The gold price traded almost ruler flat through most of Far East trading on their Thursday, but began to show signs of life about 1:45 p.m. Hong Kong time. That 'rally' lasted until ten minutes after the COMEX open---and then gold rallied sharply before getting cut off at the knees around 10:30 a.m. in New York. It crawled higher from there, but got sold down once COMEX trading was done for the day---and the electronic session yesterday looked like a duplicate of the electronic trading session on Wednesday.
The low and high ticks were recorded by the CME Group as $1,211.90 and $1,227.70 in the June contract.
Gold finished the Thursday session in New York at $1,221.40 spot, up $6.30 from Wednesday's close. Net volume was very chunky at 159,000 contracts.
With some minor variations, the silver price action was similar to gold's, so I shall spare you the play-by-play.
The low and high ticks were reported as $17.07 and $17.585 in the July contract.
Silver closed yesterday at $17.445 spot, up another 33.5 cents. Net volume was an eye-watering 60,000 contracts.
As has been the case lately, the platinum price mirrored gold and silver prices closely once again. That white metal finished the Thursday session at $1,157 spot, up 10 bucks on the day.
After chopping mostly sideways in Far East and Zurich trading yesterday, the palladium price got sold down during the exact same time-frame that the other three precious metals were rallying. Palladium's low tick came at the the other precious metal's high ticks. It rallied a bit after that, but still closed down 4 dollars at $780 spot.
The dollar index closed late on Wednesday afternoon in New York at 93.62---and then chopped quietly lower to its 93.15 low tick, which came minutes before lunch in London. The subsequent rally lasted until shortly before 11:30 a.m. in New York. It then slid quietly lower until the equity market closed---and it traded flat from there. The index closed at 93.39---down another 23 basis points.
The gold stocks gapped up a bit the open---and hit their highs at gold's 10:30 a.m. EDT high tick---and then sold down into negative territory by 2:30 p.m. before chopping quietly sideways into the close of the equity markets in New York. The HUI finished down 0.28 percent. I was underwhelmed---and hoping its not a harbinger of things to come.
The silver equities fared far better, as their initial rally was much stronger---and the high in that precious metal came at 10 a.m. EDT. Although they chopped lower from there, they rallied a bit during the last ninety minutes of trading, as Nick Laird's Intraday Silver Sentiment Index closed up 1.28 percent.
The CME Daily Delivery Report showed that zero gold and 14 silver contracts were posted for delivery within the COMEX-approved depositories on Monday. JPMorgan stopped 3 of them for clients and 6 of them for its company account. The link to yesterday's Issuers and Stoppers Report is here.
The CME Preliminary Report for the Thursday trading session showed that gold open interest fell by 4 contracts, leaving 141 left open---and silver's o.i. declined by 31 contracts, leaving 344 left---minus the 14 mentioned in the prior paragraph.
I was gobsmacked by the changes in both GLD and SLV yesterday, as both showed major withdrawals. In GLD, an authorized participant took out 141,895 troy ounces---but in SLV there was another over-the-moon withdrawal, as 2,867,610 troy ounces was taken out by an authorized participant.
Just as a matter of interest, in GLD since May 2, there have been three withdrawals [no deposits] totalling 573,542 troy ounces. In SLV since April 27 there have been five withdrawals and only 1 deposit. During that period the amount of silver in SLV has declined by 9.9 million ounces. No price action during these times periods warranted these kind of withdrawals of physical metal.
With a 3-day rally in both gold and silver under out belts, it will be interesting to see how much of these two metals will be deposited in the next few days, as it's a good bet that both ETFs are owed a decent amounts of both. And as I said yesterday, it remains to be seen if these authorized participants resort to shorting the shares in lieu of depositing real metal. I'll have more on this in tomorrow's column.
Since yesterday was Thursday, Joshua Gibbons, the Guru of the SLV Bar List, updated his website with the goings-on over at the iShares.com Internet site as of the close of business on Wednesday---and here is his report.
"Analysis of the 13 May 2015 bar list, and comparison to the previous week's list: 3,823,878.2 troy ounces were removed (all from Brinks London), no bars were added or had serial number changes."
"The bars removed were from: Degussa (0.7M oz), Handy Harman (0.6M oz), Krasnoyarsk (0.5M oz), Britannia (0.4M oz) and 25 others. As of the time that the bar list was produced, it was overallocated 16.0 oz."
"All daily changes are reflected on the bar list, except a 955,880 oz deposit Wednesday."
For the third day in a row, there was no sales report from the U.S. Mint.
There wasn't a lot of in/out activity at the COMEX-approved depositories on Wednesday. In gold, there was no in/out movement at all---and in silver, nothing was received---and only 107,072 troy ounces were shipped out. All of it came out of Canada's Scotiabank.
It was reasonably quiet over at the COMEX-approved gold kilobar depositories in Hong Kong, as only 88 kilobars were reported received---and 994 were shipped out. The link to that activity in troy ounces is here.
I have the usual number of stories for a week-day column---and I'll happily leave the final edit up to you.
Something funny happened on the way to the global reflation (telegraphed so loudly by the recent surge in 10Y yields to the highest level of 2015): PPI just crumbled by a sequential 0.4% in the month of April, despite expectations it would rise by 0.1% and continue the 0.2% monthly increase seen in March. This was a -1.3% drop in PPI - the fastest fall in 5 years.
Worse, the annual decline in final demand goods was -5.2% Y/Y, the biggest drop in the revised series in record!
And so as wholesale deflation rages, and countless other charts are screaming recession, we can't wait for the Fed to hike rates just so it can push the US back into recession and have the alibi to unleash QE4.
This chart-filled commentary appeared on the Zero Hedge website at 8:46 a.m. EDT yesterday morning---and today's first story is courtesy of Dan Lazicki.
Confirming Gallup's demise of the confidence of the consumer, Bloomberg's non-government-sanctioned Consumer Comfort index has now fallen for the 5th straight week - the longest streak of uncomfortableness since Nov 2013. The index is barely above unchanged for 2015 with people in The South and North East feeling the misery the most in the last week.
This 1-chart story showed up on the Zero Hedge website at 10:03 a.m. EDT on Thursday morning---and it's the second offering in a row from Dan Lazicki. The chart is worth a quick look.
HSBC chief economist Stephen King is already thinking about the next recession.
In a note to clients Wednesday, he warns: "The world economy is like an ocean liner without lifeboats. If another recession hits, it could be a truly titanic struggle for policymakers."
Here's King (emphasis added): Whereas previous recoveries have enabled monetary and fiscal policymakers to replenish their ammunition, this recovery — both in the US and elsewhere — has been distinguished by a persistent munitions shortage. This is a major problem. In all recessions since the 1970s, the U.S. Fed funds rate has fallen by a minimum of 5 percentage points. That kind of traditional stimulus is now completely ruled out.
"Next" recession? We haven't dug ourselves out of the last one yet. This short commentary appeared on the businessinsider.com Internet site at 8 a.m. on Wednesday morning EDT---and I thank Norman Willis for finding it for us. The full Bloomberg article containing Stephen King's comments is headlined "HSBC: Central Banks Are Running Low on Ammunition". I found this piece in yesterday's edition of the King Report.
On Monday, Picasso’s Women of Algiers (Version O), set an auction house record when it sold for $179,365,000, including the house's premium, prompting us to remark that if you were looking for signs of runaway inflation, Christie’s may be a good place to start.
The nearly $200 million price tag for the “riot of colors focused on scantily dressed women” is, according to WSJ, reflective of the work’s “trophy” status which it earned as a result of its “ownership pedigree”. Translated from high-end art world parlance to plain English: for billionaires who have seen their obscene fortunes balloon under monetary policies designed to inflate financial assets at the expense of everything else (including market stability), purchasing art affords the buyer an even greater opportunity to “boast” than hoarding $100 million homes because after all, there a lot of mega mansions, but there’s only one vibrant, multi-hued Picasso riff on a Delacroix, so really, $180 million is a bargain, especially when most of the purchase price will be recouped by S&P 2,500, or SHCOMP 6,000 (depending on the nationality of the unnamed buyer).
This trend isn’t likely to change anytime soon, and as Bloomberg reports, more than $2 billion in art has been sold at Christie’s and Sotheby’s in the last week alone with the top 10 pieces accounting for an astounding $800 million.
Bloomberg sums it up nicely: "You know the market is frothy when a Monet that sells for $40.5 million doesn’t make the final cut for a top 10 list."
Wow! This is a must read, just so you can see what people paid these grotesque sums for. It makes you want to shut the door on your Hobbit hole and never come out. It's certainly keeping the super rich out of the gold market. This is another Zero Hedge piece from yesterday---and I thank reader M.A. for sending it our way.
U.S. Senate Armed Services Committee Chairman John McCain on Wednesday rejected a request by U.S. officials for changes in federal law to let the two largest U.S. arms makers use more Russian rocket engines to compete for military satellite launches against privately held SpaceX.
McCain’s comments reflect frustration among some lawmakers about the Pentagon’s failure to halt purchases of the RD-180 Russian engines after Russia’s annexation of Crimea.
As SpaceX becomes a potential competitor to current monopoly launch provider, United Launch Alliance, a joint venture of Lockheed Martin Corp and Boeing Co, billions of dollars of orders are at stake and both sides are lobbying lawmakers hard.
This Reuters article, filed from Washington, put in an appearance on their Internet site late Wednesday afternoon EDT---and I thank South African reader B.V. for sharing it with us.
A cache of secret memos between Prince Charles and senior government ministers has been released after a 10-year legal battle, offering the clearest picture yet of the breadth and depth of the heir to the throne’s lobbying at the highest level of politics.
The 27 memos, sent in 2004 and 2005 and released only after the Guardian won its long freedom of information fight with the government, show the Prince of Wales making direct and persistent policy demands to the then prime minister Tony Blair and several key figures in his Labour government.
From Blair, Charles demanded everything from urgent action to improve equipment for troops fighting in Iraq to the availability of alternative herbal medicines in the U.K., a pet cause of the prince.
I posted the abridged version of this story that appeared on the sputniknews.com Internet site in yesterday's column. But here' the "Full Meal Deal" courtesy of The Guardian from a longish article they posted on Wednesday evening BST. It's the second contribution of the day from Elliot Simon.
"This left bad feelings on our side. We are a small country that was badly treated by a great power", according to Tadeusz Chabiera, founder of the Euro-Atlantic Association think tank in Warsaw Poland.
The "bad feelings" for a small country relate to revelations that a small secret rural prison in Stare Kiejkuty in north east Poland was used by American CIA agents to interrogate and illegally torture terror suspects. One of whom was Khalid Shaikh Mohammed, the man behind the 9/11 terror attacks.
The intelligence training base in Stare Kiejkuty became a prison known as a 'black site' for CIA agents to conduct 'enhanced interrogation techniques' — basically torture methods — that were against the law in the United States.
This news item appeared on the sputniknews.com website at 6:04 p.m. Moscow time on their Thursday afternoon, which was 11:04 a.m. EDT in Washington. It's the first offering of the day from Roy Stephens.
Ukrainian President Petro Poroshenko has accused Russia of increasing its military presence in his country, something Moscow firmly denies, and said that Ukraine would fight “Russian aggression” “until the last drop of blood."
In an interview with German broadcaster ZDF, Ukrainian President Petro Poroshenko said Russia has deployed 11,000 troops in the war-torn Eastern Ukraine, adding that they can fuel separatists in the region and make them create a land bridge to the Crimean peninsula.
This claim sparked harsh reaction from Moscow, with Kremlin spokesman Dmitry Peskov saying Thursday that: "such baseless, vague and ungrounded accusations will never produce a positive result, to put it mildly."
Poroshenko also criticized the Minsk agreement and called it a "pseudo-peace", which does not guarantee any security for his country. At the same time, his French and German counterparts consider its implementation a key aspect for maintaining security in Europe and the best option for overcoming the current crisis.
After the Kerry/Lavrov/Putin talks in Sochi early this week, Poroshenko's words ring hollow. This is another offering from the sputniknews.com Internet site yesterday afternoon Moscow time---and it's also courtesy of Roy Stephens.
When interest rates are zero and it costs a bank to look after your money it becomes an unattractive asset. Banks in some jurisdictions (such as Switzerland, Denmark and Sweden) are even charging customers interest on cash and deposits. And if you go to your bank and withdraw large amounts in the form of folding notes to avoid these charges you will be lucky if you are not treated as a sort of pariah. For the moment, at least, these problems do not extend to sound money, in other words gold.
There is an obvious alternative to cash, and that is to buy physical gold. This does not constitute a run on the banking system, because a buyer of gold uses electronic money that transfers to the seller. The problem with physical gold is a separate issue: it challenges the raison d'être of the banking system and of government currencies as well.
This is why we can still buy gold instead of encashing our deposits, for the moment at least. It can only be a matter of time before people realise that with the cash option closing this is the only way to escape an increasingly dysfunctional financial system.
This short commentary by Alasdair showed up on the goldmoney.com Internet site yesterday sometime---and I found it embedded in a GATA release.
The last 3 days have seen precious metals surging. Silver is up over 7% - its biggest such rise since Aug 2013, and Gold up 3% - its largest in 4 months. Volume is heavy also. A specific catalyst is unclear but USD weakness is being cited, weak macro data suggesting further easing, China demand ahead of SDR-backing, and finally the realization that the Chinese shift to unconventional monetary policy (LTROs) is a slippery slope to full-blown QE from which few (if any) have ever escaped.
It's way too early to break out the party favours just yet, dear reader---but the party has already started over at Zero Hedge. Read with caution. It was posted on their Internet site yesterday morning EDT---and I thank Dan Lazicki for sending it along.
I’m going out on a limb: I think the next bull phase in the gold market gets underway before October.
But not due to runaway demand…
At an International Monetary Fund (IMF) forum last month, China’s central bank governor, Zhou Xiaochuan, made it clear he believes the renminbi is “ready for reserve status.” It would be a huge step for the Chinese currency, starting with the fact that it would be added to the basket of currencies IMF member countries can include in their official reserves. Billions would be invested in it.
Once again it depends on what JPMorgan et al do, or are instructed to do. But, here's hoping the Jeff is right! This commentary showed up on the Casey Research website yesterday---and it's worth reading.
In the concluding part of his study of Venezuela's gold repatriation, gold researcher and GATA consultant Ronan Manly writes that the country's gold seems to have been put in play by bullion banks throughout Europe and that a repatriation shipment probably came from the Banque de France though Venezuela had not deposited any gold there. That is, the repatriation required some scrambling on the part of bullion banks, central banks, and the Bank for International Settlements.
But now, Manly notes, as Venezuela's socialist regime continues to push the country toward bankruptcy, the regime is pawning its gold again and actually seems to have a close relationship with certain bullion banks.
Manly concludes: "Gold leaving Venezuela on a flight back to London, New York, or elsewhere will not get the fanfare and celebration that accompanied the same gold's arrival into Caracas a short few years ago."
Manly's study is headlined "Venezuela's Gold Reserves -- Part 2: From Repatriation to Reactivation" and it was posted on the bullionstar.com Internet site in Singapore yesterday. I thank Dan Lazicki for sending it our way---and I thank Chris Powell for wordsmithing "all of the above". Like Part One that was posted in yesterday's column, it's on the longish side, but it's a very interesting read.
In a recent roundup on the outlook for gold, ScotiaMocatta says a strong upside surprise may be in store for the price of gold.
ScotiaMocatta analysts take the position that investors, presently bored with gold, will show it some favour as other holdings and asset classes turn south.
“We are still of the view that the most bullish aspect of the gold market is that other assets are already expensive – notably the dollar, treasuries and equities,” ScotiaMocatta says.
It continues, “When these correct, as indeed may be starting to happen, then investors may look for a cheap safe – haven and gold looks well placed to fill that role. With the financial system still suffering many stresses including uncertainty over Greece, competitive currency devaluation and unmanageable amounts of government debt, we feel investment demand for gold could pick up at relatively short notice.”
Since Scotiabank is one of the biggest short holders in the COMEX futures market in gold---and the biggest COMEX short in silver, they should be careful what they wish for, although this 'analyst' may not know that.
This gold-related story showed up on the mineweb.com Internet site at 11:00 a.m. BST yesterday morning, which was 6:00 a.m. in New York EDT. I thank Roy Stephens for sending it our way.
German investors have piled into gold bars and coins in the first quarter of the year as a hedge against European Central Bank policy and the threat of a Greek default bringing down the eurozone.
Latest figures from the World Gold Council show that Germans increased their buying of gold coins and bars of bullion by 20pc to 32.2 tonnes in the last quarter, the highest rate of purchases seen in a year.
The strong buying of gold - which is traditionally seen by investors as a safe-haven asset - was seen across Europe amid growing uncertainty over central bank policy and the standoff between Athens and its creditors.
"This was the strongest start in Europe for gold coins and bars that we have seen since 2011," Alistair Hewitt, head of market intelligence at the World Gold Council told The Telegraph. "German investors are fretting over the ECB, Greece and Ukraine."
This short, but must read article, appeared on the telegraph.co.uk Internet site at 10 a.m. BST yesterday morning---and it's another contribution from Roy Stephens.
Bridgewater's Ray Dalio explains in under 120 seconds why everyone should allocate some of their portfolio to gold:
"If you don't own gold...there is no sensible reason other than you don't know history or you don't know the economics of it..."
Of course, few 'status quo' believers will pay heed to the $150 billion AUM fund manager, despite his imploring everyone that to be successful, one must "Think Independently, Stay Humble".
The 2:10 minute embedded video clip is a must watch---and not to be missed is that he said it live and in person at the Council on Foreign Relations. It's the final offering of the day from Dan Lazicki---and I thank him on your behalf.
Forgive us for coming back to a subject we have covered before, but we have previously commented on our disbelief that India regained top spot as the world’s No. 1 gold consumer in 2014. This belief, which is since being perpetuated by the mainstream global media, was based on the World Gold Council (WGC)’s Gold Demand Trends report of February this year, which had India just pipping China into the No.1 spot on preliminary data. We disagreed with this assessment at the time and have pointed to other statistical analyses of the global gold market since which would also reverse this position and we are now pleased to note that the latest WGC Gold Demand Trends report has China firmly back in the No. 1 spot for 2014 with its latest consumption figure for that year put at 973.6 tonnes as against India’s 811 tonnes. China’s figure would be even higher at 1,015 tonnes if we include Hong Kong consumption which perhaps one should given that Hong Kong is a part of China even if its statistics tend to be recorded separately.
The latest WGC statistics – now provided by the Metals Focus consultancy rather than by GFMS which has provided them in the past – also suggests that Chinese consumption (excluding Hong Kong) fell by 7% in Q1 this year to 272.9 tonnes compared with Q1 2014, while India’s grew by 15% to 191.7 tonnes – which still leaves China as comfortably the No.1 global consumer. The report also points out that the two countries between them account for 54% of total global gold consumer demand. In terms of percentage of new mined supply – put at 729 tonnes for Q1 2015 – the two countries accounted for 64%. But we also believe that, in the case of China, these figures still substantially underestimate gold flows into the country, which is in part due to a rigid calculation as to what actually is defined as ‘consumer demand’. This does not appear to include demand absorbed directly by the Chinese banking system. To back up our view withdrawals from the Shanghai Gold Exchange (SGE) in Q1 this year reached around 623 tonnes – 10.5% higher than in Q1 2014. Whether one takes SGE withdrawal figures as an accurate representation of actual Chinese demand (there are arguments over this) it is certainly an accurate indicator of the levels of Chinese gold flows.
This commentary by Lawrie put in an appearance on the mineweb.com Internet site at 2:40 p.m. London time, which was 9:40 a.m. in New York. It's worth reading.
Alexandria Minerals Corporation (TSX VENTURE:AZX) and Murgor Resources Inc. (TSX VENTURE:MGR) are pleased to announce that they have entered into an arrangement whereby Alexandria will acquire all of the outstanding common shares of Murgor.
Here are some of the benefits for Alexandria's shareholders:
On January 30 Alexandria closed a non-brokered private placement of $500,000 at a price of 10 cents. There are neither Finder’s Fees nor Commissions associated with this financing. Proceeds from the sale of the shares will be used for exploration on its Cadillac Break property group in Val d'Or, Québec and general corporate purposes. Call or email Mary Vorvis, 416-305-4999/MVorvis@azx.ca, for more information on Alexandria Minerals.
Every week, or even more frequently, I explain how position changes on the COMEX between two distinct groups of speculative traders set the price of silver and gold and other commodities. On one side are the technical funds in the managed money category of the CFTC’s Disaggregated COT Report---and on the other side are commercial traders who take the opposite position of whatever the managed money traders do. If the managed money traders buy, then the commercials sell and vice versa. It never varies.
In fact, if the managed money traders didn’t behave like Pavlov’s dogs to the stimuli of buying on upside penetrations of the moving averages and selling on downward penetrations, there would be no manipulation possible in silver or any other market. If the commercials couldn’t maneuver the technical funds in the managed money category both ways, up and down, there would be no ongoing silver manipulation, just a one-time spike up or down.
The managed money traders are, by CFTC and CME classification, purely speculative traders with absolutely no legitimate bona fide hedging purpose behind their trading. That doesn’t make them illegitimate traders or bad people, just that they are pure speculators and not hedgers. The commercials are thought of as legitimate hedgers by many, but in reality they, too, are pure speculators as they are more akin to bookmakers looking to profit when the managed money traders reverse positions; just like a bookie hopes to profit when someone bets on a basketball game of a horse race and loses. These commercials are banks and financial institutions, with nary a legitimate miner or industrial consumer in their ranks. Besides, what legitimate miner or industrial user would engage in a hedging strategy based exclusively upon making book with speculative traders with no regard to internal company requirements? - Silver analyst Ted Butler: 13 May 2015
It was another day where gold, silver and platinum were allowed to rally a bit, but it was obvious from the charts that any time they got too "irrationally exuberant" to the upside, a willing seller appeared. That was particularly noticeable shortly after 11 a.m. in London---and also at 10:20 a.m. in New York in all three metals. Considering the fact that all three have wildly different supply/demand fundamentals, these obvious joined-at-the-hip price movements had nothing to do with free markets.
Gold traded above, but did not close above, its 200-day moving average, although silver did---and platinum has now broken above and closed above its 50-day moving average.
Where we go from here is up in the air. The RSI traces aren't even close to being in wildly overbought territory, so we could certainly rally from here---and I'd be happy to see it.
However, yesterday's volume numbers were, for the second day in a row, not what I wanted to see---and it's a certainty that the Commercial traders were taking on all comers in the Managed Money category as they sold short positions and went long. And as I mentioned in yesterday's column, unless there's some hidden jiggery-pokery going on that I'm unaware of, there was big deterioration in the Commercial net short positions once again. If a COT Report came out showing the effects of the last two trading days, it would mostly likely show that there's been shocking deterioration in the Commercial net short positions in both gold and silver. So, for the moment, it looks like the same old, same old.
And as I write this paragraph, the London open is about fifteen minutes away. Gold sold down a few bucks in very quiet trading in the Far East on their Friday---and is currently a hair off its low tick. The same can be said about silver, which is currently down a dime or so. Platinum is trading flat---and palladium is currently up three dollars.
Net volume in gold is approaching 14,000 contracts---and about 95 percent of that is of the HFT variety. Silver's net volume is a hair over 7,000 contracts. These are big numbers for such tiny overnight price moves---and I must admit that it doesn't bode well for the remainder of the Friday session. The dollar index, which had been flat through most of Hong Kong trading, began to rally shortly before 1 p.m. local time---and is currently up 18 basis points.
Today we get the latest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday---and it's already yesterday's news. As I said above, the price action of the last three days trumps whatever this report has to say. I'll be talking about it in tomorrow's column, but only in the most general terms.
And as I sent today's column out the door at 5:00 a.m. EDT, there isn't much going on even though London has been open a couple of hours---and things are pretty much unchanged since I wrote the previous paragraph on the situation.
Gold volume is now up to just about 24,000 contracts---and silver's net volume is just below 10,000 contracts. These are huge volumes for little or no price movement---and it's virtually all of the HFT variety. There's not a producer or consumer of the metal anywhere to be found in these numbers, so supply/demand fundamentals are being trumped by the HFT boyz and their algorithms.
The dollar index is currently up 34 basis points.
I have no idea what may happen during the remainder of the Friday session, but as you already know it's only what happens during the COMEX trading session that matters---and JPMorgan et al aren't leaving any clues. I'm expecting a down day, but would love to be spectacularly wrong.
Enjoy your weekend, or what's left of it if you live west of the International Date Line---and I'll see you here tomorrow.