Ted Butler: Another Unique Blow-Off Factor in Silver

15 February 2017 — Wednesday


The gold price didn’t do much until shortly after 10 a.m. China Standard Time on their Tuesday morning — and the tiny rally that began at that point ended at 3 p.m. CST.  It was sold down a few dollars into the London open — and then rallied quietly until shortly after 12:30 a.m. in London.  It really took off higher at that point, only to run into ‘da boyz’ ten minutes after the COMEX open.  It was forced to traded sideways from there, before getting slammed for 8 bucks at the London p.m. gold fix.  The low tick of the day came about ten minutes before London closed — and from there the price wasn’t allowed to do much until fifteen minutes before the COMEX close.  Then away it went to the upside once again, but was capped shortly after 2:30 p.m. in the thinly-traded after-hours market.  From there it was sold off a few bucks, before traded flat from 3:45 p.m. onwards.

The high and low ticks in gold both came during the morning trading session in New York — and were recorded as $1,236.00 and $1,222.70 in the April contract.

Gold was closed in New York yesterday at $1,227.80 spot, up $3.10 from Monday.  Net volume was sky high once again at 210,000 contracts.

Here’s the 5-minute gold tick chart courtesy of Brad Robertson.  There were a few volume bumps in Far East trading on their Tuesday, but the real volume didn’t begin to appear until shortly after 5:30 a.m. Denver time, which was 12:30 a.m. in London when that little rally began.  Of course the really big volume came between the afternoon London gold fix — and the low tick of the day, when JP Morgan et al put in an appearance.  After that, volume quieted down considerably, but didn’t die off to what I would call background levels until after 1:00 p.m. MST, which was 3:00 p.m. 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 silver price action in Far East trading on Tuesday mirrored what was happening in gold for a while.  But that all ended about thirty minutes before the London open.  From there, the silver price began to chop quietly higher and, like gold, really took the proverbial bit in its teeth minutes after 12:30 p.m. GMT.  That rally got capped minutes before the COMEX open as it cut through the $18 spot price mark — and its 200-day moving average.  It was sold down about a dime during the following ten minutes — and then continued to rally [under obvious interference] until the powers-that-be were forced to step in hard a few minutes before the equity markets opened in New York — and they hammered it down to its low tick of the day, which came fifteen minutes before London closed.  Then away it went to the upside once again — and ‘da boyz’ were forced to step in for the last time around 2:15 p.m. EST before it blasted back through $18 spot and its 200-day moving average once again.  From there it was forced to trade into the close, just as the gold price was.

The high and low ticks in this precious metal were recorded by the CME Group as $18.09 and $17.73 in the March contract.

Silver was closed on Tuesday at $17.925 spot, up 13 cents on the day.  Net volume was pretty heavy at just about 57,500 contracts — and roll-over/switch volume out of March was pretty heavy.

Here’s the 5-minute silver tick chart courtesy of Brad as well — and except for the odd volume bump here and there in Far East and London, the volume that mattered in this precious metal followed the same pattern as it did in silver.  It wasn’t back to background levels until around 1:00 p.m. Denver time as well.

Like for 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 here as well.

The platinum price more or less followed the same price path as gold — and to some extent, silver — except the absolute low tick was set around 12:20 p.m. in New York.  From there it rallied until shortly after 2 p.m. in the after-hours market, but wasn’t allowed back above $1,000 spot — and traded pretty flat for the rest of the day.  It was closed at $999 spot — and up 3 dollars from Monday.

Palladium inched unsteadily higher through most of the Tuesday trading session — and the high tick in that precious metal, such as it was, came minutes after 9 a.m. in New York.  It was sold back to unchanged by the Zurich close, but rallied like platinum from there into the close of trading at 5:00 p.m. EST.  Palladium finished the day at $779 spot, up 5 dollars.

The dollar index closed very late on Monday afternoon in New York at 101.00 — and  was down about 20 basis points in the first thirty minutes of trading yesterday evening in New York.  It recovered all of that and a few basis points more by around 9:30 a.m. CST on their Tuesday morning, but began to head lower about an hour later — and bounced off its 100.73 low tick on numerous occasions between 3 p.m. in Shanghai and 11:40 a.m. in London.  From there the ensuing rally looked like it was about to followed the same path, but all things changed at, or minutes before, the London p.m. gold fix.  The ramp job took the index up to its 101.38 high tick around 10:40 a.m. EST — and it chopped quietly lower until the close, finishing the Tuesday session at 101.23 — and up 23 basis points from its close on Monday.

It wasn’t quite a ‘ramp the dollar index/kill precious metals’ type of day on Tuesday, because ‘da boyz’ were forced to step into the COMEX silver market a full thirty minutes before they put the boots to the gold price at the afternoon gold fix in London.

And here’s the 6-month U.S. dollar index — and the ‘rally’ continues!

The gold stocks were up a percent and change at the open, but began to head lower immediately, with their respective low ticks coming a few minutes before 11 a.m. in New York, which was the low tick for gold.  They chopped erratically higher from there — and made it back into positive territory briefly as gold spiked higher in the after-hours market, but as soon as it was sold lower, the shares followed.  The HUI closed down a smallish 0.24 percent.

The price action in the silver equities was very similar, except they managed to stay mostly in positive territory from the moment that the COMEX closed — and up until the 1:30 p.m. close of COMEX trading.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index finished the day up 0.10 percent.  Call it unchanged once again.  Click to enlarge if necessary.

The CME Daily Delivery Report showed that 1 gold and 19 silver contracts were posted for deliver within the COMEX-approved gold depositories in New York on Thursday.  HSBC USA stopped the lone gold contract.  In silver, the only short/issuer was JP Morgan out of its client account — and ADM stopped 14 of them.  There was nobody in second place.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in February fell by 37 contracts, leaving 1,040 still left, minus the 1 mentioned in the previous paragraph.  Monday’s Daily Delivery Report showed that only 1 gold contract was posted for delivery today, so that means that 37-1=36 gold contracts holders fled the February delivery month.  Silver o.i. in February increased by 26 contracts, leaving 150 still open.  Monday’s Daily Delivery Report showed that zero silver contracts were actually posted for delivery today, so that means the obvious…that another 26 silver contracts were added to February.

There were no changed in GLD yesterday — and as of 6:58 p.m. EST yesterday evening, there were no reported changes in SLV, either.

There was another sales report from the U.S. Mint yesterday.  They sold 2,500 troy ounces of gold eagles — 2,500 one-ounce 24K gold buffaloes — and 210,000 silver eagles.

There was a bit of moment in gold over at the COMEX-approved depositories on the U.S. east coast on Monday.  There was 16,205 troy ounces received — and all of that went into Canada’s Scotiabank.  There was 13,119 troy ounces reported shipped out — and except for 128.600 troy ounce/4 kilobars out of Manfra, Tordella & Brookes, Inc…all the rest came out of Brink’s, Inc.  The link to that activity is here.

After no action on Friday, it was very busy in silver on Monday, as 1,779,896 troy ounces were reported received — and another 453,777 troy ounces were shipped out.  One container load each went into Brink’s, Inc…CNT…and Scotiabank.  There was 428,669 troy ounces was shipped out of Scotiabank as well — and the remainder of the ‘out’ movement was at CNT.  A link to that action is here.

And after many days/weeks of net inflows into the COMEX-approved gold kilobar depositories in Hong Kong, there was finally a withdrawal of some size on Monday.  They did receive 2,251 kilobars on that day, but that was dwarfed by the 9,679 kilobars that were withdrawn.  All of this action was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.

I have a fairly large number of stories for you today — and I hope you have time for the ones that interest you.


Bank Stocks, Dollar, and Yields Surge After Yellen Warns “Waiting Too Long to Hike is Unwise

Is March live? That is what Sen. Dean Heller (R., Nev.) wanted to know when he asked the Chair “Is the Fed going to raise rates in March?

Yellen responded with a variation on the language she used in her prepared testimony: The Fed will look at the proper stance of policy “at our upcoming meetings.” Every meeting is live, she said, but she can’t say precisely when the Fed will act—though the Fed does expect it will raise rates this year. She said, decisions on rates will be driven by trends in the economy, not speculation about potential changes in fiscal policy.

Precisely when we would take an action, whether in March or May or June, I know people are focused on that,” Yellen said adding “I can’t tell you exactly which meeting it would be. I would say that every meeting is live.

Heller tried several times to get Ms. Yellen to weigh in on specific policy proposals, including a border-adjusted tax, but she smiled and said that those decisions belong to Congress.

Because according to a cursory scan of her speech, she was more hawkish than most expected, arguably making a March rate hike “live” after warning that “as I noted on previous occasions, waiting too long to remove accommodation would be unwise, potentially requiring the FOMC to eventually raise rates rapidly, which could risk disrupting financial markets and pushing the economy into recession.”

Further hawkishness emerged from her claim that “Incoming data suggest that labor market conditions continue to strengthen and inflation is moving up to 2 percent, consistent with the Committee’s expectations. At our upcoming meetings, the Committee will evaluate whether employment and inflation are continuing to evolve in line with these expectations, in which case a further adjustment of the federal funds rate would likely be appropriate.

This Zero Hedge article appeared on their website at 9:55 a.m. EST on Tuesday morning — and I thank Brad Robertson for pointing it out.  Another link to it is here.

Investors’ Economic Optimism Surges to Level Not Seen Since 2011

Investors haven’t been this optimistic on the global economy since 2011, joining small businesses in taking a glass-half-full outlook as a new administration takes over in Washington.

A full 23 percent of investors expect an outright “boom,” according to a survey released Tuesday by Bank of America Merrill Lynch, while the number predicting negligible growth over the next 12 months has fallen by more than half to 43 percent.

The optimism comes amid forecasts global growth will pick up and as Donald Trump promises to cut taxes, boost fiscal spending and loosen regulations in moves that could boost corporate earnings.

Macro optimism is surging,” wrote the team, led by Michael Hartnett, Bank of America’s chief investment strategist.

The bank surveyed global fund managers during the first week of February, with respondents having a combined $630 billion in assets under management. The level of optimism is the highest seen since the firm’s survey in early 2011

This Bloomberg article was posted on their Internet site at 8:13 a.m. Denver time on Tuesday morning — and it’s the firs contribution of the day from Swedish reader Patrik Ekdahl.  Another link to it is here.

Peter Schiff: Why there’s trouble brewing in the U.S. market

This CNBC video interview with Peter, done sometime after Yellen spoke, was picked up by the marketsanity.com Internet site.  There’s also a chunk of the interview that talks about gold as well.  Peter’s interview starts around the 1:10 mark — and runs for about eight minutes in total.  I thank Roy Stephens for sending it our way.

California asks Trump for help with Oroville Dam spillway

California Gov. Jerry Brown requested federal assistance from President Donald Trump over the “potential failure” of the Ororville Dam emergency spillway.

I respectfully request that you issue an emergency declaration for direct federal assistance for the counties of Butte, Sutter and Yuba, as a result of the potential failure of the Lake Oroville Dam emergency spillway,” Brown wrote in a letter to Trump released Monday night.

Officials issued mandatory evacuations for nearly 190,000 people in the three counties Sunday. Those evacuated were sheltered in the neighboring counties of Nevada, Placer Sacramento and Yolo.

Brown said several atmospheric river storm systems struck California during January and February, which generated massive amounts of precipitation that inundated lakes, rivers and streams. Officials discovered a large hole in the Oroville Dam’s main spillway last week. They’re now worried the emergency spillway could also fail as the dam reaches capacity.

This UPI story showed up on their Internet site at 6:58 a.m. on Tuesday morning EST — and I thank Roy Stephens for bringing it to our attention.  Another link to it is here.

The Neocons and the “deep state” have neutered the Trump Presidency, it’s over folks! — The Saker

Less than a month ago I warned that a ‘color revolution ‘ was taking place in the USA.  My first element of proof was the so-called “investigation” which the CIA, FBI, NSA and others were conducting against President Trump’s candidate to become National Security Advisor, General Flynn.  Tonight, the plot to get rid of Flynn has finally succeeded and General Flynn had to offer his resignation.  Trump accepted it.

Now let’s immediately get one thing out of the way: Flynn was hardly a saint or a perfect wise man who would single-handedly saved the world.  That he was not.  However, what Flynn was is the cornerstone of Trump’s national security policy.  For one thing, Flynn dared the unthinkable: he dared to declare that the bloated US intelligence community had to be reformed.  Flynn also tried to subordinate the CIA and the Joint Chiefs to the President via the National Security Council.  Put differently, Flynn tried to wrestle the ultimate power and authority from the CIA and the Pentagon and subordinate them back to the White House.  Flynn also wanted to work with Russia. Not because he was a Russia lover, the notion of a Director of the DIA as a Putin-fan is ridiculous, but Flynn was rational, he understood that Russia was no threat to the USA or to Europe and that Russia had the West had common interests.  That is another absolutely unforgivable crimethink in Washington D.C.

The Neocon run ‘deep state’ has now forced Flynn to resign under the idiotic pretext that he had a telephone conversation, on an open, insecure and clearly monitored, line with the Russian ambassador.

And Trump accepted this resignation.

Ever since Trump made it to the White House, he has taken blow after blow from the Neocon-run Ziomedia, from Congress, from all the Hollywood double-plus-good-thinking “stars” and even from European politicians.  And Trump took each blow without ever fighting back.  Nowhere was his famous “you are fired!” to be seen.  But I still had hope.  I wanted to hope.  I felt that it was my duty to hope.

But now Trump has betrayed us all.

This longish commentary by The Saker falls into the absolute must read category — and it was posted on his Internet site yesterday.  The first person to send it our way was Brad Robertson — and another link to it is here.

The anti-Flynn ‘deep state’ coup: Spelling it out in the clearest way possible — The Saker

Okay, my sense is that a large number of commentators are misunderstanding the nature of what is going on.  So, this time, rather than writing an analysis, I will spell it out, ‘talking points’ – style and, hopefully, do a better job about making my point.  So, here we go.

1.    THIS IS NOT ABOUT FLYNN.  Let me repeat that once more.  THIS IS NOT ABOUT FLYNN!!!  Please don’t come   and tell me that Flynn was wrong on Iran, on Islam or on China.  I agree.  But, this is not about Flynn
2.    THIS IS ABOUT POWER.  As in, who is boss?  Who is number one?  Who is the alpha dog?  The President or the ‘deep state’?  That is what this is all about – showing everybody who is in charge.
3.    FLYNN WAS A SYMBOL.  He was the symbol of the entire notion of draining the Washington swamp, which is mostly the 3 letter agencies + Pentagon anyway.  Flynn was the guy who dared defy the thought police and be friendly with the Russians.  Flynn was the man who wanted to bring the CIA and JCS back under White House control.  And Flynn was the guy with contacts with SOCOM and JSOC.  Flynn had to be brought down.
4.    FLYNN WAS ALSO A CORNERSTONE.  For better or for worse, it is absolutely evident that Flynn was the brain behind Trump’s entire foreign policy.  On some stuff Flynn was great (Russia), on some stuff he was okay (Takfiri terrorism), on some stuff he was ridiculous (China) and on some stuff he was terrible (Iran).  But that is not what matters here.  Listen to Kucinich who clearly says that this is not about Trump or Flynn, but about a coup against the Presidency by the U.S. ‘deep state’.  Now that Flynn has been brought down, there is no “Trump foreign policy” left.

Here’s your second absolute must read commentary for today.  It appeared on the saker.is Internet site late yesterday afternoon in New York — and I thank ‘Wojtek from Warsaw’ for sending it along.  Another link to it is here.

Iceland’s GDP Soars 10{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}, so Residents Are Preparing for the Next Crash

Iceland’s history is of booms and busts.

So as the inhabitants of a volcanic rock in the middle of the North Atlantic ocean roar back from their 2008 economic meltdown (this latest boom was fed by tourism and construction), the talk in the streets is of what shape the next crisis will take and when exactly it will hit.

We’re just going through the up-cycle at the moment,” Einar Jonsson, a retired driver, said in an interview while grocery shopping in Reykjavik. “For the next few months -– might even be a year or two -– Icelanders will step all over each other to make as much money as they possibly can in an effort to live through the next collapse.

Don’t just take the man in the street’s word for it. Titans of industry, local economists and even the European Union and the International Monetary Fund are all warning that Iceland’s economy risks overheating.

This news story put in an appearance on the Bloomberg website at 9:00 a.m. MST on Tuesday morning — and was updated eight hours later.  I thank Patrik Ekdahl for sharing it with us — and another link to it is here.

Rolls-Royce reports record loss of £4.6 billion

However, once one-off costs have been stripped out, the company’s underlying profit was better than many experts had predicted.

Rolls-Royce agreed to pay £671m to settle corruption cases with U.K. and U.S. authorities and it has written off £4.4bn from currency related contracts.

Like many international businesses, Rolls-Royce usually “hedges” its bets to protect itself from fluctuating currency markets, as most international aerospace contracts are priced in dollars, but, as a U.K. company, much of Rolls-Royce’s costs are in pounds.

While it underlines the complicated nature of Rolls-Royce’s business – it has a £30bn currency hedging book, designed, ironically, to flatten out volatility, and has unkindly been described as a hedge fund with an engine maker attached.

This news item was posted on the bbc.com Internet site sometime on Tuesday — and it’s another contribution from Patrik Ekdahl.  Another link to this article is here.

Euro May Already Be Lost” – Vice-Chairman of EuroThinkTank Warns “No Way to Avert Break-Up

The 1st of January 2017 marked the 18th anniversary of the European common currency, the euro. Despite its success from 1999 to 2007, after 2008 the euro has become a burden for many of its members. For example, living standards in Italy and Greece are below the levels when they joined the euro. Finland is the only Nordic country using the euro and it is also the only Nordic country which has not yet recovered from the financial crash of 2008.

There have been many proposals on how to fix the euro and the EMU, but they are politically unpopular and unrealistic. In this blog-entry, we will argue that the euro will almost surely fail; we just do not know the exact timing of its demise.

Germany has been successful in the Eurozone, while Greece and Italy have not. France is not doing well either. The jury is still out for Finland.

The different growth paths are a symptom of a general problem that has haunted currency unions for centuries. Competitiveness and productivity develop at a different pace in different countries. Over time, this leads to large competitiveness differences among the members of a currency union. These differences do not usually pose a problem during economic booms because strengthening aggregate demand supports ailing fields of production. However, when a currency union faces an economic downturn or a crisis, falling aggregate demand hits less competitive industries and countries hard and the financing costs of less competitive countries jump. This is an asymmetric shock.

There’s nothing really new in this mishtalk.com article [via Zero Hedge] that appeared on their website at 12:15 p.m. EST on Tuesday, but it does shine a slightly different light on things, as it’s seen through European eyes, not North America ones.  I thank Richard Saler for bringing it to my attention — and now to yours.  Another link to it is here.

Nigel Farage – You’re In For a Bigger Shock in 2017

Nigel always calls it like it is in this 2:20 minute speech to the European Parliament in Brussels the other day.  He’s right on the money as usual — and the applause from the members indicates that his beliefs have wide support from a lot of the member E.U. states.

It was posted on the youtube.com Internet site yesterday — and I thank Roy Stephens for sending it along — and another link to it is here.

Greece said considering ditching euro in favor of U.S. dollar

Greece is said to be considering ditching the euro in favour of the U.S. dollar in a devastating move that would humiliate Brussels.

Donald Trump’s pick for E.U. ambassador Ted Malloch claimed senior Greek economists are looking into taking on the American banknotes if the country turns its back on the European currency.

Due to Greece’s crippling financial crisis, officials are said to be desperately searching for an alternative to the Eurozone, which would “freak out” Angela Merkel, according to Malloch.

Professor Malloch was interviewed on Greek TV, where he said Greece leaving the E.U. would be the best option for residents, and added the current situation is “simply unsustainable.”

I know some Greek economists who have even gone to leading think tanks in the U.S. to discuss this topic and the question of dollarization,” he said, according to local press.

This news item was posted on the dailymail.co.uk Internet site at 11:13 a.m. GMT — 6:13 a.m. in Washington — EST plus five hours — and I found it in a GATA dispatch yesterday.  Another link to it is here.

Western Interests Aim to Flummox Russia — Paul Craig Roberts and Michael Hudson

An article by Robert Berke in oilprice.com, which describes itself as “The No. 1 Source for Oil & Energy News,” illustrates how interest groups control outcomes by how they shape policy choices.

Berke’s article reveals how the U.S. intends to maintain and extend its hegemony by breaking up the alliance between Russia, Iran, and China, and by oil privatizations that result in countries losing control over their sovereignty to private oil companies that work closely with the U.S. government. As Trump has neutered his presidency by gratuitously accepting Gen. Flynn’s resignation as National Security Advisor, this scheme is likely to be Trump’s approach to “better relations” with Russia.

Berke reports that Henry Kissinger has sold President Trump on a scheme to use the removal of Russian sanctions to pry President Putin away from the Russian alliance with Iran and China. Should Putin fall for such a scheme, it would be a fatal strategic blunder from which Russia could not recover. Yet, Putin will be pressured to make this blunder.

One pressure on Putin comes from the Atlanticist Integrationists who have a material stake in their connections to the West and who want Russia to be integrated into the Western world. Another pressure comes from the affront that sanctions represent to Russians. Removing this insult has become important to Russians even though the sanctions do Russia no material harm.

We agree with President Putin that the sanctions are in fact a benefit to Russia as they have moved Russia in self-sufficient directions and toward developing relationships with China and Asia. Moreover, the West with its hegemonic impulses uses economic relationships for control purposes. Trade with China and Asia does not pose the same threat to Russian independence.

This very interesting commentary was posted on Paul’s website yesterday — and it’s another must read, especially for any serious student of the New Great Game.  I thank Larry Galearis for finding it for us — and another link to it is here.

Trump Expects Putin to “Return” Crimea to Ukraine

With every passing day, it appears that many of the anticipated foreign policy changes under the new administration may end up being nothing but smoke and mirrors. First, it was the middle east, where despite campaign promises of pulling back U.S. troops, Trump is instead considering adding to U.S. deployments to reinforce what he plans to be Syrian “safe zones.”

Then, during today’s Sean Spicer press conference, the White House spokesman had that President Trump has been “tough” on Russia and expects Moscow to “return” the Crimea peninsula to Ukraine, the White House spokesman told reporters. Addressing the resignation of National Security Adviser Michael Flynn – hounded by the media over his contacts with Russian diplomats prior to Trump’s inauguration – Spicer pointed out that Russia “seized” Crimea under the Obama administration and that the Trump-appointed ambassador to the U.N. Nikki Haley has “strongly denounced the Russian occupation.”

President Trump has made it very clear that he expects the Russian government to de-escalate violence in the Ukraine and return Crimea,” Spicer said at a daily news briefing. “At the same time, he fully expects to and wants to get along with Russia.

Russian envoy Vitaly Churkin responded by citing the U.S. Constitution and pointing out that Crimeans overwhelmingly voted to join Russia, after the U.S.-backed coup in February 2014 overthrew the elected government in Kiev.

Of course 95 percent of Crimea’s population are ethnic Russians, as it’s been Russian territory since about the time of the U.S. Declaration of Independence — and only given away as a ‘gift’ to Ukraine back in 1954 by Nikita Khrushchev.  They’ve already voted about 95 percent to leave Ukraine and rejoin Russia when given the choice — and they ain’t going to vote themselves back into it.  This must read story appeared on the Zero Hedge website at 5:34 p.m. EST on Tuesday afternoon — and the first person through the door with it was ‘David in California’.  Another link to this must read story is here.

Geopolitics at Play in China — Jim Rickards

China’s problems are not entirely external and are not limited to the new Trump administration. China is now embroiled in an internal political struggle around the efforts of President Xi to make himself the most powerful Chinese leader since Mao Zedong.

In reaction to the excesses of the Mao era — including the disastrous Great Leap Forward, which caused famine in the 1950s, and the destructive Cultural Revolution of 1966–76 — China developed a new model of collective leadership under Deng Xiaoping beginning in the 1980s.

Deng himself was never president; he held a series of lesser posts. However, he was the architect of the current presidential system and was regarded as China’s “paramount leader” from 1978 to 1987. Deng held what the Chinese call the “Mandate of Heaven,” a quasi-religious concept that has bestowed legitimacy on Chinese emperors for over 3,000 years.

The new model still had a single leader, but the leader was chosen by consensus among the Central Committee members of the Communist Party. Each leader was elected to a five-year term (in rigged elections), and was permitted to serve a second five-year term (some did so, some did not).

Importantly, at the beginning of a leader’s second five-year term, he would designate one or two likely successors. Those designated successors would then jockey for position among the Central Committee members. Slowly a consensus would emerge around one figure. That individual would then be selected as president at the end of the current president’s second term.

This commentary by Jim was posted on the dailyreckoning.com Internet site on Monday sometime — and I thank Harold Jacobsen for sending it our way.  Another link to it is here.

Toshiba: Why troubled Japanese firms survive

From a cancelled earnings announcement, to a chairman resigning, to a shambolic shouting match between executives and reporters at a hastily organised press conference – it would be fair to say that Toshiba is facing a sorry state of affairs.

Toshiba has now confirmed that it will ask for another month before it releases its earnings – but it has issued a preliminary report warning of losses worth some US$3.4bn.

Many analysts are concerned that this is a sign of far worse things to come.

It’s really unheard of in Japan to miss your planned earnings announcement,” Marc Einstein with Frost and Sullivan told me.

Timing and being on time is sacred in Japanese business culture – so things must be considerably worse than anticipated.”

So what’s gone wrong at Toshiba – once a poster child for post-war industrial Japan, now a company that hasn’t made a profit since 2013?

This very interesting news story showed up on the bbc.com Internet site on Valentine’s Day — and it’s the final offering from Swedish reader Patrik Ekdahl — and I thank him on your behalf.  Another link to this worthwhile article is here.

Italy busts crime ring that laundered €300,000 in gold per week

Italy arrested 11 people for running an international gold laundering ring on Tuesday that melted down and sold some €300,000/£255,146.68 worth of the stolen metal each week, Italian finance police said.

They were accused of buying and reselling stolen goods. Police in Italy, Hungary and Slovenia also searched about 60 homes and businesses.

Police picked up one of the group’s leaders, who was not named, at the Italy-Slovenia border carrying €200,000 in cash obtained by selling stolen gold, finance police official Filippo Ivan Bixio told Reuters.

The group, which was based in the northern industrial city of Turin, bought stolen objects from a network of contacts, paying them in cash at a discount of about 30 percent compared with market prices, Bixio said.

A company set up in Budapest issued fake purchase receipts without ever taking possession of the gold. It then sold the precious metal to the countries’ largest jewellers at market prices.

This gold-related news item, showed up on the uk.reuters.com Internet site at 5:04 p.m. GMT on February 14 — and it’s a story that I found on the Sharps Pixley website last night.  Another link to it is here.

China Net Imported 1,300 Tonnes of Gold in 2016 — Koos Jansen

For 2016 international merchandise trade statistics point out China has net imported roughly 1,300 tonnes of gold, down 17 {f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} from 2015. The importance of measuring gold imports into the Chinese domestic gold market – which are prohibited from being exported – is to come to the best understanding on the division of above ground reserves in and outside the Chinese domestic market.

Kindly be advised to have read my posts the Mechanics Of The Chinese Domestic Gold Market. If segments in this post are unclear please click the links provided.

The last bits of data are coming in from the countries that export gold to China, with which we can compute the total the Chinese have imported in 2016. There are four main gold exporters to China, which are Hong Kong, Switzerland, the UK and Australia (it’s not publicly disclosed how much South Africa exports directly to China ). Let’s start discussing the largest gold exporter to China.

Hong Kong

Since 2011 when the gold price slowly started to decline and China embarked importing gold at large, Hong Kong has been the main conduit to the mainland. According to data by the Hong Kong Census And Statistics Department (HKCSD) the special administrative region net exported 771 tonnes of gold to China in 2016, ranking first once again. Net exports were down 10 {f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} compared to 2015.

This longish chart-filled commentary put in an appearance on the Singapore-based website bullionstar.com yesterday sometime — and I found it on the gata.org Internet site.  Another link to it is here.

Ted Butler: Another Unique Blow-Off Factor in Silver

The world’s foremost silver analyst Theodore Butler has done it again. He has elaborated another bullish factor so powerful it screams at us to buy silver. As you know, Mr. Butler is the supreme expert on futures trading in silver. The reason that this knowledge is so important is because the COMEX is the primary place where silver prices are set. Forget about China, the dollar, the economy or whatever reason the media reports. Billion dollar banks, hedge funds and computerized trading monolith’s set the price on the COMEX.

What Mr. Butler’s brilliant analysis has uncovered is extremely complex, so I’ve had to simplify it so I could understand it myself. Over the years, he has pointed to the technical hedge funds as the big buyers and sellers who move prices up and down. The big banks such as JPMorgan take the other side of these trades. These technical funds usually go long as prices rise and short as prices fall. They trade in and out of their positions based on price movements.

Over the past three years, a new type of hedge fund buyer has emerged. Mr. Butler calls them the core non-technical funds. They don’t trade, they buy and hold. From late 2013 to the summer of 2015 their long position grew to 40,000 futures contracts and more recently to 60,000 contracts. That’s 300 million ounces of silver in this core long position. These are longs who are holding and waiting for higher prices. They use futures as their silver investment vehicle because of the leverage available.

According to Mr. Butler, there are two other types of silver buyers, small traders and the other large reporting traders. Together, he estimates their total long position to be another 20,000 contracts on top of the 60,000 contracts just mentioned above. That makes a total of 400 million ounces held on a long term basis when adding up these three categories of permanent longs.

Ted has spoken of these not-technical funds longs several times over the last few years — and I’ve been happy to point them whenever possible as well.  My name for them is the “unblinking” non-technical fund longs — and I’ve always suspected them of being related to the Big 4 commercial shorts in silver as well.  It is them, along with JP Morgan, that will ride this silver rocket ship when it’s finally allowed to leave the launch pad.  Of course we’ll get taken along for the ride too — and the sooner the better, of course.   Ted wrote this commentary quite some time ago — and I’m glad that he finally arranged to have it posted in the public domain in some manner.  This is another absolute must read commentary.  It showed up on the silverseek.com Internet site yesterday — and I found it in another GATA dispatch.  Another link to it is here.


This first photo is of the now-dry emergency spillway at the Oroville dam — mostly likely taken yesterday.  And as you can see from the tiny figures in the center of the photo, the erosion problem would have fast become critical if they hadn’t started letting 100,000+ cubic feet of water per second down the primary spillway to lower the level of the reservoir below the emergency spillway.  Note the temporary concrete “band-aid” in the foreground.  And as bad the situation is currently, winter is not yet over in the Sierra Nevadas — and the spring run-off hasn’t even started yet.  The Click to Enlarge feature is an absolute must with this picture…


For the third day in a row, the silver price tried to rally above its 200-day moving average — and for the third day in a row ‘da boyz’ were standing there to hammer it back not only below that average, but close it below $18 spot as well.  I also note that the gold price is back to within a dollar or so of its 100-day moving average.

As to what might happen to precious metal prices going forward from here is unknown, but the table is set if JPMorgan wish to pull the plug.  As Ted pointed out in his weekly review on Saturday, the silver is market neutral from a COMEX contract perspective, but that wouldn’t stop them from ringing the cash register for fun, profit — and price management purposes.

Here are the 6-month charts for all four precious metals, plus copper.  I’ve changed the gold chart to show the 100 and 200-day moving averages because, for the moment, they’re the only two in play…plus I wanted you to see for yourself what I was referring to in the previous paragraph.  The click to enlarge feature helps a bit with these charts, if need be.

And as I type this paragraph, the London open is less than ten minutes away — and I note that the prices of all four precious metals ticked up a bit the moment that trading began in New York at 6:00 p.m. EST on Tuesday evening, but that was it for all but palladium as the Far East session moved along.  Gold was sold down about 3 bucks by around 9 a.m. China Standard Time on their Wednesday morning — and hasn’t done much since — and is currently down $2.60 an ounce.  It was the same for silver, except it got hit for another dime shortly after 3 p.m. CST — and it’s off its current low, but down 8 cents.  Ditto for platinum — and it’s off its low by a dollar or so — and is down 3 bucks as the Zurich open approaches.  Palladium did its own thing in Far East trading on their Wednesday — and it’s in the plus column by a dollar.

Net HFT gold volume is just a bit over 28,000 contracts, which isn’t a lot — and that number in silver is around 6,700 contracts.  Roll-over/switch volume out of March is pretty light at the moment.

The dollar index rallied about 15 basis points in the first hour of trading starting at 6 p.m. EST last evening — but gave all of that back and a bit more by around 12:45 p.m. in Shanghai.  Since then it has rallied a hair — and is up 2 basis points as London opens.

Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report.  When I was speaking with Ted yesterday, we were both wondering out loud just how much of today’s volume will be in it.  We’re hoping for all of it of course, but wouldn’t be surprised if not all of it was reported in a timely manner.

Just eye-balling the silver and gold charts above.  I won’t hazard a guess on silver — and would assume that we’ll see a small decrease in the Commercial net short position in gold.  But, as I said in my Tuesday column, any attempt to call this Friday’s COT Report would be for “entertainment purposes only.”  That comment still stands.  I’ll be interested in what Ted’s estimates will be when he comes out with his mid-week commentary this afternoon.

And as I post today’s efforts on the website at 4:01 a.m. EST, I see that not much has happened during the first hour of London/Zurich trading.  Gold has been inching higher in the last thirty minutes — and is down $1.80 currently.  Silver has recovered a few pennies as well — and is down 6 cents.  Platinum has gained two dollars — and is down a dollar at the moment — and palladium is still up a buck.

Net HFT gold volume is closing in on 33,000 contracts — and that number in silver is barely over 7,600 contracts, with still no roll-over/switch volume to speak of.  There certainly hasn’t been much in the way of volume during the first hour that London has been open.

The dollar index has been crawling higher during the last hour — and is up 18 basis points.

I’m not sure what to expect when I get out of bed later this morning, but just looking at the charts, plus the current price action, I would be prepared to bet the proverbial ten dollar bill that these ‘rallies’…such as they were…are over for the moment.  However, as always, I’d love to proven spectacularly wrong about that.

See you tomorrow.


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