28 July 2015 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price got sold down a few dollars the moment that it began to trade at 6 p.m. EDT in New York on Sunday evening—and it stayed there until around 1 p.m. Hong Kong time on their Monday afternoon. It began to trend higher from there—and made it to just above the $1,105 spot mark just before 9 a.m. in London trading. But that was as high as it was allowed to get. From there it got sold down to its low of the day at 8:30 a.m. in New York trading—and it rallied from there until it poked its nose back above the $1,100 spot mark at, or shortly after, the London p.m. gold fix. It traded quietly lower from there into the close of electronic trading.
The high and low ticks were recorded by the CME Group as $1,104.40 and $1,087.70 in the August contract.
Gold closed in New York yesterday at $1,094.50 spot, down an even five bucks from Friday’s close. Gross volume was 257,000 contracts, but once the roll-overs were subtracted out, the net volume checked in at 127,000 contracts.
The price path for silver was very similar, so I’ll spare you the play-by-play. The high and lows in the precious metal were reported as $14.69 and $14.495 in the September contract.
Silver closed yesterday at $14.54 spot, down 20 cents from Friday. Net volume was on the lighter side once again at 28,500 contracts.
The charts for platinum and palladium followed the same path. Platinum was closed at $981 spot, down 6 bucks on the day—and palladium was closed at $611 spot, down $13 from Friday’s close. Here are the charts.
The dollar index closed late on Friday afternoon in New York at 97.26—and slid a bit in the first part of Far East trading. It really began to head south with a vengeance shortly after 2 p.m. Hong Kong time—and the secondary 96.46 low came at precisely 9:00 a.m. in London trading. It rallied back to 96.74 by the 8:20 a.m. EDT COMEX open before heading south once more. The 96.29 low tick came around 11:40 a.m. in New York—and from there it chopped higher until 3 p.m. before trading flat into the close. The index finished the Monday session at 96.54—down 54 basis points according to the ino.com chart here. But if you do the actual math from the Friday close, it works out to a lot more than that.
As you can see, when “da boyz” are lurking about, what’s happening with the currencies means nothing in the precious metal markets, with today’s action being a case in point.
And here’s the 6-month chart so you can see how the dollar index is doing longer term.
The gold stocks opened down, but quickly rallied into positive territory—and hit their highs just before 10:30 a.m. in New York. From there they headed lower and barely looked back. The HUI closed just off its low tick, down 4.54 percent on the day—erasing all of Friday’s gains, plus more, in the process.
The action in the silver equities was similar—and Nick Laird’s Intraday Silver Sentiment Index closed down a chunky 4.36 percent.
I would guess that there was a fair amount of forced selling by mutual funds again yesterday. But the same question that’s still looking for an answer is—who are the buyers?
The CME Daily Delivery Report showed that 21 gold and 4 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday. Nothing to see here.
The CME Preliminary Report for the Monday trading session showed that gold open interest dropped by 101 contracts, leaving only 53 left—minus the 21 posted above. In silver, o.i. in the precious metal fell by 10 contracts, leaving 163 still open—minus the 4 mentioned in the previous paragraph.
There were no reported changes in GLD yesterday—and as of 6:13 p.m. EDT yesterday evening, there were no reported changes in SLV, either. But when I was editing today’s column at 3:16 a.m. EDT this morning, I noted that an authorized participant withdrew a chunky 2,005,269 troy ounces. That’s the first real withdrawal from SLV, with the exception of a small fee payment in early July, since June 29.
One thing that both Ted and I missed last Friday was the update in the short interest numbers for both GLD and SLV by the folks over at shortsqueeze.com. Both us were expecting it either Monday, or today. Both showed huge increases. I know that Ted will certainly have something to say about it in his mid-week commentary tomorrow, but I’ll venture a guess that because of the huge sell-offs in the precious metals, a hedge fund or two took the opportunity to short the precious metals via GLD and SLV shares, a situation that will reverse itself in short order once the next rally commences. If that is the case, it’s just more of Ted Butler’s rocket fuel during the next rally.
What the report showed was the short interest in SLV rose by an eye-watering 61 percent during the period from the July to July 15 inclusive. The short interest now stands at 21.75 million troy ounces/shares, up from 13.50 million troy ounces/shares. The short interest in GLD rose by 49 percent, from 941,115 troy ounces, up to 1.402 million troy ounces.
With silver eagles back on the menu over at the U.S. Mint yesterday, it was a very busy sales day. They sold another 14,500 troy ounces of gold eagles—plus 500 one-ounce gold buffaloes—and 1,323,500 silver eagles—and I expect another big silver eagle sales number when the mint puts up their Tuesday sales figures later today. Month-to-date the mint has sold 4,032,500 silver eagles.
Over at the COMEX-approved depositories on Friday, no gold was reported received, but 66,012 troy ounces were shipped out, with virtually all of it coming out of the depositories over at HSBC USA. The link to that activity is here.
There was very decent in/out activity in silver once again, as 313,746 troy ounces were received—and 813,933 troy ounces were shipped out the door. Ninety percent of the ‘out ‘ activity was at Canada’s Scotiabank, as it’s COMEX stockpile continues to dwindle. There was no activity at the JPMorgan depository. The link to yesterday’s activity is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday, they reported receiving 8,488 kilobars—and shipped out 614 kilobars. The link to that activity, in troy ounces, is here.
I have a lot of stories for you today—and although I edited heavily, I still have quite a few. I leave the axe in your hands from hereon in.
CRITICAL READS
S&P 500: The Most Important Market Trend Line Since 2009 Was Just Broken
There’s nothing to this Zero Hedge article except this chart, so I’m posting it here so you don’t waste your time clicking on the headline. The ‘click to enlarge‘ feature works wonder—and it’s important for this chart. I thank reader M.A. for today’s first ‘story’.
The Disappearing Retirement Fund — Jeff Thomas, The International Man
As a general principle, I’ve always tended to avoid entrusting others with my money. I’ve avoided funds, as they are often based upon investments that are peaking or close to peaking. I’ve avoided pension funds, as they’re often structured in a similar manner.
And whenever by law I’ve been required to be invested in such funds, they’ve rarely been successful over the long term. In the end, I would invariably have made more money by pursuing those investments that had great promise but at the time were unpopular (and therefore under-priced).
As dubious as I tend to be of conventional investment schemes (and those who broker them), I am doubly dubious of any government-run scheme. Governments, historically, have proved to be poor money managers, and politicians tend to place more value on big promises that garner votes than on delivering on those promises.
This commentary by Jeff showed up on the internationalman.com Internet site yesterday.
Fed Accidentally Released Confidential Staff Projections
The Federal Reserve said it inadvertently released staff projections for interest rates and the economy late last month, renewing doubts about its measures to protect confidential information.
The Fed said in a statement Friday in Washington that projections prepared for the June 16-17 Federal Open Market Committee meeting were posted in error on a public website on June 29. Staff projections are normally released with a five- year lag when transcripts of FOMC meetings are published.
The disclosure follows congressional criticism over the Fed’s handling of a leak of internal policy deliberations in 2012, which is being investigated by the House Financial Services Committee.
This news item regarding the Fed put in an appearance on the newsmax.com Internet site on Friday afternoon EST—and it’s the first offering of the day from West Virginia reader Elliot Simon.
Dallas Fed Misses Expectations After June’s “Miracle” Bounce; Jobs, Wages Decline
After bouncing dramatically in June (the biggest surprise beat in over 3 years) – on the back of ‘hope’ surgiung to 6-month highs – July data continued to improve marginally but missed expectations -4.6 vs -3.5 exp). On the bright side New Orders inched into positive territory (although inventories are surging) but prices received tumbled, wages dropped, and employment fell (as hours worked rose). The biggest driver, once again, of the headline rise was ‘hope’ as the outlook rose to 18.8 – the highest since August.
As Hope over reality is averaging near 6 year highs…
This 2-chart Zero Hedge commentary is worth a quick look. It was posted on their Internet site at 10:20 a.m. EDT on Monday morning—and it’s the second story of the day from reader M.A.
Banks revolt over plan to kill $17 billion Fed payout
The banking industry is scrambling to kill a provision in the Senate highway-funding bill that would reap billions of dollars in revenue by cutting a century-old system that has reaped annual awards for banks.
Industry lobbyists say they were blindsided by the inclusion of the provision, which would help policymakers cover the bill’s cost by cutting the regular dividend the Federal Reserve pays to its member banks.
One lobbyist went so far as to reread the Federal Reserve Act of 1913 after getting wind of the proposal to determine what was at stake.
“I think it took everyone by surprise,” said Paul Merski with the Independent Community Bankers of America. “There was no study of the issue, no hearings, no consultation with the Federal Reserve itself.”
This is wonderful news! The Creature From Jekyll Island gets cut off at the knees! We haven’t heard the last of this I can assure you. It’s a must read story—and it was posted on thehill.com website early Saturday afternoon EDT—and I thank Dr. Dave Janda for bringing it to my attention, and now to yours.
Hillary faces dangerous enemy in the Obama administration
If Hillary Clinton were a cartoon character, she’d be Snidely Whiplash, forever muttering to herself, “Curses, foiled again.” And she’d be right.
The lady in waiting will have to keep waiting. Probably forever. Fate has spoken.
Already threatened by a growing trust deficit with voters, her would-be majesty now faces an even more lethal adversary. It’s called the truth, though she probably sees it as a vast, left-wing conspiracy.
The news that two inspectors general from the Obama administration want the Justice Department to investigate her handling of classified material is a potential game changer. For many Democrats, it will serve as final proof she is fatally flawed.
I don’t normally post political stories, as they’re somewhat beyond the scope of this column, but it appears the the powers-that-be are about to put a stop to this whole sordid Clinton affair—and the end of her political career can’t come soon enough for me. This news item appeared on The New York Post website in the wee hours of Sunday morning EDT—and the first person through the door with this was reader M.A. But this foxnews.com video featuring Judge Jeanine takes the cake. It takes a woman of her calibre to rip another woman a new one—and boy what a job she does! It’s an absolute must watch, the link is here—and I thank reader M.A. for passing it around on Saturday. By the way, I’m no Jeb Bush fan, either.
Meet The Kagans: Seeking War to the End of the World
If the neoconservatives have their way again, US ground troops will reoccupy Iraq, the US military will take out Syria’s secular government (likely helping Al Qaeda and the Islamic State take over), and the US Congress will not only kill the Iran nuclear deal but follow that with a massive increase in military spending.
Like spraying lighter fluid on a roaring barbecue, the neocons also want a military escalation in Ukraine to burn the ethnic Russians out of the east, and the neocons dream of spreading the blaze to Moscow with the goal of forcing Russian President Vladimir Putin from the Kremlin. In other words, more and more fires of Imperial “regime change” abroad even as the last embers of the American Republic die at home.
Much of this “strategy” is personified by a single Washington power couple: arch-neocon Robert Kagan, a co-founder of the Project for the New American Century and an early advocate of the Iraq War, and his wife, Assistant Secretary of State for European Affairs Victoria Nuland, who engineered last year’s coup in Ukraine that started a nasty civil war and created a confrontation between nuclear-armed United States and Russia.
If you’re a serious student of the New Great Game, this Zero Hedge piece from 10:15 p.m. Sunday evening EDT, falls into the absolute must read category. It’s the fourth contribution of the day from reader M.A., for which I thank him.
Market Manipulation Should Be a Crime: Bloomberg Editorial
Amid a spate of scandals over the rigging of financial benchmarks ranging from commodities to currencies to interest rates, the U.K. government is making a bold move toward restoring confidence: By the end of this year, it plans to make manipulation a criminal offense in all the affected markets.
The U.K.’s plan — aimed at maintaining London’s role as a major financial center — raises some questions. Can’t investors look out for themselves? Wouldn’t tweaking the way markets are designed, combined with the risk of damage to reputation, suffice to keep traders in line? No and no.
“Buyer beware” doesn’t apply. These markets aren’t casinos, where people can choose whether to play. Trade in money and commodities is central to the functioning of the global economy. The prices set in these markets affect what people pay for everything from gasoline to mortgages. If insiders manipulate them for personal gain, they do so at the expense of millions of ordinary consumers.
They’re talking about the markets in the U.K. here, so it really doesn’t mean much, as the U.S. is the focal point of criminal activity, particularly the COMEX. But every little bit helps, I suppose. I thank Swiss reader Werner Ullmann for sharing this Bloomberg editorial with us.
IMF warns of gloomy eurozone outlook
The International Monetary Fund has warned the eurozone faces a gloomy economic outlook thanks to lingering worries over Greece, high unemployment and a banking sector still battling to shake off the financial crisis.
The IMF’s latest health check on the eurozone found it was “susceptible to negative shocks” as growth continues to falter and monetary policymakers run out of ways to help. It called for an urgent “collective push” from the currency union to speed up reforms or else risk years of lost growth.
“A moderate shock to confidence – whether from lower expected future growth or heightened geopolitical tensions – could tip the bloc into prolonged stagnation,” said Mahmood Pradhan, the IMF’s mission chief for the eurozone.
This article appeared on The Guardian‘s website at 3:00 p.m. BST yesterday afternoon, which was 10:00 a.m. in New York. My thanks go out to Patricia Caulfield for this news item.
How the Euro Turned Into a Trap: Editorial Board
When they introduced the euro in 1999, European leaders said the common currency would be irreversible and would lead to greater economic and political integration among their countries. That pledge of permanence, long doubted by euro-skeptics, seems ever less credible.
While the eurozone may have temporarily avoided a Greek exit, it is hard to see how a deal that requires more spending cuts, higher taxes and only vague promises of debt relief can restore the crippled economy enough to keep Greece in the currency union. On Thursday, the Greek Parliament passed a second set of reforms required by the country’s creditors. Other changes, like higher taxes on farmers, are expected later in the year.
The combative finance minister of Germany, Wolfgang Schäuble, has further undermined confidence in the euro’s cohesion by saying that Greece would be better off leaving the common currency for a five-year “timeout.” As a practical matter, an exit from the currency union would almost certainly be permanent, since readmission involves a grueling process. The eurozone requires new members to keep inflation below 2 percent and to have a maximum fiscal deficit of 3 percent of gross domestic product and a public debt that is no more than 60 percent of G.D.P. The plight of the Greeks has made countries that do not use the euro, like Poland and Hungary, far less eager to join the currency union, which has come to mean a loss of sovereignty and a commitment to austerity, regardless of economic reality.
This editorial put in an appearance on The New York Times website on Saturday sometime—and it’s definitely worth reading. I thank Patricia Caulfield for finding it for us.
The Grecian Kabuki Theatre: 5 Stories
1. Varoufakis reveals cloak and dagger ‘Plan B’ for Greece, awaits treason charges: The Telegraph 2. Grexit would still be best for the survival of the eurozone: The Telegraph 3. Greek PM Tsipras under pressure over covert Syriza drachma plan reports: Reuters 4. Reports of Secret Drachma Plots Leave Tsipras Facing Fresh Crisis: Zero Hedge 5. Greece, the Sacrificial Lamb — Joe Stiglitz: N.Y. Times 6. Greek creditors seek third wave of reforms before loan: Reuters
I thank Patricia Caulfield, Roy Stephens, James O’Kelly for the above stories
Ukraine pays $120mn debt, avoids technical default – finance ministry
Kiev has made a $120-million coupon payment on its Eurobonds that was due on Friday, according to Ukraine’s Deputy Finance Minister Artem Shevalev. The country would have faced technical default if it hadn’t repaid the debt.
The coupon payment was in question until the last moment. Ukrainian Finance Minister Natalie Jaresko admitted in June that default was probable this month, adding it won’t hit people in the street.
Kiev is trying to persuade foreign private creditors to make concessions to Ukraine and to restructure $23 billion of its $70 billion debt. Last week, Kiev said Ukraine and the special creditor committee headed by the US Franklin Templeton “made progress” on the issue during direct negotiations in Washington, which took place on July 15. The committee includes T. Rowe Price, TCW Group, BTG Pactual and Franklin Templeton investment funds.
This story showed up on the Russia Today website early Friday morning Moscow time last Friday—and I thank Roy Stephens for sending it our way.
U.S. Propaganda on Crimea Misleading, But ‘Understandably’ So – French MP
French parliament member Jerome Lambert, who visited Crimea together with a group of ten French legislators, told Sputnik that the visit showed that US propaganda over Crimea is understandable even though it does not reflect realities on the peninsula.
“The US is trying to deploy in Europe and counteract Russia. The American point of view is understandable. And when there is an understanding of this, there are explanations to American propaganda, the propaganda of some US allies in Europe,” Jerome Lambert said.
The French lawmakers, led by lower-house National Assembly Foreign Affairs Committee member Thierry Mariani, said they came to Crimea to get a real sense of what is really going on in the Black Sea peninsula. During the July 23-24 trip, the parliamentarians visited Crimea, where they met with government officials.
Pozzo di Borgo said that he initially received an impression from French media that there is a war in Crimea and that everything is “horrible.” According to another visiting French legislator, Jerome Lambert, the situation in Crimea is normal and he saw many tourists in Yalta.
This follow-up article was posted on the sputniknews.com Internet site at 8:29 p.m. Moscow time on their Monday evening—and it’s courtesy of Roy Stephens.
Turkey Attacks Kurdish Militant Camps in Northern Iraq
Turkish fighter jets, which on Friday attacked Islamic State targets in Syria, have launched a wave of airstrikes in northern Iraq, targeting camps of the militant Kurdistan Workers’ Party for the first time in four years, the prime minister’s office said Saturday.
The Iraq raids, which began late Friday and continued into Saturday, effectively ended an unstable two-year cease-fire between the Turkish government and the Kurdish militants, also known by the initials of their Kurdish name, P.K.K. After a three-decade conflict that claimed at least 40,000 lives, the two sides reached a fragile peace in 2013, though there have been a few minor clashes since then.Fighter jets also struck Islamic State targets in Syria for a second day, Prime Minister Ahmet Davutoglu’s office said in the statement on Saturday. The jets entered Syrian airspace to do so, the statement said, unlike during the previous strikes, which the government said were carried out from the Turkish side of the border.
Fighter jets also struck Islamic State targets in Syria for a second day, Prime Minister Ahmet Davutoglu’s office said in the statement on Saturday. The jets entered Syrian airspace to do so, the statement said, unlike during the previous strikes, which the government said were carried out from the Turkish side of the border.
This New York Times story, filed from Istanbul, appeared on their website on Saturday sometime—and it’s another offering from Roy Stephens, for which I thank him.
NATO calls emergency meeting after Turkey’s request
Jens Stoltenberg, NATO secretary-general, has called an emergency meeting on Tuesday to discuss security at the request of Turkey after last week’s suicide bombing there and ongoing Turkish security operations on two fronts.
NATO said in a statement on Sunday that the North Atlantic Council, which includes the ambassadors of all 28 NATO allies, would meet following a request by Turkey to hold consultations under Article 4 of NATO’s founding Washington Treaty.
Turkey announced on Friday a double military offensive, one against the Islamic State of Iraq and the Levant (ISIL) group across the border in Syria, and the other targeting Kurdish PKK fighters in northern Iraq.
“Turkey requested the meeting in view of the seriousness of the situation after the heinous terrorist attacks in recent days, and also to inform allies of the measures it is taking,” NATO said.
This news story showed up on the aljazeera.com Internet site at 8:17 a.m. BST yesterday morning, which was 3:17 a.m. EDT in Washington. It’s another contribution from Roy Stephens.
Chinese regulator vows share support after markets tumble 8.5 percent in a day
China said on Monday it was prepared to buy shares to stabilize the stock market and avert “systemic risks”, after major indices plunged more than 8 percent in the biggest one-day fall since 2007.
The securities regulator also said market authorities would deal severely with anyone engaged in the “malicious shorting of stocks”, in Beijing’s latest attempt to stave off a full-blown market crash.
Monday’s slump, amid growing doubts about the strength of the world’s second biggest economy, shattered three weeks of relative calm as a barrage of support measures helped stabilize values following a sharp sell-off that started in mid-June.
“The lesson from China’s last equity bubble is that, once sentiment has soured, policy interventions aimed at shoring up prices have only a short-lived effect,” wrote Capital Economics analysts in a research note reacting to the slide.
This Reuters article, filed from Shanghai, was posted on their website at 1:14 p.m. EDT yesterday afternoon—and I thank Elliot Simon for his second contribution of the day.
Chinese Stocks Suffer Second Biggest Crash In History, 1,500 Companies Halted Limit Down
This was not supposed to happen.
After pledging, investing and otherwise guaranteeing the Chinese stock market to the tune of 10% of GDP, and intervening on at least 40 different occasions in the past month ever since China’s stock bubble burst in late June, with the subsequent crash nearly taking the Shanghai Composite red for the year, overnight China officially lost control for the second time, when after a weak start to the Monday trading session, things turned very ugly in the last hour, when the Shanghai Composite plunged by 8.48%, closing nearly at the lows, and tumbling some 345 points for its biggest one-day drop since February 2007 and its second biggest crash in history!
The selling was steady throughout the day, but spiked in the last hour on concerns China would rein in its market-supporting programs following IMF demands to normalize its relentless market intervention. According to Bloomberg’s Richard Breslow: “fear that the extraordinary support measures employed to hold up the market may be scaled back caused heavy afternoon selling resulting in a down 8.5% day.” Of course, one can come up with any number of theories to explain the plunge: for example the PBOC did not buy enough to offset the relentless selling.
This commentary showed up on the Zero Hedge website at 2:12 p.m. Monday afternoon EDT—and I thank reader M.A. for sending it our way.
China losing control as stocks crash despite emergency measures
Chinese equities have suffered the sharpest one-day crash in eight years, sending powerful tremors through global commodity markets and smashing currencies across East Asia, Latin America and Africa.
The Shanghai Composite index fell 8.5pc despite emergency measures to shore up the market, with a roster of the biggest blue-chip companies down by the maximum daily limit of 10pc. The mood was further soured by news that corporated profits in China are now contracting in absolute terms, falling 0.3pc over the past year.
The violence of the moves unnerved investors worldwide, stirring fears that the Communist Party may be losing control after stoking a series of epic bubbles in property, corporate investment and equities to keep up the blistering pace of economic growth.
This commentary by Ambrose Evans-Pritchard was posted on the telegraph.co.uk Internet site at 8:11 p.m. BST yesterday evening, which was 3:11 p.m. in New York. I thank Roy Stephens for sliding it into my in-box just before midnight Denver time last night. It’s definitely worth reading.
Japan’s Economy Shrank Last Quarter, Top Forecaster Says
The Japanese economy likely contracted last quarter, dragged down by weak consumer spending and a slump in exports, according to a top forecaster.
The world’s third-biggest economy may have shrank as much as an annualized 2.5 percent, said Yoshiki Shinke, at Dai-ichi Life Research Institute. The median estimate of 25 economists surveyed July 9-22 by Bloomberg is for 0.8 percent growth after the 3.9 percent expansion in the first quarter.
“There is no doubt Japan’s economy is in a soft patch,” said Shinke, the only economist to make the Japan Center for Economic Research’s top-five list of forecasters for the past six years. “The question isn’t whether the economy contracted but how deep the contraction was.”
The warning highlights growing caution about resilience of Japan’s recovery, with industrial production dropping in three of the four months through May, and exports falling in the second quarter the most since late 2012, according to Bank of Japan data.
This Bloomberg article appeared on their website at 3:00 p.m. Denver time on their Sunday afternoon—and it’s the third and final offering of the day from Elliot Simon.
Abenomics End Game: Thousands Protest in Downtown Tokyo, Demand Abe’s Resignation as PM Disapproval Soars
Considering that Shinzo Abe’s first reign as prime minister of Japan lasted precisely one year from September 26, 2006 until September 26 of the following year, when he voluntarily resigned due to diarrhea, the fact that he has managed to stay in power for nearly 3 years since ascending to power for the second time in December 2012 and unleashing the currency-crushing and market-surging policy of unprecedented debt and deficit monetization known as “Abenomics” is quite impressive.
It also confirms that as long as the stock market keeps going higher politicians have nothing to fear even if it means a total collapse in living standards for the rest of the population.
Yet even with the Nikkei pushing on 18 years highs, it appears that Abe may have reached his rigged market rating benefit cap, because even as the Nikkei was soaring, Abe’s approval rating was plunging.
As we reported a month ago, “Abe Cabinet’s approval rating plunged to 39%, matching a record low, as more than half of voters oppose the new U.S.-sanctioned military/security legislation being debated in the Diet…. As his popularity has waned, Abe has become more and more desperate to keep support and has, for the first time in 70- years, lower the minimum voting age from 21 to 18.”
This interesting, but not surprising, news item was posted on the Zero Hedge website at 6:21 p.m. EDT yesterday evening—and I thank reader ‘David in California’ for passing it around.
Silence from the gold mining industry and timidity from the World Gold Council
On Friday your secretary/treasurer sought comment from the World Gold Council and the investor or media relations offices of six large gold mining companies about last Sunday night’s attack on the gold market. Only Newmont Mining responded, saying it had no comment. Not responding were the gold council, Barrick Gold, Goldcorp, Kinross, Anglogold Ashanti, and Agnico-Eagle.
The gold council’s statement about the attack, conveyed to you by GATA Friday evening, was discovered by GATA’s secretary/treasurer not in the “News and Events” and “Press Releases” section of the council’s Internet site but rather in the “Tweets” section where it had been almost immediately overshadowed by an item about jewelry purchases in India. One could have gotten the impression that the council was not eager to be seen addressing the issue.
If you wanted further proof that the miners would rather go out of business than face the price management scheme head on, you don’t have to look any further than this. This commentary by Chris Powell showed up on the gata.org Internet site late Saturday morning EDT.
How Much Gold Does Donald Trump Own?
Republican Presidential candidate Donald Trump submitted his financial statement to the Federal Elections Commission (FEC), listing his assets and liabilities, and according to the information, he owns between $100,001 and $200,000 in gold.
Even more impressive his gold holdings were reported on page 36 of the 92 pages that made up his disclosure statement. What is interesting is that his holdings appear to be in physical gold — bullion — not shares of gold-backed exchange-traded funds, nor future’s contracts.
Of course, his gold holdings are minuscule compared with his overall wealth, which the FEC document puts at 1.35 billion (a total of his assets minus his liabilities). However, this figure is misleading as the FEC only asks for candidates to provide a dollar range with the top category being “over $50,000,000.”
In a press release following the filing of his financial statement Trump, in his bombastic fashion, said “The financial report is not designed for individuals with such a ‘massive wealth,.…”
This gold related story was posted on the kitco.com Internet site on Friday afternoon EDT—and it’s the final offering of the day from reader M.A., for which I thank him on your behalf.
Deutsche Bank says gold’s fair value is $US750 an ounce
Gold prices may need to fall another 30 per cent to reach fair value, according to Deutsche Bank, with cheap oil the only potential lifeline for the battered precious metal.
Gold is currently trading around $US1096, just above last week’s fresh five-year low of $US1,072.30.
But Deutsche’s paper Estimating fair value for gold argues the price of the precious metal needs to drop substantially to bring valuation levels back towards historical averages.
“Gold would need to fall towards $US750 per ounce to bring prices in real terms back towards long-run historical averages,” said Deutsche.
Deutsche ran the gold price through several models to determine “fair value” for the precious metal.
At US$750 the ounce, there wouldn’t be one operating gold mine left anywhere on Planet Earth. This bulls hit main stream media story showed up on The Sydney Morning Herald at 5:06 p.m. AEST [Australian Eastern Standard Time] on their Monday afternoon—and I thank Richard Saler for sharing it with us.
Let’s be honest: you just bottom ticked the gold market
Almost skipped posting, but on Friday I stumbled on a Jim Grant interview that I couldn’t resist writing up.
Jim was asked about the recent article by WSJ’s Jason Zweig describing gold as a pet rock.
Jim was quick to highlight another of the author’s previous stories. This article was written on September 17th, 2011 and it was titled: “Is Gold cheap? Who knows, but gold miners are…”
In what can only be described as timing that would make a Bruno Mars jealous, Jason Zweig missed top ticking the GDX gold miner ETF by mere days.
He was only three bloody days early! Brilliant! And I am not talking about some interim top that was surpassed in the coming weeks. No, Jason Zweig wrote that article within days of the ALL TIME HIGH IN GDX. That price was never to be seen again, and we are now 80% lower.
Man, I have had some bad calls in my day, but this one by Jason Zweig makes them look like slight hiccups. You decide if the pet rock article is bullish or bearish for our poor little yellow friend…
This is too cute for words—and ‘all of the above’ is all there is to this gold-related news item that appeared on themacrotourist.com Internet site yesterday. It’s a must read—and the chart is definitely worth the trip. I thank Ted Butler for bringing that to my attention—and now to yours.
2015 gold forecast isn’t panning out. What happened? — Ross Norman speaks to BNN
The current price of gold has even a top forecaster flummoxed. In January, Ross Norman of Sharps Pixley predicted the average gold price forecast for 2015 would be $1,321, but his estimates were off this time. For more, we turn to Ross Norman, CEO of Sharps Pixley.
This 4:13 minute video interview was posted on the cnn.ca website at 11:40 a.m. EDT yesterday morning—and it’s worth watching. Ross Norman doesn’t say the ‘M’ word, but he hints at it. This is the first of two gold-related stories I found on the Sharps Pixley website yesterday.
Barron‘s Kahn: Gold May Soon Reach a Bottom
Gold tumbled to a five-year low this week, reacting to the increasing likelihood that the Federal Reserve will begin raising interest rates this year, and many experts anticipate the precious metal will continue falling.
But Barron’s columnist Michael Kahn says the plunge may not last too much longer. Gold traded at $1,093.60 an ounce Thursday morning.
“Gold is a falling knife. I am not advising investors try to catch it. The trend is down, and as of [Monday] a fairly sizeable technical pattern is broken to the downside,” he writes.
“But there is something intriguing now about the yellow metal, and it has everything to do with fear. Investors seem to be willing to dump their gold holdings en masse even at already depressed levels.”
This story about gold put in an appearance on the newsmax.com Internet site early last Friday morning EDT—and it’s the final offering of the day from Elliot Simon.
What to make of gold — Lawrence Williams
Did the flash crash in gold represent a last throw of the dice for the bears, or is it just another step on the yellow metal’s seemingly inexorable downwards path?
Following what was, in retrospect, a hugely successful bear raid on gold initiated with Sunday night/Monday morning’s flash crash, continued with less publicised market interventions, gold fell Friday at one time to below the chart-significant $1080 level. It did make something of a sharp recovery after that, even crossing up through the $1100 mark in later trading that day and closing for the weekend at $1099.50. The gold price fall has seen some significant withdrawals from the big gold ETFs – notably the SPDR Gold ETF (GLD) – with the gold freed up almost certainly being used to further depress the market as it was in 2013. Deja vu all over again as Yogi Berra would have put it!
To recap – in 2013 gold fell from a beginning of the year level of $1681.50 at the LBMA morning fix on January 2nd to 1201.50 at the close on December 31st, a decline of 28.5% – despite what appeared to be record gold buying from China. Withdrawals from the Shanghai Gold Exchange hit a little under 120 tonnes in a single week in April that year and a year’s total of a massive 2,181 tonnes – almost 70% of global new mined production. This year, gold opened in London on January 2nd at $1184.25. A similar 28.5% decline would take the year-end gold price down to just below the $850 level. Is this what’s in store for gold this year? That would be even lower than some of the most bearish gold analysts are forecasting.
This commentary by Lawrie was posted on the mineweb.com Internet site on Sunday evening BST.
Low gold prices seeing Chinese pile in again. SGE withdrawals exceeding new mined supply — Lawrence Williams
One of the big questions which the gold sector may be asking is what is the low gold price doing to Chinese demand. Have the Chinese become disillusioned with gold given they piled in so strongly in 2013 when Shanghai Gold Exchange withdrawals for the year hit a massive record 2,181 tonnes, but the gold price has largely been on a downwards path ever since.
We had already seen the beginnings of a pick up in Chinese demand, as expressed by SGE withdrawals, when they hit well over 60 tonnes for the week ended July 10 all at a time when seasonality suggests Chinese demand should actually be at its lowest. But the gold price continued to fall so it would be particularly interesting to see how demand would continue, or whether it would actually increase with more bargain hunters climbing in. In the event, SGE withdrawals for the week ended July 17 have come out at the fifth highest weekly total ever – again, it should be emphasised that this high demand level has been at what is normally a very weak time of the year for Chinese demand – and brings SGE withdrawals for the year to date to a huge 1,366 tonnes – probably nearly 80% of global new mined production over the same period. (Global weekly new mined gold supply is around 62 tonnes – so for the past two weeks Chinese SGE withdrawals will have actually exceeded the world’s mined supply!)
This commentary by Lawrie appeared on his website, lawrieongold.com, on Saturday sometime—and it’s worth reading.
A Change In the IMF’s Special Drawing Rights Could Be a Gold Price Game-Changer — Lawrence Williams
If the Chinese yuan is accepted as a key participant in the IMF’s Special Drawing Rights, this could be a major game-changer for the U.S. dollar and thus for gold.
Gold moves down on negative news, but doesn’t recover the lost ground on positive news.
Being the world’s reserve currency gives the USD enormous power, which is hugely beneficial to the U.S. economy. China wants a piece of this.
China is a much more positive force towards gold’s place in the global economy than is the U.S.
It’s not just that gold is moving downwards on negative news, it’s probably more significant that it’s not moving upwards on positive news. It ratchets two steps down on the negatives and only back one step – or less – on the positives. It is getting to the situation that it may take something either catastrophic, or currency game-changing, to benefit it. However, on the potentially positive front, we may only have to wait another three months before we see the latter materialize.
This commentary by Lawrie was posted on the seekingalpha.com Internet site a week ago—and Lawrie brought it to my attention on Sunday. It’s worth reading as well.
China’s Gold Buying From Hong Kong Drops to Lowest in a Year
China’s net gold imports from Hong Kong slumped to the lowest level in almost a year in a sign that demand in the world’s biggest consumer may be slowing.
Purchases less sales sank to 22.1 metric tons in June from 67.9 tons in May and 36.4 tons a year earlier, according to data compiled by Bloomberg from the Hong Kong Census and Statistics Department. That’s the smallest since July 2014.
Gold prices fell 1.5 percent last month as the U.S. Federal Reserve moved closer to raising borrowing costs for the first time since 2006. Higher rates cut the allure of bullion as the metal doesn’t pay interest or give returns like stocks and bonds. Swiss exports to China also sank in June, falling 23 percent from May. The start of the rout that wiped $4 trillion from Chinese shares may have hurt demand and buyers were probably also concerned about prospects for more price declines.
“China’s imports of gold are yet to respond to low prices,” Simona Gambarini, commodities economist at Capital Economics Ltd., said in a e-mailed note on Monday. “We think investors are becoming increasingly worried about a more pronounced correction in China’s stock market and will return to gold to diversify their portfolios.”
This gold import data are leaked about ten days before the official numbers are released, so they may be subject to correction by then. I’ll know for sure when Nick Laird plucks them off the official website. It’s been quite a while since Hong imports to China have served as any kind of proxy for total gold imports into China, so I wouldn’t be overly concerned by the negative spin in this Bloomberg piece that was posted on their website at 5:36 a.m. MDT on Monday morning. I found this on the Sharps Pixley website.
Gold Bullion “Extremely Rare” – All World’s Gold Fits In Average Four Bedroom House
Research Director and founder of GoldCore, Mark O’Byrne, was interviewed by Bobby Kerr on Newstalk’s “Down to Business” on Saturday morning. A range of aspects pertaining to gold and the gold market were discussed including the rarity of physical gold; the enormous demand for gold from China and India and gold’s proven safe haven qualities.
When explaining the true scarcity of physical gold, Mark was asked whether all the gold ever mined would fit into a 4-bedroom house. Mark agreed, stating that if all above ground gold in existence were refined to 99.9% purity it would fit in a cube with 21-meter sides. This would be comparable to the centre court of Wimbledon or two olympic size swimming pools. It is therefore an extremely rare metal.
A house that 21 meters on a side is hardly your average 4-bedroom house, it would almost be a mansion, but we know the point he’s making. This commentary by Mark O’Byrne was posted on the goldcore.com Internet site on Monday—and it represents the final contribution of the day from Roy Stephens.
No, Bob Moriarty, we don’t want to live with market rigging
To hear 321Gold.com‘s Bob Moriarty tell it, GATA has conquered the world and now has more influence on the markets than the central banks we long have been clamoring against.
For in his commentary today, “Capitulation in Gold” — Moriarty writes:
“Speaking of GATA, they have done billions of dollars of damage to investors. Somehow they convinced tens of thousands of people that when gold went from $252 to $1,923 it was being suppressed, and like the gold derivatives time bomb, gold was going to explode one day soon. If someone was manipulating gold from $252 to $1,923, it wasn’t down. Actually if you bought lumber or soybeans and they made the same percentage move as gold did from 1999 to 2011 and you didn’t sell, it’s because you are too stupid to recognize the difference between an investment and a religion.”
Bob is such a sweetheart of guy, as anyone who has ever met him, or listened to him speak, will tell you. He and Doug Casey would be soul mates on this issue—and you saw what happened to Casey Research after Doug spent years running GATA in general, and me in particular, into the ground. Maybe the same fate awaits Bob as well? This commentary by Chris Powell appeared on the gata.org Internet site yesterday—and it’s definitely worth reading from start to finish, including Bob’s essay, which is linked in this GATA release.
The PHOTOS and the FUNNIES
THE WRAP
There has been no liquidation or reduction in the metal holdings of the big silver ETF, SLV, this week, despite the series of new price lows. Over the past month, metal holdings in SLV have actually increased by 3.5 million oz, thus preserving the counterintuitive deposit/withdrawal pattern made obvious over the past few years. Combined with the silver I believe JPMorgan has acquired over this time, it would appear that while the price has been horrid, silver appears to be very strongly held. Silver metal holdings in SLV have basically flat-lined over the past few years and are still within 10% of the peak in holdings in 2011. Just to be clear, I don’t believe JPM holds much of the metal in SLV; it holds metal apart from SLV holdings (but JPM got most of its silver from the SLV over time).
In contrast, there have been sizable withdrawals in the big gold ETF, GLD, on the order of 1 million oz over the past month to the lowest levels of gold held in the trust since 2008. From the peak in holdings since the beginning of 2013, gold holdings have fallen close to 22 million oz, or 50%, in GLD. While the (lack of) metal withdrawals from the SLV is counterintuitive considering the price decline, the gold metal withdrawals in GLD look to me to be in keeping with typical investor behavior. I know that I just labeled the outburst of main stream media negative gold commentary as lacking substance, but that doesn’t mean it is without effect.
Both SLV and GLD are investor friendly means of holding each metal because, for one thing, the securities make it easy to buy metal – perhaps too easy. (I’ll save for another day the merits or lack thereof of holding such shares, but I still hold SLV). Because it’s so easy to hold shares, I believe a number of GLD holders, who weren’t strongly convinced or aware of the COMEX price setting, have succumbed to the negative gold commentary and in conjunction with the move to 5 year price lows have liquidated holdings. I believe this is bullish for the price of gold, as it is generally constructive for price when weaker hands are liquidated. — Silver analyst Ted Butler: 25 July 2015
Even a cursory glance at gold and silver prices during the Monday session show that their prices were carefully managed in light of the awful performance of the dollar index—and $1,100 spot in gold was well defended. Nothing is going to be allowed to happen until it is—and it certainly wasn’t yesterday.
Here are the 6-month charts for the Big 6 commodities—and both copper and crude oil set new lows for this move down.
<img class="alignleft size-full wp-image-3575" src="http://www.edsteergoldandsilver.com/wp-content/uploads/2015/07/280