New Low Closes Were Set in Gold, Silver and Copper on Monday

09 May 2017 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


After getting smacked downstairs at the 6:00 p.m. EDT open on Sunday evening, the gold price began to rally sharply — and the powers-that-be had to step in a few minutes before 8 a.m. CST on their Monday morning.  Half the gain had vanished by about ninety minutes later — and the price chopped sideways until the morning gold fix was done at 10:30 a.m. BST in London.   Then away it went to the upside — and it took a fair amount of COMEX paper to put that fire out, but they had it under control by around 11:20 a.m. BST.  ‘Da boyz’ went to work at that juncture — and it back to below unchanged by the 1:30 p.m. EDT COMEX close.  It rallied a bit until 3 p.m. in the thinly-traded after-hours market.  It was sold down to its absolute low of the day from there — and that’s where it closed.

But despite all these price shenanigan, the high and low ticks aren’t worth looking up.

Gold was closed in New York yesterday at $1,226.00 spot, down $1.90 from Friday — and a new low close for this move down.  Relatively speaking, net volume wasn’t all that heavy at 162,500 contracts.  Roll-over/switch volume out of June and into future delivery months was pretty heavy.

The price action in silver was similar in most respects, so I’ll just point out that JP Morgan et al sold it down and closed it on its low tick of the day in the thinly-traded after-hours market…just like they did in gold.

The high and low ticks in this precious metal are barely worth looking up, but here they are anyway…$16.455 and $16.23 in the July contract.

Silver was closed on Monday afternoon at $16.20 spot, down 10.5 cents on the day…which was also a new low close for this move down.  Net volume was pretty healthy at 51,000 contracts.

Platinum’s rally in the first two hours of trading on Sunday evening in New York was also trashed, although it did manage to trade in positive territory for most of the Monday session after that.  It finished the day at $917 spot, up 5 bucks from Friday’s close.

The palladium price chopped around unchanged until around the London p.m. gold fix — and after that, it was sold lower, before chopping sideways for the rest of the day.  It closed at $809 spot, down 6 dollars on the day.

The dollar index closed very late on Friday afternoon in New York at 98.57.  It’s 98.51 low tick came a few minutes before 6 p.m. EDT on Sunday evening in New York — and it chopped higher from there in a fairly tight range, with most of the gains of the day coming by 11:30 a.m. in New York.  From there it chopped quietly sideways into the close.  The dollar index closed at 99.14 — and up 57 basis points from Friday.

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

And here’s the 6-month U.S. dollar index chart — and you’re free to read into it whatever you wish, which shouldn’t be a lot.

The gold stocks opened about unchanged — and then sank quietly lower until shortly after the COMEX close.  That’s when the gold price caught a bid — and the shares responded in kind.  And even though the gold price was forced lower and was closed on its low tick of the day, the gold stocks managed a positive close nonetheless — and that’s a big positive.  The HUI finished the Monday session up 0.40 percent.

And even though I don’t have the intraday Silver Sentiment/Silver 7 Index chart from Nick anymore…I still have the closing number, as it finished higher by 0.25 percent.

As you already know, the intraday Silver 7 chart is no longer available, but the long-term charts are.  Here’s what the 10-year Silver 7 graph looked like as of the close of trading yesterday — and as you can tell, we have a ways to go to get back to anywhere near the old highs.  Click to enlarge.

The CME Daily Delivery Report showed that 38 gold and 85 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.  In gold, the two short/issuers were RCG with 22 contracts out of its own account — and ED&F Man Capital Markets with 16 contracts out of its client account.  The only long/stopper worth noting was Macquarie Futures, with 16 contracts for its own account.  In silver, it was ABN Amro issuing 81 contracts — and the other 4 came from RCG.  The largest long/stopper was also ABN Amro with 48 contracts for its client account — and ADM with 24 for its client account as well.  The 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 May fell by 2 contracts, leaving 60 still around, minus the 38 mentioned just above.  Friday’s Daily Delivery Report showed that 15 gold contracts were actually posted for delivery today, so that means that 15-2=13 more gold contracts were added to the May delivery month.  Silver o.i. in May declined by 28 contracts leaving 271 still open, minus the 85 contracts mentioned in the previous paragraph.  Friday’s Daily Delivery Report showed that 99 silver contracts were actually posted for delivery today, so that means that another 99-28=71 silver contracts were added to May deliveries.

So far in May, there have been 4,192 silver contracts issued and stopped.  Plus there has been an additional 934 silver contracts added to the May delivery month so far.  Plus there’s 186 contracts of open interest left — and that doesn’t include the unknown number of contracts that will be added as the delivery month progresses.

There was a small withdrawal from GLD on Monday, as an authorized participant took out 38,063 troy ounces.  Since the gold price was capped on April 17 — and engineered lower by about $65 in the last three weeks, the amount of gold in GLD has increased by about 100,000 troy ounces.

And as of 7:51 p.m. EDT yesterday evening, there were no reported changes in SLV.  Since the silver price was capped on April 17 — and engineered lower by about $2.25 the ounce in the last three weeks, the amount of silver in SLV has increased by about 6.6 million troy ounces which, as Ted Butler pointed out, is obviously short covering by JPMorgan.

Where are the redemptions of the tens of millions of shares in GLD and SLV that have been sold by John Q. Public and the fund managers since the COMEX butchery began three weeks ago?  I would suspect that they ended up in the strongest hands of all.

The folks over at Switzerland’s Zürcher Kantonalbank were right on stick on Monday morning, as they posted the changes to their gold and silver ETFs as of the close of business on Friday, May 5 in double-quick time — and this is what they had to report.  Although their gold ETF declined by a smallish 2,487 troy ounces, their silver ETF added a chunky 392,915 troy ounces.  That’s the first time in many a moon that I’ve seen significantly more silver deposited than gold.  Someone obviously got the silver memo.  Other people have been getting it as well, as you’ll see in the chart below.

There was no sales report from the U.S. Mint once again.

As I mentioned either in my Friday or Saturday columns, I was waiting for the Royal Canadian Mint to post their 2016 Annual Report…which they finally did yesterday.  After reading through it carefully, there was not a word about gold or silver maple leaf sales.  So I fired off an e-mail to Steve Higgins, the Director of Storage and Refining Solutions who I’d had the opportunity to talk with at length in Vancouver in January — and by e-mail since — and this is what I had to say:

e-mail: higgins@mint.ca

Hi Steve,

I saw that the Mint’s 2016 annual report was published on its website yesterday — and nowhere in it did I find any mention of gold or silver maple leaf sales, either for the fourth quarter, or year-to-date for 2016.

All I found that was even remotely related to precious metal sales, was this paragraph on Page 22…

Bullion Products and Services revenues increased 17{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} to $2.3 billion from revised $2.0 billion in 2015. Sales volumes for gross gold bullion products increased 3{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} for the year ended December 31, 2016 when compared to the same period in 2015. The average price of gold also increased 8{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} to an average of 1,250.7 US$ per ounce in 2016 from an average of 1,160.1 US$ per ounce in 2015. The increased volumes and increased prices resulted in higher revenues from gross gold bullion products. Sales volume for gross silver bullion products decreased 4{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} for the year ended December 31, 2016 when compared to record levels during the same period in 2015, however due to a 9{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} increase in average price of silver from 2015, revenues generated from the sale of gross silver bullion products also increased. Sales of gold coins increased 3{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} and sales of silver coins sold decreased 6{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} for the year ended December 31, 2016 when compared to the same period in 2015.

Can you please confirm that the mint is no longer publishing its gold and silver maple leaf sales as separate line items like they’ve always done in the past?

And if this is the case, is there a reason?

From our personal conversation at the Vancouver Investment Conference in Vancouver in January — and from my previous e-mails to you, I’ve attached charts showing U.S. Mint bullion coin sales — and the same for The Perth Mint.  Why is it that the Royal Canadian Mint doesn’t feel the need to publish this data as well?

But if I inadvertently missed this information in the report somehow, I’d be grateful if you would point out which page it’s on.

Thanks in advance for your attention in this matter.

Ed

If/when I get a reply, I’ll post it in its entirety.  But I’m not holding my breath.

There was very little in/out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Friday.  There was 1,699 troy ounces received — and 6,642 shipped out.

It was almost the same in silver, as nothing was received — and only 30,089 troy ounces were shipped out of Scotiabank.

Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday, it was very quiet as well.  Nothing was received — and only 60 kilobars were shipped out of Brink’s, Inc.

Here are two charts that I didn’t have room for in Saturday’s column.   They show the weekly changes in transparent gold and silver holdings in all the known world’s ETFs.   And despite the COMEX slaughter, there’s absolutely no sign that gold and silver are being sold in a panic.  Au contraire — gold holdings are essentially flat — and silver holdings are actually on the rise.  That more or less fits with what’s happening in GLD, SLV and over at Switzerland’s Zürcher Kantonalbank.  Click to enlarge on both charts.

The last chart from Nick Laird was one he passed around in the wee hours of Monday morning — and show March gold imports into China through Hong Kong.  The unofficial number has been out there for a week or so, but here it is officially — and it’s pretty impressive at 111.6 tonnes.  Click to enlarge.

I have a large number of news items/videos/interviews in today’s column — and rather than edit the lot and hold some back until tomorrow, I thought I’d stick all of them in today’s missive — and just let you pick through them as your time permits.


CRITICAL READS

Fed-Up Advertisers Stop Paying More for Smaller U.S. TV Audiences

Thanks to competition from so many new forms of entertainment — Netflix, Facebook, Snapchat — audiences for traditional TV networks, from ESPN to MTV, are declining. In the current TV season, the four major broadcasters have lost 8 percent of their audience. Because of the slumping ratings, advertisers who want to reach a certain amount of eyeballs can’t get what they need from television anymore.

To make up for the shrinking audiences and keep ad sales high, TV networks have kept raising their rates, believing ad buyers will just have to spend more to reach the people they need. TV ratings have dropped 33 percent in the last four years while TV ad prices are up 20 percent during that period, according to Magna, the ad-buying agency owned by Interpublic Group of Cos.

But now, marketers are losing patience with the networks, and ad sales in the $70 billion U.S. TV market are slumping.

Advertisers’ businesses aren’t growing 10 percent, so when you charge 10 percent increases you’re going to scare people away from TV,” said Dave Campanelli, director of national broadcast at Horizon Media, an ad buyer.

This Bloomberg article was posted on their website on Friday afternoon EDT — and I found it in yesterday’s edition of the King Report.  Another link to it is here.


CNN, ABC, CBS and NBC ban Trump 100 Days ad

Setting a chilling precedent against free speech rights, Donald J. Trump for President, Inc. has just learned that now, all of the mainstream media television networks have decided to block the paid placement of a campaign ad that celebrates the achievements of President Trump in his first 100 days in office. The ad was first released on Monday, May 1. Since then, one by one, the mainstream TV networks have blocked the ad from running, including CNN, ABC, CBS, and NBC.

Lara Trump, the wife of Eric Trump and daughter-in-law of President Trump, who serves as a consultant to Donald J. Trump for President, Inc. said: “Apparently, the mainstream media are champions of the First Amendment only when it serves their own political views. Faced with an ad that doesn’t fit their biased narrative, CNN, ABC, CBS, and NBC have now all chosen to block our ad. This is an unprecedented act of censorship in America that should concern every freedom-loving citizen.”

On Thursday night, Lara Trump, defended the ad on Fox News Channel’s “Hannity,” stating, “It’s a great ad and it highlights all the wonderful things that have happened…It’s really disappointing…this is supposed to be a free society. We have freedom of speech. The fact that this ad is not being shown on CNN, on NBC, on CBS, on news networks who have a duty to report to the public the facts…is really, really ridiculous to me. It’s really sad.”

This is beyond petty…it’s childish.  This 3-paragraph article showed up on the washingtonexaminer.com Internet site early on Friday afternoon — and it’s the second story of the day from yesterday’s edition of the King Report.  Another link to it is here.


David Stockman — “Get out of the Stock and Bond Market and Protect Yourself with Gold

The main thing is get out of the markets. These markets are unstable. They’re rigged, and there is no reason to own stock at this point of the game. It is so overvalued. Maybe you can get another two or three percent up, but you are facing another 30{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} or 40{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} down. The risk/reward is horrible. . . . The bond market is one giant bubble because the central banks have been buying all these bonds worldwide. They’ve been buying trillions of dollars’ worth, and they are still buying a trillion dollars’ worth on an annual basis. All that is coming to a halt. The Fed has finally run out of dry powder. They are out of the bond buying business. They are even talking about the initiation of the shrinkage of their balance sheet. That clearly needs to happen . . . . The central banks are finally getting to the end of the road. There isn’t going to be any more money printing, and that is going to leave a giant mess on the doorstep of all the fiscal authorities. It’s going to make the bond market a particularly dangerous place. There is a $100 trillion global bond market, and this is the biggest bond bubble the world has ever seen.”

In closing, Stockman recommended, “Get out of the stock market. Get out of the bond market and buy some gold.”
This 31:22 minute video interview with host Greg Hunter was picked up by Mike Maloney’s website goldsilver.com on Monday — and I thank Jim Gullo for sending it along.  Another link to it is here.


Belly of the Beast — Doug Noland

The problem confronting Beijing – and global policymakers more generally – relates to the old “Austrian” analysis that Bubbles are sustained only by ever-increasing quantities of Credit creation. Inflate a Credit Bubble – with resulting elevated price structures throughout the real economy, asset markets and the financial sphere – and these various inflated price levels become progressively susceptible to any meaningful and sustained slowdown in Credit creation.

There remains this dangerous misconception that economies can simply grow/inflate their way out of debt problems. This is at odds with reality. Especially late in the cycle, liquidity is funneled into inflating asset markets rather than to the real economy (suffering from overcapacity and waning profit opportunities). It becomes easier to make returns in finance than in goods and services. Meanwhile, policy measures to sustain the unstable boom further incentivize leveraging and speculating.

To this point, Chinese officials have “succeeded” in ensuring ever-increasing amounts of Credit. The upshot has been only more outrageous real estate (largely apartment) Bubbles, rapid Credit deterioration and deeper structural maladjustment.

Beijing understands that it has a problem and appears to have a new approach: They’re going to the Belly of the Credit Beast – “shadow banking” and, more specifically, “wealth management products” (WMP). They’re also cracking down on “insurance” companies.

I often refer to a Credit Bubble’s “Terminal Phase.” Systemic risk rises exponentially at the end of the cycle – rapidly escalating quantities of increasingly risky Credit. And contemporary finance is replete with products and vehicles to transform high-risk Credit into perceived safe and liquid (money-like) financial instruments. We saw this dynamic in the U.S. at the late-stage of the mortgage finance Bubble, with “AAA” ABS/MBS, derivatives and the like. In China, frightening amounts of high-risk Credit have been intermediated through a labyrinth of WMP and shadow banking.

I forgot all about Doug’s Credit Bubble Bulletin until sometime on Saturday morning, so here it is now — and another link to it is here.


When Might the Pillaging End? — Jeff Thomas

Recently, I published the comment that, when the present debt bubble eventually pops, “governments will lose the economic power to continue their advance against economic freedom.”

The immediate reaction from one reader was, “What could we expect next?… The governments and Deep State aren’t going to ‘just go away.’

An excellent question—one which deserves an answer.

We won’t need a crystal ball to find the answer; we can look at history. After all, this isn’t the first time a government has engaged in overreach. In fact, it’s the norm. Political leaders tend to expand countries if they can, then build them into empires, becoming increasingly oppressive along the way, then causing the collapse of the empire—generally through welfare and warfare.

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


Sauron Rules in Washington — Paul Craig Roberts

The problem is that the world has listened to Americans for far too bloody long.” — Dr. Julian Osborne, from the 2000 film version of Nevil Shute’s 1957 book, On the Beach

A reader asked why neoconservatives push toward nuclear war when there can be no winners. If all die, what is the point?

The answer is that the neoconservatives believe that the U.S. can win at minimum and perhaps zero damage.

Their insane plan is as follows: Washington will ring Russia and China with anti-ballistic missile bases in order to provide a shield against a retaliatory strike from Russia and China. Moreover, these U.S. anti-ABM bases also can deploy nuclear attack missiles unknown to Russia and China, thus reducing the warning time to five minutes, leaving Washington’s victims little or no time in which to make a decision.

The neoconservatives think that Washington’s first strike will so badly damage the Russian and Chinese retaliatory capabilities that both governments will surrender rather than launch a response. The Russian and Chinese leaderships would conclude that their diminished forces leave little chance that many of their ICBMs will be able to get past Washington’s ABM shield, leaving the U.S. largely intact. A feeble retaliation by Russia and China would simply invite a second wave U.S. nuclear attack that would obliterate Russian and Chinese cities, killing millions and leaving both countries in ruins.

In short, the American warmongers are betting that the Russian and Chinese leaderships would submit rather than risk total destruction.

As I stated in the last paragraph of my Saturday column…”please do not underestimate the psychopathic personality types that now control the levers of power in Washington…and the Pentagon.”  This commentary from Paul, which is certainly worth reading, put in an appearance on the strategic-culture.org Internet site on Saturday.  The first reader through the door with this was ‘aurora’ — and another link to it is here.


Destabilizing Venezuela for Regime Change

Washington wants Venezuelan President Nicolas Maduro ousted, social democratic Bolivarian governance abolished, unrestrained predatory capitalism replacing it, Washington getting control over the country’s huge oil reserves, along with gaining another imperial trophy.

Economic war and weeks of street violence were made in the USA, perhaps ahead of tougher Trump administration efforts to forcibly remove Maduro.

Days earlier, bipartisan destabilizing Senate legislation was introduced (S. 1018) on the phony pretext of “provid(ing) humanitarian assistance for the Venezuelan people…defend(ing) democratic governance, and combat(ing) widespread public corruption…

On May 3, the bill was referred to committee, before sending it to House and Senate members for rubber-stamp passage, followed by Trump signing it into law.

The measure includes tougher sanctions and concerns about state oil company PDVSA’s dealings with Russia’s Rosneft. It calls Maduro’s government a threat to U.S. national security.

This news item appeared on the rense.com Internet site on Sunday — and it comes courtesy of Roy Stephens.  Another link to it is here.  In related news, this story headlined “U.S. National Security adviser, Venezuela opposition leader discuss Venezuela“.  It was posted on the presstv.ir Internet site at 1:36 a.m. in Tehran on Sunday morning — and it’s from Roy Stephens as well.


Puerto Ricans Face “Sacrifice Everywhere” on an Insolvent Island

Angel González, a retired schoolteacher facing a 10 percent cut to his pension, is beginning to wonder whether his three-person household will have to cut back to one cellphone and take turns using it.

Santiago Domenech, a general contractor with $2 million of his savings tied up in bonds Puerto Rico just defaulted on, once had 450 employees. Now he has eight. His father-in-law, Alfredo Torres, owns Puerto Rico’s oldest bookstore, but it has been going downhill for two years.

The government is bankrupt,” said Bernardo Rivera, 75, a private bus driver who sometimes earns only $40 all day. “Everyone is bankrupt. There is nothing left. People who do not have jobs do not take the bus to work.”

These are some of the voices of Puerto Rico’s business owners, retirees and public servants who are caught in the middle — they would say the bottom — of the largest local government insolvency in United States history. Faced with a $123 billion debt it cannot pay, Puerto Rico filed for a kind of bankruptcy protection on Wednesday, a move that sent shivers down the spines of everyone from bond holders fearful of staggering losses to street sweepers and public employees whose already meager paychecks are likely to dwindle.

This loooong, but very interesting essay, filed from San Juan, was posted on The New York Times website on Sunday — and i thank Patricia Caulfield for bringing it to our attention.  Another link to it is here.


Marc Faber: Canada needs to diversify away from trade dependence on U.S.

Marc Faber, editor & publisher at the “Gloom, Boom & Doom Report” joins BNN to discuss why the Canada needs to diversify its trade policy away from the U.S. and its economy is “looking very tired.”

This 7:00 minute video interview covers a lot of territory besides Canada — and is worth your while if you have the interest.  It appeared on the bnn.ca Internet site at 12:30 p.m. EDT on Monday afternoon — and it comes courtesy of Ken Hurt.


U.K. retailers report weak sales growth in April — survey

British retailers reported only weak growth in sales over the Easter holidays, a survey showed on Friday, adding to signs that consumer spending is losing steam as Britain gears up for a national election next month.

Retail sales in the five weeks to the end of April were 1.9 percent higher than the same period in 2016 on a like-for-like basis that excludes new store openings, accountants BDO said.

BDO said this was weaker than it had expected, despite marking the fastest growth since September 2015, as it had expected more of a rebound from April 2016’s 6.1 percent slump.

Easter – which usually gives a boost to sales – fell in April this year, unlike in 2016.

With Easter falling later, retailers would have been expecting a boost in sales in April, so these poor results will be clearly disappointing,” Sophie Michael, head of retail and wholesale at BDO, said.

This news item showed up on on the uk.reuters.com Internet site at 7:40 a.m. BST on their Friday morning — and it’s the third and final story that I ‘borrowed’ from yesterday’s edition of the King Report.  Another link to it is here.


Fascist Ukrainian regime bans Victory Day and Immortal Regiment

In two days, on the 9th of May, Russians throughout the world and others who commemorate the defeat of fascism in 1945 will celebrate Victory Day.

However, Victory Day has been effectively banned in Ukraine, a former Soviet Republic that once celebrated on the 9th of May along with Russia, Armenia, Belarus, Serbia and others.  Now though, Ukraine has effectively banned the wearing of the black and orange Ribbon of St. George the internationally recognised symbol of Victory Day.

Ukraine also plans to arrest members of the Immortal Regime, a silent march of citizens holding photos of loved ones who fought in the Great Patriotic War (Second World War).

The Ukrainian authorities who banned Victory Day as a holiday shortly after the illegal coup of 2014 are now set to arrest individuals who commemorate the day at private and local memorials to veterans of the most deadly war in human history.

The increasingly foolish Ukrainian regime has further said that the Ribbon of St. George is a communist symbol. This is a total lie. The Ribbon was first introduced to Russia in 1769, long before Karl Marx was even born. It has become a symbol deeply associated with the victory over fascism only in post-Soviet times.

This article was posted on the duran.com Internet site on Sunday morning EDT — and I thank Roy Stephens for pointing it out.  Another link to it is here.


Thai central bank chief welcomes proposal to reduce U.S. dollar transactions

Thailand’s central bank chief said Saturday he welcomed moves to wean Southeast Asia off its reliance on the U.S. dollar, as Japanese representatives put forward a bilateral currency swap proposal on the sidelines of the Asian Development Bank’s annual summit.

Japan’s proposed framework, if realized, would allow the 10 members of the Association of Southeast Asian Nations to withdraw up to ¥4 trillion ($40 billion) during times of financial crisis.

Although Bank of Thailand Governor Veerathai Santiprabhob declined to comment on specifics, saying the proposal was still in its preliminary stage and there remained “a lot of discussion that needs to be done,” he said he “very much welcomes initiatives” where “ASEAN countries and the Japanese government are working together to strengthen the region’s financial safety net.

The governor noted that increasing the use of the yen will be beneficial for both Thai and Japanese companies.

This article, filed from Yokohama, appeared on the asia.nikkei.com Internet site at 10:00 a.m. Japan Standard Time on their Sunday morning — and I found it embedded in a GATA dispatch.  Another link to it is here.


Some Chinese Banks Suspend “Interbank Business” As Regulator Demands That Collateral “Actually Exists

While largely a “controlled” tightening, meant to contain China’s out-of-control shadow banking system, the recent gyrations in Chinese capital markets are starting to have a profound impact on local funding, resulting in a collapse in new bond issuance, and according to FT calculations, in April the number of aborted issues rose to 154, up from 94 in March, 32 in February and 31 in January.

As Deutsche Bank added, “local bond markets are practically shut for corporates. In fact, YTD issuance is down 40{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}+ yoy and net issuance has been negative in three out of the first four months this year. A number of issuers are being forced to cancel bond issuances (over RMB100 billion YTD) and there were reports (Bloomberg) of even CDB halting issuance (though subsequently denied). Some AA corporates are now issuing at north of 7{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}.

These signs of mounting stress in China’s $9.3 trillion bond market come less than a month after the country’s banking regulator, Guo Shuqing, was quoted as supporting a campaign to sort out chaotic practices, and threatening to resign if the banking system became “a complete mess”.

Overnight, Deutsche Bank’s China analyst Harsh Agarwal noticed the “gyrations” in the bond market, and compared the current selloff in onshore bonds to the similar episode one year ago, saying “this time, it’s sharper and longer – AAA yield and spreads are almost 200bp and 100bp wider respectively in the past 6 months or so – because of China’s focus away from growth to deleveraging. This is far from over in our view. Every day we see headlines on new regulations trying to control leverage in different parts of the system – WMPs, insurance companies, banks, etc. Having said this, we do believe in China’s ability to make a U-turn quickly if the situation goes beyond control, and see these changes as a long term positive, hence we are not overly worried as of now.

Maybe not as of now, but Agarwal is surely getting more concerned with every incremental negative news out of China, even as the PBOC refuses to inject more liquidity, as it just did moments ago when for the third day in a row, the central bank skipped open market operations.

Meanwhile, confirming that Beijing is clearly concerned about developments behind the scene, potentially culminating in the worst possible case for China’s banking system – a shadow bank run -China Banking Regulatory Commission said in guidelines on banks’ collateral management posted on its website.

This long, but very interesting news item appeared on the Zero Hedge website at 10:06 p.m. EDT on Monday evening.  This article dovetails perfectly with what Doug Noland had to say in his weekly Credit Bubble Bulletin further up.  Another link this ZH story is here.


Alasdair Macleod: China to Price Energy in Gold, Displace Dollar

Economist Alasdair Macleod describes how Russia and China are preparing to price their energy and commodities in gold, effectively putting a halt to U.S. dollar hegemony.

This 26:00 minute audio interview was posted on the youtube.com Internet site on Saturday sometime — and it’s very much worth your while, if you have the time.  I thank Ellen Hoyt for pointing it out.


Bank of Japan “Bought the Dip” Over Half the Time in the Last 4 Years

A year ago, we noted that The Bank of Japan (BoJ) was a Top 10 holder in 90{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} of Japanese stocks. In December, we showed that BoJ was the biggest buyer of Japanese stocks in 2016. And now, as The FT reports, the real “whale” of the Japanese markets is stepping up its buying (up over 70{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} YoY) entering the market on down days more than half the time in the last four years.

As in a casino, The FT‘s Joe Lewis concludes, the whale definition may hinge less on the cash on the table and more on the psychological impact on other gamblers. The BoJ has been at the game long enough for the market to know it reliably buys on weakness.

Of the 1,038 business days between April 2013 and March 2017 there were 449 sessions where the market was down: the BoJ bought on more than half of them. Whale or not, investors are now primed to think they are swimming with one.

So given that we know SNB is extremely active in stock markets, and The BoJ is the Japanese stock market, does anyone realistically doubt The Fed is/has been active?

This 2-chart Zero Hedge article is definitely worth a quick look.  It showed up on their Internet site very late on Friday evening EDT — and I thank Richard Saler for sharing it with us.  Another link to it is here.


LME to introduce gold and silver trading on July 10

London Metal Exchange, a subsidiary of Hong Kong Exchanges and Clearing, will launch gold and silver spot and futures trading in London on July 10 in a bid to capture the increasing demand for trading of precious metals in London, the exchange said today.

The LME gold and silver product will launch at a time when HKEX is planning to introduce gold futures in the third quarter of this year should it secure approval from the Securities and Futures Commission. The trading in the two markets, however, would remain separate, and there will be no cross trading.

The HKEX and the LME gold products would be traded in different markets and different time zone,” said Kate Eded, LME head of precious metals who was speaking at a workshop in Hong Kong on Monday.

The gold and silver contracts to be launched at the LME would be traded in U.S. dollar, which will include spot trading and trading of future contracts with a maturity of up to five years.

This is the first of two stories from the South China Morning Daily.  This one was posted on their Internet site at 7:35 p.m. CST on their Monday evening — and I found it in a GATA dispatch.  Another link to it is here — and the embedded kilobar eye candy is nice!


India’s April gold imports more than double from year ago, GFMS says

India’s gold imports in April more than doubled from a year ago to 75 tonnes on strong demand during a festival that prompts purchases and as jewellers stocked up ahead of a new national sales tax, provisional data from consultancy GFMS showed.

The rise in imports by the world’s second-biggest consumer of the precious metal will likely support global prices that are near their lowest in seven weeks, but could widen the South Asian country’s trade deficit.

Indians in the last week of April celebrated the annual Hindu and Jain holy festival of Akshaya Tritiya, when buying gold is considered auspicious.

Retail demand was good during Akshay Tritiya. Many jewellers were stocking ahead of implementation of GST (Goods and Services Tax) in July,” said Sudheesh Nambiath, a senior analyst at GFMS, a division of Thomson Reuters, said today.

This gold-related Reuters story, filed from Mumbai, showed up on their website at 4:58 p.m. IST [India Standard Time] on their Monday afternoon – and it’s also from the gata.org Internet site.  Another link to it is here.


Hong Kong exchange tries gold futures again, with physical delivery this time

Hong Kong Exchanges and Clearing will undertake in the third quarter its third attempt to launch a gold futures contract after two previous failures, but traders have mixed views on its chances for success.

HKEX, which operates the local stock and futures markets, on Monday will kick off promotional efforts for a range of workshops and seminar for brokers, investors and media as part of its plan to launch two new gold futures contracts – one in US dollars and one in yuan – with physical delivery.

This will be the third attempt by the local bourse to launch a gold futures contract. The exact launch date will be subject to regulatory approval by the Securities and Futures Commission, HKEX said on Friday. It also said its London’s subsidiary London Metal Exchange will launch a gold futures contract in July.

The last attempt by HKEX to launch a gold futures contract was during the financial crisis in October 2008, but it was scrapped in March 2015 after little interest and no turnover at all for the whole of 2014.

…no turnover at all for the whole of 2014.” — Wow!  This gold-related news item appeared on the South China Morning Post at 6:54 p.m. Sunday evening CST — and updated about four hours later.  I found this on the gata.org Internet site — and another link to it is here.


Sprott, Neumeyer explain how too much demand drove junior miner prices down

Interviewed by the SGT Report, Sprott Asset Management founder Eric Sprott and First Majestic Silver CEO Keith Neumeyer discuss the irony of how too much interest in the junior gold mining stock fund GDXJ has prompted heavy selling of junior mining shares and driven their prices down.

They are also asked about the suppression of gold and silver prices by the creation of seemingly infinite amounts of contracts for metal that doesn’t exist.

Well, dear reader, they didn’t spend enough time discussing the price management scheme to suit me — and I suspect that had to do with the quality of the questions being asked.  But, having said that, this 32-minute audio/video interview that was posted on the sgtreport.com Internet site is definitely worth your while — and it’s another item I found embedded in a GATA dispatch yesterday.  Another link to this interview is here.


Netherlands marks ducat coin anniversary with one-year type

The Netherlands is marking the 200th anniversary of the current gold ducat with a special issue featuring the coin’s original design, introduced in 1817.

To mark the milestone, the Royal Dutch Mint has issued the single ducat for 2017 with the design of the thin, armored knight that was used from 1817 until 1986, and with the dual dates of 1817 and 2017. A companion double ducat features the design in use since 1986, and is dated 2017.

The first gold ducat with the legendary standing knight was struck in Holland under the United Provinces in 1586. The first double ducat came from the province of Friesland in 1612. The Dutch Kingdom continued the practice.

The gold single ducat and its companion coin, the gold double ducat, both bear a Proof finish and are only available for pre-sale until the end of May. Sales will then close and the mintage will be restricted to the number of orders received.

This gold-related story was something I found on thecoinworld.com Internet site yesterday evening — and another link to it is here.


The PHOTOS and the FUNNIES

Today’s ‘critter’ is the wild turkey, very common in its home range in the U.S…but almost wiped out in Canada by the end of WW2.  It was reintroduced just north of my home town of Glenboro in Manitoba back in the 1950s, plus in a few other spots in the prairies as well.  I never saw one in the flesh in Canada until more than fifty years later — and now the place is lousy with them.  I have had to come to a stop on a highway once, as they weren’t inclined to move too quickly.  The first one I ever saw in the wild was actually on the Big Island of Hawai’i if you can believe it.  Click to enlarge.


The WRAP

The data indicate that JP Morgan has been working overtime to take care of business and it has been remarkably successful in doing so. Just three weeks ago the silver market structure was extremely bearish, the most bearish it had been in history. Today, JP Morgan is in its best position ever for a silver price moonshot. Perhaps the crooks at JP Morgan and the CME Group can manipulate silver prices even lower to reduce JPM’s paper short position even more, but it seems like we are at the point of picking up nickels and dimes in front of a steamroller in waiting out the eventual silver price explosion.

And make no mistake, this mostly concerns silver, with gold and other commodities playing a secondary role. I only detect JP Morgan’s massive presence in silver. If the bank holds significant physical long or paper short positions in other commodities, it doesn’t show up in the data I monitor – at least, nowhere near as clearly as it shows up in silver.

At some point — and hopefully very soon, JP Morgan will likely morph from being the great silver price suppressor to the great silver price booster.  Remarkably, JPM has already accomplished the hard part – coming to buy and own 500 million net silver oz (600 million physical oz minus 100 million oz of paper shorts) over the past six years. All it has to do to cause the price to rocket higher and benefit itself more than anyone else is, quite literally, nothing. JP Morgan not adding to paper short positions on the next rally will allow silver prices to float and soar higher without limitation. And even though JPMorgan has always added to silver short positions in the past, considering just how advantageous a big rally would be to the bank at this time, the only sane bet is that JPM will let silver fly.” — Silver analyst Ted Butler: 06 May 2017


Although the price action in the precious metals was on the quiet side on Monday, it’s important to point out that new low closes for this move down were set in both gold and silver…plus copper, yesterday.  So it was another day of salami slicing in those three and, without doubt, the Managed Money traders were pitching what few longs they had left, plus going short in a big way as well.  I would also bet serious coin that the non-technical longs were adding to their positions in all three of these metals as well, particularly in silver.  However, that won’t be known for sure…and by how much…until Friday’s COT Report shows up.

Here are the usual 6-month charts, so you can see this for yourself.  The ‘click to enlarge‘ feature helps with the first four graphs.

And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price rallied a couple of dollars until around 8 a.m. in Shanghai on their Tuesday morning.  Then at 1 p.m. CST, it certainly appeared that ‘da boyz’ showed up — and by 2:20 p.m. over there, had the gold price down on the day by a few dollars — and that, of course, is a new low for this move down.  It has bounced right back since — and is up $1.40 the ounce at the moment.  The price pattern in silver was almost identical, but the HFT boyz tagged silver for about 15 cents at the same 2:20 CST time.  It has bounced back hard since — and is back to unchanged currently.  Platinum traded a dollar or so below unchanged until the same time…1 p.m. China Standard Time…and by 2:20 p.m. CST, it was down 8 bucks on the day — and has only gained back a couple of dollars since.  Palladium mostly followed in sympathy with platinum — and it’s down 2 dollars at the moment.

Net HFT gold volume is approaching 38,000 contracts already — and that number in silver is pretty beefy at just over 12,500 contracts.

The dollar index traded almost ruler flat until about 2:05 p.m. CST — and began to rally at that point — and is up 9 whole basis points as London opens.  Not much of a fig leaf to hide behind as JPMorgan et al did the dirty…but they don’t need to explain their actions to anyone…fig leaf or not.

Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report — and if the powers-that-be continue to pound away at gold and silver for the rest of the Tuesday session, this report will be a sight to see, as all of Monday and virtually all of today’s price/volume activity will be in it.

As to how much lower they can get the precious metals to go, depends entirely [as Ted Butler keeps saying] on how many more long contracts JP Morgan et al can get the Managed Money and other traders to puke up on one hand — and on the other, how many contracts can they get them to go short at the same time.  Once there are no more long contracts that are willing to be sold, or new short contracts willing to be put on…the lows for this move down will be in.  Nothing else matters.

And as I post today’s column on the website at 4:03 a.m. EDT, I see that gold has been turned a bit lower during the first hour of trading in London — and is up only 40 cents at the moment.  Silver has been chopping sideways — and is up a penny currently.  Platinum is now only down 2 dollars — and palladium is back to unchanged.

Net HFT gold volume is approaching 49,000 contracts — and that number in silver is a bit over 15,000 contracts.

The dollar index has been sliding a bit lower during the first hour of London and Zurich trading — and is currently up only 6 basis points.

Place your bets as to what may or may not happen during the rest of the Tuesday session.  But if the smack-downs in the thinly traded Far East market are any indication, I’m sure that ‘da boyz’ will be active in New York as soon as COMEX trading begins, if not sooner.  So be prepared for anything.

That’s all I have for today, which is way too much — and I’ll see you here tomorrow.

Ed