Gold & Silver Daily
 

¤ Yesterday In Gold & Silver

The gold price traded flat for a while once the markets opened on Sunday evening in New York, but got sold down in two separate selling bouts, with the low tick coming shortly after the London morning gold fix.  The 1 p.m. BST rally was dealt with in the usual manner an hour and change later in New York---and once the London p.m. fix was in, the gold price traded almost ruler flat for the remainder of the Monday session---and was closed below $1,200 spot.

The low and high ticks were reported by the CME Group as $1,196.10 and $1,209.30 in the June contract.

Gold closed yesterday in New York at $1,198.00 spot, down $9.30 from Friday's closed.  Net volume was pretty light at only 104,000 contracts.

The price action in silver followed virtually the same pattern, except the spike low tick came shorty before 1 p.m. BST---and after that it was the same old, same old.

The low and high were recorded as $16.225 and $16.51 in the May contract.

Silver closed on Monday afternoon in New York at $16.255 spot, down 23 cents from Friday.  Net volume was very much on the lighter side at 22,000 contracts.

Platinum received the same treatment, except there was no recovery at all until after 12 o'clock noon in New York---and then it was only by a few dollars. Platinum was closed at $1,150 spot, down 22 bucks on the day.

After blasting through its 50-day moving average to the upside, palladium met the same fate starting about 10:30 a.m. Zurich time---and "da boyz" on the COMEX finished the job starting shortly before 1 p.m. EDT.  Platinum was closed lower by 7 dollars at $768 spot.

The dollar index closed late on Friday afternoon in New York at 99.35---and proceeded to chop higher in fits and starts until its 99.99 a.m. London high tick, at least according to ino.com.  After that it fell all the way back down to 99.23 before "gentle hands" appeared and closed the index at 99.50---up 15 basis points on the day.

The gold stocks rallied to their high of the day in positive territory at, or minutes before, the London p.m. gold fix.  This was rather peculiar share action, as the gold price was being trashed at the time.  The the shares got sold off to around unchanged shortly after that---and stayed that way until minutes before 2:30 p.m. EDT---and then they gave up the ghost, as the HUI closed down 0.72 percent.

Once again the silver equities never got a sniff of positive territory, although their chart action was a carbon copy of the their golden brethren---and Nick Laird's Intraday Silver Sentiment Index closed down 1.37 percent.

The CME Daily Delivery Report showed that 1 gold and 5 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.  The link to yesterday's Issuers and Stoppers Report is here---and there's not much to see, although Jefferies was the short/issuer in both metals.

The CME Preliminary Report for the Monday trading session showed that gold open interest in April declined by another 72 contracts---and now stands at 2,398 contracts remaining.  Silver o.i. remained unchanged at 175 contracts.  The further we get into the delivery month with such smallish delivery action, the more intriguing it becomes.

There were no reported changes in GLD yesterday---and as of 7:13 p.m. EDT yesterday evening, there were no changes reported in SLV, either.  But when I checked back at 1:15 a.m. EDT this morning, I note that another 669,411 troy ounces were added.

The folks over at shortsqueeze.com updated their website on Friday with the changes in the short positions for both GLD and SLV up to and including March 31---and this is what they had to report.

In SLV, the short interest increased from 16.95 million shares/troy ounces, to 19.55 million troy ounces, or 15.32 percent.  In GLD the short interest increased from 1.29 million troy ounces, up to 1.46 million troy ounces, or 12.52 percent.

The U.S. Mint had a small sales report.  They sold 1,500 troy ounces of gold eagles---and 135,500 silver eagles.

There were 40,097 troy ounces of gold reported received at the COMEX-approved depositories on Friday---all of it went into HSBC USA's vault.  Only one kilobar was reported shipped out.  The link to that activity is here.

It was another monster day in silver, as 1,258,474 troy ounces were reported received, of which 1,200,224 troy ounces ended up in JPMorgan's vault.  On the other side---1,387,174 troy ounces were reported shipped out the door---and the link to that action is here.

There was no reported in/out movement at the 'Gold Kilo Stocks' depositories in Hong Kong on Friday.

I have a reasonable number of stories for a Tuesday column---and I hope it remains there for the remainder of Monday evening as I post them.

 

¤ Critical Reads

The $9 Trillion Short That May Send the Dollar Even Higher

Investors speculating the dollar rally is fizzling out may be overlooking trillions of reasons why it will keep on going.

There’s pent-up demand for the U.S. currency that will underpin years of appreciation because the world is “structurally short” the dollar, according to investor and former International Monetary Fund economist Stephen Jen.

Sovereign and corporate borrowers outside America owe a record $9 trillion in the U.S. currency, much of which will need repaying in coming years, data from the Bank for International Settlements show.

In addition, central banks that had reduced their holdings of the greenback are starting to reverse course, creating more demand. The dollar’s share of global foreign reserves shrank to a record 60 percent in 2011 from 73 percent a decade earlier, though it’s since climbed back to 63 percent.

This isn't really new "news," but the folks over at Bloomberg have finally seen fit to post a story about it.  It appeared on their Internet site at 5:00 p.m. Denver time on Monday afternoon---and it's courtesy of West Virginia reader Elliot Simon.

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Dollar’s Rise Reshuffles Global Economy Into Winners and Losers

The rising U.S. dollar is redistributing growth throughout the global economy.

The greenback’s ascent to the highest in a dozen years on a trade-weighted basis is eroding the competitiveness of the U.S. and countries whose exchange rates track the dollar, including China. It’s also pushing down commodity prices, hurting producers such as Brazil, and threatening other emerging markets where companies borrowed in the U.S. currency when it was cheaper.

On the flip side, the euro area and Japan are cashing in as their companies gain the edge in world markets that economies need to boost growth. The likes of India are benefiting, too, by paying less for their energy imports.

“The dollar’s rise is sorting the world into winners and losers,” said Peter Hooper, chief economist at Deutsche Bank Securities Inc. in New York and a former Federal Reserve official.

This story is a corollary to the first one, as it looks at the dollar's rise from another perspective.  It appeared on the Bloomberg website one minute after the previous story---and it's also courtesy of Elliot Simon.  It's worth skimming.

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Einhorn Slams Bernanke's Blog, Says Fed Policy is a "Destructive Force That Shouldn't Exist Outside of Fiction"

It's getting serious for the academic hacks who meet every two months in Basel to drink $5000 bottles of wine and regale each other with their stupidity, most of whom have never held a job outside of academia, and for whom the only solution to the second great global depression is simply to buy assets and specifically stocks in a bid to restore confidence, oblivious that everyone now understands that the greater the central bank intervention, the greater the confidence destruction.

So serious, in fact, that the Fed is now on the defensive not only from tinfoil bloggers who said QE would ultimately lead to war, revolution, and global catastrophe, but very serious people who say QE will "Permanently Impair Living Standards For Generations To Come".

In fact, the only people who defend the Fed now are socialists who believe in Magic Money Trees, other career academics, E-trade babies who believe that BTFD and BTFATH is what investing is about, and of course, various sycophants and drama majors posing as financial journalists.

Meanwhile, in an attempt to cover up his criminal actions and exonerate his genocidal stupidity which will result in global conflict, revolution and/or war, the man responsible for the final Fed Bubble, Ben Bernanke, has taken on blogging.

Luckily there are many who have taken him to task, including the man who first compared Fed policy to eating jelly donuts, David Einhorn, and who during last week's Grant's Investment Conference, had this to say about the most disturbing thing written recently by Bernanke---

This worthwhile read, including Einhorn's speech, showed up on the Zero Hedge website at 2:58 p.m. yesterday afternoon EDT---and it's the first offering of the day from Dan Lazicki.

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U.S. Telecom Association Files Suit Against Government's New Internet Rules

A legal fight against the Federal Communications Commission's new Internet traffic rules has begun with a suit by the United States Telecom Association, an industry group that represents companies including AT&T and Verizon.

The FCC's rules were approved in February and uphold the principle of net neutrality — that online content be allowed to load at the same speed. They forbid paid fast lanes favoring some content and say broadband providers can't slow Web traffic or block content.

The rules were published Monday in the government's Federal Register and would go into effect on June 12 if a court doesn't block them. Litigation could drag on for years.

USTelecom said Monday that it has filed suit to throw out the rules in the U.S. Court of Appeals for the District of Columbia. The suit asks for a review of the FCC's rules on the grounds that they violate federal law and are arbitrary. The suit also says the FCC didn't follow the proper procedure for creating the rules.

An FCC spokeswoman said in an emailed statement Monday that the agency is confident the new Internet rules will be upheld by the courts.

This AP story from 3:22 p.m. EDT yesterday afternoon, filed from New York, was picked up by the abcnews.go.com Internet site---and it's another contribution from Elliot Simon.

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What's Really Behind the U.S Crude Oil Build

Last week we saw another 10MB massive crude oil build domestically at a time when US production is flattening, refinery capacity is rising and gasoline demand is growing (5% year over year vs. 3% or lower in the recent past). This divergence can be explained in part from the rising import of heavier oil which accounted for 6.1MB (869,000 B/D) of the 10MB build last week. Imports for the week rose a whopping 6.5% sequentially and 8.5% vs. the 4 week moving average!  Once again the chase to create sensationalistic headlines to drive down oil is self-evident as US production rose a meager 14,000B/D and was not the main cause of the rise. So why, month after month since 2014, have imports risen when there exists a “glut” in US oil inventories?

In 2014 according to the EIA, API Gravity (the weight of oil) steadily increased and rose 2.84% which is very significant in adding to the oversupply of US oil. In January 2015 that number rose to nearly 3.1% year over year, according to the latest data point we have from the EIA. Given the recent surge in imports last week the bet it has risen even more.

This interesting article first appeared on the OilPrice.com Internet site last Friday---and is now posted in the clear at the Zero Hedge website yesterday afternoon at 2:33 p.m. EDT.  I thank Dan Lazicki for sending it.

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330 Million Citizens and Only One Democrat Interested in being President

I was watching Meet the Press Sunday and found it fairly comical when they got around to discussing Hillary Clinton.  In fact, they replayed a SNL skit from Saturday night that made fun of Hillary and the fact that she is the only viable candidate for the Democrats because of the Clinton dynasty.  The host of Meet the Press, Chuck Todd and his panel guests all had a good laugh “ha ha ha… yes that’s funny because it’s true ha ha ha”.  And once they had a good if not awkward chuckle, one can only presume at the expense of the American people, they simply moved on and stepped over that giant elephant in the room.  So despite the fact that we all understand something is incredibly wrong with the fact that Hillary has no challengers in a nation of 330 million citizens we are simply supposed to ignore this giant puss filled boil on the face of our democratic process.

How can this be?  How is it that in such a well educated society with an abundance of opinions throughout this vast land the Democratic party is unable to find anyone outside of the core political machine willing to even take a stab at becoming the chief public servant?  This is supposed to be a self governed democracy.  We have destroyed the entire Middle East over the past 15 years in the name of self governance and rule by the people for the people.  What a farce!  How can anyone in this country say with a straight face that we are a nation ruled by the people for the people when the system is so locked down to anyone outside of the elite political insiders that we cannot even find a few tokens to throw at the facade of democracy at work?

This right-on-the-money commentary appeared on the firstrebuttal.com Internet site yesterday sometime---and it's another offering from Dan Lazicki.

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Britain crippled by £222bn debt from backroom PFI deals – report

Each U.K. citizen has amassed a debt of £3,400 ($4,976) without even knowing about it. This is due to a U.K. government scheme that signed controversial deals with private companies to borrow money on behalf of the public and pledging to pay it back later.

The deals, which are known as Private Finance Initiatives (PFIs), were used by London to pay for public infrastructure, such as schools and hospitals. Signed with private enterprises, they would allow the government to “buy now, pay later,” the Independent on Sunday reports.

A problem is emerging though. Despite not having paid a penny, every U.K. national is now in debt to the tune of £3,400 ($4,976) because the cost of paying back the PFIs is growing every year. 2014 saw an increase of £5bn ($7.3bn) and this figure could rise even higher with inflation.

The system has proved to be fantastic for private companies, who are managing to reap large profits from investing in public infrastructure. However, financial experts have labelled the government’s policy a “financial disaster,” due to the high amounts of interest accumulated.

This interesting news item was posted on the Russia Today website at 3:37 a.m. Moscow time on their Monday morning, which was shortly after midnight in London---and 7:37 p.m. on Sunday evening in Washington.  I thank South African reader B.V. for finding it for us.

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End of the 'special relationship'? Secret U.S. memo reportedly says U.K. losing influence with Washington

A secret memo prepared by a Congressional think tank and seen by the Daily Mail says that the US may need a "reassessment of the special relationship" with its key economic partner, Britain, "because its geopolitical setting has been changing."

Winston Churchill's 1946 speech to Westminster College, in Fulton, coined the phrase "special relationship" to describe the exceptionally friendly political, diplomatic, economic, military and cultural relations between the United Kingdom and the United States.

Some 69 years later, when PM David Cameron last visited the White House in January, he quoted President Barack Obama as saying that “the special relationship is stronger than it has ever been privately and in public and I agree.”

However, a classified document dated April 2015 and prepared for the for members of US Congress reportedly states that "the UK may not be viewed as centrally relevant to the United States in all of the issues and relations considered a priority on the US agenda."

This very interesting news item put in an appearance on the Russia Today website at 9:40 a.m. Moscow time on Sunday morning---and it's the second contribution of the day from Roy Stephens.

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Taste of its own medicine? Austerity overshadows Finland vote

When Finland's opposition leader and likely new prime minister Juha Sipila warned Finland could be the next Greece, it was an election campaign quip with a serious side - signalling the risks for a country facing a perfect storm of economic woes.

Two hours drive Sipila's office in bustling Helsinki, the town of Kotka shows signs of what he means. Around one in five people is unemployed, a rate not far off Greece. Hit by the closure of paper mills left behind by the digital age, it is light years from Finland's tech-savvy image.

"When a pulp factory closes, that can be 400 people," said Sirpa Paatero, a government minister handing out campaign leaflets in the windswept town square. "The new companies coming up employ one, or two or three. That's just not enough."

Finland heads to an April 19 parliamentary election facing its worst crisis in decades - three years of recession in an economy shackled by the shrinking of its flagship Nokia, rising labour costs and a diminishing working population. Economic crisis in Russia, a big export market, has struck another blow.

This interesting Reuters article from Sunday, filed from Kotka, Finland, showed up on the South African Internet site sharenet.co.za yesterday---and it's the second offering of the day from reader B.V.

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"We Have Come to the End of the Road" - Greece Prepares For Default, Financial Times Reports

Update: as always is the case in Europe, nothing is confirmed until it is officially denied by officials, so here you go: GREEK GOV'T OFFICIAL DENIES FT REPORT GREECE PLANNING DEFAULT

There was no explanation from the government official where Greece would get the €2.5 billion it needs to fund upcoming IMF interest and principal payments.

* * * * *

It should hardly come as a surprise that after the latest round of Greek pre-negotiation negotiations with the Troika, in which the Greek representative was said to behave like a taxi driver, who "just asked where the money was and insisted his country would soon be bankrupt" and in which the Eurozone members "were disappointed and shocked at Athens' lack of movement in its plans, and in particular its reluctance to talk about cutting civil servants' pensions" that the next Greek step is to fall back - yet again - to square zero: threats of an imminent default. Which is precisely what, according to the FT, has happened "Greece is preparing to take the dramatic step of declaring a debt default unless it can reach a deal with its international creditors by the end of April, according to people briefed on the radical leftist government’s thinking."

A word of advice: now that the Eurozone, foolishly, thinks it is insulated from the consequences of a Grexit due to the ECB's QE, it does not take to ultimatums or blackmail very well. In fact, it takes these very badly.

In any event, here again is the same old song, sung one more time, now by the FT:

This "news" item was posted on the Zero Hedge website at 2:09 p.m. EDT yesterday afternoon---and I'd read it for entertainment purposes only at the moment.  I thank Dan L. for sharing it with us.

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Putin lifts ban on delivery of S-300 missile systems to Iran

The Russian president has repealed the ban prohibiting the delivery of S-300 missile air defense systems to Iran, according to the Kremlin's press service. The ban was introduced by former President Dmitry Medvedev in 2010.

“[The presidential] decree lifts the ban on transit through Russian territory, including airlift, and the export from the Russian Federation to the Islamic Republic of Iran, and also the transfer to the Islamic Republic of Iran outside the territory of the Russian Federation, both by sea and by air, of air defense missile systems S-300,” says the information note accompanying the document, RIA Novosti reported.

The decree enters into force upon the president’s signature.

Russian Foreign Minister Sergey Lavrov commented on the decision, saying that Moscow’s voluntary embargo on S-300 deliveries was no longer necessary, due to the progress in Iran’s nuclear talks made in Lausanne on April 2.

This article appeared on the Russia Today website at 12:27 p.m. Moscow time on their Monday afternoon---and I thank Roy Stephens for digging up this item for us.  A story about was also posted on the france24.com Internet site.  It's headline "Russia lifts ban on missile deliveries to Iran"---and I thank reader B.V. for bringing it to our attention.

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Saudi Arabia’s Plan to Extend the Age of Oil

Last fall, as oil prices crashed, Ali al-Naimi, Saudi Arabia’s petroleum minister and the world’s de facto energy czar, went mum. He still popped up, as is his habit, at industry conferences on three continents. Yet from mid-September to the middle of November, while benchmark crude prices plunged 21 percent to a four-year low, Naimi didn’t utter a word in public.

For 20 years, Bloomberg Markets reports in its May 2015 issue, the world’s $2 trillion oil market has parsed Naimi’s every syllable for signs of where supply and prices are heading. Twice during previous routs—amid the Asian financial crisis in 1998 and again when the global economy melted down 10 years later—Naimi reversed oil’s free fall by orchestrating production cutbacks among members of OPEC. This time, he went to ground.

At the cartel’s semiannual meeting on Nov. 27 in Vienna, Naimi shot down proposed output reductions supported by a majority of the 12 members in favor of a more daring strategy: keep pumping and wait for lower prices to force high-cost suppliers out of the market. Oil prices fell a further 10 percent by the end of the next day and kept going. Having averaged $110 a barrel from 2011 through the middle of 2014, Brent crude, the global benchmark, dipped below $50 in January.

“What they did was historic,” Daniel Yergin, the pre-eminent historian of the oil industry, told Bloomberg in February. “They said: ‘We resign. We quit. We’re no longer going to be the manager of the market. Let the market manage the market.’ That’s when you got this sort of shocked reaction that took prices down to those levels we saw.”

This longish Bloomberg essay showed up on their website at 4:00 p.m. MDT on Sunday afternoon---and it's definitely worth reading if you have the interest.  The first reader through the door with it was Howard Wiener.

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Jefferies exits commodities brokerage with Bache book sale

Jefferies Group LLC said it will sell most of its Bache unit's commodities and financial derivatives accounts to Societe Generale, ending the investment bank's four-year foray into the competitive brokerage business.

The deal to transfer accounts, ends a months-long effort by Jefferies, owned by Leucadia National Corp, to divest the unit as it struggles with high costs and falling fees.

For Jefferies, the sale and winding down of the business marks an exit after its first push into commodities in 2011 with its $430 million purchase of Prudential Bache.

Tighter regulation and increased competition have slashed margins for brokers, but Jefferies was also hit by the bankruptcy of its client, OW Bunker, last year.

Jefferies was always a huge short/issuer in silver out of its client account---and during the last four and half months issued 2,232 silver contracts.  One is left to wonder if it will be Societe Generale that will fill their shoes once they've departed the scene at the end of June.  However, if you read the first paragraph carefully, you'll notice the word "most" in there---and one wonders if it includes their precious metal trading desk. This Reuters article appeared on their website at last Thursday.

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Many gold miners in dire straits despite costs cuts -- Lawrence Williams

The latest detailed report on gold from GFMS in London does not make pretty reading for those either running gold mining operations, or investing in them. According to the specialist precious metals consultancy around 50% of the gold mining sector looks to be loss-making on its own calculated All-in-Costs basis at a $1,200/ounce gold price.

The GFMS All-in-Costs parameter, which is even more all-encompassing than the All In Sustaining Costs (AISC) metric, which has become the industry norm for most gold mining company reporting, is intended to represent the ‘stay-in-business’ capital cost, or the expenditure necessary to maintain production at current rates. In addition to the components included in the Total Production Cost, the All-in Cost figure also incorporates corporate administration costs (head office overheads), interest charges, exploration expense, extraordinary charges (such as retrenchment costs and asset carrying value write-downs), plus sustaining/on-going capital expenditure. As such, GFMS reckons that its own All-in Cost calculations may be viewed as a far more accurate measure of ‘real’ industry margins even than AISC. Both measures though do go some way to explaining why companies which boast of their mines having exceptionally low cash costs can still end up making significant corporate losses.

Thus the consultancy estimates that in 2014 the average All-in Cost of gold mine production was $1,314/oz, which represented a $427/oz, or 25%, reduction over the figure for 2013.

This commentary by Lawrie showed up on the mineweb.com Internet site last Friday---and I missed it for my Saturday column.

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'Civil war' brewing over disputed Greek goldmine

Scrawled on the homes of the village of Megali Panagia in northern Greece are slogans emblematic of the deep rift caused in this society by a controversial Canadian gold mining project.

"Goldmines are a curse for every nation," reads one -- others are more profane.

For the past three years, the investment of Hellenic Gold -- a subsidiary of Canadian firm Eldorado Gold -- has deeply divided the local communities of the Halkidiki peninsula, even setting family members at each others' throats.

In Megali Panagia itself, tit-for-tat attacks on shops and cars belonging to rival factions have been going on for years.

This article, filed from Thessaloniki, Greece, put in an appearance on the france24.com Internet site at 9:06 a.m. Europe time on their Sunday morning---and it's the fourth and final offering of the day from South African reader B.V., for which I thank him on your behalf.

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Iran, Secret Gold and the Mystery Trade Boosting Turkish Exports

Turkey’s trade balance, one of the few points for solace in this year’s worst performing bond market, might not be improving as much as the data appears to show.

Despite having no significant gold deposits, exports of the precious metal made up 70 percent of the narrowing in the current account gap, according to government data published Friday. A gold importer for 28 of last 30 years, Turkey became an exporter in 2012 when it started paying for Iranian gas in precious metals as a way of circumventing international sanctions that may soon be lifted.

In the face of slowing economic growth and accelerating inflation, Turkish President Recep Tayyip Erdogan pointed to the shrinking current account deficit among economic achievements ahead of parliamentary elections in June. Government 10-year bonds in liras, whose yields increased the most among 24 emerging-market nations tracked by Bloomberg in 2015, have steadied in the past three weeks.

“What is worrying is that the reduction in the shortfall stems from gold exports,” Nicholas Spiro, managing director of London-based Spiro Sovereign Strategy, said by phone on Friday. “It’s a very murky, very mysterious, very opaque situation. Iran is clearly the obvious suspect.”

This very intriguing gold-related news item appeared on the bloomberg.com Internet site at 3 p.m. Denver time on Sunday afternoon---and it's the second offering of the day from reader Howard Wiener.

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Kyrgyzstan’s Premier Says No Gold Deal as Mining Industry Fizzles

Kyrgyzstan’s prime minister has ordered a halt to the country’s two-year effort to renegotiate operating terms at its flagship gold mine, reasoning that a joint venture is no longer in the country’s best interests. Despite lawmakers’ near-constant chest thumping and promises to nationalize the Kumtor mine, the announcement seemed to catch them off guard.

Foreign investment has plummeted as Kyrgyzstan and Toronto-based Centerra Gold have struggled to restructure ownership of Kumtor, which is responsible for generating up to 12 percent of Kyrgyzstan’s GDP and about 40 percent of export earnings. Under the current operating contract, signed in 2009, Centerra wholly owns the mine; Kyrgyzstan, in turn, owns one-third of Centerra. Parliament voted in February 2013 to scrap that agreement, arguing it was signed by a corrupt former leader and is not in Kyrgyzstan’s best interests.

But the government has struggled to come to terms that please the raucous legislature, while maintaining that nationalization would be a disaster. In December 2013, the government and Centerra announced the outline of a deal that would equally split ownership of the mine and see Kyrgyzstan cede its Centerra shares, and thus its interest in smaller projects in Mongolia, Turkey and Canada,

What a nightmare for this company.  This article was posted on the New York-based Internet site eurasianet.org at 2:14 p.m. EDT yesterday---and I thank International Man senior editor Nick Giambruno for passing it around yesterday. 

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What is China’s real gold consumption and where is it headed? -- Lawrence Williams

There is considerable dissension in the analytical sector over what actually constitutes China’s real gold demand. On the one hand we have what the mainstream analysts record as Chinese consumption, which comes in at somewhere between 800 and 900 tonnes last year. On the other hand we have withdrawals from the Shanghai Gold Exchange (SGE) which totalled just over 2,100 tonnes in 2014, which some, notably China gold watcher Koos Jansen and Australian chart king, Nick Laird, feel is the real figure. There is thus an enormous discrepancy in the perceived data, which is, in part due to differing interpretations of what consumption is (GFMS and Metals Focus both use a somewhat limited view of what goes into the ‘consumption’ calculation, while CPM Group insists there is a substantial degree of double, or even triple or more, counting of recycled gold in the SGE figure, but without really quantifying how much is actually involved.)

As an indicator of gold flows into China, all the data has value in indicating trends, but what the various interpretations seem to show is that Chinese wholesale demand (i.e. demand by the general public comprising primarily jewellery and investment (bars and coins) and other gold investment products did indeed slip sharply in 2014 over 2013’s record levels- perhaps by as much as 30%. But the SGE figures also suggest that overall Chinese demand (which includes gold going into Chinese bank vaults for use in financial transactions – which falls outside the mainstream analysts’ ‘consumption’ calculations) did not fall back by nearly as much – perhaps by only 4%. This could be seen as indicating the banking sector perhaps accounted for close to 1,000 tonnes in 2014 – which seems an awful lot and still leaves a serious statistical discrepancy.

What is apparent from the latest set of mainstream analysts’ ‘consumption’ statistics – even though they are hugely below the SGE overall figures – is that China remained the world’s No. 1 gold consumer last year, comfortably ahead of India. Unfortunately the World Gold Council’s earlier figures, suggesting China had fallen behind India, will continue to be quoted by mainstream media as definitive – unless, and until, perhaps the WGC adjusts its data in the light of the latest GFMS figures, when the next Gold Demand Trends report comes out next month. Of coursed if one adds in the presumed bank demand, China will have remained hugely ahead of India.

This commentary by Lawrie appeared on the mineweb.com Internet site at 2:43 p.m. BST yesterday afternoon---and it's definitely worth reading.

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Shanghai International Gold Exchange Comes to Life

In September 2014 the Shanghai Gold Exchange (SGE) launched its International Board, the Shanghai International Gold Exchange (SGEI). After a slow start, the volume of the physical SGEI kilobar contract (iAu99.99) has transcended all other SGE contracts in week 15 (April 6 - 10).

The primary goals for the launch of the SGEI was to facilitate gold trading in renminbi, improve price discovery in renminbi and internationalize the renminbi. The Chinese consider gold as an indispensable component of China’s financial market and for the renminbi to internationalize the renminbi-gold market has to internationalize. It could be that the spike in trading volume of iA99.99 was an incidental burp, it could also be we’re witnessing the Chinese international gold exchange entering its adolescence.

In any case, the chairman of the SGE, Xu Luode, has been very clear about his intentions with the SGEI. A few snippets from Xu…December 2013...The Shanghai Gold Exchange chairman Xu Luode said he considers the construction of an offshore gold exchange international gold market in the Shanghai Free Trade Zone, for the cross-border use of renminbi, it will be launched for the international offshore investors… The industry comments that it will be a tool to promote the internationalization of the renminbi, … the goal is to build Shanghai into an international gold exchange trading market with global influence.

This longish article by Koos Jansen put in an appearance on the bullionstar.com Internet site early Monday morning Singapore time---and I thank Koos for bringing it to our attention.  It's worth reading---and based on what he speaks of in this article, I'll be very interested in what the SGE withdrawals show when they're reported this Friday.

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The IMF’s Gold Depositories – Part 3, Gold Swaps and the Quality of the IMF Gold

The IMF sold 403 tonnes of gold over 2009-2010. Of this total, 222 tons of the sales were in the form of direct sales to India, Bangladesh, Sri Lanka and Mauritius  (i.e. 200 tonnes to India in October 2009, 10 tonnes to Sri Lanka, 2 tonnes to Mauritius, and 10 tonnes to Bangladesh) and the remainder of approximately 181 tonnes was sold on the open market supposedly.

During and after the IMF’s ‘403 tonnes’ gold sale, the IMF never commented on which depository (or depositories) this gold was sold from. The Reserve Bank of India said sometime after the 2009 purchase from the IMF that all of its gold was held either within India,  at the Bank of England, or with the Bank of International Settlements. However, it’s possible that some of the IMF’s gold sales to India, Bangladesh, Sri Lanka and Mauritius in 2009-2010 were undertaken by transferring gold from the IMF’s Nagpur holding to gold accounts of the Reserve Bank of India, the Central Bank of Sri Lanka, the Bank of Mauritius and the Bangladesh Bank held at Nagpur. It would make some sense to do this, since the three other countries are regionally proximate to India and enjoy good international relations with India, however some of the IMF gold in Nagpur was of variable quality (read non-good delivery), and furthermore the RBI In Nagpur is not a ‘major gold trading center’ so beloved of gold hoarding central bankers.

Selling from Nagpur would have zeroed out and allowed the closure of the IMF’s gold holdings at Nagpur, and left IMF gold in only three countries, namely the US, UK and France. Since the IMF has become far less inclined to share information on its gold holdings and its gold depositories since the heady days of the 1960s and 1970s, the exact structure, quality and distribution of the IMF’s gold holdings is information that only former and current IMF Managing Directors such as Michel Camdessus, Dominique Strauss-Kahn and Christine Lagarde may be privy to.

This intriguing gold-related story [Part 3 of 3] by Ronan Manly appeared on the bullionstar.com Internet site on Saturday Singapore time---and for obvious reasons had to wait for today's column.  It's definitely worth reading.

Read more...

Central bankers gather privately in Washington this Friday to discuss gold

Attention, mainstream financial journalists! Here's something else important for you to ignore this week, thanks to the diligent eye of gold researcher and GATA consultant Ronan Manly.

It's a breakfast meeting to be held Friday in Washington for "a select group of central banks and other official-sector institutions," sponsored by the Official Monetary and Financial Institutions Forum and the World Gold Council, to discuss "gold, the renminbi, and the multi-currency system," convened in conjunction with the spring meeting of the International Monetary Fund and World Bank Group, a United Nations agency.

"Discussions," the discreet announcement from OMFIF says, "are under Chatham House Rules," whereby information may be used but never attributed.

While many nations with central banks purport to be representative democracies and while the World Gold Council purports to be the representative of the gold industry, some of whose participants actually have to get their hands dirty every day, attendance at Friday's meeting will be by invitation only. So for the record GATA has requested one.

This absolute must read GATA release showed up on their Internet site yesterday at 3 p.m. EDT.

Read more...

 

¤ The Funnies

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¤ The Wrap

Included in the continuing flow of evidence that silver is more intensely manipulated in price than gold is the physical movement of metal into and out from the COMEX-approved silver warehouses. No other metal, gold or otherwise, gets moved like physical silver has gotten moved in the COMEX warehouses these past four years. Certainly I have featured it every week since April 2011. Recently, I have openly speculated that the physical silver turnover might be cooling off based upon declining weekly turnover totals. Last week, for example, the turnover dwindled to only 1.2 million oz, the lowest movement I can remember.

Turnover may be cooling overall, but not this week. Actual silver movement in and out from the COMEX warehouses jumped from the lowest to maybe the highest ever, as an incredible 11.1 million oz were moved this week. Just as remarkable as the high turnover total was, it was remarkable that total inventories fell by a minor 1.4 million oz to 175.1 million oz.  This preserves the key observation that over the past year and a quarter, while in/out movement was white hot, COMEX silver inventory totals hardly budged. I concluded that this was a sign of supply tightness. I still feel that way, but the physical COMEX silver movement means something more specific this week. If you are guessing it might have something to do with JPMorgan, you wouldn’t be wrong.

Over the last three days, 3.4 million oz were shipped into the COMEX silver warehouse owned by JPMorgan. Since the silver physically deposited into the JPM warehouse came from other COMEX silver warehouses, the turnover unique to JPMorgan was more than 60% of the total 11.1 million oz turnover (3.4 million oz x 2 for in and out). The deposit into the JPMorgan warehouse further cemented it as the largest COMEX silver warehouse with more than 52 million oz in total reported holdings. Please remember that this was not an operating COMEX warehouse prior to April 2011---and all its deposits have occurred in the past four years. Not coincidentally, this is the same time over which I have claimed that JPMorgan had turned big physical silver buyer. - Silver analyst Ted Butler: 11 April 2015

With all four precious metals knocking on the doors of their respective 50-day moving averages at Friday's close, it should have come as no shock to anyone that JPMorgan et al weren't going to allow them to rise any further---and that's what happened.  But they allowed palladium to breach its on Monday morning in Zurich before they acted against that metal.  I'm sure that they wanted to reassure the dumb-as-posts T.A. types that their charts---and therefore their analysis---were still "accurate".

The proof is in the 6-month charts posted below.

With these "failures" at their respective 50-day moving averages, it's anyone guess as to where we go from here, but down would be my bet.  However, even a move back above the 50-day moving averages is not out of the question---and whatever direction the move may be, it won't have a thing to do with supply and demand.  It will be whatever "da boyz" are instructed to do.

As you can tell from the last story that's posted in today's column, it should be obvious by now to all and sundry, that the WGC is not in the business to help the miners.

What are they doing in secret that they can't tell their members, the public, or the gold community at large?

They were, as Chris Powell so eloquently stated over a decade ago, formed for the sole purpose of ensuring that a real world gold council could never get started---and that the interests of the mining fraternity that are members, were never seriously addressed.  This has come to pass---and exactly the same can be said for The Silver Institute.  Anyone who believes otherwise is delusional.

And as I write this paragraph, the London open is about ten minutes away.  The gold price managed to struggle back to the $1,200 spot price mark in early Tuesday morning trading in Hong Kong.  But then some thoughtful soul showed up at noon local time---and shaved ten bucks off the price over a period of two hours and change.  Silver and platinum prices, which were both up on the day as well, were dealt with in a similar manner---and at the same time.  Palladium got hit two hours later.

Net gold volume is getting up there---and sits at 23,000 contracts.  Virtually all of it is in the current front month, so it's obviously of the HFT variety.  Silver's net volume is around 3,900 contracts---and a tiny chunk of that is roll-over related.  The dollar index has been rallying since it hit its 99.30 low just before 9 a.m. Hong Kong time.  It's up 33 basis points off that low, but up only 12 basis points from Monday's close in New York.

Since today is Tuesday, it's also the cut-off for this week's Commitment of Traders Report.  The numbers in last week's report seemed to be OK---and there were no glaring deficiencies that I could tell.  But I'll be ever watchful, as I've always been, for signs that price/volume data is not being reported in a timely manner.

Here's another paragraph I stole from Ted's weekly review to paying subscribers on Saturday---and it's all about the big deterioration in gold during the reporting week.  I wrote about in my Saturday column, but his comments are much better: "Like I did in last week’s review with silver, it is proper to view the last two reporting weeks in gold on a combined basis. Over the two reporting weeks, the Commercials sold more than 55,000 COMEX gold contracts, the equivalent of 5.5 million oz. No other gold venue featured this quantity of change of ownership. The principal buyers were the technical funds in the Managed Money category, accounting for roughly 45,000 net contracts of gold bought over two weeks. There is no question that these two groups of traders on the COMEX - Commercials and Managed Money - dictate and set prices, as the COT data continuously indicate. The only question is if this is legal since it has nothing to do with any gold market fundamentals---and as such, would seem to be in violation of commodity and interstate laws of commerce." - Silver analyst Ted Butler:  11 April 2015

Since when did laws of any type matter to JPMorgan et al?

And as I send today's effort off to Stowe, Vermont at 5:25 a.m. EDT, I see that all four precious metals are trading well below their Monday closing prices---and at new low ticks on the day.  Palladium is down 2 percent, although platinum is only down 2 bucks at the moment. Net gold volume is just over the 39,000 contract mark, with 99 percent of it is in the current front month, so it's still all of the HFT variety.  In silver, net volume is up to 6,900 contracts, with 15 percent of the gross volume being roll-overs out of the May contract.  The dollar index has been chopping and flopping---and is currently up 3 basis points.

It's too soon to tell whether this is the beginning of new round of engineered price declines or not, but the current price action hints at that possibility.  I'm sure that the situation will have more clarity by the close of trading today---and if not today, then certainly by the COMEX close on Wednesday.  One of their tricks is to wait until the day after the cut-off for the current COT Report before they really pull the pin on the Managed Money---and it will be interesting to see if that turns out to be the case here.

After going into the hole to the tune of about 20,000 contracts in silver---and 55,000 contracts in gold over the last three weeks, "da boyz" will be looking to get themselves right again, by putting the Managed Money traders fully back on the short side from whence they just came.  That means much lower prices going forward, as JPMorgan et al get back to the salami slicing to the downside once again.

But before heading off to bed, I'd like to point out that Casey Research's own Louis James has been watching a company that he is convinced will be the world's next high-grade gold producer.

It’s an extremely well-funded operation working a high-grade gold deposit 8x richer than the average mine---and that’s scheduled to throw the switch on a brand-new mine and start producing gold for the very first time.

Up to this point, the market is largely ignoring it, so shares of this company are currently trading well below book.  This is your chance to invest in an advanced-stage producer at a dramatic discount... just before its true value is realized. But you must act before April 30.

If you want to find out more, you can do so by clicking here.

That's all I have for today---and I'll see you here tomorrow.

Ed Steer