27 August 2019 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price blasted higher the moment that trading started at 6:00 p.m. EDT in New York on Sunday evening — and JPMorgan et al. were obviously laying in wait — and the high tick of the day [up about $29] was set about twenty-five minutes later. By noon in Shanghai on their Monday morning, half those gains were gone — and it crept a few dollars higher until 8 a.m. BST in London/9 a.m. in Zurich. London was closed on Monday for a holiday [thanks Tariq!]…but someone was there at the open to hammer it lower — and by shortly before 10 a.m. BST, they had gold down a hair on the day. It crawled quietly higher until around 10:15 a.m. in New York — and it was then sold quietly lower until a few minute after 1 p.m. EDT. It didn’t do much after that.
The high and low ticks were reported by the CME Group as $1,558.60 and $1,528.70 in the October contract — and $1,565.00 and $1,534.80 in December.
Gold was carefully closed by ‘da boyz’ at $1,526.60 spot, precisely unchanged from Friday. Not surprisingly, net volume was monstrous at just under 387,000 contracts — and there was a fair amount of roll-over/switch volume as well…just under 25,500 contracts worth.
The powers-that-be handled silver’s spike higher on Sunday evening in New York in a similar manner, with the only difference being that silver’s high tick of the day was printed a few minutes after 9 a.m. China Standard Time on their Monday morning. After that, ‘da boyz’ guided silver’s price path in a similar price manner as gold’s.
The high and low ticks in silver were recorded as $17.755 and $17.495 in the September contract.
Silver was closed on Monday in New York at $17.635 spot, up 24 cents from Friday. Net volume wasn’t anything much out of the ordinary at 47,500 contracts but, as expected, roll-over/switch volume out of September and into future months was enormous at a bit under 62,000 contracts.
Platinum also began to head higher at the 6 p.m. open in New York on Sunday evening, but it ran into price ‘resistance’ as well. Its $864 high tick…up 9 bucks on the day…came, like it did for silver, a few minutes after 9 a.m. in Shanghai. It was back below the $860 spot mark by shortly before the Zurich open — and it edged a bit higher until shortly before 9 a.m. in New York trading. It was hammered back below unchanged by 10 a.m. EDT — and wasn’t allowed to do much after that. Platinum was closed at $854 spot, down a dollar on the day.
Ditto for palladium — and it ran into a fair amount of price ‘resistance’ in Far East and Zurich trading. But its rally was stopped dead in its tracks at the COMEX open — and then the price fight was on in earnest. However, it managed to jump higher once Zurich traded at 11 a.m. in New York, but it wasn’t allowed to get far, as that rally was capped at the $1,460 mark. Palladium was closed at $1,459 spot, up 18 bucks from Friday and, like the other three precious metals, would obviously have closed significantly higher, if allowed.
The dollar index closed very late on Friday afternoon in New York at 97.64 — and opened down about 5 basis points once trading commenced around 6:40 p.m. EDT on Sunday evening, which was 6:40 a.m. China Standard Time on their Monday morning. It crept a bit higher until around 10:50 a.m. CST — and was back at about unchanged by 7:50 a.m. in London. It shot higher at that juncture, which was the moment that the precious metals got smacked. That big ‘rally’ lasted until about 9:45 a.m. BST — and it proceeded to creep very quietly and unevenly higher until the 98.09 high tick was set around 2:50 p.m. in New York. From that juncture it crawled a very few basis points lower until trading ended at 5:30 p.m. in New York. The dollar index was closed at 98.08…up 44 basis points from Friday.
The price capping in gold and silver at the open in New York on Sunday evening had zero to do with what was happening in the currencies — and ‘da boyz’ got even more serious just before the London/Zurich opens…ramping the dollar index and hitting gold and silver prices at the same moment. Closing the gold price at exactly unchanged on the day, only added insult to injury.
Here’s the DXY chart, courtesy of Bloomberg. I set the cursor right at the moment before those ‘gentle hands’ appeared just preceding the London/Zurich opens. Click to enlarge.
And here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site. The delta between its close…97.99…and the close on the DXY chart above, was 9 basis points on Monday. Click to enlarge as well.
The gold shares were sold down about one percent in the first few minutes of trading in New York on Monday morning — and then rallied to their highs by around 10:35 a.m. EDT. They chopped quietly sideways from that point until a very few minutes before 1 p.m. — and at that juncture it certainly looked as if a not-for-profit seller appeared. Their respective lows were set shortly before 3:30 p.m. — and they ticked a bit higher into the close from there. The HUI finished down 0.37 percent.
In most respects that mattered, the silver equities traded in a similar fashion, complete with that same willing seller[s] appearing minutes before 1 p.m. in New York. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 0.09 percent…so call it unchanged. Click to enlarge if necessary.
And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart, updated with Monday’s doji. Click to enlarge as well.
I certainly wasn’t amused with Monday’s share price action in the precious metals…especially the silver equities…as whomever it was that showed up a few minutes before 1 p.m. in New York trading, weren’t selling to maximize their profits.
The CME Daily Delivery Report showed that 263 gold and 2 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.
In gold, of the four short/issuers in total, the two biggest were Advantage and International F.C. Stone, with 163 and 70 contracts out of their respective client accounts. Of the four long/stoppers in total, the only two that mattered were the CME Group and Macquarie Futures…with 125 and 124 contracts for their respective in-house/proprietary trading accounts.
The CME Group immediately reissued their 125 contracts as 10×125=1,250 ten-ounce COMEX gold mini contracts. There were three long/stoppers of those, but the only two worth pointing out were ADM and Advantage, as they picked up 748 and 501 contracts for their respective client accounts.
In silver, ADM issued the 2 lone silver contracts — and Advantage stopped them both. Both transactions involved their respective client accounts.
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 August cratered by 1,871 contracts, leaving 351 still open, minus the 263 contracts mentioned a few short paragraphs ago. Friday’s Daily Delivery Report showed that 2,009 gold contracts were posted for delivery today, so that means that 2,009-1,871=138 more gold contracts were added to the August delivery month. Silver o.i. in August increased by 2 contracts, leaving 2 still around and, without doubt, those are the same two contracts that are posted for delivery on Wednesday.
There were no reported changes in either GLD or SLV on Monday.
According to The Wall Street Journal, the short position in GLD for the 2-week period ending on August 15, 2019 increased from 1,295,000 troy ounces, to 1,872,000 troy ounces…a jump of 44.56 percent. In the two weeks prior to that, the short position in GLD had risen by 12.95 percent.
The short position in SLV also rose during that same 2-week time period…from 9.64 million troy ounces, up to 11.23 million troy ounces…an increase of 16.51 percent. In the two weeks prior to August 15, the short position in SLV had risen by 9.64 percent.
The good folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on insider their gold and silver ETF as of the close of business on Friday, August 23 — and this is what they had to report. Their gold ETF shed a tiny 1,800 troy ounces, but their silver ETF added 62,501 troy ounces.
In the other silver ETFs around the world, there was another 216,979 troy ounces added to Deutsche Bank’s DXA6 silver fund on Monday.
There was no in/out activity in gold over at the COMEX-approved depositories on the U.S. east coast on Friday. But there was 14,984 troy ounces transferred from the Eligible category and into Registered over at Delaware. I won’t bother linking this.
There was considerably more activity in silver, as 14,478 troy ounces was reported received — and all of that amount ended up at the Delaware depository. There was 1,221,159 troy ounces shipped out. One truckload…620,000 troy ounces…departed CNT — and one truckload…600,206 troy ounces was shipped out of Canada’s Scotiabank. The remaining 13,526 troy ounces left the Delaware depository. The link to all this is here.
There was a bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday. They received 30 of them — and shipped out 91. All of this occurred over at Brink’s, Inc. as per usual — and I wont’ bother linking it, either.
Here’s a chart that Nick passed around on the weekend that I’d not seen before. It shows how well a lot of things precious metal-related have done over the last three months. Click to enlarge.
The standout for me was the very poor performance of two of Nick’s Silver 7 companies…Compañía de Minas Buenaventura…up only 2.13 percent. Although Peñoles [another Silver 7 member] doesn’t show up on the chart below, its performance has been abysmal as well…about unchanged over the last three months. Hecla‘s performance hasn’t exactly set the world on fire, either. But First Majestic Silver has certainly led the pack in gains in the Silver 7…as it’s up 94 percent over the same period. It represents the largest position in my portfolio.
So if you’re looking for a reason why the silver equities have been underperforming their golden brethren…there’s the obvious reason. I don’t own, nor have I ever owned, shares in either Buenaventura or Peñoles. Of course, as you know, the junior producers have been on fire — and that’s where a large chunk of my precious metal investment dollars lay.
I have a very decent number of stories and articles for you today.
Despite a headline beat (juiced by huge and volatile surges in defense and non-defense aircraft orders), core durable goods orders disappointed and capital goods shipments (ex-Air) slumped by the most since Oct 2016.
Durable Goods Orders rose 2.1% MoM (well above the 1.2% rise expected) and YoY, durable goods rebounded into the positive…
Much of the surprise was driven by gains in aircraft orders:
- non-defense aircraft and parts new orders +47.8%
- defense aircraft and parts new orders +34.4%
But core durable goods orders disappointed (falling 0.4% MoM against expectations of no change)…Click to enlarge.
And moreover, shipments (ex-Air) fell by 0.7% MoM – the biggest drop since Oct 2016…Click to enlarge.
The slump in sales of equipment suggests American businesses remained cautious about capital spending ahead of this month’s escalation of the U.S.-China trade war.
The report compares with recent data that signal further cracks in the manufacturing sector. Markit’s PMI posted its first contraction since 2009, and the Kansas City Fed’s factory gauge shrank.
This brief 3-chart Zero Hedge commentary put it an appearance on their Internet site at 8:40 a.m. on Monday morning EDT — and I thank Brad Robertson for this one. Another link to it is here.
The Dow fell hard on Friday.
The proximate source of unease in the markets is the fear that Donald Trump has gone Full Retard.
Yes, Dear Reader, we may be wrong about our president, after all.
What if… instead of being the cynical, canny, conniving, calculating, self-promoting genius we took him for, Donald Trump turns out to be an earnest, world-improving imbecile?
And what if… his trade war isn’t the fake war we supposed it to be… but a messianic crusade ginned up by a True Believer?
Last week, POTUS told the world that he is the “chosen one” to deal with the China issue (whatever the issue is…), and then he tweeted a proclamation…
Henceforth, American businesses are “ordered” to withdraw from China, and they shall have no truck with the Middle Kingdom, unless and until, of course, their lobbyists pay off the appropriate Deep State fixer.
Then, over the weekend, Mr. Trump let fly that he had regrets about his China trade war.
This commentary from Bill appeared on the bonnerandpartners.com Internet site early on Monday morning EDT — and another link to it is here. Gregory Mannarino’s pre-market open rant on Monday morning where he discusses all the overnight rigging going on in the futures market is linked here — and his rant after the equity market closes yesterday is linked here.
The Akkadian Empire is often regarded as the world’s first empire, reaching its peak between the 24th and 22nd centuries BC, some 4,400 years ago.
It was in the Middle East, home of quite a few empires over the millennia. It began with King Sargon, who, having succeeded at conquering his neighbours in Babylonia, decided to expand further into Syria and Canaan.
King Sargon established a fad that has remained until the present day. In any era since his time, there have been those nations that, having had initial successes at conquest, couldn’t resist the temptation to “have it all.”
Over the millennia, history has seen many empires come and go. By the time of the Spanish Empire (peaking in 1521–1643), kings had a rough idea of how very big the world was and recognized that controlling it all was quite a task.
This did not, however, stop ambitious leaders. Every century has seen its Genghis Khan or Napoleon, whose desire for conquest was insatiable. Repeatedly, such leaders came to a bad end, specifically because they tried to bite off more than they could chew.
Britain owned the nineteenth century, with colonies worldwide, but today, we British eat humble pie, as we were eclipsed due to excessive warfare and government spending.
Then the U.S. owned the twentieth century, not only colonizing parts of the world, but seeking to police the rest of it.
This worthwhile commentary from Jeff was posted on the internationalman.com Internet site early on Monday morning EDT — and another link to it is here.
“It’s An Embarrassment“: IMF Faces Humiliation, Billions in Losses as Argentina Braces For Next Default
the IMF’s plan is for Argentina now that the country was facing what appears yet another bond default.
And while Steve did in fact ask that question, he didn’t get a direct answer for one simple reason: the IMF has no clue what it will do now that it is facing a historic loss on its latest, and biggest ever, $56 billion bailout of Argentina, which was completed less than over a year ago in September 2018.
It gets worse: not only does the IMF have to scramble to preserve its current bailout, and credibility, having sunk billions into a country which humiliated the IMF at the start of the century when it defaulted last, the monetary fund has to decide whether to keep injecting money into a nation that many believe will soon default on its foreign obligations – and the IMF – again, after President Mauricio Macri just got trounced by the populist opposition in a nationwide primary vote, after his IMF-backed program – based around much hated budget austerity and the world’s highest interest rates – failed to pull the economy out of recession. What happened next, as we reported two weeks ago, was a 20% crash in the peso and a collapse in government bonds, which pushed the implied risk of default above 80%.
It was in this dire context that IMF delegates arrived in Argentina on Saturday and, as Bloomberg reports, immediately began meetings with policy makers, facing a déjà vu choice from two decades ago: risk making the turmoil even worse by withholding a $5.3 billion installment due next month – or cough it up, and risk even more losses with the IMF bailout program on the verge of collapse.
“The IMF has put a lot in – not just money, but prestige,” said Hector Torres, a former executive director at the Fund who represented South American countries. “The fact that the arrangement is not performing well right now is an embarrassment,” he said. And the September installment is “going to be a difficult call.”
If the IMF does decide to throw good money after bad, it can justify it by pointing out what until recently, was at least modest success: Argentina was roughly on track to meet an IMF target of balancing the budget this year (excluding interest payments). Of course, the reason why the country performed as expected is also the reason why Macri is now on the way out, and the IMF’s involvement in the Argentine economy and politics has managed to unite the local population in its hatred unlike any other issue.
What the fund will not cite is Argentina’s economic performance, as GDP expectations have collapsed under the IMF’s supervision..and then there are the IMF’s attempts to tame Argentina inflation. Needless to say, they have failed dismally.
“The IMF is in a serious pickle,” said Esteruelas. “It reminds me of the saying: If you owe the bank $100, it’s your problem. If you owe the bank $100 million, it’s the bank’s problem.”
The best news? After leaving Argentina’s economic in disaster, and the IMF’s reputation in tatters, Christine Lagarde is off to finish off her work by taking over the ECB and doing what she does best: destroying Europe once and for all.
This very long 3-chart commentary from the Zero Hedge website, showed up there at 11:44 a.m. EDT on Monday morning — and I thank Brad Robertson for sending it. Another link to it is here.
A survey by Germany’s Ifo economic think tank has revealed a long-lasting negative mood in the business sector. Ifo’s executive index dropped for the 11th time in 12 months.
German business confidence fell more than expected during August, the Munich-based Ifo institute said on Monday. Ifo said its business confidence index — based on a survey of 9,000 firms — fell to 94.3 points this month from 95.7 points in July.
A deterioration was seen both in managers’ views of the current situation and in their predictions for the next six months.
The mood in the German business sector is low because of a slowdown in orders triggered largely by the yearlong trade war between the US and China. Uncertainty over Britain’s upcoming exit from the European Union also contributed to the growing skepticism among executives.
The closely watched Ifo index is seen widely as a reliable indicator for future growth in the German economy, the largest in Europe.
This news story showed up on the dw.com Internet site on Monday — and it’s an article I found in the Tuesday morning edition of the King Report. Another link to it is here.
One of the obvious and expected consequences or instances of ‘blowback’ from Israel’s unprecedented decision to extend its “anti-Iran” campaign into Iraq, with three airstrikes widely blamed on either Israeli drones or possibly F-35s in the last five weeks, is that it will force a deepening conflict between Iraq’s military and U.S. coalition forces.
There’s long been a broad base of Iraqi support that would like to see the American presence completely out of the country with the Islamic State long defeated, but now that political bloc just got a lot stronger in the wake of the alleged Israeli raids, at least one of which U.S. officials have already admitted Israel bore responsibility for (a July 19 attack on a Popular Mobilization Forces base in Amirli). A powerful pro-Iran faction of parliament has called Israel’s alleged attacks “a declaration of war“.
The Associated Press reports in the aftermath of yet another Israeli drone strike targeting and killing a Kataeb Hezbollah leader in al-Qaim, Iraq near the Syrian border that, “A powerful bloc in Iraq’s parliament is calling for the withdrawal of U.S. troops from Iraq following a series of airstrikes blamed on Israel targeting Iran-backed Shiite militias in the country.”
PMF commanders and officials have over the past weeks been the most vocal part of Iraq’s military and government blaming the recent spate of devastating attacks on Israel; however, following last week’s explosion at a base outside Baghdad – believed the result of an Israeli airstrike – it appears this view is now gaining support even from the prime minister’s office amid an ongoing official investigation into the blasts.
Last week Prime Minister Abdul-Mahdi had called for an end to all “unauthorized flights” including U.S. drones, spy planes, jets, or helicopters. The directive demanded that all aerial vehicles comply with Iraqi law and operations must be under Iraqi government authorization.
This news item showed up on the Zero Hedge website at 11:24 a.m. on Monday morning EDT — and another link to it is here. A related ZH story from late yesterday afternoon is headlined “Israel Warns Any Hezbollah Attack Will Bring “Reprisal on Whole Lebanese State”” — and both came courtesy of Brad Robertson.
Wells Fargo is once again cautioning investors from buying too much gold as prices continue to trade north of $1,500 an ounce.
Gold is one of the best assets to own in terms of economic uncertainty but buying too much at high levels could lead to a lot of pain, according to the latest note by Wells Fargo head of real asset strategy John LaForge.
“Market volatility is on the rise—and as history would suggest—investors are flocking to gold … The problem is that some investors do not understand gold, which can be dangerous. Flock to gold at the wrong time, and it can be painful—possibly for years,” said LaForge.
“While we do expect additional trade dispute escalation, we anticipate stabilizing economic growth in the coming year. Owning some gold in a diversified portfolio can be a good thing – we just don’t recommend owning too much at these levels,” he said.
The goal of Wells Fargo’s statement was clearly to steer clients back into investment vehicles that generate fees and away from precious metals which generally don’t.
But the impact on most clients will probably be the opposite, because most clients currently own exactly zero gold. So in reading the above they’re likely to gloss over the cautionary statements and fixate on the stuff Wells Fargo was forced to acknowledge:
“We do believe that gold has a place in a well-diversified portfolio”
“The fact that gold has moved up so much this summer, hitting fresh six-year highs in August says a lot about market sentiment …”
If you own no gold and your bank says you should own some, that amounts to a buy recommendation. Which is what Wells Fargo – and every other major bank – wishes it could avoid but increasingly can’t.
This John Rubino article based on a story at Kitco, was picked up by Zero Hedge late on Sunday morning EDT — and I found it in a GATA dispatch. Another link to it is here.
What a difference a few years makes. Back in the summer of 2015, a WSJ op-ed writer, who somehow was unaware of the past 6,000 years of human history, infamously and embarrassingly said “Let’s Be Honest About Gold: It’s a Pet Rock.” Fast forward to today, when with every central bank once again rushing to debase its currency in what increasingly appears to be the final race to the debasement bottom, when even BOE head Mark Carney recommends that it is time to retire the dollar as the world’s reserve currency, pet rock gold has emerged as the second best performing asset of the year… and at the rate it is going -4th in 2017, 3rd in 2018, 2nd in 2019 – gold will be the standout asset class of 2020. Click to enlarge.
As Bank of America writes in “anatomy of two gold bull markets“, in comparing the gold bull markets in 2008 and 2018, real rates remain key price drivers, while a critical difference in market dynamics – this time around – is that central banks have been unable to reflate global economies and even as metrics like the value and proportion of negative yielding assets has been increasing, further easing is on the cards. Linked to that, Bank of America makes a stunning admissions: “the risk of quantitative failure, which was not a concern in 2008, makes gold an attractive asset.”
Most notably, “ultra-easy monetary policies have led to distortions across various asset classes“; worse – and these are not our words, but of Bank of America – “it also stopped normal economic adjustment/ renewal mechanisms by for instance sustaining economic participants that would normally have gone out of business“, i.e. a record number of zombie corporations.
In addition, as everyone knows, debt levels have continued to increase, making it more difficult for central banks to normalize monetary policy as 2018 showed so vividly (and for Powell, painfully).
Which brings us to BofA’s conclusion: “We fear that this dynamic could ultimately lead to “quantitative failure“, under which markets refocus on those elevated liabilities and the lack of global growth, which would in all likelihood lead to a material increase in volatility.”
How does gold fall into this: “At the same time, and perhaps perversely, such a sell-off may prompt central banks to ease more aggressively, making gold an even more attractive asset to hold.”
This longish chart-filled commentary was posted on the Zero Hedge website at 3:50 p.m. EDT on Monday afternoon — and it comes to us courtesy of Brad Robertson as well. Another link to it is here.
Gold will extend its winning ways as the U.S.-China standoff harms growth, risking a deeper slowdown and inviting more central-bank easing, according to UBS Group AG, which jacked up price forecasts with a prediction the precious metal may hit $1,600 within three months.
“The trade war between the U.S. and China has escalated to a new level,” Giovanni Staunovo and Wayne Gordon, analysts at the wealth-management unit, said in a report received on Monday. “Gold has demonstrated its safe-haven qualities and we stay long the metal, a trade we initiated in mid-May.”
Gold is proving its worth as a haven this year as the two largest economies trade blows, with a significant escalation on Friday, followed by more hard-line remarks from President Donald Trump over the weekend. The Federal Reserve reduced interest rates last month as risks mounted, and some U.S. policy makers have stepped up their warnings about the outlook in recent days.
This brief gold-related Bloomberg article, appeared on the bnnbloomberg.com Internet site yesterday sometime — and I found it on the Sharps Pixley website. Another link to it is here.
World needs to prepare for return to gold standard as Washington disrupts financial order — Global Times
I believe the gold price could reach as high as $1,800 an ounce in the future, and in the meantime, there will be increasing discussions about the world’s return to the gold standard. The global market structure has been undergoing tremendous changes these days. The U.S. has been pulling itself out of the multilateral arena for the purposes of protecting and enhancing the value of its own market space. As a result, signs of structural adjustments in the world market have become increasingly evident, but are still far from raising the general attention of the global financial community. In fact, many people still hope that such structural adjustments won’t happen, so the market can go back to the old days.
Yet, it’s impossible to go back to the past because the structural adjustments are based on global capital surplus and severe overcapacity, which could cause serious world economic and financial crises.
So what would be the outcome?
The most significant change is a return to the gold standard. As capital surplus and overcapacity have exerted great pressure on the world market space, the world financial system is also trying to adapt to the huge change which is centered on the status of the dollar. From the perspective of the global financial system, the dollar is a super currency that has a strong backing of global geopolitics.
After the collapse of the Bretton Woods System, the questioning of the gold standard has never stopped. The gold standard essentially represents a world financial order. When an old financial order faces collapse, it is necessary to create a new financial order. When the U.S. decoupled the value of the dollar from gold, it actually committed to take on the responsibility of world finance, based on which a new financial order was formed. It is this financial order that has allowed the US to enjoy huge development dividends. Now, the U.S. is unwilling to continue assuming and fulfilling such responsibilities for the current world financial order, and Trump has continuously intervened in the operation of the Fed and global financial market order. This development points to the necessity of seeking and building a new financial order, which is the fundamental basis for the re-emergence of the gold standard in the world financial market.
So the gold standard is an effort by the world market and financial system to balance the “Trumpian future.” It means that the U.S. can take its own path and Americans will have the right to look after themselves, but other countries around the world will also have the right to make their own choices. In other words, this will be a process of rebalancing in the world financial market, forcing the U.S. to face up to problems. It needs to make a choice: fulfill the obligations and responsibilities for international finance, or abandon the international status of the dollar, thus allowing the dollar to become a common currency.
These are simply judgments and projections made from the perspective of geo-capitalism. For the US, the gold standard is a choice that cannot be avoided. The existence of the choice matters a lot. Countries around the world would take back their gold reserves stored in the U.S., and there remains a big question mark over the U.S.’ response. Central banks would increase their holdings of gold reserves to prepare for the return of the gold standard. Gold prices will rise, and dollar assets and energy prices will also be affected.
This short essay appeared on the globaltimes.cn Internet site at 9:08 CST on their Sunday evening. The Global Times is perceived by most to be under the control of the Chinese government, so this article would not have been posted there without their approval. You can read into it whatever you wish. I found it on the Sharps Pixley website — and another link to it is here.
While the world’s No. 1 gold producer, China, has been seeing a general decline in output and may well see it fall below 400 tonnes this year, the world’s No. 2 and 3 producers, Australia and Russia both seem to be increasing annual production of the yellow metal. The latest to come up with definitive figures is Australia which appears to have recorded a new gold production record for the calendar year ended June 30th according to Melbourne-based specialist consultancy, Surbiton Associates, which probably follows the Australian gold mining sector closer than any other organisation.
At this point it should be pointed out that down-under the fiscal year tends to run from July 1st – June 30th so the calendar year to end-June tends to provide the most accurate annual production figures available. According to Surbiton, Australian gold production hit an all-time record of 321 tonnes (10.3 million ounces) in the year to end-June this year. This compares with 310 tonnes in the previous corresponding period and 317 tonnes in calendar 2018. With Chinese production falling and Australian output rising, how long will it be before Australia becomes the world’s top gold producer – if Russia doesn’t get there first!
Surbiton goes on to note that Australian gold production totalled just under 82 tonnes in the June 2019 quarter making it the highest quarterly production level for more than 20 years. Gold output rose by four tonnes or almost five percent over the March 2019 quarter. With Australian dollar gold prices near record levels, the 2018/19 output is worth almost A$23 billion a year at current prices.
This interesting gold-related item from Lawrie put in an appearance on the Sharps Pixley website on Monday sometime — and another link to it is here.
The PHOTOS and the FUNNIES
On June 3, were in Penticton, where I was visiting my Mum — and afterwards when we were driving around exploring this small, but wonderful city, we happened upon this female mule deer munching on a new-world variety of acacia tree. From there, she wandered across the street, jumped a fence — and proceeded to graze in the yard of a very old abandoned house. The last two photos are from point-blank range — and you can tell from the angle, that we were close enough to be actually looking down on the critter. No telephoto lens needed here, as she was less than four meters away. Click to enlarge.
Sunday night showed market intervention on a mammoth scale. Gregory Mannarino and Bill King were both disgusted…with both pointing out the huge reversals in U.S. stock futures in overnight and morning trading on Sunday/Monday…from down 300 points, to up 200 by the open in New York. Add to that to the obvious capping and engineered price declines in gold, silver and platinum…plus the usual ‘gentle hands’ in the dollar index — and everything was all sweetness and light by the time trading ended on Monday afternoon…including closing the gold price at precisely unchanged on the day.
But that was only for this one day. And with interest rates zero-bound, or lower…they won’t be able to keep up this charade forever. The powers-that-be know all too well…as do you by now, dear reader…that they moment they stop intervening, the entire financial system would melt down in a New York minute. That being, as Johnny Carson once said, “…the interval between a Manhattan traffic light turning green — and the guy behind you honking his horn.”
Of course the longer they delay the inevitable, the worse the final denouement will be when it finally does manifest itself…either by [as I keep repeating] circumstance, or design.
Here are the 6-month charts in the Big 6 commodities. After ‘da boyz’ were through with them, there’s not a whole lot to see in the precious metals. But copper hit a new intraday low on Monday — and WTIC was closed at a new low for this move down. Click to enlarge for all.
And as I type this paragraph, the London open is less than a minute away — and I note that the gold price didn’t much until 1 p.m. China Standard Time on their Tuesday morning. At that juncture it was down a few dimes on the day. It rallied rather sharply from there going into the 2:15 p.m CST afternoon gold fix in Shanghai, but it has been sold a bit lower since — and is currently up $5.80 the ounce. Ditto for silver as far as its price path was concerned. It was up 11 cents at the fix, but is now up only 5 cents. Platinum has been chopping very quietly and very unsteadily higher in Far East trading — and it bounced up a bit going into the afternoon gold fix in Shanghai as well — and is up 3 bucks currently, but also off its high by a tad. The palladium price has been moving unevenly sideways during the same time period — and is down a dollar as Zurich opens.
Net HFT gold volume is a bit over 50,500 contracts — and there’s only a tiny 797 contracts worth of roll-over/switch volume in that precious metal. Net HFT silver volume is only 4,500 contracts — and there’s already a pretty chunky 6,800 contracts worth of roll-over/switch volume out of September — and in future months…mostly December.
The dollar index opened down about 4 basis points once trading commenced around 7:45 p.m. in New York on Monday evening, which was 7:45 a.m. China Standard Time on their Tuesday morning. Its current low, such as it is, came around 10:40 a.m. CST — and it’s not off that by much — and is down 12 basis points as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.
Today, at the close of COMEX trading, is the cut-off for this week’s Commitment of Traders Report — and I may hazard a guess as to what might be in it in my Wednesday missive…despite my huge [and embarrassing] misses with last week’s report.
There are still three more days left in the August delivery month — and the heavy roll-over volume out of September in silver is ongoing. The big boys that aren’t standing for delivery that month have to roll or sell their September contracts before the close of trading tomorrow — and the rest of the traders have to be out by the COMEX close on Thursday.
And as I post today’s column on the website at 4:03 a.m. EDT — I see that gold and silver prices haven’t been allowed to do much during the first hour of London trading. At the moment, gold is higher by $5.90 an ounce — and silver is up 7 cents. Platinum and palladium are both up a dollar as the first hour of Zurich trading draws to a close.
Gross gold volume is a bit under 65,500 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is around 63,000 contracts. Net HFT silver volume is still very light at only around 5,100 contracts — and there’s a bit over 9,600 contracts worth of roll-over/switch volume out of September and into future months.
The dollar index has been heading lower all throughout the first hour of London trading — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, the dollar index is down 21 basis points.
That’s it for yet another day — and I’ll see you here tomorrow.