Gold & Silver Daily

¤ Yesterday In Gold & Silver

Looking at the Kitco chart below, you can see that the gold price made four attempts to rally during the Tuesday trading session, with the most impressive one coming at 11:40 a.m. EDT when the dollar index fell out of bed.  But each time there was a not-for-profit seller in the wings to make sure that those rallies didn't go anywhere, by throwing whatever Comex paper was necessary at them.

The low and high ticks were recorded as $1,232.20 and $1,243.20 in the December contract.

Gold closed in New York yesterday at $1,234.90 up only $2.20 on the day when all was said and done.  Obviously the price would have finished quite a bit higher if JPMorgan hadn't shown up when the did.  Net volume was only 113,000 contracts, so it wasn't overly difficult for 'da boyz' to keep the gold price in line.

After the obligatory down tick at the 6 p.m. open, the chart pattern in silver was more or less the same, so I won't dwell on it much further, but the price capping after the 11:40 a.m. rally is more than obvious.

The low and high ticks were reported by the CME Group as $18.61 and $18.885 in the December contract as well.

Silver finished the Tuesday session at $18.685 spot, up 3 whole cents from Monday. Net volume was 35,500 contracts.

The platinum and palladium charts looked similar in some ways to the gold and silver charts, with the most conspicuous feature in both being the rally at 11:40 a.m. EDT.  Platinum finished up 4 dollars---and palladium closed up 8 bucks.  Here are the charts.

The dollar index closed late on Monday afternoon in New York at 84.25---and then jumped around in a 25 basis point range for a large portion of the Tuesday session---and really looked like it wanted to head south a couple of times, but it appeared that a willing buyer was showing up to catch the proverbial falling knife until it really took at header at 11:40 a.m. EDT.  It's low tick of 83.90 was met with a buyer of last resort---and it rallied back to just above the 84.00 mark, closing the Tuesday session at 84.07---down 18 basis points.  I'm just speculating here, but it's a good bet that the dollar index would have closed significantly lower if left to its own devices, which it apparently wasn't.  Here's the 3-day chart.

The gold stocks opened a bit lower, but then quickly rallied into positive territory once gold rallied in New York.  But more than half of those gains disappeared by the end of the Tuesday session---and the HUI only finished up 0.48%.

The silver stocks got sold down much harder at the open---and the subsequent rally into positive territory didn't hold---as Nick Laird's Intraday Silver Sentiment Index closed down 0.15%.

The CME's Daily Delivery Report showed that zero gold and 251 silver contracts were posted for delivery within the Comex-approved depositories on Thursday.  There were only two short/issuers---Jefferies with 196 contracts and Barclays with 55. There's a decent list of long/stoppers---and it's worth a quick look. The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Tuesday trading session showed that there are still 33 gold contracts open in September---and 609 silver contracts, down 15 from Monday's report.  But from those 609 contracts must be subtracted Thursday's 251 contract delivery.

I wasn't entirely surprised to see a withdrawal from GLD yesterday.  This time an authorized participant withdrew 134,637 troy ounces.  And as of 8:23 p.m. EDT yesterday evening, there were no reported changes in SLV.

There was another sales report from the U.S. Mint.  They sold 3,000 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---and 850,000 silver eagles.

Over at the Comex-approved depositories on Monday, they reported that 32.250 troy ounces of gold were withdrawn---and all of it was from Canada's Scotiabank.  Nothing was reported received.  The link to that activity is here.

It was much busier in silver, of course, as 598,756 troy ounces were received---and a smallish 30,417 troy ounces were removed.  The big deposit was at CNT.  The link to that action is here.

As promised, I have a lot fewer stories today---and will probably have less as the balance of the week progresses.


¤ Critical Reads

BlackRock calls for U.S. stock market reforms

BlackRock Inc, the world's largest asset manager, has asked regulators to force exchanges to lower their access fees and require greater transparency of broker dealer-run trading venues known as "dark pools."

The New York-based company outlined a set of proposals aimed at boosting public confidence in the equity markets in a letter on its website to the U.S. Securities and Exchange Commission dated Sept. 12. It said that while the market is "not broken or in need of large scale change," improving current rules would help promote fairness, order and efficiency.

Questions about the safety and fairness of the mostly electronic markets have risen in recent years following a raft of high-profile trading glitches by numerous market participants, causing hundreds of millions of dollars of losses. Those concerns hit the mainstream in late March with author Michael Lewis' book "Flash Boys: A Wall Street Revolt," which claimed the markets were rigged in favor of high-speed traders.

This Reuters story, filed from New York, appeared on their Internet site at 6:01 p.m. EDT on Monday evening---and it's something I found in yesterday's edition of the King Report.


United Offers $100,000 Buyouts to Flight Attendants

United Airlines, the only major U.S. carrier to post a quarterly loss this year, is offering its flight attendants buyouts of as much as $100,000 as it seeks to rein in costs.

Employees who accept the early-exit plan will be eligible for lump-sum payments, said a spokeswoman, Megan McCarthy, who declined to disclose the formula needed to reach the maximum. United also is recalling 1,450 furloughed attendants, most of whom took voluntary leave one to two years ago, she said.

United, a unit of United Continental Holdings Inc., is hoping for at least 2,100 takers from an attendants workforce of more than 23,000 after some senior employees sought the offer, McCarthy said. Attendants back from furlough also will help United bolster airports that were too thinly staffed, she said.

This Bloomberg story, filed from Atlanta, showed up on their website at 10 p.m. Denver time on Monday evening.  Reader Michael Cheverton, who sent me this story, had this to say about it---"Hi Ed, the staggering part about this article is that they say UAL shares are up 31% this year. For an industry that is in shambles and a company that will probably never make a profit again, that says something pertinent about just how screwed up the markets are."  He would be right about that.


France’s ‘super-rich’ take their fortunes to Belgium

A fifth of France’s 100 richest people have moved a total of €17 billion to neighbouring Belgium in recent years, a report showed at the weekend, saying the exodus is largely due to French socialist President François Hollande’s tax policies.

The report, published in Belgian financial daily L’Echo, lists France’s richest man, LVMH CEO Bernard Arnault, media moguls Stéphane Courbit and Bernard Tapie, as well as the Mulliez family, which controls the Auchan supermarket chain, among those who have made the move.

But many of France’s wealthy appear to have crossed over the border only recently.

Many “have shown up in the past three years, in other words since François Hollande was inaugurated as president,” the paper writes, attributing it to the socialist government’s pressure to get the economy back into the black amid soaring unemployment and a ballooning deficit. 

This news item showed up on the Internet site sometime on Monday---and it's the first contribution of the day from Roy Stephens.


Putin, Merkel Discuss Ukrainian Ceasefire, Gas Deliveries to Europe

Russian President Vladimir Putin and German Chancellor Angela Merkel discussed in a phone call on Monday the situation around the current ceasefire regime and deliveries of Russian gas to Europe, the Kremlin said.

"Putin and Merkel exchanged opinions on the situation with deliveries of Russian natural gas to EU member-states and agreed that the consultations in a three party format should continue," a statement on the Kremlin website said.

The leaders also discussed the development of the situation in Ukraine with focus on the importance of strict compliance with the ceasefire regime by the sides of the internal Ukrainian conflict and the effective monitoring of the situation by the Organization for Security and Cooperation in Europe, the Kremlin said.

This article appeared on the RIA Novosti website at 11:57 p.m. Moscow time on their Monday night, which was 3:57 p.m. in New York.  I thank South African reader B.V. for sharing it with us.


Gas onus on Ukraine, Gazprom says

Reliable natural gas deliveries to Europe depend largely on contractual issues in Ukraine, Russian energy company Gazprom said Tuesday.

Gazprom in June cut gas supplies to Ukraine because of ongoing disputes over pricing and debt. Ukraine pays some of the highest prices for natural gas in the region. Russia had offered a discounted price, though the Ukrainian government said it suspected the offer was politically motivated.

Russia meets about a quarter of Europe's gas needs, though most of that gas runs through the Soviet-era transit network in Ukraine. Similar rows in 2006 and 2009 left European consumers in the cold and Gazprom says the onus is now on Ukraine.

This UPI article put in an appearance on their website at 10:28 a.m. EDT on Tuesday---and it's the second contribution of the day from Roy Stephens.


Russia Central Bank Responds To Domestic Dollar Shortage, Starts Currency Swaps

With the ruble hitting record lows once again today against the U.S. dollar, it appears concerns over U.S. dollar liquidity are growing in Russia. The Russian central bank has unveiled an FX swap operation, allowing firms to borrow dollars in exchange for Rubles for a duration of 1 day (at a cost of 7%p.a.). Of course, this squeeze on USD funding - driven by Western sanctions - will, instead of isolating Russia, force Russian companies (finding USD transactions prohibitively expensive) into the CNY-axis, thus further strengthening the Yuanification of world trade and the ultimate demise of the USD as reserve currency.

And funding sanctions appear to have driven the Central Bank to supply U.S. dollar liquidity into an apparently squeezed market...

As Bloomberg reports---"Sanctions and closed access to foreign-exchange liquidity from the West” is feeding demand for dollars, DmitryPolevoy, chief economist ING.

Foreign-exchange liquidity has “virtually dried out,” with volumes sinking to about $100 million per day, compared with $1 billion to $2 billion previously, according to Natalia Orlova, the chief economist for OAOAlfa Bank in Moscow.

This article appeared on the Zero Hedge website at 2:50 p.m. EDT yesterday afternoon---and it's another contribution from reader B.V.


What draws Modi to China

Modi is due to visit the U.S. in exactly twelve days from now. But there is nothing of the American rhetoric that used to mark a Manmohan Singh visit to the White House.

An idea was thought of initially to propitiate Modi by granting him the privilege of addressing the US Congress. But it has been quietly shelved.

The heart of the matter is that there had been a pronounced 'militarization' of India's strategic outlook through the past 10-15 years, which was a period of high growth in the economy that seemed to last forever.

In those halcyon days, geopolitics took over strategic discourses and pundits reveled in notions of India's joint responsibility with the United States, the sole superpower, to secure the global commons and the 'Indo-Pacific'. 

This longish commentary falls into the must read category, especially for any serious student of the New Great Game.  It was posted on the Asia Times website yesterday sometime---and it's courtesy of Roy Stephens.


China's leaders refuse to blink as economy slows drastically

China’s leaders have brushed aside warnings of an incipient credit crunch in the Chinese economy, determined to purge excesses from the financial system despite falling house prices and the deepest industrial slowdown since the Lehman crisis.

Industrial production dropped 0.4pc in August from a month earlier, a rare event that highlights how quickly China is coming off the boil. The growth of fixed asset investment fell to record lows.

“It is a shockingly sharp deceleration,” said Wei Yao, from Société Générale. “What is surprising is the calm response from Beijing. The new leadership’s tolerance for short-term pain seems to have jumped by another big notch.”

Electricity output has dropped 2.2pc over the past year as the authorities continue to force dinosaur industries into closure, chipping away at excess capacity.

This commentary by Ambrose Evans-Pritchard showed up on the Internet site at 7:59 p.m. BST on Monday---and I thank Roy Stephens for sending it our way.  It's worth reading.


Three King World News Blogs

1. John Embry: "War in Silver Rages as People’s Confidence in the West Fades".  2. Stephen Leeb: "China, Russia, Gold---and a New World Order Rising From the East"  3. Jeffrey Saut: "Warren Buffett, Charlie Munger, City Slickers---and Just One Thing"

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed] 


Gartman Letter cites Koos Jansen and Gold Newsletter on Chinese gold demand

Regarding Chinese gold demand, which we wrote about yesterday, it is open to debate and our old friend, Brien Lundin of the Jefferson Companies in New Orleans, wrote to share his insights. We've chosen to share them further with our readers, with his approval. Brien wrote:

* * *
Hi, Dennis:

In your letter this morning, you noted that Chinese gold demand was recently reported to be down about 50 percent year over year. This is erroneous information from the World Gold Council, as I've been noting in Gold Newsletter -- that there's a lot of misinformation on this topic. The mainstream financial media keeps parroting numbers from the World Gold Council and other sources, which typically rely on import statistics from Hong Kong.

However, China has recently opened up new ports of entry for gold, a move that has correspondingly reduced the import numbers from Hong Kong.

"Much more relevant are gold delivery statistics from the Shanghai Gold Exchange, which directly indicate wholesale gold demand in China. Koos Jansen is today's leading reporter of Chinese gold demand dynamics, and he relies on the Shanghai Gold Exchange numbers for his analyses. Using the SGE reports, Jansen notes that Chinese gold demand year to date is down about 17 percent from last year's torrid pace.

This commentary appeared in a GATA dispatch yesterday.


China advances gold exchange launch, Singapore delays contract

China will launch its international gold exchange 11 days ahead of schedule, sources said on Tuesday, racing ahead in the scramble to set up an Asian bullion benchmark as rival Singapore is forced to delay its gold contract due to technical issues.

Asia, home to the world's top two gold buyers - China and India, has been clamouring to gain pricing power over the metal and challenge the dominance of London and New York in trading.

The state-run Shanghai Gold Exchange (SGE) will launch the global gold bourse in the Shanghai free-trade zone on Thursday, two sources familiar with the matter told Reuters. The SGE had initially planned the launch for Sept. 29.

This gold-related article showed up on the Reuters website at 12:41 a.m. on Tuesday---and it's another story I found over at the Internet site.


Gold's move from West to East is said intended to rebalance FX reserves

China may join other emerging countries in boosting gold reserves as the precious metal makes up a smaller share of its foreign-exchange holdings compared with developed economies, said a London-based researcher.

The country hasn't announced any changes to state gold reserves since authorities in 2009 said holdings totaled 1,054.1 metric tons. While China holds the world's biggest foreign-exchange reserves, bullion accounts for 1.1 percent of the total, compared with about 70 percent for the U.S. and Germany, the biggest gold holders, World Gold Council data show.

"It is clear that Western central banks over time will be reducing their reserves and China and other Asian countries will be increasing," David Marsh, managing director at the Official Monetary and Financial Institutions Forum, said in a Sept. 11 interview in Beijing. "Gold will become more traded among central banks in the next 30 years because there are colossal imbalances in world gold holdings as a percentage of overall asset reserves."

Central banks, net buyers of gold for 14 straight quarters, last year helped limit bullion's losses that were the most since 1981 and may increase purchases to as much as 500 tons this year after adding 409 tons last year, the London-based council said Aug. 14. The precious metal rose 3 percent this year as geopolitical tensions boosted demand for a haven.

I found this Bloomberg story embedded in a GATA release yesterday---and it's certainly worth reading.



¤ The Funnies

This Canada goose was using its wings to balance as it picked its way over the rocks as it came from the water onto land.  I wasn't planning on keeping these, because they didn't appear to have any redeeming features when I viewed them on the screen on the back of the camera.  However, when I put them up on the computer monitor at home, I was amazed at the complexity of the feather structure on the underside of the wing.  You don't normally get this view of a goose---and if you do, it's fleeting.  However a shutter speed of 1/4,000 of a second stopped the wing action cold---and they can be examined at your leisure.

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¤ The Wrap

An additional signal in the physical silver market that has been unusual and unexpected (at least by me) are the deposits into the big silver ETF, SLV. This week close to 6.5 million oz. of silver were deposited into the trust and over the past four weeks nearly 14 million oz. have been deposited. I don’t recall a previous occasion of extended price weakness and significant metal inflows into the SLV, so the deposits were certainly unexpected by me. Clearly, there have been no net inflows into the big gold ETF, GLD, further highlighting the deposits into SLV. Between a different COMEX warehouse movement pattern and dissimilar ETF metal flows, the stagnant level of silver/gold price ratio becomes even more suspicious.

The real question is who is behind the net new buying of SLV shares? By process of elimination, we know it’s not technical trend-following or price-momentum traders because these traders never buy on extended price declines. By default, the new net buyers of shares of SLV must be value-type traders, attracted by silver’s low and undervalued price. As such, it would appear that these new buyers in SLV are unlikely to sell on yet-lower silver prices and may continue to buy. I may be missing something, but I don’t see how this is bearish. - Silver analyst Ted Butler: 13 September 2014

I must admit that I was not overly happy with the price action on the rallies in both gold and silver yesterday.  It was obvious, at least to me, that they got capped in the same old way.  Volume wasn't overly heavy, so maybe I'm overreacting, but I must admit to be overly sensitive to what happens to rallies, especially in silver, before they get out of hand.  Let's see what happens next time this happens. 

Here are the 6-month gold and silver charts with Tuesday's data included.

And as I type this paragraph, it's barely noon Hong Kong time---and the London open is still three hours away.  I'm way ahead today because I have a plane to catch early tomorrow morning---and I'll be filing today's column as soon as I can, as 5:00 a.m. comes way too early.

At the moment, none of the precious metals are doing a thing.  Gold volume is 7,400 contracts---and silver's net volume is only 1,500 contracts.  As you can tell, unless there is some serious price action, there's no Globex volume worth mentioning between the 6 p.m. open in New York---and the London open the following morning.  The real big volume is always in New York.

Yesterday was also the cut-off for Friday's Commitment of Traders Report---and although I'm expecting good things in it, yesterday's volume/price action will certainly take away a bit from the positive number, as 'da boyz' were either selling longs or going short against all comers in the gold and silver 'rallies' we had yesterday.

And as I fire this off to Stowe, Vermont at 2:10 a.m. EDT, gold, silver and platinum are up a bit---and palladium is flat.  Gold and silver volume is fumes and vapours at 8,700 and 1,700 contracts respectively.  The dollar index is flat.

See you tomorrow.