20 October 2016 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
[Note: I apologize that my website was down for several hours yesterday. The hosting server crashed — and there wasn’t much either my webmaster or myself could do about it. But it’s the first down-time in more than two years, so I guess it was due. However, it did pick a rather unfortunate time of day to happen. – Ed]
There was no price activity worthy of the name in Far East trading on their Wednesday morning, although it began to drift quietly lower starting at 10 a.m. China Standard Time. The low tick of the day came shortly after 1 p.m. over there — and rallied quietly back to it 10 a.m. CST high tick shortly before 10 a.m. BST in London. About thirty minutes later, which was probably the morning gold fix, it rallied a quick six bucks in just a few minutes — and up to the $1,270 spot mark. From there, every rally attempt above that price, got sold down — and the gold price was forced to chop quietly sideways for the rest of the Wednesday session.
Except for the quick spike high around 11 a.m. in New York, gold once again traded in less than a ten dollar price range — and for that reason, I shall dispense with the low and high ticks once again.
For all intents and purposes, the silver price followed a mostly identical path to gold, so I shall dispense with the play-by-play. The low and high ticks in this precious metal weren’t worth my time, either.
Palladium was up about 7 bucks by the COMEX open yesterday morning. But as you can tell from the chart below, all those gains were gone by shortly after the London p.m. gold fix — and the price chopped mostly sideways for the rest of the Wednesday session. Palladium was closed at $634 spot, also down a dollar on the day.
The dollar index closed very late on Tuesday afternoon in New York at 97.88 — and from there it chopped and flopped around in a pretty wide range, but it never made a serious run at the 98.00 mark during the entire Wednesday session. The 97.63 low tick came a few minutes after 11 a.m. in London — and the 97.97 high tick came at 2:00 p.m. in New York right on the button. It sold off a bit from there — and dollar index finished the day at 97.85 — down 3 whole basis points.
The gold stocks gapped up a bit more than 2 percent at the open of trading in New York yesterday morning. They sold off almost to unchanged by 10:20 a.m. EDT, but took off from there, with their collective high ticks coming at noon. They sagged a bit until 2 p.m. — and then rallied a bit into the close. The HUI finished higher by 2.85 percent.
It was more or less the same price path for the silver equities, but their rally off their 10:20 a.m. lows was far more impressive — and that peaked out at 12:30 p.m. EDT. They gave up more than half of those gains by shortly before 3 p.m., but at that juncture they jumped higher by 2 percentage points within fifteen minutes — and then chopped quietly sideways into the close. It’s obvious that a large block of silver equities was purchased all at once at that time, as nothing else would account for a vertical price spike like the one you see in the chart below. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 3.34 percent. Click to enlarge if necessary.
The CME Daily Delivery Report showed that 10 gold and 85 silver contracts were posted for delivery within the COMEX-approved depositories on Friday. In gold, Canada’s Scotiabank for its own account and JPMorgan for its client account were the two long/stoppers. In silver, ABN Amro was the biggest short/issuer with 83 contracts —and the two largest long/stoppers were ADM and JPMorgan with 63 and 12 contracts for their respective client accounts. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Wednesday trading session showed that October open interest in gold rose by 180 contracts, leaving 301 still around, minus the 10 mentioned in the previous paragraph. Tuesday’s Daily Delivery Report showed that 11 gold contracts were posted for delivery today, so that means that another 11+180=191 gold contracts were added to the October delivery month. Silver o.i. in October rose once again, adding 5 contracts and leaving 168 contracts still open, minus the 85 mentioned in the previous paragraph. Tuesday’s Daily Delivery Report showed that zero silver contracts were posted for delivery today so, like yesterday, that means the obvious again.
There were no changes reported in GLD, but there was another deposit in SLV, as an authorized participant added 854,123 troy ounces.
There was a smallish sales report from the U.S. Mint. They sold 1,500 troy ounces of gold eagles, plus 1,500 one-ounce 24K gold buffaloes — and no silver eagles.
There was a lot of activity in gold over at the COMEX-approved depositories on Tuesday. Only 1,100.000 troy ounces were reported received — and that would certainly translate into 110 ten-ounce gold bars. That all went into Brink’s, Inc. The big movement was out the door, as a total of 138,239 troy ounces were shipped out. Of that amount, there was 6,172.992 troy ounces/192 kilobars [SGE kilobar weight of 32.151 troy ounces] shipped out of HSBC USA. Over at the Malca-Amit USA depository, there was 66,456.117 troy ounces/2,067 kilobars [SGE kilobar weight of 32.151 troy ounces] shipped out as well. That big withdrawal represented almost all the gold this depository had. The other big withdrawal was 65,609 troy ounces out of Canada’s Scotiabank. The link to all this action is here.
It was a little quieter in silver. Nothing was shipped in — and only 235,780 troy ounces were shipped out. All of that ‘out’ activity was either from CNT or Scotiabank — and the link to that is here.
It was another very busy day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday. The received 3,089 of them — and shipped out a chunky 7,195. All of the action was at Brink’s, Inc. — and the link to that, in troy ounces, is here.
I don’t have all the many stories today — and I hope there’s the odd one in the list below that you feel is worth reading.
Russia’s very able Foreign Ministry spokeswoman, Maria Zakharova, said that the U.S. presidential campaign is “simply some sort of a global shame” unworthy of the American people. She certainly hit the nail on the head.
Hitlery’s criminal record had to be suppressed by the Obama regime in order to move the oligarchs’ candidate in the direction of the White House. So here we are on the verge of nuclear war with Russia and China, and the important issue before the American people is Trump’s lewd comments with Billy Bush about sexually attractive women.
I mean really. Men’s talk about women is like their fish and hunting stories. It has to be taken with a grain of salt. But this aside, why is lewd talk about women more important than military conflict with Russia, which could mean nuclear war and the end of life on earth?
Trump has declared that he sees no point in conflict with Russia and that he sees no point in NATO a quarter century after the demise of the Soviet Union.
Is Trump’s lewd talk about women worse than Hitlery’s provocative talk about Russian President Vladimir Putin, whom Hitlery calls “the new Hitler”? What kind of utter fool would throw gratuitous insults at the President of a country that can wipe the U.S. and all of Western Europe off the face of the earth in a few minutes?
This commentary by Paul put in an appearance on his website yesterday sometime — and it’s certainly worth reading if you have the interest. Reader Tolling Jennings was the first one through the door with this item yesterday — and another link to it is here.
The European Commission believes it is unlikely that negotiations with the United States over a free trade deal will be completed under the current U.S. administration, a Commission source told Reuters on the condition of anonymity on Wednesday.
It wants to preserve the interim status reached in negotiations between the European Union and the U.S. on the Transatlantic Trade and Investment Partnership (TTIP), the source added.
This would allow the Commission to continue negotiating with the next U.S. administration after President Barack Obama’s term expires in January.
The source said there has been some progress on some issues, which the Commission wants to preserve, instead of starting from scratch with a new U.S. administration.
The U.S ambassador to Germany, John B. Emerson, told a German broadcaster on Tuesday that the two sides were close to bridging differences on many sticking points and that Obama would make a final push for a deal after the U.S. election on Nov. 8.
The above five paragraphs are all there is to this Reuters story that was posted on their Internet site at 6:44 a.m. on Wednesday morning EDT — and it comes courtesy of Brad Robertson via Zero Hedge.
The European Central Bank wants E.U. lawmakers to tighten proposed new rules on digital currencies such as bitcoin, fearing they might one day weaken its own control over money supply in the euro zone.
The European Commission’s draft rules, aimed at fighting terrorism, require currency exchange platforms to increase checks on the identities of people exchanging virtual currencies for real ones and report suspicious transactions.
In a legal opinion published on Tuesday, the ECB said E.U. institutions should not promote the use of digital currencies and should make clear they lack the legal status of currency or money.
“The reliance of economic actors on virtual currency units, if substantially increased in the future, could in principle affect the central banks’ control over the supply of money … although under current practice this risk is limited,” the ECB said in the opinion for the European Parliament and Council.
“Thus (E.U. legislative bodies) should not seek in this particular context to promote a wider use of virtual currencies.”
This is another Reuters story. This one was filed from Frankfurt at 8:44 a.m. EDT on Tuesday morning — and I found it embedded in a GATA release on Wednesday morning. Another link to this article is here.
In an interview with CNBC-TV18, maverick investor Marc Faber discussed his U.S. election candidate pick, leaning towards — as most Austrian economics-minded investors do — the Republican candidate: in this case, Donald Trump.
He also talked about why the Fed’s ‘money-printing’ policies were likely to prevent a major crash in global stock markets, even as they were looking expensive now.
Further, he reiterated his years-long call that investors seek exposure to “hard assets” such as gold and commodities and said the latter appeared to have bottomed out.
This 14:38 minute video interview on India’s CNBC affiliate showed up on the moneycontrol.com Internet site at 9:03 a.m. Tuesday morning, but no time zone was provided. There’s a full transcript as well — and after listening to the first bit of the interview, my advice it to read the transcript instead. I thank Ken Hurt for sending it our way — and another link to this interview is here.
Texan hedge fund manager J. Kyle Bass, the founder of Hayman Capital, reiterated his timeline for his big bet against the China’s “recklessly built” banking system.
“Sometime in the next 18 months you’re going to see a real banking crisis in China,” Bass said on Wednesday at the Vanity Fair New Establishment Summit. “Economic reality takes over.”
Back in February, Bass unveiled his case in an investor letter entitled “The $34 Trillion Experiment: China’s Banking System and the World’s Largest Macro Imbalance.”
Bass, who gained notoriety for correctly betting against the U.S. subprime crisis, wrote that similar to the U.S. banking system, China’s banking system has “increasingly pursued excess leverage, regulatory arbitrage, and irresponsible risk taking.”
He believes that the Chinese banking system losses will be gargantuan. “They’re four-times worse than we were at our peak in 2006,” he said during the panel.
This news item, which is definitely worth reading, showed up on the ca.finance.yahoo.com Internet site around 3 p.m. EDT yesterday afternoon — and I thank reader ‘David in California’ for sharing it with us. Another link to it is here.
In commentary today Sharps Pixley CEO Ross Norman rebutted your secretary/treasurer’s skepticism about the need for a price benchmarking mechanism in gold like the venerable daily gold price fixings in London, which are operated by a few large investment banks.
Maybe your secretary/treasurer should have been clearer from the outset, but it seems to GATA that valid benchmarks could be derived entirely from price and trade volume data at the end of each day, benchmarks that would result from all trading and not the trading of a few banks talking confidentially to each other and to God-only-knows who else.
Norman also disparaged Deutsche Bank’s $38 million payment to settle the class-action lawsuit accusing it of rigging the silver market. As Norman wrote, the settlement seems small. But it may be small for several reasons quite apart from what Norman supposes is the bank’s desire to confess to everything everywhere, pay a comprehensive fine, and move on.
Deutsche Bank’s payment may seem small because: 1) The plaintiffs’ lawyers surely were prepared to give the bank a break for being the first defendant to capitulate, much as prosecutors make generous plea and sentencing offers with the first criminal defendant in a case who turns state’s evidence. 2) The settlement with Deutsche Bank will pressure the other defendant banks to capitulate and pay up as well. As such Deutsche Bank’s payment may be worth far more than its nominal amount. And 3) the settlement with Deutsche Bank apparently covers only silver, even as the gold lawsuit continues and Deutsche Bank is still on the hook there.
As for Norman’s observation that GATA would do better to concentrate its fire on central banks rather than the bullion banks: GATA does concentrate its fire on central banks and has done so for many years. The bullion banks are of interest to us mainly because they often act as agents of the central banks. Norman may not have read the summary of GATA’s work that your secretary/treasurer invited him to review the other day, but it deals almost entirely with central banking. Indeed, all the questions your secretary/treasurer put to Norman directly the other day involved governments and central banks, not the banks in the London fix.
Anyway, GATA is grateful to Norman for cordially engaging with us on these issues. Hardly any respectable participant in the gold business does, and financial news organizations have forsworn critical questions involving gold. Let’s hope that this exchange hasn’t made Norman any less respectable to his business colleagues.
This commentary by GATA secretary/treasurer Chris Powell appeared on the gata.org Internet site early Tuesday evening EDT — and because I had a decent number of stories in yesterday’s column, it had to wait for today’s missive. Another link to it is here.
Gold prices in India swung to a premium for the first time in nine months on Wednesday as jewellers and dealers in the world’s No.2 consumer of the metal ramped up purchases ahead of major festivals.
Dealers were charging up to $2 an ounce over official domestic prices, the first time premiums have been seen since mid-January, said Bachhraj Bamalwa, director at the All India Gems and Jewellery Trade Federation.
Gold importers have traditionally charged premiums to mitigate risks they take due to currency and price fluctuations.
But the precious metal had been trading at a discount for most of this year due to weaker-than-usual demand and a rise in smuggling. Discounts hit a record high of $100 an ounce in July.
“In the last 10 days, demand has improved due to festivals. The correction in prices is helping to attract buyers,” said Bamalwa.
This gold-related Reuters news story put in an appearance on their website at 3:29 a.m. EDT on Wednesday morning — and it’s another story that I found in a GATA release. Another link to it is here.
Analysts at HSBC Group Inc. are telling clients that gold may be about to have another shining moment, as the precious metal’s status as a safe haven asset could boost prices, given the prospect of a looming downward shift in globalization.
The firm’s Chief Precious Metals Analyst James Steel says in a note published on Friday that “demand for gold is often stimulated by the same factors that fan protectionist and populist sentiment” and that “abrupt declines in cross border trade, investment and immigration, the dislocation of global economic policies, and a beggar-thy-neighbor approach to trade is almost tailor-made for higher gold prices.”
Wall Street and Washington have grown more concerned about the future of global trade in recent weeks. Analysts from Bank of America Merrill Lynch warned that “events show nations are becoming less willing to cooperate, more willing to contest.” Meanwhile, U.S. Treasury Secretary Jack Lew recently sought to launch a robust defense of globalization, arguing that efforts to boost trade, combined with a more equitable distribution of the fruits of economic growth, are key to ensuring U.S. prosperity.
Steel argues that if these de-globalization trends continue, gold will be a good investment. He writes that “gold prices tend to rise during periods of contraction in world trade,” while pointing out that the World Trade Organization cut back its expectations for global trade this year to a mere 1.7 percent, compared with its 2.8 percent projection in April.
This rather brief Bloomberg news item was posted on their Internet site last Friday morning — and I found embedded in a Mark O’Byrne commentary over at the goldcore.com Internet site last night. Another link to it is here. Great photo, too!
There’s not too much to be read into Wednesday’s price action, although it should be noted that once the gold price poked its nose above the $1,270 spot mark, that was as high as it was allowed to get — and it did close above its 200-day moving average, albeit not by a lot.
Other than that, there was certainly nothing resolved yesterday — and it appears that the Managed Money traders were nibbling at long positions and selling short on yesterday’s price activity in gold, although it wasn’t a lot. Needless to say, JPMorgan et al were standing right there to provide what ‘liquidity’ was needed.
And as I write this paragraph, the London open is less than ten minutes away — and I see that the tiny gold rally in morning trading in the Far East on their Thursday was rolled over at noon China Standard time, but it’s still up a dollar an ounce at the moment. Silver was up a whole 6 cents at its high — and is now down a penny. Platinum and palladium are up 2 bucks each currently, but were higher earlier in the day as well.
Net HFT gold volume is pretty light at just over 23,000 contracts — and that number in silver is around 5,400 contracts, which is very light as well. The dollar index had a 5-hour/15 basis point up/down move between the 6 p.m. open in New York on Wednesday evening — and shortly before 11 a.m. China Standard time — and it’s been in rally mode since, blasting above the 98.00 mark to 98.07 shortly after 2 p.m. over there — but is now back to the 97.99 mark and up 14 basis points as London opens.
As I mentioned in yesterday’s column, I was going to pass on what tomorrow’s Commitment of Traders might show, hoping that ‘no change’ would be the best one could hope for — and would happily defer to Ted’s read on things when his mid-week column was posted yesterday afternoon. In a sentence, here’s what he had to say…”Having come close enough the past two weeks combined, I’ll quit while I’m ahead and pass on specific contract predictions.”
I know I’m being repetitive here. We could certainly get a decent rally of some type to relieve the oversold condition at this point — and how high and for how long is going to be entirely up to ‘da boyz’. But never to be forgotten is the still outstanding obscene and grotesque commercial net short positions in both silver and gold — and until that is resolved one way or another, the ‘heavy danger’ flags are still snapping in the wind. Only the timing of all this is unknown. Ted is convinced as always, that this will be the final sell-off — and I’m not prepared to argue the point. But I do want it over with as quickly as possibly, as this waiting game is starting to get on my nerves. I’m sure your feelings are the same.
But on the other hand, I continue to be encouraged by the amount of physical metal disappearing into all venues since both gold and silver were sold down from their highs of a month or so ago. The deposit into SLV yesterday, is just another data point showing the strongest of hands continue to accumulate them. And as Ted Butler has said on many occasion, the latest being in his commentary yesterday…”[T]he massive accumulation of physical silver by JPMorgan since April 2011 may be the most bullish single factor for the metal’s future price.”
So until that day, we must as Hamlet said “suffer The Slings and Arrows of outrageous Fortune“.
And as I post today’s effort on the website at 4:05 a.m. EDT, I note that all four precious metals continue to drift lower in price during the first hour of London and Zurich trading. Gold is now down 60 cents, silver is down 3 cent — and platinum and palladium are down a buck and up a buck respectively.
Net HFT gold volume is up to just over 27,500 contracts — and that number in silver is just over 7,100 contracts. These aren’t particularly large numbers — and there hasn’t been a lot of volume in the last sixty minutes, so nothing much should be read into the current price action. The dollar index continues to slide a bit from its earlier 98.07 high — and is currently sitting at 97.97 — up 12 basis points from its close in New York late yesterday afternoon.
It’s another day where early trading has given no clue from a price or volume perspective as to what may happen when the real trading action begins in New York, so we shouldn’t be surprised by any eventuality.
I hope you’re Thursday goes/went well — depending on which side of the International Date Line you’re on — and I’ll see you here tomorrow.