Precious Metal Rallies Capped in Thin Holiday Trading

28 December 2016 — Wednesday


After getting sold down a hair in the first two hours of trading starting at 6:00 p.m. EST on Monday evening, the gold price began to crawl quietly higher starting at 9 a.m. China Standard Time on their Tuesday morning.  It was up about 5 bucks a few minutes before the London open — and at that juncture the price went vertical in very thin trading.  Even before the London open, ‘da boyz’ were there as short buyers and long sellers of last resort — and from shortly after the London open — and until around noon in New York, the price was sold back to within a few dollars of unchanged.  Then it crept higher from there until around 3:30 p.m. EST — and traded flat into the 5:00 p.m. close.

The low and high ticks were recorded by the CME Group as $1,132.80 and $1,151.70 in the February contract.

Gold was closed in New York yesterday at $1,138.80 spot, up $4.80 — and that’s net of Friday’s $5.20 gain.  Volume before the COMEX open was fumes and vapours, but picked up a bit after that.  Net volume was only a hair over 97,000 contracts.

And here’s the 5-minute gold tick chart courtesy of Brad Robertson — and the stand-out feature is the big spike/price capping event that occurred just minutes before the London open.  Volume after that was very light — and even COMEX volume was hardly worth mentioning.  Once the COMEX close passed at 11:30 a.m. Denver time on the chart below, volume dropped off to nothing.

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‘ feature is a must.

The silver price activity on Tuesday was similar in most respects to gold, but more ‘volatile’.  The rally right at the 6:00 p.m. open in New York on Monday evening, got hammered down to its low tick of the day, which came at 9 a.m. in Shanghai on their Tuesday morning.  Then it rallied in stair-step fashion, with each vertical spike being capped, but not driven lower until the price broke above the $16 spot mark at 9:00 a.m. in London.  By 9:30 a.m., JPMorgan et al began to spin the price lower and, like gold, the low tick of the day came shortly after the equity markets opened in New York on Tuesday morning.  From there the price rallied until the 1:30 p.m. EST COMEX close — and continued to rally a bit, albeit at a much slower pace.

The low and high tick in silver were reported as $15.755 and $16.105 in the March contract.

Silver finished the Wednesday trading session at $15.95 spot, up 21.5 cents from its close on Friday.  Volume was extremely light up until the COMEX open but, like gold, picked up a hair as the New York trading session moved along.  Overall, net volume was pretty quiet at just over 29,500 contracts.

Here’s the 5-minute silver tick chart courtesy of Brad as usual — and even though the volume spikes look impressive, a quick glance at the scale on the right-hand side of this chart shows that the volumes really didn’t amount to much.

Like the 5-minute gold 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‘ feature is a must her as well.

Like silver, the platinum price vaulted higher right at the 6 p.m. New York open on Monday evening.  Once that was capped, the price chopped generally higher until a few minutes before the Zurich/London open.  The platinum had another ‘silver moment’ — and the powers-that-be had to step in there as well.  It was sold lower until the London p.m. gold fix — and then vaulted higher until the price got capped around 10:45 a.m. EST in New York.  By shortly after 4 p.m., all its COMEX gains had vanished, although it did rally a few dollars after that.  Platinum finished the day at $902. spot, up 13 buck from its Friday close.

The palladium price chopped higher until shortly after 10 a.m. in Shanghai on their Tuesday morning — and then didn’t do much until around 10:15 a.m. in Zurich.  From there it sold down to its $655 spot low tick of the day — and that came minutes after 9:30 a.m. in New York, the same as it did for platinum.  The price blasted higher from there — and went ‘no ask’ minutes before the Zurich close — and it was obvious that the short sellers/long buyers of last resort obviously showed up at that juncture — and it was sold down 7 dollars or so going into the COMEX close.  It rallied back almost to its high tick of the day in the very thinly-traded after-hours market in New York.  But that gain wasn’t allowed to stand — and palladium was closed at $669 spot, up only 13 dollars as well.

The dollar index closed very late on Friday afternoon in New York at 102.95 — and once trading began around 3 p.m. on Sunday afternoon in New York, it chopped sideways in a very tight range just below the 103.00 mark until 5:30 p.m. EST on Monday afternoon.  It then rallied to its 103.15 high minutes after 10 a.m. China Standard Time on their Tuesday morning — and then spent the remainder of the Tuesday session trying to remain above the 103.00 mark.  It managed that, although just barely, as the index finished the Tuesday session in New York at 103.03 — up 8 basis points from its close on Friday.

Here’s the 3-day dollar index chart so you can at least see what happened since the 3 p.m. EST open in New York on Sunday afternoon.

And here’s the 6-month U.S. dollar index for entertainment purposes only, as usual.  As I said on Saturday, the index is looking ‘toppy’ once again.  The last time I said those words in the third week of November, the index rolled over hard, but got saved by the usual ‘gentle hands’.  It remains to be see if they show up again when this rally fails.

You should carefully noted that the index has been closed within a tiny handful of basis points either side of the 103.00 mark for the last 8 trading days in a row, which is an impossibility in a free market.

The gold stocks gapped up a bit over 2 percent at the open, then sagged a bit as the gold price was sold lower in morning trading in New York.  But minutes after 12 o’clock noon, they began to quietly head higher –and the HUI closed almost on its high tick of the day — and up 2.47 percent.

The silver equities also gapped up about 2 percent at the open — and also rallied until their respective high ticks, which came shortly before 3 p.m. EST.  Nick Laird’s Intraday Silver Sentiment finished the Tuesday session up a very respectable 4.24 percent.  Click to enlarge if necessary.

The CME Daily Delivery Report showed that 38 gold and 19 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.  In gold, 37 of those contracts were issued by Morgan Stanley out of their client account — and except for JPMorgan picking up 4 contracts for their own account, none of the long/stoppers were worth noting.  In silver, the 19 short/issuers were split up more or less equally between four different parties — and the two long/stoppers were Canada’s Scotiabank and JPMorgan, with 17 and 2 contracts for their own in-house [proprietary] trading accounts.  The link to yesterday’s Issuers and Stoppers Report is here.

With so many gold and silver contracts still outstanding for December, I must admit that these delivery numbers were disappointing.  I was expecting much more.

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in December fell by 67 contracts, leaving 496 still around, minus the 38 mentioned above.  Friday’s Daily Delivery Report showed that only 1 gold contract was actually posted for delivery today, so that means that 67-1=66 short/issuers were let off the December delivery hook by those holding the long side of their contracts.  Silver o.i. in December declined by only 3 contracts, leaving 215 left, minus the 19 mentioned two paragraphs ago.  But Friday’s Daily Delivery Report showed that in actual fact, 7 silver contracts were posted for delivery today.  So that means that another 7-3=4 silver contracts were added to the December delivery month.  This is an extraordinary event this late in a delivery month, especially this delivery month.

So we’re now down to only 1 delivery day left in December — and that’s Friday.  All these gold and silver contracts that are still open have to be resolved by the close of trading on Thursday, so they can be physically delivered on Friday.  As I’ve said a couple of times in the last few days…I’ll be more than interested in who the short/issuers and long/stoppers are on these remaining contracts.

There was a smallish withdrawal/conversion of shares from GLD yesterday, as an authorized participant took out 38,118 troy ounces.  But the SLV ETF went in the other direction, as an a.p. added 1,137,768 troy ounces.  I would suspect that this silver was used to cover an existing short position.

There have been three deposits into SLV recently — and all three occurred after the December 15th cut-off for the next report from the folks over at the Internet site, which should be out any day now.  Since they were made after the cut-off date, they won’t show up in their report until around January 9 or 10.  As Ted Butler has pointed out on numerous occasions, these sorts of things don’t happen by accident.

Well, I didn’t have to wait until today, because when I checked back on the Internet site at 11:55 p.m. EST last night, I saw that that they had updated their numbers as of the close of business on December 15.  It showed that the short positions in SLV had increased another 11.1 percent — and that’s after a 32 percent increase from their report a bit over two weeks ago.  The short position in SLV rose from 12.20 million shares/troy ounces, up to 13.49 million shares/troy ounces.  The short position in GLD dropped from 882,420 troy ounces, down to 838,850 troy ounces, which is a decline of 4.9 percent.

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 business on Thursday, December 22 — and this is what they had to report.  They added 3,055 troy ounces to their gold ETF, plus 109,892 troy ounces to their silver ETF.

There was a decent amount of gold moved around at the COMEX-approved depositories on Friday.  There was 45,043 troy ounces received —and 16,075.000 troy ounces/500 kilobars [U.K./U.S. kilobar weight] shipped out.  Of the amount shipped in, there was 24,112.500 troy ounces/750 kilobars [U.K./U.S. kilobar weight] deposited at the new International Depository Services of Delaware, plus 20,930 troy ounces shipped into Canada’s Scotiabank.  All of the ‘out’ activity was at Canada’s Scotiabank.  A link to all this is here.

For a change, there was no in/out movement in silver at all.

Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday, they reported receiving 3,338 kilobars — and shipped out 2,306 kilobars.  All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.

Here are three charts courtesy of Nick Laird.  They show Switzerland’s gold imports and exports for November.  The first charts shows the last two years of gold imports and exports, updated with November’s figures.  The last two charts show November imports and exports by country of origin and destination.

With no column on Tuesday, I have a lot of stories for you today — and I hope you can find the time to read/or listen to the ones that interest you.


Recession, market correction next year, expect rate cuts: Rickards

The Federal Reserve hiked interest rates just two weeks ago for the second time in a decade, but it will soon be cutting them again, said Jim Rickards on Tuesday.

Speaking to CNBC‘s Squawk Box, the director of The James Rickards Project said a stock market correction is coming as President-elect Donald Trump’s economic stimulus plans will not pan out, causing a “head-on collision” between perception and reality.

When the reality of no stimulus catches up with the perception of stimulus plus the Fed tightening: that’s the train wreck. Either we’re going to have a recession or a stock market correction,” he said.

This story was posted on the CNBC website in the wee hours of Tuesday morning EST — and also includes a 2:18 minute video clip.  I thank Ken Hurt for pointing it out — and another link to it is here.

Barclays chief preparing to take a stand against U.S. regulators over unduly high fines to European banks

Mr Staley’s defiance – a very different tack than that taken during the Libor settlement negotiations in 2012 which cost Bob Diamond his job – came as Deutsche Bank and Credit Suisse settled with the regulator, to the tune of a total of $12.5bn (£10.2bn) between them, covering fines and reparations.

But Mr Staley, a native Bostonian who spent most of his career at JP Morgan, appears determined to take a stand against the regulator and what he sees as European banks being unduly punished.

A Barclays source said of the negotiations: “We were a bit player in the market. The number on the table was unacceptable.

A second source said it appeared that the fines being handed out – U.S. regulators have now collected $58bn in total from eight banks in fines and relief and other payments in connection with toxic mortgage sales – were not equitable between U.S. and European banks.

This news item put in an appearance on the Internet site back on December 23 — and it comes to us courtesy of Roy Stephens.  Another link to it is here.

Canada’s Goods Producing Sector Caves

Many countries, including the U.S., report GDP on a quarterly basis. Canada reports on a monthly basis. So today Statistics Canada reported GDP for October. What’s disconcerting isn’t so much that GDP fell 0.3{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} on a monthly basis – these things happen – though it disappointed economists along the way…

The “results were surprisingly bad,” wrote Krishen Rangasamy, senior economist at Economics and Strategy, National Bank of Canada.

The GDP report is an ugly snowball of reality to the face of the economy to end the year after a nice run earlier in the fall,” said Douglas Porter, chief economist BMO .

But what was disconcerting was just how much the goods producing sectors are getting hammered across the board.

This story was posted on the Internet site on December 23 as well — and I thank Brad Robertson for this one.  Another link to it is here.

Belgium Has Credit Rating Cut by Fitch as Deficit Seen Rising

Fitch Ratings cut Belgium’s credit rating for the first time in almost five years as the government struggles to reach its goal of returning to a balanced budget.

In a statement Friday, Fitch announced a one-step reduction to AA- from AA. That’s equivalent to Belgium’s credit score of Aa3 at Moody’s and one step below the AA rating assigned by Standard & Poor’s. The outlook on the rating is stable, Fitch said.

Fitch said it raised its forecast for Belgium’s 2016 budget deficit to 3 percent of gross domestic product, from 2.7 percent in its previous review. Gross public debt, seen at 107 percent percent of GDP in 2016, is the highest among sovereigns in the AA group, according to the ratings company.

Delivering on a pledge of bringing down Europe’s highest labor taxes, Prime Minister Charles Michel’s government is struggling to finance the reduction amid higher security expenditure following the March terrorist attacks in Brussels.

Additional uncertainty comes from the potential impact of the U.K.’s decision to leave the European Union, with the Belgian economy being more exposed to U.K. demand than most of its E.U. peers.

The above five paragraphs are all there is to this brief Bloomberg article which showed up on their Internet site at 2:32 p.m. Denver time on Monday afternoon.  I thank Swedish subscriber Patrik Ekdahl for sending it along — and the link to the website version is here.

Frexit: Le Pen promises to take France out of E.U. and NATO

French presidential candidate Marine Le Pen said that NATO exists only ‘to serve Washington’s objectives’, and that she planned to hold a Brexit-style referendum, in an interview with a Greek newspaper.
Le Pen, the leader of France’s far-right National Front and a candidate for the 2017 presidential elections, is known for her Euroscepticism and anti-immigrant views. Together with France, she also suggested that Portugal, Italy, Spain, Ireland, Greece and Cyprus should also leave the European Union.

Frexit will be a part of my policy,” she said in an interview with Dimokratia. “The people must have the opportunity to vote for the liberation from slavery and blackmail imposed by technocrats in Brussels to return sovereignty to the country.

Along with her main rival, the center-right Francois Fillon, Le Pen has called for closer ties with Russia and has criticized NATO expansion into eastern Europe. Le Pen said that she would take France out of the alliance if she became president because, as she said, its existence is no longer needed.

It was established when there was a risk from the Warsaw Pact and the expansionism of the communist Soviet Union,” said Le Pen. “The Soviet Union no longer exists, and neither does the Warsaw Pact. Washington maintains the NATO presence to serve its objectives in Europe.”

Amen to that, bro’….  This news item showed up on the Internet site at 8:56 p.m. Moscow time on Christmas eve — and I thank Roy Stephens for his second contribution to today’s column.  Another link to it is here.

ECB Says Paschi Needs $9.2 Billion, More Than Bank’s Plan

The European Central Bank said Banca Monte dei Paschi di Siena SpA needs about €8.8 billion ($9.2 billion) to bolster its balance sheet, almost twice the amount the Italian lender had sought to raise in a failed capital increase.

The calculation is based on the results of a 2016 stress test, the Italian bank said in a statement late Monday, citing two letters from the ECB. While the ECB saw worsening liquidity at Monte Paschi between Nov. 30 and Dec. 21, it still considers the Italian bank to be solvent. The lender is seeking additional information on the central bank’s calculations.

The Italian government said Friday it will plow as much as €20 billion into Monte Paschi and other banks after the lender failed in its plan to raise about €5 billion from the market. Chief Executive Officer Marco Morelli had crisscrossed the globe looking for investors to back the bank’s reorganization plan, which included a share sale, a debt-for-equity swap and the sale of €28 billion of soured loans.

This Bloomberg story was posted on their Internet site at 12:36 a.m. MST on Tuesday morning — and was updated about nine and a half hours later.  I thank Patrik Ekdahl for his second offering in today’s column — and another link to it is here.

Chinese themselves prefer U.S. dollar over yuan

When former Chinese Politburo member Zhou Yongkang was arrested in 2014 on corruption charges, the scale of his ill-gotten gains was astounding, totalling some $16 billion. When sums that large are involved, most of the assets have to be invested in financial instruments and real estate.

But the list of physical currency found in his homes is revealing: 152.7 million Chinese yuan (valued at the time at $24.5 million), €662,000…£10,000…55,000 Swiss francs — and US$275 million.

The former head of China’s internal security services and one of the 10 most powerful men in China apparently preferred to keep his “petty cash” mainly in U.S. dollars.

He’s not alone. China lost around $1 trillion to capital flight in 2015, before clamping down hard at the beginning of 2016. Much of this money leaves China via fake invoicing in Hong Kong, where the local currency is pegged to the U.S. dollar. Illicit outflows are also facilitated by casinos in the Philippines, South Korea, and on remote Pacific islands, all of which operate primarily in dollars.

Predictions of the dollar’s demise and eventual replacement by the Chinese yuan, are a staple of global economic punditry, but they have little basis in reality. Of course China has become an important component of the global economy, accounting for more than 15 percent of global gross domestic product. But when Chinese people themselves prefer to hold dollars, there is little chance that the Chinese yuan will ever replace the U.S. dollar as the world’s key currency.

This news story appeared on the Internet site on December 24 — and I found this on that Internet site.  Another link to it is here.

Max Keiser/Stacy Herbert: “Double Down” with Jim Rickards

On today’s episode of Double Down, hosts Max Keiser and Stacy Herbert are joined by Jim Rickards, author of The Road to Ruin, to discuss the axis of gold and…rum barrel debt polka.

As Cuba has offered to pay its $270 million debts to the Czech Republic in rum. Jim Rickards, author of The Road to Ruin and Currency Wars, suggests this is a sign of things to come as nations seek hard currency, like gold.

Rickards points out that what he calls ‘the Axis of Gold’ — Russia, China and Iran — are able to navigate a U.S. dollar dominated financial system by trading with with world’s oldest money — gold. They also discuss Trump’s economic team and how they might alter long-standing China and dollar policy.

This audio interview with Jim begins at the 2:15 minute mark — and runs for the rest of the program, which is about twelve more minutes.  It was posted on the Internet site at 2:35 p.m. Moscow time on their Tuesday afternoon — and I thank Harold Jacobsen for pointing it out.  Another link to it is here.

Financial Times, Barron’s Tout Death of Gold

When the pall bearers and grave diggers start dancing on gold’s grave, it’s usually a good time to buy.

Here are a few articles that will have contrarian ears perking up.

Barron’s proclaims: “The End of a Golden Era”

Gold is struggling. The election of Donald J. Trump as U.S. president was supposed to increase market volatility and push investors to safe assets. Volatility has risen, but investor sentiment has shifted toward hopes of better economic growth through fiscal stimulus, tax breaks, and infrastructure investing.

Last month the Financial Times reported ‘Death of India’s big bank notes spells pain for gold and real estate

Today, Financial Times writer “Lex” gave this morbid headline “Gold: For Whom the Bell Tolls“.  Peter Atwater, not even a gold bug, caught the sentiment, announcing “This death of gold story suggests a major low is near.”  His comment seems far more likely than not.

That’s a big 10-4…good buddy!  This gold-related news item showed up on the Internet site at 1:25 p.m. on Tuesday afternoon EST — and it comes to us courtesy of Roy Stephens.  Another link to it is here.

Peru’s president proposes dredging reservoirs for gold

President Pedro Pablo Kuczynski proposed dredging a reservoir in a dry northern region of Peru to extract what he described as “much more gold” than what the country’s biggest gold mine holds, according to an interview with a local newspaper.

Kuczynski said Poechos, Peru’s biggest reservoir and a key source of water for drinking and farming in the northern Piura region, could hold one gram of gold per cubic meter in 580 million cubic meters of sediment.

It has to be dredged,” Kucyznski said in a videotaped interview with financial daily Gestion. …

Kuczynski said the sediment could be removed from Poechos for five or six years to extract its gold before letting it accumulate again for 20 years, a repeatable process that he said would make it “the only mine in the world that’s renewable.”

Kuczynski, a former investment banker who once managed a mine in West Africa for Alcoa Corp, said the same model could be used in another reservoir in Peru, Olmos, which Brookfield Infrastructure Partners LP recently bought from Brazilian builder Odebrecht.

This guy has either got his meds wrong, or he’s dreaming in Technicolor.  The rest of this story can be found on the Reuters website.  It was posted there at 4:40 p.m. EST on Monday afternoon — and it’s another news item I found in a GATA release.  Another link to it is here.

High-quality counterfeit gold bars sold in Winnipeg and other Canadian cities

If you’re planning on buying gold bars anytime soon, Winnipeg police are advising extra caution after a series of “suspicious transactions” at locations in the city.

The transactions took place November 30 at a number of pawn shops and gold buyers, police said, involving the sale or pawning of counterfeit one-ounce gold bars.

City police said officers in other Canadian cities also investigated similar incidents.

Police said the bars and packaging were very high-quality counterfeits.

They were bearing either The Perth Mint or PAMP (Produits Artistiques Mtaux Prcieux — Switzerland) stamps.

This gold-related news item was posted on the Internet site last Friday — and I found it on the Internet site on Saturday morning.  Another link to it is here.

Bundesbank says it’s bringing Germany’s home gold faster than planned

Germany’s Bundesbank has this year taken back more of its gold than planned as it moves toward hoarding half of the world’s second-largest reserve at home, Bundesbank President Jens Weidmann told German daily Bild.

We brought back significantly more gold to Germany in 2016 again than initially planned. By now, almost half of the gold reserves are in Germany,” the paper quoted Weidmann as saying in a summary of an article to be published on Saturday.

In the wake of the euro zone crisis, many ordinary Germans want to see more of the 3,381 tonnes of gold in vaults at home. Some had even questioned whether it still exists, prompting the Bundesbank to publish a long list of details on the gold holdings in 2015.

According to Bild, around 1,600 tonnes of Germany’s gold reserves are now in the country, and that figure is to rise to 1,700 tonnes by 2020.

The Bundesbank will “be done with the planned move sooner“, the paper quoted Weidmann as saying.

This 5-paragraph Reuters news item put in an appearance on their Internet site on December 24 — and it’s another gold related story that I plucked from a GATA release.  A link to the website version is here.

Even the supposed audits of Germany’s gold reserves are secret

Bullion Star publishes its primer on Germany’s gold reserves, noting that the custodian of the reserves, the Bundesbank, is extremely secretive about them, concealing even their supposed audits and omitting crucial information from the supposed list of the gold bars in the reserve.

Most of what’s in this commentary has appeared on the Internet already over the years, but seeing it all in one spot makes it worth reading.  This rather long, but informative article, showed up on the Internet site on Tuesday sometime — and I found it on the Internet site as well.  Another link to it is here.

Switzerland’s Niche in Global Gold Trade Draws Scrutiny – The Wall Street Journal

For nearly three decades, Christoph Wild has worked in this remote corner of Switzerland, at a facility hidden behind a phalanx of security cameras and razor wire.

Recently, Mr. Wild, the co-chief executive of gold refiner Argor-Heraeus SA, has had to get used to an unsettling new part of the job: public scrutiny.

After years of global focus on Switzerland’s banks as facilitators of wrongdoing, the country’s gold refiners have increasingly been targeted with similar allegations.

First the banks were the bad guys, now it’s the precious metals industry,” Mr. Wild said in an interview at his office in Mendrisio.

This Wall Street Journal article was posted in the clear on Christmas Day at 9:03 a.m. EST — and I thank Ken Hurt for finding it for us.  It’s definitely worth reading — and another link to it is here.

Gold mine output may have peaked…but will it make any difference? — Lawrie Williams

We may indeed have hit peak gold production this year, but if we have will this factor have any impact on the gold price itself?  It may improve sentiment towards investing in the yellow metal  given that the pro-gold commentators will hammer the point in their end-year analyses and in their forward forecasts, but in terms of the gold supply/demand balance (if indeed this is even really relevant in metal price terms, any production downturn is likely to be very small in percentage terms, at least in the initial couple of years.

It may actually be the gold price itself which could be the principal contributor to a production fall – but not necessarily in the manner one would suspect.  Ironically higher gold prices may lead to lower gold output, and vice versa.  Higher gold prices will often encourage miners to work lower grade sections of their ore bodies thus prolonging mine life, while lower gold prices may encourage miners who have appropriate flexibility to high grade and thus produce more gold at an unchanged mill throughput.  Indeed if global gold output does not end up turning down slightly in 2016 it will likely be this latter factor which is primarily responsible given the pressures on the miners to lower unit costs and boost, or at least maintain,  profits as gold declined from its 2012 peak.  (One way of lowering unit costs is to boost production by high grading, while maintaining the same operational costs.)

But one factor stemming from these cost cutting programmes is that the miners have also been cutting exploration, expansions and other capital expenditures which will all have a knock-on effect in the years ahead and if peak gold is not actually with us yet it very certainly will be by the end of the decade.  There have been very few truly major gold finds over the past few years which are necessary to replace aging mines at, or near, the ends of their lives and there has been a general declining grade trend.

A declining gold supply will only make a difference in the price if JPMorgan et al allow it.  That’s all there is to it, there ain’t no more.  This commentary by Lawrie appeared on the Internet site on December 24 — and it’s worth a minute or so of your time, if you have any time left, that is.  Another link to it is here.



The net effect of there now being a managed money trader or two in the ranks of the big 8 and possibly even the big 4 in gold (not in silver), is that the true commercial concentrated short position is overstated by the amount of managed money shorting in the largest traders’ categories. That is, the true net short position of the largest commercials in gold is even less than the raw numbers would indicate. In this case, it makes the market structure even more bullish than indicated. Silver analyst Ted Butler:  25 December 2016

Regarding Ted’s quote above, I mentioned in my Saturday column that Ted and I were discussing this very thing on the phone last Friday when talking about the Commitment of Traders Report — and his comments above should be considered the final word on this matter.

Yesterday’s price activity was certainly signs of holiday-induced illiquid markets, where it didn’t take much volume to move prices substantially.  Without doubt, the prices of all four precious metals would have melted up if allowed.

Ted says that this action is indicative of a market bottom — and the only way we’re going lower from here is if JPMorgan et al continue to “chum the waters” as he put it in his weekly review on Sunday…looking for more long-selling/short buying from the technical funds and small traders.

But as Ted also pointed out, there comes a time where the law of diminishing returns sets in — and we appear to be there right now.  They can attempt to set precious metal prices lower, but what are they going to get for their efforts at this juncture?

Here are the 6-month charts for all four precious metals, plus copper.

And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price began to crawl higher right from the open of trading at 6:00 p.m. in New York on Tuesday evening.  That smallish rally got turned over at 3:00 p.m. China Standard Time on their Wednesday afternoon — and it’s currently up $3.60 the ounce.  The silver price chopped sideways in a very narrow price range — and its rally above the $16 spot mark around noon in Shanghai got met by the usual not-for-profit sellers — and they’ve beaten it back to below unchanged.  It’s down 5 cents at the moment. Platinum rallied a few dollars in Far East trading, but like gold and silver, got turned a bit lower around 3 p.m. CST — and is back to unchanged on the day.  Palladium was up 7 dollars by around 11 a.m. China Standard Time — and it’s still up 6 bucks.

Net HFT gold volume is just under 22,000 contracts, which is fairly light — and that number in silver is sitting at 9,500 contracts, which is pretty decent.  Roll-over/switch volume is just about non-existent in both precious metals at the moment.

The dollar index was down about 15 basis points by 2:00 p.m. in Shanghai trading, but at that juncture began to turn higher — and is down 9 basis points as London opens.

Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report.  Just eye-balling the gold and silver charts above, I’d guess about unchanged on gold — and maybe a slight improvement in silver.  But whatever the changes are, they shouldn’t be that material.

And as I post today’s effort on the website at 4:00 a.m. EST, I see that the gold price is continuing to inch lower — and is up only $2.20 an ounce at the moment.  ‘Da boyz’ continue to pick away at the silver price — and it’s down 9 cents an ounce currently.  Platinum is now down a dollar — and palladium is up only 3 bucks.

Net HFT gold volume is up to 26,000 contracts — and that number in silver is pretty chunky at just over 10,000 contracts.  The dollar index continues to rally quietly — and is back above the 103.00 mark at 103.09…up 5 basis points from its close late on Tuesday afternoon.

With only three trading days left in 2016…actually two and a half, as I’m sure the markets will close early on Friday…I’m not expecting a lot of price fireworks.  And any that might materialize will most likely be dealt with in the same manner as those price spikes were on Tuesday.

That’s all I have for today, which is more than enough — and I’ll see you here tomorrow.


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