05 February 2019 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
With China closed for their week-long New Year’s holiday, gold was sold quietly lower until 1 p.m. China Standard Time on their Monday afternoon — and it didn’t do much from there until shortly after London opened — and at that juncture it began to crawl quietly lower once again until minutes before 1 p.m. GMT, which was about twenty minutes or so before the COMEX open in New York. From that point it began to edge higher, but under obvious ‘resistance’ — and the high of the day appeared to come at the COMEX close. It was sold a bit lower until the trading day ended at 5:00 p.m. in New York.
The high and low ticks really aren’t worth looking up.
Gold was closed on Monday at $1,311.90 spot, down $5.20 on the day. Net volume was exceedingly light at a bit over 142,500 contracts — and there was a hair under 6,400 contracts of roll-over/switch volume on top of that.
The silver price opened flat in New York at 6:00 p.m. EST — and began to crawl lower staring around 9 a.m. CST and, like gold, began to trade sideways starting at 1 p.m. over there. Also like gold, it was sold lower starting shortly after London opened — and the low tick that mattered came minutes before 1 p.m. GMT…also like for gold. The rally that began at that juncture was capped the moment it hit the unchanged mark — and once London closed for the day, it was quietly sold a nickel lower going into the 1:30 p.m. COMEX close — and didn’t do a thing after that.
The high and low ticks in silver were recorded by the CME Group as $15.93 and $15.685 in the March contract.
Silver was closed in New York yesterday at $15.84 spot, down 3 cents from Friday. Net volume was very light at a bit under 47,500 contracts — but there was a fairly hefty 12,500 contracts worth of roll-over/switch volume in that precious metal, as the countdown for the March delivery month begins.
The platinum price followed a similar pattern as both silver and gold in most respects, except its low came around 8:30 a.m. in New York and, like for silver, the New York high came shortly after the Zurich close. It was sold a few dollars lower after that — and then edged quietly sideways until the market closed at 5:00 p.m. EST. Platinum finished the Monday session in New York at $619 spot, down two dollars from Friday.
Palladium didn’t do much of anything in Far East and most of Zurich trading on their respective Mondays — and it was down a couple of bucks by the COMEX open. Then ten minutes later, there was a vicious down/up spike…which I’m sure only occurred in the spot month…and it rallied sharply from there until the equity markets opened at 9:30 a.m. in New York. It chopped quietly sideways from that point for the rest of the day. Palladium closed at $1,348 spot, up 13 dollars on the day. But, like most trading sessions, would have closed materially higher, if allowed…which it obviously wasn’t for the umpteenth time during this carefully-managed rally.
The dollar index closed very late on Friday afternoon in New York at the 95.58 mark — and opened about unchanged when trading began at 7:45 p.m. EST on Sunday evening. From that juncture, it crept quietly sideways until 10:20 a.m. China Standard Time on their Monday morning — and it began to creep higher from at that juncture. That lasted until about 12:50 p.m. CST — and from there it chopped sideways until a few minutes before 1 p.m. in London…about twenty minutes before the COMEX open. It headed a bit higher at that point — and most of the gains that mattered were in by around 9:10 a.m. in New York. From there it edged very quietly and a bit unsteadily lower until the market closed minutes before 5 p.m. EST. The dollar index finished the Monday session in New York at 95.85…up 27 basis points from Friday’s close.
Here’s the DXY chart courtesy of Bloomberg. Click to enlarge.
And here’s the 6-month U.S. dollar index chart, courtesy of the folks over at stockchart.com — and the delta between its close…95.57…and the close on the DXY chart above, was 28 basis points on Monday. Click to enlarge as well.
The gold stocks gapped down about two percent at the open — and then began to head quietly higher. All the gains that mattered were in by shortly before 11 a.m. in New York trading, but they did manage to tick into positive territory briefly at the 1:30 p.m. EST COMEX close, which was the high for gold in New York yesterday. They they faded back into negative territory by a hair — and didn’t do much after that. The HUI closed down 0.14 percent, so call it unchanged…again!
The silver equities were sold a percent and change lower at the 9:30 open in New York on Monday morning, but were back in positive territory to stay by 10:45 a.m. EST. They didn’t do much of anything after that. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index managed to close up 0.30 percent on the day. Click to enlarge if necessary.
And here’s the 1-year Silver Sentiment/Silver 7 Index chart, courtesy of Nick Laird as well. Click to enlarge.
The CME Daily Delivery Report showed that 319 gold and 106 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.
In gold, there were seven long/stoppers in total — and the only three that mattered were Scotia Capital/Scotiabank with 160 contracts out of its in-house/proprietary trading account — and Advantage and ABN Amro came in second and third, with 76 and 60 contracts out of their respective client accounts. There were seven long/stoppers in total, with JPMorgan being far the biggest with 167 contracts in total…96 for its own account, plus 71 for its client account. Citigroup was second with 86 for its own account — and Morgan Stanley picked up 25 contracts…24 for itself — and 1 for clients.
In silver, the only short/issuer worthy of the name was International F.C. Stone with 101 contracts out of its client account. The three biggest long/stoppers were JPMorgan, Advantage — and HSBC USA. Morgan picked up 44 contracts for its client account — and Advantage took 33 contracts for its client account as well. HSBC USA stopped 12 contracts for its own account.
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 February fell by 2,262 contracts, leaving 1,589 still around, minus the 319 gold contracts mentioned a few paragraphs ago. Monday’s Daily Delivery Report showed that 2,254 gold contracts were actually posted for delivery today, so that means that 2,262-2,254=8 gold contracts vanished from the February delivery month. Silver o.i. in February declined by 29 contracts, leaving 114 still open, minus the 106 contracts mentioned a few paragraphs ago. Monday’s Daily Delivery Report showed that 55 silver contracts were actually posted for delivery today, so that means that 55-29=26 more silver contracts just got added to February.
For the second business day in a row, there was a withdrawal from GLD. This time an authorized participant took out 128,638 troy ounces. There was a small withdrawal from SLV as well…132,297 troy ounces — and a withdrawal of that amount usually indicates that it was a fee payment of some kind.
The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of trading on Friday, February 1 — and this is what they had to report. Their gold ETF added 7,103 troy ounces — but their silver ETF show a decline of a tiny 2,893 troy ounces.
There was no sales report from the U.S. Mint.
There was a bit of activity over in gold over at the COMEX-approved depositories on the U.S. east coast on Friday. The only gold received was 2,000.000 troy ounces at HSBC USA — and an even number amount like that would certainly represent the receipt of 200 ten-ounce gold bars for delivery into the COMEX mini-gold contract sometime towards the end of the February delivery month. Nothing was shipped out. There was some paper activity, as 115,740.000 troy ounces/3,600 kilobars [U.K./U.S. kilobar weight] was transferred from the Eligible category — and into Registered. That certainly is destined for February delivery as well. The link to all this, is here.
There was much more activity in silver, as 796,472 troy ounces was received — and 860,485 troy ounces were shipped out. In the ‘in’ category, there was one truckload…599,993 troy ounces…dropped off at CNT — and the remaining 196,479 troy ounces ended up at Brink’s, Inc. All of the ‘out’ activity was at Brink’s, Inc. as well — and the link to all this, is here.
There was decent activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday. They reported receiving 4,200 of them — and shipped out 201. All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.
Although China/Hong Kong are closed for the New Year’s holiday week, that doesn’t apply to these gold depositories, as if there is a shipment in or out during that time period, it will be reported if it does happen — and it hasn’t happened frequently in the past.
Here are the usual two charts that Nick Laird passes around on the weekend. They show all the gold and silver held in all the know depositories, ETFs and mutual funds as of the close of trading on Friday, February 1. During the reporting week just past, there was 366,000 troy ounces of gold added and, for a change, there was an increase in silver holdings. That amounted to 5.52 million troy ounces — and almost all of that was added to SLV and COMEX stocks. Click to enlarge for both.
I have a very decent number of stories for you today.
Just as generals fight the last war, central banks always fight the last financial crisis. The Global Financial Crisis (GFC) of 2008-09 was primarily one of liquidity as markets froze up as a result of the collapse of the highly leveraged subprime mortgage sector that had commoditized fraud (hat tip to Manoj S.) via liar loans and designed-to-implode mortgage backed securities.
The central bank “solution” to institutionalized, commoditized fraud was to lower interest rates to zero and enable tens of trillions in new debt. As a result, total debt in the U.S. has soared to $70 trillion, roughly 3.5 times GDP, and global debt has skyrocketed from $84 trillion to $250 trillion. Debt in China has blasted from $7 trillion in 2008 to $40 trillion in 2018.
A funny thing happens when you depend on borrowing from the future (debt) to fund growth today: the new debt no longer boosts growth, as the returns on additional debt are increasingly marginal. This leads to what I term debt exhaustion: lenders can no longer find creditworthy borrowers, borrowers either don’t want more debt or can’t afford more debt, and the cost and risk of the additional debt far outweigh the meager gains. Whatever credit is issued is gambled in speculations that the current bubble du jour will continue indefinitely.
Equally unfortunately, propping up asset bubbles and stimulating more debt to chase speculative gambles only increases the fragility of the asset bubbles and the economy that has come to rely on them for “growth”. A useful concept here is debt saturation: just as an absorbent material can only hold so much water, a corporation, household or economy can only support so much debt before servicing the debt reduces income and increases the risk of default.
The global economy is way past the point of maximum debt saturation, and so the next stop is debt exhaustion: a sharp increase in defaults, a rapid decline in demand for more debt, a collapse in asset bubbles that depend on debt and a resulting drop in economic activity, a.k.a. a deep and profound recession that cannot be “fixed” by lowering interest rates or juicing the creation of more debt.
This worthwhile commentary by Charles was posted on his Internet site on Sunday sometime — and I lifted it from a Zero Hedge article that Brad Robertson sent our way. Another link to it is here.
Who Bought the Gigantic $1.5 Trillion of New U.S. Government Debt Issued over the Past 12 Months? — Wolf Richter
Under the impact of a stupendous spending binge peppered with juicy tax cuts, the Treasury Department has had to issue a flood of Treasury securities to fund the cash outflow. So, over the past 12 months, the U.S. gross national debt has ballooned by $1.5 trillion to $22 trillion as of January 30, according to Treasury Department data. And these are the good times when the economy is hopping. At the next recession, this is going to get cute.
But who the heck is buying all this debt? That question will grow increasingly important and worrisome as we move forward with this gigantic ballooning debt, fueled by deficits that Fed chairman Jerome Powell calls “unsustainable” at every chance he gets.
U.S. government debt, as expensive as it is in terms of interest payments for U.S. taxpayers, is a mildly income-producing asset for the creditors of the U.S. Somebody has to buy it, every last dollar of it. The U.S. relies on it. So, who bought this pile of debt that got issued in 12 months? China, Japan, other foreign investors? Nope. They’re gradually unloading this debt.
All foreign investors combined slashed their holdings of marketable Treasury securities in November by $105 billion from November a year earlier, to $6.2 trillion, according to the Treasury Department’s TIC data released today.
This article by Wolf put in an appearance on his website last Thursday sometime — and I thank Richard Saler for bringing it to our attention. Another link to it is here.
The inept and corrupt presidency of Donald Trump has unwittingly triggered the fatal blow to the American empire—the abandonment of the dollar as the world’s principal reserve currency. Nations around the globe, especially in Europe, have lost confidence in the United States to act rationally, much less lead, in issues of international finance, trade, diplomacy and war. These nations are quietly dismantling the seven-decade-old alliance with the United States and building alternative systems of bilateral trade. This reconfiguring of the world’s financial system will be fatal to the American empire, as the historian Alfred McCoy and the economist Michael Hudson have long pointed out. It will trigger an economic death spiral, including high inflation, which will necessitate a massive military contraction overseas and plunge the United States into a prolonged depression. Trump, rather than make America great again, has turned out, unwittingly, to be the empire’s most aggressive gravedigger.
The Trump administration has capriciously sabotaged the global institutions, including NATO, the European Union, the United Nations, the World Bank and the IMF, which provide cover and lend legitimacy to American imperialism and global economic hegemony. The American empire, as McCoy points out, was always a hybrid of past empires. It developed, he writes, “a distinctive form of global governance that incorporated aspects of antecedent empires, ancient and modern. This unique U.S. imperium was Athenian in its ability to forge coalitions among allies; Roman in its reliance on legions that occupied military bases across most of the known world; and British in its aspiration to merge culture, commerce, and alliances into a comprehensive system that covered the globe.”
When George W. Bush unilaterally invaded Iraq, defying with his doctrine of preemptive war international law and dismissing protests from traditional allies, he began the rupture. But Trump has deepened the fissures. The Trump administration’s withdrawal from the 2015 Iranian nuclear agreement, although Iran had abided by the agreement, and demand that European nations also withdraw or endure U.S. sanctions saw European nations defect and establish an alternative monetary exchange system that excludes the United States. Iran no longer accepts the dollar for oil on international markets and has replaced it with the euro, not a small factor in Washington’s deep animus to Tehran. Turkey is also abandoning the dollar. The U.S. demand that Germany and other European states halt the importation of Russian gas likewise saw the Europeans ignore Washington. China and Russia, traditionally antagonistic, are now working in tandem to free themselves from the dollar. Moscow has transferred $100 billion of its reserves into Chinese yuan, Japanese yen and euros. And, as ominously, foreign governments since 2014 are no longer storing their gold reserves in the United States or, as with Germany, removing them from the Federal Reserve. Germany has repatriated its 300 tonnes of gold ingots. The Netherlands repatriated its 100 tonnes.
This commentary/opinion piece by Chris put in an appearance on the truthdig.com Internet site yesterday sometime — and I thank reader Kim Lipscomb for pointing it out. Another link to it is here.
Simon Mikhailovich, lead manager of the Tocqueville Bullion Reserve, stops by Grant’s world headquarters to discuss doing business in the modern administrative state.
This interview is mostly about gold…plus a couple of Pitney Bowes commercials that Jim takes his time reading. The audio interview runs for about 26 minutes — and it showed up on the marketsanity.com Internet site on Sunday sometime. I thank Judy Sturgis for sending it along.
It looks like this could be the moment at which President Trump makes his move in respect of the Federal Reserve. We say that because the chatter we hear is that he’s considering nominating to its board of governors the economist Judy Shelton. The Sun endorses her heartily. It would mark a brilliant start to redeeming his campaign promises in respect of monetary policy and our central bank.
Ms. Shelton is no stranger to readers of Sun editorials — or the editorial page of The Wall Street Journal. She has long since emerged as one of the most articulate, but measured, advocates of the idea that our economic troubles spring in large part, if not exclusively, from the fiat nature of our currency. And that we need to bring back into our political economy the idea of sound money.
We wrote about Ms. Shelton when she delivered at Jackson Hole a speech challenging the notion that the gold standard was “crazy.” And also when, two years ago, she issued in The Wall Street Journal an op-ed piece about how Mr. Trump is right in suggesting that monetary manipulation is a real problem. We called her “The Woodpecker” for the way she has kept hammering away at the issue.
The opening on the Fed board for which Ms. Shelton is apparently being eyed is the one for which Mr. Trump had put up the economist Nellie Liang. That nomination had met resistance (her views on bank regulation were askew of the President’s and Republicans in the Senate); in January, Ms. Liang withdrew. Nothing personal, but Ms. Shelton is a far better fit.
This editorial was posted on The New York Sun website on Monday morning — and I found it in a GATA dispatch. It’s certainly worth reading — and another link to it is here.
I believe it’s safe to say that most all of us sympathise with anyone who’s living in a condition of relative slavery and, if he has the courage to attempt to free himself, we root for him to succeed. Those of us who are the most compassionate would even offer him support in his quest, if we were called upon to do so.
But few of us think about slavery as being a modern institution. We tend to see slaves as victims of a racial divide who suffered disgracefully in times gone by.
So, we should take a look at the definition of slavery. In essence, it’s a state in which the product of an individual’s labour is forcibly taken from him. (His condition may include abuse, bondage, etc., but these are symptoms, not a definition.) The purpose for enslavement is always the same: to obtain the fruits of the slave’s labour, without mutually agreed-upon compensation.
And so, if we look at the bare bones of the definition, we easily recognize that if all of the fruits of our labour are taken from us, we are entirely enslaved. If a portion of those fruits is taken from us, we are partially enslaved.
Taxation is unquestionably, by definition, partial enslavement. It’s safe to say that virtually no one in the present world has ever been asked to sign away to his government the power to tax him. Make no mistake about it – taxation is achieved through force. You don’t wish to pay whatever is demanded? You go to prison.
This very worthwhile commentary from Jeff was posted on the internationalman.com Internet site on Monday morning sometime — and another link to it is here.
Cold War 2.0 has hit South America with a bang – pitting the U.S. and expected minions against the four key pillars of in-progress Eurasia integration: Russia, China, Iran and Turkey.
It’s the oil, stupid. But there’s way more than meets the (oily) eye.
Caracas has committed the ultimate cardinal sin in the eyes of Exceptionalistan; oil trading bypassing the U.S. dollar or U.S.-controlled exchanges.
Remember Iraq. Remember Libya. Yet Iran is also doing it. Turkey is doing it. Russia is – partially – on the way. And China will eventually trade all its energy in petroyuan.
With Venezuela adopting the petro crypto-currency and the sovereign bolivar, already last year the Trump administration had sanctioned Caracas off the international financial system.
No wonder Caracas is supported by China, Russia and Iran. They are the real hardcore troika – not psycho-killer John Bolton’s cartoonish “troika of tyranny” – fighting against the Trump administration’s energy dominance strategy, which consists essentially in aiming at the total lock down of oil trading in petrodollars, forever.
This commentary/opinion piece by Pepe showed up on thesaker.is Internet site on Monday sometime — and I thank U.K. reader Tariq Khan for sending it our way. Another link to it is here.
Rome has effectively derailed an E.U. statement meant to recognize Juan Guaidó as Venezuela’s interim leader if President Nicolas Maduro fails to set up snap elections, a Five Star Movement source confirmed to RT.
Italy announced the veto at an informal meeting of E.U. foreign ministers that started on January 31 in Romania, the source said. The statement, which was supposed to be delivered by E.U. foreign affairs chief Federica Mogherini recognized Guaidó as interim president if snap elections were not held.
We must avoid mistake of Libya: Italian deputy FM speaks out against Venezuela regime change
The European Parliament is the first European body to recognize Guaidó “as the only legitimate interim president of the country until new free, transparent and credible presidential elections can be called in order to restore democracy.”
The parliament urged the E.U. to follow suit but the effort stalled due to internal discord. A range of European nations have separately recognized the opposition chief as Venezuela’s acting president, including the U.K., France, Sweden, Spain, and Austria. The coordinated move came after an eight-day deadline for Maduro to call presidential elections expired on Monday.
The U.S. announced that it is backing the new interim leader and pledged their full support immediately after what has been labeled “a coup” by officials in Caracas. However Russia, China, Turkey and Iran said they see Maduro as the only legitimate leader, warning against meddling in Venezuela’s domestic affairs.
This news item appeared on the rt.com Internet site at 9:31 a.m. Moscow time on their Thursday morning, which was 1:31 a.m. in Washington — EDT plus 8 hours. I thank Brad Robertson for sending this along — and another link to it is here.
The world’s largest pension fund – in the world’s most demographically-challenged nation – suffered a stunning record loss in the last quarter as its Abe-supporting domestic-stock-buying-spree crushed Japan’s Government Pension Investment Fund (GPIF).
Bloomberg reports that GPIF lost 9.1 percent, or ¥14.8 trillion ($136 billion), in the three months ended Dec. 31, it said in Tokyo on Friday. The decline in value and the rate of loss were the steepest based on comparable data back to April 2008. Domestic stocks were the fund’s worst performing investment, followed by foreign equities. Assets fell to 150.7 trillion yen at the end of December from a record ¥165.6 trillion in September.
While global central-bank-liquidity driven gains in global stocks helped the GPIF generate returns for the previous two fiscal years, December’s global rout underscored the risks facing the fund since it revamped strategy in 2014 to accumulate stocks and pare domestic bonds – something they vehemently deny is anything but prudent independent risk-managed behavior.
Bloomberg notes that the GPIF may have little choice but to invest in equities as fixed-income yields, especially those of Japanese government debt, are too low, said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co. in Tokyo.
“It makes sense for the GPIF to hold some risk assets in this environment because yields are low globally and bond investments don’t give good returns,” Fujiwara said. “Yet from a pensioner’s point of view, it takes too much risk on its investments.”
But that won’t stop Abe (and Kuroda) from pushing their nation’s “independent” pension fund administrators to keep buying the dip in domestic stocks…or else.
This article showed up on the Zero Hedge website at 7:40 p.m. on Monday evening EST — and another link to it is here.
For Azerbaijan’s sovereign wealth fund, nothing beats the safety of gold in a world increasingly vulnerable to trade disputes and geopolitical risk.
Known as Sofaz, the fund is looking to almost double its holdings of the precious metal in 2019 to 100 tons after resuming purchases in 2018 following a five-year break. By contrast, it’s steering clear of larger bets on bonds and especially equities, an approach that Executive Director Shahmar Movsumov says allowed the fund to avoid losses last year.
“We would want to have something that is not someone else’s credit risk,” Movsumov said in an interview in the capital, Baku, on Friday. “In a world where you see the changes in geopolitics, changes in reserve currencies, changes in the dynamics between superpowers and their imminent impact on the financial sector, you want to be on the safe side.”
This very interesting gold-related Bloomberg article [complete with a nice photo] appeared on their Internet site at 5:02 a.m. Pacific Standard Time on Sunday — and was updated about seven hours later. It’s another article that I found on the gata.org Internet site — and another link to it is here.
Asahi Holdings, a Tokyo-based precious metal refiner, is expected to emerge as the largest gold and silver refinery in the US following its planned acquisition of Republic Metals, Kunihiko Chogo, company’s general manager for corporate planning and communications told S&P Global Platts Monday.
Asahi won the U.S. court-supervised auction last week to acquire Miami-based Republic Metals and Republic Carbon for $25.5 million. The two firms filed Chapter 11 in November last year.
Republic Metals has a production capacity of 2,500 mt/year of silver and 350 mt/year of gold. Feedstock is mostly primary ore.
Asahi Holdings runs a gold and silver refinery in Utah, and another in Brampton, Canada. Outside of North America, it runs refineries in Japan, South Korea, Taiwan, Malaysia and China for recycling gold, silver, platinum, palladium, and indium from industrial scrap.
This news item, filed from Tokyo, put in an appearance on the spglobal.com Internet site on Monday sometime — and it’s something I found on the Sharps Pixley website. Another link to it is here.
Demand for gold jewelery slumped across the Middle East last year despite the precious metal becoming a popular safe haven investment amid turmoil in Iran and Turkey.
While demand for jewelery was very weak in both Saudi Arabia and the UAE in 2018, it was much worse in Turkey and Iran, where sanctions and tariff-related currency slides ate into people’s purchasing power, according to a report from the World Gold Council. Considered a safe haven investment in times of economic turmoil, overall investment in gold bars and coins doubled in the Middle East last year. But the rise was almost entirely accounted for by Iranians buying gold as sanctions sent the Iranian currency tumbling.
Still the regional investment gold buying frenzy brought little cheer to jewelers around the region — especially in Iran where demand fell by some 35 percent.
Demand for gold jewelery in Turkey sank 21 percent to just 9.1 tons in the fourth quarter, while demand dropped by 32 percent in Iran in the same period.
This gold-related story showed up on the albawaba.com Internet site on Sunday morning at 5:45 a.m. London time — 12:45 a.m. in New York — and it’s another article from the Sharps Pixley website. Another link to it is here.
Despite the opening of a number of new gold refineries in the Middle East and Asia over the past few years, the small European country of Switzerland retains its traditional place as the principal conduit for the movement of gold from West to East. Swiss refineries concentrate on taking in larger gold bars, doré bullion from the world’s mines and scrap gold and converting it to the small sizes and high purities most in demand in Asia and the Middle East.
The latest figures from the Swiss Customs administration highlight the position of the Swiss refineries in terms of global gold flows. In 2018, no less than 1,473 tonnes of gold was refined, or re-refined, in Switzerland- an amount equivalent to a little under half the volume of the total annual new gold supply. Of this amount around 86% was dispatched to Asia and the Middle East with the majority going to China, India and Hong Kong, but with significant amounts also to Thailand, Singapore, Malaysia, the United Arab Emirates and Turkey. Greater China (the Mainland plus Hong Kong) remains the principal recipient by a large margin, followed by India.
This Middle Eastern and Asian demand, particularly the latter is generally assumed to see the gold flowing into stronger hands – in other words less likely to find its way back to the markets. This is particularly so of China, with most of the gold to Hong Kong destined for onward shipment to the Mainland which prohibits gold exports.
As for the December figures the surprise here is that Hong Kong regained its position as the principal destination for Swiss gold exports – but as we noted above most of the gold imported by Hong Kong is destined for the Chinese Mainland anyway. In this context imports by Greater China remain far in excess of those into India – the other major global gold consumer.
This brief 2-chart commentary from Lawrie was posted on the Sharps Pixley website yesterday — and another link to it is here.
China is key to world gold supply and demand as both the world’s largest consumer of the metal and the world’s largest producer. What should be encouraging for gold followers is that last year, according to the China Gold Association, demand rose by around 5.7% to 1,151 tonnes, despite a slowdown in the growth of the Chinese economy. Meanwhile the country’s gold production fell by around 6% to a fraction over 401 tonnes which means that China remains the biggest contributor to any possible plateauing, or falling off, in global gold output (peak gold).
Chinese gold consumption figures are always tough to correlate, and always seem to fall short of apparent known gold imports from countries/regions which announce detailed gold export statistics like Switzerland, Hong Kong, the UK, the USA and Australia plus the nation’s own production, plus an allowance for scrap and unknown imports from counties which do not provide breakdowns of their gold trade figures, We thus tend to utilise Shanghai Gold Exchange (SGE) gold withdrawal figures as a proxy for the country’s overall demand and these came to a little over 2,000 tonnes in 2018, marginally higher than in 2017.
Assuming the SGE gold withdrawals total is accurate as a proxy for real Chinese demand there is thus a considerable gap of around 900 tonnes between the assessed demand as put forward by the China Gold Association and an annually calculated figure for Chinese gold inflows. This balance could be going into the coffers of the commercial banking system, or perhaps into unreported holdings by the Chinese central bank/government! Given that the Chinese commercial banks are state-owned this could actually be one and the same thing!
Also, because China prohibits gold exports, what goes into China stays there and emphasises the ever-continuing flow of gold from West to East.
This gold-related commentary from Lawrie put in an appearance on the Sharps Pixley website on Saturday — and another link to it is here.
The largest diamond ever found in North America at 552 carats was on display at Phillips auction house in New York on Wednesday.
The egg-sized fancy yellow diamond was discovered in October at the Diavik Diamond Mine in the Northwest Territories.
The mine is about 300 kilometres northeast of Yellowknife.
Dominion Diamond Mines and Rio Tinto Group unearthed the diamond, which is currently ranked 25th on the list of the world’s largest rough diamonds.
James Pounds, executive vice-president of Dominion Diamond Mines said the diamond’s value is unclear because it still needs to be cut and polished.
This news item, with a neat photo, showed up on the cbc.ca Internet site back on January 30th — and it comes to us courtesy of Swedish reader Patrik Ekdahl. Another link to it is here.
The PHOTOS and the FUNNIES
Today’s two photos are from The Guardian — and are courtesy of Patricia Caulfield.
The first picture was taken by Ingo Gerlach — and is captioned: “Cheetahs marking their territory in the grasslands of Masai Mara, Kenya.” Click to enlarge.
This second photo is by Anton Sorokin — and is captioned: “A yellow-eyed Ensatina, which is only found in the Bay area of California. It is a subspecies of the western salamander.” Click to enlarge.
It was interesting to note that all four precious metals were rallying a bit on Monday morning in New York at the same time as the dollar index was rising smartly as well. That certainly isn’t something we’ve seen too much of lately — and I’m also impressed by the way the precious metal equities are performing.
However, volumes in both gold and silver were very quiet on Monday, so yesterday’s price action both up and down, should be viewed in that light.
But I’m not going to get too jiggy about all this, as the potential for engineered price declines in both silver and gold are still strong possibilities if the commercial traders…with or without JPMorgan’s help…pull it off. The set-up in the COMEX futures market is neutral to bearish, at least in my opinion. However, we’re not going to know the true picture for many weeks yet.
I was must admit that with precious metals down in Far East and early morning trading in London, I was expecting the worst when I checked the charts yesterday morning — and was more than pleasantly surprised that my fears were unfounded…so far. That’s especially gratifying considering the fact that China is shut tight all week for their New Year’s celebration — and ‘da boyz’ in both London and New York [who are all the same, by the way] have the precious metal market to themselves.
But the week is still young.
Here are the 6-month charts for all four precious metals, plus copper and WTIC — and like the charts on Friday, there’s not a lot to see. Click to enlarge for all six.
And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price was up a couple of bucks by 11 a.m. China Standard Time on their Tuesday morning — and then traded sideways until shortly after 2 p.m. CST. It has been edging quietly lower since — and is currently up only 60 cents the ounce. It was the same for silver — and it’s only up a penny at the moment. Platinum and palladium haven’t done much in Far East trading, with the former up a dollar — and the latter by 2 as Zurich opens.
Net HFT gold volume is exceptionally quiet at a bit over 16,500 contracts — and there’s only a tiny 193 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is incredibly quiet as well, at a bit over 5,400 contracts — and there’s 746 contract worth of roll-over/switch volume on top of that. Based on all of this, I wouldn’t be inclined to read too much into the current price action.
The dollar index opened down a couple of basis points the moment that trading began in New York at 7:45 a.m. EST on Monday evening. It chopped quietly sideways from there until shortly after 3 p.m. CST on their Tuesday afternoon — and then it shot above unchanged by a bit starting at that point — and it’s up 3 basis points as of 7:45 a.m. GMT in London.
Today, at 1:30 p.m. EST, we get the next in the series of twice-weekly COT Reports until we’re caught up. This report today should be for positions held at the close of COMEX trading on Friday, December 28. But whatever time period it’s for, my comments on it in tomorrow’s column are going to be ever so brief — and similar in flavour to the ones I posted in Saturday’s column in reference to the COT Report for the period ending December 24.
And as I post today’s column on the website at 4:02 a.m. EST this morning, I see that the gold continues to inch lower — and is now down a dime. Silver is back at unchanged. Platinum is still up a dollar — and palladium is now up 6.
Gross gold volume is still fumes and vapours at around 22,000 contracts — and net of what little roll-over/switch volume there is, net HFT gold volume is 21,500 contracts. Net HFT silver volume is a bit over 7,000 contracts — and there’s 773 contracts worth of roll-over/switch volume in that precious metal.
The dollar index is up another handful of basis points…up 11 as of 8:45 a.m. GMT in London/9:45 a.m. CET in Zurich.
That’s all I have for today, which is more than enough — and I’ll see you here tomorrow.