24 July 2015 — Friday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
Gold rallied in fits and starts in Far East and very early London trading before “da boyz” showed up around 9:30 a.m. BST. It was all down hill until 4 p.m. EDT—and it rallied a dollar or so from there into the close of electronic trading.
The high and low were recorded by the CME Group as $1,104.90 and $1,086.10 in the August contract.
Gold finished the Thursday trading session at $1,090.40 spot, down $3.60 from Wednesday’s close. Gross volume was in the 270,000 contract range, but one the roll-overs out of the August contract were subtracted it, net volume checked in at a bit over 118,000 contracts.
Brad Robertson was kind enough to send us the 5-minute tick gold chart—and you can see the activity levels at the rally in Far East trading on their Thursday morning, along with the volume at the rally in early London trading—and then the big volume that’s always present while New York is open. Midnight Denver time is the vertical gray line on this chart—and you have to add two hours for EDT—and the ‘click to enlarge‘ feature really helps here.
The trading pattern in silver was very similar to gold’s, except the low tick came at 3:30 p.m. EDT instead of 4 p.m. It rallied about a dime off that low into the close.
The high and lows in this precious metal were reported as $14.96 and $14.545 in the September contract.
Silver finished the day at $14.66 spot, down 13.5 cents from Wednesday’s close. Net volume was pretty quiet at only 26,000 contracts.
It was the same for platinum and palladium, with their low ticks coming at 4 p.m. EDT, the same as gold. Platinum closed at $976 spot, down 3 bucks from Wednesday—and palladium finished the Thursday session at $615 spot, down 10 dollars on the day. Here are the charts.
The dollar index closed late on Wednesday afternoon in New York at 97.45–and then it dropped to around 97.27 around 10 a.m. in Hong Kong trading. The rally from that point made it back to unchange about fifteen minutes before the London open—and then it crashed down to the 97.00 level. At that point ‘not-so-gentle hands’ showed up and spent the rest of the Thursday session keeping the index above the 97.00 mark. It finished the day at 97.21—down 24 basis points from Wednesday.
Here’s the 6-month dollar index so you can keep the ‘big picture’ in mind.
The gold stocks opened in positive territory, but didn’t stay there for long—and spend most of the day heading lower, but did manage to close just off their low tick, as the HUI got clocked for another 4.30 percent.
Ditto for the silver stocks, as Nick’s Intraday Silver Sentiment Index closed lower by 5.49 percent.
I would guess that yesterday’s huge declines in the equities had a lot to do with mutual fund redemptions more than anything else. But with the way things are going right now, I know that it’s no consolation.
The CME Daily Delivery Report showed that zero gold and 91 silver contracts were posted for delivery within the COMEX-approved depositories on Monday. The only short/issuer of note was JPMorgan out of its client account with 75 contracts—and the only long/stopper worth mentioning was ABN Amro with 66 contracts for its client 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 actually rose by 35 contracts to 154 still open. And for the fourth time [at least] this month, open interest in silver rose as well—this time by 94 contracts, a very decent amount, as silver o.i. is now back up to 246 contracts. I will speculate that those same contracts are the ones that were mentioned in the previous paragraph as being set for delivery on Monday.
There was another withdrawal from GLD yesterday. This time an authorized participant took out 86,256 troy ounces. And as of 6:29 p.m. EDT, there were no reported changes in SLV. Once again the question that begs an answer is who is buying all the share in SLV that John Q. Public and the mutual/hedge funds are selling?
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 this is what he had to report.
“Analysis of the 22 July 2015 bar list, and comparison to the previous week’s list: 1,241,598.2 troy ounces were added (all to Brinks London), no bars were removed or had serial number changes.”
“The bars added were from: Yunnan Copper (0.3M oz), Kazakhmys (0.2M oz) and 7 others.”
“As of the time that the bar list was produced, it was overallocated 161.0 oz. All daily changes are reflected on the bar list.”
There was another sales report from the U.S. Mint as well. They sold another 8,000 troy ounces of gold eagles—1,500 one-ounce 24K gold buffaloes—but no silver eagles. There’s a story out on the Internet that says that mint will start selling silver eagles again on Monday, July 27. I have the story about this in the Critical Reads section, but if you can wait, the link is here.
There was big movement in gold on Wednesday, with most of it kilobar form, as the COMEX-approved depositories reported receiving 192,803 troy ounces—and shipped out 67,560 troy ounces. Of the amount received, a very chunky 159,849.800 troy ounces ended up in JPMorgan’s vault. That works out to precisely 4,972 kilobars, based on the 32.150 conversion factory they use in the COMEX depositories. The Manfra, Tordella & Brookes, Inc. depository received 25 kilobars—and Canada’s Scotiabank received another 1,000 kilobars, the second such shipment this week. The small withdrawal from the Delaware depository was in kilobar form as well. The old 100 oz good delivery bar of 0.999+ fineness is obviously on its way out the door at some point in the future—and 0.999+ fineness silver will soon follow I would think. The link to that action is here—and it’s worth a look.
There wasn’t a lot of movement in silver, as 106,929 troy ounces were received—and only 15,817 troy ounces were shipped out the door. The link to that activity is here.
Over at the COMEX-approved gold kilobar warehouses in Hong Kong on their Wednesday, the took in 2,300 kilobars—and shipped out only 127. The link to that activity, in troy ounces, is here.
I mentioned in yesterday’s column that if I could get a full transcript of the Seth Lipsky editorial that appeared in The Wall Street Journal on Wednesday, that I would post the whole thing. Well, Chris Powell, sent it to me, but there’s no link, so here it is in full below.
July 23 marks the 50th anniversary of the Coinage Act of 1965, which stripped U.S. coins of silver and made legal tender out of base metal slugs. It’s an anniversary that comes at an apt time, as Congress considers monetary reform.
This discussion has been quietly taking place in recent months, in the Senate Banking and House Financial Services committees. Rep. Kevin Brady (R., Texas), vice chairman of the Joint Economic Committee, recently reintroduced a proposal for a Centennial Monetary Commission as the Federal Reserve starts its second century.
The anniversary of the 1965 Coinage Act is a reminder of why reform is needed. Speaking from the White House Rose Garden, President Lyndon B. Johnson called the law he signed a “very rare and historic occasion.” It certainly was; it superseded the coinage act drafted by Alexander Hamilton and passed by Congress in 1792.
The original coinage act established the United States Mint and declared the dollar as the “money of account” for the new republic. It defined the dollar as 3711/4 grains of silver or the equivalent in gold; the penalty for debasing coins struck under the law was death.
When LBJ signed the 1965 act, the value of a dollar was almost exactly the same as it had been in 1792—0.77 ounces of silver. Despite some downs and ups, on average it had been remarkably steady for the long span.
That was because since Hamilton’s day, as the president noted, “our coinage of dimes, and quarters, and half dollars, and dollars have contained 90% silver.” Not any more: The new dimes and quarters would “contain no silver.” Instead they would be “composites, with faces of the same alloy used in our 5-cent piece that is bonded to a core of pure copper.” The new half dollar would have 80% silver on the outside and 19% silver inside.
In the face of a “worldwide shortage of silver,” LBJ said, “the only really prudent course was to reduce our dependence upon silver for making our coins.” Then the president made claims that look, in light of history, laughable.
“Some have asked whether our silver coins will disappear.” He denied it; silver coins would “very definitely” not disappear or “even become rarities.”
The president estimated that the more than 12 billion silver dimes and quarters and half dollars in circulation would “be used side-by-side with our new coins.” He also warned against hoarding silver: “Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin.”
This was a vain boast. The value of the dollar started sinking after the 1965 coinage act, and by 1980 the dollar—so long valued at 0.77 ounces of silver—plunged to 0.02 ounces of silver. Today it is valued at 0.06 ounces of silver.
The pre-1965 silver coins have mostly disappeared from circulation. Misers who try to spend silver or gold coins they have hoarded are subject to a capital-gains tax. Monetary purists, incidentally, prefer to speak of “spending” gold and silver, rather than “selling” it, because gold and silver are the true constitutional money.
The U.S. Constitution prohibits states from coining money themselves or making anything but gold or silver coins legal tender. But taxing the value silver and gold coins retain has prompted several states to look at exempting gold and silver coins minted by the federal government from state capital-gains taxes. Utah passed such a law in 2012, removing its capital-gains taxes from federal coins of gold and silver. Yet even if such laws catch on, they would be more protest than an answer to the default on LBJ’s promises of 1965.
A more radical approach would be the Free Competition in Currency Act, originally the brainchild of Ron Paul, the former Texas congressman, and offered again in the last Congress by Rep. Paul Broun (R., Ga.). It adopts the idea of the late Nobel laureate Friedrich Hayek. This measure would end the legal tender laws, halt capital-gains taxation on gold and silver, and permit private coinage.
The bill never got out of committee, but Hamilton would have understood its importance. He created the first U.S. central bank and would have welcomed a centennial review of the Federal Reserve—and a review of the folly LBJ signed 50 years ago.
Mr. Lipsky is the author of “The Floating Kilogram and Other Editorials on Money,” just out from New York Sun Books.
I have a very decent number of stories for a week-day column—and I hope you can find the time to read the ones the interest you the most.
CRITICAL READS
Initial Jobless Claims Plunge To Lowest Level In 42 Years
Time for a rate hike?
Initial jobless claims dropped 26,000 to 255k – its lowest since Nov 1973
While July 4th adjustments may indeed be a factor, it appears things have hardly ever been better – according to this data anyway.
If you believe the chart in this Zero Hedge article from yesterday morning, I do have a bridge to sell you. The chart is worth a look, but what it show strains credulity. I thank reader M.A. for today’s first story.
Amazon Just Became Bigger Than Walmart: Here’s Why
The moment everyone has been waiting for has finally arrived, by which of course, we mean the moment when the market cap of AMZN would finally surpass Wal-mart.
Just after 4pm Jeff Bezos’ Amazon reported number that were quite impressive at first blush. And at second blush as well. Among these: a whopping blow out beat on the top line of $23.2 billion in revenue, an increase of 27% from a year ago, and far above the $22.4 billion expected, which in turn resulted in Net income of $92 million, or EPS of $0.19. The street was expecting a loss of $0.14 per share.
In terms of where the bulk of the growth and profitability came from, one word, or rather three letters: AWS (Amazon Web Services), also known as the “cloud”, whose net sales soared by 81% Y/Y to $1.8 billion generating a 21.4% operating margin and net income of $391 million up from $77 million a year ago.
And while the quarter was good especially for AMZN the “web services” company, it was AMZN’s forecast for the future that was even more impressive.
This is another Zero Hedge article. This one put in an appearance on their website at 4:39 p.m. EDT Thursday afternoon—and it’s the second offering in a row from reader M.A.
Faber likes cash, says real estate and emerging markets equities to outperform
Marc Faber railed against central bank intervention around the globe and said he likes cash now because it “gives you flexibility to buy assets” when bubbles pop.
Mr. Faber, publisher of the “Gloom, Doom and Boom” newsletter, made his comments Thursday at the CFA Analyst Seminar in Chicago in a presentation titled, “Inflating Asset Markets and Deflating Real Economic Activity? Strategies for Global Investors.”
As he noted at the same event last year, Mr. Faber said all asset markets are overvalued, with few exceptions. “Different asset classes will be touched at different times,” he said, and ample amounts of cash on hand are necessary to take advantage when opportunities occur.
And of course, given his bearish stance, Mr. Faber recommended holding gold in a portfolio — his recommended allocation is 25%.
“Gold is insurance if the banking system fails,” he said. “As an investor I’d like to own something outside the banking system, and that includes real estate, art and gold.”
This story about Marc Faber appeared on the Pensions & Investments website yesterday at 4:02 p.m. EDT—and I thank Ken Hurt for sending it our way.
Republicans Have Minds Made Up as Debate Begins on Iran Nuclear Deal
Senator Bob Corker, Republican of Tennessee and the chairman of the Foreign Relations Committee, stared at Secretary of State John Kerry on Thursday with thinly veiled disgust.
“You have turned Iran from being a pariah to now, Congress being a pariah,” said Mr. Corker, who helped broker a delicate deal with Democrats and the White House allowing lawmakers to review the proposed lifting of sanctions against Iran.
While Mr. Corker, who promised a considered assessment of the agreement, may have seemed close to an endgame during a hearing on Capitol Hill, the vast majority of Republicans appear to have made up their minds before a single classified briefing, hearing or visit with administration officials.
Their view seems born of genuine distaste for the deal’s details, inherent distrust of President Obama, intense loyalty to Israel and an expansive view of the role that sanctions have played beyond preventing Iran’s nuclear abilities.
This news item was posted on The New York Times website yesterday sometime—and it’s the first offering of the day day from Patricia Caulfield. The original headline to this story read “Iran Nuclear Deal Appears Dead on Arrival for Republicans“.
Oil Warning: The Crash Could Be the Worst in More Than 45 Years
Morgan Stanley has been pretty pessimistic about oil prices in 2015, drawing comparisons with the some of the worst oil slumps of the past three decades. The current downturn could even rival the iconic price crash of 1986, analysts had warned—but definitely no worse.
This week, a revision: It could be much worse.
Until recently, confidence in a strong recovery for oil prices—and oil companies—had been pretty high, wrote such analysts as Martijn Rats and Haythem Rashed in a report to investors yesterday. That confidence was based on four premises, they said, and only three have proven true.
Supply and demand is one thing, but with oil being one of the Big 6 commodities, the Commercial traders have snookered the Managed Money traders onto the short side in record amounts, just like the four precious metals, plus copper. You’re looking at a COMEX-set paper price for WTIC. This Bloomberg article was posted on their website at 4:00 a.m. Denver time yesterday morning—and it’s the second offering in a row from Patricia Caulfield.
Oil Rigs Left Idling Turn Caribbean Into Expensive Parking Lot
Imagine parking your $300 million boat for months out in the open sea, with well-paid mechanics hovering around it and the engine running.
The Gulf of Mexico and the Caribbean Sea have become a garage for deep water drill ships — at a cost of about $70,000 a day each. It’s either that or send your precious rig to a scrapyard.
The dilemma underscores how an offshore industry that geared up for an oil boom is grappling with a bust. Rig owners are putting equipment aside at unprecedented numbers as customers including ConocoPhillips pull back from higher-cost deep water exploration. That’s helped make Transocean Ltd. and Ensco Plc two of the three worst performers in the Standard & Poor’s 500 Index over the past year.
“Most contractors have never seen an environment like this, where demand is falling as quickly as it is,” David Smith, an analyst at Heikkinen Energy Advisors in Houston, said in a phone interview. “It’s been a big headache, and the problem is that we’re not halfway through.”
This is another Bloomberg news item. This one showed up on their Internet site at 5:01 p.m. MDT on Wednesday afternoon, but was updated at 1:41 p.m. MDT yesterday. I thank West Virginia reader Elliot Simon for sharing it with us.
Bank of England warns Greek debt crisis could delay interest rate rise
Bank of England policymakers are concerned that backsliding in talks to resolve the Greek debt crisis could delay Britain’s first interest rate rise in eight years, but admitted that the prospect of a hike is increasing as the UK economy strengthens.
With Brussels and Athens yet to begin formal talks on a third bailout deal, the monetary policy committee (MPC) said the eurozone could falter in the event of renewed infighting between Greece and its creditors.
Uncertainty about the prospects for wage growth also held back the MPC from bringing forward a rates rise, according to minutes of its meeting this month. Instead, the MPC voted unanimously to maintain the base rate at 0.5%.
This story showed up on The Guardian website at 12:41 BST on their Wednesday afternoon—and I thank Patricia Caulfield for this article as well.
Eurozone debt crisis: why the Greece deal will work
Now that Greek banks have reopened and the government has made scheduled payments to the European Central Bank and the International Monetary Fund, does Greece’s near-death experience mark the end of the eurozone crisis? The conventional answer is a clear no.
According to most economists and political commentators, the latest Greek bailout was little more than an analgesic. It will dull the pain for a short period, but the euro’s deep-seated problems will metastasize, with a dismal prognosis for the single currency and perhaps even the European Union as a whole.
But the conventional wisdom is likely to be proved wrong. The deal between Greece and the European authorities is actually a good one for both sides. Rather than marking the beginning of a new phase of the euro crisis, the agreement may be remembered as the culmination of a long series of political compromises that, by correcting some of the euro’s worst design flaws, created the conditions for a European economic recovery.
The key word in the last paragraph is “may”—and the chances of that happening are somewhere between slim and none—and Slim is out of town. This is another story from theguardian.com Internet site early yesterday afternoon BST—and it’s another offering from Patricia Caulfield. If you do decide to read it, you should do so with your tongue firmly planted in your cheek.
Laws passed, Greece to open bailout talks as recession pushes goals further
Greece’s creditors prepared on Thursday for the start of bailout talks in Athens, after lawmakers adopted a second package of reform measures before dawn despite a left wing rebellion that may bring early elections.
In a sign of how the goal of coming to grips with the country’s debt is swiftly sliding even further away, Greece’s most influential think tank predicted a sharp drop back into recession.
That adds to the headwinds facing left wing Prime Minister Alexis Tsipras, who must negotiate a bailout worth up to €86 billion with sceptical lenders while struggling to hold his divided Syriza party together.
While his personal popularity is high, a renewed drop into recession after a modest recovery last year would test his government’s ability to push through the tough mix of tax hikes, spending cuts and economic reforms demanded by the lenders.
This Reuters article, co-filed from Athens and Brussels, was posted on their Internet site at 5:05 p.m. EDT yesterday afternoon—and it’s another contribution from Patricia Caulfield.
U.S. to place AMD components in Poland despite Iranian deal – Kerry’s deputy
U.S. anti-missile systems will be placed in Poland despite world powers reaching an agreement on Iran’s nuclear program, John A. Heffern, U.S. Deputy Secretary of State for Europe and Eurasia, said.
“The deal with Tehran doesn’t include missiles, therefore the threat remains,” Heffern told Polish Rzeczpospolita newspaper Tuesday, adding that he was speaking about Iranian rockets without nuclear warheads.
According to the U.S. diplomat, the construction of AMD components in the village of Redzikowo near the northern Polish town of Slupsk starts next year – as scheduled – and will be completed in 2018.
Washington’s plans to install anti-missile systems in Eastern Europe have been one of the biggest stumbling blocks in U.S.-Russia relations.
This story showed up on the Russia Today website at 9:05 p.m. Moscow time on their Wednesday evening, which was 2:05 p.m. EDT in Washington. I thank Roy Stephens for sending it our way.
Vladimir Putin’s approval rating at record levels
Vladimir Putin’s approval rating is at record levels, with nine out of 10 Russians saying they have a positive view of their president. Putin had an approval of 87% in July, and an all-time high of 89% in June, according to Levada Centre polling.
Following a drop in popularity in 2012 and 2013, when Putin’s approval ratings dropped into the 60s, the Russian president’s popularity picked up again last year on the back of events in Ukraine.
According to separate Levada figures from June, 66% believe that western sanctions are meant to humiliate and weaken Russia, and only 5% think they are about ending the conflict in Ukraine.
Some 70% of Russians believe the country should stick to its current position on Ukraine, while 20% say it would be better to make concessions in order to avoid sanctions. 87% support the annexation of Crimea, and only 4% think that the eastern regions of Donetsk and Luhansk should return to their pre-conflict status.
This news item, which is hardly news now, put in an appearance on theguardian.com Internet site at 1:26 p.m. BST yesterday afternoon—and it’s another contribution from Patricia Caulfield.
Ankara ‘agrees to let U.S. launch air strikes’ against Islamic State from Turkey
Turkey joined the fight against Islamic State of Iraq and the Levant (Isil), giving permission for US jets and drones to use its territory to target the group in neighbouring Syria on Thursday night, according to reports.
The decision, revealed by The Wall Street Journal, came at the end of a fast-moving week of developments which saw Isil’s war move on to Turkish territory for the first time.
Following Monday’s bombing of a Kurdish gathering in the Turkish town of Suruc which killed 32 people, there was an exchange of fire on Thursday across the Syrian border, which Turkish authorities said left one of their soldiers and an Isil fighter dead.
Earlier in the day, the Turkish cabinet, which has been accused of supporting Isil in the past as part of its determination to see the overthrow of Syria’s Assad regime, had agreed to build a fence along the border to stop the flow of fighters.
This article showed up on the telegraph.co.uk Internet site at 8:50 p.m. BST on Thursday evening, which was 3:50 p.m. EDT. The contributions from Patricia just keep on coming.
The Iran deal: Not déjà vu all over again
For many of those opposed to the deal to curb Iran’s nuclear programme struck on July 14th, the issue could hardly be more straightforward. The wily Iranians have got the better of a naive president (and five other leaders) who would rather appease a rogue state than confront it. No agreement with a country like Iran is worth the paper it is written on. The Iranians will cheat and get the bomb at a time of their own choosing, when the world is not looking.
A more sophisticated, and thus more persuasive, version of this critique is the claim that the deal with Iran is no different from the one struck by the Clinton administration with North Korea in 1994. Marco Rubio, the junior senator from Florida, has made the comparison, as has Senator Tom Cotton of Arkansas. “I think this is a repeat of the mistake of North Korea,” Israel’s prime minister, Binyamin Netanyahu, told CBS’s “Face the Nation”.
Barack Obama’s announcement last week welcoming the deal did indeed echo claims made by Bill Clinton 21 years earlier. “Today, after 16 months of intense and difficult negotiations with North Korea, we have completed an agreement that will make the United States, the Korean Peninsula and the world safer,” Mr Clinton declared then. “Under the agreement, North Korea has agreed to freeze its existing nuclear programme and to accept international inspection of all existing facilities…Compliance will be certified by the International Atomic Energy Agency.” Eight years later, that deal unravelled. Another four years on, North Korea conducted its first nuclear-weapons test.
This news story was posted on the economist.com website yesterday—and I thank Patricia Caulfield for bringing it to our attention. It’s certainly worth reading if you have the interest—and the time.
The Imperial Designs on Iran — Pepe Escobar
So what is the Obama administration really up to in Iran? What sort of strategic calculations have led to what for the moment looks like a tactical geopolitical shift?
President Obama certainly concluded that the 36-year-long Wall of Mistrust against Iran was bound to fail. The real Masters of the Universe in Washington – those who control the deep state – always knew that the “nuclear weapons” hysteria was bogus. That was part of a strategic decision to keep the Islamic Republic isolated from the West as long as possible, and ultimately force regime change.
The Pentagon’s new military strategy made it very clear that the number one issue for the Masters of the Universe – irrespective of who’s in the White House — is a concerted push to strategically isolate both Russia and China, and destroy their strategic partnership. As unrealistic as this policy may be, it may even lead to a hot war; the Pentagon does leave the option on the table.
The Masters of the Universe, setting policy way above their paperboys in the Obama administration and already thinking post-2016, are actively engaged in a three-pronged military strategy. The intelligence establishment in Russia, China and Iran – the Top Three Eurasian integration powers – totally knows what is going on.
This commentary by Pepe appeared on the sputniknews.com Internet site at 3:40 p.m. Moscow time on their Thursday afternoon, which was 8:40 a.m. EDT in Washington. My thanks go out to Roy Stephens for sharing it with us—and it falls squarely into the absolute must read category, especially for all serious students of the New Great Game.
Iran preparing to enter WTO, set up preferential trade with E.U.
Iran wants to join the World Trade Organization after putting the final signatures on a nuclear deal with the six world powers. Tehran is also interested in a preferential trade deal with the E.U., says Industry Minister Mohammad Reza Nematzadeh.
“Iran is preparing to join the WTO, and one political obstacle has already been overcome. Tehran is also interested in the negotiations with the E.U. and Central Asian countries in establishing preferential treatment in trade,” said Nematzadeh Thursday, speaking at a conference on investment and trade between Iran and the E.U. in Vienna.
He added that Tehran is interested in “a two-way trade,” and “no longer interested in a unidirectional importation of goods and machinery from Europe,” as the Iranian market has changed a lot over the years of sanctions.
Iran wants to boost manufacturing, mechanical engineering, extraction and other sectors of the economy, the bilateral investments are likely to spread not only to Iran, but to the whole region of 300 million people, Nematzadeh said.
This Russia Today offering appeared on their Internet site at 12:19 p.m. yesterday afternoon Moscow time [EDT+7 hours]—and it’s the final offering of the day from Roy Stephens, for which I thank him.
China may bring in ‘two-child policy’ to tackle demographic time bomb
Thirty-five years after enacting draconian birth control rules blamed for millions of forced abortions and the creation of a demographic “time bomb”, China could be on the verge of introducing a two-child policy. The new regulation, under which all Chinese couples would be allowed to have two children, could be implemented “as soon as the end of the year if everything goes well”, a government source was quoted as saying by the China Business News.
The highly controversial and often brutally enforced one-child policy was introduced by China’s Communist leaders in 1980 amid fears of a catastrophic population explosion. The government credits it with preventing 400 million births, but the human cost has been immense, with forced sterilisations and abortions, infanticide, and a dramatic gender imbalance that means millions of men will never find female partners.
Liang Zhongtang, a demographer from the Shanghai Academy of Social Science, said the policy should have been abolished long ago. “The core issue is not about one child or two children. It’s about reproductive freedom. It’s about basic human rights. In the past, the government failed to grasp the essence of the issue,” he said.
This very interesting article found a home over on The Guardian‘s website at 4:35 p.m. BST on their Thursday afternoon, which was 11:35 a.m. in New York—EDT+5 hours. I thank Patricia Caulfield for bringing it to our attention.
Sale of American Eagle silver bullion coins by U.S. Mint to resume July 27
The United States Mint plans to resume sales to its authorized purchasers July 27 of American Eagle silver bullion coins, three weeks after sales were suspended so depleted inventory could be replenished.
The resumption of sales will be on an allocation basis, according to U.S. Mint officials.
Insatiable investment demand forced the July 7 suspension of silver American Eagle sales while the West Point Mint continued production. Sales went beyond the Mint’s ability to produce the coins to meet demand.
This short article was posted on the coinworld.com Internet site on Monday—and I thank Tolling Jennings for bringing it to our attention.
Gold Smash Leads to Surge in Demand For Coins, Bars Around World
The manipulative smash on the gold price on Sunday night has once again led to a surge of buying of gold coins and bars across the globe. Both The Wall Street Journal and Reuters report on how bullion dealers are seeing a spike in demand for gold coins and bars in India and China and indeed Europe, Australia and the U.S.
The U.S. Mint – which ran out of Silver Eagles earlier in the month due to unexpectedly high demand – has sold 109,000 Gold Eagle one ounce coins so far this month according to Reuters. This compares with a mere 21,500 ounces sold in May and 76,000 in June. It represents the highest level of monthly demand in over two years – with more than a week to go till the end of the month.
In India, July is typically a quiet month for gold sales as farmers, who make up the bulk of the population, allocate their cash towards cultivation, according to the WSJ. However, the unusually low price has led to a surge of buying.
“Gold’s plunge to five-year lows this week has prompted a swift rise in demand from jewelry retailers in China and India, the world’s top consumers of gold, leading to a doubling of premiums paid on physical gold,” reports the WSJ via Marketwatch.
This short commentary by Mark O’Byrne appeared on the goldcore.com Internet site yesterday—and it’s certainly worth reading.
Marcia Christoff-Kurapovna: Central banks and our dysfunctional gold markets
GATA’s account of gold market rigging has made its way to the Mises Institute, thanks to an essay by financial writer Marcia Christoff-Kurapovna, “Central Banks and Our Dysfunctional Gold Markets.” GATA’s secretary/treasurer Chris Powell even gets quoted, which doesn’t happen much on this planet.
Christoff-Kurapovna writes: “Many investors still view gold as a safe-haven investment, but there remains much confusion regarding the extent to which the gold market is vulnerable to manipulation through short-term rigged market trades and long-arm central bank interventions. First, much of the gold that is being sold as shares, in certificates, or for physical hoarding in dubious ‘vaults’ just isn’t there. Second, paper gold can be printed into infinity just like regular currency. Third, new electronic gold pricing — replacing, as of this past February, the traditional five-bank phone call of the London Gold Fix in place since 1919 — has not necessarily proved a more trustworthy model. Fourth, there looms the specter of the central bank, particularly in the form of volume trading discounts that commodity exchanges offer them.”
Her essay is posted on the mises.org Internet site yesterday sometime—and the first copy of this I found in my in-box yesterday was embedded in a GATA release—and I thank Chris Powell for “all of the above.” It’s worth reading.
Now even Reuters acknowledges gold market rigging….
As the global bullion market continues to reel from a dramatic plunge in gold prices on Monday, traders from Hong Kong to New York are pointing the finger at others for being behind the move while struggling to unmask the mystery sellers.
In early Asian trading hours on Monday, investors dumped more than $500 million worth of bullion in New York in four seconds with selling occurring almost simultaneously on Chinese markets.
The sheer scale of order flow across both the Shanghai Gold Exchange and the Shanghai Futures Exchange — where combined volume for the day surpassed the notional equivalent of 250 tonnes — led many market trackers to speculate that fleet-footed Chinese hedge funds were behind the move. …
“That move was aggressive manipulation. Somebody clearly wanted the market lower and timed it very well,” said a gold trader at a bank in Hong Kong, who saw parallels with the way funds have been linked to swings in copper.
This gold-related Reuters story, co-filed from Manila and Shanghai, put in an appearance on their website at 6:23 a.m. EDT yesterday morning—and it’s another article I found on the gata.org Internet site. It ties directly into the Zero Hedge story posted next.
The Hunt For The “Mystery” Gold “Bear Raid” Leader Begins
In the immediate aftermath of Sunday night’s massive gold slam, which was oddly reminiscent of the great silver crash of 2011 when on May 1 just around 6:25pm, silver plunged by 15%, from $48 to $42 with no news or catalyst marking the all time high price of silver in the current precious metals cycle (that particular ‘malicious seller’ has never been identified) the promptly arranged narrative was that because the gold crash took place in the span of 30 seconds just before Chinese stocks opened and broke the gold futures market not once but twice, that it has to be a China-based seller with Reuters taking the lead and quickly pointing the finger with an article titled “Gold hits five-year low, under $1,100 on Chinese selling.”
Ironically, the very same Reuters last night admitted that it had been wrong and that it was in fact: “New York sell orders in thin trade” that triggered the “Shanghai gold rout”.
And just like that the narrative shifts again: instead of a Chinese seller, the real culprit appears to have been a U.S.-based entity masking as a Chinese trader, around which the media then conveniently built a further goal-seeked “story” in which the Sunday night selling (by a US entity now) was the result of a PBOC announcement that its gold holdings had risen to “only” 1,600 tons… however the problem is that all this had been known since Friday morning.
So, fast forward to this morning when in yet another Reuters piece, we “find” that the narrative has shifted once more and that now, “traders from Hong Kong to New York are pointing the finger at others for being behind the move while struggling to unmask the mystery sellers.”
In other words: the “hunt” for the great gold “bear raid leader” has begun.
This longish, but very worthwhile commentary showed up on the Zero Hedge website at 3:20 p.m. EDT yesterday afternoon—and the first person through the door with it was reader M.A.
Will financial journalism’s bear hunt lead to a dingy basement—or to the BIS?
Zero Hedge mocks the purported search by mainstream financial news organizations for the instigator of Sunday night’s nuclear assault on the gold market, and concludes that the trail will lead either to some Indian guy trading out of the dingy basement of his parents’ home in a London suburb—or to the luxurious offices of the Bank for International Settlements in Basel, Switzerland, the central bank of the central banks. Of course mainstream financial news organizations would sooner interview Kim Kardashian about the gold market than ever have to direct a critical question about gold to the BIS or any other central bank. The Zero Hedge‘s commentary is headlined “The Hunt for the ‘Mystery’ Gold ‘Bear Raid’ Leader Begins“—and it’s posted above.
But anyone who wants to know about the BIS doesn’t really have to question it much at all, as the documentation of its involvement in the gold market are on the public record already.
For at a BIS conference in Basel in June 2005, the director of the bank’s monetary and economic department, William R. White, declared that among the major objectives of central bank cooperation is “the provision of international credits and joint efforts to influence asset prices (especially gold and foreign exchange) in circumstances where this might be thought useful.”
This longish, but must read commentary by GATA secretary/treasurer Chris Powell, showed up on the gata.org Internet site yesterday evening.
The PHOTOS and the FUNNIES
THE WRAP
From the last COT cycle top on May 19, gold has fallen as much as $140 and silver by nearly $3. Thru last Friday’s COT report, the commercials have purchased nearly 84,000 gold contracts and 47,000 silver contracts. Extrapolating thru yesterday’s close of the reporting week, I’d guess another 20,000 gold and 5,000+ silver contracts were purchased by the commercials (and sold by managed money traders) and hopefully more.
As a matter of fact, gold declined by $140 since May 19 and silver declined by $3, precisely because managed money traders sold and commercials bought, most likely, more than 100,000 net gold contracts and over 50,000 net silver contracts, one of the largest position changes in history. Those are the equivalents of 10 million oz of gold and 250 million oz of silver. To my mind, the price declines had nothing to do with the dollar, China, Greece or any lack of inflation; and everything to do with the amount of futures contract positioning changes since the May 19 COT cycle top.
Having established that the May 19 top is beyond question, as measured by both price and the number of contracts repositioned, the analysis must now be centered on the pending cycle bottom. Both on a time and price basis, enough time has passed and prices have declined sufficiently for this to qualify as a COT cycle bottom. In terms of the most important variable in the COT cycle analysis, the number of contracts repositioned, we are at or close to all-time record large managed money short positions, a fact that satisfies every meaning of maximum number of contracts. — Silver analyst Ted Butler: 22 July 2015
It was obvious from the price action yesterday, that the rallies [such as they were] that began in Hong Kong trading on their Friday, weren’t going to be allowed to go anywhere, as they were capped shortly after London opened—and all those smallish gains, plus more, vanished by the close of trading in New York. All four precious metals charts are virtually carbon copies of each other—and no other explanation is possible for such an event, as their supply/demand fundamentals are wildly different.
Here are the 6-month charts for the Big 6 commodities—and as you can see, both copper and crude oil set new lows for this move down yesterday as “da boyz” spun their algorithms—and the Managed Money traders went ever shorter.
And as I write this paragraph, the London open is less than ten minutes away. The standout feature of morning trading in the Far East on their Friday morning was the new low intraday price ticks in both gold and silver that were set minutes after 10 a.m. Hong Kong time, as it was JPMorgan et al up to their old salami-slicing tricks once again. Platinum and palladium were taken lower as well, but not to new lows for this move down.
Gold’s gross volume is a hair under 50,000 contracts, which is huge, of which only around 3,700 contracts are roll-overs out of August. The rest is all HFT noise from “da boyz”. In silver, HFT volume is 10,000 contracts, which is also monstrous for this time of day, with only a couple of hundred contracts worth of roll-overs. As I’ve pointed out before, there isn’t a single contract in here being traded by either producers or users of the metal. It’s all wild-ass speculation and price management.
The dollar index made it up to around 97.33 in morning trading in the Far East, but began to head lower starting at precisely 2:00 p.m. Hong Kong time—an hour before the London open. It’s currently down 4 basis points.
Today we get the long-awaited Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday—and as incredible as the numbers should be, what has occurred since the cut-off makes the current COMEX futures market structure even more wildly bullish in the Big 6 commodities than even this report will show. And whatever the numbers are, I’ll have them for you in Saturday’s column.
And as I put this up on the website at 5:25 a.m. EDT, I see that all four precious metals have recovered off their Friday morning engineered lows in Far East trading—and are now trading flat-to-down. Gold is down 7 bucks—and silver is down 8 cents, platinum is unchanged—and palladium is up 5 bucks.
Net volume in gold has really cooled off, as it’s only increased by around 5,000 contracts since I reported on it a bit over two hours ago—and it sits around 52,500 contracts. Silver’s net volume is around 12,500 contracts now, only up 2,500 or so from when I last reported just before the London open.
The dollar index hit its 97.15 low just minutes before the London open—and is now up 28 basis points. The overnight changes in the dollar index have had zero impact on precious metal prices because, as you know, prices are set in the COMEX paper market—and what’s going on in the currencies vs. the price of precious metals, is a fig leaf that only the main stream media latches onto, as do a lot of so-called gold and silver “analysts” that really don’t know what they’re talking about.
Today is Friday—and with new lows in both gold and silver already placed earlier today in Far East trading, it wouldn’t surprise me if “da boyz” showed up again in the New York market to press their advantage further. Also on Tuesday and Wednesday of next week we get another FOMC meeting—and JPMorgan et al are almost never kind to gold and silver prices around that event, so it could be an ugly time until after the smoke goes up the chimney at the Fed next Wednesday.
That’s it for today. 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.
Ed
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