Another Price Capping Operation on Friday

03 August 2019 — Saturday


There was absolutely no follow-through to Thursday’s gold price rally in Far East trading on their Friday, as ‘da boyz’ began to lean on the price the moment that trading began at 6:00 p.m. EDT in New York on Thursday evening.  That price decline lasted until around noon in Shanghai on their Friday — and it crawled higher until a minute or so before 9 a.m. in London.  It traded pretty flat until the job numbers were released at 8:30 a.m. in Washington.  There was a tiny up/down move at that point — and it began to head higher around 9:30 a.m. EDT.  That rather anemic rally was capped and turned lower a few minutes after 12 o’clock noon in New York — and it crept quietly lower until trading ended at 5:00 p.m. EDT.

Gold traded within a one percent price range on Friday, so I won’t bother with the low and high ticks.

Gold was closed in New York yesterday at $1,440.00 spot, down $5.10 from Thursday.  Net volume in October and December combined was ginormous once again at just under 498,000 contracts — and there was only about 9,700 contracts worth of roll-over/switch volume on top of that.

Silver’s price path was guided in a similar manner to gold’s, so I shan’t bore you with a repeat of the above play-by-play.  The only difference of note was the fact that silver’s low was set around 9 a.m. in New York.

The high and low ticks were reported by the CME Group as $16.385 and $16.03 in the September contract.

Silver was closed on Friday at $16.185 spot, down 11 cents from Thursday.  Net volume was very heavy at a bit under 92,000 contracts — and there was just under 9,300 contracts worth of roll-over/switch volume out of September and into future months.

The platinum price was up 5 dollars by shortly before 9 a.m. China Standard Time on their Friday morning, but was back around the unchanged mark two hours later — and from that juncture it traded flat until the Zurich open.  Price pressure began at that point — and it was bounced off its $840 spot low tick multiple times during early morning trading in New York.  It rallied a bit until around 1 p.m. EDT — and then was sold quietly lower into the 5:00 p.m. close from there.  Platinum was closed at $843 spot, down 8 dollars on the day.

Palladium was up 14 dollars by the Zurich open — and the engineered price decline picked up from where it left off during the Thursday trading session.  The low tick that mattered came at the COMEX open in New York — and although it rallied back above the $1,400 spot mark, it was sold lower [like platinum] starting at 1 p.m. EDT.  From the COMEX close onwards, it traded flat until trading ended at 5:00 p.m. in New York.  Palladium was closed at $1,392 spot, down another 14 dollars from Thursday, but miles off its low tick of the day.

The dollar index closed very late on Thursday afternoon in New York at 98.37 — and opened up 4 basis points points once trading commenced at 7:45 p.m. EDT on Thursday evening, which was 7:45 a.m. CST on their Friday morning.  It proceeded to chop and flop around a few basis points either side of unchanged until about 11:50 a.m. in Shanghai — and at that point it began to head very unevenly lower.  The 98.05 low tick was set at 1 p.m. in New York — and it edged unevenly sideways until trading ended at 5:30 p.m. EDT.  The dollar index finished the Friday session at 98.09…down 28 basis points from Thursday’s close.

It was certainly apparent that JPMorgan et al. weren’t going to allow a falling dollar index interfere with their price engineering in the precious metals yesterday.

Here’s the DXY chart…courtesy of Bloomberg as usual.  Click to enlarge.

And here’s the 5-year U.S. dollar index chart, courtesy of the good folks over at the Internet site.  The delta between its close…97.85…and the close on the DXY chart above, was 24 basis points on Friday.  Click to enlarge as well.

The gold shares were sold a bit lower at the 9:30 open in New York yesterday morning — and their respective lows came minutes after 10 a.m. EDT.  They rallied to their highs by around 10:50 a.m. — and from that juncture the traded very quietly and unevenly lower until the markets closed at 4:00 p.m.  The HUI closed down 0.57 percent.

The silver equities were sold down a bit more than two percent at the 9:30 a.m. open — and never got a sniff of positive territory during the subsequent rally, which also ended at 10:50 a.m. in New York.  They were quietly and unevenly sold lower until their respective lows were set around 1:50 p.m. EDT — and from there, crept very quietly and unevenly higher until the 4:00 p.m. close.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 2.02 percent.   Click to enlarge if necessary.

And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart, updated with Friday’s doji.  Click to enlarge as well.

Here are the usual three charts from Nick that show what’s been happening for the week, month — and year-to-date. The first one shows the changes in gold, silver, platinum and palladium for the past trading week, in both percent and dollar and cents terms, as of their Friday closes in New York — along with the changes in the HUI and the Silver 7 Index.

Here’s the weekly chart — and only gold — and its associated equities, managed to close in the green.  The continuing price pressure in silver is more than obvious.  The engineered price decline in palladium over the last two trading days sticks out like the proverbial sore thumb that it is.  Click to enlarge.

I won’t bother with the month-to-date chart as it’s only two days old.

Here’s the year-to-date chart — and it’s terrific looking, but not as terrific as it was a week ago.  JPMorgan et al.’s near death grip on the silver price is more than obvious in this chart as well.  Click to enlarge.

‘Da boyz’ are still out there going short against all comers — and there are no signs that I can see that they’re about to be overrun, at least not yet.  And as I said in this space last week, it still remains to be seen if JPMorgan et al can pull off another round of engineered price declines in both silver and gold, considering the current financial and monetary environment that they’re facing.  But regardless of that, it appears that the gold and silver equities continue to be in accumulation mode, as it’s pretty much a given that ‘strong hands’ are buying every one of those equities that were being sold this past week.

The CME Daily Delivery Report for Day 4 of August deliveries shows that 495 gold and 66 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

In gold, of the five short/issuers in total, the only one that mattered was ABN Amro with 476 contracts out of its client account.  There were nine long/stoppers in total, with the three largest being Citigroup with 204 contracts for its in-house/proprietary trading account, JPMorgan with 137 for its client account — and Australian’s Macquarie Futures, with 80 contracts for its own account.

In silver, of the three short/issuers in total, the only two that mattered were ABN Amro and Advantage, with 53 and 11 contracts out of their respective client accounts.  There were four long/stoppers…JPMorgan picked up 27…ABN Amro 18…and Advantage with 10 contracts — and all for their respective client accounts.   Macquarie Futures stopped 11 contracts for its own account.

So far this month, there have been 4,289 gold contract issued/reissued and stopped — and that number in silver is already up to the 1,017 contract mark.  That’s quite a bit…with much more to go.

The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Friday trading session showed that gold open interest in August declined by 186 contracts, leaving 3,373 still open, minus the 495 contracts mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report shows that 221 gold contracts were posted for delivery on Monday, so that means that 221-186=35 more gold contracts just got added to the August delivery month.  Silver o.i. in August remained unchanged at 425 contracts, minus the 66 mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 66 silver contracts were actually posted for delivery on Monday, so that means that 66 more silver contracts were added to August and, without doubt, those are the same 66 contracts that are out for delivery on Tuesday.

There was another addition to GLD on Friday, as an authorized participant added 94,314 troy ounces.  There was a tiny withdrawal from SLV, as an a.p. removed 142,027 troy ounces.  A withdrawal of that size usually represents a fee payment of some kind.

In the other silver funds, I noticed that 439,898 troy ounces of silver was added to SIVR yesterday.  And in all the gold ETFs, there was a net 385,000 troy ounces added on Friday, which includes the deposit in GLD mentioned above — and in the last four weeks that number is 2,136,320 troy ounces.

There was a tiny sales report from the U.S. Mint to start off the month.  They sold 500 one-ounce 24K gold buffaloes — and anther 2,000 of those ‘America the Beautiful’ 5-ounce silver coins.

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday was another lone kilobar…32.150 troy ounces…that was shipped out of Manfra, Tordella & Brookes, Inc. — and I won’t bother linking this.

There wasn’t much activity in silver, either.  Nothing was reported received — and only 9,675 troy ounces was shipped out of the International Depository Services of Delaware.  There was a big paper transfer, however, as 1,620,976 troy ounces was moved from the Registered category — and back into Eligible over at CNT.  I’m sure that Ted would suspect that this was silver now owned by JPMorgan’s ‘client account’ that was transferred to save on storage charges.  The link to this is here.

There was a bit of movement over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  Nothing was reported received, but 116 kilobars were shipped out.  That happened over at Brink’s, Inc. of course — and I won’t bother linking this.

The Winchester Hoard is a hoard of Iron Age gold found in a field in the Winchester area of Hampshire, England, in 2000, by a retired florist and amateur metal detectorist, Kevan Halls. It was declared treasure and valued at £350,000—the highest reward granted under the Treasure Act 1996 up to the time.

The hoard contains two sets of gold jewellery; each includes a torc, a pair of brooches, or fibulae, linked by a chain (of which only one chain was found), and a bracelet (of which one was broken in half). They were all made with a very high gold content – between 91% and 99% – determined by X-ray fluorescence tests at the British Museum. The total weight of the hoard is 1,158.8 g (40.88 oz) (37.25 troy ounces). It is dated from 75–25 B.C., which places it in the Late British Iron Age.

The find was described as “the most important discovery of Iron Age gold objects” for fifty years; and the items were probably an “expensive“, “diplomatic gift“. The brooches alone were “the third discovery of its kind from Britain“.   Click to enlarge.

The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, showed no change in the commercial net short position in gold, but a slightly larger increase in the Commercial net short position in silver than Ted was expecting/hoping for.

In silver, the Commercial net short position increased by another 7,778 contracts, or 38.9 million troy ounces of paper silver.

They arrived at that number by adding 2,481 long contracts, but they also increased their short position by 10,259 contracts — and it’s the difference between those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report, it was all Managed Money traders, plus more…as they increased their long position by 3,975 contracts — and they also reduced their short position by 6,931 contracts.  It’s the sum of those two numbers…10,906 contracts…that represents their change for the reporting week.

The difference between that number — and the change in the Commercial net short position, was…10,906 minus 7,778 equals 3,128 contracts.

That difference was made up by the traders in the other two categories, as both reduced their net long positions during the reporting week…the ‘Other Reportables’ by 1,370 contracts — and the ‘Nonreportable’/small traders by 1,758 contracts.  The sum of those two numbers equals 3,128 contracts, which it must do.

Ted says that JPMorgan most likely increased their short position in silver during the reporting week — and pegs them at somewhere between 25-28,000 contracts net short.  Next Friday’s Bank Participation Report will allow him to get a more accurate picture of what the true number really is.

The Commercial net short position in silver is now up to 419.6 million troy ounces…a monstrous number.

Here’s the 3-year COT chart for silver, courtesy of Nick Laird — and the further increase in the Commercial net short position should be noted.  Click to enlarge.

Silver is now far into bearish territory — and it’s to early to predict what next week’s COT Report will look like with still two more trading days to go before the cut-off.  But JPMorgan et al are still there as short sellers of both first and last resort.

In gold, there was no change in the commercial net short position worthy of the name, as they increased their net long position by an insignificant 128 contracts.

They arrived at that number by selling 34,621 long contracts, but they also reduced their short position by 34,493 contracts — and it’s the difference between those two numbers that represents their change for the reporting week.

Under the hood in the Managed Money category increased their net long position by 7,540 contracts.  They arrived that number by adding 7,428 long contracts — and they also reduced their short position by 112 contracts.  It’s the sum of those two numbers that represents their change for the reporting week.

The difference between what the Managed Money and commercial traders did…7,540 minus 128 equals 7,412 contracts and, as is always the case, it was made up by the traders in the other two categories, as both decreased their net long positions during the reporting week.  The ‘Other Reportables’ decreased their long position by 4,402 contracts — and the traders in the ‘Nonreportable’/small trader category reduced their short position by 3,010 contracts.  The sum of those two numbers…3,010 plus 4,402 equals 7,412 contracts…which it must do.

The commercial net short position in gold stands at 28.80 million troy ounces…unchanged from last week.

Here’s Nick’s 3-year COT chart for goldClick to enlarge.

Like in silver, gold is firmly in bearish territory — and also like in silver, it’s too early to tell what next Friday’s COT Report will look like…but in a lot of respects, the above data is pretty much “yesterday’s news” after the wild price action since the Tuesday cut-off.

In the other metals, the Manged Money traders in palladium increased their net long position in this precious metal by a tiny 249 contracts.  These are the kind of volumes that move the palladium market…piddling.  The Managed Money traders are net long the palladium market by 14,328 contracts…56 percent of the total open interest.  Total open interest in palladium is 25,548 COMEX contracts, down 514 contracts from the previous week.  But after Thursday’s and Friday’s price smashes, I’m sure the changes in the next report will be far more significant.  In platinum, the Managed Money traders increased their net long position by a further 9,244 contracts during the reporting week — and are now net long the platinum market by 9,767 contracts.  These huge increases in long buying is the sole reason why the platinum price has risen during the last three weeks.  In copper, the Managed Money traders increased their net short position in that metal by a further 9,366 COMEX contracts during the reporting week — and are now net short the COMEX futures market by 41,795 contracts, or 1.04 billion pounds of the stuff.

Here’s Nick Laird’s “Days to Cover” chart updated with yesterday’s COT data for positions held at the close of COMEX trading last Tuesday. It shows the days of world production that it would take to cover the short positions of the Big 4 — and Big ‘5 through 8’ traders in each physically traded commodity on the COMEX. Click to enlarge.

For the current reporting week, the Big 4 traders are short 140 days of world silver production, which is up 6 days from last week’s report — and the ‘5 through 8’ large traders are short an additional 84 days of world silver production, unchanged from last week’s report — for a total of 224 days that the Big 8 are short, which is seven and a half months of world silver production, or about 522.8 million troy ounces of paper silver held short by the Big 8. [In the prior week’s COT Report, the Big 8 were short 218 days of world silver production.]

In the COT Report above, the Commercial net short position in silver was reported as 419.6 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 522.8 million troy ounces.  The short position of the Big 8 traders is larger than the total Commercial net short position by 522.8 minus 419.6 equals 103.2 million troy ounces.

The reason for the difference in those numbers…as it always is…is that Ted’s raptors, the 33-odd small commercial traders other than the Big 8, are net long that amount, which is preposterous.

As I mentioned in my COT commentary in silver above, Ted figures that JPMorgan is short is around 25-28,000 COMEX silver contracts, up from the 20-25,000 contracts that they were short in the prior week’s COT Report.

The Big 4 traders are short, on average, about…140 divided by 4 equals…35 days of world silver production each.  The four traders in the ‘5 through 8’ category are short 84 days of world silver production in total, which is 21 days of world silver production each, on average.

The Big 8 commercial traders are short 43.8 percent of the entire open interest in silver in the COMEX futures market, which is a tiny increase from the 43.4 percent they were short in last week’s report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be something close to the 50 percent mark.  In gold, it’s now 43.5 percent of the total COMEX open interest that the Big 8 are short, up a decent amount from the 40.4 percent they were short in last week’s report — and around 50 percent, once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 55 days of world gold production, up 3 days from what they were short in last week’s COT Report.  The ‘5 through 8’ are short another 30 days of world production, down 5 days from what they were short last week…for a total of 85 days of world gold production held short by the Big 8…down 2 days from last week’s report.  Based on these numbers, the Big 4 in gold hold about 65 percent of the total short position held by the Big 8…up 5 days from last week’s COT Report…which is a pretty big jump from the 60 percent they held in the prior COT Report.

The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 63, 72 and 79 percent respectively of the short positions held by the Big 8.  Silver is up 2 percentage points from a week ago, platinum is up 6 percentage points from last week — and palladium is up 1 percentage point from a week ago.

I don’t have all that many stories for you today.


164K Jobs Added in July, Just as Expected, But Wage Growth Comes Hot

Heading into today’s payrolls report, there was some “whisper” expectation that the July print would be a blowout due to a spike in census hiring, however that did not happen and instead the BLS reported that last month 164K jobs were added, right on top of the 165K expected. Click to enlarge.

The strong headline print however, was weakened by substantial historical downward revisions, to wit: the change in total non-farm payroll employment for May was revised down by 10,000 from +72,000 to +62,000, and the change for June was revised down by 31,000 from +224,000 to +193,000. With these revisions, employment gains in May and June combined were 41,000 less than previously reported.

What was perhaps most notable is that the report made no mention of hiring in advance of the 2020 census, and even more inexplicably federal payrolls rose just 2,000.

Looking at the 6 month moving average, it’s obvious that the U.S. economy peaked some time in 2017 and is all downhill from there…

This longish news item showed up on the Zero Hedge website at 8:37 a.m. EDT on Friday morning — and I thank Brad Robertson for sending it our way.  Another link to it is herePaul Craig Roberts has an opinion on the jobs numbers — and it’s headlined “More Fake Happy News About Jobs” — and I thank Brad for that one as well.  Paul issued a correction to this “More Fake Happy News About Jobs” on Saturday morning — and that’s linked here.

U.S. hiring slows; shorter factory workweek a red flag

U.S. job growth slowed in July and manufacturers slashed hours for workers, which together with an escalation in trade tensions between the United States and China could give the Federal Reserve ammunition to cut interest rates again next month.

The Labor Department’s closely watched monthly employment report on Friday came a day after President Donald Trump announced an additional 10% tariff on $300 billion worth of Chinese imports starting Sept. 1, a move that led financial markets to fully price in a rate cut in September.

The U.S. central bank on Wednesday cut its short-term interest rate for the first time since 2008. Fed Chairman Jerome Powell described the widely anticipated 25-basis-point monetary policy easing as insurance against downside risks to the 10-year old economic expansion, the longest in history, from trade tensions and slowing global growth.
Related Coverage

Fed officials don’t exactly have mud in their eyes after cutting interest rates this week as job growth is slowing with the rest of the world,” said Chris Rupkey, chief economist at MUFG in New York. “We see nothing in today’s report to stop a second rate cut next month.”

This Reuters story, filed from Washington was posted on their Internet site late on Thursday evening EDT  — and I thank Swedish reader Patrik Ekdahl for sending it our way.  Another link to it is here.

The Government Encourages Debt and Destroys Capital — Bill Bonner

Oh my… There he goes again.

Yesterday, Donald J. Trump dialed up his trade war.

Not to Full Retard… but at least 3/4 retard. Barron’s:

Stocks lost early gains and fell into the negative territory on Thursday as President Donald Trump tweeted that he will impose 10% tariffs on an additional $300 billion worth of imports from China.”

We predicted (among other things) that Trump would never go “Full Retard” in his trade war with China.

He has too much to lose – his reputation as a deal maker, the next election… and his personal fortune.

All of them depend on more inflation – that is, on more money sloshing around the world to pump up asset prices and consumer living standards. That’s why he is pressuring the Federal Reserve to lower rates further and faster.

But Europe, Britain, Japan, China, and the U.S. – all the world’s major economies – are already softening, slowing, and straining to move ahead. It’s Inflate or Die for them all.

This worthwhile commentary from Bill, filed from Piotou in France, appeared on the Internet site early on Friday morning EDT — and another link to it is here.

Doug Noland: Trump’s China Tariff Tweets

I view the markets’ responses to the President’s threat of additional Chinese tariffs as providing important analytical clarity. Let there be no doubt: Chinese developments have become the critical factor for global markets. And the issue is not the possibility of 10% tariffs on an additional $300 billion of Chinese imports. The critical issue is Chinese financial and economic fragilities, and the very real possibility that an escalating trade war pushes a vulnerable China over the edge.

There were analysts quick to suggest it was no coincidence that Trump’s China Tariff Tweet followed closely on the heels of the snub from Chairman Powell. The President could dismember two fowl with one stone: ratchet up the pressure on Chinese trade negotiators, while signaling to Powell that there’s an easy way and a hard way that will end at the same destination: monetary policy will now be dictated from the Oval Office.

I’ll repeat the same view that I’ve posited since early in the administration. The President is playing a dangerous game with the Chinese.

The administration is hellbent on cornering the wounded animal. China’s historic financial and economic Bubbles are in trouble. Beijing has been working intensively to stabilize its money market and corporate lending markets. More generally, China’s overheated Credit system has become deranged. Financial conditions have recently tightened dramatically for small banks and financial institutions, while real estate finance remains in a runaway speculative Bubble blow-off. System Credit is on track to approach a record $4.0 TN this year, as Credit quality rapidly deteriorates.

President Trump sees the opportunity to use China’s weakened economy to extract trade concessions. As it drifts closer to a systemic crisis of confidence, Chinese finance is the more pressing issue. Remember how such circumstances tend to unfold: very slowly then suddenly quite quickly.

If they believed a trade deal would resolve the U.S. administration’s chief concerns, Beijing would likely be more willing to compromise. But at this point I take them at their word: “China will not accept any form of pressure, intimidation or deception.” There is a clear and present risk of problematic escalation.

Beijing has been working diligently to stabilize their fragile financial and economic systems. It no doubt presents the administration an irresistible opportunity to partake in barefaced hardball. But at this point pushing China closer to the crisis point basically unleashes global “risk off,” with myriad repercussions.

This weekly commentary from Doug is definitely worth your time.  It was posted on his Internet site in the very early hours of Saturday morning — and another link to it is here.

Deutsche Bank sets aside $1.1 billion to exit derivatives

Deutsche Bank has set aside over €1 billion ($1.1 billion) to cover the cost of offloading derivatives in its ‘bad bank,’ or capital release unit, three sources at the bank told Reuters.

The cost, which has not been publicly disclosed, is included within the 7.4-billion euro budget the German lender has set aside for its restructuring, which will also see 18,000 jobs axed as the bank exits unprofitable businesses.

Key to the restructuring is the creation of a ‘bad bank’ to house €288 billion of unwanted assets earmarked for sale or wind-down, including equity derivatives and long-dated interest rate and credit derivatives.

Deutsche Bank is still assessing and gauging interest in the assets before repackaging some for sale, the sources said.

Deutsche Bank declined to comment.

I think this is going to cost a lot more. I don’t see how they’re going to get away with this little expense to wind all this down,” says Mayra Rodriguez Valladares, managing principal at consultancy MRV Associates . “Deutsche will have to hire external auditors to make sure everything is in order and there will be additional IT expenses.”

Deutsche Bank’s Chief Executive Officer Christian Sewing is looking to restore confidence among investors who have seen the bank’s stock lose more than three-quarters of its value over the past four years.

US$1.1 billion isn’t even coffee money.  This Reuters article, filed from New York at 8:16 a.m. on Friday morning EDT, is the second offering of the day from Patrik Ekdahl — and another link to it is here.

India’s gold demand up 13% despite volatile prices

Gold demand in the June quarter was up 13 per cent at 213 tonnes against 189 tonnes logged in the same period last year amid volatile prices. In terms of value, it jumped 17 per cent to Rs 62,422 crore (Rs 53,260 crore).

Jewellery demand during the quarter under review jumped 12 per cent at 169 tonne (150 tonne) while in value terms it was up 17 per cent at Rs 49,380 crore (Rs 42,200 crore).

While gold prices were down at Rs 32,500 per 10 grams in April and May against Rs 33,500 logged in February, it suddenly jumped to a record high of Rs 34,006 per 10 grams towards the second half of June in line with global trend.

Demand plunged with the sharp jump in gold prices towards the second half of June. Discount offered on gold bars to jewellers hit $23 an ounce, a level not seen since 2016.

Gold imports increased 28 per cent to 274 tonnes (193 tonnes) on anticipation of higher demand, said the Gold Demand and Trend report released by World Gold Council. However, the slowing economic trend and restrictions on movement of cash were a drag on demand in April and May, it said.

Somasundaram PR, Managing Director (India), World Gold Council said the demand was boosted by robust trade promotions, a higher number of auspicious days and a positive consumer response to softer prices in April and May. Significantly, he said bar and coin demand grew to a 5-year high in June quarter.

This gold-related news item from India put in an appearance on Internet site on their Thursday sometime — and it’s the first of several articles that I found on the Sharps Pixley website.  Another link to it is here.

Indians sell record amount of old gold as prices hit 7-year-high

Consumers in India are selling old gold to benefit from high prices. The same is reflected in the data for the June quarter that the World Gold Council released on Thursday, in Gold Demand Trends.
The report stated consumers during the quarter sold 37.9 tonnes of old gold, which is the highest quarterly sale after September 2016, when old gold sale, or scrap supply, was 39 tonnes.

Gold jewellery sold and repurchased, or remaking gold, is not calculated as part of old gold sale.
In June, the gold price crossed $1,400 an ounce in global markets, which was a six-year high, and since then has remained above that. In addition, import duty has been raised by 2.5 percentage points, making gold even costlier.

On an annual basis, the supply of scrap gold in India is likely to be at a seven-year high and may rise to 100 tonnes, according to P R Somasundaram, managing director (India) of the World Gold Council.

In 2012, the supply of scrap gold stood at 118 tonnes because people cashed their jewellery owing to a surge in local prices.

This is another story about India and gold.  This one, filed from Mumbai, showed up on the Internet site at 1:17 a.m. IST on their Friday morning, which was 4:47 p.m. in New York — EDT plus 9.5 hours.  It comes from the Sharps Pixley website as well — and another link to it is here.

China’s H1/19 gold consumption down 3.3% y/y to 523.5 tonnes — association

* China’s gold consumption fell by 3.3% year-on-year to 523.54 tonnes in the first half of 2019, the China Gold Association said on its website on Friday.

* Consumption of gold jewellery increased by 2% year-on-year to 358.77 tonnes in January-June, while consumption of gold bars slumped by 17.3% year-on-year to 110.51 tonnes.

* China, the world’s biggest gold consumer, saw its own output of the precious metal slip 5.1% year-on-year to 180.68 tonnes in the first half, the association said.

* It cited factors including the withdrawal of mining rights in nature reserves for the decline in production.

China’s gold production has really taken a tumble over the last several years — and is likely to fall even more as time progresses…if one can use the past as prologue.  The above four paragraphs are all there is to this brief Reuters article that was filed from Beijing on their Friday.  I found it on the Sharps Pixley website — and another link to the hard copy is here.

WGC: Peak gold continues to be elusive — Lawrie Williams

While the latest quarterly Gold Demand Trends report from the World Gold Co uncil (WGC) finds an encouraging pattern of gold demand growth in Q2 2019, largely due to seemingly ever-increasing Central Bank demand and some substantial inflows into gold ETFs over the quarter, along with a big pick-up in gold jewellery demand in India.  What will be disturbing for some commentators/analysts on gold is that supply – far from plateauing or diminishing, as many have been suggesting, is actually continuing to rise making the ‘peak gold’ theory something of a gold bug’s myth  – at least for the time being.  We have ourselves suggested that supply may be peaking, but not according to the WGC’s latest research.

While global mine output continues to grow, albeit by only a small amount, the higher gold prices received in Q2 led to a 9% rise in recycled gold.

On the mining front, despite contractions – quite severe in some cases – in some major gold mining nations like China, South Africa and Indonesia, new mined gold output continued to grow from some others among the world’s biggest gold mining nations – notably Russia, the U.S. and Canada (all up around 9%), and Australia up around 6%.  This led to overall new mined gold production growth of around 2% in Q2 2019 compared with the same quarter a year earlier.  This follows on from a record Q1 too.  Overall the WGC estimates H1 new mined gold production at 1,730.2 tonnes – up 1.1% on H1 2018.  Kazakhstan – a mid-sized gold producer saw output rise by a massive 18% benefiting from the continued ramp-up of Polymetal’s Kyzyl project which is continuing towards full production by the end of the current year.  In West Africa, Ghana – nowadays the continent’s largest producing nation – saw a 6% year-on-year increase in production, primarily from Ahafo and Akyem.

This longish, but very worthwhile commentary from Lawrie was posted on the Sharps Pixley website on Friday sometime — and another link to it is here.  A companion story to this, also from the Sharps Pixley website, is headlined “Gold demand increases 8% globally in Q2


Here are four more photos from our May 25 trip on the back roads east of Kamloops…heading towards Chase.  The first is of a swallow-tail butterfly that was just sitting on the road — and made no attempt to fly away.  The second is a scenery shot looking generally southwest down the South Thompson River Valley.  The third is a western kingbird sitting on a barbed-wire fence very close to where I took the last two photos.  The last photos was taken on the ‘back road’ — and within a few hundred meters of where I took the previous three photos.  I wasn’t at all happy that it was as cloudy as it was.  Click to enlarge.


Today’s C&W/pop ‘blast from the past’ came in at No. 15 on Billboard’s Year-End Hot 100 singles of 1960.  It was a huge hit for Marty Robbins back then — and it’s still an awesome ballad even today.  Here’s a live version of the tune served up on the stage of the Grand Ole Opry — and the link is here.

Today’s classical ‘blast from the past’ is one the I haven’t featured in many a moon, so it’s time for a repeat.  It’s Beethoven’s Piano Concerto No. 5 in E-flat major…a diabolical key if there ever was one.  It was composed in Vienna between 1809 and 1811 — and its first public performance was in Leipzig on 28 November 1811.  It’s as big and bold as all outdoors — and is called the ‘Emperor Concerto’ for very good reason.

Here’s the Bavarian Symphony Orchestra with the great Daniel Barenboim as soloist, who could probably play this in his sleep.  Mariss Jansons conducts — and the link is here.

Despite the continuing decline in the dollar index on Friday, it was obvious that JPMorgan et al. were not going to allow the precious metal prices to rise further — and they spent the entire day leaning on them.  With no exceptions, all were closed lower on the day.  Copper got smacked for 8 cents, which is a huge one-day move for it.  But, like the precious metals, it was all paper trading on the COMEX — and had nothing to do with any supply/demand fundamentals.

Here are the 6-month charts for all of the Big 6 commodities — and with the very obvious exceptions of palladium, copper and WTIC…the other three; gold, silver and platinum…are well above any moving average that matters.  It still remains to be seen whether, in the current political and financial environment, ‘da boyz’ can pull off another one of their patented ‘wash, rinse, spin…repeat’ cycles in them or not.  Click to enlarge.

Not a thing has changed since last week from an economic, financial or monetary viewpoint.  The ‘everything’ bubble is still as gargantuan as ever — and the powers-that-be are continuing to pull out all the financial stops to prevent this Frankenstein monster they’ve created from imploding.

As Jim Rickards said in a commentary on Internet site on Wednesday…headlined “One Manipulation Leads to Another“…

“[T]he current expansion is already the longest on record. It can’t be expected to last much longer. When it does strike, the next recession may be impossible to get out of. The central banks just don’t have the “dry powder” to fight it with.

And that comes back to a deeper problem…

The problem with any kind of market manipulation (what central bankers call “policy”) is that there’s no way to end it without unintended and usually negative consequences. Once you start down the path of manipulation, it requires more and more manipulation to keep the game going.

Finally it no longer becomes possible to turn back without crashing the system.

…the central bankers ride to the rescue of corrupt or mismanaged banks. This saves the wrong people (incompetent and corrupt bank managers and investors) and hurts the everyday investor or worker who watches his portfolio implode while the incompetent bank managers get to keep their jobs and big bonuses.

All it does is set the stage for a bigger crisis down the road.

The bigger problem is there’s no way out, as I said. One manipulation leads to another.”

Then there’s Bill Bonner‘s comments in the Critical Reads section of today’s column…

The Fed’s ultra-low interest rates also cause speculators to put real capital into goofball companies – such as Beyond Meat, Tesla, or WeWork – at outrageous prices. Cheap credit keeps these freaks and zombie businesses alive, destroying more and more capital.

When a company makes a loss, it takes valuable vital resources – most importantly, savings – and uses them to make products that are worth less than the resources that went into them.

In other words, they are destroying capital. Today, 29% of small businesses are making losses – the highest rate since 2008.

And British economist Peter Warburton back on 09 April 2001…

What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the U.S. dollar, but of all fiat currencies. Equally, they seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets.

It is important to recognize that the central banks have found the battle on the second front much easier to fight than the first. Moreover, it is not necessary for the central banks to fight the battle themselves, although central bank gold sales and gold leasing have certainly contributed to the cause. Most of the world’s large investment banks have over-traded their capital so flagrantly that if the central banks were to lose the fight on the first front, then the stock of the investment banks would be worthless. Because their fate is intertwined with that of the central banks, investment banks are willing participants in the battle against rising gold, oil, and commodity prices.”

They can fight this battle for only so long — and to repeat a sentence from Jim Rickards posted above…”Finally it no longer becomes possible to turn back without crashing the system.

And that, dear reader, is precisely the ‘Print, or Die’ path that we’re on right now…with no way out…none.  And if you want another opinion, here’s another classic rant from Gregory Mannarino from Friday afternoon — and it’s worth your while!

But it’s a battle they will lose at some point…either by circumstance, or design — and is the sole reason why the flight to precious metals is on in earnest by so many countries and their central banks.  And as I said last week in this space, that flight will, at some point, turn into a stampede.

Then all the COMEX paper in the world won’t be able to put the precious metal fire out, as the run from paper assets to hard assets will be unstoppable.

What we’ve been witnessing at an ever-increasing pace this year, are the precursors to whatever event precipitates the great unwinding.

And that’s why I’m still “all in”.

I’m done for the day — and the week — and I’ll see you here on Tuesday.