Precious Metal Equities Post Big Gains Yesterday

30 December 2016 — Friday


The gold price rallied a bit in Far East trading on their Thursday morning — and that lasted until around 12:30 p.m. China Standard Time.  From there it traded pretty flat until shortly after the London open — and at that juncture was sold down to its low tick of the day, which came right at the 8:20 a.m. EST COMEX open in New York.  It didn’t do much from there until around 10:40 a.m. — and then away it went to the upside…with obvious resistance…until it was capped for good at noon EST.  The price was sold down about five dollars from there, but starting around 3:15 p.m., it began to rally quietly once more, before getting sold off a hair just before the 5:00 p.m. close.

The low and high tick were reported as $1,142.60 and $1,160.60 in the February contract.

Gold finished the Thursday session at $1,157.70 spot, up an even 16 bucks from it’s close on Wednesday.  Net volume was fairly decent at just over 144,000 contracts, as it was obvious that the morning rallies in both the Far East and New York did not go unopposed.

Here’s the 5-minute gold tick chart courtesy of Brad Robertson — and unfortunately it doesn’t start at the 6:00 p.m. EST Wednesday evening open in New York.  But as you can tell, the volume there wasn’t huge.  The COMEX open — and the low tick of the day — are obvious on this chart at 6:20 a.m. Denver time.  I was surprised to see that the big volume spike did not occur at the end of the rally in New York, but more towards the beginning.  Volume dropped off to more or less background levels by the 11:30 a.m. MST COMEX close.

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 price action in silver was mostly similar to that in gold, although the sell-off in London trading didn’t start until the morning gold fix was done at 10:30 a.m. GMT.  Silver’s low tick came at 10:40 a.m. EST as well — and its subsequent rally was capped by ‘da boyz’ at noon in New York.  After that, it’s price path was very similar to gold’s once again.

The low and high ticks in this precious metal were reported by the CME Group as $16.04 and $16.31 in the March contract.

Silver was closed on Thursday at $16.12 spot — up 14.5 cents on the day.  Net volume was about ‘average’…whatever that means these days…at just over 39,000 contracts.

Here’s the 5-minute tick chart for silver as well — along with the usual hat tip to Brad Robertson.  There was a decent volume spike when the price got capped in late morning trading in the Far East on their Thursday.  But then volume died off to nothing until COMEX trading began.  It picked up a fair amount at that point, especially around the mid-morning rally in New York.  By the 11:30 a.m. Denver time COMEX close, it was back to fumes and vapours for the rest of the Thursday session.

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 here as well.

Platinum’s price pattern was similar in most respects to what happened with silver, with almost all the price inflection points coming at the same times.  The low tick came around 10:40 a.m. in New York — and the price was capped by JPMorgan et al at noon.  From there it was sold down into the close, but managed to finish the day in positive territory.  Platinum ended the Thursday session at the $899 spot mark, up 2 bucks from Wednesday’s close.

The palladium price didn’t do much yesterday, but did spend almost the entire day in positive territory, closing at $672 spot — and 6 dollars.  Nothing much to see here.

The dollar index closed very late on Wednesday afternoon in New York at 103.22 — and continued lower a few minutes later once trading began at 6:00 p.m. EST on Wednesday evening.  That decline lasted until around 10:15 a.m. in London — and after a decent rally that didn’t quite make it back to the 103.00 mark around 8:45 a.m. EST, it headed lower once again, with the 102.60 low tick coming at 11:30 a.m. in New York.  It had a 20 basis point up/down move over the next three hours, before chopping sideways into the close.  The dollar index finished the Thursday session at 102.61 — and down 61 basis points on the day.

And here’s the 6-month U.S. dollar index chart — and it remains to be seen if ‘gentle hands’ will appear to save it this time around.

The gold shares gapped up at the open — and kept right on going.  That rally lasted until around 11:20 a.m. in New York trading — and then inched slightly lower until the gold price began to rally anew at 3:30 p.m. EST in the after-hours market.  The gold stocks followed — and the HUI closed on its absolute high tick, up 6.90 percent.

It was an almost identical price pattern for the silver equities, except their collective high ticks came at 12 o’clock noon in New York when ‘da boyz’ showed up to cap the price.  After that they behaved in a very similar manner to their golden brethren — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 6.08 percent, almost on its high of the day.  Click to enlarge if necessary.

The CME Daily Delivery Report…First Day Notice for delivery in January…showed that 133 gold and 195 silver contracts were posted or delivery within the COMEX-approved depositories on Tuesday, January 3rd.  In gold, the only short/issuer that mattered was Goldman Sachs with 132 contracts out of its client account — and the biggest long/stopper was Canada’s Scotiabank with 131 contracts for its own in-house [proprietary] account.  It does not have a client account.  In silver, the surprise short/issuer was JPMorgan with 194 contracts out of its own account.  The only two long/stoppers of note were JPMorgan with 108 contracts for its client account, plus Scotiabank with 79 contacts for its own account.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Thursday trading session showed that December open interest in gold and silver dropped to zero, as all outstanding contracts in both are being delivered today.  Gold open interest in January fell by 141 contracts, leaving 1,143 still open, minus the 133 contracts mentioned in the previous paragraph.  Silver o.i. in January was unchanged at a surprisingly high 758 contracts, minus the 195 mentioned just above.

January is not a traditional delivery month for either precious metal, but it will still be interesting to watch how the delivery month unfolds, particularly in silver.

For the December delivery month, there were 9,578 gold contracts issued and stopped — and in silver, that number was 3,980.

Of those silver contracts, JPMorgan picked up 1,550 of them for its own account, Macquarie Futures stopped 863 contracts for its own account as well…followed by Canada’s Scotiabank with 769 contracts for its own account.  Citigroup picked up 295 contracts for its client account.  HSBC USA did not stop any silver contracts last month, although they did issue 357 contracts out of their house account.

There were no reported changes in GLD yesterday — and as of 6:09 p.m. EST yesterday evening, there were no reported changes in SLV.

There was decent gold movement over at the COMEX-approved depositories on the U.S. east coast on Wednesday, as 71,079 troy ounces were received, but only 3,761 were shipped out.  With the exception of 1,093 troy ounces, all of the ‘in’ activity was at the new International Depository Services of Delaware Depository once again.  And almost all of the ‘out’ activity was at Canada’s Scotiabank.  The link to that is here.

There was very little activity in silver, as nothing was reported received — and the 60,173 troy ounces shipped out, came out of Scotiabank’s vault.  I shan’t bother linking this amount.

It was another big day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  The reported receiving 6,155 of them — and shipped out 8,158.  I’d dearly love to know where all the gold is coming from — where it’s going to — and why.  All of this action was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.

As we approach the final few days of 2016…it appears that real news is getting harder to come by as the world winds down into New Year’s Eve.  Once again I have very few stories for you today.


Trump’s Pick for Budget Chief Liked Gold, Had Dim View of Dollar

President-elect Donald Trump’s pick for budget chief, Mick Mulvaney, has been an active investor in gold and gold-mining stocks, often seen as a hedge against collapsing currency.

The South Carolina Republican congressman has accused the Federal Reserve of debasing the value of the greenback and has praised bitcoin, an alternative currency. He held between $50,000 and $100,000 in precious metals as of the end of 2015, filings show.

Now, as Trump’s nominee to run the Office of Management and Budget, Mulvaney, 49, is poised to influence U.S. fiscal policy. As director of OMB, he would help the president set government spending and could end up working on an overhaul of the federal tax code. At least one other member of Congress appointed by Trump to a cabinet-level position, Representative Tom Price, also has a history of trading stocks while in office.

Mulvaney’s investments in mining companies date to at least 2010, the year he was elected to the House of Representatives as part of the Republican Tea Party wave. A filing detailing his holdings at the end of that year shows he and family members owned stocks and funds of gold- and silver-mining companies — including Eldorado Gold Corp., Agnico Eagle Mines Ltd. and Pan American Silver Corp. — with a total value of between $252,000 and $855,000.

This somewhat longish Bloomberg article was posted on their Internet site at 6:00 a.m. Denver time on Thursday morning — and I found it embedded in a GATA release.  Another link to it is here.

The Golden Era of Hedge Funds Draws to a Close With Clients in Revolt

Drinks flowed as hedge fund titan Robert Mercer, dressed as Mandrake the Magician, partied with Donald Trump, dressed as, well, Donald Trump.

The occasion that early December evening was Mercer’s 2016 holiday costume party, an intimate gathering of 250 at his Long Island estate. This year’s theme: “Villains and Heroes.”

In Trump, Mercer and his fellow hedge funders had much to extol. Tapping into the wealth he amassed at his wildly profitable firm, Renaissance Technologies, Mercer and his daughter Rebekah (dressed that evening in Black Widow leather) had helped vault Trump to the American presidency. Trump, more than any other president-elect, has sought out hedge fund types, from Steven Mnuchin, his choice for Treasury, to David McCormick, a leading contender at Defense, heralding a new lucrative era for American finance.

But Trump or no Trump, this year marked the beginning of the end of hedge funds as we’ve known them. Their investors are joining a growing revolt, spurred by years in which fund managers grew rich while producing little in the way of returns. In 2016, big money clients finally decided to bail. “Let them sell their summer homes and jets and return those fees to investors,” one New York City official said in a nod to the populist wave that swept Trump into the presidency.

This very interesting, but certainly not surprising article appeared on the Bloomberg website at 10:00 p.m. Denver time on Wednesday night — and another link to it is here.  It’s definitely worth reading.

Obama Strikes Back at Russia for Election Hacking

The Obama administration struck back at Russia on Thursday for its efforts to influence the 2016 election, ejecting 35 Russian intelligence operatives from the United States and imposing sanctions on Russia’s two leading intelligence services.

The administration also sanctioned four top officers of one of those services, the military intelligence unit known as the G.R.U., which the White House believes ordered the attacks on the Democratic National Committee and other political organizations.

The expulsion of the 35 Russian spies, who were posing as diplomats, was in response to the harassment of American diplomats in Russia, officials said. None of those officials are believed to be connected to the hacking, they said. In addition, the State Department announced the closing of two “recreational facilities” — one in New York, another in Maryland — that it said were used for Russian intelligence activities, although officials would not say whether they were specifically used in the election-related hacks.

In a sweeping set of announcements, the United States also released samples of malware and other indicators of Russian cyber-activity, including network addresses of computers commonly used by the Russians to launch attacks. Taken together, the actions amount to the strongest American response ever taken to a state-sponsored cyber-attack aimed at the United States.

The sanctions were in part intended to box in President-elect Donald J. Trump. Mr. Trump has consistently cast doubt that the Russian government had anything to do with the hacking of the D.N.C. or other political institutions, saying American intelligence agencies could not be trusted and suggesting that the hacking could have been the work of a “400-pound guy” sitting in his bed.

I think that the sentence I bolded in the last paragraph sums up the reason why Obama did it, better than any other.  This longish piece appeared on The New York Times website yesterday afternoon — and it comes to us courtesy of Roy Stephens.  Another link to it is here.

Festive bounce propels Britain’s FTSE 100 to new all-time closing high

London’s benchmark index hit a new all-time closing high in the first day of trading since the Christmas break driven by strong gains in the mining sector.

Despite thin volumes in quiet festive trading, the FTSE 100 finished up 37.91 points, or 0.54pc, at 7,106.08, surpassing its previous record high 7,103.98, which it recorded on April 27 2015.

Chris Beauchamp, of IG, said: “London’s traders have evidently come back from Christmas with a festive bounce in their step.

Metal prices firmed on continued expectations of Chinese stimulus and hopes on Trump’s infrastructure spending pushing London-listed miners higher. BHP Billiton jumped 4.3pc and Anglo American climbed 3.5pc.

This news item put in an appearance on the Internet site at 6:27 p.m. GMT on their Thursday evening, which was 1:27 p.m. in New York — EST plus 5 hours.  It’s courtesy of Roy Stephens as well — and another link to it is here.

Russia Warns of “Proportional Response” to Obama’s “Paranoia

Having already made it clear that any sanctions would be met with retaliation, IFX reports that Russian Commissioner Foreign Ministry on human rights, democracy and the rule of law, Konstantin Dolgov exclaimed that any anti-Russian sanctions are futile and counter-productive. Kremlin spokesman Dmitry Peskov added that Russia has no alternative than to make a proportional response, adding in a call with reporters that Moscow “doubted the effectiveness of the measures as the current U.S. presidential administration was stepping down in three weeks” while Duma Foreign Affairs head Slutsky slammed U.S. sanctions as “signs of real paranoia.

Slutsky added that “without any grounds for it another round of extremely aggressive steps towards our country are being made basing only on mere assertions.

Although the Obama administration is on its way out, Thursday’s announcement has “shown its real face,” said Andrei Krasov, first deputy head of Russia’s State Duma Defense Committee. He questioned U.S. intentions behind the sanctions and suggest the new measures could weaken “actions against the international terrorism in Syria.

Some reactions via IFX (Google Translate)

U.S. anti-Russian sanctions are counterproductive and are intended to cause damage including the future of the process of restoring bilateral relations, said Commissioner Foreign Ministry on human rights, democracy and the rule of law, Konstantin Dolgov, via “Interfax” .

Any anti-Russian sanctions are futile and counter-productive,he said.I can only reconfirm that this hysteria demonstrates the complete lack of orientation by the outgoing US administration, said the Russian diplomat.

Such unilateral steps are pursuing the aim of damage relations and complicate their recovery in the future, – he said.

Additionally, AP reports, a spokesman for President Vladimir Putin says Moscow regrets the new sanctions that the Obama administration imposed on Russia on Thursday and is considering retaliatory steps.

This longish commentary, which is well worth reading by the way, showed up on the Zero Hedge website at 2:54 p.m. EST yesterday afternoon — and I thank ‘aurora’ for passing it around.  Another link to it is here.

China’s central bank denies yuan broke 7.0000/dollar on Dec. 28 — micro blog

China’s central bank on Wednesday rejected a media report that the yuan had weakened beyond the 7.0000 per dollar level in the onshore market on Dec. 28, calling the report “irresponsible“.

The yuan traded between 6.9500 and 6.9666 per dollar on Wednesday, the PBOC said on its microblog.

But some irresponsible media reported that the onshore rate of the yuan broke the psychological threshold of 7.0000,” the central bank said.

Persistent downward pressure on the yuan has contributed to large capital outflows this year and the central bank has spent some of its foreign exchange reserves to support the currency’s value.

The spot yuan is on track to finish the year with a loss of nearly 7 percent against the dollar, and traders expect depreciation pressure to extend into 2017.

This Reuters article was posted on their website at 8:08 p.m. on Wednesday evening EST — and it’s something I ‘borrowed’ from yesterday’s edition of the King Report.  Another link to it is here.

China expands forex basket to dilute role of dollar

China said Thursday it would almost double the number of foreign currencies it uses to determine the official value of the yuan, thereby diluting the role of the dollar.

The move to expand the foreign exchange basket used to set a daily reference rate for the yuan, or renminbi, will help Beijing shake off the weakness of the currency against the greenback and project an image of stability in the unit.

The dollar will see its prominence in the basket dented by the newcomers, with its share falling from 26.4 percent to 22.4 percent. It is followed by the euro at 16.34 percent.

Among the 11 currencies to join the 13 existing ones are the South Korean won, the South African rand, the Hungarian forint, the Turkish lira, and the Polish zloty, according to the Chinese Foreign Exchange Trade System, which is run by the central bank. …

The expansion is designed to “strengthen the representativeness” of the basket and will come into force on January 1, it added.

This AFP story, datelined 11:06 p.m. IST and filed from Beijing, was picked up by The Times of India — and it’s a story I found on the Internet site early yesterday evening MST.  Another link to it is here.

China Turns to $503 Billion Rail Expansion to Boost Growth

China plans to spend 3.5 trillion yuan ($503 billion) to expand its railway system by 2020 as it turns to investments in infrastructure to bolster growth and improve connectivity across the country.

The high-speed rail network will span more than 30,000 kilometers (18,650 miles) under the proposal, according to details released at a State Council Information Office briefing in Beijing Thursday. The distance, about 6.5 times the length of a road trip between New York and Los Angeles, will cover 80 percent of major cities in China.

The plan will see high-speed rail lines across the country expand by more than half over a five-year period, a boon to Chinese suppliers of rolling stock such as CRRC Corp. and rail construction companies including China Railway Construction Corp. and China Railway Group Ltd. Earlier this year, China turned to a private company for first time to operate an inter-city rail service on the mainland, part of President Xi Jinping’s push to modernize the nation’s transport network amid slowing growth in the world’s second-largest economy.

At the end of 2015, China had 121,000 kilometers of railway lines, including 19,000 kilometers of high-speed tracks, according to a transportation white paper issued Thursday. The U.S. had 228,218 kilometers of rail lines as of 2014, according to latest available data from the World Bank.

This very interesting Bloomberg story from Wednesday evening EST appeared on the Zero Hedge website yesterday — and I thank Brad Robertson for pointing it out.  Another link to it is here — and I’ll have another story about this in my Saturday column.

James Rickards: An End to Globalism

Gordon Brewer, host of “Good Morning Scotland“, talks to lawyer and financial commentator James Rickards, who in his latest book The Road to Ruin, outlines what he believes a plot by global elites’ to hide a coming fiscal catastrophe from investors.

This audio interview from the Internet site, which was conducted on 21 December, runs for 29:46 minutes — and doesn’t appear to start at the beginning of the broadcast, so I’m not sure how much has been left out.  I’m only including this lengthy interview in today’s column because I don’t have much else to offer.  I thank Harold Jacobsen for bringing it to my attention — and now to yours.

Dubai’s gold market bears brunt of India’s note ban

Dubai’s famous Gold Souq, a prime market for yellow metal, has been witnessing almost a complete absence of visitors from India due to demonetisation, according to a media report.

For the single-store operators in the market, the demonetisation hit has been extremely severe. “What you are seeing here is a complete mirror image of the crash in gold sales within India since November 8, when demonetisation was announced,” said Cyriac Varghese, General Manager of Sky Jewellery.

Outside of the Gold Souq, shops in areas such as Bur Dubai too have been recording less of Indian visitor buying interest,” Varghese was quoted as saying by the Gulf News.

In a good year, rupee-led transactions in the market would have accounted for close to 15-20 per cent of sales, and more when gold prices take a dip (as it did last week), the report said.

According to retail sources, there has been some compensation in the form of Chinese visitors who have been more active in recent weeks with their gold buying. But this is nowhere near the levels of Indian visitors.

This gold-related news story, filed from Dubai, appeared on the website on Thursday sometime — and it’s something I found on the Sharps Pixley website.  Another link to it is here.



In COMEX gold since Nov 8, on the near $200 price decline, more than 110,000 net commercial contracts were bought and 120,000 managed money contracts have been sold. This has always been the case on big price moves in gold and silver. When prices rise, managed money traders buy (pushing prices higher) and commercials sell (in a manner not to prevent, but to control price rallies). When prices fall, managed money traders sell (pushing prices lower) and commercials buy (but not in a manner to prevent prices from falling). Whenever the managed money traders are done buying or selling, prices reverse. This is the way of the world and reality, and even though more observers than ever recognize this reality, for some unknown reason, not that many identify the process as being artificial and manipulative (since it has nothing to do with changes in actual supply and demand). I suppose it’s a matter of this occurring for so long that it somehow looks legitimate. — Silver analyst Ted Butler: 25 December 2016

Although it’s tempting to pin the rise in precious metal prices on Thursday on what was happening with the dollar index, a cursory glance at both charts proves that premise to be false.  This was strictly a COMEX-related affair — and probably had something to do with year-end book-squaring.

Having said that, I was intrigued and impressed by the solid performance of the gold equities.  Even after the powers-that-be capped the precious metal prices at noon yesterday, the shares didn’t get sold down after that — and even added to their gains as gold and silver crawled higher into the close of the New York equity markets yesterday.

Here are the 6-month charts for all four precious metals, plus copper, once again.  It’s way too soon to say if the bottom is in for this move down, but their respective rallies are encouraging.

The question to be asked is…who were the short buyers/long sellers of last resort on the price rallies in morning trading in the Far East, plus the big spikes up in both silver and gold in New York yesterday morning.  That won’t be known until the COT Report on January 6.  Gold was closed a bit above its 20-day moving averages yesterday, but not silver, so not much damage was done to the current market structure in both metals.

And as I type this paragraph, the London open is less than ten minutes away — and I see that minutes after the dollar index began to trade in New York on Thursday evening at 6 p.m. EST, it hit a big air pocket — and was down 50 basis points in a minute or so.  Although precious metal prices were in rally mode, they barely responded to this gigantic and instantaneous dollar index move.  To add insult to injury, the moment that the dollar index began to rally, which was very shortly after 9 a.m. China Standard Time on their Friday morning, the prices of all four precious metals were sold lower — and a lot of what little gains had accrued, vanished.

At the moment, gold is only up 60 cents the ounce, silver is up 3 cents — and platinum and palladium are up 5 dollars and down a dollar, respectively.

Net HFT gold volume is sitting at 35,500 contracts already — and that number in silver is 9,600 contracts.  So, like yesterday at this time, it certainly appears that the powers-that-be have been quietly busy keeping the precious metal prices in line after the dollar index cratered.

Speaking of that index, it recovered about half of its earlier loss by noon in Shanghai — and has been chopping mostly sideways since, but is still down 24 basis points from where it closed in New York late on Thursday afternoon.

Today, at 3:30 p.m. EST, we get the latest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday.  As I stated a few days ago, I’m expecting a slight deterioration in the Commercial net short position in gold, but a bit of an improvement in silver.  But whatever the changes are, they shouldn’t be material.

However, whatever they are, I’ll have all of it for you in my Saturday missive.

And as I post today’s effort on the website at 4:00 a.m. EST this morning, I see that the gold price hasn’t done much in the first hour of London trading — and is currently up 80 cents.  Silver is up 6 cents — and platinum and palladium are up 4 dollars…and down 2 dollars…respectively.

Net HFT gold volume is a bit over 41,000 contracts — and silver’s HFT volume is now up to a hair over 11,000 contracts.  The dollar index made it back to virtually unchanged a few minutes before the London open, but has rolled over a bit since — and is currently down 20 basis points.

I certainly expect the equity markets to close early this afternoon in New York — and that probably goes for the precious metals market as well.  Volume should be pretty thin, but as for price action, I wouldn’t hazard a guess after what we’ve witnessed over the last few days — and earlier today.

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


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