Despite a dollar index that was rapidly heading south, the gold price traded flat into the London open on their Wednesday morning---and began to head south shortly after 12 o'clock noon BST. The selling pressure never let up from that point---and it got a final kick in the pants at the 2 p.m. EDT release of the Fed minutes---and for about an hour traded below the $1,200 spot price mark before rallying back above it by a few dollars going into the 5:15 p.m. close of electronic trading.
The high and low tick were recorded as $1,212.50 and $1,197.40 in the June contract.
Gold finished the Wednesday trading session in New York at $1,202.20 spot, down $5.50 from Tuesday's close. Net volume wasn't overly heavy at 110,000 contracts.
Here's the 5-minute tick chart for gold courtesy of reader Brad Robertson---and you can see the big up-tick in volume as the selling pressure intensified during the Wednesday lunch hour in London---and then spilled over in the COMEX trading about thirty minutes later. Don't forget to add two hours to this chart---and use the 'click to enlarge' feature as well.
Silver's price wasn't allowed to react to the big dollar sell-off either---and after trading flat in the Far East on their Wednesday, picked up a negative bias shortly after trading began in London. The roof caved in at 10:40 a.m. EDT---and the low of the day came shortly after the Fed minutes were released---and silver struggled quietly higher from that point onward.
The high and low ticks were reported by the CME Group as $16.905 and $16.37 in the May contract.
Silver finished the day at $16.51 spot, down 32 cents from Tuesday's close. Net volume was decent at 33,000 contracts.
Platinum and palladium caught the same disease as gold and silver, with both finishing lower on the day. Platinum closed down at $1,165 spot, down 6 bucks---and palladium finished at $753 spot, down 12 dollars. Here are the charts.
The dollar index closed late on Wednesday afternoon at 97.91---and continued lower right from the open in early morning trading in the Far East. It bottomed out around 97.34 at 11:15 a.m. in London trading---and then began to head higher starting at the 8:20 a.m. EDT open of COMEX trading. There was a bit of a pop on the Fed minutes at 2 p.m.---and it chopped sideways in a tight range for the remainder of the day, closing at 98.06---and up 15 basis points from Tuesday's close.
As you already know, the moves in the precious metals were completely independent of what was happening in the currency markets, especially during the time that the dollar index was falling out of bed.
The gold stocks spent the first two minutes of the trading session in positive territory---and headed lower until shortly after 11:30 a.m. EDT. The subsequent rally back into slightly positive territory in advance of the Fed minutes ended at that point in a waterfall decline to their lows of the day, before closing a bit off that low. The HUI finished down 1.39 percent.
The silver equities followed an identical pattern, except for the fact that Nick Laird's Intraday Silver Sentiment Index closed 1.84 percent.
The CME Daily Delivery Report showed that 10 gold and 114 silver contracts were posted for delivery within the COMEX-approved depositories on Friday. The short/issuer on all ten gold contracts was JPMorgan out of its client account---and JPMorgan stopped five of them in its in-house [proprietary] trading account. These guys are such bastards! In silver, Jefferies was the short/issuer on all 114 contracts---and JPMorgan stopped 97 of them in its in-house [proprietary] trading account, plus a further 13 in its client account.
The CME Preliminary Report for the Wednesday trading session showed that gold open interest in the April delivery month declined by 77 contracts---and now sits at 2,730 contracts, minus the 10 mentioned above, of course. Not surprisingly, silver open interest fell by 200 contracts, the ones that showed up for delivery out of the blue in yesterday's report, as they get delivered today. April open interest in silver is back down to 185 contracts.
There were no reported changes in GLD yesterday---and as of 9:58 p.m EDT yesterday evening, there were no reported changes in SLV, either.
The folks over at Switzerland's Zürcher Kantonalbank updated their gold and silver ETF inventories as of the close of business on Thursday, April 2---and this is what they had to report. Their gold ETF declined by 7,708 troy ounces---and their silver ETF actually added a smallish amount---1,182 troy ounces.
There was a small sales report from the U.S. Mint. They sold 2,000 troy ounces of gold eagles---and 1,500 one-ounce 24K gold buffaloes.
There was no gold reported received at the COMEX-approved depositories on Tuesday---and a grand total of 6 kilobars were reported shipped out. But my eyes nearly popped out of my head when I saw the silver numbers, as 1,460,252 troy ounces were reported received---and 1,909,146 troy ounces were shipped out the door.
Of the total received, 1.11 million ounces ended up in JPMorgan's depository. They currently hold 48.87 million troy ounces---and the CNT Depository is in distant second place with 30.36 million troy ounces. It's always been my suspicion that virtually all the silver at CNT belongs to JPMorgan as well. Please see the charts posted below for more details on this. The link to yesterday's silver action is here---and it's definitely worth a look.
Over at the COMEX-approved gold kilo stocks depositories in Hong Kong, there was action in both of them. At Brink's, Inc. they received 7,766 kilobars---and shipped out only 223 of them. At the Malca-Amit Far East Ltd depository, they reported receiving 9 kilobars---and didn't ship out anything. The link to all the activity in troy ounces is here.
I just pulled these four charts from Nick Laird's website---and they show the silver inventories of the four most important COMEX-approved silver depositories from January 1, 2011 up until the close of trading yesterday. The drive-by shooting in silver by JPMorgan et al began on May 1, 2011. JPMorgan opened up their silver vault two days before that event---and CNT followed sixteen months later and, from out of nowhere, they are now #2 on the silver hit parade of depositories. And with JPMorgan buying physical silver from the four corners of Planet Earth, you can draw your own conclusions.
Also worth noting are the big declines in the physical silver holdings of both Scotiabank and HSBC USA, although I must admit that I'm not sure what should be read into that, but there has to be an interesting reason.
I didn't included the chart for the Delaware depository, or for Brink's, Inc.---as their inventory levels have been pretty static over the same time period. The big action has been in the above four depositories---and I would bet serious money that their individual actions are related somehow.
I have the usual number of stories for a mid-week column---and I hope there are some in here that float your boat.
No new news whatsoever, aside from perhaps greater emphasis on the fact that now The Fed is 'protector of global wealth creation' given the smorgasbord of risks discussed... left market participants and machines as confused as The Fed appears to be...
Along with some great charts, comes one of the best Wall Street cartoons of all time---which I posted in this column years ago---and for that reason alone, it's worth a look. This short Zero Hedge piece showed up on their website at 2:30 p.m. EDT on Wednesday afternoon---and today's first story is courtesy of Dan Lazicki.
If there is one word to describe today's market, as well as the market of the past week, past month, and perhaps all of 2015, it is "stop hunts." Well, technically it's two words.
The first stop hunt took place, as is now a daily routine, right after the US market open, when the entire Dow Jones increasingly, looking like the infamous, illiquid and massively overvalued (until such time as it was halted) CYNK stock, ramped, then tumbled the moment reality was glimpsed courtesy of the abysmal EIA crude report which sent crude crashing on its biggest one day drop in two months, also sending stocks into the red...only to be followed by another stop hunt, this time with the dump first then the ramp after the FOMC minutes were released.
This is the second chart-filled column courtesy of Zero Hedge. It appeared on their Internet site at 4:08 p.m. EDT yesterday---and it's the second offering in a row from Dan Lazicki.
Oil futures settled nearly 7 percent lower on Wednesday after government data showed the largest weekly increase in U.S. crude inventories since 2001 and a day after Saudi Arabia reported record production in March.
U.S. May crude closed down $3.56, or 6.6 percent, at $50.42 a barrel. The commodity has erased 2015's gains and is now down 5.4 percent on the year. Meanwhile, Brent May crude was down $3.30 at $56.90 a barrel.
U.S. crude oil inventories surged 10.95 million barrels to a record 482.39 million in the week to April 3, the Energy Information Administration (EIA) said in its weekly report.
This 58 second CNBC video clip from 8:30 a.m. Denver time yesterday morning was extracted from a Reuters story---and with the exception of one short paragraph, the transcript is posted above. It's the third story of the day from Dan Lazicki. A more comprehensive Reuters story appeared on their website yesterday afternoon. It's headlined " Oil dives 6 percent from 2015 high as stocks swell, Saudis pump"---and I thank West Virginia reader Elliot Simon for sending it along.
Refiners are poised to make gasoline at a record pace this year, keeping the biggest U.S. crude glut in more than 80 years from overflowing storage.
They’re enjoying the best margins in two years as they finish seasonal maintenance of their plants before the summer driving season. They’ll increase output to meet consumer demand and they’ve added more than 100,000 barrels a day of capacity since last summer, when they processed the most oil on record.
Booming crude production expanded inventories this year by 86 million barrels to 471 million, the highest level since 1930. Analysts from Bank of America Corp. to Goldman Sachs Group Inc. have said storage space may run out. What looks like an oversupply to banks is turning into an all-you-can-eat buffet for those making gasoline and diesel fuel.
This Bloomberg article appeared on their Internet site on Sunday afternoon---and I found it in yesterday's edition of the King Report.
Wall Street is greeting what is expected to be the worst earnings season since 2009 with a gigantic shrug.
Though there has been some selling in recent weeks, there's been no panic dumping of stocks, even though forecasts for S&P 500 first-quarter earnings have tumbled since Jan. 1, thanks to the surging dollar, falling oil prices and another severe winter. The earnings season unofficially kicks off Wednesday with results from aluminum company Alcoa.
Among some key early results, JPMorgan Chase is due to report next week along with other banks and General Electric.
First-quarter S&P 500 earnings are projected to have declined by 2.8 percent from a year ago, which would make the quarter the worst for results since the third quarter of 2009, not long after the United States emerged from the Great Recession, according to Thomson Reuters data.
This Reuters news item, filed from New York, showed up on their Internet site at 1:21 a.m. EDT Wednesday morning---and it's the second article in a row from Elliot Simon.
Having defeated the Crown in a bloody revolution some two centuries ago, Americans don’t like living under a patriarchy, oligarchy or kleptocracy. Unfortunately, the U.S. central bank, the Federal Reserve, is a little of all three.
On Monday of this week, the President of the Federal Reserve Bank of New York stated in a speech that “the Federal Reserve already is very transparent and accountable to Congress and to the public.” Two days later, Wall Street On Parade attempted to get one piece of very basic information from the Fed and got the royal runaround. We wanted to know if JPMorgan Chase, a bank operating under a deferred prosecution agreement for two felony counts and under a criminal investigation for potential currency rigging, was still the custodian of $1.7 trillion of mortgage backed securities owned by the Federal Reserve, as we had reported on November 3, 2014.
Other basic information from the Fed is also off limits to the press. Each day the President of the United States posts his daily schedule on the internet. Trying to find out whom the Chairman of the Federal Reserve has met with is far more secretive. In 2006, Greg Ip wrote in the Wall Street Journal that the Federal Reserve refused to provide the schedule of Alan Greenspan, the former Fed Chairman, for his last seven months in office on the basis that “his personal calendar wasn’t an agency record and, therefore, according to court interpretations, not subject to the FOIA.”
This commentary appeared on the wallstreetonparade.com Internet site yesterday---and I found it embedded in a GATA release.
Yes, the employment numbers were ugly. They confirm the other evidence coming in from hill and dale, industry and commerce, households and homesteads all across the nation, and all the ships at sea: This is no ordinary recovery.
No ordinary recovery – non-farm payrolls shrink with unusual verve. This probably means the printing presses must be restarted again, otherwise the ghost of ’37 is going to kick us where it hurts! – via econbrowser.com
In fact, it’s no recovery at all. It is strange and unnatural, like the victim of a quack plastic surgeon. But the damage was not an accident. No slip of the hand or equipment malfunction produced this horror. It was the result of economic grifters plying a fraudulent trade.
The Dow rose 118 points in Monday’s trading. A 0.7% increase, this was neither the result of honest investing nor any serious assessment of the economic future. Bloomberg attributed it to scammery from the Fed.
This commentary by Bill Bonner put in an appearance on the acting-man.com Internet site yesterday---and I thank Roy Stephens for pointing it out.
Turns out Venezuela is not the evil empire after all. That’s what the White House appears to be saying just days before the Summit of the Americas starts in Panama, which President Obama plans to attend.
The uproar over Venezuela started last month, when Obama signed an executive order declaring a "national emergency" as far as Venezuela was concerned, and calling the South American country "an extraordinary threat" to US national security and foreign policy.
That infuriated most Latin American countries, Venezuela in particular. President Nicolás Maduro launched a campaign to collect 10 million signatures, all demanding the declaration be rescinded.
As of Tuesday, nine million signatures had been collected, and Maduro plans to hand the signatures to Obama at the summit which begins on Friday. Roberta Jacobson, Assistant US Secretary of State for Latin America, said she was "disappointed" by the support shown for Venezuela among leaders in the region.
This story was posted on the sputniknews.com website at 9:42 p.m. Moscow time on their Wednesday evening, which was 2:42 p.m. EDT in Washington---and it's the second contribution of the day from Roy Stephens.
Argentina is suing Citibank Argentina in local courts for striking an illegal deal with a group of U.S. creditors fighting the government over unpaid debt, its economy minister said on Wednesday.
The South American country's legal action marks a fresh low in its deteriorating relations with the local subsidiary of Citigroup Inc, which has portrayed itself as an innocent party in Argentina's bitter debt battle with the funds.
Citigroup denied violating Argentine laws and said it was disappointed by Argentina's judicial steps. It did not detail what action it would take in response.
Economy Minister Axel Kicillof said last month's agreement involved Citibank, which had acted as custodian of some Argentine-law sovereign bonds, agreeing to handover the details of client accounts and fund movements to the hedge funds.
This Reuters article, filed from Buenos Aires, appeared on their Internet site at 7:39 p.m. EDT yesterday evening---and it's another item from Elliot Simon.
Back in December, the Bank of Canada said home prices were overvalued by as much as 30% and posed an “elevated” risk to the Canadian financial system. In January, Deutsche Bank found that Canada’s housing market was, more realistically, 63% overvalued.
In greater Vancouver, the “benchmark” price of all types of homes (detached, townhouse, and apartment) in March rose 7.2% from a year ago to C$660,700, according to the Real Estate Board of Greater Vancouver. Detached homes jumped 11.2% to C$1.05 million; and in Vancouver West, 12.3% to a breathtaking C$2.4 million.
Those are the Board’s “benchmark” prices. The average price for detached homes in Vancouver soared 16% from a year ago, surpassing $1.4 million for the first time. Transactions skyrocketed 54%; supply plunged 15%. Prices were doped by low interest rates, limited supply, and foreign investors. This market is hot.
But the oil patch of Canada is skidding into serious trouble.
This very interesting commentary appeared on the wolfstreet.com website on Sunday---and I thank Brad Robertson for sharing it with us.
As previously reported, overnight oil giant Royal Dutch Shell agreed to buy BG Group for £47 billion ($69.6 billion) in cash and shares, the 14th largest ever corporate takeover, the largest energy transaction in the past decade, and as the WSJ put it, "the latest sign of how tumbling energy prices are shaking up the global oil-and-gas industry."
The catalyst for the rushed, and unsolicited, deal: the sharp drop in oil and gas prices since last summer, with the hope being that thousands of layoffs and operations synergies would enable the two European energy giants to eliminate overlapping costs to lower the breakeven oil production cost.
As the WSJ, which broke news of the deal first, adds, the combination "furthers Buying BG will add 25% to Shell’s proved oil and gas reserves and 20% to production and give it access to BG’s highly prized offshore oil fields in Brazil’s Santos Basin, significant undeveloped natural gas resources in East Africa and a huge liquefied natural gas project in Australian that is ramping up this year."
As long as starved for yield bond investors are willing to throw money away, more deals like this one will take place. Ironically, mega mergers like these which cut overhead and boost productivity and efficiency (at the cost of tens of thousands of workers) mean the oil glut will persist for much longer than even the most pessimistic estimates.
This longish article appeared on the Zero Hedge website at 9:33 a.m. EDT on Wednesday morning---and it's courtesy of Dan Lazicki. There was another Zero Hedge piece about this---and it was headlined "This is How the Third Largest Energy Deal in History Happened"---and it showed up on their Internet site at 11:40 a.m. EDT yesterday morning as well. It, too, is courtesy of Dan L.
German factory orders unexpectedly fell for a second month in February in a sign Europe’s largest economy is still prone to risks.
Orders, adjusted for seasonal swings and inflation, fell 0.9 percent after a revised decline of 2.6 percent in January, data from the Economy Ministry in Berlin showed on Wednesday. The typically volatile number compares with a median estimate of a 1.5 percent increase in a Bloomberg survey. Orders slid 1.3 percent from a year earlier.
The data contrasts with other reports that indicate strength in the economy and underscore the Bundesbank’s upbeat projections for growth. While instability from Greece to Russia highlights the risks for the recovery, surveys from Markit Economics show momentum is building in both manufacturing and services in Germany.
“There is absolutely no need to be worried,” said Andreas Rees, chief German economist at UniCredit Bank AG in Frankfurt. “The upward trend in business sentiment is intact, thereby heralding better hard economic data in the next few months.”
This Bloomberg article showed up on their website at 12:00 a.m. MDT yesterday---and I thank Elliot Simon for sending it.
It had to happen sooner or later... in the new normal of yield-reaching, collateral-shortage-ing, money-printing economalypse, the Swiss government has become the first ever to issue a 10Y sovereign bond at a negative yield. As WSJ notes, while several European countries have sold government debt at negative yields up to five years of maturity - which means investors effectively pay for the privilege of buying it - no other country has previously stretched this out as long as 10 years. Mission Accomplished Central Bankers?
This brief article, which is worth reading, appeared on the Zero Hedge Internet site at 5:53 p.m. yesterday afternoon EDT---and once again I thank Dan Lazicki for sending it our way.
It was back in June 2011 when we first hinted that the time of Odious Debt is rapidly approaching.
As a reminder, this is what Odious Debt is: In international law, odious debt is a legal theory which holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable. Such debts are thus considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state. In some respects, the concept is analogous to the invalidity of contracts signed under coercion.
Today, nearly four years later, Odious Debt is now a reality in Greece, where Zoi Konstantopoulou, the head of the Greek parliament and a SYRIZA member, released two videos which have promptly gone viral, designed to promote the investigative parliamentary committee to look into the circumstances surrounding the signing of the country’s two bailout agreements that led Greece to implement its austerity measures.
This very interesting Zero Hedge article, courtesy of reader M.A., appeared on their website at 9:24 p.m. EDT Wednesday evening. This turn of events bears watching.
A billion dollars is a lot for Europe's poorest state of Moldova/Moldavia -- particularly when it disappears.
Anti-corruption prosecutors and American auditors have been searching the books for clues about the mysterious transactions, an embarrassment for the ex-Soviet state on track for EU membership.
The scandal has even threatened to destabilise the banking system in the country of 3.5 million people.
The case of the vanishing billion came to light when the Central Bank of Moldova discovered that three banks have given out loans worth a total of $1 billion, or 15 percent of the impoverished ex-Soviet state's GDP.
This AFP story, filed Chisinau, Moldova, appeared on the news.yahoo.com Internet site very early Wednesday morning---and I found it over on the gata.org Internet site.
Blaming Russia for everything has recently become a sport, Vladimir Putin’s spokesman said in response to a detailed CNN report that claimed to show how “Russian hackers” had hit White House systems in recent months.
“In regard to CNN’s sources, I don’t know who their sources are,” Putin’s spokesman Dmitry Peskov said. “We know that blaming everything on Russia has already turned into some sort of sport.”
“But what’s most important is that they aren’t looking for any submarines in the Potomac River like has been seen in other countries,” he added ironically, apparently referring to the Swedish hunt for an alleged Russian submarine in October 2014.
The Kremlin’s website, as well as the officiate site of the Russian President, face hundreds and even thousands of cyberattacks every day, said Putin’s spokesman, adding that there were attempts to crash Putin’s annual Q&A.
This is all getting so childish. This article appeared on the Russia Today website at 2:47 p.m. Moscow time on their Wednesday afternoon, which was 7:47 a.m. EDT. It's also courtesy of Roy Stephens.
Athens has not formally asked Moscow for financial help to pay off its debt, Russian President Putin said after he met with Prime Minister Alexis Tsipras in Moscow on Wednesday.
The Greek side did not contact us with any requests for help,” the Russian president said, when asked by a journalist whether Russia could help Greece with its debt burden.
Russia will not directly aid Athens to pay off its €316 billion debt, but Moscow could help out by buying Greek state assets in privatization sales, or in other investment projects, such as Turkish Stream, Putin said. In 2015 the Greek government plans to privatize €1.5 billion worth of assets.
This news story, was posted on the Russia Today website at 2:03 p.m. Moscow time yesterday afternoon---and once again I thank Roy Stephens for sending it our way.
The European Union has presented Vladimir Putin with an irresistible strategic prize, on a platter.
By insisting rigidly that Greece's radical-Left government repudiate its electoral pledges and submit to ritual fealty - even on demands of little economic merit, or that might be unwise in the particular anthropology of a post-Ottoman society - it has pushed the Greek premier into the arms of a revanchist Kremlin.
The visit of Alexis Tsipras to Moscow has been a festival of fraternity. On Wednesday he laid a wreath at the Tomb of the Unknown Soldier and spoke of the joint struggle against Fascism, and the unstated foe. The squalid subject of money was of course avoided. "Greece is not a beggar," he said.
"The visit could not have come at a better time,” said Mr Putin, purring like the cat who ate the cream.
This absolute must read commentary by Ambrose Evans-Pritchard was posted on the telegraph.co.uk Internet site at 9:56 p.m BST yesterday evening---and I thank Roy Stephens for sliding it into my in-box just after midnight Denver time this morning.
The European Union has restored sanctions on an Iranian bank and 32 shipping companies on Wednesday, days after an agreement on Tehran’s nuclear program was reached, according to the E.U.’s Official Journal.
The move comes despite Europe’s second-highest court order to end the asset freeze on Iranian institutions in January when it found fault with the legal grounds given by the E.U. However, the E.U. relisted Iran’s Bank Tejarat and 32 Iranian shipping firms using new legal grounds, a statement said Wednesday.
All those listed are regarded by E.U. as involved in nuclear or ballistic missile activities and providing support to the Government of Iran. However, eight firms were not put back on the list. The regulation should come into force on the date of publication, the statement said.
In its reasons for restoring the asset freeze on Bank Tejarat, the E.U. said that the bank “provided significant support to the Government of Iran by offering financial resources and financing services for oil and gas development projects.” It also added that Bank Tejarat could be identified as being involved in the “procurement of prohibited goods and technology.” The listed shipping firms are owned by Islamic Republic of Iran Shipping Lines (IRISL), which was previously put under sanctions.
This news item showed up on the Russia Today website at 4:04 p.m. Moscow time yesterday---and it's the final offering of the day from Roy Stephens.
President Obama admitted Tuesday in a broadcast interview that his nuclear agreement with Iran only delays Tehran from eventually acquiring a weapon, which could come immediately after Year 13 of the agreement -- leaving the problem for future presidents.
Obama made the comments about Tehran's so-called "breakout time" in an interview with NPR News that aired Tuesday morning. The president was attempting to answer the charge that the deal framework agreed upon by the U.S., Iran, and five other nations last week fails to eliminate the risk of Iran getting a nuclear weapon because it allows Tehran to keep enriching uranium.
Obama said that Iran would be capped for a decade at 300 kilograms of uranium -- not enough to convert to a stockpile of weapons-grade material.
"What is a more relevant fear would be that in Year 13, 14, 15, they have advanced centrifuges that enrich uranium fairly rapidly, and at that point, the breakout times would have shrunk almost down to zero," Obama said.
This very interesting news item put in an appearance on the foxnews.com Internet site on Tuesday---and it's definitely worth reading. It's the second article I 'borrowed' from yesterday's edition of the King Report.
The probability of a major escalation over the latest proxy Middle Eastern civil war just escalated substantially.
While it has been widely reported that the United States has been accelerating its weapons supply to the Saudi-led coalition striking rebels in Yemen as a sign of how foreign powers are deepening their involvement in the conflict, the biggest regional backer of the Houthi rebels, the state of Iran, had been mostly inert. Until this morning, when as AP reports, Iran dispatched a naval destroyer and another vessel Wednesday to waters near Yemen.
According to Iran's English-language state broadcaster Press TV, the official reason for the mini flotilla is a peacekeeping mission meant to deter piracy. It quoted Rear Adm. Habibollah Sayyari as saying the ships would be part of an anti-piracy campaign "safeguarding naval routes for vessels in the region." The real reason has nothing to do with pirates and everything to do with showing that there is another interest party in a conflict that until now has seen unilateral involvement mainly by the Saudi-led and U.S. supported Gulf Arab air campaign targeting the Yemeni rebels, known as Houthis.
This is another story courtesy of the Zero Hedge website. This one showed up there at 10:30 p.m. EDT yesterday evening---and it's the final contribution of the day from Dan Lazicki, for which I thank him on your behalf.
Iran has been accepted as a founding member of the China-led Asian Infrastructure Investment Bank (AIIB), Chinese state news agency Xinhua reported late on Tuesday.
The decision was made by existing members, including China, Britain, France, India and Italy, it added.
The United Arab Emirates has also been accepted, Xinhua said.
This brief Reuters article, filed from Beijing, showed up on their website just after midnight EDT on Wednesday morning---and I thank International Man senior editor Nick Giambruno for passing it around yesterday.
China will build a pipeline to bring natural gas from Iran to Pakistan to help address Pakistan’s acute energy shortage, under a deal to be signed during the Chinese president’s visit to Islamabad this month, Pakistani officials said.
The arrival of President Xi Jinping is expected to showcase China’s commitment to infrastructure development in ally Pakistan, at a time when few other countries are willing to make major investments in the cash-strapped, terrorism-plagued country.
The pipeline would amount to an early benefit for both Pakistan and Iran from the framework agreement reached earlier this month between Tehran and the U.S. and other world powers to prevent Iran from developing nuclear weapons. The U.S. had previously threatened Pakistan with sanctions if it went ahead with the project.
“We’re building it,” Pakistani Petroleum Minister Shahid Khaqan Abbasitold The Wall Street Journal. “The process has started.”
This isn't 'new' news, as the story has been around in one form or another for a month or more. The Wall Street Journal finally decided that it was worth their while at 1:47 p.m. EDT yesterday afternoon---and it's worth reading. It's the second article in a row from Nick Giambruno.
Unusual trading in the Australian dollar seconds ahead of each of the past three Reserve Bank of Australia policy outcomes could be a result of insider leaks, automated algorithmic trading during a market lull, or shrewd guesses.
The Australian Securities and Investments Commission confirmed on Tuesday it was investigating a spike in the Australian dollar seconds ahead of the RBA's April policy statement that confirmed that the cash rate would stay on hold at 2.25 per cent. An unchanged decision, all things being equal, would support a higher Australian dollar because of the strong expectation leading into the meeting that the RBA would cut, consistent with its easing bias.
It is not the first time the securities regulator has turned its focus on the RBA. Similar patterns where the Australian dollar has seemingly correctly preempted the RBA's decision were recorded seconds ahead of the February and March meetings, sparking fears the integrity of the central bank's protocols have been compromised.
I've posted something about this before, but it's been a while---and this version is much more recent. It appeared in the business section of The Sydney Morning Herald's website on Wednesday local time "down under"---and I found it embedded in a GATA release. The actual headline of the article reads "ASIC looks at RBA over currency trading anomaly".
The primary reasons mainstream gold analysts (and the media) don’t use Shanghai Gold Exchange (SGE) withdrawals as an indicator for Chinese wholesale gold demand, are – after a few others have been tested – Chinese Commodity Financing Deals (CCFD). Regarding gold these financing operations can be be conducted through round-tripping or gold leasing. Because of the structure of the Chinese gold market round-tripping gold flows are completely separated from the Chinese domestics gold market – the SGE system, and thus SGE withdrawals. There is no need to further investigate round tripping for our understanding of the Chinese domestic gold market.
Turning to gold leasing. The Chinese gold market is structured as such that gold leases are settled on the SGE; lessor and lessee come to an agreement after which gold is transferred from the lessor’s SGE Bullion Account to the lessee’s SGE Bullion Account. As I’ve stated previously lessees will only withdraw gold from the vaults of the SGE when the leased gold will be used in genuine gold business (The World Gold Council agreed with me in email correspondence), as a lessee that is merely seeking cheap funds has no interest in obtaining physical gold, he prefers to sell the leased gold on spot at the SGE for its proceeds. Therefor, leasing gold for acquiring cheap funds adds little distortion to total SGE withdrawals when used as wholesale gold demand indicator.
This very long commentary by Koos appeared on the bullionstar.com Internet site yesterday sometime---and I must admit that I haven't had time to read it all yet---and some of what I have read is certainly well above my pay grade.
Many gold bugs argue that governments and central banks are generally biased against gold. In some cases, like I described in my previous post, they are right. Certain countries, with India as the most notable example, have adopted hostile gold policies.
In this post, I will however show that the tide has turned with many central banks not only accumulating gold but understanding the importance gold. Many central bankers are well aware of the fragility of our current monetary system based on fractional reserves. Some have even been preparing decades for the demise of the fiat currency system and place an important role on gold in recapitalizing the system when it inevitably crashes in its current form.
This very interesting recap of what's gone on in gold over the last couple of decades is worth reading if you have the time---and it showed up on the bullionstar.com Internet site yesterday.
As economies age, debt builds up. Advanced economies – those with the highest borrowing ratings by the reputable agencies they developed – have it clogging up inside all their arteries. The Big Reset will finally become inevitable, as has been acknowledged by the IMF head Largarde, mentioning the year 2020. But what must an Armageddon debt reset necessarily involve? Few have spelled it out, not even in the famous book with the same title “The Big Reset” by Willem Middelkoop.
At the center of it all, wrapped by layers of secrecy and protected on the outside by purposefully confusing jargons is this concept of Reserves. Let’s understand it to mean ‘net worth’, ‘collateral’, or whatever a banking entity’s ‘really worth’, because what banking entities do, is to use this asset as backing to create instruments and derivatives, like loans, or even money, and expand the money supply. In long tradition, the ultimate reserve asset is of course gold. When the bank’s (or central bank’s) worthiness comes into doubt (like to many gold-deposit receipts flying around), people come for the ‘reserves’. If the reserves satisfy the claims, then it’s good.
In our fiat currency world since 1971, countries hold each other’s currencies as legitimate reserves. The country’s central bank can then go create the country’s own currency. The justification is simple: there is this unsaid assumption that when the worthiness of a country’s money becomes in doubt, one would not question the worthiness of the other currencies held as reserves, and, hence, as long as the country’s central bank can supply the ‘safe’ reserve currency to meet with the country’s currency being sold, all is well. As we approach it from this angle, we know to ask the question, “what then gives the other reserve currencies their value?” Note, this process enables country A to expand the money aggregate in foreign country B also, if only country B is happy to have currency A in its reserve to create some more currency B at will.
Money creation is a happy process. Everyone likes it, from businesses to banks to governments to the everyday wage earner who is happier even if his salary only rises by the same amount as inflation. And this is so even for our debt-money system, in which money is very much ‘loaned into existence’ as a debt is created. The temptation is strong, and this is fundamental.
This very interesting guest commentary by "LK in Hong Kong" appeared on the bullionstar.com website yesterday as well. It's also worth reading.
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The previous silver rally that started in late December and ran until late January measured about $2.80; less than the two previous $3 rallies and the $5 rally before that in mid-2013. The current silver rally that started in mid-March (and which may be over already) only managed a $1.50 gain before stumbling back below its 50 day moving average. I’m not saying the rally is over yet because I simply do not know; but it may turn out to be over if recent price declines take hold and the commercials can induce sufficient technical fund selling.
Over [the last] four years we've had a wide variety of news flows and financial market developments. It’s almost impossible to reconcile the clear price pattern of diminishing price rallies in silver and gold with the actual news flows. Even the strength in the U.S. dollar can’t be used to trace the continuing pattern of diminished price rallies in gold and silver; as the U.S. dollar index was largely unchanged thru mid-2014 and has only embarked on a dramatic rally over the past nine months, rising from 80 to nearly 100. My point is that news developments and financial events appear to have had little or no bearing on the easily observed contracting nature of precious metals rallies.
Certainly, something accounts for the visible price pattern and if it isn’t the positioning of futures contracts on the COMEX between commercials and technical funds, then I haven’t a clue as to what another explanation could be. Granted, there have been some surprises along the way, such as JPMorgan switching from being the largest COMEX gold short to its biggest long (for a while)---and the beating taken by some smaller silver commercials at the hands of the technical funds last fall. But by and large, the diminished rallies seem to go hand and glove with the degree of commercial selling on emerging rallies. - Silver analyst Ted Butler: 08 April 2015
It appears that "da boyz" are once again hard at work to get the Managed Money loaded up on the short side in all four precious metals. Along with that comes lower prices. They start the ball rolling by selling a little, knowing what the technical funds will do in advance---and it becomes self-fulfilling prophecy, as the Managed Money sells longs and goes short, which is what their black boxes tell them to do---then down goes the price in response to these actions.
We're back below the 50-day moving averages in both gold and silver once again, so there's nothing stopping the powers-that-be if they wish to repeat the sell-off that began in late January and continued until mid March. And it's a given that the low price ticks they set this time could be lower than the ones we saw three weeks ago. I urge you to reread Ted Butler's quote above.
Here are the 6-month charts for both gold and silver courtesy of stockcharts.com.
But the COT internal structure is still pretty bullish in gold---and these prices could turn on a dime if that's what JPMorgan et al decide. They may decide to load the technical funds maximum long and get all the mice in the trap before they reach for the lever again.
But whatever they decide to do, either up or down, they probably won't keep us in suspense for long---and at the moment, the signs are pretty ominous.
As I type this paragraph, the London open is just under ten minutes away. All four precious metals came under continued selling pressure during Far East trading on their Thursday---and only palladium is unchanged at the moment. Gold, silver and platinum are just off their current low ticks which came minutes before 2 p.m. Hong Kong time.
Gold and silver volumes are getting up there already---and a goodly chunk of this is the brain dead technical funds in the Managed Money category puking up longs and going short as sell stops get hit---as JPMorgan et al engineer lower prices. At the moment, gold's net volume is closing in on 21,000 contracts---and silver's net volume is just over 8,000 contracts. The dollar index has been moving quietly higher in fits and starts---and is up 17 basis points as of this writing.
And to add to what Ted said in his quote above, here is one more paragraph on the same issue: "I can’t know if the current rally in silver (and gold) has been capped at no more than the $1.50 rally seen in silver ($80 in gold) and if we’re about to embark on another sell-off designed expressly to generate technical fund selling. If so, it will be the weakest silver rally to date by far---and underscores my premise about contracting rallies. I had indicated the COMEX market structure in silver was neutral at best, but gold’s was in better shape. That certainly would account for the relative weakness in silver compared to gold this week, but I’m always hesitant to read too much into short term pricing."
And as I send today's column out the door at 5:18 a.m. EDT, I see that precious metal prices have done next to nothing in the last two and a half hours. Because of that, volumes have moderated by quite a bit.
Gold's net volume at the moment is just over 27,000 contracts---and silver's net volume is just over 9,700 contracts. There's nothing going on at the moment. And as I write this, I note that the dollar index continues to chop very quietly higher---and is currently up 33 basis points.
Although it's very quiet for now, I doubt that this state of affairs will continue as the Thursday session unfolds, particularly once we get past the noon silver fix in London.
I have no idea which direction prices will head today, so absolutely nothing will surprise me when I check the charts later this morning.
I'll be hoping for the best, but expecting the worst.
See you here tomorrow.