The Global Death Cross Just Got "Deathier"

"X" continues to mark the spot of the death of global investor rationality...

19 "policy easings" since the start of the year have surged global equity prices to record highs but has sent expectations for global GDP growth to cycle lows...

When does the foundation of faith in central planners start to break?

WTI Crude Slumps To $50 Handle On Larger-Than-Expected Inventory Build

API released its crude oil inventory data to subscribers and it printed an enormous 14.3 million barrel build (EIA tomorrow forecast at 3 million barrel build). This has sparked further weakness in WTI (not helped by refinery strikes, refinery fires, and storage capacities), pushing it to a $50 .

WTI back with a $50 

One word - Stabiliteee.....

India Lifts Ban On Bank Gold Imports: Gold Can Again Be Used As Loan Collateral

One week ago we reported that central bank purchases of gold in 2014 were the second highest in the past 50 years, driven by purchases out of Iraq, Kazakhstan and - most of all - Russia, with no offsetting selling. But what about other more conventional sources of demand? Take jewelry, which while very strong in the beginning of the century, dropped off after the Great Financial Crisis, and then tumbled again after India imposed numerous restrictions on gold imports, which however merely forced the local population to find novel ways of smuggling gold into the country.

This is what the WGC had to say about gold jewelry demand in 2014.

Having suffered weak year-on-year comparisons for much of 2014, jewellery demand rallied to a strong finish, reaching 575t in the fourth quarter – 1% higher than Q4 2013. The sector was buoyed by good festival- and wedding-related demand in India, as well as by the seasonal holiday effect in the US and UK. Global annual jewellery demand of 2,152.9t, although down 10% year-on-year, was above the five-year average by a comfortable 5% margin. 2014 was a standout year for Indian jewellery. Demand reached a record 662.1t, topping the previous year’s total by 8%. This in spite of government measures designed to restrict gold imports being in place for much of the year. Wedding- and festival-related purchases drove robust demand of 179.1t in the fourth quarter, up 19% over Q4 2013. Indeed, the second half of the year was the strongest H2 in our data series (from 2000), up 37% on H2 2013.

US jewellery demand was again notable for its improving trend: Q4 was the seventh consecutive quarter of year-on-year growth and the strongest fourth quarter since 2009. Similarly, 2014 full year demand of 132.4t was the highest for five years. That being said, it clearly has to be acknowledged that the market remains far  below pre-crisis levels of jewellery demand, which between 2000 and 2006 averaged 360t per year.

In considering jewellery demand, it is interesting to look at the contribution that the sector has made over recent years to the accumulation of above-ground stocks. Jewellery is by far the largest component of above-ground stocks of gold – accounting for almost half of the 177,200t of gold estimated to be held by private owners and central banks. Jewellery consumption less recycling provides a fairly good proxy for net demand (as the vast majority of recycled gold will be old jewellery). In years gone by net jewellery demand regularly added as much as 2,000-2,500t per year to above-ground stocks. This plunged to less than 100t during the depths of the global financial crisis as distress selling of gold skyrocketed in tandem with a slump in jewellery demand.

The last two years have seen net jewellery demand recover to exceed 1,000t. This is partly due to a firming of jewellery demand as the world has emerged from the crisis. But by far the greater impact comes from the recycling sector and the sharp reduction in the volumes of gold being sold back onto the market. Above-ground stocks of jewellery should continue accumulating at a similar rate as we expect recycling to remain low in 2015, counterbalancing the recent growth in  mine production.

In short, even with extended draconian measures created by India to prevent capital account outflows as a result of uncontrolled gold imports (which still take place only "under the table"), a whopping 1000 tons of gold ended up in the form of gold trinkets in 2014 mostly in India, and to a lesser extend in China.

All of that is about to change: earlier today India's Economic Times reported that the RBI, surely facilitated by the drop in oil prices - a key import for India - has finally lifted its ban on imports of gold coins and medallions by banks and trading houses.  The RBI in a notification also said banks are permitted to import gold on consignment basis. Domestic sales will be, however, permitted against upfront payment only.

"While the import of gold coins and medallions will no longer be prohibited, pending further review, the restrictions on banks in selling gold coins and medallions are not being removed," it said.

The RBI and the government have been receiving requests for clarification on some of operational aspects of guidelines. Aiming to tame the then widening current account deficit (CAD), the central bank in August 2013 had prohibited imports of gold coins and medallions besides restricting inbound shipments of the metal.

Under the 80:20 scheme, which was withdrawn on November 28 last year, gold imports were linked with its exports.

The notification further said the obligation to export under the scheme will continue to apply in respect of unutilised gold imported before November 28, 2014.

"Banks are free to grant gold metal loans," it said, adding that Star and Premier Trading Houses (STH/PTH) can import the metal as per entitlement without any end use restrictions.

And it's not just jewelry: per the RBI announcement:

"Nominated banks are now permitted to import gold on consignment basis. All sale of gold domestically will, however, be against upfront payments. Banks are free to grant gold metal loans."

Why is that important? Because as we wrote in January 2013 in "Don't Show Bernanke This Chart Of Gold Loans In India", before the import ban, gold in India was most certainly money, and the amount of gold loans being created in India was simply exponential.

 However, since the importing of gold and its reuse as a money-equivalent collateral meant even more undesired capital outflows, the RBI was forced to halt the practice. Until now.

What all of the above simply means is that the government, tired of fighting a losing war with gold smugglers, has opened up one more avenue by which gold can enter the country on an official, and taxable basis, and as a result physical gold will now resume flowing into India officially, a process which depending on how much gold is being mind out of the ground could mean a rapid depletion of the net available gold in any one period. 

It also means that going forward, India's true gold demand will finally be on the books, as banks find numerous loopholes to pass on the imported gold to end consumers - either in physical or loan form - only this time with the total tonnage once again being officially represented, as was the case in previous years.

By way of example, gold imports surged by 8.13% Y/Y to $1.55 billion in January after the initial RBI restrictions were eased. Expect this number to spike that much more in the coming months as banks rush to reload on physical, especially with paper gold prices determined mostly by ETFs and manipulated by central banks, continue to make purchases (in most currencies, and certainly the dollar) increasingly more attractive, just as the CEO of Rosneft explained is happening to oil right now.

Finally, for those who are unaware, India is considered the largest importer of gold - a title it shares on again, off again with China, the bulk of whose gold imports are also undocumented as they end up almost exclusively in some bonded warehouse where the gold is used as (infinitely) rehypothecated collateral for Commodity Funding Deals and/or in the vault of the PBOC.

What Russians Think Of Western Sanctions

I parse the Russian media (corporate and social) on a daily basis and I am always amazed at the completely different way the issue of western sanctions is discussed.  I think that it is important and useful for me to share this with those of you who do not speak Russian.

First, nobody in Russia believes that the sanctions will be lifted.  Nobody.  Of course, all the Russian politicians say that sanctions are wrong and not conducive to progress, but these are statements for external consumption.  In interviews for the Russian media or on talk shows, there is a consensus that sanctions will never be lifted no matter what Russia does.

Second, nobody in Russia believes that sanctions are a reaction to Crimea or to the Russian involvement in the Donbass.  Nobody.  There is a consensus that the Russian policy towards Crimea and the Donbass are not a cause, but a pretext for the sanctions.  The real cause of the sanctions is unanimously identified as what the Russians called the "process of sovereignization", i.e. the fact that Russia is back, powerful and rich, and that she dares openly defy and disobey the "Axis of Kindness".

Third, there is a consensus in Russia that the correct response to the sanctions is double: a) an external realignment of the Russian economy away from the West and b) internal reforms which will make Russia less dependent on oil exports and on the imports of various goods and technologies.

Fourth, nobody blames Putin for the sanctions or for the resulting hardships. Everybody fully understands that Putin is hated by the West not for doing something wrong, but for doing something right.  In fact, Putin's popularity is still at an all-time high.

Fifth, there is a wide agreement that the current Russian vulnerability is the result of past structural mistakes which now must be corrected, but nobody suggests that the return of Crimea to Russia or the Russian support for Novorussia were wrong or wrongly executed.

Finally, I would note that while Russia is ready for war, there is no bellicose mood at all.  Most Russians believe that the US/NATO/EU don't have what it takes to directly attack Russia, they believe that the junta in Kiev is doomed and they believe that sending the Russian tanks to Kiev (or even Novorussia) would have been a mistake.

The above is very important because if you consider all these factors you can come to an absolutely unavoidable conclusion: western sanctions have exactly zero chance of achieving any change at all in Russian foreign policy and exactly zero chance of weakening the current regime.

In fact, if anything, these sanctions strengthen the Eurasian Sovereignists by allowing them to blame all the pain of economic reforms on the sanctions and they weaken the Atlantic Integrationists by making any overt support for, or association with, the West a huge political liability.

But the Eurocretins in Brussels don't care I suppose, as long as they feel relevant or important, even if it is only in their heads.

Sourced:Vineyard of the Saker,

Japan aluminium stocks rise for tenth month, hit record

* Stocks at 3 key ports grow nearly 9 pct -Marubeni

* Breaks record set in December

Feb 17 (Reuters) - Aluminium stocks held at three major Japanese ports climbed for a tenth month to hit a record high at the end of January, as robust imports met tepid domestic demand.

 

Aluminium stocks held at Yokohama, Nagoya and Osaka grew 8.8 percent in January from a month earlier to 449,800 tonnes, Marubeni Corp said on Tuesday. The trading house collects data from those key ports.

 

That broke the previous record set in December, the highest level in data going back nearly 15 years. 

 

"A high level of imports kept coming to Japan to look for buyers as demand elsewhere in Asia stayed slack and China is exporting cheaper aluminium products to neighbouring countries," said a Tokyo-based trader, who declined to be named.

 

Chinese exports of aluminium products grew about 19 percent last year, a trend analysts expect to continue in 2015 given lower local prices compared with international markets.

 

Meanwhile, Japanese imports of aluminium ingots for 2014 soared 16 percent from a year earlier to 1.698 million tonnes, the highest since 2010, the country's trade data showed. Imports of aluminium alloys rose 11 percent to 1.125 million tonnes, the highest since 2008.

 

January inventories were also inflated by the early arrival of some cargoes that were supposed to arrive in Japan in February, as well as by weak domestic demand, the trader added.

 

Output of rolled-aluminium products by Japanese fabricators fell 2.9 percent in December from a year earlier to 160,731 tonnes, marking a second monthly decline and reflecting slow demand of vehicles and houses, the Japan Aluminium Association said.

 

Japan's aluminium premiums for primary metal shipments it agrees to pay each quarter over the London Metal Exchange (LME) cash price were set at a record high of $425 per tonne for January-March deliveries, rising for a fifth straight quarter as overseas rates remained persistently high.

 

"Spot premiums have been below $425 per tonne in Japan due to higher inventories and as some Japanese companies want to cut their stocks by March 31, the end of the current business year," the trader said.

Confusion over CTT on new agri-commodities cleared

The confusion over commodities transaction tax (CTT) on 38 new agricultural commodities is clear now. The government has neither levied as such any CTT on the trading of any new agricultural commodities nor removed it from the any commodity already covered in the list under CTT. In fact, the Central Board of Direct Taxes (CBDT) has expanded its list of the commodities exempting CTT; a finance ministry official source cleared the confusion. He added, the commodities included in this list will remain out of the ambit of CTT or CTT will not be levied on these commodities.

Previously, the news appeared in the media that the commodities transaction tax (CTT) would be levied on 38 new items of agricultural commodities as the Finance Ministry has expanded the list of agricultural commodities coming under CTT by adding 38 commodities to the existing number of 23. This created confusion in the market.

After including several agricultural commodities in the Non-CTT list, the government has opened a new window for new contracts in the agricultural commodities which exchanges now can initiate.

Commodities included in Non-CTT list  

The new commodities included in the list are rice, bajra, ginger, sesamum, small millets, tur, tur dal, urad, urad dal, onion, groundnut, moong dal, methi, ragi , betelnuts, cinnamon, nutmeg, jowar, linseed, gram daland sunflower seed. Presently, some of the new items added to the list are not traded on commodity exchanges.

Source:Markettimestv

Government exempts oilseeds, raw cotton, 36 other products from commodity transaction tax

The government has added 38 more products to the list of commodities exempt from commodity transaction tax (CTT), raising hopes among commodity exchanges and a section of brokers that the Centre might favourably consider a regulatory recommendation to reduce the levy, if not withdraw it altogether, in the Union Budget. 

Twenty three commodities like oilseeds, raw cotton, spices, etc, were exempt from CTT, introduced in July 2013. The government has exempted 38 more commodities from the levy. Many of these, onion, seedlac, ginger, gram dal, gram husk, masur, methi, safflower, rice, paddy, sesamum, moth, small millets, etc, are either not traded or are illiquid and some like urad and tur have been banned from futures trading. 

However, the move drew praise from leading agri commodity bourse NCDEX and a few brokers. 

"....... it (the development) reflects the growing recognition and confidence in the government that markets are taking a very crucial role in the agricultural economy through our efforts such as developing smart mandis, digital e-procurement platforms for government bodies, warehousing finance at the farmer's doorstep and efficient collateral management," said Samir Shah,MD and CEO, NCDEX. Chirag Shah, head of commodities & global futures, Phillip-Capital, said the move "boosted" sentiment that the government was on the "right track" to grow the nascent commodity futures market. 

The development on February 10 came days after Forward Markets Commission, or FMC, which regulates the 11-year-old commodity futures market, recommended to its parent — the finance ministry —to either withdraw or reduce the levy from the current 0.01% on the seller FMC data show that volume shrank 41% to Rs 101.4 lakh crore in FY14 (Apr 2013 - Mar 2014), the fiscal year the tax was introduced on non-farm and processed farm contracts such as gold, silver, crude oil, cotton, soya oil and sugar. In the fiscal year through January 2015, volume has fallen 42% toRs 51.3 lakh crore from the same period last year. 

Moreover, CTT collection has been significantly lower than from securities transaction tax (STT) on stock market transactions. On MCX, the country's largest commodity exchange with 90% market share, collection in the fiscal year through December was Rs 374.35 crore against Rs 4,940 crore in STT over the same period.

Source : ET