Another Day of the “Same Old, Same Old…”

09 March 2017 — Thursday


The gold price inched higher in Far East trading until around 2:30 p.m. China Standard Time on their Wednesday afternoon.  The price pressure began at that point — and gold was down 3 bucks or so by shortly after the London open.  The price chopped sideways in a very tight range from there until the COMEX open — and ‘da boyz’ quickly took it down to its low of the day, which came around 9:15 a.m. EST.  All tiny rally attempts after that were dealt with in the usual manner, as the gold price chopped quietly sideways for the rest of the Wednesday session.

Once again the gold price traded within a ten dollar price range — and the high and low ticks aren’t worth looking up.

Gold was closed in New York yesterday afternoon at 1,208.00 spot, down $7.60 from Tuesday.  Net volume was way up there at around 178,500 contracts — and roll-over/switch volume out of April wasn’t particularly heavy.

Here’s the 5-minute gold tick chart courtesy of Brad Robertson as usual.  Volume became slightly elevated starting shortly before 1 a.m. Denver time on their Wednesday morning, which was shortly before 3 p.m. in Shanghai — and that’s when ‘da boyz’ and their algos showed up.  The real volume began to arrive shortly after the noon silver fix in London, which was 5:30 p.m. MST/7:30 a.m. in New York — and really didn’t fall off to anything resembling background levels until around 13:00 Denver time/15:00 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 silver price was manhandled in a similar fashion as gold’s.  It was down less than a dime by the COMEX open, but JPMorgan et al put things right — and they closed silver almost on its low tick of the day.

The high and lows in this precious metal were recorded by the CME Group as $17.57 and $17.245 in the May contract.

Silver finished the Wednesday trading session at $17.21 spot, down 26.5 cents on the day.  Net volume was very decent at a bit under 53,500 contracts.

Here’s the 5-minute tick chart for silver from Brad as well.  There were a few notable volume spikes in silver in late Far East and early London trading once ‘da boyz’ went to work on that precious metal on their Wednesday.  It then died back to next to nothing until 06:00 a.m. Denver time, which was about twenty minutes before the COMEX open.  The real volume that mattered, including the big spike at the start of trading, occurred during the New York session…as it usually does.  Volume dropped to just above background levels at the 11:30 a.m. MST/1:30 p.m. EST COMEX close.

Like for the 5-minute tick chart 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 as well.

Just looking at the Kitco chart for platinum below, it’s obvious that the price path it was forced to follow was more or less the same for the last three trading days in a row, as JPMorgan et al guided it to another new low close for this move down as well.  Nothing free market about this either and, like the gold and silver miners, those that dig this precious metal out of the ground, won’t say a word in their defence, either.  Platinum was closed down another 15 bucks at $943 spot.

The palladium price chopped sideways a dollar or so either side of unchanged until about an hour before the Zurich open — and then was sold off to its $764 low tick by around 10:30 a.m. CET in Zurich.  It rallied back to a dollar above unchanged by the afternoon gold fix in London, which was 10 a.m. EST in New York — and then was sold lower for a small loss on the day, down 3 bucks from Tuesday’s close.  Palladium finished the Wednesday trading session at $768 spot.

The dollar index closed very late on Tuesday afternoon in New York at 101.78 — and chopped quietly sideways until shortly before 3:30 p.m. in Far East trading on their Wednesday afternoon, which was about thirty minutes before the London open.  A rather suspicious looking ‘rally’ began at that point, with the 102.19 high tick of the day coming at a minute or so before 1 p.m. in New York.  Within thirty minutes, about 15 basis points of that gain had disappeared — and the index chopped quietly higher from there into the close, finishing the Wednesday session at 102.12 — up 34 basis points from Tuesday.

Here’s the 6-month U.S. dollar index — and you’ll excuse me for thinking that yesterday’s ‘rally’ in the index had ‘gentle hands’ fingerprints all over it…just as the engineered price declines in the precious metals have JPMorgan et al’s fingerprints all over them.

The gold stocks opened down on the day, but began to rally immediately, making it back into positive territory by shortly before noon in New York.  They chopped around either side of unchanged for the rest of the day, but mostly in negative territory — and that’s where they closed.  The HUI finished lower by a smallish 0.67 percent.  Somebody was bottom fishing again yesterday.

The silver equities opened down, rallied a bit, then headed lower until around 10:40 a.m. EST.  From there they chopped sideways in a fairly wide range — and Nick Laird’s Intraday Day Silver Sentiment/Silver 7 index finished the Wednesday session down a hefty 3.11 percent…virtually on its low tick.  It was another day where a lot of the junior producers got slaughtered — and if there was bottom fishing going on, it was well disguised.  But somebody had to end up with all the shares that were sold yesterday.  Click to enlarge if necessary.

After today’s losses in the silver shares, the Silver 7 is now down year-to-date — and how much more down-side damage there will be, remains to be seen.

The CME Daily Delivery Report showed that 10 gold and a chunky 708 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.   In gold, the only short/issuer was International F.C. Stone.  The only long/stopper worth noting was Canada’s Scotiabank with 4 contracts.  In silver…where do I start?  The only two short/issuers that mattered were Macquarie Futures and Scotiabank with 539 and 164 contracts out of their respective in-house [proprietary] trading accounts.  JPMorgan was the only long/stopper worthy of the name once again, as they picked up 552 contracts for their own account — and they also stopped 125 contracts for clients as well, for a total of 677 contracts stopped.  The link to yesterday’s Issuers and Stoppers Report is here.

JPMorgan has now stopped 1,749 contracts for its own account in the March delivery month, well over the 1,500 contracts that they’re allowed by law to take.  It’s obvious that the law doesn’t apply to them.  One wonders how many more contracts they’re going to take delivery of before March goes off the board.

The CME Preliminary Report for the Wednesday trading session showed that gold open interest in March fell by 2 contracts, leaving 70 still around, minus the 10 mentioned two paragraphs ago. Tuesday’s Daily Delivery Report showed that 1 gold contract was actually posted for delivery today, so that means that 2-1=1 March contract holder in gold departed the scene.  Silver o.i. in March declined by 253 contracts, leaving 1,997 still open, minus the 708 contracts mentioned above.  Tuesday’s Daily Delivery Report showed that 131 silver contracts were actually posted for delivery today, so that means that 253-131=122 March contract holders in silver [According to Ted, most likely short/issuers with no physical silver backing their positions] were let off the March delivery hook, mostly likely by JP Morgan.

What a delivery month in silver this is turning out to be!  And it’s not even close to being over!  Ted had lots to say about it in his mid-week review yesterday — and I’ll have a bit of it in the quote in The Wrap section.

There were no reported changes in GLD yesterday, but an authorized participant, read JPMorgan, took 1,515,543 troy ounces out of SLV — and it’s a lead-pipe cinch that they are the proud new owners of that metal as well.

There was no sales report from the U.S. Mint yesterday.

Once again there was no ‘in’ activity in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday, but 5 kilobars were shipped out of Manfra, Tordella & Brookes, Inc. — plus another 1,000 kilobars departed Canada’s Scotiabank.  All were the U.K./U.S. kilobar weight of 32.150 troy ounces.  In total, there as 32,310.750 troy ounces shipped out — and the link to that activity is here.

There was no ‘in’ activity in silver, either — and only 334,727 troy ounces were shipped out.  Most of the ‘out’ action was at Scotiabank with 310,620 troy ounces.  CNT was a distant second, with 20,023 troy ounces sent off to parts unknown.  Ted pointed out that there was a transfer of physical silver from the Eligible to Registered category of 647,911 troy ounces — all from CNT — and he said that it was most likely delivery related by a reluctant short/issuer.  The link to this action is here.

It was another busy day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday, as 6,156 kilobars were received — and another 5,219 were shipped out.  All of this action was at Brink’s, Inc. as per usual — and a link to that, in troy ounces, is here.

Here’s another chart that Nick Laird passed around on Tuesday, but I didn’t have the space for until today.  This one shows the combined withdrawals from the Shanghai Gold Exchange for the first two months of 2017…compared to demand at Month 2 of prior years.  To be sure, it’s not a record, but still very impressive nonetheless.  Click to enlarge.

I have an average number of stories for you today — and I’ll happily leave the final edit up to you.


U.S. trade deficit jumps to 5-year high of $48.5 billion

The U.S. trade deficit jumped in January to the highest level in nearly five years as a flood of mobile phones and other consumer products widened America’s trade gap with China. The figure underscores the challenges facing President Donald Trump in fulfilling a campaign pledge to reduce America’s trade deficits.

The Commerce Department says the deficit in January rose 9.6 percent to $48.5 billion, up from a December deficit of $44.3 billion. It was the largest monthly gap since a deficit of $50.2 billion in March 2012.

U.S. exports edged up a slight 0.6 percent to $192.1 billion, helped by stronger auto sales. But the export gain was swamped by a 2.3 percent surge in imports, led by mobile phones, oil and foreign-made cars.

This story put in an appearance on the Internet site at 8:37 a.m. EST on Tuesday morning — and I found this news item in yesterday’s edition of the King Report.  Another link to it is here.

Urban Outfitters CEO Says the Retail Bubble Has Burst

Shares of Urban Outfitters Inc. and Express Inc. fell on Wednesday after the apparel chains gave a dour outlook for the industry, renewing concerns about America’s overabundance of retail stores.

Urban Outfitters’ fourth-quarter earnings fell short of estimates, and same-store sales were flat. At Express, sales tumbled 13 percent on that basis last quarter. The company warned that it may post a loss this quarter, surprising analysts.

Clothing sellers are struggling to cope with slow foot traffic at malls and a shift to e-commerce. The industry also has had to rely more heavily on discounts to attracts shoppers, weighing on margins. Urban Outfitters Chief Executive Officer Richard Hayne said the holiday season was disappointing, with higher markdowns than expected.

But the broader problem is there are just too many stores, he said on a conference call Tuesday evening.

The U.S. market is oversaturated with retail space and far too much of that space is occupied by stores selling apparel,” he said. “Retail square feet per capita in the United States is more than six times that of Europe or Japan. And this doesn’t count digital commerce.”

This Bloomberg story was posted on their Internet site at 7:07 a.m. Denver on Wednesday morning — and I thank Swedish reader Patrick Ekdahl for sharing it with us.  Another link to it is here.

Manhattan Retail Vacancies Soar

It used to be that taking a 10-minute walk around SoHo meant passing by at least a dozen upstart, trendy fashion retailers eager to sell you a $500 hoodie or $1,000 pair of sneakers.  But these days you’re much more likely to see a whole bunch of this…empty store space to rent.

Manhattan, generally thought to be more resistant to retail cycles than main street America due to its higher income residents and sheer population density, is proving that the combination of the brick-and-mortar retail rout (which we discussed in more depth here), stubbornly high rents and increasing competition from new neighborhoods is taking its toll on the Big Apple’s commercial real estate market.  As The New York Times noted earlier today, the retail real estate market in Manhattan is behaving an awfully lot like the luxury condo market with vacancies rising and “foreign money taking a breather.”

And while landlords have attempted to keep rents artificially high for as long as possible, it seems that the excess supply of vacant store frontage is finally starting to take its toll.

As The Real Estate Board of New York recently noted, retails rents in Manhattan are down pretty much across the board with rents in trendy areas like SoHo off around 10{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} YoY and high-end store frontage on the Upper East Side down a staggering 24{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}.

This longish article, with a really excellent map at the end showing all Manhattan business vacancies, appeared on the Zero Hedge website at 12:46 p.m. on Wednesday morning EST — and I thank Brad Robertson for sending it along.  Another link to it is here.

Mega-Bears Smell Blood as REITs Tumble

While many have blamed today’s spike in yields for the broader underperformance of the REIT sector, which sent the Bloomberg North American REIT index down 1.4{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}, its biggest one-day drop since December in a widespread selloff across all property sectors with 194 of the 214 stocks in the index lower today, it’s more than just the jump in rates that is slamming the rate-sensitive sector.

While longs are grudgingly parting with some of the prized holdings, it is the short sellers that have emerged from hibernation and have smelled blood, first and foremost among mall REITs – the most vulnerable of the lot – and are turning their attention to the struggling chains’ retail landlords. The underlying retail story is familiar, but just in case here is a brief recap from the WSJ: shares of retail-focused real-estate investment trusts, which own malls and shopping centers, have slumped since August last year, when Macy’s Inc. announced it would close 100 stores. Sears Holdings and J.C. Penney Co. later said they would close more than 100 stores each.

As a result, a regional-mall REIT index plunged about 22{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} from late July until March 6, according to data from the National Association of Real Estate Investment Trusts. And as the retail conflagration has spread, so has the shorting: the amount of short interest on retail-focused REITs increased to $7.6 billion as of March 6 from $5.6 billion as of the end of December, according to S3 Partners, a financial analytics firm, the WSJ reports.

S3 also reports that so far shorts against REITs with more class B and C malls, such as CBL & Associates Properties Inc., Pennsylvania Real Estate Investment Trust and Washington Prime Group, have been more profitable. However, increasingly shares of Class A mall REITs, which own the most productive malls in the country, have faced pressure. Short interest on mall giant Simon Property Group jumped to $1.3 billion on March 3 from $916 million at the end of 2016, near its record high. Over the same period, short interest trades in GGP Inc. increased to a record $689 million from $430 million.

Wow!  No surprises here.  The shorts must read Zero Hedge just like the rest of us.  This particular ZH story was posted on their Internet site at 4:53 p.m. EST yesterday afternoon — and I thank Richard Saler for his second contribution to today’s column.  Another link to it is here.

Fed to make sequential hikes until “something breaks“: Gundlach

Jeffrey Gundlach, chief executive officer at DoubleLine Capital, said on Tuesday he expects the Federal Reserve to begin a campaign this month of “old school” sequential interest rate hikes until “something breaks,” such as a U.S. recession.

Gundlach, who oversees more than $101 billion at Los Angeles-based DoubleLine, said U.S. economic data support a rate increase as soon as the next Fed policy meeting on March 14-15, and further rises this year, after a series of false starts in 2015 and 2016.

Confidence in the Fed has really changed a lot,” Gundlach said on an investor webcast. “The Fed has gotten a lot of respect with the bond market listening to the Fed” now that economic data support the tough rhetoric from Fed officials.

Gundlach, known on Wall Street as the “Bond King,” said on the webcast that inflationary pressures are increasing as well as business confidence, which will translate into a stock market that will “grind higher.

But Gundlach, who repeated his warning Tuesday that U.S. stocks are not cheap, said he holds Treasury inflation-protected securities and gold against this economic backdrop.

This Reuters news item, filed from New York, showed up on their website at 8:12 a.m. EST on Wednesday morning — and it comes to us courtesy of Richard Saler as well.  Another link to it is here.

FBI’s James Comey: “There is no such thing as absolute privacy in America

There is no such thing as absolute privacy in America,” the FBI director, James Comey, has declared after the disclosure of a range of hacking tools used by the CIA.

Comey was delivering prepared remarks at a cybersecurity conference in Boston, but his assessment has deepened privacy concerns already raised by the details of CIA tools to hack consumer electronics for espionage published by WikiLeaks on Tuesday.

All of us have a reasonable expectation of privacy in our homes, in our cars, and in our devices. But it also means with good reason, in court, government, through law enforcement, can invade our private spaces,” Comey said at the conference on Wednesday. “Even our memories aren’t private. Any of us can be compelled to say what we saw … In appropriate circumstances, a judge can compel any of us to testify in court on those private communications.”

Fresh concerns over personal privacy arose after WikiLeaks published what it called the first tranche of a larger body of data about CIA hacking, which it says was provided to the organisation by a whistleblower seeking to trigger a debate on the issue.

The CIA said it would not comment on the authenticity of the WikiLeaks material but issued a statement pointing out it was legally prohibited from using such surveillance tools in the U.S.

This news item put in an appearance on Internet site at 7:45 p.m. GMT on their Wednesday evening, which was 2:45 p.m. in Washington — EDT plus 5 hours.  I thank Roy Stephens for pointing it out — and another link to it is here.

Brazil’s recession worst on record

Brazil has been in recession for two years, the latest figures show, marking the deepest economic decline since records began.

The economy contracted by 3.6{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} in 2016, meaning it is now 8{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} smaller than it was in December 2014.

The country has been hard hit by the fall in commodity prices and an internal political crisis that has undermined investor confidence.

However, analysts believe the economy should start to pick up from here.

The two-year slump has seen the number of unemployed rise by 76{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} to 12.9 million, a rate of 12.6{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}.

This news story was posted on the Internet site on Tuesday sometime — and it’s another contribution from Patrick Ekdahl — and another link to it is here.

Germany’s Chief Prosecutor to Start Probe Into Wikileaks-Exposed Frankfurt Cyber-Spy Hub

The Germans are once again angry at the Americans over spying. Just a few years after Obama’s infamous apology for hacking Merkel’s phone, Germany’s chief federal prosecutor announced plans to carefully examine documents from Wikileaks (related to a secret CIA cyber-spy hub in Frankfurt), and will launch an investigation if it sees concrete indications of wrongdoing.

As VOA News reports, a spokesman for the German Foreign Ministry on Wednesday said Berlin was in close touch with Washington about the documents, which Wikileaks said showed that the CIA used the U.S. consulate in Frankfurt as a major remote hacking base.

We will initiate an investigation if we see evidence of concrete criminal acts or specific perpetrators,” a spokesman for the federal prosecutor’s office told Reuters.

We’re looking at it very carefully.”

Why would should anyone be surprised?  Germany has been a client state of the U.S. since the end of WW2…the same with Japan.   We here in Canada are pretty much under America’s thumb whether we care to admit it or not.  This is another Zero Hedge article from Brad Robertson — and it showed up on their Internet site at 2:05 p.m. EST on Wednesday afternoon.  Another link to it is here.

German economy crisis: Car demand plunges as factory orders hit lowest level since 2009

Falling demand for German cars has pushed the country’s manufacturing sector to record its worst month since 2009, raising fears for economic powerhouse of the eurozone.

Data from the the German Economy Ministry shows factory orders fell a shocking 7.4 per cent month on month in January, in what experts described as a horrendous reading.

Domestic demand fell by a sharp 10.5 per cent, amid a 16.8 per cent drop in demand for investment goods.

The reading suggests rising inflation in Germany is curbing the spending power of households.

But at the same time, export orders were down 4.9 per cent.

This news story appeared on the Internet site at 5:46 a.m. GMT on Wednesday morning — and was updated about three hours later.  I thank Patrik Ekdahl for his third offering in today’s column — and another link to it is here.

Greek farmers clash with riot police in Athens over austerity

Farmers who travelled to Athens from Crete have clashed with riot police in the latest unrest on the streets of the Greek capital, prompted by the government’s austerity policies.

The confrontation occurred outside the agriculture ministry, where farmers wielding staffs engaged with police firing teargas to prevent them from entering the building.

More than 1,100 stockbreeders and farmers arrived on overnight ferries in the early hours of Wednesday, to protest against increases in tax and social security contributions demanded by the creditors keeping Greece afloat.

Footage showed the farmers, many wearing black bandanas, smashing the windows of riot vans with shepherds’ staffs, setting fire to rubbish bins and hurling rocks and stones.

Greek farmers, long perceived to be the privileged recipients of generous E.U. funds, have historically been exempt from taxation.

This interesting article, filed from Athens, was posted on The Guardian‘s website at 5:16 p.m. GMT on Wednesday, which was 12:16 a.m. in New York — EST plus 5 hours.  It’s also courtesy of Patrik Ekdahl — and another link to it is here.

Sprott makes hostile $3.1 billion bid for Central Fund of Canada

Toronto-based Sprott Inc. said Wednesday it’s making an all-share hostile takeover bid worth $3.1 billion US for rival bullion holder Central Fund of Canada Ltd.

The money-management firm has filed an application with the Court of Queen’s Bench of Alberta seeking to allow shareholders of Calgary-based Central Fund to swap their shares for ones in a newly-formed trust that would be substantially similar to Sprott’s existing precious metal holding entities.

The company is going through the courts after its efforts to strike a friendly deal were rebuffed by the Spicer family that controls Central Fund, said Sprott spokesman Glen Williams.

“They weren’t interested in having those discussions,” Williams said.

I’m not sure what to make of this, dear reader.  This news item was posted on the Internet site at 11:02 a.m. EST on Wednesday morning — and I found it in a GATA dispatch late last night EST.  Another link to it is here.

Ron Paul to Arizona lawmakers: End capital gains tax on gold coins

Invoking claims of illegally printed paper money, the use of gold in the Bible and even foreign entanglements, former Congressman Ron Paul urged Arizona lawmakers Wednesday to let coin collectors and investors escape the state’s capital gains tax.

Paul, a three-time presidential hopeful, told members of the Senate Finance Committee it’s not fair or even legal from his perspective for the government to take its share when someone who bought a coin at $300 later sells it for $1,200.

He said the value of the coin really remains the same. It’s the value of that paper money — money he contends is “fraud” — that’s gone down.

Paul’s testimony helped buttress similar claims by Rep. Mark Finchem, R-Oro Valley, who already has ushered the tax break in HB 2014 through the House. The result was the Senate panel giving its OK on a 4-3 party-line vote and sending it to the full Senate.

But the real hurdle remains Republican Gov. Doug Ducey who vetoed similar measures in 2015 and again last year saying he feared the unintended consequences of such a change in tax law.

This story, filed from Phoenix, was posted on the Internet site yesterday sometime — and it showed up on the Internet site late on Wednesday evening.  Another link to it is here.

Indian Gold Imports Said to Almost Triple on Wedding Demand

Gold imports by India, which competes with China for the role of world’s biggest consumer, are said to have risen almost three-fold in February from a year earlier as jewelers increased stockpiles before the festival and wedding period that starts next month.

Shipments jumped 175 percent to 96.4 metric tons in February from a year earlier, according to a person familiar with provisional data from the finance ministry, who asked not to be identified as the data aren’t public. Overseas purchases slid 32 percent to 595.5 tons in the 11 months to February. Ministry spokesman D. S. Malik declined to comment on the data.

After a lull in demand exacerbated by Prime Minister Narendra Modi’s move to withdraw high denomination currency notes, jewelers are building up inventories. They expect to see some recovery in purchases ahead of India’s wedding season and on the auspicious Hindu gold-buying day of Akshaya Tritiya that falls toward the end of April this year.

We expect some heavy buying in April as a large number of weddings are expected to take place,” Mehul Choksi, chairman of jewelry store chain Gitanjali Gems Ltd., said by phone from Mumbai. “The wedding season runs from April to July, so we are expecting some recovery in demand.”

This very worthwhile gold-related Bloomberg article showed up on their website at 1:29 a.m. Denver time on their Wednesday morning — and it was updated about ninety minutes later.  I found this story embedded in a GATA dispatch yesterday — and another link to it is here.

The Path to $10,000 Gold — Jim Rickards

I’m very impressed with the recent gold action because it’s holding its own in the face of an impending rate hike. It’s fallen off a bit, but not dramatically. It tells you there are good fundamentals behind it, independent of the threat of a stronger dollar.

I believe the Fed is preparing to raise into weakness and will have to reverse course in April or May. What happens to gold then? It’s going to go higher again, because the Fed will cheapen the dollar, and that’s very bullish for gold. So I expect gold to take off in the spring and finish the year very strongly. It could challenge $1,300 or $1,400.

Now, as many of my readers know, my long-term forecast is for $10,000 gold. We’re obviously not there now. So how do I arrive at $10,000?

I want to give the basis for that forecast. I never give any forecast without giving the analysis behind it. Anybody can pull a prediction out if a hat. If you don’t have the analysis to back it up I’m not interested.

So let’s go through the math, because there is a solid mathematical basis for $10,000 gold. It’s actually the implied non deflationary price of gold under a gold standard.

Jim has written about all this before, so you’re not going to find much of anything that’s really new in this gold-related article that put in an appearance on the Internet site on Tuesday.  I found it posted in the clear on the Sharps Pixley website late last night Denver time — and another link to it is here.



As I have mentioned in the past, the key question I have in advance of every traditional COMEX silver delivery month (five per year) is what will JPMorgan do – stop, issue or stand aside on that month’s deliveries. Since JP Morgan has been the big COMEX silver delivery stopper for years, I can’t say I was surprised that it has been the big stopper this month as well.

But it isn’t the number of silver contracts or the percentage of total deliveries that JPMorgan has thus far stopped in the March deliveries that causes me to highlight this particular delivery month as the tightest I’ve seen in my decades of observing this data closely. Instead, it is the number of contracts remaining open in the March futures contract that stands out. As of the close of business [on Tuesday], some 2,000 contracts remain open, a number unusually high at this point in the delivery process. Moreover, based upon the number of deliveries assigned to JPM and its client(s) over the past few days, it would appear that JPMorgan and its clients own nearly all of the remaining 2,000 open contracts in March.

For the life of me, I can’t figure out why JPMorgan has allowed itself to have been so completely open about its accumulation of physical silver by way of COMEX futures deliveries. I can understand folks not zeroing in on the bank’s clandestine accumulation of metal via Silver Eagles or share-to-metal conversions from SLV, but taking delivery on the COMEX is the most transparent process of all. That JP Morgan would be so open on this most transparent of delivery methods is mind boggling. Forget the 450+ million ounces of silver JPM has acquired from other sources; the 90+ million oz accumulated on the COMEX is enough for me (or anyone) to call this bank a super crook. What else would you call the dominant physical silver stopper, while it is simultaneously the largest paper short seller?Silver analyst Ted Butler: 08 March 2017

Another day of salami slicing by ‘da boyz’.  They now have gold and silver sitting on their respective 50-day moving averages — and I would suspect that those will be taken out with some authority between now and the Fed/deficit ceiling news next Wednesday afternoon.

Of course, if a certain percentage of the Managed Money traders on the long side decide that they’re not going to sell into this JP Morgan-engineered price decline, then that will change things.  Ted has certainly stated that as a possibility, but the jury is still out on that.

Here are the 6-month charts for all four precious metals, plus copper — and you can see the damage for yourself.  The click to enlarge feature helps a bit on the first four charts.

And while I’m at it, here’s the 6-month chart for WTIC, as it took an enormous hit yesterday as well.

And as I type this paragraph, the London open is less than ten minutes away — and I see that after trading flat for the first two hours or so after the Thursday session began at 6:00 p.m. EST on Wednesday evening in New York, the price began to head lower — and is down $3.60 an ounce at the moment.  It was more or less the same price pattern for silver — and it’s down 5 cents.  Platinum was up about 5 bucks until shortly after 10 a.m. in Shanghai on their Thursday morning — and was then sold back below unchanged by noon over there — and that’s where it still sits.  Palladium traded flat until 11 a.m. China Standard time — and then was sold down three bucks or so — and then got hit hard again about twenty minutes or so before the Zurich open — and it’s down 8 dollars.

Net HFT gold volume is pretty heavy already at 44,000 contracts, but with new lows already set for this move down, I guess one shouldn’t be too surprised by this number.  The same can be said of silver’s volume, as it’s sitting at just under 11,000 contracts.

The dollar index has been chopping very unevenly higher ever since trading began in New York yesterday evening — and appeared to get ‘saved’ around 3 p.m. China Standard Time.  It’s currently up 4 basis points — and off its current high [such as it is] by a bit, as London opens.

This silver delivery issue in March is now a very big deal.  As Ted pointed out, there are still about 2,000 contracts left open in March — and based on how the delivery system is set up, ninety percent or more of these will be doled out to JP Morgan…either for its own account, or for ‘clients’.  However, last night’s Daily Delivery Report showed that at least 708 of those contracts are now out for delivery on Friday — and I won’t know until tonight’s Daily Delivery Report at 10 p.m. EST, just how many of them end up in the hands of JP Morgan, but the 90 percent mark won’t be off by much.

Ted also pointed out in his column yesterday that JP Morgan went over the 1,500 contract mark by 50 contracts in one silver delivery month last year — and took more than double the 3,000 gold contracts they were allowed in one gold delivery month in 2016, so what you’re seeing here isn’t unprecedented, but it’s still big news.

And as I post today’s column on the website at 4:03 a.m. EST, I note that gold has taken a bit of a drop in the last few minutes now that London trading is about an hour old.  It’s down $4.20 an ounce — and silver is down 6 cents.  Platinum has just turned a bit lower as well — and is down a dollar.  Palladium is still down 8 bucks.

Net HFT gold volume is now up to 50,000 contracts — and that number in silver has risen to 11,800 contracts, which is only up a thousand contracts or so in the last hour.

The dollar index hasn’t done much since the London/Zurich open — and is currently up 1 basis point.

Although it’s been relatively quiet from a price perspective in Far East and early London trading today, I doubt very much that it will last.  Once the noon silver fix is out of the way — and certainly at the COMEX open, I would expect that JP Morgan et al will be back in the saddle setting more new lows, as they continue to slice the precious metal salamis.

I hope I’m wrong about that, but if I had to bet the proverbial ten bucks, that’s how I’d play it.

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


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