The Engineered Sell-Off Continues…Where Will It End?

27 January 2017 — Friday


After trading sideways for two hours once trading began in New York on Wednesday evening, the gold price began to slide a bit.  The sell-off picked up steam around 9:30 a.m. in London — and ‘da boyz’ set the low tick around 10:40 a.m. in New York.  It rallied from there until about ten minutes before the COMEX close — and then crawled quietly lower until trading ended at 5:00 p.m. EST.

The high and low ticks in gold were recorded as $1,202.30 and $1,183.90 in the February contract.

Gold finished the Thursday session in New York at $1,188.30 spot, down another $12.40 from Wednesday’s close.  Surprisingly, net volume wasn’t overly heavy at just under 129,000 contracts, but roll-over/switch volume out of February was monstrous…which is no surprise.

And here’s the 5-minute gold tick chart courtesy of Brad Robertson.  Volume was light, but steady, in Far East trading on their Thursday.  It really picked up in earnest once the powers-that-be stepped on the price around 9:30 a.m. GMT in London, which is 2:30 a.m. Denver time on the chart below.  Volume only dropped off to background levels in a couple of spots during the normally thinly-traded after-hours market.

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.

It was mostly the same price pattern for silver, except the low tick of the day came with a vicious spike down, which touched its 50-day moving average — and that ended about ten minutes before the COMEX open.  It chopped higher into the London p.m. gold fix, before getting sold off to its original low around 11:30 a.m. EST — and then, like gold, rallied until shortly before the COMEX close.  After that, the price didn’t do much.

The high and low tick in this precious metal was recorded by the CME Group as $17.05 and $16.68 in the March contract.

Silver was closed at $16.74 spot, down 24 cents on the day.  Net volume was pretty heavy at a hair under 50,000 contracts.

There were a few volume bumps in Far East and London trading, with the stand-out feature being the big volume spike at the 6:10 a.m. Denver time spike low tick — and once COMEX trading ended at 11:30 a.m. MST, volume evaporated.

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 8 or 9 bucks by shortly before 9 a.m. China Standard Time on their Thursday morning, but gave back almost all that gain by 3 p.m. CST.  Two hours later — and an hour after Zurich opened, the platinum price was back to up 8 dollars, but that’s was it for the day.  JPMorgan et al set the spike low tick in platinum the same time as they did in silver…around 8:10 a.m. in New York.  It rallied back until noon EST — and the moment it touched unchanged on the day, it was quietly sold off into the 5 p.m. close.  Platinum finished the Thursday session at $976 spot, down 2 dollars from Wednesday.

Palladium was up 13 dollars in the first two hours of trading after it began in New York at 6:00 p.m. EST on Wednesday evening — and it was forced to follow a very similar price path as platinum after that.  The only real difference was that the low tick in this precious metal came around 8:45 a.m. in New York.  It rallied quietly from that point until around 12:20 p.m. EST — and it was then sold down a few bucks.  From there, it traded flat for the rest of the day.  Palladium was closed at $722 spot, down 7 bucks.

The dollar index closed very late on Wednesday afternoon in New York at 99.92 — and then fell down to around the 99.82 level — and bounced along that mark until ‘gentle hands’ showed up at 1:00 p.m. in Shanghai trading.  From there it stair-stepped its way to its 100.73 high tick, which came at 11:40 a.m. in New York.  It was back to the 100.33 mark by shortly before 3 p.m. EST, but got rescued for around ninety minutes…before turning a bit lower into the close.  The dollar index finished the Thursday session at 100.53 — and up 61 basis points on the day.

Note: the chart ends at the Thursday close.  It normally starts to track again an hour or so later — and I have the trace up to nearly midnight in New York…1 p.m. Shanghai time…but the’re obviously having issues over at the Internet site.

And here’s the 6-month U.S. dollar index chart.  It’s too soon to tell whether or not yesterday’s jamb job is the start of a rescue attempt, or the usual smoke screen to hide behind as they beat the precious metals lower.

The gold stocks gapped down about 3 percent at the open — and except for a bump up going into the London p.m. fix — and again going into the COMEX close, they traded mostly flat — and the HUI closed down 2.62 percent.

The silver equities traded in a very similar matter, but their opening losses weren’t as bad — and neither was their close.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index finished lower by only 2.29 percent.  Click to enlarge if necessary.

The CME Daily Delivery Report showed that zero gold and 34 silver contracts were posted for delivery within the COMEX-approved gold depositories on Monday.  The only short/issuer in silver was ABN Amro.  And in the long/stopper category, it was HSBC with 22 for its own account, plus 7 contracts for JP Morgan in its client account.  ADM was a distant third with 3 contracts for its client account as well.  I won’t bother linking this activity.

The CME Preliminary Report for the Thursday trading session showed that gold open interest in January declined by 13 contracts, leaving 47 left.  Wednesday’s Daily Delivery Report showed that only 3 gold contracts were actually posted for delivery today, so that means that 13-3=10 gold contract holders departed the January delivery month.  Silver o.i. in January remained unchanged at 34 contracts, but all of those showed up for delivery on Monday as per the previous paragraph.  Wednesday’s Daily Delivery Report showed that zero silver contracts were actually posted for delivery today, so that makes perfect sense in light of the 34 contracts to be delivered on Monday.

There were no reported changes in GLD yesterday, but there was a big exchange for physical in SLV, as an authorized participant took out 2,369,305 troy ounces.  I’m sure that Ted would expect that JPMorgan was the beneficiary of all this metal.

The folks over at the Internet site updated their data for the short positions in both GLD and SLV as of the close of trading on January 13 [or 16] — and this is what they had to report.  The short position in SLV increased by a smallish amount, from 12,324,700 shares/troy ounces, up to 12,545,100 shares/troy ounces, or 1.79 percent.  In GLD, the short position also rose…from 885,360 troy ounces, up to 964,850 troy ounces…which is an increase of 8.99 percent.

There was a small sales report from the U.S. Mint yesterday.  They sold 2,000 troy ounce of gold eagles — plus 1,000 one-ounce 24K gold buffaloes.

There was a bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday.  There was 32,150.000 troy ounces/1,000 kilobars [U.K./U.S. kilobar weight] received — and all of that went into JPMorgan’s gold vault.  There was also 10,489.900 troy ounces/3,260 kilobars [U.K./U.S. kilobar weight] shipped out.  Of that amount, there was 3,120 kilobars shipped out of Scotiabank — and the other 140 kilobars came out of Manfra, Tordella & Brookes, Inc.  The link to this activity is here.

In silver, there as 302,676 troy ounces received at CNT — and 306,439 troy ounces  were shipped out, with the vast majority of that coming from Canada’s Scotiabank.  The link to this activity is here.

I was another quiet day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  They didn’t receive anything — and only shipped out 159 of them.  All of this activity was at Brink’s, Inc. as per usual — and I won’t bother linking this amount.

It’s another day where I don’t have much, but that makes your editing job easier.


U.S. teen retailer Wet Seal is suddenly closing all of its stores

Struggling teen retailer Wet Seal is closing all 148 of its stores.

In a letter dated January 20 that was obtained by The Wall Street Journal, the apparel retailer notified employees working in the company’s Irvine, California headquarters that the office was permanently shutting down and laying off all of its workers.

According to the Journal, Versa Capital, which acquired the brand for $7.5 million in cash in April 2015, couldn’t raise the necessary funding or find a buyer to keep the brand alive.

Wet Seal closed 338 of its then-511 stores in January 2015, shortly before the company filed for bankruptcy protection. Then, Wall Street analysts said that falling foot traffic at shopping malls played a major role in Wet Seal’s death spiral.

The teen retailer isn’t the only brand facing store closures as shoppers ditch malls.

Earlier in January, The Limited, another apparel brand primarily based in malls, shut down all 250 of its stores and laid off 4,000 workers. Mall staples Sears and Macy’s have also announced mass closures this year, with Sears planning to close 150 namesake stores and Kmart stores in 2017 and Macy’s planning to shutter another 100 stores.

The above six paragraphs are all there is to this brief news item that appeared on the Internet site around 5 p.m. EST on Thursday afternoon.  It comes to us courtesy of Swedish reader Patrik Ekdahl — and another link to it is here.

You Can’t Have Free Market Pricing Without a Free Market

Is there such a thing as free market pricing? Where does it exist? In last week’s interview with Ed Steer I asked about free market pricing in gold. His response relates to more than metals:

Free market pricing? Well, nobody knows what the true free market price of the precious metals really is, because there never has been a free market in them since they were discovered…and now traded.

What is free market pricing? I like the Wikipedia definition:

One view is that a free market is a system in which the prices for goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority.

This commentary by Dennis was posted on his website yesterday — and I thank him for passing it along.  Another link to it is here.

Wave of State Department Personnel Resign, Are Fired as Tillerson Takes Control

Update: according to a CNN report – so as always take with lots of salt – the story has shifted materially, because according to two senior administration officials, it wasn’t a resignation by the State Department officials, but more of a termination: “the Trump administration told four top State Department management officials that their services were no longer needed as part of an effort to “clean house” at Foggy Bottom.

Patrick Kennedy, who served for nine years as the undersecretary for management, Assistant Secretaries for Administration and Consular Affairs Michele Bond and Joyce Anne Barr, and Ambassador Gentry Smith, director of the Office for Foreign Missions, were sent letters by the White House that their service was no longer required, the sources told CNN.

All four, career officers serving in positions appointed by the President, submitted letters of resignation per tradition at the beginning of a new administration. The letters from the White House said that their resignations were accepted and they were thanked for their service.

The White House usually asks career officials in such positions to stay on for a few months until their successors are confirmed.

Any implication that that these four people quit is wrong,” one senior State Department official said. “These people are loyal to the secretary, the President and to the State Department. There is just not any attempt here to dis the President. People are not quitting and running away in disgust. This is the White House cleaning house.

This amended Zero Hedge article was posted on their Internet site at 5:39 p.m. EST yesterday afternoon — and another link to it is here.

U.K. Brexit Boom Still Sees Economy Plagued by Old Problems

The U.K. economy is maintaining its stellar performance since the Brexit vote, but the reasons may be cause for concern.

Growth beat expectations again in the fourth quarter, coming in at 0.6 percent, but the make-up of the performance hints at ongoing weak links. The expansion is still being almost entirely driven by services and consumer spending, continuing a trend of lopsided growth in seen in recent years.

While the support is welcome, it may prove unsustainable. Households are borrowing with abandon and saving less, and an expected pickup in inflation through this year raises the risk of a squeeze on incomes. Economists forecast a sharp slowdown this year, and Bank of England of England Governor Mark Carney has warned of pressure from inflation and weaker business spending.

Today’s data was good, but there are pockets of potential unsustainability in household spending that could drive a slowdown,” said Chris Hare, an economist at Investec Securities in London and a former Bank of England official. The economy’s “rebalancing” toward exports has so far failed to materialize, he said.

This Bloomberg article was posted on their website at 2:30 a.m. Denver time on Thursday morning — and updated about three hours later.  It’s from Zero Hedge via Brad Robertson — and another link to it is here.

Trump’s Expected Ambassador to E.U. Says “Short the Euro, Collapse May Come In 12 to 18 Months

Professor Ted Malloch, Trump’s expected ambassador to the E.U. says “The one thing I would so in 2017 is short the euro.

I am not certain there will be a European Union in which to have negotiations… The one thing I would do in 2017 is short the euro. I think it is a currency that is not only in demise, but has a real problem and could in fact collapse in the coming year or year and a half.

It nothing else, Trump is sure to provide fodder for media discussion for four full years.

That aside, it is refreshing to hear such discussions. The breakup of the Eurozone or E.U. is a very distinct possibility.

This tiny Zero Hedge story was something that they picked up from Mish Shedlock’s website.  There’s a 1:02 minute embedded video clip which is certainly worth watching if you have the interest.  It was posted on the ZH website at 8:22 a.m. EST on Thursday morning — and I thank Richard Saler for sending it our way.  Another link to it is here.

German Vice Chancellor: The E.U. “could fall apart” if populists win the Dutch or French elections

The German Vice Chancellor and Economy Minister Sigmar Gabriel warned that the European Union “could fall apart” if populist parties got into power in the Netherlands or France.

During his last annual economic outlook before switching to foreign affairs, Gabriel issued a stark warning against the recent wave of support for populist parties.

After Brexit last year, if enemies of Europe manage again in the Netherlands or in France to get results then we face the threat that the largest civilization project of the 20th century, namely the European Union, could fall apart,” Gabriel warned.

This news story showed up on the Internet site just before noon EST yesterday morning — and it’s the second contribution of the day from Patrik Ekdahl.  Another link to it is here.

Representative Gabbard calls on U.S. government to stop ‘supporting terrorists’ after meeting Syria civilians and Assad

Hawai’i Representative Tulsi Gabbard has called on the U.S. to put an end to the “illegal war” she believes it wages in Syria after visiting Damascus and Aleppo. During her trip, she spoke with civilians, religious leaders, opposition leaders, and President Assad.

Gabbard described her privately-funded seven-day trip to Lebanon and Syria as a “fact-finding mission” to learn the truth about the war by speaking directly to the Syrian people. The itinerary was kept secret until Gabbard’s return to the U.S. for security reasons.

Gabbard travelled to Beirut, and then to Damascus and Aleppo, where she spoke with Syrian students, entrepreneurs, academics, and aid workers. She also received firsthand accounts of the conflict from refugees displaced by the war.

She met with a number of religious leaders, including The Grand Mufti of Syria Ahmad Badreddin Hassoun and Archbishop Denys Antoine Chahda, who heads the Syrian Catholic Church of Aleppo.

Gabbard also met with several leaders of the Syrian opposition who spearheaded anti-government protests in 2011. She says some of them believe that the originally peaceful uprising was hijacked by jihadists “funded and supported by Saudi Arabia, Turkey, Qatar, the United States.

This article was posted on the Internet site at 6:03 a.m. Moscow time on their Thursday morning, which was 10:03 p.m. in Washington — EST plus 8 hours.  I thank Jim Gullo for sharing it with us — and another link to it is here.

China Said to Order Banks to Curb New Loans in First Quarter

China’s central bank has ordered the nation’s lenders to strictly control new loans in the first quarter of the year, people familiar with the matter said, in another move to curb excess leverage in the financial system.

The new guidance from the People’s Bank of China puts a particular emphasis on mortgage lending, the people said, as authorities grapple to contain runaway property prices. And while the PBOC regularly seeks to guide banks’ credit decisions, this time it may also make errant lenders pay more for deposit insurance, one of the people said.

The central bank declined to comment. Policy makers are trying to strike a balance between avoiding excess credit that fuels asset bubbles and keeping enough funding in the financial system to meet the seasonal surge in demand for credit ahead of the start of the Lunar New Year holiday this week. President Xi Jinping and his top economic deputies reaffirmed last month that they plan to prioritize the control of financial risks in the economy to prevent asset bubbles.

This is a continuation of the tightening trend we’ve seen since the second half of last year and extends from shadow banking to on-balance sheet loans,” said Wei Hou, a Hong Kong-based analyst at Sanford C. Bernstein & Co.

This is another Bloomberg story from the Zero Hedge website that came to us via Brad Robertson.  This one put in an appearance on the Internet site at 6:28 p.m. MST on Wednesday evening — and was subsequently updated about two hours later.  Another link to it is here.

Russia sells giant gold deposit to Polyus-led joint venture

A joint venture between Russia’s top gold producer Polyus and state conglomerate Rostec has bought the rights to develop Sukhoi Log, one of the world’s largest untapped gold deposits, for 9.4 billion rubles ($158 million).

Russia competes with Australia for second place among the world’s largest gold producers and has one of the world’s largest gold reserves. The ore of Sukhoi Log, which translates as “dry gully” in English, contains about one fifth of Russia’s gold reserves.

After 20 years of assurances that it would sell the deposit to investors, the Russian government sold it today at a relatively cheap price as officials hope production will result in new tax revenues and jobs.

Sukhoi Log will require up to $5 billion in investments, according to industry estimates based on a 10-year-old state feasibility study.

This updated Reuters story, filed from Moscow, showed up on their Internet site at 9:18 a.m. EST on Thursday morning — and I found it in a GATA release.  Another link to it is here.

Gold exports to China soar in run-up to year of the rooster

Gold exports to China soared in the run-up to the start of the lunar new year, with volumes increasing in December from major suppliers Switzerland and Hong Kong.

More gold was sent from Swiss refiners to the world’s top consumer than in any month since at least January 2014, according to data on the website of the Swiss Federal Customs Administration, while imports from the Asian city-state also increased compared with November.

China is the world’s top gold consumer, according to data from researcher Metals Focus Ltd., and the start of the Year of the Rooster this week is associated with gifting the precious metal. Lower prices at the end of last year, brought on by a stronger dollar as the U.S. increased interest rates, supported demand.

This gold-related Bloomberg article was posted on their Internet site at 3:14 a.m. MST on Thursday morning — and updated about seven hours later.  It’s another story that I found on the Internet site — and another link to it is here.

India mulls reviving colonial-era gold mines with $2 billion reserves

India is planning to revive a cluster of colonial-era gold mines – shut for 15 years but with an estimated $2.1-billion worth of deposits left – as the world’s second-largest importer of the metal looks for ways to cut its trade deficit, officials said.

State-run Mineral Exploration has started exploring the reserves at Kolar Gold Fields, in the southern state of Karnataka, to get a better estimate of the deposits, according to three government officials and a briefing document prepared by the federal mines ministry that was seen by Reuters.

The Ministry has also appointed investment bank SBI Capital to assess the finances of the defunct state-run Bharat Gold Mines, which controls the mines, and the dues the company owes to workers and the authorities, said the officials, who are involved in the process.

India, the world’s biggest gold importer behind China, spends more than $30-billion a year buying gold from abroad, making the metal its second-biggest import item after crude oil.

This interesting Reuters article, filed from New Delhi, appeared on their Internet site at 8:39 p.m. EST on Wednesday evening — and I thank Ellen Hoyt for finding it for us.  Another link to it is here.

Physical gold demand slid to 7-year low in 2016, GFMS says

Physical gold demand fell 20 percent last year to its lowest since 2009, GFMS analysts at Thomson Reuters said in a report today, as a rebound in prices after three straight years of losses blunted appetite for the metal.

Buying of jewellery, coins, and bars, plus official sector and industrial demand, fell to 3,349 tonnes last year from 4,184 tonnes in 2015, the analysts said, the lowest in seven years.

That helped lift the net surplus in the gold market to 1,176 tonnes, up from just 220 tonnes in 2015 and the biggest physical surplus this century.

Demand was hurt towards the year-end by gains in the dollar and a sharp drop in Indian demand after Prime Minister Narendra Modi’s withdrawal of some denominations of bank notes sparked a cash crunch in the fourth quarter. “The U.S. dollar is likely to remain a substantial headwind to further price rises, at least in the first half of 2017,” it said. “Furthermore, there are few indications that physical demand from Asia is set to pick up just yet.

This Reuters story, filled with the usual statistical GFMS bulls hit, showed up on their Internet site at 3:30 a.m. EST yesterday morning — and it’s another gold-related news item that I found in a GATA release.  Another link to it is here.


When I was at the Vancouver Resource Conference this past weekend, I ran into Andy Schectman of Miles Franklin fame.  A nice guy — and a great speaker to boot!  When I was at their booth, they had the 2015 Australian 1 troy ounce Sydney Funnel-Web spider silver round for sale — and I snapped up two of them.  It doesn’t look too creepy on the coin, but in real life it resembles Shelob from the third movie in the Lord of the Rings trilogy.  It is a species of venomous [almost tarantula-sized] spider native to eastern Australia.  A funnel-web bite is regarded as a medical emergency requiring immediate hospital treatment.  Click to enlarge.  I’ll have a cartoon tomorrow, as three photos in this space is enough.


Price action this week — and since the cutoff last Tuesday — has been more two-sided than in recent previous reporting weeks, so I’m not sure what to expect in Friday’s [today’s] COT report.  I’m also mindful of how far off the mark I’ve been in gold these past couple of weeks in terms of COT predictions — and I’m not eager to preserve that record (although the surprises have been bullish).  Regardless, it doesn’t look possible for the market structures in both gold and silver to have turned very bearish from the very bullish structures indicated in the most recent reports.” — Silver analyst Ted Butler: 25 January 2017

What started out as one of Ted Butler’s possible, “scams within a scam”  on Wednesday, appears to have evolved into something more serious after yesterday’s price action is taken into consideration.

Since gold’s high tick at the London p.m. gold fix on Tuesday, just before the cut-off for today’s COT Report, the prices of all four precious metals have been engineered ever lower, even during after-hours trading — and now on Thursday as well.

Both gold and silver are hovering just above their respective 50-day moving averages — and I doubt that JPMorgan et al will pass up the opportunity of  milking the Managed Money traders for fun, profit and price management purposes…now that they’ve already got them on the run.

But as Ted has pointed out over the last two weeks, the Managed Money haven’t gone as long in gold as they normally do since the rally began back on December 20 — and during that time the Commercial net short position in gold has actually declined by 11,000 contracts.  In silver, there are only about 15,000 potential Managed Money long contracts to cover and/or go short — and as Ted said in his column on Saturday, “it should reduce the likelihood of a big price smash.”  But as you can tell, it certainly hasn’t eliminated that possibility.

These strange goings-on during the last three trading weeks are the reason that Ted has missed by a country mile on the last two COT Reports — and why today’s report could be a surprise as well.

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

And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price has been quietly selling off throughout the Far East trading session on their Friday — and is currently down $6.40 an ounce.  The price pattern in silver has been mostly the same — and it’s down 7 cents currently.  Both of these precious metals are now at new lows for this move down…and ever closer to their respective 50-day moving averages.  Platinum and palladium have been selling off in a similar manner — and they’re down 8 and 7 bucks respectively.

Net HFT gold volume is very light at just over 15,500 contracts — and roll-over/switch volume is very heavy…as it will be for the rest of the day, as all the large traders holding 150 contracts or more, have to out of February by the close of COMEX trading this afternoon.  Net HFT silver volume is exceedingly light at 4,900 contracts.

The dollar index has been crawling higher throughout the Far East trading session — and it’s up about 20 basis points as London opens.

It’s a given that the internal market structure of the COMEX futures market has improved in both gold and silver since the Tuesday cut-off — and will certainly improve more if JP Morgan et al hammer their prices materially below their respective 50-day moving averages in the days ahead.  I’ve got my $10 bet firmly placed on that event occurring.  But after that low is placed, all bets will be off.

Today we get the latest and greatest COT Report for positions held at the COMEX trading on Tuesday — and it’s even more the case after Thursday’s price action, that this report is already “yesterday’s news” in every respect.  But, like the last two reports, it’s almost a certainty that it will have surprises buried in it somewhere.

And as I post today’s column on the website at 4:00 a.m. EST this morning, I see that the prices of all four precious metals, with the exception of palladium, have been more or less chopping sideways now that London and Zurich have been open about an hour.  Gold is down $6.50 the ounce, silver is down 7 cents — and platinum and palladium are lower by 8 and 7 dollars respectively…which was the same amount they were down an hour ago.

Net HFT gold volume is very light at just over 21,000 contracts — but roll-over/switch volume continues to soar.  Net HFT silver volume is now up to just about 6,300 contracts, which is still exceedingly light, all things considered.

The dollar index made it up to the 100.82 mark by shortly before the London open, but has backed off a bit since — and is only up around 8 basis points currently.

Today is a Friday — and all the large traders [that aren’t standing for physical delivery] have to be out of the February contract by close of the COMEX futures market this afternoon.  Add to that the fact that gold and silver’s respective 50-day moving averages being only a chip shot away, not a thing will surprise me when I check the charts later this morning.

Enjoy your weekend — and I’ll see you here on Saturday.


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