Gold & Silver Daily
"JPMorgan and their HFT buddies with algorithms in tow, ran amuck in the precious metals"

¤ Yesterday In Gold & Silver

The gold price didn't do a whole heck of a lot until minutes before 10:30 a.m. BST in London on their Tuesday morning---the London a.m. gold fix---and as the last chart in yesterday's edition of The Wrap indicated, the HFT boyz showed up with a vengeance once the 'fix' was in.  They set a new low for this move down in the process---and that came at the noon London silver fix---and the subsequent rally to a few dollars above unchanged got dealt with in the usual manner at the London p.m. gold fix.  By 12:30 p.m. EDT, the gold price was back down near its low of the day---and wasn't allowed to do much after that.

The low and high were reported by the crooks over at the CME Group as $1,204.30 and $1,220.70 in the December contract.

Gold closed in New York yesterday afternoon at $1,208.70 spot, down $6.30 on the day.  Not surprisingly, net volume was way up there at 174,000 contracts.

It was more or less the same chart pattern in silver.  The high of the day, such as it was, came about 11:30 a.m. Hong Kong time---and after that, the silver chart looked pretty much the same as the gold chart for the remainder of the Tuesday session.  The only major difference was the JPMorgan et al set a new low for this move down at 12:30 p.m. EDT, rather than the noon silver fix London that happened with gold.  And then, like gold, the silver price wasn't allowed to do much after that.

The high and low were reported as $17.57 and $16.85 in the December contract.

Silver finished the trading day yesterday at $16.97 spot, down 49 cents from Monday's close.  Net volume was heavy there as well at around 62,000 contracts.

Platinum hit is high tick an hour or so before the Zurich open---and except for a brief bounce going into the London p.m. gold fix, it sold off quietly for the rest of the day, closing down 5 bucks on the day.

Palladium's high came at the same time as platinum's, but then the HFT boyz and their algorithms really put the screws to the metal, with the new $763 low price for this move down coming shortly after 12 o'clock noon in New York.  The price recovered a bunch immediately after that, before trading flat for the remainder of the day.  The metal closed down 18 bucks, giving up all its Monday gains, plus four dollars more.

From its high on September 1, to its low tick yesterday, the palladium price has been engineered lower to the tune of $149---or 16%.

The dollar index closed at 85.61 late on Monday afternoon in New York---and its low tick of 85.50 came at 2:20 p.m. Hong Kong time.  The rally to its 86.20 high came at 12:25 p.m. in London.  From there it sold off to around 85.90 by 10:30 a.m. EDT---and then traded flat for the remainder of the Tuesday session, closing at 85.926, which was up 31 or so basis points from Monday.

The gold stocks opened down, but rallied into positive territory for a minute or so at the London p.m. gold fix---and once JPMorgan et al showed up, the gold price, along with their associated equities, never got a sniff of positive territory again.  The HUI closed down 1.99%.

The silver equities got crushed under the jackboots of JPMorgan et al once again, as Nick Laird's Intraday Silver Sentiment Index closed down a whopping 3.78%.

The CME Daily Delivery Report for Day 2 of the October delivery month showed that 57 gold and 170 silver contracts were posted for delivery within the Comex-approved depositories on Thursday. In gold, the short/issuer of note was HSBC USA with 49 contracts---and Barclays stopped 57 contracts.  In silver, Jefferies was the short/issuer on 139 contracts---and RCG was a distant second with 30 contracts.  The long/stoppers were Jefferies, Canada's Scotiabank and R.J. O'Brien with 41, 98 and 31 contracts respectively.  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 2,498 gold contracts open in October, which was down 475 contracts from yesterday's report.  There are still 375 silver contracts open as well, a decrease of 39 from Monday's Preliminary Report.  From these numbers, one has to subtract the deliveries posted in the previous paragraph to get the true state of things as of the close of trading yesterday.

An authorized participant over at the GLD ETF withdrew another 76,924 troy ounces of gold yesterday---and as of 9:52 p.m. EDT yesterday evening, there were no reported changes in SLV.  But when I checked back an hour later, I was amazed to see that an eye-watering 4,075,208 troy ounces were deposited yesterday.  Since August 4, there has been just under 30 million troy ounces deposited into SLV---and silver is down $3.25 the ounce over that same period.  Ted and I are still looking for an explanation.

By the way, over that same time period, GLD is down about 900,000 troy ounces.

The U.S. Mint had another sales report yesterday to end the month.  They sold 2,500 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---and a whopping 765,000 silver eagles.  After discussions with Ted Butler, he seems to feel that the mystery buyer of silver eagles may have returned.  We'll see what October brings.  The mint also sold another 100 platinum eagles as well.

Unless something is added today, the totals for the month of September are as follows: They sold 58,000 gold eagles---14,500 one-ounce 24K gold buffaloes---4,140,000 silver eagles---and 2,700 platinum eagles.  The only product that didn't see a sales increase of over 100 percent compared to August were the gold buffaloes---and sales there were up 'only' 81 percent.

It was another big day for gold shipments out of the Comex-approved depositories on Monday.  They reported receiving a tiny 1,607 troy ounces, but 160,910 troy ounces were shipped out.  The vast majority of the gold shipped out came from JPMorgan's vault---160,750.000 troy ounces, which works out to precisely 5,000 kilobars.  The link to that activity is here.

In silver, there was 385,747 troy ounces reported shipped in---and 879,231 troy ounces shipped out---the lion's share of which came out of the CNT Depository.  The link to that action is here.

I don't have that many stories for you today---and I hope you'll find some of them of interest.  And starting with today's column, I will no longer be posting the daily King World News interviews.  If you wish to read them on a daily basis, you can go directly to Eric's website linked here---and bookmark his Internet site for future reference.


¤ Critical Reads

First diagnosed case of Ebola in the U.S.

A patient being treated at a Dallas hospital is the first person diagnosed with Ebola in the United States, health officials announced Tuesday.

The unidentified man left Liberia on September 19 and arrived in the United States on September 20, said Dr. Thomas Frieden, director of the Centers for Disease Control and Prevention.

At that time, the individual did not have symptoms. "But four or five days later," he began to exhibit them, Frieden said. The individual was hospitalized and isolated Sunday at Texas Health Presbyterian Hospital.

Citing privacy concerns, health officials declined to release any details about how the patient contracted the virus, what he was doing in Liberia or how he was being treated.

This story broke yesterday afternoon---and here's the CNN version of things.  I thank reader David Caron for today's first story.  The folks over at Russia Today also posted an article about this.  It's headlined "Ebola diagnosed in U.S. for first time – Center for Disease Control"---and the link to that is here.  I thank Harry Grant for sending it.


Shiller: 'There Is a Sign of Some Weakening' in Housing Market

The S&P/Case Shiller 20-city composite home price index fell a seasonally adjusted 0.5 percent in July, the third straight month of declines.

When you combine that with recent decreases in existing and pending home sales, "there is a sign of some weakening" in the housing market, though it's "not dramatic," Nobel laureate economist Robert Shiller, whom the index is named after, told CNBC.

Existing home sales dropped 1.8 percent in August, and pending home sales slid 1 percent.

The above three paragraphs are all that's worth reading in this story that showed up on their Internet site at 10:58 a.m. EDT on Tuesday morning---and I thank West Virginia reader Elliot Simon for sending it.


JPMorgan to face U.S. class action in $10 billion MBS case

A federal judge on Tuesday said JPMorgan Chase & Co must face a class action lawsuit by investors who claimed the largest U.S. bank misled them about the safety of $10 billion of mortgage-backed securities it sold before the financial crisis.

U.S. District Judge Paul Oetken in Manhattan certified a class action as to JPMorgan's liability but not as to damages, saying it was unclear how investors could value the certificates they bought, given how the market was "not particularly liquid." He said the plaintiffs could try again to certify a class on damages.

Oetken ruled 10 months after JPMorgan reached a $13 billion settlement to resolve U.S. and state probes into the New York-based bank's sale of mortgage securities.

The class consists of investors before March 23, 2009 in certificates issued from nine of 11 trusts created by JPMorgan for the April 2007 offering. The other two trusts attracted only a handful of investors, and are the subject of other lawsuits.

This Reuters article, filed from New York, appeared on their Internet site at 7:09 p.m. EDT on Tuesday evening---and I thank reader 'h c' for sending it our way.


Morningstar strips Pimco Total Return Fund of its gold rating

Morningstar downgraded its analyst rating on the Pimco Total Return Fund to "bronze" from "gold", citing uncertainty about outflows and the reshuffling of management responsibilities after the exit of co-founder Bill Gross.

Gross, the bond market's most renowned investor, quit Pimco for distant rival Janus Capital Group Inc. on Friday, a day before he was expected to be fired from the huge investment firm he helped found more than 40 years ago.

Dan Ivascyn, one of Pimco's deputy chief investment officers, was named Group Chief Investment Officer to replace Gross. With Bill Gross' abrupt departure, Pimco's $222 billion flagship Total Return Fund has been taken over by Scott Mather, Mark Kiesel and Mihir Worah.

This Reuters article appeared on their website at 5:15 a.m. EDT yesterday morning---and I thank Orlando, Florida reader Dennis Mong for sharing it with us.


Europe's €500bn money funds risk AAA downgrade if they 'break the buck'

Europe’s giant money market funds are struggling to stay afloat as negative interest rates drain the industry’s lifeblood, with many at risk of crippling downgrades by the rating agencies.

Standard & Poor’s said the €500bn nexus of funds in the eurozone is facing serious stress, increasingly unable to generate profits since the European Central Bank cut its deposit rate to -0.02pc and pulled down short-term rates across the spectrum of maturities.

“Pressure is building for these funds,” said Andrew Paranthoiene, the agency’s credit director. “We’re observing portfolios on a weekly basis. If there is any deviation from our credit metrics, a rating committee would determine if rating action was appropriate. In our view, any loss of capital means that the 'safety of principal’ has been breached,” he said.

Standard & Poor’s rates all its European money market funds at AAA(m). Industry experts say it is unclear whether the funds could function for long at a lower rating, given the nature of their business as ultra-safe depositories of corporate cash.

This Ambrose Evans-Pritchard offering appeared on the Internet site at 7:08 p.m. BST yesterday evening---and I thank South African reader B.V. for bringing it to our attention.


Germany Fights on Two Fronts to Preserve the Eurozone

The European Court of Justice announced Sept. 22 that hearings in the case against the European Central Bank's (ECB) bond-buying scheme known as Outright Monetary Transactions (OMT) will begin Oct. 14. Though the process is likely to be lengthy, with a judgment not due until mid-2015, the ruling will have serious implications for Germany's relationship with the rest of the eurozone. The timing could hardly be worse, coming as an anti-euro party has recently been making strides in the German political scene, steadily undermining the government's room for maneuver.

All of the measures the ECB has announced so far, however, are mere appetizers. Financial markets have been demanding quantitative easing, a broad-based program of buying sovereign bonds in order to inject a large quantity of money into the market. Up to this stage, three major impediments have existed to such a policy: the German government's ideological aversion to spending taxpayers' money on peripheral economies; the political conception that quantitative easing would ease the pressure on peripheral economies to reform; and the court case that has been hanging over OMT (the only existing mechanism available to the ECB for undertaking sovereign bond purchases). Notably, the OMT in its original guise and quantitative easing are not precisely the same thing. In the original conception of OMT, the ECB would offset any purchases in full by taking an equivalent amount of money out of circulation, (i.e., not increasing the money supply itself). Nonetheless, any declaration that OMT is illegal would severely inhibit Draghi's room for maneuver should he wish to undertake full quantitative easing.

This confluence of events leaves Merkel nervously awaiting the decision of the European Court of Justice. In truth, she is in a no-win situation. If the Luxembourg court holds OMT illegal, Draghi's promise would be weakened, removing the force that has kept many sovereign bond yields at artificially low levels and permitting the desperate days of 2011-2012 to surge back. If the European Court of Justice takes up the German court's three suggestions and undercuts OMT to the extent that the market deems it to be of little consequence, the same outcome could occur. And if the European Court of Justice rules that OMT is legal, a sizable inhibitor to quantitative easing will have been removed, and the possibility of a fully fledged bond-buying campaign will loom ever closer, much to the chagrin of the German voter and to the political gain of the Alternative for Germany.

This very interesting and well written essay showed up on the Internet site early yesterday morning---and I thank Dan Lazicki for sending it our way.  It's worth reading.


Recovery? 60% of Greeks Live at or Below Poverty Levels

While Greek government yields (and political leaders) proclaim the troubled peripheral European nation is 'recovering', the risk of major political upheaval in Greece has not gone away ahead of next year's presidential vote next year. As Reuters notes, under growing pressure from anti-bailout leftists, Greek Prime Minister Antonis Samaras desperately needs a new narrative to get the backing of lawmakers and rally Greeks fed up with four years of austerity.

We wish him luck as Keep Talking Greece notes, it is high time that the real data of the economic situation of the Greek society come to the surface and so it did this week. A report from Greece's State Budget Office found that three in every five Greeks, or some 6.3 million people, were living in poverty or under the threat of poverty in 2013 due to material deprivation and unemployment.

This news item was posted on the Zero Hedge website at 10:05 p.m. EDT last night---and I thank Harry Grant for his second contribution to today's column.  It's worth your time.


Mass default looms as world sinks beneath a sea of debt

As if the fast degenerating geopolitical situation isn’t bad enough, here’s another lorry load of concerns to add to the pile.

The U.K. and U.S. economies may be on the mend at last, but that’s not the pattern elsewhere. On a global level, growth is being steadily drowned under a rising tide of debt, threatening renewed financial crisis, a continued squeeze to living standards, and eventual mass default.

I exaggerate only a little in depicting this apocalyptic view of the future as the conclusion of the latest “Geneva Report”, an annual assessment informed by a top drawer conference of leading decision makers and economic thinkers of the big challenges facing the global economy.

Aptly titled “Deleveraging? What Deleveraging?”, the report points out that, far from paying down debt since the financial crisis of 2008/9, the world economy as a whole has in fact geared up even further. The raw numbers make explosive reading.

This commentary by Jeremy Warner appeared on The Telegraph's website at 6:36 p.m. BST on Sunday evening---and I found it on their Internet site yesterday morning.


E.U. Failed Again to Break 'Vicious' Sanctions Circle: Russia's E.U. Envoy

The European Union has failed again to break the vicious circle of sanction mentality by refusing to lift the current sanctions against Russia over Ukraine, Russia's Ambassador to the European Union Vladimir Chizhov said Tuesday.

The European Union on Tuesday decided keep in place economic sanctions on Russia over its alleged backing of independence supporters in eastern Ukraine despite some "encouraging developments" in the situation.

"Unfortunately, it is still not happening, despite mounting signals indicating EU's attempts to look at the prospects and review the strategy of development of relations with Russia," Chizhov said, commenting on the EU decision.

"Let's see how our partners will act in the future, but at present we are not really 'inspired' by their behavior," the diplomat said, adding that the E.U. would most likely return to the discussion of the issue at the end of October.

This RIA Novosti article put in an appearance on their website at 9:34 p.m. Moscow time on their Tuesday evening, which was 1:34 p.m. in New York.  It's the first offering of the day from Roy Stephens.


Ukrainian Energy Ministry Not Satisfied With Berlin ‘Winter Plan’ on Gas

The Ukrainian Energy Ministry said Tuesday it had three reasons to object the “Winter Plan” on gas, endorsed by Russia and the European Commission during the ministerial gas meeting in Berlin last Friday.

The plan envisages that Kiev repays of $3.1 billion of its gas debt to Russia and pays in advance to Gazprom for the delivery of five billion cubic meters of gas at the price of $385 per 1,000 cubic meters, with a discount of $100. The plan, intended to reduce risks for transit of Europe-bound Russian gas via Ukraine, is to be in place until late March.

Kiev, however, rejects Russia’s offer of the $100 gas-price discount in the form of an export-duty exemption and wants the contract price to be reduced instead.

This is the second story in a row from the RIA Novosti Internet site.  It was posted there at 7:31 p.m. Moscow time yesterday evening.  It's also the second article in a row from Roy Stephens.


Russia Says Arctic Well Drilled With Exxon Strikes Oil

Russia, viewed by the Obama administration as hostile to U.S. interests, has discovered what may prove to be a vast pool of oil in one of the world’s most remote places with the help of America’s largest energy company.

Russia’s state-run OAO Rosneft said a well drilled in the Kara Sea region of the Arctic Ocean with Exxon Mobil Corp. struck oil, showing the region has the potential to become one of the world’s most important crude-producing areas.

The announcement was made by Igor Sechin, Rosneft’s chief executive officer, who spent two days sailing on a Russian research ship to the drilling rig where the find was unveiled today. The well found about 1 billion barrels of oil and similar geology nearby means the surrounding area may hold more than the U.S. part of the Gulf or Mexico, he said.

“It exceeded our expectations,” Sechin said in an interview. This discovery is of “exceptional significance in showing the presence of hydrocarbons in the Arctic.”

This Bloomberg story, co-filed from Moscow and London, appeared on their Internet site at 1:02 p.m. Denver time on Saturday---and it's another contribution from Roy Stephens.


Is Turkey on the verge of joining IS battle?

Turkey’s government could seek parliament’s approval for military action against the Islamic State (IS) organisation within the next 24 hours, officials said Monday, in the latest sign of the country’s changing stance on combating the jihadist group.

"The motions have not yet been sent to parliament. They may come tomorrow," parliamentary speaker Cemil Cicek was quoted as saying by Turkey’s NTV television.

The motions for military mandates in Iraq and Syria could be debated as soon as Thursday, according to Turkish newspaper Hurriyet.

It would represent the most concrete step in a string of recent indications that Turkey is moving away from its previous reluctance to engage in an armed conflict with IS, as the militant group continues to occupy vast swaths of Iraqi and Syrian territory.

This news item was posted on the Internet site yesterday sometime---and it's another Roy Stephens offering.


Afghan, U.S. officials sign long-awaited pact to ensure troops stay past 2014

The new President of Afghanistan Ghani Ahmadzai has paved the way for U.S. troops to stay in the country. He has signed a security deal with the U.S., which will see just under 10,000 American soldiers present, to help train and assist Afghan forces.

National security adviser Hanif Atmar and U.S. Ambassador James Cunningham signed the bilateral security agreement in a televised ceremony at the presidential palace, a day after Ghani was inaugurated as the new Afghan president.

"As an independent country, based on our national interests, we signed this agreement for stability, goodwill, and prosperity of the our people, stability of the region and the world," Ghani said in a speech after the signing, according to Reuters.

Aside from the 10,000 US soldiers, another 2,000 NATO troops will also boost numbers. They will stay on after the U.S. and its allies formally end their combat mission at the end of 2012.

This story appeared on the Russia Today website at 10:46 a.m. Moscow time on their Tuesday morning---and I thank Roy Stephens for sending it our way.


Tens of thousands up all night: Massive protests light up Hong Kong skyline

Hong Kong is witnessing one of the city's largest rallies in decades, with tens of thousands of people taking to the streets to join a protest movement, widely known as #OccupyCentral, demanding election reform.

Although the movement's hash tag mentions only one of Hong Kong's districts, by Tuesday protesters had gathered in at least four of the city's busiest areas – including Admiralty, the Central business district, the popular shopping district of Causeway Bay, and Mong Kok in Kowloon.

This photo essay appeared on the Russia Today Internet site at 7:33 p.m. Moscow time on their Tuesday evening---and it's the final offering of the day from Roy Stephens, for which I thank him.


What Hong Kong Means for the Global Economy

Will the tensions in Hong Kong be the straw that breaks the global economy’s back? That question is on many investors’ minds as they watch the Chinese government's response to one of the biggest sociopolitical challenges it has faced in recent years. The answer is far from straightforward.

It is already a tentative time for the world economy. Growth is faltering in Europe and Japan. The U.S. economy, while doing better, has yet to lift off. Emerging economies have slowed, and are unlikely to return to higher growth anytime soon.

Meanwhile, pockets of excessive risk-taking have multiplied in financial markets, adding to concerns about future volatility. And the central banks in advanced countries have already ventured deep into the terrain of experimentation; the effectiveness of their policies is far from assured. The world cannot afford a politically induced slowdown in China.

This commentary by Mohamed El-Erian appeared on the Internet site at 8:57 a.m. EDT on Tuesday morning---and I thank Elliot Simon for finding it for us.


Alasdair MacLeod: Gold's Role as a Safety Net for the Economic Tightrope Ahead

WindRock interviews Alasdair MacLeod, well-known monetary expert and Director of Research at GoldMoney.  Mr. MacLeod addresses such issues as: global money supplies which are now levered to 180 times pre-2008 levels; currency risk throughout the world as central bankers accelerate monetary expansion in light of continued economic weakness; inflation's impoverishing effect upon the very people policy makers hope to help through money printing; and reasons to own physical gold outside of the banking system, including the necessity of avoiding safety deposit boxes.

This 31:23 minute audio interview was posted on the Internet site this week sometime---and it's worth your while.  The audio quality is not the best, so you have to pay close attention. [Note: When I checked the link on this website at 4:59 a.m. EDT, the link didn't work, although it worked fine earlier.  I hope it's working by the time you get around to clicking on it. - Ed]


U.S. gold output declines on back of Newmont, Barrick

Production of gold by U.S. mines was 17,700 kilograms (569,068 troy ounces) in June, down 10% from 19,600 kg (630,154 oz) in June 2013, the U.S. Geological Survey recently reported.

Domestic gold production for the first six months of this year was down 8% than that of the first half of last year due to lower production from Barrick Gold’s Cortez Mine and Newmont Mining’s Nevada operations.

For the first half of this year, U.S. mines produced 103,000 kg (3,311,526 oz) of gold. Nevada led production with 74,100 kg (2,382,370 oz), followed by Alaska with 15,100 kg (485,476 oz), and other states combined at 14,000 kg.

The Cortez Mine in Northern Nevada produced only 13,800 kg (443,680 oz) of gold during the first half of this year, down 42% from the first six months of last year “owing to a drastic decline in grade in ore from the Cortez Hill open pit,” said the USGS.

This gold-related news item appeared on their Internet site yesterday sometime---and my thanks go out to Manitoba reader U.M.  It's definitely worth reading.


Swiss Gold Referendum Attracting Attention Two Months Ahead of Vote

A referendum on Switzerland’s gold reserves is starting to attract some attention outside of the country as a yes vote would have significant implications for the gold market, said one market analyst.

On November 30, Swiss citizens will go to the polls to vote on three areas; whether or not the Swiss National Bank should increase its gold reserves to 20%, that the central bank should stop selling its precious metals and that all its gold should be held within the country.

Ole Hansen, head commodity strategist at Saxo Bank in Denmark, said it is still early in the campaign, but he has started monitoring the public sentiment in Switzerland as the next two months will be a critical time.

He added that the Scottish referendum, held on September 18, is a strong reminder that sentiment can shift dramatically in a very short period. With all the geopolitical instability throughout the globe and concerns about European growth, it might not take much to convince people that the central bank needs to hold more gold in its reserve, he said.

This very interesting news item showed up on the Internet site at 1:05 p.m. EDT yesterday afternoon---and I thank reader M.A. for sharing it with us.


Golden Rule---Why Beijing is Buying: Alan Greenspan

If China were to convert a relatively modest part of its $4 trillion foreign exchange reserves into gold, the country’s currency could take on unexpected strength in today’s international financial system. It would be a gamble, of course, for China to use part of its reserves to buy enough gold bullion to displace the United States from its position as the world’s largest holder of monetary gold. (As of spring 2014, U.S. holdings amounted to $328 billion.) But the penalty for being wrong, in terms of lost interest and the cost of storage, would be modest. For the rest of the world, gold prices would certainly rise, but only during the period of accumulation. They would likely fall back once China reached its goal. 

The broader issue -- a return to the gold standard in any form -- is nowhere on anybody’s horizon. It has few supporters in today’s virtually universal embrace of fiat currencies and floating exchange rates. Yet gold has special properties that no other currency, with the possible exception of silver, can claim. For more than two millennia, gold has had virtually unquestioned acceptance as payment. It has never required the credit guarantee of a third party. No questions are raised when gold or direct claims to gold are offered in payment of an obligation; it was the only form of payment, for example, that exporters to Germany would accept as World War II was drawing to a close. Today, the acceptance of fiat money -- currency not backed by an asset of intrinsic value -- rests on the credit guarantee of sovereign nations endowed with effective taxing power, a guarantee that in crisis conditions has not always matched the universal acceptability of gold.

This article was posted on the Council on Foreign Relations Internet site on Monday sometime---and it went viral the moment it appeared.  It's an absolute must read, of course---and the first time I saw it, it was posted on the Internet site yesterday morning.  If you can't view it at this website, it's posted in the clear here.


Koos Jansen: China aims to exceed U.S. in gold reserves

The president of the China Gold Association, gold researcher and GATA consultant Koos Jansen discloses today, argues that China should accumulate gold reserves greater than those of the United States because gold is a strategic asset, money without counterparty risk.

The association's president, Song Xin, adds that a "gold bank" should be established by China "to break the barrier between the commodity and monetary world. It can further help us acquire reserves and give us more say and control in the gold market."

Jansen's report is headlined "China Aims for Official Gold Reserves at 8,500 Tonnes"---and it's posted at the Singapore Internet site  I found this in a GATA release yesterday---and I thank Chris Powell for wordsmithing the above paragraphs of introduction.  It's on the longish side, but a must read.


Mike Kosares: Why China thinks gold is the buy of the century

China's foreign-exchange surplus is so much larger than the nominal value of all the official gold in the world that a mightily upward revaluation of the monetary metal is inevitable, Mike Kosares of Centennial Precious Metals in Denver writes; "China," Kosares writes, "through its staunch advocacy of gold, might already be in the process of forcing the issue."

Kosares' commentary is headlined "Why China Thinks Gold Is the Buy of the Century" and it's posted at Centennial's Internet site,  Once again I thank Chris Powell for doing all the heavy lifting here.



¤ The Funnies

The first photo is one I took in San Antonio on the grounds of the resort.  It's a female Monarch Butterfly.  We have these in Canada as well, but not in the area that I live in, as the plant that their larva feed on [milkweed] doesn't grow this far north.  But I used to raise them at home in southern Manitoba when I was a kid.  The second photo is of a rather scraggly looking male cardinal, which is another creature that we never see in our part of Canada.

Sponsor Advertisement

Avrupa and Antofagasta intersect copper-rich VMS in Pyrite Belt, Portugal

•             First Greenfields discovery of massive sulfide mineralization in 20 years in the Iberian Pyrite Belt
•             10.85 meters of massive and semi-massive/stockwork sulfide mineralization grading 1.81% Cu, 2.57% Pb, 4.38% Zn, 0.13% Sn, and 75.27 ppm Ag
•             Including 7.95 meters @ 2.21% Cu, 3.05% Pb, 4.82% Zn, 0.15% Sn, 89.8 ppm Ag
•             Followed by 2.90 meters @ 0.71% Cu, 1.27% Pb, 3.17% Zn, 0.092% Sn, 35.4 ppm Ag
•             Avrupa and Antofagasta sign an amended Joint Venture Agreement

Please visit our website to learn more about the company and current exploration program.


¤ The Wrap

Even though I already discussed that silver broke the pattern of technical fund net selling being the prime cause of the price decline in the reporting week, the other four metals exhibited a stark similarity in that the managed money category in gold, copper, platinum and palladium all featured big long liquidation and an increase in short positions to the point where the net selling in the managed money category accounted for more selling than any other category. 

What this proves is that the collusive commercial trickery of the technical funds, so prevalent in COMEX silver for years, has now spread to all the COMEX metals. Actual supply and demand has been pushed aside in price discovery considerations and has been replaced by crooked dealings on exchanges run by the CME. That’s because the quantities of contracts dealt with on the COMEX and NYMEX far exceed the quantities of actual materials being transacted over similar periods of time. And since we know that participants in the managed money category are purely speculative (as are their commercial counterparties), the price of silver, gold, copper, platinum and palladium is being set and manipulated by speculators. This is so against the intent of US commodity law so as to embarrass the crooks at the CFTC and CME. (I would imagine, based upon the regulatory record that the crooks at JPMorgan are beyond being embarrassed). - Silver analyst Ted Butler: 27 September 2014

It was another day where JPMorgan and their HFT buddies with algorithms in tow, ran amuck in the precious metals.  All four, plus copper, set new lows for this move down, with the engineered price declines in both silver and palladium being the most egregious.

Also some consideration should be placed on the fact that it was month and quarter end yesterday as well---but how much of yesterday's price action was a result of book-squaring is open for debate.

Here are the 6-month charts for all five once again.

These engineered price declines are already miles past where I expected them to end---and speculating on when that might happen at this point is a mug's game.   Da boyz will keep hammering away until they've got the technical funds and small traders as minimum long and maximum short as they can get them.

And as Ted Butler pointed out in a quote I posted in this space late last week:

I’ve written about technical funds and the COT Report for ages, so this may seem to be old stuff. But I’m talking about a relatively new pattern, namely, the emergence of collective short positions in the managed money category on a scale never witnessed before, particularly in COMEX silver. Simply put (and I recognize this is not a simple subject) and over the past two years, the technical funds have come to establish at times far larger gross short positions than they did in previous years. This is especially true in COMEX silver, but also true in COMEX gold and copper, as well as in other commodities.

There is no question in my mind that the increased willingness of the technical funds to hold much larger short positions than they previously held is the reason we have witnessed a series of new price lows in silver and other commodities. In other words, the only reason we are at---and have seen the new price lows in silver---is because of the record amount of technical fund short selling on the COMEX. - Silver analyst Ted Butler: 24 September 2014

That, of course, applies to the six key commodities---the four precious metals, copper---and crude oil.

And as I write this paragraph, the London open is fifteen minutes away.  Gold, silver and palladium are all off their earlier lows---but are still below their closing prices in New York yesterday afternoon.  The HFT boyz slammed platinum pretty hard---and took it down 22 bucks at one point, but it's still down 16 dollars at the moment.  Gold volume is at 16,000 contracts---and silver's volume is already pretty chunky at 6,400 contracts.  The dollar index is up a small handful of basis points.

Yesterday was the cut-off for Friday's Commitment of Traders Report---and both Ted and I were discussing just how much of yesterday's price/volume action will appear in that report.  As I've said on many occasions, they can withhold data from this report when it suits them, but we won't know for sure until the report shows up on the CFTC's website on Friday afternoon.

And as I send this off to Stowe, Vermont at 5:02 a.m. EDT, I note that gold is trading quietly sideways, but for how much longer remains to be seen.  The other three precious metals have all had new engineered price lows set---and at one point platinum was down 38 bucks.  Gold volume is just over 22,000 contracts---and silver's net volume now sits at just under 9,800 contracts.  The dollar index is being ramped higher at the moment---and is up 22 basis points as of 9:52 a.m. BST in London.

I haven't the faintest idea of what will happen in the New York trading session.  Volumes were pretty low when I filed yesterday's column, but they exploded the moment that gold got slammed shortly before 10:30 a.m. BST in London, which I pointed out before was the London a.m. gold fix.  So what JPMorgan et al may have in store for us as the Wednesday trading day progresses is a complete unknown and, like I said in this space yesterday, nothing will surprise me when I check the charts later this morning.

But one thing I do know for sure is that the precious metal mining companies will say nothing---and do nothing---even as they watch their companies, their industry---and their shareholders, get obliterated.  The CFTC, the World Gold Council---and The Silver Institute are fully complicit in all of this---and with 'friends' like these, who needs enemies?

I hope your day goes well as can be expected under these circumstances---and I'll see you here tomorrow.