TFMR Podcast #14 - Ned Naylor-Leyland Discusses PAGE, Silver and True Price Discovery

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“You never change things by fighting the existing reality.
To change something, build a new model that makes the existing model obsolete.”

― Richard Buckminster Fuller

Please stop what you're doing and listen to this extremely important interview with Ned Naylor-Leyland of Cheviot Asset Management in London.

Many have wondered what happened to the Pan Asia Gold Exchange. We were all excited last summer when we first heard about it but, then, things went eerily quiet. Today, Ned Naylor-Leyland and Andrew Maguire are finally able to go public with an update on PAGE and, more importantly, information on a brand new exchange that will soon begin trading a spot, physical silver contract.

Please do three things for me:

  1. Listen to this entire podcast.
  2. Read the research note below that Ned published today for Cheviot clients.
  3. Listen to Andy Maguire's interview with Eric King. It can be found here: https://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/3/2_Whistleblower_Maguire_-_US_Entity_Interferes_in_Gold_Market.html

Today is an historic day in the effort to dislodge the imperial forces that dominate the leveraged, paper markets of gold and silver. We must to grateful to Ned, Andy and all those involved in making this new silver exchange a reality. Ned promises to keep us posted with more details as the launch of the exchange draws near. For now, be comfortable in knowing that we have powerful allies who are intent upon making obsolete the existing model and will soon put forth a new structure, one that finally allows for true price discovery in the precious metals.

TF

P.A.G.E. Squashed: And now for something completely different...

by,

Ned Naylor-Leyland, Cheviot Asset Management

Last year at the GATA Goldrush 2011 conference I presented about the Pan Asia Gold Exchange (PAGE) and the likelihood of the ‘Spot Dog’ shaking off its ‘futures handlers’. This was to happen thanks to this new game-changing Chinese Exchange driving a return to a more acceptable form of price discovery. Much water has passed under the bridge since the ‘soft’ opening of PAGE in the early summer of last year, and everyone is well overdue an update. Meanwhile,thanks in no small measure to the debacle at MFGlobal, the spot dog has indeed thrown off its handlers (hence the emergence of backwardation in Silver) – but, as can be inferred from the title above, PAGE has also been squashed, Monty Python-style.

Fortunately, however, this is far from the full story, as the players behind the 1:1 allocated market concept are determined to make it run come hell and/or high water. The market is begging for this return to real price discovery and in spite of the interference so far, the change IS coming. It is disappointing to have to report that PAGE has not rolled out the way we anticipated, however everything that I presented at the GATA Goldrush conference was accurate at the time. The fact that a major Chinese regional development program was stalled appears, at least in part, to have been due to the publicity generated by Andrew Maguire and I. Too much is very evidently at stake in the world of Ponzi Bullion banking for the status quo not to fight its corner. Soon after the noise was made about PAGE and its forthcoming 1:1 allocated Gold contract, the shenanigans started. Just after the publicized ‘soft launch’ (with Central government mandarins in attendance) and the noise made on the internet about its implications, the one shareholder in PAGE that had a foreign listing (in the US) suddenly and stealthily increased its share-holding from 10% to 25%, acquiring additional board directors along the way. The rationale for this sudden change in the weighting of shareholders is shrouded in mystery, however what we do know is that this entity then insisted that they be allowed to build the trading platforms for PAGE from the ground up, rather than buying a working platform off the shelf to get PAGE operational in a timely manner.

This blocking tactic at board level effectively stopped the progress of the fully-allocated spot contract in its tracks, and it was immediately clear to the international-facing people that something fundamental had changed internally. Interestingly, the key Independent Director of this small listed entity that blocked the timely roll-out of PAGE is a well-known Western banker within China, whose CV includes work for the Federal Trade Commission, the Sloan Foundation (related to MIT) and his wife is a member of the Council on Foreign Relations. Whether this intervention respect of the platform was nefarious or not, it was understandable that the people behind the international-facing fully-allocated contract decided to step aside from PAGE and set up their own dedicated exchange. More on that in a moment. Following on from this removal of the 1:1 international contract, the domestic and leveraged PAGE Gold contract (via the Agricultural Bank) also subsequently went the way of the dodo, thanks to the well- publicized People’s Bank of China (PBoC) announcement about control over domestic Gold trading outside of Shanghai. It appears that the shiny Gold building constructed in Kunming City for PAGE will sadly remain (as elsewhere in China) a ‘see- through’, at least until the new Communist Party Politburo are voted in and the new political culture is embedded later this year when who knows, the rules on Gold trading again may be relaxed. Ostensibly these new PBoC rules about Gold trading were brought in to ‘protect the public’, but it is interesting to me that such a U-turn in policy appears to have been driven by pressure exerted somewhere within the People’s Bank, rather than it being typically characteristic of the long-term planning of the Chinese.

As disappointing as this all appears, there is a very substantial Silver lining to what has happened, both respect of the international allocated contracts and the indeed the domestic leveraged ones. By freeing themselves of the other shareholders within PAGE, the international-facing contracts are now being developed independently and under a new name. After the shenanigans of last year Andrew and I will not be giving the name of this new exchange until it is properly ‘live’ in a few months time, as it seems obvious that too much is at stake within the existing Bullion Banking system for this to be allowed to launch without some attempt at interference.

The aforementioned change in domestic Chinese rules mean that along with every other regional Precious Metals exchange, the new unnamed 1:1 allocated exchange is launching with Silver initially, which of course is the Achilles Heel of the Bullion banking system. This in my opinion is far more bullish and exciting short and medium-term than the Gold contract would have been, as the physical Silver market is so tight. Furthermore, all the regional exchanges mothballed by the PBoC rule change can switch, and are switching to Silver trading which is not covered by the change in rules. The contract itself will be, as before, an international rolling 90 day spot one, denominated in RMB, and the new entity is supported by the same serious players within the Chinese political and military establishment as before. The physical will be acquired ahead of closing each monthly tranche and will be vaulted entirely outside of the Bullion Banks (i.e. private vaulting facilities). From there the allocated receipts will be recorded on an electronic register and the issue will be tradeable in the secondary market with the register adjusted real-time. This is extremely good news for holders of real Silver and extremely bad news for holders of fake paper Silver who rely on the 350:1 leverage being maintained as the world’s sole price discovery mechanism for large purchases of the white metal. This effectively will be like dealing in an RMB-denominated and fully allocated version of some of the popular Silver Bullion Trusts, but rather than trading at a premium, the premium will price the issue ahead of purchase, affecting global price discovery, as previously mooted.

The guts of this new exchange that is rising Phoenix-like from the ashes of PAGE, are agreed and under construction. The international conduit for the new exchange has also been established and is ready to receive business once the legal framework (well down the road) is given final sign off by their Chinese legal team. Unlike PAGE, which was primarily established by domestic Chinese interests, the new entity is much more streamlined, better funded and the problems encountered last year by PAGE have helped to clarify the route going forwards. All in all, the squashing of the Pan Asia Gold Exchange has in truth only served to accelerate the move to real price discovery, and the control over domestic Gold trading is in my opinion yet another reason to be bullish about the prospects for the Silver price. Once the new exchange is ‘live’ in the summer we will be back with the all- important details about where and how to gain access for those interested in buying physical in size rather than paper illusions. Many serious physical Silver buyers, who are desperate to leave the farce of the Loco London system are ready to jump ship once the final sign off takes place.

Ned Naylor-Leyland
February 2012

  319 Comments

  Refresh
SIlverbee
Mar 11, 2012 - 4:17pm

ABX

Coincidentally Andrew Maguire's company is called Coghlan Capital and the ABX exchange share holders/owners are the Coughlins.

Also he has a trading seminar coming up in London on Monday and there is a space free!

carnex
Mar 7, 2012 - 2:50am
Bohemianboatman
Mar 5, 2012 - 11:17am

@boatman

Martin Armstrong has also had a terrific track record. Here were his predictions he made in 1998:

1998 = Collapse of Russia

So in 1998, during his Fall Tour, Martin Armstrong predicted the collapse of Russia in 1998...? There's something wrong with this prediction. :-)

BUDDHA PRINCESS
Mar 5, 2012 - 11:12am

Commodities Under Fire

Commodities Under Fire as China, European PMIs Reboot Growth Fears

*Crude Oil, Copper Aiming Lower as Global Slowdown Fears Return

*Gold and Silver Sold as Risk Aversion Stokes Demand for US Dollar

Commodity prices are under pressure to start the trading week as fears of a global economic slowdown return to the spotlight. With the immediate threat of a market-wide credit crisis emanating from the Eurozone neutralized for now by the ECB’s LTRO efforts, investors have an opportunity to re-evaluate the macro-economic environment. The picture is hardly rosy, with economists’ median forecasts hinting global GPD will add just 2.14 percent in 2012 to mark the weakest performance since the world emerged from the Great Recession two years ago.

Ominous news from China served as the near-term catalyst to set the stage for the return of growth-linked jitters, with Premier Wen Jiabao announcing that his country will officially target a GDP growth rate of 7.5 percent in this year. This marks the lowest goal since 2004 and – if achieved – would amount to the weakest performance since 1990. Disappointing European data flow compounded the risk-averse environment. The composite Eurozone PMI gauge was revised lower to show manufacturing- and service-sector activity contracted at a faster pace than previously estimated in February. Likewise, the UK Services PMI reading fell short of expectations, showing the slowest growth in three months.

Looking ahead, the risk-averse tone appears likely to carry forward. S&P 500 stock index futures are trading sharply lower ahead of the opening bell on Wall Street, suggesting that directly growth-linked commodities including copper and crude oil will remain heavy. US data flow threatens to compound the selloff, with theUS ISM Non-Manufacturing Composite gauge expected to pull back in February after hitting an 11-month high in January. Gold and silver are likewise vulnerable as the dour mood is stokes safe-haven demand for the US Dollar, putting de-facto downward pressure on the precious metals complex. Scheduled remarks from Dallas Fed President Richard Fisher may further encourage sellers if they echo the moderation in dovish rhetoric seen in Ben Bernanke’s testimony last week, denting demand for an alternative to fiat.

WTI Crude Oil (NY Close): $106.70 // -2.14 // -1.97%

Prices are testing key support at 105.82, the 23.6% Fibonacci retracement level reinforced by a rising trend line set from the February 2 swing bottom, after putting in a bearish Three Outside Down candlestick pattern. Negative RSI divergence reinforces the case for a downside scenario. A daily close below 105.82 initially targets the 38.2% Fib at 103.28.

Spot Gold (NY Close): $1712.60 // -5.68 // -0.33%

Prices remain locked between 1687.97 and 1727.06, the 38.2% and 23.6% Fibonacci retracement levels, respectively. A daily close above resistance exposes the December 2 high at 1763.00 anew. Alternatively, a push through immediate support exposes the 50% level at 1656.38.

Spot Silver (NY Close): $34.79 // -0.70 // -1.96%

Prices are testing through support at 34.59, the 23.6% Fibonacci retracement, after completing a Bearish Engulfing candlestick pattern below resistance at 36.99. A daily close below this boundary exposes the 38.2% Fib at 32.97 as the next key level. Near-term resistance lines up at 35.66, the October 28 high.

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.904 // -0.028 // -0.71%

Prices appear to be carving out a Head and Shoulders topping chart pattern below the 4.0 figure, although confirmation is required on a daily close below the formation’s neckline at 3.713. Before that however, sellers must overcome initial rising trend line support set from the December 15 swing low, now at 3.811. Near-term resistance is at 3.947. If the Head and Shoulders is confirmed, sellers will aim for a measured target at 3.438.

Daily Chart - Created Using FXCM Marketscope 2.0

Written by Ilya Spivak, Currency Strategist for Dailyfx.com

BUDDHA PRINCESS
Mar 5, 2012 - 11:07am

Yen Soars as China Sets Soft GDP Goal, Stoking Global Slowdown F

Yen Soars as China Sets Soft GDP Goal, Stoking Global Slowdown Fears

The Japanese Yen soared overnight, adding as much as 0.9 percent on average against its leading counterparts, as a selloff across Asian bourses stocked safe-haven demand. The MSCI Asia Pacific regional benchmark stock index sank after Chinese Premier Wen Jiabao said his country will officially target a GDP growth rate of 7.5 percent in 2012. This marks the lowest goal since 2004 and – if achieved – would amount to the weakest performance since 1990. The US Dollar likewise rose against overtly growth-linked currencies including its Australian, Canadian and New Zealand namesakes but performance was mixed against the other non-Yen majors.

Looking ahead, global slowdown concerns appear like to remain in focus. UK Services PMI is expected to print lower in February, snapping a three-month winning streak. The analogous US ISM Non-Manufacturing Composite gauge is likewise expected to pull back over the same period after hitting an 11-month high in January. Futures tracking the benchmark S&P 500 stock index – a proxy for overall sentiment trends – are pointing sharply lower to suggest risk aversion remains the dominant theme across the markets. A speech from Dallas Fed President Richard Fisher on “The State of the Economy” may also prove market-moving, particularly if the remarks echo the moderation in dovish rhetoric seen in Ben Bernanke’s testimony last week. Against the current backdrop, further evidence that a QE3 program is becoming increasingly unlikely would probably amplify risk-averse tendencies.

Asia Session: What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

21:45

NZD

Net Migration s.a. (JAN)

-650

-

-530 (R-)

21:45

NZD

Value of All Buildings (4Q)

2.9%

2.0%

-1.6% (R+)

22:30

AUD

AiG Performance of Service Index (FEB)

46.7

-

51.9

23:30

AUD

TD Securities Inflation (MoM) (FEB)

0.1%

-

0.2%

23:30

AUD

TD Securities Inflation (YoY) (FEB)

2.0%

-

2.2%

0:01

GBP

Lloyds Business Barometer (FEB)

1

-

-11

0:30

AUD

Company Operating Profit (QoQ) (4Q)

-6.5%

0.0%

4.8%

0:30

AUD

Inventories (4Q)

1.4%

0.3%

-1.1%

0:30

AUD

ANZ Job Advertisements (MoM) (FEB)

3.3%

-

7.5% (R+)

2:30

CNY

China HSBC Services PMI (FEB)

53.9

-

52.5

Euro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

8:15

CHF

Retail Sales (Real) (YoY) (JAN)

-

0.6%

Low

8:45

EUR

Italian PMI Services (FEB)

45.2

44.8

Low

8:50

EUR

French PMI Services (FEB F)

50.3

50.3

Low

8:55

EUR

German PMI Services (FEB F)

52.6

52.6

Medium

9:00

EUR

Euro-Zone PMI Composite (FEB F)

49.7

49.7

Medium

9:00

EUR

Euro-Zone PMI Services (FEB F)

49.4

49.4

Medium

9:00

EUR

Italy PPI (YoY) (JAN)

3.4%

4.0%

Low

9:00

EUR

Italy PPI (MoM) (JAN)

0.6%

0.1%

Low

9:30

GBP

PMI Services (FEB)

54.9

56

Medium

9:30

EUR

Euro-Zone Sentix Investor Confidence (MAR)

-5

-11.1

Low

9:30

GBP

Official Reserves (Changes)

-

$2477M

Low

10:00

EUR

Euro-Zone Retail Sales (MoM) (JAN)

-0.1%

-0.3%

Medium

10:00

EUR

Euro-Zone Retail Sales (YoY) (JAN)

-1.5%

-1.3%

Medium

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.3093

1.3292

GBPUSD

1.5732

1.5926

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

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BUDDHA PRINCESS
Mar 5, 2012 - 11:03am

S&P 500 StrugglestoFind Direction,DollarEdging to Key Resistance

By Ilya Spivak, Currency Strategist, Daily FX.com

THE TAKEAWAY: The S&P 500 is struggling to find directional near 2011 highs while the US Dollar is on pace to challenge the boundaries of its near-term down trend.

S&P 500 – Positioning remains indecisive as prices test the 1358.60-1376.10 area, with a narrow bullish breakout late last week again falling short on follow-through. Negative RSI divergence still points to fading upward momentum, warning of a reversal lower. A break below 1358.60 initially exposes 1337.30, the 23.6% Fibonacci retracement. Alternatively, a sustained push higher targets the 1400 figure.

CRUDE OIL – Prices are testing key support at 105.82, the 23.6% Fibonacci retracement level reinforced by a rising trend line set from the February 2 swing bottom, after putting in a bearish Three Outside Down candlestick pattern. Negative RSI divergence reinforces the case for a downside scenario. A daily close below 105.82 initially targets the 38.2% Fib at 103.28.

GOLD – Prices remain locked between 1687.97 and 1727.06, the 38.2% and 23.6% Fibonacci retracement levels, respectively. A daily close above resistance exposes the December 2 high at 1763.00 anew. Alternatively, a push through immediate support exposes the 50% level at 1656.38.

Daily Chart - Created Using FXCM Marketscope 2.0

US DOLLAR – As we suspected last week, prices moved higher after putting in a Bullish Engulfing candlestick pattern. Resistance now looms at 9896, the February 22 swing high, but the larger boundary to watch is the falling trend line defining the down trend since mid-December. A daily close above this boundary would go a long toward confirming a lasting bullish reversal. Near-term support lines up at 9835, the 14.6% Fibonacci expansion.

¤
Mar 5, 2012 - 10:41am

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Key Economic Events Week of 7/6

7/6 9:45 ET Markit Service PMI
7/6 10:00 ET ISM Service PMI
7/7 10:00 ET Job openings
7/9 8:30 ET Initial jobless claims
7/9 10:00 ET Wholesale inventories
7/10 8:30 ET PPI for June

Key Economic Events Week of 6/29

6/30 9:00 ET Case-Shiller home prices
6/30 9:45 ET Chicago PMI
6/30 10:00 ET Consumer Confidence
6/30 12:30 ET CGP and SSHW to Capitol Hill
7/1 8:15 ET ADP Employment
7/1 9:45 ET Markit Manu PMI
7/1 10:00 ET ISM Manu PMI
7/1 2:00 ET June FOMC minutes
7/2 8:30 ET BLSBS
7/2 10:00 ET Factory Orders

Key Economic Events Week of 6/22

6/22 8:30 ET Chicago Fed
6/22 10:00 ET Existing home sales
6/23 9:45 ET Markit flash PMIs for June
6/23 10:00 ET New home sales
6/25 8:30 ET Q1 GDP final guess
6/25 8:30 ET Durable Goods
6/26 8:30 ET Pers Inc and Spending
6/26 8:30 ET Core inflation

Key Economic Events Week of 6/15

6/16 8:30 ET Retail Sales
6/16 8:30 ET Cap Ute and Ind Prod
6/16 10:00 ET Chief Goon Powell US Senate
6/16 4:00 pm ET Goon Chlamydia speech
6/17 8:30 ET Housing Starts
6/17 12:00 ET Chief Goon Powell US House
6/18 8:30 ET Initial Jobless Claims
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6/19 8:30 ET Current Account Deficit
6/19 1:00 pm ET CGP and Mester conference

Key Economic Events Week of 6/8

6/9 10:00 ET Job openings
6/9 10:00 ET Wholesale inventories
6/10 8:30 ET CPI for May
6/10 2:00 ET FOMC Fedlines
6/10 2:30 ET CGP presser
6/11 8:30 ET Initial jobless claims
6/11 8:30 ET PPI for May
6/12 8:30 ET Import price index
6/12 10:00 ET Consumer sentiment

Key Economic Events Week of 5/25

5/26 8:30 ET Chicago Fed
5/26 10:00 ET Consumer Confidence
5/27 2:00 ET Fed Beige Book
5/28 8:30 ET Q2 GDP 2nd guess
5/28 8:30 ET Durable Goods
5/29 8:30 ET Pers Inc and Cons Spend
5/29 8:30 ET Core Inflation
5/29 9:45 ET Chicago PMI

Key Economic Events Week of 5/18

5/18 2:00 ET Goon Bostic speech
5/19 8:30 ET Housing starts
5/19 10:00 ET CGP and Mnuchin US Senate
5/20 10:00 ET Goon Bullard speech
5/20 2:00 ET April FOMC minutes
5/21 8:30 ET Philly Fed
5/21 9:45 ET Markit flash PMIs for May
5/21 10:00 ET Goon Williams speech
5/21 1:00 ET Goon Chlamydia speech
5/21 2:30 ET Chief Goon Powell speech

Key Economic Events Week of 5/11

5/11 12:00 ET Goon Bostic speech
5/11 12:30 ET Goon Evans speech
5/12 8:30 ET CPI
5/12 9:00 ET Goon Kashnkari speech
5/12 10:00 ET Goon Quarles speech
5/12 10:00 ET Goon Harker speech
5/12 5:00 ET Goon Mester speech
5/13 8:30 ET PPI
5/13 9:00 ET Chief Goon Powell speech
5/14 8:30 ET Initial jobless claims and import prices
5/14 1:00 ET Another Goon Kashnkari speech
5/14 6:00 ET Goon Kaplan speech
5/15 8:30 ET Retail Sales and Empire State index
5/15 9:15 ET Cap Ute and Ind Prod
5/15 10:00 ET Business Inventories

Key Economic Events Week of 5/4

5/4 10:00 ET Factory Orders
5/5 8:30 ET US Trade Deficit
5/5 9:45 ET Markit Service PMI
5/5 10:00 ET ISM Sevrice PMI
5/6 8:15 ET ADP jobs report
5/7 8:30 ET Productivity
5/8 8:30 ET BLSBS
5/8 10:00 ET Wholesale Inventories

Key Economic Events Week of 4/27

4/28 8:30 ET Advance trade in goods
4/28 9:00 ET Case-Shiller home prices
4/29 8:30 ET Q1 GDP first guess
4/29 2:00 ET FOMC Fedlines
4/29 2:30 ET CGP presser
4/30 8:30 ET Pers Inc and Cons Spend
4/30 9:45 ET Chicago PMI
5/1 9:45 ET Markit Manu PMI
5/1 10:00 ET ISM Manu PMI

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