Gold rallied unsteadily in Far East trading on their Friday---and the high of the day came with a capped price spike just a few minutes before the London open. From there, every rally attempt got sold down---and the low of the day came at 10:15 a.m. EDT, which was either at, or just after, the London p.m. gold fix. From there, the gold price rallied a bit into the close.
The high and low ticks for the day were reported by the CME Group as $1,232.70 and $1,212.80 in the December contract.
Gold finished the Friday session at $1,219.40 spot, down $2.50 from Thursday's close. Net volume was not overly heavy at 123,000 contracts.
The silver price pattern was similar to gold's, except much more subdued---and the low tick came at 1 p.m. BST in London, which was twenty minutes before the Comex open. Silver chopped higher for the remainder of the Friday session in New York---and closed on its absolute high tick.
The low and high were reported as $17.725 and $17.44 in the December contract.
Silver finished the trading day yesterday at $17.66 spot, up 16 cents on the day. Net volume was 35,500 contracts.
Platinum rallied a bit in early Far East trading, but then got sold back down to unchanged and remained that way until shortly after Zurich opened. Then down it went for the rest of the day, hitting its low tick---and a new low for this move down---about 2:30 p.m. in New York. After that, the price didn't do much. JPMorgan et al finally close platinum below the $1,300 mark at $1,297 spot, down another 12 bucks.
Palladium got it in the neck for the second day in a row---and I thought the smack-down just after the Zurich open on Thursday morning was egregious! But Friday's price action was even more grotesque. After hanging around the $800 mark for most of the trading session, the HFT boyz and their algorithms showed up---and the palladium price was down over $20 by 2 p.m. EDT. Then just minutes before the 5:15 p.m. EDT close, they showed up once again and carved another seven or eight bucks off the price. These guys have no shame, but they obviously have an agenda---and are just as obviously pressed for time as well.
Palladium was closed at $772 spot, virtually on its low tick of the day---and down a whopping $25 on the day---3.14%. It almost goes without saying that this was another new low for this move down.
The dollar index closed at 85.18 late on Thursday afternoon in New York---and then didn't do a lot until around 11:30 a.m. BST in London on their Friday morning. Then away it went to the upside, with the 85.67 high coming minutes before 2:30 p.m. EDT. From there it slid a few basis points into the close, finishing the week at 85.64---up 46 basis points on the day.
The gold stocks gapped down a bit at the open---and continued to slide from there, with the low tick coming at 3 p.m. EDT---and the shares managed to cut their loses a bit, but the HUI still closed down another 1.46%.
It was more or less the same pattern in the silver stocks---and despite the fact that the silver price finished well into positive territory, the silver equities closed down another 1.35%.
The CME Daily Delivery Report showed that 1 gold and 17 silver contracts were posted for delivery within the Comex-approved depository on Tuesday. The First Day Notice numbers for the October delivery month weren't forthcoming, so they'll be posted on Monday evening on the CME's website---and I'll have it for you on Tuesday.
The CME Preliminary Report for the Friday trading session showed that 1 gold and 17 silver contracts were still open in the September contract---and you will carefully note that they match the numbers in the previous paragraph precisely. The September delivery month is now done.
There was another withdrawal from GLD yesterday, this time an authorized participant took out 38,463 troy ounces. And in keeping with tradition, there was another deposit in SLV yesterday as 767,147 troy ounces were added. The SLV mystery continues---and deepens.
There was a sales report from the U.S. Mint yesterday. They sold 3,000 troy ounces of gold eagles---1,500 one-ounce 24K gold buffaloes---and 250,000 silver eagles.
Month-to-date the U.S. Mint has churned out 51,500 troy ounces of gold eagles---13,000 one-ounce 24K gold buffaloes---and 3,050,000 silver eagles---and 600 platinum eagles.
Mint sales for September so far are light years ahead of August---up over 100 percent in gold eagles, 50 percent in buffaloes---and 50 percent in silver eagles---and I can tell you that sales this week at the bullion store where I work, have been very robust.
Over at the Comex-approved depositories on Thursday, there was another very decent withdrawal in gold, as 96,450.000 troy ounces were shipped out and, to the ounce, that number works out to exactly 3,000 kilobars. The link to that activity is here.
It was another very busy day in silver as well, as 744,036 troy ounces were reported received---and 629,362 troy ounces were shipped out. The link to that action is here.
The Commitment of Traders Report for positions held at the close of Comex trading on Tuesday were about what I was expecting in silver, but rather disappointing in gold.
In silver, the Commercial net short position declined by a hefty 6,792 contracts, or 34.0 million troy ounces. The Commercial net short position is now down to 16,767 contracts, or 83.8 million troy ounces---and within spitting distance of its late May/early June record low.
For a change, it wasn't the Managed Money traders in the technical fund category going short that caused the decline, as they actually covered 1,638 of their short contracts during the reporting week. It was the small traders [the Nonreportable category] that were involved, as their net long position declined by 4,702 contracts. Ted says that it appears that the Managed Money is all full up on the short side---and all of this week's improvements came from these Nonreportable futures contract holders, plus Non-Commercial traders other than the technical funds.
Ted also mentioned that JPMorgan's short position in silver is now down to about 11,500 contracts, their lowest short-side corner in the Comex futures market since taking over the silver short position of Bear Stearns in 2008. And not to be forgotten in all of this, is the equally extreme short-side corner in the Comex silver market held by Canada's Scotiabank.
In gold, the Commercial net short position only declined by 11,924 contracts, or 1.19 million troy ounces. I was expecting around double that amount. The Commercial net short position in that precious metal now stands at 6.43 million troy ounces.
The big changes were in the Manged Money category, as they sold an additional 3,232 long contracts---and bought 6,933 short contracts. The small traders in the Nonreportable category also pitched 4,278 longs in addition to that.
Of course, standing there buying all the long positions offered in both metals, was JPMorgan et al.
Ted was rather surprised to see that there was no change in JPMorgan's long-side corner in the Comex gold market, as it remained around the 25,000 contract/2.5 million troy ounce mark.
Ted also remarked that the Comex futures market showed major improvements in platinum, palladium, copper and crude oil, as 'da boyz' continue to game the technical funds into extreme positions on the short side. The only big exception is the dollar index, where the technical funds are holding monster long positions---and JPMorgan et al are mega short.
And, without doubt, we've seen more improvements in the internal structure of the precious metals since the Tuesday cut-off---and also without doubt, we're back at, or below, the record lows set back in late May/early June. And we've exceeded those lows in both platinum and palladium, as those two metals have been savaged during the latest engineered price decline.
Once again we have to contemplate the subsequent actions of JPMorgan et al, as all these shorts look to cover during the next rally---and in the dollar index, it's the opposite. Will they let the technical funds off easy once again, or will 'da boyz' just put their hands in their pockets?
And as Ted Butler and I have said countless times that, and only that, will determine not only how high price rise from here, but how fast they get they get there as well. Nothing else matters.
I have the usual number of stories for a weekend---and the final edit is up to you.
Macy's CEO Terry Lundgren said he was expecting a rebound this year.
It didn't happen.
"The consumer has not bounced back with the confidence that we were all looking for," Lundgren said at the Goldman Sachs Annual Retail Conference earlier this month, weeks after the company reported sluggish second-quarter sales.
Lundgren also said he doesn't expect things to get better in time for the holiday season.
Why would anyone be surprised by this news, I wonder? It was posted on the businessinsider.com Internet site at 1:25 p.m. EDT on Friday---and I thank Harry Grant for today's first story.
Bill Gross, the bond market's most renowned investor, quit Pimco for distant rival Janus Capital Group Inc on Friday, the day before he was expected to be fired from the huge investment firm he co-founded more than 40 years ago.
Gross, 70, had been clashing with the firm's executive committee and had threatened to resign multiple times, a source familiar with the situation said. The committee had planned to accept his latest resignation from the post of chief investment officer on Saturday.
The surprise development, which rattled the U.S. bond market, came the day before Pimco and its parent, German insurer Allianz SE, planned to dismiss Gross, the source said.
Gross will manage the Janus Global Unconstrained Bond Fund beginning on Monday, Janus said in a statement. The fund, started in May, has just $13 million in assets.
This Reuters article appeared on the ca.finance.yahoo.com Internet site yesterday sometime---and I thank Dr. Dave Janda for bringing it to my attention.
Bloomberg has a story today on the faltering of Draghi’s latest scheme to levitate Europe’s somnolent socialist economies by means of a new round of monetary juice called TLTRO—–$1.3 trillion in essentially zero cost four-year funding to European banks on the condition that they expand their business loan books. Using anecdotes from Spain, the piece perhaps inadvertently highlights all that is wrong with the entire central bank money printing regime that is now extirpating honest finance nearly everywhere in the world.
On the one hand, the initial round of TLTRO takedowns came in at only $100 billion compared to the $200 billion widely expected. It seems that Spanish banks, like their counterparts elsewhere in Europe, are finding virtually no demand among small and medium businesses for new loans.
Many small and medium-sized businesses are wary of the offers from banks as European Central Bank President Draghi prepares to pump more cash into the financial system to boost prices and spur growth. The reticence in Spain suggests demand for credit may be as much of a problem as the supply.
The monthly flow of new loans of as much as 1 million euros for as much as a year — a type of credit typically used by small and medium-sized companies — is still down by two-thirds in Spain from a 2007 peak, according to Bank of Spain data.
On the other hand, Spain’s sovereign debt has rallied to what are truly stupid heights—with the 10-year bond hitting a 2.11% yield yesterday (compared to 7% + just 24 months ago). The explanation for these parallel developments is that the hedge fund speculators in peripheral sovereign debt do not care about actual expansion of the Spanish or euro area economies that is implicit in Draghi’s targeted promotion of business lending (whether healthy and sustainable, or not). They are simply braying that “T” for targeted LTRO is not enough; they demand outright sovereign debt purchases by the ECB—-that is, Bernanke style QE and are quite sure they will get it. That’s why they are front-running the ECB and buying the Spanish bond. It is a patented formula and hedge fund speculators have been riding it to fabulous riches for many years now.
This commentary, with some excellent charts, showed up on David's website on Friday someday---and it's the first offering of the day from Roy Stephens.
Heightened global market instability has began to be transmitted to U.S. securities markets.
There’s much that we simply don’t know. There is as well a lot we know with an important degree of confidence.
Some months back I highlighted an exceptional Bank of America Merrill Lynch research report, “Pig in the Python – the EM Carry Trade Unwind” (Ajay Singh Kapur, Ritesh Samadhiya and Umesha de Silva). Especially in light of recent market developments, it’s a good time to revisit this thesis and highlight some of their data.
From “Pig in the Python,” February 2014: “Since 3Q2008, the US Federal Reserve QE has unleashed a massive $2 TN debt-driven carry trade into emerging markets, disproportionately increasing their forex reserves (by $2.7 TN from end-3Q 2008), their monetary bases (by $3.2 TN), their credit and monetary aggregates (M2 up by $14.9 TN), consequently boosting economic growth and asset prices (mainly property and bonds). As the Fed continues to taper its heterodox policy, we believe these large carry trades are likely to diminish, or be unwound.”
Doug's must read commentary showed up on the prudentbear.com Internet site on Friday evening---and it's courtesy of reader U.D.
Barely a year removed from the devastation of the 2008 financial crisis, the president of the Federal Reserve Bank of New York faced a crossroads. Congress had set its sights on reform. The biggest banks in the nation had shown that their failure could threaten the entire financial system. Lawmakers wanted new safeguards.
The Federal Reserve, and, by dint of its location off Wall Street, the New York Fed, was the logical choice to head the effort. Except it had failed miserably in catching the meltdown.
New York Fed President William Dudley had to answer two questions quickly: Why had his institution blown it, and how could it do better? So he called in an outsider, a Columbia University finance professor named David Beim, and granted him unlimited access to investigate. In exchange, the results would remain secret.
After interviews with dozens of New York Fed employees, Beim learned something that surprised even him. The most daunting obstacle the New York Fed faced in overseeing the nation's biggest financial institutions was its own culture. The New York Fed had become too risk-averse and deferential to the banks it supervised. Its examiners feared contradicting bosses, who too often forced their findings into an institutional consensus that watered down much of what they did.
This story went viral the moment it got posted on the Internet yesterday. This version, which is a must read, appeared on the propublica.org Internet site at 5 a.m. EDT on Friday morning---and I found it in a GATA release.
There are three other versions that were sent to me. The original Bloomberg story headlined "The Secret Goldman Sachs Tapes" was written by Michael Lewis of "Flash Boys" fame---and it's a must read as well. I thank Roy Stephens for sending that version. Zero Hedge couldn't help themselves---and their take on it is headlined "How Goldman Controls the New York Fed: 47.5 Hours of "The Secret Goldman Sachs Tapes" Explain"---and this commentary is courtesy of reader 'David in California'. The New York Post also jumped into the fray with an article entitled "Tapes showing meek oversight of Goldman are about to rock Wall Street"---and this one is courtesy of reader Brad Robertson.
Alex was the dinner speaker last Saturday night at the Casey Summit in San Antonio---and his speech, along with the zeal with which it was delivered, received decidedly mixed reviews.
But here he is in an interview with Doug Casey. It was posted on the youtube.com Internet site yesterday sometime. It's a 2-part interview---and the first installment starts at the 2:35 minute mark and runs until the 17:30 minute mark. Then, after a five minute break/commercial, the interview starts again at the 22:40 minute mark---and ends at 43:10.
I've had no time to watch it as of yet, but it will be in the pile of things I have to read/listen to, before the weekend is done.
A whistleblower of HSBC fraud has denounced the bank’s chairman, Douglas Flint, as “an extraordinary hypocrite” following the financier’s suggestion that those who expose crime in Britain’s financial services sector should be rewarded and celebrated.
Flint made the comment at the launch of Britain’s Chartered Institute for Securities & Investment’s (CISI) “Speak Up” initiative launched on Tuesday. The program was set up to encourage financial services firms to adopt a policy that assists staff in reporting legislative, regulatory and company policy violations.
Calling on U.K. financial firms to take a more proactive approach to tackling misconduct in the workplace, Flint said firms should “encourag[e] the calling out of both good and bad behaviour” and reward and praise “those who escalate their concerns even if they are sometimes wrong”.
But HSBC whistleblower and financial campaigner Nicholas Wilson condemned Flint’s comments, insisting they were disingenuous. In an exclusive interview, Wilson told RT he had attempted to expose fraud in HSBC for years, yet Flint had turned a blind eye.
This article appeared on the Russia Today website at 1:14 p.m. Moscow time on their Thursday afternoon---and I thank Harry Grant for sending it our way.
Six banks have entered settlement discussions with the U.K.'s main markets regulator over the alleged manipulation of foreign exchange in what could amount to record fines.
Each of the banks -- Barclays, Citigroup, HSBC, JPMorgan Chase, Royal Bank of Scotland, and UBS -- are facing fines in the hundreds of millions of pounds from the Financial Conduct Authority, according to people familiar with the situation.
The settlement talks, which typically last eight weeks, are only with the FCA and do not include the United States or any other domestic regulator.
This Financial Times story showed up on their website yesterday sometime---and it's posted in the clear in this GATA release.
Trilateral natural gas talks Friday in Berlin have resulted in temporary relief for Ukraine, delegates at the conference confirmed.
Russian, Ukrainian and European officials met in Berlin in an effort to avert a gas crisis for the upcoming winter.
Russia meets about a quarter of the gas needs for Europe, though the bulk of that volume runs through the Soviet-era transit system in Ukraine. Contractual woes in 2006 and 2009 forced Russian gas company Gazprom to cut gas supplies through Ukraine and European leaders are worried about a repeat of the crisis given ongoing acrimony between Kiev and Moscow.
The original headline to this UPI story, filed from Berlin yesterday, read "Ukraine, Europe, Russia make progress in gas talks"---and it's another contribution from Roy Stephens.
U.S. actions in Ukraine should be classified not only as hostile with regard to Russia, but also as targeting global destabilization. The U.S. is essentially provoking an international conflict to salvage its geopolitical, financial, and economic authority. The response must be systemic and comprehensive, aimed at exposing and ending U.S. political domination, and, most importantly, at undermining U.S. military-political power based on the printing of dollars as a global currency.
The world needs a coalition of sound forces advocating stability —in essence, a global anti-war coalition with a positive plan for rearranging the international financial and economic architecture on the principles of mutual benefit, fairness, and respect for national sovereignty.
CURBING THE ARBITRARINESS OF RESERVE CURRENCY ISSUERS
This coalition could be comprised of large independent states (BRICS); the developing world (most of Asia, Africa, and Latin America), which has been discriminated against in the current global financial and economic system; CIS countries interested in balanced development without conflicts; and those European nations not prepared to obey the disparaging U.S. diktat. The coalition should take measures to eliminate the fundamental causes of the global crisis.
Sergei Glaziev is an Advisor to the President of the Russian Federation---and a Full Member of the Russian Academy of Sciences. This commentary of his showed up on the globalaffairs.ru Internet site on Tuesday---and it's certainly worth reading. I thank Roy Stephens for sharing it with us.
The British parliament voted overwhelmingly on Friday to join a U.S.-led coalition against the Islamic State militant group. Belgium and Denmark also announced that they would join the international effort against the jihadists.
British lawmakers voted 524 to 43 in favour of military action, paving the way for the Royal Air Force to immediately join strikes targeting the Islamic State (IS) group, also known as ISIS or ISIL.
The vote came after Prime Minister David Cameron recalled parliament from recess to back military action following an official request from the Iraqi government.
This article appeared on the france24.com Internet site early this morning Europe time--and I thank Roy Stephens for his final offering in today's column.
1. Andrew Maguire [#1]: "Stunning 650 Tonnes of Gold Bought in Takedown" 2. Ronald-Peter Stoferle: "Concerned About the Gold and Silver Smash - Just Read This" 3. Andrew Maguire [#2]: "Final Stages of Historic Capitulation in Gold and Silver"
[Note: Besides my usual disclaimer on our daily dose of hyperbole out of King World News that's posted below---I, and others, have some real issues with this 650 tonne figure---and here are just two of them. This amount of gold represents almost 80 percent of the current contents of the GLD ETF---and 25 percent of yearly gold production. Considering the fact that the goings-on inside the LBMA are totally opaque, I'd like to see some proof for what appears to be an outlandish claim. - Ed]
[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]
The market for precious metals is not as big as you might think.
One year's worth of mined platinum is only the size of a car. But it's worth about $8 billion.
Visual Capitalist took one year's production of eight commodities, lumped each of them into a three-dimensional cubes, and put them next to landmarks around the world.
They also calculated the value of each cube.
Wow! Talk about a reality check! This short, but truly amazing photo essay showed up on the businessinsider.com Internet site at 4:49 p.m. EDT on Thursday afternoon---and it's an absolute must read. I was amazed---and you will be too!!! I thank reader Harry Grant for his third offering in today's column.
For years the Royal Mint has sold collectible coins commemorating special events direct to the public.
But "bullion" coins made for investment purposes – such as Sovereigns, Britannias or Lunars (introduced last year) – have until now been available only through dealers.
Bullion coins are generally produced to a less perfect finish than special-edition coins made for collectors. This means their price tracks more precisely the value of the gold they contain. By comparison, collectable coins typically go on sale – initially at least – for substantially more than the value of the gold they contain.
From this week the Royal Mint offers a bullion-coin service through which individuals can buy as few as one coin at a time directly. Buyers create an online account and buy coins via the Mint’s website, where prices change constantly according to the gold market.
Once the transaction is complete the Mint dispatches the coins in insured mail which – for a "limited time" – is free within Britain.
This interesting essay appeared on the telegraph.co.uk Internet site at 8:14 a.m. BST on their Friday morning---and it's an article I found on the gata.org Internet site.
Suppressed prices for gold and silver are obviously considered buying rates by German investors. The German precious metals trade reports a surge in sales.
“For about a week we record considerably increased turnover again, which is now on previous year’s level, so it doubled compared to the recent months.”, Rene Lehman from the internet dealer Münzland in Dresden told Goldreporter.
“We can confirm that customer demand has considerably increased in the recent days.“, said Dominik Kochmann, CEO of ESG Edelmetalle in Rheinstetten.
Daniel Marburger, Director of Coininvest GmbH in Frankfurt/Main also stated that "In the past seven working days we have seen an extreme surge in demand."
Well, dear reader, as I said further up in today's column, bullion demand here in Edmonton---especially silver---has really taken flight at our store this week as well. And since JPMorgan et al have put it on sale below the cost of production---why the hell not!!! And that is investment advice---and the buyers have figured that out all by themselves! This news item was posted on the German website goldreporter.de early yesterday evening Europe time---and I found it embedded in a GATA release.
It would appear to us that the factors that would make gold a safe-haven asset have not gone away.
In fact these factors are strengthening, as described above. The only rational explanation appears to be that gold remains an investment safe-haven as it has always done, but that this is not yet being recognised by the price discovery process in the market.
Adding in the fact that there is a continued disconnect between, on the one hand, the global physical gold market primarily driven out of China and India, and on the other hand, the New York gold futures market and unallocated London bullion market on the other hand, then this disconnect should not be expected to persist over the medium term.
This is especially the case given the heightened geopolitical and macroeconomic risks.
With the gold price not yet signalling the geopolitical and macroeconomic alarm bells that many would have expected it to, the question of gold price manipulation remains a valid question.
This must read commentary appeared on the Irish website goldcore.com on Friday. It also showed up in a GATA release as well.
Defeating markets is the primary objective of central banking, GoldMoney research director Alasdair Macleod writes today, adding that it will come at the expense of hyperinflation, since debt is so overwhelming that interest rates, while already at zero, cannot be raised without collapsing the world economy.
Macleod's analysis is headlined "Valuing Gold and Turkey Farming" and it was posted on the goldmoney.com Internet site on Friday. I found it posted on the gata.org Internet site yesterday---and it's worth reading.
In the first installment of his review of the operations of the new Shanghai International Gold Exchange in Shanghai's free-trade zone, gold researcher and GATA consultant Koos Jansen writes, among other things, that the exchange seems designed to discourage export of gold from China.
Jansen's analysis is headlined "The Workings of the Shanghai International Gold Exchange, Part 1" and it's posted at the Singapore Internet site bullionstar.com early Thursday evening local time. I found this gold-related story on the gata.org Internet site yesterday. It's long---and a bit thick, but worth your while. I stole 'all of the above' from another GATA release.
Reported Hong Kong net exports of gold to mainland China were again at an extremely low level in August at a mere 21.1 tonnes. In previous years the Hong Kong figures have been taken by global gold analysts as something of a proxy for total Chinese gold imports, even though gold was known to have entered the Chinese mainland by other routes, but this had been assumed to be in relatively insignificant quantities. This year, though, China has eased the path to passage of gold through other ports of entry – notably Shanghai and Beijing – for which no data is forthcoming and given that this easing coincides with the apparent downturn in the Hong Kong figures, it could well be the case that imports via these alternative routes have been replacing gold which had previously come in via Hong Kong.
On the face of things, if one takes the Hong Kong figures for net gold exports to China alone (see table below), Chinese demand appears to have fallen by a massive 33% this year from 725 tonnes to 485 tonnes. But this is belied by figures for withdrawals from the Shanghai Gold Exchange which are only down by around half this percentage, and which have been particularly strong in the past few weeks. This has also coincided with price premiums over the London gold price again appearing in Shanghai.
This commentary by Lawrie was posted on the mineweb.com Internet site yesterday sometime---and it's also worth reading.
Even a shutter speed of 1/4,000 of a second couldn't entirely freeze the movement of the tips of the primary flight feathers on this female mallard duck I photographed three weeks ago.
Freegold Ventures Limited is a North American gold exploration company with three gold projects in Alaska. Current projects include Golden Summit, Vinasale and Rob. Both Vinasale and Golden Summit host NI 43-101 Compliant Resource Calculations.
An updated NI 43-101 resource was calculated on Golden Summit in October 2012 and using 0.3 g/t cutoff the current resource is 73,580,000 tonnes grading 0.67 g/t Au for total of 1,576,000 contained ounces in the indicated category, and 223,300,000 tonnes grading 0.62 g/t Au for a total of 4,437,000 contained ounces in the inferred category. In addition to the Golden Summit Project the Vinasale also hosts a NI 43-101 resource calculation which was updated in March 2013. Indicated resources are 3.41 million tonnes averaging 1.48 g/t Au for 162,000 ounces, and Inferred resources are 53.25 million tonnes averaging 1.05 g/t Au for 1,799,000 ounces of gold utilizing a cutoff value of 0.5 grams/tonne (g/t) as a possible open pit cutoff. Please send us an email for more information, firstname.lastname@example.org
There is no doubt in my mind that the technical funds are being herded onto the short side of COMEX silver, gold and copper by their counterparties, the collusive commercials which are buying every contract that the technical funds sell or go short. I have to stop here to make a point that has been bothering me lately.
As clear as the silver manipulation has become to increasing numbers of observers, it is important to recognize that it is not as simple (or complex) as some maintain it is. It is not commercial selling that is fueling the move to new lows, as the commercials have been buying hand over fist. Yes, the commercials get things rolling to the downside by HFT tricks and spoofing, but that’s only to get the technical funds to sell so that the commercials can buy. That’s spelled out without exception in the evolving COT data.
It’s too bad that many observers and commentators (not subscribers) have failed to grasp this manipulation basic because it then leads to unprovable conclusions, such as it’s the government driving gold and silver prices lower by having the bullion banks sell short. Perhaps there is government involvement is some way, but it is the technical funds selling short on price declines, not the commercials. The commercials only sell on price rises. All the data confirm this. - Silver analyst Ted Butler: 24 September 2014
Today's pop 'blast from the past' dates back to 1978---three years after the beginning of the permanent negative gold bias in London---and neither the artist, Billy Joel---nor the tune---needs any further introduction. The link is here.
Today's classical 'blast from the past' is one I heard on CBC-FM yesterday as I was driving around the city running errands. It's Frédéric Chopin's Piano Concerto No. 2 in F minor, Op. 21 that he composed in 1830 when he was around 20 years old. In this youtube.com video, Russian pianist Evgeny Kissin does the honours---and the Warsaw Philharmonic Orchestra accompanies, with Antoni Wit conducting. The link is here.
Well, it was only platinum and palladium that set new low price tick for this move down on Friday---and it took brute force to engineer that price decline in palladium during the Comex trading session in New York. Like everything else that's been going on in the precious metals, it was more than obvious that there was nothing free market about it. And as I mentioned at the top of this column, it looked like it had an air of desperation about it as well.
Here are the 6-month charts in all four precious metals.
I mentioned the circumstances surrounding the next rally in the precious metals---and other commodities---in my comments regarding the Commitment of Traders Report, so I shall not repeat them here.
Yesterday I posted a chart regarding the "London Gold Price Bias"---which has been negative every year since 1975. Here's the chart once again, along with my comments---and I've added others to it to complete the picture. This is 'THE JUICE' of today's column---and I urge you to spend more than a few minutes on it.
"Here's the 5-year chart of that bias using the LBMA's own data. It actually begins about 40 minutes before the London open, which is about 2:20 p.m. in the Hong Kong trading session---and the negative bias continues until the London p.m. fix at 3 p.m. BST, or 10 a.m. EDT. After that, the price rallies until 2:45 p.m. Hong Kong time the following morning. This is the 5-year average---and using a 2-minute tick and about 1,100 trading days, it removes all the 'noise'---and leaves the trend stripped naked for all to see."
Here's another chart based directly on LBMA price data going back 44 years.
In theory, and without considering commissions, what the above charts shows in plain English is that if you invested a hundred bucks at the London a.m. gold fix on January 2, 1970---and sold your position at the London p.m. gold fix the same day---and then reinvested the proceeds the next day at the London a.m. fix---and sold at the p.m. fix---and did that every business day for 44 years, you would the have the magnificent sum of $12.87 cents in your trading account as the closing of trading on September 10, 2014.
For the first four years on the above chart, the bias was positive [low morning fix and a higher afternoon fix], so you made money---from $100 up to around $330. The bias was deliberately turned negative in London beginning on January 2, 1975---and that's plain to see on this chart, especially when you see how the gold price performed as the years progressed. If you 'bought high and sold low' every business day for 39 years, your $380 at the peak turned into $12.87.
Then Nick Laird took the same $100---bought the London p.m. fix and sold the position at the London a.m. fix the following day and re-invested the proceeds just as he did before, for the same 44 year period---and this is what that chart looks like. Your initial hundred bucks would have turned into $27,711 on September 10, 2014.
Of course you would have done infinitely better ex-London if you'd sold your position at 2:20 p.m. in Hong Kong---and then invested the proceeds at the p.m. fix the same day in London.
And here's another chart that hits you between the eyes.
It shows that between 1999 and 2012---during the biggest bull market in gold in history, London [the red bars] was down every year. That's the 'negative price bias' in action.
This pattern wouldn't exist in a free mark market---which it isn't!
So when they talk about rigging the gold market in London, it's not the individual fixes that matter, it's the negative bias between the morning and afternoon gold fixes that is the "fix"---and it's been negative for 39 years in a row. It's a good bet that around 90 percent of all the volume in gold [or any other commodity for that matter] occurs between 2:45 p.m. in Hong Kong---and the 3 p.m. BST gold fix in London.
Before heading off to bed, I'd like to quickly remind you of the 40th Annual New Orleans Investment Conference from October 22-25, 2014. That's less than four weeks away! If you're interested, you can find out everything you need to know by clicking here.
That's it for the day---and the week.
See you on Tuesday.