25 January 2017 — Wednesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price spiked higher the moment that trading began at 6:00 p.m. EST in New York on Monday evening — and after getting hammered flat, chopped lower from there. It’s low tick in London came at 11 a.m. GMT — and it began to head a bit higher. It really took off at the 9:30 a.m. EST open of the equity markets in New York, only to get smacked lower starting at the 10 a.m. EST London p.m. gold fix. The absolute low of the day came a minute or so after 3 p.m. in the thinly-traded after-hours market. Its rally from there wasn’t allow to get far — and the price didn’t do much in the last hour of trading.
The high and low ticks in gold were reported as $1,220.10 and $1,206.20 in the February contract.
Here’s the 5-minute gold tick chart courtesy of Brad Robertson. Volume wasn’t overly heavy in Far East or London trading on Monday and, as usual, the only volume that really mattered came in the COMEX trading session — and really didn’t back off to background levels until after 14:00 Denver time on the chart below, which was after 4 p.m. EST.
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 action unfolded in a similar manner to gold’s, with the only real difference coming in the form of a secondary rally during the lunch hour in New York. From there, the silver price continued to be engineered lower — and its low tick at $17 spot, came at the same time as gold’s, shortly after 3 p.m. in the after-hours market.
Unlike gold, the high and low ticks for silver both occurred during the New York trading session — and were recorded by the CME Group as $17.31 and $17.025 in the March contract.
And here’s the 5-minute tick chart for silver, courtesy of Brad as well. And, like gold, all the volume that mattered, happened between 06:00 a.m. and 14:00 p.m. MDT in the New York trading 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 as well.
The platinum price rallied about 6 dollars by around 11:30 a.m. in Shanghai, but was sold lower from there, with the $978 low tick coming at 11 a.m. in Zurich trading. It began to head higher from there, but really caught a bid at the COMEX open. Then, like gold and silver, it was capped and sold off a bit at the London p.m. gold fix. But by 10:40 p.m. it was back in rally mode before running into what looked like the usual short buyers and long sellers of last resort at the $1,004 spot mark. By around 3:30 p.m. ‘da boyz’ had it down ten bucks off its high — and it traded sideways into the close from there. Platinum finished the Monday session at $994 spot, up only 14 bucks on the day. It was up $24 at its high.
The price action in palladium was mostly similar to what it was in platinum, except for the fact that the powers-that-be showed up to cap the rally — and drive it lower around 12:25 p.m. in New York. It finished the Tuesday session at $787 spot, up 11 dollars on the day and, like platinum, was closed well off its high.
The dollar index closed very late on Monday afternoon in New York at 99.96. It rallied about twenty basis points in the first few hours of trading in the Far East, but set a double bottom to match Monday’s low tick shortly before noon China Standard Time on their Tuesday morning. From there it rallied to its 100.43 high tick of the day — and that came at precisely 11:00 a.m. GMT in London. Down it went from there, with the 99.97 low tick coming at precisely 10:00 a.m. EST in New York/3:00 p.m. GMT in London…which was the exact time of the London p.m. gold fix. The dollar index took off higher once again starting around 12:30 p.m. in New York. It topped out about the 100.37 mark shortly after 3 p.m. EST — and chopped quietly lower from there into the close. The index finished the Tuesday session at 100.27 — and up 31 basis points from Monday.
With the high and lows in the dollar index coming exactly on the hour — and exactly four hours apart, with the low tick of the day coming right at the London p.m. gold fix, you just to have to know that the currency markets were being managed to perfection — along with precious metals prices yesterday.
The gold stock opened unchanged — and were up bit over 2 percent by minutes after the London p.m. gold fix. They chopped valiantly sideways for about four hours, before giving up the ghost at 1 p.m. EST. They fell into the red in late afternoon trading in New York, but managed to rally a bit at the close, as the HUI finished higher by a whisker…up 0.18 percent. Considering how badly JPMorgan et al beat up the gold price after the p.m. gold fix yesterday, any close in positive territory should be considered a win.
It was more or less the same price chart for the silver equities. But once they rolled over into negative territory starting at 1:01 p.m. EST, they weren’t able to pull off the same miracle recovery as the gold shares. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by 0.64 percent. Click to enlarge if necessary.
The CME Daily Delivery Report showed that 1 gold and 1 silver contract were posted for delivery within the COMEX-approved gold depositories on Thursday. Scotiabank stopped both the gold and silver contracts once again.
The CME Preliminary Report for the Tuesday trading session showed that gold open interest in January dropped by 7 contracts, leaving just 54 left…minus the 1 contract mentioned above. Monday’s Daily Delivery Report showed that 8 gold contracts were actually posted for delivery today, so that means that 8-7=1 more gold contract was added to January. Silver o.i. in January fell by 150 contracts, leaving just 30 left…minus the 1 contract mentioned in the previous paragraph. Monday’s Daily Delivery Report showed that 151 silver contracts were actually posted for delivery today, so that means that 151-150=1 silver contract holder on the short/issuer side exited the January contract.
Even with the price trend in both gold and silver still on the rise, both GLD and SLV reported withdrawals again yesterday. In the face of these precious metal rallies, it has to be taken as a truism now that these withdrawals are conversions of shares into physical metal to avoid SEC reporting requirements, as per what Ted Butler has been saying for a while now.
In GLD, there was a withdrawal/conversion of shares totalling 95,267 troy ounces — and in SLV that withdrawal/conversion totalled 947,752 troy ounces.
There was a sales report from the U.S. Mint yesterday. They sold 5,500 troy ounces of gold eagles — 1,500 one-ounce 24K gold buffaloes — and 150,000 silver eagles.
It was another zero in/out day in gold over at the COMEX-approved depositories on the U.S. east coast on Monday.
But, as usual, it was considerably different in silver, as 1,770,386 troy ounces were received — and 608,492 troy ounces were shipped out the door for parts unknown. JPMorgan received another 572,227 troy ounces — and that officially put them over the 90 million troy ounce mark, at 90.1 million. The rest of the ‘in’ activity was at CNT — and virtually all of the ‘out’ activity was at Canada’s Scotiabank. The link to all that action is here.
It was fairly busy over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday. They received 11,600 of them, but shipped out only 306. All of this activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.
I have a fairly decent number of stories for you today — and I hope there are a few in here that interest you.
President Trump sharply changed the federal government’s approach to the environment on Tuesday as he cleared the way for two major oil pipelines that had been blocked, and set in motion a plan to curb regulations that slow other building projects.
In his latest moves to dismantle the legacy of his predecessor, Mr. Trump resurrected the Keystone XL pipeline that had stirred years of debate, and expedited another pipeline in the Dakotas that had become a major flash point for Native Americans. He also signed a directive ordering an end to protracted environmental reviews.
“I am, to a large extent, an environmentalist, I believe in it,” Mr. Trump said during a meeting with auto industry executives. “But it’s out of control, and we’re going to make it a very short process. And we’re going to either give you your permits, or we’re not going to give you your permits. But you’re going to know very quickly. And generally speaking, we’re going to be giving you your permits.”
The decisions expanded an effort to unravel much of the policy structure left by former President Barack Obama, who made fighting climate change a central priority. Just a day earlier, Mr. Trump formally abandoned the Trans-Pacific Partnership, an ambitious 12-nation trade pact negotiated by Mr. Obama.
This New York Times article, filed from Washington, put in an appearance on their Internet site on Tuesday sometime — and it comes to us courtesy of Roy Stephens — and another link to it is here.
A $90 billion wave of maturing commercial mortgages, leftover debt from the 2007 lending boom, is laying bare the weak links in the U.S. real estate market.
It’s getting harder for landlords who rely on borrowed cash to find new loans to pay off the old ones, leading to forecasts for higher delinquencies. Lenders have gotten choosier about which buildings they’ll fund, concerned about overheated prices for properties from hotels to shopping malls, and record values for office buildings in cities such as New York. Rising interest rates and regulatory constraints for banks also are increasing the odds that borrowers will come up short when it’s time to refinance.
“There are a lot more problem loans out there than people think,” said Ray Potter, founder of R3 Funding, a New York-based firm that arranges financing for landlords and investors. “We’re not going to see a huge crash, but there will be more losses than people are expecting.”
The winners and losers of a lopsided real estate recovery will be cemented as the last vestiges of pre-crisis debt clear the system. While Manhattan skyscraper values have surged 50 percent above the 2008 peak, prices for suburban office buildings still languish 4.8 percent below, according to an index from Moody’s Investors Service and Real Capital Analytics Inc. Borrowers holding commercial real estate outside of major metropolitan areas are now feeling the pinch as they attempt to secure fresh financing, Potter said.
This Bloomberg news item was posted on their website at 3:00 a.m. Denver time on Tuesday morning — and was updated a bit more than five hours later. I thank Swedish reader Patrik Ekdahl for bringing it to my attention — and another link to it is here.
It’s time to talk about the balance sheet.
Eight years after the Federal Reserve launched the first of three controversial bond-buying campaigns to help save the U.S. economy, its holdings are stuck at $4.5 trillion, and the question of when to let them shrink is beginning to simmer.
Several policy makers have pushed publicly to get the debate started. How the discussion plays out could have big implications for the pace of future interest-rate hikes and for the dollar.
The sheer weight of the balance sheet helps hold down long-term U.S. borrowing costs, which is why the Fed bought bonds in the first place. If officials allow holdings to mature without continuing their current practice of reinvesting the principal, they could push yields higher by reducing demand in the bond market.
At the very least, he said, the Fed should be talking about the issue soon. San Francisco Fed President John Williams, Atlanta’s Dennis Lockhart, Philadelphia’s Patrick Harker and Dallas chief Robert Kaplan have all agreed.
This is another Bloomberg article courtesy of Patrik Ekdahl. This one showed up on their Internet site at 10:01 p.m. MST on Monday evening — and another link to it is here.
U.S. Treasury Secretary nominee Steven Mnuchin isn’t jumping on the Republican bandwagon to audit the Fed.
In written questions by senators following his confirmation hearing last Thursday, Mnuchin was asked about his thoughts on “politicizing decisions made by the Federal Reserve Board of Governors and the benefits of an independent central bank.”
Mnuchin’s answer was crafted carefully.
“The Federal Reserve is organized with sufficient independence to conduct monetary policy and open market operations,” Mnuchin responded to Senator Bill Nelson, a Florida Democrat. “I endorse the increased transparency we have seen from the Federal Reserve Board over recent years.”
The response appears to lean against legislation such as the Fed Oversight Reform and Modernization Act of 2015, or FORM Act, which was introduced in the House of Representatives but never became law, which would have subjected the central bank’s monetary policy decisions to greater congressional scrutiny.
Here’s another Bloomberg story. This one was posted on their website at 1:23 p.m. Denver time on Tuesday afternoon — and I found it embedded in a GATA release. Another link to it is here.
You’ve heard the axiom “History repeats itself.” It does, but never in exactly the same way. To apply the lessons of the past, we must understand the differences of the present.
During the American Revolution, the British came prepared to fight a successful war—but against a European army. Their formations, which gave them devastating firepower, and their red coats, which emphasized their numbers, proved the exact opposite of the tactics needed to fight a guerrilla war.
Before World War I, generals still saw the cavalry as the flower of their armies. Of course, the horse soldiers proved worse than useless in the trenches.
Before World War II, in anticipation of a German attack, the French built the “impenetrable” Maginot Line. History repeated itself and the attack came, but not in the way they expected. Their preparations were useless because the Germans didn’t attempt to penetrate it; they simply went around it, and France was defeated.
The generals don’t prepare for the last war out of perversity or stupidity, but rather because past experience is all they have to go by. Most of them simply don’t know how to interpret that experience. They are correct in preparing for another war but wrong in relying upon what worked in the last one.
This loooong commentary by Doug was posted on the internationalman.com Internet site yesterday — and another link to it is here.
Britain’s Supreme Court ruled Tuesday that Parliament must vote on whether the government can begin the country’s exit from the European Union.
It means the Brexit — Britain’s departure from the E.U., as voted on in a June referendum – requires approval of Parliament’s members and peers prior to the start of talks, and not after. The government of British Prime Minister Theresa May planned on beginning the withdrawal procedure — invoking Article 50 of the Lisbon Treaty — by the end of March. While it is unclear if the court ruling will change May’s schedule, it is expected she has enough votes in Parliament to proceed.
“The British people voted to leave the E.U., and the government will deliver on their verdict — triggering Article 50, as planned, by the end of March. Today’s ruling does nothing to change that,” May’s office said in a statement Tuesday.
Supreme Court President Lord David Neuberger, reading the ruling, saying, “By a majority of eight to three, the Supreme Court today rules that the government cannot trigger Article 50 without an act of Parliament authorizing it to do so.”
The court ruled that because the legal consequences of leaving the E.U. were so great, an act of Parliament was required to begin the process, which likely will take about two years. Although Parliament members from Scotland, Wales and Northern Ireland can be involved in arguing and voting on the issue, the British government will not need the approval of their respective Parliaments to begin the exit, the court added. In June’s referendum, 52 percent of all voters chose to leave the E.U., while 62 percent of Scottish voters chose to remain.
This UPI story put in an appearance on their Internet site at 7:11 a.m. EST on Tuesday morning — and I thank Roy Stephens for pointing it out. Another link to it is here. There was also a Reuters piece about this headlined “Brexit plans unlikely to be slowed by Article 50 defeat” — and it’s from Zero Hedge via Brad Robertson.
Europe’s populist right predicted Donald Trump’s entry into the White House will herald the end of the old way of doing business in the west, as the continent’s leaders wrestled with how to deal with the new president.
Anti-establishment politicians including Marine Le Pen, head of the National Front in France, and Geert Wilders of the Dutch Freedom Party echoed the combative language of the new U.S. president’s inaugural address at a celebratory rally in Koblenz, western Germany, on Saturday while Chancellor Angela Merkel was trying to reassure her supporters at a meeting in the country’s industrial heartland.
Le Pen and her allies are spearheading the most sustained challenge to Europe’s status quo since the end of the Cold War, with the continent facing elections this year in Germany, France and the Netherlands. While a meeting of the populist right would once have been dismissed as a sideshow, Trump’s unexpected rise and the U.K.’s decision to leave the E.U. in last year’s referendum have focused investors’ concerns on the where the next threat to the European Union project might emerge.
“The first major hit on the old order was Brexit,” Le Pen told a couple of hundred cheering supporters in Koblenz’s conference center. E.U. countries will soon “leave the prison of Europe,” she predicted, branding Merkel’s decision to let almost a million migrants into Germany last year “a catastrophe.” Trump himself has called the move “a catastrophic mistake.”
Here’s yet another Bloomberg story. This one was posted on their Internet site at 7:38 a.m. MST on Saturday — and it’s something I found in yesterday’s edition of the King Report. Another link to it is here.
China said on Tuesday it had “irrefutable” sovereignty over disputed islands in the South China Sea after the White House vowed to defend “international territories” in the strategic waterway.
White House spokesman Sean Spicer in his comments on Monday signaled a sharp departure from years of cautious U.S. handling of China’s assertive pursuit of territorial claims in Asia.
“The U.S. is going to make sure that we protect our interests there,” Spicer said when asked if Trump agreed with comments by his secretary of state nominee, Rex Tillerson. On Jan. 11, Tillerson said China should not be allowed access to islands it has built in the contested South China Sea.
“It’s a question of if those islands are in fact in international waters and not part of China proper, then yeah, we’re going to make sure that we defend international territories from being taken over by one country,” Spicer said.
Chinese Foreign Ministry spokeswoman Hua Chunying told a regular news briefing on Tuesday “the United States is not a party to the South China Sea dispute“.
This Reuters article, co-filed from Beijing and Washington, appeared on their website at 6:15 p.m. India Standard Time [IST] on their Tuesday evening — and I thank Brad Robertson for finding it for us. Another link to it is here.
Russia is expected to sell discounted rights to one of the world’s largest untapped gold deposits this week to a joint venture of miner Polyus and a state conglomerate, industry sources and analysts said, after sanctions and restrictions discouraged other bidders.
The starting price in the January 26 auction of the Sukhoi Log deposit is $145 million, valuing gold there at $2 per ounce, around 10 times cheaper than deposits of a similar size elsewhere in the world, according to one analyst.
The Russian government, after 20 years of promises to sell the deposit, hopes that the start of production will generate much-needed tax revenues and jobs.
Moscow has also come under pressure from a two-year lobbying campaign by shareholders in the joint venture of Polyus and state-run Rostec, according to an industry source, who spoke on condition of anonymity.
Rostec is headed by Sergei Chemezov, a close associate of Russian President Vladimir Putin.
As part of a policy of keeping strategic resources in Russian hands, the government limited access of foreign investors to the auction, ordering that 25 percent of any bidder should be owned by state-controlled firms.
This interesting Reuters news item, filed from Moscow, showed up on their Internet site at 7:45 a.m. EST on Monday — and I found it on the gata.org Internet site. Another link to it is here.
The gold beneath Egypt’s desert could make it a top global producer, but the investment terms on offer are driving away small explorers whose skills the country needs to unlock its mineral wealth.
The Egyptian government launched its first international tender for gold mining concessions in eight years last week, potentially an exciting opportunity for global miners to help develop a relatively untapped gold-mining frontier.
Though it has a history of gold-mining stretching back to the pharaohs, Egypt today has a single commercial gold mine, Centamin’s Sukari, which produced 551,036 ounces last year.
In Egypt’s mineral-rich Eastern Desert alone, some exploration companies estimate potential gold reserves could be higher than 300 tonnes, although the government declines to give an estimate.
But mining companies active in Egypt and Africa say the new exploration round, which offers five concession areas and closes on April 20, is unlikely to lure investors because of commercial terms they say are among the least attractive in the world.
This gold-related news item was posted on the Reuters website at 10:48 a.m. on Tuesday morning EST — and it’s another article that showed up in a GATA release yesterday. Another link to it is here.
The introduction of a Sharia standard for gold will not only be good for investors but also for gold producing countries and even individual mining operations.
Last month the Sharia Gold Standard was approved as a collaboration between the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), the Islamic standard-setting body, and The World Gold Council (WGC) in London.
“We launched the standard to enable greater access to gold for the Islamic investment community,” says Natalie Dempster, the managing director, central banks and public policy at the WGC. Currently, the WGC is talking to Islamic financiers and product developers as well as scholars over how to put the standard into practice.
Much as it is in the rest of the world, gold has long played a role in Muslim society as a store of wealth and as a means to facilitate trade. However, its use comes with a caveat rooted in Islamic texts, according to AAOIFI.
It is a ribawi item, which puts it in a special category of six items regarded as so important to daily life that they cannot be hoarded (the others being silver, dates, wheat, salt and barley).
Of course the gold price will only rise when JPMorgan et al allow it, as supply/demand fundamentals mean nothing in a managed price environment. That’s something that you should have figured out even if you’ve only been reading my column for a week or so. This worthwhile gold story was posted on the United Arab Emirates website thenational.ae on their Tuesday sometime — and I lifted it from the goldcore.com Internet site thanks to Richard Saler. Another link to it is here.
The PHOTOS and the FUNNIES
When I was out in the ravine when it was really warm two weekends ago — and along with the squirrel shots, I took some black-capped chickadee photos as well. They’re skittish little things — and most of the time you can’t even lock focus on them once they land, before they’re off again. I’m not keeping these, but thought I’d post them. The first picture is from about 5 meters away — and the second one from 4 meters, is craning what little neck it’s got to check me out. Because they were partly in shade, I had to use fill flash on both these shot. The click to enlarge feature only helps on the first photo.
Although it appeared that the dollar index was the sole determinant of precious metal prices yesterday. The fact that the precision of the high and low ticks in the dollar index were miles away from anything that resembled a free market in the currencies — and for that reason, there was no free market allowed in the precious metal yesterday as well.
The strange separation in price patterns between silver and gold on one hand — and platinum and palladium on the other during the Tuesday trading session was more than unusual. I’m not sure what to make of it, but it certainly doesn’t pass the smell test, either.
Here are the 6-month charts for all four precious metals, plus copper, once again. And I should point out, also once again, that all the price action in these metals that occurred after the COMEX close yesterday, don’t show up in the doji.
And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price traded flat until around 11 a.m. in Shanghai on their Wednesday morning — and was sold down to a new low shortly after 3 p.m. over there — and has rallied a bit since. Right now it’s down $5.00 an ounce. After a brief tick up at the 6 p.m. open in New York on Tuesday evening, silver has been sold lower as well, with its current low coming at 2 p.m. CST on their Wednesday afternoon — and silver is down 7 cents currently. Platinum was also sold down to its Far East low at 2 p.m. CST as well. It’s down 4 bucks at the moment. Palladium didn’t do a lot in Far East trading up until 2 p.m. — and has been sold lower from there — and is down 5 dollars.
Net HFT gold volume is approaching 41,000 contracts — and roll-over/switch volume out of February is nothing special. Net HFT silver volume is right at the 10,000 contract mark. Both these numbers are pretty heavy for this time of day — and for this type of price action. But, having said that, it’s a given that some of the Managed Money traders may have been forced to sell on these new lows, so that may account for the current volume levels.
The dollar index fell down to the 100.15 level around 10:15 a.m. China Standard Time, but has been chopping quietly higher since then, with its current 100.42 high tick coming a few minutes after 3 p.m. over there. It has rolled over a bit since then — and as London opens, the index is up only 2 basis points.
Since the 1:30 p.m. EST COMEX close yesterday was also the cut-off for this Friday’s Commitment of Traders Report, some of the most interesting price/volume data from Tuesday’s trading session won’t be in it. Just eye-balling the above charts for gold and silver, I’d say we’ll see mostly unchanged in both reports just from scanning the dojis. But for the last several weeks, what was in the COT Reports was radically different that what appeared in the price action on these charts. So I shall sit on the fence again this week.
But if Ted has something to say about it in his mid-week column today, I’ll try to remember to stick it in my Friday column. But as he said in his Saturday weekly review — and in my quote in yesterday’s column…”my prediction for what would be reported in the gold COT [last Friday] was akin to nuking the wrong target by 1,000 miles – I was that far off.” So maybe he’ll pass on a guess this time.
And as I post today’s column on the website at 4:05 a.m. EST this morning, I see that the tiny rallies in all four precious metals going into the London open have all been turned sharply lower. Gold is down $7.50 an ounce, silver is now down 21 cents — and platinum and palladium are down 7 bucks each.
Net HFT gold volume is a hair over 48,000 contracts — and roll-over/switch volume out of February have increased a decent amount. Net HFT volume in silver is now up to 11,500 contracts.
As for what might happen during the rest of the Wednesday session, I haven’t a clue. I don’t know if prices will be allowed to power higher from here, or if gold and silver prices will be turned back through their respective 50-day moving averages. But on that big spike down just before 9 a.m. in London just now, silver did touch its 50-day moving average.
The precious metals certainly wanted to blast off in the “really big move” on Wednesday…but ‘da boyz’ were there at the fix as short buyers and long sellers of last resort in both gold and silver as usual.
All we can do is watch and wait — and then see how the rest of the week unfolds — and what the Big 8 traders have been up to in Friday’s COT Report.
That’s all I have for today — and I’ll see you here tomorrow.