2017 Starts On a Bit of a Wild Note

04 January 2017 — Wednesday


Gold opened down a dollar or so when trading commenced in New York at 6:00 p.m. EST on Monday evening — and at 9:00 a.m. China Standard Time began to rally sharply.  It ran into “all the usual suspects” almost immediately — and the Far East high tick came around 10:30 a.m. in Shanghai on their Tuesday morning.  The price didn’t do much until the usual selling pressure appeared around 2:45 p.m. CST.  The low tick came around 11:20 a.m. GMT in London — and it began to chop unsteadily higher until shortly after the London p.m. gold ‘fix’ was in.  It spiked up from there, but ‘da boyz’ were waiting — and the high tick of the day came a minute or so after 1 p.m. EST.  It chopped quietly lower from there into the 5:00 p.m. close.

The low and high ticks were reported as $1,146.50 and $1,166.00 in the February contract.

Gold was closed in New York yesterday at $1,158.30 spot, up $7.40 from Friday’s close.  Net volume was enormous at just under 194,000 contracts.

Here’s the 5-minute gold tick chart courtesy of Brad Robertson — and it goes all the way back to the New York open on Monday evening, which is 16:00 Denver time on the chart below.  There was decent volume on the sharp rally in Far East trading — and then again in spots during the engineered price decline during the London session.  As always, the biggest volume was in New York, but it quieted down pretty good after 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 chart for silver was almost the same as gold’s.  The spike down around 10 a.m. GMT in London on the Kitco chart below looks like a data feed error, because it certainly doesn’t show up in the low tick data for March. But it’s certainly possible that the spike down only affected the current spot month.  The rally that developed after 9:30 a.m. in New York certainly had more legs than gold’s, but ‘da boyz’ showed up in force around 11:40 a.m. EST to cap it, once it appeared it was about to get out of hand to the upside.  It was sold quietly lower from there — and from shortly before 4 p.m. it then traded sideways into the close.

The low and high ticks in this precious metal were reported by the CME Group as $15.935 and $16.55 in the March contract.

Silver finished the Tuesday session at $16.27 spot, up 39 cents on the day.  Net volume was very heavy at just over 73,500 contracts.  Roll-over volume out of March was pretty decent as well.  The same can be said for gold.

Here’s the 5-minute tick chart for silver courtesy of Brad as well.  There was some decent volume on the price spike in Shanghai trading — and then it dropped off substantially until the noon silver fix, which is 05:00 a.m. Denver time.  As you can tell, COMEX volume was pretty enormous as JPMorgan et al were most likely going short all comers as the rally progressed — and I’ll have more on this in The Wrap.  Volume dropped off to more or less background levels sometime after 2 p.m. in New York — noon on the 5-minute tick chart below.

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.

The price chart for platinum was very similar to gold and silver’s.  The rally in that precious metal began shortly after 12 o’clock noon in Zurich — and the high tick of the day came shortly before 1 p.m. in New York.  It’s certainly obvious from that chart that the powers-that-be were standing there as short buyers and long sellers of last resort throughout its entire rally as well.  Platinum was closed on Tuesday at $936 spot, up 35 bucks on the day.  But, like gold and silver, would have closed materially higher if allowed to trade freely.

Palladium’s big rally began shortly before 1 p.m. in Zurich — and it’s price was capped around 11:30 a.m. in New York.  It got sold down about 8 dollars from its high tick by around 1 p.m. EST — and then didn’t do much after that.  Palladium finished the Tuesday session at $708 spot — and up 30 dollars on the day.

The dollar index closed very late on Friday afternoon in New York at 102.40 — and opened down a hair when trading began shortly before 3 p.m. EST on Sunday afternoon.  The 102.28 low tick was put in a couple of hours later — and it began to rally from there.  Its 102.94 high tick on Monday came at 4:30 p.m. EST — and by 1 p.m. China Standard time on their Tuesday morning, it was down to the 102.59 mark.  Then minutes before 3 p.m. over there, the dollar index began to ‘rally’ anew, but began to roll over a hair staring around 12:30 p.m. GMT in London.  It then was blasted higher at, or shortly before, the London p.m. gold fix yesterday — and the 103.82 high tick was set about 10:10 a.m. EST on Tuesday morning.  It headed sharply lower from there, but appeared to get rescued by the usual ‘gentle hands’ shortly after 11:30 a.m.  It rallied weakly from there, closing in New York late yesterday afternoon at 103.22 — and up 82 basis points from where it finished the day on Friday.

Here’s the 3-day U.S. dollar index chart so you can see all the ‘action’ right from the Sunday afternoon open in New York.

And here’s the 6-month U.S. dollar index chart courtesy of stockcharts.com as usual — and the doji for the Tuesday trading session also contains the data from Monday as well.

The gold stocks had a big up/down move in the first forty minutes of trading on Tuesday morning — and then began to chop quietly but steadily higher for the rest of the day.  The HUI closed on its high tick — and up 4.17 percent.

It was more or less the same price pattern for the silver equities — and Nick Laird’s Intraday Silver 7/Silver Sentiment Index closed up 4.40 percent — and on its high tick of the day as well.  Click to enlarge if necessary.

The CME Daily Delivery Report showed that 875 gold and 1 silver contract were posted for delivery on Thursday within the COMEX-approved depositories.  The only short/issuer was JPMorgan out of its client account — and the only long/stopper worth mentioning was Canada’s Scotiabank with 861 contracts.  Scotiabank also stopped the lone silver contract issued.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in January rose by 7 contracts, leaving 1,014 still around, minus the 875 mentioned above.  Friday’s Daily Delivery Report showed that only 2 gold contracts were posted for delivery today, so that means that another 2+7=9 gold contracts were added to the January delivery month.  Silver o.i. in January dropped by 3 contracts, leaving 464 still around, minus the 1 mentioned in the previous paragraph.  Friday’s Daily Delivery Report showed that only 1 silver contract was posted for delivery today, so that means that 3-1=2 short/issuers were let off the January delivery hook in silver.

There was another withdrawal/conversion of shares in GLD yesterday, as an authorized participant removed 266,807 troy ounces.  And as of 6:16 p.m. EST yesterday evening, there were no reported changed in SLV.

The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on with their gold and silver ETFs as of the close of trading on Friday — and this is what they had to report.  They added a smallish 3,111 troy ounces to their gold ETF, but their silver ETF declined by a fairly hefty 217,275 troy ounces.

There was no in/out movement in gold over at the COMEX-approved gold depositories on the U.S. east coast on Friday.

The same can’t be said of silver, as there was very decent activity.  There was 515,901 troy ounces received — and all of that went into Brink’s, Inc. — and 974,476 troy ounces were shipped out.  Of that amount, there was 633,291 troy ounces shipped out of CNT — and the balance came out of Canada’s Scotiabank.  The link to that action is here.

It was pretty quiet over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  All of the activity was at Brink’s, Inc. as per usual.  They reported receiving 418 kilobars — and shipped out 198.  The link to that, in troy ounces, is here.

Here are two charts that Nick Laird passed around last night.  They show U.S. Mint eagle sales updated with the 2016 data.  The gold eagle sales chart also includes sales of the 1-troy ounce gold buffalo as well.  The mint sold 1,204,000 troy ounces of gold eagles/buffaloes, plus 39.1 million silver eagles during 2016.

Not to be forgotten are the five troy ounce ‘America the Beautiful’ silver bullion coins.  The mint reported selling 285,900 of them during 2016, so that works out to another 1.43 million troy ounces of silver used up.

Considering the fact that it’s been three days since my last column, I don’t have all that many stories for you today.


Ford Cancels Plans for New $1.6 Billion Mexico Plant

Ford Motor Co. will scrap plans to build a $1.6 billion plant in Mexico, after coming under criticism by President-elect Donald Trump for shifting small-car production south of the border.

The next-generation Focus compact car will be built at an existing factory in Hermosillo, Mexico, and Ford will cancel plans to build a plant in San Luis Potosi, Chief Executive Officer Mark Fields said Tuesday. The second-largest U.S. automaker will build two products at a factory in Wayne, Michigan, where it assembles the Focus now, protecting about 3,500 jobs.

One of the factors we’re looking at is the more positive U.S. business environment that we foresee under President-elect Trump and the pro-growth policies that he’s been outlining,” Fields told reporters at Ford’s factory in Flat Rock, Michigan, where the company is investing $700 million and adding 700 jobs. “This is a vote of confidence around that.

Ford Executive Chairman Bill Ford called Trump this morning to inform him of the company’s plans to cancel construction of the new plant in Mexico, which had begun in May. Fields said he discussed the new plan with Vice President-elect Mike Pence.

This Bloomberg news item put in an appearance on their Internet site at 9:07 a.m. Denver time on Tuesday morning — and was subsequently updated about ninety minutes later.  I thank Swedish reader Patrik Ekdahl for pointing it out.  Another link to it is here.

A giant wave of store closures is about to hit the U.S.

Retailers are bracing for a fresh wave of store closures at the start of the new year.

The industry is heading into 2017 with a glut of store space as shopping continues to shift online and foot traffic to malls declines, according to analysts.

If you are weaker player, it’s going to be a very tough 2017 for you,” said RJ Hottovy, a consumer equity strategist for Morningstar.

He said he’s expecting a number of retailers to file for bankruptcy next year, in addition to mass store closures.

Nearly every major department store, including Macy’s, Kohl’s, Walmart, and Sears, have collectively closed hundreds of stores over the last couple years to try and stem losses from unprofitable stores and the rise of e-commerce.  But the closures are far from over.

No surprises here — and I expect the same thing in Canada as well.  This news item was posted on the nordic.businessinsider.com Internet site at on Saturday afternoon EST — and it’s the second contribution in a row from Patrik Ekdahl.  Another link to it is here.

What RVs Say About the American Economy

Anyone despairing about the possibility of an economic slowdown may want to visit this county of 200,000 in northern Indiana for a boost.

Elkhart County is the capital of the recreational-vehicle (RV) industry, with 65 percent of all RVs made in the county, according to the Recreational Vehicle Industry Association. And right now, the recreational vehicle industry is doing very, very well. “We’re going gangbusters,” Wes Bogan, marketing director of RV company Thor Motor Coach, told me on a tour of the factory where the vehicles are assembled. The RV industry predicts that 2017 will be a banner year, with manufacturers shipping a record 438,000 units, up 4.4 percent from 2016.

This is good news not just for the thousands of people employed in the RV and related industries in Indiana. Usually, economists look at some fairly standard indicators to assess the economy’s health: new claims for unemployment insurance filed by the recently jobless, consumer confidence surveys, and the consumer confidence index, which measures how Americans feel about the economy. (Some also look to wackier signs: Alan Greenspan has a theory that an uptick in men’s underwear sales is good economic news.)

But RV sales turn out to be a pretty good predictor too: When RV sales are doing well, the economy follows; when RV sales tank, the economy is soon to tank too.

This article…filed from Elkhart, Indiana…showed up on theatlantic.com Internet site last Thursday — and I thank Roy Stephens for sending it along.  Another link to it is here.

U.S. dollar’s share of global currency reserves slips in third quarter

The U.S. dollar’s share of currency reserves reported to the International Monetary Fund slipped in the third quarter of 2016 to its lowest level in two years, data from the IMF showed today.

The July-September period was the third consecutive decline in the dollar’s share of allocated currency reserves, or those reported to the IMF. The decline could reflect increased optimism about the global economy, with the European economy seen on improved footing.

In the third quarter the dollar comprised 63.3 percent of allocated reserves, the smallest share since the third quarter of 2014. The dollar made up 63.8 percent of allocated reserves in the second quarter.

The euro’s share rose to 20.3 percent in the same period from 20.0 percent the quarter before, while the yen’s share increases to 4.5 percent from 4.4 percent.

This Reuters news item was posted on their website last Friday morning EST — and I found it embedded in a GATA release.  Another link to it is here.

Venezuela Military Trafficking Food as Country Goes Hungry

When hunger drew tens of thousands of Venezuelans to the streets last summer in protest, President Nicolas Maduro turned to the military to manage the country’s diminished food supply, putting generals in charge of everything from butter to rice.

But instead of fighting hunger, the military is making money from it, an Associated Press investigation shows. That’s what grocer Jose Campos found when he ran out of pantry staples this year. In the middle of the night, he would travel to an illegal market run by the military to buy corn flour—at 100 times the government-set price.

The military would be watching over whole bags of money,” Campos said. “They always had what I needed.”

With much of the oil country on the verge of starvation and malnourished children dying in pediatric wards, food trafficking has become big business in Venezuela. And the military is at the heart of the graft, according to documents and interviews with more than 60 officials, company owners and workers, including five former generals.

This story, filed from Puerto Cabello in Venezuela, was posted on theepochtimes.com Internet site on January 1 — and it’s the third contribution of the day from Patrik Ekdahl.  Another link to it is here.

U.K. companies stockpile cash amid fears of slowdown

Britain’s businesses are building up more cash and trimming debts as they cash in on the current surge in shopping – but also prepare to cope with any slowdown in the economy next year.

Firms typically borrow more when they are confident enough to invest, and build up cash when they are nervous, indicating they want to be in a position of financial strength going into 2017.

Since the referendum we’ve seen our U.K. portfolio of business customers increase their cash deposits and reduce their utilisation of overdraft facilities,” said Noel Quinn, chief executive of global commercial banking at HSBC.

Figures from the Bank of England show non-financial companies’ deposits rose to £428.5bn in October, the highest level in the seven years for which data are available.

This news item appeared on the telegraph.co.uk Internet site on Saturday evening GMT — and it’s yet another offering from Swedish reader Patrik Ekdahl.  Another link to it is here.

Euro Area Sees Price Gains as Manufacturing Picks Up Pace

Euro-area manufacturing expanded last month at the fastest rate since April 2011, in a sign that the currency bloc’s recovery is intact heading into 2017.

A Purchasing Managers’ Index climbed to 54.9 in December, IHS Markit said on Monday. The reading matches the initial estimate on Dec. 15 and was up from 53.7 in November. Higher import costs resulting from a weaker euro, combined with increased global commodity prices, led to the sharpest inflation for average purchasing costs in more than five-and-a-half years.

The European Central Bank has extended its stimulus program until at least the end of the year as it strives to return consumer-price growth to its goal of just under 2 percent. While inflation looks set to accelerate in coming months, officials are concerned that core prices — excluding energy and food — have so far shown no convincing upward trend.

Euro-zone manufacturers are entering 2017 on a strong footing, having ended 2016 with a surge in production,” said Chris Williamson, chief business economist at IHS Markit. “Policy makers will be doubly-pleased to see the manufacturing sector’s improved outlook being accompanied by rising price pressures.

PMI readings rose in all seven of the countries in the survey, with growth strongest in the Netherlands and Austria. Germany’s gauge was at the highest in three years, France’s in more than five years, and Spain’s in 11 months. Italy’s pace of growth improved and Greece’s contraction eased.

One month’s worth of statistics does not make a trend.  Let’s see what things look like in six months time.  This Bloomberg article put in an appearance on their Internet site at 2:00 a.m. Denver time on Monday morning — and it’s the fifth and final offering of the day from Patrik E.  Another link to this news item is here.

China Inc.’s large dollar debts fuel Beijing’s efforts to curb yuan plunge

The large pile of foreign debt owed by Chinese companies, from state-owned banks to airlines, is giving added impetus to Beijing’s efforts to keep the yuan from falling too steeply against the rallying dollar.

The yuan dropped by 4 percent over the past three months, as the dollar recently hit a 14-year high against 16 currencies. The faster-than-expected depreciation is causing more businesses and individuals to try to get out of yuan, further pressuring the currency.

To bolster the yuan, the central bank and other agencies have ratcheted up controls on Chinese companies as well as citizens investing offshore. In the latest move banks were ordered over the weekend to step up scrutiny of individuals’ purchases of foreign currency. The most bandied-about foreign U.S. dollar debt holdings is somewhere around $7 Trillion — and a goodly chunk of that will disappear into money heaven as foreign companies default on their U.S. debt obligations — Chinese companies included.  This news item, filed from Beijing, showed up on The Wall Street Journal website yesterday — and the rest of it is hidden behind their subscription wall.  I found this story on that gata.org Internet site — and here’s the link to the article anyway.

Bitcoin Surges Above $1,000 as China Unveils New Capital Controls

As noted on January 1, for the first time in three years, and only the second time in history, bitcoin rose above $1,000 in Yuan-denominated Chinese trading, however it was limited to the lower side of this “round number” psychological barrier in U.S. trading, as BTC flirted with $999.99 for most of the day on the popular Coinbase exchange, without crossing it.

Overnight, however, Chinese demand proved too great and US markets had no choice but to arb the difference. So with Bitcoin trading in China at an implied price of over $1,050 at this moment, bitcoin finally soared above $1,000 in the U.S. as well, trading just around $1,024 on Coinbase as of this moment.

Various catalysts for the recent surge have been cited, chief among which is the ongoing crackdown against cash in India providing a new source of demand for bitcoin. However, the most immediate driver of the recent burst in Chinese demand originates, not unexpectedly, from China where Beijing over the weekend implemented even more of what we have said since September 2015 will keep pushing bitcoin relentlessly higher: capital controls.

Recall that as we noted over the weekend, in order to further curb capital outflows, Chinese banks will be required to report all yuan-denominated cash transactions exceeding 50,000 yuan (around 7,100 US dollars) to the People’s Bank of China (PBOC), down from the current level of 200,000 yuan, according to a PBOC document released on Friday. Cross-border transfers more than 200,000 yuan by individuals will also be subject to the report process. In terms of foreign currencies, the report threshold remains at the equivalent of 10,000 US dollars for both cash transactions and overseas transfers.

How do we know that this latest PBOC intervention in capital markets was merely the latest form of capital controls? Because the PBOC immediately said it wasn’t.  As Xinhua reported overnight, “the policy stoked worries that the government is trying to impose capital control in a disguised form. It is not capital control at all, central bank economist Ma Jun said. Actually, imposing limits on capital movement, i.e. controls, is by definition just that.

This 3-chart story was posted on the Zero Hedge website at 8:29 a.m. EST on Monday morning — and I thank Richard Saler for sharing it with us.  Another link to it is here.

James Rickards – The Road to Ruin – PART 1 of 2

This 48:34 minute video interview with Jim is, without doubt, the best one I’ve ever watched.  This londonreal.tv.com video presentation showed up on the youtube.com Internet site on Sunday.  The interview, hosted by Brian Rose, actually starts at the 5:28 minute mark — and that’s where you should fast-forward to unless you want to watch all his razzle dazzle at the beginning.

And if you want to watch Part 2…which is free…you have to sign up for it.  The link for that is posted below the interview itself.  I thank Harold Jacobsen for bringing this to my attention — and now to yours.  I can’t speak to the second part, as I haven’t watched it, but Part 1 is not to missed in my opinion.

Gold imports into India hit 13-year low

With the government giving a push to digital transactions following demonetisation and discouraging the purchase of assets using cash, some trends expected to change the gold business have been identified.

The immediate impact of demonetisation has been on gold demand, which went up sharply after the withdrawal of the 500- and 1000-rupee notes on November 8. While the demand for gold increased immediately after demonetisation, it fell sharply in December. Now for buying jewellery or bullion worth more than Rs 2 lakh, purchasers have to state their permanent account number.

It would not be surprising to see the government stipulating that jewellery purchases of over Rs 20,000 should be supported by a government-authorised identification,” said an analyst who tracks Asian gold markets.

The import of gold in 2016 in tonnage terms has been the lowest since 2003, according to the GFMS TR. The organisation has estimated the official gold import in 2016 at 492 tonnes, a large part of that being for export.

The customs duty from gold import could be approximately Rs 8,000 crore, about less than half of what was collected a year ago. The low revenue also leaves room for cutting the import duty on gold to bring it in alignment with the proposed goods and services tax, whose rate could be 4-6 per cent.

This gold-related new items appeared on the rediff.com Internet site at 11:53 a.m. IST on their Wednesday morning — and it’s something I found on the Sharps Pixley website early yesterday evening.  Another link to it is here.

China’s November net gold imports drop to 10-month low

China’s net gold imports via main conduit Hong Kong in November dropped 17.84 percent from October to its lowest in 10 months, data showed on Thursday. Net-gold imports fell to 50.178 tonnes in November from 61.075 tonnes in October, marking its lowest since 33.041 tonnes reported in January this year, according to data emailed to Reuters by the Hong Kong Census and Statistics Department.

Total gold imports fell to 63.508 tonnes from 67.165 tonnes in October. “Towards the year-end most banks have used up their quota and that’s why the numbers have fallen,” a trader with a Chinese import bank said. “The quota will only be renewed at the beginning of next year. Most banks will not be able to import much gold during the end of the year.”

Earlier this month, gold premiums in China surged to over $40 an ounce, their highest in nearly three years, on fears of limited supply of the metal. The supply shortage, traders said, was due to Beijing’s efforts to restrict import licenses. The import curbs may be part of China’s efforts to limit yuan outflows after the currency’s slide to 8-1/2-year lows last month.

This short Reuters article was posted on the brecorder.com Internet site on January 1 — and it’s the second story in a row that I plucked from the Sharps Pixley website.  Another link to it is here.  Nick won’t have the charts on this for at least another week, until the ‘official’ numbers are posted.

GATA’s Ed Steer to speak at Vancouver Resource Investment Conference

GATA Board of Directors member Ed Steer, publisher of the daily Ed Steer’s Gold and Silver Digest letter will speak at Cambridge House’s Vancouver Resource Investment Conference, to be held Sunday and Monday, January 22 and 23 at the Vancouver Convention Centre West in Vancouver, British Columbia, Canada.

Also speaking, among others, will be Peter Schiff of Euro-Pacific Capital, Frank Holmes of U.S. Global Investors, Doug Casey of Casey Research, Peter Spina of GoldSeek.com and SilverSeek.com, David Morgan of The Morgan Report and Silver-Investor.com, Thom Calandra of The Calandra Report, Rick Rule of Sprott U.S. Holdings, Tommy Humphreys of CEO.ca, Keith Neumeyer of First Majestic Silver Corp., and Andy Schectman of the Miles Franklin bullion dealership.

As usual scores of resource companies will be exhibiting. A discounted rate will be available to conference participants at the Fairmont Waterfront hotel across the street from the convention center.

Admission will be free with advance registration and otherwise will cost C$20 at the door.

This item was posted on the gata.org Internet site yesterday afternoon — and if you do take the time to show up at the conference, please don’t be shy about introducing yourself.  Another link to this posting is here.

Interview with First Majestic Silver CEO Keith Neumeyer

This 28:15 minute audio interview with Keith was posted on the youtube.com Internet site on Monday.  It rambles off topic a bit at times…but if you’re a fan of him and his companies, it should prove worth your while.

And as the GATA release above pointed out, Keith will be a guest speaker at the Vancouver conference as well.

The first person through the door with this story — and there were many — was Ellen Hoyt.  And I thank her for sending it our way early yesterday morning.

Peter Boehringer: Germany’s gold reserves in U.S. were only paper claims

As it often has done before, Germany’s Bundesbank has released news at Christmastime to avoid critical examination and discussion, this time news about its repatriation of the nation’s gold reserves.

The repatriated tonnage volume reported — “approximately 200 tonnes,” bringing the total of gold repatriated to approximately 1,580 tonnes or 47 percent of Germany’s gold reserves — is OK, not spectacular. And this month there was far more important news about Germany’s gold, though it was overlooked.

The important news came December 21 from the major German news agency, DPA-AFX, and most likely was written by the Bundesbank itself for DPA-AFX. The news agency published a German-language news brief that was uncritically republished by most German newspapers and magazines without anyone recognizing its political, economic, and historical sensitivity.

The news item said: “… in den 1950er und 1960er Jahren wuchs der deutsche Goldschatz rasant. Denn. … Bundesrepublik [hatte] dank des Exports viele Dollar, die bei der US-Zentralbank gegen Goldforderungen eingetauscht werden konnten.”

In English: “Germany’s gold hoard grew rapidly in the 1950s and 1960s. Thanks to its export surplus, the Federal Republic amassed many dollars that could be exchanged at the U.S. central bank against gold claims.

The news brief’s term was “gold claims” — not “physical gold bars,” which both the Bundesbank and the U.S. Federal Reserve contend have constituted the German gold reserves held in the United States.

This GATA release came out on Saturday.  I sent a copy of it to Jim Rickards on Monday evening — and heard back from him within thirty minutes — and this was his comment on this story…

Thanks Ed.

There are couple of interesting facts here, but this is mostly nonsense. In the 1950s and 1960s you never got gold from the U.S. central bank as the article says, you got it from the Treasury. The New York Fed was only a custodian after 1934.

The whole “gold claims” versus “gold” distinction is a red herring, probably just lost in translation. It is true that Fed bars are not good delivery bars; they’re irregular and mostly about 92{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} gold; that’s why Germany has them refined in Switzerland before taking final delivery in Frankfurt. The gold is moving slowly not because it’s not there but because no one wants to disrupt the gold leasing market, which is based in New York and London, not Frankfurt.

I sent Jim’s comments off to Chris Powell — and this was his reply…

Thanks. Maybe, but this doesn’t explain why the Bundesbank would not produce a bar list, or why it can’t answer for itself.

Also, of course, Jim doesn’t explain why the Fed/Treasury should be concerned about disrupting the gold leasing market just by repatriating ratty old gold bars from the 1950s and 1960s from a vault in New York to a vault in Frankfurt. Sounds to me as if maybe the gold long has been assumed, on paper, to be in several places at once.

Another link to this German gold story, sans the Rickards/Powell comments, is here.  It’s certainly worth your while if you have the time.



Lately, JPMorgan has been buying back many of its silver (and gold) short positions on the COMEX, as it has succeeded, once again, in rigging prices lower. But there is a limit to how many short contracts JPMorgan can buy back at lower prices and, as I have indicated previously, the bank is most likely at or close to that limit presently. This is what has set the stage for an inevitable rally, with only the timing and extent of the rally in any question. So, we’re back in familiar territory with one thing to be determined – will JPMorgan add to shorts, just as it has on every prior silver rally?” — Silver analyst Ted Butler: 31 December 2016

Well, if JPMorgan et al hadn’t appeared, the rallies in all four precious metals on Tuesday would have certainly turned in the “big ones” in an instant.

Right in the middle of a dollar index rally of some size, all four precious metals rallied, with only gold being denied big gains.  Of course all four ran into short buyers and long sellers as the rallies gathered strength, so it’s obvious that they didn’t go unopposed.

Gold closed back above its 20-day moving average, but not by a significant amount — and silver broke above, but did not close above, its 20-day moving average.

But, as Ted said on the phone yesterday…who were the buyers — and the sellers?  Ted presumed, most likely correctly, that it was the Managed Money traders on the buy side that drove prices higher.  But the question as to who the sellers might be is still very much up in the air.  Was it Ted’s raptors taking profits on their rather large long positions in both silver and gold?  What were the Big 4 traders…read JPMorgan…up to yesterday?  Were they short buyers, or perhaps long buyers.  And the ‘5 through 8’ large commercial traders?  Questions with no answers at the moment.

Here are the 6-month charts for all four precious metals, plus copper, so you can see how things stand as of the close of trading yesterday.

Since this week is the second holiday-shortened trading week in a row, the cut-off for this Friday’s Commitment of Traders Report was at the close of COMEX trading yesterday.  It remains to be see just how much of yesterday’s volume activity actually makes it into that report.  I’m not optimistic, so we’ll just have to wait and see.

And as I type this paragraph, the London open is less than ten minutes away — and I see that the gold price was sold down a few dollars in the first two hours of trading once New York opened at 6:00 p.m. EST on Tuesday evening.  From that low, it began to chop quietly higher — and is up $2.80 the ounce currently.  It was more or less the same price chart for silver — and it’s up 8 cents.  The platinum price got sold down a bit more than ten bucks in the first hour of trading on Tuesday evening in New York — and has been crawling higher since, but is still down 5 bucks the ounce.  Palladium traded pretty flat until around 11 a.m. China Standard Time on their Wednesday morning — and it’s  now up 6 dollars the ounce.

Net HFT gold volume is a hair over 35,000 contracts already — and that number in silver is a bit over 11,000 contracts.  These rallies, such as they are, are obviously not going unopposed.

The dollar index opened flat at 6 p.m. EST last night — and then jumped up about 10 basis points after a couple of hours.  It began to chop quietly lower after that, with most of the damage starting at precisely 2:00 p.m. CST — and is currently down 1 basis point as London opens.

Well, to say we’ve started off the new year with unusual price activity is somewhat of an understatement.  And even though all of yesterday’s price action was strictly a COMEX paper affair, the fact that it happened during a ramp job in the U.S. dollar index is more than noteworthy.

Also of note is the fact that CFTC Chairman Timothy Massad announced his resignation yesterday.  But as Ted Butler pointed out in an e-mail, this position is a political appointment — and Trump will pick his own chairman, so there was nothing unusual about this turn of events.

I’m wondering out loud that along with this change in U.S. Presidents on January 20, might we not see the end of this price management scheme, or at least a price adjustment of some size.  This is wild-ass speculation on my part, but after yesterday’s price action, I’ll certainly be sensitive to this possibility.  But as I also mentioned at the top of The Wrap section, the only reason we didn’t have the ‘big one’ yesterday was because the short buyers and long sellers of last resort were on the job.  But which short buyers and long sellers is the $64,000 question.

And as I post today’s column on the website at 4:00 a.m. EST this morning, I note that the gold price is up a bit more at $4.30 per ounce, but is obviously running into ‘opposition’.  Silver is up 11 cents now, but was up 15 a few minutes earlier.  Platinum is back to unchanged — and palladium is up 12 bucks.

Net HFT gold volume is now up to around 44,500 contracts — and in silver that number is around 13,500.

The dollar index continues to head lower — and is down 8 basis points now that London and Zurich have been open an hour.

I haven’t the foggiest notion as to what might come our way during the rest of the Wednesday session so, as usual, nothing will surprise me when I power up my computer later this morning.

Enjoy your day — and I’ll see you here tomorrow.


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