The “Plunge Protection Team” at Battle Stations on the Fed News

25 May 2017 — Thursday


The gold price didn’t do much until shortly before 2 p.m. China Standard Time on their Tuesday afternoon — and at that point it hit a bit of an air pocket going into the 2:15 p.m. afternoon gold fix in Shanghai.  From there it crept quietly and unsteadily higher, before another tiny sell-off occurred just before noon in New York.  It began to rally anew — and equally as quietly as before.  There was a bit of jiggle [with enormous volume] at the 2:00 p.m. EDT release of the Fed minutes — and it continued to inch higher in price right until trading ended at 5:00 p.m. in New York.

The low and high ticks, like on Tuesday, are barely worth looking up — and were recorded as $1,247.60 and $1,258.80 in the June contact.

Gold finished the Wednesday session in New York at $1,258.60 spot, up $7.90 from Tuesday’s close.  Net volume was very heavy once again at just under 186,000 contracts.  There was respectable roll-over/switch volume out of June as well.

Here’s the 5-minute tick charts from Brad — and I’m only including it because I want you to note the enormous volume spikes that came at — and just after — the Fed news at 12:00 p.m. Denver time on this chart.  The gold price tried to blast higher, but wasn’t allowed to — and it took a lot of volume over a fairly long time period to get it back in the box.  Volume never retreated back to background after that.

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

After struggling higher by a few pennies in the first two hour and change of trading starting at 6:00 p.m. EDT in New York on Tuesday evening, the silver price was sold unevenly lower into the afternoon gold fix in Shanghai.  Then, like gold, the silver price began to chop slowly but unevenly higher through the rest of the Tuesday session in both London and New York.  There was a little price jiggle [with big volume] on the Fed news at 2 p.m. EDT…but from there, the price continued to rally quietly right into the close.

The low and high ticks were reported by the CME Group as $16.895 and $17.23 in the July contract.

Gold finished the Wednesday session on its high tick of $17.215 spot, up 16.5 cents on the day.  Net volume was pretty heavy once again at 74,000 contracts.

Here’s the 5-minute silver tick chart courtesy of Brad Robertson.  There was spotty volume in Far East and early London trading, but it began to get more serious once the silver fix was in at noon BST, which was 05:00 a.m. Denver time on the chart below.  Volume was pretty steady as well, except when ‘da boyz’ showed up on the Fed news to put the silver fire out.  Silver’s volumes didn’t fall back to background until around 13:30 p.m. MDT, which was 3:30 p.m. EDT.

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

Platinum was sold generally lower into the afternoon gold fix in Shanghai…2:15 p.m. CST…just like silver.  Then, mostly like silver as well, it edged quietly higher for the rest of the Tuesday session — and the two somewhat vigorous rally attempts during the COMEX trading session got turned aside in the usual fashion by ‘da boyz.  Platinum also closed on its high tick of the day…such as it was…at $949 spot, up a whole 5 dollars from Tuesday.

Palladium was down about 4 bucks by the afternoon gold fix in Shanghai on their Tuesday afternoon — and was only down 2 dollars by the time the COMEX open rolled around.  The algos got spun, the spoofing began — and down went the price.  The low price tick of the day was printed just minutes after the equity market opened in New York — and it chopped higher in a fairly wide range from that point into the 5:00 p.m. EDT close.  Palladium finished the day at $764 spot, down 8 bucks.

The dollar index closed very late on Tuesday afternoon in New York at 97.34 — and then chopped and flopped around 10 basis points either side of that number until the 97.47 high tick was set just a few minutes before noon in New York.  It headed lower from there — and would have crashed and burned on the Fed news, if it had not been for the usual ‘gentle hands’ that appeared at that juncture.  Once the algos got the index stabilized, it continued to slide from there — and the 97.03 low tick was set just minutes before 5 p.m. EDT, which was shortly before trading ceased for the day.  The dollar index closed at 97.09…down 25 basis points from Tuesday, but would have obviously closed materially lower if allowed to trade freely.

Here’s the 6-month U.S. dollar index chart — and most of Tuesday’s gains vanished after yesterday’s decline.  But in actual fact, the index would have closed many hundreds of basis points lower if allowed.  That’s why this chart is always posted for entertainment purposes only.

The are no markets anymore, only interventions.” — Chris Powell

The gold stocks opened unchanged — and then rallied to their morning highs just after 10 a.m. in New York trading.  They sold off from there — and down almost 2 percent by minutes before noon EDT.  Then they began to rally quietly higher, complete with the little dos-à-dos on the Fed news. They continued to chug higher from there — and back into positive territory to stay…but closed off their respective high ticks by a bit as the day traders exited stage left.  The HUI closed higher by 1.17 percent.

The silver equities followed an identical path, but Nick Laird’s Intraday Silver Sentiment/Silver 7 Index only finished the Tuesday session up 0.92 percent.  Click to enlarge if necessary.

And here’s the 6-month Silver Sentiment/Silver 7 Index so you can see how things are unfolding in the longer term…Click to enlarge as well.

The CME Daily Delivery Report showed that 4 gold and 11 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.  The May delivery month in silver is rapidly coming at an end.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Wednesday trading session showed that gold open interest in May rose by 3 contracts, leaving 30 still around, minus the 4 mentioned just above.  Tuesday’s Daily Delivery Report showed that 3 gold contracts were actually posted for delivery today, so that means that another 3+3=6 gold contracts were added to the May delivery month.  Silver o.i. in May declined by 6 contracts, leaving 65 left, minus the 11 mentioned in the previous paragraph.  Tuesday’s Daily Delivery Report showed that 8 silver contracts were actually posted for delivery today, so that means that another 8-6=2 silver contracts were added to the May delivery month.

There were no reported changes in GLD yesterday, but there was a decent withdrawal from SLV, as an authorized participant…most likely JP Morgan…took out 1,892,424 troy ounces.  Based on the price action during the last week, I’m going to make the assumption the this was a conversion of shares for physical metal by JPM, as the recent price activity certainly doesn’t warrant a withdrawal of any size, let alone this one.  But if Ted thinks otherwise in his weekly review on Saturday, his opinion on this should be considered definitive.

The folks over at the Internet site updated their website with the current short positions in both SLV and GLD as of the close of trading on June 15 — and this is what they had to report.  The short position in SLV went from 13.92 million shares/troy ounces, down to 13.48 million shares/troy ounces, a decline of only 3.14 percent.  And after all the millions of ounce of silver deposited since the beginning of May, I must admit that I was expecting a much bigger drop than this.  The short position in GLD fell from 917,160 troy ounces, down to 808,690 troy ounces, which was a decline of 11.83 percent.

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

There was some gold movement for a change over at the COMEX-approved depositories on the U.S. east coast on their Tuesday.  The only ‘in’ activity was 64,300.000 troy ounce/2,000 kilobars [U.K./U.S. kilobar weight] received at Canada’s Scotiabank…plus they shipped out 6,430.000 troy ounces/200 kilobars as well.  The other ‘out’ activity was 192.900 troy ounces/6 kilobars [U.K./U.S. kilobar weight] shipped from Manfra, Tordella & Brookes, Inc.  The link to that activity is here.

It was a pretty busy day in silver, as 1,218,993 troy ounces were reported received — and 377,950 troy ounces were shipped out.  A container of silver…599,359 troy ounces…was dropped off at Scotiabank — and JP Morgan picked up a container as  well…619,634 troy ounces.   All of the ‘out ‘ activity was at CNT.  The link to that is here.

It was a very busy day at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.  There was 11,312 kilobars received — and another 4,093 shipped out.  All of that action was at Brink’s, Inc. — and the link to that is here.

I have an average number of stories for you today — and I hope you’ll find a few that you feel are worth your time.


Markit’s U.S. Flash PMI ‘Still Looks Somewhat Underwhelming

Research firm Markit released a bunch of economic data points Friday morning, which point to slowing manufacturing growth and healthy services growth.

Here’s the key findings:

  • Flash U.S. Composite Output Index at 53.9 (53.2 in April). 3-month high.
  • Flash U.S. Services Business Activity Index at 54.0 (53.1 in April). 4-month high.
  • Flash U.S. Manufacturing PMI at 52.5 (52.8 in April). 8-month low.
  • Flash U.S. Manufacturing Output Index at 53.3 (53.5 in April), 8-month low.

According to Markit, a 53.9 composite index equates to a 1.5{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} annualized rate of growth.

This brief article was posted on the Internet site at 10:24 a.m. on Tuesday morning — and it’s something I found in yesterday’s edition of the King Report.  Another link to it is here.

Crispin Odey: “Why Do I Remain Stubbornly Bearish?

It was over half a year ago that many predicted, this site included, that Crispin Odey’s double down, all in bet on central bank failure would be his “make it or break it” swan song, which if incorrect would also lead to the shuttering of his hedge fund. Well, rumors of Odey’s demise appear to have been greatly exaggerated again, because despite being down 9.9{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} YTD and down 31.1{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} LTM in his Odey Mac fund, not only is Crispin Odey still around, but he is bearish as ever, as he explains in his latest April letter to clients.

Manager’s Report

This last quarter saw the first synchronised upturn in global economic growth for three years. Stock markets also, in profits terms, had the wind behind them because 1Q 2017 was being compared to 1Q 2016 when the world looked like it was falling apart. Ever since central banks pushed credit through the system a year ago, with China leading the way, asset prices, commodity prices and eventually consumer confidence have lifted up towards the sky.

    So why do I remain stubbornly bearish?

        Firstly because what got the developed world into its crisis in 2008 was “large widespread borrowing by individuals who could not repay their debts” and now what has got us out of our crisis, is luckily, “large widespread borrowing by individuals who could not repay their debts.”

        In 1942 when Hitler’s Germany was at the gates of Kiev as well as Moscow, and Britain was on its own just surviving, Todt, Hitler’s Minister of Supply, startled Hitler by saying that the German war effort would stall. For his prescience he disappeared a week later when his plane fell to earth unexpectedly. But what he could see was that the lines of supply were at breaking point. Success was the necessary ingredient of failure.

        The U.S. economy is now operating above its operating capacity. Free capacity in the workforce is less than 3 months of growth. This is why Yellen and the Fed are keen to raise rates in June. The UK already has a gross savings rate of 6{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} against a necessary investment rate of 11{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} of GNP. Such a shortfall should call for higher interest rates to encourage savings to grow but no. With the Bank of England’s encouragement, consumer debt is rising at 8{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} per annum whilst wages are only rising by 2{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}. How long this madness? Japan will start in the second half of this year to eat its savings – whether sushi or tempura – as spending is financed by asset sales.

This commentary, which I consider worth reading, appeared on the Zero Hedge website at 6:00 p.m. on Wednesday evening EDT — and I thank Richard Saler for pointing it out.  Another link to it is here.

Fire Burn — and Cauldron Bubble” For Trump — Eric Margolis

`Double, double toil and trouble; Fire burn and cauldron bubble.’ The witches in Macbeth.

President Trump’s administration is now at a high boil as he faces intense heat from all sides. The Republican Party has backed away from their embattled president. U.S. intelligence agencies are baying for his blood. The U.S. media plays the role of the witches in ‘Macbeth’ as it plots against Trump.

One increasingly hears whispers about impeachment or the wonderful 1964 film about a military coup in Washington, ‘Seven Days in May.’

As in Shakespeare’s King Lear, Trump stands almost alone on a blasted heath, howling that he has been betrayed. The world watches on in dismay and shock.

Trump has made this huge mess and must now live with it. Yes, he is being treated unfairly by appointment of a special prosecutor when the titanic sleaze of the Clintons was never investigated. But that’s what happens when you are widely detested. No mercy for Trump, a man without any mercy for others.

This opinion piece put in an appearance on Eric’s website on Saturday — and I thank Kathmandu reader Nitin Agrawal for sending it along.  Another link to it is here.

Truth Has Become Un-American — Paul Craig Roberts

Those of us who have exited The Matrix are concerned that there are no checks on Washington’s use of nuclear weapons in the interest of US hegemony over the world.

Washington and Israel are the threats to peace. Washington demands world hegemony, and Israel demands hegemony in the Middle East.

There are two countries that stand in the way of Washington’s world hegemony—Russia and China. Consequently, Washington has plans for preemptive nuclear strikes against both countries. It is difficult to imagine a more serious threat to mankind, and there is no awareness or acknowledgment of this threat among the Congress, the presstitute media, and the general public in the United States and Washington’s European vassal populations.

Two countries and a part of a third stand in the way of Greater Israel. Israel wants the water resources of southern Lebanon, but cannot get them, despite twice sending in the Israeli Army, because of the Lebanese Hezbollah militia, which is supplied by Syria and Iran. This is why Syria and Iran are on Washington’s hit list. Washington serves the military/security complex, Wall Street and the over-sized US banks, and Israel.

It is unclear if the Russians and Chinese understand that Washington’s hostility toward them is not just some sort of misunderstanding that diplomacy can work out.

This right-on-the-money must read commentary by Paul showed up on his website on Tuesday — and I lifted it from a Zero Hedge article that Brad Robertson sent out way.  Another link to it is here.

All Heck/Hell Breaks Loose in Toronto’s House Price Bubble

It’s fear.

During the first two weeks in May, according to preliminary data from Toronto Real Estate Board, home listings surged 47{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} from the same period last year even as sales plunged 16{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}. The average selling price dropped 3.3{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} from April – and this, after a 33{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} year-over-year spike in home prices in March and a 25{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} surge in April. Something is happening to Toronto’s blistering house price bubble.

We are seeing people who paid those crazy prices over the last few months walking away from their deposits,” Carissa Turnbull, a Royal LePage broker in the Toronto suburb of Oakville, told Bloomberg. She said they didn’t get a single visitor to an open house over the weekend. “They don’t want to close anymore.

Definitely a perception change occurred from Home Capital,” Shubha Dasgupta, owner of Toronto-based mortgage brokerage Capital Lending Centre, told Bloomberg.

In less than one week we went from having 40 or 50 people coming to an open house to now, when you are lucky to get five people,” Case Feenstra, an agent at Royal LePage Real Estate Services Loretta Phinney in Mississauga, Ontario, told Bloomberg. “Everyone went into hibernation.”

Having spent 27 years in residential real estate here in Edmonton, I recognize the precursors.  The Toronto and area housing bubble is in the process of imploding.  Lower sales, soaring listings, deposit walk-aways, plus little to no traffic at open houses are all the signs I need to see.  Look out below!  This must read news item…if you’re a Canadian, that is…appeared on the Internet site yesterday — and it comes courtesy of Roy Stephens.  Another link to it is here.

For the First Time Ever, European Equities Yield More Than Junk Bonds

Last week, when looking at the the distortion and absurdity unleashed by the ECB’s asset purchase program upon European capital markets, we showed the unprecedented collapse in European junk bond yields as captured by the effective yield of the BofA/ML Euro High Yield Index, which is now trading just shy of all time lows, having dropped below 3{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} at the end of April, and printed at 2.79{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} on May 23, within bps of record lows, roughly 50 bps wider than where the the US 10Y is trading at this moment, and inside the 30Y US Treasury. Assuming a 1.9{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} European CPI (as of April), this means that the real rate of return on Europe’s junk yields is now 0.89{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}.  But we digress.

So why does European junk debt trade with seemingly no more risk than the world’s most risk-free security? Simple: expectations that the ECB will keep buying it, and so far it has. In fact, yesterday DB’s Jim Reid reported that according to “the latest ECB CSPP numbers were out yesterday and I was surprised to see the average daily corporate purchases at €401mn last week, notably above the average daily run rate of €365mn since the program started. So back in April and early May it looked like a broadly equal CSPP/PSPP split but last week’s numbers gives us the possibility that CSPP hasn’t been tapered as much after all.”

So much for the ECB tapering… and incidentally as of May 19, the ECB owned €86.9 billion in European corporate bonds, up €2 billion from the prior week, and lifting the number of securities held by the central bank to 924. Putting it in context, as of this weekend, the ECB held 13.4{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} of the entire €649.12BN in European corporate bonds outstanding.

In light of this, is BofA’s recommendation to short junk? Of course not: it would be sheer insanity to step in front of the relentless ECB juggernaut which continues to push yield chasers into the last remaining pockets of yield. Instead, he believes that even credit investors should start migrating to stocks – the last remaining bastion of yield in Europe. To wit:

Equity markets offer more attractive dividend yield, also exhibiting positive convexity on the earnings cycle…. While remaining constructive for high yield credit, as it offers better cushion to rising rates vs its IG counterpart, we think that European equities present a better upside opportunity. On a macro level investors could express this theme being long European stocks, while selling iBoxx € HY TRS as a RelVal trade, to reach “higher” yield.

Think about that for a second: the ECB has forced credit strategists to advise their credit-fund employed clients to buy stocks.

This longish and somewhat involved chart-filled commentary was posted on the Zero Hedge website at 9:36 a.m. EDT yesterday morning — and it’s the second offering in a row from Richard Saler.  Another link to it is here.

Draghi’s Lieutenants Spar as ECB Braces for Exit Strategy Debate

Mario Draghi’s right-hand man and left-hand man may have some differences to sort out.

Peter Praet and Benoit Coeure, arguably the two most influential members of the European Central Bank after the president, have struck contrasting tones about how to communicate the institution’s intentions.

Both are wary of how markets will react to the ECB’s first step toward unwinding stimulus, but while Praet advocates caution and maintaining the easing bias enshrined in current guidance, Coeure has warned that moving too slowly could eventually lead to a bigger shock.

The differences are subtle but, as Draghi works to build a consensus ahead of the June 8 policy meeting, they go to the heart of the debate over unwinding a program that has dominated the euro area for years. Get it right and the currency bloc would make a smooth transition to normality; get it wrong and the market tumult would push that goal ever further into the future.

This Bloomberg article showed up on their Internet site at 10:00 p.m. Denver time on Tuesday night –and it’s the third and final contribution of the day from Richard Saler.  Another link to it is here.

Following Trump’s visit to Saudi Arabia and Israel, Iran has no option but to look to China and Russia

U.S. President Trump’s visit to Saudi Arabia, his agreement to supply Saudi Arabia with $300 billion worth of U.S. arms, his implacably hostile rhetoric towards Iran, and the openly expressed intentions of Saudi Arabia’s de facto ruler Deputy Crown Prince Mohammed bin Salman to launch a pre-emptive war against Iran, clarify policy options for Iran’s leadership and people.

It is now clear that the option of a rapprochement between Iran and the West does not exist whilst Iran remains an Islamic Republic.

Instead the U.S. sees or pretends to see an existential threat from Iran towards Israel and – bizarrely – towards itself, and has sided decisively against Iran with Iran’s enemies, Saudi Arabia and Israel.

Prince Mohammed bin Salman has moreover said that there is nothing the Iranians can ever say or do which will make him change his attitude of implacable hostility towards them.

This story from Alex Mercouris…which is a must read, especially if you’re a serious student of the New Great Game… was posted on Internet site on Tuesday sometime –and another link to it is here.

Thousands flee Philippine city after rebel rampage claimed by Islamic State

Thousands of civilians fled fighting in the Philippines on Wednesday as troops tried to fend off Islamist militants who took over large parts of a city, capturing Christians, seizing and torching buildings and setting free scores of prisoners.

Islamic State claimed responsibility for the rampage via its Amaq news agency, and President Rodrigo Duterte defended his decision to declare martial law on Mindanao, the Muslim-majority island where Marawi City is located, to prevent the spread of extremism in the impoverished region.

The violence flared in Marawi on Tuesday afternoon after a botched raid by security forces on a hideout of the Maute, a militant group that has pledged allegiance to Islamic State.

Fighters quickly dispersed, torching buildings and taking over bridges, a hospital, two jails, a church and a college. Duterte said he heard reports they may have beheaded a police chief.

He said Islamic State must be repelled from the Christian-majority Philippines and he would use all means possible to crush the Maute group and the allied Abu Sayyaf, whatever the consequences.

This Reuters news story, filed from Pantar in the Philippines, showed up on their Internet site at 1:23 p.m. on Wednesday afternoon EDT — and I thank Brad Robertson for finding it for us on Zero Hedge.  Another link to it is here.

China “National Team” Rescues Stocks as Downgrade Crushes Commodities

Iron ore led a slump in industrial commodities after Moody’s Investor Service downgraded China’s credit rating and warned that the country’s debt position will worsen as its economic expansion slows. However, one glance at the divergence between industrial metals’ collapse and the sudden buying panic in Chinese stocks confirms what Asher Edelman noted yesterday about the U.S. markets, China’s so-called “National Team” was clearly intervening…

As Bloomberg reports, Iron ore futures on the Dalian Commodity Exchange fell as much as 5.6 percent to 452 yuan a metric ton, almost by the daily limit, before closing at 455.50 yuan, extending Tuesday’s 3 percent loss. Nickel led a broad slump among base metals, dropping as much as 2.4 percent to $9,125 a ton on the London Metal Exchange. Nickel stockpiles rose the most in more than a year.

In context, the overnight reversal in Chinese stocks is even more obvious…

Moody’s move, downgrading China’s debt to A1 from Aa3, adds to concerns about the effects of a slowdown in the country’s economic growth, following on from downbeat manufacturing readings and weak commodity imports, Simona Gambarini, an analyst at Capital Economics Ltd., said by phone from London. “We’re not particularly concerned about credit growth getting out of hand, but in regards to industrial metals, we have been negative on the outlook for some time on the basis that Chinese growth will slow.

Will The National Team be back tonight?

I see that the Chinese version of the USA’s “Plunge Protection Team” even has its own name.  This short 2-chart story was posted on the Zero Hedge website at 9:00 p.m. EDT yesterday evening — and another link to it is here.

Gold and Silver Bullion Now Treated as Money in Arizona

Undermining the Federal Reserve received a major boost yesterday.

Arizona Governor Doug Ducey signed into law a bill that eliminates capital gains taxes on gold and silver, thus allowing Arizona residents to use precious metals as currency instead of Federal Reserve notes.

Currency competition against the monopolist Fed is starting to unfold. Let’s hope that other states follow in Arizona’s heroic footsteps. There’s no reason to wait for another severe financial crisis to act.

Every supporter of free-markets should cheer Arizona’s passage of HB 2014. There is no more justification for forcing individuals to use government-created money than there is for forcing them to drive government-manufactured cars. In fact, as the Federal Reserve’s 114 years of failure shows, giving monopoly control over our money supply to a secretive central bank is the most dangerous form of government intervention,” said Dr. Ron Paul.

This worthwhile gold-related news story showed up on the Internet site yesterday sometime — and I thank Roy Stephens for digging it up for us.  Another link to it is here.

London’s gold benchmark hit by volatility after banks exit

London’s gold benchmark experienced large, unpredictable fluctuations after some banks left the auction that sets the price relied upon by the $5 trillion-a-year bullion market, according to a Reuters analysis of trading data.

The benchmark is meant to be a fair and accurate daily snapshot of the fast-moving “spot” market and is used by gold producers and consumers around the world to price contracts.

Its level is set by the London Bullion Market Association (LBMA) Gold Price auction, which sees big banks and brokers electronically input their trading orders, with an algorithm matching buyers to sellers and setting the price.

But trading volumes fell sharply after April 10, when four of the 14 participating banks and brokers stopped taking part after the auction’s administrator, Intercontinental Exchange (ICE), introduced a requirement to clear that meant participants had to modify their own IT systems and procedures.

Lower liquidity – which fuels volatility – led to the benchmark diverging more widely from the underlying spot price, according to the analysis of ICE and trading data, leaving gold buyers and sellers around the world with large unexpected gains or losses.

This Reuters article, filed from London, appeared on their website at 1:25 p.m. EDT on Wednesday afternoon — and I found it embedded in a GATA dispatch.  Another link to it is here.

India top importer of Swiss gold for fourth successive month — Lawrie Williams

There’s probably no better indicator of the pick-up this year in Indian gold demand, after a dismal 2016, than the levels of Swiss exports to the world’s second most populous nation.  In April, India was again the principal export destination for Swiss re-refined gold, as it has been every month so far this year.  In the four months of the year so far India has imported no less than 167.2 tonnes of gold from the small European nation’s plethora of top-rated gold refiners.  At this rate India will import around 500 tonnes of gold from Switzerland alone and, historically, it only sources a little under half its reported gold imports from Switzerland – in Q1 this year India reported total gold imports of 249 tonnes, of which 47.7{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e}, or 119.2 tonnes came in from Switzerland.

While as my colleague Julian Phillips notes in a recent post on the early year peak is perhaps already behind us, ahead of the monsoon season, but then gold demand tends to pick up again from September on as the harvest comes in, and ahead of the Dhanteras and Diwali festivals in October and then again with peak wedding season coming in in November and December.  Indian Hindu weddings tend to take place on auspicious dates throughout the year apart from from mid-July to end-October – Chaturmas – a period deemed inauspicious for Hindu weddings.

Julian Phillips thus puts estimated Indian gold demand this year as likely being around 1,000 tonnes plus, although this would likely be boosted by smuggled metal, while the World Gold Council (WGC) put India’s consumer demand last year at 675.5 tonnes.  There may be an element of the jewellery sector restocking ahead of an expected Goods and Services Tax imposition due to come in in mid-year which could reduce second half imports, but regardless it looks as though Indian demand is due for a major pick-up this year which will enhance the yellow metal’s fundamentals.

This commentary by Lawrie, which is certainly worth a look, put in an appearance on the Sharps Pixley website yesterday — and another link to it is here.

Massive Emerald Weighing Over 600 Pounds Found by Miners in Brazil

Workers at a mine in the northeastern Brazilian state of Bahia have discovered an enormous emerald, weighing in at about 600 pounds and standing more than four feet tall.

A spokesman with Brazil’s National Mineral Production Department, Paulo Santana, detailed that the gemstone was discovered in April by miners working for the Bahia Mineral Cooperative, according to a New York Times report.

The enormous gem was sold to a local mine owner, Santana said. The spokesman declined to estimate the uncut precious stone’s current market value.

Brazilian government spokesman Santana added that the gemstone is the second such huge example unearthed in Brazil’s northern mining region of Carnaiba, following the 2001 find of an emerald weighing over 640 pounds that was valued at some $300 million.

The above four paragraphs are about all there is to this tiny story that showed up on the Internet site at 12:35 a.m. Moscow time on their Thursday morning, which was 5:35 p.m. in New York on Wednesday afternoon…EDT plus 7 hours.  It was updated about three hours later — and another link to it is hereThe photo is definitely worth the trip — and I thank ‘aurora’ for passing it around.


Minutes after the magpie photo session I featured yesterday, this drake mallard in full breeding plumage swam by just a few feet off shore — and even though I’ve got more photos of these things than I need, it was all the bird ‘action’ going on at the time, so here it is.  The ‘click to enlarge‘ feature shows the incredible colour patterns in the feathers.  I took the second mallard shot as I was walking around the shore — and I thought three of these things all in a row was worth a picture.  Click to enlarge as well.


If you are not prepared to use force to defend civilization, then be prepared to accept barbarism.” — Thomas Sowell

It was a ‘nothing’ sort of day in gold yesterday.  True, the price rallied a bit in New York, but the big price rally on the Fed news at 2 p.m. EDT was brutally capped in an instant.  It was more or less the same for silver, expect its rally on Wednesday not only started sooner during the Wednesday session, its gains were more impressive…a fact that did not spill over into its respective equities.  And, like in gold, the rally on the Fed news was hammered flat in a minute or so.

As I’ve already pointed out, the Plunge Protection Team was at battle stations in the currency markets as well, as the dollar index graph certainly illustrates.

But they were busy elsewhere, too — and here’s what Bill King of the King Report had to say about it in his column for today, which came out very late last night EDT…

Because the FOMC Minutes from the May 3 meeting loomed, few traders wanted to play.  So, the S&P 500 Index snaked above and below 2400 [6 times] from the opening, until the FOMC minutes appeared.
Stocks dipped on the release of the FOMC Minutes because the Fed indicated that it will hike rates in July.  The Fed called Q1 economic weakness and low March CPI “transitory”, which is now a word that engenders snickers due to Bernanke’s risible overuse of the word to mitigate inflationary economic data.  P.S. – The Fed used “transitory” nine times in the minutes in reference to Q1 economic growth.
We have regularly noted that manipulators love to juice stocks higher after FOMC Minutes are released, provided there are no hawkish surprises.  This is precisely what occurred yesterday.
After the initial dip on the Fed’s reaffirmation of its plan to hike rates, someone decide to aggressively buy SPMs.  This produced a six-handle rally within fifteen minutes.  Because most traders had seen this movie before, SPMs quickly rescinded four-handles of the rally.
However, the manipulators were determined to bust the S&P 500 Index above its all-time high.  So, they poured into SPMs and stocks during the final hour of trading.
It’s been a while, but long-time readers will recall that we occasionally complain that the financial media and confused pundits often try to attribute a fundamental reason for market action that is the result of a trading scheme.  This occurred again yesterday.
The usual suspects, searching desperately for an explanation for the rally after hawkish FOMC Minutes, settled on the rationalization that the market was pleased with the Fed’s plan to reduce its balance sheet.  The alluded-to Fed plan is devoid of details. So, attributing positive benefit to it is wrong.

And to quote GATA’s Chris Powell for a second time in today’s column… “There are no markets anymore, only interventions.

Here are the 6-month charts for all four precious metals, plus copper once again — and, once again, the high closes in all four precious metals are M.I.A. in the Wednesday’s dojis, as they occurred after the 1:30 p.m. COMEX close yesterday.  They’ll appear on Thursday’s dojis later today.  The ‘click to enlarge‘ feature helps a bit with the first four charts.

And as I type this paragraph, the London open is less than ten minutes away — and I see that the gold price traded a dollar or so lower once the market opened in New York at 6:00 p.m. EDT on Wednesday evening — and then didn’t do much of anything in Far East trading on their Thursday.  At the moment it’s down $1.10 cents an ounce.  Silver followed a similar price pattern — and made it a penny or two above unchanged about fifteen minutes before the afternoon gold fix in Shanghai.  It’s back to unchanged at the moment.  Platinum and palladium did even less during Far East trading, with the former down a dollar — and the latter up a buck as the Zurich open looms.  There’s certainly not much happening.

Net HFT gold volume is just over 31,000 contracts — and roll-over/switch volume out of June is getting up there.  Net HFT silver volume is approaching 8,500 contracts — and like what has been happening all week, roll-over/switch volume out of July is fairly substantial.

The dollar index began to head lower almost the moment that trading began in New York yesterday evening — and it’s current 99.89 low tick was set a minute or two before 2 p.m. China Standard Time.  It has rallied a bit since, but is still down 11 basis points as London opens.

It’s obvious that the powers-that-be are not going to let the markets do what they really want to do, at least for the moment.  All things paper want to crash and burn — and all things precious want to blast skyward.  Sooner or later this will happen by design, or otherwise…but it obviously wasn’t yesterday.

And as I post today’s column  on the website at 4:02 a.m. EDT, I note that the gold price hasn’t changed much — and is currently down 90 cents the ounce now that London has been open an hour.  Silver is down 4 cents — and platinum and palladium are down 2 dollars and up 1 dollar respectively.  There’s still not much of anything going on.  It’s very quiet.

Net HFT gold volume is approaching 35,000 contracts, which is only up a few thousand contracts from an hour ago — and silver’s net volume is a hair under 10,000 contracts.  Volume in both precious metals are fumes and vapours currently, so not too much should be read into the current price action.

The dollar index is now a few basis points lower than it was an hour ago — and is down 15 basis points.

And as I said in Wednesday’s missive, with May about to go off the board in five trading days, I’m not about to prognosticate on what may or may not happen in the precious metals, especially after the performance that JPMorgan et al put in on the Fed minutes at 2 p.m.  All we can do is just sit here and see what that the rest of the Thursday session has in store for us.

I’m off to bed.  See you tomorrow.