The gold price opened in positive territory at 6 p.m. EST in New York on Sunday night---and then, starting at 9 a.m. Hong Kong time on their Monday morning, the price jumped through the $1,330 mark only to run into a wall of selling that prevented it from rallying any further. Volume was well over 20,000 contracts by lunchtime in Hong Kong---and well over 30,000 contracts by the London open. It was obvious that JPMorgan et al were waiting for the Sunday night open of the Globex trading system just as eagerly as I was.
The low after the smack-down in Hong Kong, such as it was, came shortly after trading began in London. The price developed a positive bias after that, but never broke above the $1,330 price mark again---and with New York closed for the day, Globex trading ended at 1:15 p.m. EST.
The high tick at the price spike in Hong Kong trading was recorded at $1,332.40 in the April contract.
Gold 'closed' yesterday at the $1,329.00 spot mark---and up $9.90 from Friday's close. Gross volume was around 57,000 contracts, with well over half of that occurred before the London open.
It was almost the same story in silver during the Hong Kong trading session---and at the high tick, silver was up almost 50 cents from Friday's close, but once London opened, silver got sold back down to within a dime of Friday's close, only to gain 20 cents shortly before 1 p.m. GMT---and then as the price headed back towards the $22 spot market, it got tapped back down at precisely 11:30 a.m. EST in Globex trading.
The CME Group recorded the high tick on Monday morning in Hong Kong at $21.97 in the March contract.
Silver closed at $21.84 on Monday---up 33.5 cents from Friday's close. Net volume was a bit under 25,000 contracts and, like gold, half of it was used to snuff out the 9 a.m. rally in Hong Kong.
Silver, like gold, would have finished materially higher if allowed to do so, which it obviously wasn't.
Platinum and palladium had tiny rallies in the early going on Sunday night in New York. Both managed to finish in positive territory, but only just. It's a good bet that the volume was very light---and the market very illiquid. Here are the charts.
The dollar index closed late on Friday afternoon in New York at 80.14---and began to head lower the moment that trading began in New York on Sunday evening. The low of 79.95 which, just glancing at the 3-day chart below, occurred around 9 a.m. Hong Kong time, appeared to come at the precise moment when gold and silver price took off to the upside.
The subsequent rally in the dollar index had it back to unchanged by shortly after 12 o'clock noon in London---and from there it proceeded to chop sideways in a very tight range for the remainder of the Monday session. The index closed basically flat at 80.13. Here's the 3-day chart.
With the equity markets in New York closed for President's Day on Monday, there were no HUI or Silver Sentiment Index charts. Canada's markets were closed for Family Day.
The real reason for a column today is to deal with the backlog of stories accumulated over the weekend---and I do have quite a few.
Soros Fund Management has doubled up a bet that the S&P 500 /quotes/zigman/3870025/realtime SPX is headed for a fall.
Within Friday’s 13F filings news was the revelation that the firm, founded by legendary investor George Soros, increased a put position on the S&P 500 ETF, /quotes/zigman/714403/delayed /quotes/nls/spy SPY, by a whopping 154% in the fourth quarter, compared with the third. (A put or short position basically gives the owner the right to sell a security at a set price for a limited time, and in making such a bet, an investor generally believes the security is going to decline.)
The value of that holding, the biggest position in the fund, has risen to $1.3 billion from around $470 million. It now makes up a 11.13% chunk of all reported holdings. It had been cut to 5.14% in the third quarter, from 13.54% in the second quarter, which itself marked another dramatic lift on the bearish call.
This news item appeared on the marketwatch.com Internet site early yesterday morning---and today's first story is courtesy of Joe Kahan.
I’ve been observing the Wall Street machine in action since my days at Morgan Stanley years ago. The truth is, Wall Street really doesn’t need a sophisticated high-tech “Infinity Machine.” They’re already in a Snowden-style low-tech “Singularity,” “accelerating returns” skimming money from 95 million Main Street investors.
Remember, Wall Street has only one goal, make insiders super rich, and shareholders rich. The public interest and the rest of the world are never part of their competitive algorithms. Never.
They achieve their goal with the basic ideas of behavioral-finance geniuses like Richard Thaler, by keeping investors in the dark, dependent, irrational and uninformed. Very simple. Here are 10 of Wall Street’s high-tech/low-tech weapons used by their psychological/neuro-scientific/behavioral finance cyber-warriors to control their casinos.
This commentary by columnist Paul Farrell was posted on the marketwatch.com website on Monday morning EST---and it's courtesy of reader Kenneth Beckman.
Venezuela’s President Nicolas Maduro announced on Sunday that he had ordered the expulsion of three US consular officials who he accused of conspiring against his government.
Maduro did not identify the officials, but said the Venezuelan Foreign Ministry would give more details later.
"Go and do your (coup) plotting in Washington!" the president roared in a televised address, charging that the US diplomats had met with students involved in anti-government protests.
This very short story was posted on the france24.com Internet site yesterday sometime---and it's worth reading. My thanks go out to Roy Stephens for his first offering of the day.
Britain's fraud agency has started criminal proceedings against three former bankers of Britain's Barclays Plc for the alleged manipulation of Libor interest rates, it said on Monday.
The Serious Fraud Office (SFO) said criminal proceedings had started against Peter Charles Johnson, Jonathan James Mathew and Stylianos Contogoulas, alleging they conspired to defraud between June 2005 and August 2007.
Barclays paid $450 million in July 2012 to settle charges it had manipulated Libor interest rates, and several more banks have followed and regulators continue to investigate the scandal.
The above three paragraphs is all there is to this Reuters story that was filed from London early yesterday morning EST---and it's courtesy of reader M.A.
German Chancellor Angela Merkel is proposing building up a European communications network to help improve data protection.
It would avoid e-mails and other data automatically passing through the United States.
In her weekly podcast, she said she would raise the issue on Wednesday with French President Francois Hollande.
Revelations of mass surveillance by the US National Security Agency (NSA) have prompted huge concern in Europe.
This article appeared on the bbc.co.uk Internet site on Saturday sometime---and I thank South African reader B.V. for sharing it with us. A similar story showed up on The New York Times website on Sunday. It's headlined Merkel Backs Plan to Keep European Data in Europe---and it's courtesy of Roy Stephens.
While the propaganda surrounding Europe's "recovery" has reached deafening levels, what is going on behind the scenes is quite the opposite, and in the latest example that Europe is increasingly formalizing a regime of implicit capital controls, we learn that Italy has just ordered banks to withhold a 20% tax on all inbound wire transfers: a decree which on to of everything will apply retroactively to February 1. As Il Sole reports, "the deductions will be automatic (unless prior request for exclusion), and then it will be up to the taxpayer to prove that the money is not in the nature of compensation "income." In other words, as of this moment, but really starting two weeks ago, all Italians are money launderers unless proven innocent.
Some more details on Italy's latest decision to limit capital flows into the country, Google translated---
---the collection is the result of the decision to consider any transfer from abroad and directed to an individual Italian, as a component of taxable income, subject to proof to the contrary, which must be date the taxpayer receives the sum on your account. However, the first payments to the Treasury by intermediaries (mainly banks) will be performed July 16, so that the deemed payment accrued from February 1 until June 30 (and therefore set aside and with interest). Next, you will pay the withholding every 16th of the month following the effective perception of the sum. In fact, all taxpayers who receive a transfer from abroad on their personal account - and not professional or business - will be applied to the deduction, as an advance which will then be computed in the annual tax return.
This news item showed up on the Zero Hedge website late Sunday morning EST---and I thank reader M.A. for his second offering in today's column.
Turkey's finance minister knows his country is in the cross-hairs as the US and China tighten the liquidity spigot, viewed by many as the most vulnerable of the big emerging market states, and potentially the detonator of a broader global crisis.
Mehmet Şimşek is a poacher turned game-keeper. He used to work for Merrill Lynch and is a well-known face in London. Indeed, he is a British citizen.
"We are aware it's going to be tough," he said, admitting that the government woke up to a "changed world" last year as US Federal Reserve turned hawkish.
"We are not going to fight the markets because we know we can't win. We'll let the adjustment take place, as it already has with the currency," he said.
This Ambrose Evans-Pritchard commentary was posted on the telegraph.co.uk Internet site very early yesterday morning GMT---and it's another contribution from Roy Stephens.
As we showed over the weekend, it is abundantly clear that for all the talk of reform, Chinese authorities have found the gap between words and deeds uncrossable. First, Chinese authorities bailed out the relatively small CEG#1 Trust (for fear of contagion); second, the PBOC injects CNY 375 bn into short-term repo to save banks from a liquidity crisis at year-end; third, total social financing rose by the largest amount on record in January (despite all the talk of deleveraging following the Plenum); and now, fourth, thanks to a CNY 2bn loan (to an entirely insolvent coal company), Chinese authorities have bailed out a 2nd wealth-management product - this time even smaller.
We noted the "technical default" of Jilin Trust last week, and despite its de minimus size, China Development Bank loaned CNY 2bn to the verge-of-bankruptcy Liansheng coal company, and thus bailed out investors in the trust - piling on the moral hazard.
The Jilin Trust default, as we noted last week, was the second notable 'technical' default among Chinese wealth management products recently and caused consternation among investors.
This longish Zero Hedge piece from yesterday was posted on their Internet site yesterday afternoon EST---and it's the first contribution of the day from Manitoba reader Ulrike Marx. It's worth skimming.
1. Robert Fitzwilson: "This Will Shock the Markets and Send Gold Soaring in 2014". 2. Keith Barron: "Gold and Silver Surge---and a Frightening Look Into Our Future". 3. William Kaye: "The Vampire Squid, JP Morgan, Dead Bankers and Criminal Acts". 4. Rick Rule: "Gold Shorts to See a Massive Squeeze as They Fail to Deliver". 5. John Hathaway: "Strap Yourself in For COMEX Default and Gold Surge". 6. Tom Fitzpatrick: "Gold and Silver to Torture Shorts as Historic Advances Continue". 7. John Embry: "U.S. Moving in Disastrous Direction That Ensures Total Collapse". 8. Richard Russell: "World in a Depression as the U.S. Lies to Its People". 9. The first audio interview is with Rick Rule---and the second audio interview is with Art Cashin.
[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests, to them, and not to me. Thank you. - Ed]
The London Metal Exchange (LME) will expand direct access to data feeds from its electronic trading system, aiming to boost computer-driven trading, the exchange said on Monday.
High-frequency trading on financial markets has spurred controversy and has been blamed for volatile market moves, such as the plunge in shares on Wall Street in 2010, known as the "flash crash". Supporters of such trading say it adds liquidity to markets.
The European Union agreed last month on new curbs on high-speed trading to be implemented by the end of 2016.
Starting on March 24, clients of LME members will be able to plug into a data feed from the LMEselect electronic trading system instead of having to go through third parties, a statement said.
This Reuters story, filed from London, was posted on their Internet site early yesterday morning EST---and it's another offering from Ulrike Marx.
Gold researcher and GATA consultant Koos Jansen muses about U.S. State Department minutes from 1971 showing Secretary of State Henry Kissinger negotiating the devaluation of the dollar with French President Georges Pompidou, with much of the conversation involving the revaluation of gold. Some market analysts believe that Western governments no longer have confidential discussions about rigging the currency markets, dismissing suspicions of that kind of thing as "conspiracy theory." But many State Department records, including those cited tonight by Jansen, show that it is all conspiracy fact.
Jansen's commentary is headlined "The End of Bretton Woods and the Race to the Bottom, 1971" and it's posted at Jansen's Internet site, ingoldwetrust.ch. I thank Chris Powell for wordsmithing all of the above.
China’s “unfolding credit crunch” is having an unforeseen and dramatic impact on gold prices as investors urgently stock up on the precious metal as a form of financial protection against a sharp correction in the world’s second largest economy.
This is the main reason why gold prices have unexpectedly shot up more than 10pc to breach $1,300 (£776) an ounce for the first time since November against the prevailing forecasts for weaker demand made by many industry experts at the beginning of the year, according to Adrian Ash, head of research at gold trading platform BullionVault.com.
Rebounding is part of the reason for the rise, said Ash, adding: “Gold lost 30pc and silver nearly 40pc last year. The world economy will struggle to deliver all the good news priced in by that crash. But China’s unfolding credit-crunch looks central right now.”
Well, dear reader, I know you're sick of hearing this, but JPMorgan et al decide when---and to what level---prices rise. Because if they weren't riding shotgun over the precious metal market, they would be sky high by now---and the rest of the world's economic, financial and monetary systems would be a smoulder ruin. This piece showed up on The Telegraph's website on Sunday evening GMT---and I thank Ulrike Marx for sending it along.
Hedge funds raised bullish gold wagers to a three-month high as signs of slowing U.S. economic growth spurred demand for haven assets. Billionaire John Paulson maintained his bullion holdings last quarter.
The net-long position climbed 17 percent to 69,291 futures and options in the week ended Feb. 11, U.S. Commodity Futures Trading Commission data show. Long wagers rose 8.8 percent, the most since March. Net-bullish holdings across 18 U.S.-traded commodities rose 18 percent to 1.07 million contracts, the highest since October 2012, led by silver and coffee.
Investors’ return to gold after the bear market in 2013 is driving prices to the longest rally since 2011. U.S. factory output unexpectedly fell in January, and emerging-market equities and currencies weakened. Paulson, the biggest owner of the largest exchange-traded product backed by the metal, left his holdings unchanged in the fourth quarter, a government filing showed. Goldman Sachs Group Inc. and Barclays Plc say the rebound will falter.
This Bloomberg story, filed from New York, was posted on their Internet site sometime yesterday---and I thank reader Ken Hurt for finding it for us.
MineWeb's Lawrence Williams notes the attack by CPM Group's Jeffrey Christian on Sprott Asset Management's John Embry, made Friday on Business News Network in Canada in response to Embry's expression of suspicion on BNN that impairment of the German Bundesbank's gold at the Federal Reserve Bank of New York is behind the slow pace of the Bundesbank's gold repatriation.
In his interview on BNN which runs about 10 minutes, Christian expresses confidence that nothing is amiss with Germany's gold and that questions have been raised about it only by people who are trying to scare investors into buying gold.
Certainly, as always, people in the gold sector are "talking their book" here. Embry and the Sprott people are advocates of and investors in the monetary metals, while Christian has described his company as having most central banks as clients, and of course most central banks, even central banks in gold-producing countries, are enemies of gold, gold being an independent and neutral form of money that competes with central bank money and restricts central bank power.
This GATA release from yesterday is a must read---and has lot of embedded links---including the link to Lawrie Williams' commentary. But the first person through the door with the Williams essay at mineweb.com was Ulrike Marx, for which I thank her.
My jaw dropped lower and lower last Thursday as I perused quarterly reports from some of the world's largest gold producers. Many of the results were shockingly bad.
Impairment charges, reserve write-downs, earnings losses, and dividend cuts—no company escaped the fallout from lower gold prices. Some reported bad news on every aspect of their businesses.
But here's the most striking thing: The market didn't care.
It's almost paradoxical—gold stocks rose heartily that day, even those reporting the worst results. GDX (Gold Miners ETF), which consists solely of producers, was up 4.4%. That's not a lack of concern we're seeing; it's outright, almost reckless bullishness.
This commentary by Jeff Clark was posted on the Casey Research website yesterday---and is part of the contents of yesterday's edition of the Casey Daily Dispatch.
This 40-page "Things that make you go hmmm..." commentary by Grant was posted in pdf format on the mauldineconomics.com Internet site yesterday. The precious metals info starts on page 6---and continues through page 18. This is the second offering of the day from Ken Hurt, for which I thank him. It's a large file, so be patient on the download.
Interview with Jim Rickards on bail-ins, market closures, and a detailed look at Yellen, the Fed playbook, and what to look for ahead in terms of QE. He also covers equities and gold views for 2014.
I had to decide whether or not to put this 35-minute interview [from February 11] in the regular stories section, or in the precious metal section---and this it's the latter that won out. I hope you have the time to listen to everything he has to say, but the gold-related stuff starts at, or just after, the 26-minute mark---and that part is definitely worth listening to. I thank Harold Jacobsen for digging this interview up for us.
Gold jewellery exports continued to dive in January, the tenth consecutive monthly fall, with outbound shipments dropping 23 per cent to Rs 2,993 crore.
Besides, gold jewellery exports from April to January fell 44.42 per cent to Rs 33,178 crore from Rs 59,693 crore from the corresponding period of the previous fiscal.
This very short story was posted on the Economic Times of India website mid-Monday morning India Standard Time---and once again I thank Ulrike Marx for digging it up for us. It's also the first of five in a row from her.
India will look into relaxing gold imports curbs, but won't let its current account deficit (CAD) balloon, Finance Minister P. Chidambaram said on Monday.
"There are pros and cons (on easing gold import curbs), we will weigh them carefully, the goal is to contain the CAD at a level where it can be fully and safely financed," Chidambaram told reporters after presenting the interim budget in parliament earlier.
"The operative word is, we will look into it," he said.
This Reuters story, filed from New Delhi, was posted on their website late yesterday afternoon IST---and I thank Ulrike Marx sending it our way.
India’s gold demand remained buoyant in 2013 and rose by 13 per cent to 975 tonnes compared to 2012 despite the Government putting in several restrictions to curb imports, according to a World Gold Council report.
Gold demand in the country was 864 tonnes during 2012, according to data given in the WGC ‘Gold Demand Trends 2013’ report.
“India’s gold demand was up 13 per cent in 2013, compared to 2012. Demand in the second half was lower due to the effect of the supply curbs introduced in that period, but, equally, it was due to households having met a large part of their annual gold requirements in the first half, using the price drop in April as a buying opportunity,” WGC Managing Director India Somasundaram PR told PTI here.
This very interesting news item appeared on thehindubusinessline.com website on their Tuesday...and once again my thanks go out to Ulrike Marx for bringing it to our attention.
The world’s fresh gold supply fell in 2013 as continued shrinkage in recycling activity modestly outweighed growth in mine production, the World Gold Council reported Tuesday.
The Gold Council report listed total supply last year at 4,339.9 metric tons, down from 4,415.2 tons the year before.
The amount of recycled gold fell to 1,371.4 tons from 1,590.8 in 2012. Mine production climbed to 3,018.6 tons in 2013 from 2,864.10 the year before.
The annual supply of recycled gold declined for the sixth consecutive year to the lowest level since 2008, the WGC said.
I don't find this story, posted on the kitco.com website in the wee hours of this morning EST, particularly surprising---and it's worth reading if you have the time. Once again I thank Ulrike Marx for sending it our way.
While 880.8 tonnes of gold flowed out of exchange traded funds in 2013, according to the World Gold Council's Gold Demand Trends report for the fourth quarter and full year 2013, three quarters of these outflows were absorbed by consumer demand.
This, the WGC says, marks the largest year-on-year increase in consumer demand for the yellow metal since its records began and justifies it calling 2013, the year of the consumer. But, it says, it also reflects a distinct polarisation in sentiment between those institutional funds selling out of ETFs and consumers buying jewellery, bars and coins.
Indeed, it says, "no review of 2013 would be complete without a mention of the unprecedented flow of gold from western vaults to eastern markets, via refiners in North America, Switzerland, and Dubai."
This must read gold-related news item showed up on the mineweb.com Internet site very early this morning. This story is the fifth of five in a row from Ulrike Marx---and her final offering in today's column.
I believe that sudden and massive losses and margin calls of more than $2.5 billion on tens of thousands of short COMEX gold and silver contracts were the specific triggers that killed Bear Stearns. Let’s face it – Bear was so leveraged that a sudden demand of more than $2.5 billion in immediate payment for any reason could have put them under. Bear Stearns’ excessive gold and silver shorts on the COMEX are the most plausible reason for the sudden demise. Bear Stearns did fail and due to a sudden cash crunch was acquired by JPMorgan for a fraction of what it was worth two months earlier. Bear Stearns was the largest short in COMEX gold and silver at the time. The day of Bear Stearns’ demise coincides precisely with the day of the historic high price points in gold and silver. That is also the same day the biggest COMEX gold and silver short would experience maximum loss and a cumulative demand for upwards of $2.5 billion in cash deposits for margin. It was no coincidence the music stopped for Bear Stearns that same day.
Gold prices rose from under $800 in mid-December 2007 to $1,000 in mid-March 2008, a gain of more than $200. Silver prices rose from under $14 in mid-December to $21 when Bear Stearns failed on March 17, 2008. That was a gain of $7. This was the highest price for silver and close to the highest price of gold since 1980. Obviously, a $200 rise in the price of gold and a $7 rise in the price of silver is not good if you are the biggest gold and silver short.
I've been posting quotes out of Ted's bi-weekly commentaries on this incredible story since he broached the issue with his paying subscribers last Wednesday. Ted has decided, and rightly so, that this issue should be in the public domain. This falls into the absolute must read category...and the two embedded charts tell all.
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A $200 adverse price move on 75,000 COMEX gold contracts would result in a mark-to-market loss and margin call of $1.5 billion. A $7 adverse price move on 35,000 COMEX silver contracts would result in a mark to market loss and margin call of $1.2 billion. Bear Stearns had to come up with $2.7 billion because gold and silver prices rose sharply in the first quarter of 2008 and the company bet the wrong way. That it couldn’t come up with all the margin money for the losses in gold and silver, is the most visible reason it went under. - Silver analyst Ted Butler: 17 February 2014
With the the U.S markets closed on Monday for their holiday, the trading volume was very quiet. But it was more than obvious from what happened before lunch Hong Kong time on their Monday, that "da boyz" were not asleep at the switch. They, or their proxies, were ever vigilant, as they did whatever it took to kill the silver and gold rallies in the Far East.
I posted the 6-month gold and silver charts in The Wrap section of Saturday's column, so I shan't post them again. But what they show is that both metals have now broken clear of their respective 200-day moving averages---and it's a pretty good bet that "da boyz" are trying to prevent prices from doing what they want to, which is blast significantly higher---so they showed up on Monday morning in Hong Kong with all guns blazing as that event began to unfold.
And as I put the finishing touches on today's column, I see that the not-for-profit sellers have been at it again in Far East trading on their Tuesday morning. Both gold and silver ticked higher right out of the gate at 6 p.m. on Monday evening EST---and less that 15 minutes later, the HFT boyz showed up. The lows [for the moment] in all four precious metals came shortly after 2 p.m. Hong Kong time---and have rallied a bit from there. That has continued for about the first hour of trading in London---and it will be interesting to see how the precious metals perform, or are allowed to perform, as the Tuesday trading session unfolds in both London and New York---especially New York.
Volumes [net of Monday's volume] as of 3:55 a.m. EST are huge already, which is not surprising considering the price action---and the dollar index isn't doing much, not that it matters, as the precious metal price action has nothing to do with the dollar index, at least not at the moment.
Now that we know that JPMorgan has received carte blanche approval to do what they wish within the precious metal market, you should be looking at these markets with new eyes---as all should be clear to you now. I know that it was a revelation to me---and it puts everything in perfect perspective, as all the puzzle pieces from March 2008 onwards, now fit together perfectly. It's obvious that Bart Chilton knew exactly what you know now, but was forbidden [probably under the pain of death] from saying anything about it. Well, the secret is out.
The one question remaining would be whether or not this immunity from prosecution for JPMorgan will mean the continuation of the price management scheme forever. From what I've seen in the COT Reports over the last couple of weeks---and JPMorgan's actions in the last twelve month or so---I'd say they're heading for exits, but at their own pace. This coming Friday's COT Report should tell us a lot.
As I hit the send button on today's efforts, I note that not much has happened in the hour or so since I commented on the price action last. Gold is down 12 bucks---and silver is down 30 cents. Both metals have 'given back' all their gains from Monday, plus a bit more. Volumes have cooled off quite a bit in the last hour or so---and the dollar index is flat.
But minutes after I wrote the above paragraph, the HFT boyz appeared---and this is what the Kitco gold and silver charts look like as of 5:20 a.m. EST.
As I said further up in The Wrap, the rest of Tuesday trading could prove interesting---and that has already turned out to be the case.
I hope your day goes well---and I'll see you here tomorrow.