Except for a little price excitement between 9 a.m. and noon in Hong Kong yesterday, it was pretty much a nothing sort of day for gold. The low of the day came just after 12 o'clock noon in London, and the tiny rally going into the Comex open wasn't allowed to get far.
The gold price closed at $1,365.80 spot, up $2.50 from Tuesday's close. Net volume was extremely light, about 104,000 contracts.
You can be forgiven if you mistake the silver chart for the gold chart, or vice versa; as they look identical. And, like gold, the tiny rally that began at the noon silver fix in London, didn't get too far once trading began in New York.
Silver finished the Wednesday session at $23.215 spot, up 24.5 cents from Tuesday. Net volume was a very quiet 34,500 contracts.
Both platinum and palladium made rally attempts in Far East trading on their Wednesday morning, and neither got far. Platinum then got sold down the moment that Zurich opened, and that continued until late in the Comex trading session in New York. Palladium ran into a price ceiling at the $700 spot price mark, before getting sold down when trading began on the Comex. Here are the charts.
The dollar index closed on Tuesday afternoon in New York at 81.83. When it opened in Far East trading on their Wednesday morning, it rallied up to 81.93 by 2 p.m. local time in Hong Kong, then it was all down hill until the 81.46 low at 1:30 p.m. in New York. After that, the index didn't do much, closing the Wednesday session at 81.53, which was down 30 basis points from Tuesday's close.
The gold stocks more or less followed the gold price. They opened up about one percent, but immediately got sold down two percent, with every rally attempt after that also meeting with an eager seller. However, the upward bias remained intact into the close, and the HUI finished up 0.67%.
The silver stocks followed a virtually identical chart pattern as gold, and Nick Laird's Intraday Silver Sentiment Index closed up 0.71%.
(Click on image to enlarge)
The CME's Daily Delivery Report showed that 13 gold and 7 silver contracts were posted for delivery on Friday within the Comex-approved depositories. The link to that activity is here.
The good folks over at the shortsqueeze.com Internet site updated the short positions for both GLD and SLV as of 31 August. SLV showed an increase in its short position of 18.94 percent, which translates into an additional 2.53 million shares which were sold short because there was no metal available to deposit when the original transaction[s] was/were done, so the authorized participant was forced to short the shares in lieu of the real deal. I would bet a fair chunk of change that the deposit into SLV that was reported on Tuesday, 964,058 troy ounces, was made by an authorized participant [read JPMorgan Chase] to cover part of that short position.
The 15,880,700 troy ounces/shares currently sold short [in total] in SLV as of this report, represents 4.5 percent of the outstanding shares of SLV, or around 500 metric tonnes. Using past as prologue, this is not an outrageous amount. But the fact of the matter is that there should be zero short position in any hard metal ETF. Can you imagine the hue and cry if CEF or PSLV did an offering, got the cash, and then didn't buy/deposit all the metal they said they would? Shareholders would burn Eric Sprott and Stephan Spicer at the stake; after they got out of jail for fraud, that is. But nobody bats an eyelash when this happens in SLV or GLD. [Now you know why I wouldn't touch either of these ETFs with the proverbial 10-foot cattle prod.]
There was only a tiny increase in the short position over at GLD. This new report showed 2.68 percent. But the total number of GLD shares sold short is about 10 percent of all the outstanding shares issued in GLD, over 3 million troy ounces of gold in total, almost 100 metric tonnes. This is an outrageous amount. Why the GLD fund managers allow this situation to exist is beyond me.
Before laying this issues aside, dear reader, let me ask this question. What would the silver and gold prices be by the end of the trading day today if the authorized participants had to go out and purchase real metal in the open market to cover their portion of the outstanding short positions in both these ETFs, especially silver? And you wonder why Ted Butler is screaming about the permanent short positions in both GLD and SLV. It's out and out fraud.
There were no reported sales from the U.S. Mint yesterday.
Over at the Comex-approved depositories on Tuesday, they reported almost no activity in gold. None was reported received, and only 482 troy ounces were shipped out. Here's the link to that data.
It was pretty quiet in silver as well on Tuesday. Only 116,244 troy ounces were received, and 40,237 troy ounces were shipped out the door for parts unknown. Here's the link to that activity.
I have even fewer stories today than I had yesterday, and the final edit of the ones I do have, is up to you.
Companies and countries around the world are rushing to tap global bond markets before borrowing costs hurtle even higher, with many paying big yield premiums to replenish their coffers.
With the U.S. 10-year Treasury yield - the risk-free rate against which all assets are bench-marked - a whisker under 3 percent, money is still cheap by historical standards.
But the U.S. Federal Reserve's preparations to roll back its $85 billion (53 billion pounds)-a-month stimulus mean yields are likely to climb steadily from current levels.
This Reuters piece showed up on The New York Times website late yesterday morning...and I thank Phil Barlett for today's first story.
Stanley Druckenmiller, who boasts one of the hedge-fund industry’s best long-term track records of the past three decades, said it would be a “big deal” for financial markets if the Federal Reserve were to completely end its asset purchases as outlined over the next 12 months.
“How in the world does anyone think when the actual exit happens that prices are not going to respond?” Druckenmiller said today on Bloomberg Television’s “Market Makers” with Erik Schatzker and Stephanie Ruhle, given the selloff in bonds and emerging markets in the past few months on the mere hint that the Fed might taper its purchases.
The Fed is poised this month to start reducing unprecedented bond purchases that have fueled a four-year market rally, economists said. Chairman Ben S. Bernanke has said the central bank may end its bond-buying program in mid-2014 if the economy finally achieves sustainable growth.
Jeffrey Gundlach, manager of the $36 billion DoubleLine Total Return Bond Fund, said yesterday the Fed is making a “big mistake” by moving ahead with its exit plan without pegging it more closely to market conditions.
This Bloomberg news item, complete with an 8-minute embedded video interview, was posted on their website just before lunch Denver time yesterday...and I thank reader Ken Hurt for sending it.
Jeff Gundlach of DoubleLine Funds just wrapped up his latest public webcast.
He reiterated his calls for interest rates and inflation to remain low. He also reiterated his worry about the longer risks of high Federal debts and deficits.
Gundlach spent quite a bit of time on the turmoil in the emerging markets, particularly India.
"I would not own the Indian stock market," he said. "It looks very scary."
Nothing we haven't heard already, dear reader. Jeff's 53-slide presentation on his public webcast was posted on the businessinsider.com Internet site late Tuesday afternoon...and I thank Ken Hurt for his second contribution in a row to today's column.
Morgan Stanley almost vanished when hedge funds, spooked by difficulties getting money out of bankrupt Lehman Brothers, pulled more than $128 billion in two weeks from Morgan Stanley. To stay afloat it sold a 20 percent stake, became a bank holding company and borrowed $107.3 billion from the Federal Reserve on a single day.
Five years after Lehman sank on Sept. 15, 2008, triggering the worst financial crisis since the Great Depression, Morgan Stanley is safe enough to survive a shock that devastating, Porat said. Morgan Stanley's Ruth Porat and Chief Executive Officer James Gorman, with prodding from regulators, led a drive to cut risk and boost capital to soften the next blow.
While the amount of capital at the six largest U.S. lenders has almost doubled since 2008, policy makers and some Wall Street veterans say that’s not enough. They see a system still too leveraged, complicated and interconnected to withstand a panic, and regulators ill-equipped to head one off -- the same conditions that led to the last crisis.
“We’re safer, but we’re not safe enough,” said Stefan Walter, who led global efforts to revise capital rules as general secretary of the Basel Committee on Banking Supervision.
The big U.S. banks are larger now than they ever were before the banking crisis...and they are now so interconnected...that if one goes, they all go. This longish Bloomberg news item, which is worth reading, was posted on their website Tuesday morning MDT...and is something I found in yesterday's edition of the King Report.
The big (symbolic) news out of Wall Street today is this: Three of the 30 members of the Dow Jones industrial average are changing. Alcoa, Hewlett-Packard and Bank of America are out. Nike, Visa and Goldman Sachs are in.
It is tempting to use this occasion as an opportunity to examine the symbolism of what this says about Corporate America, and the global economy. Aluminum (Alcoa) is out! Athletic wear is in! Down with plain old conventional banking! Up with fancy high-finance investment banks.
But in reality, it really only shows the utter uselessness of the Dow Jones industrial average for measuring anything. It is an accident of history that the Dow is the most widely cited measure of how the overall stock market is doing, and a bad accident.
Truer words were never spoken! This article appeared on The Washington Post website on Thursday morning...and is the second offering of the day that I borrowed from yesterday's edition of the King Report.
The income gap between the richest 1 percent and the rest of America last year reached the widest point since the Roaring Twenties.
The top 1 percent of U.S. earners collected 19.3 percent of household income in 2012, their largest share since 1928. And the share held by the top 10 percent of earners last year reached a record 48.2 percent.
U.S. income inequality has been growing for almost three decades. But it grew again last year, according to an analysis of IRS figures dating to 1913 by economists at the University of California, Berkeley, the Paris School of Economics and Oxford University.
This moneynews.com story was posted on their Internet site late Tuesday morning...and I thank West Virginia reader Elliot Simon for sharing it with us.
Raouchan Gazakov brought his family to Syria, taught his 5-year-old son to make bombs and bade farewell to his relative, a suicide bomber. RT’s Maria Finoshina talked to him in a Damascus prison and asked him why he came to fight for Al-Qaeda.
“A group called Murad approached me a year ago and convinced me that Muslims in Syria are being oppressed and killed, and that I should go and take up arms against Assad for world jihad,” Raouchan said in the spartan prison, where some 200 inmates are held – most of them jihadist fighters for Al-Qaeda or affiliated groups. The prisoners’ fate is unknown, although it looks grim.
Raouchan says he sneaked into Syria last January through Turkey. In Istanbul, two men claiming to be from Al-Qaeda met Raouchan and accompanied him to Syria. There, he joined a large terrorist group run by an Egyptian jihadist.
You couldn't make this stuff up. There are so many photos/videos that it makes this story seem longer than it really is. In actual fact, it's a short read...and worth it. It was posted on the Russia Today website mid-morning yesterday, which was around 2:30 a.m. EDT, and it's Roy Stephens first offering in today's column.
Recent events surrounding Syria have prompted me to speak directly to the American people and their political leaders. It is important to do so at a time of insufficient communication between our societies.
Relations between us have passed through different stages. We stood against each other during the cold war. But we were also allies once, and defeated the Nazis together. The universal international organization — the United Nations — was then established to prevent such devastation from ever happening again.
The United Nations’ founders understood that decisions affecting war and peace should happen only by consensus, and with America’s consent the veto by Security Council permanent members was enshrined in the United Nations Charter. The profound wisdom of this has underpinned the stability of international relations for decades.
No one wants the United Nations to suffer the fate of the League of Nations, which collapsed because it lacked real leverage. This is possible if influential countries bypass the United Nations and take military action without Security Council authorization.
This op-ed piece by Vladimir Putin was posted on The New York Times website yesterday...and it's an absolute must read. I thank Casey Research's own Nick Giambruno for sharing this with us.
The CIA has begun delivering weapons to rebels in Syria, ending months of delay in lethal aid that had been promised by the Obama administration, according to U.S. officials and Syrian figures. The shipments began streaming into the country over the past two weeks, along with separate deliveries by the State Department of vehicles and other gear — a flow of material that marks a major escalation of the U.S. role in Syria’s civil war.
The arms shipments, which are limited to light weapons and other munitions that can be tracked, began arriving in Syria at a moment of heightened tensions over threats by President Obama to order missile strikes to punish the regime of Bashar al-Assad for his alleged use of chemical weapons in a deadly attack near Damascus last month.
The arms are being delivered as the United States is also shipping new types of nonlethal gear to rebels. That aid includes vehicles, sophisticated communications equipment and advanced combat medical kits.
This 3-page story appeared on The Washington Post website yesterday...and my thanks go out to Roy Stephens once again.
President Hassan Rouhani is set to meet Putin on the sidelines of a summit of the Shanghai Cooperation Organisation held in Kyrgyzstan on Friday, in the newly-elected centrist cleric's first meeting with a major world leader. The Kommersant business daily reported Wednesday that Putin will offer to supply Iran S-300 air defence missile systems as well as build a second reactor at the Bushehr nuclear plant.
The S-300 offer would be a particularly contentious development given it would essentially revive a contract for similar missile systems that Russia cancelled in 2010 after heavy Israeli and US pressure. Putin's spokesman Dmitry Peskov told Kommersant that Putin and Rowhani were expected to discuss "working together in the nuclear energy sphere" and "questions of military technical cooperation" at the summit in Bishkek.
Chemical Weapons Decomissioning ain't gonna happen. Of course, the practicalities of dismantling and storing these weapons is hugely problematic.
Carrying out Russia's plan to dismantle Syria's stockpiles of mustard gas and sarin and VX nerve agents is viewed as a long shot by many diplomats, top experts and current and former U.S. officials.
"The Russian proposal sounds attractive, but very quickly, operational problems could derail obtaining international control, much less actually destroying the arsenal," said Amy Smithson, an expert on chemical weapons at the James Martin Center for Nonproliferation Studies in Washington, D.C.
This very long essay was posted on the Zero Hedge website yesterday...and is a must read for all students of the New Great Game.
As lawmakers debate barring Berlusconi from office, the former prime minister and his supporters threaten to scuttle Italy's governing coalition.
This week it once again seemed like Silvio Berlusconi's fate would be sealed. But that turned out not to be the case: 23 Italian senators spent six hours discussing and threatening one another -- before adjourning until late Tuesday evening. That meeting also ended without a vote.
The hearings, which are reportedly set to resume on Thursday at 9 a.m., are supposed to determine whether the former prime minister will lose his political office after being decisively found guilty of tax fraud. The law states Berlusconi must go, but the law, at this point, has become a side issue.
Berlusconi himself is in a state of perpetual outrage. He recently spoke of "attempted political assassination," and on Monday made a statement that pointed to what this Italian farce is actually about. "They are treating me," he said, appalled, "like a common criminal."
Well then, maybe he's an "uncommon" criminal...but he's a crook no matter how you slice it or dice it. This story was posted on the German website spiegel.de yesterday afternoon Europe time...and I thank Roy Stephens for bringing it to our attention.
Japan is stumbling helplessly from one crisis to the next as it battles the ongoing disaster at the Fukushima nuclear power plant. US nuclear inspector Dale Klein is demanding the intervention of foreign experts, but a quick solution is unlikely.
This week, the chief nuclear officers of around 100 American nuclear power plant reactors are taking a field trip. They are travelling to Japan and then taking a bus to Fukushima. There, dressed in protective suits, they will walk through the ruins left behind by the earthquake of the century, the tsunami of the century and the resulting triple nuclear reactor meltdown that occurred in March 2011.
"I can assure you when they get back from this trip, all of these chief nuclear officers will double their safety precautions," says Dale Klein, who has made the same trip and describes it as "very sobering." Klein, who was head of the United States Nuclear Regulatory Commission until 2009, now serves as chair of the Nuclear Reform Monitoring Committee, which advises Tokyo Electric Power Company (TEPCO), the company that once ran the Fukushima power plant and is now responsible for cleaning up the site. In the eyes of industry experts and the Japanese public alike, the company has proved one thing unequivocally -- that it is in far over its head in trying to handle the aftermath of the disaster.
This news item was posted on the spiegel.de Internet site on Tuesday afternoon Europe time. Every time I read an article on the situation at Fukushima, the situation seems to be heading from bad to worse...with no end in sight. I thank Roy Stephens for his final offering in today's column.
The first interview is with Grant Williams...and it's headlined "Amazing - GLD ETF Tells Customers You Can't Have the Gold". The second commentary is with John Hathaway. It's entitled "People Can't Get Their Gold Out of GLD as Inventories Plunge". And lastly is this blog featuring Dr. Stephen Leeb. It bears the title "GLD, Gold's Coming Super-Surge and the Next Bretton Woods".
In yet another instance of how the Indian government is seeking to utilise “idle” gold and control gold imports, the government appears to be knocking on the doors of several temples, seeking information about their gold ornaments and artifacts.
The Reserve Bank of India (RBI) has sent letters to several temples and their boards, seeking to collect data about gold contained within the temples. Estimates suggest that Indian temples have up to a combined total of 30,000 tonnes of gold.
The issue has, however, taken on political overtones, evoking the ire of Hindu fundamental groups across the country. While some opposition political parties have questioned the move and its timing, some rightist groups have sent a letter to the temple boards asking them to ignore the RBI letter.
This article, filed from Mumbai, was posted on the mineweb.com Internet site in the wee hours of this morning EDT.
Bernard has been the called the Rosa Parks of the alternative money movement. More than 10 years ago, he had this idea that he would make his own money - not the fake stuff we are used to, but the real stuff made of actual silver. He called his currency the Liberty Dollar (and why not, since there is no trademark on the word dollar?).
The feds raided him in in 2006. In 2007, the government outright stole 2 tons of coins from him, many of them featuring an image of Ron Paul, plus 500 silver coins and 50 gold coins. They threw him in jail and dragged his name through the mud many times.
He was later convicted of making counterfeit coins - an ironic conviction given that he was making silver coins to compete with official coins made out of scrap metal. That conviction was in March 2011, fully 2½ years ago. The government labelled him a 'domestic terrorist'. Yet - and this is what amazed me - he still hasn't been sentenced. He walks around as free as you or me.
This must read commentary was posted on the dailyreckoning.com.au Internet site yesterday...and my thanks go out to Elliot Simon for sharing it with us.
Drilling Intersects 102 Meters of 1.97 gpt Gold at Columbus Gold’s Paul Isnard Gold Project; Drilling Confirms Depth Extension of Gold Mineralization
Columbus Gold Corporation (CGT: TSX-V) (“Columbus Gold”) is pleased to announce results of the initial five (5) core drill holes at its Paul Isnard gold project in French Guiana. The holes confirm depth extension of gold mineralization below shallow holes drilled on the 43-101 compliant 1.9 million ounce Montagne d’Or inferred gold deposit at Paul Isnard in the 1990’s and support the current program of resource expansion through offsetting open-ended gold mineralization indicated by the earlier holes.
Robert Giustra, CEO of Columbus Gold, commented: “These drill results validate Columbus Gold’s approach to adding ounces with a lower-risk drilling program designed to infill and to extend the mineralized zones to 200 m vertical depth from surface; a depth amenable to open pit mining.”
Fourteen (14) holes have been completed (assays pending) by Columbus Gold in the current program and drilling is progressing at the rate of about 3,000 meters per month with one drill-rig on a 24 hour basis. Columbus Gold plans to accelerate the current program by engaging a second drill-rig as soon as one can be obtained.
Please visit our website for more information about the project.
There have been continued reports on JPMorgan of new legal settlements, an increase in legal loss reserves and the potential sale of their physical commodities business and departure of the bank’s commodities head, Ms. Blythe Masters, before the end of the year. To my knowledge, the bank intends to hold on to its gold/silver operation; but I don’t know if that’s by choice or because of the potential legal toxicity of the unit. I’m still of the opinion that the successive flip of the concentrated COMEX silver short position from Drexel Burnham, to AIG, to Bear Stearns and then to JPMorgan over the past 20 years, stops with JPM; although I can’t be sure of how it plays out for JPMorgan. - Silver analyst Ted Butler, 11 September 2013
It was a nothing day on Wednesday, just another day off the calendar as Ted Butler is wont to say. Volume was very light in both silver and gold, and there's nothing to be read into yesterday's price action.
One of the stories I posted yesterday was headlined "Christian Garcia: U.S. Mint hedges silver purchases with HSBC and JPM ".
At the end of video, Mike Maloney said he'd be interested in hearing what silver analyst Ted Butler had to say about the whole thing. Here, in part, is an e-mail exchange between Bron Suchecki at The Perth Mint and Ted Butler, and I've had permission from both to post this. First is two of the paragraphs from Bron's e-mail to Ted on the above story:
"The U.S. Mint says it has working stock of silver of 8.9moz worth $309m and in addition the $241.5m of hedges, which @ $34.65 = 6.9moz. That 6.9moz would equate to 1,393 contracts. Given current open interest of around 100,000 contracts, that doesn’t strike me as much “cover” or explanation to the CFTC."
"As to the claim that JPM is using this as "cover", HSBC is a direct competitor of JPM in the precious metals markets and are equal in size with JPM in the market. I would argue that they would consider it an embarrassment within the precious metal industry for them to have to hedge their hedge with JPM. Secondly, would not HSBC want to “use” the hedge they are doing for US Mint (I would note that just because the trading partner lists HSBC as their operating bank doesn’t mean they do all their hedging with them, but lets assume they do) as "cover" to the CFTC for any short position they have on COMEX rather than "giving" it to their competitor and thereby help their competitor?"
And Ted's reply,
Hi Bron, Thanks for your note.
"Hedging involves the legitimate transfer of price risk. I'm not sure how the Mint could have much real price risk, as they buy silver (in blank form, not good delivery bars) at the prevailing market price and fairly quickly process it and sell it at the prevailing price (plus a mark up). Perhaps the Mint feels it must hedge that limited time period in which I suppose they have risk exposure, but it wouldn't involve significant quantities and would not necessarily have to be hedged on the COMEX (I'm sure HSBC could devise a customized OTC transaction)."
"I am alleging that JPMorgan made $3 billion on their short market corners in COMEX gold and silver from Dec 4, 2012 thru the recent lows and used the price decline that they engineered to take those profits and flip it into a long market corner in gold and a sharply reduced (but still significant) short corner in silver. These crooks at JPM flipped a 7.5 million gold ounce short market corner into a 8.5 million oz long position (in early August). They reduced their short market corner in COMEX silver by more than 100 million oz during that time."
"It's hard for me to imagine how JPM could hide behind whatever the Mint may be hedging as an excuse for JPM's market manipulations in gold and silver. But I'd like to see them try." Ted.
All this wild speculation about Comex default, delivery problems with GLD, the U.S. Mint hedging strategy, is just that, pure speculation, a total red herring. Instead of making stuff up I, like Ted Butler, prefer to have some verifiable proof of anything. Hard data for me has yet to go out of style, and that's what you expect to get from me, or you wouldn't be reading this.
I've been a Commitment of Traders/Bank Participation Report junkie for years now, because I know that the data contained in them is correct. That's where everyone's focus should be. If the CFTC and CME Group were actually lying about it, they wouldn't be posting data that leads straight to JPMorgan Chase.
Why go searching for all this "pie-in-the-sky" sensationalism that can't be proved, and/or makes no sense at all, when the U.S. government produces the hard data weekly and monthly that hangs these three bullion banks out to dry? And not to be forgotten is "Table 9" in the quarterly derivatives report from the OCC.
I post some of the stories and interviews on all this crazy stuff, but the smallest amount I can get away with, and I hold my nose on a lot of what I do post, and rarely read any of it. So, until things change, when I'm talking about price management, short/long positions and deliveries in this column, I'll stick to what I can prove, and what makes real-world sense. I'll leave the rest to the lunatic fringe.
I note that the selling pressure in both gold and silver began the moment that trading started at 6 p.m. yesterday evening in New York. It continued through most of the Far East session, and then the high-frequency traders really got serious just minutes before the London open. This will certainly set the tone for the rest of the day in Europe, and also when trading on the Comex begins this morning. Gold volume is already over 40,000 contracts but, surprisingly enough, silver's volume is only around 9,000 contracts as I write this paragraph at 3:48 a.m. EDT. Platinum and palladium are down as well, but not to the extent that either silver or gold are. The dollar index is flat. It's obvious that this is another bear raid by JPMorgan et al. It's just unfortunate that this trading data won't be in tomorrow's Commitment of Traders Report.
And as I hit the send button on this morning's column at 5:20 a.m. EDT, the high-frequency traders are still pounding away at both gold and silver. At the moment, gold is down twenty-five dollars, and silver is down 65 cents. Gold volume is north of 53,000 contracts, and silver's volume is a hair over 12,000 contracts. The dollar index is up a handful of basis points.
Gold is within ten bucks of its 50-day moving average, but silver is still over a dollar away.
How long can this continue, and how low can JPMorgan get the precious metal prices? Beats me. We have the FOMC meeting coming up next week, and maybe gold and silver are being softened up in advance of that event. We'll find out, as they say, in the fullness of time.
See you tomorrow.