Gold & Silver Daily
"Nothing much should be read into yesterday's price action"

¤ Yesterday In Gold & Silver

NOTE:  Even though it's Thanksgiving Day in the USA tomorrow, I will have a column.  But it will be posted on the Saturday time schedule.

The gold price peaked out on Tuesday at the London a.m. gold fix and then got sold down back below the $1,200 spot price by 1:10 p.m. GMT---10 minutes before the Comex open.  The ensuing rally back above $1,200 got hit by the HFT boyz a minute or so before 8:30 a.m. EST---and 30 minutes later, gold hit its low tick of the day.  After that it rallied back to the $1,200 pot mark at or just before the London p.m. gold fix, which was minutes before 10 a.m. in New York.  The price dipped a few dollars after that, but rallied to close a hair above the $1,200 mark.

The low and high ticks, such as they were, were reported by the CME Group as $1,189.00 and $1,202.20 in the December contract.

Gold closed the Tuesday session at $1,201.20 spot, up $2.90 from Monday's close.  Gross volume came close to 360,000 contracts, but only netted out to 62,000 contracts, even lower than Monday's net volume.

The silver price didn't do much, hitting its low of the day shortly before 1 p.m. Hong Kong time.  From there it rallied to its high tick around 8:25 a.m. GMT in London.  From the high of the day, the silver price got sold down to its low of the day at 9:01 a.m. EST---the same minute as gold hit its low.  From that point silver rallied until 10:30 a.m. EST---and then sagged down until 12:30 p.m. EST [the same as gold]---and from there it rallied until around 3:30 p.m., before trading sideways into the close.

The low and high ticks were recorded as $16.435 and $16.69 in the December contract.

Silver's gross volume was a bit more than 125,000 contracts, but netted out to only 16,500 contracts, which is a very tiny amount.

Platinum rallied early in Far East trading on their Tuesday but rolled over, hitting its low of the day around 1 p.m. Hong Kong time.  From there, it rallied until about noon in Zurich.  It had a down/up dip from 8:30 to 9:00 a.m. in New York, just like gold and silver---and from shortly after 10 a.m. EST, it chopped sideways in a fairly tight range into the 5:15 p.m. close of electronic trading.  Platinum closed up an even $20.

Palladium took another run at the $800 spot price mark, but ran into a willing seller about 9:45 a.m. EST when it looked it was about to blast above that mark.  After that, it got sold back down to unchanged on the day.

The dollar index closed late on Monday afternoon in New York at 89.15.  From there it didn't do much until it spiked up to its 88.30 high at the 8:20 a.m. EST Comex open.  Then it headed south with a vengeance, hitting its 87.84 low minutes after 11 a.m. in New York.  After that, it didn't do a lot, closing at 87.89---down 26 points on the day.

The gold stocks opened unchanged---and rallied a percent or so within the first hour---and then drifted quietly lower until 12:30 p.m. EST.  The gold price began to rally at that point, as did the gold shares---and they really put on a burst in the last 30 minutes of the New York trading session, as the HUI closed up a very respectable 3.94%.

The silver equities followed a very similar pattern---and Nick Laird's Intraday Silver Sentiment Index closed up 4.40%.

The old wives' tale that big movement in the precious metal shares is a precursor to a rally in the metals themselves is about to be put to the test.  Here's an article from the Internet site headlined "Gold stocks surge in massive volumes" that reader M.A. sent our way late last night.

The CME Daily Delivery Report showed that 4 gold and 2 silver contracts were posted for delivery within the Comex-approved depositories on Friday.

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in November dropped by 7 contracts and is down to 4 contracts still open.  Silver o.i. dropped from 28 contracts down to 2 contracts.  These few contracts are what is posted for delivery on Friday in the previous paragraph, so the November delivery month is done.

There were no reported changes in GLD yesterday---and as of 9:35 p.m. EST yesterday evening, there were no reported changes in SLV, either.

I note that the folks over at the Internet site updated their short positions for both GLD and SLV for the period ending November 15---and here's what they had to say.

The short position in SLV blew out by 17.53%, from 14.85 million shares/troy ounces to 17.45 million shares/troy ounces.  The new short position represents 542 metric tonnes of the stuff, or approximately 1,745 Comex good delivery bars---eight days of world silver production.

In GLD, the short position increased by 17.37%---from 1.51 million troy ounces, to 1.77 million troy ounces.  That's 55 metric tonnes of the stuff.

Allowing a short position to exist in a physical metal fund is one of several reasons I wouldn't own either one of these ETFs.

The good folks over at Switzerland's Zürcher Kantonalbank updated their gold and silver ETFs with data as of the close of trading on Friday, November 21.  Their gold ETF declined by 19,567 troy ounces---and their silver ETF also declined, by 21,585 troy ounces.

There was another decent sales report from the U.S. Mint yesterday.  They sold 4,000 troy ounces of gold eagles---1,000 one-ounce 24K gold buffaloes---and 211,500 silver eagles.

There wasn't much gold movement over at the Comex-approved depositories on Monday.  There was 2,290 troy ounces reported received---and 2,432 troy ounces shipped out.

It was totally different in silver, of course, as 943,300 troy ounces were received---and 1,357,141 troy ounces were shipped out.  The link to that action is here.

I have a decent number of stories in today's Critical Reads section---and I hope you have the time to read all the ones that you find of interest.


¤ Critical Reads

This Is What $11.71 Trillion Worth of Household Debt Looks Like

Household debt rose to $11.71 trillion in the third quarter.

According to the New York Federal Reserve's latest Household Debt and Credit report, household debt in the third quarter rose 0.7%, or $78 billion, to $11.71 trillion, up from $11.62 trillion in the second quarter.

Overall, household debt is below its $12.68 trillion peak reached in the third quarter of 2008.

"Outstanding household debt, led by increases in auto loans, student loans and credit card balances, has steadily trended upward in recent quarters," said Wilbert van der Klaauw, senior vice president and economist at the New York Fed. "In light of these data, it appears that the deleveraging period has come to an end and households are borrowing more."

Today's first story appeared on the Internet site at 11:40 a.m. EST yesterday---and I thank reader U.D. for passing it around yesterday evening.


How the World's Most Leveraged Hedge Fund Got Away with Insider Trading

While everyone is aware by now that the biggest component of SAC's abnormal outperformance over the years was its recourse to "information arbitrage" and its reliance on "expert networks", both of which managed to send the SAC logo to Federal Purgatory, if not the hedge fund's infamous art-collecting founder, one player in the massive hedge fund insider trading ring which was busted over the past few years, involves the one hedge fund, which as we have shown in the past, has the highest leverage in the U.S. if not the world: Citadel, with $142 billion in regulatory assets.

Today, we learn just how Ken Griffin's conglomerate also got its hands clean, and more importantly, how it managed to avoid any legal consequences.

As Bloomberg reported overnight, "the FBI files spell it out: An analyst at Citadel LLC, the hedge fund with $23 billion in capital invested globally, told agents he made millions of dollars trading on information from a company insider."

Normally, this would have been enough for the FBI to raid said hedge fund and at least settle for a fine, if not pursue outright prison time for those involved. This time, however, it did not.

This longish commentary about the Federals Reserve's private hedge fund was posted on the Zero Hedge Web site at 11:32 a.m. EST yesterday morning---and I thank Manitoba reader U.M. for sending it our way.


Forex Rigging Probe: US Prosecutors to Grill London Traders

U.S. prosecutors are set to travel to London in the forthcoming weeks to probe City traders about currency market manipulation. However, British prosecutors are yet to file a criminal charge against UK financiers who rigged the rates.

U.S. Department of Justice (DOJ) officials will interview a group of current or former HSBC employees, along with other City bankers, as part of their criminal investigation into foreign exchange market (Forex) manipulation, inside sources told Reuters on Tuesday

The largely unregulated $5.3-trillion-a-day foreign exchange market is used by corporate treasurers and asset managers to value their funds.

The American body is currently investigating whether banks colluded to alter Forex rates and bolster their profits in the process. Such a maneuver is a violation of American and U.K. fraud and anti-trust laws. Prosecutors are also investigating whether traders deliberately misled their clients.

This offering from the Russia Today Web site appeared there at 5:43 p.m. Moscow time on their Tuesday---and it's the first contribution of the day from Roy Stephens.


Symantec Discovers "Regin" Spy Code Lurking on Computer Networks

Security researchers say they have discovered a sophisticated piece of malicious code spying on researchers, governments, businesses, and critical telecommunications infrastructure since 2008.

The malware, called Regin, was first discovered by Symantec, the antivirus company, which released a white paper describing its findings on Sunday. On Monday, The Intercept, a digital magazine started by the journalist Glenn Greenwald, reported that the Regin malware is part of a decade-long joint operation by the National Security Agency and its British counterpart, the Government Communications Headquarters, or G.C.H.Q. The Intercept report is based in part on disclosures from former N.S.A. contractor Edward J. Snowden.

“In the world of malware threats, only a few rare examples can truly be considered groundbreaking and almost peerless,” Symantec wrote. “What we have seen in Regin is just such a class of malware.”

Symantec found evidence that the malware has been used on targets in 10 countries, primarily Saudi Arabia and Russia, as well as Pakistan, Afghanistan, India, Mexico, Ireland, Belgium and Austria. The Intercept reported Monday that the malware had been used to spy on companies in the European Union, notably Belgacom, a partly state-owned Belgian phone and Internet provider.

This very interesting article appeared on the New York Times Web site on Monday at 12:42 p.m. EST---and it's the second offering of the day from Roy Stephens.


France Postpones Mistral Delivery to Russia over Ukraine "Until Further Notice"

President Francois Hollande has decided to suspend delivery of the first Mistral-class ship to Russia "until further notice," citing the situation in Ukraine as the reason, media reported an Elysee Palace statement.

"The President of the Republic believes that the current situation in the east of Ukraine still does not allow the transfer of the first Russian Mistral-type ships to Russia," a statement from the Elysée Palace said.

In this regard, Francois Hollande felt it necessary to postpone the new order to study the request for permission to supply Russia with the first Mistral vessel, the communique informed.

Russian Deputy Defense Minister Yury Borisov said it will patiently wait for the fulfillment of the contract, RIA Novosti reports.

This news story put in an appearance on the Russia Today Internet site at 11:50 a.m. Moscow time on their Tuesday morning, which was 3:50 a.m. EST on  Monday morning.


EU Is "Aged and Weary," Pope Says

In a highly anticipated speech attended by almost all members of the European Parliament, pope Francis on Tuesday (25 November) criticised the E.U.'s treatment of migrants, its institutions, and its focus on growth and consumerism.

“Despite a larger and stronger Union, Europe seems to give the impression of being somewhat aged and weary, feeling less and less a protagonist in a world which frequently regards it with aloofness, mistrust, and even, at times, suspicion”, he said during his speech in Strasbourg.

He likened the European continent to “a grandmother, no longer fertile and vibrant”.

Francis also signalled a “growing mistrust on the part of [EU] citizens towards institutions … engaged in laying down rules perceived as insensitive to individual people, if not downright harmful.”

No flies on this guy, as he understands the situation perfectly---and isn't afraid to say so.  This article appeared on the Internet site at 3:34 p.m. Europe time Tuesday afternoon---and it's also courtesy of Roy Stephens.


Jean-Claude Juncker's €315 Billion "New Deal" Dismissed as a Subprime Gimmick

The European Commission has launched a €315bn “New Deal” to pull Europe out of its economic slump over the next three years, but will provide almost no new money of its own and is relying on subprime forms of financial engineering.

The shopping list of investments and infrastructure projects will take months to sift through, and the stimulus will not reach meaningful scale until 2016. The scheme has already run into a blizzard of criticism. It depends on leverage that increases the headline figure by 15 times, leaving EU taxpayers bearing the heaviest risk while private investors are shielded from losses.

Jean-Claude Juncker, the Commission’s embattled new president, has made the plan the centre piece of his “last chance” drive to restore popular faith in the E.U. project, but it risks becoming an emblem of paralysis and failure instead.

“The money is chicken feed and it won’t do anything to kick-start growth,” said Professor Charles Wyplosz, from Geneva University. “It is unbelievable they are doing this rather than real fiscal expansion. The private sector will just take governments to the cleaners.

This Ambrose Evans-Pritchard commentary showed up on the Internet site at 6:21 p.m. GMT yesterday evening---and it's courtesy of South African reader B.V.  It's worth your while if you have the time---and the interest.


German Foreign Minister: "Crimea Will Remain a Source of Conflict"

German Foreign Minister Frank-Walter Steinmeier warned recently that leaders should tone down their rhetoric on Russia. SPIEGEL asked him whether his comments were directed at Chancellor Merkel and how he believes the conflict with Russia might develop.

German Chancellor Angela Merkel is a master at keeping her cool, even when the pressure becomes almost unbearable. This may explain why a speech she gave at the Lowy Institute for International Policy in Sydney, immediately following the G-20 summit in Brisbane, turned so many heads. Her comments in Sydney were the clearest indication yet that she is losing patience with Russia. "Outdated thinking in terms of spheres of influence which tramples international law underfoot must not be allowed to prevail," she said. "Russia is violating the territorial integrity and the sovereignty of Ukraine."

During the audience discussion after the speech, Merkel warned that "we're not just talking about Ukraine. We're talking about Moldavia, about Georgia. If things go on, we'll be talking about Serbia and the Western Balkans."

Coming as it did just hours after an interview with Russian President Vladimir Putin was aired on German television, the speech was seen as a direct and forceful response. And it seemed to make German Foreign Minister Frank-Walter Steinmeier uncomfortable. It is important, he said not long after Merkel's comments, "that in our use of language in public, we do not eliminate our chances of contributing to the easing of tensions and to the mitigation of conflict."

This interview/article was posted on the German website at 12:34 p.m. Europe time on Tuesday---and it's definitely a must read if you're a serious student of the New Great Game.  It's courtesy of Roy Stephens once again, for which I thank him.  The headline above is new---and certainly more provocative than its original title, which was German Foreign Minister Steinmeier on Russia and Ukraine.


Russia’s Eighth Humanitarian Convoy to Deliver Aid to Eastern Ukraine on Nov. 30

The eighth convoy of Russia’s Emergency Situations Ministry is expected to deliver humanitarian aid to Donbass on November 30, the Russian deputy emergency situations minister said on Tuesday.

“Over 100 vehicles are due to cross the border on Sunday. They are to deliver 1,000 tons of cargo,” Vladimir Stepanov said.

The convoy will consist of building materials needed for the destroyed houses: glass, slate, roofing material and also fuel.

Stepanov said one half of vehicles will go to Lugansk while the other one to Donetsk. “We know exactly where this aid will go,” Stepanov said.

This short article appeared on the Internet site at 10:29 a.m. Moscow time on their Tuesday morning---and once again I thank Roy Stephens for sharing it with us.


Russia Looks to the East, but It Still Needs Europe

Anyone reading the Western business press relating to Russia recently will be left with the distinct impression that global trading relations with this part of the world are undergoing a momentous and irreversible shift east. Russian business ties with the West are severed, sanctioned and broken. Asian players, most prominently the Chinese corporations, are set to step in and fill the gaps left by retreating Western investment.

Certainly the recent fanfare of political handshaking ceremonies and deal signings would support such a proposition. The APEC Summit in Beijing in November saw Moscow and Beijing conclude an agreement between state-backed companies Gazprom and China National Petroleum Corporation (CNPC) to supply gas from Western Siberia to China, from gas fields currently piped to Europe. This follows hot on the heels of the “Power of Siberia” project agreement between these companies signed in May with a purported $400bn deal value. If both projects are completed, overall volumes of gas supplies to China could exceed those supplied to Europe over the medium term.

Nonetheless, there remains a high level of scepticism in many business circles, including many Russian ones, as to how real or achievable this pivot east really is, at least in the short to medium term. The reality is that Europe will remain by far Russia’s largest export market for gas and as a bloc its largest overall trading partner for years to come. U.S. trade with Russia is much lower, but even so the U.S. remains Russia’s single largest foreign direct investor for infrastructure and power projects.

The Gazprom-CNPC deals are still just broad framework agreements, the latest milestones in years of protracted negotiations, with much planning and negotiation of the underlying contracts still to come. When speaking to bankers and professional advisers in Moscow, Beijing and Shanghai, there is a large element of wait-and-see about the realistic levels of deal flow that might emanate from Russian-Asian business cooperation over the next few years, as compared to those relating to Russian-Western trade and investment.

This opinion/analysis piece appeared on the Internet site early yesterday morning Moscow time---and it's the second offering of the day from reader B.V.


Remarks by Foreign Minister Sergey Lavrov at the XXII Assembly of the Council on Foreign and Defence Policy, Moscow, 22 November 2014

1)  Lavrov is considered very much a "moderate" and his language has always been strictly diplomatic.  So when you read Lavrov, just imagine what folks in other Russian ministries are thinking.
2) Lavrov makes no secret of his view of the USA and of his plans for the future of our planet.  When you read his words, try to imagine what a US Neocon feels and thinks and you will immediately see why the US elites both hate and fear Russia.
3) Finally, Lavrov openly admits that Russia and China have forged an long-term strategic alliance (proving all the nay-sayers who predicted that China would backstab Russian wrong).  This is, I would argue, the single most important strategic development in the past decade.
4)  Finally, notice the clear contempt which Lavrov has for a pseudo-Christian "West" which dares not speak in defense of persecuted Christians, denies its own roots, and does not even respect its own traditions. Russia did not want this conflict.  Russia did everything in her power to prevent it.  But the West left Russia no choice and Russia now openly declares her willingness to fight and prevail.  

Of all the non-precious-metals related stories in today's column, this is by far the most important---and falls into the absolute must-read category, especially for all serious students of the New Great Game.  It was posted on the Internet site yesterday---and I thank Roy Stephens for bringing it to my attention---and now to yours.


Saudi Sights Set on US Shale at Crucial OPEC Meeting

OPEC's biggest crude producer Saudi Arabia will have its sights set on the upstart US shale oil business at a crucial cartel meeting to debate possible output cuts on Thursday.

Analysts say the kingdom is content to see shale oil producers -- and even some members of the cartel -- suffer from low prices and will resist pressure to reduce output and shore up the cost of oil.

A barrel of crude has plunged by about one third in value since June to around $80 in an increasingly competitive market.

Saudi Oil Minister Ali al-Naimi was silent about his government's intentions Monday as he arrived in Vienna ahead of the OPEC gathering.

This AFP story, filed from Riyadh, showed up on the Internet site late on Monday evening---and it's courtesy of Casey Research's own Dennis Miller.


Four Major Oil Producers Say Current Oil Prices Too Low

Russia, Venezuela, Saudi Arabia, Mexico agreed that current oil prices were too low and decided to take coordinated actions to revert the trend, Venezuela’s foreign minister said.

Venezuelan Foreign Minister Rafael Ramirez attended energy talks in Vienna with officials from Russia, Saudi Arabia and Mexico in Vienna earlier in the day.

“Everyone agreed that the current price is bad. We will continue our work. Everyone is concerned about the price,” he told reporters after the talks.

“The price should be $100 per barrel, this is a fair price,” he said.

This news item put in an appearance on the Internet site at 7:15 p.m. Moscow time on Tuesday evening---and is the final offering of the day from Roy Stephens, for which I thank him on your behalf.


CFTC Tells CME Group to Work More on "Spoofing" Detection

CME Group Inc, the world's largest futures market operator, should continue to develop strategies to detect an illegal manipulative trading practice known as "spoofing," the U.S. Commodity Futures Trading Commission said on Monday.

Spoofing involves rapidly placing orders to create the illusion of market demand. Unsuspecting traders are then tricked into buying or selling at artificial prices, only to later find that the orders were canceled.

The practice gained notoriety last month after high-frequency trader Michael Coscia was charged with manipulating commodity futures prices in the first U.S. federal criminal prosecution of spoofing.

This Reuters article, filed from Chicago, was posted on their Web site at 6:51 p.m. EST on Monday evening---and it's courtesy of Manitoba reader U.M.


Grant Williams: How Could It Happen?

In the new edition of his Things That Make You Go Hmmm... letter, Singapore fund manager Grant Williams writes some future history that regards GATA favorites Alasdair Macleod and Koos Jansen as prophets of a Chinese-engineered golden age -- an age golden, at least, for those who heeded the prophets and got their gold in time.

Williams' letter is headlined "How Could It Happen?" and it was posted at the Internet site yesterday sometime--and I found it embedded in a GATA release.


FT's Tett: Gold “Tangible” and “Clear”; People “Unnerved” About “Money” in “Bottomless Cyber Space”

While we agree that Greenspan's legacy is a tarnished one, we also recall his statement to Marc Faber at the New Orleans Investment Conference last month where he said "I never said the central bank is independent."

At that conference he also stated that the Federal Reserve was sitting on "a pile of tinder" and that gold would go "measurably higher."

Gillian Tett has a record of unbiased analysis and commentary regarding the gold markets. In 2011 she suggested that it would be "foolish to simply deride or ignore" the Gold Anti-Trust Action Committee (GATA). 

GATA's contention of manipulation of the gold markets have now been borne out.

Tett is highly respected both in journalism but also in financial and economic circles. In her previous roles, she was U.S. Managing Editor and oversaw global coverage of the financial markets. In March 2009 she was Journalist of the Year at the British Press Awards. In June 2009 her book Fool’s Gold won Financial Book of the Year at the inaugural Spear’s Book Awards.

This Financial Times story by Gillian Tett received 'the treatment' from Mark O'Byrne yesterday.  Gillian's FT story was the headline to my Friday column---and even though Mark's efforts are a day or so late, they definitely aren't the proverbial dollar short, as I consider Mark to be one of the best writers on the Internet---and his analysis of this news item in the current financial environment are definitely worth your time.  I found it on the Internet site yesterday.


Nick Laird: Gold Algos Run Wild

Goldbugs hearts were racing today as gold roared up whilst Comex was closed for 1/2 hour. The price started leaping once it got over $1,200 & topped out at the price of $1,466.38 - a 22% rise of$270.

It was live on multiple websites and data feeds across the web so many got to watch the excitement. Goldbugs watched the prices on NetDania, iFeed and eSignal data feeds and on websites such as and so the price increase appeared real.

Comex shorts must have been wetting themselves.

What must be asked is what was happening to these live quotes that gold rose almost $270 on multiple data feeds? Who was doing the watching---and who did the monitoring---and then the correction? Someone in control was watching these live feeds and reacting to them? What was happening to the quote stacks - who was buying/selling - did it really happen?

Well, dear reader, I was totally oblivious to this amazing event, as I only follow Kitco at home---and we even use Kitco pricing at the store.  I didn't even hear about it from any of my readers until early yesterday evening.  The first I heard of it was when Nick sent me this story very late yesterday afternoon Mountain Standard Time.  It's definitely worth looking at---and it's posted on the Internet site.  Nick also sent along the Zero Hedge commentary on it---and it's headlined "Something Appears to Be Going On with Gold". [And as of 4:30 a.m. EST this morning, I haven't heard another thing about it. - Ed]


French Populist Leader Joins Gold Repatriation Campaign

Marine Le Pen, leader of the populist National Front political party in France and likely France's next president if the country should last until another election, has picked up the gold repatriation issue by writing to the governor of the central bank, the Banque de France. Le Pen's letter, translated from French to English, is posted at her party's Internet site.

An official of the central bank disclosed last year that it is secretly trading gold for its own account and for other central banks "nearly on a daily basis."

That same official said this month that central banks are managing their gold reserves "more actively" these days, while worrying more about "auditability," perhaps since the gold sometimes is construed to be in more than one place at the same time.

This commentary appeared on the Internet site yesterday---and it's definitely worth reading.  And although I thank Chris Powell for wordsmithing 'all of the above'---the first person through the door with this yesterday was reader U.M.---and she also sent along the Zero Hedge commentary on this headlined Here Comes France: Right-Wing Leader Marine Le Pen Demands Central Bank Repatriate French Gold.  It's worth reading as well.


Guardian's Report on Swiss Gold Initiative Quotes GATA Consultant Koos Jansen

The Swiss like referendums: there were 11 last year and there have been nine more this year, on subjects ranging from who pays for abortions to whether the state should buy a certain type of new fighter aircraft.

This Sunday there are three more, but one has attracted more attention than most because there are fears that if it wins majority support it could trigger a worldwide gold rush.

Five million Swiss voters are to decide on a proposal that would force the central bank to triple its gold reserves. The vote is being watched closely by financial markets and governments around the world. ...

"Gold continues to trigger impetuous and irrational reactions in many people," Sergio Rossi, professor of macroeconomics and monetary economics at Fribourg University, told the Swiss news agency SDA.

This Swiss gold referendum-related story appeared on Internet site at 9:24 p.m. GMT yesterday evening---and I found it posted on the Internet site.  The article's real headline reads Fears that ‘dangerous’ Switzerland referendum could spark gold rush.


Indian Government Investigating Black Money in Swiss Banks Entering India Via Gold Import

Following reports of a sharp increase in the import of gold from Switzerland, Indian authorities have started investigating whether unaccounted money parked by Indians in banks these is entering India in the form of gold.

From this year, Swiss authorities have started disclosing that country’s import, as well as export, of precious metals. Between January and October, Switzerland exported 380 tonnes of gold to India. In January, India’s share in Switzerland’s overall gold and silver exports stood at 14.1%. This has increased to 16%.

So far this year, India has imported 27.7% of the gold exported by Switzerland; in January, this was only 15%.

The Centre has asked the customs department and the Reserve Bank of India to tally the gold imported from Switzerland with export data released by Swiss authorities and the payment for gold by India to banks and traders in Switzerland in March. A source said if both sets of data matched, one could conclude there was no direct relation between the gold imported from Switzerland to India and the black money parked in that country. “We believe even if the black money parked there is entering India through gold import, it will not come directly from Switzerland; importers will route that through Hong Kong of Dubai to hide the true identity.”

This interesting story, filed from Mumbai, was posted on the Internet site late Tuesday evening IST---and it's another offering from reader U.M.


China’s Gold Imports Through Hong Kong Rise for a Third Month on Jewelry Sales

China’s gold imports from Hong Kong rose for a third month as increasing jewelry sales countered weakening demand for the metal as an investment amid falling prices.

Net imports totaled 69 tonnes in October, compared with 61.7 tonnes the previous month and 129.9 tons a year earlier, according to calculations by Bloomberg News based on data from the Hong Kong Census and Statistics Department today. Exports to the territory from China rose to 42.4 tons in October from 30.1 tons in September, the statistics department said in a separate statement. The figures don’t represent all imports of the metal by China, which doesn’t publish such data.

The value of China’s jewelry sales in October rose 2.9 percent from the previous month, according to the National Bureau of Statistics. Bullion fell below $1,200 an ounce last month and erased its gains for the year as the U.S. economy improved and the dollar strengthened on prospects for higher interest rates, damping demand for precious metals as an inflation hedge.

“Higher jewelry sales for the third month defied some earlier forecasts that Chinese demand would falter after falling prices,” Liu Xu, an independent gold analyst in Beijing, said by phone before the data was released.

As usual, the official import data through Hong Kong was leaked early---and here's the story about it in this Bloomberg article that was filed from Beijing at 3:43 a.m. Denver time on Tuesday morning.  Nick Laird won't be able to update his chart on this until the official numbers are released in the first week of December.  This is another gold-related news item from reader U.M.


Chow Tai Fook Jewelry Group Plots New Grounds to Chase China’s Tourists

Chow Tai Fook Jewellery Group Ltd. (1929) plans to open new stores outside its main markets in Hong Kong and China, as it chases its Chinese customers outside familiar territory.

“While overseas travel is increasingly popular among the Mainland Chinese, it means more and more of their shopping budgets are spent in the new tourist destinations outside our major markets,” the world’s largest listed jewelry chain said in a statement to the Hong Kong Stock Exchange yesterday.

Chow Tai Fook plans to double its number of points of sales, including concessionaires and standalone outlets, in the next 10 years. Stores in tourist hotspots outside mainland China and Hong Kong will also be its target “to capture the spending power of the affluent outbound Mainland Chinese tourists,” it said.

The expansion plan comes as the jeweler said pro-democracy protests held near its Hong Kong stores curtailed Chinese tourists. Travelers from China splurged the most on tax-free shopping last year, accounting for 27 percent of spending, according to a study by tax-refund points operator Global Blue.

This very interesting gold-related news item, filed from Hong Kong, appeared on the Bloomberg Web site at 6:52 p.m. Mountain Standard Time yesterday evening---and once again it's courtesy of reader U.M.


Lawrence Williams: Global Gold Supply in Deficit This Year, Even More So Next

In a previous article we have already shown that Indian and Chinese gold demand between them currently account for annual gold consumption levels of perhaps as much as 3,100 tonnes, roughly equivalent to global new mined gold production as recorded by the World Gold Council (3,115 tonnes over the 12 months to end September).

The Chinese and Indian figures we have recorded are probably themselves understated – with Indian consumption swelled by smuggled gold imports to avoid the 10% import duty and take advantage of the gold premiums on the Indian markets. China’s figures are also understated in that they are mainland China figures and do not include Hong Kong net gold imports which probably should add another 40-50 tonnes to the figure given that Hong Kong is technically part of China, but in terms of economic statistics, including gold net imports, it is treated as an independent state.

For the 12 months to end September this year, Asia, other than China and India, is reported to have consumed some 280 tonnes, Middle East 218.6 tonnes, Turkey 121.9 tonnes, Russia 73.8 tonnes, USA 174.3 tonnes, Europe ex-CIS 272.1 tonnes and Other (countries not detailed in the main table) 425.3 tonnes, giving us the overall total of 1,566 tonnes.

The WGC’s Gold Demand Trends data puts global supply for the 12 months to end-September over and above new mined production at 1,143.5 tonnes. Taking our own figures for Chinese and Indian demand as being approximately equal to global new mined production that suggest to us that gold supply is going to be in deficit this year to the tune of around 420 tonnes plus, which is fairly substantial in the supply/demand equation (around 10%).

Lawrie correctly concludes that the reason that gold prices aren't higher is because of the antics of JPMorgan et al in the Comex futures market.  This must read commentary showed up on the Internet site yesterday---and it's the final offering of the day from Manitoba reader U.M.---and I thank her on you behalf.


John Hathaway: Monetary Tectonics

The modern-day central banker trades with counterparties that are giant commercial banks with derivative books of disturbing scale and complexity. It seems impossible that these commercial exposures could be constructed and maintained without the knowledge and complicity of the official sector. For example, Deutsche Bank, already a defendant in 1,000 lawsuits, claims derivative exposure that is 20 times the GDP of Germany and 5 times that of the entire Eurozone. It is not a great leap to suggest that central-bank traders and their megabank opposites – spawn of the same gene pool, schooled in the same institutions, career paths intertwined, frequenters of the same conferences, and just a speed-dial away – are ideologically indistinguishable and intellectually and morally corrupt in equal proportion. We applaud the efforts of litigators and plaintiffs already in process and those in the wings, and look forward to the depositions and discoveries yet to come.

Whether the eventual cessation of manipulative practices translates into a change of trend for the gold price remains to be seen, although it seems logical that the bullish consensus for financial assets equates to a complacent and very large short position in gold that will have to be covered (37.5 million troy ounces). More important, as we demonstrated in “Let’s Get Physical”, there is a massive asymmetry between paper claims on gold and physical metal. Should Western investment demand, accustomed to acting only through financial instruments such as ETFs, futures contracts, and derivatives, revive only modestly, the fragile link between paper claims and the real thing – which has been stretched and contorted by extreme rehypothecation (the use by financial institutions of clients’ assets, posted as collateral) – could easily shatter. The major winners in a systemic repricing of gold will be those who own or produce the real thing.

John's got such a way with words---and this right-on-the-money commentary was posted on the Internet site yesterday---and I thank him for sliding a copy of it into my inbox before I found it on my own.  It's an absolute must read of course---and probably deserves a second read as well.



¤ The Funnies

Cypress Development Corp. is a Canadian gold, silver and base metals exploration company developing projects in Red Lake, Ontario, Canada, and in Nevada, U.S.A.

Cypress holds a 100% interest in the approximately 1140 acre Gunman Zinc-Silver Project located in White Pine County, northeast of Eureka, Nevada. Three RC drill programs totaling approx. 38,000 feet have been completed by Cypress on the Gunman project with significant grades between 5% to 33% per ton zinc and 0.5 to 15.0 oz per ton silver over considerable widths encountered. Zinc could represent the next big base metal play due to ongoing demand growth and the closures of 3 major mines in Canada, Australia and Ireland and not enough supply coming on stream from new projects. Sentiment could shift towards zinc, with prices potentially rallying in anticipation of tightening supplies. Please visit our website for more information.


¤ The Wrap

The U.S. Mint continues to produce and sell Silver Eagles at their maximum production capacity, but sales are still rationed, indicating more demand than supply. As with the unusual demand for wholesale bars in the COMEX silver inventories, the great demand for Silver Eagles is usually a free market mandate for higher prices according to the law of supply and demand. But the operative term is free market mandate and, once again, the only plausible explanation for great silver demand and lower prices is a market that is being manipulated.

Still, we have crossed the 40 million oz mark in Silver Eagles sold this year, only the second such year in the 28 year history of the program. And yes, I still believe it has not been broad retail demand that has accounted for the record Silver Eagle sales these past few years, but a certain Mr. Big. For some reason, Mr. Big hasn’t taken a shine towards Gold Eagles, as year-to-date sales are down close to 40% this year compared to last and even more compared to the past few years. I suppose if you are going to manipulate prices more in one commodity compared to another, it would follow that you would buy much more of the more manipulated item – silver in this case. - Silver analyst Ted Butler: 22 November 2014

Except for the rather strange down/up move after the Comex open yesterday, nothing much should be read into yesterday's price action.  However, the rather strange goings-on in the gold price feeds on many other Internet sites yesterday that Nick Laird pointed out should not be forgotten---but as of this moment, I've heard nothing further about it.

Here are the 6-month charts for the 'Big 6' commodities.  Only palladium is currently above its 50-day moving average---and Dr. Copper set a new low price tick for this move down, but only by a fraction of a cent.  WTIC came close to a new low---and with the OPEC meeting in Geneva tomorrow, I'm sure that we'll see further volatility in the oil price, along with natural gas.

Yesterday was the day that the large traders had to be out of their December positions in the Comex futures market---and everyone else has to be out by the close of trading today, as there won't be much in the way of volume on Thursday, as the markets are closed in the U.S.  Friday is First Notice Day for the December delivery month---and I'll have all of that, plus the latest Commitment of Traders data in Saturday's missive.

And as I write this paragraph, the London open is about 20 minutes away.  The gold price got sold down below the $1,200 spot mark shortly after trading began in the Far East on their Wednesday morning---and its rally attempt above that mark shortly after 3 p.m Hong Kong time met the same fate.  Net volume is amazingly light at just under 6,000 contracts, with most of the trading now in the new front month, which is February.

Silver got sold down 15 cents or so, with its Far East low coming about 12:30 p.m. Hong Kong time---and it hasn't done much since.  Silver's net volume is a shockingly low 1,500 contracts and, like gold, the greater percentage of the trading activity is now in silver's new front month, which is March.

Based on these net volumes, nothing should be read into the current prices of either metal.

The platinum price isn't doing much, but palladium is crawling towards the $800 spot price mark once again---and I would guess that this rally attempt will meet the same fate as the one yesterday.

The dollar index isn't doing a thing.

Yesterday was the cutoff for this Friday's Commitment of Traders Report---if there is a report, that is.  I'll ask Ted today, as he keeps track of such things---and I'll let you know tomorrow.  Just eyeballing the charts for the reporting week just past, I'd guess that we'll some minor deterioration in the short positions in both silver and gold, but with the big volume/rollover activity we'd had in the last several days, I certainly wouldn't bet the farm on that outcome.

And as I send today's effort off to Stowe, Vermont at 5:20 a.m. EST, I see that all four precious metals have been sold down off their highs of the day---and only palladium is up from Tuesday's close in New York.

Net volume in gold is still very tiny, about 9,000 contracts or so---and silver's net volume is barely over the 2,000 contract mark, so nothing much should be read into the current price action except for the fact that palladium's attempt to break through the $800 price mark was turned back once again, although the trading day is still young.

The dollar index is up about 10 basis points.

Based on what I see at the moment, it seems that there won't be much net volume today, as traders in New York will be anxious to get out of the office early, as I'm sure they will have their sights set on an early start to what for most will be a long weekend.

That's all I have for today which, like yesterday, is more than enough.  I wish all my American readers a happy Thanksgiving---and if you're one of the lucky ones, a good long weekend as well.

See you here tomorrow.

Ed Steer