Jim Rickards: The Golden Conspiracy

26 May 2017 — Friday


The gold price really didn’t do much in the Far East trading session on their Thursday.  There was a down/up dip of a few dollars between the New York open at 6:00 p.m. EDT on Wednesday evening — and 11 a.m. CST in Shanghai.  It began to head gently lower starting at 2 p.m. China Standard Time, which was about fifteen minutes before the afternoon gold fix in Shanghai — and that trading pattern continued up until around 2:15 p.m. in the thinly-traded after-hours market in new York.  The price didn’t do much after that.  There were three tiny rally attempts yesterday, with the first one starting around the noon silver fix in London — and all were turned lower before they got too far.

The high and low ticks certainly aren’t worth looking up.

Gold finished the Thursday session at $1,255.40 spot, down $3.20 from Wednesday.  Net volume was very much on the lighter side for a change at just over 120,000 contracts — and roll-over/switch volume out of June was, not surprisingly, very heavy.

In most respects, the price pattern in silver was similar to what happened in gold, although there was a noticeable rally between the noon silver fix and the London p.m. gold fix.  Then, like gold, it was sold lower until around 2:30 p.m. EDT in the thinly-traded after-hours market.  It traded flat from there into the close.

Like for gold, the high and low ticks aren’t worth the effort.

Silver finished the trading day in New York at $17.115 spot, down 10.5 cents from Wednesday’s close.  Net volume was very much on the lighter side as well…relatively speaking, that is…at just over 48,000 contracts.

Platinum traded flat, to down a dollar or so — and that last until at, or just before, the noon silver fix in London.  The rally that developed at that point got capped and turned lower starting shortly before 12 o’clock noon in New York.  By the 5:00 p.m. EDT close, ‘da boyz’ had taken back all those gains, plus more, as platinum was closed at $946 spot, down 3 dollars on the day.

Palladium traded about five dollars or so either side of unchanged all through the Thursday trading session, with most of the COMEX trading in positive territory.  Palladium finished the day at $770 spot, up 6 bucks from Wednesday’s close.

The dollar index closed very late on Wednesday afternoon at 97.09 — and began to head lower almost the moment that trading began in New York on Wednesday evening.  By 11 a.m. CST on their Thursday morning it was down to the 96.90 mark — and it traded flat until 2 p.m. when a weak rally took it back above the 97.00 mark briefly by the London open an hour later.  That crashed and burned by around 9:25 a.m. BST…but the rally that began ten minutes later had some more help behind it by the look of it.  It made it up almost to the 97.18 mark before running out of gas — and it traded mostly within a ten basis point price range for the rest of the Thursday session.  The index closed at 97.23 — and up 14 basis points on the day.

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

The gold stocks gapped down about two percent at the open — and then chopped quietly lower until minutes after 2 p.m. in New York trading.  They caught a bid at that point — and rallied sharply until 3:30 p.m. EDT.  At that juncture it appeared like the day trader types sold their positions for the day — and the HUI slid a bit into the close, finishing the Thursday session down 1.25 percent.

The silver equities opened down a bit — and chopped lower until around 12:15 p.m. EDT.  They began to chop rather erratically higher from there — and then suffered the same fate as the gold shares at 3:30 p.m. in New York trading.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down only 0.50 percent.  Click to enlarge if necessary.

And here’s the 6-month chart of the Silver Sentiment/Silver 7 Index — and the click to enlarge feature works wonders here as well.

The CME Daily Delivery Report showed that 1 gold and 21 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.  ADM [out of its client account] was the short/issuer for all the contracts in both gold and silver — and in silver, the two biggest long/stoppers were Morgan Stanley with 13 — and Citigroup with 7 — both for their respective client accounts.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Thursday trading session showed that gold open interest in May fell by 7 contracts, leaving 23 still open, minus the 1 contract mentioned just above.  Wednesday’s Daily Delivery Report showed that 4 gold contracts were actually posted for delivery today, so that means that 7-4=3 contract holders in gold exited the May delivery month without either issuing or stopping any gold.  Silver o.i. in May declined by 24 contracts, leaving 41 still around, minus the 21 contracts mentioned in the previous paragraph.  Wednesday’s Daily Delivery Report stated that 11 silver contracts were actually posted for delivery today, so that means that 24-11=13 contract holders in silver exited the May delivery month without actually delivering or receiving physical metal.

There were no reported changes in either GLD or SLV yesterday.

There was a sales report from the U.S. Mint.  They sold 1,000 troy ounces of gold eagles — and 150,000 silver eagles — but no gold buffaloes.

There was very little activity in gold over at the COMEX-approved gold depositories on the U.S. east coast on Wednesday.  Nothing was reported received — and only 7,298.050 troy ounces/227 kilobars [U.K./U.S. kilobar weight] were shipped out.   218 were shipped out of Canada’s Scotiabank — and 9 left the depository over at Manfra, Tordella & Brookes, Inc.  I won’t bother linking this amount.

In silver, there was 377,950 troy ounces received — and 63,548 troy ounces shipped out.  The 377,950 troy ounces received went into HSBC USA — and that was a transfer of the same amount out of CNT on Tuesday.  And except for 2,997 troy ounces shipped out of Delaware, the rest…60,551 troy ounces… came out of Scotiabank.  The link to that activity is here.

It was a pretty big day at the gold kilobar depository at Brink’s Inc. in Hong Kong on their Wednesday, as 3,000 kilobars were reported received, plus an eye-watering 18,107 kilobars were shipped out the door for parts unknown.  That’s the biggest one-day withdrawal that I can remember in the now 4-year history of that H.K. kilobar depository.  The link to that action is here.

I only have a handful of stories for you today — and I hope there’s at least one or two in the list below that you’ll find worthy of your time.


Jim Rickards: “The time to prepare is now

The key to bubble analysis is to look at what’s causing the bubble. If you get the hidden dynamics right, your ability to collect huge profits or avoid losses is greatly improved.

Based on data going back to the 1929 crash, this current bubble looks like a particular kind that can produce large, sudden losses for investors.

The market right now is especially susceptible to a sharp correction, or worse.

Before diving into the best way to play the current bubble dynamics to your advantage, let’s look at the evidence for whether a bubble exists in the first place…

This commentary from Jim was posted on thecrux.com Internet site, but it doesn’t bear a dateline.  However, I know it’s recent, because I read it on The Daily Reckoning website the other day.  I thank Kathmandu reader Nitin Agrawal for pointing it out — and another link to it is here.

How Can a Company Give Away Their Product and Be Worth Billions? — Dennis Miller

In 2016, Facebook (FB) earned over $10 billion, while seemingly giving away their product. FB’s sales averaged almost 50{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} growth over the last 5 years. The current stock price tops $150/share – the market values the company in excess of $425 billion. That’s pretty heavy lifting for a company that went public just five years ago.

Tech stocks mentality

Investors look for tech companies to continually invent new products. Apple did that with the Mac, iPhone and iPad, leading the world into a new dimension of technology.

Apple is a very profitable company. In the last year their stock price hit a low of $89.47 and is now approaching $150, giving Apple a Market Cap around $800 billion.

Companies like Apple are continually trying to develop new products and current product improvements to stay ahead of the competition. When they are able to innovate ahead of the competition they are well rewarded.

This commentary by Dennis showed up on his Internet site yesterday — and another link to it is here.

Do This Before the U.S. Blacklists Your AmEx — Nick Giambruno

There’s an important card missing from your wallet…

Like many people around the world, you likely use a credit or debit card from Visa, MasterCard, or American Express. These are private companies. But ultimately, they have to do what the US government wants.

That means your ability to use these cards—or for your business to accept them—depends on the U.S. government’s blessing. If it wants to sanction or blacklist you, it can easily pressure MasterCard (or whomever) to cut you off.

This gives Uncle Sam tremendous leverage to pressure people and businesses alike. It’s a political weapon. And the U.S. is not shy about using it.

This very worthwhile commentary by Nick appeared on the internationalman.com Internet site on Tuesday — and another link to it is here.

The next financial crisis could be in forex

For centuries, cross-border trade has come with a currency problem. The expansion of globalisation has not made it any less pressing. The dilemma identified by the economist Robert Triffin is a powerful – and alarmingly current – reminder that a worldwide foreign exchange crisis is only one big mood change away.

The Scottish philosopher and economist David Hume identified the fundamental issue in 1752. While the sum of global exports always equals global imports, countries can run persistent trade deficits. In Hume’s time, the deficit country shipped gold to pay for overseas goods. Today, creditors have to accept large quantities of deficit countries’ currency.

Hume thought the free market would correct these imbalances, through what we now call currency devaluations. Exports would rise, imports would fall, and the gold would return. But it turns out that the economic patterns which lead to trade deficits are remarkably stubborn. They persist as long as importers can find a way to pay for their lifestyles.

When the gold runs out or the lenders finally give up, default is almost unavoidable. Usually, such national financial failures cause only small ripples in the world economy. But that is not always the case. As Triffin pointed out in 1960 the effects would be much more serious if creditors lose faith in the global reserve currency – the unit which is readily accepted for trade and commonly used for savings pretty much everywhere.

This opinion piece, filed from London, is definitely worth reading.  It was posted on the Reuters website at 11:34 a.m. EDT on Wednesday.  Jim Rickards has spoken of Triffin’s Dilemma before — and here’s the link to his commentary about it.  That’s why the allure of the SDR is so strong for the world’s central bankers, as it eliminates Triffin’s Dilemma entirely.  Another link to the Reuters article is here — and I thank Richard Saler for sending it along.

Brazil sinks deeper into crisis as its unelected President faces corruption charges

Deepening political and economic crisis in Brazil exposes the folly of last summer’s impeachment of Dilma Rousseff – the country’s democratically elected leader – on obviously concocted charges.

Back on 29th August 2016 I wrote an article for The Duran in which I said that the pending impeachment of Brazilian President Dilma Rousseff was a disaster for Brazil, removing from office a President who for all her mistakes had been democratically elected and was not corrupt, and replacing her with Michel Temer, an appointed President who would inevitably be compromised by the grossly partisan method of his appointment through a flawed impeachment process orchestrated by a corrupt and self-seeking elite.

I also pointed out that the ostensible reason for impeaching Rousseff – that her government had engaged in an illegal budget manoeuvre during Brazil’s recession – would convince no one since it was all too obviously not the real reason for Rousseff’s impeachment but rather an excuse for it, the true reason being the wish of a corrupt right wing elite to remove form office a President who was both left wing and not corrupt.

This longish commentary by Alex Mercouris is certainly worth reading if you have the interest.  It put in an appearance on theduran.com Internet site on Wednesday sometime — and another link to it is here.

Eurasian Economic Transformation Goes Forward — F. William Engdahl

At this juncture it’s clear that the attempt of the Trump Administration and related circles in the U.S. military industrial complex have failed in their prime objective, that of driving a permanent wedge between Russia and China, the two great Eurasian powers capable of peacefully ending the Sole Superpower hegemony of the United States. Some recent examples of seemingly small steps with enormous future economic and geopolitical potential between Russia and China underscore this fact. The Project of the Century, as we can now call the China One Belt One Road infrastructure development–the economic integration on a consensual basis by the nations of Eurasia, outside the domination of NATO countries of the USA and E.U. – is proceeding at an interesting pace in unexpected areas.

1971: America’s Twilight Begins

It’s very essential in my view to appreciate where the post-1944 development of America’s role in the world went seriously wrong. The grandiose project dubbed by Henry Luce in 1941 as the American Century, if I were to pick a date, began its twilight on August 15, 1971.

That was the point in time a 44-year-old Under-Secretary of the Treasury for International Monetary Affairs named Paul Volcker convinced a clueless President Richard Milhous Nixon that the treaty obligations of the 1944 Bretton Woods Treaty on a postwar Gold Exchange Standard should be simply ignored. Volcker rejected the express mandate of the Bretton Woods Treaty which would have seen a devaluation of the dollar in order to rebalance world major currencies. By 1971 the economies of war-ravaged countries such as Japan, Germany and France had rebuilt at a significantly higher level of efficiency than the U.S.

A devaluation of the dollar would have given a major boost to U.S. industrial exports and eased the export of dollar inflation in the world arising from Lyndon Johnson’s huge Vietnam War budget deficits. The de-industrialization of the USA could have thereby been avoided. Wall Street would hear none of that. Their mantra in effect was, “Nothin’ personal, just bizness…” The banks began the destruction of the American industrial base in favor of cheap labor and ultra-high-profit manufacture abroad.

Instead of correcting that at a point it could have had an enormously positive economic effect, Volcker advised Nixon to in effect spit on America’s international treaty obligations and to brazenly dare the world to do something about it. On Volcker’s advice, Nixon simply ripped the treaty in shreds and ended Federal Reserve redemption of dollars held by foreign central banks for U.S. gold reserves. The U.S. dollar overnight was no longer “as good as gold.”

This longish, but must read commentary appeared on the journal-neo.org Internet site on Tuesday — and I thank Roy Stephens for pointing it out.  Another link to it is here.

Russian explorers find ‘swamp’ of Soviet money, all worthless

A group of explorers in Russia have found around a billion roubles in old Soviet money at an abandoned mine, but it’s all completely worthless.

The group from St. Petersburg, who publish a blog on abandoned sites across Russia, came across the money after following rumors that large quantities of cash had been dumped in old missile silos near Moscow after the collapse of the Soviet Union, the Komsomolskaya Pravda news website reports.

After travelling for several hours across rough terrain in Russia’s Vladimir region, they found the mine literally overflowing with cash.

The site contains an estimated one billion roubles (US$18 million or £13.5 million at current exchange rates, or US$33.3 million at the “official” Soviet rate in 1991) in Soviet Union banknotes of various denominations issued between 1961 and 1991, all no longer legal tender in the Russian Federation. The mine had been flooded in recent years, leaving what was essentially a swamp of banknotes bearing the face of Vladimir Lenin, the explorers’ YouTube channel shows.

This news item [in English] was posted on the bbc.com Internet site yesterday.  There’s a 9:53 minute youtube.com video, which is only accessible through the Russian version of the story — and is also linked in this GATA dispatch.  Of course — and not surprisingly, they’re all speaking Russian…but I found some of the background music to be rather familiar!  Another link to all this is here.

China Gold demand favoring Bullion over jewelry during Q1

Analysts with Citi said that growth in demand for gold bars in China has outpaced the increase in jewelry-related consumption.

Demand for gold bars rose 60.2{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} to 101.2 tons in the first quarter, while gold-jewelry demand rose 1.4{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} to 170.9 tons. Zhang Yongtao, deputy chairman of the China Gold Association, was quoted as saying that bullion remains pivotal to Chinese households that accumulate gold via bars, biscuits and coins in light of relatively weak market prices.

Moreover, the backdrop of stagnant economic growth, financial market uncertainties and property policy restrictions all help to boost bullion sales,” Citi added.

“Conversely, gold jewelry demand growth is likely to remain flat this year. Apart from dominant and established jewelry names, the majority of small to mid-tier jewelers expect to see sluggish sales for the remainder of the year. As such, gold sales, including retail and wholesale, should remain flat at 60 billion yuan (US$8.7 billion) in 2017,” Citi noted.

The above four paragraphs are all there is to this brief gold-related news item, filed from Shanghai, that was posted on the scrapregister.com Internet site at 6:59 p.m. CST on their Thursday evening.  I found it on the Sharps Pixley website last night Denver time — and another link to it is here.

Jim Rickards: The Golden Conspiracy

Is there gold price manipulation going on? Absolutely. There’s no question about it. That’s not just an opinion.

There is statistical evidence piling up to make the case, in addition to anecdotal evidence and forensic evidence. The evidence is very clear, in fact.

I’ve spoken to members of Congress. I’ve spoken to people in the intelligence community, in the defense community, very senior people at the IMF. I don’t believe in making strong claims without strong evidence, and the evidence is all there.

I spoke to a PhD statistician who works for one of the biggest hedge funds in the world. I can’t mention the fund’s name but it’s a household name. You’ve probably heard of it. He looked at COMEX (the primary market for gold) opening prices and COMEX closing prices for a 10-year period. He was dumbfounded.

He said it was is the most blatant case of manipulation he’d ever seen. He said if you went into the aftermarket, bought after the close and sold before the opening every day, you would make risk-free profits.  He said statistically that’s impossible unless there’s manipulation occurring.

This absolute must read commentary from Jim put in an appearance on The Daily Reckoning website yesterday — and I found it on the gata.org Internet site very late last night MDT.  Another link to it is here.


Two pairs of Canada geese had merged their broods of chicks…19 in all…and as they trooped past me, how could I resist.  So I didn’t.  The goslings at this age have outlandish sized feet compared to not only their wings, but their body size as well.  So at this stage of their lives, they look somewhat silly.  It’s hard to believe that by the end of of summer, they’ll be virtually indistinguishable from their parents.  These photos were taken almost at the minimum focal length for my 400mm lens — and in the second shot, I didn’t even have to crop it at all, it’s straight out of the camera.  And with the one of the ever-vigilant parents standing close by, this ‘neck and head’ shot was all that would fit in the frame from where I was sitting.  The ‘click to enlarge‘ brings these photos of them up to ‘life size’.


The big (near) surprise in silver in the last reporting week is that the technical funds actually added aggressively to short positions despite an increase in prices because the moving averages weren’t penetrated. Even though that’s what occurred this week as well, the prior reporting week featured a large increase in total open interest, suggesting something unusual was up. This week, total silver open interest is down, so I feel it would be too much to hope for a repeat of last week’s results (although I’d love to be wrong).

It seems to me that even though the key moving averages weren’t penetrated this reporting week, the one dollar increase in price over the past two weeks should have been enough to have persuaded some technical funds to buy back short positions on a loss-limiting basis. In fact, I think there might have been as many as 10,000 contracts of commercial selling and managed money short covering. I would guess that the commercial selling was mostly of the raptor long liquidation variety and I am not expecting that JP Morgan increased its short selling. Nor do I think many managed money longs were added, just shorts bought back.

Even if the silver report indicates an expected deterioration of 10,000 net contracts or so, it’s important to remember that there was an improvement of nearly 80,000 net technical fund contracts over the prior four reporting weeks, so the market structure in silver should still be good to go (for an explosion). The wonder is that here we are, nestled just slightly below the major technical fund buy signal of upward moving average penetration, [along] with a COT setup as good as I can remember.  As The Wall Street Journal points out – it’s increasingly a quant investment world. What it doesn’t point out is that the quants are on the wrong side of COMEX silver in a very big way. Silver analyst Ted Butler: 24 May 2017

Thursday was just “another day off the calendar” as Ted said on the phone yesterday.  But it was obvious that once the afternoon gold fix was done for the day in Shanghai…2:15 p.m. CST/2:15 a.m. EDT on the Kitco charts at the top of this column…that silver and gold prices were very much under the thumb of JP Morgan et al until about an hour after the COMEX close.

And since that’s the case once again, the dojis for both gold and silver in the 6-month charts below, don’t reflect the actual closing prices that occurred at 5:00 p.m. EDT.  Here are these charts for all four precious metals, plus copper, once again.  The ‘click to enlarge‘ feature helps a bit with the first four.

As Ted mentioned in the quote, with silver still being held below its 50 and 200-day moving averages, there’s no reason why the Managed Money traders would be going long at this juncture, as they only act when these moving averages are penetrated to the upside.  Once ‘da boyz’ allow that to happen, we should find out in short order if JP Morgan is prepared to act as short buyer and long seller of last resort on the ensuing rally.

And as I type this paragraph, the London open is less than ten minutes away — and I note that after getting sold down for a couple of hours after the gold market opened at 6:00 p.m. EDT on Thursday evening in New York, the price wandered quietly, but unsteadily higher — and then jumped up a bit about five minutes before the London open.  It’s currently up $4.90 an ounce.  It was the same general price pattern for silver — and it’s up 7 cents.  Ditto for platinum — and it’s up 6 bucks.  The palladium price traded lower until 1 p.m. in Shanghai — and then has rallied sharply since…back above unchanged — and up 2 dollars as the Zurich open looms.

Net HFT gold volume is around 22,500 contracts, which is very light — and roll-over/switch volume is very heavy.  The net HFT volume in silver is pretty decent at just over 9,100 contracts — and there’s no roll-over/switch volume worthy of the name.

The dollar index opened flat at 6:00 p.m. in New York yesterday evening, but an hour later took off to its current 97.39 high tick a minute or so before 10 a.m. China Standard Time on their Friday morning. It has been quietly selling off since — and is up only 9 basis points as London opens.

Today we get the new Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday.  I’m certainly in no position to comment on what might be in it, as Ted is the real authority here and, like him, I’m hoping for the outcome that he presented in his quote at the start of The Wrap, which is certainly worth rereading.

And as I post today’s column on the website at 4:02 a.m. EDT, I see that those quick blasts higher in price in all four precious metals were all dealt with in the usual manner by ‘da boyz’ just minutes after the London/Zurich opens.  Gold is up $6.20 an ounce, silver is up 10 cents — and platinum and palladium are up 8 dollars and 2 bucks respectively.

Net HFT gold volume is approaching 35,000 contracts, which is a bit more than a 50 percent increase in net gold volume in just the last hour, so the short buyers and long seller of last resort are obviously very busy.  Roll-over/switch volume is substantial.  Silver’s net volume is just about 13,500 contracts — and roll-over/switch volume out of July is barely fumes and vapours.

The dollar index began to head lower at a much faster rate starting about thirty-five minutes before the London open — and it’s now down 6 basis points.

Since today is Friday — and the last day before all the large traders have to be out of the June COMEX contract in gold…unless they’re standing for delivery…I expect it to be another heavy volume day, with enormous roll-over/switch volume associated it with it as well.  And, like has been happening all week, the roll-over/switch volume out of the July contract in silver has also been pretty beefy, except for today so far.

That’s all I have for this missive.  I’m on the road to Vancouver early this afternoon — and I’ll be writing my Saturday column on my laptop, which is never one of my favourite things to do, so it’s going to be a short as I can make it, as I have other fish to fry while I’m there.

Enjoy your weekend, or what’s left of it if you live just west of the International Date Line — and I’ll see you here tomorrow.