Silver and Gold Rally Quietly Without Obvious Interference

07 February 2017 — Tuesday


The gold price attempted rally in the first two hours of trading in New York on Sunday evening, but ran into ‘resistance’ around 9 a.m. China Standard Time on their Monday morning.  From there it chopped very quietly lower until the 10:30 a.m. GMT morning gold fix in London.  And, with the exception of 2-hour hiatus between the COMEX open and around 10:20 a.m. EST, rallied quietly and uneventfully until 4 p.m. in the thinly-traded after-hours market in New York.  It traded flat from there until the close at 5:00 p.m.

The low and high tick in gold Monday was recorded by the CME Group as $1,220.80 and $1,237.50 in the April contract.

Gold closed yesterday in New York at $1,235.20 spot, up $15.70 from Friday.  Net volume was fairly hefty at just under 184,000 contracts.

Here’s the 5-minute gold tick chart courtesy of Brad Robertson as usual — and there’s not really a lot to see.  But I should point out that volume didn’t fall off to anything even remotely resembling ‘background’ until well after 14:00 Denver time, which was 16:00 in New York.

The vertical gray line is 10:00 p.m. Denver time, midnight in New York — and 1:00 p.m. China Standard Time [CST] the following afternoon in Shanghai—and don’t forget to add two hours for EST.  The ‘click to enlarge‘ feature is a must.

The price action in silver was similar, although the rally after the London a.m. gold fix — and the one that followed the tiny sell-off that ended at 10:20 a.m. in New York — were both far more subdued than they were in gold.

The low and high ticks in this precious metal were reported as $17.46 and $17.76 in the March contract.

Silver finished the Monday session at $17.71 spot, up 22 cents on the day.  Net volume wasn’t overly heavy at just under 42,500 contracts.

And here’s the 5-minute tick chart for silver — and there’s really not a lot to see.  Even the big volume spikes weren’t all that large in contract terms.

As in gold, 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.

And in most respects, the price path for platinum was very similar to the one that was laid out for silver and gold.  The only real difference was that once that New York low was in at 10:20 a.m. EST, the price never got above its 8:30 a.m. EST high tick…which certainly wasn’t the case for the other two precious metals, as both powered higher once their respective New York lows were in at that same time.  Platinum finished the Monday session at $1,012 spot, up 11 bucks from its close on Friday.

Palladium had a mind of its own yesterday.  It was up over 10 dollars by noon China Standard Time on their Monday — and then didn’t do a lot until around 2 p.m. in Zurich, which was about twenty minutes before the COMEX open in New York.  It rallied, with some opposition, until 1 p.m. EST — and wasn’t allowed/couldn’t break above the $772 spot mark after that.  Palladium closed in New York yesterday at $770 spot, up 23 dollars on the day.

The dollar index closed very late on Friday afternoon in New York at 99.73 — and dropped 10 basis points the moment that trading began at 4:00 p.m. EST on Sunday afternoon.  That was its low tick of the day — and it rallied to its double-top high of 100.25 between 9:05 and around 10:25 a.m. in New York.  It began to chop lower from there — and then began to inch higher starting around 3:40 p.m. EST.  It finished the Monday session in New York at 99.90 — and up 17 basis points from its Friday close.

It was one of those days where the precious metals continued to rally in the face of a rising dollar index — and these rallies picked up even more steam once the dollar index turned lower around 10:25 a.m. EST.

Of course we’d see a lot more days like yesterday if the powers-that-be would allow it.

Here’s the 3-day dollar index so you can see all of Friday, Sunday and Monday’s ‘action’ on one chart.

And here’s the 6-month U.S. dollar index…which you can read into whatever you wish.

The gold stocks gapped up around 1.5 percent at the open — and gave more than half of that back going into the afternoon gold fix in London thirty minutes later.  After that, they never looked back — and the rally developed even more legs starting around 2:20 p.m. EST.  The HUI closed on its high tick of the day…up 3.67 percent.

The price action in the silver equities were almost exactly the same as they were for the gold stocks — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 3.61 percent.  Click to enlarge if necessary.

The CME Daily Delivery Report showed that 111 gold and 1 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.  In gold, the two largest short/issuers were ABN Amro with 89 — and Morgan Stanley with 15 contracts…both from their respective client accounts.  It was the three “usual suspects” once again as long/stoppers…HSBC USA, Scotiabank — and JPMorgan with 56, 31 and 23 contracts for their respective in-house [proprietary] trading accounts.  In silver, it was Scotiabank stopping the lone contract issued — and a link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Monday trading session showed that gold open interest in February declined by 419 contracts, leaving 1,773 still open, minus the 111 mentioned just above.  Friday’s Daily Delivery Report showed that 156 gold contracts were actually posted for delivery today, so that means that 419-156=263 gold contract holders exited the February contract.  Silver o.i. in February fell by 2 contracts, leaving 161 still around, minus the 1 contract mentioned in the previous paragraph.  Friday’s Daily Delivery Report showed that zero silver contracts were posted for delivery today, so 2 contract holders departed the February delivery month.

For the fourth day in a row, there was a deposit in GLD.  This time an authorized participant added 133,356 troy ounces.  And as of 6:39 p.m. EST yesterday evening, there were no reported changes in SLV.

The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of trading on Friday, February 3 — and this is what they had to report.  They added 24,609 troy ounces to their gold ETF — and 327,423 troy ounces to their silver ETF.

There was another small sales report from the U.S. Mint — and only the second one this month.  They sold 2,000 troy ounces of gold eagles — 1,500 one-ounce 24K gold buffaloes — and 125,000 silver eagles.

There was very little activity in gold over at the COMEX-approved depositories on the U.S. east coast on Friday.  There was 1,000 troy ounces shipped into Brink’s, Inc. — an 64.300 troy ounces/2 kilobars [U.K./U.S. kilobar weight] shipped out of Canada’s Scotiabank.  I won’t bother linking this small amount.

And as is almost always the case, there was a good deal more activity in silver, as 1,258,639 troy ounces were reported received — but only 34,167 troy ounces were shipped out.  There was a container-load each [600,000+ troy ounces] shipped into both HSBC USA and Canada’s Scotiabank — and the amounts shipped out came from three different depositories.  The link to all this action is here.

It was semi-quiet at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  There were 1,506 kilobars reported received — and 555 shipped out.  All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.

Here are two charts that Nick Laird passed around very late on Friday evening.  I was already “full up” with charts in my Saturday column already, so these had to wait for today.

The first shows the gold imports into India for December 2016 — and the number for that month was only 52.737 tonnes.  Click to enlarge.

The second chart shows the yearly gold imports into India, updated with the data for 2016.  For all of 2016…India imported only 582 tonnes.  Click to enlarge.

I have a fairly large number of stories for you today — and that’s after a hard edit of everything that was in my in-box after three days of no column.  I hope you find some that interest you.


Dismantling Dodd-Frank: Donald Trump’s Valentine’s Gift to Wall Street

On Friday the country’s attention was glued to the brave Seattle federal judge who overturned the Trump immigration ban. But that same day, the president was closeted with the very people he denounced in his faux-populist campaign: the Wall Street elite. He welcomed Jamie Dimon, the CEO of JP Morgan, one of the biggest global banks, and Larry Fink of BlackRock, the world’s largest asset management firm.

He had an enormous gift for them: the undoing of the Dodd-Frank financial regulations that were passed to protect consumers after the 2008 financial meltdown but were deemed overly burdensome by the bankers.

Dodd-Frank made it harder for the banks to dream up all those fancy financial instruments like credit default swaps featured in books and films like The Big Short and Too Big to Fail. The law curtailed the shenanigans that cost people their homes, wiped out their retirement savings and almost caused a depression. The banks and private equity firms were now free to get creative again, Trump’s new order said.

And there was more. The Obama administration “fiduciary rule”, much hated by Wall Street, would be rolled back. The rule protected retirees from conflicts by stockbrokers. With the rule gone, it will be the stockbrokers who are protected.

The White House message was unmistakable: Happy days are here again.

This must read opinion piece appeared on Internet site at 2:24 p.m. GMT on their Monday afternoon, which was 9:24 a.m. in New York — EDT plus 5 hours.  Today’s first article is courtesy of Patricia Caulfield — and another link to it is here.

End of Fed Independence! House Financial Services Committee Sends Warning Letter to Yellen “This is Unacceptable

The Trump team wasted no time in telling Fed Chair Janet Yellen what is and is not acceptable.

Patrick McHenry, the vice chairman of the House financial services committee, sent Yellen a letter of admonishment regarding international negotiations the Fed conducts in secret, with no oversight.

One line stands out: “This is unacceptable”. The preceding paragraph tears into the Fed’s secret negotiations with foreign bureaucrats, “without transparency, accountability, or the authority to do so.”

This commentary, plus a link to “the letter” showed up on the Internet site on Friday afternoon EST — and I thank Judy Sturgis for pointing it out.  Another link to it is here.

When the Money Supply Dries Up — Jeff Thomas

In 1944, the U.S. had been the primary supplier for arms for the allies during World War II and, as such, exited the war with more wealth than any of the other nations that had entered the war earlier, draining their treasuries of money. Since payment was largely demanded in gold, the US held three-quarters of the world’s gold and therefore was in a position to call the shots with regard to the free world’s economic future.

At Bretton Woods, the U.S. took advantage of this situation, setting up the World Bank and the IMF and declaring the dollar to be the default currency for all countries concerned. From that point on, the US was in the catbird seat, able to dictate economic terms to other countries and even to behave irresponsibly, eventually creating previously unheard-of levels of debt, thereby inspiring other nations to do their best to create their own debt in order to keep pace as best they could.

Eventually, of course, such irresponsible economics will cause any country, no matter how powerful, to collapse economically, no matter how many Keynesian economists such as Thomas Piketty, Paul Krugman, and Larry Summers declare otherwise.

This worthwhile commentary by Jeff was posted on the Internet site on Monday sometime — and another link to it is here.

Bill Gross —  Investment Outlook: February 2017

But in order to control volatility, and keep a floor under asset prices, central bankers may be trapped in a QE-forever cycle, (in order to keep the global system functioning). Withdrawal of stimulus, as has happened with the Fed in the past few years, seemingly must be replaced by an increased flow of asset purchases (bonds and stocks) from other central banks, as shown in Chart I.  A client asked me recently when the Fed or other central banks would ever be able to sell their assets back into the market.  My answer was “NEVER”.  A $12 trillion global central bank balance sheet is PERMANENT – and growing at over $1 trillion a year, thanks to the ECB and the BOJ.

An investor must know that it is this money that now keeps the system functioning.  Without it, even 0{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} policy rates are like methadone – cancelling the craving but not overcoming the addiction.  The relevant point of all this for today’s financial markets?  A 2.45{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}, 10-year U.S. Treasury rests at 2.45{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} because the ECB and BOJ are buying $150 billion a month of their own bonds and much of that money then flows from 10 basis points JGB’s and 45 basis point Bunds into 2.45{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} U.S. Treasuries.  Without that financial methadone, both bond and stock markets worldwide would sink and produce a tantrum of significant proportions.  I would venture a guess that without QE from the ECB and BOJ that 10-year U.S. Treasuries would rather quickly rise to 3.5{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} and the U.S. economy would sink into recession.

I don’t always agree with what Bill has to say, but this is one of the times I do.  This right-on-the-money commentary was sent to us by Richard Saler.  It comes to us in a pdf file — and another link to it is here.

Which Assets Are Most Likely To Survive The “System Reset”? — Charles Hugh Smith

Your skills, knowledge and social capital will emerge unscathed on the other side of the re-set wormhole. Your financial assets held in centrally controlled institutions will not.

Longtime correspondent C.A. recently asked a question every American household should be asking: which assets are most likely to survive the “system re-set” that is now inevitable? It’s a question of great import because not all assets are equal in terms of survivability in crisis, when the rules change without advance notice.

If you doubt the inevitability of a system implosion/re-set, please read Is America In A Bubble (And Can It Ever Return To “Normal”)? This brief essay presents charts that reveal a sobering economic reality: America is now dependent on multiple asset bubbles never popping–something history suggests is not possible.

It isn’t just a financial re-set that’s inevitable–it’s a political and social re-set as well.

This longish commentary by Charles was picked up by the Zero Hedge website — and is datelined 5:52 p.m. on Monday afternoon EST.  It has obviously been ‘updated’ since Richard Saler sent it to me at 9:22 a.m. EST yesterday morning.  Another link to it is here.

Tiffany Abruptly Drops CEO in Luxury Industry’s Latest Shake-Up

Tiffany & Co. abruptly replaced Chief Executive Officer Frederic Cumenal after disappointing financial results, just hours before the jewelry chain introduced a new campaign with the first Super Bowl ad in its history.

Cumenal, 57, who had run the company since April 2015, is being succeeded on an interim basis by chairman and former CEO Michael Kowalski, Tiffany said on Sunday afternoon. The shake-up follows the departure of the jeweler’s top designer three weeks ago and weak holiday sales that sent the stock tumbling.

The past week marked a series of management changes in the luxury industry. Ralph Lauren Corp. CEO Stefan Larsson is departing after clashing with its namesake founder over the company’s creativity direction. Barneys New York replaced its CEO with Chief Operating Officer Daniella Vitale. And Riccardo Tisci, the creative director of LVMH’s fashion brand Givenchy, left the company.

More management turnover could come if the sluggish sales continue at luxury companies, which are coping with aging customers, Yarbrough said.

These companies have long histories of high-single-digit revenue growth, and if they continue to post little growth, I would expect more changes,” he said. “The industry has to adapt due to changing tastes and the fact the baby boomers are retiring.

This Bloomberg news item put in an appearance on their Internet site at 2:33 p.m. EST on Sunday afternoon Denver time — and was subsequently updated at 8:17 a.m. MST on Sunday morning.  It’s a Zero Hedge story that comes to us via Brad Robertson — and another link to it is here.

ABN Amro Slashes 60{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} of Senior Management After Staff Cuts

ABN Amro NV plans cut 60 of its 100 senior management jobs and reduce the number of top executives by more than half in a revamp that reflects the bank’s shrinking size.

A new management board will include the heads of retail, commercial, corporate and institutional, and private banking, the Amsterdam-based lender said in a statement on Monday. It will include Chief Executive Officer Kees van Dijkhuizen as well as the vice chairman and a chief financial officer who hasn’t yet been appointed.

ABN Amro has done a lot of restructuring and I think the top structure was not completely aligned with the rest of the company,” said Bart Horsten, an Amsterdam-based analyst at Kempen & Co who rates the stock buy. “It will make the company a bit more lean and mean in terms of decision making.”

ABN Amro, which is 70 percent owned by the Dutch government following a state rescue, said in November it would cut 1,500 jobs as it steps up cost reductions. The bank, which employed 26,500 people last year, said its total workforce is expected to decline by 13 percent by 2020. The Dutch government has said it plans to gradually exit its holding in the bank.

If you’ve heard the name before, it’s because this Dutch bank is a precious metals issuer and stopper in the COMEX futures market.  This is another Bloomberg story.  It was posted on their website at 1:08 a.m. MST on Monday morning, but was updated about two hours later.  It’s from Zero Hedge via Brad Robertson once again — and another link to it is here.

France First: Marine Le Pen Speech Interrupted by Cheers “France! France!

France’s far-right party leader Marine Le Pen promised a crackdown on foreigners and the forces of globalisation if she won the presidency as she kicked off her campaign for a highly unpredictable election.

Launching her bid in front of a 3,000-strong crowd in Lyon on Sunday, she laid out a plan to pull the country out the euro, tax foreign workers, impose trade barriers and stop “uncontrolled immigration”.

Interrupted by chants of “France! France!” and “On est chez nous!” (“This is our country”), she told a raucous crowd that the country was threatened by the “two totalitarianisms” of economic globalisation and Islamic fundamentalism.

A report by UBS Wealth Management last week gave Ms. Le Pen a 40 per cent chance of becoming president. Since Ms. Le Pen succeeded her father as party head in 2011, the FN has softened its xenophobic rhetoric and developed a statist platform designed to attract blue-collar workers disappointed by the left.

This Financial Times story found a home over at the Internet site on Sunday afternoon EST — and I thank Roy Stephens for sharing it with us.  Another link to it is here.

Draghi Says Euro Is Irreversible as Le Pen Urges French Exit

Mario Draghi reaffirmed that the euro is irreversible in a defense of the single currency against populists who reject it.

L’euro e’ irrevocabile, the euro is irrevocable,” the European Central Bank president said at the European Parliament on Monday, using both his native Italian and English. “Questo e’ il trattato, this is the treaty.

Draghi has made the claim multiple times before, but the issue of whether and how a country can leave the single currency returned to the fore after French presidential candidate Marine Le Pen said she would take France out of the euro if elected. Even after Greece and its European partners stepped back from the brink of a split in the summer of 2015, the procedures for a euro exit remain undefined and the repercussions of such a move are near impossible to gauge.

The question of a euro exit has also flared in Italy, where the Five Star Movement — which is running close to the leading Democrat Party in polls — favors a referendum on membership.

This Bloomberg story from 11:03 a.m. MST on Monday morning came from today’s edition of the King Report — and another link to it is here.

French Presidential Candidate Fillon Apologizes For Employing His Family, Vows To Keep Campaigning With Renewed Energy

With some speculating that French presidential candidate Francois Fillon, mired in a growing political scandal involving public payments made to his wife and children for a “fake job”, would announce a resignation at a 4pm conference, moments ago the former front-runner for the French presidency defended himself as Reuters suggested, and stated that he has “nothing to hide“, that his wife’s salary was “perfectly justified” and that he has been the subject of unprecedented political attacks.

He also said that “everything about him is legal and transparent” and that he would disclose his assets, including his real estate, and bank accounts. While he did acknowledge the “morality” angle of his case, he called for overall reform of the parliamentary aide system. Curiously, he also added that his wife “never worked for any Russian entity.

I understand the need for me to clarify things and I will do it because I have nothing to hide,” Fillon said at a press conference in Paris. “Yes I employed my spouse. She was in the job for 15 years.

The practice was legal, though he acknowledged that it is no longer seen as acceptable and he apologized to voters.

He did not miss the opportunity to take a dig at his main opponent, Marine Le Pen, and said that the “real danger in France is the extreme right.”

This Zero Hedge story was posted on their website at 10:30 a.m. on Monday morning EST — and it’s another contribution from Richard Saler.  Another link to it is here.

The “Impossible” Happens in Germany

I am pleased (mostly) to report the “impossible” has happened.  Support for SPD has risen 10 percentage points in two weeks.

Hermann Binkert, head of the Insa polling agency, stated “I would have said it was impossible to improve your ratings by 10 percentage points in 14 days. But that’s what’s happened.

The rise in support [for SPD], two weeks after Martin Schulz was picked as the SPD’s leader, increases the uncertainty in the run-up to the September Bundestag election and raises the possibility that Ms Merkel — once seemingly invulnerable — might even be defeated in her bid for a fourth term in office.

According to Insa, support for the SPD has risen from 21 per cent two weeks ago, just before the former European Parliament president took over as party leader, to 31 per cent. The party has grabbed support from Ms Merkel’s Christian Democrat/Christian Socialist bloc, which is down from 32.5 per cent to 30 per cent, and from smaller parties, including the anti-immigration Alternative for Germany (AfD).

Mr Binkert suggested Mr Schulz’s rise was no flash in the pan and that voters had been showing their frustrations with Ms Merkel for two years. “It needed somebody to bring together those frustrations. Schulz has benefited,” he said. “He has made an emotional connection with the voters.

This Financial Times story was posted on the Internet site at 9:47 on Monday…but doesn’t state whether it’s a.m. or p.m.  I would assume a.m.  I thank Roy Stephens for sending it our way — and another link to it is here.

Deutsche Bank purchases ads to apologize for “serious errors

Deutsche Bank AG bought full-page ads in all major German newspapers over the weekend to apologize for “serious errors” after misconduct costs helped tip the company into two years of losses.

Legal cases that date back many years cost the Frankfurt-based company “reputation and trust” in addition to about €5 billion ($5.4 billion) since John Cryan took over as chief executive officer in July 2015, the CEO said in the ad, blaming the “misconduct of a few” employees.

Cryan, who replaced Anshu Jain as co-CEO in 2015 and became sole CEO last year, is seeking to rebuild trust in the lender. He has settled some of the bank’s largest legal matters over the past two months and is adding staff to prevent financial crime. Concern over the lender’s financial strength led some wealthy and institutional clients to take their business elsewhere in the fourth quarter.

While Cryan hasn’t shied away from criticism of the bank’s controls and information technology, such paid-for apologies are rare. Volkswagen AG, the German carmaker that cheated on emissions tests, took out ads in 2015 to apologize for its behavior. In the U.S., Wells Fargo & Co. ran ads in newspapers and on TV, after authorities said branch workers may have opened more than 2 million unauthorized deposit accounts and credit cards over half a decade.

“I’m sorry” is no substitute for jail time.  This Bloomberg news item appeared on their Internet site at 8:55 a.m. MST on Sunday morning — and was updated at 3:41 a.m. Denver time on Monday morning.  I found it on the Internet site — and another link to it is here.  Another link to it is here.

Draghi Rebuts Trump Lines on Currency Wars, Bank Rules

Mario Draghi took the Trump administration to task, addressing recent assertions that Germany is a currency manipulator and warning against the rollback of post-crisis financial regulation.

Speaking at a hearing in Brussels on Monday, the European Central Bank president responded to the charge by U.S. National Trade Council Director Peter Navarro and others that Germany is using a “grossly undervalued” euro to gain an unfair trade advantage.

The ECB has not intervened in the foreign exchange markets since 2011,” Draghi told European Union lawmakers, adding that Germany’s trade surplus was the result of productivity gains. “Germany has a significant bilateral trade surplus with the U.S., a material current account surplus, but it has not engaged in persistent one-sided intervention in the foreign exchange market.”

In a question-and-answer session punctuated with lawmakers’ concerns over the shifts in global economic and financial policy brought about by the change of government in Washington, Draghi also hit out at the U.S. President’s moves to begin dismantling the Dodd-Frank Act. Rolling back the compendium of financial rules intended to prevent a repeat of the 2008 financial crisis would be “very worrisome,” he said.

The last thing we need at this point in time is a relaxation in regulation,” Draghi said. “Frankly I don’t see any reason to relax the present regulatory stance which has produced a stronger banking and financial services industry than before the crisis.

This Bloomberg news item showed up on their website at 7:29 a.m. Denver time on Monday morning — and was subsequently updated three hours later.  I found it in today’s edition of the King Report — and another link to it is here.

Game-changers ahead on the (long) Maritime Silk Road — Pepe Escobar

From the Bab al-Mandab to the strait of Malacca, from the strait of Hormuz to the strait of Lombok, all the way to the key logistical hub of Diego Garcia 2,500 miles southeast of Hormuz, the question pops up: How will the unpredictable new normal in Washington – which is not exactly China-friendly – affect the wider Indian Ocean?

At play are way more than key chokepoints in an area that straddles naval supply chains and through which also flows almost 40{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} of the oil that powers Asian-Pacific economies. This is about the future of the Maritime Silk Road, a key component of the Chinese One Belt, One Road (OBOR), and thus about how Big Power politics will unfold in a key realm of the Rimland.

India imports almost 80{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} of its energy from the Middle East via the Indian Ocean. Thus, for Delhi, protection of supply chains must be the norm, as in the current drive to develop three carrier battle groups and at least 160 naval vessels, including submarines, before 2022. That also implies boosting a cooperation agreement with the nations bordering the strait of Malacca – Malaysia, Singapore and Indonesia – and developing military infrastructure in the Andaman and Nicobar islands.

China for its part advances a relentless economic / infrastructural drive from Myanmar to Pakistan, from Bangladesh to the Maldives, from Sri Lanka to Djibouti – a counterbalance to the impossibility of fully implementing “escape from Malacca”, the complex, multi-pronged Beijing strategy for diversifying energy supplies.

The privileged infrastructure connectivity hub remains the megaport of Gwadar in the Arabian Sea – which will be controlled for the next 40 years by a Chinese company.  Gwadar is the naval destination of the US$46 billion (and counting) China-Pakistan Economic Corridor (CPEC) originating in Xinjiang, which will be the economic New Silk Roads game-changer in South Asia.

This implies everyone jumping aboard the new Karakoram highway, currently under construction in Pakistan’s sublimely mountainous northern Gilgit-Baltistan, with the military watching over a frantic maze of Chinese engineers.

This very interesting commentary by Pepe is certainly worth reading if you have the interest — and it comes to us courtesy of Ellen Hoyt — and another link to it is here.

London law firm plans U.K. class action against gold and silver market rigging

A British law firm, Leon Kaye Solicitors, with offices in London, Portugal, and Spain, is contemplating bringing a class-action lawsuit under the United Kingdom’s Competition Act against financial institutions suspected or already accused of manipulating the gold and silver markets. The firm is seeking contact with investors who believe they may have been harmed by such manipulation.

To the best of GATA’s knowledge, similar lawsuits have been brought so far only in the United States and Canada, and it would be a shame to give crooked gold and silver traders and bullion banks a pass in London, which remains the center of metals trading. It appears that people living outside the United Kingdom can become plaintiffs there.

With luck discovery and deposition in all these lawsuits eventually may expose and incriminate central banks in the market rigging, as they commonly intervene in the markets through intermediary financial houses.

Information about the possible class action in the U.K. is posted at the Leon Kaye Solicitors internet site — and another link to this is here.  I found this in a GATA release yesterday morning.

London gold traders to open vaults in transparency push

London’s centuries-old gold market is to usher in an era of transparency with plans to reveal how much bullion is held in vaults in and around the city, including those controlled by the Bank of England.

The move is being led by the London Bullion Market Association, which will provide data for the first time on how much gold is traded in the Square Mile.

Some of the world’s biggest banks are trying to shift trading of the precious metal on to an exchange. By providing greater transparency and data, the LBMA, whose members include HSBC and JPMorgan, hopes to head off the challenge and persuade regulators that banks trading bullion should not have to face more onerous funding requirements.

The LBMA plans to release the monthly vault data on a three-month lag, according to people involved in the process. It will show gold bars held by the Bank of England, the gold clearing banks, and those operated by the security companies such as Brink’s, which are also members of the LBMA, according to a person involved in setting up the programme.

This gold-related news item appeared in the Financial Times of London on Sunday — and I found it on the Internet site.  Here’s what Chris Powell had to say about it….”Open vaults”? Hardly. The LBMA will issue reports that no independent auditor will be permitted to check and confirm. Those reports will not account for gold swaps and leases with central banks and other bullion banks that allow gold to be counted multiple times. And the data will be three months old besides. These failings are obvious but, being a mere public-relations agency for the financial industry, the Financial Times can’t bring itself to question them. It’s all pathetic but this at least shows that the gold gangsters are getting nervous.”  Chris would be right about this.  The entire FT article is posted in the clear in this GATA release — and another link to it is here.

China stocked up on Swiss gold as turbulent year came to a close

China’s gold imports from Switzerland soared at the end of last year when Beijing was struggling to defend the yuan and incoming U.S. President Donald Trump was casting grave doubts about Sino-U.S. economic ties.

The Swiss Federal Customs Administration said in January that its gold bullion exports to China rose to 158 tonnes in December from 30.6 tonnes in November, according to, a website for gold investors.

Switzerland owns the world’s major gold refineries, with India and China its top export destinations. The Swiss customs data did not reveal details about the buyers in China. However, economists said rising corporate and individual demand ahead of the Lunar New Year and a possible purchase by the central bank — to diversify foreign reserves and counter any adverse impact from Trump’s remarks — could explain the surge.

Meanwhile, China’s gold consumption dropped 6.7 per cent to 975.4 tonnes from the previous year, though it still remains the world’s top gold consumer and largest producer.

The yuan’s depreciation in 2016, the bear stock market in China, as well as external shocks such as Britain’s vote to leave the European Union and Trump’s surprising victory as an unconventional presidential candidate have all contributed to the steady demand for gold as a safe-haven asset.

This gold-related news item appeared on the South China Morning Post at 8:02 a.m. CT on their Sunday morning — and updated about twenty-six hours later at 10:03 a.m. on their Monday morning.  It’s another news item I found on the Internet site yesterday — and another link to it is here.

Ross Norman: The Outlook for Gold

This 33-minute video presentation to what was probably a room full of blue-chip investors, was posted on the Internet site.

Of course Ross neatly sidesteps the price fixing issues, even though they’re swirling around the bullion banks’ heads in the main stream media these days.

But Ross is a good speaker/presenter — and it’s worth watching.  The best bit is what he doesn’t talk about when he presents the opportunity to himself!  He dances around the elephant in the precious metal living room like the pro he is.

I found this video on the Sharps Pixley website yesterday — and another link to it is here.



The turnover or physical movement of metal brought into or removed from the COMEX-approved silver warehouses continued high [last] week as nearly 7.9 million oz were moved. Total COMEX silver inventories fell 0.7 million oz to 179 million oz. Massive physical movement, minimal total inventory change – the same story for nearly six years running; a phenomenon unique to silver (like so many other things). I say it points to wholesale physical tightness and will report other explanations as and if they become available. The JPMorgan COMEX silver warehouse featured no movement this week and none was expected since the bank already moved in more than it stopped for delivery on futures contracts in December. I’m still trying to figure out where the extra 1.2 million oz came from last week. Silver analyst Ted Butler: 04 February 2017

I’m not exactly sure what should be read, if anything, into yesterday’s price action in all four precious metals.  As I said at the top of this column when discussing the dollars index, it appeared that the precious metals had a mind of their own — and were rising despite a rising dollar index which, as I said “we’d see a lot more days like yesterday if the powers-that-be would allow it.

There didn’t seem to be an awful lot of official interference yesterday — and I have no idea why.  Everything appeared as close to normal as you could possible imagine.  But maybe that was an illusion as well.

‘Robert in Denver’ sent me a 1-minute video clip from Bloomberg Far East as I was typing The Wrap just now.  The clip in question is at the 11:02 mark — and the ‘talking head’ made the comment that “gold appeared to be leading the dollar move” this time around.  We’ll see how long that this situation is allowed to last.

Here are the 6-month charts for all four precious metals, plus copper.  This time I’ve left in the 200-day moving average in silver because, after yesterday’s price move, it’s well within striking distance now.

And as I type this paragraph, the London open is less than ten minutes away — and I see that as the dollar index rally that began in the late afternoon in New York on Monday, continued, the gold price sold quietly lower until shortly before noon in Shanghai.  But by shortly after 1 p.m. over there, it was back within a dime or so of unchanged.  However, as the dollar index continue to rocket ever higher, the gold price sold off a bit — and is down $4.80 an ounce.  Silver had a tiny price spike about an hour after trading began in New York at 6:00 p.m. EST yesterday evening…and that was dealt with in the usual manner.  Then it followed the gold price — and by shortly after 2 p.m. CST, it was up a penny or two from Monday’s close.  Then the spoofing and algos got spun — and silver got sold sharply lower — and is currently down 12 cents an ounce.  It was similar for platinum, except its rally in afternoon trading in the Far East didn’t make it back to anywhere near unchanged — and it has been sold down in the last couple of hours as well…8 bucks to be exact.  Palladium sold off three or four bucks starting around 9 a.m. China Standard Time on their Tuesday morning — and didn’t do much after that, but was sold down a few more dollars in the lead-up to the Zurich open — and it’s down 5 bucks currently.

Net HFT gold volume is approaching 39,000 contracts — and that number in silver is just about 10,500 contracts.  Roll-over/switch volume in silver is nothing special at the moment.

The dollar index has been on a bit of tear since it began to trade at 6:00 p.m. in New York yesterday evening — and as London opens, it’s up 42 basis points at 100.31 — and just off its current high tick.

Considering the ‘strength’ of the rally in the dollar index, I’m actually quite surprised that ‘da boyz’ haven’t really hammered the prices harder.  I suppose I shouldn’t say that too loudly.

Since today is Tuesday, we have the cut-off for this Friday’s Commitment of Traders Report…along with the companion Bank Participation Report.  This will allow Ted to recalibrate JPMorgan’s short position in silver in the COMEX futures market.  He pegged them with a 22,000 contract short position in last week’s COT Report — and it will be interesting to see how much they’ve added during this reporting week, if anything.

And as I post today’s missive on the website at 4:04 a.m. EST, I note that the rally in the dollar index topped out at the 100.65 mark around 8:15 a.m. GMT in London — and is off that high by a bit.  Gold bounced off its current low tick at the same time — and is down $4.50 an ounce, which is about where it was at the London open.  Silver has also bottomed, at least for the moment — and is down 11 cents an ounce currently.  It was mostly the same price pattern for platinum and palladium…with the former down 8 dollars — and the latter by 9.

Net HFT gold volume is now up to around 52,000 contracts — and that number in silver is sitting at 13,000 contracts.

I’ve already spoken of the dollar index — and it remains to be seen if we’ve seen the top for the day or not.  Right now its up 69 basis points — and off its current high by 6 basis points.

With the Trump administration in “loose cannon” mode currently, anything is possible going forward — and that’s something that I spent a few paragraphs on in my Saturday column, so hang onto your hats.

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


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