Alasdair Macleod – 09 December 2013 In the jigsaw that is the Great Game of Asia pieces which heretofore made little sense on their own are beginning to slot in to give us an idea of the final picture. These disparate pieces are as varied as China’s claim of territorial rights over Japan’s Senkaku Islands,
Alasdair Macleod – 02 December 2013 Ron Paul, the (retired) Republican Senator concluded a speech before Congress in 2006 thus: The chaos that one day will ensue from our 35-year experiment with worldwide fiat money will require a return to money of real value. We will know that day is approaching when oil-producing countries demand
Alasdair Macleod – 09 December 2013
In the jigsaw that is the Great Game of Asia pieces which heretofore made little sense on their own are beginning to slot in to give us an idea of the final picture. These disparate pieces are as varied as China’s claim of territorial rights over Japan’s Senkaku Islands, NATO’s backing off from Syria, America’s détente with Iran and the surprising move by Iran to improve relations with the other Gulf States. The Chinese yuan is now second only to the US dollar in trade finance, displacing the euro. George Osborne, UK Chancellor at very short notice recently flew over to China, when there was already a British delegation there. And this week, again at little notice David Cameron flies to China for top level meetings with the new president and the premier, promoted by the British media as a trade mission.
There are also a few gold-coloured pieces in want of a slot in the puzzle. The Arabs are recasting some of their gold into one-kilo bars ahead of the introduction of a spot gold contract on the Dubai Gold and Commodity Exchange in a deliberate move away from LBMA standards. Chinese gold imports are far, far greater than Western analysts acknowledge. Despite accelerating physical demand from the Far East, Western capital markets insist on suppressing the gold price, forcing physical metal to rapidly disappear from Western vaults into the anonymity of Asia.
If we stand back to get an overall impression of how this jigsaw fits together, the guiding hand of China can be imagined throughout. While one can read too much into any big-picture action, things do seem to be working for China. The Senkaku dispute, with its provocative Air Defence Identification Zone looks like a kung-fu feint, designed to throw America off-balance and into defending her alliances with Japan and other long-standing allies. America has ended up wrong-footed over regional policy, hampered by a newly-appointed and inexperienced ambassador in Japan and by the imminent retirement of her ambassador in Beijing. All this detracts America from addressing China’s more important interests. Washington is now belatedly sending high-level envoys to the region, but this will be to no avail.
We must conclude that China’s future interest is no longer with America, which has been her largest trading partner. Her new ambitions are predominantly towards Asia through the Shanghai Cooperation Organisation (SCO), which is an economic bloc she jointly runs with Russia and has ambitions for the whole continent, excluding for the moment only South-East Asia and Japan. The spread of current member states, observers and associates covers more than half the world’s population. This she sees as her home turf with lots to develop. And the most important outstanding strategic objective for China is to do away with the US dollar for Asian cross-border trade, and also eventually with all other trade wherever possible.
This explains why America finds herself parked in a cul-de-sac labelled Senkaku. China is instead turning to London to utilise strong existing links with Hong Kong to develop a yuan alternative for trade finance for her non-Asian trade, which is why Cameron and Co are getting so excited. And even before this move, the financial power behind China’s economic renaissance has been sufficient to knock the euro into third place for trade finance.
We now turn to the Middle East. China’s interest in absorbing the Middle East into her sphere of influence is obvious, given her current and future energy requirements; but she will also want to tap into the enormous wealth in the region. Her link into it is through Iran, an SCO Observer State, to which she provided covert support during the Ahmadinejad years. One can only speculate about the degree of Chinese influence behind Iranian political developments, with Iran now aligning herself with China’s view that trade matters more than belligerence with her perceived enemies. However, if one acknowledges China’s strategic and trade interests, there is a ready explanation behind Iran’s diplomatic moves to heal the rift with Saudi Arabia and other members of the Gulf Cooperation Council.
The great-game strategy for the Middle-East appears to have been to force the US to resign as regional policeman, which has happened in two stages. Initially Russia brokered a deal over Syria, leaving America and her NATO partners completely outflanked. This was followed by a similar move over Iran, guided possibly by China. There will be no leaving party, and the role of American policeman will be replaced by common peaceful trade interests throughout Asia.
We can begin to see how our jigsaw puzzle might complete. But there is an extra piece for which there is no place, and that is the dollar. It is simply becoming surplus to requirements; and here again China has America cornered. After concluding her alliances with the Middle East she will control directly and indirectly almost all the world’s above-ground stocks of gold, which in the final analysis is more powerful than any fiat currency, reserve status or not.
One can only speculate about how much of this is self-inflicted by the Americans. Was it her overt imperialism that undermined her, or is it the Fed’s monetary policy? I also remember Alan Greenspan’s undiplomatic remarks over China’s stock of US Treasuries, when he pointed out that they had the problem, not America.
That is for post-event analysis, but for now Western markets seem to be unaware of these important developments, leaving the dollar/gold pair more mispriced than perhaps at any point in history. Physical gold is being cornered, leaving Western capital markets operating as little more than casinos backed only by hot air. The dollar will one day be a bit-player in international trade, meaning that enormous quantities are becoming redundant and will have to be sold for something else.
After the inevitable upwards explosion in the dollar price of gold, we shall be left wondering at what price we will need to offer our goods and services to get some of it back from Asia.
Alasdair Macleod – 02 December 2013
Ron Paul, the (retired) Republican Senator concluded a speech before Congress in 2006 thus:
The chaos that one day will ensue from our 35-year experiment with worldwide fiat money will require a return to money of real value. We will know that day is approaching when oil-producing countries demand gold, or its equivalent, for their oil rather than dollars or euros.*
To most people even today this is probably a pie-in-the-sky comment, but they would be wrong not to consider it more seriously in the light of subsequent events.
The possibility of the demise of the petrodollar is increasing quite rapidly for two reasons. Firstly, US oil consumption has fallen from 38% of the World’s total in 1965 to less than 20% today, while Asia/Pacific consumption has increased threefold to over 33%. Furthermore due to shale oil production US oil imports are expected to reduce further in the coming years, perhaps eliminating her oil deficit entirely, negating the need for petrodollars. This leaves the Arab nations with a stack of useless dollars.
The chart below shows the enormity of their problem.
In the thirty years before 2000, total energy export revenue ignoring compounding interest totalled $3.5 trillion and in the thirteen years since then over $8 trillion. With interest, and despite accelerated infrastructure spending since the late 1990s that still leaves enormous currency balances in Middle-Eastern hands, likely to be a number like $8-10 trillion with a large element of it still in dollars.
Secondly, America’s failure to support Mubarak in Egypt, the volte-face over Syria and now the détente with Iran have altered long-term relations with Saudi Arabia, forcing her to reconsider strategic options for the future and to look after her own interests. Saudi Arabia and Israel find that America is no longer prepared to be the regional policeman. And when she unsuccessfully courted Russia for help over Syria and got nowhere, it must have only heightened the Saudi’s sense of insecurity.
One could argue it all comes down to the money, but the other reality is US electoral fatigue after Iraq and Afghanistan; so a logical reassessment shows the region’s future on both trade and strategic grounds is increasingly focused towards Asia and Europe, not the US.
The currency replacement for the petrodollar need not concern us for the moment. What is more interesting is the regional attitude to gold, which was acquired in large quantities up to the mid-1990s, as insurance against this eventual outcome. Interestingly, I have discovered from contacts in the Swiss refining industry that some of this gold in LBMA 400 ounce gold bars is now being recast into the new Chinese 9999 standard of 1 kilo bars.
It is not immediately clear why Arab gold is being recast. However, taking into account the significant shift in the region’s trade and strategic options it becomes clear that gold held for eventual resale into dollar-denominated markets makes no sense at all, particularly when there are enormous dollar balances that will also have to be addressed.
However, the Arabs know that if they sell their dollars they will risk undermining the whole fiat currency regime. It is therefore quite possible they will seek as an alternative to take at least a portion of their oil revenue in gold or its equivalent, as Ron Paul suggested; so he had a point seven years ago and the foreign exchanges should now begin to anticipate this event.
There is a lesson for us in this: when we are distracted by China’s accelerating demand for gold and her conflicting desire not to trigger a financial crisis, the unexpected catalyst for monetary chaos may well be the actions of the Middle-Eastern potentates who cornered the gold market thirty years ago.
*This speech was recently commented on and drawn to my attention by Casey Research.
Max interviews Alasdair Macleod of GoldMoney.com about 400 ounce London .995 gold bars being sent to Switzerland from Arab holders and melted down to 1 kilo .9999 bars, thus moving gold from the London standard, to the new better Chinese standard – suggesting we may be entering a post-petrodollar world. In which case, petrodollars could be flowing back into NY in pure dollar form to cause high inflation. And, finally, Max and Alasdair suggest that unless you rig gold markets, your forex and libor-rigging won’t work.
The interview starts at minute 15:15.
Alasdair Macleod – 22 November 2013
The relationship between gold and commodities is essentially a simple one. If you look at long-term charts of oil priced in gold for example, you find that they have been more constant than oil priced in paper currencies. In 1965, gold was at $35 and oil was priced at $2.90 per barrel, so priced in gold oil was 0.083 ounces. Today gold is $1250 and oil is $95, so oil is 0.076 ounces. Therefore the price of oil in terms of gold has hardly changed over nearly forty years compared with it rising 33 times measured in US dollars.
What has happened is the purchasing power of the dollar has fallen. Since 1965 the quantity of gold in above ground stocks has doubled, which other things being equal explains a rise in the price of oil in gold terms. At the same time, the Fiat Money Quantity (a measure of total dollar cash and deposits in the banking system) has increased 33 times, which again is broadly consistent with the price of oil measured in USD increasing substantially.
There are significant fluctuations in price from the oil side as well. Before the Lehman crisis in mid-2008, oil peaked at $140 before collapsing to under $40by the year-end, or in gold terms, 0.14oz to 0.05oz, so there is no precision in these relationships. However, so long as economic conditions are roughly stable, over time it will be true that gold, in paper currency terms, will tend to move in line with commodity prices.
For this reason many analysts make the mistake of tying gold closely to the general commodity cycle. This trend assumption ignores the monetary role of gold at a time of great currency inflation and systemic risk. It is hardly surprising, since so far as I’m aware not one commodity analyst even considers the possibility that changes in commodity prices might be due to changes in the purchasing power of the currency.
For this reason, they will either use technical analysis or will focus on prospective demand for commodities in the light of the global economic outlook. Both these approaches are inherently subjective.
The monetary situation today is at an extreme for which the consensus is not prepared. Let us take two simple facts: governments are being funded by their central banks at wholly artificial interest rates; and the global banking system, exposed to government bonds, interest rate swaps and highly-indebted customers, would face a renewed crisis if interest rates and bond yields were suddenly normalised.
Not only has there been significant deviation between gold and commodity prices in the past, but the past is no guide to the current position. Currency inflation is now a significant and escalating problem, and those that think gold will continue to act like any other commodity are almost certainly mistaken.
Alasdair Macleod – 22 November 2013
There is considerable disagreement about Chinese gold demand, with delivery figures on the Shanghai Gold Exchange and import/export figures for Hong Kong suggesting the real totals are far higher than those published by the World Gold Council and Thompson-Reuters GFMS.
Recently Eric Sprott of Sprott Global Resource Investments Limited tackled this issue and wrote an open letter to the WGC pointing out that import/export figures show far higher levels of gold demand than the WGC’s estimates for Asia, particularly China, Hong Kong, Thailand, India and Turkey. The response is not on the WGC website, though it appears to be partially quoted elsewhere.
It seems that Sprott and the WGC are trying to do two different things. Sprott is interested in how much gold is actually taken into a country net of exports, irrespective of its use category, taking the view that there can be no more accurate estimate of overall gold demand, irrespective of how it is used. The WGC is trying to identify how much gold is used for specific purposes, which given the opaqueness of the market means they will never track all of it down. Crudely put it is top-down versus bottom-up.
To see how different the results can be let’s look at the solid figures for China and Hong Kong for the first nine months of 2013 which are set out in the table below, before comparing the result with that of the WGC.
|Shanghai Gold Exchange delivered||1,671.6|
|HK exports to China||164.9|
|Less Chinese exports to HK||264.9||_______|
|Net imports into China||1,571.7|
|Less exports to China||164.9|
|Less re-exports to China||1,077.5|
|Less exports to rest of the world||46.0|
|Less re-exports to rest of the world||78.8||_______|
|Net imports into HK (vault storage)||559.0|
|Total identified imports for China and Hong Kong||2,130.7|
All these are published figures which we can assume to be accurate. Mainland China does not release import/export statistics for gold but we know what has been physically delivered through the Shanghai Gold Exchange, the monopoly physical market, and we know what Hong Kong imports exports and re-exports. We can also be reasonably certain that these figures exclude off-market government transactions, such as direct purchases from the mines of all China’s gold production, given that Chinese-refined bars are never seen in circulation. Exports from Hong Kong refer to gold processed into a materially different form from that imported, typically jewellery; so exported to the Mainland they are additional to SGE deliveries. Re-exports refers to imports re-exported with no material processing, and therefore can be assumed to be bullion trans-shipped and destined for the SGE, ignoring for simplicity’s sake that some may have bypassed the SGE and been sent directly to private buyers. Exports and re-exports to the rest of the world obviously must be deducted.
The conclusion is that between them gold absorbed by private sector purchases in Hong Kong and China amount to at least 2,130.7 tonnes in the first nine months of this year, or 2,841 tonnes annualised. This compares with the WGC’s estimates from their quarterly Gold Demand Trends of only 818.6 tonnes for the same period, or 1,091.5 annualised. Given the hard evidence of Hong Kong and SGE statistics it appears that the WGC’s figures substantially understate the true position. Furthermore, any analysis of gold demand will fail to account for the increase in gold ownership not constrained by national boundaries.
Estimates of China’s demand also exclude government purchases of gold in foreign markets, and gold that may have been acquired and imported by wealthy Chinese from foreign locations without going through Hong Kong or the SGE. So without taking into account these extra factors China and Hong Kong’s combined imports from the rest of the world exceeds all other mine supply by at least 580 tonnes on an annualised basis.
It now becomes clear that without significant leasing by Western central banks total Asian demand could not be satisfied at current prices, because there is no evidence of material selling by existing holders of above-ground stocks, with the exception of ETF liquidation which is minor compared with the amounts involved.
Alasdair Macleod – 18 November 2013
Based on the monthly figures to 1st October recently released by the St Louis Fed, FMQ jumped $227bn in September to $12,176bn. This puts it $4,819bn and 65% over the long-term exponential trend established between 1960 and July 2008, the month before the Lehman crisis. The revised chart is shown below.
QE3 is running at $85bn, and directly increases FMQ by double that amount, or $170bn, indicating that other factors contributed $57bn to the FMQ total. This suggests that the current rate of QE was insufficient to provide the liquidity required in money markets consistent with current interest rates, at least for the month of September. However, bond yields are still high, despite the deferral of tapering, as shown in the second chart, which is of the US Treasury 10-year note yield.
Since 30th October the Treasury 10-year note yield has increased from 2.5% to 2.75%. During that time it has been more widely acknowledged that tapering has been deferred for the foreseeable future. This being the case, the rise in yield indicates that underlying tightness in bond markets has returned after a brief pause, despite the Fed’s bond purchases and the liquidity this provides. Therefore, QE3 may need to be supplemented by other measures if interest rates and bond yields are to be maintained at current levels.
Note: the methodology and construction of FMQ was published by GoldMoney, here.
Alasdair Macleod – 15 November 2013
Zerohedge recently drew attention to the growing level of foreign bank cash deposits, tucked away at the bottom of the Fed’s H.8 statement.
Foreign banks’ cash balances have increased by $518.7bn since September 2012, accounting for almost all of the increase in these banks’ total assets in the H.8 table. The implication is that these cash balances are held as reserves on the Fed’s balance sheet, the counterpart of quantitative easing.
This naturally raises the reasonable question posed by Zerohedge’s article as to why the Fed appears to be benefiting foreign banks with QE. The answer is either these deposits have been transferred to them from US banks in the normal course of business or the Fed is prepared to provide liquidity to foreign banks: after all the US dollar is the reserve currency. And this liquidity is most needed by the weakest banks in the international banking system, many of which are in the eurozone.
The ECB’s room for manoeuvre with respect to money-printing is more limited, and it is the only central bank of the big four not to have overtly quantitatively eased. Furthermore, the eurozone is still in trouble even though it has disappeared from the headlines. The chart below of bank lending figures supplied by the ECB illustrates the problem.
Bank lending peaked in mid-2012, and by mid-2013 it had contracted over €1 trillion. By now, the ECB should have advance knowledge of the yet-to-be-released Q3 bank lending total, which if it has continued the downward trend explains why the ECB unexpectedly reduced interest rates recently.
Meanwhile, the Bank of England has finally admitted that the UK’s economy is growing. Conventional wisdom suggests the BoE should permit interest rates to return to more normal levels, but it refuses to do so for at least another year. The fact that the UK continues with current interest rate polices is due in part to policy coordination with the Fed, the ECB and to a lesser extent perhaps the Bank of Japan.
The logical implication from the Fed’s and the BoE’s actions is that interest rate policies are being managed with the weakest in mind. Therefore the course of prices and bank lending in the eurozone could be regarded as the current determinant of when tapering will be introduced by the Fed.
However there is still an overriding problem: if the stimulant of monetary inflation is reduced, rates along the yield curve will rise rapidly from today’s wholly artificially suppressed levels. The two cannot be divorced. The Fed knows this, and it is central to its internal debate.
The fact of the matter is that just as zero interest rates flatter bank balance sheets and government borrowing costs, the reverse is also true. Add into the mix the deflationary implications of more normal interest rates and it is obvious that the Fed and the BoE are trapped. They will not be looking forward to the day when they run out of excuses for this dilemma. But for now at least there is a rescue mission in place for the eurozone, and the Fed will continue to lend its support to foreign banks.
Alasdair Macleod – 08 November 2013
This week an article in Euromoney points out that liquidity in bond markets is drying up. The blame is laid at the door of regulations designed to increase banks’ capital relative to their balance sheets. Furthermore, the article informs us, new regulations restricting the gearing on repo transactions are likely to make things worse, not only reducing bond market liquidity further, but also affecting credit markets. The reason this will be so is that in a repurchase agreement a bank supplies credit to non-banks for the period of the repo.
One could take another equally valid point of view: the reason for deteriorating liquidity in bond markets is due in part to yields being unnaturally low. If you price bonds too highly, which amounts to the same thing, few investors want to buy them without the unconditional support of the central bank as a ready buyer. This, after all, is why just the hint of tapering recently was enough to derail the markets. So here again we come up against the same choice: if the Fed insists on mispricing the market with its interventions and zero interest rate policy it must fully support the market with both QE and also twist applied to the yield curve to maintain market liquidity.
For the investment analysts and commentators that still expect tapering this must come as something of a surprise. The underlying point they have missed is that once a central bank embarks on a policy of printing money as a cure-all, it is impossible to stop, or even to just taper without risking a liquidity crisis. Increasingly illiquid markets are now telling us that QE should be increased.
The point was rammed home this week by the ECB’s decision to lower interest rates. The move was sold to the financial press as designed to stimulate inflation and reduce the risk of deflation. However, central to the deflation argument is the need to stimulate liquidity in the secondary markets, which according to the Euromoney article “are now close to breakdown”.
At least the ECB rate cut should defuse tapering expectations in US markets, making it easier for the Fed to back down from its failed experiment. The Fed now needs to plant the suggestion that QE will have to be increased, or a similar mechanism designed to boost liquidity introduced.
This will not be difficult in the prevailing economic conditions. Even though GDP remains a positive figure, concerns over deflation abound and are preoccupying more and more analysts. These are concerns which analysts can readily accept as an immediate and greater risk than inflation.
Alasdair Macleod – 25 October 2013
A number of people have asked me to expand on how the rapid expansion of money supply leads to an effect the opposite of that intended: a fall in economic activity. This effect starts early in the recovery phase of the credit cycle, and is particularly marked today because of the aggressive rate of monetary inflation. This article takes the reader through the events that lead to this inevitable outcome.
There are two indisputable economic facts to bear in mind. The first is that GDP is simply a money-total of economic transactions, and a central bank fosters an increase in GDP by making available more money and therefore bank credit to inflate this number. This is not the same as genuine economic progress, which is what consumers desire and entrepreneurs provide in an unfettered market with reliable money. The second fact is that newly issued money is not absorbed into an economy evenly: it has to be handed to someone first, like a bank or government department, who in turn passes it on to someone else through their dealings and so on, step by step until it is finally dispersed.
As new money enters the economy, it naturally drives up the prices of goods bought with it. This means that someone seeking to buy a similar product without the benefit of new money finds it is more expensive, or put more correctly the purchasing power of his wages and savings has fallen relative to that product. Therefore, the new money benefits those that first obtain it at the expense of everyone else. Obviously, if large amounts of new money are being mobilised by a central bank, as is the case today, the transfer of wealth from those who receive the money later to those who get it early will be correspondingly greater.
Now let’s look at today’s monetary environment in the United States. The wealth-transfer effect is not being adequately recorded, because official inflation statistics do not capture the real increase in consumer prices. The difference between official figures and a truer estimate of US inflation is illustrated by John Williams of Shadowstats.com, who estimates it to be 7% higher than the official rate at roughly 9%, using the government’s computation methodology prior to 1980. Simplistically and assuming no wage inflation, this approximates to the current rate of wealth transfer from the majority of people to those that first receive the new money from the central bank.
The Fed is busy financing most of the Government’s borrowing. The newly-issued money in Government’s hands is distributed widely, and maintains prices of most basic goods and services at a higher level than they would otherwise be. However, in providing this funding, the Fed creates excess reserves on its own balance sheet, and it is this money we are considering.
The reserves on the Fed’s balance sheet are actually deposits, the assets of commercial banks and other domestic and foreign depository institutions that use the Fed as a bank, in the same way the rest of us have bank deposits at a commercial bank. So even though these deposits are on the Fed’s balance sheet, they are the property of individual banks.
These banks are free to draw down on their deposits at the Fed, just as you and I can draw down our deposits. However, because US banks have been risk-averse and under regulatory pressure to improve their own financial position, they have tended to leave money on deposit at the Fed, rather than employ it for financial activities. There are signs this is changing.
Rather than earn a quarter of one per cent, some of this deposit money has been employed in financial speculation in derivative markets, or found its way into the stock market, gone into residential property, and some is now going into consumer loans for credit-worthy borrowers.
In addition to the government’s deficit spending, these channels represent ways in which money is entering the economy. Furthermore, anyone working in the main finance centres is being paid well, so prices in New York and London are driven higher than in other cities and in the country as a whole. They spend their bonuses on flashy cars and country houses, benefiting salesmen and property values in fashionable locations. And with stock prices close to their all-time highs, investors with portfolios everywhere feel financially better off, so they can increase their spending as well.
All the extra spending boosts GDP, and to some extent it has a snowball effect. Banks loosen their purse strings a little more, and spending increases further. But the number of people benefiting is only a small minority of the population. The rest, low-paid workers on fixed incomes, pensioners, people living on modest savings in cash at the bank, and part time employed as well as the unemployed find their cost of living has gone up. They all think prices have risen, and don’t understand that their earnings, pensions and savings have been reduced by monetary inflation: they are the ultimate victims of wealth transfer.
While luxury goods are in strong demand in London and New York, general merchants in the country find trading conditions tough. Higher prices are forcing most people to spend less, or to seek cheaper alternatives. Manufacturers of everyday goods have to find ways to reduce costs, including firing staff. After all if you transfer wealth from ordinary folk they will simply spend less and businesses will suffer.
So we have a paradox: growth in GDP remains positive; indeed artificially strong because of the under-recording of inflation, while in truth the economy is in a slump. The increase in GDP, which reflects the money being spent by the fortunate few before it is absorbed into general circulation, conceals a worse economic situation than before. The effect of an expansion of new money into an economy does not make the majority of people better off; instead it makes them worse off because of the wealth transfer effect. No wonder unemployment remains stubbornly high.
It is the commonest fallacy in economics today that monetary inflation stimulates activity. Instead, it benefits the few at the expense of the majority. The experience of all currency inflations is just that, and the worse the inflation the more the majority of the population is impoverished.
The problem for central banks is that the alternative to maintaining an increasing pace of monetary growth is to risk triggering a widespread debt crisis involving both over-indebted governments and also over-extended businesses and home-owners. This was why the concept of tapering, or putting a brake on the rate of money creation, destabilised worldwide markets and was rapidly abandoned. With undercapitalised banks already squeezed between bad debts and depositor liabilities, there is the potential for a cascade of financial failures. And while many central bankers could profit by reading and understanding this article, the truth is they are not appointed to face up to the reality that monetary inflation is economically destructive, and that escalating currency expansion taken to its logical conclusion means the currency itself will eventually become worthless.
Alasdair Macleod interviewed by Chris Martensen of PeakProperity.com on 19th October.