Free Markets in Anything Were Nowhere to Be Found Yesterday

06 December 2016 — Tuesday


The powers-that-be were waiting — and as the gold price blasted higher when the markets opened at 6:00 p.m. on Sunday evening, they went to work in seconds.  Its Far East low came at 10 a.m. China Standard Time on their Monday morning — and the tiny rally from there came to an end shortly after 2 p.m. CST.  It was sold down until just before 9 a.m. in London — and the weak rally from there ran into ‘da boyz’ shortly before the COMEX opened in New York.  The low tick of the day — and a new intraday low for this move down — was set at, or just after, the London p.m. gold fix. From there it rallied sharply — and was back to just about unchanged moments before the COMEX close.  But it was obvious that the short buyers/long sellers of last resort showed up  at that juncture — and sold the metal lower until 4 p.m. EST.  It traded flat from the there.

The high and low ticks were recorded by the CME Group as $1,190.20 and $11,58.60 in the February contract.

Gold was closed in New York yesterday at $1,170.00 spot, down $7.10 from Friday.  Net volume was very heavy at 201,000 contracts.161206gold

Here’s the 5-minute gold tick chart courtesy of Brad Robertson — and unfortunately, it doesn’t go all the way back to the open on Sunday evening in New York.  It starts about 19:00 Denver time, which was 9 p.m. EDT.  There was very decent volume on the engineered price decline in the first hour of London trading — and then again starting around 6:00 a.m. MDT — and really didn’t drop off to background until after 14:00 Denver time, which was 4:00 p.m. 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.161206-5-minute-gold

With some minor variations, JPMorgan et al treated silver in the same way as they did gold’s price.  The big rally after the afternoon gold fix was capped just before 1 p.m. in New York  — and once the COMEX closed, ‘da boyz’ drove it lower for a slight loss on the day.

The high and low ticks in this precious metal were reported as $17.05 and $16.545 in the March contract.

Silver was closed on Monday at $16.71 spot, down a penny on the day.  Net volume was not as heavy as one would expect all thing considered, at just under 49,500 contracts.161206silver

Here’s the 5-minute tick silver chart from Brad — and this one goes all the way back to the New York open on Sunday evening, so you can see the price/volume fireworks associated with the violent price capping that occurred in that precious metal as well.  The price/action volume in silver was similar to what happening in gold for the remainder of the Monday session.

As per the 5-minute gold chart above, 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 as well.161206-5-minute-silver

Platinum’s price spike at 6 p.m. on Sunday evening was hammered flat [and then some] within an hour.  It rallied back to a few dollars above unchanged by 2 p.m. in Shanghai trading on their Monday afternoon.  But by shortly after 12 o’clock noon in Zurich, it was back to down $4 on the day.  It began to rally from that point but, like gold and silver, got capped and then driven lower starting shortly before the COMEX close.  Platinum finished the Monday session at $935 spot, up 7 dollars from Friday.161206plati

The trading in palladium was similar, but ‘da boyz’ had it down 15 dollars by 11 a.m. in Zurich, which was a new engineered price low for this move down.  It began to head higher around noon Europe time but, like the other three precious metals, the powers-that-be stepped in…this time at the 11 a.m. EST Zurich close — and that, as they say, was that.  It was sold lower into the COMEX close — and traded flat from there.  Palladium finished the Monday session in New York at $743 spot, up 4 bucks on the day.161206plad

The dollar index closed very late on Friday afternoon in New York at 100.67 — and dipped a hair at the 12:45 p.m. EST open on Sunday afternoon.  It was up to the 100.90 mark by minutes before 5 p.m. EST in New York — and blasted higher from there, with the 101.72 high tick coming around 6:20 p.m. on Sunday evening, which was about 20 minutes after midnight in Europe.  Then the powers-that-be showed up — and within forty minutes had it down to 101.20.  From there it rallied quietly higher until about 11:20 a.m. in Shanghai.  Then ‘da boyz’ really went to work — and the 99.85 low tick came just a few minutes before the COMEX close.  It rallied back above the 100.00 mark by 3 p.m. EST — and then traded flat from there.  The dollar index finished the day at 100.14 — down 53 basis points from its close on Friday, but had an intraday move of about 328 basis points…up 112 basis points on Sunday…down 187 on Monday…and then up 29 going into the Monday close.

I captured this dollar index image on Sunday evening, just so I could post it in today’s column.161206usd-sunday-night

And here’s the 3-day U.S. dollar index charts which, like all other dollar charts that show up in this space, is posted strictly for entertainment purposes only.  Like most days, there were no free markets anywhere to be seen.  It’s just that yesterday’s managed markets were far more egregious than most.161206intraday-gif

And, as usual, here’s the equally meaningless 6-month U.S. Dollar index charts which is good for a bit of a giggle as well.161206-6-month-usd

The gold shares gapped down at the open and, not surprisingly, their respective low ticks came at gold’s low around 10:15 a.m. in New York.  They rallied back into positive territory by shortly before 1 p.m. EST, but once ‘da boyz’ hit the gold price at the COMEX close, the fell back to unchanged — and sold off in the last hour of trading, as the HUI closed down 0.31 percent.161206hui

This silver equities gapped down about 2 percent at the open — and they followed a similar path to the gold stocks, except they were back in positive territory an hour or so before their golden brethren.  Other than that, the silver shares followed an identical price path, except they never got a sniff of negative territory after that, as Nick Laird’s Intraday Silver Sentiment Index closed higher by 1.11 percent.  Click to enlarge if necessary.161206silver-7

The CME Daily Delivery Report showed that 37 gold and 52 silver contracts were posted for delivery on Wednesday from within the COMEX-approved depositories.  In gold, RCG issued 22 contracts — and the usual Three Musketeers picked up most of them…HSBC USA [12], Scotiabank [6] — and JPMorgan [16 for its customers and 2 contracts for its own account].  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Monday trading session showed that gold open interest in December dropped by 1,683 contracts, leaving 1,589 left…minus the 37 contracts mentioned just above.  Friday’s Daily Delivery Report showed that 1,612 gold contracts were actually posted for delivery today, so that means that another 1,683 – 1,612 = 71 contract holders on the short side in gold were let off the delivery hook by those long/stoppers holding the opposite side of those contracts.  Silver o.i. in December fell by 74 contracts, leaving 1,989 contracts left…minus the 52 mentioned in the previous paragraph.  Friday’s Daily Delivery Report showed that 23 silver contracts were actually posted for delivery today, so that means that 74 – 23 = 51 silver contract holders on the short side got let off the December delivery hook by those short/issuers that held the other side of these trades.

There was a tiny withdrawal from GLD yesterday, as an authorized participant removed 10,383 troy ounces and, like the smallish withdrawal from SLV late last week, this was probably a fee payment of some kind as well.  And as of 7:37 p.m. EDT on Monday evening, there were no reported changes in SLV.

I’m still expecting a big exchange for physical in SLV one of these days, as I suspect Ted’s “big buyer” has been accumulating SLV shares — and will have to redeem them for physical at some point.  Although they may be doing it smaller chunks now, because the 9.5 million troy ounces that got redeemed in two separate tranches on November 18 and 22 really did stick out like the proverbial sore thumbs they were.

The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of trading on Friday, December 2 — and this is what they had to report.  Their gold ETF declined by 14,689 troy ounces — but their silver ETF added 8,327 troy ounces.

There was a very decent sales report from the U.S. Mint.  They sold 28,500 troy ounces of gold eagles — 5,500 one-ounce 24K gold buffaloes — and 140,000 silver eagles.  I would guess that Ted’s “big buyer” was responsible for most of these sales, as retail demand sucks right now.

There was very little gold movement over at the COMEX-approved depositories on the U.S. east coast on Friday.  Nothing was reported received — and only 6,430.000 troy ounces/200 kilobars [U.K./U.S. kilobar weight] were shipped out.  All of that ‘activity’ was at Canada’s Scotiabank — and I shan’t bother linking it.

In silver, there was 498,133 troy ounces received — and another 500,133 troy ounces shipped out the door.  All of that activity was at CNT — and the link to that is here.

It was a quiet day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  Nothing was reported received — and only 23 kilobars were shipped out — and those were from the vaults over at Loomis International.  I won’t bother linking this activity, either.

Here are a couple of charts that Nick passed around on the weekend.  They show the Intraday Gold and Silver Price Movements for November.  If you take every two minute tick for the same time interval every trading day of the month and average them out, you can see the underlying trends, if any.  Charts like this remove all the daily “noise”…so you can see them.  If the markets are free and fair, there should be little of anything to see.  But when ‘da boyz’ are out and about like the were in November — and every month for the last 30 years, their handiwork is blatantly obvious…as it is here.

I see that Nick has added a Shanghai p.m. gold fix line to the gold chart…which is a new one on me and, as it turns out, that appears to be the daily high tick in both gold and silver.  It’s all down hill from there until the inevitable rallies that begin once trading commences in the Far East at 6:00 p.m. EST in New York, which is 8 a.m. in Tokyo.  The click to enlarge feature works wonders  for both charts.161206intraday-gold


And here are two more charts that Nick slid into my in-box early on Monday evening.  They show gold and silver imports into India, updated with October’s data…86 tonnes of gold and 319 tonnes of silver.  Click to enlarge on both.161206india-gold


I have lots of stories today — and I’ll happily leave the final edit up to you.


Sears is on the brink of catastrophe as stores closures loom and top execs flee the company

Things aren’t looking good for Sears.

The company is shutting down dozens of Kmart stores this month and two of its highest-ranking executives left this week in the midst of the key holiday shopping season.

This comes following speculation among Sears and Kmart employees, suppliers, and several banks that the retailer will soon go bankrupt – something Sears has repeatedly dismissed.

Jeff Balagna, formerly Sears’ executive vice president, left the company Wednesday, “in order to focus on his other business interests and pursue other career opportunities,” Sears said in an SEC filing dated November 23.  Balagna did not respond to a request for comment. Sears declined to comment beyond what was stated in the filing.

Sears President and Chief Member Officer Joelle Maher also left the company this week, Sears confirmed to Business Insider. The company declined to give a reason for her departure.

This news item was posted on the Internet site late on Saturday afternoon — and I thank Swedish reader Patrik Ekdahl for sharing it with me.  Another link to it is here.

Jim Rickards — Donald Trump’s unhappy fate is to oversee a financial crisis far worse than the last

An earthquake doesn’t care if you’re progressive or populist. It destroys your house all the same. Likewise a financial crisis is indifferent to a politician’s policy mix. Systemic crises proceed according to their own dynamic based on the array of agents in a system, and systemic scale.

The tempo of recent crises in 1994, 1998, and 2008 says a crisis is likely soon. A new global financial panic will be one legacy of the Trump administration. It won’t be Trump’s fault, merely his misfortune.

The equilibrium and value-at-risk models used by banks will not foresee the new panic. Those models are junk science relying as they do on notions of efficient markets, normally distributed risk, continuous liquidity, and a future that resembles the past. None of those hypotheses match reality.

Advances in behavioural psychology have demolished the idea of efficient markets. Data shows the degree distribution of risk is a power curve not a normal bell curve. Liquidity evaporates when most needed. Prices gap down; they do not move continuously. Each of the 1994, 1998, and 2008 crises was worse than the one before, and required more drastic intervention. The future does not resemble the past; it keeps getting worse. The standard models are in ruins.

This commentary by Jim Rickards appeared on the Internet site at 4:59 a.m. EST on Friday — and I thank Harold Jacobsen for pointing it out.  Another link to it is here — and it’s worth reading.

A Chicken in Every Pot — Jeff Thomas

Collectivism will always eventually destroy the economy of any nation, no matter how great it may be.

That’s a pretty powerful statement. Is it historically supportable? Let’s visit a current example Venezuela to examine the overall process of collectivism, then look at a few other historical cases and see what we can learn.

Again, having once been number fourteen on the list of economically free countries, Venezuela is now at the very bottom – at number 152 – as a direct result of collectivism.

As Margaret Thatcher once said, “The trouble with socialism is that, eventually, you run out of other people’s money.” Quite so. It does take a while, however. A newly collectivist state at first appears to be solving problems. What it’s really doing is feeding off of past profits. It gobbles up the economy’s store of nuts, but when these nuts are gone, that’s it – there’s no more, and the economy collapses. People starve.

Venezuela now has increasing shortages of food, hyperinflation has set in, the government is totally corrupt, the government is running out of funds for entitlements, and government healthcare is overburdened and failing. Like Cuba in the 1980s, there are no longer any dogs or cats on the streets of Caracas, and for the same reason as in Cuba – they’re being eaten by those with no other source of protein.

This must read commentary by Jeff Thomas showed up on the Internet site yesterday — and another link to it is here.  And it IS worth reading!

In Brazil, State Debt Is a Ticking Time Bomb

Rio is not alone in penury; most of Brazil’s state governments are in trouble, with some of the largest running debts of over twice annual revenues. That’s a violation of Brazil’s fiscal responsibility law, the same offense that led to the impeachment of Rousseff on Aug. 31. What’s more worrisome, local governments cannot declare bankruptcy, which means that failing states are ultimately the federal treasury’s headache. Last month, under intense pressure from the hinterlands, Finance Minister Henrique Meirelles offered bereft states a share of the $26 billion the federal government expects to collect from wealthy Brazilians in a one-off foreign asset tax amnesty. Meirelles conditioned the bailout on belt tightening, including deep salary cuts. The deal lasted all of a week, as several governors advised they had no intentions to slash budgets.

How much the federal fix will help is another question. The roots of the financial collapse owe to a years-long festival of overspending, lavish lending, and generous tax breaks that began in Brazil’s boom years but carried on long after the economy started to tank in 2014. From 2010 to 2014, spending by state and local governments outpaced revenues by around 50 percent a year. The recession spoiled the party in 2015, but even then public revenues fell three times faster than spending. States are now in hock to federal banks to the tune of $35 billion.

What’s worse, many states have no idea just how much tax revenue they’ve sacrificed to fiscal incentives for favored companies, as Rio’s Pezao recently admitted. (Hint: alone from 2008 to 2013, according to state auditors.) “This is what happens when you have fixed expenditures with non-permanent source of revenues,” said Alberto Ramos, an emerging-markets analyst with Goldman Sachs. “This was a chronicle of a death foretold.

This story put in an appearance on the Internet site at 6:30 a.m. EST on Friday morning — and I thank Patrik Ekdahl for his second offering in today’s column.  Another link to it is here.

Matteo Renzi’s Italian referendum defeat ‘threatens survival of the euro,’ warn German business leaders

The euro’s survival is under increased threat following the political instability caused by the Italian referendum result, German business bosses warned yesterday, raising further questions about the long-term viability of Italy’s membership of the currency union.

Ulrich Grillo, the head of the Federation of German Industries, or BDI, said the crushing defeat handed to the Italy’s centrist prime minister, Matteo Renzi, had worsened the outlook for the survival of the single currency.

The risks of a new political instability for economic development, the financial markets and the currency union are increasing further,” he said.

Stock and bond markets shrugged off the immediate risk from the Italian vote, but a leading independent analyst warned that Italy’s membership of the euro on “borrowed time” following Mr Renzi’s defeat at the hands of anti-establishment political forces.

The bitter three-month campaign had demonstrated that Italian voters would not tolerate indefinitely the chronic unemployment, stagnant wages and Brussels-imposed austerity that now came with euro membership.

This article, filed from Rome, appeared on the Internet site at 5:22 p.m. GMT on Monday, which was 12:22 p.m. in Washington…EDT plus 5 hours.  I thank Roy Stephens for sending it — and another link to it is here.

Draghi ‘Put’ Steadies Stocks As Italian Banking System Collapses

The Draghi put is still alive – or at least that’s what the market seems to think, judging by the response to the Italian vote outcome.

The Plunge Protection Team was very evident at the European open.

But as Bloomberg notes, while a rejection of Renzi’s reform proposals was expected, political instability and uncertainty over the fate of the country’s troubled banks aren’t fully priced in, and bank stocks are tumbling (after a panic bid at the open)…and Italian bank bonds are a bloodbath.

And as the vicious circle between the sovereign and the banking system escalates, so Italian default risk is at 3 year highs.

Yep, ‘da boyz’ were everywhere to ensure that free markets were not operating as they should after the vote in Italy.  This 5-chart Zero Hedge news item showed up on their Internet site at 8:57 a.m. on Monday morning EST — and I thank Richard Saler for sending it our way.  Another link to it is here.

Italian banking shares poised for worst year since 2011 after referendum defeat 

Italian banking shares suffered hefty losses after Matteo Renzi’s heavy constitutional referendum defeat revived fresh concerns about the fragility of the country’s financial system.

In tumultuous trading, Italy’s banks index fell by as much as 4.8pc in early trade as investors feared efforts to raise capital for beleaguered banks could be derailed by political uncertainty. The index, which has plunged by 46.9pc so far this year, is now on track for its biggest annual fall since the height of the euro debt crisis in 2011.

Despite creeping into positive territory, the banks index closed down 2.2pc. Shares Monte dei Paschi tumbled 4.2pc, while UniCredit surrendered 3.3pc, Banca Popolare Milano dropped 7.9pc, and Mediobanco lost 4.2pc.

The world’s oldest bank Monte dei Paschi is the biggest casualty of the ‘No’ vote as it puts its €5bn rescue plan in danger of failing. The bank, which was rated the weakest lender in European stress tests this summer, now needs to raise the money by the end of the month to stay in business.

A decision on its private recapitalisation plan is expected to be taken in the next three to four days as investors are waiting for political developments to become clearer before committing.

This story put in an appearance on the Internet site at 7:09 p.m. GMT yesterday evening, which was 2:09 p.m. in New York — EDT plus five hours.  I thank Roy Stephens for sliding it into my in-box just before I hit the publish button on today’s column — and another link to it is here.

Erdogan Says Turkey Faces ‘Economic Sabotage’ as Lira Plunges

Turkish President Recep Tayyip Erdogan on Saturday said his political enemies are trying to sabotage the economy by speculating on the stock market, foreign exchange rate and interest rates after failing to overthrow his administration in July.

The lira plunged to record lows over the past week even as Erdogan urged Turks to convert their foreign currency savings into liras and gold while vowing to keep up his fight against high interest rates.

Erdogan is trying to verbally stem a run on the lira, which has lost more than any other emerging market currency over the past month, damping everything from consumer sentiment to economic growth. Since a coup was quelled in July, Erdogan has sought popular support to shift from a parliamentary system to an executive presidency to concentrate power in his office.

Someone is trying to force this country to its knees by economic sabotage after failing to seize it with tanks, guns and F-16s on July 15,” when a coup by a faction within the military failed, Erdogan said at the opening of a shopping mall in Istanbul on Saturday. “This is not a new game and we’re used to it. Especially in the last three years, they are constantly attempting to use economic crisis as a trump card.

This Bloomberg offering was posted on their website at 10:43 a.m. EST on Saturday morning — and it’s the third contribution of the day from Patrik Ekdahl.  Another link to it is here.

Hands off the Iran Deal — Eric Margolis

President-elect Donald Trump vows to either tear up or rewrite the recent international nuclear deal with Iran, calling it ‘disastrous,’ and ‘the worst deal ever negotiated by Washington.’

Iran, which has closed important nuclear facilities, shut down half its centrifuges, and neutralized its stores of nuclear material under the international agreement, must be wondering if it’s nuclear deal was not really, really disastrous.

In his rush to condemn the Iran deal, Donald Trump seems to be forgetting that the pact was co-signed by Britain, France, Russia, China, Germany and the U.N. Backing out of the pact will be no easy matter and sure to provoke a diplomatic storm.

The outgoing CIA director, John Brennan, calls Trump’s plan to junk the Iran deal ‘the height of folly.’ Brennan warns that doing so would further destabilize the Mideast and embolden hard-liners on all sides. He could have added that if Iran resumes nuclear enrichment, Israel’s far right government will likely go to war with Iran in order to preserve its Mideast nuclear monopoly.

This very interesting opinion piece appeared on the Internet site on Saturday sometime — and I thank Kathmandu reader Nitin Agrawal for sending it our way on Sunday.  Another link to it is here.

Deutsche Bank to pay $60 million to settle U.S. gold price-fixing case

Deutsche Bank AG has agreed to pay $60 million to settle private U.S. antitrust litigation by traders and other investors who accused the German bank of conspiring to manipulate gold prices at their expense.

The preliminary settlement was filed on Friday with the U.S. District Court in Manhattan, and requires a judge’s approval.

Deutsche Bank denied wrongdoing. The bank in October agreed to pay $38 million to settle similar litigation over alleged silver price manipulation.

Amanda Williams, a spokeswoman for the bank, declined to comment. Lawyers for the plaintiffs did not immediately respond to requests for comment.

The case is one of many in the Manhattan court in which investors accused banks of conspiring to rig rates and prices in financial and commodities markets.

Another licensing fee — and nobody goes to jail.  This Reuters article, filed from New York, was posted on their Internet site at 5:17 p.m. EST last Friday afternoon — and I found it embedded in a GATA release.  Another link to it is here.

How the gold banking system operates for surreptitious price suppression

Bullion Star in Singapore this past week produced a primer about the international gold banking system, showing how central banks use it to create a vast amount of imaginary “paper gold” for largely surreptitious price suppression in defense of their own currencies.

Bullion Star explains: “Even if the bullion banks have access to borrowed central bank gold stored at the Bank of England, that gold is owed to the lending central banks, and therefore has multiple claims on it. If there was a run on the fractional-reserve bullion banking system by customers wanting to convert their unallocated positions to allocated gold holdings, analogous to a bank run where all customers want to withdraw their cash at the same time, this could lead to some serious problems in the ability of the bullion banks to provide the required gold. Such a situation would undoubtedly require cash settlement of customer positions, a move that would see the price of paper gold collapse while the price of physical gold would skyrocket.

This very long — and very involved/convoluted commentary is headlined “Bullion Banking Mechanics” and it’s posted on the Internet site — and I found it on the Internet site.  Another link to it is here.

Koos Jansen: Debunking GFMS’ gold demand statistics

What came to light as on odd discrepancy between GFMS’ Chinese gold demand and “apparent supply” has proven to be a tenacious cover-up by the oldest consultancy firm in the gold market.

Not only does GFMS publish incomplete and misleading data on Chinese gold demand — all its supply-and-demand data is incomplete and misleading.

As a result, the vast majority of investors has been brainwashed to believe total gold supply and demand consists mainly of global mine output and jewelry demand. In reality, the supply-and-demand data GFMS publishes is just the tip of the iceberg. But the firm is reluctant to admit this, lest its business model be severely damaged.

GFMS has denied all allegations about its incomplete Chinese gold demand statistics by continuously making up false arguments. Therefore, BullionStar will debunk, once more, such arguments spread by GFMS.

GATA consultant Reg Howe laid GFMS bare for the world to see over a decade ago, so there would be nothing in this report that would surprise me, or should surprise you.  I’ve always maintained that the precious metal reports from GFMS, along with those from The CPM Group, are borderline fiction.  This commentary by Koos which, surprisingly, is not as long as his normal short novels, appeared on the Internet site on Saturday Singapore time — and another link to it is here.  I found this in a GATA release as well.

Gold, GFMS, China Demand: Koos speaks out — Lawrie Williams [Sharps Pixley]

In a new posting on bullionstar.comDebunking GFMS’ Gold Demand Statistics – Jansen looks at all GFMS’ latest opinions on this, and why they are all, in his view, incorrect – indeed he describes them as a cover-up, which also has to apply to the theories on this matter promulgated by the other major precious metals analysts.  It is hardly surprising that Metals Focus’ analysis comes up with something close to that of GFMS, although perhaps not quite so downbeat.  This is because the latter consultancy utilises the services of Hong Kong based consultancy Precious Metals Insights for its Chinese data whose managing director is Philip Klapwijk, former executive chairman of GFMS and who will thus have had ultimate responsibility for the original GFMS research on Chinese consumption.  Given Metals Focus provides, as noted above, the data used by The World Gold Council in its pronouncements, this is often the data used by global media as the definitive Chinese gold demand figure.

This might not be a problem if the GFMS and Metals Focus/WGC data was anywhere close to the kinds of figures  which Jansen comes up with, but the figures they use are only less than half those suggested by Jansen who bases his calculations on Shanghai Gold Exchange (SGE) gold withdrawals.  In part this is because what the consultancies count as gold demand ignores financial/institutional intake, which can be substantial, and which is why Jansen considers the data misleading. Last year, for example, SGE withdrawals amounted to over 2,596 tonnes of gold – a new record – whereas GFMS calculations for Chinese consumption came in at under 900 tonnes a figure also picked up by much of the world’s mainstream media.  The difference between that and the SGE figure is ENORMOUS.

We have pointed out here beforehand that the real, and obvious, anomaly comes in when you look at actual gold supply into China.  If we add known Chinese gold imports – from Hong Kong, Switzerland, the UK, the USA and Australia, all of which publish gold export figures  – and add in Chinese gold production (China is the world’s No. 1 gold producer – some 450 tonnes in 2015)  plus an estimate of scrap supply, not to mention direct imports from countries which don’t publish export statistics, we come up with a combined figure of around 2,000 tonnes or more (if anything Jansen’s calculations are even higher).  As gold exports from China are officially prohibited – which isn’t to say that absolutely zero goes out, but close – these figures would seem to make the GFMS calculations even more untenable.

This excellent commentary by Lawrie appeared on his own website yesterday — and it’s definitely worth reading.  I thank Patricia Caulfield for finding it for us — an another link to it is here.

Fears Rise over Future Supply of Gold

For the first time in history, gold supply into the future is under enormous pressure.”

The warning from Mark Bristow, chief executive of London-listed Randgold, encapsulates the gold-mining sector’s woes.

Bullion’s only modest price recovery this year compared with other commodities has led the industry to cut spending on exploration dramatically to less than $4 billion from almost $10 billion in 2012.

There is a chronic shortage of exploration money and as usual the gold price is not acting in the way everyone thought it would do,” says Peter Hambro, chairman of the company.

This backdrop has left many in the industry forecasting a supply shortage by the end of the decade.

Mr. Bristow believes this supply shortage will be inevitable unless some major discoveries of large, high-grade ore bodies are suddenly made, “Which frankly seems a remote possibility.

Of course Mark knows perfectly well why “the gold price is not acting in the way everyone thought it would do” — but doesn’t breath of a word of it here.  He’s like every other precious metal mining executive in the world.  They all know what’s going on, but won’t say a word, or raise a finger to save themselves, their industry and…heaven forbid…their shareholders.  This story appeared on the Financial Times website on Monday — and the rest of this article that’s posted in the clear is contained in this GATA release, which is where I found this gold-related story.  Chris has headlined it “Who needs real metal if paper will do?” — and another link to it is here.

Gold price forecast to soar 50 percent up next year amid euro-zone uncertainties

Gold traders expect the price of gold to climb between 25 per cent to 50 per cent next year as a coming swarm of political uncertainties will lead investors to bet on the precious metal.

Haywood Cheung Tak-hay, the honorary permanent president of the Chinese Gold and Silver Exchange Society, said that events so far this year had caused the per ounce price of gold to fluctuate between US$1,100 and US$1,377.

The many surprise results this year, ranging from the Brexit vote in June, when Britain voted to leave the European Union in a referendum, to the surprise result in November when Donald Trump was elected president of the United States, have all shocked the investment markets. This has led investors to buy in gold,” Cheung told the Post.

He said this trend would continue into next year, and he expected gold to hit US$1,500 per ounce.

The political uncertainties are likely to continue to haunt investment markets next year. There are presidential elections in France, Germany and the Netherlands. These will all introduce uncertainties in the market,” Cheung said.

Here’s another so-called expert that really should know better.  The gold price will most assuredly rise, but only to the level that JPMorgan et al allow it — and a time of their choosing.  Precious metal prices are set on the COMEX — and JPMorgan et al are in total control of that price mechanism…at least for now.  This ‘news’ item appeared on the South China Morning Post at 11:59 p.m. China Standard Time on Sunday night — and another link to it is here.  I thank West Virginia reader Elliot Simon for sharing it with us.

Gold Standard Approved for Islamic Finance, Opening New Market

Gold is acceptable for the first time as an investment in Islamic finance after the group that sets standards for the industry adopted Shariah-compliant rules for trading the metal.

The rules, approved Nov. 19, allow gold to be used in the $1.88-trillion Islamic finance business, the Accounting and Auditing Organization for Islamic Financial Institutions said Monday in a statement. The organization developed the standards with help from the producer-funded World Gold Council, which has said the new rules could spur demand for “hundreds of tons” of gold.

The SPDR Gold Trust, the biggest exchange-traded fund backed by bullion traded under stock symbol GLD, will probably qualify, and the standard may open new demand to central banks, Mohd Daud Bakar, a Shariah scholar, said at a press conference in Dubai today. Comex gold futures wouldn’t qualify because of a physical backing requirement, he said.

We fully expect to announce imminently that GLD does qualify,” Natalie Dempster, a managing director of the World Gold Council, said at the conference. Physical gold bars and coins may also qualify, she said. The rules require that a bank selling gold has to offer same-day settlement or has to demonstrate it can provide the exact gold being sold within one day, Dempster said. The standard also applies to silver, according to Hamed Hassan Merah, secretary general of the Islamic finance group.

Of course, all this new demand in gold and silver, if it does in fact materialize, will only affect the price if the powers-that-be allow it.  This interesting Bloomberg story showed up on their Internet site at 6:00 a.m. EST on Monday morning — and it’s another gold-related article I found embedded in a GATA release.  Another link to it is here.


As per usual, here are two more of the finalists for the 2016 Comedy Wildlife Photography AwardsClick to enlarge.161206photo-1



I’m convinced the price take-down over the past month in gold and silver was as deliberate and highly orchestrated as any I’ve ever seen. I know I’m talking about a price manipulation which shouldn’t be condoned in any way – but the manipulation itself was masterful, nonetheless. The largest amount of gold and silver ounces repositioned were of the COMEX paper variety by far, but the 2.5 million physical ounces of gold withdrawn from GLD was worth $3 billion, hardly chump change. There’s no doubt in my mind that whoever primarily orchestrated the price decline on the COMEX, not only bought back a large number of gold and silver short futures contracts, but much of the physical gold and silver dishoarded by investors in GLD and SLV, as well. Along with stopping big physical deliveries on the COMEX.
Speaking of JPMorgan, I sense the bank’s octopus reach for physical metal continues to extend into Gold and Silver Eagles. This past month featured weak retail demand for these coins, just as the same weak retail demand was reflected in redemptions in GLD and SLV. Yet the U.S. Mint sold more Gold Eagles in November than in any month this year. These circumstances can’t be explained away from it being the work of a big buyer. And the only reason I can come up with why JPMorgan hasn’t been buying more Silver Eagles is that its overall silver buying has become too obvious in too many venues. The bottom line on all this is JPMorgan is taking extraordinary measures to buy as much physical silver and now gold as it can. Maybe you should too.Silver analyst Ted Butler: 03 December 2016

Free markets in anything were nowhere to be found on Planet Earth on Monday — and it even started early with the dollar index on Sunday afternoon in New York.  The powers-that-be, which would include the BIS, the world’s central banks, the Exchange Stabilization Fund — and the big bullion banks, were all at battle stations across the entire financial spectrum yesterday.  The firepower to keep the world’s financial system upright and still going around the track was awesome to behold.

The April 2008 quote — “There are no markets anymore, only interventions” — was very apropos again yesterday.

Not only did they stop the gold price spike in its tracks at the 6:00 p.m. EST open on Sunday evening, they also managed to set a new interim day low in that precious metal on Monday as well, PLUS they closed it down on the day as well.

And as you can tell from the Kitco charts at the top of today’s column, the precious metals would all have closed materially higher if they had been allowed to trade freely.  And, in most ways, the 6-month precious metal charts below are there mainly for entertainment purposes as well, because the data on them mean nothing…as ‘da boyz’ are painting these charts to perfection.161206-6-month-gold


161206-6-month-copperAnd as I type this paragraph, the London open is less than ten minutes away — and I note that all four precious metals began to rally about an hour after trading began in New York at 6:00 p.m. on Monday evening.  The rallies were capped within a few hours — and turned lower, but have rallied sharply in the last hour as the dollar index took a bit of a hit.  At the moment, gold is up $2.90 an ounce, silver is up 9 cents — and platinum and palladium are up 6 and 3 dollars respectively.  All four are off their earlier highs by decent amounts.

Net HFT gold volume is around 31,500 contracts, with no roll-over/switch volume worthy of the name.  That number in silver is sitting at 9,300 contracts, with very tiny switch volume.  Both these volume numbers are pretty high, so it shows that even these tiny rallies in morning trading in the Far East…and in the last hour…are not going unopposed.

The dollar index had been inching higher all through Far East trading — and was up about 10 basis points or so by shortly after 3 p.m. in Shanghai, but has given all that back since then — and is basically sitting at unchanged as London opens.

Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report.  Looking at the charts, plus the current trading in the Far East at 1:20 a.m. China Standard Time on their Tuesday afternoon, I can’t imagine that ‘da boyz’ will set a new intra or closing day low in any of the precious metals before the 1:30 p.m. COMEX close, but you just never know.

The other interesting chart of the five posted above, is copper.  That metal is up almost 30 percent in the last six weeks or so — and was powering higher again yesterday.  The powers-that-be don’t seem to be overly interested in keeping base metal prices in line.  But, of course, run-away lead, zinc or copper prices won’t bring down the world’s financial system, now will they?

And as I post today’s column on my website at 4:00 a.m. EST, I see that precious metal prices aren’t doing much — and are lower by a bit now that London and Zurich have been open for an hour.  Gold is up $2.20 the ounce, silver is up only a nickel — and platinum and palladium are higher by 3 and 1 dollar respectively.

Net HFT gold volume is now up to 38,500 contracts — and that number in silver is 10,500 contracts.  These aren’t big increases from an hour ago, so nothing should be read into the price action during the last hour.  The dollar index continues to drift lower — and is down 11 basis points as I write this.

After yesterday’s [and Sunday’s] performance by ‘da boyz’ — it would be unwise to underestimate their power when they choose to use it to save their beloved fiat currency system.  But, having said that, all the signs certainly point to bottoms being set in gold and silver — and it just remains to be seen how high they will be allowed to rise whenever the next major rallies materialize.

That’s all I have for today — and I’ll see you here tomorrow.


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