The gold price rose about five bucks in early Far East trading, before trading flat until just before 2 p.m. Hong Kong time. At that point, the HFT selling began, with the low of the day [$1,305.30 spot] coming on a spike down that ended at 9 a.m. in New York right on the button. But by 11 a.m. EDT, the gold price had gained back most of its New York losses, and then traded more or less sideways into the 1:30 p.m. Comex close.
At that point, the price spiked up about fourteen bucks in about half an hour, before getting sold down to almost where it closed on Monday.
Gold finished the Tuesday session at $1,323.00 spot, down 70 cents. Net volume was pretty decent at 161,000 contracts, with a quarter of that coming by 10 a.m. BST in London.
Here's the New York Spot Gold [Bid] chart so you can see the action there in more detail.
After trading sideways for the first hour, silver headed higher in a hurry, and the price was not only north of $22 the troy ounce shortly after 9 a.m. in Hong Kong trading, but was in danger of going parabolic.
But, not to worry, as a seller of last resort appeared in the nick of time, and within an hour the price was back down below the $22 spot mark. Then, just like in gold, the HFT crowd showed up shortly before 2 p.m. in Hong Kong trading, and that was pretty much it until the noon silver fix in London, which also appeared to be the low price tick of the day.
Silver rallied a bit after that, but also got taken down shortly after the Comex open, and its New York low [$21.35 spot] also came at 9 a.m. EDT right on the button. After that it followed the gold price pattern, complete with the price run-up that began the moment that Comex trading ended, along with the sell-off into the 5:15 p.m. EDT electronic close.
Silver finished the trading day on Tuesday at $21.72 spot, up a whole 8 cents from Monday.
Here's the New York Spot Silver [Bid] chart on its own. As you can see at a glance, the price pattern was very similar to gold's.
Both platinum and palladium also ran into the same Hong Kong seller as gold and silver, but after that, their price diverged not only from each other, but also from what gold and silver were doing as well. Platinum's low tick came shortly before 1 p.m. in New York. Here are the charts.
The dollar index closed in New York late Monday afternoon at 80.45. It spent all of Tuesday slowly chopping higher, and finished the day at 80.59, which was up 14 basis points from Monday's close.
The gold stocks were down two percent within 15 minutes of the open, but rallied back to just above unchanged by 10 a.m. EDT. After that they chopped sideways in a sawtooth manner, before closing unchanged on the day, like in 0.00%.
The silver stocks opened down and stayed down for the rest of the Tuesday session, but their chart pattern was identical to the chart pattern for the gold stocks. Nick Laird's Intraday Silver Sentiment Index finished lower by 1.82%.
The CME's Daily Delivery Report showed that 10 gold and 10 silver contracts were posted for delivery within the Comex-approved depositories on Thursday. There were only 20 contracts in total, but JPMorgan Chase and Canada's Bank of Nova Scotia were the long/stoppers on every single contract. The link to yesterday's Issuers and Stoppers Report is here.
There were no reported changes in GLD yesterday. Both Ted Butler and I were sort of expecting a withdrawal from SLV, but one didn't materialize. Instead, an authorized participant deposited 867,470 troy ounces. Without doubt, that was done to cover an existing short position.
Based on the price action in silver since September 13, there should have been some decent withdrawals. But as of yesterday's close in SLV, 4.24 million ounces has been deposited instead. I would guess that the entity depositing silver has also been buying up most, if not all of the SLV shares that have been sold in the last ten trading days. I would suspect that entity to be JPMorgan Chase. Unfortunately, none of this activity will be in the next short report [which will be out later this week] from the good folks over at shortsqueeze.com, as the cut-off date for their upcoming report was probably the 13th as well.
About two hours after I wrote the above paragraph, I happened to check the shortsqueeze.com website, and lo and behold, it had been updated. It showed that for the first half of September, the short position in SLV had only declined by 1.34%, from 15,880,700 shares/troy ounces, down to 15,668,000 shares/troy ounces. That's a hair over 487 metric tonnes of silver. It's obvious that the 4.24 million ounces of silver deposited since the cut-off will reduce the remaining short position by a huge amount. As of this new report, the short position in SLV shares represents only 4.4% of the total number outstanding.
The short position in GLD declined by 17.90%, from 30,766,200 shares, down to 25,260,200 shares; or 2.526 million ounces, a bit more than 80 metric tonnes. The short position in GLD is now down to around 8 percent of the total shares outstanding, which is an outrageous amount considering the fact that the shorted shares have no gold [or silver] backing them.
I expect that Ted Butler will have more to say about this in his mid-week commentary to his paying subscribers this afternoon, and I'll report on any comments he might have.
Over at Switzerland's Zürcher Kantonalbank bank for the week ending Friday, September 20, they reported small deposits in both their gold and silver ETFs. Their gold ETF rose by 14,721 troy ounces, and their silver ETF had 40,478 ounces deposited.
The U.S. Mint had a tiny sales report yesterday. They sold 1,000 troy ounces of gold eagles, and that was it.
It was a semi-eventful day in gold over at the Comex-approved depositories on Friday. They didn't report receiving anything, but HSBC USA shipped a fairly chunky 173,358 troy ounces out the door. The link to that activity is here.
In silver, Canada's Bank of Nova Scotia reported receiving 959,943 troy ounces, and nothing was shipped out. The link to that action is here.
The table of numbers below is something that I asked Nick Laird to whip up for us. What it shows is the closing price of all five Comex-traded metals on the day that gold hit its high price tick on January 21, 1980. The second column of numbers shows the closing price of these same commodities as of the close of trading on Monday. The third column shows the gains or losses in each metal since 33 years ago.
Based on the U.S. governments own inflation figures, John Williams over at shadowstats.com said several years back that silver should be somewhere north of $160 the ounce, and gold should be around $2,700/ounce. John's projected prices for both gold and silver based on the true U.S. inflation rate would make your eyes glaze over, as they are several multiples of these numbers.
It's obvious from these numbers that the Fed, and others, have had great success in keeping commodity prices under control as they print the U.S. dollar into oblivion.
I don't have that many stories, but there are a number of longish interviews that will take a chunk of your time, so I hope you have some to spare.
JPMorgan Chase & Co., Barclays Plc, Credit Suisse Group AG, and 10 other international lenders were sued by a U.S. credit union regulator alleging they illegally manipulated benchmark Libor interest rates.
The National Credit Union Administration, an Alexandria, Virginia-based regulator, sued the banks yesterday at a U.S. court in Kansas.
Their alleged manipulation “resulted in a loss of income from investments and other assets held by five failed corporate credit unions: U.S. Central, WesCorp, Members United, Southwest and Constitution,” according to an NCUA statement yesterday.
The banks are accused of giving false information in response to a daily survey by the British Bankers’ Association, which asks lenders how much it would cost to borrow money from each other for various intervals in 10 different currencies.
This Bloomberg story, filed from Chicago, was posted on their Internet site early yesterday afternoon MDT...and I thank West Virginia reader Elliot Simon for today's first story.
JPMorgan has had its fill of legal headaches.
To solve a large chunk of the problem, the bank is now making a big offer: It will pay what would amount to one of the biggest fines in history to the Department of Justice to wipe clean the slate with prosecutors. WSJ says it has offered $3 billion for a global settlement.
That actually could be something of a pittance to what the bank is up against.
Earlier this month, analysts at Bernstein attempted to get to the bottom of J.P. Morgan’s legal issues. The analysts estimated that since 2009, J.P. Morgan has set aside about $21 billion in total legal reserves, including what Bernstein expects to be $2 billion in the current quarter.
Three billion dollars? Their generosity knows no bounds. This was posted on The Wall Street Journal website early yesterday evening EDT...and it's courtesy of reader John Sanders.
In his new commentary, "The 80 / 20 Rule," GoldMoney research director Alasdair Macleod warns that money exiting the bond market as interest rates rise will likely inflate asset prices and make inflation even more of a hardship for people of no particular financial means.
"The fatal error of rescuing both the banking system and government finances by reckless currency inflation is becoming apparent to all," Macleod writes. "Unless this policy is somehow reversed, we risk a global rerun of the collapse of the German mark in 1923."
Alasdair's commentary is posted at GoldMoney's Internet site, and I borrowed the above paragraphs of introduction from a GATA release yesterday.
A eurozone bank resolution fund should have its own credit line allowing it to cover the costs of bank failure, European Central Bank (ECB) chief Mario Draghi said Monday.
Speaking on Monday (23 September) at a hearing of the European Parliament's Economic committee, Draghi told MEPs that although national authorities will still be responsible for bearing the costs of bank resolution in the short-term, a permanent fund would need a "backstop."
The ECB will be conducting stress-tests of banks across the eurozone in the coming months, as it prepares to become the bloc’s single bank supervisor next year.
“We’ll have to have national backstops in place,” said Draghi, adding that “the role for the national backstops is there and it’s realistic.”
More smoke and mirrors from the E.U. This news item, filed from Brussels, appeared on the euobserver.com Internet site yesterday morning...and I thank Roy Stephens for sending it our way.
Ukraine has agreed a deal with a Chinese firm to lease five per cent of its land to feed China's burgeoning and increasingly demanding population, it has been reported.
It would be the biggest so called "land grab" agreement, where one country leases or sells land to another, in a trend that has been compared to the 19th century "scramble for Africa", but which is now spreading to the vast and fertile plains of eastern Europe.
Under the 50-year plan, China would eventually control three million hectares, an area equivalent to Belgium or Massachusetts, which represents nine per cent of Ukraine's arable land. Initially 100,000 hectares would be leased.
The farmland in the eastern Dnipropetrovsk region would be cultivated principally for growing crops and raising pigs. The produce will be sold at preferential prices to Chinese state-owned conglomerates, said the Xinjiang Production and Construction Corp (XPCC), a quasi-military organisation also known as Bingtuan.
This very interesting story was posted on the telegraph.co.uk Internet site early yesterday evening BST.
Warm words from top EU diplomats in New York have set the stage for a potential breakthrough in the decades-long confrontation between Iran and the US.
EU foreign relations chief Catherine Ashton told press after meeting her Iranian counterpart, Javad Zarif, at the UN general assembly on Monday (23 September) that she "was struck … by the energy and determination that the foreign minister demonstrated" on reaching a deal on Iran's alleged nuclear weapons programme.
British foreign minister William Hague, who also met Zarif, said: "The United Kingdom does not seek a confrontational relationship with Iran and is open to better relations."
He noted that if Iran takes "concrete steps" on nuclear non-proliferation then "I believe a more constructive relationship can be created."
This is another story from the euobserver.com Internet site yesterday morning Europe time...and another offering from Roy Stephens.
The first commentary is with Dr. Stephen Leeb...and it's headlined "Calm Before the Storm as the World Heads Into Second Meltdown". The second interview is with John Ing. It bears the title "Current Debt Trajectory Will Lead to Western Disintegration". And lastly comes this blog with Citi analyst Tom Fitzpatrick...and it's entitled "This Is Why the Price of Gold Is Now Set to Super-Surge".
[Although I post all of Eric King's interviews, I wish to go on the record as saying that I don't necessarily agree with everything that's said by some of his guests. - Ed]
Air France said Tuesday it had filed a complaint after gold bars worth around 1.6 million euros ($2.1 million) were stolen from a plane bound for Zurich from Paris.
The gold bars, weighing around 50 kilos (110 pounds), were placed inside the plane at Paris's Charles de Gaulle airport last Thursday by employees of the US security firm Brink's.
It is as yet unclear how the theft happened, but an airport source said the robbers had "probably made use of airport accomplices."
This interesting story was posted on the businessinsider.com Internet site yesterday afternoon...and I thank Washington state reader S.A. for bringing it to our attention.
The Federal Reserve is concerned about suspiciously heavy trading of gold futures after its meeting last week that may have been triggered by a premature release of market-sensitive information.
In a statement, the central bank said Tuesday that news organizations that receive embargoed information from the Fed agree to withhold information until the time set for its release. The Fed statement said, "We will be conducting follow-up conversations with news organizations to ensure our procedures are completely understood."
Trading in financial markets is now dominated by automated computer systems, which make trades in tiny fractions of a second that can lead to millions of dollars in profit. Receiving the data early - even by a few milliseconds - can give an unfair advantage to some firms.
The Fed may be "concerned," but it probably won't do a thing about it even if they find the evidence...and the culprit. This story, filed from Washington, was posted on the cbsnews.com Internet site yesterday afternoon EDT...and my thanks go out to reader M.A. for being the first person through the door with it.
Max Keiser of "The Keiser Report" on the Russia Today television network today did a spectacular interview with London metals trader Andrew Maguire, who described his facilitation of statements given last year to the U.S. Commodity Futures Trading Commission by JPMorgan Chase employees confirming that their company manipulates the monetary metals markets.
Keiser's interview with Maguire is about 12 minutes long and is posted with some introductory commentary by Turd Ferguson at the TF Metals Report's Internet site. Maguire's interview begins at the 13-minute mark.
Well, dear reader, one can only hope that if the CFTC chooses NOT to do anything with these whistle-blower statements to the CFTC, that they will at some point be posted in the public domain for everyone to see. Because if the CFTC hasn't done anything with this evidence since last year, it's a good bet that they will never do anything. Their Ted Butler-inspired 5-year investigation into the silver price management scheme is proof of that. However, hope does spring eternal!
I borrowed the above paragraphs of introduction from a GATA release yesterday. The interview, along with TF's introductory comments, are definitely worth your time.
Anglo Far-East's John Ward interviews Jim Rickards. This interview was posted on their website on Monday. It's in an mp3 format, so it takes a bit of time for it to begin playing after you hit the "Download" button on the website. I thank Harold Jacobsen for finding this for us.
Kitco News was in New York City for Platinum Week and caught up with best-selling author Jim Rickards to talk the fed, gold and the international monetary system. According to Rickards, the Fed knows gold has to go higher but taper talks continue to put downward pressure on the yellow metal. Rickards expects the Fed to continue "tapering into weakness" and says there may even be a recession next year.
This 9-minute Kitco News video interview, hosted by Daniela Cambone, was posted on the youtube.com Internet site on Monday...and it's the second offering in a row from Harold Jacobsen.
Interviewed by Tekoa da Silva at Bull Market Thinking, fund adviser and geopolitical strategist James G. Rickards charges that the Federal Reserve is "manipulating every market in the world," including gold.
Rickards adds that Germany's Bundesbank really doesn't want any of its gold returned from the Federal Reserve Bank of New York and has arranged for the return of a small part of it only as a political sop to agitation in Germany's parliament. Rather, Rickards says, the Bundesbank wants to remain part of the scheme of Western central banks to manipulate the gold market, which is best accomplished by storing and leasing gold in the major trading centers of New York and London.
Still, he expects big changes in the world monetary system within two years. A summary of the interview and a link to its audio are posted at the Bull Market Thinking Internet site...and I thank Chris Powell for wordsmithing the above introductory paragraphs.
Sprott Asset Management CEO Eric Sprott, interviewed by Lars Schall for Matterhorn Asset Management's Gold Switzerland Internet site, says manipulation of the gold market has become obvious, that central banks already have lost their battle against gold, and that there will never be an audit of the U.S. gold reserve. The interview is 28 minutes long and was posted at the goldswitzerland.com Internet site yesterday. Once again I thank Chris Powell for doing all the heavy lifting for me.
Mason Graphite Inc. announced that purities of 99.9% graphitic carbon (“Cg”) were obtained from preliminary studies testing the purification of the graphite concentrates from its flagship Lac Guéret project located in northeastern Quebec. The trials were carried out on three coarse size fractions of graphite; +48 mesh returned 99.6% Cg, +80 mesh returned 99.7% Cg and +150 mesh returned 99.9% Cg. Benoît Gascon, President & CEO commented, “Having reached 99.9% Cg from the very first run of testing, without any optimization, reaffirms our belief in the exceptional quality of the graphite hosted on our property. These high purity levels are required in many industrial applications including electrochemical applications like Lithium-ion batteries which are used in electric vehicles, portable electronics and cordless power tools, which represent a significant and growing market.” Mason Graphite will now move forward with larger scale testing designed to optimize the purification process and further improve these excellent results. Please visit the website for more information.
I have one new thought on JPMorgan’s alleged market manipulation in the London Whale derivatives trade and the ongoing gold and silver manipulation. There were no technical funds as counter parties to JPM in the London Whale trade; the counter parties were sophisticated hedge funds who took a position opposite to JPM on a valuation basis, not because of moving average price signals. The counter parties in the London Whale trade weren’t price fickle traders of the kind that represent the COMEX counter parties to JPMorgan in gold and silver. Therefore, JPMorgan couldn’t shake out the hedge funds in the Whale trade as this crooked bank can do on the COMEX. There will come a day when JPMorgan can’t trick the technical funds on the COMEX either, because the silly tech funds no longer exist or because more value oriented traders take them on in silver and gold. - Silver analyst Ted Butler: 21 September 2013
Yesterday was just another day when the Commercial traders had their way with prices in all four precious metals once again. As Jim Rickards said in one of the interviews above, the Fed is manipulating every market in the world, including gold. They aren't doing it directly, of course, but rather through their agents dealing on the Globex trading system, which includes the Comex in New York.
But they can't keep it up forever.
Yesterday in The Wrap I was mentioning that if we got through the Tuesday trading day with no big rally, then this Friday's Commitment of Traders Report would show further large improvements in the Commercial net short positions in both gold and silver. Well, I got my wish; and this Friday's COT Report should be a sight to behold.
As Jim Rickards has been going on about for years, which is also the title to his new book, the current world U.S.-centric financial system is on its last legs. Only the timing of its demise is unknown. However, somewhere in the not-to-distant future, the U.S. dollar will breathe its last as reserve currency.
I would suggest/speculate that the powers that be will attempt to keep the precious metals/commodity prices under control as best they can until that event occurs. It's also my opinion that they won't succeed, but until they decide to allow gold and silver to rally, we just have to endure the obvious price management scheme until it does end.
As British economist Peter Warburton said in the three most important paragraphs ever written way back in April of 2001, which is now almost twelve and a half years ago:
Central banks are engaged in a desperate battle on two fronts
What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, they seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets.
It is important to recognize that the central banks have found the battle on the second front much easier to fight than the first. Last November, I estimated the size of the gross stock of global debt instruments at $90 trillion for mid-2000. How much capital would it take to control the combined gold, oil and commodity markets? Probably, no more than $200 billion, using derivatives. Moreover, it is not necessary for the central banks to fight the battle themselves, although central bank gold sales and gold leasing have certainly contributed to the cause. Most of the world's large investment banks have over-traded their capital [bases] so flagrantly that if the central banks were to lose the fight on the first front, then their stock would be worthless. Because their fate is intertwined with that of the central banks, investment banks are willing participants in the battle against rising gold, oil, and commodity prices.
Central banks, and particularly the US Federal Reserve, are deploying their heavy artillery in the battle against a systemic collapse. This has been their primary concern for at least seven years. Their immediate objectives are to prevent the private sector bond market from closing its doors to new or refinancing borrowers and to forestall a technical break in the Dow Jones Industrials. Keeping the bond markets open is absolutely vital at a time when corporate profitability is on the ropes. Keeping the equity index on an even keel is essential to protect the wealth of the household sector and to maintain the expectation of future gains. For as long as these objectives can be achieved, the value of the US dollar can also be stabilized in relation to other currencies, despite the extraordinary imbalances in external trade.
The above came from his landmark essay "The Debasement of World Currency: It is inflation, but not as we know it". Everything you need to know about how and why the world's economic, financial and monetary system is unfolding the way it is, is contained in those three paragraphs; including the price management scheme in the precious metals and all other key commodities.
So if the Fed really wants to stoke the inflationary fires, all they have to do is take their foot off the price of gold and silver for awhile and they'll get their wish.
Not very much happened in Far East trading on their Wednesday. All four precious metals are basically unchanged from their closing prices in New York on Tuesday. As I type this paragraph, London has been open exactly one hour, and volumes are pretty light in both gold and silver. And, not that it matters, the U.S. dollar isn't doing much.
And as I hit the send button on today's column at 5:10 a.m. EDT, prices still aren't doing much, but trading volumes are getting up there, and the dollar index still isn't doing a thing.
I haven't got the foggiest notion as to how trading is going to unfold in New York today, so nothing will surprise me when I roll out of bed later this morning.
That's all I have. I hope your Wednesday goes well, and I'll see you here tomorrow.