but it’s probably the best they’ll get.

Normally, subordinate debt is the sole preserve of sophisticated investors. But not in Italy. Almost half of Italian banks’ subordinate bonds are owned by retail investors, a dark legacy of banks using their customers as a piggy bank for cheap funding. Put simply, misselling subordinated debt to unsuspecting depositors was “the way they recapitalized the banking system,” as Jim Millstein, the U.S. Treasury official who led the restructuring of U.S. banks after the financial crisis, told Bloomberg earlier this year.

Now some of those retail investors, many of whom are traditional voters of Matteo Renzi’s centre-left party, are on the verge of being bailed in. It’s Renzi’s worst nightmare, at the worst possible time: the swap scheduled to take place on Nov 28, just 6 days before referendum day.

A Classic Prisoner’s Dilemma

An even greater danger is that the swap fails, as individual bondholders decline to participate in the hopes that other bondholders do, leaving them with a safer bond, rather than iffy equity, in a recapitalized bank that still pays a juicy interest rate. As the Wall Street Journal points out, it’s a classic prisoner’s dilemma. If the swap fails, the EU’s bail-in rules will probably kick in, including the forced conversion of subordinate bonds.

In such an event, the risk of contagion cannot be overstated. Many of Italy’s other banks face very similar problems to MPS. They include Unicredit, the country’s sole global systemically important bank (G-SIB), which hopes to dump tens of billions of euros worth of impaired assets in the coming months as well as raise €10-13 billion in new capital from investors, over double the amount that MPS has spectacularly failed to muster. By Don Quijones, Raging Bull-Shit.

Italy is in the middle of a blossoming banking crisis, and now this. Read…  The Global “Populist” Doom Tour Swings to Italy

Trump Already Keeping Jobs in the U.S., The TPP Is Falling Apart, Should He Dump the Fed?

Bond Carnage hits Mortgage Rates. But This Time, it’s Real

Wolf Richter wolfstreet.com, www.amazon.com/author/wolfrichter

The “risk free” bonds have bloodied investors.

The carnage in bonds has consequences. The average interest rate of the a conforming 30-year fixed mortgage as of Friday was quoted at 4.125% for top credit scores. That’s up about 0.5 percentage point from just before the election, according to Mortgage News Daily. It put the month “on a short list of 4 worst months in more than a decade.”

One of the other three months on that short list occurred at the end of 2010 and two “back to back amid the 2013 Taper Tantrum,” when the Fed let it slip that it might taper QE Infinity out of existence.

Investors were not amused. From the day after the election through November 16, they yanked $8.2 billionout of bond funds, the largest weekly outflow since Taper-Tantrum June.

The 10-year Treasury yield today jumped to 2.36% in late trading the highest since December 2015, up 66 basis point since the election, and up one full percentage point since July!

The 10-year yield is at a critical juncture. In terms of reality, the first thing that might happen is a rate increase by the Fed in December, after a year of flip-flopping. A slew of post-election pronouncements by Fed heads – including Yellen’s “relatively soon” – have pushed the odds of a rate hike to 98%.

Then in January, the new administration will move into the White House. It will take them a while to get their feet on the ground. Legislation isn’t an instant thing. Lobbyists will swarm all over it and ask for more time to shoehorn their special goodies into it. In other words, that massive deficit-funded stimulus package, if it happens at all, won’t turn into circulating money for a while.

So eventually the bond market is going to figure this out and sit back and lick its wounds. A week ago, I pontificated that “it wouldn’t surprise me if yields fall some back next week – on the theory that nothing goes to heck in a straight line.”

And with impeccable timing, that’s what we got: mid-week, one teeny-weeny little squiggle in the 10-year yield, which I circled in the chart below. The only “pullback” in the yield spike since the election. (via StockCharts.com):

Note how the 10-year yield has jumped 100 basis points (1 percentage point) since July. I still think that pullback in yields is going to happen any day now. As I said, nothing goes to heck in a straight line.

In terms of dollars and cents, this move has been wiped out a lot of wealth. Bond prices fall when yields rise. This chart (via StockCharts.com) shows the CBOT Price Index for the 10-year note. It’s down 5.6% since July:

The 30-year Treasury bond went through a similar drubbing. The yield spiked to 3.01%. The mid-week pullback was a little more pronounced. Since the election, the yield has spiked by 44 basis points and since early July by 91 basis points (via StockCharts.com):

Folks who have this “risk free” bond in their portfolios: note that in terms of dollars and cents, the CBOT Price Index for the 30-year bond has plunged 13.8% since early July!

However, the election razzmatazz hasn’t had much impact on junk bonds. They’d had a phenomenal run from mid-February through mid-October, when NIRP refugees from Europe and Japan plowed into them, along with those who believed that crushed energy junk bonds were a huge buying opportunity and that the banks after all wouldn’t cut these drillers’ lifelines to push them into bankruptcy, and so these junk bonds surged until mid-October. Since then, they have declined some. But they slept through the election and haven’t budged much since.

It seems worried folks fleeing junk bonds, or those cashing out at the top, were replaced by bloodied sellers of Treasuries.

Overall in bond-land, the Bloomberg Barclays Global Aggregate bond Index fell 4% from Friday November 4, just before the election, through Thursday. It was, as Bloomberg put it, “the biggest two-week rout in the data, which go back to 1990.”

And the hated dollar – which by all accounts should have died long ago – has jumped since the election, as the world now expects rate hikes from the Fed while other central banks are still jabbering about QE. In fact, it has been the place to go since mid-2014, which is when Fed heads began sprinkling their oracles with references to rate hikes (weekly chart of the dollar index DXY back to January 2014):

The markets now have a new interpretation: Every time a talking head affiliated with the future Trump administration says anything about policies — deficit-funded stimulus spending for infrastructure and defense, trade restrictions, new tariffs, walls and fences, keeping manufacturing in the US, tax cuts, and what not — the markets hear “inflation.”

So in the futures markets, inflation expectations have jumped. This chart via OtterWood Capital doesn’t capture the last couple of days of the bond carnage, but it does show how inflation expectations in the futures markets (black line) have spiked along with the 10-year yield (red line), whereas during the Taper Tantrum in 2013, inflation expectations continued to head lower:

Inflation expectations and Treasury yields normally move in sync. And they do now. The futures markets are saying that the spike in yields and mortgage rates during the Taper Tantrum was just a tantrum by a bunch of spooked traders, but that this time, it’s real, inflation is coming and rates are going up; that’s what they’re saying.

Trump's Asian Pivot: 'US to Jump on One Belt, One Road Bandwagon'

Newly elected US President Donald Trump is likely to abolish Barack Obama's pivot to Asia policy and stop encouraging Asian Pacific nations to aggravate tensions in the South China Sea, Tom McGregor, Commentator and Editor at China Network Television (CNTV) suggested in an interview with Sputnik.

Donald Trump is likely to bring about a change in the US foreign policy, Tom McGregor, Commentator and Editor at CNTV and News Republic APP Asia-Pacific geopolitical columnist, believes. According to the journalist, after Trump's election the US may break the ice with China and ASEAN nations. Killing the Trans-Pacific Partnership (TPP) project will become Trump's first step in this direction, he noted. 'Trump Will Stop Obama's Pivot to Asia' "Trump will stop Obama's Pivot to Asia, and he's already ended TPP. He will no longer encourage Asian governments behind-the-scenes to spark territorial disputes in the South China Sea," McGregor assumed. © FLICKR/ GAGE SKIDMORE 50 Shades of Hawkish: Bolton Vs Giuliani as Trump's Top Picks for State Secretary Indeed, Politico.com reports that Trump will quit the controversial trade pact within the first 100 days, citing an internal transition team document shared with the media outlet. Speaking to Sputnik, Dr. Seijiro Takeshita of the University of Shizuoka and Philip Levy, Senior Fellow on the Global Economy, underscored that TPP was the cornerstone of Barack Obama's "pivot to Asia" policy. McGregor assumed that tensions between Beijing and Washington may "devolve into trade and global currency disputes." "Japan and China are considered to be flagrant 'currency manipulators' and Trump will confront Beijing and Tokyo over this matter," the journalist noted. For its part, "Beijing will criticize Trump for disregarding the Climate Change agreement, because so many Chinese companies invested big bucks into Green Energy companies and countless renewables energy will go into bankruptcy, causing problems to China's economy," according to McGregor. However, there are also signs of potential improvements in US-China relations. © AP PHOTO/ NG HAN GUAN, POOL 'Adjusting the Strategy': Trump Signals US Wants Broader Economic Cooperation With China In his interview with the South China Morning Post senior adviser to Trump on national security and intelligence James Woolsey underscored that the Obama administration's disregard for the Chinese-led Asian Infrastructure Investment Bank (AIIB) was a "strategic mistake." Woolsey also added that he expected a "much warmer" response from Trump to Beijing's "One Belt, One Road" initiative. "Trump has an ambitious plan to rebuild America's infrastructure," McGregor pointed out. "China's Belt & Road can play a pivotal role to help Trump make American infrastructure great again. The first step will be for Trump to sign the US up as a member of the China-led Asian Infrastructure Investment Bank (AIIB)," he predicted. 'New Dawn' Will Rise for ASEAN Nations As for ASEAN nations, McGregor assumed that "a new dawn will arise" for them "with Trump in the White House." Will Trump stop their "drift" toward China? "ASEAN members were drifting to China, because Obama and the prospects of Hillary Clinton becoming US President moved them in that direction. They did not support the bullying tactics of Obama and Clinton, so who could blame them for befriending Beijing," the journalist explained. © REUTERS/ NG HAN GUAN/POOL Philippine President Rodrigo Duterte and Chinese President Xi Jinping (R) shake hands after a signing ceremony held in Beijing, China, October 20, 2016 "They will return back to Washington for support, but they will maintain friendship with China, so they can receive maximum benefits from both sides. That's a pragmatic and win-win approach," he elaborated. Trump's First Domestic, Foreign Political Steps The CNTV commentator also gave his prognosis of Trump's very first steps after the inauguration. "Here's what we can expect. Trump will make decisions, based on his own viewpoints. He will listen and consider advice, but he will be the final decision maker. He won't act in a consensus manner, similar to what President Barack Obama had done during White House meetings," McGregor told Sputnik. "His agenda at the start will be to toughen up immigration laws, aid countries that are fighting radical Islamists, launch investigations under the Department of Justice to root out corruption, cancel the US as signatory of the Paris Agreement Climate Change Treaty, end sanctions against Russia, force NATO to move troops away from Russian border, sign the US up for China's Belt and Road via the AIIB, and the big shocker: Visit Mexico for his first trip abroad as US President," the journalist suggested. © PHOTO: PIXABAY America's Rebalance: Trump's Election Opened Door to New Global Order During his second month in office, Trump is likely to focus more on domestic policies, McGregor envisions. "It will be Trump vs. The Washington Beltway Establishment for his first year in office, but as Trump rises in popularity polls after six months, the GOP will find ways to mend fences," he predicted. On the other hand, according to the CNTV commentator, Trump's foreign policy is likely to "shift away" from neo-conservative values, such as the US' global hegemony. Remarkably, as Tom Engelhardt noted in his April article for TomDispatch.com, Trump "is the first American leader… of recent times not to feel the need or obligation to insist that the US, the 'sole' superpower of Planet Earth, is an 'exceptional' nation, an 'indispensable' country, or even in an unqualified sense a 'great' one." More Populist Politicians Will Win Elections in Europe Given the EU leadership's anxiety about Trump's win, what are the prospects of US-European relations? "It's great news that Eurocrats and a few European leaders feel a deep sense of anxiety about Trump and they will soon discover that Trump was not joking about asking the EU and UK to spend more money on NATO," McGregor noted. Trump's biggest headaches will come from pro-globalist Western European governments, McGregor deems. "They will demand he support the status quo, but Trump will respond by mocking them on his Twitter account," the journalist remarked ironically. According to the journalist, Europe may face the "circulation of elites." "We can expect to see more populist politicians, from the Left and Right, to win more elections," he concluded. The views expressed in this article are solely those of the author and do not necessarily reflect the official position of Sputnik.

Read more: https://sputniknews.com/politics/201611151047472984-trump-china-asean-new-silk-road-aiib/

Major Winter Storm to Hit Ottawa Ontario on Sunday November 20, 2016

Major Winter Storm is on its way for Ottawa Ontario on Sunday November 20, 2016 and it will bring 20 to 30+ cm of Snow and the Winds will be Very Strong Coming from the North that will Cause Blowing and Drifting Snow Including Cornwall Ontario, Brockville Ontario, Kingston and Belleville Ontario and it will be Stormy Conditions and It will Bring Whiteout Conditions and Reduced Visibility and Driving will be Treacherous and Dangerous Driving Conditions and Roads will be Very Slippery and The Low Pressure System will be Intense and The Major Winter Storm will also be Hitting Hawkesbury Ontario and 1st Half of Sunday November 20, 2016 will Start off as Rain and 2nd Half of Sunday the Rain will Change over to Snow in Ottawa and Cornwall Ontario. People in Ottawa Ontario and The Surrounding Areas Be Prepared Have your Winter Boots, Winter Jackets, Hats, Gloves, Scarfs and Ski Pants Ready. Order your Pizzas and Chinese Food and Buy Cases of Pepsi and Coke. Do your Grocery Shopping Don’t Wait until the Last Minute Do it Right Now. Buy your Hefts at Home Hardware Stores. Have your iPads, iPods, Cell Phones, Laptops and Tablets Charged and Have your 3G and 4G Internet Ready. When you are Driving your Car Take your Time Driving your Car and Slow Down so you Don’t Get in the Car Accident. When you are Walking Be Very Careful while you are Walking so you Don’t Slip and Fall. Make Sure to Have your Furnaces Ready and Turn on the Furnaces to Keep the House Warm. Drink Lots of Green Tea, White Tea, Red Tea and Drink Lots of Green Tea to Keep you Warm. Have your Extra Blankets Ready to Keep you Warm. When you are Walking Don’t Walk too Far. Make Sure to Have your Shovels, Hefts, Snow Scoops, Snow Blowers, Snow Plows and Salt Trucks Ready. If you Have anybody Living in Ottawa Ontario and The Surrounding Areas. Be Prepared for the Major Winter Storm on Sunday November 20, 2016. Take Care and Stay Safe and Don’t Get Caught in the Major Winter Storm Stay Warm and Be safe.

The U.S. Silver Market Experienced Two Significant Developments In August

by SRSrocco 

According to the USGS most recent report, the U.S. silver market experienced two significant developments in August.  From the data published in the USGS August Silver Mineral Industry Survey, U.S. silver production declined significantly while silver imports surged to near record highs.

First, U.S. silver production in August is down a stunning 14% compared to the same month last year and down 10% versus the previous month:

This is certainly a big decline compared to the trend earlier in the year where the average U.S. silver mine supply was approximately 95 metric tons a month.  What makes this quite surprising is that the price of silver hit a high of $20.7 in August, nearly $5 higher than during January-March.  So, why is U.S. silver production declining so much as the price continued higher??

I called up the USGS Silver Specialist and left a message on their answering service as to the details why silver production in the U.S. declined so much in August.  If I receive a reply, I will update the post.

Secondly, the U.S. silver imports hit a near record high of 581 metric tons (mt) in August versus 502 mt in July and 464 mt in June:

This large jump in U.S. silver imports is interesting as demand for the iShares Silver ETF was basically flat in August.  Even though the SLV ETF silver inventories surged during the first half of the year, it was relatively flat in July and August.

What I found also quite interesting is that the U.S. imported 55 mt of silver from Poland in August which was half of their total monthly mine supply.  Poland produces about 105 mt of silver a month.  Normally, Poland exports no more than 10-20 mt of silver a month to the United States.

For whatever reason, U.S. silver imports surged as the price hit a record high of $20.7 in August.  As I mentioned, this silver did not make its way into the iShares Silver SLV ETF as their inventories remained flat.  So, where did it go?

Well, according to the information from the COMEX, total inventories on the exchange increased from 153 million oz (Moz) at the beginning of August to 163 Moz by the end of the month.  Thus, the COMEX silver inventories increased 10 Moz or 311 metric tons in August.  Thus, some of the nearly 80 metric tons imported by the United States in August made its way into the COMEX silver inventories.

Of course, that is if the COMEX holds all the silver it states in its inventories or if each silver bar doesn’t have several owners.

Regardless, to see such a large decline in U.S. silver production in August was quite surprising.  Furthermore, the Silver Institute just put out their 2016 Interim Silver Report which they state that world silver production is forecasted to decline in 2016.

Unfortunately, once U.S. and global oil production starts to head south in a big way, world silver production will most certainly follow suit.  More about this in future articles.

Lastly, I will begin posting articles by The Hills Group on the oil and energy market this weekend.  Bedford Hill of The Hills Group, has a wealth of knowledge on the oil industry, their ETP Oil Model as well as other aspects of the energy industry.  I will be posting The Hills Group short response to the USGS announcement of a new 20 billion barrel oil resource in the Wolfcamp Shale formation in Texas.

YOU DON’T OWN YOURSELF, THE FEDERAL RESERVE DOES

[11/19/16]  For a while I have been receiving e-mails from a good friend who has asked me to investigate something weird about the Birth Certificates. He wanted me to take a look at them because they have certain numbers and other things printed on them that need an explanation.

When I looked at my own Birth Certificate, I noticed it was a copy of the original. So I went through old boxes and baby books that my Mom had saved before she died and found what I was looking for — my original Birth Certificate. It was brittle and yellowed with decades of age but — wow — it was NOT the original!

What I have learned since is kind of like discovering that you are part of the Matrix. It seems none of us have our original Birth Certificates — they are all copies. And the copies have a serial number on them, issued on special Bank Bond paper and authorized by “The American Bank Note Company.” Huh?

The truth is stranger than fiction. But here it is:

It seems that back in 1913 the United States was short of cash. By the end of World War I, wartime costs had depleted the treasury and there were several really bad financial panics. The country needed to print more money than it had as equity to restore confidence in the money supply and get the economy back on its feet.

When you or I need more money, we use something as collateral and go to a bank for a loan. When a country needs more money it has to go somewhere also. But in 1913 there wasn’t anywhere to go. So the US created the Federal Reserve Act. This established a private central bank (The Federal Reserve Bank) that would regulate the amount of money the US government was allowed to borrow and put in circulation. It also would expect to be repaid, like any bank, with interest.

After only 20 years things went from bad to worse. During Franklin D. Roosevelt’s presidency, in 1933, the US was unable to pay its debt. The county was bankrupt. The private banks that made up the Federal Reserve demanded their money and Roosevelt responded. He had to use the only thing left of any value to pay the banks and continue doing business with them — the citizens of our country. Us!

Exactly how all this was orchestrated is too lengthy to be addressed here, but this much can be told. The original birth or naturalization record for every U.S. Citizen is on file in the official records in Washington, D.C. (you get to keep a copy!) and the property and assets of every living U.S. Citizen is pledged as collateral for the National Debt!

Within two weeks and three days each Certificate of Live Birth is to be filed in Washington D.C. Evidence reveals that there is even a Federal Children Department established by the Shepherd/Townsend Act of 1922 under the Department of Commerce that appears to be involved in this process in some way. Every citizen is given a number (the red number on the Birth Certificate) and each live birth is valued at from 650,000 to 750,000 Federal Reserve dollars in collateral from the Fed.

This kind of makes you feel a little different when you look at Federal Reserve Chairman, Nancy Yellen, doesn’t it?

OK. Let’s take a pause to look at the Birth Certificates [below]. You will see the red numbers and you will see the fact that it is, in reality, a “Bank Note.” Congratulations — you and I are commodities!