The gold price was under choppy selling pressure up until ten minutes after the COMEX open in New York yesterday morning---and at that point the HFT boyz and their algorithms went to work, with most of the damage done by around 10:35 a.m. EDT. The gold price traded flat after that, but the absolute low tick was a quick down/up spike minutes before 11:30 a.m.
The high and low tick were reported by the CME Group as $1,225.50 and $1,205.10 in the June contract.
Gold closed in New York on Tuesday at $1,208.00 spot, down $17.80 from Monday's close. Net volume was 149,000 contracts, but I was expecting more than that.
Here's the 5-minute gold tick chart courtesy of Brad Robertson. The two big volume spikes occurred when 'da boyz' spun their algorithms, or spoofed the market. The dark gray line is midnight EDT---and don't to forget to add two hours for EDT, as this charts is MST. The 'click to enlarge' feature works wonders.
The silver price was already down by 30 cents when the HFT boyz spun their algorithms at 10:20 a.m. EDT---and in less than fifteen minutes had shaved another 55 cents off the price. Once the low was in, the price crept higher into the close.
The high and low ticks were recorded as $17.735 and $16.87 in the July contract, an intraday move of over 4 percent.
Silver closed yesterday at $17.07 spot, down 61 cents from Monday. Net volume was very decent at 55,500 contracts.
Platinum also got its head handed to it starting just after 12 o'clock noon in London---and when JPMorgan et al were done with it in COMEX trading, the price was down 27 bucks to $1,148 spot.
Palladium turned in a mini version of what happened in the platinum market, as it closed at $773 spot, down 12 dollars from Monday.
The dollar index closed late on Monday afternoon in New York at 94.16---and began to show signs of life to the upside around 2 p.m. in Hong Kong trading. But the real rally began minutes before the London open, with most of the gains coming shortly before 9 a.m. EDT---and then did next to nothing after that.
You should carefully note that the dollar index had posted virtually all of its gains before "da boyz" and their HFT buddies put in an appearance in New York.
Here once again is the 6-month rally in the U.S. Dollar index chart complete with yesterday's 'action'.
The gold stocks gapped down---and quietly chopped lower for the remainder of the day, as the HUI closed on its absolute low tick, down 4.08 percent---giving up almost half its 2015 gains in the process.
The silver stocks fared little better---and their rally attempts after the morning silver price take-down didn't amount to much. The silver equities closed on their absolute low ticks as well. Nick Laird's Intraday Silver Sentiment Index closed down 3.91 percent.
The CME Daily Delivery Report showed that 8 gold and 1 lonely silver contract were posted for delivery within the COMEX-approved depositories on Thursday.
The CME Preliminary Report for the Tuesday trading session showed that gold open interest in May dropped by 2 contracts to 139 contracts remaining. Not surprisingly, silver o.i. for May took a 127 contract hit after the yesterday's delivery notices were filled today. Silver open interest is down to 297 contracts.
There were no changes in GLD yesterday---and as of 9:30 p.m. EDT yesterday evening, there were no reported changes in SLV either.
There was no sales report from the U.S. Mint.
There wasn't much activity in gold at the COMEX-approved depositories on Monday. There was 34,370 troy ounces reported received over at HSBC USA---and nothing was shipped out.
It as much busier in silver, as 963,879 troy ounces were shipped in---but only 17,298 ounces were shipped out the door. Most of the 'in' activity as at Canada's Scotiabank and Brink's Inc. The link to that action is here.
Over at the gold kilobar depositories in Hong Kong on their Monday, they received 3,000 kilobars---and shipped out 3,218 kilobars. All of the activity was at Brink's, Inc.---and the link to that is here.
I don't have a lot of stories today---and after the treasure trove I had in Tuesday's column, that's quite all right by me.
Following two ugly months of dramatically missed expectations, Housing Starts exploded to 'recovery' highs (highest since Nov 2007) jumping 20.2% MoM to 1.135million (against 1.015 exp.). This is the 2nd biggest MoM jump in history.
Both single-family (3rd biggest MoM surge since the crisis peak) and multi-family starts surged. Permits also surged in April (jumping 10.1% MoM - the most since 2012) to 1.143 million (well above expectations) and the highest since June 2008. and Well these huge mal-investment spikes make perfect sense in light of the collapse in lumber prices (and thus demand).
This chart-filled Zero Hedge piece from 8:40 a.m. EDT on Tuesday morning is worth running through---and I thank reader M.A. for today's first story.
Maybe, just maybe, this whole bond rout is ending.
The global sell-off that’s set investors on edge finally slowed last week, and some analysts are saying the worst is over. Treasuries look fairly valued given the outlook for inflation and interest rates, according to Bank of America Corp. -- although with plenty of caveats. In Germany, options traders convinced a bund-market crash was all but inevitable less than two weeks ago have scaled back most of those bets.
Goldman Sachs Group Inc. warns that government debt is still expensive, but a growing number of investors are finding value after the four-week exodus sent yields soaring. Prudential Financial Inc.’s Robert Tipp is buying because tepid U.S. growth will keep the Federal Reserve on hold, while Europe remains too weak to sustain higher yields.
“There’s a good chance people will look back at this as having been a good buying opportunity,” Tipp, the chief investment strategist at Prudential’s fixed-income unit, which manages $560 billion, said from Newark, New Jersey.
This Bloomberg article from Sunday afternoon Denver time was something I found in yesterday's edition of the King Report.
I’ve Read Obama’s Secret Trade Deal. Elizabeth Warren Is Right to Be Concerned.
"You need to tell me what’s wrong with this trade agreement, not one that was passed 25 years ago,” a frustrated President Barack Obama recently complained about criticisms of the Trans Pacific Partnership (TPP). He’s right. The public criticisms of the TPP have been vague. That’s by design—anyone who has read the text of the agreement could be jailed for disclosing its contents. I’ve actually read the TPP text provided to the government’s own advisers, and I’ve given the president an earful about how this trade deal will damage this nation. But I can’t share my criticisms with you.
I can tell you that Elizabeth Warren is right about her criticism of the trade deal. We should be very concerned about what's hidden in this trade deal—and particularly how the Obama administration is keeping information secret even from those of us who are supposed to provide advice.
So-called “cleared advisers” like me are prohibited from sharing publicly the criticisms we’ve lodged about specific proposals and approaches. The government has created a perfect Catch 22: The law prohibits us from talking about the specifics of what we’ve seen, allowing the president to criticize us for not being specific. Instead of simply admitting that he disagrees with me—and with many other cleared advisers—about the merits of the TPP, the president instead pretends that our specific, pointed criticisms don’t exist.
I posted a story about this in my Saturday column, I believe---but here's the Zero Hedge take on it---and it's definitely worth reading. I thank Dan Lazicki for sharing it with us.
Britain’s inflation rate fell below zero for the first time in more than half a century, as the drop in food and energy prices depressed the cost of living.
Consumer prices declined 0.1 percent in April from a year earlier, the Office for National Statistics said in London on Tuesday. Economists had forecast the rate to be zero, according to the median of 35 estimates in a Bloomberg News survey. Core inflation slowed to 0.8 percent, the lowest since 2001.
With inflation so far below the Bank of England’s 2 percent target, policy makers are under little immediate pressure to raise the key interest rate from a record-low 0.5 percent. Governor Mark Carney said last week that any period of falling prices will be temporary and an expected pickup in inflation at the end of the year means the next move in borrowing costs is likely to be an increase.
“For now, it represents an obstruction to a BOE rate hike,” said Alan Clarke, an economist at Scotiabank in London. “Enjoy it while it lasts because there is a good chance that inflation will be back in positive territory next month.”
This Bloomberg article showed up on their Internet site at 2:30 a.m. Denver time yesterday morning---and I thank West Virginia reader Elliot Simon for finding it for us.
Europe faces the risk of a second revolt by Left-wing forces in the South after Portugal’s Socialist Party vowed to defy austerity demands from the country’s creditors and block any further sackings of public officials.
"We will carry out a reverse policy,” said Antonio Costa, the Socialist leader.
Mr Costa said a clear majority of his party wants to halt the “obsession with austerity”. Speaking to journalists in Lisbon as his country prepares for elections - expected in October - he insisted that Portugal must start rebuilding key parts of the public sector following the drastic cuts under the previous EU-IMF Troika regime.
The Socialists hold a narrow lead over the ruling conservative coalition in the opinion polls and may team up with far-Left parties, possibly even with the old Communist Party.
This Ambrose Evans-Pritchard commentary put in an appearance on the telegraph.co.uk Internet site at 6:00 p.m. BST yesterday evening, which was 1:00 p.m. in Washington. I thank South African reader B.V. for bringing it to our attention.
German Chancellor Angela Merkel is considering delivering a keynote address to make the case for aiding Greece as she faces down a potential revolt from as much as a third of her bloc’s lawmakers.
Merkel would hold the speech after Greece and its creditors agree on a deal with conditions she deems strong enough to sell to parliament and the German public, according to two government officials. She would argue that a Greek exit from the euro area would risk causing geopolitical instability in the region, said the officials, who asked not to be identified because the discussions are private.
Merkel’s desire to keep Greece in the euro is fraught with political risk given the level of exasperation in Germany with Prime Minister Alexis Tsipras after four months of brinkmanship. While some German policy makers have hardened their stance against helping Greece, others are hinting at more flexibility to avert a financial collapse.
“Should we seriously go and prescribe in detail what the Greeks are allowed to spend and what revenue they can have?” Deputy Finance Minister Thomas Steffen said in an interview. “I say no. It’s the rough framework that has to be clear.
This is the Zero Hedge spin on an embedded Bloomberg story from very early yesterday morning MDT---and it's worth reading. It's another offering from Dan Lazicki.
The gridlock over the country's eurozone future is resulting in record numbers of lost jobs and a destruction in growth potential, according to figures from the Hellenic Confederation of Commerce and Enterprise (ESEE),
Since Syriza took office in late January, an average 59 small businesses have shut up shop, with approximately 613 jobs destroyed every single day, say ESEE.
Having suffered from the worst depression in the developed world since the 1930s - losing a quarter of its output - Greece's renewed political crisis has shattered the fragile business confidence in the country.
More than a third of all bank loans are now classed as "bad" (or non-performing), while the ESEE notes that more than 95pc of all applications for bank loans are rejected every day.
This news item was posted on The Telegraph's website at 1 p.m. London time on their Tuesday afternoon---and I thank Roy Stephens for sending it along. It's worth reading.
Ukraine’s parliament on Tuesday handed ministers the power to suspend foreign debt payments to defend against “unscrupulous” creditors.
The vote was the latest episode in an escalating row over a $25bn (£16bn) rescue package with the International Monetary Fund and European Union.
“In case of attacks on Ukraine by unscrupulous creditors, this moratorium will protect state assets and the state sector,” the prime minister Arseniy Yatsenyuk said.
Finance minister Natalie Jaresko said the overwhelming vote in the Rada, allowing the government to suspend payments to Ukraine’s international sovereign debt-holders, was “an important protection for citizens who are already shouldering a heavy burden due to the war in the east”.
This story showed up on theguardian.com Internet site at 8:22 p.m. BST yesterday evening, which was 3:22 p.m. in New York. The Bloomberg spin on this news item is headlined "Ukraine Piles Pressure on Creditors Payment-Delay Powers"---and both are courtesy of Jim Skinner.
So a woman walks into a room… That’s how quite a few jokes usually start. In our case, self-appointed Queen of Nulandistan Victoria “F**k the E.U.” walks into a room in Moscow to talk to Russian deputy foreign ministers Sergei Ryabkov and Grigory Karasin.
A joke? Oh no; that really happened. Why?
Let’s start with the official reactions. Karasin qualified the talks as "fruitful", while stressing Moscow does not approve of Washington becoming part of the Normandy-style (Russia, Ukraine, Germany and France) negotiations on Ukraine. Not after the relentless demonization not only of the Kremlin but also of Russia as a whole since the Maidan coup.
Ryabkov, for his part, made it known the current state of the US-Russia relationship remains, well, corrosive.
This very interesting commentary by Pepe certainly falls into the must read category for any serious student of the New Great Game. It appeared on the sputniknews.com website at 4:28 p.m. Moscow time on their Tuesday afternoon---and I thank U.K. reader Tariq Khan for sending it our way.
So, Warren Buffett comes with his own railroad. That means he has his own pipeline. So, Warren Buffett’s a guy who’s dumping paper money, getting into hard assets in the form of transportation and energy in particular. And the dollar could go to zero and it has no effect on him. He still owns a railroad
The other example are the Chinese. The Chinese have spent the last four years acquiring approximately 3,000 to 4,000 tons of gold. Now, how do we know that? We have some hard data. We know China’s mining output is about 450 tons a year. We know China’s imports through Hong Kong are coming in between 800 and 1,000 tons a year. This has been going on for four years so that’s kinda 6,000 tons there and where you have to use a little guesswork is okay, we know how much gold China is getting, how much is going to private consumption, how much is going to the government? We’re not as clear on that, but I use kinda half as the first approximation.
The gold is gonna go up like this so they’ve created a hedge where they win this way and they win this way so I would say look at China buying gold, look at Warren Buffett buying hard assets in energy and that will give some guidance. The two other ones, powerful, biggest, best and foreign investors in the world are getting out of paper money into hard assets.
This commentary by Jim is a rehash of what he's said before. However, there is some new material in it, so it's still worth reading---and I thank Dan Lazicki for his final offering in today's column.
Hugo Stinnes is practically unknown today, but this was not always the case.
In the early 1920s, he was the wealthiest man in Germany at a time when the country was the world's third-largest economy. He was a prominent industrialist and investor with diverse holdings in Germany and abroad.
Chancellors and Cabinet ministers of the newly formed Weimar Republic routinely sought his advice on economic and political problems. In many ways, Stinnes played a role in Germany similar to the one Warren Buffett plays in the U.S. today…
He was an ultra-wealthy investor whose opinion was eagerly sought on important political matters, who exercised powerful behind the-scenes influence, and who seemed to make all the right moves when it came to playing markets.
This commentary by Jim Rickards showed up in the Casey Research publication "On The Radar"---and it's also worth your time.
Yearning for sunnier skies for your gold investments? How’s this sound…
That’s not pie in the sky wishful thinking—it accurately describes the next stage of the gold market, something that will soon visit your portfolio.
I'm hoping that Jeff has the inside track from Jamie Dimon, as it will be up to him [et al] if this comes to fruition. But like you, dear reader, I'm praying he'll be right. This commentary by Jeff showed up on the Casey Research website yesterday.
India will allow citizens to deposit gold with banks to earn interest as the world's second-biggest consumer seeks to cut reliance on imports by tapping idle bullion lying with households.
Individuals and institutions can deposit a minimum of 30 grams in the form of bullion or jewelry under a so-called gold monetization scheme, according to a draft document released by the government today. The banks can set the interest rate on the deposits and the metal mobilized may be loaned to jewelers, the government said.
Success in drawing out a part of the more than 20,000 metric tons of gold lying with households and institutions like temples may help India lower dependence on imports and ease pressure on the current-account deficit. While the plan proposes to ensure steady supply of bullion to jewelers, banks may benefit from a new business in a country where gold is bought during festivals and marriages as part of the bridal trousseau or given as a gifts in the form of ornaments.
The monetization plan will be limited to select cities initially as it requires a vast setup of infrastructure for secure handling of gold, according to the draft plan. Customers will have the option of redeeming deposits either in cash or in gold with a minimum tenure of one year. Investors may be exempted from paying capital gains tax, wealth tax, and income tax, the draft showed.
Good luck getting this up and running! This very interesting Bloomberg story is a must read. The above headline is courtesy of GATA's Chris Powell, but the real headline states "India Moves a Step Closer to Tapping 20,000-Tonne Gold Hoard". It was posted on the gata.org Internet site at 3:19 MDT yesterday morning.
The moot question is will the inhibitions that marred the earlier gold deposit scheme vanish. The answer sadly is in the negative.
The metal would be melted as hitherto much to the dismay and chagrin of women folk, to whom melting mangal sutra for example is abshagun, inauspicious and a strict no-no. That our ladies routinely lose out to the wicked jewelers on account of wastage but are finicky about melting on sentimental grounds need not detain us.
The tax exemptions mean a lot for those in the 30% income tax bracket as it would heighten the post-tax return on investments but temples and shrines like Tirumala Tirupati Dewastanam (TTD), Shirdi Sai Baba Trust, Mata Vaishneo Devi trust etc. are in any case tax-exempt.
And there is no guarantee that tax sleuths will not come calling hot on deposit, asking for the source, the irritant that bedeviled the earlier schemes as well.
Black money in this country finds sanctuary in real estate and gold. Gold has never come tumbling out of cupboards, lofts, and lockers enticed by interest, which pales before the tax consequences.
This extremely interesting article showed up on the firstpost.com Internet site at 8:15 a.m. India Standard Time [IST] on their Wednesday morning---and it's also worth reading. I found it on the gata.org Internet site just before midnight Denver time last night.
The past three years have seen a concerted effort by producing gold miners to cut costs but has this now run its course with all those costs that are within the control of the mining companies already slashed perhaps as far as they can be? Indeed over the past year, the miners have been able to claim falling costs primarily through beneficial factors outside their own control.
Think on it. Much of the actual cost cutting over the past two to three years has come from dropping capital projects, reducing exploration expenditures, laying off surplus staff, cutting out layers of administration and a small amount from improvements in mining technology. Disposals of less profitable operations to leaner and meaner rivals and the closure of the least economic mines have also been playing their part in company boards being able to point to better cost figures all round. These figures have also been enhanced by mining to higher grades - thus producing more gold without increasing basic operating procedures, so costs per ounce of gold produced have appeared to fall as a consequence. But are these measures at the expense of mine lives, new project development and overall longer-term corporate viability?
Take nearly all these factors. Reducing exploration expenditures and cutting back on capital projects is bound to affect the longer-term potential of the company making the cuts. High grading reduces overall ore reserves and mineral resources. The only real 'cost cuts' are those achieved via permanent labor and administration reductions, changes in the mining plan and processing efficiencies to improve figures and the removal of loss making and marginal operations through sale or closure. Once these have been made, one might argue there is little further the companies can do (apart perhaps from reducing some of the over the top pay packages commanded by senior executives, but in truth these have little overall effect on the bottom line for the bigger companies).
This commentary by Lawrie was posted on the seekingalpha.com Internet site early yesterday morning EDT---and it's definitely worth reading.
CME Group Inc said on Monday it would launch a zinc futures contract next month, stepping up a global battle for metals market share with the London Metal Exchange amid expanding Asian markets.
CME’s announcement, which included a statement from JP Morgan Chase & Co expressing strong support for the move, said the new zinc contract will begin trading June 29. The first available U.S. delivery was targeted for October, pending regulatory reviews, CME said.
The statement did not explain JPMorgan’s role in the zinc contract, but a source familiar with the matter said JPMorgan “absolutely” intends to provide liquidity on the new market, adding to its existing market-making activities on the LME.
CME Group and JPMorgan team up to rig another market. Well, dear reader, "providing more liquidity" is the same reason they use for being involved in the precious metal market---and that "liquidity" JPMorgan [et al] speak of is used to manage prices. The question that begs to be asked is since they neither produce nor consume these metals, why are they there? This Reuters article from yesterday found a home over at the mineweb.com Internet site---and it's worth skimming.
The lesser scaup is a small and somewhat shy diving duck which can be found everywhere in Western Canada during the breeding season. Most only get to see them from a distance, but with the help of a telephoto lens and some judicious cropping, the male is a rather handsome fellow in his breeding plumage. Here are three different profiles that I took on Sunday.
First Majestic is a mining company focused on silver production in México and is aggressively pursuing the development of its existing mineral property assets. The Company presently owns and operates five producing silver mines; the La Parrilla Silver Mine, the San Martin Silver Mine, the La Encantada Silver Mine, the La Guitarra Silver Mine, and the Del Toro Silver Mine. Production from these five mines is anticipated to be between 11.8 to 13.2 million ounces of pure silver or 15.3 to 17.1 million ounces of silver equivalents in 2015.
Recently, a bit of attention has been placed on my speculation about JPMorgan acquiring hundreds of millions of ounces of silver over the past four years. More seem to think my speculation is on the mark from what I can tell, but some observers disagree, often demanding concrete and incontrovertible proof about my claims. However, if unquestioned proof was available, there would be no speculation necessary on my part and everyone would have seen what JPMorgan was up to.
The key feature for JPMorgan or anyone accumulating hundreds of millions ounces of silver at extremely depressed prices would be to do so without the public knowledge and the reaction that would cause silver prices to rise before the accumulation was complete. Is there any reason to think that JPMorgan could pull off what I claim they pulled off if everyone was aware of it from the get-go? As it is, I have fully admitted that it took me years to figure out what this crooked bank was up to. To those that claim what I suggest is impossible, how about an alternative explanation for why we just had a massive withdrawal of metal from SLV on strongly surging prices and trading volume? - Silver analyst Ted Butler: 16 May 2015
This is getting tiresome, but it's not like you weren't warned well in advance.
As I said in my Saturday column---"Excuse me for thinking this, but the price action of the last couple of days has all the hallmarks of a top [hopefully temporary] in these rallies. In addition to the cooling-off in the precious metal prices themselves, their associated equities have not exactly been roaring to the upside. The charts below look toppy to me, as does the HUI."
Well, JPMorgan et al, along with their HFT buddies and their algorithms did to the precious metals yesterday what the monster rally in the U.S. dollar index couldn't. The rally in the dollar index was pretty much done by the time the spoofing started on the COMEX in New York. Yesterday's price action, like the price action on Monday, is just more proof that what the dollar index is doing is mostly irrelevant to gold and silver price. It's 100 percent COMEX paper affair at all times---and at the end of June, JPMorgan et al get to add zinc to the list of metals they will control.
Here's the 6-month charts for all four precious metals, so you can see the hatchet jobs for yourself.
As you can tell from the above charts, the gold price is now back below its 200-day moving average---and although silver traded below that same average on Tuesday, it did not close below it. Both platinum and palladium are back at their respective 50-day moving averages.
Now we're back to where we were two months ago. How low in price and number of contracts are JPMorgan et al from another low where they've got the Managed Money traders minimum long and maximum short? Will this engineered price decline be death by a thousand cuts, or will they take the proverbial axe to it like they did yesterday?
Of course the precious metal market could power higher at any time regardless of "all of the above"---and if it does, it will only happen if "da boyz" are instructed to allow it to happen.
At the moment, it's the same old, same old---and the miners just sit there knowing full well what's going on, and do nothing. I'm sure that there are special favours going out to all and sundry at The World Gold Council, The Silver Institute, Gold Field Mineral Services and CPM Group for keeping the miners under control.
And as I type this paragraph, the London open is about fifteen minutes away. After trading more or less flat through most of the Far East session on their Wednesday, gold and silver prices began to roll over starting around 1:45 p.m. Hong Kong time, just as the dollar index---which had also been trading ruler flat all night long---began to head higher. Gold is down about three dollars---and silver is down 12 cents.
Net gold volume is already very decent at 18,500 contracts, with virtually all of that of the HFT variety. Silver's net volume is a hair over 4,500 contracts---and all of its volume is in the current front month as well.
Platinum and palladium, which had been trading a few dollars higher through most of the Far East session are now respectively, down and flat on the day. And with the London open now four minutes away, the dollar index is up 41 basis points.
Yesterday at the close of the COMEX trading session was the cut-off for this Friday's Commitment of Traders Report---and because of the wild up/down price action during the reporting week, it will be impossible to tell whether all of yesterday's price/volume data will be in it. As is most often the case, not all the data on a high-volume day like yesterday, gets reported in a timely manner. I know that Ted Butler will have something to say about it in his mid-week commentary this afternoon EDT---and I'll be interested to see if he's prepared to put his marker down on this.
And as I send today's effort out the door at 5:15 a.m. EDT, I see that the dollar rally has rolled over---and the index is only up 18 basis points at the moment. All four precious metals hit their current respective lows shortly before the London open. Both gold and silver are back to about unchanged on the day---and platinum and palladium are up 4 and 9 dollars respectively.
Gold's net volume is a bit over 28,000 contracts---and silver's net volume is around 6,700 contracts. Most of the volume is in their respective current front months, so it's mostly of the HFT variety.
I have no idea what to expect as the remainder of the Wednesday trading session unfolds, but as is almost always the case, what "da boyz" do during the COMEX trading session in New York is what matters. And despite the fact that Jim Rickards said that the "price management scheme in gold and silver is now so obvious that JPMorgan et al should be embarrassed about it," they obviously aren't---and are still hard at it.
That's all I have for today---and I'll see you here tomorrow.