Another Far East Precious Metals Rally Snuffed Out

23 November 2016 — Wednesday


For the second day in a row gold rallied in early Far East trading and, for the second day in a row the price got capped and turned lower just before 10 a.m. China Standard Time.  It really didn’t do a lot after that until the noon silver fix in London was done for the day — and that juncture ‘da boyz’ began to lean on the price with more authority — and gold’s low tick was set a few minutes after 10:30 a.m. in New York.  The subsequent rally was capped around 12:15 p.m. EST — and it chopped sideways to lower for the rest of the Tuesday session.

Gold’s high and low ticks were reported as $1,220.90 and $1,205.60 in the December contract.

Gold was closed yesterday at $1,212.10 spot, down $1.90 from Monday’s close.  Net volume was pretty substantial at just under 157,500 contracts — and roll-over volume out of December was more respectable, but certainly not heavy.161123gold

And here’s the 5-minute gold tick chart courtesy of Brad Robertson and, for the second day in a row, barely qualifies to be included.  There was decent volume in morning trading in the Far East associated with the rally/price capping — and except for a bit during early afternoon trading in the Far East, there wasn’t much background volume yesterday.  Of course all the volume that really mattered was in COMEX trading in New York.

The vertical gray line is 10:00 p.m. Denver time, midnight in New York — and 1:00 p.m. China Standard Time [CST] the following afternoon in Shanghai—and don’t forget to add two hours for EST.  The ‘click to enlarge‘ is a must for this chart.161123-5-minute-gold

Silver’s price rally in Far East trading on their Tuesday morning was much more robust — and JPMorgan et al had to be on their toes to keep the price from blowing sky high.  Like in gold, they were in the market just before 10 a.m. CST — and once again around 9:30 a.m. in London.  Also like gold, the low tick came a few minutes after 10:30 a.m. EST — and after that the silver price was forced to behave like the gold price in just about every respect.

The high and low ticks in this precious metal were recorded by the CME Group as $16.885 and $16.52 in the December contract.

Silver was closed at $16.62 spot, up 6 cents on the day — but over 20 cents off its high tick.  Net volume was pretty decent at just over 41,000 contracts — and roll-over volume, like gold, was respectable…but not overly heavy.161123silver

And here’s the 5-minute silver tick chart courtesy of Brad once again.  You can certainly see the rally-associated volume in Far East trading yesterday but, as usual, the only volume that really mattered began at the COMEX open in New York.  It cratered to background levels once the COMEX trading session was done, which was 11:30 a.m. MDT on the chart below.

Like the 5-minute gold tick chart, the vertical gray line is 10:00 p.m. Denver time, midnight in New York — and 1:00 p.m. China Standard Time [CST] the following afternoon in Shanghai—and don’t forget to add two hours for EST.  The ‘click to enlarge‘ is a must here as well.161123-5-minute-silver

Platinum rallied until minutes after 12 o’clock noon Shanghai time, although it did get sold off a bit minutes before 10 a.m., just like silver and gold did.  You can tell from the Kitco chart below that the platinum price wasn’t allowed to trade above $947 spot.  From noon CST onwards, the price chopped mostly sideways to lower until noon in London and, like the other two precious metals, began to get sold down from there, with low coming about ten minutes after gold and silver’s low tick.  Its healthy rally from there was capped and turned lower starting a few minutes after 12 o’clock noon EST.  That sell-off ended at the COMEX close — and it traded flat for the rest of the day.  Platinum finished the Tuesday session in New York unchanged at $936 spot.  It was up 11 dollars at its high tick.161123plati

The palladium price chopped mostly sideways with a somewhat positive bias — and was up 6 bucks by 2 p.m. Zurich time on their Tuesday afternoon, which was twenty minutes before the COMEX open.  It took off from there — and was capped and turned lower once it hit $747 spot, which was shortly before the equity market opened in New York yesterday morning.  Like platinum, palladium was also sold down until trading on the COMEX ended — and was then sold off a few more dollars right at the 5 p.m. EST close.  Palladium finished the day at $738 spot, up another ten bucks, but well off its high tick.161123plad

The dollar index closed very late on Monday afternoon in New York at 100.96 — and as soon as trading began at 6 p.m. EST on Monday evening, the index shed a bit over 20 basis points in the first thirty minutes.  But by 2:15 p.m. Shanghai time, it was back up to the 101.10 mark — and by 9:40 a.m. GMT in London, it was down to its 100.65 low tick.  It began to rally from there — and the 101.32 high tick was punched at 10:30 a.m. in New York, which was the low tick for gold, silver and platinum yesterday.  By around 12:10 p.m., it was back below 101.00 — but managed to rally and close at 101.01 by the end of the Tuesday session.  The dollar index finished the day up 5 whole basis points after a wild intraday ride.161123intraday-gif

And here’s the 6-month U.S. dollar index chart, showing you how the world’s ‘reserve’ currency is doing in the medium term.161123-6-month-usd

The gold stocks opened a hair above unchanged, with their respective low ticks coming around 10:40 a.m. in New York.  They rallied back to almost unchanged by 12:15 p.m. EST, but when gold’s price got capped at that juncture, their prices began to fade a bit.  That lasted until shortly before 3 p.m. — and they rallied sharply to their opening highs, but couldn’t quite squeeze a positive close.  The HUI finished the Tuesday session down 0.13 percent.161123hui

The silver equities opened up about a percent, but sold down into negative territory to their respective lows at the JPMorgan et al engineered low price tick of the day, which came at 10:30 a.m. in New York.  By 12:10 p.m. they were back in positive territory [mostly] to stay — and their late-day rally brought Nick Laird’s Intraday Silver Sentiment/Silver 7 Index to a gain of 1.09 percent.  Click to enlarge if necessary.161123silver-7

Most of the stocks in the index were up considerably more than that, but Peñoles got smacked for a 4.31 percent loss — and that dragged down the average by a considerable amount.

And, in the interest of full disclosure, I bought a decent amount of shares in First Majestic Silver again yesterday.

The CME’s Daily Delivery Report showed that 16 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Friday.  Goldman issued 9 contracts — and ADM issued 7.  Canada’s Scotiabank stopped 10 — and ADM 6 contracts.  I shan’t bother linking this activity.

The CME’s Preliminary Report for the Tuesday trading session showed that gold open interest in November rose by 10 contracts, leaving 27 contracts still open, minus the 16 mentioned in the previous paragraph.  Monday’s Daily Delivery Report showed that zero gold contracts were posted for delivery today, so November o.i. remains at 27 contracts.  Silver o.i. in November dropped by 3 contracts, leaving 1 contract remaining.  Monday’s Daily Delivery Report showed that 3 silver contracts were posted for delivery today, so those number work out perfectly, with 1 contract still to be delivered between now and next Wednesday.

December open interest in gold dropped by 23,927 contracts, leaving 175,824 still left to be dealt with before the close of trading next Tuesday.  December silver o.i. fell by 6,065 contracts, leaving 50,287 still open.

Another day — and another decline in GLD, as an authorized participant took out 123,933 troy ounces.  In SLV, there was a much larger withdrawal, as an a.p. removed 3,082,879 troy ounces.

It’s hard to know at this stage of the game if these withdrawals are “plain vanilla” liquidation, as Ted would call it, or if a large entity/large entities are converting recently-purchased shares for physical metal in order to avoid SEC reporting requirements?  Another question that we can never know the answer to.

There was another sales report from the U.S. Mint yesterday.  They sold 7,000 troy ounces of gold eagles — 500 one-ounce 24K gold buffaloes — but no silver eagles.

There was no gold activity worthy of the name over at the COMEX-approved depositories on the U.S. east coast on Monday.  Nothing was reported received — and 2 lonely kilobars/64.300 troy ounces in total were shipped out of Brink’s, Inc.

It was much busier in silver, as 108,381 troy ounces were reported received — and a chunky 1,101,682 troy ounces were shipped out.  All of the ‘in’ activity was at Brink’s, Inc. — and with the exception of around 60,000 ounces, all of the ‘out’ activity was at HSBC USA.  The link to that action is here.

It was another decently busy day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  They reported receiving 7,315 of them — and shipped out 1,075.  All of this action was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.

It was another very quiet news day — and I don’t have all that many stories.  In actual fact I had to ‘pad’ the list in order for it to get to a respectable number.


Citi and J.P. Morgan top regulators’ list of banks posing systemic risk

Two U.S. banks – Citi and JP Morgan – have been designated as potentially posing the greatest risks to the global financial system in an annual ranking by regulators.

Citi has replaced HSBC and joined JP Morgan in the highest ranking issued by the Financial Stability Board (FSB), an international alliance of central bankers, policy makers and regulators that sorts 30 major banks into five categories.

The more systemically important the bank, the more capital it must hold to absorb losses during time of crisis. No bank has ever been placed in the highest, fifth category – which adds 3.5 percentage points to a bank’s capital requirement – since the FSB rankings were introduced five years. Citi and JP Morgan are in the fourth category.

HSBC, Britain’s biggest bank, has been moved out of the fourth category for the first time to the third, reducing the top up to its capital by half a percentage point to 2{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}. Barclays has also had its status cut by one category, from the third to the less risky second bracket.

No surprises here — and I’d be prepared to bet serious coin that their real ratings are much more dangerous than indicated here.  This news item appeared on Internet site at 6:44 p.m. GMT on their Monday evening — and it comes to us courtesy of Brad Robertson.  Another link to this story is here.

Deutsche Bank Warns “The Plate-Spinning Era” Is Over

Deutsche Bank’s long-held analogy of “plate-spinning” central bankers acting like the old popular circus act where the performers would spin plates on numerous poles and run between them in order to re-spin before they came crashing down to the ground, has held perfectly for several years. Over the years more plates have been added and central bankers have had to run faster and faster between them to stop gravity taking over. 

But now Deutsche Bank is concerned:

Up to this year we’ve felt confident that they could continue this art for the foreseeable future and thus keep asset prices elevated as a result. We accepted that such policy wasn’t conducive for growth and prevented reform/creative destruction, but was positive in the short-term for most assets tied to monetary policy in some valuation form or another. 

However 2016 has been a landmark year as we seem to have reached a point where the faster the plates are spun the more the unintended short-term consequences. The banking sector – especially in Europe and Japan – has been severely constrained by negative rates and flatter curves. If the sector was healthier they could withstand such an attack on their profitability but with inherent underlying weakness and with a need to build better regulatory defenses, monetary policy has started to be a sizeable negative. Given how important banks are to the wider economy then it’s no longer a win-win when central banks ease policy

This very interesting and worthwhile Zero Hedge article appeared on their website at 3:34 p.m. on Tuesday afternoon EDT — and another link to it is here.

Nigel Farage hits out at ‘cesspit’ of politics as Downing Street rejects Donald Trump’s call to make him British ambassador to the United States

Nigel Farage has hit out at the “cesspit” of politics as Downing Street rejected Donald Trump’s calls for the interim Ukip leader to become Britain’s next ambassador to the United States.

In a surprising tweet, which has raised eyebrows in the U.K., Mr Trump made the recommendation to his almost 16 million followers on Monday night.

In response, Mr Farage said: “I’m very flattered by the comments and I have said since I met the president-elect that I would like to do anything I can to act in a positive way to help relationships between our two countries.”

However, the news was greeted with a quick riposte from No 10 who insisted that it is for Britain to decide who serves as its ambassador to the United States. A spokesman said: “You have an ambassador who only took up his post earlier this year.

He is doing a great job. We have chosen our ambassador and there is no vacancy.

This story was posted on the Internet site at 2:13 p.m. GMT on Tuesday afternoon, which was 9:13 a.m. in Washington — EDT plus 5 hours.  I thank Roy Stephens for sending it — and another link to it is here.

Swiss Watch Exports Have Biggest Monthly Drop in Seven Years

Swiss watch exports plunged 16 percent in October, the biggest monthly drop in seven years, as demand weakened in almost every major market for Rolex and Omega timepieces.

Shipments fell to 1.68 billion francs ($1.7 billion), the Federation of the Swiss Watch Industry said in a statement Tuesday. The decline was much greater than expected and was made worse because October was the weakest month of last year, according to Zuzanna Pusz, an analyst at Berenberg.

The longest slump in more than two decades is threatening employment in the Swiss watch industry, which had been riding a boom as rich Chinese bought more timepieces. Richemont plans to cut more than 200 positions at brands such as Vacheron Constantin, the Unia trade union said last week. Any rebound is now even further away, according to Luca Solca, an analyst at Exane BNP Paribas.

The weaker-than-expected October export performance places expectations of growth by year-end under increased pressure,” Solca wrote.

This news story showed up on the Bloomberg website at 2:20 a.m. EST yesterday morning — and was updated a couple of hours later.  I thank Patrik Ekdahl for sharing it with us — and another link to it is here.

Putin’s 2015 U.N. speech on ‘multi-polar world‘ coming to fruition

When Vladimir Putin took the podium to address the delegates in attendance at the 70th U.N. General Assembly in New York on September 28, 2015 the sense that we were about to witness a seminal moment in history was inescapable.

And so it proved.

The speech the Russian leader proceeded to deliver to the delegates in attendance, along with an expectant world via the international media, was tantamount to announcing the birth of a multi-polar world, one in which Washington would no longer enjoy the uncontested primacy and hegemony it had since the demise of the Soviet Union in 1991.

In a trenchant indictment, Putin reminded the delegates of the responsibility of Washington and its allies in destabilizing the Middle East since 9/11, and how their actions had unleashed chaos and crises to the point where it now threatened to reduce the entire region to a state of permanent anarchy. The most powerful moment in the speech came when he looked up from his notes and out to the assembled international delegates, whereupon, directly addressing the US government and political establishment, he said, “Do you now realize what you have done?”

It was a j’accuse delivered in the form of a simple question, penetrating the walls of propaganda that had been erected to conceal the truth of U.S. exceptionalism. Russia was no longer a second tier power, Putin’s address confirmed, reduced to the role of bystander while Washington’s writ ran wherever it saw fit. And no longer was it, as unofficial representative of the emerging powers otherwise known as BRIC, prepared to accept a world in which the U.S., supported by its European allies, continued to treat international law as an optional extra where its interests were concerned, or the principle of national sovereignty as a gift to be bestowed or removed as it deemed fit rather than the universal and inalienable right enshrined in the U.N. Charter.

This commentary by John Wright was posted on the Internet site on Sunday afternoon Moscow time — and is certainly worth reading, especially if you’re a serious student of the New Great Game.  Another link to it is here — and it’s another contribution from Roy Stephens.

Good Luck, Saudi Arabia, You’re Going To Need It

Depending on your political preference, you either have to feel sorry for Saudi Arabia or savor the moment . The country’s four-decade run as global oil king is slipping through its fingers, and there’s not really much it can do to stop the slide. Sure, Saudi Arabia is still the world’s largest oil exporter and the second largest producer, but its ability to sway global markets is much diminished.

Many factors have contributed to Saudi Arabia’s loss of power in global oil markets. Here are a few: Its decision in November 2014 to forgo its historic role of swing producer and actually ramp up production as global oil supplies were becoming saturated is one. Another is the U.S. shale oil revolution that started the whole oil supply glut in the first place. However, the Saudis still had the chance to be masters of their own fate, and they blew it.

In a fever-pitched attempt to protect market share, particularly in Asia and Europe, they kept pumping and pumping, so much that they reached new output levels in July. The Saudis had also hoped to shut out as much U.S. shale oil production as possible, but that also backfired.

This opinion piece put in an appearance on the Internet site at 1:16 a.m. on Monday morning EST — and I thank Swedish reader Patrik Ekdahl for sending it along.  Another link to it is here.

As TPP Dies, Asian Nations Salute Their New “Free Trade” Leader: China

Over the weekend we reported that as Obama was speaking at the APEC summit in Peru, hoping to salvage his global trade legacy, the TPP, China’s President Xi Jinping officially called for the launch of the Free Trade Area of Asia-Pacific for “institutional guarantee of open economy“, a move many had expected would take place as China was eager to fill in the void left by the U.S. in any trans-Pacific trade treaty.

As we previously reported, in his speech in LIma, Xi Jinping sought to position himself as a leader in global commerce, vowing to support trade. The attendees signaled “deepening economic integration and opposing trade protectionism,” the Foreign Ministry spokesman said on Tuesday.

Then, overnight, China got a present when Trump announced in a brief video statement that his first executive order upon becoming president would be to remove the U.S. from the TPP. That’s all Beijing needed to hear and this morning China said it hoped to conclude an Asia-wide trade pact as soon as possible, in what the WSJ dubbed was “a sign of Beijing’s intent to broaden its regional influence amid the apparent collapse of the U.S.-backed Trans-Pacific Partnership.

What is notable is the eagerness – and ease – by most TPP member states (except Japan) to shift their allegiances from Washington to D.C. What is also notable is just how critical free trade is to most Asian countries, whose economies are heavily export-oriented, as opposed to rising calls for protectionism in much less trade-dependent (and much more debt-reliant) America and Europe. It also signals, as the WSJ writes, the unraveling of Mr. Obama’s vision to make the TPP accord an economic anchor for U.S. strategic engagement in a region being transformed by China’s growing economic might and expansionist aims.

This very worthwhile news item appeared on the Zero Hedge website at 12:37 p.m. EST yesterday afternoon — and I thank ‘David in California’ for passing it around yesterday.  Another link to this story is here — and it’s worth reading as well.

Hybrid airships to support mining operation in Quebec

Hybrid airships proto-typed at the Lockheed Martin Skunk Works in California, which has pushed the boundaries of aerospace design for decades, are the key to reducing global dependence on mostly Chinese mining operations for rare earth metals (REMs).

The LMH-1 costs $40 million each but the companies put the value of the service agreement at US$850 million, including fuel costs, over a 10-year period beginning in 2019, with further extensions of up to 20 years. That’s in line with the mine’s projected life, during which annual ore concentrate shipments over some 250 kilometres to Schefferville, Que., are projected at more than 200,000 tonnes.

Grant Cool of Edmonton, chief operating officer of Hybrid Enterprises, the Atlanta-based exclusive worldwide LMH-1 reseller, said the Skunk Works had flown a one-third scale demonstrator. The production version, at 120 feet (37 metres) overall length, is capable of carrying 21 tonnes of cargo and 19 passengers at 60 knots up to 1,400 nautical miles. It derives 80 per cent of its carrying capacity from its helium-filled hull. The other 20 per cent is from lift generated aerodynamically by its tri-lobe design, powered by four diesel-driven thrust-vectoring propellers. The side-stick fly-by-wire system, based on the setup in Lockheed Martin’s F-35 Lightning II joint strike fighter, also handles conventional control surfaces at the stern.

This very interesting story, along with some very interesting photos, appeared on the Internet site about a week ago — and it’s worth a look.  It’s the second offering of the day from Brad Robertson — and another link to it is here.

Decoding the Future for Stocks, Real Estate, Gold and Silver — Mike Maloney

What if you knew what the markets were going to do before they did it? What if you knew the ultimate destiny of stocks, real estate, and gold and silver?” That’s how Mike Maloney began his presentation at the Gold & Silver Summit in San Francisco last week.  Mike tells the audience upfront that not only do we know what’s coming, but we can profit from it. “We were left with a road map that we can turn into a treasure map.” It’s an exciting proclamation, though not everything coming will be pleasant.

So what is this road map? And how do we turn it into a treasure map?

This 56:47 minute video presentation by Mike, which he presented at the San Francisco Gold & Silver Summit last week, showed up on the Internet site yesterday sometime — and his right-hand guy and video photographer extraordinaire, Dan ‘the man’ Rubock, sent it to me in the wee hours of Tuesday morning.  I haven’t had time to watch it yet, but will do so today for sure.  And if you don’t have time for it now, it will put in an appearance in my Saturday column.  Another link to it is here.

The PHOTOS and the FUNNIES161123photo-1



Let me state this as simply as I can – if the managed money traders don’t add to short positions from here on out, there is little for the commercials to buy and little reason for prices to fall.  The managed money traders are the food supply for the commercials.  When I first fashioned the trading pattern on the COMEX in Jurassic Park terms years ago, it was based on the biggest 4 and 8 traders as T-rexes and the smaller commercials as velociraptors preying on the plant eating technical funds.  Incredibly, the technical funds rarely disappointed in behaving as reliable prey.  But if that has changed, as suggested by this week’s COT Report, it could be that the commercials’ food supply is or has dried up on this downswing in price.
No big managed money shorting equals no big commercial buying.  That’s a potential game changer in the gold and silver price manipulation on a par with the actual extinction of the dinosaurs. I realize that I analyze the silver and gold markets differently from others.  Yes, more are following the COT reports currently than ever before, but certainly not in terms of what the biggest and most concentrated traders are doing or the significance that the managed money traders may have changed their ways.  Simply because I have been looking for and expecting some change in the trading pattern, I can’t help but note what took place in the current COT Report.Silver analyst Ted Butler: 19 November 2016

Tuesday was just another day where JPMorgan et al had to show up in the Far East markets, or in morning trading in London, to prevent all four precious metals from running away to the upside.  It was basically the same as what happened on Monday.

Here are the 6-month charts for all four precious metals, plus copper once again — and the copper show is getting interesting.  I’m hoping that it will soon spill over into the silver and gold markets.161123-6-month-gold


And as I type this paragraph, the London open is less than ten minutes away — and I note that gold was up two bucks and change by 11 a.m. China Standard Time on their Wednesday morning.  But at that point it, along with the other three precious metals, were sold lower by a bit.  The gold price was sold back below unchanged, but is now up $1.10 the ounce.  Silver, following the same route, is now up only a penny.  Platinum and palladium are up 3 bucks apiece with the same trading pattern.

Net HFT gold volume is a hair over 20,000 contracts, which is very light — and roll-over volume is decent.  Silver’s net volume is a bit under 5,000 contracts, which is also pretty light — and roll-over volume there is very decent already.  The dollar index chopped sideways in a very tight range up until shortly after 2 p.m. CST — and is back below the 101.00 mark — and down 5 basis points as London opens.  It was down 10 earlier.

Well, with the Dow and S&P 500 at new highs because of  the money that Trump is expected to spend — and the whiff of inflation in the air, there’s no doubt that the precious metals are chomping at the bit to break away to the upside.  For the moment ‘da boyz’ have been instructed to hold them in place, but for how much longer, one wonders?

I would guess that any price fireworks will be on the back burner until after First Notice Day, which is next Wednesday.  But not to be forgotten is this slam-dunk interest rate hike coming up in December.  So between now and then, it’s going to be a tough price call in gold and silver.  And as Ted and I have said before, ‘da boyz’ appear to be in complete control of precious metal prices at the moment.

Of course the only fly in the ointment for higher prices is the ugly internal configuration in the COMEX futures market.  But at this juncture — and as per Ted Butler’s comments above — it may not matter any more.  But until it doesn’t…it does!

And as I post today’s column on the website at 4:03 a.m. EDT, I note that all four precious metals continue to trend quietly lower in the first hour of London trading.  At the moment, gold is down 90 cents.  Silver…which had been down a penny a few minutes ago…is now up a penny — and platinum and palladium haven’t done much in the first hour of Zurich trading, with the former up 2 dollars — and the latter up 3.

Net HFT gold volume is barely over 25,000 contracts — and roll-over volume has picked up substantially in the first hour of London trading.  Net HFT volume in silver is just over 6,000 contracts — and roll-over/switch volume is up an appreciable amount as well.  It’s very quiet at the moment, but I doubt that will last.

And after selling off 10 basis points by 3:10 p.m. in Shanghai, the dollar index is now in rally mode — and up 16 basis points.

With tomorrow being Thanksgiving in the U.S. — followed immediately by Black Friday — I would guess that price and volume activity will start to drop off by lunchtime in New York today — and it should be a very quiet Wednesday afternoon.  Some markets may even close early.  The same thing can be said for Friday, as most traders will be long gone by the close of trading today, so there won’t be too many bodies around in New York on that day, either.

There are still the overseas markets to contend with — but ‘da boyz’ will have their proxies out and about to ensure that nothing untoward happens for the next couple of days.

However, I may be assuming a lot here, so we’ll just have to wait and see.

And on that note, I wish all my American subscribers a safe and happy Thanksgiving holiday weekend.  Eat lots and drink lots!

I will have a report tomorrow, Friday and Saturday, but I guarantee that they will be as brief as I can make them.



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